MORGAN STANLEY INSTITUTIONAL FUND INC, 485APOS, 1999-01-27

MORGAN STANLEY INSTITUTIONAL FUND INC
485APOS, 1999-01-27

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As Filed With the Securities and Exchange Commission on January 27, 1999

File No. 33-23166
811-5624
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
POST-EFFECTIVE AMENDMENT NO. 40 [X]

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 41 [X]

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
---------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

1221 Avenue of the Americas
New York, New York 10020
------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (800) 548-7786
--------------
Harold J. Schaaff, Jr., Esq.
Morgan Stanley Dean Witter Investment Management Inc.
1221 Avenue Of The Americas, New York, New York 10020
-----------------------------------------------------
(Name and Address of Agent for Service)

Copy to:
Michael F. Klein, Esq. Richard W. Grant, Esq.
Morgan Stanley Dean Witter Morgan, Lewis & Bockius LLP
Investment Management Inc. 1701 Market Street
1221 Avenue of the Americas Philadelphia, PA 19103
New York, NY 10020

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

It is proposed that this filing will become effective (check appropriate box)

immediately upon filing pursuant to paragraph (b)
---
on [ date ] pursuant to paragraph (b)
---
X 60 days after filing pursuant to paragraph (a)(1)
---
75 days after filing pursuant to paragraph (a)(2)
---
on [ date] pursuant to paragraph (a) of Rule 485.
---

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<PAGE>

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PROSPECTUS JANUARY , 1999
- -------------------------------------------------------------------------------

PORTFOLIOS OF [LOGO] MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.

EQUITY GROWTH PORTFOLIO

THE EQUITY GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN GROWTH-ORIENTED EQUITY SECURITIES OF MEDIUM AND LARGE
CAPITALIZATION COMPANIES.

AGGRESSIVE EQUITY PORTFOLIO

THE AGGRESSIVE EQUITY PORTFOLIO SEEKS CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN
CORPORATE EQUITY AND EQUITY-LINKED SECURITIES.

EMERGING GROWTH PORTFOLIO

THE EMERGING GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN GROWTH-ORIENTED EQUITY SECURITIES OF SMALL- TO MEDIUM-SIZED
CORPORATIONS.

VALUE EQUITY PORTFOLIO

THE VALUE EQUITY PORTFOLIO SEEKS HIGH TOTAL RETURN BY INVESTING PRIMARILY IN
EQUITY SECURITIES WHICH THE INVESTMENT ADVISER BELIEVES TO BE UNDERVALUED
RELATIVE TO THE STOCK MARKET IN GENERAL AT THE TIME OF PURCHASE.

TECHNOLOGY PORTFOLIO

THE TECHNOLOGY PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF COMPANIES THAT THE INVESTMENT ADVISER EXPECTS
TO BENEFIT FROM THEIR INVOLVEMENT IN TECHNOLOGY AND TECHNOLOGY-RELATED
INDUSTRIES.

INVESTMENT ADVISER

Morgan Stanley Dean Witter Investment Management Inc.

DISTRIBUTOR

Morgan Stanley & Co. Incorporated

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>

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TABLE OF CONTENTS
- -------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT SUMMARY
EQUITY GROWTH PORTFOLIO 1
AGGRESSIVE EQUITY PORTFOLIO 2
EMERGING GROWTH PORTFOLIO 3
VALUE EQUITY PORTFOLIO 4
TECHNOLOGY PORTFOLIO 5
ADDITIONAL RISK FACTORS AND INFORMATION 6
PAST PERFORMANCE 8
FEES AND EXPENSES OF THE PORTFOLIOS 9
INVESTMENT ADVISER 10
MANAGEMENT FEES 10
PORTFOLIO MANAGERS 11
DISTRIBUTION OF PORTFOLIO SHARES 13
SHAREHOLDER INFORMATION 13
FINANCIAL HIGHLIGHTS 15
EQUITY GROWTH PORTFOLIO 16
AGGRESSIVE EQUITY PORTFOLIO 17
EMERGING GROWTH PORTFOLIO 18
VALUE EQUITY PORTFOLIO 19
TECHNOLOGY PORTFOLIO 20
ACCOUNT REGISTRATION FORM
[TO BE ATTACHED]
</TABLE>

<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
EQUITY GROWTH PORTFOLIO
- -------------------------------------------------------------------------------

THE EQUITY GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN GROWTH-ORIENTED EQUITY SECURITIES OF MEDIUM AND LARGE
CAPITALIZATION COMPANIES.

APPROACH

MSDW Investment Management seeks to maximize long-term capital appreciation by
investing primarily in the equity securities of U.S. and, to a limited extent,
foreign companies that exhibit strong or accelerating earnings growth. The
universe of eligible companies generally includes those with market
capitalizations of $500 million or more. MSDW Investment Management emphasizes
individual security selection and may focus the Portfolio's holdings within the
limits permissible for a diversified fund.

PROCESS

MSDW Investment Management follows a flexible investment program in looking for
companies with above average capital appreciation potential. MSDW Investment
Management focuses on well established companies with consistent or rising
earnings growth records and compelling business strategies. MSDW Investment
Management continually and rigorously studies company developments, including
business strategy, management focus and financial results, to identify companies
with earnings growth and business momentum. In addition, MSDW Investment
Management closely monitors analysts' expectations to ascertain issuers that
have the potential for positive earnings surprises versus consensus
expectations. Valuation is of secondary importance and is viewed in the context
of prospects for sustainable earnings growth and the potential for positive
earnings surprises in relation to consensus expectations. The Portfolio
considers selling securities of issuers that no longer meet MSDW Investment
Management's criteria.

RISK

Investing in the Equity Growth Portfolio may be appropriate for you if you are
willing to accept the risks and uncertainties of investing in equity securities
in the hope of earning superior returns. In general, prices of equity securities
are more volatile than those of fixed income securities. The prices of equity
securities will rise and fall in response to a number of different
factors. In particular, prices of equity securities will respond to
events that affect entire financial markets or industries (changes in
inflation or consumer demand, for example) and to events that affect
particular issuers (news about the success or failure of a new
product, for example). In addition, at times the Portfolio's market
sector, mid- to large-capitalization growth-oriented equity
securities, may underperform relative to other sectors.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C> <C>
COMMENCED OPERATIONS ON SEPTEMBER 16, 1996
1997 37.27%
1998 xx.xx%
HIGH (QUARTER)
mo/yr
xx.xx%
LOW (QUARTER)
mo/yr
xx.xx%
</TABLE>

THE BAR CHART ABOVE SHOWS THE PERFORMANCE OF THE PORTFOLIO YEAR-BY-YEAR AND THE
PORTFOLIO'S BEST AND WORST PERFORMANCE FOR A QUARTER. TOGETHER WITH THE TABLE
UNDER "PAST PERFORMANCE", THIS INFORMATION DEMONSTRATES THE VARIABILITY OF
PERFORMANCE OVER TIME AND PROVIDES AN INDICATION OF THE RISKS OF INVESTING IN
THE PORTFOLIO. HOW THE PORTFOLIO HAS PERFORMED IN THE PAST DOES NOT NECESSARILY
INDICATE HOW THE PORTFOLIO WILL PERFORM IN THE FUTURE.

1
<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
AGGRESSIVE EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

THE AGGRESSIVE EQUITY PORTFOLIO SEEKS CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN CORPORATE EQUITY AND EQUITY-LINKED SECURITIES.

APPROACH

MSDW Investment Management seeks to maximize capital appreciation by investing
in equity and equity-linked securities of U.S., and to a limited extent, foreign
companies that exhibit strong or accelerating earnings growth. The universe of
eligible companies mainly includes those with market capitalizations of $500
million or more. MSDW Investment Management emphasizes individual security
selection. The Portfolio generally concentrates its holdings in a relatively
small number of companies and may invest up to 25% of its assets in a single
issuer.

PROCESS

MSDW Investment Management follows a flexible investment program in looking for
companies with above average capital appreciation potential. Fundamental equity
research drives the process. MSDW Investment Management focuses on
well-established companies with consistent or rising earnings growth records and
compelling business strategies. MSDW Investment Management continually and
rigorously studies company developments, including business strategy, management
focus and financial results, to identify companies with earnings growth and
business momentum. In addition, MSDW Investment Management closely monitors
analysts' expectations to ascertain issuers that have the potential for positive
earnings surprises versus consensus expectations. Valuation is of secondary
importance and is viewed in the context of prospects for sustainable earnings
growth and the potential for positive earnings surprises in relation to
consensus expectations. The Portfolio considers selling securities of issuers
that no longer meet MSDW Investment Management's criteria. MSDW Investment
Management's focus on individual security selection may lead to an emphasis on
particular industry sectors.

RISK

Investing in the Aggressive Equity Portfolio may be appropriate for you if you
are willing to accept the risks and uncertainties of investing in a
non-diversified portfolio of equity securities in the hope of earning
superior returns. In general, prices of equity securities are more
volatile than those of fixed income securities. The prices of equity
securities will rise and fall in response to a number of different
factors. In particular, equity securities will respond to events that
affect entire financial markets or industries (changes in inflation
or consumer demand, for example) and to events that affect particular
issuers (news about the success or failure of a new product, for
example). In addition, at times the Portfolio's market sector, mid-
to large-capitalization growth-oriented equity securities, may
underperform relative to other sectors.

THE RISKS OF INVESTING IN THE PORTFOLIO MAY BE INTENSIFIED BECAUSE
THE PORTFOLIO IS NON-DIVERSIFIED, WHICH MEANS THAT IT MAY INVEST IN
SECURITIES OF A LIMITED NUMBER OF ISSUERS. AS A RESULT, THE
PERFORMANCE OF A PARTICULAR INVESTMENT OR A SMALL GROUP OF
INVESTMENTS MAY AFFECT THE PORTFOLIO'S PERFORMANCE MORE THAN IF THE
PORTFOLIO WERE DIVERSIFIED. IN ADDITION, THE PORTFOLIO MAY SELL
SHORT. IN A SHORT SALE TRANSACTION, THE PORTFOLIO SELLS A BORROWED
SECURITY IN ANTICIPATION OF A DECLINE IN THE MARKET VALUE OF THAT
SECURITY, HOPING TO PROFIT FROM THE DIFFERENCE BETWEEN THE AMOUNT
RECEIVED FROM THE SALE AND THE COST OF REPLACING THE BORROWED
SECURITY. IF MSDW INVESTMENT MANAGEMENT INCORRECTLY PREDICTS THAT THE
PRICE OF THE BORROWED SECURITY WILL DECLINE, THE PORTFOLIO MAY LOSE
MONEY BECAUSE THE AMOUNT NECESSARY TO REPLACE THE BORROWED SECURITY
WILL BE GREATER THAN THE AMOUNT RECEIVED FROM THE SALE.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C>
COMMENCED OPERATIONS ON MARCH 8, 1995
1996 40.90%
1997 33.31%
1998 xx.xx%
HIGH (QUARTER)
4/95 - 6/95
13.88%
LOW (QUARTER)
1/97 - 3/97
-3.60%
</TABLE>

2
<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------------------

THE EMERGING GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN GROWTH-ORIENTED EQUITY SECURITIES OF SMALL- TO MEDIUM-SIZED
CORPORATIONS.

APPROACH

MSDW Investment Management seeks to maximize long-term capital appreciation by
investing primarily in the equity securities of U.S. and, to a limited extent,
foreign companies that are early in their life cycles but have the potential to
become major enterprises. The Portfolio will invest in small- to medium-sized
companies, generally those with revenues ranging from $10 million to $750
million.

PROCESS

MSDW Investment Management follows a flexible investment program in looking for
companies with above average prospects for capital appreciation. The process is
driven by fundamental research. MSDW Investment Management relies on its
judgment and research capabilities to assess economic, industry, market and
company developments, including business strategy, management focus and
financial results. MSDW Investment Management focuses on companies with strong
business models and high revenue visibility, dominance in a niche or market, and
shareholder oriented management. MSDW Investment Management's financial analysis
of each company focuses on its earnings growth, price/earnings ratio, profit
margins and price/revenue ratio. MSDW Investment Management's focus on
individual security selection may lead to an emphasis on particular industry
sectors.

RISK

Investing in the Emerging Growth Portfolio may be appropriate for you if you are
willing to accept the risks and uncertainties of investing in the equity
securities of emerging growth companies in the hope of earning superior returns.
In general, prices of equity securities are more volatile than those of fixed
income securities. The prices of equity securities will rise and fall in
response to a number of different factors. In particular, equity securities will
respond to events that affect entire financial markets or industries (changes in
inflation or consumer demand, for example) and to events that affect particular
issuers (news about the success or failure of a new product, for
example).

THE RISK OF INVESTING IN EQUITY SECURITIES IS INTENSIFIED IN THE CASE
OF THE SMALL- TO MEDIUM-SIZED COMPANIES IN WHICH THE PORTFOLIO WILL
INVEST. MARKET PRICES FOR SUCH COMPANIES' EQUITY SECURITIES TEND TO
BE MORE VOLATILE THAN THOSE OF LARGER, MORE ESTABLISHED COMPANIES.
SUCH COMPANIES MAY THEMSELVES BE MORE VULNERABLE TO ECONOMIC OR
COMPANY SPECIFIC PROBLEMS. IN ADDITION, AT TIMES THE PORTFOLIO'S
MARKET SECTOR, GROWTH-ORIENTED EQUITY SECURITIES OF SMALL- TO
MEDIUM-SIZED CORPORATIONS, MAY UNDERPERFORM RELATIVE TO OTHER
SECTORS.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C> <C>
COMMENCED OPERATIONS ON NOVEMBER 1, 1989
1990 xx.xx%
1991 xx.xx%
1992 xx.xx%
1993 0.00%
1994 -0.62%
1995 33.31%
1996 3.72%
1997 11.36%
1998 xx.xx%
HIGH (QUARTER)
1/91 - 3/91
27.36%
LOW (QUARTER)
7/90 - 9/90
-22.43%
</TABLE>

3
<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
VALUE EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

THE VALUE EQUITY PORTFOLIO SEEKS HIGH TOTAL RETURN BY INVESTING PRIMARILY IN
EQUITY SECURITIES WHICH MSDW INVESTMENT MANAGEMENT BELIEVES TO BE UNDERVALUED
RELATIVE TO THE STOCK MARKET IN GENERAL AT THE TIME OF PURCHASE.

APPROACH

MSDW Investment Management seeks to construct a diversified portfolio of equity
securities of U.S. and, to a limited extent, foreign issuers that will
outperform the market over the long term. MSDW Investment Management emphasizes
a bottom-up approach to investing that seeks to identify securities of
undervalued issuers.

PROCESS

MSDW Investment Management selects securities from a universe comprised of the
500 largest companies in the U.S. market. The selection process focuses on
companies with distinctively below average price-to-earnings and price-to-book
value ratios and high dividend yields. MSDW Investment Management conducts
additional fundamental analysis to ascertain financial soundness. The Portfolio
then purchases securities of companies that research indicates sell below their
estimated value. The Portfolio will typically sell securities when prices revert
to MSDW Investment Management's estimated value.

RISK

Investing in the Value Equity Portfolio may be appropriate for you if you are
willing to accept the risks and uncertainties of investing in equity securities
of U.S. issuers in the hope of earning superior returns. In general, prices of
equity securities are more volatile than those of fixed income securities. The
prices of equity securities will rise and fall in response to a number of
different factors. In particular, prices of equity securities will respond to
events which affect entire financial markets or industries (changes in inflation
or consumer demand, for example) and to events that affect particular issuers
(news about the success or failure of a new product, for example). In addition,
at times the Portfolio's market sector, undervalued equity securities of
large-capitalization companies, may underperform relative to other sectors.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C> <C>
COMMENCED OPERATIONS ON JANUARY 31, 1990
1991 xx.xx%
1992 xx.xx%
1993 15.14%
1994 -1.29%
1995 33.69%
1996 19.73%
1997 29.20%
1998 xx.xx%
HIGH (QUARTER)
4/97 - 6/97
11.17%
LOW (QUARTER)
7/90 - 9/90
-11.89%
</TABLE>

4
<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
TECHNOLOGY PORTFOLIO
- -------------------------------------------------------------------------------

THE TECHNOLOGY PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF COMPANIES THAT MSDW INVESTMENT MANAGEMENT
EXPECTS TO BENEFIT FROM THEIR INVOLVEMENT IN TECHNOLOGY AND TECHNOLOGY-RELATED
INDUSTRIES.

APPROACH

MSDW Investment Management seeks to maximize long-term capital appreciation by
identifying significant long-term technology trends and by investing primarily
in companies MSDW Investment Management believes are positioned to benefit
materially from these trends.

PROCESS

MSDW Investment Management extensively researches technology trends in order to
identify industry sectors and issuers with strong prospects and leading market
share. The Portfolio invests in a broad range of technology-related industries,
including: computers; software and peripheral products; electronics;
communications equipment and services; entertainment; multimedia; and
information services. The Portfolio seeks to overweight investment in the best-
positioned sectors, while underweighting the sectors exposed to the greatest
risk in comparison to potential return. MSDW Investment Management looks to
invest in issuers with strong management teams, reasonable valuation relative to
growth prospects and whose competitors face sustainable barriers to market
entry. The Portfolio may participate in the global technology market by
investing up to 35% of its total assets in the equity or fixed income securities
of foreign issuers, including those located in emerging markets.

RISK

Investing in the Technology Portfolio may be appropriate for you if you are
willing to accept the risks and uncertainties of investing in equity securities
of companies in the technology sector in the hope of earning superior returns
and diversifying your investment portfolio. Because the Portfolio invests
primarily in technology-related issuers, there is an additional risk that
economic events may affect a substantial portion of the Portfolio's investments.
Historically, the price of securities in this sector have tended to be volatile.
In general, prices of equity securities are more volatile than those of fixed
income securities. The prices of equity securities will rise and fall in
response to a number of different factors. In particular, prices of equity
securities will respond to events which affect entire financial markets or
industries (changes in inflation or consumer demand, for example) and to events
that affect a particular issuer (news about the success or failure of
a new product, for example). In addition, at times the Portfolio's
market sector, equity securities of technology-related issuers, may
underperform relative to other sectors.

THE PORTFOLIO MAY INVEST IN THE EQUITY SECURITIES OF BOTH LARGE AND
SMALL COMPANIES. WHILE MSDW INVESTMENT MANAGEMENT BELIEVES THAT
SMALLER COMPANIES MAY PROVIDE GREATER GROWTH POTENTIAL THAN LARGER,
MORE ESTABLISHED FIRMS, INVESTING IN THE SECURITIES OF SMALLER
COMPANIES ALSO INVOLVES GREATER RISK AND PRICE VOLATILITY.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C>
COMMENCED OPERATIONS ON SEPTEMBER 16, 1996
1997 37.27%
1998 xx.xx%
HIGH (QUARTER)
mo/yr--mo/yr
xx.xx%
LOW (QUARTER)
mo/yr--mo/yr
xx.xx%
</TABLE>

5
<PAGE>

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ADDITIONAL RISK FACTORS AND INFORMATION
- -------------------------------------------------------------------------------

THIS SECTION DISCUSSES ADDITIONAL RISK FACTORS AND INFORMATION RELATED TO THE
PORTFOLIOS. THE PORTFOLIOS' INVESTMENT PRACTICES AND LIMITATIONS ARE DESCRIBED
IN MORE DETAIL IN THE STATEMENT OF ADDITIONAL INFORMATION ("SAI"), WHICH LEGALLY
IS A PART OF THIS PROSPECTUS. FOR DETAILS ABOUT HOW TO OBTAIN A COPY OF THE SAI
AND OTHER REPORTS AND INFORMATION, SEE THE BACK COVER OF THIS PROSPECTUS.

PRICE VOLATILITY

The value of your investment in a Portfolio is based on the market prices of the
securities the Portfolio holds. These prices change daily due to economic and
other events that affect markets generally, as well as those that affect
particular industries and companies. These price movements, sometimes called
volatility, may be greater or lesser depending on the types of securities the
Portfolio owns and the markets in which the securities trade. Over time, equity
securities have generally shown superior gains, although they tended to be more
volatile in the short term. Fixed income securities, regardless of credit
quality, also experience price volatility, especially in response to interest
rate changes. As a result of price volatility, there is a risk that you may lose
money by investing in a Portfolio.

DERIVATIVES

The Portfolios may use various instruments that derive their values from those
of specified securities, indices, currencies or other points of reference for
both hedging and non-hedging purposes. Derivatives include futures, options,
forward contracts, swaps, and structured notes. These derivatives, including
those used to manage risk, are themselves subject to risks of the different
markets in which they trade and, therefore, may not serve their intended
purposes.

The primary risks of derivatives are: (i) changes in the market value of
securities held by a Portfolio, and of derivatives relating to those securities,
may not be proportionate, (ii) there may not be a liquid market for a portfolio
to sell a derivative, which could result in difficulty closing a position and
(iii) certain derivatives can magnify the extent of losses incurred due to
changes in the market value of the securities to which they relate. In addition,
derivatives are subject to counter party risk. To minimize this risk, a
Portfolio may enter into derivatives transactions with counter parties that meet
certain requirements for credit quality and collateral. Also, a Portfolio may
invest in certain derivatives that require the Portfolio to segregate some or
all of its cash or liquid securities to cover its obligations under those
instruments. At certain levels, this can cause the Portfolio to lose flexibility
in managing its investments properly, responding to shareholder redemption
requests, or meeting other obligations. If the Portfolio is in that position, it
could be forced to sell other securities that it wanted to retain.

A Portfolio will limit its use of derivatives to 33 1/3% of its total assets
measured by the aggregate notional amount of outstanding derivatives. While the
use of derivatives may be advantageous to a Portfolio, if MSDW Investment
Management is not successful in employing them, the Portfolio's performance may
be worse than if it did not make such investments. See the Statement of
Additional Information for more about the risks of different types of
derivatives.

FOREIGN INVESTING

To the extent that a Portfolio invests in foreign countries, there is the risk
that news and events unique to a country or region will affect those markets and
their issuers. These same events will not necessarily have an effect on the U.S.
economy or similar issuers located in the United States. In addition, a
Portfolio's investments in foreign countries generally will be denominated in
foreign currencies. As a result, changes in the value of a country's currency
compared to the U.S. dollar may affect the value of a Portfolio's investments.
These changes may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country. These
risks may be intensified for the Technology Portfolio's investments in emerging
markets countries. MSDW Investment Management may invest in certain instruments,
such as derivatives, and may use certain techniques, such as hedging, to manage
these risks. However, MSDW Investment Management cannot guarantee that it will
be practical to hedge these risks in certain markets or under particular
conditions or that it will succeed in doing so.

6
<PAGE>

BANK INVESTORS

An investment in a Portfolio is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.

YEAR 2000 RISK

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

TEMPORARY DEFENSIVE
INVESTMENTS

When MSDW Investment Management believes that changes in economic, financial or
political conditions warrant, each Portfolio may invest without limit in certain
short- and medium-term fixed income securities for temporary defensive purposes.
If MSDW Investment Management incorrectly predicts the effects of these changes,
such defensive investments may adversely affect the Portfolio's performance.

PORTFOLIO TURNOVER

Consistent with its investment policies, a Portfolio will purchase and sell
securities without regard to the effect on portfolio turnover. Higher portfolio
turnover (e.g. over 100% per year) will cause a Portfolio to incur additional
transaction costs and may result in taxable gains being passed through to
shareholders.

7
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE
- -------------------------------------------------------------------------------

These tables compare the performance of each Portfolio to an index of similar
securities. An index is a hypothetical measure of performance based on the ups
and downs of securities that make up a particular market. The index does not
show actual investment returns or reflect payment of management or brokerage
fees, which would lower the index's performance. The tables separately compare
Class A and Class B shares of each Portfolio, except the Technology Portfolio,
to the index so that you can compare performance for each class from its
commencement date. The index itself does not actually have two classes.

