MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUS, 497, 2000-11-29

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUS
497, 2000-11-29

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<PAGE>
Filed Pursuant to Rule 497(c)
Registration File No.: 2-81151

PROSPECTUS -- NOVEMBER 29, 2000

MORGAN STANLEY DEAN WITTER

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

DEVELOPING GROWTH SECURITIES TRUST

A MUTUAL FUND THAT SEEKS LONG-TERM 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>
The Fund Investment Objective ............................ 1
Principal Investment Strategies ................. 1
Principal Risks ................................. 2
Past Performance ................................ 4
Fees and Expenses ............................... 5
Additional Investment Strategy Information ...... 6
Additional Risk Information ..................... 7
Fund Management ................................. 7

Shareholder Information Pricing Fund Shares ............................. 8
How to Buy Shares ............................... 8
How to Exchange Shares ......................... 10
How to Sell Shares ............................. 12
Distributions .................................. 14
Tax Consequences ............................... 14
Share Class Arrangements ....................... 15

Financial Highlights ............................................... 24

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

This Prospectus contains important information about the Fund.
Please read it carefully and keep it for future reference.
</TABLE>

<PAGE>

THE FUND

[GRAPHIC OMITTED]

INVESTMENT OBJECTIVE
--------------------------------
Morgan Stanley Dean Witter Developing Growth Securities Trust (the
"Fund") seeks long-term capital growth.

[GRAPHIC OMITTED]

PRINCIPAL INVESTMENT STRATEGIES
--------------------------------------------
(sidebar)
CAPITAL GROWTH
An investment objective
having the goal of
selecting securities with
the potential to rise
in price rather than
pay out income.
(end sidebar)

The Fund will normally invest at least 65% of its assets in common
stocks (including depository receipts) and other equity securities.
In deciding which of these securities to buy, hold or sell, the
Fund's "Investment Manager," Morgan Stanley Dean Witter Advisors
Inc., analyzes a company's potential to grow much more rapidly than
the economy. The Fund's other equity securities may include
convertible securities and preferred stocks. The Fund will invest
primarily in smaller and medium-sized companies. The Investment
Manager focuses its securities selection upon a diversified group of
emerging growth companies that have moved beyond the difficult and
extremely risky start-up phase and show positive earnings with the
prospects of achieving significant further profit gains in at least
the next two-to-three years. The proportion of the Fund's assets
invested in particular industries will shift in accordance with the
Investment Manager's views of the market, economy and political
conditions. The Fund may also invest in securities issued in initial
public offerings ("IPOs").

The Fund may invest up to 10% of its assets in foreign securities.
This percentage limitation, however, does not apply to securities of
foreign companies that are listed in the U.S. on a national
securities exchange.

Common stock is a share ownership or equity interest in a
corporation. It may or may not pay dividends, as some companies
reinvest all of their profits back into their businesses, while
others pay out some of their profits to shareholders as dividends. A
depository receipt is generally issued by a bank or financial
institution and represents an ownership interest in the common stock
or other equity securities of a foreign company.

In addition, the Fund may invest in fixed-income securities issued or
guaranteed by United States government, its agencies or
instrumentalities, and investment grade debt 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.

<PAGE>

[GRAPHIC OMITTED]

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

Common Stocks and Other Equity Securities. A principal risk of
investing in the Fund is associated with its investments in common
stocks and other equity securities. In general, stock and other
equity security values fluctuate in response to activities specific
to the company as well as general market, economic and political
conditions. These prices can fluctuate widely.

Small & Medium Capitalization Companies. The Fund's investments in
smaller and medium-sized companies carry more risk than investments
in larger companies. While some of the Fund's holdings in these
companies may be listed on a national securities exchange, such
securities are more likely to be traded in the over-the-counter
market. The low market liquidity of these securities may have an
adverse impact on the Fund's ability to sell certain securities at
favorable prices and may also make it difficult for the Fund to
obtain market quotations based on actual trades for purposes of
valuing the Fund's securities. Investing in lesser-known, smaller and
medium capitalization companies involves greater risk of volatility
of the Fund's net asset value than is customarily associated with
larger, more established companies. Often smaller and medium
capitalization companies and the industries in which they are focused
are still evolving and, while this may offer better growth potential
than larger, more established companies, it also may make them more
sensitive to changing market conditions.

Convertible Securities. The Fund's investments in convertible
securities subject the Fund to the risks associated with both
fixed-income securities and common stocks. To the extent that a
convertible security's investment value is greater than its
conversion value, its price will be likely to increase when interest
rates fall and decrease when interest rates rise, as with a
fixed-income security. If the conversion value exceeds the investment
value, the price of the convertible security will tend to fluctuate
directly with the price of the underlying equity security. Because
there are no credit quality restrictions concerning the Fund's
convertible securities investments, these investments may be
speculative in nature.

Foreign Securities. The Fund's investments in foreign securities
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.

<PAGE>

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

Securities of foreign issuers may be less liquid than comparable
securities of U.S. issuers and, as such, their price changes may be
more volatile. Furthermore, foreign exchanges and broker-dealers are
generally subject to less government and exchange scrutiny and
regulation than their U.S. counterparts. In addition, differences in
clearance and settlement procedures in foreign markets may occasion
delays in settlements of the Fund's trades effected in those markets
and could result in losses to the Fund due to subsequent declines in
the value of the securities subject to the trades.

Shares of IPOs. Fund purchases of shares issued in IPOs expose the
Fund to the additional risks associated with companies that have
little operating history as public companies, as well as to the risks
inherent in those sectors of the market where these new issuers
operate. The market for IPO issuers has been volatile, and share
prices of certain newly-public companies have fluctuated in
significant amounts over short periods of time. In addition, the
Investment Manager cannot guarantee continued access to IPOs.

Other Risks. The performance of the Fund also will depend on whether
the Investment Manager is successful in pursuing the Fund's
investment strategy. The Fund is also subject to other risks from its
permissible investments including the risks associated with
fixed-income securities.

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

<PAGE>

[GRAPHIC OMITTED]

PAST PERFORMANCE
----------------------------
(sidebar)
ANNUAL TOTAL RETURNS
This chart shows the
performance of the
Fund's Class B shares
over the past
10 calendar years.
(end sidebar)

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

ANNUAL TOTAL RETURNS -- CALENDAR YEARS

[GRAPHIC OMITTED]

-3.80% 48.17% -2.54% 30.80% -4.61% 47.69% 12.25% 13.34% 7.81% 98.98%
1990 '91 '92 '93 '94 '95 '96 '97 '98 '99

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. Year-to-date total return as of
September 30, 2000 was -12.64%.

During the periods shown in the bar chart, the highest return for a
calendar quarter was 59.25% (quarter ended December 31, 1999) and the
lowest return for a calendar quarter was -29.82% (quarter ended
September 30, 1990).

(sidebar)
AVERAGE ANNUAL
TOTAL RETURNS
This table compares the Fund's
average annual total returns
with those of a broad measure
of market performance over
time. The Fund's returns
include the maximum applicable
sales charge for each Class
and assume you sold your
shares at the end of each
period.
(end sidebar)

AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1999)

<TABLE>
<CAPTION>
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
<S> <C> <C> <C>
Class A(1) 90.07% -- --
Class B 93.98% 32.02% 21.46%
Class C(1) 98.14% -- --
Class D(1) 101.00% -- --
Russell 2000 Index 21.26% 16.69% 13.40%
</TABLE>

(1) Classes A, C and D commenced operations on July 28, 1997.

(2) The Russell 2000 Index is a capitalization-weighted index, which is
comprised of the 2000 smallest stocks included in the Russell 2000 Index.
The Index does not include any expenses, fees or charges. The Index is
unmanaged and should not be considered an investment.

<PAGE>

[GRAPHIC OMITTED]

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

(sidebar)
SHAREHOLDER FEES
These fees are paid
directly from
your investment.
(end sidebar)

(sidebar)
ANNUAL FUND
OPERATING EXPENSES
These expenses are deducted
from the Fund's assets and
are based on expenses paid
for the fiscal year ended
September 30, 2000.
(end sidebar)

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C>
SHAREHOLDER FEES
Maximum sales charge (load) imposed on
purchases (as a percentage of offering price) 5.25%(1) None None None

Maximum deferred sales charge (load) (as a
percentage based on the lesser of the offering
price or net asset value at redemption) None(2) 5.00%(3) 1.00%(4) None

ANNUAL FUND OPERATING EXPENSES
Management fee 0.49% 0.49% 0.49% 0.49%
Distribution and service (12b-1) fees 0.24% 1.00% 1.00% None
Other expenses 0.12% 0.12% 0.12% 0.12%
Total annual Fund operating expenses 0.85% 1.61% 1.61% 0.61%
</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 CDSC of 1.00% that will be imposed if you sell
your shares within one year after purchase, except for certain specific
circumstances.

(3) The CDSC is scaled down to 1.00% during the sixth year, reaching zero
thereafter. See "Share Class Arrangements" for a complete discussion of
the CDSC.

(4) Only applicable if you sell your shares within one year after purchase.

EXAMPLE

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

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

<TABLE>
<CAPTION>
IF YOU SOLD YOUR SHARES: IF YOU HELD YOUR SHARES:
--------------------------------------- --------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A $607 $782 $ 972 $1,519 $607 $782 $972 $1,519
----------- ---- ---- ------ ------ ---- ---- ---- ------
CLASS B $664 $808 $1,076 $1,911 $164 $508 $876 $1,911
----------- ---- ---- ------ ------ ---- ---- ---- ------
CLASS C $264 $508 $ 876 $1,911 $164 $508 $876 $1,911
----------- ---- ---- ------ ------ ---- ---- ---- ------
CLASS D $ 62 $195 $ 340 $ 762 $ 62 $195 $340 $ 762
----------- ---- ---- ------ ------ ---- ---- ---- ------
</TABLE>

<PAGE>

Long-term shareholders of Class B and Class C may pay more in sales
charges, including distribution fees, than the economic equivalent of
the maximum front-end sales charges permitted by the NASD.

[GRAPHIC OMITTED]

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

Fixed-Income Securities. The Fund may invest up to 35% of its total
assets in fixed-income securities issued or guaranteed by the United
States government, its agencies or instrumentalities, and corporate
debt securities rated Baa or better by Moody's Investors Service or
BBB or better by Standard & Poor's or, if not rated, judged to be of
comparable quality by the Investment Manager.

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. When the Fund takes a defensive position, it
may not achieve its investment objective.

Portfolio Turnover. The Fund may engage in active and frequent
trading of its portfolio securities. The Financial Highlights Table
at the end of this Prospectus shows the Fund's portfolio turnover
rates during recent fiscal years. A portfolio turnover rate of 200%,
for example, is equivalent to the Fund buying and selling all of its
securities two times during the course of the year. A high portfolio
turnover rate (over 100%) could result in high brokerage costs and an
increase in taxable capital gains distributions to the Fund's
shareholders. See the sections on "Distributions" and "Tax
Consequences."

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

<PAGE>

[GRAPHIC OMITTED]

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

Fixed-Income Securities. Principal risks of investing in the Fund are
also associated with its fixed-income securities. All fixed-income
securities are subject to two types of risk: credit risk and interest
rate risk. Credit risk refers to the possibility that the issuer of a
security will be unable to make interest payments and/or repay the
principal on its debt. 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. Accordingly, a rise in the
general level of interest rates may cause the price of the Fund's
fixed-income securities to fall substantially. Fixed-income
securities rated Baa by Moody's Investors Service or BBB by Standard
& Poor's have speculative characteristics.

[GRAPHIC OMITTED]

FUND MANAGEMENT
----------------------------
(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, had approximately
$155 billion in assets under
management as of
October 31, 2000.
(end sidebar)

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

The Fund's portfolio is managed within the Investment Manager's
Growth Group. Armon Bar-Tur, a Vice President of the Investment
Manager, has been the Fund's primary portfolio manager since July
1999. Mr. Bar-Tur has been a portfolio manager with the Investment
Manager since October 1996, prior to which time he was a research
analyst with Merrill Lynch Asset Management. Co-management has been
provided by John Roscoe, a Vice President of the Investment Manager,
since May 2000. Mr. Roscoe has been a portfolio manager with the
Investment Manager since December 1997, prior to which time he was an
equity analyst at Rockefeller and Company, Inc.

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 September 30, 2000, the Fund accrued total compensation to the
Investment Manager amounting to 0.49% of the Fund's average daily net
assets.

<PAGE>

SHAREHOLDER INFORMATION

[GRAPHIC OMITTED]

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

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

The 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 Trustees. In these
cases, the Fund's net asset value will reflect certain portfolio
securities' fair value rather than their market price. With respect
to securities that are 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.

[GRAPHIC OMITTED]

HOW TO BUY SHARES
------------------------------
(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 (877) 937-MSDW
(toll-free) for the telephone
number of the Morgan Stanley
Dean Witter office nearest
you. You may also access our
office locator on our Internet
site at:
www.msdwadvice.com/funds
(end sidebar)

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

<PAGE>

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.

When you buy Fund shares, the shares are purchased at the next share
price calculated (less any applicable front-end sales charge for
Class A shares) after we receive your purchase order. Your payment is
due on the third business day after you place your purchase order. We
reserve the right to reject any order for the purchase of Fund
shares.

(sidebar)
EASYINVEST(SM)
A purchase plan that allows
you to transfer money
automatically from your
checking or savings account or
from a Money Market Fund on a
semi-monthly, monthly or
quarterly basis. Contact your
Morgan Stanley Dean Witter
Financial Advisor for further
information about this
service.
(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, (3) the following programs approved by the Fund's
distributor: (i) qualified state tuition plans described in Section
529 of the Internal Revenue Code and (ii) certain other investment
programs that do not charge an asset-based fee, or (4)
employer-sponsored employee benefit plan accounts.

