MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPEMENT SEC
485APOS, 1999-04-29
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<PAGE>
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1999
 
                                                      REGISTRATION NOS.: 2-70421
                                                                        811-3129
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                                ----------------
 
                                   FORM N-1A
                             REGISTRATION STATEMENT
                        UNDER THE SECURITIES ACT OF 1933                     /X/
                        PRE-EFFECTIVE AMENDMENT NO.                          / /
                        POST-EFFECTIVE AMENDMENT NO. 25                      /X/
                                     AND/OR
              REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
                                  ACT OF 1940                                /X/
                                AMENDMENT NO. 26                             /X/
 
                              -------------------
 
    MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
   (FORMERLY NAMED DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.)
                            (A MARYLAND CORPORATION)
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
 
                             TWO WORLD TRADE CENTER
                            NEW YORK, NEW YORK 10048
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
 
       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600
 
                                BARRY FINK, ESQ.
                             TWO WORLD TRADE CENTER
                            NEW YORK, NEW YORK 10048
                    (NAME AND ADDRESS OF AGENT FOR SERVICE)
 
                              -------------------
 
                                    COPY TO:
                            DAVID M. BUTOWSKY, ESQ.
                             GORDON ALTMAN BUTOWSKY
                             WEITZEN SHALOV & WEIN
                              114 WEST 47TH STREET
                            NEW YORK, NEW YORK 10036
 
                              -------------------
 
                 APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
 As soon as practicable after this Post-Effective Amendment becomes effective.
 
 IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
 
             immediately upon filing pursuant to paragraph (b)
- -------
             on (date) pursuant to paragraph (b)
- -------
             60 days after filing pursuant to paragraph (a)
- -------
             on June 28, 1999 pursuant to paragraph (a) of rule
   X         485.
- -------
 
           AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
 
            -------------------------------------------------------
            -------------------------------------------------------
<PAGE>
    MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
 
                             CROSS-REFERENCE SHEET
 
                                   FORM N-1A
 
<TABLE>
<CAPTION>
                 ITEM                                    CAPTION
- ---------------------------------------  ---------------------------------------
<S>                                      <C>
PART A                                                 PROSPECTUS
 1.  ..................................  Cover Page; Back Cover
 2.  ..................................  Investment Objective: Principal
                                         Investment Strategies, Principal Risks,
                                          Past Performance
 3.  ..................................  Fees and Expenses
 4.  ..................................  Investment Objective: Principal
                                         Investment Strategies; Principal Risks;
                                          Additional Investment Strategy
                                          Information; Additional Risk
                                          Information
 5.  ..................................  Not Applicable
 6.  ..................................  Fund Management
 7.  ..................................  Pricing Fund Shares; How to Buy Shares;
                                         How to Exchange Shares; How to Sell
                                          Shares; Distributions; Tax
                                          Consequences
 8.  ..................................  Share Class Arrangements
 9.  ..................................  Financial Highlights
PART B                                     STATEMENT OF ADDITIONAL INFORMATION
</TABLE>
 
    Information required to be included in Part B is set forth under the
appropriate caption in Part B of this Registration Statement.
 
PART C
 
    Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
                                                         PROSPECTUS - JUNE, 1999
 
Morgan Stanley Dean Witter
                                         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......................................                   3
                          Fees and Expenses.....................................                   4
                          Additional Investment Strategy Information............                   5
                          Additional Risk Information...........................                   6
                          Fund Management.......................................                   7
 
Shareholder Information   Pricing Fund Shares...................................                   8
                          How to Buy Shares.....................................                   8
                          How to Exchange Shares................................                  10
                          How to Sell Shares....................................                  11
                          Distributions.........................................                  13
                          Tax Consequences......................................                  13
                          Share Class Arrangements..............................                  14
 
Financial Highlights      ......................................................                  21
 
Our Family of Funds       ......................................................   Inside Back Cover
 
                          THIS PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE FUND. PLEASE READ
                          IT CAREFULLY AND KEEP IT FOR FUTURE REFERENCE.
</TABLE>
 
           FUND CATEGORY
           ---------------------------
       /X/ GROWTH
 
       / / Growth and Income
 
       / / Income
 
       / / Money Market
<PAGE>
(SIDEBAR)
CAPITAL GROWTH
AN INVESTMENT OBJECTIVE HAVING THE GOAL OF SELECTING SECURITIES WITH THE
POTENTIAL TO RISE IN VALUE RATHER THAN PAY OUT INCOME.
(END SIDEBAR)
 
THE FUND
 
ICON  INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
           Morgan Stanley Dean Witter Natural Resource Development Securities
           Inc. is a mutual fund that seeks capital growth. There is no
           guarantee that the Fund will achieve this objective.
 
ICON  PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
           The Fund will normally invest at least 65% of its 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 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. 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.
 
           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.
 
                                                                               1
<PAGE>
           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
- --------------------------------------------------------------------------------
           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 sector 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.
 
           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.
 
2
<PAGE>
           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.
 
           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
(SIDEBAR)  insured by any bank, governmental entity, or the FDIC.
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)
 
ICON  PAST PERFORMANCE
- --------------------------------------------------------------------------------
           The bar chart and table below provide some indication of the risks of
           investing in the Fund. The Fund's past performance does not indicate
           how the Fund will perform in the future.
 
ANNUAL TOTAL RETURNS - CALENDAR YEARS
 
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
 
<TABLE>
<S>        <C>
1989          31.63%
`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%.
 
                                                                               3
<PAGE>
 
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED THE 1998 CALENDAR YEAR)
- -------------------------------------------------------------------------------
                                     PAST 1 YEAR   PAST 5 YEARS   PAST 10 YEARS
<S>                                  <C>           <C>            <C>
- -------------------------------------------------------------------------------
 Class A                               -25.32%          --             --
- -------------------------------------------------------------------------------
 Class B(1)                            -25.63%        6.45%           8.29%
- -------------------------------------------------------------------------------
 Class C                               -22.61%          --             --
- -------------------------------------------------------------------------------
 Class D                               -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    Prior to July 28, 1997, the Fund only issued Class B shares.
2    The Standard & Poor's-Registered Trademark- 500 Composite Stock Price Index
     (S&P 500) is a broad-based index, the performance of which is based on the
     average performance of 500 widely held common stocks. The performance of
     the Index does not include any expenses, fees or charges. The Index is
     unmanaged and should not be considered an investment.
3    The Lipper 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.
 
(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. 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.
SHAREHOLDER FEES
THESE FEES ARE PAID DIRECTLY FROM YOUR INVESTMENT.
ANNUAL FUND
OPERATING EXPENSES
THESE EXPENSES ARE DEDUCTED FROM THE FUND'S ASSETS AND ARE BASED ON EXPENSES
PAID FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1999.
(END SIDEBAR)
 
ICON  FEES AND EXPENSES
- --------------------------------------------------------------------------------
           The Fund offers four Classes of shares: Classes A, B, C and D. Each
           Class has a different combination of fees, expenses and other
           features. The table below briefly describes the fees and expenses
           that you may pay if you buy and hold shares of the Fund. The Fund
           does not charge account or exchange fees. See the "Share Class
 
           Arrangements" section for further fee and expense information.
 
<TABLE>
<CAPTION>
                                                               CLASS A     CLASS B     CLASS C    CLASS D
<S>                                                           <C>         <C>         <C>         <C>
- ---------------------------------------------------------------------------------------------------------
 SHAREHOLDER FEES
- ---------------------------------------------------------------------------------------------------------
 Maximum sales charge (load) imposed on purchases (as a
 percentage of offering price)                                  5.25%(1)    None        None       None
- ---------------------------------------------------------------------------------------------------------
 Maximum deferred sales charge (load)
 (as a percentage based on the lesser of
 the offering price or net asset value at redemption)          None(2)      5.00%(3)    1.00%(4)   None
- ---------------------------------------------------------------------------------------------------------
 ANNUAL FUND OPERATING EXPENSES
- ---------------------------------------------------------------------------------------------------------
 Management fee                                                 0.62%       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 on sales made within one year after purchase,
     except for certain specific circumstances.
3    The CDSC is scaled down to 1.00% during the sixth year, reaching zero
     thereafter. See "Share Class Arrangements" for a complete discussion of the
     CDSC.
4    Only applicable to sales made within one year after purchase.
 
4
 
<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>
 
ICON  ADDITIONAL INVESTMENT STRATEGY INFORMATION
- --------------------------------------------------------------------------------
           The Fund's investment objective is to seek capital growth. There is
           no guarantee that the Fund will achieve this objective.
 
           This section provides additional information concerning 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 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 referenced in "Principal Investment Strategies" apply at
           the time the Fund acquires an investment. Subsequent percentage
           changes that result from market fluctuations or changes in assets
           will not require the Fund to sell any portfolio security. The Fund
           may change its principal investment strategies without shareholder
           approval; however, you would be notified of any changes.
 
                                                                               5
<PAGE>
ICON  ADDITIONAL RISK INFORMATION
- --------------------------------------------------------------------------------
           This section provides additional information regarding 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
           individual and governmental issuers in which the Fund invests do not
           properly process and calculate date-related information from and
           after January 1, 2000. While year 2000-related computer problems
           could have a negative effect on the Fund, the Investment Manager and
           affiliates are working hard to avoid any problems and to obtain
           assurances from their service providers that they are taking similar
           steps.
 
           In addition, it is possible that the markets for securities in which
           the Fund invests may be detrimentally affected by computer failures
           throughout the financial services industry beginning January 1, 2000.
           Improperly functioning trading systems may result in settlement
           problems and liquidity issues. In addition, corporate and
           governmental data processing errors may result in production problems
           for individual companies and overall economic uncertainties. Earnings
           of individual issuers will be affected by remediation costs, which
           may be substantial and may be reported inconsistently in U.S. and
           foreign financial statements. Accordingly, the Fund's investments may
           be adversely affected.
 
6
<PAGE>
(SIDEBAR)
MORGAN STANLEY DEAN WITTER ADVISORS INC.
THE INVESTMENT MANAGER IS WIDELY RECOGNIZED AS A LEADER IN THE MUTUAL FUND
INDUSTRY AND TOGETHER WITH MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC., ITS
WHOLLY-OWNED SUBSIDIARY, HAS MORE THAN $   BILLION IN ASSETS UNDER MANAGEMENT OR
ADMINISTRATION AS OF              , 1999.
(END SIDEBAR)
 
ICON  FUND MANAGEMENT
- --------------------------------------------------------------------------------
                            The Fund has retained the Investment Manager --
                            Morgan Stanley Dean Witter Advisors Inc. -- to
                            provide administrative services, manage its business
                            affairs and invest its assets, including the placing
                            of orders for the purchase and sale of portfolio
                            securities. The Investment Manager is a wholly-owned
                            subsidiary of Morgan Stanley Dean Witter & Co., a
                            preeminent global financial services firm that
                            maintains leading market positions in each of its
                            three primary businesses: securities, asset
                            management and credit services. Its main business
                            office is located at Two World Trade Center, New
                            York, NY 10048.
 
                            The Fund 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. Prior 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.
 
                                                                               7
<PAGE>
(SIDEBAR)
CONTACTING A FINANCIAL ADVISOR
IF YOU ARE NEW TO THE MORGAN STANLEY DEAN WITTER FAMILY OF FUNDS AND WOULD LIKE
TO CONTACT A FINANCIAL ADVISOR, CALL (800) THE-DEAN FOR THE TELEPHONE NUMBER OF
THE MORGAN STANLEY DEAN WITTER OFFICE NEAREST YOU. YOU MAY ALSO ACCESS OUR
OFFICE LOCATOR ON OUR INTERNET SITE AT: WWW.DEANWITTER.COM/FUNDS
(END SIDEBAR)
 
SHAREHOLDER INFORMATION
 
ICON  PRICING FUND SHARES
- --------------------------------------------------------------------------------
           The price of Fund shares (excluding sales charges), called "net asset
           value," is based on the value of the Fund's portfolio securities.
           While the assets of each Class are invested in a single portfolio of
           securities, the net asset value of each Class will differ because the
           Classes have different ongoing distribution fees.
 
           The net asset value per share of the Fund is determined once daily at
           4:00 p.m. Eastern time on each day that the New York Stock Exchange
           is open (or, on days when the New York Stock Exchange closes prior to
           4:00 p.m., at such earlier time). Shares will not be priced on days
           that the New York Stock Exchange is closed.
 
           The value of the Fund's portfolio securities is based on the
           securities' market price when available. When a market price is not
           readily available, including circumstances under which the Investment
           Manager determines that a security's market price is not accurate, a
           portfolio security is valued at its fair value, as determined under
           procedures established by the Fund's Board of Directors. In these
           cases, the Fund's net asset value will reflect certain portfolio
           securities' fair value rather than their market price. 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.
 
           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.
 
8
<PAGE>
           When you buy Fund shares, the shares are purchased at the next share
           price calculated (less any applicable front-end sales charge for
           Class A shares) after we receive your investment order in proper
           form. We reserve the right to reject any order for the purchase of
(SIDEBAR)  Fund Shares.
EASYINVEST-SM-
A PURCHASE PLAN THAT ALLOWS YOU TO TRANSFER MONEY AUTOMATICALLY FROM YOUR
CHECKING OR SAVINGS ACCOUNT OR FROM A MONEY MARKET FUND ON A SEMI-MONTHLY,
MONTHLY OR QUARTERLY BASIS. CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL
ADVISOR FOR FURTHER INFORMATION ABOUT THIS SERVICE.
(END SIDEBAR)
 
<TABLE>
<CAPTION>
MINIMUM INVESTMENT AMOUNTS
- ------------------------------------------------------------------------------------------------
                                                                            MINIMUM INVESTMENT
                                                                          ----------------------
 INVESTMENT OPTIONS                                                        INITIAL   ADDITIONAL
<S>                                  <C>                                  <C>        <C>
- ------------------------------------------------------------------------------------------------
 Regular accounts                                                         $1,000        $ 100
- ------------------------------------------------------------------------------------------------
 Individual Retirement Accounts:     Regular IRAs                         $1,000        $ 100
                                     Education IRAs                       $500          $ 100
- ------------------------------------------------------------------------------------------------
 EASYINVEST-SM-                      (Automatically from your checking
                                     or savings account or Money Market
                                     Fund)                                $100*         $ 100*
- ------------------------------------------------------------------------------------------------
</TABLE>
 
*    Provided your schedule of investments totals $1,000 in twelve months.
 
                            There is no minimum investment amount if you
                            purchase Fund shares through: (1) the Investment
                            Manager's mutual fund asset
           allocation plan, (2) a program, approved by the Fund's distributor,
           in which you pay an asset-based fee for advisory, administrative
           and/or brokerage services, or (3) employer-sponsored employee benefit
           plan accounts.
 
           INVESTMENT OPTIONS FOR CERTAIN INSTITUTIONAL AND OTHER
           INVESTORS/CLASS D SHARES. To be eligible to purchase Class D shares,
           you must qualify under one of the investor categories specified in
           the "Share Class Arrangements" section of this PROSPECTUS.
 
           THREE DAY SETTLEMENT. Fund shares are sold through the Fund's
           distributor, Morgan Stanley Dean Witter Distributors Inc., on a
           normal three business day basis; that is, your payment for Fund
           shares is due on the third business day (settlement day) after you
           place a purchase order.
 
           SUBSEQUENT INVESTMENTS SENT DIRECTLY TO THE FUND. In addition to
           buying additional Fund shares for an existing account by contacting
           your Morgan Stanley Dean Witter Financial Advisor, you may send a
           check directly to the Fund. To buy additional shares in this manner:
 
           - Write a "letter of instruction" to the Fund specifying the name(s)
             on the account, the account number, the social security or tax
             identification number, the Class of shares you wish to purchase and
             the investment amount (which would include any applicable front-end
             sales charge). The letter must be signed by the account owner(s).
 
           - Make out a check for the total amount payable to: Morgan Stanley
             Dean Witter 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.
 
                                                                               9
<PAGE>
ICON  HOW TO EXCHANGE SHARES
- --------------------------------------------------------------------------------
           PERMISSIBLE FUND EXCHANGES. You may exchange shares of any Class of
           the Fund for the same Class of any other continuously offered
           Multi-Class Fund, or for shares of a No-Load Fund, Money Market Fund
           or Short-Term U.S. Treasury Trust, without the imposition of an
           exchange fee. See the inside back cover of this PROSPECTUS for each
           Morgan Stanley Dean Witter Fund's designation as a Multi-Class Fund,
           No-Load Fund or Money Market Fund. If a Morgan Stanley Dean Witter
           Fund is not listed, consult the inside back cover of that fund's
           PROSPECTUS for its designation. For purposes of exchanges, shares of
           FSC Funds (subject to a front-end sales charge) are treated as Class
           A shares of a Multi-Class Fund.
 
           Exchanges may be made after shares of the Fund acquired by purchase
           have been held for thirty days. There is no waiting period for
           exchanges of shares acquired by exchange or dividend reinvestment.
           The current PROSPECTUS for each Fund describes its investment
           objective(s), policies and investment minimums, and should be read
           before investment.
 
           EXCHANGE PROCEDURES. You can process an exchange by contacting your
           Morgan Stanley Dean Witter Financial Advisor or other authorized
           financial representative. Otherwise, you must forward an exchange
           privilege authorization form to the Fund's transfer agent -- Morgan
           Stanley Dean Witter Trust FSB -- and then write the transfer agent or
           call (800) 869-NEWS to place an exchange order. You can obtain an
           exchange privilege authorization form by contacting your Financial
           Advisor or other authorized financial representative or by calling
           (800) 869-NEWS. If you hold share certificates, no exchanges may be
           processed until we have received all applicable share certificates.
 
           An exchange to any Morgan Stanley Dean Witter Fund (except a Money
           Market Fund) is made on the basis of the next calculated net asset
           values of the Funds involved after the exchange instructions are
           accepted. When exchanging into a Money Market Fund, the Fund's shares
           are sold at their next calculated net asset value and the Money
           Market Fund's shares are purchased at their net asset value on the
           following business day.
 
           The Fund may terminate or revise the exchange privilege upon required
           notice. Certain services normally available to shareholders of Money
           Market Funds, including the check writing privilege, are not
           available for Money Market Fund shares you acquire in an exchange.
 
           TELEPHONE EXCHANGES. For your protection when calling Morgan Stanley
           Dean Witter Trust FSB, we will employ reasonable procedures to
           confirm that exchange instructions communicated over the telephone
           are genuine. These procedures may include requiring various forms of
           personal identification such as name, mailing address, social
           security or other tax identification number. Telephone instructions
           also may be recorded.
 
           Telephone instructions will be accepted if received by the Fund's
           transfer agent between 9:00 a.m. and 4:00 p.m. Eastern time, on any
           day the New York Stock Exchange is open for business. During periods
           of drastic economic or market changes, it is possible that the
           telephone exchange procedures may be difficult to implement, although
           this has not been the case with the Fund in the past.
 
10
<PAGE>
           MARGIN ACCOUNTS. If you have pledged your Fund shares in a margin
           account, contact your Morgan Stanley Dean Witter Financial Advisor or
           other authorized financial representative regarding restrictions on
           the exchange of such shares.
 
           TAX CONSIDERATIONS OF EXCHANGES. If you exchange shares of the Fund
           for shares of another Morgan Stanley Dean Witter Fund there are
           important tax considerations. For tax purposes, the exchange out of
           the Fund is considered a sale of Fund shares -- and the exchange into
           the other Fund is considered a purchase. As a result, you may realize
           a capital gain or loss.
 
           You should review the "Tax Consequences" section and consult your own
           tax professional about the tax consequences of an exchange.
 
           FREQUENT EXCHANGES. A pattern of frequent exchanges may result in the
           Fund limiting or prohibiting, at its discretion, additional purchases
           and/or exchanges. The Fund will notify you in advance of limiting
           your exchange privileges.
 
           CDSC CALCULATIONS ON EXCHANGES. See the "Share Class Arrangements"
           section of this PROSPECTUS for a further discussion of how applicable
           contingent deferred sales charges (CDSCs) are calculated for shares
           of one Morgan Stanley Dean Witter Fund that are exchanged for shares
           of another.
 
           For further information regarding exchange privileges, you should
           contact your Morgan Stanley Dean Witter Financial Advisor or call
           (800) 869-NEWS.
 
ICON  HOW TO SELL SHARES
- --------------------------------------------------------------------------------
           You can sell some or all of your Fund shares at any time. If you sell
           Class A, Class B or Class C shares, your net sale proceeds are
           reduced by the amount of any applicable CDSC. Your shares will be
           sold at the next price calculated after we receive your order to sell
           as described below.
 
<TABLE>
<CAPTION>
 OPTIONS            PROCEDURES
<S>                 <C>
- --------------------------------------------------------------------------------
 Contact your       To sell your shares, simply call your Morgan Stanley Dean
 Financial Advisor  Witter Financial Advisor or other authorized financial
                    representative.
                    ------------------------------------------------------------
ICON
                    Payment will be sent to the address to which the account is
                    registered or deposited in your brokerage account.
- --------------------------------------------------------------------------------
 By Letter          You can also sell your shares by writing a "letter of
                    instruction" that includes:
ICON
                    - your account number;
                    - the dollar amount or the number of shares you wish to
                      sell;
                    - the Class of shares you wish to sell; and
                    - the signature of each owner as it appears on the account.
                    ------------------------------------------------------------
                    If you are requesting payment to anyone other than the
                    registered owner(s) or that payment be sent to any address
                    other than the address of the registered owner(s) or
                    pre-designated bank account, you will need a signature
                    guarantee. You can obtain a signature guarantee from an
                    eligible guarantor acceptable to Morgan Stanley Dean Witter
                    Trust FSB. (You should contact Morgan Stanley Dean Witter
                    Trust FSB at (800) 869-NEWS for a determination as to
                    whether a particular institution is an eligible guarantor.)
                    A notary public CANNOT provide a signature guarantee.
                    Additional documentation may be required for shares held by
                    a corporation, partnership, trustee or executor.
                    ------------------------------------------------------------
                    Mail the letter to Morgan Stanley Dean Witter Trust FSB at
                    P.O. Box 983, Jersey City, New Jersey 07303. If you hold
                    share certificates, you must return the certificates, along
                    with the letter and any required additional documentation.
- --------------------------------------------------------------------------------
</TABLE>
 
                                                                              11
<PAGE>
 
<TABLE>
<CAPTION>
 OPTIONS            PROCEDURES
<S>                 <C>
- --------------------------------------------------------------------------------
                    A check will be mailed to the name(s) and address in which
                    the account is registered, or otherwise according to your
                    instructions.
- --------------------------------------------------------------------------------
 Systematic         If your investment in all of the Morgan Stanley Dean Witter
 Withdrawal Plan    Family of Funds has a total market value of at least
                    $10,000, you may elect to withdraw amounts of $25 or more,
                    or in any whole percentage of a Fund's balance (provided the
                    amount is at least $25), on a monthly, quarterly,
ICON
                    semi-annual or annual basis, from any Fund with a balance of
                    at least $1,000. Each time you add a Fund to the plan, you
                    must meet the plan requirements.
                    ------------------------------------------------------------
                    Amounts withdrawn are subject to any applicable CDSC. A CDSC
                    may be waived under certain circumstances. See the Class B
                    waiver categories listed in the "Share Class Arrangements"
                    section of this Prospectus.
                    ------------------------------------------------------------
                    To sign up for the Systematic Withdrawal Plan, contact your
                    Morgan Stanley Dean Witter Financial Advisor or call (800)
                    869-NEWS. You may terminate or suspend your plan at any
                    time. Please remember that withdrawals from the plan are
                    sales of shares, not Fund "distributions," and ultimately
                    may exhaust your account balance. The Fund may terminate or
                    revise the plan at any time.
                    ------------------------------------------------------------
</TABLE>
 
           PAYMENT FOR SOLD SHARES. After we receive your complete instructions
           to sell as described above, a check will be mailed to you within
           seven days, although we will attempt to make payment within one
           business day. Payment may also be sent to your brokerage account.
 
           Payment may be postponed or the right to sell your shares suspended
           under unusual circumstances. If you request to sell shares that were
           recently purchased by check, payment of the sale proceeds may be
           delayed for the minimum time needed to verify that the check has been
           honored (not more than fifteen days from the time we receive the
           check).
 
           TAX CONSIDERATIONS. Normally, your sale of Fund shares is subject to
           federal and state income tax. You should review the "Tax
           Consequences" section of this PROSPECTUS and consult your own tax
           professional about the tax consequences of a sale.
 
           REINSTATEMENT PRIVILEGE. If you sell Fund shares and have not
           previously exercised the reinstatement privilege, you may, within 35
           days after the date of sale, invest any portion of the proceeds in
           the same Class of Fund shares at their net asset value and receive a
           pro rata credit for any CDSC paid in connection with the sale.
 
           INVOLUNTARY SALES. The Fund reserves the right, on sixty days'
           notice, to sell the shares of any shareholder (other than shares held
           in an IRA or 403(b) Custodial Account) whose shares, due to sales by
           the shareholder, have a value below $100, or in the case of an
           account opened through EASYINVEST-SM-, if after 12 months the
           shareholder has invested less than $1,000 in the account.
 
           However, before the Fund sells your shares in this manner, we will
           notify you and allow you sixty days to make an additional investment
           in an amount that will increase the value of your account to at least
           the required amount before the sale is processed. No CDSC will be
           imposed on any involuntary sale.
 
12
<PAGE>
           MARGIN ACCOUNTS. Certain restrictions may apply to Fund shares
           pledged in margin accounts with Dean Witter Reynolds or another
           authorized broker-dealer of Fund shares. If you hold Fund shares in
           this manner, please contact your Morgan Stanley Dean Witter Financial
           Advisor or other authorized financial representative for more
(SIDEBAR)  details.
TARGETED DIVIDENDS-SM-
YOU MAY SELECT TO HAVE YOUR FUND DISTRIBUTIONS AUTOMATICALLY INVESTED IN OTHER
CLASSES OF FUND SHARES OR CLASSES OF ANOTHER MORGAN STANLEY DEAN WITTER FUND
THAT YOU OWN. CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL ADVISOR FOR
FURTHER INFORMATION ABOUT THIS SERVICE.
(END SIDEBAR)
 
ICON  DISTRIBUTIONS
- --------------------------------------------------------------------------------
           The Fund passes substantially all of its earnings from income and
           capital gains along to its investors as "distributions." The Fund
           earns income from stocks and interest from fixed-income investments.
           These amounts are passed along to Fund shareholders as "income
           dividend distributions." The Fund realizes capital gains whenever it
           sells securities for a higher price than it paid for them. These
           amounts may be passed along as "capital gain distributions."
 
                            The Fund declares income dividends separately for
                            each Class. Distributions paid on Class A and Class
                            D shares usually will be higher than for Class B and
                            Class C because distribution fees that Class B and
                            Class C pay are higher. Normally, income dividends
                            and capital gains are distributed annually in
                            December. The Fund, however, may retain and reinvest
                            any long-term capital gains. The Fund may at times
           make payments from sources other than income or capital gains that
           represent a return of a portion of your investment.
 
           Distributions are reinvested automatically in additional shares of
           the same Class and automatically credited to your account, unless you
           request in writing that all distributions be paid in cash. If you
           elect the cash option, the Fund will mail a check to you no later
           than seven business days after the distribution is declared. No
           interest will accrue on uncashed checks. If you wish to change how
           your distributions are paid, your request should be received by the
           Fund's transfer agent, Morgan Stanley Dean Witter Trust FSB, at least
           five business days prior to the record date of the distributions.
 
ICON  TAX CONSEQUENCES
- --------------------------------------------------------------------------------
           As with any investment, you should consider how your Fund investment
           will be taxed. The tax information in this PROSPECTUS is provided as
           general information. You should consult your own tax professional
           about the tax consequences of an investment in the Fund.
 
           Unless your investment in the Fund is through a tax-deferred
           retirement account, such as a 401(k) plan or IRA, you need to be
           aware of the possible tax consequences when:
 
           - The Fund makes distributions; and
           - You sell Fund shares, including an exchange to another Morgan
             Stanley Dean Witter Fund.
 
           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
 
                                                                              13
<PAGE>
           shares. A distribution also may be subject to local income tax. Any
           income dividend distributions and any short-term capital gain
           distributions are taxable to you as ordinary income. Any long-term
           capital gain distributions are taxable as long-term capital gains, no
           matter how long you have owned shares in the Fund.
 
           Every January, you will be sent a statement (IRS Form 1099-DIV)
           showing the taxable distributions paid to you in the previous year.
           The statement provides full information on your dividends and capital
           gains for tax purposes.
 
           TAXES ON SALES. Your sale of Fund shares normally is subject to
           federal and state income tax and may result in a taxable gain or loss
           to you. A sale also may be subject to local income tax. Your exchange
           of Fund shares for shares of another Morgan Stanley Dean Witter Fund
           is treated for tax purposes like a sale of your original shares and a
           purchase of your new shares. Thus, the exchange may, like a sale,
           result in a taxable gain or loss to you and will give you a new tax
           basis for your new shares.
 
           When you open your Fund account, you should provide your social
           security or tax identification number on your investment application.
           By providing this information, you will avoid being subject to a
           federal backup withholding tax of 31% on taxable distributions and
           redemption proceeds. Any withheld amount would be sent to the IRS as
           an advance tax payment.
 
ICON  SHARE CLASS ARRANGEMENTS
- --------------------------------------------------------------------------------
           The Fund offers several Classes of shares having different
           distribution arrangements designed to provide you with different
           purchase options according to your investment needs. Your Morgan
           Stanley Dean Witter Financial Advisor or other authorized financial
           representative can help you decide which Class may be appropriate for
           you.
 
           The general public is offered three Classes: Class A shares, Class B
           shares and Class C shares, which differ principally in terms of sales
           charges and ongoing expenses. A fourth Class, Class D shares, is
           offered only to a limited category of investors. Shares that you
           acquire through reinvested distributions will not be subject to any
           front-end sales charge or CDSC -- contingent deferred sales charge.
           Sales personnel may receive different compensation for selling each
           Class of shares. The sales charges applicable to each Class provide
           for the distribution financing of shares of that Class.
 
           The chart below compares the sales charge and annual 12b-1 fee
           applicable to each Class:
 
<TABLE>
<CAPTION>
CLASS     SALES CHARGE                                                  ANNUAL 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>
 
14
<PAGE>
(SIDEBAR)
FRONT-END SALES
CHARGE OR FSC
AN INITIAL SALES CHARGE YOU PAY WHEN PURCHASING CLASS A SHARES THAT IS BASED ON
A PERCENTAGE OF THE OFFERING PRICE. THE PERCENTAGE DECLINES BASED UPON THE
DOLLAR VALUE OF CLASS A SHARES YOU PURCHASE. WE OFFER THREE WAYS TO REDUCE YOUR
CLASS A SALES CHARGES - THE COMBINED PURCHASE PRIVILEGE, RIGHT OF ACCUMULATION
AND LETTER OF INTENT.
(END SIDEBAR)
 
 CLASS A SHARES
Class A shares are sold at net asset value plus an initial sales charge of up to
5.25%. The initial sales charge is reduced for purchases of $25,000 or more
according to the schedule below. Investments of $1 million or more are not
subject to an initial sales charge, but are generally subject to a contingent
deferred sales charge, or CDSC, of 1.0% on sales made within one year after the
last day of the month of purchase. The CDSC will be assessed in the same manner
and with the same CDSC waivers as with Class B shares. Class A shares are also
subject to a distribution (12b-1) fee of up to 0.25% of the average daily net
assets of the Class.
 
The offering price of Class A shares includes a sales charge (expressed as a
percentage of the offering price) on a single transaction as shown in the
following table:
 
<TABLE>
<CAPTION>
                                                       FRONT-END SALES CHARGE
                                          ------------------------------------------------
 AMOUNT OF                                PERCENTAGE OF PUBLIC   APPROXIMATE PERCENTAGE OF
 SINGLE TRANSACTION                          OFFERING PRICE           AMOUNT INVESTED
<S>                                       <C>                    <C>
- ------------------------------------------------------------------------------------------
 Less than $25,000                                 5.25%                    5.54%
- ------------------------------------------------------------------------------------------
 $25,000 but less than $50,000                     4.75%                    4.99%
- ------------------------------------------------------------------------------------------
 $50,000 but less than $100,000                    4.00%                    4.17%
- ------------------------------------------------------------------------------------------
 $100,000 but less than $250,000                   3.00%                    3.09%
- ------------------------------------------------------------------------------------------
 $250,000 but less than $1 million                 2.00%                    2.04%
- ------------------------------------------------------------------------------------------
 $1 million and over                                  0                        0
- ------------------------------------------------------------------------------------------
</TABLE>
 
           The reduced sales charge schedule is applicable to purchases of Class
           A shares in a single transaction by:
 
           - A single account (including an individual, trust or fiduciary
             account).
           - Family member accounts (limited to husband, wife and children under
             the age of 21).
           - Pension, profit sharing or other employee benefit plans of
             companies and their affiliates.
           - Tax-exempt organizations.
           - Groups organized for a purpose other than to buy mutual fund
             shares.
 
           COMBINED PURCHASE PRIVILEGE. You also will have the benefit of
           reduced sales charges by combining purchases of Class A shares of the
           Fund in a single transaction with purchases of Class A shares of
           other Multi-Class Funds and shares of FSC Funds.
 
           RIGHT OF ACCUMULATION. You also may benefit from a reduction of sales
           charges if the cumulative net asset value of Class A shares of the
           Fund purchased in a single transaction, together with shares of other
           Funds you currently own which were previously purchased at a price
           including a front-end sales charge (including shares acquired through
           reinvestment of distributions), amounts to $25,000 or more. Also, if
           you have a cumulative net asset value of all your Class A and Class D
           shares equal to at
 
                                                                              15
<PAGE>
           least $5 million (or $25 million for certain employee benefit plans),
           you are eligible to purchase Class D shares of any Fund subject to
           the Fund's minimum initial investment requirement.
 
           You must notify your Morgan Stanley Dean Witter Financial Advisor or
           other authorized financial representative (or Morgan Stanley Dean
           Witter Trust FSB if you purchase directly through the Fund), at the
           time a purchase order is placed, that the purchase qualifies for the
           reduced charge under the Right of Accumulation. Similar notification
           must be made in writing when an order is placed by mail. The reduced
           sales charge will not be granted if: (i) notification is not
           furnished at the time of the order; or (ii) a review of the records
           of Dean Witter Reynolds or other authorized dealer of Fund shares or
           the Fund's transfer agent does not confirm your represented holdings.
 
           LETTER OF INTENT. The schedule of reduced sales charges for larger
           purchases also will be available to you if you enter into a written
           "letter of intent." A letter of intent provides for the purchase of
           Class A shares of the Fund or other Multi-Class Funds and/or shares
           of FSC Funds. The initial purchase under a letter of intent must be
           at least 5% of the stated investment goal. To determine the
           applicable sales charge reduction, you may also include: (1) the cost
           of shares of other Morgan Stanley Dean Witter Funds which were
           previously purchased at a price including a front-end sales charge
           during the 90-day period prior to the distributor receiving the
           letter of intent, and (2) the cost of shares of other Funds you
           currently own acquired in exchange for shares of Funds purchased
           during that period at a price including a front-end sales charge. You
           can obtain a letter of intent by contacting your Morgan Stanley Dean
           Witter Financial Advisor or other authorized financial
           representative, or by calling (800) 869-NEWS. If you do not achieve
           the stated investment goal within the thirteen-month period, you are
           required to pay the difference between the sales charges otherwise
           applicable and sales charges actually paid.
 
           OTHER FRONT-END SALES CHARGE WAIVERS. In addition to investments of
           $1 million or more, your purchase of Class A shares is not subject to
           a front-end sales charge (or a CDSC upon sale) if your account
           qualifies under one of the following categories:
 
           - A trust for which Morgan Stanley Dean Witter Trust FSB provides
             discretionary trustee services.
 
           - Persons participating in a fee-based investment program (subject to
             all of its terms and conditions, including mandatory sale or
             transfer restrictions on termination) approved by the Fund's
             distributor pursuant to which they pay an asset-based fee for
             investment advisory, administrative and/or brokerage services.
 
           - Employer-sponsored employee benefit plans, whether or not qualified
             under the Internal Revenue Code, for which Morgan Stanley Dean
             Witter Trust FSB serves as trustee or Dean Witter Reynolds'
             Retirement Plan Services serves as recordkeeper under a written
             Recordkeeping Services Agreement ("MSDW Eligible Plans") which have
             at least 200 eligible employees.
 
           - An MSDW Eligible Plan whose Class B shares have converted to Class
             A shares, regardless of the plan's asset size or number of eligible
             employees.
 
16
<PAGE>
(SIDEBAR)
CONTINGENT DEFERRED SALES CHARGE OR CDSC
A FEE YOU PAY WHEN YOU SELL SHARES OF CERTAIN MORGAN STANLEY DEAN WITTER FUNDS
PURCHASED WITHOUT AN INITIAL SALES CHARGE. THIS FEE DECLINES THE LONGER YOU HOLD
YOUR SHARES AS SET FORTH IN THE TABLE.
(END SIDEBAR)
 
           - 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.
 
         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
 
                                                                              17
<PAGE>
             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 benefit will be reduced
             by the amount of your shares that are not subject to a CDSC. If you
             suspend your participation in the plan, you may later resume plan
             payments without requiring a new determination of the account value
             for the 12% CDSC waiver.
 
           - Sales of shares that (i) certain unit investment trusts purchased
             (on which a sales charge has been paid) or (ii) are attributable to
             reinvested distributions from, or the proceeds of, certain unit
             investment trusts.
 
           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.
 
18
<PAGE>
           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, No-Load Fund or Short-Term U.S. Treasury Trust, the holding
           period for conversion is frozen as of the last day of the month of
           the exchange and resumes on the last day of the month you exchange
           back into Class B shares.
 
           EXCHANGING SHARES SUBJECT TO A CDSC. There are special considerations
           when you exchange Fund shares that are subject to a CDSC. When
           determining the length of time you held the shares and the
           corresponding CDSC rate, any period (starting at the end of the
           month) during which you held shares of a fund that does NOT charge a
           CDSC WILL NOT BE COUNTED. Thus, in effect the "holding period" for
           purposes of calculating the CDSC is frozen upon exchanging into a
           fund that does not charge a CDSC.
 
           For example, if you held Class B shares of the Fund in a regular
           account for one year, exchanged to Class B of another Morgan Stanley
           Dean Witter Multi-Class Fund for another year, then sold your shares,
           a CDSC rate of 4% would be imposed on the shares based on a two year
           holding period -- one year for each Fund. However, if you had
           exchanged the shares of the Fund for a Money Market Fund (which does
           not charge a CDSC) instead of the Multi-Class Fund, then sold your
           shares, a CDSC rate of 5% would be imposed on the shares based on a
           one year holding period. The one year in the Money Market Fund would
           not be counted. Nevertheless, if shares subject to a CDSC are
           exchanged for a Fund that does not charge a CDSC, you will receive a
           credit when you sell the shares equal to the distribution (12b-1)
           fees, if any, you paid on those shares while in that Fund up to the
           amount of any applicable CDSC.
 
           In addition, shares that are exchanged into or from a Morgan Stanley
           Dean Witter Fund subject to a higher CDSC rate will be subject to the
           higher rate, even if the shares are re-exchanged into a Fund with a
           lower CDSC rate.
 
         CLASS C SHARES  Class C shares are sold at net asset value with no
        initial sales charge but are subject to a CDSC of 1.0% on sales made
           within one year after the last day of the month of purchase. The CDSC
           will be assessed in the same manner and with the same CDSC waivers as
           with Class B shares.
 
           DISTRIBUTION FEE. Class C shares are subject to an annual
           distribution (12b-1) fee of up to 1.0% of the average daily net
           assets of that Class. The Class C shares' distribution fee may cause
           that Class to have higher expenses and pay lower dividends than Class
           A or Class D shares. Unlike Class B shares, Class C shares have no
           conversion feature and, accordingly, an investor that purchases Class
           C shares may be subject to distribution (12b-1) fees applicable to
           Class C shares for an indefinite period.
 
                                                                              19
<PAGE>
         CLASS D SHARES  Class D shares are offered without any sales charge on
           purchases or sales and without any distribution (12b-1) fee. Class D
           shares are offered only to investors meeting an initial investment
           minimum of $5 million ($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.
 
           - Persons participating in a fee-based investment program (subject to
             all of its terms and conditions, including mandatory sale or
             transfer restrictions on termination) approved by the Fund's
             distributor pursuant to which they pay an asset-based fee for
             investment advisory, administrative and/or brokerage services.
 
           - Employee benefit plans maintained by Morgan Stanley Dean Witter &
             Co. or any of its subsidiaries for the benefit of certain employees
             of Morgan Stanley Dean Witter & Co. and its subsidiaries.
 
           - Certain unit investment trusts sponsored by Dean Witter Reynolds.
 
           - Certain other open-end investment companies whose shares are
             distributed by the Fund's distributor.
 
           - Investors who were shareholders of the Dean Witter Retirement
             Series on September 11, 1998 for additional purchases for their
             former Dean Witter Retirement Series accounts.
 
           MEETING CLASS D ELIGIBILITY MINIMUMS. To meet the $5 million ($25
           million for MSDW Eligible Plans) initial investment to qualify to
           purchase Class D shares you may combine: (1) purchases in a single
           transaction of Class D shares of the Fund and other Morgan Stanley
           Dean Witter Multi-Class Funds and/or (2) previous purchases of Class
           A and Class D shares of Multi-Class Funds and shares of FSC Funds you
           currently own, along with shares of Morgan Stanley Dean Witter Funds
           you currently own that you acquired in exchange for those shares.
 
         NO SALES CHARGES FOR REINVESTED CASH DISTRIBUTIONS  If you receive a
           cash payment representing an income dividend or capital gain and you
           reinvest that amount in the applicable Class of shares by returning
           the check within 30 days of the payment date, the purchased shares
           would not be subject to an initial sales charge or CDSC.
 
         PLAN OF DISTRIBUTION (RULE 12B-1 FEES)  The Fund has adopted a Plan of
           Distribution in accordance with Rule 12b-1 under the Investment
           Company Act of 1940 with respect to the distribution of Class A,
           Class B and Class C shares. The Plan allows the Fund to pay
           distribution fees for the sale and distribution of these shares. It
           also allows the Fund to pay for services to shareholders of Class A,
           Class B and Class C shares. Because these fees are paid out of the
           Fund's assets on an ongoing basis, over time these fees will increase
           the cost of your investment in these Classes and may cost you more
           than paying other types of sales charges.
 
20
<PAGE>
FINANCIAL HIGHLIGHTS
 
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 fiscal years of the Fund. Certain
information reflects financial results for a single Fund share 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>
CLASS B SHARES
- -------------------------------------------------------------------------------------------------------------------------
 FOR THE YEAR ENDED FEBRUARY 28                       1999          1998*++         1997          1996**          1995
<S>                                                 <C>            <C>            <C>            <C>            <C>
- -------------------------------------------------------------------------------------------------------------------------
 
 SELECTED PER SHARE DATA:
- -------------------------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period               $   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.
 
                                                                              21
<PAGE>
 
<TABLE>
<CAPTION>
CLASS A SHARES
- ---------------------------------------------------------------------------------------------
                                         FOR THE YEAR ENDED    FOR THE PERIOD JULY 28, 1997*
 SELECTED PER SHARE DATA:                 FEBRUARY 28, 1999     THROUGH FEBRUARY 28, 1998++
<S>                                      <C>                   <C>
- ---------------------------------------------------------------------------------------------
 Net asset value, beginning of period           $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.
 
22
<PAGE>
 
<TABLE>
<CAPTION>
CLASS C SHARES
- ---------------------------------------------------------------------------------------------
                                         FOR THE YEAR ENDED    FOR THE PERIOD JULY 28, 1997*
 SELECTED PER SHARE DATA:                 FEBRUARY 28, 1999     THROUGH FEBRUARY 28, 1998++
<S>                                      <C>                   <C>
- ---------------------------------------------------------------------------------------------
 Net asset value, beginning of period           $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.
 
                                                                              23
<PAGE>
 
<TABLE>
<CAPTION>
CLASS D SHARES
- ------------------------------------------------------------------------------------------------------------------
                                                              FOR THE YEAR ENDED    FOR THE PERIOD JULY 28, 1997*
 SELECTED PER SHARE DATA:                                      FEBRUARY 28, 1999     THROUGH FEBRUARY 28, 1998++
<S>                                                           <C>                   <C>
- ------------------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period                               $ 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.
 
24
<PAGE>
NOTES
 
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                                                                              25
<PAGE>
NOTES
 
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26
<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 Growth Fund
Special Value Fund
Value Fund
 
THEME FUNDS
Financial Services Trust
Health Sciences Trust
Information Fund
Natural Resource Development Securities
Precious Metals and Minerals Trust
 
GLOBAL/INTERNATIONAL FUNDS
Competitive Edge Fund - "Best Ideas" Portfolio
European Growth Fund
Fund of Funds - International Portfolio
Global Dividend Growth Securities
International SmallCap Fund
Japan Fund
Pacific Growth Fund
 
- --------------------------------------------------------------------------------
 GROWTH AND INCOME FUNDS
- ---------------------------------
Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
Fund of Funds - Domestic Portfolio
Income Builder Fund
Mid-Cap Dividend Growth Securities
<PAGE>
S&P 500 Index Fund
S&P 500 Select Fund
Strategist Fund
Value-Added Market Series/Equity Portfolio
 
THEME FUNDS
Global Utilities Fund
Real Estate Fund
Utilities Fund
 
- --------------------------------------------------------------------------------
 INCOME FUNDS
- ---------------------------------
 
GOVERNMENT INCOME FUNDS
Federal Securities Trust
Short-Term U.S. Treasury Trust
U.S. Government Securities Trust
 
DIVERSIFIED INCOME FUNDS
Diversified Income Trust
 
CORPORATE INCOME FUNDS
High Yield Securities
Intermediate Income Securities
Short-Term Bond Fund (NL)
 
GLOBAL INCOME FUNDS
World Wide Income Trust
 
TAX-FREE INCOME FUNDS
California Tax-Free Income Fund
Hawaii Municipal Trust (FSC)
Limited Term Municipal Trust (NL)
Multi-State Municipal Series Trust (FSC)
New York Tax-Free Income Fund
Tax-Exempt Securities Trust
 
- --------------------------------------------------------------------------------
 MONEY MARKET FUNDS
- ---------------------------------
 
TAXABLE MONEY MARKET FUNDS
Liquid Asset Fund (MM)
U.S. Government Money Market Trust (MM)
<PAGE>
TAX-FREE MONEY MARKET FUNDS
California Tax-Free Daily Income Trust (MM)
N.Y. Municipal Money Market Trust (MM)
Tax-Free Daily Income Trust (MM)
 
There may be Funds created after this PROSPECTUS was published. Please consult
the inside front cover of a new Fund's prospectus for its designation, e.g.,
Multi-Class Fund or Money Market Fund.
 
Unless otherwise noted, each listed Morgan Stanley Dean Witter Fund, except for
Short-Term U.S. Treasury Trust, is a Multi-Class Fund. A Multi-Class Fund is a
mutual fund offering multiple Classes of shares. The other types of funds are:
NL - No-Load (Mutual) Fund; MM - Money Market Fund; FSC - A mutual fund sold
with a front-end sales charge and a distribution (12b-1) fee.
<PAGE>
                                                         PROSPECTUS - JUNE, 1999
 
Additional information about the Fund's investments is available in the Fund's
ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS. In the Fund's ANNUAL REPORT, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. The
Fund's Statement of Additional Information also provides additional information
about the Fund. The Statement of Additional Information is incorporated herein
by reference (legally is part of this PROSPECTUS). For a free copy of any of
these documents, to request other information about the Fund, or to make
shareholder inquiries, please call:
 
                                 (800) 869-NEWS
 
You also may obtain information about the Fund by calling your Morgan Stanley
Dean Witter Financial Advisor or by visiting our Internet site at:
 
                            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:
 
<TABLE>
<S>                   <C>
CLASS A:  NREAX       CLASS C:  NRECX
- ------------------------------------------
 
CLASS B:  NREBX       CLASS D:  NREDX
- ------------------------------------------
</TABLE>
 
Morgan Stanley Dean Witter
                                         NATURAL RESOURCE DEVELOPMENT SECURITIES
 
                               [BACK COVER PHOTO]
 
                                                        A MUTUAL FUND THAT SEEKS
                                                                  CAPITAL GROWTH
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
 
JUNE   , 1999
                                                           MORGAN STANLEY DEAN
                                                           WITTER
                                                           NATURAL RESOURCE
                                                           DEVELOPMENT
                                                           SECURITIES INC.
 