AVERAGE ANNUAL TOTAL RETURN (FOR THE YEAR ENDED DECEMBER 31, 1998)

<TABLE>
<CAPTION>
EQUITY GROWTH PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS S&P 500 INDEX
ON APRIL 2, 1991) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- ------------------------------------------------------------------------------------------------------
PAST FIVE YEARS % N/A % N/A
- ------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

THE S&P 500 IS A STOCK INDEX COMPRISED OF 500 LARGE-CAP U.S. COMPANIES WITH
MARKET CAPITALIZATION OF $1 BILLION OR MORE. THESE 500 COMPANIES ARE A
REPRESENTATIVE SAMPLE OF SOME 100 INDUSTRIES, CHOSEN MAINLY FOR MARKET SIZE,
LIQUIDITY AND INDUSTRY GROUP REPRESENTATION. THE S&P IS A MARKET-VALUE WEIGHTED
INDEX (STOCK PRICE TIMES NUMBER OF SHARES OUTSTANDING), WITH EACH STOCK'S WEIGHT
IN THE INDEX PROPORTIONATE TO ITS MARKET VALUE.

<TABLE>
<CAPTION>
AGGRESSIVE EQUITY PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS S&P 500 INDEX
ON MARCH 8, 1995) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- -------------------------------------------------------------------------------------------------------
PAST FIVE YEARS N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

<TABLE>
<CAPTION>
EMERGING GROWTH PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS RUSSELL 2000 INDEX
ON NOVEMBER 1, 1989) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- -------------------------------------------------------------------------------------------------------
PAST FIVE YEARS % N/A % N/A
- -------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

RUSSELL 2000 INDEX IS AN UNMANAGED INDEX COMPRISED OF 2000 OF THE SMALLEST 2000
COMPANIES IN THE RUSSELL 3000 INDEX AND REPRESENTS APPROXIMATELY 11% OF THE
APPROXIMATELY 98% OF THE INVESTIBLE U.S. EQUITY MARKET.

<TABLE>
<CAPTION>
VALUE EQUITY PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS S&P 500 INDEX
ON JANUARY 31, 1990) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- -------------------------------------------------------------------------------------------------------
PAST FIVE YEARS % %
- -------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

<TABLE>
<CAPTION>
TECHNOLOGY PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS
ON SEPTEMBER 16, 1996) ON SEPTEMBER 16, 1996) S&P 500 INDEX
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % %
- ------------------------------------------------------------------------------------------------------
PAST FIVE YEARS N/A N/A N/A
- ------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % %
</TABLE>

8
<PAGE>
- --------------------------------------------------------------------------------
FEES AND EXPENSES OF THE PORTFOLIOS
- -------------------------------------------------------------------------------

1998 ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)

<TABLE>
<CAPTION>
EQUITY AGGRESSIVE
GROWTH EQUITY EMERGING GROWTH VALUE EQUITY TECHNOLOGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------
MANAGEMENT FEES
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A 0.60% 0.80% 1.00% 0.50% 1.00%
- --------------------------------------------------------------------------------------------------------------------------------
CLASS B 0.60% 0.80% 1.00% 0.50% 1.00%
12B-1 FEE
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A NONE NONE NONE NONE NONE
- --------------------------------------------------------------------------------------------------------------------------------
CLASS B 0.25% 0.25% 0.25% 0.25% 0.25%
OTHER EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A --% --% --% --% --%
- --------------------------------------------------------------------------------------------------------------------------------
CLASS B --% --% --% --% --%
TOTAL ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A --% --% --% --% --%
- --------------------------------------------------------------------------------------------------------------------------------
CLASS B --% --% --% --% --%
</TABLE>

The Management Fees for the Portfolios shown in the table above are the highest
that could be charged. This table does not show the effects of MSDW Investment
Management's voluntary fee waivers and/or expense reimbursements. MSDW
Investment Management has voluntarily agreed to reduce its management fee and/or
reimburse the Portfolios so that total expenses will not exceed the rates in the
table below.

MAXIMUM EXPENSES AFTER FEE WAIVERS/EXPENSE REIMBURSEMENTS

<TABLE>
<CAPTION>
EQUITY AGGRESSIVE EMERGING VALUE
GROWTH EQUITY GROWTH EQUITY TECHNOLOGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
CLASS A 0.80% 1.00% 1.25% 0.70% 1.25%
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
CLASS B 1.05% 1.25% 1.50% 0.95% 1.50%
</TABLE>

FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS ARE VOLUNTARY AND MSDW INVESTMENT
MANAGEMENT RESERVES THE RIGHT TO TERMINATE ANY WAIVER AND/OR REIMBURSEMENT AT
ANY TIME AND WITHOUT NOTICE.

9
<PAGE>
EXAMPLE
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN EACH
PORTFOLIO WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS HAVING SIMILAR
INVESTMENT OBJECTIVES.

The example assumes that you invest $10,000 in each Portfolio for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example assumes that your investment has a 5% return each year and
that each Portfolio's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
EQUITY GROWTH PORTFOLIO
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

AGGRESSIVE EQUITY PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

EMERGING GROWTH PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

VALUE EQUITY PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

TECHNOLOGY PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------
INVESTMENT ADVISER
- -------------------------------------------------------------------------------

Morgan Stanley Dean Witter Investment Management Inc. ("MSDW Investment
Management"), with principal offices at 1221 Avenue of the Americas, New York,
New York 10020, conducts a worldwide portfolio management business and provides
a broad range of portfolio management services to customers in the United States
and abroad. Morgan Stanley Dean Witter & Co. ("MSDW") is the direct parent of
MSDW Investment Management and Morgan Stanley. 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. At
December 31, 1998, MSDW Investment Management, together with its affiliated
institutional asset management companies, managed assets of approximately $
billion, including assets under fiduciary advice.

- -------------------------------------------------------------------------------
MANAGEMENT FEES
- -------------------------------------------------------------------------------

For the year ended December 31, 1998, MSDW Investment Management received from
each Portfolio the management fee set forth in the table below:

<TABLE>
<CAPTION>
EQUITY GROWTH AGGRESSIVE EQUITY EMERGING GROWTH VALUE EQUITY TECHNOLOGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------
MANAGEMENT FEE CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
-------------------------------------------------------------------------------------------------
PAID IN FISCAL YEAR
ENDED DECEMBER 31, 1998 0.58% 0.58% 0.74% 0.74% 0.91% 0.91% 0.40% 0.40% 0.00% 0.00%
</TABLE>

10
<PAGE>

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(NET OF WAIVERS AND AS A
PERCENTAGE OF AVERAGE
NET ASSETS)
</TABLE>

11
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
- -------------------------------------------------------------------------------

THE FOLLOWING INDIVIDUALS HAVE PRIMARY PORTFOLIO MANAGEMENT RESPONSIBILITY FOR
THE PORTFOLIOS:

EQUITY GROWTH PORTFOLIO

PHILIP W. FRIEDMAN, MARGARET K. JOHNSON AND WILLIAM S. AUSLANDER

Philip W. Friedman is a Managing Director of MSDW Investment Management and
Morgan Stanley and is head of the Institutional Equity Group of MSDW Investment
Management. In addition to portfolio management, his equity research
responsibilities include business equipment and services, capital goods,
consumer durables, multi-industry and transportation. Prior to joining MSDW
Investment Management in 1997, he was the North American Director of Equity
Research at Morgan Stanley. From 1990 to 1995, he was a member of Morgan
Stanley's Equity Research team. Mr. Friedman graduated from Rutgers University
with a B.A. (PHI BETA KAPPA AND SUMMA CUM LAUDE) in Economics. He also holds a
Masters of Management from the J.L. Kellogg School of Management at Northwestern
University. Margaret K. Johnson is a Principal of MSDW Investment Management and
Morgan Stanley and a portfolio manager in the Institutional Equity Group. She
joined MSDW Investment Management in 1984. She holds a B.A. degree from Yale
College and is a Chartered Financial Analyst. William S. Auslander is a
Principal of MSDW Investment Management and Morgan Stanley and a portfolio
manager in the Institutional Equity Group. He joined MSDW Investment Management
in 1995 as an equity analyst in the Institutional Equity Group. Prior to joining
MSDW Investment Management, he worked at Icahn & Co. for nine years as an equity
analyst. He graduated from the University of Wisconsin at Madison with a B.A. in
Economics and received an M.B.A. from Columbia University. Margaret K. Johnson
has shared primary responsibility for managing the Portfolio's assets since July
1993. Philip W. Friedman and William S. Auslander have shared primary
responsibility for managing the Portfolio's assets since September 1998.

AGGRESSIVE EQUITY PORTFOLIO

PHILIP W. FRIEDMAN AND WILLIAM S. AUSLANDER

Information about Messrs. Friedman and Auslander is included under the Equity
Growth Portfolio above. Philip W. Friedman and William S. Auslander have shared
primary responsibility for managing the Portfolio's assets since September 1998.

EMERGING GROWTH PORTFOLIO

ALEXANDER L. UMANSKY AND DENNIS P. LYNCH

Alexander L. Umansky is a Vice President of MSDW Investment Management and
Morgan Stanley. He joined the Adviser in 1994 as a Compliance Analyst and in
1996, he became a research analyst in the Institutional Equity Group. Prior to
joining the Adviser, Mr. Umansky was a financial analyst in Morgan Stanley's
Global Risk Management department. He graduated from New York University's Stern
School of Business with a B.S. in Computer Science and Finance. Dennis P. Lynch
joined the Adviser in 1998 as a Research Analyst. Prior to joining the Adviser,
Mr. Lynch worked as a research analyst for JP Morgan Securities from 1994 to
1996. He earned a B.A. from Hamilton College in 1993 and an M.B.A. with honors
from Columbia University in 1998. Alexander L. Umansky and Dennis P. Lynch have
shared primary responsibility for managing the Portfolio's assets since January
1999.

11
<PAGE>

VALUE EQUITY PORTFOLIO

STEPHEN C. SEXAUER

Stephen C. Sexauer is a Principal of MSDW Investment Management and Morgan
Stanley and is a portfolio manager of the Institutional Equity Group of MSDW
Investment Management. In addition to portfolio management, his equity research
responsibilities include telecommunications, technology, finance and utilities.
Mr. Sexauer joined MSDW Investment Management in July 1989 after three years as
Vice President at Salomon Brothers. Previously, he was with Merrill Lynch
Economics and Wharton Econometrics. Mr. Sexauer received a B.S. in Economics
from the University of Illinois and an M.B.A. in Economics and Statistics from
the University of Chicago. Mr. Sexauer has had primary responsibility for
managing the Portfolio's assets since January 1992.

TECHNOLOGY PORTFOLIO

ALEXANDER UMANSKY AND STEPHEN C. SEXAUER

Information about Mr. Umansky is included under the Emerging Growth Portfolio
above. Information about Mr. Sexauer is included under the Value Equity
Portfolio above. Alexander Umansky and Stephen C. Sexauer have had primary
responsibility for managing the Portfolio's assets since September 1998 and
January 1998, respectively.

12
<PAGE>

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

DISTRIBUTION OF PORTFOLIO SHARES
- -------------------------------------------------------------------------------

Morgan Stanley is the exclusive Distributor of Class A shares and Class B shares
of each Portfolio. Morgan Stanley receives no compensation for distributing
Class A shares of the Portfolios. The Fund has adopted a Plan of Distribution
with respect to the Class B shares of each Portfolio pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, (the "Plan"). Under the
Plan, each Portfolio pays the Distributor a distribution fee of 0.25% of the
Class B shares' average daily net assets on an annualized basis. The
distribution fee compensates the Distributor for marketing and selling Class B
shares. The Distributor may pay others for providing distribution-related and
other services, including account maintenance services. Over time the
distribution fees will increase the cost of your investment and may cost you
more than paying other types of sales charges.

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

SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------

ABOUT NET ASSET VALUE

The net asset value per share of a class of shares of a Portfolio is determined
by dividing the total market value of the Portfolio's investments and other
assets attributable to the class, less any liabilities attributable to the
class, by the total number of outstanding shares of that class of the Portfolio.
In making this calculation, the Portfolio generally values securities at market
price. If market prices are unavailable or may be unreliable because of events
occurring after the close of trading, fair value prices may be determined in
good faith using methods approved by the Board of Directors. The Portfolios may
hold portfolio securities that are listed on foreign exchanges. These securities
may trade on weekends or other days when the Portfolios do not calculate NAV. As
a result, the value of these investments may change on days when you cannot
purchase or sell shares.

PRICING OF PORTFOLIO SHARES

HOW TO PURCHASE SHARES

You may purchase Class A shares and Class B shares of each Portfolio directly
from the Fund, from the Distributor or through certain third parties ("Financial
Intermediaries"). [You may purchase shares of the Portfolios on each day that
the NYSE is open. However, on days that the NYSE is open but banks are closed
the Portfolios will accept purchases only by check.]

The minimum initial investment generally is $500,000 for Class A shares and
$100,000 for Class B shares of each Portfolio. The minimum additional investment
generally is $1,000 for each account that you have. If the value of your account
falls below the minimum initial investment amount for Class A shares or Class B
shares as a result of share redemptions, the Fund will notify you. Your account
may be subject to involuntary conversion from Class A shares to Class B shares
or involuntary redemption in the case of Class B shares if the value of your
account remains below the minimum initial investment amount for 60 consecutive
days. MSDW Investment Management may waive the minimum initial investment and
involuntary conversion or redemption features for certain investors, including
individuals purchasing through a Financial Intermediary.

You may arrange to purchase shares directly from the Fund by calling
1-800-548-7786 or by returning a completed Account Registration Form with
payment for your purchase. The price you pay will be the net asset value
calculated at the Pricing Time following receipt of your purchase order and
payment.

13
<PAGE>

To purchase shares through the Distributor or a Financial Intermediary, you
should contact the Distributor or your Financial Intermediary for details.
Generally, the price of shares purchased through the Distributor or a Financial
Intermediary is the price calculated at the next Pricing Time after the Fund
receives your order from the Distributor or your Financial Intermediary. Certain
Financial Intermediaries have made arrangements with the Fund so that you may
purchase shares at the price calculated at the next Pricing Time after your
Financial Intermediary receives your purchase order. Your Financial Intermediary
may charge an additional service or transaction fee.

HOW TO REDEEM SHARES

You may redeem Portfolio shares directly from the Fund, through the Distributor
or through your Financial Intermediary, each as described above under Purchase
of Shares. The redemption price will be the net asset value per share calculated
at the next Pricing Time, which may be more or less than the purchase price of
your shares. The Fund will ordinarily distribute redemption proceeds in cash
within one business day of your redemption request, but it may take up to seven
business days. However, if you purchased shares by check, the Fund will not
distribute redemption proceeds until it has collected your purchase payment,
which may take up to eight days. The Portfolios will honor redemptions but pay
them the following day on days that the NYSE is open but banks are closed. In
certain circumstances, for example, if payment of redemption proceeds in cash
would be detrimental to the remaining shareholders, a Portfolio may pay
redemption proceeds by a distribution-in-kind of readily marketable portfolio
securities.

EXCHANGE FEATURES

You may exchange Portfolio shares for shares of the other available portfolios
of the Fund. To obtain a prospectus for another portfolio, call the Fund at
1-800-548-7786 or contact your Financial Intermediary. If you purchased
Portfolio shares through a Financial Intermediary, certain portfolios may be
unavailable for exchange. Contact your Financial Intermediary to determine which
portfolios are available for exchange. The Fund currently consists of the
following portfolios:

<TABLE>
<S> <C>
U.S. EQUITY GLOBAL AND INTERNATIONAL EQUITY
Aggressive Equity Portfolio Active International Allocation
Emerging Growth Portfolio Portfolio
Equity Growth Portfolio Asian Real Estate Portfolio
MicroCap Portfolio+ Asian Equity Portfolio
Technology Portfolio China Growth Portfolio+
U.S. Equity Plus Portfolio Emerging Markets Portfolio
U.S. Real Estate Portfolio European Equity Portfolio
Value Equity Portfolio European Real Estate Portfolio
FIXED INCOME Global Equity Portfolio
Emerging Markets Debt Portfolio Gold Portfolio*
Fixed Income Portfolio International Equity Portfolio*
Global Fixed Income Portfolio International Magnum Portfolio
High Yield Portfolio International Small Cap Portfolio
Mortgage-Backed Securities Portfolio+ Japanese Equity Portfolio
Municipal Bond Portfolio Latin American Portfolio
MONEY MARKET
Money Market Portfolio
Municipal Money Market Portfolio
</TABLE>

*PORTFOLIO IS CURRENTLY CLOSED TO NEW INVESTORS

+PORTFOLIO HAS NOT YET COMMENCED OPERATIONS

14
<PAGE>

Time after the Fund receives your exchange order. Frequent trades in your
account(s) can disrupt management of a Portfolio and raise its expenses.
Therefore, the Fund may bar a shareholder who trades excessively from making
further exchanges or purchases.

DIVIDENDS AND DISTRIBUTIONS

It is the policy of each of the Equity Growth, Aggressive Equity and Value
Equity Portfolios to distribute to shareholders substantially all of its taxable
net investment income in the form of a quarterly dividend. It is the policy of
each of the Emerging Growth and Technology Portfolios to distribute to
shareholders substantially all of its taxable net investment income in the form
of an annual dividend. Each Portfolio's policy is to distribute to shareholders
net capital gains on an annual basis.

The Fund automatically reinvests all dividends and distributions in additional
shares. However, you may elect to receive distributions in cash by giving
written notice to the Fund or your Financial Intermediary or by checking the
appropriate box in the Distribution Option section on the Account Registration
Form.

TAXES

The dividends and distributions you receive from a Portfolio may be subject to
Federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are ordinary income and capital gains distributions are taxed
based on how long the Portfolio held the assets. The Fund will tell you annually
how to treat dividends and distributions.

If you redeem shares of a Portfolio, you will be subject to tax on any gains you
earn based on your holding period for the shares. An exchange of shares of a
Portfolio for shares of another portfolio is a sale of Portfolio shares for tax
purposes. Conversions of shares between classes will not result in taxation.

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

The following financial highlights tables are intended to help you understand
the financial performance of the Class A shares and Class B shares of each
Portfolio for the past five years or, if less than five years, the life of the
Portfolio or Class. Certain information reflects financial results for a single
Portfolio share. The total returns in the tables represent the rate that an
investor would have earned (or lost) on an investment in each Portfolio
(assuming reinvestment of all dividends and distributions). This information has
been audited by , whose report, along with the Fund's
financial statements, are incorporated by reference into the Fund's Statement of
Additional Information and are included in the Fund's December 31, 1998 Annual
Report to Shareholders.

15
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
EQUITY GROWTH PORTFOLIO
- -------------------------------------------------------------------------------

16
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
AGGRESSIVE EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

17
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
EMERGING GROWTH PORTFOLIO
- -------------------------------------------------------------------------------

18
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
VALUE EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

19
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
TECHNOLOGY PORTFOLIO
- -------------------------------------------------------------------------------

20
<PAGE>

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

WHERE TO FIND ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

In addition to this Prospectus, the Fund has a Statement of Additional
Information ("SAI"), dated ________, 1999, which contains additional, more
detailed information about the Fund and the Portfolios. The SAI is incorporated
by reference into this Prospectus and, therefore, legally forms a part of this
Prospectus.

SHAREHOLDER REPORTS

The Fund publishes annual and semi-annual reports containing financial
statements, and quarterly reports. These reports contain additional information
about each Portfolio's investments. In the Fund's shareholder reports, you will
find a discussion of the market conditions and the investment strategies that
significantly affected each Portfolio's performance during that period.

For additional Fund information, including information regarding the investments
comprising the Fund's Portfolios, please call 1-800-548-7786 or visit the MSDW
Investment Management web site at www. .

You may obtain the SAI and shareholder reports without charge by contacting the
Fund at the toll-free number above. If you purchased shares through a Financial
Intermediary, you may also obtain these documents, without charge, by contacting
your Financial Intermediary.

Information about the Fund, including the SAI, and the annual and semi-annual
reports, may be obtained from the Securities and Exchange Commission in any of
the following ways: (1) In person: you may review and copy documents in the
Commission's Public Reference Room in Washington D.C. (for information call
1-800-SEC-0330); (2) On-line: you may retrieve information from the Commission's
web site at "http://www.sec.gov"; or (3) By mail: you may request documents,
upon payment of a duplicating fee, by writing to Securities and Exchange
Commission, Public Reference Section, Washington, D.C. 20549-6009. To aid you in
obtaining this information, the Fund's Investment Company Act registration
number is 811-05624.

[LOGO] MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
P.O. Box 2798
Boston, Massachusetts 02208-2798

FOR INFORMATION CALL 1-800-548-7786

<PAGE>

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

PROSPECTUS JANUARY , 1999
- -------------------------------------------------------------------------------

PORTFOLIOS OF MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.

FIXED INCOME PORTFOLIO

THE FIXED INCOME PORTFOLIO SEEKS TO PRODUCE A HIGH TOTAL RETURN CONSISTENT WITH
THE PRESERVATION OF CAPITAL BY INVESTING PRIMARILY IN A DIVERSIFIED PORTFOLIO OF
FIXED INCOME SECURITIES.

MUNICIPAL BOND PORTFOLIO

THE MUNICIPAL BOND PORTFOLIO SEEKS TO PRODUCE A HIGH LEVEL OF CURRENT INCOME
CONSISTENT WITH PRESERVATION OF PRINCIPAL BY INVESTING PRIMARILY IN MUNICIPAL
OBLIGATIONS, THE INTEREST ON WHICH IS EXEMPT FROM FEDERAL INCOME TAX.

MORTGAGE-BACKED SECURITIES PORTFOLIO

THE MORTGAGE-BACKED SECURITIES PORTFOLIO SEEKS TO PRODUCE AS HIGH A LEVEL OF
CURRENT INCOME CONSISTENT WITH THE PRESERVATION OF CAPITAL BY INVESTING
PRIMARILY IN A VARIETY OF INVESTMENT GRADE MORTGAGE-BACKED SECURITIES.

MONEY MARKET PORTFOLIO
THE MONEY MARKET PORTFOLIO SEEKS TO MAXIMIZE CURRENT INCOME AND PRESERVE CAPITAL
WHILE MAINTAINING HIGH LEVELS OF LIQUIDITY THROUGH INVESTING IN HIGH QUALITY
MONEY MARKET INSTRUMENTS WITH REMAINING MATURITIES OF 397 DAYS OR LESS.

MUNICIPAL MONEY MARKET PORTFOLIO
THE MUNICIPAL MONEY MARKET PORTFOLIO SEEKS TO MAXIMIZE CURRENT TAX-EXEMPT INCOME
AND PRESERVE CAPITAL WHILE MAINTAINING HIGH LEVELS OF LIQUIDITY THROUGH
INVESTING IN HIGH QUALITY MONEY MARKET INSTRUMENTS WITH REMAINING MATURITIES OF
397 DAYS OR LESS WHICH ARE EXEMPT FROM FEDERAL INCOME TAX.

INVESTMENT ADVISER
Morgan Stanley Dean Witter Investment Management Inc.
DISTRIBUTOR
Morgan Stanley & Co. Incorporated

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC. (THE "FUND") IS A NO-LOAD
MUTUAL FUND THAT IS DESIGNED TO MEET THE INVESTMENT NEEDS OF DISCERNING
INVESTORS WHO PLACE A PREMIUM ON QUALITY AND PERSONAL SERVICE. THE FUND MAKES
AVAILABLE TO INSTITUTIONAL INVESTORS A SERIES OF PORTFOLIOS WHICH BENEFIT FROM
THE INVESTMENT EXPERTISE AND COMMITMENT TO EXCELLENCE ASSOCIATED WITH MORGAN
STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC. ("MSDW INVESTMENT MANAGEMENT")
AND ITS AFFILIATES. THIS PROSPECTUS OFFERS CLASS A AND CLASS B SHARES OF THE
PORTFOLIOS LISTED ABOVE (EACH A "PORTFOLIO" AND COLLECTIVELY THE "PORTFOLIOS"),
EXCEPT THAT THE MUNICIPAL MONEY MARKET PORTFOLIO OFFERS ONLY CLASS A SHARES.