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

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

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

<PAGE>

o Make out a check for the total amount payable to: Morgan Stanley
Dean Witter Developing Growth Securities Trust.

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

[GRAPHIC OMITTED]

HOW TO EXCHANGE SHARES
------------------------------------
Permissible Fund Exchanges. You may exchange shares of any Class of
the Fund for the same Class of any other continuously offered
Multi-Class Fund, or for shares of a No-Load Fund, a Money Market
Fund, North American Government Income Trust or Short-Term U.S.
Treasury Trust, without the imposition of an exchange fee. In
addition, Class A shares of the Fund may be exchanged for shares of
an FSC Fund (funds subject to a front-end sales charge). 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, Money
Market Fund or FSC Fund. If a Morgan Stanley Dean Witter Fund is not
listed, consult the inside back cover of that fund's prospectus for
its designation.

Exchanges may be made after shares of the fund acquired by purchase
have been held for thirty days. There is no waiting period for
exchanges of shares acquired by exchange or dividend reinvestment.
The current prospectus for each fund describes its investment
objective(s), policies and investment minimums, and should be read
before investment. Since exchanges are available only into
continuously offered Morgan Stanley Dean Witter Funds, exchanges are
not available into any new Morgan Stanley Dean Witter Fund during its
initial offering period, or when shares of a particular Morgan
Stanley Dean Witter Fund are not being offered for purchase.

Exchange Procedures. You can process an exchange by contacting your
Morgan Stanley Dean Witter Financial Advisor or other authorized
financial representative. Otherwise, you must forward an exchange
privilege authorization form to the Fund's transfer agent -- Morgan
Stanley Dean Witter Trust FSB -- and then write the transfer agent or
call (800) 869-NEWS to place an exchange order. You can obtain an
exchange privilege authorization form by contacting your Financial
Advisor or other authorized financial representative or by calling
(800) 869-NEWS. If you hold share certificates, no exchanges may be
processed until we have received all applicable share certificates.

An exchange to any Morgan Stanley Dean Witter Fund (except a Money
Market Fund) is made on the basis of the next calculated net asset
values of the funds involved after the exchange instructions are
accepted. When exchanging into a Money Market Fund, the Fund's shares
are sold at their next calculated net asset value and the Money
Market Fund's shares are purchased at their net asset value on the
following business day.

The Fund may terminate or revise the exchange privilege upon required
notice. The check writing privilege is not available for Money Market
Fund shares you acquire in an exchange.

<PAGE>

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.

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

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

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

Limitations on Exchanges. Certain patterns of past exchanges and/or
purchase or sale transactions involving the Fund or other Morgan
Stanley Dean Witter Funds may result in the Fund limiting or
prohibiting, at its discretion, additional purchases and/or
exchanges. Determinations in this regard may be made based on the
frequency or dollar amount of the previous exchanges or purchase or
sale transactions. You will be notified in advance of limitations on
your exchange privileges.

CDSC Calculations on Exchanges. See the "Share Class Arrangements"
section of this Prospectus for a further discussion of how applicable
contingent deferred sales charges (CDSCs) are calculated for shares
of one Morgan Stanley Dean Witter Fund that are exchanged for shares
of another.

For further information regarding exchange privileges, you should
contact your Morgan Stanley Dean Witter Financial Advisor or call
(800) 869-NEWS.

<PAGE>

[GRAPHIC OMITTED]

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

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

<PAGE>

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

Payment may be postponed or the right to sell your shares suspended
under unusual circumstances. If you request to sell shares that were
recently purchased by check, your sale will not be effected until it
has been verified that the check has been honored.

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.

<PAGE>

[GRAPHIC OMITTED]

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

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

The Fund declares income dividends separately for each Class.
Distributions paid on Class A and Class D shares usually will be
higher than for Class B and Class C because distribution fees that
Class B and Class C pay are higher. Normally, income dividends are
distributed to shareholders annually. Capital gains, if any, are
usually distributed 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. However,
if you purchase Fund shares through a Financial Advisor within three
business days prior to the record date for the distribution, the
distribution will automatically be paid to you in cash, even if you
did not request to receive all distributions in cash. No interest
will accrue on uncashed checks. If you wish to change how your
distributions are paid, your request should be received by the Fund's
transfer agent, Morgan Stanley Dean Witter Trust FSB, at least five
business days prior to the record date of the distributions.

[GRAPHIC OMITTED]

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

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:

o The Fund makes distributions; and

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

<PAGE>

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

Every January, you will be sent a statement (IRS Form 1099-DIV)
showing the taxable distributions paid to you in the previous year.
The statement provides 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.

[GRAPHIC OMITTED]

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

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

<PAGE>

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

<TABLE>
<CAPTION>
MAXIMUM
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>

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

(sidebar)
FRONT-END SALES CHARGE OR FSC
An initial sales charge you
pay when purchasing Class A
shares that is based on a
percentage of the offering
price. The percentage declines
based upon the dollar value of
Class A shares you purchase.
We offer three ways to reduce
your Class A sales charges --
the Combined Purchase
Privilege, Right of
Accumulation and Letter of
Intent.
(end sidebar)

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

<TABLE>
<CAPTION>
FRONT-END SALES CHARGE
-------------------------------------------------
PERCENTAGE OF APPROXIMATE PERCENTAGE
AMOUNT OF SINGLE TRANSACTION PUBLIC OFFERING PRICE OF NET AMOUNT INVESTED
--------------------------------------------------------------------------------------
<S> <C> <C>
Less than $25,000 5.25% 5.54%
$25,000 but less than $50,000 4.75% 4.99%
$50,000 but less than $100,000 4.00% 4.17%
$100,000 but less than $250,000 3.00% 3.09%
$250,000 but less than $1 million 2.00% 2.04%
$1 million and over 0 0
</TABLE>

<PAGE>

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

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

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

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

o Tax-exempt organizations.

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

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

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

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 sales charge under the Right of Accumulation. Similar
notification must be made in writing when an order is placed by mail.
The reduced sales charge will not be granted if: (i) notification is
not furnished at the time of the order; or (ii) a review of the
records of Dean Witter Reynolds or other authorized dealer of Fund
shares or the Fund's transfer agent does not confirm your represented
holdings.

Letter of Intent. The schedule of reduced sales charges for larger
purchases also will be available to you if you enter into a written
"letter of intent." A letter of intent provides for the purchase of
Class A shares of the Fund or other Multi-Class Funds or shares of
FSC Funds within a thirteen-month period. The initial purchase under
a letter of intent must be at least 5% of the stated investment goal.
To determine the applicable sales charge reduction, you may also
include: (1) the cost of shares of other Morgan Stanley Dean Witter
Funds which were previously purchased at a price including a
front-end sales charge during the 90-day period prior to the
distributor receiving the letter of intent, and (2) the cost of
shares of other funds you currently own acquired in exchange

<PAGE>

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

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

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

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

o Qualified state tuition plans described in Section 529 of the
Internal Revenue Code (subject to all applicable terms and
conditions) and certain other investment programs that do not
charge an asset-based fee and have been approved by the Fund's
distributor.

o 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 Morgan
Stanley Dean Witter's Retirement Plan Services serves as
recordkeeper under a written Recordkeeping Services Agreement
("MSDW Eligible Plans") which have at least 200 eligible
employees.

o 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.

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

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

<PAGE>

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

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

(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)

<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:

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

o Sales in connection with the following retirement plan
"distributions:" (i) lump-sum or other distributions from a
qualified corporate or self-employed retirement plan following
retirement (or, in the case of a "key employee" of a "top heavy"
plan, following attainment of age 591/2); (ii) distributions
from an IRA or 403(b) Custodial Account following attainment of
age 591/2; 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).

<PAGE>

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

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

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

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

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

Distribution Fee. Class B shares are subject to an annual 12b-1 fee
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 (not
including reinvestments 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 (b) the average daily net assets of Class
B.

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

<PAGE>

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

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

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

Exchanging Shares Subject to a CDSC. There are special considerations
when you exchange Fund shares that are subject to a CDSC. When
determining the length of time you held the shares and the
corresponding CDSC rate, any period (starting at the end of the
month) during which you held shares of a fund that does not charge a
CDSC will not be counted. Thus, in effect the "holding period" for
purposes of calculating the CDSC is frozen upon exchanging into a
fund that does not charge a CDSC.

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

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

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

<PAGE>

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

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

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

o Certain investment programs that do not charge an asset-based
fee and have been approved by the Fund's distributor. However,
Class D shares are not offered for investments made through
Section 529 plans (regardless of the size of the investment).

o 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.

o Certain unit investment trusts sponsored by Dean Witter
Reynolds.

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

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

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

<PAGE>

A and Class D shares of Multi-Class Funds and shares of FSC Funds you
currently own, along with shares of Morgan Stanley Dean Witter Funds
you currently own that you acquired in exchange for those shares.

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

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

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance for the periods indicated. Certain information reflects
financial results for a single Fund share throughout each period. 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).

The information for the fiscal year ended September 30, 2000 has been audited
by Deloitte & Touche LLP, independent auditors, whose report, along with the
Fund's financial statements, is included in the annual report, which is
available upon request. The financial highlights for the fiscal year ended
September 30, 1999 and all periods presented prior thereto have been audited by
other independent accountants.

<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
FOR THE YEAR ENDED SEPTEMBER 30, THROUGH
2000 1999 1998 SEPTEMBER 30, 1997
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A++
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 31.44 $ 20.38 $ 27.50 $ 24.62
------------------------------------------------- ------- ------- -------- ---------
Income (loss) from investment operations:
Net investment loss (0.12) (0.07) (0.06) (0.02)
Net realized and unrealized gain (loss) 12.89 11.50 (4.75) 2.90
------- ------- -------- ---------
Total income (loss) from investment operations 12.77 11.43 (4.81) 2.88
------------------------------------------------- ------- ------- -------- ---------
Less distributions from net realized gain (6.47) (0.37) (2.31) --
------------------------------------------------- ------- ------- -------- ---------
Net asset value, end of period $ 37.74 $ 31.44 $ 20.38 $ 27.50
------------------------------------------------- ------- ------- -------- ---------
TOTAL RETURN+ 40.16% 56.81% (18.26)% 11.70%(1)
------------------------------------------------- ------- ------- -------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.85%(3) 0.90%(3) 0.94%(3) 0.99%(2)
Net investment loss (0.35)%(3) (0.25)%(3) (0.23)%(3) (0.46)%(2)
------------------------------------------------- --------- --------- --------- ---------
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $44,008 $15,246 $ 5,822 $ 978
Portfolio turnover rate 184% 172% 178% 154%
</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.

<PAGE>

<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30, 2000++ 1999++
--------------------------------------------------------------------------------
<S> <C> <C>
CLASS B
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 30.90 $ 20.19
------------------------------------------------- ---------- ---------
Income (loss) from investment operations:
Net investment loss (0.44) (0.27)
Net realized and unrealized gain (loss) 12.71 11.35
---------- ---------
Total income (loss) from investment operations 12.27 11.08
------------------------------------------------- ---------- ---------
Less distributions from net realized gain (6.47) (0.37)
------------------------------------------------- ---------- ---------
Net asset value, end of period $ 36.70 $ 30.90
------------------------------------------------- ---------- ---------
TOTAL RETURN+ 39.12% 55.59%
------------------------------------------------- ---------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.61%(1) 1.70%(1)
Net investment loss (1.11)%(1) (1.05)%(1)
------------------------------------------------- ------------ ----------
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $1,056,116 $770,392
Portfolio turnover rate 184% 172%

<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30, 1998++ 1997*++ 1996
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS B
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 27.46 $ 27.71 $ 25.54
------------------------------------------------- --------- -------- --------
Income (loss) from investment operations:
Net investment loss (0.20) (0.28) (0.23)
Net realized and unrealized gain (loss) (4.76) 3.92 4.32
--------- -------- --------
Total income (loss) from investment operations (4.96) 3.64 4.09
------------------------------------------------- --------- -------- --------
Less distributions from net realized gain (2.31) (3.89) (1.92)
------------------------------------------------- --------- -------- --------
Net asset value, end of period $ 20.19 $ 27.46 $ 27.71
------------------------------------------------- --------- -------- --------
TOTAL RETURN+ (18.88)% 16.38% 17.53%
------------------------------------------------- --------- -------- --------
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.69%(1) 1.68% 1.69%
Net investment loss (0.98)%(1) (1.21)% (1.03)%
------------------------------------------------- ---------- -------- --------
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $596,834 $877,539 $799,201
Portfolio turnover rate 178% 154% 149%
</TABLE>

* Prior to July 28, 1997, the Fund issued one class of shares. All shares
of the Fund held prior to that date have been designated Class B shares.

++ 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.

<PAGE>

<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
FOR THE YEAR ENDED SEPTEMBER 30, THROUGH
2000 1999 1998 SEPTEMBER 30, 1997
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS C++
SELECTED PER SHARE DATA
Net asset value, beginning of period $ 30.95 $ 20.19 $ 27.46 $ 24.62
------------------------------------------------- ------- ------- -------- ---------
Income (loss) from investment operations:
Net investment loss (0.42) (0.25) (0.23) (0.05)
Net realized and unrealized gain (loss) 12.70 11.38 (4.73) 2.89
------- ------- -------- ---------
Total income (loss) from investment operations 12.28 11.13 (4.96) 2.84
------------------------------------------------- ------- ------- -------- ---------
Less distributions from net realized gain (6.47) (0.37) (2.31) --
------------------------------------------------- ------- ------- -------- ---------
Net asset value, end of period $ 36.76 $ 30.95 $ 20.19 $ 27.46
------------------------------------------------- ------- ------- -------- ---------
TOTAL RETURN+ 39.09% 55.84% (18.88)% 11.54%(1)
------------------------------------------------- --------- --------- --------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.61%(3) 1.58%(3) 1.69%(3) 1.71%(2)
Net investment loss (1.11)%(3) (0.93)%(3) (0.98)%(3) (1.19)%(2)
------------------------------------------------- --------- --------- --------- ---------
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $17,007 $4,728 $ 2,185 $1,066
Portfolio turnover rate 184% 172% 178% 154%
</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.