- ----------------------------------------------------------------------
 
    This STATEMENT OF ADDITIONAL INFORMATION is not a PROSPECTUS. The PROSPECTUS
(dated June   , 1999) for the Morgan Stanley Dean Witter Natural Resource
Development Securities Inc. may be obtained without charge from the Fund at its
address or telephone number listed below or from Dean Witter Reynolds at any of
its branch offices.
 
Morgan Stanley Dean Witter
Natural Resource Development Securities Inc.
Two World Trade Center
New York, New York 10048
(800) 869-NEWS
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
 
<TABLE>
<S>                                                                                      <C>
I. Fund History........................................................................          4
 
II. Description of the Fund and Its Investments and Risks..............................          4
  A. Classification....................................................................          4
  B. Investment Strategies and Risks...................................................          4
  C. Fund Policies/Investment Restrictions.............................................         12
 
III. Management of the Fund............................................................         14
  A. Board of Directors................................................................         14
  B. Management Information............................................................         14
  C. Compensation......................................................................         19
 
IV. Control Persons and Principal Holders of Securities................................         20
 
V. Investment Management and Other Services............................................         21
  A. Investment Manager................................................................         21
  B. Principal Underwriter.............................................................         21
  C. Services Provided by the Investment Manager and Fund Expenses Paid by Third
   Parties.............................................................................         21
  D. Dealer Reallowances...............................................................         22
  E. Rule 12b-1 Plan...................................................................         22
  F. Other Service Providers...........................................................         26
 
VI. Brokerage Allocation and Other Practices...........................................         27
  A. Brokerage Transactions............................................................         27
  B. Commissions.......................................................................         27
  C. Brokerage Selection...............................................................         28
  D. Directed Brokerage................................................................         29
  E. Regular Broker-Dealers............................................................         29
 
VII. Capital Stock and Other Securities................................................         29
 
VIII. Purchase, Redemption and Pricing of Shares.......................................         29
  A. Purchase/Redemption of Shares.....................................................         29
  B. Offering Price....................................................................         30
 
IX. Taxation of the Fund and Shareholders..............................................         31
 
X. Underwriters........................................................................         33
 
XI. Calculation of Performance Data....................................................         33
 
XII. Financial Statements..............................................................         34
</TABLE>
 
                                       2
<PAGE>
GLOSSARY OF SELECTED DEFINED TERMS
- --------------------------------------------------------------------------------
 
    The terms defined in this glossary are frequently used in this STATEMENT OF
ADDITIONAL INFORMATION (other terms used occasionally are defined in the text of
the document).
 
"CUSTODIAN"--The Bank of New York.
 
"DEAN WITTER REYNOLDS"--Dean Witter Reynolds Inc., a wholly-owned broker-dealer
subsidiary of MSDW.
 
"DIRECTORS"--The Board of Directors of the Fund.
 
"DISTRIBUTOR"--Morgan Stanley Dean Witter Distributors Inc., a wholly-owned
broker-dealer subsidiary of MSDW.
 
"FINANCIAL ADVISORS"--Morgan Stanley Dean Witter authorized financial services
representatives.
 
"FUND"--Morgan Stanley Dean Witter Natural Resource Development Securities Inc.,
a registered open-end investment company.
 
"INVESTMENT MANAGER"--Morgan Stanley Dean Witter Advisors Inc., a wholly-owned
investment advisor subsidiary of MSDW.
 
"INDEPENDENT DIRECTORS"--Directors who are not "interested persons" (as defined
by the Investment Company Act) of the Fund.
 
"MORGAN STANLEY & CO."--Morgan Stanley & Co. Incorporated, a wholly-owned
broker-dealer subsidiary of MSDW.
 
"MORGAN STANLEY DEAN WITTER FUNDS"--Registered investment companies (i) for
which the Investment Manager serves as the investment advisor and (ii) that hold
themselves out to investors as related companies for investment and investor
services.
 
"MSDW"--Morgan Stanley Dean Witter & Co., a preeminent global financial services
firm.
 
"MSDW SERVICES COMPANY"--Morgan Stanley Dean Witter Services Company Inc., a
wholly-owned fund services subsidiary of the Investment Manager.
 
"TRANSFER AGENT"--Morgan Stanley Dean Witter Trust FSB, a wholly-owned transfer
agent subsidiary of MSDW.
 
                                       3
<PAGE>
I. FUND HISTORY
- --------------------------------------------------------------------------------
 
    The Fund was incorporated in the State of Maryland on December 22, 1980
under the name InterCapital Natural Resource Development Securities Inc. On
March 16, 1983 the Fund's shareholders approved a change in the Fund's name,
effective March 21, 1983, to Dean Witter Natural Resource Development Securities
Inc. Effective June 22, 1998, the Fund's name was changed to Morgan Stanley Dean
Witter Natural Resource Development Securities Inc.
 
II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
- --------------------------------------------------------------------------------
 
A. CLASSIFICATION
 
    The Fund is an open-end, diversified management investment company whose
investment objective is capital growth.
 
B. INVESTMENT STRATEGIES AND RISKS
 
    The following discussion of the Fund's investment strategies and risks
should be read with the sections of the Fund's PROSPECTUS titled "Principal
Investment Strategies," "Principal Risks," "Additional Investment Strategy
Information," and "Additional Risk Information."
 
    OPTIONS AND FUTURES TRANSACTIONS.  The Fund may engage in transactions in
listed and OTC options. Listed options are issued or guaranteed by the exchange
on which they are traded or by a clearing corporation such as the Options
Clearing Corporation ("OCC"). Ownership of a listed call option gives the Fund
the right to buy from the OCC (in the U.S.) or other clearing corporation or
exchange, the underlying security covered by the option at the stated exercise
price (the price per unit of the underlying security) by filing an exercise
notice prior to the expiration date of the option. The writer (seller) of the
option would then have the obligation to sell to the OCC (in the U.S.) or other
clearing corporation or exchange, the underlying security at that exercise price
prior to the expiration date of the option, regardless of its then current
market price. Ownership of a listed put option would give the Fund the right to
sell the underlying security to the OCC (in the U.S.) or other clearing
corporation or exchange, at the stated exercise price. Upon notice of exercise
of the put option, the writer of the put would have the obligation to purchase
the underlying security from the OCC (in the U.S.) or other clearing corporation
or exchange, at the exercise price. The Fund may not write covered options on
portfolio securities exceeding in the aggregate 25% of the value of its total
assets.
 
    COVERED CALL WRITING.  The Fund is permitted to write covered call options
on portfolio securities without limit. The Fund will receive from the purchaser,
in return for a call it has written, a "premium;" i.e., the price of the option.
Receipt of these premiums may better enable the Fund to earn a higher level of
current income than it would earn from holding the underlying securities alone.
Moreover, the premium received will offset a portion of the potential loss
incurred by the Fund if the securities underlying the option decline in value.
 
    The Fund may be required, at any time during the option period, to deliver
the underlying security against payment of the exercise price on any calls it
has written. This obligation is terminated upon the expiration of the option
period or at such earlier time when the writer effects a closing purchase
transaction. A closing purchase transaction is accomplished by purchasing an
option of the same series as the option previously written. However, once the
Fund has been assigned an exercise notice, the Fund will be unable to effect a
closing purchase transaction.
 
    Options written by the Fund normally have expiration dates of from up to
eighteen months from the date written. The exercise price of a call option may
be below, equal to or above the current market value of the underlying security
at the time the option is written.
 
    COVERED PUT WRITING.  A writer of a covered put option, the Fund incurs an
obligation to buy the security underlying the option from the purchaser of the
put, at the option's exercise price at any time during the option period, at the
purchaser's election. Through the writing of a put option, the Fund would
 
                                       4
<PAGE>
receive income from the premium paid by purchasers. The potential gain on a
covered put option is limited to the premium received on the option (less the
commissions paid on the transaction). During the option period, the Fund may be
required, at any time, to make payment of the exercise price against delivery of
the underlying security. The operation of and limitations on covered put options
in other respects are substantially identical to those of call options.
 
    PURCHASING CALL AND PUT OPTIONS.  The Fund may purchase listed and OTC call
and put options on securities and stock indexes in amounts equaling up to 10% of
its total assets, with a maximum of 5% of the Fund's assets invested in stock
index options. The purchase of a call option would enable the Fund, in return
for the premium paid to lock in a purchase price for a security during the term
of the option. The purchase of a put option would enable the Fund, in return for
a premium paid, to lock in a price at which it may sell a security during the
term of the option.
 
    OTC OPTIONS.  OTC options are purchased from or sold (written) to dealers or
financial institutions which have entered into direct agreements with the Fund.
With OTC options, such variables as expiration date, exercise price and premium
will be agreed upon between the Fund and the transacting dealer, without the
intermediation of a third party such as the OCC. The Fund will engage in OTC
option transactions only with member banks of the Federal Reserve Bank System or
primary dealers in U.S. Government securities or with affiliates of such banks
or dealers.
 
    RISKS OF OPTIONS TRANSACTIONS.  The successful use of options depends on the
ability of the Investment Manager to forecast correctly interest rates and/or
market movements. If the market value of the portfolio securities upon which
call options have been written increases, the Fund may receive a lower total
return from the portion of its portfolio upon which calls have been written than
it would have had such calls not been written. During the option period, the
covered call writer has, in return for the premium on the option, given up the
opportunity for capital appreciation above the exercise price should the market
price of the underlying security increase, but has retained the risk of loss
should the price of the underlying security decline. The covered put writer also
retains the risk of loss should the market value of the underlying security
decline below the exercise price of the option less the premium received on the
sale of the option. In both cases, the writer has no control over the time when
it may be required to fulfill its obligation as a writer of the option. Prior to
exercise or expiration, an option position can only be terminated by entering
into a closing purchase or sale transaction. Once an option writer has received
an exercise notice, it cannot effect a closing purchase transaction in order to
terminate its obligation under the option and must deliver or receive the
underlying securities at the exercise price.
 
    The Fund's ability to close out its position as a writer of an option is
dependent upon the existence of a liquid secondary market on option exchanges.
There is no assurance that such a market will exist.
 
    In the event of the bankruptcy of a broker through which the Fund engages in
transactions in options, the Fund could experience delays and/or losses in
liquidating open positions purchased or sold through the broker and/or incur a
loss of all or part of its margin deposits with the broker.
 
    Each of the exchanges has established limitations governing the maximum
number of call or put options on the same underlying security which may be
written by a single investor, whether acting alone or in concert with others
(regardless of whether such options are written on the same or different
exchanges or are held or written on one or more accounts or through one or more
brokers). An exchange may order the liquidation of positions found to be in
violation of these limits and it may impose other sanctions or restrictions.
These position limits may restrict the number of listed options which the Fund
may write.
 
    The hours of trading for options may not conform to the hours during which
the underlying securities are traded. To the extent that the option markets
close before the markets for the underlying securities, significant price and
rate movements can take place in the underlying markets that cannot be reflected
in the option markets.
 
    There can be no assurance that a liquid secondary market will exist for a
particular option at any specific time.
 
                                       5
<PAGE>
    STOCK INDEX OPTIONS.  The Fund may invest in options on broadly based
indexes. Options on stock indexes are similar to options on stock except that,
rather than the right to take or make delivery of stock at a specified price, an
option on a stock index gives the holder the right to receive, upon exercise of
the option, an amount of cash if the closing level of the stock index upon which
the option is based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option. This amount of cash is equal to
such difference between the closing price of the index and the exercise price of
the option expressed in dollars times a specified multiple. The writer of the
option is obligated, in return for the premium received, to make delivery of
this amount.
 
    RISKS OF OPTIONS ON INDEXES.  Because exercises of stock index options are
settled in cash, the Fund could not, if it wrote a call option, provide in
advance for its potential settlement obligations by acquiring and holding the
underlying securities. A call writer can offset some of the risk of its writing
position by holding a diversified portfolio of stocks similar to those on which
the underlying index is based. However, most investors cannot, as a practical
matter, acquire and hold a portfolio containing exactly the same stocks as the
underlying index, and, as a result, bear a risk that the value of the securities
held will vary from the value of the index. Even if an index call writer could
assemble a stock portfolio that exactly reproduced the composition of the
underlying index, the writer still would not be fully covered from a risk
standpoint because of the "timing risk" inherent in writing index options.
 
    When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level on the date when the option is exercised. As with
other kinds of options, the writer will not learn that it had been assigned
until the next business day, at the earliest. The time lag between exercise and
notice of assignment poses no risk for the writer of a covered call on a
specific underlying security, such as a common stock, because there the writer's
obligation is to deliver the underlying security, not to pay its value as of a
fixed time in the past. So long as the writer already owns the underlying
security, it can satisfy its settlement obligations by simply delivering it, and
the risk that its value may have declined since the exercise date is borne by
the exercising holder. In contrast, even if the writer of an index call holds
stocks that exactly match the composition of the underlying index, it will not
be able to satisfy its assignment obligations by delivering those stocks against
payment of the exercise price. Instead, it will be required to pay cash in an
amount based on the closing index value on the exercise date; and by the time it
learns that it has been assigned, the index may have declined, with a
corresponding decrease in the value of its stock portfolio. This "timing risk"
is an inherent limitation on the ability of index call writers to cover their
risk exposure by holding stock positions.
 
    A holder of an index option who exercises it before the closing index value
for that day is available runs the risk that the level of the underlying index
may subsequently change. If a change causes the exercised option to fall
out-of-the-money, the exercising holder will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
 
    If dissemination of the current level of an underlying index is interrupted,
or if trading is interrupted in stocks accounting for a substantial portion of
the value of an index, the trading of options on that index will ordinarily be
halted. If the trading of options on an underlying index is halted, an exchange
may impose restrictions prohibiting the exercise of such options.
 
    FUTURES CONTRACTS.  The Fund may purchase and sell interest rate and stock
index futures contracts that are traded on U.S. commodity exchanges on such
underlying securities as U.S. Treasury bonds, notes, bills and GNMA Certificates
and such indexes as the S&P 500 Index, the Moody's Investment-Grade Corporate
Bond Index and the New York Stock Exchange Composite Index.
 
    A futures contract purchaser incurs an obligation to take delivery of a
specified amount of the obligation underlying the contract at a specified time
in the future for a specified price. A seller of a futures contract incurs an
obligation to deliver the specified amount of the underlying obligation at a
specified time in return for an agreed upon price. The purchase of a futures
contract enables the Fund, during the term of the contract, to lock in a price
at which it may purchase a security and protect against a
 
                                       6
<PAGE>
rise in prices pending purchase of portfolio securities. The sale of a futures
contract enables the Fund to lock in a price at which it may sell a security and
protect against declines in the value of portfolio securities.
 
    Although most futures contracts call for actual delivery or acceptance of
securities, the contracts usually are closed out before the settlement date
without the making or taking of delivery. Index futures contracts provide for
the delivery of an amount of cash equal to a specified dollar amount times the
difference between the index value at the open or close of the last trading day
of the contract and the futures contract price. A futures contract sale is
closed out by effecting a futures contract purchase for the same aggregate
amount of the specific type of security and the same delivery date. If the sale
price exceeds the offsetting purchase price, the seller would be paid the
difference and would realize a gain. If the offsetting purchase price exceeds
the sale price, the seller would pay the difference and would realize a loss.
Similarly, a futures contract purchase is closed out by effecting a futures
contract sale for the same aggregate amount of the specific type of security and
the same delivery date. If the offsetting sale price exceeds the purchase price,
the purchaser would realize a gain, whereas if the purchase price exceeds the
offsetting sale price, the purchaser would realize a loss. There is no assurance
that the Fund will be able to enter into a closing transaction.
 
    MARGIN.  If the Fund enters into a futures contract, it is initially
required to deposit an "initial margin" of cash or U.S. Government securities or
other liquid portfolio securities ranging from approximately 2% to 5% of the
contract amount. Initial margin requirements are established by the exchanges on
which futures contracts trade and may, from time to time, change. In addition,
brokers may establish margin deposit requirements in excess of those required by
the exchanges.
 
    Initial margin in futures transactions is different from margin in
securities transactions in that initial margin does not involve the borrowing of
funds by a broker's client but is, rather, a good faith deposit on the futures
contract which will be returned to the Fund upon the proper termination of the
futures contract. The margin deposits made are marked to market daily and the
Fund may be required to make subsequent deposits of cash or U.S. Government
securities, called "variation margin," which are reflective of price
fluctuations in the futures contract.
 
    OPTIONS ON FUTURES CONTRACTS.  The Fund may purchase and write call and put
options on futures contracts and enter into closing transactions with respect to
such options to terminate an existing position. An option on a futures contract
gives the purchaser the right (in return for the premium paid), and the writer
the obligation, to assume a position in a futures contract (a long position if
the option is a call and a short position if the option is a put) at a specified
exercise price at any time during the term of the option. Upon exercise of the
option, the delivery of the futures position by the writer of the option to the
holder of the option is accompanied by delivery of the accumulated balance in
the writer's futures margin account, which represents the amount by which the
market price of the futures contract at the time of exercise exceeds, in the
case of a call, or is less than, in the case of a put, the exercise price of the
option on the futures contract.
 
    The writer of an option on a futures contract is required to deposit initial
and variation margin pursuant to requirements similar to those applicable to
futures contracts. Premiums received from the writing of an option on a futures
contract are included in initial margin deposits.
 
    LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS ON FUTURES.  The Fund may not
enter into futures contracts or purchase related options thereon if, immediately
thereafter, the amount committed to margin plus the amount paid for premiums for
unexpired options on futures contracts exceeds 5% of the value of the Fund's
total assets, after taking into account unrealized gains and unrealized losses
on such contracts it has entered into, provided, however, that in the case of an
option that is in-the-money (the exercise price of the call (put) option is less
(more) than the market price of the underlying security) at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%.
However, there is no overall limitation on the percentage of the Fund's net
assets which may be subject to a hedge position.
 
                                       7
<PAGE>
    RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS.  The prices
of securities and indexes subject to futures contracts (and thereby the futures
contract prices) may correlate imperfectly with the behavior of the cash prices
of the Fund's portfolio securities. Also, prices of futures contracts may not
move in tandem with the changes in prevailing interest rates and market
movements against which the Fund seeks a hedge. A correlation may also be
distorted (a) temporarily, by short-term traders' seeking to profit from the
difference between a contract or security price objective and their cost of
borrowed funds; (b) by investors in futures contracts electing to close out
their contracts through offsetting transactions rather than meet margin deposit
requirements; (c) by investors in futures contracts opting to make or take
delivery of underlying securities rather than engage in closing transactions,
thereby reducing liquidity of the futures market; and (d) temporarily, by
speculators who view the deposit requirements in the futures markets as less
onerous than margin requirements in the cash market. Due to the possibility of
price distortion in the futures market and because of the possible imperfect
correlation between movements in the prices of securities and movements in the
prices of futures contracts, a correct forecast of interest rate and/or market
movement trends by the Investment Manager may still not result in a successful
hedging transaction.
 
    There is no assurance that a liquid secondary market will exist for futures
contracts and related options in which the Fund may invest. In the event a
liquid market does not exist, it may not be possible to close out a futures
position and, in the event of adverse price movements, the Fund would continue
to be required to make daily cash payments of variation margin. In addition,
limitations imposed by an exchange or board of trade on which futures contracts
are traded may compel or prevent the Fund from closing out a contract which may
result in reduced gain or increased loss to the Fund. The absence of a liquid
market in futures contracts might cause the Fund to make or take delivery of the
underlying securities at a time when it may be disadvantageous to do so.
 
    Exchanges limit the amount by which the price of a futures contract may move
on any day. If the price moves equal the daily limit on successive days, then it
may prove impossible to liquidate a futures position until the daily limit moves
have ceased. In the event of adverse price movements, the Fund would continue to
be required to make daily cash payments of variation margin on open futures
positions. In these situations, if the Fund has insufficient cash, it may have
to sell portfolio securities to meet daily variation margin requirements at a
time when it may be disadvantageous to do so. In addition, the Fund may be
required to take or make delivery of the instruments underlying interest rate
futures contracts it holds at a time when it is disadvantageous to do so. The
inability to close out options and futures positions could also have an adverse
impact on the Fund's ability to effectively hedge its portfolio.
 
    Futures contracts and options thereon which are purchased or sold on foreign
commodities exchanges may have greater price volatility than their U.S.
counterparts. Furthermore, foreign commodities exchanges may be less regulated
and under less governmental scrutiny than U.S. exchanges. Brokerage commissions,
clearing costs and other transaction costs may be higher on foreign exchanges.
Greater margin requirements may limit the Fund's ability to enter into certain
commodity transactions on foreign exchanges. Moreover, differences in clearance
and delivery requirements on foreign exchanges may occasion delays in the
settlement of the Fund's transactions effected on foreign exchanges.
 
    In the event of the bankruptcy of a broker through which the Fund engages in
transactions in futures or options thereon, the Fund could experience delays
and/or losses in liquidating open positions purchased or sold through the broker
and/or incur a loss of all or part of its margin deposits with the broker.
 
    MONEY MARKET SECURITIES.  The Fund may invest in various money market
securities for cash management purposes or when assuming a temporary defensive
position, which among others may include commercial paper, bank acceptances,
bank obligations, corporate debt securities, certificates of deposit, U.S.
Government securities, obligations of savings institutions and repurchase
agreements. Such securities are limited to:
 
                                       8
<PAGE>
    U.S. GOVERNMENT SECURITIES.  Obligations issued or guaranteed as to
principal and interest by the United States or its agencies (such as the
Export-Import Bank of the United States, Federal Housing Administration and
Government National Mortgage Association) or its instrumentalities (such as the
Federal Home Loan Bank), including Treasury bills, notes and bonds;
 
    BANK OBLIGATIONS.  Obligations (including certificates of deposit, time
deposits and bankers' acceptances) of banks subject to regulation by the U.S.
Government and having total assets of $1 billion or more, and instruments
secured by such obligations, not including obligations of foreign branches of
domestic banks except to the extent below;
 
    EURODOLLAR CERTIFICATES OF DEPOSIT.  Eurodollar certificates of deposit
issued by foreign branches of domestic banks having total assets of $1 billion
or more;
 
    OBLIGATIONS OF SAVINGS INSTITUTIONS.  Certificates of deposit of savings
banks and savings and loan associations, having total assets of $1 billion or
more;
 
    FULLY INSURED CERTIFICATES OF DEPOSIT.  Certificates of deposit of banks and
savings institutions, having total assets of less than $1 billion, if the
principal amount of the obligation is federally insured by the Bank Insurance
Fund or the Savings Association Insurance Fund (each of which is administered by
the FDIC), limited to $100,000 principal amount per certificate and to 10% or
less of the Fund's total assets in all such obligations and in all illiquid
assets, in the aggregate; and
 
    COMMERCIAL PAPER.  Commercial paper rated within the two highest grades by
Standard & Poor's Corporation ("S&P") or the two highest grade by Moody's
Investors Service, Inc. ("Moody's") or, if not rated, issued by a company having
an outstanding debt issue rated at least AA by S&P or Aa by Moody's.
 
    REPURCHASE AGREEMENTS.  The Fund may invest in repurchase agreements. When
cash may be available for only a few days, it may be invested by the Fund in
repurchase agreements until such time as it may otherwise be invested or used
for payments of obligations of the Fund. These agreements, which may be viewed
as a type of secured lending by the Fund, typically involve the acquisition by
the Fund of debt securities from a selling financial institution such as a bank,
savings and loan association or broker-dealer. The agreement provides that the
Fund will sell back to the institution, and that the institution will
repurchase, the underlying security serving as collateral at a specified price
and at a fixed time in the future, usually not more than seven days from the
date of purchase. The collateral will be marked-to-market daily to determine
that the value of the collateral, as specified in the agreement, does not
decrease below the purchase price plus accrued interest. If such decrease
occurs, additional collateral will be requested and, when received, added to the
account to maintain full collateralization. The Fund will accrue interest from
the institution until the time when the repurchase is to occur. Although this
date is deemed by the Fund to be the maturity date of a repurchase agreement,
the maturities of securities subject to repurchase agreements are not subject to
any limits.
 
    While repurchase agreements involve certain risks not associated with direct
investments in debt securities, the Fund follows procedures designed to minimize
such risks. These procedures include effecting repurchase transactions only with
large, well-capitalized and well-established financial institutions whose
financial condition will be continually monitored by the Investment Manager
subject to procedures established by the Directors. In addition, as described
above, the value of the collateral underlying the repurchase agreement will be
at least equal to the repurchase price, including any accrued interest earned on
the repurchase agreement. In the event of a default or bankruptcy by a selling
financial institution, the Fund will seek to liquidate such collateral. However,
the exercising of the Fund's right to liquidate such collateral could involve
certain costs or delays and, to the extent that proceeds from any sale upon a
default of the obligation to repurchase were less than the repurchase price, the
Fund could suffer a loss.
 
    ZERO COUPON TREASURY SECURITIES.  A portion of the securities purchased by
the Fund may be "zero coupon" securities. Such securities are purchased at a
discount from their face amount, giving the purchaser the right to receive their
full value at maturity. A zero coupon security pays no interest to its
 
                                       9
<PAGE>
holder during its life. Its value to an investor consists of the difference
between its face value at the time of maturity and the price for which it was
acquired, which is generally an amount significantly less than its face value
(sometimes referred to as a "deep discount" price).
 
    The interest earned on such securities is, implicitly, automatically
compounded and paid out at maturity. While such compounding at a constant rate
eliminates the risk of receiving lower yields upon reinvestment of interest if
prevailing interest rates decline, the owner of a zero coupon security will be
unable to participate in higher yields upon reinvestment of interest received if
prevailing interest rates rise. For this reason, zero coupon securities are
subject to substantially greater market price fluctuations during periods of
changing prevailing interest rates than are comparable debt securities which
make current distributions of interest. Current federal tax law requires that a
holder (such as the Fund) of a zero coupon security accrue a portion of the
discount at which the security was purchased as income each year even though the
Fund receives no interest payments in cash on the security during the year.
 
    LENDING PORTFOLIO SECURITIES.  The Fund may lend its portfolio securities to
brokers, dealers and other financial institutions, provided that the loans are
callable at any time by the Fund, and are at all times secured by cash or cash
equivalents, which are maintained in a segregated account pursuant to applicable
regulations and that are equal to at least 100% of the market value, determined
daily, of the loaned securities. The advantage of these loans is that the Fund
continues to receive the income on the loaned securities while at the same time
earning interest on the cash amounts deposited as collateral, which will be
invested in short-term obligations.
 
    As with any extensions of credit, there are risks of delay in recovery and,
in some cases, even loss of rights in the collateral should the borrower of the
securities fail financially. However, these loans of portfolio securities will
only be made to firms deemed by the Fund's management to be creditworthy and
when the income which can be earned from such loans justifies the attendant
risks. Upon termination of the loan, the borrower is required to return the
securities to the Fund. Any gain or loss in the market price during the loan
period would inure to the Fund.
 
    When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loaned securities, to
be delivered within one day after notice, to permit the exercise of the rights
if the matters involved would have a material effect on the Fund's investment in
the loaned securities. The Fund will pay reasonable finder's, administrative and
custodial fees in connection with a loan of its securities.
 
    WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS.  From
time to time the Fund may purchase securities on a when-issued or delayed
delivery basis or may purchase or sell securities on a forward commitment basis.
When these transactions are negotiated, the price is fixed at the time of the
commitment, but delivery and payment can take place a month or more after the
date of commitment. While the Fund will only purchase securities on a
when-issued, delayed delivery or forward commitment basis with the intention of
acquiring the securities, the Fund may sell the securities before the settlement
date, if it is deemed advisable. The securities so purchased or sold are subject
to market fluctuation and no interest or dividends accrue to the purchaser prior
to the settlement date.
 
    At the time the Fund makes the commitment to purchase or sell securities on
a when-issued, delayed delivery or forward commitment basis, it will record the
transaction and thereafter reflect the value, each day, of such security
purchased, or if a sale, the proceeds to be received, in determining its net
asset value. At the time of delivery of the securities, their value may be more
or less than the purchase or sale price. An increase in the percentage of the
Fund's assets committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis may increase the volatility of its net
asset value. The Fund will also establish a segregated account on the Fund's
books in which it will continually maintain cash or cash equivalents or other
liquid portfolio securities equal in value to commitments to purchase securities
on a when-issued, delayed delivery or forward commitment basis.
 
                                       10
<PAGE>
    WHEN, AS AND IF ISSUED SECURITIES.  The Fund may purchase securities on a
"when, as and if issued" basis under which the issuance of the security depends
upon the occurrence of a subsequent event, such as approval of a merger,
corporate reorganization or debt restructuring. The commitment for the purchase
of any such security will not be recognized in the portfolio of the Fund until
the Investment Manager determines that issuance of the security is probable. At
that time, the Fund will record the transaction and, in determining its net
asset value, will reflect the value of the security daily. At that time, the
Fund will also establish a segregated account on the Fund's books in which it
will maintain cash or cash equivalents or other liquid portfolio securities
equal in value to recognized commitments for such securities.
 
    The value of the Fund's commitments to purchase the securities of any one
issuer, together with the value of all securities of such issuer owned by the
Fund, may not exceed 5% of the value of the Fund's net assets at the time the
initial commitment to purchase such securities is made. An increase in the
percentage of the Fund's assets committed to the purchase of securities on a
"when, as and if issued" basis may increase the volatility of its net asset
value. The Fund may also sell securities on a "when, as and if issued" basis
provided that the issuance of the security will result automatically from the
exchange or conversion of a security owned by the Fund at the time of sale.
 
    PRIVATE PLACEMENTS.  The Fund may invest up to 10% of its total assets in
securities which are subject to restrictions on resale because they have not
been registered under the Securities Act of 1933 (the "Securities Act"), or
which are otherwise not readily marketable. (Securities eligible for resale
pursuant to Rule 144A under the Securities Act, and determined to be liquid
pursuant to the procedures discussed in the following paragraph, are not subject
to the foregoing restriction.) These securities are generally referred to as
private placements or restricted securities. Limitations on the resale of these
securities may have an adverse effect on their marketability, and may prevent
the Fund from disposing of them promptly at reasonable prices. The Fund may have
to bear the expense of registering the securities for resale and the risk of
substantial delays in effecting the registration.
 
    Rule 144A permits the Fund to sell restricted securities to qualified
institutional buyers without limitation. The Investment Manager, pursuant to
procedures adopted by the Directors, will make a determination as to the
liquidity of each restricted security purchased by the Fund. If a restricted
security is determined to be "liquid," the security will not be included within
the category "illiquid securities," which under current policy may not exceed
10% of the Fund's total assets. However, investing in Rule 144A securities could
have the effect of increasing the level of Fund illiquidity to the extent the
Fund, at a particular point in time, may be unable to find qualified
institutional buyers interested in purchasing such securities.
 
    WARRANTS AND SUBSCRIPTION RIGHTS.  The Fund may acquire warrants and
subscription rights attached to other securities. A warrant is, in effect, an
option to purchase equity securities at a specific price, generally valid for a
specific period of time, and has no voting rights, pays no dividends and has no
rights with respect to the corporation issuing it.
 
    A subscription right is a privilege granted to existing shareholders of a
corporation to subscribe to shares of a new issue of common stock before it is
offered to the public. A subscription right normally has a life of two to four
weeks and a subscription price lower than the current market value of the common
stock. A subscription right is freely transferable.
 
    UNIT OFFERINGS.  The Fund may also purchase unit offerings (where corporate
debt securities are offered as a unit with convertible securities, preferred or
common stocks, warrants, or any combination thereof).
 
    YEAR 2000.  The investment management services provided to the Fund by the
Investment Manager and the services provided to shareholders by the Distributor
and the Transfer Agent depend on the smooth functioning of their computer
systems. Many computer software systems in use today cannot recognize the year
2000, but revert to 1900 or some other date, due to the manner in which dates
were encoded and calculated. That failure could have a negative impact on the
handling of securities trades,
 
                                       11
<PAGE>
pricing and account services. The Investment Manager, the Distributor and the
Transfer Agent have been actively working on necessary changes to their own
computer systems to prepare for the year 2000 and expect that their systems will
be adapted before that date, but there can be no assurance that they will be
successful, or that interaction with other non-complying computer systems will
not impair their services at that time.
 
    In addition, it is possible that the markets for securities in which the
Fund invests may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and liquidity issues. In
addition, corporate and governmental data processing errors may result in
production problems for individual companies and overall economic uncertainties.
Earnings of individual issuers will be affected by remediation costs, which may
be substantial and may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Fund's investments may be adversely affected.
 
C. FUND POLICIES/INVESTMENT RESTRICTIONS
 
    The investment objective, policies and restrictions listed below have been
adopted by the Fund as fundamental policies. Under the Investment Company Act of
1940 (the "Investment Company Act"), a fundamental policy may not be changed
without the vote of a majority of the outstanding voting securities of the Fund.
The Investment Company Act defines a majority as the lesser of (a) 67% or more
of the shares present at a meeting of shareholders, if the holders of 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b) more
than 50% of the outstanding shares of the Fund. For purposes of the following
restrictions: (i) all percentage limitations apply immediately after a purchase
or initial investment; and (ii) any subsequent change in any applicable
percentage resulting from market fluctuations or other changes in total or net
assets does not require elimination of any security from the portfolio.
 
    The Fund will:
 
         1. Seek capital growth.
 
    The Fund may not:
 
         1. Invest more than 5% of the value of its total assets in the
    securities of any one issuer (other than obligations issued, or guaranteed
    by, the United States Government, its agencies or instrumentalities).
 
         2. Purchase more than 10% of all outstanding voting securities or any
    class of securities of any one issuer.
 
         3. Invest more than 25% of the value of its total assets in securities
    of issuers in any one industry. This restriction does not apply to bank
    obligations or obligations issued or guaranteed by the United States
    Government, its agencies or instrumentalities.
 
         4. Invest in securities of any issuer if, to the knowledge of the Fund,
    any officer or director of the Fund or of the Investment Manager owns more
    than 1/2 of 1% of the outstanding securities of the issuer, and the officers
    and directors who own more than 1/2 of 1% own in the aggregate more than 5%
    of the outstanding securities of the issuer.
 
         5. Purchase or sell real estate or interests therein (including limited
    partnership interests), although the Fund may purchase securities of issuers
    which engage in real estate operations and securities secured by real estate
    or interests therein.
 
         6. Purchase or sell commodities, except that the Fund may purchase and
    sell futures contracts and related options.
 
         7. Borrow money, except that the Fund may borrow from a bank for
    temporary or emergency purposes in amounts not exceeding 5% (taken at the
    lower of cost or current value) of its total assets (not including the
    amount borrowed).
 
                                       12
<PAGE>
         8. Pledge its assets or assign or otherwise encumber them, except to
    secure permitted borrowings. For the purposes of this restriction,
    collateral arrangements with respect to the writing of options and
    collateral arrangements with respect to initial or variation margin for
    futures are not deemed to be pledges of assets.
 
         9. Issue senior securities as defined in the Investment Company Act,
    except insofar as the Fund may be deemed to have issued a senior security by
    reason of (a) entering into any repurchase agreement; (b) borrowing money in
    accordance with restrictions described above; or (c) lending portfolio
    securities.
 
        10. Make loans of money or securities, except: (a) by the purchase of
    debt obligations in which the Fund may invest consistent with its investment
    objective and policies; (b) by investment in repurchase agreements; or (c)
    by lending its portfolio securities.
 
        11. Make short sales of securities.
 
        12. Purchase securities on margin, except for short-term loans as are
    necessary for the clearance of purchases of portfolio securities. The
    deposit or payment by the Fund of initial or variation margin in connection
    with futures contracts or related options thereon is not considered the
    purchase of a security on margin.
 
        13. Engage in the underwriting of securities, except insofar as the Fund
    may be deemed an underwriter under the Securities Act in disposing of a
    portfolio security and then only in an aggregate amount not to exceed 5% of
    the Fund's total assets.
 
        14. Invest for the purpose of exercising control or management of any
    other issuer.
 
        15. Invest more than 5% of the value of its total assets in securities
    of issuers having a record, together with predecessors, of less than 3 years
    of continuous operation. This restriction shall not apply to any obligation
    of the United States Government, its agencies or instrumentalities.
 
        16. Purchase oil, gas or other mineral leases, rights or royalty
    contracts or exploration or development programs, except that the Fund may
    invest in the securities of companies which operate, invest in, or sponsor
    these programs.
 
        17. Purchase securities of other investment companies, except in
    connection with a merger, consolidation, reorganization or acquisition of
    assets.
 
    In addition, the Fund, as a non-fundamental policy, will not invest more
than 5% of the value of its net assets in warrants, including not more than 2%
of such assets in warrants not listed on the New York or American Stock
Exchange. However, the acquisition of warrants attached to other securities not
subject to this restriction.
 
    Notwithstanding any other investment policy or restriction, the Fund may
seek to achieve its investment objective by investing all or substantially all
of its assets in another investment company having substantially the same
investment objective and policies as the Fund.
 
III. MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
 
A. BOARD OF DIRECTORS
 
    The Board of Directors of the Fund oversees the management of the Fund but
does not itself manage the Fund. The Directors review various services provided
by or under the direction of the Investment Manager to ensure that the Fund's
general investment policies and programs are properly carried out. The Directors
also conduct their review to ensure that administrative services are provided to
the Fund in a satisfactory manner.
 
    Under state law, the duties of the Directors are generally characterized as
a duty of loyalty and a duty of care. The duty of loyalty requires a Director to
exercise his or her powers in the interest of the Fund and
 
                                       13
<PAGE>
not the Director's own interest or the interest of another person or
organization. A Director satisfies his or her duty of care by acting in good
faith with the care of an ordinarily prudent person and in a manner the Director
reasonably believes to be in the best interest of the Fund and its shareholders.
 
B. MANAGEMENT INFORMATION
 
    DIRECTORS AND OFFICERS.  The Board of the Fund consists of eight (8)
Directors. These same individuals also serve as directors or trustees for all of
the Morgan Stanley Dean Witter Funds. Six Directors (75% of the total number)
have no affiliation or business connection with the Investment Manager or any of
its affiliated persons and do not own any stock or other securities issued by
the Investment Manager's parent company, MSDW. These are the "non-interested" or
"independent" Directors. The other two Directors (the "management Directors")
are affiliated with the Investment Manager. All of the Independent Trustees also
serve as Independent Directors of "Discover Brokerage Index Series," a mutual
fund for which the Investment Manager is the investment advisor. Three of the
six Independent Directors are also Independent Directors or Trustees of certain
other mutual funds, referred to as the "TCW/DW Funds," for which MSDW Services
Company is the manager and TCW Funds Management, Inc. is the investment advisor.
 
    The Directors and executive officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with the
Investment Manager, and with the 85 Morgan Stanley Dean Witter Funds, the 11
TCW/DW Funds and Discover Brokerage Index Series, are shown below.
 
<TABLE>
<CAPTION>
      NAME, AGE, POSITION WITH FUND AND ADDRESS                PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------  ----------------------------------------------------------
<S>                                                     <C>
Michael Bozic (58) ...................................  Vice Chairman of Kmart Corporation (since December, 1998);
Director                                                Director or Trustee of the Morgan Stanley Dean Witter
c/o Kmart Corporation                                   Funds and Discover Brokerage Index Series; formerly
3100 West Big Beaver Road                               Chairman and Chief Executive Officer of Levitz Furniture
Troy, Michigan                                          Corporation (November, 1995-November, 1998) and President
                                                        and Chief Executive Officer of Hills Department Stores
                                                        (May, 1991-July, 1995); formerly variously Chairman, Chief
                                                        Executive Officer, President and Chief Operating Officer
                                                        (1987-1991) of the Sears Merchandise Group of Sears,
                                                        Roebuck and Co.; Director of Eaglemark Financial Services,
                                                        Inc. and Weirton Steel Corporation.
 
Charles A. Fiumefreddo* (66) .........................  Chairman, Director or Trustee and Chief Executive Officer
Chairman of the Board,                                  of the Morgan Stanley Dean Witter Funds, the TCW/DW Funds
Chief Executive Officer and Director                    and Discover Brokerage Index Series; formerly Chairman,
Two World Trade Center                                  Chief Executive Officer and Director of the Investment
New York, New York                                      Manager, the Distributor and MSDW Services Company;
                                                        Executive Vice President and Director of Dean Witter
                                                        Reynolds; Chairman and Director of the Transfer Agent;
                                                        formerly Director and/or officer of various MSDW
                                                        subsidiaries (until June 1998).
</TABLE>
 
                                       14
<PAGE>
<TABLE>
<CAPTION>
      NAME, AGE, POSITION WITH FUND AND ADDRESS                PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------  ----------------------------------------------------------
<S>                                                     <C>
Edwin J. Garn (66) ...................................  Director or Trustee of the Morgan Stanley Dean Witter
Director                                                Funds and Discover Brokerage Index Series; formerly United
c/o Huntsman Corporation                                States Senator (R-Utah)(1974-1992) and Chairman, Senate
500 Huntsman Way                                        Banking Committee (1980-1986); formerly Mayor of Salt Lake
Salt Lake City, Utah                                    City, Utah (1971-1974); formerly Astronaut, Space Shuttle
                                                        Discovery (April 12-19, 1985); Vice Chairman, Huntsman
                                                        Corporation; Director of Franklin Covey (time management
                                                        systems), BMW Bank of North America, Inc., United Space
                                                        Alliance (joint venture between Lockheed Martin and the
                                                        Boeing Company) and Nuskin Asia Pacific (multilevel
                                                        marketing); member of the board of various civic and
                                                        charitable organizations.
 
Wayne E. Hedien (65) .................................  Retired; Director or Trustee of the Morgan Stanley Dean
Director                                                Witter Funds and Discover Brokerage Index Series; Director
c/o Gordon Altman Butowsky                              of The PMI Group, Inc. (private mortgage insurance);
 Weitzen Shalov & Wein                                  Trustee and Vice Chairman of The Field Museum of Natural
Counsel to the Independent Directors                    History; formerly associated with the Allstate Companies
114 West 47th Street                                    (1966-1994), most recently as Chairman of The Allstate
New York, New York                                      Corporation (March, 1993-December, 1994) and Chairman and
                                                        Chief Executive Officer of its wholly-owned subsidiary,
                                                        Allstate Insurance Company (July, 1989-December, 1994);
                                                        director of various other business and charitable
                                                        organizations.
 
Dr. Manuel H. Johnson (50) ...........................  Senior Partner, Johnson Smick International, Inc., a
Director                                                consulting firm; Co-Chairman and a founder of the Group of
c/o Johnson Smick International, Inc.                   Seven Council (G7C), an international economic commission;
1133 Connecticut Avenue, N.W.                           Chairman of the Audit Committee and Director or Trustee of
Washington, D.C.                                        the Morgan Stanley Dean Witter Funds, the TCW/DW Funds and
                                                        Discover Brokerage Index Series; Director of Greenwich
                                                        Capital Markets, Inc. (broker-dealer) and NVR, Inc. (home
                                                        construction); Chairman and Trustee of the Financial
                                                        Accounting Foundation (oversight organization of the
                                                        Financial Accounting Standards Board); formerly Vice
                                                        Chairman of the Board of Governors of the Federal Reserve
                                                        System (1986-1990) and Assistant Secretary of the U.S.
                                                        Treasury.
 
Michael E. Nugent (62) ...............................  General Partner, Triumph Capital, L.P., a private in-
Director                                                vestment partnership; Chairman of the Insurance Committee
c/o Triumph Capital, L.P.                               and Director or Trustee of the Morgan Stanley Dean Witter
237 Park Avenue                                         Funds, the TCW/DW Funds and Discover Brokerage Index
New York, New York                                      Series; formerly Vice President, Bankers Trust Company and
                                                        BT Capital Corporation (1984-1988); director of various
                                                        business organizations.
</TABLE>
 
                                       15
<PAGE>
<TABLE>
<CAPTION>
      NAME, AGE, POSITION WITH FUND AND ADDRESS                PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------  ----------------------------------------------------------
<S>                                                     <C>
Philip J. Purcell* (55) ..............................  Chairman of the Board of Directors and Chief Executive
Director                                                Officer of MSDW, Dean Witter Reynolds and Novus Credit
1585 Broadway                                           Services Inc.; Director of the Distributor; Director or
New York, New York                                      Trustee of the Morgan Stanley Dean Witter Funds and
                                                        Discover Brokerage Index Series; Director and/or officer
                                                        of various MSDW subsidiaries.
 
John L. Schroeder (68) ...............................  Retired; Chairman of the Derivatives Committee and
Director                                                Director or Trustee of the Morgan Stanley Dean Witter
c/o Gordon Altman Butowsky                              Funds, the TCW/DW Funds and Discover Brokerage Index
 Weitzen Shalov & Wein                                  Series; Director of Citizens Utilities Company; formerly
Counsel to the Independent Directors                    Executive Vice President and Chief Investment Officer of
114 West 47th Street                                    the Home Insurance Company (August, 1991-September, 1995).
New York, New York
 
Mitchell M. Merin (45) ...............................  President and Chief Operating Officer of Asset Management
President                                               of MSDW (since December, 1998); President and Director
Two World Trade Center                                  (since April, 1997) and Chief Executive Officer (since
New York, New York                                      June, 1998) of the Investment Manager and MSDW Services
                                                        Company; Chairman, Chief Executive Officer and Director of
                                                        the Distributor (since June, 1998); Chairman and Chief
                                                        Executive Officer (since June, 1998) and Director (since
                                                        January, 1998) of the Transfer Agent; Director of various
                                                        MSDW subsidiaries; President of the Morgan Stanley Dean
                                                        Witter Funds, the TCW/DW Funds and Discover Brokerage
                                                        Index Series (since May, 1999); previously Chief Strategic
                                                        Officer of the Investment Manager and MSDW Services
                                                        Company and Executive Vice President of the Distributor
                                                        (April, 1997-June, 1998), Vice President of the Morgan
                                                        Stanley Dean Witter Funds, the TCW/DW Funds and Discover
                                                        Brokerage Index Series (May, 1997-April, 1999), and
                                                        Executive Vice President of Dean Witter, Discover & Co.
</TABLE>
 
                                       16
<PAGE>
<TABLE>
<CAPTION>
      NAME, AGE, POSITION WITH FUND AND ADDRESS                PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------  ----------------------------------------------------------
<S>                                                     <C>
Barry Fink (44) ......................................  Senior Vice President (since March, 1997) and Secretary
Vice President, Secretary                               and General Counsel (since February, 1997) and Director
and General Counsel                                     (since July, 1998) of the Investment Manager and MSDW
Two World Trade Center                                  Services Company; Senior Vice President (since March,
New York, New York                                      1997) and Assistant Secretary and Assistant General
                                                        Counsel (since February, 1997) of the Distributor;
                                                        Assistant Secretary of Dean Witter Reynolds (since August,
                                                        1996); Vice President, Secretary and General Counsel of
                                                        the Morgan Stanley Dean Witter Funds and the TCW/DW Funds
                                                        (since February, 1997); Vice President, Secretary and
                                                        General Counsel of Discover Brokerage Index Series;
                                                        previously First Vice President (June, 1993-February,
                                                        1997), Vice President and Assistant Secretary and
                                                        Assistant General Counsel of the Investment Manager and
                                                        MSDW Services Company and Assistant Secretary of the Mor-
                                                        gan Stanley Dean Witter Funds and the TCW/DW Funds.
 
David F. Myers (44) ..................................  Vice President of the Investment Manager.
Vice President
Two World Trade Center
New York, New York
 
Catherine Maniscalco (35) ............................  Vice President (since June, 1997) and a portfolio manager
Vice President                                          (since March, 1995) of the Investment Manager; formerly a
Two World Trade Center                                  portfolio management product specialist at National
New York, New York                                      Investor Data Services (April, 1994-March, 1995) and a
                                                        portfolio manager at Prudential Securities Investment
                                                        Management (July, 1990-April, 1994).
 
Thomas F. Caloia (53) ................................  First Vice President and Assistant Treasurer of the
Treasurer                                               Investment Manager and MSDW Services Company; Treasurer of
Two World Trade Center                                  the Morgan Stanley Dean Witter Funds, the TCW/DW Funds and
New York, New York                                      Discover Brokerage Index Series.
</TABLE>
 
- ------------------------------
*   Denotes Directors who are "interested persons" of the Fund as defined by the
    Investment Company Act.
 
    In addition, RONALD E. ROBISON, Executive Vice President, Chief
Administrative Officer and Director of the Investment Manager and MSDW Services
Company, ROBERT S. GIAMBRONE, Senior Vice President of the Investment Manager,
MSDW Services Company, the Distributor and the Transfer Agent and Director of
the Transfer Agent, and JOSEPH J. MCALINDEN, Executive Vice President and Chief
Investment Officer of the Investment Manager and Director of the Transfer Agent,
and KENTON J. HINCHLIFFE, IRA N. ROSS, PAUL D. VANCE, Senior Vice Presidents of
the Investment Manager are Vice Presidents of the Fund.
 