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>
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
- -------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT SUMMARY
FIXED INCOME PORTFOLIO 1
MUNICIPAL BOND PORTFOLIO 2
MORTGAGE-BACKED SECURITIES PORTFOLIO 3
MONEY MARKET PORTFOLIO 4
MUNICIPAL MONEY MARKET PORTFOLIO 5
ADDITIONAL RISK FACTORS AND INFORMATION 6
PAST PERFORMANCE 8
FEES AND EXPENSES OF THE PORTFOLIOS 9
INVESTMENT ADVISER 10
MANAGEMENT FEES 10
PORTFOLIO MANAGERS 11
DISTRIBUTION OF PORTFOLIO SHARES 12
SHAREHOLDER INFORMATION 12
FINANCIAL HIGHLIGHTS 14
FIXED INCOME PORTFOLIO 15
MUNICIPAL BOND PORTFOLIO 16
MORTGAGE-BACKED SECURITIES PORTFOLIO 17
MONEY MARKET PORTFOLIO 18
MUNICIPAL MONEY MARKET PORTFOLIO 19
ACCOUNT REGISTRATION FORM
[TO BE ATTACHED]
</TABLE>

<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
FIXED INCOME PORTFOLIO
- -------------------------------------------------------------------------------

THE FIXED INCOME PORTFOLIO SEEKS TO PRODUCE A HIGH TOTAL RETURN CONSISTENT WITH
THE PRESERVATION OF CAPITAL BY INVESTING PRIMARILY IN A DIVERSIFIED PORTFOLIO OF
FIXED INCOME SECURITIES.

APPROACH

MSDW Investment Management seeks to preserve capital and produce an attractive
real rate of return by emphasizing investment in intermediate-term fixed income
securities. MSDW Investment Management sets an annual target rate of return at
the beginning of the year and manages the Portfolio by using adjustments to the
Portfolio's average maturity.

PROCESS

MSDW Investment Management's fixed income team analyzes the fixed income market,
including the yield curve, maturity and duration, spreads and the level of
interest rates. Investments in U.S. Government, mortgage-backed and U.S.
corporate securities and form the core of the Portfolio. The Portfolio will
typically invest between 50% and 75% of its total assets in U.S. Government and
mortgage-backed securities. Corporate fixed income securities will be rated at
least investment grade at the time of investment. MSDW Investment Management
usually purchases long-term bonds on a short-term opportunistic basis when
market analysis indicates that they will enhance return without significantly
increasing risk. The Portfolio may invest up to 15% of its assets in fixed
income securities denominated in foreign currencies when MSDW Investment
Management believes that they will add value to the Portfolio.

RISK

Investing in the Fixed Income Portfolio may be appropriate for you if you are
willing to accept the risks and uncertainties of investing in fixed income
securities in the hope of earning an attractive rate of return while generally
preserving capital. Although the Portfolio invests primarily in fixed income
securities that are rated in the two highest rating categories, or believed by
MSDW Investment Management to be of equivalent quality, credit risk and market
risk, particularly changes in interest rates, will still affect the prices of
fixed income securities. To the extent that the Portfolio invests in securities
denominated in a foreign currency, changes in the value of that
country's currency compared to the U.S. dollar will affect the value
of the Portfolio's investments. In addition, at times the Portfolio's
market sector, U.S. fixed income securities, may underperform
relative to other sectors.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C> <C>
COMMENCED OPERATIONS ON MAY 15, 1991
1992 -1.xx%
1993 9.xx%
1994 -3.xx%
1995 19.xx%
1996 4.6x%
1997 10.xx%
1998 xx.xx%
HIGH (QUARTER)
4/95 - 6/95
6.30%
LOW (QUARTER)
1/94 - 3/94
-3.12%
</TABLE>

1
<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
MUNICIPAL BOND PORTFOLIO
- -------------------------------------------------------------------------------

APPROACH

MSDW Investment Management seeks to preserve capital and produce an attractive
real rate of return by emphasizing investment in investment grade (i.e., those
rated in the four highest rating categories or believed to be of equivalent
quality) intermediate- and long-term obligations that pay interest that is
exempt from federal income tax. The investment process is designed to capture
value in the municipal market through credit analysis, recognition of relative
value and trade execution.

PROCESS

MSDW Investment Management assesses the relative yields available on securities
of different maturities and its expectations of future changes in interest
rates. Based on evolving economic and credit market conditions, MSDW Investment
Management adjusts the Portfolio's average maturity, usually in a range between
7 and 10 years. Individual portfolio securities are municipal obligations issued
by various states, territories and possessions of the United States and the
District of Columbia, and their political subdivisions, agencies and
instrumentalities with an emphasis on general obligation and essential purpose
revenue bonds. The Portfolio has a fundamental policy of investing, under normal
circumstances, at least 80% of its assets in municipal obligations rated
investment grade at the time of investment, or futures and options on futures
relating to these municipal obligations. The Portfolio will not invest more than
20% of its assets in municipal obligations that pay interest subject to the
alternative minimum tax. The Portfolio may invest up to 20% of its assets in
cash, cash equivalents, U.S. Government securities and investment grade
corporate fixed income securities. Typically, at least 65% of the Portfolio's
assets will be invested in municipal obligations having an initial maturity of
more than a year.

RISK

Investing in the Municipal Bond Portfolio may be appropriate for you
if you are willing to accept the risks and uncertainties of investing
in municipal fixed income securities. Although the Portfolio's
investments in municipal obligations are rated investment grade, or
of equivalent quality, market risks, particularly changes in interest
rates, will still affect the prices of fixed income securities. In
addition, at times the Portfolio's market sector, municipal bonds,
may underperform relative to other sectors.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C>
COMMENCED OPERATIONS ON JANUARY 18, 1995
1996 4.xx%
1997 7.xx%
1998 xx.xx%
HIGH (QUARTER)
10/95 - 12/95
2.69%
LOW (QUARTER)
1/97 - 3/97
-0.05%
</TABLE>

2
<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES PORTFOLIO
- -------------------------------------------------------------------------------

APPROACH

MSDW Investment Management seeks to preserve capital and produce an attractive
real rate of return by emphasizing investment in high quality (i.e., those rated
in the three highest rating categories or believed to be of equivalent quality)
short- and intermediate-term mortgage-backed securities. The investment process
is designed to achieve an attractive return through gradual shifts in portfolio
maturity.

PROCESS

MSDW Investment Management assesses current and projected market and economic
conditions and, based on its evaluation, sets an annual target rate of return
for the Portfolio. MSDW Investment Management manages the Portfolio primarily
using gradual shifts in maturities to achieve the target rate of return. Short-
and intermediate-term mortgage-backed securities form the core of the Portfolio.
The Portfolio may hold long-term securities (i.e., securities with maturities
over 10 years) when MSDW Investment Management believes that they will enhance
return without significantly increasing risk. Typically, the Portfolio expects
to invest at least 75% of its assets in mortgage-backed securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities or rated in
the highest rating category. However, the Portfolio may invest up to 15% in
mortgage-backed securities rated in the third highest rating category or, if
unrated, believed by MSDW Investment Management to be of equivalent quality.

RISK

Investing in the Mortgage-Backed Securities Portfolio may be appropriate for you
if you are willing to accept the risks and uncertainties of investing in fixed
income securities, and mortgage-backed securities in particular. Although most
of the Portfolio's investments are issued or guaranteed by the U.S. Government
or its instrumentalities or rated in the top three rating categories, or of
equivalent quality, market risks, particularly changes in interest rates, will
still affect the prices of fixed income securities. Moreover, mortgage-backed
securities are subject to prepayment risk. In addition, at times the Portfolio's
market sector, mortgage-backed securities, may underperform relative to other
sectors.

A BAR CHART SHOWING THE PERFORMANCE OF THE PORTFOLIO IS NOT PROVIDED BECAUSE, AS
OF DECEMBER 31, 1998, THE MORTGAGE-BACKED SECURITIES PORTFOLIO HAD NOT COMMENCED
OPERATIONS.

3
<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- -------------------------------------------------------------------------------

THE MONEY MARKET PORTFOLIO SEEKS TO MAXIMIZE CURRENT INCOME AND PRESERVE CAPITAL
WHILE MAINTAINING HIGH LEVELS OF LIQUIDITY THROUGH INVESTING IN HIGH QUALITY
MONEY MARKET INSTRUMENTS WITH REMAINING MATURITIES OF 397 DAYS OR LESS.

APPROACH

MSDW Investment Management seeks to maximize current income and preserve capital
while maintaining liquidity by investing in money market instruments and
maintaining a share price of $1.00 per share.

PROCESS

RISK

The Portfolio invests only in money market instruments that MSDW Investment
Management believes present minimal credit risk. However, an investment in the
Portfolio is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Although the Portfolio seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Portfolio.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C> <C>
COMMENCED OPERATIONS ON NOVEMBER 15, 1988
1989 xx.xx%
1990 xx.xx%
1991 xx.xx%
1992 1.xx%
1993 2.8x%
1994 3.8x%
1995 5.5x%
1996 5.xx%
1997 5.2x%
1998 xx.xx%
HIGH (QUARTER)
4/89 - 6/89
2.34%
LOW (QUARTER)
4/93 - 6/93
0.67%
</TABLE>

4
<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET PORTFOLIO
- -------------------------------------------------------------------------------

THE MUNICIPAL MONEY MARKET PORTFOLIO SEEKS TO MAXIMIZE CURRENT TAX-EXEMPT INCOME
AND PRESERVE CAPITAL WHILE MAINTAINING HIGH LEVELS OF LIQUIDITY THROUGH
INVESTING IN HIGH QUALITY MONEY MARKET INSTRUMENTS WITH REMAINING MATURITIES OF
397 DAYS OR LESS WHICH ARE EXEMPT FROM FEDERAL INCOME TAX.

APPROACH

MSDW Investment Management seeks to maximize current income and preserve capital
while maintaining liquidity by investing in money market instruments that pay
interest that is exempt from federal taxation and maintaining a share price of
$1.00 per share.

PROCESS

MSDW Investment Management assesses current and projected market and economic
conditions, particularly interest rates. Based on this analysis, MSDW Investment
Management uses gradual shifts in average maturity to manage the Portfolio
conservatively. MSDW Investment Management selects particular municipal money
market securities that it believes offer the most attractive risk/return
trade-off. Individual portfolio securities are money market obligations issued
by various states, territories and possessions of the United States and the
District of Columbia, and their political subdivisions, agencies and
instrumentalities. Typically, the Portfolio will invest at least 80% of its
assets in tax-exempt municipal obligations. The Portfolio will not invest in
municipal obligations that pay interest subject to the alternative minimum tax.

RISK

The Portfolio invests only in municipal money market instruments that MSDW
Investment Management believes present minimal credit risk. However, an
investment in the Portfolio is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Portfolio
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Portfolio.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C> <C>
COMMENCED OPERATIONS ON FEBRUARY 10, 1989
1990 xx.xx%
1991 xx.xx%
1992 1.xx%
1993 1.9x%
1994 2.4x%
1995 3.4x%
1996 3.0x%
1997 3.2x%
1998 xx.xx%
HIGH (QUARTER)
10/89 - 12/89
1.52%
LOW (QUARTER)
1/94 - 3/94
0.46%
</TABLE>

5
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL RISK FACTORS AND INFORMATION
- -------------------------------------------------------------------------------

PRICE VOLATILITY

The value of your investment in the Fixed Income, Municipal Bond and
Mortgage-Backed Securities Portfolios is based on the market prices of the
securities the Portfolio holds. These prices change daily due to economic and
other events that affect markets generally, as well as those that affect
particular industries and companies. These price movements, sometimes called
volatility, may be greater or lesser depending on the types of securities the
Portfolio owns and the markets in which the securities trade. Fixed income
securities, regardless of credit quality, experience price volatility,
especially in response to interest rate changes. As a result of price
volatility, there is a risk that you may lose money by investing in any of these
Portfolios.

FIXED INCOME SECURITIES

Investments in fixed income securities are subject to credit risk and market
risk. Credit risk is the possibility that an issuer may be unable to meet its
scheduled principal and interest payments. Market risk is the possibility that a
change in interest rates or the market's perception of an issuer's prospects may
adversely affect the value of a fixed income security. Generally, fixed income
securities decrease in value as interest rates rise and vice versa. Prices of
longer term securities also are generally more volatile, so the average maturity
of portfolio securities affects risk.

MORTGAGE-BACKED SECURITIES

Mortgage-backed securities are fixed-income securities representing an interest
in a pool of underlying mortgage loans. They are sensitive to changes in
interest rates, but may respond to these changes differently from other fixed
income securities due to the possibility of prepayment of the underlying
mortgage loans. As a result, it may not be possible to determine in advance the
actual maturity date or average life of a mortgage-backed security. Rising
interest rates tend to discourage refinancings, with the result that the average
life and volatility of the security will increase and its market price will
decrease. When interest rates fall, however, mortgage-backed securities may not
gain as much in market value because additional mortgage prepayments must be
reinvested at lower interest rates. Prepayment risk may make it difficult to
calculate the average maturity of a portfolio of mortgage-backed securities and,
therefore, to assess the volatility risk of that portfolio.

DERIVATIVES

Each Portfolio, except the Money Market and Municipal Money Market Portfolios,
may use various instruments that derive their values from those of specified
securities, indices, currencies or other points of reference for both hedging
and non-hedging purposes. Derivatives include futures, options, forward
contracts, swaps, and structured notes. These derivatives, including those used
to manage risk, are themselves subject to risks of the different markets in
which they trade and, therefore, may not serve their intended purposes.

6
<PAGE>

the Portfolio to lose flexibility in managing its investments properly,
responding to shareholder redemption requests, or meeting other obligations. If
the Portfolio is in that position, it could be forced to sell other securities
that it wanted to retain.

BANK INVESTORS

An investment in a Portfolio is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.

YEAR 2000 RISK

TEMPORARY DEFENSIVE
INVESTMENTS

PORTFOLIO TURNOVER

7
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE
- -------------------------------------------------------------------------------

These tables compare the performance of each Portfolio, except the Money Market
and Municipal Money Market Portfolios, to an index of similar securities. An
index is a hypothetical measure of performance based on the ups and downs of
securities that make up a particular market. The index does not show actual
investment returns or reflect payment of management or brokerage fees, which
would lower the index's performance. The tables separately compare Class A and
Class B shares to the index so that you can compare performance for each class
from its commencement date. The index itself does not actually have two classes.

AVERAGE ANNUAL TOTAL RETURN (FOR THE YEAR ENDED DECEMBER 31, 1998)

<TABLE>
<CAPTION>
FIXED INCOME PORTFOLIO
CLASS A CLASS B LEHMAN AGGREGATE
(COMMENCED OPERATIONS (COMMENCED OPERATIONS BOND INDEX
ON MAY 15, 1991) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- ------------------------------------------------------------------------------------------------------
PAST FIVE YEARS % %
- ------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

THE LEHMAN AGGREGATE BOND INDEX IS AN UNMANAGED INDEX COMPRISED OF THE
GOVERNMENT/CORPORATE INDEX, THE MORTGAGE-BACKED SECURITIES INDEX AND THE
ASSET-BACKED SECURITIES INDEX.

<TABLE>
<CAPTION>
MUNICIPAL BOND PORTFOLIO LEHMAN 7-YEAR
CLASS A CLASS B* MUNICIPAL
(COMMENCED OPERATIONS (COMMENCED OPERATIONS BOND INDEX
ON JANUARY 18, 1995) ON JANUARY 2, 1996) CLASS A CLASS B*
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
PAST ONE YEAR % -- % --
- -------------------------------------------------------------------------------------------------------
PAST FIVE YEARS -- --
- -------------------------------------------------------------------------------------------------------
SINCE INCEPTION % -- % --
</TABLE>

THE LEHMAN 7-YEAR MUNICIPAL BOND INDEX CONSISTS OF INVESTMENT GRADE BONDS WITH
MATURITIES BETWEEN 6-8 YEARS, RATED BAA OR BETTER. ALL BONDS HAVE BEEN TAKEN
FROM ISSUES OF AT LEAST $50 MILLION IN SIZE SOLD WITHIN THE LAST FIVE YEARS.

*NO PAST PERFORMANCE INFORMATION IS PROVIDED FOR CLASS B SHARES BECAUSE THERE
CURRENTLY ARE NO CLASS B SHAREHOLDERS.

<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS
ON NOVEMBER 15, 1988) ON )
<S> <C> <C>
- -------------------------------------------------------------------------------------------
PAST ONE YEAR % %
- -------------------------------------------------------------------------------------------
PAST FIVE YEARS % %
- -------------------------------------------------------------------------------------------
SINCE INCEPTION % %
</TABLE>

<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET PORTFOLIO
CLASS A
(COMMENCED OPERATIONS
ON FEBRUARY 10, 1989)
<S> <C>
- -------------------------------------------------------------------------------------------------
PAST ONE YEAR %
- -------------------------------------------------------------------------------------------------
PAST FIVE YEARS %
- -------------------------------------------------------------------------------------------------
SINCE INCEPTION %
</TABLE>

YOU MAY OBTAIN THE CURRENT 7-DAY YIELD OF THE MONEY MARKET AND MUNICIPAL MONEY
MARKET PORTFOLIOS BY CALLING 1-800-548-7786. NO INFORMATION IS PROVIDED FOR THE
MORTGAGE-BACKED SECURITIES PORTFOLIO, BECAUSE IT HAS NOT COMMENCED OPERATIONS.

1998 ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)

<TABLE>
<CAPTION>
MORTGAGE- BACKED MUNICIPAL
FIXED INCOME MUNICIPAL BOND SECURITIES MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO++ PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------
MANAGEMENT FEES
- ------------------------------------------------------------------------------------------------------------------------
CLASS A 0.35% 0.35% 0.35% 0.30% 0.30%
- ------------------------------------------------------------------------------------------------------------------------
CLASS B 0.35% 0.35% 0.35% 0.30% N/A

12B-1 FEE
- ------------------------------------------------------------------------------------------------------------------------
CLASS A NONE NONE NONE NONE NONE
- ------------------------------------------------------------------------------------------------------------------------
CLASS B 0.25%+ 0.25% 0.25% 0.25% N/A

OTHER EXPENSES
- ------------------------------------------------------------------------------------------------------------------------
CLASS A --% --% --% --% --%
- ------------------------------------------------------------------------------------------------------------------------
CLASS B --% --% --% --% N/A

TOTAL ANNUAL FUND OPERATING EXPENSES
- ------------------------------------------------------------------------------------------------------------------------
CLASS A --% --% --% --% --%
- ------------------------------------------------------------------------------------------------------------------------
CLASS B --% --% --% --% N/A
+THE ACTUAL 12B-1 FEE PAID BY THE PORTFOLIO FOR THE LAST FISCAL YEAR WAS 0.15% BECAUSE MORGAN STANLEY HAS AGREED TO
WAIVE 0.10% OF THE 0.25% DISTRIBUTION FEE IT IS ENTITLED TO RECEIVE.

++ESTIMATED.
</TABLE>

MAXIMUM EXPENSES AFTER FEE WAIVERS/EXPENSE REIMBURSEMENTS

<TABLE>
<CAPTION>
MORTGAGE- MUNICIPAL
FIXED MUNICIPAL BACKED MONEY MONEY
INCOME BOND SECURITIES MARKET MARKET
PORTFOLIO PORTFOLIO PORTFOLIO+ PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C>
CLASS A 0.45% 0.45% 0.45% 0.49% 0.50%
- -------------------------------------------------------------------------------------------
CLASS B 0.60% 0.70% 0.70% 0.74% N/A
</TABLE>

+ESTIMATED.

FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS ARE VOLUNTARY AND MSDW INVESTMENT
MANAGEMENT RESERVES THE RIGHT TO TERMINATE ANY WAIVER AND/OR REIMBURSEMENT AT
ANY TIME AND WITHOUT NOTICE.

9
<PAGE>
EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN EACH
PORTFOLIO WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS HAVING SIMILAR
INVESTMENT OBJECTIVES.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
FIXED INCOME PORTFOLIO
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

MUNICIPAL BOND PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

MORTGAGE-BACKED SECURITIES PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

MONEY MARKET PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

MUNICIPAL MONEY MARKET PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------
INVESTMENT ADVISER
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
MANAGEMENT FEES
- -------------------------------------------------------------------------------

For the year ended December 31, 1998, MSDW Investment Management received from
each Portfolio the management fee set forth in the table below:

<TABLE>
<CAPTION>
FIXED INCOME MUNICIPAL BOND MORTGAGE- BACKED MONEY MARKET MUNICIPAL MONEY
PORTFOLIO SECURITIES MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MANAGEMENT FEE CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
-------------------------------------------------------------------------------------------------
PAID IN FISCAL YEAR
ENDED DECEMBER 31, 1998 0.20% 0.20% 0.12% 0.12% 0.20% 0.20% 0.30% 0.30% 0.30% N/A
(NET OF WAIVER AND AS A
PERCENTAGE OF AVERAGE
NET ASSETS)
</TABLE>

10
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
- -------------------------------------------------------------------------------

THE FOLLOWING INDIVIDUALS HAVE PRIMARY PORTFOLIO MANAGEMENT RESPONSIBILITY FOR
THE PORTFOLIOS:

FIXED INCOME PORTFOLIO
WARREN ACKERMAN, III

Warren Ackerman is a Principal of MSDW Investment Management and Morgan Stanley.
Prior to joining MSDW Investment Management in December 1993, Mr. Ackerman spent
over 14 years with Bankers Trust Company as a Managing Director responsible for
institutional active fixed income management. Mr. Ackerman is a graduate of
Monmouth College with a B.S. in Economics. Mr. Ackerman has had primary
responsibility for managing the Portfolio's assets since March 1994.

MUNICIPAL BOND PORTFOLIO
LORI A. COHANE

Lori A. Cohane is a Principal of MSDW Investment Management and Morgan Stanley.
Prior to joining MSDW Investment Management in 1994, Ms. Cohane spent eight
years with Salomon Brothers Asset Management as a Vice President, Portfolio
Manager and Senior Credit Analyst of municipal bond accounts, managing
portfolios for high net worth individuals, open- and closed-end bond funds and
institutional accounts. Ms. Cohane is a MAGNA CUM LAUDE graduate of the State
University of New York at Albany with a B.S. degree in Finance and Economics.
Ms. Cohane has had primary responsibility for managing the Portfolio's assets
since its inception.

MORTGAGE-BACKED SECURITIES PORTFOLIO
WARREN ACKERMAN, III

Information about Mr. Ackerman is included under Fixed Income Portfolio above.

MONEY MARKET PORTFOLIO
ABIGAIL JONES FEDER AND DANIEL M. NILAND

Abigail Jones Feder is a Principal of MSDW Investment Management and Morgan
Stanley and shares responsibility for managing short-term taxable and tax-exempt
portfolios. Ms. Feder joined Morgan Stanley's Corporate Finance Department in
1985. In 1987 she joined MSDW Investment Management as a Marketing Analyst and
was promoted to Marketing Director in 1988. She joined the Fixed Income Group as
a Portfolio Manager in 1989. Ms. Feder holds a B.A. from Vassar College. Ms.
Feder has had primary responsibility for managing the Portfolio's assets since
its inception. Daniel M. Niland joined MSDW Investment Management in July 1997
as a Vice President and shares responsibility for managing short-term taxable
portfolios. Prior to joining MSDW Investment Management, Mr. Niland managed
liquidity and short duration fixed income portfolios for institutional and
private accounts at Citibank Global Asset Management from 1996 to 1997. Before
joining Citibank, Mr. Niland worked at J.P. Morgan from 1991 to 1996 as a
portfolio manager investing $20 billion in short-term securities for that firm's
securities lending program. Mr. Niland holds a B.A. from Iona College and an
M.B.A. from Fordham University. Mr. Niland has shared primary responsibility for
managing the Portfolio's assets since July 1997.

MUNICIPAL MONEY MARKET PORTFOLIO
ABIGAIL JONES FEDER
Information about Ms. Feder is included under the Money Market Portfolio above.
Ms. Feder has had primary responsibility for managing the Portfolio's assets
since its inception.

11
<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTION OF PORTFOLIO SHARES
- -------------------------------------------------------------------------------

Morgan Stanley is the exclusive Distributor of Class A shares and Class B shares
of each Portfolio. Morgan Stanley receives no compensation for distributing
Class A shares of the Portfolios. The Fund has adopted a Plan of Distribution
with respect to the Class B shares of each Portfolio pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, (the "Plan"). Under the
Plan, each Portfolio pays the Distributor a distribution fee of 0.25% of the
Class B shares' average daily net assets on an annualized basis. Morgan Stanley
has agreed to waive 0.10% of the 0.25% distribution fee it is entitled to
receive from the Fixed Income Portfolio. The distribution fee compensates the
Distributor for marketing and selling Class B shares. The Distributor may pay
others for providing distribution-related and other services, including account
maintenance services. Over time the distribution fees will increase the cost of
your investment and may cost you more than paying other types of sales charges.