<PAGE>

<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
FOR THE YEAR ENDED SEPTEMBER 30, THROUGH
2000 1999 1998 SEPTEMBER 30, 1997
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS D++
SELECTED PER SHARE DATA
Net asset value, beginning of period $ 31.60 $ 20.44 $ 27.51 $ 24.62
------------------------------------------------- ------- ------- ---------- ---------
Income (loss) from investment operations:
Net investment income (loss) 0.03 (0.01) 0.01 (0.01)
Net realized and unrealized gain (loss) 12.91 11.54 (4.77) 2.90
------- ------- ---------- ---------
Total income (loss) from investment operations 12.94 11.53 (4.76) 2.89
------------------------------------------------- ------- ------- ---------- ---------
Less distributions from net realized gain (6.47) (0.37) (2.31) --
------------------------------------------------- ------- ------- ---------- ---------
Net asset value, end of period $ 38.07 $ 31.60 $ 20.44 $ 27.51
------------------------------------------------- ------- ------- ---------- ---------
TOTAL RETURN+ 40.53% 57.14% (18.05)% 11.74%(1)
------------------------------------------------- ------- ------- ---------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.61%(3) 0.70%(3) 0.69%(3) 0.70%(2)
Net investment income (loss) (0.11)%(3) (0.05)%(3) 0.02%(3) (0.20)%(2)
------------------------------------------------- --------- --------- ---------- ---------
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $66,696 $6,625 $ 3,291 $ 22
Portfolio turnover rate 184% 172% 178% 154%
</TABLE>

* The date shares were first issued.

++ The per share amount 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.

<PAGE>

NOTES

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

<PAGE>

MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS
The Morgan Stanley Dean Witter Family of Funds offers
investors a wide range of investment choices.
Come on in and meet the family!

<TABLE>
<S> <C> <C>
GROWTH FUNDS GROWTH FUNDS THEME FUNDS
Aggressive Equity Fund Financial Services Trust
American Opportunities Fund Health Sciences Trust
Capital Growth Securities Information Fund
Developing Growth Securities Natural Resource Development Securities
Growth Fund Technology Fund
Market Leader Trust
Mid-Cap Equity Trust GLOBAL/INTERNATIONAL FUNDS
New Discoveries Fund Competitive Edge Fund - "Best Ideas" Portfolio
Next Generation Trust European Growth Fund
Small Cap Growth Fund Fund of Funds - International Portfolio
Special Value Fund International Fund
Tax-Managed Growth Fund International SmallCap Fund
21st Century Trend Fund Japan Fund
Latin American Growth Fund
Pacific Growth Fund

</TABLE>

<TABLE>
<S> <C> <C>
GROWTH & INCOME FUNDS Balanced Growth Fund Total Return Trust
Balanced Income Fund Value Fund
Convertible Securities Trust Value-Added Market Series/Equity Portfolio
Dividend Growth Securities
Equity Fund THEME FUNDS
Fund of Funds - Domestic Portfolio Real Estate Fund
Income Builder Fund Utilities Fund
S&P 500 Index Fund
S&P 500 Select Fund GLOBAL FUNDS
Strategist Fund Global Dividend Growth Securities
Total Market Index Fund Global Utilities Fund
</TABLE>

<TABLE>
<S> <C> <C>
INCOME FUNDS GOVERNMENT INCOME FUNDS GLOBAL INCOME FUNDS
Federal Securities Trust North American Government Income Trust
Short-Term U.S. Treasury Trust World Wide Income Trust
U.S. Government Securities Trust
TAX-FREE INCOME FUNDS
DIVERSIFIED INCOME FUNDS California Tax-Free Income Fund
Diversified Income Trust Hawaii Municipal Trust(FSC)
Limited Term Municipal Trust(NL)
CORPORATE INCOME FUNDS Multi-State Municipal Series Trust(FSC)
High Yield Securities New York Tax-Free Income Fund
Intermediate Income Securities Tax-Exempt Securities Trust
Short-Term Bond Fund(NL)
</TABLE>

<TABLE>
<S> <C> <C>
MONEY MARKET FUNDS TAXABLE MONEY MARKET FUNDS TAX-FREE MONEY MARKET FUNDS
Liquid Asset Fund(MM) California Tax-Free Daily Income Trust(MM)
U.S. Government Money Market Trust(MM) New York Municipal Money Market Trust(MM)
Tax-Free Daily Income Trust(MM)
</TABLE>

There may be funds created after this Prospectus was published. Please consult
the inside back cover of a new fund's prospectus for its designation, e.g.,
Multi-Class Fund or Money Market Fund.

Unless otherwise noted, each listed Morgan Stanley Dean Witter Fund except for
North American Government Income Trust and Short-Term U.S. Treasury Trust is a
Multi-Class Fund. A Multi-Class Fund is a mutual fund offering multiple Classes
of shares. The other types of funds are: NL -- No-Load (Mutual) Fund; MM --
Money Market Fund; FSC -- A mutual fund sold with a front-end sales charge and
a distribution (12b-1) fee.

<PAGE>

PROSPECTUS - NOVEMBER 29, 2000

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

(800) 869-NEWS

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.MSDWADVICE.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 (202) 942-8090. Reports and
other information about the Fund are available on the EDGAR Database on the
SEC's Internet site (www.sec.gov), and copies of this information may be
obtained, after paying a duplicating fee, by electronic request at the
following E-mail address: [email protected], or by writing the Public
Reference Section of the SEC, Washington, DC 20549-0102.

TICKER SYMBOLS:

Class A: DGRAX Class C: DGRCX
---------------------- --------------------
Class B: DGRBX Class D: DGRDX
---------------------- --------------------

(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-3639)

Morgan Stanley Dean Witter

DEVELOPING GROWTH
SECURITIES TRUST

A MUTUAL FUND THAT SEEKS
LONG-TERM CAPITAL GROWTH
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

MORGAN STANLEY DEAN WITTER
DEVELOPING GROWTH SECURITIES TRUST

NOVEMBER 29, 2000
--------------------------------------------------------------------------------

This Statement of Additional Information is not a Prospectus. The
Prospectus (dated November 29, 2000) for the Morgan Stanley Dean Witter
Developing Growth Securities Trust may be obtained without charge from the Fund
at its address or telephone number listed below or from Dean Witter Reynolds at
any of its branch offices.

Morgan Stanley Dean Witter
Developing Growth Securities Trust
Two World Trade Center
New York, New York 10048
(800) 869-NEWS

<PAGE>

TABLE OF CONTENTS

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

I. Fund History ....................................................... 4
II. Description of the Fund and Its Investments and Risks .............. 4
A. Classification ............................................ 4
B. Investment Strategies and Risks ........................... 4
C. Fund Policies/Investment Restrictions ..................... 7
III. Management of the Fund ............................................. 8
A. Board of Trustees ......................................... 8
B. Management Information .................................... 9
C. Compensation .............................................. 13
IV. Control Persons and Principal Holders of Securities ................ 15
V. Investment Management and Other Services ........................... 15
A. Investment Manager ........................................ 15
B. Principal Underwriter ..................................... 15
C. Services Provided by the Investment Manager ............... 16
D. Dealer Reallowances ....................................... 17
E. Rule 12b-1 Plan ........................................... 17
F. Other Service Providers ................................... 21
G. Codes of Ethics ........................................... 22
VI. Brokerage Allocation and Other Practices ........................... 22
A. Brokerage Transactions .................................... 22
B. Commissions ............................................... 22
C. Brokerage Selection ....................................... 23
D. Directed Brokerage ........................................ 24
E. Regular Broker-Dealers .................................... 24
VII. Capital Stock and Other Securities ................................. 24
VIII. Purchase, Redemption and Pricing of Shares ......................... 25
A. Purchase/Redemption of Shares ............................. 25
B. Offering Price ............................................ 25
IX. Taxation of the Fund and Shareholders .............................. 26
X. Underwriters ....................................................... 28
XI. Calculation of Performance Data .................................... 28
XII. Financial Statements ............................................... 29

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.

"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 Developing Growth Securities Trust, a
registered open-end investment company.

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

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

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

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

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

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

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

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

3
<PAGE>

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

The Fund was organized as a Massachusetts business trust, under a
Declaration of Trust, on December 28, 1982, with the name Dean Witter Developing
Growth Securities Trust. On June 22, 1998, the Fund's name was changed to Morgan
Stanley Dean Witter Developing Growth Securities Trust.

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

A. CLASSIFICATION

The Fund is an open-end, diversified management investment company whose
investment objective is to seek long-term 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."

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:

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

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

Eurodollar Certificates of Deposit. Eurodollar certificates of deposit
issued by foreign branches of domestic banks having total assets of $1 billion
or more;

Obligations of Savings Institutions. Certificates of deposit of savings
banks and savings and loan associations, having total assets of $1 billion or
more;

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

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

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

4
<PAGE>

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 approved by
the Trustees are 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. 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.

LENDING PORTFOLIO SECURITIES. The Fund may lend its portfolio securities to
brokers, dealers and other financial institutions, provided that the loans are
callable at any time by the Fund, and are at all times secured by cash or cash
equivalents, which are maintained in a segregated account pursuant to applicable
regulations and that are equal to at least 100% of the market value, determined
daily, of the loaned securities. The advantage of these loans is that the Fund
continues to receive the income on the loaned securities while at the same time
earning interest on the cash amounts deposited as collateral, which will be
invested in short-term obligations. The Fund will not lend more than 25% of the
value of its total assets.

As with any extensions of credit, there are risks of delay in recovery and,
in some cases, even loss of rights in the collateral should the borrower of the
securities fail financially. However, these loans of portfolio securities will
only be made to firms deemed by the Fund's management to be creditworthy and
when the income which can be earned from such loans justifies the attendant
risks. Upon termination of the loan, the borrower is required to return the
securities to the Fund. Any gain or loss in the market price during the loan
period would inure to the Fund.

When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loaned securities, to
be delivered within one day after notice, to permit the exercise of the rights
if the matters involved would have a material effect on the Fund's investment in
the loaned securities. The Fund will pay reasonable finder's, administrative and
custodial fees in connection with a loan of its securities.

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

At the time the Fund makes the commitment to purchase or sell securities on
a when-issued, delayed delivery or forward commitment basis, it will record the
transaction and thereafter reflect the value, each day, of such security
purchased, or if a sale, the proceeds to be received, in determining its net
asset value. At the time of delivery of the securities, their value may be more
or less than the purchase or sale price. An increase in the percentage of the
Fund's assets committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis may increase the volatility

5
<PAGE>

of its net asset value. The Fund will also establish a segregated account on the
Fund's books in which it will continually maintain cash or cash equivalents or
other liquid portfolio securities equal in value to commitments to purchase
securities on a when-issued, delayed delivery or forward commitment basis.

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

An increase in the percentage of the Fund's assets committed to the
purchase of securities on a "when, as and if issued" basis may increase the
volatility of its net asset value. The Fund may also sell securities on a "when,
as and if issued" basis provided that the issuance of the security will result
automatically from the exchange or conversion of a security owned by the Fund at
the time of sale.

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

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

WARRANTS. The Fund may acquire warrants. 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.

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

ZERO COUPON SECURITIES. A portion of the fixed-income 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. 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 on interest-paying securities if prevailing interest rates
rise.

6
<PAGE>

A zero coupon security pays no interest to its holder during its life.
Therefore, to the extent the Fund invests in zero coupon securities, it will not
receive current cash available for distribution to shareholders. In addition,
zero coupon securities are subject to substantially greater price fluctuations
during periods of changing prevailing interest rates than are comparable
securities which pay interest on a current basis. 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.

LEVERAGING. The Fund may borrow money from a bank in an amount up to 25% of
the Fund's total assets (including the amount borrowed) less its liabilities
(not including any borrowings but including the fair market value at the time of
computation of any other senior securities then outstanding). The Fund may
borrow to seek to enhance capital appreciation by leveraging its investments
through purchasing securities with borrowed funds. The Fund will maintain asset
coverage with respect to any borrowings in accordance with the Investment
Company Act of 1940 (the "Investment Company Act"). Leveraging Fund investments
has speculative characteristics.

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, as amended, 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 (unless otherwise noted); 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 long-term 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. Concentrate its investments in any particular industry, but if deemed
appropriate for attainment of its investment objective, up to 25% of
its total assets (valued at the time of investment) may be invested in
any one industry classification used by the Fund for investment
purposes. This restriction does not apply to obligations issued or
guaranteed by the United States government or its agencies or
instrumentalities.

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

5. Borrow money, except from banks for investment purposes or as a
temporary measure for extraordinary or emergency purposes.

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

7
<PAGE>

7. Purchase or sell real estate or interests therein, although the Fund
may purchase securities of issuers which engage in real estate
operations and securities which are secured by real estate or interests
therein.

8. Purchase or sell commodities or commodity futures contracts.

9. 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
such programs.

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

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

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

13. Pledge its assets or assign or otherwise encumber them except to secure
permitted borrowings. To meet the requirements of regulations in
certain states, the Fund, as a matter of operating policy but not as a
fundamental policy, will limit any pledge of its assets to 5% of its
net assets so long as shares of the Fund are being sold in those
states.

14. 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; or (c) lending portfolio securities.

15. Make loans of money or securities, except by: (a) the purchase of debt
obligations; (b) investment in repurchase agreements; or (c) lending
its portfolio securities.

16. Make short sales of securities.

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

18. 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.