                                       17
<PAGE>
    In addition, FRANK BRUTTOMESSO, MARILYN K. CRANNEY, LOU ANNE D. MCINNIS,
CARSTEN OTTO and RUTH ROSSI, First Vice Presidents and Assistant General
Counsels of the Investment Manager and MSDW Services Company, and TODD LEBO,
Vice President and Assistant General Counsel of the Investment Manager and MSDW
Services Company, are Assistant Secretaries of the Fund.
 
    INDEPENDENT DIRECTORS AND THE COMMITTEES.  Law and regulation establish both
general guidelines and specific duties for the Independent Directors. The Morgan
Stanley Dean Witter Funds seek as Independent Directors individuals of
distinction and experience in business and finance, government service or
academia; these are people whose advice and counsel are in demand by others and
for whom there is often competition. To accept a position on the Funds' Boards,
such individuals may reject other attractive assignments because the Funds make
substantial demands on their time. Indeed, by serving on the Funds' Boards,
certain Directors who would otherwise be qualified and in demand to serve on
bank boards would be prohibited by law from doing so. All of the Independent
Directors serve as members of the Audit Committee. Three of them also serve as
members of the Derivatives Committee. In addition, three of the Directors,
including two Independent Directors, serve as members of the Insurance
Committee.
 
    The Independent Directors are charged with recommending to the full Board
approval of management, advisory and administration contracts, Rule 12b-1 plans
and distribution and underwriting agreements; continually reviewing Fund
performance; checking on the pricing of portfolio securities, brokerage
commissions, transfer agent costs and performance, and trading among Funds in
the same complex; and approving fidelity bond and related insurance coverage and
allocations, as well as other matters that arise from time to time. The
Independent Directors are required to select and nominate individuals to fill
any Independent Director vacancy on the Board of any Fund that has a Rule 12b-1
plan of distribution. Most of the Morgan Stanley Dean Witter Funds have a Rule
12b-1 plan.
 
    The Audit Committee is charged with recommending to the full Board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing engagement;
approving professional services provided by the independent accountants and
other accounting firms prior to the performance of the services; reviewing the
independence of the independent accountants; considering the range of audit and
non-audit fees; reviewing the adequacy of the Fund's system of internal
controls; and preparing and submitting Committee meeting minutes to the full
Board.
 
    The Board of each Fund has a Derivatives Committee to approve parameters for
and monitor the activities of the Fund with respect to derivative investments,
if any, made by the Fund.
 
    Finally, the Board of each Fund has formed an Insurance Committee to review
and monitor the insurance coverage maintained by the Fund.
 
    ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT DIRECTORS FOR ALL
MORGAN STANLEY DEAN WITTER FUNDS.  The Independent Directors and the Funds'
management believe that having the same Independent Directors for each of the
Morgan Stanley Dean Witter Funds avoids the duplication of effort that would
arise from having different groups of individuals serving as Independent
Directors for each of the Funds or even of sub-groups of Funds. They believe
that having the same individuals serve as Independent Directors of all the Funds
tends to increase their knowledge and expertise regarding matters which affect
the Fund complex generally and enhances their ability to negotiate on behalf of
each Fund with the Fund's service providers. This arrangement also precludes the
possibility of separate groups of Independent Directors arriving at conflicting
decisions regarding operations and management of the Funds and avoids the cost
and confusion that would likely ensue. Finally, having the same Independent
Directors serve on all Fund Boards enhances the ability of each Fund to obtain,
at modest cost to each separate Fund, the services of Independent Directors, of
the caliber, experience and business acumen of the individuals who serve as
Independent Directors of the Morgan Stanley Dean Witter Funds.
 
    DIRECTOR AND OFFICER INDEMNIFICATION.  The Fund's By Laws provides that no
Director, officer, employee or agent of the Fund is liable to the Fund or to a
shareholder, nor is any Director, officer, employee or agent liable to any third
persons in connection with the affairs of the Fund, except as such
 
                                       18
<PAGE>
liability may arise from his/her or its own bad faith, willful misfeasance,
gross negligence or reckless disregard of his/her or its duties. With the
exceptions stated, the By-Laws provides that a Director, officer, employee or
agent is entitled to be indemnified against all liability in connection with the
affairs of the Fund.
 
C. COMPENSATION
 
    The Fund pays each Independent Director an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Directors, the Independent
Directors or Committees of the Board of Directors attended by the Director (the
Fund pays the Chairman of the Audit Committee an additional annual fee of $750,
and the Chairmen of the Derivatives and Insurance Committees additional annual
fees of $500). If a Board meeting and a meeting of the Independent Directors or
a Committee meeting, or a meeting of the Independent Directors and/or more than
one Committee meeting, take place on a single day, the Directors are paid a
single meeting fee by the Fund. The Fund also reimburses such Directors for
travel and other out-of-pocket expenses incurred by them in connection with
attending such meetings. Directors and officers of the Fund who are or have been
employed by the Investment Manager or an affiliated company receive no
compensation or expense reimbursement from the Fund for their services as
Director.
 
    The following table illustrates the compensation that the Fund paid to its
Independent Directors for the fiscal year ended February 28, 1999.
 
                               FUND COMPENSATION
 
<TABLE>
<CAPTION>
                              AGGREGATE
NAME OF INDEPENDENT         COMPENSATION
 DIRECTOR                   FROM THE FUND
- -------------------------  ---------------
<S>                        <C>
Michael Bozic............     $   1,550
Edwin J. Garn............         1,700
Wayne E. Hedien..........         1,700
Dr. Manuel H. Johnson....         1,650
Michael E. Nugent........         1,700
John L. Schroeder........         1,700
</TABLE>
 
    The following table illustrates the compensation paid to the Fund's
Independent Directors for the calendar year ended December 31, 1998 for services
to the 85 Morgan Stanley Dean Witter Funds and, in the case of Messrs. Johnson,
Nugent and Schroeder, the 11 TCW/DW Funds that were in operation at December 31,
1998. With respect to Messrs. Johnson, Nugent and Schroeder, the TCW/DW Funds
are included solely because of a limited exchange privilege between those Funds
and five Morgan Stanley Dean Witter Money Market Funds. No compensation was paid
to the Fund's Independent Directors by Discover Brokerage Index Series for the
calendar year ended December 31, 1998.
 
    CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS AND TCW/DW FUNDS
 
<TABLE>
<CAPTION>
                                                                    TOTAL CASH
                                                                   COMPENSATION
                               FOR SERVICE                         FOR SERVICES
                              AS DIRECTOR OR                            TO
                               TRUSTEE AND                           85 MORGAN
                             COMMITTEE MEMBER    FOR SERVICE AS    STANLEY DEAN
                               OF 85 MORGAN       TRUSTEE AND      WITTER FUNDS
                                 STANLEY        COMMITTEE MEMBER      AND 11
NAME OF INDEPENDENT            DEAN WITTER        OF 11 TCW/DW        TCW/DW
 DIRECTOR                         FUNDS              FUNDS             FUNDS
- ---------------------------  ----------------   ----------------   -------------
<S>                          <C>                <C>                <C>
Michael Bozic..............      $120,150                --          $120,150
Edwin J. Garn..............       132,450                --           132,450
Wayne E. Hedien............       132,350                --           132,350
Dr. Manuel H. Johnson......       128,400            62,331           190,731
Michael E. Nugent..........       132,450            62,131           194,581
John L. Schroeder..........       132,450            64,731           197,181
</TABLE>
 
    As of the date of this STATEMENT OF ADDITIONAL INFORMATION, 55 of the Morgan
Stanley Dean Witter Funds, including the Fund, have adopted a retirement program
under which an Independent Director who retires after serving for at least five
years (or such lesser period as may be determined by the Board) as an
Independent Director or Trustee of any Morgan Stanley Dean Witter Fund that has
adopted the
 
                                       19
<PAGE>
retirement program (each such Fund referred to as an "Adopting Fund" and each
such Director referred to as an "Eligible Director") is entitled to retirement
payments upon reaching the eligible retirement age (normally, after attaining
age 72). Annual payments are based upon length of service.
 
    Currently, upon retirement, each Eligible Director is entitled to receive
from the Adopting Fund, commencing as of his or her retirement date and
continuing for the remainder of his or her life, an annual retirement benefit
(the "Regular Benefit") equal to 30.22% of his or her Eligible Compensation plus
0.5036667% of such Eligible Compensation for each full month of service as an
Independent Director or Trustee of any Adopting Fund in excess of five years up
to a maximum of 60.44% after ten years of service. The foregoing percentages may
be changed by the Board.(1) "Eligible Compensation" is one-fifth of the total
compensation earned by such Eligible Director for service to the Adopting Fund
in the five year period prior to the date of the Eligible Director's retirement.
Benefits under the retirement program are not secured or funded by the Adopting
Funds.
 
    The following table illustrates the retirement benefits accrued to the
Fund's Independent Directors by the Fund for the fiscal year ended February 28,
1999 and by the 55 Morgan Stanley Dean Witter Funds (including the Fund) for the
year ended December 31, 1998, and the estimated retirement benefits for the
Independent Trustees, to commence upon their retirement, from the Fund as of
February 28, 1999 and from the 55 Morgan Stanley Dean Witter Funds as of
December 31, 1998.
 
   RETIREMENT BENEFITS FROM THE FUND AND ALL MORGAN STANLEY DEAN WITTER FUNDS
 
<TABLE>
<CAPTION>
                             FOR ALL ADOPTING FUNDS
                           ---------------------------
                            ESTIMATED                                                 ESTIMATED ANNUAL
                             CREDITED                                                     BENEFITS
                              YEARS        ESTIMATED       RETIREMENT BENEFITS       UPON RETIREMENT(2)
                            OF SERVICE     PERCENTAGE      ACCRUED AS EXPENSES     -----------------------
                                AT             OF        -----------------------    FROM
NAME OF INDEPENDENT         RETIREMENT      ELIGIBLE     BY THE       BY ALL         THE       FROM ALL
 DIRECTORS                 (MAXIMUM 10)   COMPENSATION    FUND    ADOPTING FUNDS    FUND    ADOPTING FUNDS
- -------------------------  ------------   ------------   -------  --------------   -------  --------------
<S>                        <C>            <C>            <C>      <C>              <C>      <C>
Michael Bozic............          10          60.44%    $  412   $     22,377     $ 1,029  $     52,250
Edwin J. Garn............          10          60.44        623         35,225       1,029        52,250
Wayne E. Hedien..........           9          51.37        654         41,979         875        44,413
Dr. Manuel H. Johnson....          10          60.44        251         14,047       1,029        52,250
Michael E. Nugent........          10          60.44        441         25,336       1,029        52,250
John L. Schroeder........           8          50.37        828         45,117         861        44,343
</TABLE>
 
- ------------------------
(1) An Eligible Director may elect alternative payments of his or her retirement
    benefits based upon the combined life expectancy of the Eligible Director
    and his or her spouse on the date of such Eligible Director's retirement. In
    addition, the Eligible Director may elect that the surviving spouse's
    periodic payment of benefits will be equal to a lower percentage of the
    periodic amount when both spouses were alive. The amount estimated to be
    payable under this method, through the remainder of the later of the lives
    of the Eligible Director and spouse, will be the actuarial equivalent of the
    Regular Benefit.
 
(2) Based on current levels of compensation. Amount of annual benefits also
    varies depending on the Director's elections described in Footnote (1)
    above.
 
IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------
 
    The following owned 5% or more of the outstanding shares of Class A on
             , 1999: The following owned 5% or more of the outstanding shares of
Class B on              , 1999: The following owned 5% or more of the
outstanding shares of Class C on              , 1999: The following owned 5% or
more of the outstanding shares of Class D on              , 1999:
 
    As of the date of this STATEMENT OF ADDITIONAL INFORMATION, the aggregate
number of shares of common stock of the Fund owned by the Fund's officers and
Directors as a group was less than 1% of the Fund's shares of common stock
outstanding.
 
V. INVESTMENT MANAGEMENT AND OTHER SERVICES
- --------------------------------------------------------------------------------
 
A. INVESTMENT MANAGER
 
    The Investment Manager to the Fund is Morgan Stanley Dean Witter Advisors
Inc., a Delaware corporation, whose address is Two World Trade Center, New York,
New York 10048. The Investment
 
                                       20
<PAGE>
Manager is a wholly-owned subsidiary of MSDW, a Delaware corporation. MSDW is a
preeminent global financial services firm that maintains leading market
positions in each of its three primary businesses: securities, asset management
and credit services.
 
    Pursuant to an Investment Management Agreement (the "Management Agreement")
with the Investment Manager, the Fund has retained the Investment Manager to
provide administrative services and manage the investment of the Fund's assets,
including the placing of orders for the purchase and sale of portfolio
securities. The Fund pays the Investment Manager monthly compensation calculated
daily by applying the following annual rates to the net assets of the Fund
determined as of the close of each business day: 0.625% to the portion of the
daily net assets not exceeding $250 million and 0.50% to the portion of the
daily net assets exceeding $250 million. The management fee is allocated among
the Classes pro rata based on the net assets of the Fund attributable to each
Class. For the fiscal years ended February 28, 1997, 1998 and 1999, the
Investment Manager accrued total compensation under the Management Agreement in
the amounts of $1,221,826, $1,752,565 and $1,408,351, respectively.
 
    The Investment Manager has retained its wholly-owned subsidiary, MSDW
Services Company, to perform administrative services for the Fund.
 
B. PRINCIPAL UNDERWRITER
 
    The Fund's principal underwriter is the Distributor (which has the same
address as the Investment Manager). In this capacity, the Fund's shares are
distributed by the Distributor. The Distributor has entered into a selected
dealer agreement with Dean Witter Reynolds, which through its own sales
organization sells shares of the Fund. In addition, the Distributor may enter
into similar agreements with other selected broker-dealers. The Distributor, a
Delaware corporation, is a wholly-owned subsidiary of MSDW.
 
    The Distributor bears all expenses it may incur in providing services under
the Distribution Agreement. These expenses include the payment of commissions
for sales of the Fund's shares and incentive compensation to Financial Advisors.
The Distributor also pays certain expenses in connection with the distribution
of the Fund's shares, including the costs of preparing, printing and
distributing advertising or promotional materials, and the costs of printing and
distributing prospectuses and supplements thereto used in connection with the
offering and sale of the Fund's shares. The Fund bears the costs of initial
typesetting, printing and distribution of prospectuses and supplements thereto
to shareholders. The Fund also bears the costs of registering the Fund and its
shares under federal and state securities laws and pays filing fees in
accordance with state securities laws.
 
    The Fund and the Distributor have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act. Under the
Distribution Agreement, the Distributor uses its best efforts in rendering
services to the Fund, but in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations, the Distributor is
not liable to the Fund or any of its shareholders for any error of judgment or
mistake of law or for any act or omission or for any losses sustained by the
Fund or its shareholders.
 
C. SERVICES PROVIDED BY THE INVESTMENT MANAGER AND FUND EXPENSES PAID BY THIRD
PARTIES
 
    The Investment Manager manages the investment of the Fund's assets,
including the placing of orders for the purchase and sale of portfolio
securities. The Investment Manager obtains and evaluates the information and
advice relating to the economy, securities markets, and specific securities as
it considers necessary or useful to continuously manage the assets of the Fund
in a manner consistent with its investment objective.
 
    Under the terms of the Management Agreement, in addition to managing the
Fund's investments, the Investment Manager maintains certain of the Fund's books
and records and furnishes, at its own expense, the office space, facilities,
equipment, clerical help, bookkeeping and certain legal services as the Fund may
reasonably require in the conduct of its business, including the preparation of
prospectuses, proxy statements and reports required to be filed with federal and
state securities commissions (except insofar as the participation or assistance
of independent accountants and attorneys is, in the opinion of the Investment
Manager, necessary or desirable). In addition, the Investment Manager pays
 
                                       21
<PAGE>
the salaries of all personnel, including officers of the Fund, who are employees
of the Investment Manager. The Investment Manager also bears the cost of
telephone service, heat, light, power and other utilities provided to the Fund.
 
    Expenses not expressly assumed by the Investment Manager under the
Management Agreement or by the Distributor, will be paid by the Fund. These
expenses will be allocated among the four Classes of shares pro rata based on
the net assets of the Fund attributable to each Class, except as described
below. Such expenses include, but are not limited to: expenses of the Plan of
Distribution pursuant to Rule 12b-1; charges and expenses of any registrar,
custodian, stock transfer and dividend disbursing agent; brokerage commissions;
taxes; engraving and printing share certificates; registration costs of the Fund
and its shares under federal and state securities laws; the cost and expense of
printing, including typesetting, and distributing prospectuses of the Fund and
supplements thereto to the Fund's shareholders; all expenses of shareholders'
and Directors' meetings and of preparing, printing and mailing of proxy
statements and reports to shareholders; fees and travel expenses of Directors or
members of any advisory board or committee who are not employees of the
Investment Manager or any corporate affiliate of the Investment Manager; all
expenses incident to any dividend, withdrawal or redemption options; charges and
expenses of any outside service used for pricing of the Fund's shares; fees and
expenses of legal counsel, including counsel to the Directors who are not
interested persons of the Fund or of the Investment Manager (not including
compensation or expenses of attorneys who are employees of the Investment
Manager); fees and expenses of the Fund's independent accountants; membership
dues of industry associations; interest on Fund borrowings; postage; insurance
premiums on property or personnel (including officers and Directors) of the Fund
which inure to its benefit; extraordinary expenses (including, but not limited
to, legal claims and liabilities and litigation costs and any indemnification
relating thereto); and all other costs of the Fund's operation. The 12b-1 fees
relating to a particular Class will be allocated directly to that Class. In
addition, other expenses associated with a particular Class (except advisory or
custodial fees) may be allocated directly to that Class, provided that such
expenses are reasonably identified as specifically attributable to that Class
and the direct allocation to that Class is approved by the Directors.
 
    The Management Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the Investment Manager is not liable to the Fund or any
of its investors for any act or omission by the Investment Manager or for any
losses sustained by the Fund or its investors.
 
    The Management Agreement will remain in effect from year to year, provided
continuance of the Management Agreement is approved at least annually by the
vote of the holders of a majority, as defined in the Investment Company Act, of
the outstanding shares of the Fund, or by the Directors; provided that in either
event such continuance is approved annually by the vote of a majority of the
Directors.
 
D. DEALER REALLOWANCES
 
    Upon notice to selected broker-dealers, the Distributor may reallow up to
the full applicable front-end sales charge during periods specified in such
notice. During periods when 90% or more of the sales charge is reallowed, such
selected broker-dealers may be deemed to be underwriters as that term is defined
in the Securities Act.
 
E. RULE 12b-1 PLAN
 
    The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the
Investment Company Act (the "Plan") pursuant to which each Class, other than
Class D, pays the Distributor compensation accrued daily and payable monthly at
the following annual rates: 0.25% and 1.0% of the average daily net assets of
Class A and Class C, respectively, and, with respect to Class B, 1.0% of the
lesser of: (a) the average daily aggregate gross sales of the Fund's Class B
shares since the inception of the Plan on July 2, 1984 (not including
reinvestment of dividends or capital gains distributions), less the average
daily aggregate net asset value of the Fund's Class B shares redeemed since the
Plan's inception upon which a contingent deferred sales charge has been imposed
or upon which such charge has been waived, or (b) the average daily net assets
of Class B attributable to shares issued, net of related shares redeemed, since
the inception of the Plan.
 
                                       22
<PAGE>
    The Distributor also receives the proceeds of front-end sales charges
("FSCs") and of contingent deferred sales charges ("CDSCs") imposed on certain
redemptions of shares, which are separate and apart from payments made pursuant
to the Plan. The Distributor has informed the Fund that it and/or Dean Witter
Reynolds received the proceeds of CDSCs and FSCs, for the last three fiscal
years ended February 28, in approximate amounts as provided in the table below
(the Distributor did not retain any of these amounts).
 
<TABLE>
<CAPTION>
                                               1999                      1998                      1997
                                     ------------------------  ------------------------  ------------------------
<S>                                  <C>          <C>          <C>          <C>          <C>          <C>
Class A(2).........................     FSCs:(1)  $    10,626     FSCs:(1)  $    18,000  FSCs:                N/A
                                          CDSCs:  $         0       CDSCs:  $         0       CDSCs:          N/A
Class B............................       CDSCs:  $   404,686       CDSCs:  $   372,894       CDSCs:  $   151,113
Class C(2).........................       CDSCs:  $     1,864       CDSCs:  $       885       CDSCs:          N/A
</TABLE>
 
- ------------------------
(1) FSCs apply to Class A only.
 
(2) This Class commenced operations on July 28, 1997.
 
    The Distributor has informed the Fund that the entire fee payable by Class A
and a portion of the fees payable by each of Class B and Class C each year
pursuant to the Plan equal to 0.25% of such Class' average daily net assets are
currently each characterized as a "service fee" under the Rules of the National
Association of Securities Dealers, Inc. (of which the Distributor is a member).
The "service fee" is a payment made for personal service and/or the maintenance
of shareholder accounts. The remaining portion of the Plan fees payable by a
Class, if any, is characterized as an "asset-based sales charge" as such is
defined by the Rules of the Association.
 
    Under the Plan and as required by Rule 12b-1, the Directors receive and
review promptly after the end of each calendar quarter a written report provided
by the Distributor of the amounts expended under the Plan and the purpose for
which such expenditures were made. Class B shares of the Fund accrued amounts
payable to the Distributor under the Plan, during the fiscal year ended February
28, 1999, of $2,124,861. This amount is equal to 1.00% of the average daily net
assets of Class B for the fiscal year. For the fiscal year ended February 28,
1999, Class A and Class C shares of the Fund accrued payments under the Plan
amounting to $1,320 and $12,497, respectively, which amounts are equal to 0.24%
and 1.00% of the average daily net assets of Class A and Class C, respectively,
for the fiscal year.
 
    The Plan was adopted in order to permit the implementation of the Fund's
method of distribution. Under this distribution method the Fund offers four
Classes, each with a different distribution arrangement.
 
    With respect to Class A shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from proceeds of the FSC, commissions for the
sale of Class A shares, currently a gross sales credit of up to 5.0% of the
amount sold (except as provided in the following sentence) and an annual
residual commission, currently a residual of up to 0.25% of the current value of
the respective accounts for which they are the Financial Advisors or dealers of
record in all cases. On orders of $1 million or more (for which no sales charge
was paid) or net asset value purchases by employer-sponsored employee benefit
plans, whether or not qualified under the Internal Revenue Code, for which the
Transfer Agent serves as Trustee or Dean Witter Reynolds Retirement Plan
Services serves as recordkeeper pursuant to a written Recordkeeping Services
Agreement ("MSDW Eligible Plans"), the Investment Manager compensates Financial
Advisors by paying them, from its own funds, a gross sales credit of 1.0% of the
amount sold.
 
    With respect to Class B shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the sale
of Class B shares, currently a gross sales credit of up to 5.0% of the amount
sold (except as provided in the following sentence) and an annual residual
commission, currently a residual of up to 0.25% of the current value (not
including reinvested dividends or distributions) of the amount sold in all
cases. In the case of Class B shares purchased by MSDW Eligible Plans, Dean
Witter Reynolds compensates its Financial Advisors by paying them, from its own
funds, a gross sales credit of 3.0% of the amount sold.
 
                                       23
<PAGE>
    With respect to Class C shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the sale
of Class C shares, currently a gross sales credit of up to 1.0% of the amount
sold and an annual residual commission, currently up to 1.0% of the current
value of the respective accounts for which they are the Financial Advisors of
record.
 
    With respect to Class D shares other than shares held by participants in the
Investment Manager's mutual fund asset allocation program, the Investment
Manager compensates Dean Witter Reynolds's Financial Advisors by paying them,
from its own funds, commissions for the sale of Class D shares, currently a
gross sales credit of up to 1.0% of the amount sold. There is a chargeback of
100% of the amount paid if the Class D shares are redeemed in the first year and
a chargeback of 50% of the amount paid if the Class D shares are redeemed in the
second year after purchase. The Investment Manager also compensates Dean Witter
Reynolds's Financial Advisors by paying them, from its own funds, an annual
residual commission, currently up to 0.10% of the current value of the
respective accounts for which they are the Financial Advisors of record (not
including accounts of participants in the Investment Manager's mutual fund asset
allocation program).
 
    The gross sales credit is a charge which reflects commissions paid by Dean
Witter Reynolds to its Financial Advisors and Dean Witter Reynolds's
Fund-associated distribution-related expenses, including sales compensation, and
overhead and other branch office distribution-related expenses including (a) the
expenses of operating Dean Witter Reynolds's branch offices in connection with
the sale of Fund shares, including lease costs, the salaries and employee
benefits of operations and sales support personnel, utility costs,
communications costs and the costs of stationery and supplies, (b) the costs of
client sales seminars, (c) travel expenses of mutual fund sales coordinators to
promote the sale of Fund shares and (d) other expenses relating to branch
promotion of Fund sales.
 
    The distribution fee that the Distributor receives from the Fund under the
Plan, in effect, offsets distribution expenses incurred under the Plan on behalf
of the Fund and, in the case of Class B shares, opportunity costs, such as the
gross sales credit and an assumed interest charge thereon ("carrying charge").
In the Distributor's reporting of the distribution expenses to the Fund, in the
case of Class B shares, such assumed interest (computed at the "broker's call
rate") has been calculated on the gross credit as it is reduced by amounts
received by the Distributor under the Plan and any contingent deferred sales
charges received by the Distributor upon redemption of shares of the Fund. No
other interest charge is included as a distribution expense in the Distributor's
calculation of its distribution costs for this purpose. The broker's call rate
is the interest rate charged to securities brokers on loans secured by
exchange-listed securities.
 
    The Fund is authorized to reimburse expenses incurred or to be incurred in
promoting the distribution of the Fund's Class A and Class C shares and in
servicing shareholder accounts. Reimbursement will be made through payments at
the end of each month. The amount of each monthly payment may in no event exceed
an amount equal to a payment at the annual rate of 0.25%, in the case of Class
A, and 1.0%, in the case of Class C, of the average net assets of the respective
Class during the month. No interest or other financing charges, if any, incurred
on any distribution expenses on behalf of Class A and Class C will be
reimbursable under the Plan. With respect to Class A, in the case of all
expenses other than expenses representing the service fee, and, with respect to
Class C, in the case of all expenses other than expenses representing a gross
sales credit or a residual to Financial Advisors and other authorized financial
representatives, such amounts shall be determined at the beginning of each
calendar quarter by the Directors, including, a majority of the Independent
Directors. Expenses representing the service fee (for Class A) or a gross sales
credit or a residual to Financial Advisors and other authorized financial
representatives (for Class C) may be reimbursed without prior determination. In
the event that the Distributor proposes that monies shall be reimbursed for
other than such expenses, then in making quarterly determinations of the amounts
that may be reimbursed by the Fund, the Distributor will provide and the
Directors will review a quarterly budget of projected distribution expenses to
be incurred on behalf of the Fund, together with a report explaining the
purposes and anticipated benefits of incurring such expenses. The Directors will
determine which particular expenses, and the portions thereof, that may be borne
by the Fund, and in making such a determination shall consider the scope of the
Distributor's commitment to promoting the distribution of the Fund's Class A and
Class C shares.
 
                                       24
<PAGE>
    Each Class paid 100% of the amounts accrued under the Plan with respect to
that Class for the fiscal year ended February 28, 1999 to the Distributor. The
Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to
the Plan, $29,920,698 on behalf of Class B since the inception of the Plan. It
is estimated that this amount was spent in approximately the following ways: (i)
13.13% ($3,929,525)-- advertising and promotional expenses; (ii) 1.17%
($351,239)--printing of prospectuses for distribution to other than current
shareholders; and (iii) 85.70% ($25,639,934)--other expenses, including the
gross sales credit and the carrying charge, of which 10.84% ($2,780,291)
represents carrying charges, 36.91% ($9,463,892) represents commission credits
to Dean Witter Reynolds branch offices and other selected broker-dealers for
payments of commissions to Financial Advisors and other authorized financial
representatives, and 52.25% ($13,395,751) represents overhead and other branch
office distribution-related expenses. The amounts accrued by Class A and Class C
for distribution during the fiscal year ended February 28, 1999 were for
expenses which relate to compensation of sales personnel and associated overhead
expenses.
 
    In the case of Class B shares, at any given time, the expenses of
distributing shares of the Fund may be more or less than the total of (i) the
payments made by the Fund pursuant to the Plan; and (ii) the proceeds of CDSCs
paid by investors upon redemption of shares. For example, if $1 million in
expenses in distributing Class B shares of the Fund had been incurred and
$750,000 had been received as described in (i) and (ii) above, the excess
expense would amount to $250,000. The Distributor has advised the Fund that in
the case of Class B shares the excess distribution expenses, including the
carrying charge designed to approximate the opportunity costs incurred by Dean
Witter Reynolds which arise from it having advanced monies without having
received the amount of any sales charges imposed at the time of sale of the
Fund's Class B shares, totaled $5,822,597 as of February 28, 1999 (the end of
the Fund's fiscal year), which was equal to 3.95% of the net assets of Class B
on such date. Because there is no requirement under the Plan that the
Distributor be reimbursed for all distribution expenses with respect to Class B
shares or any requirement that the Plan be continued from year to year, this
excess amount does not constitute a liability of the Fund. Although there is no
legal obligation for the Fund to pay expenses incurred in excess of payments
made to the Distributor under the Plan and the proceeds of CDSCs paid by
investors upon redemption of shares, if for any reason the Plan is terminated,
the Directors will consider at that time the manner in which to treat such
expenses. Any cumulative expenses incurred, but not yet recovered through
distribution fees or CDSCs, may or may not be recovered through future
distribution fees or CDSCs.
 
    In the case of Class A and Class C shares, expenses incurred pursuant to the
Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net
assets of Class A or Class C, respectively, will not be reimbursed by the Fund
through payments in any subsequent year, except that expenses representing a
gross sales commission credited to Morgan Stanley Dean Witter Financial Advisors
and other authorized financial representatives at the time of sale may be
reimbursed in the subsequent calendar year. The Distributor has advised the Fund
that unreimbursed expenses representing a gross sales commission credited to
Morgan Stanley Dean Witter Financial Advisors and other authorized financial
representatives at the time of sale totaled $530 in the case of Class C at
December 31, 1998 (the end of the calendar year), which amount was equal to
0.05% of the assets of Class C on such date and that there were no such expenses
that may be reimbursed in the subsequent year in the case of Class A or on such
date. No interest or other financing charges will be incurred on any Class A or
Class C distribution expenses incurred by the Distributor under the Plan or on
any unreimbursed expenses due to the Distributor pursuant to the Plan.
 
    No interested person of the Fund nor any Independent Director has any direct
financial interest in the operation of the Plan except to the extent that the
Distributor, the Investment Manager, Dean Witter Reynolds, MSDW Services Company
or certain of their employees may be deemed to have such an interest as a result
of benefits derived from the successful operation of the Plan or as a result of
receiving a portion of the amounts expended thereunder by the Fund.
 
    On an annual basis, the Directors, including a majority of the Independent
Directors, consider whether the Plan should be continued. Prior to approving the
last continuation of the Plan, the Directors requested and received from the
Distributor and reviewed all the information which they deemed
 
                                       25
<PAGE>
necessary to arrive at an informed determination. In making their determination
to continue the Plan, the Directors considered: (1) the Fund's experience under
the Plan and whether such experience indicates that the Plan is operating as
anticipated; (2) the benefits the Fund had obtained, was obtaining and would be
likely to obtain under the Plan, including that: (a) the Plan is essential in
order to give Fund investors a choice of alternatives for payment of
distribution and service charges and to enable the Fund to continue to grow and
avoid a pattern of net redemptions which, in turn, are essential for effective
investment management; and (b) without the compensation to individual brokers
and the reimbursement of distribution and account maintenance expenses of Dean
Witter Reynolds's branch offices made possible by the 12b-1 fees, Dean Witter
Reynolds could not establish and maintain an effective system for distribution,
servicing of Fund shareholders and maintenance of shareholder accounts; and (3)
what services had been provided and were continuing to be provided under the
Plan to the Fund and its shareholders. Based upon their review, the Directors,
including each of the Independent Directors, determined that continuation of the
Plan would be in the best interest of the Fund and would have a reasonable
likelihood of continuing to benefit the Fund and its shareholders. In the
Directors' quarterly review of the Plan, they will consider its continued
appropriateness and the level of compensation provided therein.
 
    The Plan may not be amended to increase materially the amount to be spent
for the services described therein without approval by the shareholders of the
affected Class or Classes of the Fund, and all material amendments to the Plan
must also be approved by the Directors in the manner described above. The Plan
may be terminated at any time, without payment of any penalty, by vote of a
majority of the Independent Directors or by a vote of a majority of the
outstanding voting securities of the Fund (as defined in the Investment Company
Act) on not more than thirty days' written notice to any other party to the
Plan. So long as the Plan is in effect, the election and nomination of
Independent Directors shall be committed to the discretion of the Independent
Directors.
 
F. OTHER SERVICE PROVIDERS
 
(1) TRANSFER AGENT/DIVIDEND-PAYING AGENT
 
    Morgan Stanley Dean Witter Trust FSB is the Transfer Agent for the Fund's
shares and the Dividend Disbursing Agent for payment of dividends and
distributions on Fund shares and Agent for shareholders under various investment
plans. The principal business address of the Transfer Agent is Harborside
Financial Center, Plaza Two, Jersey City, New Jersey 07311.
 
(2) CUSTODIAN AND INDEPENDENT ACCOUNTANTS
 
    The Bank of New York, 90 Washington Street, New York, New York 10286 is the
Custodian of the Fund's assets. Any of the Fund's cash balances with the
Custodian in excess of $100,000 are unprotected by federal deposit insurance.
These balances may, at times, be substantial.
 
    PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036, serves as the independent accountants of the Fund. The independent
accountants are responsible for auditing the annual financial statements of the
Fund.
 
(3) AFFILIATED PERSONS
 
    The Transfer Agent is an affiliate of the Investment Manager, and of the
Distributor. As Transfer Agent and Dividend Disbursing Agent, the Transfer
Agent's responsibilities include maintaining shareholder accounts, disbursing
cash dividends and reinvesting dividends, processing account registration
changes, handling purchase and redemption transactions, mailing prospectuses and
reports, mailing and tabulating proxies, processing share certificate
transactions, and maintaining shareholder records and lists. For these services,
the Transfer Agent receives a per shareholder account fee from the Fund and is
reimbursed for its out-of-pocket expenses in connection with such services.
 
VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
- --------------------------------------------------------------------------------
 
A. BROKERAGE TRANSACTIONS
 
    Subject to the general supervision of the Directors, the Investment Manager
is responsible for decisions to buy and sell securities for the Fund, the
selection of brokers and dealers to effect the
 
                                       26
<PAGE>
transactions, and the negotiation of brokerage commissions, if any. Purchases
and sales of securities on a stock exchange are effected through brokers who
charge a commission for their services. In the over-the-counter market,
securities are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. The Fund also expects
that securities will be purchased at times in underwritten offerings where the
price includes a fixed amount of compensation, generally referred to as the
underwriter's concession or discount. Options and futures transactions will
usually be effected through a broker and a commission will be charged. On
occasion, the Fund may also purchase certain money market instruments directly
from an issuer, in which case no commissions or discounts are paid.
 
    For the fiscal years ended February 28, 1997, 1998 and 1999, the Fund paid a
total of $986,176, $638,253 and $333,733, respectively, in brokerage
commissions.
 
B. COMMISSIONS
 
    Pursuant to an order of the SEC, the Fund may effect principal transactions
in certain money market instruments with Dean Witter Reynolds. The Fund will
limit its transactions with Dean Witter Reynolds to U.S. Government and
government agency securities, bank money instruments (i.e., certificates of
deposit and bankers' acceptances) and commercial paper. The transactions will be
effected with Dean Witter Reynolds only when the price available from Dean
Witter Reynolds is better than that available from other dealers.
 
    During the fiscal years ended February 28, 1997, 1998 and 1999, the Fund did
not effect any principal transactions with Dean Witter Reynolds.
 
    Brokerage transactions in securities listed on exchanges or admitted to
unlisted trading privileges may be effected through Dean Witter Reynolds, Morgan
Stanley & Co. and other affiliated brokers and dealers. In order for an
affiliated broker or dealer to effect any portfolio transactions on an exchange
for the Fund, the commissions, fees or other remuneration received by the
affiliated broker or dealer must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
an exchange during a comparable period of time. This standard would allow the
affiliated broker or dealer to receive no more than the remuneration which would
be expected to be received by an unaffiliated broker in a commensurate
arm's-length transaction. Furthermore, the Directors, including the Independent
Directors, have adopted procedures which are reasonably designed to provide that
any commissions, fees or other remuneration paid to an affiliated broker or
dealer are consistent with the foregoing standard. The Fund does not reduce the
management fee it pays to the Investment Manager by any amount of the brokerage
commissions it may pay to an affiliated broker or dealer.
 
    During the fiscal years ended February 28, 1997, 1998 and 1999, the Fund
paid a total of $263,065, $129,925 and $57,167, respectively, in brokerage
commissions to Dean Witter Reynolds. During the fiscal year ended February 28,
1999, the brokerage commissions paid to Dean Witter Reynolds represented
approximately 17.13% of the total brokerage commissions paid by the Fund during
the year and were paid on account of transactions having an aggregate dollar
value equal to approximately 24.68% of the aggregate dollar value of all
portfolio transactions of the Fund during the year for which commissions were
paid.
 
    During the period June 1, 1997 through February 28, 1998 and during the
fiscal year ended February 28, 1999, the Fund paid a total of $4,800 and $28,737
respectively, in brokerage commissions to Morgan Stanley & Co., which
broker-dealer became an affiliate of the Investment Manager on May 31, 1997 upon
consummation of the merger of Dean Witter, Discover & Co. with Morgan Stanley
Group Inc. During the fiscal year ended February 28, 1999, the brokerage
commissions paid to Morgan Stanley & Co. represented approximately 8.61% of the
total brokerage commissions paid by the Fund for this period and were paid on
account of transactions having an aggregate dollar value equal to approximately
9.07% of the aggregate dollar value of all portfolio transactions of the Fund
during the year for which commissions were paid.
 
                                       27
<PAGE>
C. BROKERAGE SELECTION
 
    The policy of the Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions. Consistent with this
policy, when securities transactions are effected on a stock exchange, the
Fund's policy is to pay commissions which are considered fair and reasonable
without necessarily determining that the lowest possible commissions are paid in
all circumstances. The Fund believes that a requirement always to seek the
lowest possible commission cost could impede effective portfolio management and
preclude the Fund and the Investment Manager from obtaining a high quality of
brokerage and research services. In seeking to determine the reasonableness of
brokerage commissions paid in any transaction, the Investment Manager relies
upon its experience and knowledge regarding commissions generally charged by
various brokers and on its judgment in evaluating the brokerage and research
services received from the broker effecting the transaction. These
determinations are necessarily subjective and imprecise, as in most cases an
exact dollar value for those services is not ascertainable.
 
    In seeking to implement the Fund's policies, the Investment Manager effects
transactions with those brokers and dealers who the Investment Manager believes
provide the most favorable prices and are capable of providing efficient
executions. If the Investment Manager believes the prices and executions are
obtainable from more than one broker or dealer, it may give consideration to
placing portfolio transactions with those brokers and dealers who also furnish
research and other services to the Fund or the Investment Manager. The services
may include, but are not limited to, any one or more of the following:
information as to the availability of securities for purchase or sale;
statistical or factual information or opinions pertaining to investment; wire
services; and appraisals or evaluations of portfolio securities. The information
and services received by the Investment Manager from brokers and dealers may be
of benefit to the Investment Manager in the management of accounts of some of
its other clients and may not in all cases benefit the Fund directly.
 
    The Investment Manager currently serves as investment manager to a number of
clients, including other investment companies, and may in the future act as
investment manager or advisor to others. It is the practice of the Investment
Manager to cause purchase and sale transactions to be allocated among the Fund
and others whose assets it manages in such manner as it deems equitable. In
making such allocations among the Fund and other client accounts, various
factors may be considered, including the respective investment objectives, the
relative size of portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments
generally held and the opinions of the persons responsible for managing the
portfolios of the Fund and other client accounts. In the case of certain initial
and secondary public offerings, the Investment Manager utilizes a pro rata
allocation process based on the size of the Morgan Stanley Dean Witter Funds
involved and the number of shares available from the public offering.
 
D. DIRECTED BROKERAGE
 
    During the fiscal year ended February 28, 1999, the Fund paid $247,373 in
brokerage commissions in connection with transactions in the aggregate amount of
$101,431,726 to brokers because of research services provided.
 
E. REGULAR BROKER-DEALERS
 
    During the fiscal year ended February 28, 1999, the Fund did not purchase
securities issued by brokers or dealers that were among the ten brokers of the
ten dealers that executed transactions for or with the Fund in the largest
dollar amounts during the year. At February 28, 1999, the Fund did not own any
securities issued by any of these issuers.
 
VII. CAPITAL STOCK AND OTHER SECURITIES
- --------------------------------------------------------------------------------
 
    The Fund is authorized to issue 2 billion shares of common stock of $0.01
par value (500 million for each Class). Shares of the Fund, when issued, are
fully paid, non-assessable, fully transferrable and
 
                                       28
<PAGE>
redeemable at the option of the holder. Except for agreements entered into by
the Fund in its ordinary course of business within the limitations of the Fund's
fundamental investment policies (which may be modified only by shareholder
vote), the Fund will not issue any securities other than common stock.
 
    All shares of common stock are equal as to earnings, assets and voting
privileges except that each Class will have exclusive voting privileges with
respect to matters relating to distribution expenses borne solely by such Class
or any other matter in which the interests of one Class differ from the
interests of any other Class. In addition, Class B shareholders will have the
right to vote on any proposed material increase in Class A's expenses, if such
proposal is submitted separately to Class A shareholders. Also, as discussed
herein, Class A, Class B and Class C bear the expenses related to the
distribution of their respective shares.
 
    The shares of the Fund do not have cumulative voting rights, which means
that the holders of more than 50% of the shares voting for the election of
Directors can elect 100% of the Directors if they choose to do so, and in such
event, the holders of the remaining shares voting for the election of Directors
will not be able to elect any person or persons to the Board of Directors.
 
    The Fund is not required to hold annual meetings of shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Directors may call special meetings of shareholders for action by shareholder
vote as may be required by the Investment Company Act or the Fund's By-Laws.
 
VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
- --------------------------------------------------------------------------------
 
A. PURCHASE/REDEMPTION OF SHARES
 
    Information concerning how Fund shares are offered to the public (and how
they are redeemed and exchanged) is provided in the Fund's PROSPECTUS.
 
    TRANSFER AGENT AS AGENT.  With respect to the redemption or repurchase of
Fund shares, the application of proceeds to the purchase of new shares in the
Fund or any other Morgan Stanley Dean Witter Funds and the general
administration of the exchange privilege, the Transfer Agent acts as agent for
the Distributor and for the shareholder's authorized broker-dealer, if any, in
the performance of such functions. With respect to exchanges, redemptions or
repurchases, the Transfer Agent shall be liable for its own negligence and not
for the default or negligence of its correspondents or for losses in transit.
The Fund shall not be liable for any default or negligence of the Transfer
Agent, the Distributor or any authorized broker-dealer.
 
    The Distributor and any authorized broker-dealer have appointed the Transfer
Agent to act as their agent in connection with the application of proceeds of
any redemption of Fund shares to the purchase of shares of any other Morgan
Stanley Dean Witter Fund and the general administration of the exchange
privilege. No commission or discounts will be paid to the Distributor or any
authorized broker-dealer for any transaction pursuant to the exchange privilege.
 
    TRANSFERS OF SHARES.  In the event a shareholder requests a transfer of Fund
shares to a new registration, the shares will be transferred without sales
charge at the time of transfer. With regard to the status of shares which are
either subject to the CDSC or free of such charge (and with regard to the length
of time shares subject to the charge have been held), any transfer involving
less than all of the shares in an account will be made on a pro rata basis (that
is, by transferring shares in the same proportion that the transferred shares
bear to the total shares in the account immediately prior to the transfer). The
transferred shares will continue to be subject to any applicable CDSC as if they
had not been so transferred.
 
B. OFFERING PRICE
 
    The Fund's Class B, Class C and Class D shares are offered at net asset
value per share and the Class A shares are offered at net asset value per share
plus any applicable FSC which is distributed among the Fund's Distributor, Dean
Witter Reynolds and other authorized dealers as described in Section "V.
Investment Management and Other Services -- E. Rule 12b-1 Plan." The price of
Fund shares, called "net asset value," is based on the value of the Fund's
portfolio securities. Net asset value per share of each Class is calculated by
dividing the value of the portion of the Fund's securities and
 
                                       29
<PAGE>
other assets attributable to that Class, less the liabilities attributable to
that Class, by the number of shares of that Class outstanding. The assets of
each Class of shares are invested in a single portfolio. The net asset value of
each Class, however, will differ because the Classes have different ongoing
fees.
 
    In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
stock exchange is valued at its latest sale price on that exchange, prior to the
time when assets are valued; if there were no sales that day, the security is
valued at the latest bid price (in cases where a security is traded on more than
one exchange, the security is valued on the exchange designated as the primary
market pursuant to procedures adopted by the Directors); and (2) all other
portfolio securities for which over-the-counter market quotations are readily
available are valued at the latest bid price. When market quotations are not
readily available, including circumstances under which it is determined by the
Investment Manager that sale or bid prices are not reflective of a security's
market value, portfolio securities are valued at their fair value as determined
in good faith under procedures established by and under the general supervision
of the Fund's Directors. For valuation purposes, quotations of foreign portfolio
securities, other assets and liabilities and forward contracts stated in foreign
currency are translated into U.S. dollar equivalents at the prevailing market
rates prior to the close of the New York Stock Exchange.
 
    Short-term debt securities with remaining maturities of sixty days or less
at the time of purchase are valued at amortized cost, unless the Directors
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Directors.
 
    Listed options on debt securities are valued at the latest sale price on the
exchange on which they are listed unless no sales of such options have taken
place that day, in which case they will be valued at the mean between their
latest bid and asked prices. Unlisted options on debt securities and all options
on equity securities are valued at the mean between their latest bid and asked
prices. Futures are valued at the latest sale price on the commodities exchange
on which they trade unless the Directors determine such price does not reflect
their market value, in which case they will be valued at their fair value as
determined in good faith under procedures established by and under the
supervision of the Directors.
 
    Generally, trading in foreign securities, as well as corporate bonds, U.S.
Government securities and money market instruments, is substantially completed
each day at various times prior to the close of the New York Stock Exchange. The
values of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events which may affect the values of such securities and such
exchange rates may occur between the times at which they are determined and the
close of the New York Stock Exchange and will therefore not be reflected in the
computation of the Fund's net asset value. If events that may affect the value
of such securities occur during such period, then these securities may be valued
at their fair value as determined in good faith under procedures established by
and under the supervision of the Directors.
 
IX. TAXATION OF THE FUND AND SHAREHOLDERS
- --------------------------------------------------------------------------------
 
    The Fund generally will make two basic types of distributions: ordinary
dividends and long-term capital gain distributions. These two types of
distributions are reported differently on a shareholder's income tax return and
they are also subject to different rates of tax. The tax treatment of the
investment activities of the Fund will affect the amount and timing and
character of the distributions made by the Fund. Tax issues relating to the Fund
are not generally a consideration for shareholders such as tax exempt entities
and tax-advantaged retirement vehicles such as an IRA or 401(k) plan.
Shareholders are urged to consult their own tax professionals regarding specific
questions as to federal, state or local taxes.
 
                                       30
<PAGE>
    INVESTMENT COMPANY TAXATION.  The Fund intends to remain qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986. As such, the Fund will not be subject to federal income tax on its net
investment income and capital gains, if any, to the extent that it distributes
such income and capital gains to its shareholders.
 
    The Fund generally intends to distribute sufficient income and gains so that
the Fund will not pay corporate income tax on its earnings. The Fund also
generally intends to distribute to its shareholders in each calendar year a
sufficient amount of ordinary income and capital gains to avoid the imposition
of a 4% excise tax. However, the Fund may instead determine to retain all or
part of any net long-term capital gains in any year for reinvestment. In such
event, the Fund will pay federal income tax (and possibly excise tax) on such
retained gains.
 
    Gains or losses on sales of securities by the Fund will be long-term capital
gains or losses if the securities have a tax holding period of more than one
year. Gains or losses on the sale of securities with a tax holding period of one
year or less will be short-term gains or losses.
 
    Gains or losses on the Fund's transactions in listed non-equity options,
futures and options on futures generally are treated as 60% long-term and 40%
short-term. When the Fund engages in options and futures transactions, various
tax rules may accelerate or defer recognition of certain gains and losses,
change the character of certain gains or losses, or alter the holding period of
other investments held by the Fund. The application of these rules would
therefore also affect the amount, timing and character of distributions made by
the Fund.
 