- -------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------

ABOUT NET ASSET VALUE

In calculating net asset value, the Fixed Income, Municipal Bond and
Mortgage-Backed Securities Portfolios generally value securities at market
price. If market prices are unavailable or may be unreliable because of events
occurring after the close of trading, fair value prices may be determined in
good faith using methods approved by the Board of Directors. The Portfolios may
hold portfolio securities that are listed on foreign exchanges. These securities
may trade on weekends or other days when the Portfolios do not calculate NAV. As
a result, the value of these investments may change on days when you cannot
purchase or sell shares.

The Money Market and Municipal Money Market Portfolios seek to maintain a stable
net asset value per share of $1.00 by valuing portfolio securities using
"amortized cost." Amortized cost involves valuing a portfolio security at cost
and, thereafter, assuming a constant amortization to maturity of any discount or
premium. This method of valuation does not take into account any unrealized
gains or losses or the impact of fluctuating interest rates on the market value
of portfolio securities. While using amortized cost provides certainty in
valuation, it may result in periods during which the value as determined by
amortized cost is higher or lower than the price the Portfolio would receive if
it sold the security.

PRICING OF PORTFOLIO SHARES

You may buy or sell (redeem) Class A and Class B shares of each Portfolio at the
net asset value next determined for the class after receipt of your order. The
Fund determines net asset value for the Fixed Income, Municipal Bond and
Mortgage-Backed Securities Portfolios as of the close of the NYSE (normally 4:00
p.m. Eastern Time) and for the Money Market and Municipal Money Market
Portfolios as of 12:00 noon Eastern Time and 11:00 a.m. Eastern Time,
respectively, on each day that the NYSE is open for business (the "Pricing
Time").

HOW TO PURCHASE SHARES

You may purchase Class A shares and Class B shares of each Portfolio directly
from the Fund, from the Distributor or through certain third parties ("Financial
Intermediaries"). [You may purchase Class B shares of the Money Market Portfolio
only through a Financial Intermediary. You may purchase shares of the
Portfolios, except the Money Market and Municipal Money Market Portfolios, on
each day that the NYSE is open. However, on days that the NYSE is open but banks
are closed the Portfolios will accept purchases only by check.] The Money Market
and Municipal Money Market Portfolios are closed on any day that banks are
closed, but will continue to price shares. The minimum initial investment
generally is $500,000 for Class A shares and $100,000 for Class B shares of the
Fixed Income, Municipal Bond and Mortgage-Backed Securities Portfolios and
$100,000 for Class A shares of the Money Market and Municipal Money Market
Portfolios. There is no minimum initial investment for Class B shares of the
Money Market Portfolio.

12
<PAGE>

subject to involuntary conversion from Class A shares to Class B shares or
involuntary redemption in the case of Class B shares if the value of your
account remains below the minimum initial investment amount for 60 consecutive
days. MSDW Investment Management may waive the minimum initial investment and
involuntary conversion or redemption features for certain investors, including
individuals purchasing through a Financial Intermediary.

HOW TO REDEEM SHARES

You may redeem Portfolio shares directly from the Fund, through the Distributor
or through your Financial Intermediary, each as described above under Purchase
of Shares. The redemption price will be the net asset value per share calculated
at the next Pricing Time, which may be more or less than the purchase price of
your shares. The Fund will ordinarily distribute redemption proceeds in cash
within one business day of your redemption request, but it may take up to seven
business days. However, if you purchased shares by check, the Fund will not
distribute redemption proceeds until it has collected your purchase payment,
which may take up to eight days. The Portfolios, except the Money Market and
Municipal Money Market Portfolios, will honor redemptions but pay them on the
following day on days that the NYSE is open but the banks are closed. The Money
Market and Municipal Money Market Portfolios are closed, but will continue to
price shares, on any day that banks are closed. In certain circumstances, for
example, if payment of redemption proceeds in cash would be detrimental to the
remaining shareholders, a Portfolio may pay redemption proceeds by a
distribution-in-kind of readily marketable portfolio securities.

EXCHANGE FEATURES

*PORTFOLIO IS CURRENTLY CLOSED TO NEW INVESTORS

+PORTFOLIO HAS NOT YET COMMENCED OPERATIONS

13
<PAGE>

When you exchange for shares of another portfolio, your transaction will be
treated the same as an initial purchase. You will be subject to the same minimum
initial investment and account size as an initial purchase. Accordingly, you
will not necessarily receive the same class of shares that you tendered for
exchange. Your exchange price will be the price calculated at the next Pricing
Time after the Fund receives your exchange order. Frequent trades in your
account(s) can disrupt management of a Portfolio and raise its expenses.
Therefore, the Fund may bar a shareholder who trades excessively from making
further exchanges or purchases.

DIVIDENDS AND DISTRIBUTIONS

The policy of each of the Fixed Income, Municipal Bond and Mortgage-Backed
Securities Portfolios is to distribute to shareholders substantially all of its
taxable net investment income in the form of a monthly dividend and to
distribute net capital gains on an annual basis.

Each of the Money Market and Municipal Money Market Portfolios computes net
investment income and declares a dividend as of 1:00 p.m. Eastern Time on each
day. These dividends accrue daily and are distributed on the 15th day of each
month, or the next business day if the 15th is a holiday or weekend. The Money
Market and Municipal Money Market Portfolios will distribute capital gains, if
any, at least annually.

TAXES

The Municipal Bond and Municipal Money Market Portfolios generally distribute
income that is exempt from federal taxation, however, these Portfolios may
invest in securities that generate taxable income. Income exempt from federal
tax may be subject to state and local taxes.

- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

14
<PAGE>
- ----------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
FIXED INCOME PORTFOLIO
- -------------------------------------------------------------------------------

15
<PAGE>
- ----------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
MUNICIPAL BOND PORTFOLIO
- -------------------------------------------------------------------------------

16
<PAGE>
- ----------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES PORTFOLIO
- -------------------------------------------------------------------------------

17
<PAGE>
- ----------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- -------------------------------------------------------------------------------

18
<PAGE>
- ----------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET PORTFOLIO
- -------------------------------------------------------------------------------

19
<PAGE>
- -------------------------------------------------------------------------------
WHERE TO FIND ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

SHAREHOLDER REPORTS

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
P.O. Box 2798
Boston, Massachusetts 02208-2798

FOR INFORMATION CALL 1-800-548-7786
<PAGE>

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

PROSPECTUS JANUARY , 1999
- -------------------------------------------------------------------------------

PORTFOLIOS OF [LOGO] MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.

EMERGING MARKETS PORTFOLIO
THE EMERGING MARKETS PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF ISSUERS IN EMERGING MARKET COUNTRIES.

EMERGING MARKETS DEBT PORTFOLIO

THE EMERGING MARKETS DEBT PORTFOLIO SEEKS HIGH TOTAL RETURN BY INVESTING
PRIMARILY IN FIXED INCOME SECURITIES OF GOVERNMENT AND GOVERNMENT-RELATED
ISSUERS AND, TO A LESSER EXTENT, OF CORPORATE ISSUERS IN EMERGING MARKET
COUNTRIES.

LATIN AMERICAN PORTFOLIO
THE LATIN AMERICAN PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF LATIN AMERICAN ISSUERS AND, FROM TIME TO TIME,
FIXED INCOME SECURITIES ISSUED OR GUARANTEED BY LATIN AMERICAN ISSUERS.

INVESTMENT ADVISER

Morgan Stanley Dean Witter Investment Management Inc.

DISTRIBUTOR

Morgan Stanley & Co. Incorporated

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>

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

TABLE OF CONTENTS
- -------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT SUMMARY
EMERGING MARKETS PORTFOLIO 1
EMERGING MARKETS DEBT PORTFOLIO 2
LATIN AMERICAN PORTFOLIO 3
ADDITIONAL RISK FACTORS AND INFORMATION 4
PAST PERFORMANCE 6
FEES AND EXPENSES OF THE PORTFOLIOS 7
INVESTMENT ADVISER 8
MANAGEMENT FEES 8
PORTFOLIO MANAGERS 9
DISTRIBUTION OF PORTFOLIO SHARES 10
SHAREHOLDER INFORMATION 10
FINANCIAL HIGHLIGHTS 12
EMERGING MARKETS PORTFOLIO 13
EMERGING MARKETS DEBT PORTFOLIO 14
LATIN AMERICAN PORTFOLIO 15
ACCOUNT REGISTRATION FORM
[TO BE ATTACHED]
</TABLE>

<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
EMERGING MARKETS PORTFOLIO
- -------------------------------------------------------------------------------

THE EMERGING MARKETS PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF ISSUERS IN EMERGING MARKET COUNTRIES.
APPROACH

MSDW Investment Management seeks to maximize returns and manage the risks of
investing in emerging markets by investing in growth-oriented equity securities
in undervalued markets and, from time to time, in fixed income securities. MSDW
Investment Management's investment approach combines top-down country allocation
with bottom-up stock selection. Investment selection criteria include attractive
growth characteristics, reasonable valuations and managements that focus on
shareholder value.

PROCESS

MSDW Investment Management's global allocation team analyzes the global economic
environment, particularly its impact on emerging markets and allocates the
Portfolio's assets among emerging markets based on relative economic, political
and social fundamentals, stock valuations and investor sentiment. MSDW
Investment Management invests within countries based on the work of country
specialists who conduct extensive fundamental analysis of issuers within these
markets and seek to identify issuers with strong earnings growth prospects. To
manage risk, MSDW Investment Management emphasizes thorough macroeconomic and
fundamental research.

RISK

Investing in the Emerging Markets Portfolio may be appropriate for you if you
are willing to accept the risks and uncertainties of investing in the equity
securities of issuers in emerging markets in the hope of earning superior
returns and diversifying your investment portfolio. In general, prices of equity
securities are more volatile than those of fixed income securities. The prices
of equity securities will rise and fall in response to a number of different
factors. In particular, prices of equity securities will respond to events which
affect entire financial markets or industries (changes in inflation or consumer
demand, for example) and to events that affect particular issuers
(news about the success or failure of a new product, for example). In
addition, at times the Portfolio's market sector, emerging markets
equity securities, may underperform relative to other sectors.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C>
COMMENCED OPERATIONS ON SEPTEMBER 25, 1992
1993 86.xx%
1994 -10.xx%
1995 -13.xx%
1996 -12.xx%
1997 -1.xx%
1998 xx.xx%
HIGH (QUARTER)
10/93 - 12/93
35.26%
LOW (QUARTER)
10/97 - 12/97
-20.42%
</TABLE>

1
<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
EMERGING MARKETS DEBT PORTFOLIO
- -------------------------------------------------------------------------------

MSDW Investment Management seeks high total return by investing in a portfolio
of emerging market debt that offers low correlation to many other asset classes.
Using macroeconomic and fundamental analysis, MSDW Investment Management seeks
to identify developing countries that are undervalued and have attractive or
improving fundamentals. After the country allocation is determined, the sector
and security selection is made within each country.

PROCESS

MSDW Investment Management's global allocation team analyzes the global economic
environment and its impact on emerging markets. MSDW Investment Management
focuses on investing in countries that show signs of positive fundamental
change. This analysis considers the macroeconomic and sociopolitical factors of
a country. This analysis considers macroeconomic factors, such as GDP Growth,
inflation, monetary policy, fiscal policy and interest rates and sociopolitical
factors, such as political risk, leadership, social stability and commitment to
reform. In selecting securities, MSDW Investment Management first examines yield
curves with respect to a country and then considers instrument-specific
criteria, including (i) spread duration; (ii) current yield; (iii) real interest
rates; and (iv) liquidity. The Portfolio's holdings may range in maturity from
overnight to 30 years or more and will not be subject to any minimum credit
rating standard. MSDW Investment Management may, when or if available, use
hedging strategies, including the use of derivatives to protect the Portfolio
from overvalued currencies or to take advantage of undervalued currencies.

RISK

Investing in the Emerging Markets Debt Portfolio may be appropriate for you if
you are willing to accept the risks and uncertainties of investing in
lower-rated and unrated fixed income securities in emerging markets in the hope
of earning superior total return and diversifying your investment portfolio.
Market prices of fixed income securities respond to economic developments as
well as to perceptions of the creditworthiness of individual issuers, including
governments. Generally, fixed income securities decrease in value as interest
rates rise and vice versa. Investing in emerging markets intensifies risk,
because lower quality fixed income securities are more volatile in price. The
Portfolio invests in many fixed income securities that are rated below
"investment grade" or are not rated, but are of equivalent quality. These fixed
income securities are often referred to as "high yield securities" or "junk
bonds". High yield securities range from those for which the prospect
for repayment of principal and interest is predominantly speculative
to those which are currently in default on principal or interest
payments. When the Portfolio invests in high yield securities, it
generally seeks to receive a correspondingly higher return on the
securities it holds to compensate it for the additional credit risk
and market risk it has assumed. Prices of longer term fixed income
securities also are generally more volatile, so the average maturity
of the securities in the Portfolio affects risk. At times the
Portfolio's market sector, emerging markets debt securities, may
underperform relative to other sectors. In addition, the Portfolio
may borrow money for investment purposes. Borrowing for investment
purposes is a speculative activity that creates leverage. Leverage
will magnify the effect of increases and decreases in prices of
portfolio securities.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C>
COMMENCED OPERATIONS ON FEBRUARY 1, 1994
1995 28.xx%
1996 50.xx%
1997 41.xx%
1998 xx.xx%
HIGH (QUARTER)
4/95 - 6/95
29.97%
LOW (QUARTER)
1/95 - 3/95
-14.94%
</TABLE>

2
<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
LATIN AMERICAN PORTFOLIO
- -------------------------------------------------------------------------------

THE LATIN AMERICAN PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF LATIN AMERICAN ISSUERS AND, FROM TIME TO TIME,
FIXED INCOME SECURITIES ISSUED OR GUARANTEED BY LATIN AMERICAN ISSUERS.
APPROACH

MSDW Investment Management seeks to maximize returns and manage the risks of
investing in Latin American markets by investing in growth oriented securities
in undervalued markets. MSDW Investment Management's investment approach
combines top-down country allocation with bottom-up stock selection. Investment
selection criteria include attractive growth characteristics, reasonable
valuations and managements that have strong shareholder value orientation.

PROCESS

MSDW Investment Management's global allocation team analyzes the global economic
environment and its impact on Latin America. MSDW Investment Management
allocates the Portfolio's assets among Latin American countries based on
relative economic, political and social fundamentals, stock valuations and
investor sentiment. MSDW Investment Management invests within countries based on
the work of country specialists who conduct extensive fundamental analysis of
Latin American issuers and seek to identify issuers with strong earnings growth
potential. The Portfolio may concentrate in the Latin American
telecommunications or financial services industries because of the relatively
small number of Latin American issuers and the possibility that one or more
Latin American markets may become dominated by issuers engaged in these
industries.

RISK

Investing in the Latin American Portfolio may be appropriate for you if you are
willing to accept the risks and uncertainties of investing in the equity
securities of issuers in Latin America in the hope of achieving superior returns
and diversifying your investment portfolio. In general, prices of equity
securities are more volatile than those of fixed income securities. The prices
of equity securities will rise and fall in response to a number of different
factors. In particular, prices of equity securities will respond to events which
affect entire financial markets or industries (changes in inflation or consumer
demand, for example) and to events that affect particular issuers
(news about the success or failure of a new product, for example). In
addition, at times the Portfolio's market sector, equity securities
of Latin American issuers, may underperform relative to other
sectors.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C>
COMMENCED OPERATIONS ON JANUARY 18, 1995
1996 49.xx%
1997 41.xx%
1998 xx.xx%
HIGH (QUARTER)
4/97 - 6/97
24.11%
LOW (QUARTER)
10/97 - 12/97
-8.31%
</TABLE>

3
<PAGE>

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

ADDITIONAL RISK FACTORS AND INFORMATION
- -------------------------------------------------------------------------------

PRICE VOLATILITY

The value of your investment in a Portfolio is based on the market prices of the
securities the Portfolio holds. These prices change daily due to economic and
other events that affect markets generally, as well as those that affect
particular companies or governments. These price movements, sometimes called
volatility, may be greater or lesser depending on the types of securities the
Portfolio owns and the markets in which the securities trade. Over time, equity
securities have generally shown superior gains, although they have tended to be
more volatile in the short term. Fixed income securities, regardless of credit
quality, also experience price volatility, especially in response to interest
rate changes. As a result of price volatility, there is a risk that you may lose
money by investing in a Portfolio.

FOREIGN INVESTING

INVESTING IN FOREIGN COUNTRIES, PARTICULARLY EMERGING MARKETS, ENTAILS THE RISK
THAT NEWS AND EVENTS UNIQUE TO A COUNTRY OR REGION WILL AFFECT THOSE MARKETS AND
THEIR ISSUERS. THESE SAME EVENTS WILL NOT NECESSARILY HAVE AN EFFECT ON THE U.S.
ECONOMY OR SIMILAR ISSUERS LOCATED IN THE UNITED STATES. IN ADDITION, A
PORTFOLIO'S INVESTMENTS IN FOREIGN COUNTRIES GENERALLY WILL BE DENOMINATED IN
FOREIGN CURRENCIES. AS A RESULT, CHANGES IN THE VALUE OF A COUNTRY'S CURRENCY
COMPARED TO THE U.S. DOLLAR MAY AFFECT THE VALUE OF A PORTFOLIO'S INVESTMENTS.
THESE CHANGES MAY HAPPEN SEPARATELY FROM AND IN RESPONSE TO EVENTS THAT DO NOT
OTHERWISE AFFECT THE VALUE OF THE SECURITY IN THE ISSUER'S HOME COUNTRY. MSDW
INVESTMENT MANAGEMENT MAY INVEST IN CERTAIN INSTRUMENTS, SUCH AS DERIVATIVES,
AND MAY USE CERTAIN TECHNIQUES, SUCH AS HEDGING, TO MANAGE THESE RISKS. HOWEVER,
MSDW INVESTMENT MANAGEMENT CANNOT GUARANTEE THAT IT WILL BE PRACTICAL TO HEDGE
THESE RISKS IN CERTAIN MARKETS OR UNDER PARTICULAR CONDITIONS OR THAT IT WILL
SUCCEED IN DOING SO. THE RISKS OF INVESTING IN A PORTFOLIO MAY BE INTENSIFIED
BECAUSE THE PORTFOLIOS ARE NON-DIVERSIFIED, WHICH MEANS THAT THEY MAY INVEST IN
SECURITIES OF A LIMITED NUMBER OF ISSUERS. AS A RESULT, THE PERFORMANCE OF A
PARTICULAR INVESTMENT OR A SMALL GROUP OF INVESTMENTS MAY AFFECT THE PORTFOLIOS'
PERFORMANCE MORE THAN IF THE PORTFOLIOS WERE DIVERSIFIED.

EMERGING MARKET RISKS

Emerging market countries are countries that major international financial
institutions, such as the World Bank, generally consider to be less economically
mature than developed nations, such as the United States or most nations in
Western Europe. Emerging market countries can include every nation in the world
except the United States, Canada, Japan, Australia, New Zealand, Singapore and
most countries located in Western Europe. Emerging market countries may be more
likely to experience political turmoil or rapid changes in economic conditions
than more developed countries, and the financial condition of issuers in
emerging market countries may be more precarious than in other countries. These
characteristics result in greater risk of price volatility in emerging market
countries, which may be heightened by currency fluctuations relative to the U.S.
dollar.

DERIVATIVES

4
<PAGE>

BANK INVESTORS

An investment in a Portfolio is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.

YEAR 2000 RISK

In addition, other unaffiliated service providers may be faced with similar
problems. MSDW Investment Management and Morgan Stanley are monitoring their
remedial efforts, but there can be no assurance that they and the services they
provide will not be adversely affected. In addition, it is possible that the
markets for securities in which the Portfolios invest may be detrimentally
affected by computer failures throughout the financial services industry
beginning January 1, 2000. Improperly functioning trading systems may result in
settlement problems and liquidity issues. In addition, corporate and
governmental data processing errors may result in production problems for
individual companies and overall economic uncertainties. Earnings of individual
issuers will be affected by remediation costs, which may be substantial and may
be reported inconsistently in U.S. and foreign financial statements.
Accordingly, the Portfolios' investments may be adversely affected.

TEMPORARY DEFENSIVE
INVESTMENTS

When MSDW Investment Management believes that changes in economic, financial or
political conditions warrant, each Portfolio may invest without limit in certain
short- and medium-term fixed income securities for temporary purposes. If MSDW
Investment Management incorrectly predicts the effects of these changes, such
defensive investments may adversely affect the Portfolios' performance.

PORTFOLIO TURNOVER

5
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE
- -------------------------------------------------------------------------------

These tables compare the performance of each Portfolio to an index of similar
securities. An index is a hypothetical measure of performance based on the ups
and downs of securities that make up a particular market. The index does not
show actual investment returns or reflect payment of management or brokerage
fees, which would lower the index's performance. The tables separately compare
Class A and Class B shares to the index so that you can compare performance for
each class from its commencement date. The index itself does not actually have
two classes.

AVERAGE ANNUAL TOTAL RETURN (FOR THE YEAR ENDED DECEMBER 31, 1998)

<TABLE>
<CAPTION>
EMERGING MARKETS PORTFOLIO
CLASS A CLASS B IFC GLOBAL TOTAL RETURN
(COMMENCED OPERATIONS (COMMENCED OPERATIONS COMPOSITE INDEX
ON SEPTEMBER 25, 1992) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- ----------------------------------------------------------------------------------------------------------------------
PAST FIVE YEARS % %
- ----------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

THE IFC GLOBAL TOTAL RETURN INDEX IS AN UNMANAGED INDEX OF COMMON STOCKS AND
INCLUDES DEVELOPING COUNTRIES IN LATIN AMERICA, EAST AND SOUTH ASIA, EUROPE, THE
MIDDLE EAST AND AFRICA (INCLUDES DIVIDENDS).

<TABLE>
<CAPTION>
EMERGING MARKETS DEBT PORTFOLIO
CLASS A CLASS B J.P. MORGAN EMERGING
(COMMENCED OPERATIONS (COMMENCED OPERATIONS MARKETS BOND PLUS INDEX
ON FEBRUARY 1, 1994) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- ---------------------------------------------------------------------------------------------------------------------
PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

THE J.P. MORGAN EMERGING MARKETS BOND PLUS INDEX IS A MARKET WEIGHTED INDEX
COMPOSED OF BRADY BONDS, OUTSTANDING LOANS AND EUROBONDS, AS WELL AS U.S. DOLLAR
LOCAL MARKET INSTRUMENTS OF ARGENTINA, BRAZIL, BULGARIA, MEXICO, MOROCCO,
RUSSIA, NIGERIA, THE PHILIPPINES, POLAND AND VENEZUELA.

<TABLE>
<CAPTION>
LATIN AMERICAN PORTFOLIO
CLASS A CLASS B MSCI EMERGING MARKETS
(COMMENCED OPERATIONS (COMMENCED OPERATIONS GLOBAL LATIN AMERICA INDEX
ON JANUARY 18, 1995) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- ---------------------------------------------------------------------------------------------------------------------
PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

THE MSCI EMERGING MARKETS GLOBAL LATIN AMERICA INDEX IS A BROAD BASED MARKET CAP
WEIGHTED COMPOSITE INDEX COVERING AT LEAST 60% OF MARKETS IN ARGENTINA, BRAZIL,
CHILE, COLOMBIA, PERU, MEXICO AND VENEZUELA (INCLUDES DIVIDENDS).

6
<PAGE>
- --------------------------------------------------------------------------------
FEES AND EXPENSES OF THE PORTFOLIOS
- -------------------------------------------------------------------------------

1998 ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)

<TABLE>
<CAPTION>
EMERGING MARKETS EMERGING MARKETS LATIN AMERICAN
PORTFOLIO DEBT PORTFOLIO PORTFOLIO
MANAGEMENT FEES
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
CLASS A 1.25% 1.00% 1.10%
- -----------------------------------------------------------------------------------------
CLASS B 1.25% 1.00% 1.10%

12B-1 FEE
- -----------------------------------------------------------------------------------------
CLASS A NONE NONE NONE
- -----------------------------------------------------------------------------------------
CLASS B 0.25% 0.25% 0.25%

OTHER EXPENSES
- -----------------------------------------------------------------------------------------
CLASS A --% --% --%*
- -----------------------------------------------------------------------------------------
CLASS B --% --% --%*

TOTAL ANNUAL FUND OPERATING EXPENSES
- -----------------------------------------------------------------------------------------
CLASS A --% --% --%
- -----------------------------------------------------------------------------------------
CLASS B --% --% --%
</TABLE>

*OTHER EXPENSES FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 WOULD HAVE BEEN
% IF CERTAIN EXPENSES RELATED TO THE PORTFOLIO'S INVESTMENT ACTIVITIES HAD
BEEN INCLUDED.