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

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 TRUSTEES

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

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

8
<PAGE>

B. MANAGEMENT INFORMATION

TRUSTEES AND OFFICERS. The Board of the Fund consists of nine (9) Trustees.
These same individuals also serve as directors or trustees for all of the Morgan
Stanley Dean Witter Funds. Six Trustees (67% of the total number) have no
affiliation or business connection with the Investment Manager or any of its
affiliated persons and do not own any stock or other securities issued by the
Investment Manager's parent company, MSDW. These are the "non-interested" or
"independent" Trustees. The other three Trustees (the "management Trustees") are
affiliated with the Investment Manager.

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

NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
------------------------------------------- ----------------------------------------------------
<S> <C>
Michael Bozic (59) ........................ Retired; Director or Trustee of the Morgan Stanley
Trustee Dean Witter Funds; formerly Vice Chairman of
c/o Mayer, Brown & Platt Kmart Corporation (December 1998-October
Counsel to the Independent Trustees 2000), Chairman and Chief Executive Officer of
1675 Broadway Levitz Furniture Corporation (November 1995-
New York, New York November 1998) and President and Chief Executive
Officer of Hills Department Stores (May 1991-July
1995); formerly variously Chairman, Chief Executive
Officer, President and Chief Operating Officer
(1987-1991) of the Sears Merchandise Group of Sears,
Roebuck and Co.; Director of Weirton Steel
Corporation.

Charles A. Fiumefreddo* (67) .............. Chairman, Director or Trustee and Chief Executive
Chairman of the Board, Officer of the Morgan Stanley Dean Witter Funds;
Chief Executive Officer and Trustee formerly Chairman, Chief Executive Officer and
Two World Trade Center Director of the Investment Manager, the Distributor
New York, New York and MSDW Services Company; Executive Vice President
and Director of Dean Witter Reynolds; Chairman and
Director of the Transfer Agent; formerly Director
and/or officer of various MSDW subsidiaries (until
June 1998).

Edwin J. Garn (68) ........................ Director or Trustee of the Morgan Stanley Dean
Trustee Witter Funds; formerly United States Senator (R-
c/o Summit Ventures LLC Utah) (1974-1992) and Chairman, Senate Banking
1 Utah Center Committee (1980-1986); formerly Mayor of Salt
201 S. Main Street Lake City, Utah (1971-1974); formerly Astronaut,
Salt Lake City, Utah Space Shuttle Discovery (April 12-19, 1985); Vice
Chairman, Huntsman Corporation (chemical company);
Director of Franklin Covey (time management systems),
BMW Bank of North America, Inc. (industrial loan
corporation), United Space Alliance (joint venture
between Lockheed Martin and the Boeing Company) and
Nuskin Asia Pacific (multilevel marketing); member of
the Utah Regional Advisory Board of Pacific Corp.;
member of the board of various civic and charitable
organizations.
</TABLE>

9
<PAGE>

NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
------------------------------------------- -----------------------------------------------------
<S> <C>

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

James F. Higgins* (52) .................... Chariman of the Private Client Group of MSDW
Trustee (since August 2000); Director of the Transfer Agent
Two World Trade Center and Dean Witter Realty Inc.; Director or Trustee of
New York, New York the Morgan Stanley Dean Witter Funds (since June
2000); previously President and Chief Operating
Officer of the Private Client Group of MSDW (May
1999-August 2000), President and Chief Operating
Officer of Individual Securities of MSDW (February
1997-May 1999), President and Chief Operating Officer
of Dean Witter Securities of MSDW (1995-February
1997), and President and Chief Operating Officer of
Dean Witter Financial (1989-1995) and Director
(1985-1997) of Dean Witter Reynolds.

Dr. Manuel H. Johnson (51) ................ Senior Partner, Johnson Smick International, Inc.,
Trustee a consulting firm; Co-Chairman and a founder of
c/o Johnson Smick International, Inc. the Group of Seven Council (G7C), an international
1133 Connecticut Avenue, N.W. economic commission; Chairman of the Audit
Washington, D.C. Committee and Director or Trustee of the Morgan
Stanley Dean Witter Funds; Director of Greenwich
Capital Markets, Inc. (broker-dealer), Independence
Standards Board (private sector organization
governing independence of auditors) 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 and Assistant
Secretary of the U.S. Treasury.

Michael E. Nugent (64) .................... General Partner, Triumph Capital, L.P., a private
Trustee investment partnership; Chairman of the Insurance
c/o Triumph Capital, L.P. Committee and Director or Trustee of the Morgan
237 Park Avenue Stanley Dean Witter Funds; formerly Vice President,
New York, New York Bankers Trust Company and BT Capital Corporation;
director of various business organizations.

</TABLE>

10
<PAGE>

NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
------------------------------------------- -----------------------------------------------------
<S> <C>

Philip J. Purcell* (57) ................... Chairman of the Board of Directors and Chief
Trustee Executive Officer of MSDW, Dean Witter Reynolds
1585 Broadway and Novus Credit Services Inc.; Director of the
New York, New York Distributor; Director or Trustee of the Morgan
Stanley Dean Witter Funds; Director of American
Airlines, Inc. and its parent company, AMR
Corporation; Director and/or officer of various MSDW
subsidiaries.

John L. Schroeder (70) .................... Retired; Chairman of the Derivatives Committee
Trustee and Director or Trustee of the Morgan Stanley
c/o Mayer, Brown & Platt Dean Witter Funds; Director of Citizens
Counsel to the Independent Trustees Communications Company (telecommunications
1675 Broadway company); formerly Executive Vice President and
New York, New York Chief Investment Officer of the Home Insurance
Company (August 1991-September 1995).

Mitchell M. Merin (47) .................... President and Chief Operating Officer of Asset
President Management of MSDW (since December 1998);
Two World Trade Center President and Director (since April 1997) and Chief
New York, New York Executive Officer (since June 1998) of the Investment
Manager and MSDW Services Company; Chairman, Chief
Executive Officer and Director of the Distributor
(since June 1998); Chairman and Chief Executive
Officer (since June 1998) and Director (since January
1998) of the Transfer Agent; Director of various MSDW
subsidiaries; President of the Morgan Stanley Dean
Witter Funds (since May 1999); Trustee of various Van
Kampen investment companies (since December 1999);
previously Chief Strategic Officer of the Investment
Manager and MSDW Services Company and Executive Vice
President of the Distributor (April 1997-June 1998),
Vice President of the Morgan Stanely Dean Witter
Funds (May 1997-April 1999), and Executive Vice
President of Dean Witter, Discover & Co.

Barry Fink (45) ........................... General Counsel of Asset Management of MSDW
Vice President, Secretary (since May 2000); Executive Vice President (since
and General Counsel December 1999) and Secretary and General
Two World Trade Center Counsel (since February 1997) and Director (since
New York, New York July 1998) of the Investment Manager and MSDW
Services Company; Vice President, Secretary and
General Counsel of the Morgan Stanley Dean Witter
Funds (since February 1997); Vice President and
Secretary of the Distributor; previously, Senior Vice
President (March 1997-December 1999), First Vice
President, Assistant Secretary and Assistant General
Counsel of the Investment Manager and MSDW Services
Company.

Armon Bar-Tur (30) ........................ Vice President of the Investment Manager (since
Vice President October 1996); Vice President of various Morgan
Two World Trade Center Stanley Dean Witter Funds formerly a research
New York, New York analyst with Merrill Lynch Asset Management.
</TABLE>

11
<PAGE>

NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
------------------------------------------- ----------------------------------------------------
<S> <C>

John S. Roscoe (37) ....................... Vice President of the Investment Manager (since
Vice President April 1998) and Portfolio Manager (since December
Two World Trade Center 1997); Vice President of various Morgan Stanley
New York, New York Dean Witter Funds; formerly an equity analyst at
Rockefeller and Company, Inc.

Thomas F. Caloia (54) ..................... First Vice President and Assistant Treasurer of the
Treasurer Investment Manager, the Distributor and MSDW
Two World Trade Center Services Company; Treasurer of the Morgan
New York, New York Stanley Dean Witter Funds.
</TABLE>

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

In addition, Ronald E. Robison, Executive Vice President, Chief
Administrative Officer and Director of the Investment Manager and MSDW Services
Company, Robert S. Giambrone, Senior Vice President of the Investment Manager,
MSDW Services Company, the Distributor and the Transfer Agent and Director of
the Transfer Agent, Joseph J. McAlinden, Executive Vice President and Chief
Investment Officer of the Investment Manager and Director of the Transfer Agent,
Ira N. Ross, Senior Vice President of the Investment Manager and Paul D. Vance,
Senior Vice President of the Investment Manager and Director of the Growth and
Income group of the Investment Manager, are Vice Presidents of the Fund.

In addition, Marilyn K. Cranney, Todd Lebo, Lou Anne D. McInnis, Carsten
Otto and Ruth Rossi, First Vice Presidents and Assistant General Counsels of the
Investment Manager and MSDW Services Company, and Natasha Kassian, Assistant
Vice President and Assistant General Counsel of the Investment Manager and MSDW
Services Company, are Assistant Secretaries of the Fund.

INDEPENDENT DIRECTORS/TRUSTEES AND THE COMMITTEES. Law and regulation
establish both general guidelines and specific duties for the independent
directors/trustees. The Morgan Stanley Dean Witter Funds seek as independent
directors/trustees individuals of distinction and experience in business and
finance, government service or academia; these are people whose advice and
counsel are in demand by others and for whom there is often competition. To
accept a position on the Funds' Boards, such individuals may reject other
attractive assignments because the funds make substantial demands on their time.
All of the independent directors/trustees serve as members of the Audit
Committee. In addition, three of the directors/trustees, including two
independent directors/trustees, serve as members of the Derivatives Committee
and the Insurance Committee.

The independent directors/trustees are charged with recommending to the
full board approval of management, advisory and administration contracts, Rule
12b-1 plans and distribution and underwriting agreements; continually reviewing
fund performance; checking on the pricing of portfolio securities, brokerage
commissions, transfer agent costs and performance, and trading among funds in
the same complex; and approving fidelity bond and related insurance coverage and
allocations, as well as other matters that arise from time to time. The
independent directors/trustees are required to select and nominate individuals
to fill any independent director/trustee vacancy on the board of any fund that
has a Rule 12b-1 plan of distribution. Most of the Morgan Stanley Dean Witter
Funds have a Rule 12b-1 plan.

The Audit Committee is charged with recommending to the full board the
engagement or discharge of the Fund's independent auditors; directing
investigations into matters within the scope of the independent auditors'
duties, including the power to retain outside specialists; reviewing with the
independent auditors the audit plan and results of the auditing engagement;
approving professional services provided by the independent auditors and other
accounting firms prior to the performance of the services; reviewing the
independence of the independent auditors; 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.

12
<PAGE>

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

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

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

C. COMPENSATION

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

The following table illustrates the compensation that the Fund paid to its
Independent Trustees for the fiscal year ended September 30, 2000.

FUND COMPENSATION

<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
------------------------------- --------------
<S> <C>
Michael Bozic ................. $1,550
Edwin J. Garn ................. 1,600
Wayne E. Hedien ............... 1,600
Dr. Manuel H. Johnson ......... 2,350
Michael E. Nugent ............. 2,100
John L. Schroeder ............. 2,050
</TABLE>

13
<PAGE>

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

CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS

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

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

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

The following table illustrates the retirement benefits accrued to the
Fund's Independent Trustees by the Fund for the fiscal year ended September 30,
2000 and by the 55 Morgan Stanley Dean Witter Funds (including the Fund) for the
year ended December 31, 1999, and the estimated retirement benefits for the
Independent Trustees, to commence upon their retirement, from the Fund as of
September 30, 2000 and from the 55 Morgan Stanley Dean Witter Funds as of
December 31, 1999.

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

14
<PAGE>

RETIREMENT BENEFITS FROM ALL MORGAN STANLEY DEAN WITTER FUNDS

ESTIMATED
FOR ALL ADOPTING FUNDS RETIREMENT ANNUAL
-------------------------------- BENEFITS BENEFITS
ESTIMATED ACCRUED AS UPON
CREDITED EXPENSES RETIREMENT(2)
YEARS ESTIMATED --------------------- -------------------------
OF SERVICE AT PERCENTAGE OF BY ALL FROM ALL
RETIREMENT ELIGIBLE BY THE ADOPTING FROM ADOPTING
NAME OF INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION FUND FUNDS THE FUND FUNDS
------------------------------- --------------- -------------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Michael Bozic ................. 10 60.44% $ 391 $20,933 $ 967 $50,588
Edwin J. Garn ................. 10 60.44 653 31,737 967 50,675
Wayne E. Hedien ............... 9 51.37 734 39,566 822 43,000
Dr. Manuel H. Johnson ......... 10 60.44 381 13,129 1,420 75,520
Michael E. Nugent ............. 10 60.44 691 23,175 1,269 67,209
John L. Schroeder ............. 8 50.37 1,113 41,558 987 52,994
</TABLE>

----------
(2) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in Footnote (1) on
page 14.

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

The following owned 5% or more of the outstanding Class A shares of the
Fund as of November 10, 2000: Morgan Stanley Dean Witter Trust FSB Trustee,
Atlantic Automotive Corp. 401(k) Plan , P.O. Box 957, Jersey City, N.J.
07303-0957-7.711%.

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

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

A. INVESTMENT MANAGER

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

Pursuant to an Investment Management Agreement (the "Management Agreement")
with the Investment Manager, the Fund has retained the Investment Manager to
provide administrative services and manage the investment of the Fund's assets,
including the placing of orders for the purchase and sale of portfolio
securities. The Fund pays the Investment Manager monthly compensation calculated
daily by applying the following annual rates to the net assets of the Fund
determined as of the close of each business day: 0.50% to the portion of the
Fund's average daily net assets not exceeding $500 million and 0.475% of the
portion of the Fund's average daily net assets exceeding $500 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 September 30,
1998, 1999 and 2000, the Fund accrued total compensation to the Investment
Manager under the Management Agreement in the amount of $3,924,618, $3,515,654
and $5,906,875, 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

15
<PAGE>

entered into a selected dealer agreement with Dean Witter Reynolds, which
through its own sales organization sells shares of the Fund. In addition, the
Distributor may enter into similar agreements with other selected
broker-dealers. The Distributor, a Delaware corporation, is a wholly-owned
subsidiary of MSDW.