    Under certain tax rules, the Fund may be required to accrue a portion of any
discount at which certain securities are purchased as income each year even
though the Fund receives no payments in cash on the security during the year. To
the extent that the Fund invests in such securities, it would be required to pay
out such accrued discount as an income distribution in each year in order to
avoid taxation at the Fund level. Such distributions will be made from the
available cash of the Fund or by liquidation of portfolio securities if
necessary. If a distribution of cash necessitates the liquidation of portfolio
securities, the Investment Manager will select which securities to sell. The
Fund may realize a gain or loss from such sales. In the event the Fund realizes
net capital gains from such transactions, its shareholders may receive a larger
capital gain distribution, if any, than they would in the absence of such
transactions.
 
    TAXATION OF DIVIDENDS AND DISTRIBUTIONS.  Shareholders normally will have to
pay federal income taxes, and any state and/or local income taxes, on the
dividends and other distributions they receive from the Fund. Such dividends and
distributions, to the extent that they are derived from net investment income or
short-term capital gains, are taxable to the shareholder as ordinary income
regardless of whether the shareholder receives such payments in additional
shares or in cash.
 
    Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder has
held the Fund's shares and regardless of whether the distribution is received in
additional shares or in cash. The Taxpayer Relief Act of 1997 reduced the
maximum tax on long-term capital gains applicable to individuals from 28% to
20%.
 
    Shareholders are generally taxed on any ordinary dividend or capital gain
distributions from the Fund in the year they are actually distributed. However,
if any such dividends or distributions are declared in October, November or
December and paid in January then such amounts will be treated for tax purposes
as received by the shareholders on December 31, to shareholders of record of
such month.
 
    Subject to certain exceptions, a corporate shareholder may be eligible for a
70% dividends received deduction to the extent that the Fund earns and
distributes qualifying dividends from its investments. Distributions of net
capital gains by the Fund will not be eligible for the dividends received
deduction.
 
                                       31
<PAGE>
    Shareholders who are not citizens or residents of the United States and
certain foreign entities may be subject to withholding of United States tax on
distributions made by the Fund of investment income and short term capital
gains.
 
    After the end of each calendar year, shareholders will be sent full
information on their dividends and capital gain distributions for tax purposes,
including the portion taxable as ordinary income, and the portion taxable as
long-term capital gains.
 
    PURCHASES AND REDEMPTIONS AND EXCHANGES OF FUND SHARES.  Any dividend or
capital gains distribution received by a shareholder from any investment company
will have the effect of reducing the net asset value of the shareholder's stock
in that company by the exact amount of the dividend or capital gains
distribution. Furthermore, such dividends and capital gains distributions are
subject to federal income taxes. If the net asset value of the shares should be
reduced below a shareholder's cost as a result of the payment of dividends or
the distribution of realized long-term capital gains, such payment or
distribution would be in part a return of the shareholder's investment but
nonetheless would be taxable to the shareholder. Therefore, an investor should
consider the tax implications of purchasing Fund shares immediately prior to a
distribution record date.
 
    In general, a sale of shares results in capital gain or loss, and for
individual shareholders, is taxable at a federal rate dependent upon the length
of time the shares were held. A redemption of a shareholder's Fund shares is
normally treated as a sale for tax purposes. Fund shares held for a period of
one year or less will, for tax purposes, generally result in short-term gains or
losses and those held for more than one year generally result in long-term gain
or loss. Any loss realized by shareholders upon a redemption of shares within
six months of the date of their purchase will be treated as a long-term capital
loss to the extent of any distributions of net long-term capital gains with
respect to such shares during the six-month period.
 
    Gain or loss on the sale or redemption of shares in the Fund is measured by
the difference between the amount received and the tax basis of the shares.
Shareholders should keep records of investments made (including shares acquired
through reinvestment of dividends and distributions) so they can compute the tax
basis of their shares. Under certain circumstances a shareholder may compute and
use an average cost basis in determining the gain or loss on the sale or
redemption of shares.
 
    Exchanges of Fund shares for shares of another fund, including shares of
other Morgan Stanley Dean Witter Funds, are also subject to similar tax
treatment. Such an exchange is treated for tax purposes as a sale of the
original shares in the first fund, followed by the purchase of shares in the
second fund.
 
    If a shareholder realizes a loss on the redemption or exchange of a fund's
shares and reinvests in that fund's shares within 30 days before or after the
redemption or exchange, the transactions may be subject to the "wash sale"
rules, resulting in a postponement of the recognition of such loss for tax
purposes.
 
X. UNDERWRITERS
- --------------------------------------------------------------------------------
 
    The Fund's shares are offered to the public on a continuous basis. The
Distributor, as the principal underwriter of the shares, has certain obligations
under the Distribution Agreement concerning the distribution of the shares.
These obligations and the compensation the Distributor receives are described
above in the sections titled "Principal Underwriter" and "Rule 12b-1 Plans."
 
XI. CALCULATION OF PERFORMANCE DATA
- --------------------------------------------------------------------------------
 
    From time to time, the Fund may quote its "total return" in advertisements
and sales literature. These figures are computed separately for Class A, Class
B, Class C and Class D shares. The Fund's "average annual total return"
represents an annualization of the Fund's total return over a particular period
and is computed by finding the annual percentage rate which will result in the
ending redeemable
 
                                       32
<PAGE>
value of a hypothetical $1,000 investment made at the beginning of a one, five
or ten year period, or for the period from the date of commencement of
operations, if shorter than any of the foregoing. The ending redeemable value is
reduced by any contingent deferred sales charge ("CDSC") at the end of the one,
five, ten year or other period. For the purpose of this calculation, it is
assumed that all dividends and distributions are reinvested. The formula for
computing the average annual total return involves a percentage obtained by
dividing the ending redeemable value by the amount of the initial investment
(which in the case of Class A shares is reduced by the Class A initial sales
charge), taking a root of the quotient (where the root is equivalent to the
number of years in the period) and subtracting 1 from the result. The average
annual total returns for Class B for the one year, five year and ten year
periods ended February 28, 1999 were -30.23%, 4.67% and 7.06%, respectively. The
average annual total returns of Class A for the fiscal year ended February 28,
1999 and for the period July 28, 1997 (inception of the Class) through February
28, 1999 were -29.93% and -20.18%, respectively. The average annual total
returns of Class C for the fiscal year ended February 28, 1999 and for the
period July 28, 1997 (inception of the Class) through February 28, 1999 were
- -27.39% and -18.08%, respectively. The average annual total returns of Class D
for the fiscal year ended February 28, 1999 and for the period July 28, 1997
(inception of the Class) through February 28, 1999 were -25.86% and -17.22%,
respectively.
 
    In addition, the Fund may advertise its total return for each Class over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. These calculations may or may not reflect the
imposition of the maximum front-end sales charge for Class A or the deduction of
the CDSC for each of Class B and Class C which, if reflected, would reduce the
performance quoted. For example, the average annual total return of the Fund may
be calculated in the manner described above, but without deduction for any
applicable sales charge. Based on this calculation, the average annual total
returns of Class B for the one year, five year and the ten year periods ended
February 28, 1999, were -26.60%, 4.96% and 7.06%, respectively. Based on this
calculation, the average annual total returns of Class A for the fiscal year
ended February 28, 1999 and for the period July 28, 1997 through February 28,
1999 were -26.04% and -17.42%, respectively, the average annual total returns of
Class C for the fiscal year ended February 28, 1999 and for the period July 28,
1997 through February 28, 1999 were -26.67% and -18.08%, respectively and, the
average annual total returns of Class D for the fiscal year ended February 28,
1999 and for the period July 28, 1997 through February 28, 1999 were -25.86% and
- -17.22%, respectively.
 
    In addition, the Fund may compute its aggregate total return for each Class
for specified periods by determining the aggregate percentage rate which will
result in the ending value of a hypothetical $1,000 investment made at the
beginning of the period. For the purpose of this calculation, it is assumed that
all dividends and distributions are reinvested. The formula for computing
aggregate total return involves a percentage obtained by dividing the ending
value (without reduction for any sales charge) by the initial $1,000 investment
and subtracting 1 from the result. Based on the foregoing calculation, the total
returns for Class B for the one year, five year and the ten year periods ended
February 28, 1999, were -26.60%, 27.36% and 97.80%, respectively. Based on the
foregoing calculation, the total returns of Class A for the fiscal year ended
February 28, 1999 and for the period July 28, 1997 through February 28, 1999
were -26.04% and -26.21%, respectively, the total returns of Class C for the
fiscal year ended February 28, 1999 and for the period July 28, 1997 through
February 28, 1999 were -26.67% and -27.14%, respectively, and the total returns
of Class D for the fiscal year ended February 28, 1999 and for the period July
28, 1997 through February 28, 1999 were -25.86% and -25.92%, respectively.
 
    The Fund may also advertise the growth of hypothetical investments of
$10,000, $50,000 and $100,000 in each Class of shares of the Fund by adding 1 to
the Fund's aggregate total return to date (expressed as a decimal and without
taking into account the effect of any applicable CDSC) and multiplying by
$9,475, $48,000 and $97,000 in the case of Class A (investments of $10,000,
$50,000 and $100,000 adjusted for the initial sales charge) or by $10,000,
$50,000 and $100,000 in the case of each
 
                                       33
<PAGE>
of Class B, Class C and Class D, as the case may be. Investments of $10,000,
$50,000 and $100,000 in each Class at inception of the Class would have grown or
declined to the following amounts at February 28, 1999:
 
<TABLE>
<CAPTION>
                                                                 INVESTMENT AT INCEPTION OF:
                                                 INCEPTION   -----------------------------------
CLASS                                              DATE:      $10,000     $50,000     $100,000
- -----------------------------------------------  ----------  ---------  -----------  -----------
<S>                                              <C>         <C>        <C>          <C>
Class A........................................    07/28/97  $   6,992  $    35,419  $    71,576
Class B........................................    03/30/81     27,759      138,795      227,590
Class C........................................    07/28/97      7,286       36,430       72,860
Class D........................................    07/28/97      7,408       37,040       74,080
</TABLE>
 
    The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by recognized organizations.
 
XII. FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
 
    EXPERTS.  The financial statements of the Fund for the fiscal year ended
February 28, 1999 included in this STATEMENT OF ADDITIONAL INFORMATION and
incorporated by reference in the PROSPECTUS have been so included and
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
 
                                   * * * * *
 
    This STATEMENT OF ADDITIONAL INFORMATION and the PROSPECTUS do not contain
all of the information set forth in the REGISTRATION STATEMENT the Fund has
filed with the SEC. The complete REGISTRATION STATEMENT may be obtained from the
SEC.
 
                                       34
<PAGE>

     MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.

                              PART C  OTHER INFORMATION

Item 23.  Exhibits:


     1.        Form of Amendment to the Articles of Incorporation of the
               Registrant.

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

     4.        Form of Amended Investment Management Agreement between the 
               Registrant and Morgan Stanley Dean Witter Advisors Inc.

     5.(a)     Form of Amended Distribution Agreement between the Registrant and
               Morgan Stanley Dean Witter Distributors Inc. 

     5.(b)     Form of Selected Dealer Agreement. 
 
     6.        Retirement Plan for Non-Interested Trustees or Directors.

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

     8(b).     Form of Amended Services Agreement between Morgan Stanley Dean
               Witter Advisors Inc. and Morgan Stanley Dean Witter Services 
               Company Inc.

     10.       Consent of Independent Accountants.

     14.       Financial Data Schedules.

     15.       Amended Multiple Class Plan pursuant to Rule 18f-3.

- --------------------------------------------------------------------------------
All other exhibits were previously filed via EDGAR and are hereby incorporated
by reference.

Item 24.  PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

          None

Item 25.  INDEMNIFICATION

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

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ( the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange 
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.  In the event that a claim for 


<PAGE>

indemnification against such liabilities ( other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such director,
officer or controlling person in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act, and will be governed by the final adjudication of such
issue.

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

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

Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR

     See "The Fund and Its Management" in the Prospectus regarding the business
of the investment advisor.  The following information is given regarding
officers of Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors").  MSDW
Advisors is a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co.  The
principal address of the Morgan Stanley Dean Witter Funds is Two World Trade
Center, New York, New York 10048.

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

CLOSED-END INVESTMENT COMPANIES
(1)  Morgan Stanley Dean Witter California Insured Municipal Income Trust
(2)  Morgan Stanley Dean Witter California Quality Municipal Securities
(3)  Morgan Stanley Dean Witter Government Income Trust
(4)  Morgan Stanley Dean Witter High Income Advantage Trust
(5)  Morgan Stanley Dean Witter High Income Advantage Trust II
(6)  Morgan Stanley Dean Witter High Income Advantage Trust III
(7)  Morgan Stanley Dean Witter Income Securities Inc.
(8)  Morgan Stanley Dean Witter Insured California Municipal Securities
(9)  Morgan Stanley Dean Witter Insured Municipal Bond Trust
(10) Morgan Stanley Dean Witter Insured Municipal Income Trust
(11) Morgan Stanley Dean Witter Insured Municipal Securities
(12) Morgan Stanley Dean Witter Insured Municipal Trust
(13) Morgan Stanley Dean Witter Municipal Income Opportunities Trust
(14) Morgan Stanley Dean Witter Municipal Income Opportunities Trust II
(15) Morgan Stanley Dean Witter Municipal Income Opportunities Trust III
(16) Morgan Stanley Dean Witter Municipal Income Trust


                                          2
<PAGE>

(17) Morgan Stanley Dean Witter Municipal Income Trust II
(18) Morgan Stanley Dean Witter Municipal Income Trust III
(19) Morgan Stanley Dean Witter Municipal Premium Income Trust
(20) Morgan Stanley Dean Witter New York Quality Municipal Securities
(21) Morgan Stanley Dean Witter Prime Income Trust
(22) Morgan Stanley Dean Witter Quality Municipal Income Trust
(23) Morgan Stanley Dean Witter Quality Municipal Investment Trust
(24) Morgan Stanley Dean Witter Quality Municipal Securities

OPEN-END INVESTMENT COMPANIES
(1)  Active Assets California Tax-Free Trust
(2)  Active Assets Government Securities Trust
(3)  Active Assets Money Trust
(4)  Active Assets Tax-Free Trust
(5)  Morgan Stanley Dean Witter Aggressive Equity Fund
(6)  Morgan Stanley Dean Witter American Value Fund
(7)  Morgan Stanley Dean Witter Balanced Growth Fund
(8)  Morgan Stanley Dean Witter Balanced Income Fund
(9)  Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(10) Morgan Stanley Dean Witter California Tax-Free Income Fund
(11) Morgan Stanley Dean Witter Capital Growth Securities
(12) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS PORTFOLIO"
(13) Morgan Stanley Dean Witter Convertible Securities Trust
(14) Morgan Stanley Dean Witter Developing Growth Securities Trust
(15) Morgan Stanley Dean Witter Diversified Income Trust 
(16) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(17) Morgan Stanley Dean Witter Equity Fund
(18) Morgan Stanley Dean Witter European Growth Fund Inc.
(19) Morgan Stanley Dean Witter Federal Securities Trust
(20) Morgan Stanley Dean Witter Financial Services Trust
(21) Morgan Stanley Dean Witter Fund of Funds
(22) Morgan Stanley Dean Witter Global Dividend Growth Securities
(23) Morgan Stanley Dean Witter Global Utilities Fund
(24) Morgan Stanley Dean Witter Growth Fund
(25) Morgan Stanley Dean Witter Hawaii Municipal Trust
(26) Morgan Stanley Dean Witter Health Sciences Trust
(27) Morgan Stanley Dean Witter High Yield Securities Inc.
(28) Morgan Stanley Dean Witter Income Builder Fund
(29) Morgan Stanley Dean Witter Information Fund
(30) Morgan Stanley Dean Witter Intermediate Income Securities
(31) Morgan Stanley Dean Witter International SmallCap Fund
(32) Morgan Stanley Dean Witter Japan Fund
(33) Morgan Stanley Dean Witter Limited Term Municipal Trust
(34) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(35) Morgan Stanley Dean Witter Market Leader Trust
(36) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(37) Morgan Stanley Dean Witter Mid-Cap Growth Fund
(38) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(39) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(40) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(41) Morgan Stanley Dean Witter New York Tax-Free Income Fund


                                          3
<PAGE>

(42) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(43) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
(44) Morgan Stanley Dean Witter Real Estate Fund
(45) Morgan Stanley Dean Witter S&P 500 Index Fund
(46) Morgan Stanley Dean Witter S&P 500 Select Fund
(47) Morgan Stanley Dean Witter Select Dimensions Investment Series
(48) Morgan Stanley Dean Witter Select Municipal Reinvestment Fund
(49) Morgan Stanley Dean Witter Short-Term Bond Fund
(50) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(51) Morgan Stanley Dean Witter Special Value Fund
(52) Morgan Stanley Dean Witter Strategist Fund 
(53) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(54) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(55) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(56) Morgan Stanley Dean Witter U.S. Government Securities Trust
(57) Morgan Stanley Dean Witter Utilities Fund
(58) Morgan Stanley Dean Witter Value-Added Market Series
(59) Morgan Stanley Dean Witter Value Fund
(60) Morgan Stanley Dean Witter Variable Investment Series
(61) Morgan Stanley Dean Witter World Wide Income Trust

     
The term "TCW/DW Funds" refers to the following registered investment companies:

OPEN-END INVESTMENT COMPANIES
(1)  TCW/DW Emerging Markets Opportunities Trust
(2)  TCW/DW Global Telecom Trust
(3)  TCW/DW Income and Growth Fund
(4)  TCW/DW Latin American Growth Fund
(5)  TCW/DW Mid-Cap Equity Trust
(6)  TCW/DW North American Government Income Trust
(7)  TCW/DW Small Cap Growth Fund
(8)  TCW/DW Total Return Trust

CLOSED-END INVESTMENT COMPANIES 
(1)  TCW/DW Term Trust 2000
(2)  TCW/DW Term Trust 2002 
(3)  TCW/DW Term Trust 2003


                                          4
<PAGE>

<TABLE>
<CAPTION>

NAME AND POSITION WITH        OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION 
MORGAN STANLEY DEAN           OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS 
WITTER ADVISORS INC.          AND NATURE OF CONNECTION                     
- -------------------------     ------------------------------------------------
<S>                           <C>
Mitchell M. Merin             President and Chief Operating Officer of Asset 
President, Chief              Management of Morgan Stanley Dean Witter & Co. 
Executive Officer and         ("MSDW); Chairman, Chief Executive Officer and 
Director                      Director of Morgan Stanley Dean Witter Distributors Inc. 
                              ("MSDW Distributors") and Morgan Stanley Dean Witter Trust 
                              FSB ("MSDW Trust"); President, Chief Executive Officer and
                              Director of Morgan Stanley Dean Witter Services Company 
                              Inc. ("MSDW Services"); Vice President of the Morgan 
                              Stanley Dean Witter Funds, TCW/DW Funds and Discover Brokerage
                              Index Series; Executive Vice President and Director of Dean 
                              Witter Reynolds Inc. ("DWR"); Director of various MSDW subsidiaries.
     
Joseph J. McAlinden           Vice President of the Morgan Stanley Dean Witter 
Executive Vice President      Funds and Discover Brokerage Index Series; 
and Chief Investment          Director of MSDW Trust.
Officer   

Ronald E. Robison             Executive Vice President, Chief Administrative Officer and
Executive Vice President,     Director of MSDW Services; Vice President of the Morgan 
Chief Administrative          Stanley Dean Witter Funds, TCW/DW Funds and Discover 
Officer and Director          Brokerage Index Series.

Edward C. Oelsner, III
Executive Vice President

John Van Heuvelen             President of MSDW Trust
Executive Vice President

Barry Fink                    Assistant Secretary of DWR; Senior Vice President,
Senior Vice President,        Secretary, General Counsel and Director of MSDW 
Secretary, General            Services; Senior Vice President, Assistant Secretary and 
Counsel and Director          Assistant General Counsel of MSDW Distributors; Vice 
                              President, Secretary and General Counsel of the Morgan Stanley 
                              Dean Witter Funds, TCW/DW Funds and Discover Brokerage Index Series.
                         
Peter M. Avelar               Vice President of various Morgan Stanley Dean Witter 
Senior Vice President         Funds.

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

Douglas Brown  
Senior Vice President


                                       5
<PAGE>

NAME AND POSITION WITH        OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION 
MORGAN STANLEY DEAN           OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS 
WITTER ADVISORS INC.          AND NATURE OF CONNECTION 
- -------------------------     ------------------------------------------------
Rosalie Clough
Senior Vice President
and Director of Marketing

Richard Felegy
Senior Vice President

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

Robert S. Giambrone           Senior Vice President of MSDW Services, MSDW 
Senior Vice President         Distributors and MSDW Trust and Director of MSDW Trust; 
                              Vice President of the Morgan Stanley Dean Witter Funds, 
                              TCW/DW Funds and Discover Brokerage Index Series. 

Rajesh K. Gupta               Vice President of various Morgan Stanley Dean Witter 
Senior Vice President         Funds.

Kenton J. Hinchliffe          Vice President of various Morgan Stanley Dean Witter 
Senior Vice President         Funds and Discover Brokerage Index Series.

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

Margaret Iannuzzi
Senior Vice President

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

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

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

Anita H. Kolleeny             Vice President of various Morgan Stanley Dean Witter 
Senior Vice President         Funds.    

Jonathan R. Page              Vice President of various Morgan Stanley Dean Witter 
Senior Vice President         Funds.

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

Guy G. Rutherfurd, Jr.        Vice President of various Morgan Stanley Dean Witter
Senior Vice President         Funds.


                                       6
<PAGE>

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

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

James Solloway
Senior Vice President

Jayne M. Stevlingson          Vice President of various Morgan Stanley Dean Witter 
Senior Vice President         Funds.

Paul D. Vance                 Vice President of various Morgan Stanley Dean Witter 
Senior Vice President         Funds.

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

James F. Willison             Vice President of various Morgan Stanley Dean Witter 
Senior Vice President         Funds.

Frank Bruttomesso             First Vice President and Assistant Secretary of MSDW 
First Vice President and      Services; Assistant Secretary of MSDW Distributors, the 
Assistant Secretary           Morgan Stanley Dean Witter Funds, TCW/DW Funds and 
                              Discover Brokerage Index Series.

Toby Burroughs
First Vice President

Thomas F. Caloia              First Vice President and Assistant Treasurer of
First Vice President          MSDW Services; Assistant Treasurer of MSDW 
and Assistant                 Distributors; Treasurer and Chief Financial and Accounting 
Treasurer                     Officer of the Morgan Stanley Dean Witter Funds,
                              TCW/DW Funds and Discover Brokerage Index Series..

Thomas Chronert     
First Vice President

Marilyn K. Cranney            Assistant Secretary of DWR; First Vice President and
First Vice President          Assistant Secretary of MSDW Services; Assistant 
and Assistant Secretary       Secretary of MSDW Distributors, the Morgan Stanley Dean
                              Witter Funds, TCW/DW Funds and Discover Brokerage Index Series.

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


                                       7
<PAGE>

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

Peter W. Gurman
First Vice President

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

David Johnson
First Vice President

Stanley Kapica
First Vice President

Lou Anne D. McInnis           First Vice President and Assistant Secretary of MSDW 
First Vice President and      Services; Assistant Secretary of MSDW Distributors, the 
Assistant Secretary           Morgan Stanley Dean Witter Funds, TCW/DW Funds and 
                              Discover Brokerage Index Series.

Carsten Otto                  First Vice President and Assistant Secretary of MSDW
First Vice President          Services; Assistant Secretary of MSDW Distributors, the 
and Assistant Secretary       Morgan Stanley Dean Witter Funds, TCW/DW Funds and Discover 
                              Brokerage Index Series.

Ruth Rossi                    First Vice President and Assistant Secretary of MSDW 
First Vice President and      Services; Assistant Secretary of MSDW Distributors the 
Assistant Secretary           Morgan Stanley Dean Witter Funds, TCW/DW Funds and 
                              Discover Brokerage Index Series.

James P. Wallin
First Vice President
     
Dale Albright
Vice President

Joan G. Allman
Vice President

Andrew Arbenz
Vice President

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

Armon Bar-Tur
Vice President


                                       8
<PAGE>

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

Raymond Basile
Vice President

Nancy Belza
Vice President

Maurice Bendrihem
Vice President and
Assistant Controller

Dale Boettcher
Vice President

Ronald Caldwell
Vice President

Joseph Cardwell
Vice President

Liam Carroll
Vice President

Philip Casparius
Vice President

Aaron Clark
Vice President

William Connerly
Vice President

David Dineen                  
Vice President                

Sheila Finnerty
Vice President

Jeffrey D. Geffen
Vice President

Sandra Gelpieryn
Vice President

Michael Geringer
Vice President


                                       9
<PAGE>

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

Gail Gerrity
Vice President

Ellen Gold
Vice President

Stephen Greenhut
Vice President

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

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

David T. Hoffman
Vice President

Christopher Jones
Vice President

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

Carol Espejo-Kane
Vice President

Nancy Kennedy
Vice President

Doug Ketterer
Vice President

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

Kimberly LaHart
Vice President

Thomas Lawlor
Vice President

Todd Lebo                     Vice President and Assistant Secretary of MSDW 
Vice President and            Services; Assistant Secretary of MSDW Distributors, the 
Assistant Secretary           Morgan Stanley Dean Witter Funds, TCW/DW Funds and 
                              Discover Brokerage Index Series.

                                       10
<PAGE>

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

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

Nancy Login
Vice President

Sharon Loguercio
Vice President

Steven MacNamara
Vice President

Catherine Maniscalco          Vice President of Morgan Stanley Dean Witter Natural 
Vice President                Resource Development Securities Inc.

Albert McGarity
Vice President

Teresa McRoberts              Vice President of Morgan Stanley Dean Witter S&P 500 
Vice President                Select Fund.

Mark Mitchell
Vice President

Julie Morrone  
Vice President

Mary Beth Mueller
Vice President

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

James Nash
Vice President

Richard Norris
Vice President

George Paoletti               Vice President of various Morgan Stanley Dean Witter 
Vice President                Funds.

Anne Pickrell                 Vice President of various  Morgan Stanley Dean Witter 
Vice President                Funds.

Dawn Rorke
Vice President

                                       11
<PAGE>

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

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

Hugh Rose
Vice President

Robert Rossetti               Vice President of various Morgan Stanley Dean Witter 
Vice President                Funds.

Carl F. Sadler
Vice President

Deborah Santaniello
Vice President

Patrice Saunders
Vice President

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

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

Robert Stearns
Vice President

Naomi Stein
Vice President

Michael Strayhorn
Vice President

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

Marybeth Swisher
Vice President

Stuart Taylor
Vice President

Robert Vanden Assem
Vice President

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


                                       12
<PAGE>

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

Michael Thayer
Vice President

John Wong
Vice President

</TABLE>


Item 27.    PRINCIPAL UNDERWRITERS

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

(1)  Active Assets California Tax-Free Trust
(2)  Active Assets Government Securities Trust
(3)  Active Assets Money Trust
(4)  Active Assets Tax-Free Trust
(5)  Morgan Stanley Dean Witter Aggressive Equity Fund
(6)  Morgan Stanley Dean Witter American Value Fund
(7)  Morgan Stanley Dean Witter Balanced Growth Fund
(8)  Morgan Stanley Dean Witter Balanced Income Fund
(9)  Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(10) Morgan Stanley Dean Witter California Tax-Free Income Fund
(11) Morgan Stanley Dean Witter Capital Growth Securities
(12) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS PORTFOLIO"
(13) Morgan Stanley Dean Witter Convertible Securities Trust
(14) Morgan Stanley Dean Witter Developing Growth Securities Trust
(15) Morgan Stanley Dean Witter Diversified Income Trust 
(16) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(17) Morgan Stanley Dean Witter Equity Fund
(18) Morgan Stanley Dean Witter European Growth Fund Inc.
(19) Morgan Stanley Dean Witter Federal Securities Trust
(20) Morgan Stanley Dean Witter Financial Services Trust
(21) Morgan Stanley Dean Witter Fund of Funds
(22) Morgan Stanley Dean Witter Global Dividend Growth Securities
(23) Morgan Stanley Dean Witter Global Utilities Fund
(24) Morgan Stanley Dean Witter Growth Fund
(25) Morgan Stanley Dean Witter Hawaii Municipal Trust
(26) Morgan Stanley Dean Witter Health Sciences Trust
(27) Morgan Stanley Dean Witter High Yield Securities Inc.
(28) Morgan Stanley Dean Witter Income Builder Fund
(29) Morgan Stanley Dean Witter Information Fund
(30) Morgan Stanley Dean Witter Intermediate Income Securities
(31) Morgan Stanley Dean Witter International SmallCap Fund
(32) Morgan Stanley Dean Witter Japan Fund
(33) Morgan Stanley Dean Witter Limited Term Municipal Trust
(34) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(35) Morgan Stanley Dean Witter Market Leader Trust


                                          13
<PAGE>

(36) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(37) Morgan Stanley Dean Witter Mid-Cap Growth Fund
(38) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(39) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(40) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(41) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(42) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(43) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
(44) Morgan Stanley Dean Witter Prime Income Trust
(45) Morgan Stanley Dean Witter Real Estate Fund
(46) Morgan Stanley Dean Witter S&P 500 Index Fund
(47) Morgan Stanley Dean Witter S&P 500 Select Fund
(48) Morgan Stanley Dean Witter Short-Term Bond Fund
(49) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(50) Morgan Stanley Dean Witter Special Value Fund
(51) Morgan Stanley Dean Witter Strategist Fund 
(52) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(53) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(54) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(55) Morgan Stanley Dean Witter U.S. Government Securities Trust
(56) Morgan Stanley Dean Witter Utilities Fund
(57) Morgan Stanley Dean Witter Value-Added Market Series
(58) Morgan Stanley Dean Witter Value Fund
(59) Morgan Stanley Dean Witter Variable Investment Series
(60) Morgan Stanley Dean Witter World Wide Income Trust
(1)  TCW/DW Emerging Markets Opportunities Trust 
(2)  TCW/DW Global Telecom Trust
(3)  TCW/DW Income and Growth
(4)  TCW/DW Latin American Growth Fund
(5)  TCW/DW Mid-Cap Equity Trust
(6)  TCW/DW North American Government Income Trust
(7)  TCW/DW Small Cap Growth Fund
(8)  TCW/DW Total Return Trust 

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

NAME                     POSITIONS AND OFFICE WITH MSDW DISTRIBUTORS 

Christine A. Edwards     Executive Vice President, Secretary, Director and Chief
                         Legal Officer. 

Michael T. Gregg         Vice President and Assistant Secretary.

James F. Higgins         Director

Fredrick K. Kubler       Senior Vice President, Assistant Secretary and Chief 
                         Compliance Officer.


                                          14
<PAGE>

Philip J. Purcell        Director

John Schaeffer           Director

Charles Vadala           Senior Vice President and Financial Principal.
     
Item 28.  LOCATION OF ACCOUNTS AND RECORDS
     
     All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained by the Investment Manager at its offices, except records relating to
holders of shares issued by the Registrant, which are maintained by the
Registrant's Transfer Agent, at its place of business as shown in the
prospectus.
     
Item 29.  MANAGEMENT SERVICES
     
     Registrant is not a party to any such management-related service contract.

Item 30.  UNDERTAKINGS
     
     None.



                                          15
<PAGE>

                                      SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York on the 29th day of April, 1999.

                                   MORGAN STANLEY DEAN WITTER NATURAL
                                   RESOURCE DEVELOPMENT SECURITIES INC. 


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

     Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 25 has been signed below by the following persons
in the capacities and on the dates indicated.

     Signatures               Title                                   Date

(1) Principal Executive Officer    President, Chief 
                                   Executive Officer,
                                   Director and Chairman

By  /s/ Charles A. Fiumefreddo                                      04/29/99
   -----------------------------
    Charles A. Fiumefreddo

(2) Principal Financial Officer    Treasurer and Principal
                                   Accounting Officer
                   
By /s/ Thomas F. Caloia                                             04/29/99
  ------------------------------
    Thomas F. Caloia

(3) Majority of the Directors 

    Charles A. Fiumefreddo (Chairman)
    Philip J. Purcell

By   /s/ Barry Fink                                                 04/29/99  
    ----------------------------
     Barry Fink
     Attorney-in-Fact

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


By   /s/ David M. Butowsky                                          04/29/99
    -----------------------------
     David M. Butowsky 
     Attorney-in-Fact 




<PAGE>

    MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.

                              Exhibits Index


     1.        Form of Amendment to the Articles of Incorporation of the
               Registrant.

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

     4.        Form of Amended Investment Management Agreement between the
               Registrant and Morgan Stanley Dean Witter Advisors Inc.

     5.(a)     Form of Amended Distribution Agreement between the Registrant and
               Morgan Stanley Dean Witter Distributors Inc. 

     5.(b)     Form of Selected Dealer Agreement. 
 
     6.        Retirement Plan for Non-Interested Trustees or Directors.

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

     8.(b)     Form of Amended Services Agreement between Morgan Stanley Dean
               Witter Advisors Inc. and Morgan Stanley Dean Witter Services
               Company Inc.

     10.       Consent of Independent Accountants.

     14.       Financial Data Schedules.

     15.       Amended Multiple Class Plan pursuant to Rule 18f-3.



<PAGE>

                             DEAN WITTER NATURAL RESOURCE
                             DEVELOPMENT SECURITIES INC.


                                ARTICLES OF AMENDMENT
                             CHANGING NAME OF CORPORATION
                        PURSUANT TO MGCL SECTION 2-605 (a)(4)



     Dean Witter Natural Resource Development Securities Inc., a Maryland
corporation, having its principal office in Baltimore City, Maryland
(hereinafter called the "Corporation"), hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
     
     FIRST:    The Charter of the Corporation is hereby amended by striking out
ARTICLE II of the Articles of Incorporation and inserting in lieu thereof the
following:

                                     "ARTICLE II
     The name of the Corporation is Morgan Stanley Dean Witter Natural Resource
Development Securities Inc."

     SECOND:   The foregoing amendment to the Charter of the Corporation has
been approved by the Board of Directors and is limited to a change expressly
permitted by Section 2-605 of the Maryland General Corporation Law.

     THIRD:    The Corporation is registered as an open-end management
investment company under the Investment Company Act of 1940.

     FOURTH:   These Articles of Amendment shall become effective at 9:00 a.m.,
Eastern Time, on June 22, 1998.


<PAGE>

     IN WITNESS WHEROF, the Corporation has caused these presents to be signed
in its name and on its behalf by its President and attested by its Secretary on
this 19th day of June 1998.
     
     
                                             DEAN WITTER NATURAL RESOURCE
                                             DEVELOPMENT SECURITIES INC.
     



     
                                             By:  /s/ Charles A. Fiumefreddo 
                                                  --------------------------
                                             Name:  Charles A. Fiumefreddo
                                             Title:  President



ATTESTED:



/s/ Barry Fink           
- --------------------
Name:  Barry Fink
Title: Secretary


     THE UNDERSIGNED, the President of Dean Witter Natural Resource Development
Securities Inc. who executed on behalf of the Corporation the foregoing Articles
of Amendment of which this certificate is made a part, hereby acknowledges in
the name and on behalf of the Corporation the foregoing Articles of Amendment to
be the corporate act of the Corporation and hereby certifies that to the best of
his knowledge, information and belief the matters and facts set forth therein
with respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.




                                                /s/ Charles A. Fiumefreddo  
                                             ------------------------------
                                             Name:  Charles A. Fiumefreddo
                                             Title:  President




                                          2


<PAGE>

                                      BY-LAWS 
                                          
                                        OF 
                                          
                    MORGAN STANLEY DEAN WITTER NATURAL RESOURCE 
                            DEVELOPMENT SECURITIES INC. 
                      AMENDED AND RESTATED AS OF MAY 1, 1999 
                                          
                                     ARTICLE I 
                                      OFFICES 

   SECTION 1.1. PRINCIPAL OFFICE. The principal office of the Corporation in 
the State of Maryland shall be in the City of Baltimore. 

   SECTION 1.2. OTHER OFFICES. In addition to its principal office in the 
State of Maryland, the Corporation may have an office or offices in the City 
of New York, State of New York, and at such other places as the Board of 
Directors may from time to time designate or the business of the Corporation 
may require. 

                                    ARTICLE II 
                              STOCKHOLDERS' MEETINGS 

   SECTION 2.1. PLACE OF MEETINGS. Meetings of stockholders shall be held at 
such place, within or without the State of Maryland, as may be designated 
from time to time by the Board of Directors. 

   SECTION 2.2. ANNUAL MEETINGS. An annual meeting of stockholders, when 
required, at which the stockholders shall elect a Board of Directors and 
transact such other business as may properly come before the meeting, shall 
be held in June of each year, the precise date in June to be fixed by the 
Board of Directors. Notwithstanding anything to the contrary contained 
herein, the Corporation shall not be required to hold an annual meeting in 
any year in which none of the following is required to be acted upon by 
stockholders under the Investment Company Act of 1940, as amended: 

     (1) election of directors; 

     (2) approval of an investment advisory or management agreement; 

     (3) ratification of the selection of independent accountants; and 

     (4) approval of a distribution plan or agreement; 

provided, however, that a special meeting of stockholders shall promptly be 
called when requested in writing by the recordholders of not less than 10% of 
the Corporation's shares.

   SECTION 2.3. SPECIAL MEETINGS. Special meetings of stockholders of the 
Corporation shall be held whenever called by the Board of Directors or the 
President of the Corporation. Special meetings of stockholders shall also be 
called by the Secretary upon the written request of the holders of shares 
entitled to vote not less than twenty-five percent (25%) of all the votes 
entitled to be cast at such meeting. Such request shall state the purpose or 
purposes of such meeting and the matters proposed to be acted on thereat. The 
Secretary shall inform such stockholders of the reasonable estimated cost of 
preparing and mailing such notice of the meeting, and upon payment to the 
Corporation of such costs, the Secretary shall give notice stating the 
purpose or purposes of the meeting to all entitled to a vote at such meeting. 
No special meeting need be called upon the request of the holders of shares 
entitled to cast less than a majority of all votes entitled to be cast at 
such meeting, to consider any matter which is substantially the same as a 
matter voted upon at any special meeting of stockholders held during the 
preceding twelve months. 

   SECTION 2.4. NOTICE OF MEETINGS. Written or printed notice of every 
stockholders' meeting stating the place, date and time, and in the case of a 
special meeting the purpose or purposes thereof, shall be 

<PAGE>

given by the Secretary not less than ten (10) nor more than ninety (90) days 
before such meeting to each stockholder entitled to vote at such meeting, 
either by mail or by presenting it to him personally, or by leaving it at his 
residence or usual place of business. If mailed, such notice shall be deemed 
to be given when deposited in the United States mail, postage prepaid, 
directed to the stockholder at his address as it appears on the records of 
the Corporation. 

   SECTION 2.5. QUORUM AND ADJOURNMENT OF MEETINGS. Except as otherwise 
provided by law, by the Charter of the Corporation, or by these By-Laws, at 
all meetings of stockholders the holders of a majority of the shares issued 
and outstanding and entitled to vote thereat, present in person or 
represented by proxy, shall be requisite and shall constitute a quorum for 
the transaction of business. In the absence of a quorum, the stockholders 
present or represented by proxy and entitled to vote thereat shall have power 
to adjourn the meeting from time to time without notice other than 
announcement at the meeting, until a quorum shall be present. At any 
adjourned meeting at which a quorum shall be present, any business may be 
transacted if the meeting had been held as originally called. 

   SECTION 2.6. VOTING RIGHTS, PROXIES. At each meeting of stockholders, each 
holder of record of stock entitled to vote thereat shall be entitled to one 
vote in person or by proxy for each share of stock of the Corporation and for 
the fractional portion of one vote for each fractional share entitled to vote 
so registered in his or her name on the records of the Corporation on the 
date fixed as the record date for the determination of stockholders entitled 
to vote at such meeting. Without limiting the manner in which a stockholder 
may authorize another person or persons to act for such shareholder as proxy 
pursuant hereto, the following shall constitute a valid means by which a 
shareholder may grant such authority: 

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

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

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

   SECTION 2.7. VOTE REQUIRED. Except as otherwise provided by law, by the 
Charter of the Corporation, or by these By-Laws, at each meeting of 
stockholders at which a quorum is present, all matters shall be decided by a 
majority of the votes cast by the stockholders present in person or 
represented by proxy and entitled to vote with respect to any such matter. 

   SECTION 2.8. ACTION BY STOCKHOLDERS WITHOUT MEETING. Except as otherwise 
provided by law, the provisions of these By-Laws relating to notices and 
meetings to the contrary notwithstanding, any action 

                                         2
<PAGE>

required or permitted to be taken at any meeting of stockholders may be taken 
without a meeting if a consent in writing setting forth the action shall be 
signed by all the stockholders entitled to vote upon the action and such 
consent shall be filed with the records of the Corporation. 

   SECTION 2.9. PRESENCE AT MEETINGS. Presence at meetings of stockholders 
requires physical attendance by the stockholder or his or her proxy at the 
meeting site and does not encompass attendance by telephonic or other 
electronic means. 

                                    ARTICLE III 
                                     DIRECTORS 

   SECTION 3.1. NUMBER AND TERM. The Board of Directors shall consist of not 
less than three (3) and not more than fifteen (15) directors, the number of 
directors to be fixed from time to time within the above-specified limits by 
the affirmative vote of a majority of the whole Board of Directors. At the 
first annual meeting of stockholders and at each meeting thereafter called 
for the purpose of electing directors, the stockholders shall elect directors 
to hold office until their successors are elected and qualify. Directors need 
not be stockholders of the Corporation. 

   SECTION 3.2. POWERS. The business of the Corporation shall be managed by 
the Board of Directors which may exercise all powers of the Corporation and 
do all lawful acts and things which are not by law or by the Charter of the 
Corporation, or by these By-Laws, directed or required to be exercised or 
done exclusively by the stockholders. 

   SECTION 3.3. ORGANIZATIONAL MEETINGS. The first meeting of each newly 
elected Board of Directors for the purposes of organization and the election 
of officers and otherwise shall be held at such time and place as shall be 
specified in a notice given as hereinafter provided for special meetings of 
the Board of Directors, or as shall be specified in a written waiver signed 
by all directors. 

   SECTION 3.4. REGULAR MEETINGS. Regular meetings of the Board of Directors 
may be held at such time and place as shall be determined from time to time 
by the Board of Directors without further notice. 

   SECTION 3.5. SPECIAL MEETINGS. Special meetings of the Board of Directors 
may be called at any time by the President and shall be called by such 
President or the Secretary upon the written request of any two (2) directors. 

   SECTION 3.6. NOTICE OF SPECIAL MEETINGS. Written notice of special 
meetings of the Board of Directors, stating the place, date and time thereof, 
shall be given not less than two (2) days before such meeting to each 
director, personally, by telegram, by mail, or by leaving such notice at his 
place of residence or usual place of business. If mailed, such notice shall 
be deemed to be given when deposited in the United States mail, postage 
prepaid, directed to the director at his address as it appears on the records 
of the Corporation. 

   SECTION 3.7. TELEPHONE MEETINGS. Any member or members of the Board of 
Directors or of any committee designated by the Board, may participate in a 
meeting of the Board, or any such committee, as the case may be, by means of 
a conference telephone or similar communications equipment if all persons 
participating in the meeting can hear each other at the same time. 
Participation in a meeting by these means constitutes presence in person at 
the meeting. This Section 3.7 shall not be applicable to meetings held for 
the purpose of voting in respect of approval of contracts or agreements 
whereby a person undertakes to serve or act as investment adviser of, or 
principal underwriter for, the Corporation. 

   SECTION 3.8. QUORUM, VOTING AND ADJOURNMENT OF MEETINGS. At all meetings 
of the Board of Directors, a majority of the whole Board shall be requisite 
to and shall constitute a quorum for the transaction of business. If a quorum 
is present, the affirmative vote of a majority of the directors present shall 
be the act of the Board of Directors, unless the concurrence of a greater 
proportion is expressly required for such action by law, the Charter of the 
Corporation or these By-Laws. If at any meeting of the Board there be less 
than a quorum present, the directors present thereat may adjourn the meeting 
from time to time, without notice other than announcement at the meeting 
until a quorum shall have been obtained. 

                                         3
<PAGE>

   SECTION 3.9. REMOVAL. Any one or more of the directors may be removed, 
either with or without cause, at any time, by the affirmative vote of the 
stockholders holding a majority of the outstanding shares entitled to vote 
for the election of directors. (For purposes of determining the circumstances 
and procedures under which such removal of directors may take place, the 
provisions of Section 16(c) of the Investment Company Act of 1940 shall be 
applicable to the same extent as if the Corporation were subject to the 
provisions of that Section.) The successor or successors of any director or 
directors so removed may be elected by the stockholders entitled to vote 
thereon at the same meeting to fill any resulting vacancies for the unexpired 
term of removed directors. Except as provided by law, pending such an 
election (or in the absence of such an election), the successor or successors 
of any director or directors so removed may be chosen by the Board of 
Directors. 

   SECTION 3.10. VACANCIES. Except as otherwise provided by law, any vacancy 
occurring in the Board of Directors and newly created directorships resulting 
from an increase in the authorized number of directors may be filled by the 
vote of a majority of the directors then in office or, if only one director 
shall then be in office, by such director. A director elected by the Board of 
Directors to fill a vacancy shall be elected to hold office until the next 
annual meeting of stockholders or until his successor is elected and 
qualifies. 

   SECTION 3.11. ACTION BY DIRECTORS WITHOUT MEETING. The provisions of these 
By-Laws covering notices and meetings to the contrary notwithstanding, and 
except as required by law, any action required or permitted to be taken at 
any meeting of the Board of Directors may be taken without a meeting if a 
consent in writing setting forth the action shall be signed by all of the 
directors entitled to vote upon the action and such written consent is filed 
with the minutes of proceedings of the Board of Directors. 

   SECTION 3.12. EXPENSES AND FEES. Each director may be allowed expenses, if 
any, for attendance at each regular or special meeting of the Board of 
Directors and each director who is not an officer or employee of the 
Corporation or of its investment manager or underwriter or of any corporate 
affiliate of any of said persons shall receive for services rendered as a 
director of the Corporation such compensation as may be fixed by the Board of 
Directors. Nothing herein contained shall be construed to preclude any 
director from serving the Corporation in any other capacity and receiving 
compensation therefor. 

   SECTION 3.13. EXECUTION OF INSTRUMENTS AND DOCUMENTS AND SIGNING OF CHECKS 
AND OTHER OBLIGATIONS AND TRANSFERS. All instruments, documents and other 
papers shall be executed in the name and on behalf of the Corporation and all 
checks, notes, drafts and other obligations for the payment of money by the 
Corporation shall be signed, and all transfer of securities standing in the 
name of the Corporation shall be executed, by the President, any Vice 
President or the Treasurer or by any one or more officers or agents of the 
Corporation as shall be designated for that purpose by vote of the Board of 
Directors; notwithstanding the above, nothing in this Section 3.13 shall be 
deemed to preclude the electronic authorization, by designated persons, of 
the Corporation's Custodian to transfer assets of the Corporation. 

   SECTION 3.14. CONTRACTS. Except as otherwise provided by law or by the 
Charter of the Corporation, no contract or transaction between the 
Corporation and any partnership or corporation, and no act of the 
Corporation, shall in any way be affected or invalidated by the fact that any 
officer or director of the Corporation is pecuniarily or otherwise interested 
therein or is a member, officer or director of such interest shall be known 
to the Board of Directors of the Corporation. Specifically, but without 
limitation of the foregoing, the Corporation may enter into one or more 
contracts appointing Morgan Stanley Dean Witter Advisors Inc. investment 
manager of the Corporation, and may otherwise do business with Morgan Stanley 
Dean Witter Advisors Inc., notwithstanding the fact that one or more of the 
directors of the Corporation and some or all of its officers are, have been 
or may become directors, officers, members, employees, or stockholders of 
Morgan Stanley Dean Witter Advisors Inc.; and in the absence of fraud, the 
Corporation and Morgan Stanley Dean Witter Advisors Inc. may deal freely with 
each other, and neither such contract appointing Morgan Stanley Dean Witter 
Advisors Inc. investment manager to the Corporation nor any other contract or 
transaction between the Corporation and Morgan Stanley Dean Witter Advisors 
Inc. shall be invalidated or in any wise affected thereby, nor shall any 
director or officer of the Corporation by reason thereof be liable to the 
Corporation or to any stockholder 

                                         4
<PAGE>

or creditor of the Corporation or to any other person for any loss incurred 
under or by reason of any such contract or transaction. For purposes of this 
paragraph, any reference to "Morgan Stanley Dean Witter Advisors Inc." shall 
be deemed to include said company and any parent, subsidiary or affiliate of 
said company and any successor (by merger, consolidation or otherwise) to 
said company or any such parent, subsidiary or affiliate. 