MAXIMUM EXPENSES AFTER FEE WAIVERS/EXPENSE REIMBURSEMENTS

<TABLE>
<CAPTION>
EMERGING MARKETS EMERGING MARKETS LATIN AMERICAN
PORTFOLIO+ DEBT PORTFOLIO+ PORTFOLIO
CLASS A 1.75% 1.75% 1.70%
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
CLASS B 2.00% 2.00% 1.95%
</TABLE>

FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS ARE VOLUNTARY AND MSDW INVESTMENT
MANAGEMENT RESERVES THE RIGHT TO TERMINATE ANY WAIVER AND/OR REIMBURSEMENT AT
ANY TIME AND WITHOUT NOTICE.

+BECAUSE THE TOTAL ANNUAL OPERATING EXPENSES OF THE EMERGING MARKETS AND
EMERGING MARKETS DEBT PORTFOLIOS DID NOT EXCEED THE MAXIMUM EXPENSE LIMITS,
MSDW INVESTMENT MANAGEMENT DID NOT WAIVE ANY OF ITS ADVISORY FEE FOR THESE
PORTFOLIOS.

7
<PAGE>
EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN EACH
PORTFOLIO WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS HAVING SIMILAR
INVESTMENT OBJECTIVES.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
EMERGING MARKETS PORTFOLIO
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

EMERGING MARKETS DEBT PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

LATIN AMERICAN PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------
INVESTMENT ADVISER
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
MANAGEMENT FEES
- -------------------------------------------------------------------------------

For the year ended December 31, 1998, MSDW Investment Management received from
each Portfolio the management fee set forth in the table below:

<TABLE>
<CAPTION>
EMERGING EMERGING LATIN
MARKETS MARKETS DEBT AMERICAN
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
---------------------------------------------------------
MANAGEMENT FEE PAID IN
FISCAL YEAR ENDED
DECEMBER 31, 1998 1.25% 1.25% 1.00% 1.00% 0.84% 0.84%
(NET OF WAIVERS AND AS A
PERCENTAGE OF AVERAGE
NET ASSETS)
</TABLE>

8
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
- -------------------------------------------------------------------------------

THE FOLLOWING INDIVIDUALS HAVE PRIMARY DAY-TO-DAY PORTFOLIO MANAGEMENT
RESPONSIBILITY FOR THE PORTFOLIOS:

EMERGING MARKETS PORTFOLIO

ROBERT L. MEYER AND ANDY SKOV

Robert L. Meyer joined MSDW Investment Management in 1989 and is a Managing
Director of MSDW Investment Management and Morgan Stanley. He is head of and a
Portfolio Manager of the Emerging Markets Equity Group. He was born in Argentina
and graduated from Yale University with a B.A. in Economics and Political
Science. He received a J.D. from Harvard Law School. In addition, he is also a
Chartered Financial Analyst. Andy Skov joined MSDW Investment Management in
1994. He is a Principal of MSDW Investment Management and Morgan Stanley and
Portfolio Manager of the Emerging Markets Equity Group. Prior to joining MSDW
Investment Management, he worked in the Latin America group at Bankers Trust in
corporate finance, research and sales; two of those years he spent in Argentina.
He graduated from the University of California at Berkeley with a B.A. (PHI BETA
KAPPA) in Political Science and Economic Development. Mr. Meyer has shared
primary responsibility for managing the Portfolio's assets since September 1997.
Mr. Skov has shared primary responsibility for managing the Portfolio's assets
since October 1998.

EMERGING MARKETS DEBT PORTFOLIO
THOMAS L. BENNETT, STEPHEN F. ESSER AND ABIGAIL L. MCKENNA

Thomas L. Bennett, a Managing Director of Morgan Stanley, joined MSDW Investment
Management in 1996 and has been a portfolio manager with MSDW Investment
Management's affiliate, Miller Anderson & Sherrerd, LLP ("MAS") since 1984. Mr.
Bennett is the Chairman of MAS Funds and has a B.S. in Chemistry and an M.B.A.
from the University of Cincinnati. Stephen F. Esser, a Managing Director of
Morgan Stanley, joined MSDW Investment Management in 1996 and has been a
portfolio manager with MAS since 1988. Mr. Esser is a member of the New York
Society of Security Analysts and has a B.S. degree (SUMMA CUM LAUDE; PHI BETA
KAPPA) from the University of Delaware. Abigail L. McKenna joined MSDW
Investment Management and is a Principal of MSDW Investment Management and
Morgan Stanley. Ms. McKenna focuses primarily on the trading and management of
the emerging markets debt portfolios. Prior to joining MSDW Investment
Management, she was a Senior Portfolio Manager at MIMCO from 1995 to 1996 and a
Limited Partner at Weiss Peck & Greer from 1991 to 1995, where she was
responsible for the portfolio management of Corporate Bond Portfolios. Ms.
McKenna holds a B.S. in International Relations from Georgetown University and
is a Chartered Financial Analyst. Thomas L. Bennett, Stephen F. Esser and
Abigail L. McKenna have shared primary responsibility for managing the
Portfolio's assets since October 1998.

LATIN AMERICAN PORTFOLIO

ROBERT L. MEYER, ANDY SKOV AND MICHAEL PERL

Information about Messrs. Meyer and Skov is included under the Emerging Markets
Portfolio above. Michael Perl joined MSDW Investment Management in 1998. He is a
Vice President and Portfolio Manager in the Emerging Markets Equity Group. Prior
to joining MSDW Investment Management, he worked as a Latin American Portfolio
Manager at Bankers Trust Australia from 1992 to 1998. He graduated from the
University of New South Wales with a Bachelor of Commerce (Honors), majoring in
Finance, Accounting and Taxation. Mr. Meyer has had primary responsibility for
managing the Portfolio's assets since inception. Messrs. Skov and Perl have
shared primary responsibility for managing the Portfolio's assets since May 1997
and November 1998, respectively.

9
<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTION OF PORTFOLIO SHARES
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------

ABOUT NET ASSET VALUE

PRICING OF PORTFOLIO SHARES

HOW TO PURCHASE SHARES

You may purchase Class A shares and Class B shares of each Portfolio directly
from the Fund, from the Distributor or through certain third parties ("Financial
Intermediaries"). [You may purchase shares of the Portfolios on each day that
the NYSE is open. However, on days that the NYSE is open but banks are closed
the Portfolios will accept purchases only by check.]

10
<PAGE>

HOW TO REDEEM SHARES

EXCHANGE FEATURES

*PORTFOLIO IS CURRENTLY CLOSED TO NEW INVESTORS

+PORTFOLIO HAS NOT YET COMMENCED OPERATIONS

11
<PAGE>

DIVIDENDS AND DISTRIBUTIONS

Each Portfolio's policy is to distribute to shareholders substantially all of
its taxable net investment income in the form of an annual dividend and to
distribute net capital gains on an annual basis.

TAXES

The dividends and distributions you receive from a Portfolio may be subject to
Federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are ordinary income and capital gains distributions are taxed
based on how long the Portfolio held the assets. A Portfolio may be able to pass
through to you a credit for foreign income taxes it pays. The Fund will tell you
annually how to treat dividends and distributions.

- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

12
<PAGE>
- ----------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
EMERGING MARKETS PORTFOLIO
- -------------------------------------------------------------------------------

13
<PAGE>
- ----------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
EMERGING MARKETS DEBT PORTFOLIO
- -------------------------------------------------------------------------------

14
<PAGE>
- ----------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
LATIN AMERICAN PORTFOLIO
- -------------------------------------------------------------------------------

15
<PAGE>
- -------------------------------------------------------------------------------
WHERE TO FIND ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

SHAREHOLDER REPORTS

[LOGO] MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
P.O. Box 2798
Boston, Massachusetts 02208-2798

FOR INFORMATION CALL 1-800-548-7786
<PAGE>

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

PROSPECTUS JANUARY , 1999
- -------------------------------------------------------------------------------

PORTFOLIOS OF MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.

GLOBAL FIXED INCOME PORTFOLIO

THE GLOBAL FIXED INCOME PORTFOLIO SEEKS TO PRODUCE AN ATTRACTIVE REAL RATE OF
RETURN WHILE PRESERVING CAPITAL BY INVESTING IN PRIMARILY HIGH QUALITY FIXED
INCOME SECURITIES OF ISSUERS THROUGHOUT THE WORLD, INCLUDING U.S. ISSUERS.

HIGH YIELD PORTFOLIO

THE HIGH YIELD PORTFOLIO SEEKS TO MAXIMIZE TOTAL RETURN BY INVESTING PRIMARILY
IN A DIVERSIFIED PORTFOLIO OF HIGH YIELD FIXED INCOME SECURITIES THAT OFFER A
YIELD ABOVE THAT GENERALLY AVAILABLE ON DEBT SECURITIES IN THE FOUR HIGHEST
RATING CATEGORIES OF THE RECOGNIZED RATING SERVICES.

INVESTMENT ADVISER

Morgan Stanley Dean Witter Investment Management Inc.

DISTRIBUTOR

Morgan Stanley & Co. Incorporated

<TABLE>
<S> <C>
INVESTMENT SUMMARY
GLOBAL FIXED INCOME PORTFOLIO 1
HIGH YIELD PORTFOLIO 2
ADDITIONAL RISK FACTORS AND INFORMATION 3
PAST PERFORMANCE 5
FEES AND EXPENSES OF THE PORTFOLIOS 6
INVESTMENT ADVISER 7
MANAGEMENT FEES 7
PORTFOLIO MANAGERS 8
DISTRIBUTION OF PORTFOLIO SHARES 9
SHAREHOLDER INFORMATION 9
FINANCIAL HIGHLIGHTS 11
GLOBAL FIXED INCOME PORTFOLIO 12
HIGH YIELD PORTFOLIO 13
ACCOUNT REGISTRATION FORM
[TO BE ATTACHED]
</TABLE>

<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
GLOBAL FIXED INCOME PORTFOLIO
- -------------------------------------------------------------------------------

THE GLOBAL FIXED INCOME PORTFOLIO SEEKS TO PRODUCE AN ATTRACTIVE REAL RATE OF
RETURN WHILE PRESERVING CAPITAL BY INVESTING PRIMARILY IN HIGH QUALITY FIXED
INCOME SECURITIES OF ISSUERS THROUGHOUT THE WORLD, INCLUDING U.S. ISSUERS.

APPROACH

MSDW Investment Management seeks to produce an attractive return by constructing
a portfolio of fixed income securities from throughout the world. MSDW
Investment Management manages interest rate, country, and currency exposures by
a strategic, value-based approach that favors securities which offer high
interest rates and sizable incremental yield at longer maturities. MSDW
Investment Management seeks to preserve capital by investing in high quality
(i.e., those rated in the three highest rating categories or believed to be of
equivalent quality) fixed income securities. The Portfolio may, however, be
exposed to currency risk with respect to its non-U.S. investments.

PROCESS

MSDW Investment Management asesses real interest rates, inflationary trends and
yield curves in the global fixed income markets and combines this with a
separate currency analysis that focuses on relative interest rate differentials
and economic competitiveness. MSDW Investment Management then seeks to establish
overweight positions in markets that offer the most attractive yield curves and
the highest yields over and above future inflation. The Portfolio generally
invests in fixed income securities having intermediate maturities (remaining
maturities between 3 and 7 years) as a starting point, then shifts to longer
maturities where real yields are attractive and shorter maturities where they
are less attractive. The Portfolio generally emphasizes investment in securities
of U.S. and foreign governments and their agencies and instrumentalities, but
may invest in other fixed income securities rated in the three highest rating
categories of a nationally recognized statistical rating organization or that
MSDW Investment Management believes to be of equivalent quality.

RISK

Investing in the Global Fixed Income Portfolio may be appropriate for you if you
are willing to accept the risks and uncertainties of investing in fixed income
securities of U.S. and foreign issuers, many of which may be denominated in
foreign currencies, in the hope of earning an attractive rate of return. Market
prices of fixed income securities respond to economic developments, especially
changes in interest rates, as well as to perceptions of the
creditworthiness of individual issuers, including governments.
Generally, fixed income securities decrease in value as interest
rates rise and vice versa. Prices of longer term fixed income
securities also are generally more volatile, so the average maturity
of the securities in the Portfolio affects risk. In addition, at
times the Portfolio's market sector, global fixed income securities,
may underperform relative to other sectors.

TO THE EXTENT THAT THE PORTFOLIO INVESTS IN FOREIGN COUNTRIES, THERE
IS THE RISK THAT NEWS AND EVENTS UNIQUE TO A COUNTRY OR REGION WILL
AFFECT THOSE MARKETS AND THEIR ISSUERS. THESE SAME EVENTS WILL NOT
NECESSARILY HAVE AN EFFECT ON THE U.S. ECONOMY OR SIMILAR ISSUERS
LOCATED IN THE UNITED STATES. IN ADDITION, THE PORTFOLIO'S
INVESTMENTS IN FOREIGN COUNTRIES GENERALLY WILL BE DENOMINATED IN
FOREIGN CURRENCIES. AS A RESULT, CHANGES IN THE VALUE OF A COUNTRY'S
CURRENCY COMPARED TO THE U.S. DOLLAR MAY AFFECT THE VALUE OF THE
PORTFOLIO'S INVESTMENTS. THESE CHANGES MAY HAPPEN SEPARATELY FROM AND
IN RESPONSE TO EVENTS THAT DO NOT OTHERWISE AFFECT THE VALUE OF THE
SECURITY IN THE ISSUER'S HOME COUNTRY. MSDW INVESTMENT MANAGEMENT MAY
INVEST IN CERTAIN INSTRUMENTS, SUCH AS DERIVATIVES, AND MAY USE
CERTAIN TECHNIQUES, SUCH AS HEDGING, TO MANAGE THESE RISKS. HOWEVER,
MSDW INVESTMENT MANAGEMENT CANNOT GUARANTEE THAT IT WILL BE PRACTICAL
TO HEDGE THESE RISKS IN CERTAIN MARKETS OR UNDER PARTICULAR
CONDITIONS OR THAT IT WILL SUCCEED IN DOING SO. THE RISKS OF
INVESTING IN THE PORTFOLIO MAY BE INTENSIFIED BECAUSE THE PORTFOLIO
IS NON-DIVERSIFIED, WHICH MEANS THAT IT MAY INVEST IN SECURITIES OF A
LIMITED NUMBER OF ISSUERS. AS A RESULT, THE PERFORMANCE OF A
PARTICULAR INVESTMENT OR A SMALL GROUP OF INVESTMENTS MAY AFFECT THE PORTFOLIO'S
PERFORMANCE MORE THAN IF THE PORTFOLIO WERE DIVERSIFIED.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C> <C>
COMMENCED OPERATIONS ON MAY 1, 1991
1992 xx.xx%
1993 15.34%
1994 -6.08%
1995 19.32%
1996 6.44%
1997 1.50%
1998 xx.xx%
HIGH (QUARTER)
7/91 - 9/91
6.89%
LOW (QUARTER)
1/97 - 3/97
- -3.72%
</TABLE>

1
<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
HIGH YIELD PORTFOLIO
- -------------------------------------------------------------------------------

APPROACH

The Portfolio invests primarily in high yield securities (commonly referred to
as "junk bonds"). The Portfolio also may invest in other fixed income
securities, including U.S. Government securities, mortgage-backed securities,
and investment grade corporate bonds. The Portfolio may also invest in foreign
fixed income securities, including emerging market securities. MSDW Investment
Management will generally use futures, swaps and other derivatives in managing
the Portfolio.

PROCESS

MSDW Investment Management uses equity and fixed income valuation techniques,
together with analyses of economic and industry trends, to determine the
Portfolio's overall structure, sector allocation and desired maturity. MSDW
Investment Management emphasizes securities of companies that have strong
industry positions and favorable outlooks for cash flow and asset values. MSDW
Investment Management conducts a credit analysis for each security considered
for investment to evaluate its attractiveness relative to the level of risk it
presents. The Portfolio maintains a high level of diversification to minimize
its exposure to the risks associated with any particular issuer.

RISK

Investing in the High Yield Portfolio may be appropriate for you if you are
willing to accept the risks and uncertainties of investing in non-investment
grade fixed income securities of U.S. and foreign issuers in the hope of earning
a return that is superior to that available from investment grade fixed income
securities. Market prices of fixed income securities respond to economic
developments, especially changes in interest rates, as well as to perceptions of
the creditworthiness of individual issuers, including governments. Generally,
fixed income securities decrease in value as interest rates rise and vice versa.
The Portfolio invests in fixed income securities that are rated below
"investment grade" or are not rated, but are of equivalent quality. These fixed
income securities are often referred to as "high yield securities" or "junk
bonds." High yield securities range from those for which the prospect for
repayment of principal and interest is predominantly speculative to those which
are currently in default on principal or interest payments. When the Portfolio
invests in high yield securities, it generally seeks to receive a
correspondingly higher return on the securities it holds to compensate it for
the additional credit risk and market risk it has assumed, however, prices of
high yield securities generally are more volatile than prices of
investment grade fixed income securities. Prices of longer term fixed
income securities also are generally more volatile, so the average
maturity of the securities in the Portfolio affects risk. In
addition, at times the Portfolio's market sector, high yield
securities, may underperform relative to other sectors.

TO THE EXTENT THAT THE PORTFOLIO INVESTS IN FOREIGN COUNTRIES,
PARTICULARLY EMERGING MARKETS, THERE IS THE RISK THAT NEWS AND EVENTS
UNIQUE TO A COUNTRY OR REGION WILL AFFECT THOSE MARKETS AND THEIR
ISSUERS. THESE SAME EVENTS WILL NOT NECESSARILY HAVE AN EFFECT ON THE
U.S. ECONOMY OR SIMILAR ISSUERS LOCATED IN THE UNITED STATES. IN
ADDITION, THE PORTFOLIO'S INVESTMENTS IN FOREIGN COUNTRIES GENERALLY
WILL BE DENOMINATED IN FOREIGN CURRENCIES. AS A RESULT, CHANGES IN
THE VALUE OF A COUNTRY'S CURRENCY COMPARED TO THE U.S. DOLLAR MAY
AFFECT THE VALUE OF THE PORTFOLIO'S INVESTMENTS. THESE CHANGES MAY
HAPPEN SEPARATELY FROM AND IN RESPONSE TO EVENTS THAT DO NOT
OTHERWISE AFFECT THE VALUE OF THE SECURITY IN THE ISSUER'S HOME
COUNTRY. MSDW INVESTMENT MANAGEMENT MAY INVEST IN CERTAIN
INSTRUMENTS, SUCH AS DERIVATIVES, AND MAY USE CERTAIN TECHNIQUES,
SUCH AS HEDGING, TO MANAGE THESE RISKS. HOWEVER, MSDW INVESTMENT
MANAGEMENT CANNOT GUARANTEE THAT IT WILL BE PRACTICAL TO HEDGE THESE
RISKS IN CERTAIN MARKETS OR UNDER PARTICULAR CONDITIONS OR THAT IT
WILL SUCCEED IN DOING SO.

EMERGING MARKET COUNTRIES ARE COUNTRIES THAT MAJOR INTERNATIONAL
FINANCIAL INSTITUTIONS, SUCH AS THE WORLD BANK, GENERALLY CONSIDER TO
BE LESS ECONOMICALLY MATURE THAN DEVELOPED NATIONS, SUCH AS THE
UNITED STATES OR MOST NATIONS IN WESTERN EUROPE. EMERGING MARKET
COUNTRIES CAN INCLUDE EVERY NATION IN THE WORLD EXCEPT THE UNITED
STATES, CANADA, JAPAN, AUSTRALIA, NEW ZEALAND, AND MOST COUNTRIES
LOCATED IN WESTERN EUROPE. EMERGING MARKET COUNTRIES MAY BE MORE LIKELY TO
EXPERIENCE POLITICAL TURMOIL OR RAPID CHANGES IN ECONOMIC CONDITIONS THAN MORE
DEVELOPED COUNTRIES, AND THE FINANCIAL CONDITION OF ISSUERS IN EMERGING MARKET
COUNTRIES MAY BE MORE PRECARIOUS THAN IN OTHER COUNTRIES. THESE CHARACTERISTICS
RESULT IN GREATER RISK OF PRICE VOLATILITY IN EMERGING MARKET COUNTRIES, WHICH
MAY BE HEIGHTENED BY CURRENCY FLUCTUATIONS RELATIVE TO THE U.S. DOLLAR.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C> <C>
COMMENCED OPERATIONS ON SEPTEMBER 28, 1992
1993 22.11%
1994 -4.18%
1995 23.35%
1996 15.01%
1997 15.87%
1998 xx.xx%
HIGH (QUARTER)
1/93 - 3/93
7.74%
LOW (QUARTER)
10/94 - 12/94
- -2.23%
</TABLE>

2
<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
ADDITIONAL RISK FACTORS AND INFORMATION
- -------------------------------------------------------------------------------

PRICE VOLATILITY

The value of your investment in a Portfolio is based on the market prices of the
securities the Portfolio holds. These prices change daily due to economic and
other events that affect markets generally, as well as those that affect
particular regions, countries, industries and companies. These price movements,
sometimes called volatility, may be greater or lesser depending on the types of
securities the Portfolio owns and the markets in which the securities trade.
Fixed income securities, regardless of credit quality, experience price
volatility, especially in response to interest rate changes. As a result of
price volatility, there is a risk that you may lose money by investing in a
Portfolio.

DERIVATIVES

BANK INVESTORS

An investment in a Portfolio is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.

YEAR 2000 RISK

3
<PAGE>

providers may be faced with similar problems. MSDW Investment Management and
Morgan Stanley are monitoring their remedial efforts, but there can be no
assurance that they and the services they provide will not be adversely
affected.

TEMPORARY DEFENSIVE
INVESTMENTS

PORTFOLIO TURNOVER

4
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE
- -------------------------------------------------------------------------------

These tables compare the performance of each Portfolio to an index of similar
securities. An index is a hypothetical measure of performance based on the ups
and downs of securities that make up a particular market. The index does not
show actual investment returns or reflect payment of management or brokerage
fees, which would lower the index's performance. The tables separately compare
Class A and Class B shares to the index so that you can compare performance for
each class from its commencement date. The index itself does not actually have
two classes.

AVERAGE ANNUAL TOTAL RETURN (FOR THE YEAR ENDED DECEMBER 31, 1998)

<TABLE>
<CAPTION>
GLOBAL FIXED INCOME
PORTFOLIO
CLASS A CLASS B J.P. MORGAN TRADED
(COMMENCED OPERATIONS (COMMENCED OPERATIONS GLOBAL BOND INDEX
ON MAY 1, 1991) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- --------------------------------------------------------------------------------------------------------
PAST FIVE YEARS % %
- --------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

THE J.P. MORGAN TRADED GLOBAL BOND INDEX IS AN UNMANAGED INDEX OF SECURITIES AND
INCLUDES AUSTRALIA, BELGIUM, CANADA, DENMARK, FRANCE, GERMANY, ITALY, JAPAN, THE
NETHERLANDS, SPAIN, SWEDEN, THE UNITED KINGDOM AND THE UNITED STATES.

<TABLE>
<CAPTION>
HIGH YIELD
PORTFOLIO
CLASS A CLASS B CS FIRST BOSTON
(COMMENCED OPERATIONS (COMMENCED OPERATIONS HIGH YIELD INDEX
ON SEPTEMBER 28, 1992) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- -------------------------------------------------------------------------------------------------------
PAST FIVE YEARS % %
- -------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

THE CS FIRST BOSTON HIGH YIELD INDEX IS AN UNMANAGED INDEX OF HIGH YIELD
CORPORATE BONDS.