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

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

C. SERVICES PROVIDED BY THE INVESTMENT MANAGER

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

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

Expenses not expressly assumed by the Investment Manager under the
Management Agreement or by the Distributor, will be paid by the Fund. These
expenses will be allocated among the four Classes of shares pro rata based on
the net assets of the Fund attributable to each Class, except as described
below. Such expenses include, but are not limited to: expenses of the Plan of
Distribution pursuant to Rule 12b-1; charges and expenses of any registrar,
custodian, stock transfer and dividend disbursing agent; brokerage commissions;
taxes; engraving and printing share certificates; registration costs of the Fund
and its shares under federal and state securities laws; the cost and expense of
printing, including typesetting, and distributing prospectuses of the Fund and
supplements thereto to the Fund's shareholders; all expenses of shareholders'
and Trustees' meetings and of preparing, printing and mailing of proxy
statements and reports to shareholders; fees and travel expenses of Trustees or
members of any advisory board or committee who are not employees of the
Investment Manager or any corporate affiliate of the Investment Manager; all
expenses incident to any dividend, withdrawal or redemption options; charges and
expenses of any outside service used for pricing of the Fund's shares; fees and
expenses of legal counsel, including counsel to the Trustees who are not
interested persons of

16
<PAGE>

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 auditors; membership dues of industry associations; interest
on Fund borrowings; postage; insurance premiums on property or personnel
(including officers and Trustees) of the Fund which inure to its benefit;
extraordinary expenses (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification relating thereto); and
all other costs of the Fund's operation. The 12b-1 fees relating to a particular
Class will be allocated directly to that Class. In addition, other expenses
associated with a particular Class (except advisory or custodial fees) may be
allocated directly to that Class, provided that such expenses are reasonably
identified as specifically attributable to that Class and the direct allocation
to that Class is approved by the Trustees.

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

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

D. DEALER REALLOWANCES

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

E. RULE 12b-1 PLAN

The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under
the Investment Company Act (the "Plan") pursuant to which each Class, other than
Class D, pays the Distributor compensation accrued daily and payable monthly at
the following annual rates: 0.25% 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 Fund (not including reinvestments 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 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.

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 September 30, in approximate amounts as provided in the table below
(the Distributor did not retain any of these amounts).

2000 1999 1998
----------------------- --------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A .......... FSCs:(1) $ 93,205 FSCs: $ 34,000 FSCs:(1) $ 56,000
CDSCs: $ 51 CDSCs: $ 190 CDSCs: $ 40
Class B .......... CDSCs: $642,814 CDSCs: $940,000 CDSCs: $1,202,000
Class C .......... CDSCs: $ 11,297 CDSCs: $ 1,600 CDSCs: $ 2,700
</TABLE>

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

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'

17
<PAGE>

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 Trustees receive and
review promptly after the end of each calendar quarter a written report provided
by the Distributor of the amounts expended under the Plan and the purpose for
which such expenditures were made. For the fiscal year ended September 30, 2000,
Class B shares of the Fund accrued amounts payable to the Distributor under the
Plan of $11,379,057. This amount is equal to 1.00% of the average daily net
assets of Class B and was calculated pursuant to clause (b) of the compensation
formula under the Plan. For the fiscal year ended September 30, 2000, Class A
and Class C shares of the Fund accrued payments under the Plan amounting to
$82,464 and $134,820, 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 MSDW's Retirement Plan Services serves as
recordkeeper pursuant to a written Recordkeeping Services Agreement ("MSDW
Eligible Plans"), the Investment Manager compensates Financial Advisors by
paying them, from its own funds, a gross sales credit of 1.0% of the amount
sold.

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

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

With respect to Class D shares other than shares held by participants in
the Investment Manager's mutual fund asset allocation program, the Investment
Manager compensates Dean Witter Reynolds' 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' 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'
Fund-associated distribution-related expenses, including

18
<PAGE>

sales compensation, and overhead and other branch office distribution-related
expenses including (a) the expenses of operating Dean Witter Reynolds' branch
offices in connection with the sale of Fund shares, including lease costs, the
salaries and employee benefits of operations and sales support personnel,
utility costs, communications costs and the costs of stationery and supplies,
(b) the costs of client sales seminars, (c) travel expenses of mutual fund sales
coordinators to promote the sale of Fund shares and (d) other expenses relating
to branch promotion of Fund sales.

The Investment Manager pays a retention fee to Financial Advisors at an
annual rate of 0.05% of the value of shares of the Fund sold after January 1,
2000 and held for at least one year. Shares purchased through the reinvestment
of dividends will be eligible for a retention fee, provided that such dividends
were earned on shares otherwise eligible for a retention fee payment. Shares
owned in variable annuities, closed-end fund shares and shares held in 401(k)
plans where the Transfer Agent or MSDW's Retirement Plan Services is either
recordkeeper or trustee are not eligible for a retention fee.

For the first year only, the retention fee is paid on any shares of the
Fund sold after January 1, 2000 and held by shareholders on December 31, 2000.

The retention fees are paid by the Investment Manager from its own assets,
which may include profits from investment management fees payable under the
Management Agreement, as well as from borrowed funds.

The distribution fee that the Distributor receives from the Fund under the
Plan, in effect, offsets distribution expenses incurred under the Plan on behalf
of the Fund and, in the case of Class B shares, opportunity costs, such as the
gross sales credit and an assumed interest charge thereon ("carrying charge").
These expenses may include the cost of Fund-related educational and/or
business-related trips or payment of Fund-related educational and/or promotional
expenses of Financial Advisors. For example, the Distributor has implemented a
compensation program available only to Financial Advisors meeting specified
criteria under which certain marketing and/or promotional expenses of those
Financial Advisors are paid by the Distributor out of compensation it receives
under the Plan. 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 Trustees, including, a majority of the Independent
Trustees. Expenses representing the service fee (for Class A) or a gross sales
credit or a residual to Financial Advisors and other authorized financial
representatives (for Class C) may be reimbursed without prior determination. In
the event that the Distributor proposes that monies shall be reimbursed for
other than such expenses, then in making quarterly determinations of the amounts
that may be reimbursed by the Fund, the Distributor will provide and the
Trustees will review a quarterly budget of projected distribution expenses to be
incurred on behalf of the Fund, together with a report explaining the purposes
and anticipated benefits of incurring such expenses. The Trustees will determine
which particular expenses, and the portions thereof, that may be borne by the
Fund, and in making such a determination shall consider the scope of the
Distributor's commitment to promoting the distribution of the Fund's Class A and
Class C shares.

19
<PAGE>

Each Class paid 100% of the amounts accrued under the Plan with respect to
that Class for the fiscal year ended September 30, 2000 to the Distributor. The
Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to
the Plan, $94,536,029 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)
7.62% ($7,208,359) - advertising and promotional expenses; (ii) 0.59% ($556,557)
- printing of prospectuses for distribution to other than current shareholders;
and (iii) 91.79% ($86,771,113) - other expenses, including the gross sales
credit and the carrying charge, of which 17.99% ($15,611,119) represents
carrying charges, 33.95% ($29,460,238) 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 48.05% ($41,699,756) represents overhead and other branch
office distribution-related expenses. The amounts accrued by Class A and a
portion of the amounts accrued by Class C under the Plan during the fiscal year
ended September 30, 2000 were service fees. The remainder of the amounts accrued
by Class C were for expenses which relate to compensation of sales personnel and
associated overhead expenses.

In the case of Class B shares, at any given time, the expenses of
distributing shares of the Fund may be more or less than the total of (i) the
payments made by the Fund pursuant to the Plan; and (ii) the proceeds of CDSCs
paid by investors upon redemption of shares. For example, if $1 million in
expenses in distributing Class B shares of the Fund had been incurred and
$750,000 had been received as described in (i) and (ii) above, the excess
expense would amount to $250,000. The Distributor has advised the Fund that in
the case of Class B shares the excess distribution expenses, including the
carrying charge designed to approximate the opportunity costs incurred by Dean
Witter Reynolds which arise from it having advanced monies without having
received the amount of any sales charges imposed at the time of sale of the
Fund's Class B shares, totaled $18,337,042 as of September 30, 2000 (the end of
the Fund's fiscal year), which was equal to 1.74% 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 Trustees will consider at that time the manner in which to treat such
expenses. Any cumulative expenses incurred, but not yet recovered through
distribution fees or CDSCs, may or may not be recovered through future
distribution fees or CDSCs.

In the case of Class A and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 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 $12,005 in the case of Class C at
December 31, 1999 (the end of the calendar year), which amount was equal to
0.12% of the net assets of Class C on such date, and that there were no such
expenses that may be reimbursed in the subsequent year in the case of Class A on
such date. No interest or other financing charges will be incurred on any Class
A or Class C distribution expenses incurred by the Distributor under the Plan or
on any unreimbursed expenses due to the Distributor pursuant to the Plan.

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

On an annual basis, the Trustees, including a majority of the Independent
Trustees, consider whether the Plan should be continued. Prior to approving the
last continuation of the Plan, the Trustees

20
<PAGE>

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

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

F. OTHER SERVICE PROVIDERS

(1) TRANSFER AGENT/DIVIDEND-PAYING AGENT

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

(2) CUSTODIAN AND INDEPENDENT AUDITORS

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

Deloitte & Touche LLP, Two World Financial Center, New York, NY 10281,
serves as the independent auditors of the Fund. The independent auditors 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.

21
<PAGE>

G. CODES OF ETHICS

The Fund, the Invesment Manager and the Distributor have each adopted a
Code of Ethics pursuant to Rule 17j-1 under the Investment Company Act. The
Codes of Ethics are designed to detect and prevent improper personal trading.
The Codes of Ethics permit personnel subject to the Codes to invest in
securities, including securities that may be purchased, sold or held by the
Fund, subject to a number of restrictions and controls including prohibitions
against purchases of securities in an Initial Public Offering and a preclearance
requirement with respect to personal securities transactions.

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

A. BROKERAGE TRANSACTIONS

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

For the fiscal years ended September 30, 1998, 1999 and 2000, the Fund paid
a total of $2,210,633, $2,017,461 and $1,832,572, 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 September 30, 1998, 1999 and 2000, the Fund
did not effect any principal transactions with Dean Witter Reynolds.

Brokerage transactions in securities listed on exchanges or admitted to
unlisted trading privileges may be effected through Dean Witter Reynolds, Morgan
Stanley & Co. and other affiliated brokers and dealers. In order for an
affiliated broker or dealer to effect any portfolio transactions on an exchange
for the Fund, the commissions, fees or other remuneration received by the
affiliated broker or dealer must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
an exchange during a comparable period of time. This standard would allow the
affiliated broker or dealer to receive no more than the remuneration which would
be expected to be received by an unaffiliated broker in a commensurate
arm's-length transaction. Furthermore, the Trustees, including the Independent
Trustees, have adopted procedures which are reasonably designed to provide that
any commissions, fees or other remuneration paid to an affiliated broker or
dealer are consistent with the foregoing 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 September 30, 1998, 1999 and 2000, the Fund
paid a total of $100,032, $103,031 and $55,512, respectively, in brokerage
commissions to Dean Witter Reynolds. During the fiscal year ended September 30,
2000, the brokerage commissions paid to Dean Witter Reynolds represented
approximately 3.03% of the total brokerage commissions paid by the Fund during

22
<PAGE>

the year and were paid on account of transactions having an aggregate dollar
value equal to approximately 3.91% of the aggregate dollar value of all
portfolio transactions of the Fund during the year for which commissions were
paid.

During the fiscal years ended September 30, 1998, 1999 and 2000, the Fund
paid a total of $125,345, $59,825 and $48,964, respectively, in brokerage
commissions to Morgan Stanley & Co. During the fiscal year ended September 30,
2000, the brokerage commissions paid to Morgan Stanley & Co. represented
approximately 2.67% 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 2.55% of the aggregate dollar value of all
portfolio transactions of the Fund during the year for which commissions were
paid.

C. BROKERAGE SELECTION

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

The Fund anticipates that certain of its transactions involving foreign
securities will be effected on foreign securities exchanges. Fixed commissions
on such transactions are generally higher than negotiated commissions on
domestic transactions. There is also generally less government supervision and
regulation of foreign securities exchanges and brokers than in the United
States.

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 relevant funds and/or client
accounts involved and the number of shares available from the public offering.

23
<PAGE>

D. DIRECTED BROKERAGE

During the fiscal year ended September 30, 2000, the Fund paid $1,548,264
in brokerage commissions in connection with transactions in the aggregate amount
of $709,506,155 to brokers because of research services provided.

E. REGULAR BROKER-DEALERS

During the fiscal year ended September 30, 2000, the Fund did not purchase
securities issued by brokers or dealers that were among the ten brokers or ten
dealers which executed transactions for or with the Fund in the largest dollar
amounts during the period. At September 30, 2000, the Fund did not own any
securities issued by any such issuers.

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

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

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

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

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

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

24
<PAGE>

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.

OUTSIDE BROKERAGE ACCOUNTS. If a shareholder wishes to maintain his or her
fund account through a brokerage company other than Dean Witter Reynolds, he or
she may do so only if the Distributor has entered into a selected dealer
agreement with that brokerage company. Accounts maintained through a brokerage
company other than Dean Witter Reynolds may be subject to certain restrictions
on subsequent purchases and exchanges. Please contact your brokerage company or
the Transfer Agent for more information.