   SECTION 3.15. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND 
AGENTS. (a) The Corporation shall indemnify any person who was or is a party 
or is threatened to be made a party to any threatened, pending, or completed 
action, suit, or proceeding, whether civil, criminal, administrative, or 
investigative (other than an action by or in the right of the Corporation) by 
reason of the fact that he is or was a director, officer, employee or agent 
of the Corporation. The indemnification shall be against expenses, including 
attorneys' fees, judgments, fines, and amounts paid in settlement, actually 
and reasonably incurred by him in connection with the action, suit, or 
proceeding, if he acted in good faith and in a manner he reasonably believed 
to be in or not opposed to the best interests of the Corporation, and, with 
respect to any criminal action or proceeding, had no reasonable cause to 
believe his conduct was unlawful. Directors acting in their official capacity 
must act in good faith and in a manner reasonably believed to be in the best 
interest of the Corporation. The termination of any action, suit, or 
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo 
contendere or its equivalent shall not, of itself, create a presumption that 
the person did not act in good faith and in a manner which he reasonably 
believed to be in or not opposed to the best interests of the Corporation, 
and, with respect to any criminal action or proceeding, had reasonable cause 
to believe that his conduct was unlawful. A director may not be indemnified 
in respect of any proceeding charging improper personal benefit to the 
director, whether or not involving action in the director's official 
capacity, in which the director was adjudged to be liable on the basis that 
personal benefit was improperly received. 

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

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

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

      (2) The determination shall be made: 

        (i) By the Board of Directors, by a majority vote of a quorum which 
     consists of directors who were not parties to the action ("non-party 
     directors"), suit or proceeding; or if a quorum of non-party directors 
     is not obtainable by a majority vote of a committee of at least two 
     non-party directors; or 

                                         5
<PAGE>

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

      (iii) By the stockholders. 

      (3) Authorization of indemnification and determination as to 
reasonableness of expenses shall be made in the same manner as the 
determination that indemnification is permissible. However, if the 
determination that indemnification is permissible is made by independent 
legal counsel, authorization of indemnification and determination as to 
reasonableness of expenses shall be made by a committee of non-party 
directors or by the non-party quorum of the Board, or if neither exists, by 
the full Board. 

      (4) Notwithstanding the provisions of paragraphs (1) and (2) of this 
subsection (d), no person shall be entitled to indemnification for any 
liability, whether or not there is an adjudication of liability, arising by 
reason of willful misfeasance, bad faith, gross negligence, or reckless 
disregard of duties as described in Sections 17(h) and (i) of the Investment 
Company Act of 1940, as amended ("disabling conduct"). A person shall be 
deemed not liable by reason of disabling conduct if, either: 

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

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

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

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

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

    (1) authorized in the specific case by the Board of Directors; and 

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

    (3) either 

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

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

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

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

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

   (f) The indemnification provided by this Section shall not be deemed 
exclusive of any other rights to which a person may be entitled under any 
by-law, agreement, vote of stockholders or disinterested directors or 
otherwise, both as to action in his official capacity and as to action in 
another capacity while holding the office, and shall continue as to a person 
who has ceased to be a director, officer, employee, or agent and inure to the 
benefit of the heirs, executors and administrators of such person. 

   (g) The Corporation may purchase and maintain insurance on behalf of any 
person who is or was a director, officer, employee, or agent of the 
Corporation, against any liability asserted against him and 

                                         6
<PAGE>

incurred by him in any such capacity, or arising out of his status as such. 
However, in no event will the Corporation pay for that portion of the 
premium, if any, for insurance to indemnify any officer or director against 
liability for any act for which the Corporation itself is not permitted to 
indemnify him. 

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

   (i) Any indemnification of, or advance of expenses to, a director in 
accordance with this Section, if arising out of a proceeding by or in the 
right of the Corporation, shall be reported in writing to the shareholders 
with the notice of the next stockholders' meeting or prior to the meeting. 

                                    ARTICLE IV 
                                    COMMITTEES 

   SECTION 4.1. EXECUTIVE AND OTHER COMMITTEES.  The Board of Directors, by 
resolution adopted by a majority of the whole Board, may designate an 
Executive Committee and/or other committees, each committee to consist of two 
(2) or more of the directors of the Corporation and may delegate to such 
committees, in the intervals between meetings of the Board of Directors, any 
or all of the powers of the Board of Directors in the management of the 
business and affairs of the Corporation, except the power to: declare 
dividends or distributions of stock; issue stock; recommend to stockholders 
any action requiring stockholder approval; amend the By-Laws of the 
Corporation; or approve any merger or share exchange which does not require 
shareholder approval. In the absence of any member of any such committee, the 
members thereof present at any meeting, whether or not they constitute a 
quorum, may appoint a member of the Board of Directors to act in place of 
such absent member. Each such committee shall keep a record of its 
proceedings. 

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

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

   SECTION 4.2. ADVISORY COMMITTEE. The Board of Directors may appoint an 
advisory committee which shall be composed of persons who do not serve the 
Corporation in any other capacity and which shall have advisory functions 
with respect to the investments of the Corporation, but which shall have no 
power to determine that any security or other investment shall be purchased, 
sold or otherwise disposed of by the Corporation. The number of persons 
constituting any such advisory committee shall be determined from time to 
time by the Board of Directors. The members of any such advisory committee 
may receive compensation for their services and may be allowed such fees and 
expenses for the attendance at meetings as the Board of Directors may from 
time to time determine to be appropriate. 

   SECTION 4.3. COMMITTEE ACTION WITHOUT MEETING. The provisions of these 
By-Laws covering notices and meetings to the contrary notwithstanding, and 
except as required by law, any action required or permitted to be taken at 
any meeting of any Committee of the Board appointed pursuant to Section 4.1 
of these By-Laws may be taken without a meeting if a consent in writing 
setting forth the action shall be signed by all members of the Committee 
entitled to vote upon the action and such written consent is filed with the 
records of the proceedings of the Committee. 

                                     ARTICLE V 
                                     OFFICERS 

   SECTION 5.1. EXECUTIVE OFFICERS. The executive officers of the Corporation 
shall be a Chairman of the Board, a President, one or more Vice Presidents, a 
Secretary and a Treasurer. The Chairman of the 

                                         7
<PAGE>

Board shall be selected from among the Directors but none of the other 
executive officers need be a member of the Board of Directors. Two or more 
offices, except those of President and any Vice President, may be held by the 
same person, but no officer shall execute, acknowledge or verify any 
instrument in more than one capacity. The executive officers of the 
Corporation shall be elected annually by the Board of Directors and each 
executive officer so elected shall hold office until his or her successor is 
elected and has qualified. 

   SECTION 5.2. OTHER OFFICERS AND AGENTS. The Board of Directors may also 
elect one or more Assistant Vice Presidents, Assistant Secretaries and 
Assistant Treasurers and may elect, or may delegate to the Chairman the power 
to appoint, such other officers and agents as the Board of Directors shall at 
any time or from time to time deem advisable. 

   SECTION 5.3. TERM AND REMOVAL AND VACANCIES. Each officer of the 
Corporation shall hold office until his or her successor is elected and has 
qualified. Any officer or agent of the Corporation may be removed by the 
Board of Directors whenever, in its judgment, the best interests of the 
Corporation will be served thereby, but such removal shall be without 
prejudice to the contractual rights, if any, of the person so removed. 

   SECTION 5.4. COMPENSATION OF OFFICERS. The compensation of officers and 
agents of the Corporation shall be fixed by the Board of Directors, or by the 
Chairman to the extent provided by the Board of Directors with respect to 
officers appointed by the Chairman. 

   SECTION 5.5. POWERS AND DUTIES. All officers and agents of the 
Corporation, as between themselves and the Corporation, shall have such 
authority and perform such duties in the management of the Corporation as may 
be provided in or pursuant to these By-Laws or, to the extent not so 
provided, as may be prescribed by the Board of Directors; provided that no 
rights of any third party shall be affected or impaired by any such By-Law or 
resolution of the Board unless such third party has knowledge thereof. 

   SECTION 5.6. THE CHAIRMAN. The Chairman shall be the chief executive 
officer of the Corporation, shall preside at all meetings of the stockholders 
and of the Board of Directors, shall have general and active management of 
the business of the Corporation, shall see that all orders and resolutions of 
the Board of Directors are carried into effect and, in connection therewith, 
shall be authorized to delegate to the President or to one or more Vice 
Presidents such of his or her powers and duties at such times and in such 
manner as he or she may deem advisable, shall be a signatory on all Annual 
and Semi-Annual Reports as may be sent to stockholders, and shall perform 
such other duties as the Board of Directors may from time to time prescribe. 

   SECTION 5.7. THE PRESIDENT. The President shall perform such duties as the 
Board of Directors and the Chairman may from time to time prescribe and 
shall, in the absence or disability of the Chairman, exercise the powers and 
perform the duties of the Chairman. The President shall be authorized to 
delegate to one or more Vice Presidents such of his or her powers and duties 
at such times and in such manner as he or she may deem advisable. 

   SECTION 5.8. THE VICE PRESIDENTS. The Vice Presidents shall be of such 
number and shall have such titles as may be determined from time to time by 
the Board of Directors. The Vice President, or, if there shall be more than 
one, the Vice Presidents in such order as may be determined from time to time 
by the Board of Directors or the Chairman, shall, in the absence or 
disability of the President, exercise the powers and perform the duties of 
the President, and shall perform such other duties as the Board of Directors 
or the Chairman may from time to time prescribe. 

   SECTION 5.9. THE ASSISTANT VICE PRESIDENTS. The Assistant Vice President, 
or, if there shall be more than one, the Assistant Vice Presidents in such 
order as may be determined from time to time by the Board of Directors or the 
Chairman, shall perform such duties and have such powers as may be assigned 
them from time to time by the Board of Directors or the Chairman. 

   SECTION 5.10. THE SECRETARY. The Secretary shall attend all meetings of 
the Board of Directors and all meetings of the stockholders and record all 
the proceedings of the meetings of the stockholders and of the Board of 
Directors in a book to be kept for that purpose, and shall perform like 
duties for the 

                                         8
<PAGE>

standing committees when required. He or she shall give, or cause to be 
given, notice of all meetings of the stockholders and special meetings of the 
Board of Directors, and shall perform such other duties and have such powers 
as the Board of Directors or the Chairman may from time to time prescribe. He 
or she shall keep in safe custody the seal of the Corporation and affix or 
cause the same to be affixed to any instrument requiring it, and, when so 
affixed, it shall be attested by his or her signature or by the signature of 
an Assistant Secretary. 

   SECTION 5.11. THE ASSISTANT SECRETARIES. The Assistant Secretary, or, if 
there shall be more than one, the Assistant Secretaries in such order as may 
be determined from time to time by the Board of Directors or the Chairman, 
shall, in the absence or disability of the Secretary, perform the duties and 
exercise the powers of the Secretary and shall perform such duties and have 
such other powers as the Board of Directors or the Chairman may from time to 
time prescribe. 

   SECTION 5.12. THE TREASURER. The Treasurer shall be the chief financial 
officer of the Corporation. He or she shall keep or cause to be kept full and 
accurate accounts of receipts and disbursements in books belonging to the 
Corporation, and he or she shall render to the Board of Directors and the 
Chairman, whenever any of them require it, an account of his or her 
transactions as Treasurer and of the financial condition of the Corporation, 
and he or she shall perform such other duties as the Board of Directors or 
the Chairman may from time to time prescribe. 

   SECTION 5.13. THE ASSISTANT TREASURERS. The Assistant Treasurer, or, if 
there shall be more than one, the Assistant Treasurers in such order as may 
be determined from time to time by the Board of Directors or the Chairman, 
shall, in the absence or disability of the Treasurer, perform the duties and 
exercise the powers of the Treasurer and shall perform such other duties and 
have such other powers as the Board of Directors or the Chairman may from 
time to time prescribe. 

   SECTION 5.14. DELEGATION OF DUTIES. Whenever an officer is absent or 
disabled, or whenever for any reason the Board of Directors may deem it 
desirable, the Board of Directors may delegate the powers and duties of an 
officer or officers to any other officer or officers or to any Director or 
Directors. 

                                    ARTICLE VI 
                                   CAPITAL STOCK 

   SECTION 6.1. ISSUANCE OF STOCK. The Corporation shall not issue its shares 
of capital stock except as approved by the Board of Directors. 

   SECTION 6.2. CERTIFICATES OF STOCK. Certificates for shares of each class 
of the capital stock of the Corporation shall be in such form and of such 
design as the Board of Directors shall approve, subject to the right of the 
Board of Directors to change such form and design at any time or from time to 
time, and shall be entered in the books of the Corporation as they are 
issued. Each such certificate shall bear a distinguishing number; shall 
exhibit the holder's name and certify the number of full shares owned by such 
holder; shall be signed by or in the name of the Corporation by the 
President, or a Vice President or an Assistant Treasurer, and countersigned 
by the Secretary or an Assistant Secretary or the Treasurer of the 
Corporation; shall be sealed with the corporate seal; and shall contain such 
recitals as may be required by law. Where any stock certificate is signed by 
a Transfer Agent or by a Registrar, the signature of such corporate officers 
and the corporate seal may be facsimile, printed or engraved. The Corporation 
may, at its option, defer the issuance of a certificate or certificates to 
evidence shares of capital stock owned of record by any stockholder until 
such time as demand therefor shall be made upon the Corporation or its 
Transfer Agent, but upon the making of such demand each stockholder shall be 
entitled to such certificate or certificates. 

   In case any officer or officers who shall have signed, or whose facsimile 
signature or signatures shall appear on, any such certificate or certificates 
shall cease to be such officer or officers of the Corporation, whether 
because of death, resignation or otherwise, before such certificate or 
certificates shall have been delivered by the Corporation, such certificate 
or certificates shall, nevertheless, be adopted by the Corporation and be 
issued and delivered as though the person or persons who signed such 
certificate or certificates or whose facsimile signature or signatures shall 
appear therein had not ceased to be such officer or officers of the 
Corporation. 

                                         9
<PAGE>

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

   SECTION 6.3. TRANSFER OF STOCK. Transfers of shares of the capital stock 
of the Corporation shall be made only on the books of the Corporation by the 
holder thereof, or by his attorney thereunto duly authorized by a power of 
attorney duly executed and filed with the Corporation or a Transfer Agent of 
the Corporation, if any, upon written request in proper form if no share 
certificate has been issued, or in the event such certificate has been 
issued, upon presentation and surrender in proper form of said certificate. 

   SECTION 6.4. RECORD DATE. The Board of Directors may fix in advance a date 
as the record date for the purpose of determining stockholders entitled to 
notice of, or to vote at, any meeting of stockholders, or stockholders 
entitled to receive payment of any dividend or the allotment of any rights, 
or in order to make a determination of stockholders for any other purpose. 
Such date, in any case shall be not more than ninety (90) days, and in case 
of a meeting of stockholders not less than ten (10) days prior to the date on 
which particular action requiring such determination of stockholders is to be 
taken. In lieu of fixing a record date the Board of Directors may provide 
that the stock transfer books shall be closed for a stated period but not to 
exceed, in any case, twenty (20) days. If the stock transfer books are closed 
for the purpose of determining stockholders entitled to notice of a vote at a 
meeting of stockholders, such books shall be closed for at least ten (10) 
days immediately preceding such meeting. 

   SECTION 6.5. LOST, STOLEN, DESTROYED AND MULTILATED CERTIFICATES. The 
Board of Directors may direct a new certificate or certificates to be issued 
in place of any certificate or certificates theretofore issued by the 
Corporation alleged to have been lost, stolen or destroyed, upon satisfactory 
proof of such loss, theft, or destruction; and the Board of Directors may, in 
its discretion, require the owner of the lost, stolen or destroyed 
certificate, or his legal representative, to give to the Corporation and to 
such Registrar, Transfer Agent and/or Transfer Clerk as may be authorized or 
required to countersign such new certificate or certificates, a bond in such 
sum and of such type as they may direct, and with such surety or sureties, as 
they may direct, as indemnity against any claim that may be against them or 
any of them on account of or in connection with the alleged loss, theft or 
destruction of any such certificate. 

   SECTION 6.6. REGISTERED OWNERS OF STOCK. The Corporation shall be entitled 
to recognize the exclusive right of a person registered on its books as the 
owner of shares of stock to receive dividends, and to vote as such owner, and 
to hold liable for calls and assessments a person registered on its books as 
the owner of shares of stock, and shall not be bound to recognize any 
equitable or other claim to or interest in such share or shares on the part 
of any other person, whether or not it shall have express or other notice 
thereof, except as otherwise provided by the laws of Maryland. 

   SECTION 6.7. FRACTIONAL DENOMINATIONS. Subject to any applicable 
provisions of law and the Charter of the Corporation, the Corporation may 
issue shares of its capital stock in fractional denominations, provided that 
the transactions in which and the terms and conditions upon which shares in 
fractional denominations may be issued may from time to time be limited or 
determined by or under the authority of the Board of Directors. 

                                    ARTICLE VII 
                           SALE AND REDEMPTION OF STOCK 

   SECTION 7.1. SALE OF STOCK. Upon the sale of each share of its Common 
Stock, except as otherwise permitted by applicable laws and regulations, the 
Corporation shall receive in cash or in securities not less than the current 
net asset value thereof, exclusive of any distributing commission or 
discount, and in no event less than the par value thereof. 

   SECTION 7.2. REDEMPTION OF STOCK. Subject to and in accordance with any 
applicable laws and regulations and any applicable provisions of the 
Corporation's Articles of Incorporation, the Corporation shall redeem all 
outstanding shares of its capital stock duly delivered or offered for 
redemption by any registered stockholder in a manner prescribed by or under 
authority of the Board of Directors. Any shares so delivered or offered for 
redemption shall be redeemed at a redemption price prescribed by the Board of 
Directors in accordance with applicable laws and regulations; provided that 
in no event shall such price be less than the applicable net asset value of 
such shares. The Corporation may redeem, at current net 

                                         10
<PAGE>

asset value, shares not offered for redemption held by any shareholder whose 
shares have a value of less than $100, or such lesser amount as may be fixed 
by the Board of Directors; provided that before the Corporation redeems such 
shares it must notify the shareholder that the value of his shares is less 
than $100 and allow him 60 days to make an additional investment in an amount 
which will increase the value of his account to $100 or more. The Corporation 
shall pay redemption prices in cash. 

                                   ARTICLE VIII 
                            DIVIDENDS AND DISTRIBUTIONS 

   Subject to any applicable provisions of law and the Charter of the 
Corporation, dividends and distributions upon the Common Stock of the 
Corporation may be declared at such intervals as the Board of Directors may 
determine, in cash, in securities or other property, or in shares of stock of 
the Corporation, from any sources permitted by law, all as the Board of 
Directors shall from time to time determine. 

   Inasmuch as the computation of net income and net profits from the sale of 
securities or other properties for federal income tax purposes may vary from 
the computation thereof on the books of the Corporation, the Board of 
Directors shall have power, in its discretion, to distribute as income 
dividends and as capital gain distributions, respectively, amounts sufficient 
to enable the Corporation to avoid or reduce liability for federal income 
taxes. 

                                    ARTICLE IX 
                                 BOOKS AND RECORDS 

   SECTION 9.1. LOCATION. The books and records of the Corporation may be 
kept outside the State of Maryland at such place or places as the Board of 
Directors may from time to time determine, except as otherwise required by 
law. 

   SECTION 9.2. STOCK LEDGERS. The Corporation shall maintain at the office 
of its Transfer Agent an original stock ledger containing the names and 
addresses of all stockholders and the number of shares held by each 
stockholder. Such stock ledger may be in written form or any other form 
capable of being converted into written form within a reasonable time for 
visual inspection. 

   SECTION 9.3. ANNUAL STATEMENT. The President or a Vice President or the 
Treasurer shall prepare or cause to be prepared annually a full and correct 
statement of the affairs of the Corporation, including a statement of assets 
and liabilities and a statement of operations for the preceding fiscal year, 
which shall be submitted at the annual meeting of stockholders if such 
meeting be held, and shall be filed within twenty (20) days thereafter at the 
principal office of the Corporation in the State of Maryland. 

                                     ARTICLE X 
                                 WAIVER OF NOTICE 

   Whenever any notice of the time, place or purpose of any meeting of 
stockholders, directors, or of any committee is required to be given under 
the provisions of the statute or under the provisions of the Charter of the 
Corporation or these By-Laws, a waiver thereof in writing, signed by the 
person or persons entitled to such notice and filed with the records of the 
meeting, whether before or after the holding thereof, or actual attendance at 
the meeting of Directors or committee in person, shall be deemed equivalent 
to the giving of such notice to such person. 

                                  ARTICLE XI 
                                MISCELLANEOUS 

   SECTION 11.1. SEAL. The Board of Directors shall adopt a corporate seal, 
which shall be in the form of a circle, and shall have inscribed thereon the 
name of the Corporation, the year of its incorporation, and the words 
"Corporate Seal--Maryland." Said seal may be used by causing it or a 
facsimile thereof to be impressed or affixed or reproduced or otherwise. 

                                         11
<PAGE>

   SECTION 11.2. FISCAL YEAR. The fiscal year of the Corporation shall end on 
such date as the Board of Directors may by resolution specify, and the Board 
of Directors may by resolution change such date for future fiscal years at 
any time and from time to time. 

   SECTION 11.3. ORDERS FOR PAYMENT OF MONEY. All orders or instructions for 
the payment of money of the Corporation, and all notes or other evidences of 
indebtedness issued in the name of the Corporation, shall be signed by such 
officer or officers or such other person or persons as the Board of Directors 
may from time to time designate, or as may be specified in or pursuant to the 
agreement between the Corporation and the bank or trust company appointed as 
Custodian of the securities and funds of the Corporation. 

                                    ARTICLE XII 
                        COMPLIANCE WITH FEDERAL REGULATIONS 

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

                                   ARTICLE XIII 
                                    AMENDMENTS 

   These By-Laws may be amended, altered, or repealed at any annual or 
special meeting of the stockholders by the affirmative vote of the holders of 
a majority of the shares of capital stock of the Corporation issued and 
outstanding and entitled to vote, provided notice of the general purpose of 
the proposed amendment, alteration or repeal is given in the notice of said 
meeting; or, at any meeting of the Board of Directors, by a vote of a 
majority of the whole Board of Directors, provided, however, that any By-Law 
or amendment or alteration of the By-Laws adopted by the Board of Directors 
may be amended, altered or repealed and any By-Law repealed by the Board of 
Directors may be reinstated, by vote of the stockholders of the Corporation. 

                                         12


<PAGE>
                        INVESTMENT MANAGEMENT AGREEMENT
 
    AGREEMENT made as of the 31st day of May, 1997, and amended as of April 30,
1998, by and between Dean Witter Natural Resource Development Securities Inc., a
Maryland corporation (hereinafter called the "Fund"), and Dean Witter
InterCapital Inc., a Delaware corporation (hereinafter called the "Investment
Manager"):
 
    WHEREAS, The Fund is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act"); and
 
    WHEREAS, The Investment Manager is registered as an investment adviser under
the Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser; and
 
    WHEREAS, The Fund desires to retain the Investment Manager to render
management and investment advisory services in the manner and on the terms and
conditions hereinafter set forth; and
 
    WHEREAS, The Investment Manager desires to be retained to perform services
on said terms and conditions:
 
    Now, Therefore, this Agreement
 
                              W I T N E S S E T H:
 
that in consideration of the premises and the mutual covenants hereinafter
contained, the Fund and the Investment Manager agree as follows:
 
     1. The Fund hereby retains the Investment Manager to act as investment
manager of the Fund and, subject to the supervision of the Directors, to
supervise the investment activities of the Fund as hereinafter set forth.
Without limiting the generality of the foregoing, the Investment Manager shall
obtain and evaluate such information and advice relating to the economy,
securities and commodities markets and securities and commodities as it deems
necessary or useful to discharge its duties hereunder; shall continuously manage
the assets of the Fund in a manner consistent with the investment objectives and
policies of the Fund; shall determine the securities and commodities to be
purchased, sold or otherwise disposed of by the Fund and the timing of such
purchases, sales and dispositions; and shall take such further action, including
the placing of purchase and sale orders on behalf of the Fund, as the Investment
Manager shall deem necessary or appropriate. The Investment Manager shall also
furnish to or place at the disposal of the Fund such of the information,
evaluations, analyses and opinions formulated or obtained by the Investment
Manager in the discharge of its duties as the Fund may, from time to time,
reasonably request.
 
     2. The Investment Manager shall, at its own expense, maintain such staff
and employ or retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary or useful to the performance
of its obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Investment Manager shall be deemed to
include persons employed or otherwise retained by the Investment Manager to
furnish statistical and other factual data, advice regarding economic factors
and trends, information with respect to technical and scientific developments,
and such other information, advice and assistance as the Investment Manager may
desire. The Investment Manager shall, as agent for the Fund, maintain the Fund's
records and books of account (other than those maintained by the Fund's transfer
agent, registrar, custodian and other agencies). All such books and records so
maintained shall be the property of the Fund and, upon request therefor, the
Investment Manager shall surrender to the Fund such of the books and records so
requested.
 
     3. The Fund will, from time to time, furnish or otherwise make available to
the Investment Manager such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as the Investment
Manager may reasonably require in order to discharge its duties and obligations
hereunder.
 
     4. The Investment Manager shall bear the cost of rendering the investment
management and supervisory services to be performed by it under this Agreement,
and shall, at its own expense, pay the compensation of the officers and
employees, if any, of the Fund who are also directors, officers or employees of
the Investment Manager, and provide such office space, facilities and equipment
and such clerical help and
<PAGE>
bookkeeping services as the Fund shall reasonably require in the conduct of its
business. The Investment Manager shall also bear the cost of telephone service,
heat, light, power and other utilities provided to the Fund.
 
     5. The Fund assumes and shall pay or cause to be paid all other expenses of
the Fund, including without limitation: the charges and expenses of any
registrar, any custodian or depository appointed by the Fund for the safekeeping
of its cash, portfolio securities or commodities and other property, and any
stock transfer or dividend agent or agents appointed by the Fund; brokers'
commissions chargeable to the Fund in connection with portfolio transactions to
which the Fund is a party; all taxes, including securities or commodities
issuance and transfer taxes, and fees payable by the Fund to federal, state or
other governmental agencies; the cost and expense of engraving or printing
certificates representing shares of the Fund; all costs and expenses in
connection with the registration and maintenance of registration of the Fund and
its shares with the Securities and Exchange Commission and various states and
other jurisdictions (including filing fees and legal fees and disbursements of
counsel); the cost and expense of printing, including typesetting, and
distributing prospectuses and statements of additional information of the Fund
and supplements thereto to the Fund's shareholders; all expenses of
shareholders' and Directors' meetings and of preparing, printing and mailing
proxy statements and reports to shareholders; fees and travel expenses of
Directors or members of any advisory board or committee who are not employees of
the Investment Manager or any corporate affiliate of the Investment Manager; all
expenses incident to the payment of any dividend, distribution, withdrawal or
redemption, whether in shares or in cash; charges and expenses of any outside
service used for pricing of the Fund's shares; charges and expenses of legal
counsel, including counsel to the Directors of the Fund who are not interested
persons (as defined in the Act) of the Fund or the Investment Manager, and of
independent accountants, in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund borrowings;
postage; insurance premiums on property or personnel (including officers and
Directors) of the Fund which inure to its benefit; extraordinary expenses
(including but not limited to legal claims and liabilities and litigation costs
and any indemnification related thereto); and all other charges and costs of the
Fund's operation unless otherwise explicitly provided herein.
 
     6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Investment Manager, the Fund shall pay to the Investment
Manager monthly compensation determined by applying the following annual rates
to the Fund's daily net assets: 0.625% of the portion of the daily net assets
not exceeding $250 million; and 0.50% of the portion of the daily net assets
exceeding $250 million. Except as hereinafter set forth, compensation under this
Agreement shall be calculated and accrued daily and the amounts of the daily
accruals shall be paid monthly. Such calculations shall be made by applying
1/365ths of the annual rates to the Fund's net assets each day determined as of
the close of business on that day or the last previous business day. If this
Agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of the
month this Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fees as set forth above.
 
    Subject to the provisions of paragraph 7 hereof, payment of the Investment
Manager's compensation for the preceding month shall be made as promptly as
possible after completion of the computations contemplated by paragraph 7
hereof.
 
     7. In the event the operating expenses of the Fund, including amounts
payable to the Investment Manager pursuant to paragraph 6 hereof, for any fiscal
year ending on a date on which this Agreement is in effect, exceed the expense
limitations applicable to the Fund imposed by state securities laws or
regulations thereunder, as such limitations may be raised or lowered from time
to time, the Investment Manager shall reduce its management fee to the extent of
such excess and, if required, pursuant to any such laws or regulations, will
reimburse the Fund for annual operating expenses in excess of any expense
limitation that may be applicable; provided, however, there shall be excluded
from such expenses the amount of any interest, taxes, brokerage commissions,
distribution fees and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Fund. Such reduction, if any, shall be computed
and accrued daily, shall be settled on a
 
                                       2
<PAGE>
monthly basis, and shall be based upon the expense limitation applicable to the
Fund as at the end of the last business day of the month. Should two or more
such expense limitations be applicable as at the end of the last business day of
the month, that expense limitation which results in the largest reduction in the
Investment Manager's fee shall be applicable.
 
    For purposes of this provision, should any applicable expense limitation be
based upon the gross income of the Fund, such gross income shall include, but
not be limited to, interest on debt securities in the Fund's portfolio accrued
to and including the last day of the Fund's fiscal year, and dividends declared
on equity securities in the Fund's portfolio, the record dates for which fall on
or prior to the last day of such fiscal year, but shall not include gains from
the sale of securities.
 
     8. The Investment Manager will use its best efforts in the supervision 
and management of the investment activities of the Fund, but in the absence 
of willful misfeasance, bad faith, gross negligence or reckless disregard of 
its obligations hereunder, the Investment Manager shall not be liable to the 
Fund or any of its investors for any error of judgment or mistake of law or 
for any act or omission by the Investment Manager or for any losses sustained 
by the Fund or its investors.
 
     9. Nothing contained in this Agreement shall prevent the Investment Manager
or any affiliated person of the Investment Manager from acting as investment
adviser or manager for any other person, firm or corporation and shall not in
any way bind or restrict the Investment Manager or any such affiliated person
from buying, selling or trading any securities or commodities for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any Director, officer or
employee of the Investment Manager to engage in any other business or to devote
his or her time and attention in part to the management or other aspects of any
other business whether of a similar or dissimilar nature.
 
    10. This Agreement shall remain in effect until April 30, 1999 and from year
to year thereafter provided such continuance is approved at least annually by
the vote of holders of a majority, as defined in the Investment Company Act (the
"Act"), of the outstanding voting securities of the Fund or by the Directors of
the Fund; provided that in either event such continuance is also approved
annually by the vote of a majority of the Directors of the Fund who are not
parties to this Agreement or "interested persons" (as defined in the Act) of any
such party, which vote must be cast in person at a meeting called for the
purpose of voting on such approval; provided, however, that (a) the Fund may, at
any time and without the payment of any penalty, terminate this Agreement upon
thirty days' written notice to the Investment Manager, either by majority vote
of the Directors of the Fund or by the vote of a majority of the outstanding
voting securities of the Fund; (b) this Agreement shall immediately terminate in
the event of its assignment (to the extent required by the Act and the rules
thereunder) unless such automatic terminations shall be prevented by an
exemptive order of the Securities and Exchange Commission; and (c) the
Investment Manager may terminate this Agreement without payment of penalty on
thirty days' written notice to the Fund. Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed post-paid, to the other
party at the principal office of such party.
 
    11. This Agreement may be amended by the parties without the vote or consent
of the shareholders of the Fund to supply any omission, to cure, correct or
supplement any ambiguous, defective or inconsistent provision hereof, or if they
deem it necessary to conform this Agreement to the requirements of applicable
federal laws or regulations, but neither the Fund nor the Investment Manager
shall be liable for failing to do so.
 
    12. This Agreement shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflicts with the applicable provisions of the Act, the latter shall control.
 
    13. The Investment Manager and the Fund each agree that the name "Dean
Witter," which comprises a component of the Fund's name, is a property right of
Dean Witter Reynolds Inc. The Fund agrees and consents that (i) it will only use
the name "Dean Witter" as a component of its name and for no other purpose, (ii)
it will not purport to grant to any third party the right to use the name "Dean
Witter" for any
 
                                       3
<PAGE>
purpose, (iii) the Investment Manager or its parent, Morgan Stanley Dean Witter
& Co., or any corporate affiliate of the Investment Manager's parent, may use or
grant to others the right to use the name "Dean Witter," or any combination or
abbreviation thereof, as all or a portion of a corporate or business name or for
any commercial purpose, including a grant of such right to any other investment
company, (iv) at the request of the Investment Manager or its parent, the Fund
will take such action as may be required to provide its consent to the use of
the name "Dean Witter," or any combination or abbreviation thereof, by the
Investment Manager or its parent or any corporate affiliate of the Investment
Manager's parent, or by any person to whom the Investment Manager or its parent
or any corporate affiliate of the Investment Manager's parent shall have granted
the right to such use, and (v) upon the termination of any investment advisory
agreement into which the Investment Manager and the Fund may enter, or upon
termination of affiliation of the Investment Manager with its parent, the Fund
shall, upon request by the Investment Manager or its parent, cease to use the
name "Dean Witter" as a component of its name, and shall not use the name, or
any combination or abbreviation thereof, as a part of its name or for any other
commercial purpose, and shall cause its officers, Directors and shareholders to
take any and all actions which the Investment Manager or its parent may request
to effect the foregoing and to reconvey to the Investment Manager or its parent
any and all rights to such name.
 
    IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, as amended, on April 30, 1998 in New York, New York.
 
<TABLE>
<S>                                             <C>
                                                DEAN WITTER NATURAL RESOURCE
                                                 DEVELOPMENT SECURITIES INC.
 
                                                By              /s/ BARRY FINK
                                                ..............................................
 
Attest:
 
            /s/ FRANK BRUTTOMESSO
 .............................................
 
                                                DEAN WITTER INTERCAPITAL INC.
 
                                                By        /s/ CHARLES A. FIUMEFREDDO
                                                ..............................................
 
Attest:
 
           /s/ MARILYN K. CRANNEY
 .............................................
</TABLE>
 
                                       4

<PAGE>
                        MORGAN STANLEY DEAN WITTER FUNDS
                             DISTRIBUTION AGREEMENT
 
    AGREEMENT made as of this 28th day of July, 1997, and amended as of June 22,
1998, between each of the open-end investment companies to which Morgan Stanley
Dean Witter Advisors Inc. acts as investment manager, that are listed on
Schedule A, as may be amended from time to time (each, a "Fund" and
collectively, the "Funds"), and Morgan Stanley Dean Witter Distributors Inc., a
Delaware corporation (the "Distributor").
 
                              W I T N E S S E T H:
 
    WHEREAS, each Fund is registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and it is in the
interest of each Fund to offer its shares for sale continuously, and
 
    WHEREAS, each Fund and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of each Fund's transferable
shares, of $0.01 par value (the "Shares"), to commence on the date listed above,
in order to promote the growth of each Fund and facilitate the distribution of
its shares.
 
    NOW, THEREFORE, the parties agree as follows:
 
    SECTION 1.  APPOINTMENT OF THE DISTRIBUTOR.
 
    (a) Each Fund hereby appoints the Distributor as the principal underwriter
and distributor of the Fund to sell Shares to the public on the terms set forth
in this Agreement and that Fund's prospectus and the Distributor hereby accepts
such appointment and agrees to act hereunder. Each Fund, during the term of this
Agreement, shall sell Shares to the Distributor upon the terms and conditions
set forth herein.
 
    (b) The Distributor agrees to purchase Shares, as principal for its own
account, from each Fund and to sell Shares as principal to investors, and
securities dealers, including Dean Witter Reynolds Inc. ("DWR"), an affiliate of
the Distributor, upon the terms described herein and in that Fund's prospectus
(the "Prospectus") and statement of additional information included in the
Fund's registration statement (the "Registration Statement") most recently filed
from time to time with the Securities and Exchange Commission (the "SEC") and
effective under the Securities Act of 1933, as amended (the "1933 Act"), and the
1940 Act or as the Prospectus may be otherwise amended or supplemented and filed
with the SEC pursuant to Rule 497 under the 1933 Act.
 
    SECTION 2.  EXCLUSIVE NATURE OF DUTIES.  The Distributor shall be the
exclusive principal underwriter and distributor of each Fund, except that the
exclusive rights granted to the Distributor to sell the Shares shall not apply
to Shares issued by each Fund: (i) in connection with the merger or
consolidation of any other investment company or personal holding company with
the Fund or the acquisition by purchase or otherwise of all (or substantially
all) the assets or the outstanding shares of any such company by the Fund; (ii)
pursuant to reinvestment of dividends or capital gains distributions; or (iii)
pursuant to the reinstatement privilege afforded redeeming shareholders.
 
    SECTION 3.  PURCHASE OF SHARES FROM EACH FUND.  The Shares are offered in
four classes (each, a "Class"), as described in the Prospectus, as amended or
supplemented from time to time.
 
    (a) The Distributor shall have the right to buy from each Fund the Shares of
the particular class needed, but not more than the Shares needed (except for
clerical errors in transmission), to fill unconditional orders for Shares of the
applicable class placed with the Distributor by investors or securities dealers.
The price which the Distributor shall pay for the Shares so purchased from the
Fund shall be the net asset value, determined as set forth in the Prospectus,
used in determining the public offering price on which such orders were based.
 
    (b) The Shares are to be resold by the Distributor at the public offering
price of Shares of the applicable class as set forth in the Prospectus, to
investors or to securities dealers, including DWR, who
 
                                       1
<PAGE>
have entered into selected dealer agreements with the Distributor upon the terms
and conditions set forth in Section 7 hereof ("Selected Dealers").
 
    (c) Each Fund shall have the right to suspend the sale of the Shares at
times when redemption is suspended pursuant to the conditions set forth in
Section 4(f) hereof. Each Fund shall also have the right to suspend the sale of
the Shares if trading on the New York Stock Exchange shall have been suspended,
if a banking moratorium shall have been declared by federal or New York
authorities, or if there shall have been some other extraordinary event which,
in the judgment of a Fund, makes it impracticable to sell its Shares.
 
    (d) Each Fund, or any agent of a Fund designated in writing by the Fund,
shall be promptly advised of all purchase orders for Shares received by the
Distributor. Any order may be rejected by a Fund; provided, however, that a Fund
will not arbitrarily or without reasonable cause refuse to accept orders for the
purchase of Shares. The Distributor will confirm orders upon their receipt, and
each Fund (or its agent) upon receipt of payment therefor and instructions will
deliver share certificates for such Shares or a statement confirming the
issuance of Shares. Payment shall be made to the Fund in New York Clearing House
funds. The Distributor agrees to cause such payment and such instructions to be
delivered promptly to the Fund (or its agent).
 
    (e) With respect to Shares sold by any Selected Dealer, the Distributor is
authorized to direct each Fund's transfer agent to receive instructions directly
from the Selected Dealer on behalf of the Distributor as to registration of
Shares in the names of investors and to confirm issuance of the Shares to such
investors. The Distributor is also authorized to instruct the transfer agent to
receive payment directly from the Selected Dealer on behalf of the Distributor,
for prompt transmittal to each Fund's custodian, of the purchase price of the
Shares. In such event the Distributor shall obtain from the Selected Dealer and
maintain a record of such registration instructions and payments.
 
    SECTION 4.  REPURCHASE OR REDEMPTION OF SHARES.
 
    (a) Any of the outstanding Shares of a Fund may be tendered for redemption
at any time, and each Fund agrees to redeem its Shares so tendered in accordance
with the applicable provisions set forth in its Prospectus. The price to be paid
to redeem the Shares shall be equal to the net asset value determined as set
forth in the Prospectus less any applicable contingent deferred sales charge
("CDSC"). Upon any redemption of Shares the Fund shall pay the total amount of
the redemption price in New York Clearing House funds in accordance with
applicable provisions of the Prospectus.
 
    (b) The redemption by a Fund of any of its Class A Shares purchased by or
through the Distributor will not affect the applicable front-end sales charge
secured by the Distributor or any Selected Dealer in the course of the original
sale, except that if any Class A Shares are tendered for redemption within seven
business days after the date of the confirmation of the original purchase, the
right to the applicable front-end sales charge shall be forfeited by the
Distributor and the Selected Dealer which sold such Shares.
 
    (c) The proceeds of any redemption of Class A, Class B or Class C Shares
shall be paid by each Fund as follows: (i) any applicable CDSC shall be paid to
the Distributor or to the Selected Dealer, or, when applicable, pursuant to the
Rules of the Association of the National Association of Securities Dealers, Inc.
("NASD"), retained by the Fund and (ii) the balance shall be paid to the
redeeming shareholders, in each case in accordance with applicable provisions of
its Prospectus in New York Clearing House funds. The Distributor is authorized
to direct a Fund to pay directly to the Selected Dealer any CDSC payable by a
Fund to the Distributor in respect of Class A, Class B, or Class C Shares sold
by the Selected Dealer to the redeeming shareholders.
 
    (d) The Distributor is authorized, as agent for the Fund, to repurchase
Shares, represented by a share certificate which is delivered to any office of
the Distributor in accordance with applicable provisions set forth in each
Fund's Prospectus. The Distributor shall promptly transmit to the transfer agent
of the Fund for redemption all Shares so delivered. The Distributor shall be
responsible for the accuracy of instructions transmitted to the Fund's transfer
agent in connection with all such repurchases.
 
                                       2
<PAGE>
    (e) The Distributor is authorized, as agent for each Fund, to repurchase
Shares held in a shareholder's account with a Fund for which no share
certificate has been issued, upon the telephonic request of the shareholders, or
at the discretion of the Distributor. The Distributor shall promptly transmit to
the transfer agent of the Fund, for redemption, all such orders for repurchase
of Shares. Payment for Shares repurchased may be made by a Fund to the
Distributor for the account of the shareholder. The Distributor shall be
responsible for the accuracy of instructions transmitted to the Fund's transfer
agent in connection with all such repurchases.
 
    (f) Redemption of its Shares or payment by a Fund may be suspended at times
when the New York Stock Exchange is closed, when trading on said Exchange is
restricted, when an emergency exists as a result of which disposal by a Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for a Fund fairly to determine the value of its net assets, or
during any other period when the SEC, by order, so permits.
 
    (g) With respect to its Shares tendered for redemption or repurchase by any
Selected Dealer on behalf of its customers, the Distributor is authorized to
instruct the transfer agent of a Fund to accept orders for redemption or
repurchase directly from the Selected Dealer on behalf of the Distributor and to
instruct the Fund to transmit payments for such redemptions and repurchases
directly to the Selected Dealer on behalf of the Distributor for the account of
the shareholder. The Distributor shall obtain from the Selected Dealer, and
shall maintain, a record of such orders. The Distributor is further authorized
to obtain from the Fund, and shall maintain, a record of payment made directly
to the Selected Dealer on behalf of the Distributor.
 
    SECTION 5.  DUTIES OF THE FUND.
 
    (a) Each Fund shall furnish to the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of its Shares, including one
certified copy, upon request by the Distributor, of all financial statements
prepared by the Fund and examined by independent accountants. Each Fund shall,
at the expense of the Distributor, make available to the Distributor such number
of copies of its Prospectus as the Distributor shall reasonably request.
 
    (b) Each Fund shall take, from time to time, but subject to the necessary
approval of its shareholders, all necessary action to fix the number of its
authorized Shares and to register Shares under the 1933 Act, to the end that
there will be available for sale such number of Shares as investors may
reasonably be expected to purchase.
 
    (c) Each Fund shall use its best efforts to pay the filing fees for an
appropriate number of its Shares to be sold under the securities laws of such
states as the Distributor and the Fund may approve. Any qualification to sell
its Shares in a state may be withheld, terminated or withdrawn by a Fund at any
time in its discretion. As provided in Section 8(c) hereof, such filing fees
shall be paid by the Fund. The Distributor shall furnish any information and
other material relating to its affairs and activities as may be required by a
Fund in connection with the sale of its Shares in any state.
 
    (d) Each Fund shall, at the expense of the Distributor, furnish, in
reasonable quantities upon request by the Distributor, copies of its annual and
interim reports.
 
    SECTION 6.  DUTIES OF THE DISTRIBUTOR.
 
    (a) The Distributor shall sell shares of each Fund through DWR and may sell
shares through other securities dealers and its own Financial Advisors, and
shall devote reasonable time and effort to promote sales of the Shares, but
shall not be obligated to sell any specific number of Shares. The services of
the Distributor hereunder are not exclusive and it is understood that the
Distributor may act as principal underwriter for other registered investment
companies, so long as the performance of its obligations hereunder is not
impaired thereby. It is also understood that Selected Dealers, including DWR,
may also sell shares for other registered investment companies.
 
                                       3
<PAGE>
    (b) Neither the Distributor nor any Selected Dealer shall give any
information or make any representations, other than those contained in the
Registration Statement or related Prospectus and any sales literature
specifically approved by the appropriate Fund.
 
    (c) The Distributor agrees that it will at all times comply with the
applicable terms and limitations of the Rules of the Association of the NASD.
 
    SECTION 7.  SELECTED DEALERS AGREEMENTS.
 
    (a) The Distributor shall have the right to enter into selected dealer
agreements with Selected Dealers for the sale of Shares. In making agreements
with Selected Dealers, the Distributor shall act only as principal and not as
agent for a Fund. Shares sold to Selected Dealers shall be for resale by such
dealers only at the public offering price set forth in the Prospectus. With
respect to Class A Shares, in such agreement the Distributor shall have the
right to fix the portion of the applicable front-end sales charge which may be
allocated to the Selected Dealers.
 
    (b) Within the United States, the Distributor shall offer and sell Shares
only to Selected Dealers that are members in good standing of the NASD.
 
    (c) The Distributor shall adopt and follow procedures, as approved by each
Fund, for the confirmation of sales of its Shares to investors and Selected
Dealers, the collection of amounts payable by investors and Selected Dealers on
such sales, and the cancellation of unsettled transactions, as may be necessary
to comply with the requirements of the NASD, as such requirements may from time
to time exist.
 
    SECTION 8.  PAYMENT OF EXPENSES.
 
    (a) Each Fund shall bear all costs and expenses of the Fund, including fees
and disbursements of legal counsel including counsel to the Directors/Trustees
of each Fund who are not interested persons (as defined in the 1940 Act) of the
Fund or the Distributor, and independent accountants, in connection with the
preparation and filing of any required Registration Statements and Prospectuses
and all amendments and supplements thereto, and the expense of preparing,
printing, mailing and otherwise distributing prospectuses and statements of
additional information, annual or interim reports or proxy materials to
shareholders.
 
    (b) The Distributor shall bear all expenses incurred by it in connection
with its duties and activities under this Agreement including the payment to
Selected Dealers of any sales commissions, service fees and other expenses for
sales of a Fund's Shares (except such expenses as are specifically undertaken
herein by a Fund) incurred or paid by Selected Dealers, including DWR. The
Distributor shall bear the costs and expenses of preparing, printing and
distributing any supplementary sales literature used by the Distributor or
furnished by it for use by Selected Dealers in connection with the offering of
the Shares for sale. Any expenses of advertising incurred in connection with
such offering will also be the obligation of the Distributor. It is understood
and agreed that, so long as a Fund's Plan of Distribution pursuant to Rule 12b-1
under the 1940 Act ("Rule 12b-1 Plan") continues in effect, any expenses
incurred by the Distributor hereunder may be paid in accordance with the terms
of such Rule 12b-1 Plan.
 
    (c) Each Fund shall pay the filing fees, and, if necessary or advisable in
connection therewith, bear the cost and expense of qualifying each Fund as a
broker or dealer, in such states of the United States or other jurisdictions as
shall be selected by the Fund and the Distributor pursuant to Section 5(c)
hereof and the cost and expenses payable to each such state for continuing to
offer Shares therein until the Fund decides to discontinue selling Shares
pursuant to Section 5(c) hereof.
 
    SECTION 9.  INDEMNIFICATION.
 