5
<PAGE>
- --------------------------------------------------------------------------------
FEES AND EXPENSES OF THE PORTFOLIOS
- -------------------------------------------------------------------------------

1998 ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)

<TABLE>
<CAPTION>
GLOBAL HIGH
FIXED INCOME YIELD
PORTFOLIO PORTFOLIO
<S> <C> <C>
------------------------------
MANAGEMENT FEES
- -----------------------------------------------------------------
CLASS A 0.40% 0.375%
- -----------------------------------------------------------------
CLASS B 0.40% 0.375%

12b-1 FEE
- -----------------------------------------------------------------
CLASS A NONE NONE
- -----------------------------------------------------------------
CLASS B 0.25%+ 0.25%

OTHER EXPENSES
- -----------------------------------------------------------------
CLASS A --% --%
- -----------------------------------------------------------------
CLASS B --% --%

TOTAL ANNUAL FUND OPERATING EXPENSES
- -----------------------------------------------------------------
CLASS A --% --%
- -----------------------------------------------------------------
CLASS B --% --%
</TABLE>

+THE ACTUAL 12b-1 FEE PAID BY THE PORTFOLIO FOR THE LAST FISCAL YEAR WAS 0.15%
BECAUSE MORGAN STANLEY HAS AGREED TO WAIVE 0.10% OF THE 0.25% DISTRIBUTION FEE
IT IS ENTITLED TO RECEIVE.

MAXIMUM EXPENSES AFTER FEE WAIVERS/EXPENSE REIMBURSEMENTS

<TABLE>
<CAPTION>
GLOBAL FIXED INCOME HIGH YIELD
PORTFOLIO PORTFOLIO
<S> <C> <C>
- --------------------------------------------------------------------------
CLASS A 0.50% 0.695%
- --------------------------------------------------------------------------
CLASS B 0.65% 0.925%
</TABLE>

FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS ARE VOLUNTARY AND MSDW INVESTMENT
MANAGEMENT RESERVES THE RIGHT TO TERMINATE ANY WAIVER AND/OR REIMBURSEMENT AT
ANY TIME AND WITHOUT NOTICE.

6
<PAGE>
EXAMPLE
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN EACH
PORTFOLIO WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS HAVING SIMILAR
INVESTMENT OBJECTIVES.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
GLOBAL FIXED INCOME PORTFOLIO
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

HIGH YIELD PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------
INVESTMENT ADVISER
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
MANAGEMENT FEES
- -------------------------------------------------------------------------------

For the year ended December 31, 1998, MSDW Investment Management received from
each Portfolio the management fee set forth in the table below:

<TABLE>
<CAPTION>
GLOBAL HIGH
FIXED INCOME YIELD
PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
-----------------------------------
MANAGEMENT FEE CLASS A CLASS B CLASS A CLASS B
-------------------------------------
PAID IN FISCAL YEAR
ENDED
DECEMBER 31, 1998 0.19% 0.19% 0.375% 0.375%
(NET OF WAIVERS AND AS A
PERCENTAGE OF AVERAGE
NET ASSETS)
</TABLE>

7
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
- -------------------------------------------------------------------------------

THE FOLLOWING INDIVIDUALS HAVE PRIMARY PORTFOLIO MANAGEMENT RESPONSIBILITY FOR
THE PORTFOLIOS:

GLOBAL FIXED INCOME PORTFOLIO

J. DAVID GERMANY, MICHAEL B. KUSHMA, PAUL F. O'BRIEN AND RAM WILLNER

J. David Germany joined MSDW Investment Management in 1996 and is a Managing
Director of Morgan Stanley. He has been a portfolio manager with MSDW Investment
Management's affiliated institutional investment management company, Miller
Anderson & Sherrerd, LLP ("MAS") since 1991. He was Vice President & Senior
Economist for Morgan Stanley from 1989 to 1991. He holds an A.B. degree
(Valedictorian) from Princeton University and a Ph.D. in Economics from the
Massachusetts Institute of Technology. Michael B. Kushma, a Principal of Morgan
Stanley, joined the firm in 1987. He was a member of Morgan Stanley's global
fixed income strategy group in the fixed income division from 1987 to 1995,
where he became the division's senior government bond strategist. He joined MSDW
Investment Management in 1995, where he took responsibility for global fixed
income bond strategy. He advised MAS Funds Global Fixed Income and International
Fixed Income Portfolios in 1996. Mr. Kushma received an A.B. in Economics from
Princeton University in 1979, and an M.Sc. in Economics from Columbia University
in 1983. Paul F. O'Brien joined MSDW Investment Management and MAS in 1996 and
is a Principal of Morgan Stanley. He was head of European Economics from 1993
through 1995 for JP Morgan and a Principal Administrator from 1991 through 1992
for the Organization for Economic Cooperation and Development. Mr. O'Brien holds
a B.S. degree from the Massachusetts Institute of Technology and a Ph.D. in
Economics from the University of Minnesota. Ram Willner, a Principal of Morgan
Stanley, has been a portfolio manager with MAS since April 1998. From 1994 to
1998 he was a Market Strategist/Risk Control Manager and Director of
International Bond Research with Pacific Investment Management Company and from
1992 to 1994 he was a Senior Quantitative Analyst for Sanford C. Bernstein & Co.
Prior to that he was a Vice President of Citibank, NA. Mr. Willner holds a B.A.
from Brandeis University, an M.S.I.A. from Carnegie-Mellon University and a
D.B.A. from Harvard University. J. David Germany, Michael B. Kushma and Paul F.
O'Brien have had primary responsibility for managing the Global Fixed Income
Portfolio since September 1997. Ram Willner has shared primary responsibility
for managing the Global Fixed Income Portfolio since April 1998.

HIGH YIELD PORTFOLIO

ROBERT ANGEVINE, THOMAS L. BENNETT AND STEPHEN F. ESSER

Robert Angevine is a Principal of MSDW Investment Management and Morgan Stanley
and the Portfolio Manager for high yield investments. Prior to joining MSDW
Investment Management in October 1988, he spent over eight years at Prudential
Insurance where he was responsible for one of the largest open-end high yield
mutual funds in the country. Mr. Angevine also manages high yield assets for one
of the largest corporate pension funds in the country. His other experience
includes international treasury operations at a major pharmaceutical company and
commercial banking. Mr. Angevine received an M.B.A. from Fairleigh Dickinson
University and a B.A. in Economics from Lafayette College. He served two years
as a Lieutenant in the U.S. Army. Thomas L. Bennett joined MSDW Investment
Management in 1996, is a Managing Director of Morgan Stanley, and has been a
portfolio manager with MAS since 1984. Mr. Bennett is the Chairman of the MAS
Funds and has a B.S. degree (Chemistry) and an M.B.A. from the University of
Cincinnati. Stephen F. Esser joined MSDW Investment Management in 1996, is a
Managing Director of Morgan Stanley, and has been a portfolio manager with MAS
since 1988. Mr. Esser is a member of the New York Society of Security Analysts
and has a B.S. degree (SUMMA CUM LAUDE; PHI BETA KAPPA) from the University of
Delaware. Mr. Angevine has had primary responsibility for managing the
Portfolio's assets since its inception. Mr. Bennett and Mr. Esser have had
primary responsibility for managing the Portfolio's assets since April 1996.

8
<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTION OF PORTFOLIO SHARES
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------

ABOUT NET ASSET VALUE

PRICING OF PORTFOLIO SHARES

HOW TO PURCHASE SHARES

You may purchase Class A shares and Class B shares of each Portfolio directly
from the Fund, from the Distributor or through certain third parties ("Financial
Intermediaries"). [You may purchase shares of the Portfolios on each day that
the NYSE is open. However, on days that the NYSE is open but banks are closed
the Portfolios will accept purchases only by check.]

To purchase shares through the Distributor or a Financial Intermediary, you
should contact the Distributor or your Financial Intermediary for details.
Generally, the price of shares purchased

9
<PAGE>

through the Distributor or a Financial Intermediary is the price calculated at
the next Pricing Time after the Fund receives your order from the Distributor or
your Financial Intermediary. Certain Financial Intermediaries have made
arrangements with the Fund so that you may purchase shares at the price
calculated at the next Pricing Time after your Financial Intermediary receives
your purchase order. Your Financial Intermediary may charge an additional
service or transaction fee.

HOW TO REDEEM SHARES

EXCHANGE FEATURES

*PORTFOLIO IS CURRENTLY CLOSED TO NEW INVESTORS

+PORTFOLIO HAS NOT YET COMMENCED OPERATIONS

10
<PAGE>

DIVIDENDS AND DISTRIBUTIONS

Each Portfolio's policy is to distribute to shareholders substantially all of
its taxable net investment income in the form of a quarterly dividend and to
distribute net capital gains on an annual basis.

TAXES

The dividends and distributions you receive from a Portfolio may be subject to
Federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are ordinary income and capital gains distributions are taxed
based on how long the Portfolio held the assets. A Portfolio may be able to pass
through to you a credit for foreign income taxes it pays. The Fund will tell you
annually how to treat dividends and distributions.

- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

11
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
GLOBAL FIXED INCOME PORTFOLIO
- -------------------------------------------------------------------------------

12
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
HIGH YIELD PORTFOLIO
- -------------------------------------------------------------------------------

13
<PAGE>
- -------------------------------------------------------------------------------
WHERE TO FIND ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

SHAREHOLDER REPORTS

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
P.O. Box 2798
Boston, Massachusetts 02208-2798

FOR INFORMATION CALL 1-800-548-7786
<PAGE>

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

PROSPECTUS JANUARY , 1999
- -------------------------------------------------------------------------------

PORTFOLIOS OF MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.

GLOBAL EQUITY PORTFOLIO

THE GLOBAL EQUITY PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF ISSUERS THROUGHOUT THE WORLD, INCLUDING U.S.
ISSUERS.

INTERNATIONAL EQUITY PORTFOLIO

THE INTERNATIONAL EQUITY PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY
INVESTING PRIMARILY IN EQUITY SECURITIES OF NON-U.S. ISSUERS.

INTERNATIONAL SMALL CAP PORTFOLIO

THE INTERNATIONAL SMALL CAP PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY
INVESTING PRIMARILY IN EQUITY SECURITIES OF NON-U.S. ISSUERS WITH EQUITY MARKET
CAPITALIZATION OF LESS THAN $1 BILLION.

EUROPEAN EQUITY PORTFOLIO

THE EUROPEAN EQUITY PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF EUROPEAN ISSUERS.

INVESTMENT ADVISER

Morgan Stanley Dean Witter Investment Management Inc.

DISTRIBUTOR

Morgan Stanley & Co. Incorporated

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC. (THE "FUND") IS A NO-LOAD
MUTUAL FUND THAT IS DESIGNED TO MEET THE INVESTMENT NEEDS OF DISCERNING
INVESTORS WHO PLACE A PREMIUM ON QUALITY AND PERSONAL SERVICE. THE FUND MAKES
AVAILABLE TO INSTITUTIONAL INVESTORS A SERIES OF PORTFOLIOS WHICH BENEFIT FROM
THE INVESTMENT EXPERTISE AND COMMITMENT TO EXCELLENCE ASSOCIATED WITH MORGAN
STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC. ("MSDW INVESTMENT MANAGEMENT")
AND ITS AFFILIATES. THIS PROSPECTUS OFFERS CLASS A AND CLASS B SHARES OF THE
PORTFOLIOS LISTED ABOVE (EACH A "PORTFOLIO" AND COLLECTIVELY THE "PORTFOLIOS"),
EXCEPT THAT THE INTERNATIONAL SMALL CAP PORTFOLIO OFFERS ONLY CLASS A SHARES.

<TABLE>
<S> <C>
INVESTMENT SUMMARY
GLOBAL EQUITY PORTFOLIO 1
INTERNATIONAL EQUITY PORTFOLIO 2
INTERNATIONAL SMALL CAP PORTFOLIO 3
EUROPEAN EQUITY PORTFOLIO 4
ADDITIONAL RISK FACTORS AND INFORMATION 5
PAST PERFORMANCE 7
FEES AND EXPENSES OF THE PORTFOLIOS 8
INVESTMENT ADVISER 9
MANAGEMENT FEES 9
PORTFOLIO MANAGERS 10
DISTRIBUTION OF PORTFOLIO SHARES 12
SHAREHOLDER INFORMATION 12
FINANCIAL HIGHLIGHTS 14
GLOBAL EQUITY PORTFOLIO 15
INTERNATIONAL EQUITY PORTFOLIO 16
INTERNATIONAL SMALL CAP PORTFOLIO 17
EUROPEAN EQUITY PORTFOLIO 18
ACCOUNT REGISTRATION FORM
[TO BE ATTACHED]
</TABLE>

<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
GLOBAL EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

THE GLOBAL EQUITY PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF ISSUERS THROUGHOUT THE WORLD, INCLUDING U.S.
ISSUERS.

APPROACH

MSDW Investment Management seeks to maintain a diversified portfolio of global
equity securities based on individual stock selection and emphasizes a bottom-up
approach to investing that seeks to identify securities of undervalued issuers.

PROCESS

MSDW Investment Management selects securities for investment from a universe of
eligible issuers consisting of approximately 3,200 companies in the Morgan
Stanley Capital International (MSCI) World Index. MSDW Investment Management
expects to invest at least 20% of the Portfolio's total assets in the common
stocks of U.S. issuers. MSDW Investment Management initially conducts
quantitative screening designed to identify undervalued issuers, based on
price-to-book value, price-to-cash flow and other value-oriented criteria.
Analysts then conduct fundamental analysis on the 25% of issuers that
quantitative screening indicates are most undervalued. They focus on criteria
such as financial structure, strategic value of assets, franchise, products and
management. In addition, MSDW Investment Management typically visits each
company prior to investing. MSDW Investment Management continually scrutinizes
Portfolio holdings to insure that they remain on its list of the 25% most
undervalued companies in the global equity universe.

RISK

Investing in the Global Equity Portfolio may be appropriate for you if you are
willing to accept the risks and uncertainties of investing in a portfolio of
equity securities of issuers throughout the world. In general, prices of equity
securities are more volatile than those of fixed income securities. The prices
of equity securities will rise and fall in response to a number of different
factors. In particular, prices of equity securities will respond to events that
affect entire financial markets or industries (changes in inflation or consumer
demand, for example) and to events that affect particular issuers
(news about the success or failure of a new product, for example). In
addition, at times the Portfolio's market sector, foreign and
domestic equity securities, may underperform relative to other
sectors.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C> <C>
COMMENCED OPERATIONS ON JULY 15,
1992
1993 44.24%
1994 6.95%
1995 18.66%
1996 22.83%
1997 23.75%
1998 xx.xx%
HIGH (QUARTER)
10/95 - 12/95
17.94%
LOW (QUARTER)
10/94 - 12/94
-3.18%
</TABLE>

1
<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

THE INTERNATIONAL EQUITY PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY
INVESTING PRIMARILY IN EQUITY SECURITIES OF NON-U.S. ISSUERS.

APPROACH

MSDW Investment Management seeks to maintain a diversified portfolio of equity
securities of non-U.S. issuers based on individual stock selection. MSDW
Investment Management emphasizes a bottom-up approach to investing that seeks to
identify securities of undervalued issuers.

PROCESS

MSDW Investment Management screens issuers in a universe comprised of
approximately 1,900 companies in non-U.S. markets. The screening process is
based on a rigorous value-oriented discipline that focuses on price-to-book
value and price-to-cash flow. MSDW Investment Management then conducts
fundamental analysis on the 25% of companies that quantitative screening
indicates are most undervalued. Fundamental analysis focuses on financial
structure, strategic value of assets, franchise, products and management and
analysts typically visit each company prior to investing. The Portfolio
considers selling securities of issuers that fall out of its list of the 25%
most undervalued companies or that its fundamental analysis indicates no longer
meet expectations.

RISK

Investing in the International Equity Portfolio may be appropriate for you if
you are willing to accept the risks and uncertainties of investing in the equity
securities of non-U.S. issuers in the hope of earning superior returns and
diversifying your investment portfolio. In general, prices of equity securities
are more volatile than those of fixed income securities. The prices of equity
securities will rise and fall in response to a number of different factors. In
particular, prices of equity securities will respond to events which affect
entire financial markets or industries (changes in inflation or consumer demand,
for example) and to events that affect particular issuers (news about the
success or failure of a new product, for example). In addition, at times the
Portfolio's market sector, equity securities of foreign issuers, may
underperform relative to other sectors.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C> <C>
COMMENCED OPERATIONS ON AUGUST 4, 1989
1990 xx.xx%
1991 xx.xx%
1992 xx.xx%
1993 46.50%
1994 12.39%
1995 11.77%
1996 19.64%
1997 13.91%
1998 xx.xx%
HIGH (QUARTER)
1/93 - 3/93
13.79%
LOW (QUARTER)
7/90 - 9/90
-18.85%
</TABLE>

2
<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
INTERNATIONAL SMALL CAP PORTFOLIO
- -------------------------------------------------------------------------------

THE INTERNATIONAL SMALL CAP PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY
INVESTING PRIMARILY IN EQUITY SECURITIES OF NON-U.S. ISSUERS WITH EQUITY MARKET
CAPITALIZATIONS OF LESS THAN $1 BILLION.

APPROACH

MSDW Investment Management seeks to maintain a diversified portfolio of equity
securities of small cap non-U.S. issuers based on individual stock selection.
MSDW Investment Management emphasizes a bottom-up approach to investing that
seeks to identify securities of undervalued issuers.

PROCESS

MSDW Investment Management screens issuers in a universe comprised of
approximately 3,000 small cap companies in non-U.S. markets. The screening
process is based on a rigorous value-oriented discipline that focuses on
price-to-book value, price-to-cash flow and price-to-sales per share. MSDW
Investment Management then conducts fundamental analysis on companies that
quantitative screening indicates are most undervalued. Fundamental analysis
focuses on financial structure, strategic value of assets, franchise, product
competitiveness and management. Analysts typically visit each company prior to
investing and maintain regular contact. The Portfolio considers selling
securities of issuers that reach their expected fair value or that fundamental
analysis indicates no longer meet expectations. Under normal circumstances, the
Portfolio will invest a minimum of 80% of its total assets in companies with
market capitalizations of less than $1 billion.

RISK

Investing in the International Small Cap Portfolio may be appropriate for you if
you are willing to accept the risks and uncertainties of investing in the equity
securities of small cap non-U.S. issuers in the hope of earning superior returns
and diversifying your investment portfolio. In general, prices of equity
securities are more volatile than those of fixed income securities. The prices
of equity securities will rise and fall in response to a number of different
factors. In particular, prices of equity securities will respond to events which
affect entire financial markets or industries (changes in inflation or consumer
demand, for example) and to events that affect particular issuers
(news about the success or failure of a new product, for example).

THE RISK OF INVESTING IN EQUITY SECURITIES IS INTENSIFIED IN THE CASE
OF THE SMALL CAP COMPANIES IN WHICH THE PORTFOLIO INVESTS. MARKET
PRICES FOR SUCH COMPANIES' EQUITY SECURITIES TEND TO BE MORE VOLATILE
THAN THOSE OF LARGER, MORE ESTABLISHED COMPANIES. SMALL CAP COMPANIES
MAY THEMSELVES BE MORE VULNERABLE TO ECONOMIC OR COMPANY SPECIFIC
PROBLEMS. IN ADDITION, AT TIMES THE PORTFOLIO'S MARKET SECTOR, EQUITY
SECURITIES OF SMALLER FOREIGN ISSUERS, MAY UNDERPERFORM RELATIVE TO
OTHER SECTORS.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C>
COMMENCED OPERATIONS ON DECEMBER 15, 1992
1993 45.34%
1994 5.25%
1995 2.60%
1996 16.82%
1997 -0.55%
1998 xx.xx%
HIGH (QUARTER)
1/93 - 3/93
17.46%
LOW (QUARTER)
10/97 - 12/97
-5.85%
</TABLE>

3
<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
EUROPEAN EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

THE EUROPEAN EQUITY PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF EUROPEAN ISSUERS.

APPROACH

MSDW Investment Management seeks to maintain a diversified portfolio of equity
securities of European issuers based on individual stock selection. MSDW
Investment Management emphasizes a bottom-up approach to investing that seeks to
identify securities of undervalued European issuers.

PROCESS

MSDW Investment Management screens issuers in a universe of approximately 1,200
companies in the Morgan Stanley Capital International (MSCI) Europe Index. The
screening process is based on a rigorous value-oriented discipline that focuses
on price-to-book value and price-to-cash flow. MSDW Investment Management then
conducts fundamental analysis on the 25% of companies that quantitative
screening indicates are most undervalued. Fundamental analysis focuses on
financial structure, strategic value of assets, franchise, products and
management and analysts typically visit each company prior to investing. The
Portfolio considers selling securities of issuers that fall out of its list of
the 25% most undervalued companies or that fundamental analysis indicates no
longer meet expectations.

RISK

Investing in the European Equity Portfolio may be appropriate for you if you are
willing to accept the risks and uncertainties of investing in the equity
securities of European issuers in the hope of earning superior returns and
diversifying your investment portfolio. In general, prices of equity securities
are more volatile than those of fixed income securities. The prices of equity
securities will rise and fall in response to a number of different factors. In
particular, prices of equity securities will respond to events which affect
entire financial markets or industries (changes in inflation or consumer demand,
for example) and to events that affect particular issuers (news about the
success or failure of a new product, for example). In addition, at
times the Portfolio's market sector, equity securities of European
issuers, may underperform relative to other sectors.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C> <C>
COMMENCED OPERATIONS ON APRIL 2,
1993
1994 10.88%
1995 11.85%
1996 22.29%
1997 17.88%
1998 xx.xx%
HIGH (QUARTER)
7/93 - 9/93
13.62%
LOW (QUARTER)
10/97 - 12/97
-2.92%
</TABLE>

4
<PAGE>

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

ADDITIONAL RISK FACTORS AND INFORMATION
- -------------------------------------------------------------------------------

PRICE VOLATILITY

The value of your investment in a Portfolio is based on the market prices of the
securities the Portfolio holds. These prices change daily due to economic and
other events that affect markets generally, as well as those that affect
particular regions, countries, industries and companies. These price movements,
sometimes called volatility, may be greater or lesser depending on the types of
securities the Portfolio owns and the markets in which the securities trade.
Over time, equity securities have generally shown superior gains, although they
have tended to be more volatile in the short term. Fixed income securities,
regardless of credit quality, also experience price volatility, especially in
response to interest rate changes. As a result of price volatility, there is a
risk that you may lose money by investing in a Portfolio.

FOREIGN INVESTING

Investing in foreign countries entails the risk that news and events unique to a
country or region will affect those markets and their isssuers. These same
events will not necessarily have an effect on the U.S. economy or similar
issuers located in the United States. In addition, a Portfolio's investments in
foreign countries generally will be denominated in foreign currencies. As a
result, changes in the value of a country's currency compared to the U.S. dollar
may affect the value of a Portfolio's investments. These changes may happen
separately from and in response to events that do not otherwise affect the value
of the security in the issuer's home country. MSDW Investment Management may
invest in certain instruments, such as derivatives, and may use certain
techniques, such as hedging, to manage these risks. However, MSDW Investment
Management cannot guarantee that it will be practical to hedge these risks in
certain markets or under particular conditions or that it will succeed in doing
so.

EMERGING MARKET RISKS

The Portfolios may invest in emerging market countries, which are countries that
major international financial institutions, such as the World Bank, generally
consider to be less economically mature than developed nations, such as the
United States or most nations in Western Europe. Emerging market countries can
include every nation in the world except the United States, Canada, Japan,
Australia, New Zealand, and most countries located in Western Europe. Emerging
market countries may be more likely to experience political turmoil or rapid
changes in economic conditions than more developed countries, and the financial
condition of issuers in emerging market countries may be more precarious than in
other countries. These characteristics result in greater risk of price
volatility in emerging market countries, which may be heightened by currency
fluctuations relative to the U.S. dollar.

DERIVATIVES

5
<PAGE>

BANK INVESTORS

An investment in a Portfolio is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.

YEAR 2000 RISK

TEMPORARY DEFENSIVE
INVESTMENTS

PORTFOLIO TURNOVER

6
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE
- -------------------------------------------------------------------------------

These tables compare the performance of each Portfolio to an index of similar
securities. An index is a hypothetical measure of performance based on the ups
and downs of securities that make up a particular market. The index does not
show actual investment returns or reflect payment of management or brokerage
fees, which would lower the index's performance. The tables separately compare
Class A and Class B shares of each Portfolio, except the International Small Cap
Portfolio which only offers Class A shares, to the index so that you can compare
performance for each class from its commencement date. The index itself does not
actually have two classes.