B. OFFERING PRICE

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

In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange, NASDAQ, or
other exchange is valued at its latest sale price, 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 Trustees); 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

25
<PAGE>

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 Trustees. 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 Trustees
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Trustees.

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

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

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

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

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

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

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

Under certain tax rules, the Fund may be required to accrue a portion of
any discount at which certain securities are purchased as income each year even
though the Fund receives no payments in cash on the security during the year. In
addition, if the Fund invests in an equity security of a non-U.S.

26
<PAGE>

corporation classified as a "passive foreign investment company" for U.S. tax
purposes, the application of certain technical tax provisions applying to
investments in such companies may result in the Fund being required to accrue
income in respect of the security without any receipt of cash attributable to
such income. To the extent that the Fund invests in such securities, it would be
required to pay out such income 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 maximum tax rate on long-term capital gains
realized by non-corporate shareholders is 20%.

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

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

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

After the end of each calendar year, shareholders will be sent 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. Under current law, the maximum tax rate on long-term capital gains
realized by non-corporate shareholders is 20%. Any loss realized by shareholders
upon a sale or redemption of shares within six months of the date of their
purchase will be treated as a long-term capital loss to the extent of any
distributions of net long-term capital gains with respect to such shares during
the six-month period.

27
<PAGE>

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 Plan."

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

From time to time, the Fund may quote its "total return" in advertisements
and sales literature. These figures are computed separately for Class A, Class
B, Class C and Class D shares. The Fund's "average annual total return"
represents an annualization of the Fund's total return over a particular period
and is computed by finding the annual percentage rate which will result in the
ending redeemable value of a hypothetical $1,000 investment made at the
beginning of a one, five or ten year period, or for the period from the date of
commencement of operations, if shorter than any of the foregoing. The ending
redeemable value is reduced by any contingent deferred sales charge ("CDSC") at
the end of the one, five, ten year or other period. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involves a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment (which in the case of Class A shares is reduced by the Class A
initial sales charge), taking a root of the quotient (where the root is
equivalent to the number of years in the period) and subtracting 1 from the
result. Based on this calculation, the average annual total returns for Class B
for the one year, five year and ten year periods ended September 30, 2000 were
34.12%, 18.96% and 22.13%, respectively. The average annual total returns of
Class A for the fiscal year ended September 30, 2000 and for the period July 28,
1997 (inception of the Class) through September 30, 2000 were 32.80% and 22.42%,
respectively. The average annual total returns of Class C for the fiscal year
ended September 30, 2000 and for the period July 28, 1997 (inception of the
Class) through September 30, 2000 were 38.09% and 23.63%, respectively. The
average annual total returns of Class D for the fiscal year ended September 30,
2000 and for the period July 28, 1997 (inception of the Class) through September
30, 2000 were 40.53% and 24.82%, respectively.

In addition, the Fund may advertise its total return for each Class over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. These calculations may or may not reflect the
imposition of the maximum front-end sales charge for Class A or the deduction of
the CDSC for each of Class B and Class C which, if reflected, would reduce the
performance quoted. For example, the average annual total return of the Fund may
be calculated in the manner described above, but without deduction for any
applicable sales charge. Based on this calculation, the average annual total
returns of Class B for the one year, five year and ten year periods ended
September 30, 2000 were 39.12%, 19.15% and 22.13%, respectively. The average
annual total returns of Class A for the fiscal year ended September 30, 2000 and
for the period July 28, 1997 (inception of the Class) through

28
<PAGE>

September 30, 2000 were 40.16% and 24.52%, respectively. The average annual
total returns of Class C for the fiscal year ended September 30, 2000 and for
the period July 28, 1997 (inception of the Class) through September 30, 2000
were 39.09% and 23.63%, respectively. The average annual total returns of Class
D for the fiscal year ended September 30, 2000 and for the period July 28, 1997
(inception of the Class) through September 30, 2000 were 40.53% and 24.82%,
respectively.

In addition, the Fund may compute its aggregate total return for each Class
for specified periods by determining the aggregate percentage rate which will
result in the ending value of a hypothetical $1,000 investment made at the
beginning of the period. For the purpose of this calculation, it is assumed that
all dividends and distributions are reinvested. The formula for computing
aggregate total return involves a percentage obtained by dividing the ending
value (without reduction for any sales charge) by the initial $1,000 investment
and subtracting 1 from the result. Based on this calculation, the total returns
of Class B for the one year, five year and ten year periods ended September 30,
2000 were 39.12%, 140.19% and 638.34%, respectively. The total returns of Class
A for the fiscal year ended September 30, 2000 and for the period July 28, 1997
(inception of the Class) through September 30, 2000 were 40.16% and 100.67%,
respectively. The total returns of Class C for the fiscal year ended September
30, 2000 and for the period July 28, 1997 (inception of the Class) through
September 30, 2000 were 39.09% and 96.13%, respectively. The total returns of
Class D for the fiscal year ended September 30, 2000 and for the period July 28,
1997 (inception of the Class) through September 30, 2000 were 40.53% and
102.20%, respectively.

The Fund may also advertise the growth of hypothetical investments of
$10,000, $50,000 and $100,000 in each Class of shares of the Fund by adding 1 to
the Fund's aggregate total return to date (expressed as a decimal and without
taking into account the effect of any applicable CDSC) and multiplying by
$9,475, $48,000 and $97,000 in the case of Class A (investments of $10,000,
$50,000 and $100,000 adjusted for the initial sales charge) or by $10,000,
$50,000 and $100,000 in the case of each of Class B, Class C and Class D, as the
case may be. Investments of $10,000, $50,000 and $100,000 in each Class at
inception of the Class would have grown to the following amounts at September
30, 2000:

INVESTMENT AT INCEPTION OF:
INCEPTION ------------------------------------
CLASS DATE: $10,000 $50,000 $100,000
----------------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Class A ......... 07/28/97 $19,013 $96,322 $194,650
Class B ......... 04/29/83 69,349 346,745 693,490
Class C ......... 07/28/97 19,613 98,065 196,130
Class D ......... 07/28/97 20,220 101,100 202,200
</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
September 30, 2000 included herein in reliance on the report of Deloitte &
Touche LLP, independent auditors, and on the authority of that firm as experts
in auditing and accounting.

* * * * *

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

29
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS September 30, 2000

NUMBER OF
SHARES VALUE
--------- --------------
<S> <C> <C>
COMMON STOCKS (74.2%)
Advertising/Marketing
Services (1.2%)
100,000 ADVO, Inc.* ........................... $ 3,300,000
355,200 Getty Images, Inc.* ................... 10,811,400
--------------
14,111,400
--------------
Aerospace & Defense (3.3%)
385,200 Innovative Solutions & Support,
Inc.* ............................... 6,596,550
172,000 L-3 Communications Holdings,
Inc.* ............................... 9,718,000
136,300 Litton Industries, Inc.* .............. 6,090,906
324,000 Teledyne Technologies Inc.* ........... 9,436,500
464,500 Titan Corp. (The)* .................... 7,664,250
--------------
39,506,206
--------------

Air Freight/Couriers (1.6%)
241,300 C.H. Robinson Worldwide, Inc. ......... 13,599,517
113,600 Expeditors International of
Washington, Inc. .................... 5,119,100
--------------
18,718,617
--------------
Airlines (0.3%)
72,000 SkyWest, Inc. ......................... 3,690,000
--------------
Apparel/Footwear (0.3%)
91,000 Kenneth Cole Productions, Inc.
(Class A)* .......................... 3,213,437
--------------
Auto Parts: O.E.M. (1.0%)
485,900 Gentex Corp.* ......................... 12,147,500
--------------
Biotechnology (5.1%)
77,300 BioTransplant, Inc.* .................. 1,318,931
97,300 Celgene Corp.* ........................ 5,789,350
250,000 Dendreon Corp.* ....................... 5,894,531
131,700 ImmunoGen, Inc.* ...................... 4,502,494
143,000 Intermune Pharmaceuticals, Inc.*....... 7,757,750
120,000 Myriad Genetics, Inc.* ................ 10,320,000
100,000 NeoPharm, Inc.* ....................... 3,950,000
113,600 Neurocrine Biosciences, Inc.* ......... 5,112,000
113,700 Onyx Pharmaceuticals, Inc.* ........... 2,799,862
54,800 Progenics Pharmaceuticals, Inc.* ...... 1,503,575
40,600 Regeneration Technologies, Inc.* ...... 334,950
137,400 Titan Pharmaceuticals, Inc.* .......... 8,931,000
140,400 Vion Pharmaceuticals, Inc.* ........... 2,509,650
--------------
60,724,093
--------------
<CAPTION>

NUMBER OF
SHARES VALUE
--------- --------------
<S> <C> <C>
Broadcasting (0.5%)
295,300 Westwood One, Inc.* ................... $ 6,330,494
--------------
Building Products (0.1%)
72,800 Lamson & Sessions Co. (The)* .......... 864,462
--------------
Cable/Satellite TV (0.8%)
190,700 Pegasus Communications Corp.* ......... 9,213,194
--------------
Chemicals: Agricultural (0.1%)
52,400 Eden Bioscience Corp.* ................ 1,729,200
--------------
Computer Communications (0.9%)
204,500 Computer Network Technology
Corp.* .............................. 7,029,687
71,000 Elastic Networks Inc.* ................ 989,562
63,600 MRV Communications, Inc.* ............. 2,881,875
--------------
10,901,124
--------------

Computer Peripherals (3.3%)
391,000 DSP Group, Inc.* ...................... 14,613,625
227,500 Electronics for Imaging, Inc.* ........ 5,744,375
345,400 M-Systems Flash Disk Pioneers
Ltd. (Israel)* ...................... 13,189,962
545,200 Maxtor Corp.* ......................... 5,724,600
--------------
39,272,562
--------------
Contract Drilling (0.4%)
48,600 R&B Falcon Corp.* ..................... 1,354,725
87,900 Santa Fe International Corp. .......... 3,960,994
--------------
5,315,719
--------------
Data Processing Services (0.2%)
150,000 Pegasus Solutions, Inc.* .............. 2,934,375
--------------
Discount Stores (0.3%)
110,000 BJ's Wholesale Club, Inc.* ............ 3,753,750
--------------
Electrical Products (0.1%)
27,500 Proton Energy Systems, Inc.* .......... 787,187
--------------
Electronic Components (2.8%)
208,600 APW Ltd. .............................. 10,169,250
133,700 Blue Wave Systems Inc.* ............... 672,678
81,700 M-Wave, Inc.* ......................... 2,129,306
500,000 MEMC Electronic Materials, Inc.*....... 6,437,500
113,800 Methode Electronics, Inc.
(Class A) ........................... 5,042,762
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS

30
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS September 30, 2000, continued

NUMBER OF
SHARES VALUE
-------------- --------------
<S> <C> <C>

250,000 Parthus Technologies PLC
(Ireland)* ........................... $ 994,545
136,400 Spectrum Control, Inc.* ................ 2,190,925
47,800 Stratos Lightwave, Inc.* ............... 1,541,550
27,300 Three-Five Systems, Inc.* .............. 798,525
112,500 TTM Technologies, Inc.* ................ 2,643,750
--------------
32,620,791

--------------
Electronic Equipment/
Instruments (1.4%)
193,300 Lexar Media, Inc.* ..................... 2,247,112
158,000 Zygo Corp.* ............................ 13,746,000
--------------
15,993,112

--------------
Electronic Production
Equipment (4.4%)
213,600 Advanced Energy Industries, Inc.* 7,048,800
169,100 Asyst Technologies, Inc.* .............. 3,424,275
181,800 ATMI, Inc.* ............................ 4,249,575
495,000 EMCORE Corp.* .......................... 20,581,172
350,000 inSilicon Corp.* ....................... 5,075,000
45,400 Keithley Instruments, Inc. ............. 3,178,000
320,000 MKS Instruments, Inc.* ................. 8,760,000
--------------
52,316,822
--------------

Engineering &
Construction (0.4%)
227,100 SpectraSite Holdings, Inc.* ............ 4,215,544
--------------
Finance/Rental/Leasing (0.4%)
186,400 Comdisco, Inc. ......................... 3,553,250
22,700 Metris Companies, Inc. ................. 896,650
--------------
4,449,900
--------------

Household/Personal Care (0.3%)
154,500 Carter-Wallace, Inc. ................... 3,775,594
--------------
Industrial Machinery (0.3%)
90,500 Actuant Corp. (Class A) ................ 356,344
75,000 Singulus Technologies AG
(Germany) ............................ 3,525,395
--------------
3,881,739
--------------
Information Technology
Services (2.1%)
381,900 Manhattan Associates, Inc.* ............ 23,391,375
91,000 Mediagrif Interactive
Technologies (Canada)* ............... 808,499
--------------
24,199,874
--------------
Internet Software/Services (1.6%)
53,400 Art Technology Group, Inc.* ............ 5,059,650
197,500 Digex, Inc.* ........................... 9,257,812