    (a) Each Fund shall indemnify and hold harmless the Distributor and each
person, if any, who controls the Distributor against any loss, liability, claim,
damage or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, claim, damage or expense and reasonable counsel
fees incurred in connection therewith) arising by reason of any person acquiring
any Shares, which may be based upon the 1933 Act, or on any other statute or at
common law, on the ground that the Registration Statement or related Prospectus
and Statement of Additional Information, as from time to time amended
 
                                       4
<PAGE>
and supplemented, or the annual or interim reports to shareholders of a Fund,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading, unless such statement or omission was made in reliance
upon, and in conformity with, information furnished to the Fund in connection
therewith by or on behalf of the Distributor; provided, however, that in no case
(i) is the indemnity of a Fund in favor of the Distributor and any such
controlling persons to be deemed to protect the Distributor or any such
controlling persons thereof against any liability to a Fund or its security
holders to which the Distributor or any such controlling persons would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of reckless disregard of its
obligations and duties under this Agreement; or (ii) is a Fund to be liable
under its indemnity agreement contained in this paragraph with respect to any
claim made against the Distributor or any such controlling persons, unless the
Distributor or any such controlling persons, as the case may be, shall have
notified the Fund in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall have
been served upon the Distributor or uch controlling persons (or after the
Distributor or such controlling persons shall have received notice of such
service on any designated agent), but failure to notify the Fund of any such
claim shall not relieve it from any liability which it may have to the person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. Each Fund will be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the defense,
of any such suit brought to enforce any such liability, but if a Fund elects to
assume the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Distributor or such controlling person or persons, defendant
or defendants in the suit. In the event the Fund elects to assume the defense of
any such suit and retain such counsel, the Distributor or such controlling
person or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, but, in case the Fund does
not elect to assume the defense of any such suit, it will reimburse the
Distributor or such controlling person or persons, defendant or defendants in
the suit, for the reasonable fees and expenses of any counsel retained by them.
Each Fund shall promptly notify the Distributor of the commencement of any
litigation or proceedings against it or any of its officers or
Directors/Trustees in connection with the issuance or sale of the Shares.
 
    (b) (i) The Distributor shall indemnify and hold harmless each Fund and each
of its Directors/ Trustees and officers and each person, if any, who controls
the Fund against any loss, liability, claim, damage, or expense described in the
indemnity contained in subsection (a) of this Section, but only with respect to
statements or omissions made in reliance upon, and in conformity with,
information furnished to a Fund in writing by or on behalf of the Distributor
for use in connection with the Registration Statement or related Prospectus and
Statement of Additional Information, as from time to time amended, or the annual
or interim reports to shareholders.
 
        (ii) The Distributor shall indemnify and hold harmless each Fund and
each Fund's transfer agent, individually and in its capacity as the Fund's
transfer agent, from and against any claims, damages and liabilities which arise
as a result of actions taken pursuant to instructions from, or on behalf of, the
Distributor to: (1) redeem all or a part of shareholder accounts in the Fund
pursuant to Section 4(g) hereof and pay the proceeds to, or as directed by, the
Distributor for the account of each shareholder whose Shares are so redeemed;
and (2) register Shares in the names of investors, confirm the issuance thereof
and receive payment therefor pursuant to Section 3(e) hereof.
 
        (iii) In case any action shall be brought against a Fund or any person
so indemnified by this Section 9(b) in respect of which indemnity may be sought
against the Distributor, the Distributor shall have the rights and duties given
to a Fund, and the Fund and each person so indemnified shall have the rights and
duties given to the Distributor, by the provisions of subsection (a) of this
Section 9.
 
    (c) If the indemnification provided for in this Section 9 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to herein, then each indemnifiying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
benefits received by a Fund on the one hand and the Distributor on the other
from the
 
                                       5
<PAGE>
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of a Fund on the one hand and the Distributor on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by a Fund on the one hand and the Distributor on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Fund bear to the total
compensation received by the Distributor, in each case as set forth in the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by a Fund or the Distributor and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Each Fund and the Distributor agree that it would not be
just and equitable ifcontribution were determined by pro rata allocation or by
any other method of allocation which does not take into account the equitable
considerations referred to above. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to above shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such claim. Notwithstanding the
provisions of this subsection (c), the Distributor shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Shares distributed by it to the public were offered to the public exceeds
the amount of any damages which it has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
 
    SECTION 10.  DURATION AND TERMINATION OF THIS AGREEMENT.  This Agreement
shall remain in force until April 30, 1999, and thereafter, but only so long as
such continuance is specifically approved at least annually by (i) the Board of
Directors/Trustees of each Fund, or by the vote of a majority of the outstanding
voting securities of the Fund, cast in person or by proxy, and (ii) a majority
of those Directors/ Trustees who are not parties to this Agreement or interested
persons of any such party and who have no direct or indirect financial interest
in this Agreement or in the operation of the Fund's Rule 12b-1 Plan or in any
agreement related thereto, cast in person at a meeting called for the purpose of
voting upon such approval.
 
    This Agreement may be terminated at any time without the payment of any
penalty, by the Directors/ Trustees of a Fund, by a majority of the
Directors/Trustees of a Fund who are not interested persons of the Fund and who
have no direct or indirect financial interest in this Agreement, or by vote of a
majority of the outstanding voting securities of a Fund, or by the Distributor,
on sixty days' written notice to the other party. This Agreement shall
automatically terminate in the event of its assignment.
 
    The terms "vote of a majority of the outstanding voting securities,"
"assignment" and "interested person," when used in this Agreement, shall have
the respective meanings specified in the 1940 Act.
 
    SECTION 11.  AMENDMENTS OF THIS AGREEMENT.  This Agreement may be amended by
the parties only if such amendment is specifically approved by (i) the
Directors/Trustees of a Fund, or by the vote of a majority of outstanding voting
securities of a Fund, and (ii) a majority of those Directors/Trustees of a Fund
who are not parties to this Agreement or interested persons of any such party
and who have no direct or indirect financial interest in this Agreement or in
any Agreement related to the Fund's Rule 12b-1 Plan, cast in person at a meeting
called for the purpose of voting on such approval.
 
    SECTION 12.  ADDITIONAL FUNDS.  If at any time another Fund desires to
appoint the Distributor as its principal underwriter and distributor under this
Agreement, it shall notify the Distributor in writing. If the Distributor is
willing to serve as the Fund's principal underwriter and distributor under this
Agreement, it shall notify the Fund in writing, whereupon such other Fund shall
become a Fund hereunder.
 
    SECTION 13.  GOVERNING LAW.  This Agreement shall be construed in accordance
with the law of the State of New York and the applicable provisions of the 1940
Act. To the extent the applicable law of the
 
                                       6
<PAGE>
State of New York, or any of the provisions herein, conflicts with the
applicable provisions of the 1940 Act, the latter shall control.
 
    SECTION 14.  PERSONAL LIABILITY.  With respect to any Fund that is organized
as an unincorporated business trust under the laws of the Commonwealth of
Massachusetts, its Declaration of the Trust (each, a "Declaration") is on file
in the office of the Secretary of the Commonwealth of Massachusetts. Each
Declaration provides that the name of the Fund refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally; and
no Trustee, shareholder, officer, employee or agent of any Fund shall be held to
any personal liability, nor shall resort be had to their private property for
the satisfaction of any obligation or claim or otherwise, in connection with the
affairs of any Fund, but the Trust Estate only shall be liable.
 
    IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, as amended, on June 22, 1998 in New York, New York.
 
                                          ON BEHALF OF THE FUNDS SET FORTH ON
                                          SCHEDULE A, ATTACHED HERETO
 
                                          By: ..................................
 
                                          MORGAN STANLEY DEAN WITTER
                                          DISTRIBUTORS INC.
 
                                          By: ..................................
 
                                       7
<PAGE>
                        MORGAN STANLEY DEAN WITTER FUNDS
                             DISTRIBUTION AGREEMENT
                                   SCHEDULE A
                              AT FEBRUARY 9, 1999
 
<TABLE>
<S>        <C>
1)         Morgan Stanley Dean Witter Aggressive Equity Fund
2)         Morgan Stanley Dean Witter American Value Fund
3)         Morgan Stanley Dean Witter Balanced Growth Fund
4)         Morgan Stanley Dean Witter Balanced Income Fund
5)         Morgan Stanley Dean Witter California Tax-Free Income Fund
6)         Morgan Stanley Dean Witter Capital Appreciation Fund
7)         Morgan Stanley Dean Witter Capital Growth Securities
8)         Morgan Stanley Dean Witter Competitive Edge Fund
9)         Morgan Stanley Dean Witter Convertible Securities Trust
10)        Morgan Stanley Dean Witter Developing Growth Securities Trust
11)        Morgan Stanley Dean Witter Diversified Income Trust
12)        Morgan Stanley Dean Witter Dividend Growth Securities Inc.
13)        Morgan Stanley Dean Witter Equity Fund
14)        Morgan Stanley Dean Witter European Growth Fund Inc.
15)        Morgan Stanley Dean Witter Federal Securities Trust
16)        Morgan Stanley Dean Witter Financial Services Trust
17)        Morgan Stanley Dean Witter Fund of Funds
18)        Morgan Stanley Dean Witter Global Dividend Growth Securities
19)        Morgan Stanley Dean Witter Global Utilities Fund
20)        Morgan Stanley Dean Witter Growth Fund
21)        Morgan Stanley Dean Witter Health Sciences Trust
22)        Morgan Stanley Dean Witter High Yield Securities Inc.
23)        Morgan Stanley Dean Witter Income Builder Fund
24)        Morgan Stanley Dean Witter Information Fund
25)        Morgan Stanley Dean Witter Intermediate Income Securities
26)        Morgan Stanley Dean Witter International Fund
27)        Morgan Stanley Dean Witter International SmallCap Fund
28)        Morgan Stanley Dean Witter Japan Fund
29)        Morgan Stanley Dean Witter Managers Focus Fund
30)        Morgan Stanley Dean Witter Market Leader Trust
31)        Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
32)        Morgan Stanley Dean Witter Mid-Cap Growth Fund
33)        Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
34)        Morgan Stanley Dean Witter New York Tax-Free Income Fund
35)        Morgan Stanley Dean Witter Pacific Growth Fund Inc.
36)        Morgan Stanley Dean Witter Precious Metals and Minerals Trust
37)        Morgan Stanley Dean Witter Real Estate Fund
38)        Morgan Stanley Dean Witter Special Value Fund
39)        Morgan Stanley Dean Witter S&P 500 Index Fund
40)        Morgan Stanley Dean Witter S&P 500 Select Fund
41)        Morgan Stanley Dean Witter Strategist Fund
42)        Morgan Stanley Dean Witter Tax-Exempt Securities Trust
43)        Morgan Stanley Dean Witter U.S. Government Securities Trust
44)        Morgan Stanley Dean Witter Utilities Fund
45)        Morgan Stanley Dean Witter Value-Added Market Series
46)        Morgan Stanley Dean Witter Value Fund
47)        Morgan Stanley Dean Witter Worldwide High Income Fund
48)        Morgan Stanley Dean Witter World Wide Income Trust
</TABLE>
 
                                       8

<PAGE>
                  MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC.
                       OMNIBUS SELECTED DEALER AGREEMENT
 
Dear Sir or Madam:
 
    We,  Morgan Stanley Dean Witter Distributors Inc. (the "Distributor") have a
distribution agreement (the "Distribution Agreement") with each of the  open-end
investment  companies listed  in Schedule  A attached  hereto (each,  a "Fund"),
pursuant to which we act as the  Distributor for the sale of each Fund's  shares
of  common stock  or beneficial  interest, as the  case may  be, (the "Shares").
Under the Distribution  Agreement, we have  the right to  distribute Shares  for
resale.
 
    Each  Fund is an open-end management investment company registered under the
Investment Company Act of 1940, as amended, and the Shares being offered to  the
public  are  registered  under  the  Securities Act  of  1933,  as  amended (the
"Securities Act").  You have  received  a copy  of the  Distribution  Agreements
between  us and each Fund and reference  is made herein to certain provisions of
such Distribution Agreements. The terms used herein, including "Prospectus"  and
"Registration  Statement" of each Fund and "Selected Dealer" shall have the same
meaning in this Agreement  as in the Distribution  Agreements. As principal,  we
offer to sell Shares to your customers, upon the following terms and conditions:
 
    1.  In all sales  of Shares to  the public you  shall act on  behalf of your
customers which for  purposes of  this Agreement  are limited  to customers  for
which Nations Banc Investments, Inc. is the Introducing Broker, and in no trans-
action shall  you have  any authority to  act as agent for a Fund, for us or for
any Selected Dealer.
 
    2. Orders received from  you will be  accepted through us  or on our  behalf
only  at the public offering price applicable to each order, as set forth in the
applicable current Prospectus. The procedure relating to the handling of  orders
shall  be subject to written instructions which  we or the applicable Fund shall
forward from  time to  time to  you. All  orders are  subject to  acceptance  or
rejection  by us or a Fund in the  sole discretion of either. The Distributor of
the Fund will promptly notify you in writing of any such rejection.
 
    3. You  shall  not place  orders  for any  Shares  unless you  have  already
received purchase orders for such Shares at the applicable public offering price
and subject to the terms hereof and of the applicable Distribution Agreement and
Prospectus.  In connection  herewith, you  agree to  abide by  the terms  of the
applicable  Distribution  Agreement  and  Prospectus  to  the  extent   required
hereunder.  Furthermore, you agree  that (i) you  will offer or  sell any of the
Shares only  under  circumstances  that  will  result  in  compliance  with  all
applicable Federal and state securities laws; (ii) you will not furnish or cause
to  be furnished to any  person any information relating  to the Shares which is
inconsistent in any  respect with  the information contained  in the  applicable
Prospectus  (as then amended or supplemented)  or cause any advertisements to be
published by radio or  television or in  any newspaper or  posted in any  public
place  or use any sales promotional material without our consent and the consent
of the  applicable Fund;  and (iii)  you will  endeavor to  obtain proxies  from
purchasers  of Shares. You also agree that you will be liable to Distributor for
payment of the  purchase price for  Shares purchased by  customers and that  you
shall make payment for such shares when due.
 
    4.  We will  compensate you for  sales of  shares of the  Funds and personal
services to  Fund  shareholders  by  paying you  a  sales  charge  and/or  other
commission  (which may be in  the form of a gross  sales credit and/or an annual
residual commission) and/or a service fee, each as separately agreed by you  and
us with respect to each Fund.
 
    5.  If any Shares sold  to your customers under  the terms of this Agreement
are repurchased by us for the account  of a Fund or are tendered for  redemption
within  seven business days after  the date of the  confirmation of the original
purchase by you, it is agreed that  you shall forfeit your right to, and  refund
to us, any commission received by you with respect to such Shares.
 
    6. No person is authorized to make any representations concerning the Shares
or  the Funds except those contained in the current applicable Prospectus and in
such printed information  subsequently issued  by us  or a  Fund as  information
supplemental to such Prospectus. In selling Shares, you shall rely solely on the
representations   contained  in  the   applicable  Prospectus  and  supplemental
information mentioned above. Any printed information which we furnish you  other
than the Prospectus and the Funds' periodic reports and
<PAGE>
proxy   solicitation  materials  are   our  sole  responsibility   and  not  the
responsibility of  the  Funds,  and you  agree  that  the Funds  shall  have  no
liability or responsibility to you in these respects unless expressly assumed in
connection therewith.
 
    7. You are hereby authorized (i) to place orders directly with a Fund or its
agent  for shares of the Fund  to be sold by us  subject to the applicable terms
and conditions  governing the  placement  of orders  for  the purchase  of  Fund
Shares,  as set forth in  the Distribution Agreement, and  (ii) to tender Shares
directly to the Fund or its agent for redemption subject to the applicable terms
and conditions set forth in the Distribution Agreement. We will provide you with
copies of any updates to the Distribution Agreement.
 
    8. We reserve the right in our discretion, without notice, to suspend  sales
or  withdraw the offering of Shares entirely. Each party hereto has the right to
cancel this agreement with respect to one or more Funds upon fifteen days  prior
written notice to the other party.
 
    9.  I. You shall indemnify and hold us harmless from and against any and all
losses, costs,  (including  reasonable  attorney's  fees)  claims,  damages  and
liabilities  which arise  as a result  of action taken  pursuant to instructions
from you, or on your  behalf to: (a)(i) place orders  for Shares of a Fund  with
the  Fund's transfer agent or direct  the transfer agent to receive instructions
for the order  of Shares, and  (ii) accept  monies or direct  that the  transfer
agent accept monies as payment for the order of such Shares, all as contemplated
by  and in accordance  with Section 3 of  the applicable Distribution Agreement;
(b)(i) place orders  for the  redemption of  Shares of  a Fund  with the  Fund's
transfer  agent  or direct  the transfer  agent to  receive instruction  for the
redemption of such Shares and (ii) to pay redemption proceeds or to direct  that
the  transfer agent  pay redemption proceeds  in connection with  orders for the
redemption of Shares, all as contemplated by and in accordance with Section 4 of
the applicable Distribution Agreement; Distributor agrees to indemnify and  hold
harmless  you  and your  affiliates,  officers, directors,  control  persons and
employees from  and against  any  and all  losses, costs  (including  reasonable
attorney's  fees), claims,  damages and liabilities  which arise as  a result of
Distributor's failure to fulfill its obligations hereunder and from any  alleged
inaccuracy,  omission or  misrepresentation contained  in any  prospectus or any
advertising, or sales literature prepared  by Distributor or the Fund  provided,
however, that in no case, (i) is this indemnity in favor of you or us and any of
other  party's such controlling persons  to be deemed to  protect us or any such
controlling persons against any  liability to which we  or any such  controlling
persons  would otherwise be subject by  reason of willful misfeasance, bad faith
or gross negligence in the  performance of our duties  or by reason of  reckless
disregard  of our obligations and duties  under this Agreement or the applicable
Distribution Agreement;  or  (ii) are  you  to  be liable  under  the  indemnity
agreement  contained in this paragraph with respect to any claim made against us
or any such controlling persons, unless  we or any such controlling persons,  as
the  case may be,  shall have notified  you in writing  within a reasonable time
after the summons or other first legal process giving information of the  nature
of  the claim  shall have been  served upon  us or such  controlling persons (or
after we or such controlling persons shall have received notice of such  service
on  any designated agent), notwithstanding the failure to notify you of any such
claim shall not relieve you from any liability which you may have to the  person
against  whom such action is brought otherwise  than on account of the indemnity
agreement contained in this paragraph.
 
    II. You will be entitled to participate at your own expense in the  defense,
or,  if you so elect, to assume the  defense, of any suit brought to enforce any
such liability, but if you  elect to assume the  defense, such defense shall  be
conducted  by counsel chosen  by you and  reasonably satisfactory to  us or such
controlling person or persons, defendant or defendants in the suit. In the event
you elect to assume the defense of any such suit and retain such counsel, we  or
such  controlling person or persons, defendant  or defendants in the suit, shall
bear the fees and expenses of any  additional counsel retained by them, but,  in
case you do not elect to assume the defense of any such suit, you will reimburse
us  or such controlling person or persons,  defendant or defendants in the suit,
for the reasonable fees and expenses of any counsel retained by them. Each party
shall promptly notify the other party  to this Agreement of the commencement  of
any  litigation or proceedings against it or any of its officers or directors in
connection with the issuance or sale of the Shares pursuant to this Agreement.
 
                                       2
<PAGE>
    III. If the indemnification provided for in this Section 9 is unavailable or
insufficient to hold harmless the Distributor,  as provided above in respect  of
any  losses, claims,  damages, liabilities  or expenses  (or actions  in respect
thereof) referred to  herein, then you  shall contribute to  the amount paid  or
payable  by  us as  a result  of  such losses,  claims, damages,  liabilities or
expenses (or actions in respect thereof) in such proportion as is appropriate to
reflect the relative  benefits received by  you on the  one hand and  us on  the
other  from the offering of the Shares.  If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law, then  you
shall  contribute to such  amount paid or  payable by such  indemnified party in
such proportion as is appropriate to reflect not only such relative benefits but
also your relative fault on the one hand and our relative fault on the other, in
connection with  the statements  or  omissions which  resulted in  such  losses,
claims,  damages, liabilities  or expenses (or  actions in  respect thereof), as
well as any other  relevant equitable considerations. You  and we agree that  it
would  not be  just and  equitable if contribution  were determined  by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to above. The amount paid or payable by us
as a result of the losses, claims, damages, liabilities or expenses (or  actions
in  respect thereof) referred to  above shall be deemed  to include any legal or
other expenses reasonably  incurred by  us in connection  with investigating  or
defending  any  such claim.  Notwithstanding the  provisions of  this subsection
(III), you shall  not be  required to  contribute any  amount in  excess of  the
amount  by which the total  price at which the Shares  distributed by you to the
public were offered to the  public exceeds the amount  of any damages which  you
have  otherwise been required to pay by  reason of such untrue or alleged untrue
statement or  omission  or alleged  omission.  No person  guilty  of  fraudulent
misrepresentation  (within the meaning  of Section 11(f)  of the Securities Act)
shall be entitled to  contribution from any  person who was  not guilty of  such
fraudulent misrepresentation.
 
    IV.  Notwithstanding the provisions  of subsections (I),  (II) and (III), we
shall indemnify,  defend and  hold harmless  you and  your officers,  directors,
employees,  affiliates, agents, successors and assigns  from and against any and
all claims  and all  related  losses, expenses,  damages, cost  and  liabilities
including  reasonable attorneys' fees and  expenses incurred in investigation or
defense, arising out of or related to any breach of any representation, warranty
or covenant by us contained in Section 15 of this Agreement.
 
    11. We  shall  have full  authority  to take  such  action as  we  may  deem
advisable  in  respect  of  all  matters  pertaining  to  the  distribution  and
redemption of Shares. Neither  party shall be under  any liability to the  other
party  except  for lack  of  good faith  and  for obligations  expressly assumed
herein. Nothing contained in this paragraph  is intended to operate as, and  the
provisions  of  this paragraph  shall not  in any  way whatsoever  constitute, a
waiver by you of compliance with any provision of the Securities Act, or of  the
rules   and  regulations  of  the  Securities  and  Exchange  Commission  issued
thereunder.
 
    12. Each  party represents  that it  is a  member in  good standing  of  the
National  Association of Securities Dealers, Inc. and, with respect to any sales
in the United States,  each party hereby  agrees to abide by  the Rules of  Fair
Practice  of such  Association relating  to the  performance of  the obligations
hereunder.
 
    13. We will inform you in writing as  to the states in which we believe  the
Shares  have been qualified for sale under,  or are exempt from the requirements
of,  the  respective  securities  laws  of   such  states,  but  we  assume   no
responsibility   or  obligation  as  to  your   right  to  sell  Shares  in  any
jurisdiction.
 
    14. Notwithstanding any other provision  of this Agreement to the  contrary,
we  represent and  warrant that  the names and  addresses of  your customers (or
customers of your affiliates) which have or  which may come to our attention  in
connection  with this Agreement are confidential and are your exclusive property
and shall  not  be  utilized by  us  except  in connection  with  the  functions
performed   by  us  in  connection  with  this  Agreement.  Notwithstanding  the
foregoing, should a customer request, that we or an organization affiliated with
us, provide services to such customer, we or such affiliated organization  shall
in  no way violate this representation and warranty, nor be considered in breach
of this Agreement.
 
    15. We represent, warrant, and covenant to you that the marketing materials,
any communications distributed to the public and training materials designed  by
us  or our agents relating to the product sold under this Agreement are true and
accurate  and   do  not   omit  to   state  a   fact  necessary   to  make   the
 
                                       3
<PAGE>
information  contained therein not misleading and comply with applicable federal
and state laws.  We further  represent, warrant, and  covenant to  you that  the
performance  by us of our obligations under this Agreement in no way constitutes
an infringement on  or other  violation of copyright,  trade secret,  trademark,
proprietary information or non-disclosure rights of any other party.
 
    16.  We shall  maintain a  contingency disaster  recovery plan,  and, in the
event you are  so required by  any regulatory or  governmental agency, we  shall
make  such plan available to  you for inspection at  your office upon reasonable
advance notice by you. Each party agrees  that it will at all times conduct  its
activities under this Agreement in an equitable, legal and professional manner.
 
    17.  We understand  that the performance  of your and  our obligations under
this  Agreement  is  subject  to  examination  during  business  hours  by  your
authorized  representatives  and auditors  and by  federal and  state regulatory
agencies, and  we agree  that  upon being  given  reasonable notice  and  proper
identification  we shall submit or furnish at a reasonable time and place to any
such representative or  regulatory agency  reports, information,  or other  data
relating to this Agreement as may reasonably be required or requested by you. We
shall  maintain and make  available to you upon  reasonable notice all material,
data, files, and records  relating to this  Agreement for a  period of not  less
than three years after the termination of this Agreement.
 
    18.  The  sales, advertising  and promotional  materials designed  by either
party or its agents relating to products sold under this Agreement shall  comply
with  applicable  federal and  state  laws. Each  party  agrees that  the sales,
advertising and promotional materials shall be made available to the other party
prior to distribution to your employees or customers.
 
    19. Any controversy or claim between or among the parties hereto arising out
of or relating to this Agreement, including  any claim based on or arising  from
an  alleged tort, shall be determined  by binding arbitration in accordance with
the rules of the National Association of Securities Dealers, Inc. Judgment  upon
any arbitration award may be entered in any court having jurisdiction. Any party
to  this  Agreement  may  bring  an action,  including  a  summary  or expedited
proceeding, to compel  arbitration of  any controversy  or claim  to which  this
Agreement applies in any court having jurisdiction over such action.
 
    20.  All notices  or other communications  under this Agreement  shall be in
writing and given as follows:
 
If to us:             Morgan Stanley Dean Witter Distributors Inc.
                      Attn: Barry Fink,
                      Two World Trade Center
                      New York, NY 10048

If to you:            National Financial
                      Services Corporation
                      Attn: Robert Masabuy
                      4201 Congress Street, Suite 245
                      Boston, MA

or such other address as the parties may hereafter specify in writing. Each such
notice to  any party  shall  be either  hand-delivered or  transmitted,  postage
prepaid,  by  registered or  certified United  States  mail with  return receipt
requested, and shall be deemed effective only upon receipt.
 
                                       4
<PAGE>
    21. This Agreement shall become effective as of the date of your  acceptance
hereof, provided that you return to us promptly a signed and dated copy.
 
                                          MORGAN STANLEY DEAN WITTER
                                          DISTRIBUTORS INC.
 
                                          By  /s/
                                             ...................................
                                                    (Authorized Signature)
 
Please return one signed copy
    of this agreement to:
Morgan Stanley Dean Witter Distributors Inc.
Two World Trade Center
New York, New York 10048
 
Accepted:
 
Firm Name:  National Financial Services by
           ................................
By: 
    .......................................
 
Address:  
         ..................................
          
         ..................................
Date:  
       ....................................
 
                                       5
<PAGE>
                                   SCHEDULE A
 
<TABLE>
<C>        <S>
           Dean Witter Global Asset Allocation Fund
           Morgan Stanley Dean Witter American Value Fund
           Morgan Stanley Dean Witter Balanced Growth Fund
           Morgan Stanley Dean Witter Balanced Income Fund
           Morgan Stanley Dean Witter California Tax-Free Income Fund
           Morgan Stanley Dean Witter Capital Appreciation Fund
           Morgan Stanley Dean Witter Capital Growth Securities
           Morgan Stanley Dean Witter Competitive Edge Fund, "Best Ideas" Portfolio
           Morgan Stanley Dean Witter Convertible Securities Trust
           Morgan Stanley Dean Witter Developing Growth Securities Trust
           Morgan Stanley Dean Witter Diversified Income Trust
           Morgan Stanley Dean Witter Dividend Growth Securities Inc.
           Morgan Stanley Dean Witter Equity Fund
           Morgan Stanley Dean Witter European Growth Fund Inc.
           Morgan Stanley Dean Witter Federal Securities Trust
           Morgan Stanley Dean Witter Financial Services Trust
           Morgan Stanley Dean Witter Fund of Funds
           Morgan Stanley Dean Witter Global Dividend Growth Securities
           Morgan Stanley Dean Witter Global Short-Term Income Fund Inc.
           Morgan Stanley Dean Witter Global Utilities Fund
           Morgan Stanley Dean Witter Growth Fund
           Morgan Stanley Dean Witter Hawaii Municipal Trust
           Morgan Stanley Dean Witter Health Sciences Trust
           Morgan Stanley Dean Witter High Yield Securities Inc.
           Morgan Stanley Dean Witter Income Builder Fund
           Morgan Stanley Dean Witter Information Fund
           Morgan Stanley Dean Witter Intermediate Income Securities Inc.
           Morgan Stanley Dean Witter International SmallCap Fund
           Morgan Stanley Dean Witter Japan Fund
           Morgan Stanley Dean Witter Limited Term Municipal Trust
           Morgan Stanley Dean Witter Market Leader Trust
           Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
           Morgan Stanley Dean Witter Mid-Cap Growth Fund
           Morgan Stanley Dean Witter Multi-State Municipal Series Trust
           Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
           Morgan Stanley Dean Witter New York Tax-Free Income Fund
           Morgan Stanley Dean Witter Pacific Growth Fund Inc.
           Morgan Stanley Dean Witter Precious Metals and Minerals Trust
           Morgan Stanley Dean Witter S&P 500 Index Fund
           Morgan Stanley Dean Witter S&P 500 Select Fund
           Morgan Stanley Dean Witter Short-Term Bond Fund
           Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
           Morgan Stanley Dean Witter Special Value Fund
           Morgan Stanley Dean Witter Strategist Fund
           Morgan Stanley Dean Witter Tax-Exempt Securities Trust
           Morgan Stanley Dean Witter U.S. Government Securities Trust
           Morgan Stanley Dean Witter Utilities Fund
           Morgan Stanley Dean Witter Value-Added Market Series
           Morgan Stanley Dean Witter Value Fund
           Morgan Stanley Dean Witter World Wide Income Trust
</TABLE>
 
                                      A-1

<PAGE>
                          SECOND AMENDED AND RESTATED
                              RETIREMENT PLAN FOR
                            NON-INTERESTED TRUSTEES
                                  OR DIRECTORS
 
    Certain of the investment companies for which Morgan Stanley Dean Witter
Advisors Inc. ("MSDW Advisors") currently acts as manager or adviser adopted a
Retirement Plan for Non-Interested Trustees and Directors (the "Original Plan")
on February 21, 1991 (the "Commencement Date"). The Original Plan was amended
and restated on October 22, 1993, effective January 1, 1994 and further amended
by First Amendment dated December 19, 1995 and by Second Amendment dated May 8,
1997. The participating Funds now desire to amend and restate the Plan further
as provided herein effective as of the Commencement Date (as so amended, the
"Plan"), for the purposes of expanding the flexibility of Non-Interested
Trustees and Directors to make and change their elections of benefits.
 
    1.  DEFINITIONS
 
    (a) "Independent Board Member" shall mean (i) a Trustee of an Adopting Fund
if the Adopting Fund is organized as a Massachusetts business trust, (ii) a
Director of an Adopting Fund if the Adopting Fund is organized as a corporation,
and (iii) a "director" (as such term is defined in Section 2(a)(12) of the
Investment Company Act of 1940, as amended [the "Act"]) of an Adopting Fund if
the Adopting Fund is any other type of organization, who in any such case is not
an interested person (as such term is defined in Section 2(a)(19) of the Act) of
MSDW Advisors.
 
    (b) "Eligible Board Member" shall mean an Independent Board Member who at
the time of Retirement (as hereinafter defined) has served as an Independent
Board Member of any Adopting Fund for at least five years, or such lesser period
as may be determined by the Board.
 
    (c) "Eligible Service" shall mean service as an Independent Board Member.
 
    (d) "Eligible Retirement Date" shall mean, with respect to any Independent
Board Member, the later of (i) January 1, 1993, (ii) the first day of the
calendar month following the month in which such Independent Board Member's
seventy-second birthday occurs, or (iii) such later date as the Board may
establish as his or her "Eligible Retirement Date."
 
    (e) "Retirement" shall mean any termination of service of an Independent
Board Member except any termination which the Board determines to have resulted
from the Independent Board Member's willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Independent Board Member.
 
    (f) "Benefit" shall mean with respect to any Eligible Board Member, (i) the
Regular Benefit, unless the Alternate Benefit has been elected or the Early
Benefit granted, (ii) the Alternate Benefit, if elected by such Eligible Board
Member, unless the Early Benefit has been granted, or (iii) the Early Benefit,
if granted by the Board.
 
    (g) "Eligible Compensation" shall mean, with respect to any Eligible Board
Member of any Adopting Fund, an amount equal to one-fifth of the total
compensation, inclusive of compensation as a member of the Board or of a Board
Committee or as chairperson of a Board Committee, earned by such Eligible Board
Member for Eligible Service with respect to such Adopting Fund (other than under
this Plan) in the five year period prior to the date of his or her Retirement.
 
    (h) "Actuarial Equivalent" shall mean an actuarially equivalent benefit, as
computed by the Board with the advice of an enrolled actuary (as defined in the
Employee Retirement Income Security Act of 1974, as amended ["ERISA"]), using
assumptions determined by the Board at the time of the computation.
 
    (i) "Board" shall mean, with respect to any Adopting Fund, the Board of
Directors or Trustee or "directors," (as such term is defined in Section
2(a)(12) of the Act, of such Adopting Fund.
 
    (j) "Adoption Date" shall mean February 21, 1991.
 
                                       1
<PAGE>
    2.  ELIGIBILITY
 
    Each Eligible Board Member will be eligible to receive a Benefit from each
Adopting Fund commencing on such Eligible Board Member's Eligible Retirement
Date.
 
    3.  RETIREMENT DATE; AMOUNT OF BENEFIT
 
    (a) RETIREMENT. Each Independent Board Member will retire not later than his
or her Eligible Retirement Date. The foregoing provision shall be deemed by the
adoption of this Plan by any Fund to be an amendment of such Fund's by-laws
superseding any provision therein that an Independent Board Member shall serve
until his or her successor shall have been elected and qualified.
Notwithstanding the foregoing, the Board of any Adopting Fund may, to avoid the
simultaneous retirement of more than one of the Independent Board Members or for
any other appropriate reason, waive the obligation of any Independent Board
Member to retire on such date and may establish a later date as his or her
"Eligible Retirement Date." Any establishment of an Eligible Retirement Date may
be further extended by the Board.
 
    (b) REGULAR RETIREMENT BENEFIT. Upon Retirement, each Eligible Board Member
will receive, commencing as of such Eligible Board Member's Eligible Retirement
Date and continuing for the remainder of the Eligible Board Member's life, from
each Adopting Fund a retirement benefit (the "Regular Benefit") paid at an
annual rate equal to the percentage of his or her Eligible Compensation
established by resolution of the Board of such Adopting Fund most recently
adopted prior to the date of his or her retirement (the "Most Recent
Resolution") as the "Minimum Percentage," PLUS an additional percentage of such
Eligible Compensation for each full month of Eligible Service for any of the
Adopting Funds in excess of five years established by the Most Recent Resolution
as the "Monthly Additional Percentage," up to the percentage established by the
Most Recent Resolution as the "Maximum Percentage" of such Eligible Compensation
for ten or more years of Eligible Service for any of the Adopting Funds.
 
    (c) ELECTION OF ALTERNATE PAYMENT OF BENEFIT. Each Independent Board Member
shall have the option, exercisable at any time, and revisable at any time and
from time to time, prior to his or her first acceptance of benefits under the
Plan to elect (i) to receive, subject to being or becoming an Eligible Board
Member, a retirement benefit (the "Alternate Benefit") based upon the combined
life expectancy of such Eligible Board Member and his or her spouse on the date
of such Eligible Board Member's Retirement (rather than solely upon such
Eligible Board Member's own life, as shall be the case unless such Eligible
Board Member shall otherwise elect as provided in this Section 3(c)), and (ii)
if the Independent Board Member elects to receive the Alternate Benefit, to
elect a benefit either (x) to the last survivor of the Eligible Board Member or
spouse, whether the Eligible Board Member or spouse is the last survivor (a
"joint and last survivor" benefit) or (y) to the Eligible Board Member's spouse
if the spouse survives the Eligible Board Member (a "joint and contingent
survivor" benefit) equal in periodic amount to a percentage (the "Designated
Survivor's Percentage") of the periodic amount that would be, or would be
assumed to be, in effect while both the Eligible Board Member and spouse were
alive. The Designated Survivor's Percentage shall be the percentage stated in
the most recently delivered notice of election given by such Independent Board
Member, or, if no percentage is stated in any such notice, 100%. Payment of the
Alternate Benefit shall commence on the later of such Eligible Board Member's
Eligible Retirement Date or the date of his or her Retirement, shall be reduced
to the Designated Survivor's Percentage (if less than 100%) upon the earlier of
the deceases of the Eligible Board Member and spouse in the case of a joint and
last survivor benefit, or of the Eligible Board Member in the case of a joint
and contingent survivor benefit, and shall be payable through the remainder of
the life of the survivor of such Eligible Board Member and spouse. The Alternate
Benefit shall be the Actuarial Equivalent of the Regular Benefit provided under
paragraph 3(b). In the event of the death of an Eligible Board Member who has
chosen the Alternate Benefit prior to such Eligible Board Member's Retirement,
his or her spouse shall be entitled to a retirement benefit, commencing upon
such death, which shall be the Actuarial Equivalent of the benefit such spouse
would have received had such Eligible Board Member died on his or her Eligible
Retirement Date.
 
    (d) EARLY PAYMENT OF BENEFIT. An Eligible Board Member for good cause may
apply to the Board of any Adopting Fund for, and, at the discretion of such
Board, may be granted, a retirement benefit (the "Early Benefit") which is the
Actuarial Equivalent of the Regular Benefit or Alternate Benefit previously
elected
 
                                       2
<PAGE>
by such Eligible Board Member. Payment of the Early Benefit shall commence on a
date fixed by the Board in its sole discretion as such Eligible Board Member's
Eligible Retirement Date and shall be payable through the remainder of such
Eligible Board Member's life, or, if the Alternate Benefit had been elected, the
later of the lives of such Eligible Board Member and spouse. Good cause for
these purposes may include (but is not limited to) the permanent disability of
the Eligible Board Member.
 
    (e) Anything contained herein to the contrary notwithstanding, upon the
adoption by an Adopting Fund of a plan of liquidation, such Adopting Fund shall
pay to each Eligible Board Member who has retired, in lieu of his or her Benefit
from such Adopting Fund, an amount (the "Lump Sum") equal to the then present
value of the Benefit, using a discount rate determined by the Board at the time
of the computation. The Lump Sum shall be paid by such Adopting Fund at or
before the final liquidation and dissolution of such Adopting Fund.
 
    4.  TIME OF PAYMENT
 
    The Benefit to each Eligible Board Member or his or her spouse will, except
as provided in Section 3(c), 3(d) or 3(e) hereof, commence on such Eligible
Board Member's Eligible Retirement Date and will be paid each year in quarterly
installments that are as nearly equal as possible on the first day of each
calendar quarter.
 
    5.  PAYMENT OF BENEFIT; ALLOCATION OF COSTS
 
    Each Adopting Fund is responsible for the payment of Benefits based upon
Eligible Compensation from such Adopting Fund, as well as its proportionate
share of all expenses of administration of the Plan, including without
limitation all accounting and legal fees and expenses and fees and expenses of
any enrolled actuary. The obligations of each Adopting Fund to pay such benefits
and expenses will not be secured or funded in any manner, and such obligations
will not have any preference over the lawful claims of the Adopting Funds'
creditors and stockholders, shareholders, beneficiaries or limited partners, as
the case may be. To the extent that an Adopting Fund consists of one or more
separate portfolios, such costs and expenses will be allocated among such
portfolios in the proportion that compensation of Independent Board Members is
allocated among such portfolios.
 
    6.  ADMINISTRATION
 
    (a) ADMINISTRATION. Any question involving entitlement to payments under or
the administration of the Plan will be referred to the Board, which shall make
all interpretations and determinations necessary or desirable for the Plan's
administration (such interpretations and determinations to be final and
conclusive) and shall cause such records to be kept as may be necessary for the
administration of the Plan.
 
    7.  MISCELLANEOUS
 
    (a) RIGHTS NOT ASSIGNABLE. The right to receive any payment under the Plan
is not transferable or assignable. Except as otherwise provided herein with
respect to the Alternate Benefit, the Plan shall not create any benefit, cause
of action, right of sale, transfer, assignment, pledge, encumbrance, or other
such right in any spouse or heirs or the estate of any Eligible Board Member or
retired Eligible Board Member.
 
    (b) AMENDMENT, ETC. With respect to each Adopting Fund, the Board, including
a majority of the Independent Board Members of such Board, may at any time amend
or terminate the Plan or waive any provision of the Plan, PROVIDED, that except
as otherwise provided herein, no amendment, termination or waiver will impair
the rights of an Independent Board Member to receive upon Retirement the
payments which would have been made to such Independent Board Member had there
been no such amendment, termination or waiver (based upon such Board Member's
Eligible Service to the date of such amendment, termination or waiver) or the
rights of a retired Eligible Board Member to receive any Benefit due under the
Plan, without the consent of such Independent Board Member or Eligible Board
Member. Notwithstanding any provision to the contrary, the Board, with the
concurrence of a majority of the Independent Board Members of such Board and
without the consent of any individual Independent Board Member, may at any time
(i) amend or terminate the Plan to comply with any applicable provision of law
or any rule or regulation adopted, or proposed to be adopted, by any
governmental agency or any decision of any court or administrative agency, (ii)
change any assumptions used to determine what benefit may be an
 
                                       3
<PAGE>
Actuarial Equivalent, or (iii) terminate the Plan of an Adopting Fund (an
"Acquired Adopting Fund") substantially all the assets of which are acquired by
an entity which is itself an Adopting Fund (the "Acquiring Adopting Fund")
pursuant to a plan of reorganization between the Acquired Adopting Fund and the
Acquiring Adopting Fund (the "Reorganization Plan"), such termination to be
deemed approved upon adoption of the Reorganization Plan and to be effective
upon the effectiveness of the reorganization contemplated thereby without
liability or further obligation for any benefits accrued or otherwise payable to
an Independent Board Member by the Acquired Adopting Fund.
 
    (c) NO RIGHT TO REELECTION. Nothing in the Plan will create any obligation
on the part of the Board to nominate any Independent Board Member for
reelection.
 
    (d) VACANCIES. Although the Board will retain the right to increase or
decrease its size, it shall be the general policy to replace each retired
Independent Board Member by selecting a new Independent Board Member from
candidates recommended by the remaining Independent Board Members.
 
    (e) CONSULTING. Each retired Eligible Board Member may render such services
for any of the Adopting Funds, for such compensation, as may be agreed upon from
time to time by such retired Eligible Board Member and the Board.
 
    (f) EFFECTIVENESS. The Plan will be effective for all Independent Board
Members who have dates of Retirement occurring on or after the Adoption Date.
Periods of Eligible Service shall include periods commencing prior to such date.
 
                                       4
<PAGE>
                       MORGAN STANLEY DEAN WITTER FUNDS:
                  FUNDS THAT HAVE ADOPTED THE RETIREMENT PLAN
                    FOR NON-INTERESTED TRUSTEES OR DIRECTORS
                                   SCHEDULE A
                                   MARCH 1999
 
<TABLE>
<S>        <C>
1)         Active Assets California Tax-Free Trust
2)         Active Assets Government Securities Trust
3)         Active Assets Money Trust
4)         Active Assets Tax-Free Trust
5)         Morgan Stanley Dean Witter American Value Fund
6)         Morgan Stanley Dean Witter California Insured Municipal Income Trust
7)         Morgan Stanley Dean Witter California Quality Municipal Securities
8)         Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
9)         Morgan Stanley Dean Witter California Tax-Free Income Fund
10)        Morgan Stanley Dean Witter Capital Growth Securities
11)        Morgan Stanley Dean Witter Convertible Securities Trust
12)        Morgan Stanley Dean Witter Developing Growth Securities Trust
13)        Morgan Stanley Dean Witter Diversified Income Trust
14)        Morgan Stanley Dean Witter Dividend Growth Securities Inc.
15)        Morgan Stanley Dean Witter European Growth Fund Inc.
16)        Morgan Stanley Dean Witter Federal Securities Trust
17)        Morgan Stanley Dean Witter Global Dividend Growth Securities
18)        Morgan Stanley Dean Witter Government Income Trust
19)        Morgan Stanley Dean Witter Health Sciences Trust
20)        Morgan Stanley Dean Witter High Income Advantage Trust
21)        Morgan Stanley Dean Witter High Income Advantage Trust II
22)        Morgan Stanley Dean Witter High Yield Securities Inc.
23)        Morgan Stanley Dean Witter Income Securities Inc.
24)        Morgan Stanley Dean Witter Insured Municipal Bond Trust
25)        Morgan Stanley Dean Witter Insured Municipal Income Trust
26)        Morgan Stanley Dean Witter Insured Municipal Securities
27)        Morgan Stanley Dean Witter Insured Municipal Trust
28)        Morgan Stanley Dean Witter Intermediate Income Securities
29)        Morgan Stanley Dean Witter Limited Term Municipal Trust
30)        Morgan Stanley Dean Witter Liquid Asset Fund Inc.
31)        Morgan Stanley Dean Witter Multi-State Municipal Series Trust
32)        Morgan Stanley Dean Witter Municipal Income Opportunities Trust
33)        Morgan Stanley Dean Witter Municipal Income Opportunities Trust II
34)        Morgan Stanley Dean Witter Municipal Income Opportunities Trust III
35)        Morgan Stanley Dean Witter Municipal Income Trust
36)        Morgan Stanley Dean Witter Municipal Income Trust II
37)        Morgan Stanley Dean Witter Municipal Premium Income Trust
38)        Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
39)        Morgan Stanley Dean Witter New York Municipal Money Market Trust
40)        Morgan Stanley Dean Witter New York Tax-Free Income Fund
41)        Morgan Stanley Dean Witter Pacific Growth Fund Inc.
42)        Morgan Stanley Dean Witter Prime Income Trust
43)        Morgan Stanley Dean Witter Quality Municipal Income Trust
44)        Morgan Stanley Dean Witter Quality Municipal Investment Trust
45)        Morgan Stanley Dean Witter Quality Municipal Securities
46)        Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
47)        Morgan Stanley Dean Witter Strategist Fund
</TABLE>
 
                                       5
<PAGE>
<TABLE>
<S>        <C>
48)        Morgan Stanley Dean Witter Tax-Exempt Securities Trust
49)        Morgan Stanley Dean Witter Tax-Free Daily Income Trust
50)        Morgan Stanley Dean Witter U.S. Government Money Market Trust
51)        Morgan Stanley Dean Witter U.S. Government Securities Trust
52)        Morgan Stanley Dean Witter Utilities Fund
53)        Morgan Stanley Dean Witter Value-Added Market Series
54)        Morgan Stanley Dean Witter Variable Investment Series
55)        Morgan Stanley Dean Witter World Wide Income Trust
</TABLE>
 
                                       6

<PAGE>


                                 AMENDED AND RESTATED
                        TRANSFER AGENCY AND SERVICE AGREEMENT

                                         with

                         MORGAN STANLEY DEAN WITTER TRUST FSB








                                                                [open-end funds]

<PAGE>


                                  TABLE OF CONTENTS
     
     
                                                                          Page
                                                                          ----
 
Article 1      Terms of Appointment. . . . . . . . . . . . . . . . . . .  1

Article 2      Fees and Expenses . . . . . . . . . . . . . . . . . . . .  5

Article 3      Representations and Warranties of MSDW TRUST. . . . . . .  6

Article 4      Representations and Warranties of the Fund. . . . . . . .  7

Article 5      Duty of Care and Indemnification. . . . . . . . . . . . .  7

Article 6      Documents and Covenants of the Fund and MSDW TRUST. . . . 10

Article 7      Duration and Termination of Agreement . . . . . . . . . . 13

Article 8      Assignment. . . . . . . . . . . . . . . . . . . . . . . . 14

Article 9      Affiliations. . . . . . . . . . . . . . . . . . . . . . . 14

Article 10     Amendment . . . . . . . . . . . . . . . . . . . . . . . . 15

Article 11     Applicable Law. . . . . . . . . . . . . . . . . . . . . . 15

Article 12     Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 15

Article 13     Merger of Agreement . . . . . . . . . . . . . . . . . . . 17

Article 14     Personal Liability. . . . . . . . . . . . . . . . . . . . 17


                                         -i-

<PAGE>

              AMENDED AND RESTATED TRANSFER AGENCY AND SERVICE AGREEMENT


          AMENDED AND RESTATED AGREEMENT made as of the 22nd day of June, 1998
by and between each of the Funds listed on the signature pages hereof, each of
such Funds acting severally on its own behalf and not jointly with any of such
other Funds (each such Fund hereinafter referred to as the "Fund"), each such
Fund having its principal office and place of business at Two World Trade
Center, New York, New York, 10048, and MORGAN STANLEY DEAN WITTER TRUST FSB
("MSDW TRUST"), a federally chartered savings bank, having its principal office
and place of business at Harborside Financial Center, Plaza Two, Jersey City,
New Jersey 07311.