AVERAGE ANNUAL TOTAL RETURN (FOR THE YEAR ENDED DECEMBER 31, 1998)

<TABLE>
<CAPTION>
GLOBAL EQUITY PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS MSCI WORLD INDEX
ON JULY 15, 1992) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- ------------------------------------------------------------------------------------------------------
PAST FIVE YEARS % %
- ------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

THE MSCI WORLD INDEX IS AN UNMANAGED INDEX OF COMMON STOCKS AND INCLUDES
SECURITIES REPRESENTATIVE OF THE MARKET STRUCTURE OF 22 DEVELOPED MARKET
COUNTRIES IN NORTH AMERICA, EUROPE, AND THE ASIA/PACIFIC REGION, INCLUDING
DIVIDENDS.

<TABLE>
<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS MSCI EAFE INDEX
ON AUGUST 4, 1989) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- ------------------------------------------------------------------------------------------------------
PAST FIVE YEARS % %
- ------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

THE MSCI EAFE INDEX IS AN UNMANAGED INDEX OF COMMON STOCKS AND INCLUDES EUROPE,
AUSTRALASIA AND THE FAR EAST, INCLUDING DIVIDENDS NET OF WITHHOLDING TAXES.

<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP PORTFOLIO
CLASS A MSCI EAFE SMALL
(COMMENCED OPERATIONS CAP INDEX
ON DECEMBER 15, 1992) CLASS A
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
PAST ONE YEAR % %
- ----------------------------------------------------------------------------------------------------
PAST FIVE YEARS % %
- ----------------------------------------------------------------------------------------------------
SINCE INCEPTION % %
</TABLE>

THE MSCI EAFE SMALL CAP INDEX IS AN ARITHMETIC, UNMANAGED, MARKET VALUE-WEIGHTED
AVERAGE OF THE PERFORMANCE OF OVER 900 SECURITIES OF COMPANIES LISTED ON THE
STOCK EXCHANGE OF COUNTRIES IN EUROPE, AUSTRALASIA AND THE FAR EAST WITH A FIXED
MARKET CAPITALIZATION CUT OFF OF U.S. $200-$800 MILLION (THIS INDEX IS A PRICE
ONLY INDEX AND DOES NOT INCLUDE DIVIDENDS).

<TABLE>
<CAPTION>
EUROPEAN EQUITY PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS MSCI EUROPE INDEX
ON APRIL 2, 1993) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- ------------------------------------------------------------------------------------------------------
PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

THE MSCI EUROPE INDEX IS AN UNMANAGED MARKET VALUE WEIGHTED INDEX OF COMMON
STOCKS LISTED ON THE STOCK EXCHANGE OF COUNTRIES IN EUROPE, INCLUDING DIVIDENDS.

7
<PAGE>
- --------------------------------------------------------------------------------
FEES AND EXPENSES OF THE PORTFOLIOS
- -------------------------------------------------------------------------------

The Securities and Exchange Commission (the "Commission") requires that the Fund
disclose in the table below the fees and expenses that you may pay if you buy
and hold shares of the Portfolios. The Portfolios do not charge any sales loads
or similar fees when you purchase or redeem shares, with the exception of the
International Small Cap Portfolio which may charge a 1.00% transaction fee,
payable to the Portfolio, in connection with each purchase and redemption. The
transaction fee is intended to allocate transaction costs associated with
purchases and redemptions of shares of the Portfolio to investors actually
making such purchases and redemptions rather than to the Portfolio's other
shareholders. The 1.00% fee represents MSDW Investment Management's estimate of
the cost of acquiring and disposing of Portfolio securities. The fee will not be
charged with respect to purchases and redemptions that do not result in actual
transaction costs to the Portfolio. The Annual Fund Operating Expenses in the
table below do not reflect voluntary fee waivers and/or expense reimbursements
from MSDW Investment Management.

1998 ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)

<TABLE>
<CAPTION>
GLOBAL INTERNATIONAL INTERNATIONAL
EQUITY EQUITY SMALL CAP EUROPEAN EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C>
--------------------------------------------------------------------
MANAGEMENT FEES
- -----------------------------------------------------------------------------------------------
CLASS A 0.80% 0.80% 0.95% 0.80%
- -----------------------------------------------------------------------------------------------
CLASS B 0.80% 0.80% N/A 0.80%

12B-1 FEE
- -----------------------------------------------------------------------------------------------
CLASS A NONE NONE NONE NONE
- -----------------------------------------------------------------------------------------------
CLASS B 0.25% 0.25% N/A 0.25%

OTHER EXPENSES
- -----------------------------------------------------------------------------------------------
CLASS A --% --% --% --%
- -----------------------------------------------------------------------------------------------
CLASS B --% --% N/A --%

TOTAL ANNUAL FUND OPERATING EXPENSES
- -----------------------------------------------------------------------------------------------
CLASS A --% --% --% --%
- -----------------------------------------------------------------------------------------------
CLASS B --% --% N/A --%
</TABLE>

MAXIMUM EXPENSES AFTER FEE WAIVERS/EXPENSE REIMBURSEMENTS

<TABLE>
<CAPTION>
GLOBAL INTERNATIONAL INTERNATIONAL EUROPEAN
EQUITY EQUITY SMALL CAP EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
CLASS A 1.00% 1.00% 1.15% 1.00%
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
CLASS B 1.25% 1.25% N/A 1.25%
</TABLE>

FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS ARE VOLUNTARY AND MSDW INVESTMENT
MANAGEMENT RESERVES THE RIGHT TO TERMINATE ANY WAIVER AND/OR REIMBURSEMENT AT
ANY TIME AND WITHOUT NOTICE.

8
<PAGE>
EXAMPLE
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN EACH
PORTFOLIO WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS HAVING SIMILAR
INVESTMENT OBJECTIVES.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
GLOBAL EQUITY PORTFOLIO
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

INTERNATIONAL EQUITY PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

INTERNATIONAL SMALL CAP PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $

EUROPEAN EQUITY PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------
INVESTMENT ADVISER
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
MANAGEMENT FEES
- -------------------------------------------------------------------------------

For the year ended December 31, 1998, MSDW Investment Management received from
each Portfolio the management fee set forth in the table below:

<TABLE>
<CAPTION>
GLOBAL INTERNATIONAL INTERNATIONAL EUROPEAN EQUITY
EQUITY EQUITY SMALL CAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------
MANAGEMENT FEE CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
-----------------------------------------------------------------------------
PAID IN FISCAL YEAR
ENDED DECEMBER 31, 1998 0.69% 0.69% 0.78% 0.78% 0.88% N/A 0.71% 0.71%
(NET OF WAIVERS AND AS A
PERCENTAGE OF AVERAGE
NET ASSETS)
</TABLE>

9
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
- -------------------------------------------------------------------------------

THE FOLLOWING INDIVIDUALS HAVE PRIMARY PORTFOLIO MANAGEMENT RESPONSIBILITY FOR
THE PORTFOLIOS:

GLOBAL EQUITY PORTFOLIO

FRANCES CAMPION, RICHARD BOON AND PAUL BOYNE

Frances Campion joined MSDW Investment Management in January 1990 as a Global
Equity Fund Manager and is now a Managing Director of MSDW Investment Management
and Morgan Stanley. Her responsibilities include day-to-day management of the
Global Equity product. Prior to joining MSDW Investment Management, Ms. Campion
was a U.S. equity analyst with Lombard Odier Limited where she had
responsibility for the management of global portfolios. Ms. Campion has ten
years global investment experience. She is a graduate of University College,
Dublin. Richard Boon joined the MSDW Investment Management's Global Equity team
in London in September 1995 and became a Principal in December 1998. In addition
to portfolio construction, his responsibilities include security analysis on
North American and Australasian equities. Prior to joining MSDW Investment
Management, he spent seven years in investment banking; working for Deutsche
Bank as a member of their Equity Capital Markets Group; advising the UK Post
Office on its proposed privatization; and with Ord Minnett Securities in their
Mergers & Acquisitions division. He is a graduate of both Canterbury and
Victoria Universities, New Zealand. Mr. Boon is individually registered in the
UK with the Investment Management Regulatory Organisation. Paul Boyne joined
MSDW Investment Management, London in 1993 after working as a Chartered
Accountant with Grant Thornton International in Dublin. At MSDW Investment
Management, he assists in the implementation of the Global Equity Program and
the analysis of North American and Irish equities. He is currently completing a
post-graduate degree with University College, Dublin. Mr. Boyne became a
Principal in December 1998. Mr. Boyne is individually registered in the UK with
the Investment Management Regulatory Organisation. Frances Campion has had
primary responsibility for managing the Portfolio's assets since .
Richard Boon and Paul Boyne have shared primary responsibility for managing the
Portfolio's assets since .

INTERNATIONAL EQUITY PORTFOLIO

DOMINIC CALDECOTT, PETER WRIGHT, WILLIAM LOCK, KATE CORNISH-BOWDEN AND WALTER
RIDDELL

Dominic Caldecott is a Managing Director of MSDW Investment Management and
Morgan Stanley and has been primarily responsible for managing the Portfolio's
assets since its inception. He has ten years professional experience, primarily
in Tokyo, Hong Kong, and Seoul. Prior to joining Morgan Stanley, he worked with
GT Management Group in Tokyo and Hong Kong, specializing in Pacific Basin
investment management. He is responsible for a number of Pacific Basin
investment programs for clients of Morgan Stanley. Mr. Caldecott is a graduate
of New College, Oxford, England. Peter Wright joined MSDW Investment Management
in December 1996, as a Portfolio Manager with the core International Equity
Program. He became a Principal of MSDW Investment Management in 1997. He has
eleven years investment experience, most recently with the State of Wisconsin
Investment Board, where he was an Investment Director and Portfolio Manager
responsible for managing the agency's $2.5 billion International Equity
portfolio. Mr. Wright is a graduate of Victoria University of Wellington, New
Zealand. Mr. Wright is individually registered in the UK with the Investment
Management Regulatory Organisation. William Lock joined MSDW Investment
Management, London in March 1994 as an Equity Analyst with principal
responsibility for UK Equity Research. He became a Principal of MSDW Investment
Management in 1997. Prior to joining MSDW Investment Management, he was a member
of CS First Boston's Corporate Finance Group and a Management Consultant with
Arthur D. Little. He graduated from Keble College, Oxford. Mr. Lock is
individually registered in the UK with the Investment Management Regulatory
Organisation. Kate Cornish-Bowden joined MSDW Investment Management in April
1992 as an Equity Analyst after working as a Research Analyst for M&G Investment
Management. She became a Principal of MSDW Investment Management in 1998 and is
closely involved with MSDW Investment Management's company visiting program. Her
responsibilities include fundamental International Equity research and
selection. She is an associate member of the Institute of Investment Management
and Research. She graduated from Leicester University with an Economics degree

10
<PAGE>

and holds an M.B.A. from the University of Nottingham. Ms. Cornish-Bowden is
individually registered in the UK with the Investment Management Regulatory
Organisation. Walter Riddell joined MSDW Investment Management in October 1995
as an Intern, and became a Research Analyst in October 1996. He works closely
with Dominic Caldecott and Kate Cornish-Bowden on the international portfolio
where his responsibilities include fundamental research after company visits. He
graduated from Oxford in 1995 with a history degree. Mr. Riddell is individually
registered in the UK with the Investment Management Regulatory Organisation.
Dominic Caldecott has had primary responsibility for managing the Portfolio's
assets since . Peter Wright, William Lock, Kate Cornish-Bowden and
Walter Riddell have shared primary responsibility for managing the Portfolio's
assets since .

INTERNATIONAL SMALL CAP PORTFOLIO

MARGARET NAYLOR, WILLEM VINKE AND NATHALIE DEGANS

Margaret Naylor is a Managing Director of MSDW Investment Management and Morgan
Stanley. She has overall responsibility for investment strategy and stock
selection for the International Small Cap program. She also focuses on Pacific
Basin research and stock selection and has been primarily responsible for
managing the Portfolio's assets since December 1992. Prior to joining MSDW
Investment Management in 1987, she spent three years at the Trade Policy
Research Centre, an independent research unit. Ms. Naylor is a graduate of the
University of York. Willem Vinke joined MSDW Investment Management, London in
September 1995 after working for MSDW Debt Capital Markets group, a division of
Investment Banking. He became a Vice President of MSDW Investment Management in
1997 and has been with the MSDW Investment Management since June 1992. Prior to
Investment Banking, he worked in the Fixed Income Division. He focuses primarily
on analyzing European smaller companies and is a member of the International
Small Cap team. He is a Dutch national and is fluent in French, German and
Spanish. Mr. Vinke is a graduate of the University of Manchester and the London
School of Economics. Mr. Vinke is individually registered in the UK with the
Investment Management Regulatory Organisation. Nathalie Degans joined MSDW
Investment Management in March 1996 as an Equity Analyst, focusing primarily on
UK and Continental European smaller company research. She became a Vice
President of MSDW Investment Management in 1997. She is a member of the
International Small Cap team and has been with the firm since September, 1993
joining us from Morgan Stanley Corporate Treasury London. Prior to joining MSDW
Investment Management, Ms. Degans was with Banque Indosuez New York for six
years. She is a French national and is a graduate from ISG, France and INSEAD,
France. Ms. Degans is individually registered in the UK with the Investment
Management Regulatory Organisation. Margaret Naylor has had primary
responsibility for managing the Portfolio's assets since . Willem Vinke
and Nathalie Degans have shared primary responsibility for managing the
Portfolio's assets since .

EUROPEAN EQUITY PORTFOLIO

ROBERT SARGENT AND ALASTAIR ANDERSON

Robert Sargent joined Morgan Stanley International in May 1986, and transferred
to MSDW Investment Management in June 1987. Mr. Sargent is now a Managing
Director of MSDW Investment Management and Morgan Stanley and has been primarily
responsible for managing the Portfolio's assets since its inception. As the fund
manager with primary responsibility for continental European stock selection and
portfolio management, Mr. Sargent is closely involved with MSDW Investment
Management's fundamental research effort and company visiting program. He is a
graduate of York University, Toronto, Canada. Alastair Anderson joined MSDW
Investment Management in June 1994 to focus on building up a database of
European company accounts. He became a Vice President in December 1996. Prior to
joining MSDW Investment Management, he worked for Deloitte & Touche as a Trainee
Chartered Accountant. Mr. Anderson is a commerce graduate of the University of
Cape Town. Mr. Anderson is individually registered in the UK with the Investment
Management Regulatory Organisation. Robert Sargent has had primary
responsibility for managing the Portfolio's assets since . Alastair
Anderson has shared primary responsibility for managing the Portfolio's assets
since .

- -------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------

ABOUT NET ASSET VALUE

The net asset value per share of a class of shares of the Portfolio is
determined by dividing the total market value of the Portfolio's investments and
other assets attributable to the class, less any liabilities attributable to the
class, by the total number of outstanding shares of that class of the Portfolio.
In making this calculation, the Portfolio generally values securities at market
price. If market prices are unavailable or may be unreliable because of events
occurring after the close of trading, fair value prices may be determined in
good faith using methods approved by the Board of Directors. The Portfolios may
hold portfolio securities that are listed on foreign exchanges. These securities
may trade on weekends or other days when the Portfolios do not calculate NAV. As
a result, the value of these investments may change on days when you cannot
purchase or sell shares.

PRICING OF PORTFOLIO SHARES

HOW TO PURCHASE SHARES

You may purchase Class A shares and Class B shares of each Portfolio directly
from the Fund, from the Distributor or through certain third parties ("Financial
Intermediaries"). [You may purchase shares of the Portfolios on each day that
the NYSE is open. However, on days that the NYSE is open but banks are closed
the Portfolios will accept purchases only by check.]

The Portfolios do not charge any sales loads or similar fees when you purchase
or redeem shares, with the exception of the International Small Cap Portfolio
which may charge a 1.00% transaction fee, payable to the Portfolio, in
connection with each purchase and redemption. The minimum initial investment
generally is $500,000 for Class A shares and $100,000 for Class B shares of each
Portfolio. The minimum additional investment generally is $1,000 for each
account that you have. If the value of your account falls below the minimum
initial investment amount for Class A shares or Class B shares as a result of
share redemptions, the Fund will notify you. Your account may be subject to
involuntary conversion from Class A shares to Class B shares or involuntary
redemption in the case of Class B shares if the value of your account remains
below the minimum initial investment amount for 60 consecutive days. MSDW
Investment Management may waive the minimum initial investment and involuntary
conversion or redemption features for certain investors, including individuals
purchasing through a Financial Intermediary.

12
<PAGE>

HOW TO REDEEM SHARES

EXCHANGE FEATURES

*PORTFOLIO IS CURRENTLY CLOSED TO NEW INVESTORS

+PORTFOLIO HAS NOT YET COMMENCED OPERATIONS

13
<PAGE>

DIVIDENDS AND DISTRIBUTIONS

TAXES

The dividends and distributions you receive from a Portfolio may be subject to
Federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are ordinary income and capital gains distributions are taxed
based on how long the Portfolio held the assets. A Portfolio may be able to pass
through to you a credit for foreign income taxes it pays. The Fund will tell you
annually how to treat dividends and distributions.

- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

14
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
GLOBAL EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

15
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

16
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
INTERNATIONAL SMALL CAP PORTFOLIO
- -------------------------------------------------------------------------------

17
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
EUROPEAN EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

18
<PAGE>
- -------------------------------------------------------------------------------
WHERE TO FIND ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

SHAREHOLDER REPORTS

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
P.O. Box 2798
Boston, Massachusetts 02208-2798

FOR INFORMATION CALL 1-800-548-7786
<PAGE>

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

PROSPECTUS JANUARY , 1999
- -------------------------------------------------------------------------------

A PORTFOLIO OF [LOGO] MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.

U.S. EQUITY PLUS PORTFOLIO

THE U.S. EQUITY PLUS PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF ISSUERS INCLUDED IN THE STANDARD & POOR'S 500
INDEX ("S&P 500").

INVESTMENT ADVISER

Morgan Stanley Dean Witter Investment Management Inc.

DISTRIBUTOR

Morgan Stanley & Co. Incorporated

<TABLE>
<S> <C>
INVESTMENT SUMMARY
U.S. EQUITY PLUS PORTFOLIO 1
ADDITIONAL RISK FACTORS AND INFORMATION 2
PAST PERFORMANCE 4
FEES AND EXPENSES OF THE PORTFOLIO 4
INVESTMENT ADVISER 5
MANAGEMENT FEES 5
PORTFOLIO MANAGERS 6
DISTRIBUTION OF PORTFOLIO SHARES 7
SHAREHOLDER INFORMATION 7
FINANCIAL HIGHLIGHTS 9
U.S. EQUITY PLUS PORTFOLIO 10
ACCOUNT REGISTRATION FORM
[TO BE ATTACHED]
</TABLE>

<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
U.S. EQUITY PLUS PORTFOLIO
- -------------------------------------------------------------------------------

THE U.S. EQUITY PLUS PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF ISSUERS INCLUDED IN THE S&P 500.

APPROACH

MSDW Investment Management seeks to maintain an investment portfolio that
consistently exceeds the performance of the S&P 500 Index while maintaining
comparable price volatility. MSDW Investment Management's investment approach
combines an active and systematic security selection process with the
application of a rigorous risk control process.

PROCESS

MSDW Investment Management seeks to purchase equity securities of the most
attractive issuers in the S&P 500 based upon a disciplined, analytical
investment strategy that combines both quantitative and qualitative analysis.
MSDW Investment Management first considers historical stock prices, earnings,
cash flow, dividend yield information, consensus earnings and earnings growth
forecasts in order to identify and rank the attractiveness of all securities in
the investment universe. Following this quantitative analysis, MSDW Investment
Management purchases securities from the remaining pool of issuers based on
qualitative recommendations from Morgan Stanley & Co.'s team of research
analysts. MSDW Investment Management also uses a proprietary market conditions
model to adapt Portfolio investments to changing market environments.

RISK

Investing in the U.S. Equity Plus Portfolio may be appropriate for you if you
are willing to accept the risks and uncertainties of investing in equity
securities in the hope of earning superior returns and diversifying your
investment portfolio. In general, prices of equity securities are more volatile
than those of fixed income securities. The prices of equity securities will rise
and fall in response to a number of different factors. In particular, prices of
equity securities will respond to events which affect entire financial markets
or industries (changes in inflation or consumer demand, for example) and to
events that affect particular issuers (news about the success or failure of a
new product, for example). In addition, at times the Portfolio's market sector,
equity securities of larger U.S. issuers, may underperform relative
to other sectors.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C>
COMMENCED OPERATIONS ON JULY 31, 1997
1998 xx.xx%
HIGH (QUARTER)
mo/yr--mo/yr
xx.xx%
LOW (QUARTER)
mo/yr--mo/yr
xx.xx%
</TABLE>

1
<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
ADDITIONAL RISK FACTORS AND INFORMATION
- -------------------------------------------------------------------------------

THIS SECTION DISCUSSES ADDITIONAL RISK FACTORS AND INFORMATION RELATED TO THE
PORTFOLIO. THE PORTFOLIO'S INVESTMENT PRACTICES AND LIMITATIONS ARE DESCRIBED IN
MORE DETAIL IN THE STATEMENT OF ADDITIONAL INFORMATION ("SAI"), WHICH LEGALLY IS
A PART OF THIS PROSPECTUS. FOR DETAILS ABOUT HOW TO OBTAIN A COPY OF THE SAI AND
OTHER REPORTS AND INFORMATION, SEE THE BACK COVER OF THIS PROSPECTUS.

PRICE VOLATILITY

The value of your investment in the Portfolio is based on the market prices of
the securities the Portfolio holds. These prices change daily due to economic
and other events that affect markets generally, as well as those that affect
particular companies or governments. These price movements, sometimes called
volatility, may be greater or lesser depending on the types of securities the
Portfolio owns and the markets in which the securities trade. Over time, equity
securities have generally shown superior gains, although they have tended to be
more volatile than fixed income securities in the short term. Fixed income
securities, regardless of credit quality, also experience price volatility,
especially in response to interest rate changes. As a result of price
volatility, there is a risk that you may lose money by investing in the
Portfolio.

DERIVATIVES

The Portfolio may use various instruments that derive their values from those of
specified securities, indices, currencies or other points of reference for both
hedging and non-hedging purposes. Derivatives include futures, options, forward
contracts, swaps, and structured notes. These derivatives, including those used
to manage risk, are themselves subject to risks of the different markets in
which they trade and, therefore, may not serve their intended purposes.

The primary risks of derivatives are: (i) changes in the market value of
securities held by the Portfolio, and of derivatives relating to those
securities, may not be proportionate, (ii) there may not be a liquid market for
a portfolio to sell a derivative, which could result in difficulty closing a
position and (iii) certain derivatives can magnify the extent of losses incurred
due to changes in the market value of the securities to which they relate. In
addition, derivatives are subject to counter party risk. To minimize this risk,
the Portfolio may enter into derivatives transactions with counter parties that
meet certain requirements for credit quality and collateral. Also, the Portfolio
may invest in certain derivatives that require the Portfolio to segregate some
or all of its cash or liquid securities to cover its obligations under those
instruments. At certain levels, this can cause the Portfolio to lose flexibility
in managing its investments properly, responding to shareholder redemption
requests, or meeting other obligations. If the Portfolio is in that position, it
could be forced to sell other securities that it wanted to retain.

The Portfolio will limit its use of derivatives to 33 1/3% of its total assets
measured by the aggregate notional amount of outstanding derivatives. While the
use of derivatives may be advantageous to the Portfolio, if MSDW Investment
Management is not successful in employing them, the Portfolio's performance may
be worse than if it did not make such investments. See the Statement of
Additional Information for more about the risks of different types of
derivatives.

BANK INVESTORS

An investment in the Portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.

YEAR 2000 RISK

2
<PAGE>

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

TEMPORARY DEFENSIVE

INVESTMENTS

When MSDW Investment Management believes that changes in economic, financial or
political conditions warrant, the Portfolio may invest without limit in certain
short- and medium-term fixed income securities for temporary purposes. If MSDW
Investment Management incorrectly predicts the effects of these changes, such
defensive investments may adversely affect the Portfolio's performance.

PORTFOLIO TURNOVER

Consistent with its investment policies, the Portfolio will purchase and sell
securities without regard to the effect on portfolio turnover. Higher portfolio
turnover (e.g. over 100% per year) will cause the Portfolio to incur additional
transaction costs and may result in taxable gains being passed through to
shareholders.