NUMBER OF
SHARES VALUE
-------------- --------------
<S> <C> <C>
24,500 Quest Software, Inc.* .................. $ 1,521,680
90,500 WebEx Communications, Inc.* ............ 3,337,187
--------------
19,176,329
--------------
Investment Banks/Brokers (0.6%)
127,400 AmeriTrade Holding Corp.
(Class A)* ........................... 2,261,350
60,500 eSPEED, Inc (Class A)* ................. 1,720,469
104,600 LaBranche & Co., Inc.* ................. 3,491,045
--------------
7,472,864
--------------
Medical Distributors (0.6%)
86,300 Priority Healthcare Corp.
(Class B)* ........................... 6,580,375
--------------
Medical Specialties (9.9%)
209,100 ABIOMED, Inc.* ......................... 14,244,937
459,000 ArthroCare Corp.* ...................... 8,921,813
192,100 Coherent, Inc.* ........................ 13,062,800
852,200 Cytyc Corp.* ........................... 36,751,125
36,400 EPIX Medical, Inc.* .................... 509,600
206,800 PharmaNetics, Inc.* .................... 3,929,200
348,500 ResMed, Inc.* .......................... 10,890,625
352,200 SonoSite, Inc.* ........................ 6,581,738
452,500 Zoll Medical Corp.* .................... 22,059,375
--------------
116,951,213
--------------
Metal Fabrications (1.9%)
286,700 Maverick Tube Corp.* ................... 7,722,981
190,800 Precision Castparts Corp. .............. 7,321,950
104,500 Shaw Group Inc. (The)* ................. 7,367,250
--------------
22,412,181
--------------
Miscellaneous
Manufacturing (1.1%)
300,000 Mettler-Toledo International Inc.*...... 13,200,000
--------------
Movies/Entertainment (0.6%)
204,400 Pixar, Inc.* ........................... 6,566,350
--------------
Oil & Gas Production (2.5%)
199,700 Cabot Oil & Gas Corp. (Class A) ........ 4,068,888
1,110,850 Cross Timbers Royalty Trust ............ 21,314,434
200,000 Forest Oil Corp.* ...................... 3,237,500
54,600 St. Mary Land & Exploration Co.......... 1,259,213
--------------
29,880,035
--------------

Oilfield Services/Equipment (0.5%)
27,300 BJ Services Co.* ....................... 1,668,713
196,750 Grant Prideco, Inc.* ................... 4,316,203
--------------
5,984,916
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS

31
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS September 30, 2000, continued

NUMBER OF
SHARES VALUE
--------- --------------
<S> <C> <C>
Packaged Software (4.6%)
554,300 Inet Technologies, Inc.* ............... $ 16,213,275
123,500 NetIQ Corp.* ........................... 8,112,406
300,000 Peregine Systems, Inc.* ................ 5,681,250
916,200 Project Software & Development,
Inc.* ................................ 14,244,047
212,800 SmartForce PLC (ADR) (Ireland)*......... 10,081,400
--------------
54,332,378
--------------
Pharmaceuticals: Generic Drugs (0.2%)
61,875 Galen Holdings ADR (United
Kingdom) ............................. 2,815,313
--------------
Pharmaceuticals: Other (1.3%)
429,500 Connetics Corp.* ....................... 10,361,688
109,100 Dura Pharmaceuticals, Inc.* ............ 3,859,413
40,900 Matrix Pharmaceutical, Inc.* ........... 636,506
--------------
14,857,607
--------------
Precious Metals (0.8%)
338,200 Stillwater Mining Co.* ................. 9,155,074
--------------
Property - Casualty Insurers (0.4%)
86,200 Everest Re Group, Ltd. (Bermuda)........ 4,266,900
--------------
Publishing: Newspapers (0.1%)
100,000 Metro International S.A. (Class B)
(Sweden)* ............................ 1,244,555
--------------
Recreational Products (0.6%)
299,900 Concord Camera Corp.* .................. 7,684,938
--------------
Regional Banks (0.8%)
159,600 Silicon Valley Bancshares* ............. 9,294,206
--------------
Semiconductors (5.5%)
131,500 C-Cube Semiconductor Inc.* ............. 2,695,750
288,300 Exar Corp.* ............................ 34,884,300
8,500 Micronas Semiconductor Holding
AG (Switzerland)* .................... 4,528,083
693,000 Oak Technology, Inc.* .................. 18,970,875
236,300 Tvia, Inc.* ............................ 4,238,631
--------------
65,317,639
--------------
Services to the Health Industry (3.3%)
90,900 Cerner Corp.* .......................... 4,221,169
183,300 IMPATH Inc.* ........................... 11,570,813
161,200 Laboratory Corp. of America
Holdings* ............................ 19,303,700
200,000 MDS Inc. (Canada) ...................... 4,192,733
--------------
39,288,415
--------------
Specialty Stores (0.5%)
205,900 Cost Plus, Inc.* ....................... 6,202,738
--------------

NUMBER OF
SHARES VALUE
--------- --------------
<S> <C> <C>
Specialty Telecommunications (0.8%)
405,000 Evoke Communications Inc.* ............. $ 2,657,813
277,800 Pinnacle Holdings Inc.* ................ 7,396,425
--------------
10,054,238
--------------
Telecommunication Equipment (3.2%)
168,300 BreezeCom Ltd. (Israel)* ............... 5,543,381
327,000 CommScope, Inc.* ....................... 8,011,500
326,100 DDi Corp.* ............................. 14,429,925
70,100 MCK Communications, Inc.* .............. 1,586,013
72,700 Plantronics, Inc.* ..................... 2,762,600
50,000 Tandberg ASA (Norway)* ................. 1,472,693
135,000 Vyyo Inc.* ............................. 4,050,000
--------------
37,856,112
--------------
Trucking (0.2%)
59,000 Landstar Systems, Inc.* ................ 2,632,875
--------------
Wireless Communications (1.0%)
50,000 Clearnet Communications Inc.
(Class A) (Canada)* .................. 2,215,625
127,200 Leap Wireless International, Inc.*...... 7,957,950
8,493 RTX Telecom A/S (Denmark) * ............ 394,569
29,600 Tritel, Inc.* .......................... 423,650
--------------
10,991,794
--------------
TOTAL COMMON STOCKS
(Cost $649,758,103) .................... 878,885,741
--------------
</TABLE>

PRINCIPAL
AMOUNT IN
THOUSANDS
-----------
<S> <C> <C>
CONVERTIBLE BONDS (0.5%)
Pharmaceuticals: Other (0.4%)
$ 5,010 Dura Pharmaceuticals, Inc.
3.50% due 07/15/02 ....................... 4,759,500
-------------
Telecommunication
Equipment (0.1%)
1,260 Cyras Systems, Inc. - 144A**
4.50% due 08/15/05 ....................... 1,512,000
-------------

TOTAL CONVERTIBLE BONDS
(Cost $5,779,125) .......................... 6,271,500
-------------
SHORT-TERM INVESTMENT (a) (23.8%)
U.S. GOVERNMENT AGENCY
281,100 Federal National Mortgage Assoc.
6.32% due 10/02/00
(Cost $281,050,651) ...................... 281,050,651
-------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS

32
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS September 30, 2000, continued

VALUE
----------------
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $936,587,879) (b) ......... 98.5% 1,166,207,892

OTHER ASSETS IN EXCESS OF
LIABILITIES ..................... 1.5 17,619,492
----- --------------
NET ASSETS ...................... 100.0% $1,183,827,384
===== ==============
</TABLE>

--------------------------------
ADR American Depository Receipt.
* Non-income producing security.

** Resale is restricted to qualified institutional investors.
(a) Purchased on a discount basis. The interest rate shown has been adjusted
to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates the
aggregate cost for book purposes. The aggregate gross unrealized
appreciation is $247,809,978 and the aggregate gross unrealized
depreciation is $18,189,965, resulting in net unrealized appreciation of
$229,620,013.

FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT
SEPTEMBER 30, 2000:

CONTRACTS TO IN DELIVERY UNREALIZED
DELIVER EXCHANGE FOR DATE DEPRECIATION
-------------------------------------------------------------
<S> <C> <C> <C>
$ 730,142 CAD 1,092,000 10/03/00 $ (3,401)
CAD 3,540,696 $ 2,348,876 10/03/00 (7,503)
DKK 1,440,235 $ 169,739 10/04/00 (496)
THB 44,625,570 $ 1,057,227 10/04/00 (1,254)
GBP 942,611 $ 1,380,265 10/06/00 (8,578)
--------
Total unrealized depreciation ............. $(21,232)
========
</TABLE>

Currency Abbreviations:

-----------------------
CAD Canadian Dollar.
DKK Danish Krone.
THB Thai Bat.
GBP British Pound.

SEE NOTES TO FINANCIAL STATEMENTS

33
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000

<TABLE>
<CAPTION>
ASSETS:

<S> <C>
Investments in securities, at value
(cost $936,587,879) .................................................... $1,166,207,892
Cash ..................................................................... 50,585
Receivable for:
Investments sold ...................................................... 48,838,230
Shares of beneficial interest sold .................................... 775,846
Interest .............................................................. 43,783
Dividends ............................................................. 41,498
Prepaid expenses and other assets ........................................ 74,647
--------------
TOTAL ASSETS .......................................................... 1,216,032,481
--------------
LIABILITIES:
Unrealized depreciation on open forward foreign currency contracts ....... 21,232
Payable for:
Investments purchased ................................................. 26,772,006
Shares of beneficial interest repurchased ............................. 3,827,939
Plan of distribution fee .............................................. 931,252
Investment management fee ............................................. 491,923
Accrued expenses and other payables ...................................... 160,745
--------------
TOTAL LIABILITIES ..................................................... 32,205,097
--------------
NET ASSETS ............................................................ $1,183,827,384
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital .......................................................... $ 705,278,212
Net unrealized appreciation .............................................. 229,619,960
Accumulated net investment loss .......................................... (147,357)
Accumulated undistributed net realized gain .............................. 249,076,569
--------------
NET ASSETS ............................................................ $1,183,827,384
==============
CLASS A SHARES:
Net Assets ............................................................... $44,007,923
Shares Outstanding (unlimited authorized, $.01 par value) ................ 1,166,103
NET ASSET VALUE PER SHARE ............................................. $37.74
======
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) ....................... $39.83
======

CLASS B SHARES:
Net Assets ............................................................... $1,056,116,384
Shares Outstanding (unlimited authorized, $.01 par value) ................ 28,778,738
NET ASSET VALUE PER SHARE ............................................. $36.70
======

CLASS C SHARES:
Net Assets ............................................................... $17,006,981
Shares Outstanding (unlimited authorized, $.01 par value) ................ 462,691
NET ASSET VALUE PER SHARE ............................................. $36.76
======

CLASS D SHARES:
Net Assets ............................................................... $66,696,096
Shares Outstanding (unlimited authorized, $.01 par value) ................ 1,751,874
NET ASSET VALUE PER SHARE ............................................. $38.07
======
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS

34
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL STATEMENTS, continued

STATEMENT OF OPERATIONS
For the year ended September 30, 2000

NET INVESTMENT LOSS:

<S> <C>

INCOME
Interest .................................................. $ 5,468,202
Dividends (net of $3,638 foreign withholding tax) ......... 706,096
------------
TOTAL INCOME ........................................... 6,174,298
------------

EXPENSES
Plan of distribution fee (Class A shares) ................. 82,464
Plan of distribution fee (Class B shares) ................. 11,379,057
Plan of distribution fee (Class C shares) ................. 134,820
Investment management fee ................................. 5,906,875
Transfer agent fees and expenses .......................... 1,126,508
Registration fees ......................................... 141,879
Shareholder reports and notices ........................... 117,237
Custodian fees ............................................ 86,818
Professional fees ......................................... 66,501
Trustees' fees and expenses ............................... 17,751
Other ..................................................... 13,675
------------
TOTAL EXPENSES ......................................... 19,073,585
------------
NET INVESTMENT LOSS .................................... (12,899,287)
------------
NET REALIZED AND UNREALIZED GAIN:

Net realized gain ......................................... 287,755,083
Net change in unrealized appreciation ..................... 13,083,650
------------
NET GAIN ............................................... 300,838,733
------------
NET INCREASE .............................................. $287,939,446
============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS

35
<PAGE>

Morgan Stanley Dean Witter Developing Growth Securities Trust
Financial Statements, continued

STATEMENT OF CHANGES IN NET ASSETS

FOR THE YEAR FOR THE YEAR
ENDED ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
-------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss .................................. $ (12,899,287) $ (7,356,974)
Net realized gain .................................... 287,755,083 153,313,817
Net change in unrealized appreciation ................ 13,083,650 165,480,270
-------------- --------------
NET INCREASE ...................................... 287,939,446 311,437,113
-------------- --------------

DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAIN:
Class A shares ....................................... (3,654,596) (124,327)
Class B shares ....................................... (161,645,400) (10,501,816)
Class C shares ....................................... (1,263,910) (44,486)
Class D shares ....................................... (1,510,969) (62,639)
-------------- --------------
TOTAL DISTRIBUTIONS ............................... (168,074,875) (10,733,268)
-------------- --------------
Net increase (decrease) from transactions in shares of
beneficial interest ................................ 266,972,801 (111,845,093)
-------------- --------------
NET INCREASE ...................................... 386,837,372 188,858,752
NET ASSETS:
Beginning of period .................................. 796,990,012 608,131,260
-------------- --------------
END OF PERIOD
(Including accumulated net investment losses of
$147,357 and $45,483, respectively) ............... $1,183,827,384 $ 796,990,012
============== ==============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS

36
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 2000

1. ORGANIZATION AND ACCOUNTING POLICIES

Morgan Stanley Dean Witter Developing Growth Securities Trust (the "Fund") is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
a diversified, open-end management investment company. The Fund's investment
objective is long-term capital growth. The Fund was organized as a Massachusetts
business trust on December 28, 1982 and commenced operations on April 29, 1983.
On July 28, 1997, the Fund converted to a multiple class share structure.

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

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

The following is a summary of significant accounting policies:

A. VALUATION OF INVESTMENTS - (1) an equity portfolio security listed or traded
on the New York or American Stock Exchange, NASDAQ, or other exchange is valued
at its latest sale price, prior to the time when assets are valued; if there
were no sales that day, the security is valued at the latest bid price; (2) all
other portfolio securities for which over-the-counter market quotations are
readily available are valued at the latest available bid price; (3) when market
quotations are not readily available, including circumstances under which it is
determined by Morgan Stanley Dean Witter Advisors Inc. (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
Trustees (valuation of debt securities for which market quotations are not
readily available may be based upon current market prices of securities which
are comparable in coupon, rating and maturity or an appropriate matrix utilizing
similar factors); and (4) short-term debt securities having a maturity date of
more than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.