          WHEREAS, the Fund desires to appoint MSDW TRUST as its transfer agent,
dividend disbursing agent and shareholder servicing agent and MSDW TRUST desires
to accept such appointment;


          NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:


Article 1      TERMS OF APPOINTMENT; DUTIES OF MSDW TRUST


               1.1  Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints MSDW TRUST to act as, and MSDW
TRUST agrees to act as, the transfer agent for each series and class of shares
of the Fund, whether now or hereafter authorized or issued ("Shares"), dividend
disbursing agent and shareholder servicing agent in 


                                         -1-
<PAGE>

connection with any accumulation, open-account or similar plans provided to the
holders of such Shares ("Shareholders") and set out in the currently effective
prospectus and statement of additional information ("prospectus") of the Fund,
including without limitation any periodic investment plan or periodic withdrawal
program.


               1.2  MSDW TRUST agrees that it will perform the following
services:


                (a) In accordance with procedures established from time to time
by agreement between the Fund and MSDW TRUST, MSDW TRUST shall:


                (i) Receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation therefor to the
custodian of the assets of the Fund (the "Custodian");


               (ii) Pursuant to purchase orders, issue the appropriate number of
Shares and issue certificates therefor or hold such Shares in book form in the
appropriate Shareholder account;


              (iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation therefor to the Custodian;


               (iv) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay over or cause to be
paid over in the appropriate manner such monies as instructed by the redeeming
Shareholders;


                                         -2-
<PAGE>


               (v) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;


              (vi) Prepare and transmit payments for dividends and
distributions declared by the Fund;


             (vii) Calculate any sales charges payable by a Shareholder on
purchases and/or redemptions of Shares of the Fund as such charges may be
reflected in the prospectus;


            (viii) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and


               (ix) Record the issuance of Shares of the Fund and maintain
pursuant to Rule 17Ad-10(e) under the Securities Exchange Act of 1934 ("1934
Act") a record of the total number of Shares of the Fund which are authorized,
based upon data provided to it by the Fund, and issued and outstanding.  MSDW
TRUST shall also provide to the Fund on a regular basis the total number of
Shares that are authorized, issued and outstanding and shall notify the Fund in
case any proposed issue of Shares by the Fund would result in an overissue.  In
case any issue of Shares would result in an overissue, MSDW TRUST shall refuse
to issue such Shares and shall not countersign and issue any certificates
requested for such Shares.  When recording the issuance of Shares, MSDW TRUST
shall have no obligation to take cognizance of any Blue Sky laws relating to the
issue of sale of such Shares, which functions shall be the sole responsibility
of the Fund.


               (b)  In addition to and not in lieu of the services set forth in
the above paragraph (a), MSDW TRUST shall: 


                                         -3-
<PAGE>

                (i) perform all of the customary services of a transfer agent,
dividend disbursing agent and, as relevant, shareholder servicing agent in
connection with dividend reinvestment, accumulation, open-account or similar
plans (including without limitation any periodic investment plan or periodic
withdrawal program), including but not limited to, maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxies, receiving and
tabulating proxies, mailing shareholder reports and prospectuses to current
Shareholders, withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing appropriate forms required with respect to
dividends and distributions by federal tax authorities for all Shareholders,
preparing and mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and mailing activity statements
for Shareholders and providing Shareholder account information;


               (ii) open any and all bank accounts which may be necessary or
appropriate in order to provide the foregoing services; and


              (iii) provide a system that will enable the Fund to monitor the
total number of Shares sold in each State or other jurisdiction.


                (c) In addition, the Fund shall:


                (i) identify to MSDW TRUST in writing those transactions and
assets to be treated as exempt from Blue Sky reporting for each State; and 


                                         -4-
<PAGE>

               (ii) verify the inclusion on the system prior to activation of
each State in which Fund shares may be sold and thereafter monitor the daily
purchases and sales for shareholders in each State.  The responsibility of MSDW
TRUST for the Fund's status under the securities laws of any State or other
jurisdiction is limited to the inclusion on the system of each State as to which
the Fund has informed MSDW TRUST that shares may be sold in compliance with
state securities laws and the reporting of purchases and sales in each such
State to the Fund as provided above and as agreed from time to time by the Fund
and MSDW TRUST.


                (d) MSDW TRUST shall provide such additional services and
functions not specifically described herein as may be mutually agreed between
MSDW TRUST and the Fund.  Procedures applicable to such services may be
established from time to time by agreement between the Fund and MSDW TRUST.


Article 2      FEES AND EXPENSES

               2.1  For performance by MSDW TRUST pursuant to this Agreement,
each Fund agrees to pay MSDW TRUST an annual maintenance fee for each
Shareholder account and certain transactional fees, if applicable, as set out in
the respective fee schedule attached hereto as Schedule A.  Such fees and
out-of-pocket expenses and advances identified under Section 2.2 below may be
changed from time to time subject to mutual written agreement between the Fund
and MSDW TRUST.


               2.2  In addition to the fees paid under Section 2.1 above, the
Fund agrees to reimburse MSDW TRUST for out of pocket expenses in connection
with the services rendered 


                                         -5-
<PAGE>

by MSDW TRUST hereunder.  In addition, any other expenses incurred by MSDW TRUST
at the request or with the consent of the Fund will be reimbursed by the Fund.


               2.3  The Fund agrees to pay all fees and reimbursable expenses
within a reasonable period of time following the mailing of the respective
billing notice.  Postage for mailing of dividends, proxies, Fund reports and
other mailings to all Shareholder accounts shall be advanced to MSDW TRUST by
the Fund upon request prior to the mailing date of such materials.


Article 3      REPRESENTATIONS AND WARRANTIES OF MSDW TRUST

               MSDW TRUST represents and warrants to the Fund that:

               3.1  It is a federally chartered savings bank whose principal
office is in New Jersey.


               3.2  It is and will remain registered with the U.S. Securities
and Exchange Commission ("SEC") as a Transfer Agent pursuant to the requirements
of Section 17A of the 1934 Act.


               3.3  It is empowered under applicable laws and by its charter and
By-Laws to enter into and perform this Agreement.


               3.4  All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.


               3.5  It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.


                                         -6-
<PAGE>


Article 4      REPRESENTATIONS AND WARRANTIES OF THE FUND

               The Fund represents and warrants to MSDW TRUST that:


               4.1  It is a corporation duly organized and existing and in good
standing under the laws of Delaware or Maryland or a trust duly organized and
existing and in good standing under the laws of Massachusetts, as the case may
be.


               4.2  It is empowered under applicable laws and by its Articles of
Incorporation or Declaration of Trust, as the case may be, and under its By-Laws
to enter into and perform this Agreement.


               4.3  All corporate proceedings necessary to authorize it to enter
into and perform this Agreement have been taken.


               4.4  It is an investment company registered with the SEC under
the Investment Company Act of 1940, as amended (the "1940 Act").


               4.5  A registration statement under the Securities Act of 1933
(the "1933 Act") is currently effective and will remain effective, and
appropriate state securities law filings have been made and will continue to be
made, with respect to all Shares of the Fund being offered for sale.


Article 5      DUTY OF CARE AND INDEMNIFICATION

               5.1  MSDW TRUST shall not be responsible for, and the Fund shall
indemnify and hold MSDW TRUST harmless from and against, any and all losses,
damages, costs, 


                                         -7-
<PAGE>

charges, counsel fees, payments, expenses and liability arising out of or
attributable to:


               (a)  All actions of MSDW TRUST or its agents or subcontractors
required to be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.


               (b)  The Fund's refusal or failure to comply with the terms of
this Agreement, or which arise out of the Fund's lack of good faith, negligence
or willful misconduct or which arise out of breach of any representation or
warranty of the Fund hereunder.


               (c)  The reliance on or use by MSDW TRUST or its agents or
subcontractors of information, records and documents which (i) are received by
MSDW TRUST or its agents or subcontractors and furnished to it by or on behalf
of the Fund, and (ii) have been prepared and/or maintained by the Fund or any
other person or firm on behalf of the Fund.


               (d)  The reliance on, or the carrying out by MSDW TRUST or its
agents or subcontractors of, any instructions or requests of the Fund.


               (e)  The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities or Blue Sky
laws of any State or other jurisdiction that notice of offering of such Shares
in such State or other jurisdiction or in violation of any stop order or other
determination or ruling by any federal agency or any State or other jurisdiction
with respect to the offer or sale of such Shares in such State or other
jurisdiction.


                                         -8-
<PAGE>


               5.2  MSDW TRUST shall indemnify and hold the Fund harmless from
or against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to any action or failure
or omission to act by MSDW TRUST as a result of the lack of good faith,
negligence or willful misconduct of MSDW TRUST, its officers, employees or
agents.


               5.3  At any time, MSDW TRUST may apply to any officer of the Fund
for instructions, and may consult with legal counsel to the Fund, with respect
to any matter arising in connection with the services to be performed by MSDW
TRUST under this Agreement, and MSDW TRUST and its agents or subcontractors
shall not be liable and shall be indemnified by the Fund for any action taken or
omitted by it in reliance upon such instructions or upon the opinion of such
counsel.  MSDW TRUST, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document furnished by or on behalf of
the Fund, reasonably believed to be genuine and to have been signed by the
proper person or persons, or upon any instruction, information, data, records or
documents provided to MSDW TRUST or its agents or subcontractors by machine
readable input, telex, CRT data entry or other similar means authorized by the
Fund, and shall not be held to have notice of any change of authority of any
person, until receipt of written notice thereof from the Fund.  MSDW TRUST, its
agents and subcontractors shall also be protected and indemnified in recognizing
stock certificates which are reasonably believed to bear the proper manual or
facsimile signature of the officers of the Fund, and the proper countersignature
of any former transfer agent or registrar, or of a co-transfer agent or
co-registrar.


                                         -9-
<PAGE>

               5.4  In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage reasonably beyond its control, or
other causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to perform or
otherwise from such causes.


               5.5  Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for any
act or failure to act hereunder.


               5.6  In order that the indemnification provisions contained in
this Article 5 shall apply, upon the assertion of a claim for which either party
may be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim.  The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim.  The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.


Article 6      DOCUMENTS AND COVENANTS OF THE FUND AND MSDW TRUST

               6.1  The Fund shall promptly furnish to MSDW TRUST the following,
unless previously furnished to Dean Witter Trust Company, the prior transfer
agent of the Fund:


                                         -10-
<PAGE>

               (a)  If a corporation:

               (i)  A certified copy of the resolution of the Board of Directors
of the Fund authorizing the appointment of MSDW TRUST and the execution and
delivery of this Agreement;


               (ii) A certified copy of the Articles of Incorporation and
By-Laws of the Fund and all amendments thereto;


               (iii)Certified copies of each vote of the Board of Directors
designating persons authorized to give instructions on behalf of the Fund and
signature cards bearing the signature of any officer of the Fund or any other
person authorized to sign written instructions on behalf of the Fund;


               (iv) A specimen of the certificate for Shares of the Fund in the
form approved by the Board of Directors, with a certificate of the Secretary of
the Fund as to such approval;


               (b)  If a business trust:
 

               (i)  A certified copy of the resolution of the Board of Trustees
of the Fund authorizing the appointment of MSDW TRUST and the execution and
delivery of this Agreement;


               (ii) A certified copy of the Declaration of Trust and By-Laws of
the Fund and all amendments thereto;


                                         -11-
<PAGE>


              (iii) Certified copies of each vote of the Board of Trustees
designating persons authorized to give instructions on behalf of the Fund and
signature cards bearing the signature of any officer of the Fund or any other
person authorized to sign written instructions on behalf of the Fund;


               (iv) A specimen of the certificate for Shares of the Fund in the
form approved by the Board of Trustees, with a certificate of the Secretary of
the Fund as to such approval;


               (c)  The current registration statements and any amendments and
supplements thereto filed with the SEC pursuant to the requirements of the 1933
Act or the 1940 Act;

               (d)  All account application forms or other documents relating to
Shareholder accounts and/or relating to any plan, program or service offered or
to be offered by the Fund; and


               (e)  Such other certificates, documents or opinions as MSDW TRUST
deems to be appropriate or necessary for the proper performance of its duties.
 

               6.2  MSDW TRUST hereby agrees to establish and maintain
facilities and procedures reasonably acceptable to the Fund for safekeeping of
Share certificates, check forms and facsimile signature imprinting devices, if
any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices.


                                         -12-
<PAGE>

               6.3  MSDW TRUST shall prepare and keep records relating to the
services to be performed hereunder, in the form and manner as it may deem
advisable and as required by applicable laws and regulations.  To the extent
required by Section 31 of the 1940 Act, and the rules and regulations
thereunder, MSDW TRUST agrees that all such records prepared or maintained by
MSDW TRUST relating to the services performed by MSDW TRUST hereunder are the
property of the Fund and will be preserved, maintained and made available in
accordance with such Section 31 of the 1940 Act, and the rules and regulations
thereunder, and will be surrendered promptly to the Fund on and in accordance
with its request.


               6.4  MSDW TRUST and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential and shall not be voluntarily disclosed to
any other person except as may be required by law or with the prior consent of
MSDW TRUST and the Fund.


               6.5  In case of any request or demands for the inspection of the
Shareholder records of the Fund, MSDW TRUST will endeavor to notify the Fund and
to secure instructions from an authorized officer of the Fund as to such
inspection.  MSDW TRUST reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.


Article 7      DURATION AND TERMINATION OF AGREEMENT

               7.1  This Agreement shall remain in full force and effect until
August 1, 


                                         -13-
<PAGE>

2000 and from year-to-year thereafter unless terminated by either party as
provided in Section 7.2 hereof.


               7.2  This Agreement may be terminated by the Fund on 60 days
written notice, and by MSDW TRUST on 90 days written notice, to the other party
without payment of any penalty.


               7.3  Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and other
materials will be borne by the Fund.  Additionally, MSDW TRUST reserves the
right to charge for any other reasonable fees and expenses associated with such
termination.


Article 8      ASSIGNMENT

               8.1  Except as provided in Section 8.3 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.


               8.2  This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.


               8.3  MSDW TRUST may, in its sole discretion and without further
consent by the Fund, subcontract, in whole or in part, for the performance of
its obligations and duties hereunder with any person or entity including but not
limited to companies which are affiliated with MSDW TRUST; PROVIDED, HOWEVER,
that such person or entity has and maintains the qualifications, if any,
required to perform such obligations and duties, and that MSDW TRUST 


                                         -14-
<PAGE>

shall be as fully responsible to the Fund for the acts and omissions of any
agent or subcontractor as it is for its own acts or omissions under this
Agreement.


Article 9      AFFILIATIONS

               9.1  MSDW TRUST may now or hereafter, without the consent of or
notice to the Fund, function as transfer agent and/or shareholder servicing
agent for any other investment company registered with the SEC under the 1940
Act and for any other issuer, including without limitation any investment
company whose adviser, administrator, sponsor or principal underwriter is or may
become affiliated with Morgan Stanley Dean Witter & Co. or any of its direct or
indirect subsidiaries or affiliates.


               9.2  It is understood and agreed that the Directors or Trustees
(as the case may be), officers, employees, agents and shareholders of the Fund,
and the directors, officers, employees, agents and shareholders of the Fund's
investment adviser and/or distributor, are or may be interested in MSDW TRUST as
directors, officers, employees, agents and shareholders or otherwise, and that
the directors, officers, employees, agents and shareholders of MSDW TRUST may be
interested in the Fund as Directors or Trustees (as the case may be), officers,
employees, agents and shareholders or otherwise, or in the investment adviser
and/or distributor as directors, officers, employees, agents, shareholders or
otherwise.


Article 10     AMENDMENT

               10.1 This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution of
the Board of Directors or the Board of Trustees (as the case may be) of the
Fund.


                                         -15-
<PAGE>

Article 11     APPLICABLE LAW

               11.1 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of New York.


Article 12     MISCELLANEOUS

               12.1 In the event that one or more additional investment
companies managed or administered by Morgan Stanley Dean Witter Advisors Inc. or
any of its affiliates ("Additional Funds") desires to retain MSDW TRUST to act
as transfer agent, dividend disbursing agent and/or shareholder servicing agent,
and MSDW TRUST desires to render such services, such services shall be provided
pursuant to a letter agreement, substantially in the form of Exhibit A hereto,
between MSDW TRUST and each Additional Fund.


               12.2 In the event of an alleged loss or destruction of any Share
certificate, no new certificate shall be issued in lieu thereof, unless there
shall first be furnished to MSDW TRUST an affidavit of loss or non-receipt by
the holder of Shares with respect to which a certificate has been lost or
destroyed, supported by an appropriate bond satisfactory to MSDW TRUST and the
Fund issued by a surety company satisfactory to MSDW TRUST, except that MSDW
TRUST may accept an affidavit of loss and indemnity agreement executed by the
registered holder (or legal representative) without surety in such form as MSDW
TRUST deems appropriate indemnifying MSDW TRUST and the Fund for the issuance of
a replacement certificate, in cases where the alleged loss is in the amount of
$1,000 or less.


          12.3 In the event that any check or other order for payment of money
on the 


                                         -16-
<PAGE>

account of any Shareholder or new investor is returned unpaid for any reason,
MSDW TRUST will (a) give prompt notification to the Fund's distributor
("Distributor") (or to the Fund if the Fund acts as its own distributor) of such
non-payment; and (b) take such other action, including imposition of a
reasonable processing or handling fee, as MSDW TRUST may, in its sole
discretion, deem appropriate or as the Fund and, if applicable, the Distributor
may instruct MSDW TRUST.


          12.4 Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or to MSDW TRUST shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.

To the Fund:

[Name of Fund]
Two World Trade Center
New York, New York  10048

Attention:  General Counsel

To MSDW TRUST:

Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center
Plaza Two
Jersey City, New Jersey  07311

Attention:  President

Article 13     MERGER OF AGREEMENT

               13.1 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.


                                         -17-
<PAGE>

Article 14     PERSONAL LIABILITY

               14.1 In the case of a Fund organized as a Massachusetts business
trust, a copy of the Declaration of Trust of the Fund is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Board of Trustees of the Fund as
Trustees and not individually and that the obligations of this instrument are
not binding upon any of the Trustees or shareholders individually but are
binding only upon the assets and property of the Fund; provided, however, that
the Declaration of Trust of the Fund provides that the assets of a particular
Series of the Fund shall under no circumstances be charged with liabilities
attributable to any other Series of the Fund and that all persons extending
credit to, or contracting with or having any claim against, a particular Series
of the Fund shall look only to the assets of that particular Series for payment
of such credit, contract or claim.


          IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Agreement to be executed in their names and on their behalf by and
through their duly authorized officers, as of the day and year first above
written.

     
     MORGAN STANLEY DEAN WITTER FUNDS

     MONEY MARKET FUNDS

  1. Morgan Stanley Dean Witter Liquid Asset Fund Inc.
  2. Active Assets Money Trust
  3. Morgan Stanley Dean Witter U.S. Government Money Market Trust
  4. Active Assets Government Securities Trust
  5. Morgan Stanley Dean Witter Tax-Free Daily Income Trust
  6. Active Assets Tax-Free Trust
  7. Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
  8. Morgan Stanley Dean Witter New York Municipal Money Market Trust
  9. Active Assets California Tax-Free Trust


                                         -18-
<PAGE>

       EQUITY FUNDS

 10. Morgan Stanley Dean Witter American Value Fund
 11. Morgan Stanley Dean Witter Mid-Cap Growth Fund
 12. Morgan Stanley Dean Witter Dividend Growth Securities Inc.
 13. Morgan Stanley Dean Witter Capital Growth Securities
 14. Morgan Stanley Dean Witter Global Dividend Growth Securities
 15. Morgan Stanley Dean Witter Income Builder Fund
 16. Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
 17. Morgan Stanley Dean Witter Precious Metals and Minerals Trust
 18. Morgan Stanley Dean Witter Developing Growth Securities Trust
 19. Morgan Stanley Dean Witter Health Sciences Trust
 20. Morgan Stanley Dean Witter Capital Appreciation Fund
 21. Morgan Stanley Dean Witter Information Fund
 22. Morgan Stanley Dean Witter Value-Added Market Series 
 23. Morgan Stanley Dean Witter European Growth Fund Inc.
 24. Morgan Stanley Dean Witter Pacific Growth Fund Inc.
 25. Morgan Stanley Dean Witter International SmallCap Fund 
 26. Morgan Stanley Dean Witter Japan Fund 
 27. Morgan Stanley Dean Witter Utilities Fund 
 28. Morgan Stanley Dean Witter Global Utilities Fund 
 29. Morgan Stanley Dean Witter Special Value Fund 
 30. Morgan Stanley Dean Witter Financial Services Trust
 31. Morgan Stanley Dean Witter Market Leader Trust
 32. Morgan Stanley Dean Witter Fund of Funds
 33. Morgan Stanley Dean Witter S&P 500 Index Fund
 34. Morgan Stanley Dean Witter Competitive Edge Fund
 35. Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
 36. Morgan Stanley Dean Witter Equity Fund
 37. Morgan Stanley Dean Witter Growth Fund
 38. Morgan Stanley Dean Witter S&P 500 Select Fund

       BALANCED FUNDS 

 39. Morgan Stanley Dean Witter Balanced Growth Fund 
 40. Morgan Stanley Dean Witter Balanced Income Trust 

       ASSET ALLOCATION FUNDS

 41. Morgan Stanley Dean Witter Strategist Fund 
 42. Dean Witter Global Asset Allocation Fund 

                                         -19-
<PAGE>

       FIXED INCOME FUNDS

 43. Morgan Stanley Dean Witter High Yield Securities Inc.
 44. Morgan Stanley Dean Witter High Income Securities
 45. Morgan Stanley Dean Witter Convertible Securities Trust
 46. Morgan Stanley Dean Witter Intermediate Income Securities
 47. Morgan Stanley Dean Witter Short-Term Bond Fund
 48. Morgan Stanley Dean Witter World Wide Income Trust
 49. Morgan Stanley Dean Witter Global Short-Term Income Fund Inc.
 50. Morgan Stanley Dean Witter Diversified Income Trust
 51. Morgan Stanley Dean Witter U.S. Government Securities Trust
 52. Morgan Stanley Dean Witter Federal Securities Trust
 53. Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
 54. Morgan Stanley Dean Witter Intermediate Term U.S. Treasury Trust
 55. Morgan Stanley Dean Witter Tax-Exempt Securities Trust 
 56. Morgan Stanley Dean Witter Limited Term Municipal Trust
 57. Morgan Stanley Dean Witter California Tax-Free Income Fund
 58. Morgan Stanley Dean Witter New York Tax-Free Income Fund
 59. Morgan Stanley Dean Witter Hawaii Municipal Trust
 60. Morgan Stanley Dean Witter Multi-State Municipal Series Trust
 61. Morgan Stanley Dean Witter Select Municipal Reinvestment Fund

       SPECIAL PURPOSE FUNDS

 62. Dean Witter Retirement Series
 63. Morgan Stanley Dean Witter Variable Investment Series
 64. Morgan Stanley Dean Witter Select Dimensions Investment Series

       TCW/DW FUNDS

 65. TCW/DW North American Government Income Trust
 66. TCW/DW Latin American Growth Fund
 67. TCW/DW Income and Growth Fund
 68. TCW/DW Small Cap Growth Fund
 69. TCW/DW Total Return Trust


                                         -20-
<PAGE>

 70. TCW/DW Global Telecom Trust
 71. TCW/DW Mid-Cap Equity Trust
 72. TCW/DW Emerging Markets Opportunities Trust


                         By:                                     
                            -------------------------------------
                            Barry Fink
                            Vice President and General Counsel

ATTEST:

- --------------------
Assistant Secretary

                         MORGAN STANLEY DEAN WITTER TRUST FSB

                         By:                                                    
                            -------------------------------------
                            John Van Heuvelen
                            President

ATTEST:

- ------------------------
Executive Vice President


                                         -21-
<PAGE>

                                      EXHIBIT A


Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center
Plaza Two
Jersey City, NJ 07311


Gentlemen:

          The undersigned, (INSET NAME OF INVESTMENT COMPANY) a (Massachusetts
business trust/Maryland corporation) (the "Fund"), desires to employ and appoint
Morgan Stanley Dean Witter Trust FSB ("MSDW TRUST") to act as transfer agent for
each series and class of shares of the Fund, whether now or hereafter authorized
or issued ("Shares"), dividend disbursing agent and shareholder servicing agent,
registrar and agent in connection with any accumulation, open-account or similar
plan provided to the holders of Shares, including without limitation any
periodic investment plan or periodic withdrawal plan.

          The Fund hereby agrees that, in consideration for the payment by the
Fund to MSDW TRUST of fees as set out in the fee schedule attached hereto as
Schedule A, MSDW TRUST shall provide such services to the Fund pursuant to the
terms and conditions set forth in the Transfer Agency and Service Agreement
annexed hereto, as if the Fund was a signatory thereto.


                                         -22-
<PAGE>

          Please indicate MSDW TRUST's acceptance of employment and appointment
by the Fund in the capacities set forth above by so indicating in the space
provided below.

                         Very truly yours,


                         (NAME OF FUND)



                         By:
                            ----------------------------------
                            Barry Fink
                            Vice President and General Counsel


ACCEPTED AND AGREED TO:



MORGAN STANLEY DEAN WITTER TRUST FSB



By:
   -----------------------
Its:
    ----------------------
Date:
     ---------------------


                                         -23-
<PAGE>


                                      SCHEDULE A


Fund:     Morgan Stanley Dean Witter Natural Resource Development Securities
          Inc.

Fees:     (1)  Annual maintenance fee of $12.65 per shareholder account, payable
          monthly.

          (2)  A fee equal to 1/12 of the fee set forth in (1) above, for
          providing Forms 1099 for accounts closed during the year, payable
          following the end of the calendar year.

          (3)  Out-of-pocket expenses in accordance with Section 2.2 of the
          Agreement.

          (4)  Fees for additional services not set forth in this Agreement
          shall be as negotiated between the parties.


                                         -24-


<PAGE>

                               SERVICES AGREEMENT
 
    AGREEMENT made as of the 17th day of April, 1995, and amended as of June 22,
1998, by and between Morgan Stanley Dean Witter Advisors Inc., a Delaware
corporation (herein referred to as "MSDW Advisors"), and Morgan Stanley Dean
Witter Services Company Inc., a Delaware corporation (herein referred to as
"MSDW Services").
 
    WHEREAS, MSDW Advisors has entered into separate agreements (each such
agreement being herein referred to as an "Investment Management Agreement") with
certain investment companies as set forth on Schedule A (each such investment
company being herein referred to as a "Fund" and, collectively, as the "Funds")
pursuant to which MSDW Advisors is to perform, or supervise the performance of,
among other services, administrative services for the Funds (and, in the case of
Funds with multiple portfolios, the Series or Portfolios of the Funds (such
Series and Portfolio being herein individually referred to as "a Series" and,
collectively, as "the Series"));
 
    WHEREAS, MSDW Advisors desires to retain MSDW Services to perform the
administrative services as described below; and
 
    WHEREAS, MSDW Services desires to be retained by MSDW Advisors to perform
such administrative services:
 
    Now, therefore, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
 
    1. MSDW Services agrees to provide administrative services to each Fund as
hereinafter set forth. Without limiting the generality of the foregoing, MSDW
Services shall (i) administer the Fund's business affairs and supervise the
overall day-to-day operations of the Fund (other than rendering investment
advice); (ii) provide the Fund with full administrative services, including the
maintenance of certain books and records, such as journals, ledger accounts and
other records required under the Investment Company Act of 1940, as amended (the
"Act"), the notification to the Fund and MSDW Advisors of available funds for
investment, the reconciliation of account information and balances among the
Fund's custodian, transfer agent and dividend disbursing agent and MSDW
Advisors, and the calculation of the net asset value of the Fund's shares; (iii)
provide the Fund with the services of persons competent to perform such
supervisory, administrative and clerical functions as are necessary to provide
effective operation of the Fund; (iv) oversee the performance of administrative
and professional services rendered to the Fund by others, including its
custodian, transfer agent and dividend disbursing agent, as well as accounting,
auditing and other services; (v) provide the Fund with adequate general office
space and facilities; (vi) assist in the preparation and the printing of the
periodic updating of the Fund's registration statement and prospectus (and, in
the case of an open-end Fund, the statement of additional information), tax
returns, proxy statements, and reports to its shareholders and the Securities
and Exchange Commission; and (vii) monitor the compliance of the Fund's
investment policies and restrictions.
 
    In the event that MSDW Advisors enters into an Investment Management
Agreement with another investment company, and wishes to retain MSDW Services to
perform administrative services hereunder, it shall notify MSDW Services in
writing. If MSDW Services is willing to render such services, it shall notify
MSDW Advisors in writing, whereupon such other Fund shall become a Fund as
defined herein.
 
    2. MSDW Services shall, at its own expense, maintain such staff and employ
or retain such personnel and consult with such other persons as it shall from
time to time determine to be necessary or useful to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of MSDW Services shall be deemed to include
officers of MSDW Services and persons employed or otherwise retained by MSDW
Services (including officers and employees of MSDW Advisors, with the consent of
MSDW Advisors) to furnish services, statistical and other factual data,
information with respect to technical and scientific developments, and such
other information, advice and assistance as MSDW Services may desire. MSDW
Services shall maintain each Fund's records and books of account
 
                                       1
 
<PAGE>

(other than those maintained by the Fund's transfer agent, registrar, custodian
and other agencies). All such books and records so maintained shall be the
property of the Fund and, upon request therefor, MSDW Services shall surrender
to MSDW Advisors or to the Fund such of the books and records so requested.
 
    3. MSDW Advisors will, from time to time, furnish or otherwise make
available to MSDW Services such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as MSDW Services
may reasonably require in order to discharge its duties and obligations to the
Fund under this Agreement or to comply with any applicable law and regulation or
request of the Board of Directors/Trustees of the Fund.
 
    4. For the services to be rendered, the facilities furnished, and the
expenses assumed by MSDW Services, MSDW Advisors shall pay to MSDW Services
monthly compensation calculated daily (in the case of an open-end Fund) or
weekly (in the case of a closed-end Fund) by applying the annual rate or rates
set forth on Schedule B to the net assets of each Fund. Except as hereinafter
set forth, (i) in the case of an open-end Fund, compensation under this
Agreement shall be calculated by applying 1/365th of the annual rate or rates to
the Fund's or the Series' daily net assets determined as of the close of
business on that day or the last previous business day and (ii) in the case of a
closed-end Fund, compensation under this Agreement shall be calculated by
applying the annual rate or rates to the Fund's average weekly net assets
determined as of the close of the last business day of each week. If this
Agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of the
month this Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fees as set forth on Schedule B. Subject to the
provisions of paragraph 5 hereof, payment of MSDW Services' compensation for the
preceding month shall be made as promptly as possible after completion of the
computations contemplated by paragraph 5 hereof.
 
    5. In the event the operating expenses of any open-end Fund and/or any
Series thereof, or of InterCapital Income Securities Inc., including amounts
payable to MSDW Advisors pursuant to the Investment Management Agreement, for
any fiscal year ending on a date on which this Agreement is in effect, exceed
the expense limitations applicable to the Fund and/or any Series thereof imposed
by state securities laws or regulations thereunder, as such limitations may be
raised or lowered from time to time, or, in the case of InterCapital Income
Securities Inc. or Morgan Stanley Dean Witter Variable Investment Series or any
Series thereof, the expense limitation specified in the Fund's Investment
Management Agreement, the fee payable hereunder shall be reduced on a pro rata
basis in the same proportion as the fee payable by the Fund under the Investment
Management Agreement is reduced.
 
    6. MSDW Services shall bear the cost of rendering the administrative
services to be performed by it under this Agreement, and shall, at its own
expense, pay the compensation of the officers and employees, if any, of the Fund
employed by MSDW Services, and such clerical help and bookkeeping services as
MSDW Services shall reasonably require in performing its duties hereunder.
 
    7. MSDW Services will use its best efforts in the performance of
administrative activitives on behalf of each Fund, but in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, MSDW Services shall not be liable to the Fund or any of
its investors for any error of judgment or mistake of law or for any act or
omission by MSDW Services or for any losses sustained by the Fund or its
investors. It is understood that, subject to the terms and conditions of the
Investment Management Agreement between each Fund and MSDW Advisors, MSDW
Advisors shall retain ultimate responsibility for all services to be performed
hereunder by MSDW Services. MSDW Services shall indemnify MSDW Advisors and hold
it harmless from any liability that MSDW Advisors may incur arising out of any
act or failure to act by MSDW Services in carrying out its responsibilities
hereunder.
 
    8. It is understood that any of the shareholders, Directors/Trustees,
officers and employees of the Fund may be a shareholder, director, officer or
employee of, or be otherwise interested in, MSDW Services, and in any person
controlling, controlled by or under common control with MSDW Services, and that
MSDW Services and any person controlling, controlled by or under common control
with MSDW
 
                                       2
<PAGE>

Services may have an interest in the Fund. It is also understood that MSDW
Services and any affiliated persons thereof or any persons controlling,
controlled by or under common control with MSDW Services have and may have
advisory, management, administration service or other contracts with other
organizations and persons, and may have other interests and businesses, and
further may purchase, sell or trade any securities or commodities for their own
accounts or for the account of others for whom they may be acting.
 
    9. This Agreement shall continue until April 30, 1999, and thereafter shall
continue automatically for successive periods of one year unless terminated by
either party by written notice delivered to the other party within 30 days of
the expiration of the then-existing period. Notwithstanding the foregoing, this
Agreement may be terminated at any time, by either party on 30 days' written
notice delivered to the other party. In the event that the Investment Management
Agreement between any Fund and MSDW Advisors is terminated, this Agreement will
automatically terminate with respect to such Fund.
 
    10. This Agreement may be amended or modified by the parties in any manner
by written agreement executed by each of the parties hereto.
 
    11. This Agreement may be assigned by either party with the written consent
of the other party.
 
    12. This Agreement shall be construed and interpreted in accordance with the
laws of the State of New York.
 
    IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, as amended, on June 22, 1998 in New York, New York.
 
<TABLE>
<S>                                            <C>
                                               MORGAN STANLEY DEAN WITTER ADVISORS INC.
 
                                               By: -----------------------------------------
 
Attest:
- ---------------------------------------------
 
                                               MORGAN STANLEY DEAN WITTER SERVICES COMPANY
                                               INC.
 
                                               By: -----------------------------------------
 
Attest:
- ---------------------------------------------
</TABLE>
 
                                       3

<PAGE>

                                   SCHEDULE A
                        MORGAN STANLEY DEAN WITTER FUNDS
                          AS AMENDED AS OF MAY 1, 1999
 
                                 OPEN-END FUNDS
 
<TABLE>
<C>        <S>
       1.  Active Assets California Tax-Free Trust
       2.  Active Assets Government Securities Trust
       3.  Active Assets Money Trust
       4.  Active Assets Tax-Free Trust
       5.  Morgan Stanley Dean Witter Aggressive Equity Fund
       6.  Morgan Stanley Dean Witter American Opportunities Fund
       7.  Morgan Stanley Dean Witter Balanced Growth Fund
       8.  Morgan Stanley Dean Witter Balanced Income Fund
       9.  Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
      10.  Morgan Stanley Dean Witter California Tax-Free Income Fund
      11.  Morgan Stanley Dean Witter Capital Growth Securities
      12.  Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS" Portfolio
      13.  Morgan Stanley Dean Witter Convertible Securities Trust
      14.  Morgan Stanley Dean Witter Developing Growth Securities Trust
      15.  Morgan Stanley Dean Witter Diversified Income Trust
      16.  Morgan Stanley Dean Witter Dividend Growth Securities Inc.
      17.  Morgan Stanley Dean Witter Equity Fund
      18.  Morgan Stanley Dean Witter European Growth Fund Inc.
      19.  Morgan Stanley Dean Witter Federal Securities Trust
      20.  Morgan Stanley Dean Witter Financial Services Trust
      21.  Morgan Stanley Dean Witter Fund of Funds
           (i)  Domestic Portfolio
           (ii) International Portfolio
      22.  Morgan Stanley Dean Witter Global Dividend Growth Securities
      23.  Morgan Stanley Dean Witter Global Utilities Fund
      24.  Morgan Stanley Dean Witter Growth Fund
      25.  Morgan Stanley Dean Witter Hawaii Municipal Trust
      26.  Morgan Stanley Dean Witter Health Sciences Trust
      27.  Morgan Stanley Dean Witter High Yield Securities Inc.
      28.  Morgan Stanley Dean Witter Income Builder Fund
      29.  Morgan Stanley Dean Witter Information Fund
      30.  Morgan Stanley Dean Witter Intermediate Income Securities
      31.  Morgan Stanley Dean Witter International Fund
      32.  Morgan Stanley Dean Witter International SmallCap Fund
      33.  Morgan Stanley Dean Witter Japan Fund
      34.  Morgan Stanley Dean Witter Limited Term Municipal Trust
      35.  Morgan Stanley Dean Witter Liquid Asset Fund Inc.
      36.  Morgan Stanley Dean Witter Managers Focus Fund
      37.  Morgan Stanley Dean Witter Market Leader Trust
      38.  Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
      39.  Morgan Stanley Dean Witter Mid-Cap Growth Fund
      40.  Morgan Stanley Dean Witter Multi-State Municipal Series Trust
      41.  Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
      42.  Morgan Stanley Dean Witter New York Municipal Money Market Trust
      43.  Morgan Stanley Dean Witter New York Tax-Free Income Fund
</TABLE>
 
                                      A-1
<PAGE>
<TABLE>
<C>        <S>
      44.  Morgan Stanley Dean Witter Pacific Growth Fund Inc.
      45.  Morgan Stanley Dean Witter Precious Metals and Minerals Trust
      46.  Morgan Stanley Dean Witter Real Estate Fund
      47.  Morgan Stanley Dean Witter Select Dimensions Investment Series
           (i)    American Opportunities Portfolio
           (ii)   Balanced Growth Portfolio
           (iii)  Developing Growth Portfolio
           (iv)   Diversified Income Portfolio
           (v)    Dividend Growth Portfolio
           (vi)   Emerging Markets Portfolio
           (vii)  Global Equity Portfolio
           (viii) Growth Portfolio
           (ix)   Mid-Cap Growth Portfolio
           (x)    Money Market Portfolio
           (xi)   North American Government Securities Portfolio
           (xii)  Utilities Portfolio
           (xiii) Value-Added Market Portfolio
      48.  Morgan Stanley Dean Witter Select Municipal Reinvestment Fund
      49.  Morgan Stanley Dean Witter U.S. Government Money Market Trust
      50.  Morgan Stanley Dean Witter Utilities Fund
      51.  Morgan Stanley Dean Witter Short-Term Bond Fund
      52.  Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
      53.  Morgan Stanley Dean Witter Special Value Fund
      54.  Morgan Stanley Dean Witter Strategist Fund
      55.  Morgan Stanley Dean Witter S&P 500 Index Fund
      56.  Morgan Stanley Dean Witter S&P 500 Select Fund
      57.  Morgan Stanley Dean Witter Tax-Exempt Securities Trust
      58.  Morgan Stanley Dean Witter Tax-Free Daily Income Trust
      59.  Morgan Stanley Dean Witter U.S. Government Securities Trust
      60.  Morgan Stanley Dean Witter Value Fund
      61.  Morgan Stanley Dean Witter Value-Added Market Series
      62.  Morgan Stanley Dean Witter Variable Investment Series
           (i)    Aggressive Equity Portfolio
           (ii)   Capital Growth Portfolio
           (iii)  Competitive Edge "Best Ideas" Portfolio
           (iv)   Dividend Growth Portfolio
           (v)    Equity Portfolio
           (vi)   European Growth Portfolio
           (vii)  Global Dividend Growth Portfolio
           (viii) High Yield Portfolio
           (ix)   Income Builder Portfolio
           (x)    Money Market Portfolio
           (xi)   Quality Income Plus Portfolio
           (xii)  Pacific Growth Portfolio
           (xiii) S&P 500 Index Portfolio
           (xiv)  Short-Term Bond Portfolio
           (xv)   Strategist Portfolio
           (xvi)  Utilities Portfolio
      63.  Morgan Stanley Dean Witter World Wide Income Trust
      64.  Morgan Stanley Dean Witter Worldwide High Income Fund
</TABLE>
 
                                      A-2
<PAGE>
<TABLE>
<CAPTION>
                                              CLOSED-END FUNDS
<C>        <S>
 
      65.  Morgan Stanley Dean Witter High Income Advantage Trust
      66.  Morgan Stanley Dean Witter High Income Advantage Trust II
      67.  Morgan Stanley Dean Witter High Income Advantage Trust III
      68.  Morgan Stanley Dean Witter Income Securities Inc.
      69.  Morgan Stanley Dean Witter Government Income Trust
      70.  Morgan Stanley Dean Witter Insured Municipal Bond Trust
      71.  Morgan Stanley Dean Witter Insured Municipal Trust
      72.  Morgan Stanley Dean Witter Insured Municipal Income Trust
      73.  Morgan Stanley Dean Witter California Insured Municipal Income Trust
      74.  Morgan Stanley Dean Witter Insured Municipal Securities
      75.  Morgan Stanley Dean Witter Insured California Municipal Securities
      76.  Morgan Stanley Dean Witter Quality Municipal Investment Trust
      77.  Morgan Stanley Dean Witter Quality Municipal Income Trust
      78.  Morgan Stanley Dean Witter Quality Municipal Securities
      79.  Morgan Stanley Dean Witter California Quality Municipal Securities
      80.  Morgan Stanley Dean Witter New York Quality Municipal Securities
</TABLE>
 
                                      A-3
<PAGE>
                                                                      SCHEDULE B
 
                MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC.
                        SCHEDULE OF ADMINISTRATIVE FEES
                          AS AMENDED AS OF MAY 1, 1999
 
    Monthly compensation calculated daily by applying the following annual rates
to a fund's daily net assets:
 
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
- ------------------
<S>                                                                <C>
Morgan Stanley Dean Witter Balanced Income Fund                    0.060% of the daily net assets.
 
Morgan Stanley Dean Witter California Tax-Free Income Fund         0.055% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.0525% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $750 million; 0.050% of the
                                                                   portion of the daily net assets exceeding $750 million but not
                                                                   exceeding $1 billion; 0.0475% of the portion of the daily net
                                                                   assets exceeding $1 billion but not exceeding $1.25 billion; and
                                                                   0.045% of the portion of the daily net assets exceeding $1.25
                                                                   billion.
 
Morgan Stanley Dean Witter Convertible Securities Trust            0.060% of the portion of the daily net assets not exceeding $750
                                                                   million; 0.055% of the portion of the daily net assets exceeding
                                                                   $750 million but not exceeding $1 billion; 0.050% of the portion
                                                                   of the daily net assets of the exceeding $1 billion but not
                                                                   exceeding $1.5 billion; 0.0475% of the portion of the daily net
                                                                   assets exceeding $1.5 billion but not exceeding $2 billion;
                                                                   0.045% of the portion of the daily net assets exceeding $2
                                                                   billion but not exceeding $3 billion; and 0.0425% of the portion
                                                                   of the daily net assets exceeding $3 billion.
 
Morgan Stanley Dean Witter Diversified Income Trust                0.040% of the daily net assets.
 
Morgan Stanley Dean Witter Federal Securities Trust                0.055% of the portion of the daily net assets not exceeding $1
                                                                   billion; 0.0525% of the portion of the daily net assets exceeding
                                                                   $1 billion but not exceeding $1.5 billion; 0.050% of the portion
                                                                   of the daily net assets exceeding $1.5 billion but not exceeding
                                                                   $2 billion; 0.0475% of the portion of the daily net assets
                                                                   exceeding $2 billion but not exceeding $2.5 billion; 0.045% of
                                                                   the portion of the daily net assets exceeding $2.5 billion but
                                                                   not exceeding $5 billion; 0.0425% of the portion of the daily net
                                                                   assets exceeding $5 billion but not exceeding $7.5 billion;
                                                                   0.040% of the portion of the daily net assets exceeding $7.5
                                                                   billion but not exceeding $10 billion; 0.0375% of the portion of
                                                                   the daily net assets exceeding $10 billion but not exceeding
                                                                   $12.5 billion; and 0.035% of the portion of the daily net assets
                                                                   exceeding $12.5 billion.
 
Morgan Stanley Dean Witter Hawaii Municipal Trust                  0.035% of the daily net assets.
</TABLE>
 
                                      B-1
<PAGE>
<TABLE>
<S>                                                                <C>
Morgan Stanley Dean Witter High Yield Securities Inc.              0.050% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.0425% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $750 million; 0.0375% of the
                                                                   portion of the daily net assets exceeding $750 million but not
                                                                   exceeding $1 billion; 0.035% of the portion of the daily net
                                                                   assets exceeding $1 billion but not exceeding $2 billion; 0.0325%
                                                                   of the portion of the daily net assets exceeding $2 billion but
                                                                   not exceeding $3 billion; and 0.030% of the portion of daily net
                                                                   assets exceeding $3 billion.
 
Morgan Stanley Dean Witter Intermediate Income Securities          0.060% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.050% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $750 million; 0.040% of the
                                                                   portion of the daily net assets exceeding $750 million but not
                                                                   exceeding $1 billion; and 0.030% of the portion of the daily net
                                                                   assets exceeding $1 billion.
 
Morgan Stanley Dean Witter Limited Term Municipal Trust            0.050% of the daily net assets.
 
Morgan Stanley Dean Witter Multi-State Municipal Series Trust (10  0.035% of the daily net assets.
  Series)
 
Morgan Stanley Dean Witter New York Tax-Free Income Fund           0.055% of the portion of the daily net assets not exceeding $500
                                                                   million; and 0.0525% of the portion of the daily net assets
                                                                   exceeding $500 million.
 
Morgan Stanley Dean Witter Select Dimensions Investment Series--
  Diversified Income Portfolio                                     0.040% of the daily net assets.
  North American Government Securities Portfolio                   0.039% of the daily net assets.
 
Morgan Stanley Dean Witter Select Municipal Reinvestment Fund      0.050% of the daily net assets.
 
Morgan Stanley Dean Witter Short-Term Bond Fund                    0.070% of the daily net assets.
 
Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust          0.035% of the daily net assets.
 
Morgan Stanley Dean Witter Tax-Exempt Securities Trust             0.050% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.0425% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $750 million; 0.0375% of the
                                                                   portion of the daily net assets exceeding $750 million but not
                                                                   exceeding $1 billion; and 0.035% of the portion of the daily net
                                                                   assets exceeding $1 billion but not exceeding $1.25 billion;
                                                                   .0325% of the portion of the daily net assets exceeding $1.25
                                                                   billion.
</TABLE>
 
                                      B-2
<PAGE>
<TABLE>
<S>                                                                <C>
Morgan Stanley Dean Witter U.S. Government Securities Trust        0.050% of the portion of the daily net assets not exceeding $1
                                                                   billion; 0.0475% of the portion of the daily net assets exceeding
                                                                   $1 billion but not exceeding $1.5 billion; 0.045% of the portion
                                                                   of the daily net assets exceeding $1.5 billion but not exceeding
                                                                   $2 billion; 0.0425% of the portion of the daily net assets
                                                                   exceeding $2 billion but not exceeding $2.5 billion; 0.040% of
                                                                   the portion of the daily net assets exceeding $2.5 billion but
                                                                   not exceeding $5 billion; 0.0375% of the portion of the daily net
                                                                   assets exceeding $5 billion but not exceeding $7.5 billion;
                                                                   0.035% of the portion of the daily net assets exceeding $7.5
                                                                   billion but not exceeding $10 billion; 0.0325% of the portion of
                                                                   the daily net assets exceeding $10 billion but not exceeding
                                                                   $12.5 billion; and 0.030% of the portion of the daily net assets
                                                                   exceeding $12.5 billion.
 
Morgan Stanley Dean Witter Variable Investment Series--
  High Yield Portfolio                                             0.050% of the portion of the daily net assets not exceeding $500
                                                                   million; and 0.0425% of the daily net assets exceeding $500
                                                                   million.
  Quality Income Plus Portfolio                                    0.050% of the portion of the daily the net assets up to $500
                                                                   million; and 0.045% of the portion of the daily net assets
                                                                   exceeds $500 million.
  Short-Term Bond Portfolio                                        0.045% of the daily net assets.
 
Morgan Stanley Dean Witter World Wide Income Trust                 0.075% of the portion of the daily net assets up to $250 million;
                                                                   0.060% of the portion of the daily net assets exceeding $250
                                                                   million but not exceeding $500 million; 0.050% of the portion of
                                                                   the daily net assets of the exceeding $500 million but not
                                                                   exceeding $750 million; 0.040% of the portion of the daily net
                                                                   assets exceeding $750 million but not exceeding $1 billion; and
                                                                   0.030% of the portion of the daily net assets exceeding $1
                                                                   billion.
 
Morgan Stanley Dean Witter Worldwide High Income Fund              0.060% of the daily net assets.
</TABLE>

<TABLE>
<CAPTION>
EQUITY FUNDS
- ------------
<S>                                                                <C>
Morgan Stanley Dean Witter Aggressive Equity Fund                  0.075% of the daily net assets.
 