37
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 2000, continued

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

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

D. FOREIGN CURRENCY TRANSLATION - The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities, other assets and liabilities and forward foreign currency
contracts ("forward contracts") are translated at the exchange rates prevailing
at the end of the period; and (2) purchases, sales, income and expenses are
translated at the exchange rates prevailing on the respective dates of such
transactions. The resultant exchange gains and losses are included in the
Statement of Operations. Pursuant to U.S. Federal income tax regulations,
certain foreign exchange gains/losses included in realized and unrealized
gain/loss are included in or are a reduction of ordinary income for federal
income tax purposes. The Fund does not isolate that portion of the results of
operations arising as a result of changes in the foreign exchange rates from the
changes in the market prices of the securities.

E. FORWARD FOREIGN CURRENCY CONTRACTS - The Fund may enter into forward
contracts which are valued daily at the appropriate exchange rates. The
resultant unrealized exchange gains and losses are included in the Statement of
Operations. The Fund records realized gains or losses on delivery of the
currency or at the time the forward contract is extinguished (compensated) by
entering into a closing transaction prior to delivery.

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

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

38
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 2000, continued

2. INVESTMENT MANAGEMENT AGREEMENT

Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined as of the close
of each business day: 0.50% to the portion of the daily net assets not exceeding
$500 million and 0.475% to the portion of the daily net assets exceeding $500
million.

3. PLAN OF DISTRIBUTION

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

In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts totaled
$18,337,042 at September 30, 2000.

In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended September 30, 2000, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.24% and
1.0%, respectively.

39
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 2000, continued

The Distributor has informed the Fund that for the year ended September 30,
2000, it received contingent deferred sales charges from certain redemptions of
the Fund's Class A shares, Class B shares and Class C shares of $51, $642,814
and $11,297, respectively, and received $93,205, in front-end sales charges from
sales of the Fund's Class A shares. The respective shareholders pay such charges
which are not an expense of the Fund.

4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES

The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended September 30, 2000 aggregated
$2,004,444,132, and $2,143,558,930, respectively.

For the year ended September 30, 2000, the Fund incurred $55,512 in brokerage
commissions with Dean Witter Reynolds Inc., an affiliate of the Investment
Manager and Distributor, for portfolio transactions executed on behalf of the
Fund.

For the year ended September 30, 2000, the Fund incurred brokerage commissions
of $48,964 with Morgan Stanley & Co., Inc., an affiliate of the Investment
Manager and Distributor, for portfolio transactions executed on behalf of the
Fund.

Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At September 30, 2000, the Fund had
transfer agent fees and expenses payable of approximately $1,200.

The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended September 30, 2000
included in Trustees' fees and expenses in the Statement of Operations amounted
to $5,937. At September 30, 2000, the Fund had an accrued pension liability of
$46,422 which is included in accrued expenses in the Statement of Assets and
Liabilities.

5. FEDERAL INCOME TAX STATUS

As of September 30, 2000, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales and permanent book/tax
differences primarily attributable to a net operating loss. To reflect
reclassifications arising from the permanent differences, accumulated
undistributed net realized gain was charged and accumulated net investment loss
was credited $12,797,413.

40
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 2000, continued

6. SHARES OF BENEFICIAL INTEREST

Transactions in shares of beneficial interest were as follows:

FOR THE YEAR FOR THE YEAR
ENDED ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
-------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- ---------------- --------------- ------------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold .................................. 1,994,457 $ 85,863,075 1,795,565 $ 45,961,645
Reinvestment of distributions ......... 94,160 3,633,635 5,508 123,765
Redeemed .............................. (1,407,453) (61,472,121) (1,601,819) (41,473,827)
---------- -------------- ---------- --------------
Net increase - Class A ................ 681,164 28,024,589 199,254 4,611,583
---------- -------------- ---------- --------------
CLASS B SHARES

Sold .................................. 9,500,562 402,163,034 19,364,899 501,039,654
Reinvestment of distributions ......... 4,024,083 151,909,148 444,464 9,880,417
Redeemed .............................. (9,675,480) (389,502,655) (24,437,018) (628,930,869)
---------- -------------- ----------- --------------
Net increase (decrease) - Class B ..... 3,849,165 164,569,527 (4,627,655) (118,010,798)
---------- -------------- ----------- --------------
CLASS C SHARES

Sold .................................. 418,525 18,422,696 1,377,267 36,318,739
Reinvestment of distributions ......... 31,863 1,204,735 1,953 43,445
Redeemed .............................. (140,469) (5,783,453) (1,334,660) (35,381,357)
---------- -------------- ----------- --------------
Net increase - Class C ................ 309,919 13,843,978 44,560 980,827
---------- -------------- ----------- --------------
CLASS D SHARES

Sold .................................. 2,740,754 112,718,938 2,267,493 57,727,289
Reinvestment of distributions ......... 33,389 1,297,173 1,883 42,446
Redeemed .............................. (1,231,883) (53,481,404) (2,220,762) (57,196,440)
---------- -------------- ----------- --------------
Net increase - Class D ................ 1,542,260 60,534,707 48,614 573,295
---------- -------------- ----------- --------------
Net increase (decrease) in Fund ....... 6,382,508 $ 266,972,801 (4,335,227) $ (111,845,093)
========= ============== ========== ==============
</TABLE>

41
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 2000, continued

7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS

The Fund may enter into forward contracts to facilitate settlement of foreign
currency denominated portfolio transactions or to manage foreign currency
exposure associated with foreign currency denominated securities.

Forward contracts involve elements of market risk in excess of the amount
reflected in the Statement of Assets and Liabilities. The Fund bears the risk of
an unfavorable change in the foreign exchange rates underlying the forward
contracts. Risks may also arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their contracts.

At September 30, 2000, there were outstanding forward contracts.

42
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL HIGHLIGHTS

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

FOR THE PERIOD
FOR THE YEAR ENDED SEPTEMBER 30, JULY 28, 1997*
--------------------------------------- THROUGH
2000 1999 1998 SEPTEMBER 30, 1997
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES#

SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $31.44 $20.38 $27.50 $24.62
------ ------ ------ ------
Income (loss) from investment operations:
Net investment loss ................................... (0.12) (0.07) (0.06) (0.02)
Net realized and unrealized gain (loss) ............... 12.89 11.50 (4.75) 2.90
------ ------ ------ ------
Total income (loss) from investment operations ......... 12.77 11.43 (4.81) 2.88
------ ------ ------ ------
Less distributions from net realized gain .............. (6.47) (0.37) (2.31) -
------ ------ ------ ------
Net asset value, end of period ......................... $37.74 $31.44 $20.38 $27.50
====== ====== ====== ======
TOTAL RETURN+ .......................................... 40.16% 56.81% (18.26)% 11.70%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 0.85%(3) 0.90%(3) 0.94%(3) 0.99%(2)
Net investment loss .................................... (0.35)%(3) (0.25)%(3) (0.23)%(3) (0.46)%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $44,008 $15,246 $5,822 $978
Portfolio turnover rate ................................ 184% 172% 178% 154%

</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.

SEE NOTES TO FINANCIAL STATEMENTS

43
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL HIGHLIGHTS, continued

FOR THE YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------------------------
2000# 1999# 1998# 1997*# 1996
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES

SELECTED PER SHARE DATA:
Net asset value, beginning of period .................. $30.90 $20.19 $27.46 $27.71 $25.54
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment loss .................................. (0.44) (0.27) (0.20) (0.28) (0.23)
Net realized and unrealized gain (loss) .............. 12.71 11.35 (4.76) 3.92 4.32
------ ------ ------ ------ ------
Total income (loss) from investment operations ........ 12.27 11.08 (4.96) 3.64 4.09
------ ------ ------ ------ ------
Less distributions from net realized gain ............. (6.47) (0.37) (2.31) (3.89) (1.92)
------ ------ ------ ------ ------
Net asset value, end of period ........................ $36.70 $30.90 $20.19 $27.46 $27.71
====== ====== ====== ====== ======
TOTAL RETURN+ ......................................... 39.12% 55.59% (18.88)% 16.38% 17.53%

RATIOS TO AVERAGE NET ASSETS:
Expenses .............................................. 1.61% (1) 1.70% (1) 1.69% (1) 1.68% 1.69%
Net investment loss ................................... (1.11)%(1) (1.05)%(1) (0.98)%(1) (1.21)% (1.03)%

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ............... $1,056,116 $770,392 $596,834 $877,539 $799,201
Portfolio turnover rate ............................... 184% 172% 178% 154% 149%

</TABLE>

-------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class B shares.
# 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.

SEE NOTES TO FINANCIAL STATEMENTS

44
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL HIGHLIGHTS, continued

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED SEPTEMBER 30, JULY 28, 1997*
-------------------------------------------------- THROUGH
2000 1999 1998 SEPTEMBER 30, 1997
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS C SHARES#

SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $30.95 $20.19 $27.46 $24.62
------ ------ ------ ------
Income (loss) from investment operations:
Net investment loss ................................... (0.42) (0.25) (0.23) (0.05)
Net realized and unrealized gain (loss) ............... 12.70 11.38 (4.73) 2.89
------ ------ ------ ------
Total income (loss) from investment operations ......... 12.28 11.13 (4.96) 2.84
------ ------ ------ ------
Less distributions from net realized gain .............. (6.47) (0.37) (2.31) -
------ ------ ------ ------
Net asset value, end of period ......................... $36.76 $30.95 $20.19 $27.46
====== ====== ====== ======

TOTAL RETURN+ .......................................... 39.09% 55.84% (18.88)% 11.54%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 1.61%(3) 1.58%(3) 1.69%(3) 1.71%(2)
Net investment loss .................................... (1.11)%(3) (0.93)%(3) (0.98)%(3) (1.19)%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $17,007 $4,728 $2,185 $1,066
Portfolio turnover rate ................................ 184% 172% 178% 154%

</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.

SEE NOTES TO FINANCIAL STATEMENTS

45
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL HIGHLIGHTS, continued

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED SEPTEMBER 30, JULY 28, 1997*
-------------------------------------------- THROUGH
2000 1999 1998 SEPTEMBER 30, 1997
-----------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
CLASS D SHARES#

SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $31.60 $20.44 $27.51 $24.62
------ ------ ------ ------
Income (loss) from investment operations:
Net investment income (loss) .......................... 0.03 (0.01) 0.01 (0.01)
Net realized and unrealized gain (loss) ............... 12.91 11.54 (4.77) 2.90
------ ------ ------ ------
Total income (loss) from investment operations ......... 12.94 11.53 (4.76) 2.89
------ ------ ------ ------
Less distributions from net realized gain .............. (6.47) (0.37) (2.31) -
------ ------ ------ ------
Net asset value, end of period ......................... $38.07 $31.60 $20.44 $27.51
====== ====== ====== ======
TOTAL RETURN+ .......................................... 40.53% 57.14% (18.05)% 11.74% (1)

RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 0.61%(3) 0.70%(3) 0.69%(3) 0.70%(2)
Net investment income (loss) ........................... (0.11)%(3) (0.05)%(3) 0.02% (3) (0.20)%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $66,696 $6,625 $3,291 $22
Portfolio turnover rate ................................ 184% 172% 178% 154%
</TABLE>

-------------
* The date shares were first issued.
# The per share amount 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.

SEE NOTES TO FINANCIAL STATEMENTS

46
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
OF MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST:

We have audited the accompanying statement of assets and liabilities of Morgan
Stanley Dean Witter Developing Growth Securities Trust (the "Fund"), including
the portfolio of investments, as of September 30, 2000, and the related
statements of operations and changes in net assets, and the financial highlights
for the year then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit. The statement of changes in net assets for the year ended September 30,
1999 and the financial highlights for each of the respective stated periods
ended September 30, 1999 were audited by other independent accountants whose
report, dated November 8, 1999, expressed an unqualified opinion on that
statement and financial highlights.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 2000, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Morgan
Stanley Dean Witter Developing Growth Securities Trust as of September 30, 2000,
the results of its operations, the changes in its net assets, and the financial
highlights for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.

Deloitte & Touche LLP
New York, New York
November 9, 2000

2000 FEDERAL TAX NOTICE (unaudited)

During the fiscal year ended September 30, 2000, the Fund paid to its
shareholders $3.62 per share from long-term capital gains.

47
<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
CHANGE IN INDEPENDENT ACCOUNTANTS

On July 1, 2000 PricewaterhouseCoopers LLP resigned as independent accountants
of the Fund.

The reports of PricewaterhouseCoopers LLP on the financial statements of the
Fund for the past two fiscal years contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle.

In connection with its audits for the two most recent fiscal years and through
July 1, 2000, there have been no disagreements with PricewaterhouseCoopers LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of PricewaterhouseCoopers LLP would have caused them to make
reference thereto in their report on the financial statements for such years.

The Fund, with the approval of its Board of Trustees and its Audit Committee,
engaged Deloitte & Touche LLP as its new independent accountants as of July 1,
2000.

<PAGE>

MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
REPORT OF INDEPENDENT ACCOUNTANTS

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
MORGAN STANLEY DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST

In our opinion, the statement of changes in net assets and the financial
highlights of Morgan Stanley Dean Witter Developing Growth Securities Trust (the
"Fund") (not presented separately herein) present fairly, in all material
respects, the changes in its net assets for the year ended September 30, 1999
and the financial highlights for each of the years in the period ended September
30, 1999, in conformity with generally accepted accounting principles. This
financial statement and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above. We have not audited the financial statements or financial highlights of
the Fund for any period subsequent to September 30, 1999.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
November 8, 1999