Morgan Stanley Dean Witter American Opportunities Fund             0.0625% of the portion of the daily net assets not exceeding $250
                                                                   million; 0.050% of the portion of the daily net assets exceeding
                                                                   $250 million but not exceeding $2.25 billion; 0.0475% of the
                                                                   portion of the daily net assets exceeding $2.25 billion but not
                                                                   exceeding $3.5 billion; 0.0450% of the portion of the daily net
                                                                   assets exceeding $3.5 billion but not exceeding $4.5 billion; and
                                                                   0.0425% of the portion of the daily net assets exceeding $4.5
                                                                   billion.
 
Morgan Stanley Dean Witter Balanced Growth Fund                    0.060% of the portion of the daily net assets not exceeding $500
                                                                   million; and 0.0575% of the portion of the daily net assets
                                                                   exceeding $500 million.
</TABLE>
 
                                      B-3
<PAGE>
<TABLE>
<S>                                                                <C>
Morgan Stanley Dean Witter Capital Growth Securities               0.065% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.055% of the portion exceeding $500 million but not
                                                                   exceeding $1 billion; 0.050% of the portion of the daily net
                                                                   assets exceeding $1 billion but not exceeding $1.5 billion; and
                                                                   0.0475% of the portion of the daily net assets exceeding $1.5
                                                                   billion.
 
Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS"     0.065% of the portion of the daily net assets not exceeding $1.5
  Portfolio                                                        billion; and 0.0625% of the portion of the daily net assets
                                                                   exceeding $1.5 billion.
 
Morgan Stanley Dean Witter Developing Growth Securities Trust      0.050% of the portion of the daily net assets not exceeding $500
                                                                   million; and 0.0475% of the portion of the daily net assets
                                                                   exceeding $500 million.
 
Morgan Stanley Dean Witter Dividend Growth Securities Inc.         0.0625% of the portion of the daily net assets not exceeding $250
                                                                   million; 0.050% of the portion of the daily net assets exceeding
                                                                   $250 million but not exceeding $1 billion; 0.0475% of the portion
                                                                   of the daily net assets exceeding $1 billion but not exceeding $2
                                                                   billion; 0.045% of the portion of the daily net assets exceeding
                                                                   $2 billion but not exceeding $3 billion; 0.0425% of the portion
                                                                   of the daily net assets exceeding $3 billion but not exceeding $4
                                                                   billion; 0.040% of the portion of the daily net assets exceeding
                                                                   $4 billion but not exceeding $5 billion; 0.0375% of the portion
                                                                   of the daily net assets exceeding $5 billion but not exceeding $6
                                                                   billion; 0.035% of the portion of the daily net assets exceeding
                                                                   $6 billion but not exceeding $8 billion; 0.0325% of the portion
                                                                   of the daily net assets exceeding $8 billion but not exceeding
                                                                   $10 billion; 0.030% of the portion of the daily net assets
                                                                   exceeding $10 billion but not exceeding $15 billion; and 0.0275%
                                                                   of the portion of the daily net assets exceeding $15 billion.
 
Morgan Stanley Dean Witter                                         0.051% of the daily net assets.
  Equity Fund
 
Morgan Stanley Dean Witter European Growth Fund Inc.               0.057% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.054% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $2 billion; and 0.051% of the
                                                                   portion of the daily net assets exceeding $2 billion.
 
Morgan Stanley Dean Witter Financial Services Trust                0.075% of the portion of the daily net assets not exceeding $500
                                                                   million; and 0.0725% of the portion of the daily net assets
                                                                   exceeding $500 million.
 
Morgan Stanley Dean Witter Fund of Funds--
  Domestic Portfolio                                               None
  International Portfolio                                          None
</TABLE>
 
                                      B-4
<PAGE>
<TABLE>
<S>                                                                <C>
Morgan Stanley Dean Witter Global Dividend Growth Securities       0.075% of the portion of the daily net assets not exceeding $1
                                                                   billion; 0.0725% of the portion of the daily net assets exceeding
                                                                   $1 billion but not exceeding $1.5 billion; 0.070% of the portion
                                                                   of the daily net assets exceeding $1.5 billion but not exceeding
                                                                   $2.5 billion; 0.0675% of the portion of the daily net assets
                                                                   exceeding $2.5 billion but not exceeding $3.5 billion; 0.0650% of
                                                                   the portion of the daily net assets exceeding $3.5 billion but
                                                                   not exceeding $4.5 billion; and 0.0625% of the portion of the
                                                                   daily net assets exceeding $4.5 billion.
 
Morgan Stanley Dean Witter Global Utilities Fund                   0.065% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.0625% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $1 billion; and 0.060% of the
                                                                   portion of the daily net assets exceeding $1 billion.
 
Morgan Stanley Dean Witter Growth Fund                             0.048% of the portion of daily net assets not exceeding $750
                                                                   million; 0.045% of the portion of daily net assets exceeding $750
                                                                   million but not exceeding $1.5 billion; and 0.042% of the portion
                                                                   of daily net assets exceeding $1.5 billion.
 
Morgan Stanley Dean Witter Health Sciences Trust                   0.10% of the portion of daily net assets not exceeding $500
                                                                   million; and 0.095% of the portion of daily net assets exceeding
                                                                   $500 million.
 
Morgan Stanley Dean Witter Income Builder Fund                     0.075% of the portion of the net assets not exceeding $500
                                                                   million; and 0.0725% of the portion of daily net assets exceeding
                                                                   $500 million.
 
Morgan Stanley Dean Witter Information Fund                        0.075% of the portion of the daily net assets not exceeding $500
                                                                   million; and 0.0725% of the portion of the daily net assets
                                                                   exceeding $500 million.
 
Morgan Stanley Dean Witter International Fund                      0.060% of the daily net assets.
 
Morgan Stanley Dean Witter International SmallCap Fund             0.069% of the daily net assets.
 
Morgan Stanley Dean Witter                                         0.057% of the daily net assets.
  Japan Fund
 
Morgan Stanley Dean Witter Managers Focus Fund                     0.0625% of the daily net assets.
 
Morgan Stanley Dean Witter Market Leader Trust                     0.075% of the daily net assets.
 
Morgan Stanley Dean Witter                                         0.075 of the daily net assets.
  Mid-Cap Dividend Growth Securities
 
Morgan Stanley Dean Witter                                         0.075% of the portion of the daily net assets not exceeding $500
  Mid-Cap Growth Fund                                              million; and 0.0725% of the portion of the daily net assets
                                                                   exceeding $500 million.
</TABLE>
 
                                      B-5
<PAGE>
<TABLE>
<S>                                                                <C>
Morgan Stanley Dean Witter Natural Resource Development            0.0625% of the portion of the daily net assets not exceeding $250
  Securities Inc.                                                  million and 0.050% of the portion of the daily net assets
                                                                   exceeding $250 million.
 
Morgan Stanley Dean Witter Pacific Growth Fund Inc.                0.057% of the portion of the daily net assets not exceeding $1
                                                                   billion; 0.054% of the portion of the daily net assets exceeding
                                                                   $1 billion but not exceeding $2 billion; and 0.051% of the
                                                                   portion of the daily net assets exceeding $2 billion.
 
Morgan Stanley Dean Witter Precious Metals and                     0.080% of the daily net assets.
  Minerals Trust
 
Morgan Stanley Dean Witter Real Estate Fund                        0.060% of the daily net assets.
 
Morgan Stanley Dean Witter Select Dimensions Investment Series--
  American Opportunities Portfolio                                 0.0625% of the portion of the daily net assets not exceeding $500
                                                                   million; and 0.060% of the portion of the daily net assets
                                                                   exceeding $500 million.
  Balanced Growth Portfolio                                        0.065% of the daily net assets.
  Developing Growth Portfolio                                      0.050% of the daily net assets.
  Dividend Growth Portfolio                                        0.0625% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.050% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $1 billion; and 0.0475% of the
                                                                   portion of the daily net assets exceeding $1 billion.
  Emerging Markets Portfolio                                       0.075% of the daily net assets.
  Global Equity Portfolio                                          0.10% of the daily net assets.
  Growth Portfolio                                                 0.048% of the daily net assets.
  Mid-Cap Growth Portfolio                                         0.075% of the daily net assets
  Utilities Portfolio                                              0.065% of the daily net assets.
  Value-Added Market Portfolio                                     0.050% of the daily net assets.
 
Morgan Stanley Dean Witter Special Value Fund                      0.075% of the portion of the daily net assets not exceeding $500
                                                                   million; and 0.0725% of the portion of daily net assets exceeding
                                                                   $500 million.
 
Morgan Stanley Dean Witter Strategist Fund                         0.060% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.055% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $1 billion; 0.050% of the portion
                                                                   of the daily net assets exceeding $1 billion but not exceeding
                                                                   $1.5 billion; 0.0475% of the portion of the daily net assets
                                                                   exceeding $1.5 billion but not exceeding $2.0 billion; and 0.045%
                                                                   of the portion of the daily net assets exceeding $2.0 billion.
 
Morgan Stanley Dean Witter                                         0.040% of the portion of the daily net assets not exceeding $1.5
  S&P 500 Index Fund                                               billion; 0.0375% of the portion of daily net assets exceeding
                                                                   $1.5 billion but not exceeding $3 billion; and 0.035% of the
                                                                   portion of daily net assets exceeding $3 billion.
 
Morgan Stanley Dean Witter                                         0.060% of the daily net assets.
  S&P 500 Select Fund
</TABLE>
 
                                      B-6
<PAGE>
<TABLE>
<S>                                                                <C>
Morgan Stanley Dean Witter Utilities Fund                          0.065% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.055% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $1 billion; 0.0525% of the portion
                                                                   of the daily net assets exceeding $1 billion but not exceeding
                                                                   $1.5 billion; 0.050% of the portion of the daily net assets
                                                                   exceeding $1.5 billion but not exceeding $2.5 billion; 0.0475% of
                                                                   the portion of the daily net assets exceeding $2.5 billion but
                                                                   not exceeding $3.5 billion; 0.045% of the portion of the daily
                                                                   net assets exceeding $3.5 but not exceeding $5 billion; and
                                                                   0.0425% of the daily net assets exceeding $5 billion.
 
Morgan Stanley Dean Witter Value Fund                              0.060% of the daily net assets.
 
Morgan Stanley Dean Witter Value-Added Market Series               0.050% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.45% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $1 billion; 0.0425% of the portion
                                                                   of the daily net assets exceeding $1.0 billion but not exceeding
                                                                   $2.0 billion; and 0.040% of the portion of the daily net assets
                                                                   exceeding $2 billion.
 
Morgan Stanley Dean Witter Variable Investment Series--
  Aggressive Equity Portfolio                                      0.075% of the daily net assets.
  Capital Growth Portfolio                                         0.065% of the daily net assets.
  Competitive Edge "Best Ideas" Portfolio                          0.065% of the daily net assets.
  Dividend Growth Portfolio                                        0.0625% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.050% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $1 billion; 0.0475% of the portion
                                                                   of the daily net assets exceeding $1.0 billion but not exceeding
                                                                   $2.0 billion; 0.045% of the portion of the daily net assets
                                                                   exceeding $2 billion but not exceeding $3 billion; and 0.0425% of
                                                                   the portion of the daily net assets exceeding $3 billion.
  Equity Portfolio                                                 0.050% of the portion of the daily net assets not exceeding $1
                                                                   billion; and 0.0475% of the portion of the daily net assets
                                                                   exceeding $1 billion.
  European Growth Portfolio                                        0.057% of the portion of the daily net assets not exceeding $500
                                                                   million; and 0.054% of the portion of the daily net assets
                                                                   exceeding $500 million.
  Global Dividend Growth Portfolio                                 0.075% of the portion of the daily net assets not exceeding $1
                                                                   billion; and 0.0725% of the portion of daily net assets exceeding
                                                                   $1 billion.
  Income Builder Portfolio                                         0.075% of the daily net assets.
  Pacific Growth Portfolio                                         0.057% of the daily net assets.
  S&P 500 Index Portfolio                                          0.040% of the daily net assets.
  Strategist Portfolio                                             0.050% of the portion of the daily net assets not exceeding $1.5
                                                                   billion; and 0.0475% of the portion of the daily net assets
                                                                   exceeding $1.5 billion.
  Utilities Portfolio                                              0.065% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.055% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $1 billion; and 0.0525% of the
                                                                   portion of the daily net assets exceeding $1 billion.
</TABLE>
 
                                      B-7
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
- ------------------
<S>                                                                <C>
Active Assets Trusts:                                              0.050% of the portion of the daily net assets not exceeding $500
  (1) Active Assets Tax-Free Trust                                 million; 0.0425% of the portion of the daily net assets exceeding
  (2) Active Assets California Tax-Free Trust                      $500 million but not exceeding $750 million; 0.0375% of the
  (3) Active Assets Government Securities Trust                    portion of the daily net assets exceeding $750 million but not
                                                                   exceeding $1 billion; 0.035% of the portion of the daily net
                                                                   assets exceeding $1 billion but not exceeding $1.5 billion;
                                                                   0.0325% of the portion of the daily net assets exceeding $1.5
                                                                   billion but not exceeding $2 billion; 0.030% of the portion of
                                                                   the daily net assets exceeding $2 billion but not exceeding $2.5
                                                                   billion; 0.0275% of the portion of the daily net assets exceeding
                                                                   $2.5 billion but not exceeding $3 billion; and 0.025% of the
                                                                   portion of the daily net assets exceeding $3 billion.
 
  (4) Active Assets Money Trust                                    0.050% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.0425% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $750 million; 0.0375% of the
                                                                   portion of the daily net assets exceeding $750 million but not
                                                                   exceeding $1 billion; 0.035% of the portion of the daily net
                                                                   assets exceeding $1 billion but not exceeding $1.5 billion;
                                                                   0.0325% of the portion of the daily net assets exceeding $1.5
                                                                   billion but not exceeding $2 billion; 0.030% of the portion of
                                                                   the daily net assets exceeding $2 billion but not exceeding $2.5
                                                                   billion; 0.0275% of the portion of the daily net assets exceeding
                                                                   $2.5 billion but not exceeding $3 billion; 0.025% of the portion
                                                                   of the daily net assets exceeding $3 billion but not exceeding
                                                                   $15 billion; 0.0249% of the portion of the daily net assets
                                                                   exceeding $15 billion but not exceeding $17.5 billion; and
                                                                   0.0248% of the portion of the daily net assets exceeding $17.5
                                                                   billion.
 
Morgan Stanley Dean Witter California Tax-Free Daily               0.050% of the portion of the daily net assets not exceeding $500
  Income Trust                                                     million; 0.0425% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $750 million; 0.0375% of the
                                                                   portion of the daily net assets exceeding $750 million but not
                                                                   exceeding $1 billion; 0.035% of the portion of the daily net
                                                                   assets exceeding $1 billion but not exceeding $1.5 billion;
                                                                   0.0325% of the portion of the daily net assets exceeding $1.5
                                                                   billion but not exceeding $2 billion; 0.030% of the portion of
                                                                   the daily net assets exceeding $2 billion but not exceeding $2.5
                                                                   billion; 0.0275% of the portion of the daily net assets exceeding
                                                                   $2.5 billion but not exceeding $3 billion; and 0.025% of the
                                                                   portion of the daily net assets exceeding $3 billion.
</TABLE>
 
                                      B-8
<PAGE>
<TABLE>
<S>                                                                <C>
Morgan Stanley Dean Witter Liquid Asset Fund Inc.                  0.050% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.0425% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $750 million; 0.0375% of the
                                                                   portion of the daily net assets exceeding $750 million but not
                                                                   exceeding $1 billion; 0.035% of the portion of the daily net
                                                                   assets exceeding $1 billion but not exceeding $1.35 billion;
                                                                   0.0325% of the portion of the daily net assets exceeding $1.35
                                                                   billion but not exceeding $1.75 billion; 0.030% of the portion of
                                                                   the daily net assets exceeding $1.75 billion but not exceeding
                                                                   $2.15 billion; 0.0275% of the portion of the daily net assets
                                                                   exceeding $2.15 billion but not exceeding $2.5 billion; 0.025% of
                                                                   the portion of the daily net assets exceeding $2.5 billion but
                                                                   not exceeding $15 billion; 0.0249% of the portion of the daily
                                                                   net assets exceeding $15 billion but not exceeding $17.5 billion;
                                                                   and 0.0248% of the portion of the daily net assets exceeding
                                                                   $17.5 billion.
 
Morgan Stanley Dean Witter                                         0.050% of the portion of the daily net assets not exceeding $500
  New York Municipal Money                                         million; 0.0425% of the portion of the daily net assets exceeding
  Market Trust                                                     $500 million but not exceeding $750 million; 0.0375% of the
                                                                   portion of the daily net assets exceeding $750 million but not
                                                                   exceeding $1 billion; 0.035% of the portion of the daily net
                                                                   assets exceeding $1 billion but not exceeding $1.5 billion;
                                                                   0.0325% of the portion of the daily net assets exceeding $1.5
                                                                   billion but not exceeding $2 billion; 0.030% of the portion of
                                                                   the daily net assets exceeding $2 billion but not exceeding $2.5
                                                                   billion; 0.0275% of the portion of the daily net assets exceeding
                                                                   $2.5 billion but not exceeding $3 billion; and 0.025% of the
                                                                   portion of the daily net assets exceeding $3 billion.
 
Morgan Stanley Dean Witter Select Dimensions Investment Series--   0.050% of the daily net assets.
  Money Market Portfolio
 
Morgan Stanley Dean Witter                                         0.050% of the portion of the daily net assets not exceeding $500
  Tax-Free Daily Income Trust                                      million; 0.0425% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $750 million; 0.0375% of the
                                                                   portion of the daily net assets exceeding $750 million but not
                                                                   exceeding $1 billion; 0.035% of the portion of the daily net
                                                                   assets exceeding $1 billion but not exceeding $1.5 billion;
                                                                   0.0325% of the portion of the daily net assets exceeding $1.5
                                                                   billion but not exceeding $2 billion; 0.030% of the portion of
                                                                   the daily net assets exceeding $2 billion but not exceeding $2.5
                                                                   billion; 0.0275% of the portion of the daily net assets exceeding
                                                                   $2.5 billion but not exceeding $3 billion; and 0.025% of the
                                                                   portion of the daily net assets exceeding $3 billion.
</TABLE>
 
                                      B-9
<PAGE>
<TABLE>
<S>                                                                <C>
Morgan Stanley Dean Witter U.S. Government Money Market Trust      0.050% of the portion of the daily net assets not exceeding $500
                                                                   million; 0.0425% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $750 million; 0.0375% of the
                                                                   portion of the daily net assets exceeding $750 million but not
                                                                   exceeding $1 billion; 0.035% of the portion of the daily net
                                                                   assets exceeding $1 billion but not exceeding $1.5 billion;
                                                                   0.0325% of the portion of the daily net assets exceeding $1.5
                                                                   billion but not exceeding $2 billion; 0.030% of the portion of
                                                                   the daily net assets exceeding $2 billion but not exceeding $2.5
                                                                   billion; 0.0275% of the portion of the daily net assets exceeding
                                                                   $2.5 billion but not exceeding $3 billion; and 0.025% of the
                                                                   portion of the daily net assets exceeding $3 billion.
 
Morgan Stanley Dean Witter Variable Investment Series-- Money      0.050% of the portion of the daily net assets not exceeding $500
  Market Portfolio                                                 million; 0.0425% of the portion of the daily net assets exceeding
                                                                   $500 million but not exceeding $750 million; and 0.0375% of the
                                                                   portion of the daily net assets exceeding $750 million.
</TABLE>
 
    Monthly compensation calculated weekly by applying the following annual
rates to a fund's weekly net assets:
 
<TABLE>
<CAPTION>
CLOSED-END FUNDS
- ----------------
<S>                                            <C>
Morgan Stanley Dean Witter Government Income   0.060% of the average weekly net assets.
  Trust
 
Morgan Stanley Dean Witter                     0.075% of the portion of the average weekly net assets not
  High Income Advantage Trust                  exceeding $250 million; 0.060% of the portion of average
                                               weekly net assets exceeding $250 million and not exceeding
                                               $500 million; 0.050% of the portion of average weekly net
                                               assets exceeding $500 million and not exceeding $750
                                               million; 0.040% of the portion of average weekly net assets
                                               exceeding $750 million and not exceeding $1 billion; and
                                               0.030% of the portion of average weekly net assets exceeding
                                               $1 billion.
 
Morgan Stanley Dean Witter                     0.075% of the portion of the average weekly net assets not
  High Income Advantage Trust II               exceeding $250 million; 0.060% of the portion of average
                                               weekly net assets exceeding $250 million and not exceeding
                                               $500 million; 0.050% of the portion of average weekly net
                                               assets exceeding $500 million and not exceeding $750
                                               million; 0.040% of the portion of average weekly net assets
                                               exceeding $750 million and not exceeding $1 billion; and
                                               0.030% of the portion of average weekly net assets exceeding
                                               $1 billion.
 
Morgan Stanley Dean Witter                     0.075% of the portion of the average weekly net assets not
  High Income Advantage Trust III              exceeding $250 million; 0.060% of the portion of average
                                               weekly net assets exceeding $250 million and not exceeding
                                               $500 million; 0.050% of the portion of average weekly net
                                               assets exceeding $500 million and not exceeding $750
                                               million; 0.040% of the portion of the average weekly net
                                               assets exceeding $750 million and not exceeding $1 billion;
                                               and 0.030% of the portion of average weekly net assets
                                               exceeding $1 billion.
</TABLE>
 
                                      B-10
<PAGE>
<TABLE>
<S>                                            <C>
Morgan Stanley Dean Witter Income Securities   0.050% of the average weekly net assets.
  Inc.
 
Morgan Stanley Dean Witter Insured Municipal   0.035% of the average weekly net assets.
  Bond Trust
 
Morgan Stanley Dean Witter Insured Municipal   0.035% of the average weekly net assets.
  Trust
 
Morgan Stanley Dean Witter Insured Municipal   0.035% of the average weekly net assets.
  Income Trust
 
Morgan Stanley Dean Witter California Insured  0.035% of the average weekly net assets.
  Municipal Income Trust
 
Morgan Stanley Dean Witter Quality Municipal   0.035% of the average weekly net assets.
  Investment Trust
 
Morgan Stanley Dean Witter                     0.035% of the average weekly net assets.
  New York Quality Municipal Securities
 
Morgan Stanley Dean Witter Quality Municipal   0.035% of the average weekly net assets.
  Income Trust
 
Morgan Stanley Dean Witter Quality Municipal   0.035% of the average weekly net assets.
  Securities
 
Morgan Stanley Dean Witter California Quality  0.035% of the average weekly net assets.
  Municipal Securities
 
Morgan Stanley Dean Witter Insured Municipal   0.035% of the average weekly net assets.
  Securities
 
Morgan Stanley Dean Witter Insured California  0.035% of the average weekly net assets.
  Municipal Securities
</TABLE>
 
                                      B-11


<PAGE>




CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information 
constituting part of this Post-Effective Amendment No. 25 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated 
April 13, 1999, relating to the financial statements and financial 
highlights of Morgan Stanley Dean Witter Natural Resources Development 
Securities Inc., formerly Dean Witter Natural Resources Development 
Securities Inc., which appears in such Statement of Additional Information, 
and to the incorporation by reference of our report into the Prospectus which
constitutes part of this Registration Statement. We also consent to the 
references to us under the headings "Custodian and Independent Accountants" 
and "Experts" in such Statement of Additional Information and to the reference
to us under the heading "Financial Highlights" in such Prospectus.



PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
April 29, 1999



<PAGE>
                        MORGAN STANLEY DEAN WITTER FUNDS
                              MULTIPLE CLASS PLAN
                             PURSUANT TO RULE 18f-3
 
INTRODUCTION
 
    This plan (the "Plan") is adopted pursuant to Rule 18f-3(d) of the
Investment Company Act of 1940, as amended (the "1940 Act"), effective as of
July 28, 1997, and amended as of June 22, 1998. The Plan relates to shares of
the open-end investment companies to which Morgan Stanley Dean Witter Advisors
Inc. acts as investment manager, that are listed on Schedule A, as may be
amended from time to time (each, a "Fund" and collectively, the "Funds"). The
Funds are distributed pursuant to a system (the "Multiple Class System") in
which each class of shares (each, a "Class" and collectively, the "Classes") of
a Fund represents a pro rata interest in the same portfolio of investments of
the Fund and differs only to the extent outlined below.
 
I.  DISTRIBUTION ARRANGEMENTS
 
    One or more Classes of shares of the Funds are offered for purchase by
investors with the sales load structures described below. In addition, pursuant
to Rule 12b-1 under the 1940 Act, the Funds have each adopted a Plan of
Distribution (the "12b-1 Plan") under which shares of certain Classes are
subject to the service and/or distribution fees ("12b-1 fees") described below.
 
1.  CLASS A SHARES
 
    Class A shares are offered with a front-end sales load ("FESL"). The
schedule of sales charges applicable to a Fund and the circumstances under which
the sales charges are subject to reduction are set forth in each Fund's current
prospectus. As stated in each Fund's current prospectus, Class A shares may be
purchased at net asset value (without a FESL): (i) in the case of certain large
purchases of such shares; and (ii) by certain limited categories of investors,
in each case, under the circumstances and conditions set forth in each Fund's
current prospectus. Class A shares purchased at net asset value may be subject
to a contingent deferred sales charge ("CDSC") on redemptions made within one
year of purchase. Further information relating to the CDSC, including the manner
in which it is calculated, is set forth in paragraph 6 below. Class A shares are
also subject to payments under each Fund's 12b-1 Plan to reimburse Morgan
Stanley Dean Witter Distributors Inc., Dean Witter Reynolds Inc. ("DWR"), its
affiliates and other broker-dealers for distribution expenses incurred by them
specifically on behalf of the Class, assessed at an annual rate of up to 0.25%
of average daily net assets. The entire amount of the 12b-1 fee represents a
service fee within the meaning of National Association of Securities Dealers,
Inc. ("NASD") guidelines.
 
2.  CLASS B SHARES
 
    Class B shares are offered without a FESL, but will in most cases be subject
to a six-year declining CDSC which is calculated in the manner set forth in
paragraph 6 below. Class B shares purchased by certain qualified
employer-sponsored benefit plans are subject to a three-year declining CDSC
which is calculated in the manner set forth in paragraph 6 below. The schedule
of CDSC charges applicable to each Fund is set forth in each Fund's current
prospectus. With the exception of certain of the Funds which have a different
formula described below (Morgan Stanley Dean Witter American Value Fund, Morgan
Stanley Dean Witter Natural Resource Development Securities Inc., Morgan Stanley
Dean Witter Strategist Fund and Morgan
 
                                       1
<PAGE>
Stanley Dean Witter Dividend Growth Securities Inc.)(1), Class B shares are also
subject to a fee under each Fund's respective 12b-1 Plan, assessed at the annual
rate of up to 1.0% of either: (a) the lesser of (i) the average daily aggregate
gross sales of the Fund's Class B shares since the inception of the Fund (not
including reinvestment of dividends or capital gains distributions), less the
average daily aggregate net asset value of the Fund's Class B shares redeemed
since the Fund's inception upon which a CDSC has been imposed or waived, or (ii)
the average daily net assets of Class B; or (b) the average daily net assets of
Class B. A portion of the 12b-1 fee equal to up to 0.25% of the Fund's average
daily net assets is characterized as a service fee within the meaning of the
NASD guidelines and the remaining portion of the 12b-1 fee, if any, is
characterized as an asset-based sales charge. Also, Class B shares have a
conversion feature ("Conversion Feature") under which such shares convert to
Class A shares after a certain holding period. Details of the Conversion Feature
are set forth in Section IV below.
 
3.  CLASS C SHARES
 
    Class C shares are offered without imposition of a FESL, but will in most
cases be subject to a CDSC of 1.0% on redemptions made within one year after
purchase. Further information relating to the CDSC is set forth in paragraph 6
below. In addition, Class C shares, under each Fund's 12b-1 Plan, are subject to
12b-1 payments to reimburse Morgan Stanley Dean Witter Distributors Inc., DWR,
its affiliates and other broker-dealers for distribution expenses incurred by
them specifically on behalf of the Class, assessed at the annual rate of up to
1.0% of the average daily net assets of the Class. A portion of the 12b-1 fee
equal to up to 0.25% of the Fund's average daily net assets is characterized as
a service fee within the meaning of NASD guidelines. Unlike Class B shares,
Class C shares do not have the Conversion Feature.
 
4.  CLASS D SHARES
 
    Class D shares are offered without imposition of a FESL, CDSC or a 12b-1 fee
for purchases of Fund shares by (i) investors meeting an initial minimum
investment requirement and (ii) certain other limited categories of investors,
in each case, as may be approved by the Boards of Directors/Trustees of the
Funds and as disclosed in each Fund's current prospectus.
 
5.  ADDITIONAL CLASSES OF SHARES
 
    The Boards of Directors/Trustees of the Funds have the authority to create
additional Classes, or change existing Classes, from time to time, in accordance
with Rule 18f-3 under the 1940 Act.
 
- ------------
 
(1)The payments under the 12b-1 Plan for each of Morgan Stanley Dean Witter
American Value Fund, Morgan Stanley Dean Witter Natural Resource Development
Securities Inc. and Morgan Stanley Dean Witter Dividend Growth Securities Inc.
are assessed at the annual rate of 1.0% of the lesser of: (a) the average daily
aggregate gross sales of the Fund's Class B shares since the inception of the
Fund's Plan (not including reinvestment of dividends or capital gains
distributions), less the average daily aggregate net asset value of the Fund's
Class B shares redeemed since the Plan's inception upon which a contingent
deferred sales charge has been imposed or waived, or (b) the average daily net
assets of Class B attributable to shares issued, net of related shares redeemed,
since inception of the Plan. The payments under the 12b-1 Plan for the Morgan
Stanley Dean Witter Strategist Fund are assessed at the annual rate of: (i) 1%
of the lesser of (a) the average daily aggregate gross sales of the Fund's Class
B shares since the effectiveness of the first amendment of the Plan on November
8, 1989 (not including reinvestment of dividends or capital gains
distributions), less the average daily aggregate net asset value of the Fund's
Class B shares redeemed since the effectiveness of the first amended Plan, upon
which a contingent deferred sales charge has been imposed or waived, or (b) the
average daily net assets of Class B attributable to shares issued, net of
related shares redeemed, since the effectiveness of the first amended Plan; plus
(ii) 0.25% of the average daily net assets of Class B attributable to shares
issued, net of related shares redeemed, prior to effectiveness of the first
amended Plan.
 
                                       2
<PAGE>
6.  CALCULATION OF THE CDSC
 
    Any applicable CDSC is calculated based upon the lesser of net asset value
of the shares at the time of purchase or at the time of redemption. The CDSC
does not apply to amounts representing an increase in share value due to capital
appreciation and shares acquired through the reinvestment of dividends or
capital gains distributions. The CDSC schedule applicable to a Fund and the
circumstances in which the CDSC is subject to waiver are set forth in each
Fund's prospectus.
 
II.  EXPENSE ALLOCATIONS
 
    Expenses incurred by a Fund are allocated among the various Classes of
shares pro rata based on the net assets of the Fund attributable to each Class,
except that 12b-1 fees relating to a particular Class are allocated directly to
that Class. In addition, other expenses associated with a particular Class
(except advisory or custodial fees), may be allocated directly to that Class,
provided that such expenses are reasonably identified as specifically
attributable to that Class and the direct allocation to that Class is approved
by the Fund's Board of Directors/Trustees.
 
III.  CLASS DESIGNATION
 
    All shares of the Funds held prior to July 28, 1997 (other than the shares
held by certain employee benefit plans established by DWR and its affiliate, SPS
Transaction Services, Inc., shares of Funds offered with a FESL, and shares of
Morgan Stanley Dean Witter Balanced Growth Fund and Morgan Stanley Dean Witter
Balanced Income Fund) have been designated Class B shares. Shares held prior to
July 28, 1997 by such employee benefit plans have been designated Class D
shares. Shares held prior to July 28, 1997 of Funds offered with a FESL have
been designated Class D shares. In addition, shares of Morgan Stanley Dean
Witter American Value Fund purchased prior to April 30, 1984, shares of Morgan
Stanley Dean Witter Strategist Fund purchased prior to November 8, 1989 and
shares of Morgan Stanley Dean Witter Natural Resource Development Securities
Inc. and Morgan Stanley Dean Witter Dividend Growth Securities Inc. purchased
prior to July 2, 1984 (with respect to such shares of each Fund, including such
proportion of shares acquired through reinvestment of dividends and capital
gains distributions as the total number of shares acquired prior to each of the
preceding dates in this sentence bears to the total number of shares purchased
and owned by the shareholder of that Fund) have been designated Class D shares.
Shares of Morgan Stanley Dean Witter Balanced Growth Fund and Morgan Stanley
Dean Witter Balanced Income Fund held prior to July 28, 1997 have been
designated Class C shares except that shares of Morgan Stanley Dean Witter
Balanced Growth Fund and Morgan Stanley Dean Witter Balanced Income Fund held
prior to July 28, 1997 that were acquired in exchange for shares of an
investment company offered with a CDSC have been designated Class B shares and
those that were acquired in exchange for shares of an investment company offered
with a FESL have been designated Class A shares.
 
IV.  THE CONVERSION FEATURE
 
    Class B shares held before May 1, 1997 will convert to Class A shares in
May, 2007, except that Class B shares which were purchased before July 28, 1997
by trusts for which Morgan Stanley Dean Witter Trust FSB ("MSDW Trust") provides
discretionary trustee services converted to Class A shares on August 29, 1997
(the CDSC was not applicable to such shares upon the conversion). In all other
instances, Class B shares of each Fund will automatically convert to Class A
shares, based on the relative net asset values of the shares of the two Classes
on the conversion date, which will be approximately ten (10) years after the
date of the original purchase. Conversions will be effected once a month. The 10
year period will be calculated 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 or a series of exchanges, from the last day of the month in which the
original Class B shares were purchased, provided that shares originally
purchased before May 1, 1997 will convert to Class A shares in May, 2007. Except
as set forth below, the conversion of shares purchased on or after May 1, 1997
will take place in the month following the tenth anniversary of the purchase.
There will also be converted at that time such proportion of Class B shares
acquired through automatic reinvestment of dividends owned by the shareholder as
the total number of his or her Class B shares converting at the time bears to
the total number of outstanding Class B shares purchased and owned by the
shareholder. In the case of Class B shares held by a 401(k) plan or other plan
qualified under Section 401(a) of the Internal Revenue Code (the "Code") and
 
                                       3
<PAGE>
for which MSDW Trust serves as Trustee or DWR's Retirement Plan Services serves
as recordkeeper pursuant to a written Recordkeeping Services Agreement, all
Class B shares will convert to Class A shares on the conversion date of the
first shares of a Fund purchased by that plan. In the case of Class B shares
previously exchanged for shares of an "Exchange Fund" (as such term is defined
in the prospectus of each Fund), the period of time the shares were held in the
Exchange Fund (calculated from the last day of the month in which the Exchange
Fund shares were acquired) is excluded from the holding period for conversion.
If those shares are subsequently re-exchanged for Class B shares of a Fund, the
holding period resumes on the last day of the month in which Class B shares are
reacquired.
 
    Effectiveness of the Conversion Feature is subject to the continuing
availability of a ruling of the Internal Revenue Service or an opinion of
counsel to the effect that (i) the conversion of shares does not constitute a
taxable event under the Code; (ii) Class A shares received on conversion will
have a basis equal to the shareholder's basis in the converted Class B shares
immediately prior to the conversion; and (iii) Class A shares received on
conversion will have a holding period that includes the holding period of the
converted Class B shares. The Conversion Feature may be suspended if the Ruling
or opinion is no longer available. In such event, Class B shares would continue
to be subject to Class B fees under the applicable Fund's 12b-1 Plan.
 
V.  EXCHANGE PRIVILEGES
 
    Shares of each Class may be exchanged for shares of the same Class of the
other Funds and for shares of certain other investment companies without the
imposition of an exchange fee as described in the prospectuses and statements of
additional information of the Funds. The exchange privilege of each Fund may be
terminated or revised at any time by the Fund upon such notice as may be
required by applicable regulatory agencies as described in each Fund's
prospectus.
 
VI.  VOTING
 
    Each Class shall have exclusive voting rights on any matter that relates
solely to its 12b-1 Plan, except that Class B shareholders will have the right
to vote on any proposed material increase in Class A's expenses, including
payments under the Class A 12b-1 Plan, if such proposal is submitted separately
to Class A shareholders. If the amount of expenses, including payments under the
Class A 12b-1 Plan, is increased materially without the approval of Class B
shareholders, the Fund will establish a new Class A for Class B shareholders
whose shares automatically convert on the same terms as applied to Class A
before the increase. In addition, each Class shall have separate voting rights
on any matter submitted to shareholders in which the interests of one Class
differ from the interests of any other Class.
 
                                       4
<PAGE>
                        MORGAN STANLEY DEAN WITTER FUNDS
                   MULTIPLE CLASS PLAN PURSUANT TO RULE 18f-3
                                   SCHEDULE A
                              AT FEBRUARY 9, 1999
 
<TABLE>
<S>        <C>
1)         Morgan Stanley Dean Witter Aggressive Equity Fund
2)         Morgan Stanley Dean Witter American Value Fund
3)         Morgan Stanley Dean Witter Balanced Growth Fund
4)         Morgan Stanley Dean Witter Balanced Income Fund
5)         Morgan Stanley Dean Witter California Tax-Free Income Fund
6)         Morgan Stanley Dean Witter Capital Appreciation Fund
7)         Morgan Stanley Dean Witter Capital Growth Securities
8)         Morgan Stanley Dean Witter Competitive Edge Fund
9)         Morgan Stanley Dean Witter Convertible Securities Trust
10)        Morgan Stanley Dean Witter Developing Growth Securities Trust
11)        Morgan Stanley Dean Witter Diversified Income Trust
12)        Morgan Stanley Dean Witter Dividend Growth Securities Inc.
13)        Morgan Stanley Dean Witter Equity Fund
14)        Morgan Stanley Dean Witter European Growth Fund Inc.
15)        Morgan Stanley Dean Witter Federal Securities Trust
16)        Morgan Stanley Dean Witter Financial Services Trust
17)        Morgan Stanley Dean Witter Fund of Funds
18)        Morgan Stanley Dean Witter Global Dividend Growth Securities
19)        Morgan Stanley Dean Witter Global Utilities Fund
20)        Morgan Stanley Dean Witter Growth Fund
21)        Morgan Stanley Dean Witter Health Sciences Trust
22)        Morgan Stanley Dean Witter High Yield Securities Inc.
23)        Morgan Stanley Dean Witter Income Builder Fund
24)        Morgan Stanley Dean Witter Information Fund
25)        Morgan Stanley Dean Witter Intermediate Income Securities
26)        Morgan Stanley Dean Witter International Fund
27)        Morgan Stanley Dean Witter International SmallCap Fund
28)        Morgan Stanley Dean Witter Japan Fund
29)        Morgan Stanley Dean Witter Managers Focus Fund
30)        Morgan Stanley Dean Witter Market Leader Trust
31)        Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
32)        Morgan Stanley Dean Witter Mid-Cap Growth Fund
33)        Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
34)        Morgan Stanley Dean Witter New York Tax-Free Income Fund
35)        Morgan Stanley Dean Witter Pacific Growth Fund Inc.
36)        Morgan Stanley Dean Witter Precious Metals and Minerals Trust
37)        Morgan Stanley Dean Witter Real Estate Fund
38)        Morgan Stanley Dean Witter Special Value Fund
39)        Morgan Stanley Dean Witter S&P 500 Index Fund
40)        Morgan Stanley Dean Witter S&P 500 Select Fund
41)        Morgan Stanley Dean Witter Strategist Fund
42)        Morgan Stanley Dean Witter Tax-Exempt Securities Trust
43)        Morgan Stanley Dean Witter U.S. Government Securities Trust
44)        Morgan Stanley Dean Witter Utilities Fund
45)        Morgan Stanley Dean Witter Value-Added Market Series
46)        Morgan Stanley Dean Witter Value Fund
47)        Morgan Stanley Dean Witter Worldwide High Income Fund
48)        Morgan Stanley Dean Witter World Wide Income Trust
</TABLE>
 
                                       5

<TABLE> <S> <C>

<PAGE>
<ARTICLE> 6
<SERIES>
   <NUMBER> 011
   <NAME> MORGAN STANLEY DEAN WITTER NATURAL RESOURCES - CLASS A
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          FEB-28-1999
<PERIOD-END>                               FEB-28-1999
<INVESTMENTS-AT-COST>                      178,309,725
<INVESTMENTS-AT-VALUE>                     161,499,561
<RECEIVABLES>                                4,322,943
<ASSETS-OTHER>                                  98,252
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                             165,920,756
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                      970,435
<TOTAL-LIABILITIES>                            970,435
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                   193,467,539
<SHARES-COMMON-STOCK>                           68,091
<SHARES-COMMON-PRIOR>                           22,281
<ACCUMULATED-NII-CURRENT>                     (52,409)
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                   (11,654,645)
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                  (16,810,164)
<NET-ASSETS>                                   691,035
<DIVIDEND-INCOME>                            3,683,514
<INTEREST-INCOME>                              188,322
<OTHER-INCOME>                                       0
<EXPENSES-NET>                             (4,190,835)
<NET-INVESTMENT-INCOME>                      (318,999)
<REALIZED-GAINS-CURRENT>                  (10,954,030)
<APPREC-INCREASE-CURRENT>                 (56,429,019)
<NET-CHANGE-FROM-OPS>                     (67,702,048)
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                       (5,526)
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                         87,666
<NUMBER-OF-SHARES-REDEEMED>                   (42,239)
<SHARES-REINVESTED>                                383
<NET-CHANGE-IN-ASSETS>                   (123,340,431)
<ACCUMULATED-NII-PRIOR>                       (49,179)
<ACCUMULATED-GAINS-PRIOR>                    1,984,738
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                        1,408,351
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                              4,190,835
<AVERAGE-NET-ASSETS>                           555,428
<PER-SHARE-NAV-BEGIN>                            13.87
<PER-SHARE-NII>                                   0.03
<PER-SHARE-GAIN-APPREC>                         (3.61)
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                       (0.14)
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              10.15
<EXPENSE-RATIO>                                   1.14
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<TABLE> <S> <C>

<PAGE>
<ARTICLE> 6
<SERIES>
   <NUMBER> 012
   <NAME> MORGAN STANLEY DEAN WITTER NATURAL RESOURCES - CLASS B
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          FEB-28-1999
<PERIOD-END>                               FEB-28-1999
<INVESTMENTS-AT-COST>                      178,309,725
<INVESTMENTS-AT-VALUE>                     161,499,561
<RECEIVABLES>                                4,322,943
<ASSETS-OTHER>                                  98,252
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                             165,920,756
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                      970,435
<TOTAL-LIABILITIES>                            970,435
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                   193,467,539
<SHARES-COMMON-STOCK>                       14,708,614
<SHARES-COMMON-PRIOR>                       19,790,988
<ACCUMULATED-NII-CURRENT>                     (52,409)
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                   (11,654,645)
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                  (16,810,164)
<NET-ASSETS>                               147,527,336
<DIVIDEND-INCOME>                            3,683,514
<INTEREST-INCOME>                              188,322
<OTHER-INCOME>                                       0
<EXPENSES-NET>                             (4,190,835)
<NET-INVESTMENT-INCOME>                      (318,999)
<REALIZED-GAINS-CURRENT>                  (10,954,030)
<APPREC-INCREASE-CURRENT>                 (56,429,019)
<NET-CHANGE-FROM-OPS>                     (67,702,048)
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                   (2,604,507)
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                     10,150,338
<NUMBER-OF-SHARES-REDEEMED>               (15,417,509)
<SHARES-REINVESTED>                            184,797
<NET-CHANGE-IN-ASSETS>                   (123,340,431)
<ACCUMULATED-NII-PRIOR>                       (49,179)
<ACCUMULATED-GAINS-PRIOR>                    1,984,738
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                        1,408,351
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                              4,190,835
<AVERAGE-NET-ASSETS>                       212,487,496
<PER-SHARE-NAV-BEGIN>                            13.81
<PER-SHARE-NII>                                 (0.04)
<PER-SHARE-GAIN-APPREC>                         (3.60)
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                       (0.01)
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              10.03
<EXPENSE-RATIO>                                   1.90
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<TABLE> <S> <C>

<PAGE>
<ARTICLE> 6
<SERIES>
   <NUMBER> 013
   <NAME> MORGAN STANLEY DEAN WITTER NATURAL RESOURCES - CLASS C
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          FEB-28-1999
<PERIOD-END>                               FEB-28-1999
<INVESTMENTS-AT-COST>                      178,309,725
<INVESTMENTS-AT-VALUE>                     161,499,561
<RECEIVABLES>                                4,322,943
<ASSETS-OTHER>                                  98,252
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                             165,920,756
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                      970,435
<TOTAL-LIABILITIES>                            970,435
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                   193,467,539
<SHARES-COMMON-STOCK>                          127,480
<SHARES-COMMON-PRIOR>                          107,779
<ACCUMULATED-NII-CURRENT>                     (52,409)
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                   (11,654,645)
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                  (16,810,164)
<NET-ASSETS>                                 1,277,627
<DIVIDEND-INCOME>                            3,683,514
<INTEREST-INCOME>                              188,322
<OTHER-INCOME>                                       0
<EXPENSES-NET>                             (4,190,835)
<NET-INVESTMENT-INCOME>                      (318,999)
<REALIZED-GAINS-CURRENT>                  (10,954,030)
<APPREC-INCREASE-CURRENT>                 (56,429,019)
<NET-CHANGE-FROM-OPS>                     (67,702,048)
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                      (14,135)
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                        448,875
<NUMBER-OF-SHARES-REDEEMED>                  (430,175)
<SHARES-REINVESTED>                              1,001
<NET-CHANGE-IN-ASSETS>                   (123,340,431)
<ACCUMULATED-NII-PRIOR>                       (49,179)
<ACCUMULATED-GAINS-PRIOR>                    1,984,738
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                        1,408,351
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                              4,190,835
<AVERAGE-NET-ASSETS>                         1,249,715
<PER-SHARE-NAV-BEGIN>                            13.81
<PER-SHARE-NII>                                 (0.02)
<PER-SHARE-GAIN-APPREC>                         (3.63)
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                       (0.14)
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              10.02
<EXPENSE-RATIO>                                   1.90
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>

<TABLE> <S> <C>

<PAGE>
<ARTICLE> 6
<SERIES>
   <NUMBER> 014
   <NAME> MORGAN STANLEY DEAN WITTER NATURAL RESOURCES - CLASS D
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          FEB-28-1999
<PERIOD-END>                               FEB-28-1999
<INVESTMENTS-AT-COST>                      178,309,725
<INVESTMENTS-AT-VALUE>                     161,499,561
<RECEIVABLES>                                4,322,843
<ASSETS-OTHER>                                  98,252
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                             165,920,756
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                      970,435
<TOTAL-LIABILITIES>                            970,435
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                   193,467,539
<SHARES-COMMON-STOCK>                        1,516,381
<SHARES-COMMON-PRIOR>                          947,564
<ACCUMULATED-NII-CURRENT>                     (52,409)
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                   (11,654,645)
<OVERDISTRIBUTION-GAINS>                             0
<ACCUM-APPREC-OR-DEPREC>                  (16,810,164)
<NET-ASSETS>                                15,454,323
<DIVIDEND-INCOME>                            3,683,514
<INTEREST-INCOME>                              188,322
<OTHER-INCOME>                                       0
<EXPENSES-NET>                             (4,190,835)
<NET-INVESTMENT-INCOME>                      (318,999)
<REALIZED-GAINS-CURRENT>                  (10,954,030)
<APPREC-INCREASE-CURRENT>                 (56,429,019)
<NET-CHANGE-FROM-OPS>                     (67,702,048)
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                            0
<DISTRIBUTIONS-OF-GAINS>                     (114,256)
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                      1,402,605
<NUMBER-OF-SHARES-REDEEMED>                  (842,093)
<SHARES-REINVESTED>                              8,305
<NET-CHANGE-IN-ASSETS>                   (123,340,431)
<ACCUMULATED-NII-PRIOR>                       (49,179)
<ACCUMULATED-GAINS-PRIOR>                    1,984,738
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                           0
<GROSS-ADVISORY-FEES>                        1,408,351
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                              4,190,835
<AVERAGE-NET-ASSETS>                        13,556,531
<PER-SHARE-NAV-BEGIN>                            13.89
<PER-SHARE-NII>                                   0.05
<PER-SHARE-GAIN-APPREC>                         (3.61)
<PER-SHARE-DIVIDEND>                                 0
<PER-SHARE-DISTRIBUTIONS>                       (0.14)
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              10.19
<EXPENSE-RATIO>                                      0
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>


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