3
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE
- -------------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURN (FOR THE YEAR ENDED DECEMBER 31, 1998)

<TABLE>
<CAPTION>
U.S. EQUITY PLUS PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS
ON JULY 31, 1997) ON JULY 31, 1997) S&P 500 INDEX
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
PAST ONE YEAR
- ----------------------------------------------------------------------------------------------------
PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------
SINCE INCEPTION % % %
</TABLE>

- --------------------------------------------------------------------------------
FEES AND EXPENSES OF THE PORTFOLIO
- -------------------------------------------------------------------------------

1998 ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)

<TABLE>
<CAPTION>
U.S. EQUITY PLUS
PORTFOLIO
<S> <C>
MANAGEMENT FEES
- --------------------------------------------------------------------
CLASS A 0.45%
- --------------------------------------------------------------------
CLASS B 0.45%
12B-1 FEE
- --------------------------------------------------------------------
CLASS A NONE
- --------------------------------------------------------------------
CLASS B 0.25%
OTHER EXPENSES
- --------------------------------------------------------------------
CLASS A --%+
- --------------------------------------------------------------------
CLASS B --%+
TOTAL ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------
CLASS A --%
- --------------------------------------------------------------------
CLASS B --%
</TABLE>

+ESTIMATED.

The Management Fees for the Portfolio shown in the table above are the highest
that could be charged. This table does not show the effects of MSDW Investment
Management's voluntary fee waivers and/or expense reimbursements. MSDW
Investment Management has voluntarily agreed to reduce its management fee and/or
reimburse the Portfolio so that total expenses will not exceed the following
rates:

MAXIMUM EXPENSES AFTER FEE WAIVERS/EXPENSE REIMBURSEMENTS

<TABLE>
<CAPTION>
U.S. EQUITY PLUS
PORTFOLIO
<S> <C>
CLASS A 0.80%
- --------------------------------------------------------------------
CLASS B 1.05%
</TABLE>

FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS ARE VOLUNTARY AND MSDW INVESTMENT
MANAGEMENT RESERVES THE RIGHT TO TERMINATE ANY WAIVER AND/OR REIMBURSEMENT AT
ANY TIME AND WITHOUT NOTICE.

4
<PAGE>
EXAMPLE
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
PORTFOLIO WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS HAVING SIMILAR
INVESTMENT OBJECTIVES.

The example assumes that you invest $10,000 in the Portfolio for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example assumes that your investment has a 5% return each year and
that the Portfolio's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
U.S. EQUITY PLUS PORTFOLIO
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------
INVESTMENT ADVISER
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
MANAGEMENT FEES
- -------------------------------------------------------------------------------

For the year ended December 31, 1998, MSDW Investment Management received from
the Portfolio the management fee set forth in the table below:

<TABLE>
<CAPTION>
U.S. EQUITY PLUS
PORTFOLIO
-----------------
<S> <C> <C>
MANAGEMENT FEE CLASS A CLASS B
-----------------
PAID IN FISCAL YEAR ENDED
DECEMBER 31, 1998 0.34% 0.34%
(NET OF WAIVERS AND AS A
PERCENTAGE OF AVERAGE NET
ASSETS)
</TABLE>

5
<PAGE>

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

PORTFOLIO MANAGERS
- -------------------------------------------------------------------------------

THE FOLLOWING INDIVIDUALS HAVE PRIMARY DAY-TO-DAY PORTFOLIO MANAGEMENT
RESPONSIBILITY FOR THE PORTFOLIO:

U.S. EQUITY PLUS PORTFOLIO

NARAYAN RAMACHANDRAN AND EUGENE FLOOD, JR.

Narayan Ramachandran is a Managing Director of MSDW Investment Management and
Morgan Stanley and is a portfolio manager and head of the Structured Asset
Management business at MSDW Investment Management. Prior to joining MSDW
Investment Management in 1996, he was Managing Director of RogersCasey
Associates, Inc. ("RogersCasey"), an investment consulting and special assets
advisory firm based in Darien, Connecticut. As President of RogersCasey's
investment advisory subsidiary, he was responsible for leading the special
assets advisory business with $2 billion in assets under management. Prior to
that, he was Director of Research for RogersCasey, with his research efforts
focused on quantitative investment models. He has a B.S. in Chemical Engineering
from the Indian Institute of Technology in Bombay and an M.B.A. from the
University of Michigan at Ann Arbor. He is also a chartered Financial Analyst.
Eugene Flood joined Morgan Stanley in 1987. He is a Principal of MSDW Investment
Management and Morgan Stanley and a senior portfolio manager of MSDW Investment
Management's Structured Asset Management business. He has traded a broad
spectrum of instruments including equities, fixed income, foreign exchange and
commodities. Additionally, he has consulted for a variety of private sector
companies and government agencies. Dr. Flood received an A.B. in Economics from
Harvard University and a Ph.D. in Economics from the Massachusetts Institute of
Technology.

6
<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTION OF PORTFOLIO SHARES
- -------------------------------------------------------------------------------

Morgan Stanley is the exclusive Distributor of Class A shares and Class B shares
of the Portfolio. Morgan Stanley receives no compensation for distributing Class
A shares of the Portfolio. The Fund has adopted a Plan of Distribution with
respect to the Class B shares of the Portfolio pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, (the "Plan"). Under the Plan, the
Portfolio pays the Distributor a distribution fee of 0.25% of the Class B
shares' average daily net assets on an annualized basis. The distribution fee
compensates the Distributor for marketing and selling Class B shares. The
Distributor may pay others for providing distribution-related and other
services, including account maintenance services. Over time the distribution
fees will increase the cost of your investment and may cost you more than paying
other types of sales charges.

- -------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------

ABOUT NET ASSET VALUE

The net asset value per share of a class of shares of the Portfolio is
determined by dividing the total market value of the Portfolio's investments and
other assets attributable to the class, less any liabilities attributable to the
class, by the total number of outstanding shares of that class of the Portfolio.
In making this calculation, the Portfolio generally values securities at market
price. If market prices are unavailable or may be unreliable because of events
occurring after the close of trading, fair value prices may be determined in
good faith using methods approved by the Board of Directors. The Portfolio may
hold portfolio securities that are listed on foreign exchanges. These securities
may trade on weekends or other days when the Portfolio does not calculate NAV.
As a result, the value of these investments may change on days when you cannot
purchase or sell shares.

PRICING OF PORTFOLIO SHARES
You may buy or sell (redeem) Class A and Class B shares of the Portfolio at the
net asset value next determined for the class after receipt of your order. The
Fund determines net asset value as of the close of the NYSE (normally 4:00 p.m.
Eastern Time) on each day that the NYSE is open for business (the "Pricing
Time").

HOW TO PURCHASE SHARES

You may purchase Class A shares and Class B shares of the Portfolio directly
from the Fund, from the Distributor or through certain third parties ("Financial
Intermediaries"). [You may purchase shares of the Portfolio on each day that the
NYSE is open. However, on days that the NYSE is open but banks are closed the
Portfolio will accept purchases only by check.]

The minimum initial investment generally is $500,000 for Class A shares and
$100,000 for Class B shares. The minimum additional investment generally is
$1,000 for each account that you have. If the value of your account falls below
the minimum initial investment amount for Class A shares or Class B shares as a
result of share redemptions, the Fund will notify you. Your account may be
subject to involuntary conversion from Class A shares to Class B shares or
involuntary redemption in the case of Class B shares if the value of your
account remains below the minimum initial investment amount for 60 consecutive
days. MSDW Investment Management may waive the minimum initial investment and
involuntary conversion or redemption features for certain investors, including
individuals purchasing through a Financial Intermediary.

7
<PAGE>
purchase shares at the price calculated at the next Pricing Time after your
Financial Intermediary receives your purchase order. Your Financial Intermediary
may charge an additional service or transaction fee.

HOW TO REDEEM SHARES

You may redeem Portfolio shares directly from the Fund, through the Distributor
or through your Financial Intermediary, each as described above under Purchase
of Shares. The redemption price will be the net asset value per share calculated
at the next Pricing Time, which may be more or less than the purchase price of
your shares. The Fund will ordinarily distribute redemption proceeds in cash
within one business day of your redemption request, but it may take up to seven
business days. However, if you purchased shares by check, the Fund will not
distribute redemption proceeds until it has collected your purchase payment,
which may take up to eight days. The Portfolio will honor redemptions but pay
them the following day on days that the NYSE is open but banks are closed. In
certain circumstances, for example, if payment of redemption proceeds in cash
would be detrimental to the remaining shareholders, the Portfolio may pay
redemption proceeds by a distribution-in-kind of readily marketable portfolio
securities.

EXCHANGE FEATURES

*PORTFOLIO IS CURRENTLY CLOSED TO NEW INVESTORS

+PORTFOLIO HAS NOT YET COMMENCED OPERATIONS

When you exchange for shares of another portfolio, your transaction will be
treated the same as an initial purchase. You will be subject to the same minimum
initial investment and account size as an initial purchase. Accordingly, you
will not necessarily receive the same class of shares that you tendered for
exchange. Your exchange price will be the price calculated at the next Pricing
Time after the Fund receives your exchange order. Frequent trades in your
account(s) can disrupt management of the Portfolio and raise its expenses.
Therefore, the Fund may bar a shareholder who trades excessively from making
further exchanges or purchases.

8
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
The Portfolio's policy is to distribute to shareholders substantially all of its
taxable net investment income in the form of an annual dividend and to
distribute net capital gains on an annual basis.

TAXES

The dividends and distributions you receive from the Portfolio may be subject to
Federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are ordinary income and capital gains distributions are taxed
based on how long the Portfolio held the assets. The Fund will tell you annually
how to treat dividends and distributions.

If you redeem shares of the Portfolio, you will be subject to tax on any gains
you earn based on your holding period for the shares. An exchange of shares of
the Portfolio for shares of another portfolio is a sale of Portfolio shares for
tax purposes. Conversions of shares between classes will not result in taxation.

- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

The following financial highlights tables are intended to help you understand
the financial performance of the Class A shares and Class B shares of the
Portfolio for the past five years or, if less than five years, the life of the
Portfolio or Class. Certain information reflects financial results for a single
Portfolio share. The total returns in the tables represent the rate that an
investor would have earned (or lost) on an investment in the Portfolio (assuming
reinvestment of all dividends and distributions). This information has been
audited by , whose report, along with the Fund's financial
statements, are incorporated by reference into the Fund's Statement of
Additional Information and are included in the Fund's December 31, 1998 Annual
Report to Shareholders.

9
<PAGE>
- ----------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
U.S. EQUITY PLUS PORTFOLIO
- -------------------------------------------------------------------------------

10
<PAGE>
- -------------------------------------------------------------------------------
WHERE TO FIND ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

In addition to this Prospectus, the Fund has a Statement of Additional
Information ("SAI"), dated ________, 1999, which contains additional, more
detailed information about the Fund and the Portfolio. The SAI is incorporated
by reference into this Prospectus and, therefore, legally forms a part of this
Prospectus.

SHAREHOLDER REPORTS

The Fund publishes annual and semi-annual reports containing financial
statements, and quarterly reports. These reports contain additional information
about the Portfolio's investments. In the Fund's shareholder reports, you will
find a discussion of the market conditions and the investment strategies that
significantly affected the Portfolio's performance during that period.

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
P.O. Box 2798
Boston, Massachusetts 02208-2798

FOR INFORMATION CALL 1-800-548-7786
<PAGE>

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

PROSPECTUS JANUARY , 1999
- -------------------------------------------------------------------------------

PORTFOLIOS OF [LOGO] MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.

EUROPEAN REAL ESTATE PORTFOLIO

THE EUROPEAN REAL ESTATE PORTFOLIO SEEKS TO PROVIDE CURRENT INCOME AND LONG-TERM
CAPITAL APPRECIATION BY INVESTING PRIMARILY IN EQUITY SECURITIES OF COMPANIES IN
THE EUROPEAN REAL ESTATE INDUSTRY.

ASIAN REAL ESTATE PORTFOLIO

THE ASIAN REAL ESTATE PORTFOLIO SEEKS TO PROVIDE LONG-TERM CAPITAL APPRECIATION
BY INVESTING PRIMARILY IN EQUITY SECURITIES OF COMPANIES IN THE ASIAN REAL
ESTATE INDUSTRY.

U.S. REAL ESTATE PORTFOLIO

THE U.S. REAL ESTATE PORTFOLIO SEEKS TO PROVIDE ABOVE AVERAGE CURRENT INCOME AND
LONG-TERM CAPITAL APPRECIATION BY INVESTING PRIMARILY IN EQUITY SECURITIES OF
COMPANIES IN THE U.S. REAL ESTATE INDUSTRY, INCLUDING REAL ESTATE INVESTMENT
TRUSTS ("REITS).

INVESTMENT ADVISER
Morgan Stanley Dean Witter Investment Management Inc.

DISTRIBUTOR
Morgan Stanley & Co. Incorporated

<TABLE>
<S> <C>
INVESTMENT SUMMARY
EUROPEAN REAL ESTATE PORTFOLIO 1
ASIAN REAL ESTATE PORTFOLIO 2
U.S. REAL ESTATE PORTFOLIO 3
ADDITIONAL RISK FACTORS AND INFORMATION 4
PAST PERFORMANCE 6
FEES AND EXPENSES OF THE PORTFOLIOS 7
INVESTMENT ADVISER 8
MANAGEMENT FEES 8
PORTFOLIO MANAGERS 9
DISTRIBUTION OF PORTFOLIO SHARES 10
SHAREHOLDER INFORMATION 10
FINANCIAL HIGHLIGHTS 12
EUROPEAN REAL ESTATE PORTFOLIO 13
ASIAN REAL ESTATE PORTFOLIO 14
U.S. REAL ESTATE PORTFOLIO 15
ACCOUNT REGISTRATION FORM
[TO BE ATTACHED]
</TABLE>

<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
EUROPEAN REAL ESTATE PORTFOLIO
- -------------------------------------------------------------------------------

THE EUROPEAN REAL ESTATE PORTFOLIO SEEKS TO PROVIDE CURRENT INCOME AND LONG-TERM
CAPITAL APPRECIATION BY INVESTING PRIMARILY IN EQUITY SECURITIES OF COMPANIES IN
THE EUROPEAN REAL ESTATE INDUSTRY.

APPROACH

MSDW Investment Management seeks a combination of current income and capital
appreciation by constructing a portfolio of equity securities of European real
estate companies. MSDW Investment Management considers a company to be European
if its securities are traded on a recognized stock exchange in Europe or if it
is organized in a European country and operates primarily in Europe. The
Portfolio will invest primarily in companies located in Germany, France,
Switzerland, Belgium, Italy, Spain, Portugal, Finland, Sweden, Denmark, Norway,
Ireland and the United Kingdom but may also invest in the emerging markets of
Europe. MSDW Investment Management's approach emphasizes bottom-up stock
selection with a top-down country allocation overlay.

PROCESS

MSDW Investment Management's dedicated real estate team focuses on valuation,
including underlying asset values, values per square foot and property yields as
well as property portfolio composition, lease expiration, capital structure and
management. MSDW Investment Management employees typically visit with each
company, as well as selected properties, before investing, seeking companies
with attractive fundamental valuations relative to underlying real estate
values. In seeking an optimal matrix of country and property market exposure,
MSDW Investment Management considers broad demographic and macroeconomic factors
as well as criteria such as space demand, new construction and rental patterns.

RISK

Investing in the European Real Estate Portfolio may be appropriate for you if
you are willing to accept the risks and uncertainties of the European real
estate market in the hope of earning current income and long-term gain while
diversifying your investment portfolio. In general, prices of equity securities
are more volatile than those of fixed income securities. The prices of equity
securities will rise and fall in response to a number of different
factors. In particular, prices of equity securities will respond to
events which affect entire financial markets or industries (changes
in inflation or consumer demand, for example) and to events that
affect particular issuers (news about the success or failure of a new
product, for example). Investing in real estate companies entails the
risks of the real estate business generally, including sensitivity to
economic and business cycles, changing demographic patterns and
government actions. In addition, at times the Portfolio's market,
European real estate securities, may underperform relative to other
sectors.

INVESTING IN FOREIGN COUNTRIES, PARTICULARLY EMERGING MARKETS,
ENTAILS THE RISK THAT NEWS AND EVENTS UNIQUE TO A COUNTRY OR REGION
WILL AFFECT THOSE MARKETS AND THEIR ISSUERS. THESE SAME EVENTS WILL
NOT NECESSARILY HAVE AN EFFECT ON THE U.S. ECONOMY OR SIMILAR ISSUERS
LOCATED IN THE UNITED STATES. IN ADDITION, THE PORTFOLIO'S
INVESTMENTS IN FOREIGN COUNTRIES GENERALLY WILL BE DENOMINATED IN
FOREIGN CURRENCIES. AS A RESULT, CHANGES IN THE VALUE OF A COUNTRY'S
CURRENCY COMPARED TO THE U.S. DOLLAR MAY AFFECT THE VALUE OF THE
PORTFOLIO'S INVESTMENTS. THESE CHANGES MAY HAPPEN SEPARATELY FROM AND
IN RESPONSE TO EVENTS THAT DO NOT OTHERWISE AFFECT THE VALUE OF THE
SECURITY IN THE ISSUER'S HOME COUNTRY. MSDW INVESTMENT MANAGEMENT MAY
INVEST IN CERTAIN INSTRUMENTS, SUCH AS DERIVATIVES, AND MAY USE
CERTAIN TECHNIQUES, SUCH AS HEDGING, TO MANAGE THESE RISKS. HOWEVER,
MSDW INVESTMENT MANAGEMENT CANNOT GUARANTEE THAT IT WILL BE PRACTICAL TO HEDGE
THESE RISKS IN CERTAIN MARKETS OR UNDER PARTICULAR CONDITIONS OR THAT IT WILL
SUCCEED IN DOING SO. THE RISKS OF INVESTING IN THE PORTFOLIO MAY BE INTENSIFIED
BECAUSE THE PORTFOLIO IS NON-DIVERSIFIED, WHICH MEANS THAT IT MAY INVEST IN
SECURITIES OF A LIMITED NUMBER OF ISSUERS. AS A RESULT, THE PERFORMANCE OF A
PARTICULAR INVESTMENT OR A SMALL GROUP OF INVESTMENTS MAY AFFECT THE PORTFOLIO'S
PERFORMANCE MORE THAN IF THE PORTFOLIO WERE DIVERSIFIED.

<TABLE>
<CAPTION>
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
PERFORMANCE (CLASS A SHARES)
<S> <C>
COMMENCED OPERATIONS ON OCTOBER 1, 1997
1998 xx.xx%
HIGH (QUARTER)
mo/yr-mo/yr
xx.xx%
LOW (QUARTER)
mo/yr-mo/yr
xx.xx%
</TABLE>

1
<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
ASIAN REAL ESTATE PORTFOLIO
- -------------------------------------------------------------------------------

THE ASIAN REAL ESTATE PORTFOLIO SEEKS TO PROVIDE LONG-TERM CAPITAL APPRECIATION
BY INVESTING PRIMARILY IN EQUITY SECURITIES OF COMPANIES IN THE ASIAN REAL
ESTATE INDUSTRY.

APPROACH

MSDW Investment Management seeks capital appreciation by constructing a
portfolio of equity securities of Asian real estate companies. MSDW Investment
Management considers a company to be Asian if its securities are traded on a
recognized stock exchange in Asia or if it is organized in an Asian country and
operates primarily in Asia. The Portfolio will invest primarily in the more
established Asian markets, including Singapore, Malaysia, Hong Kong and
Thailand, but may also invest in emerging markets and in Japan, Australia and
New Zealand. MSDW Investment Management's approach emphasizes bottom-up stock
selection with a top-down country allocation overlay.

PROCESS

RISK

Investing in the Asian Real Estate Portfolio may be appropriate for you if you
are willing to accept the risks and uncertainties of the Asian real estate
market in the hope of earning long-term gain while diversifying your investment
portfolio. In general, prices of equity securities are more volatile than those
of fixed income securities. The prices of equity securities will rise
and fall in response to a number of different factors. In particular,
prices of equity securities will respond to events which affect
entire financial markets or industries (changes in inflation or
consumer demand, for example) and to events that affect particular
issuers (news about the success or failure of a new product, for
example). Investing in real estate companies entails the risks of the
real estate business generally, including sensitivity to economic and
business cycles, changing demographic patterns and government
actions. In addition, at times the Portfolio's market sector, Asian
real estate securities, may underperform relative to other sectors.

INVESTING IN FOREIGN COUNTRIES, PARTICULARLY EMERGING MARKETS,
ENTAILS THE RISK THAT NEWS AND EVENTS UNIQUE TO A COUNTRY OR REGION
WILL AFFECT THOSE MARKETS AND THEIR ISSUERS. THESE SAME EVENTS WILL
NOT NECESSARILY HAVE AN EFFECT ON THE U.S. ECONOMY OR SIMILAR ISSUERS
LOCATED IN THE UNITED STATES. IN ADDITION, THE PORTFOLIO'S
INVESTMENTS IN FOREIGN COUNTRIES GENERALLY WILL BE DENOMINATED IN
FOREIGN CURRENCIES. AS A RESULT, CHANGES IN THE VALUE OF A COUNTRY'S
CURRENCY COMPARED TO THE U.S. DOLLAR MAY AFFECT THE VALUE OF THE
PORTFOLIO'S INVESTMENTS. THESE CHANGES MAY HAPPEN SEPARATELY FROM AND
IN RESPONSE TO EVENTS THAT DO NOT OTHERWISE AFFECT THE VALUE OF THE
SECURITY IN THE ISSUER'S HOME COUNTRY. MSDW INVESTMENT MANAGEMENT MAY
INVEST IN CERTAIN INSTRUMENTS, SUCH AS DERIVATIVES, AND MAY USE CERTAIN
TECHNIQUES, SUCH AS HEDGING, TO MANAGE THESE RISKS. HOWEVER, MSDW INVESTMENT
MANAGEMENT CANNOT GUARANTEE THAT IT WILL BE PRACTICAL TO HEDGE THESE RISKS IN
CERTAIN MARKETS OR UNDER PARTICULAR CONDITIONS OR THAT IT WILL SUCCEED IN DOING
SO. THE RISKS OF INVESTING IN THE PORTFOLIO MAY BE INTENSIFIED BECAUSE THE
PORTFOLIO IS NON-DIVERSIFIED, WHICH MEANS THAT IT MAY INVEST IN SECURITIES OF A
LIMITED NUMBER OF ISSUERS. AS A RESULT, THE PERFORMANCE OF A PARTICULAR
INVESTMENT OR A SMALL GROUP OF INVESTMENTS MAY AFFECT THE PORTFOLIO'S
PERFORMANCE MORE THAN IF THE PORTFOLIO WERE DIVERSIFIED.

2
<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
U.S. REAL ESTATE PORTFOLIO
- -------------------------------------------------------------------------------

APPROACH

MSDW Investment Management seeks a combination of current income and long-term
gain by constructing a portfolio of equity securities of companies that are in
the U.S. real estate business. The Portfolio focuses on REITs as well as real
estate operating companies and diversifies its investments as to issuers,
property types and region. MSDW Investment Management's approach emphasizes
bottom-up stock selection with a top-down asset allocation overlay.

PROCESS

MSDW Investment Management actively manages the Portfolio using a combination of
top-down and bottom-up methodologies. The top-down asset allocation overlay is
determined by focusing on key regional criteria, which include demographic and
macroeconomic considerations (for example, population, employment, household
formation and income). MSDW Investment Management employs a value-driven
approach to bottom-up security selection which emphasizes underlying asset
values, values per square foot and property yields. In seeking an optimal matrix
of regional and property market exposure, MSDW Investment Management considers
broad demographic and macroeconomic factors as well as criteria such as space
demand, new construction and rental patterns.

RISK

Investing in the U.S. Real Estate Portfolio may be appropriate for you if you
are willing to accept the risks and uncertainties of the U.S. real estate market
in the hope of earning current income and long-term gain while diversifying your
investment portfolio. In general, prices of equity securities are
more volatile than those of fixed income securities. The prices of
equity securities will rise and fall in response to a number of
different factors. In particular, prices of equity securities will
respond to events which affect entire financial markets or industries
(changes in inflation or consumer demand, for example) and to events
that affect particular issuers (news about the success or failure of
a new product, for example). Investing in real estate companies
entails the risks of the real estate business generally, including
sensitivity to economic and business cycles, changing demographic
patterns and government actions. These risks may be intensified
because the Portfolio is non-diversified, which means that it may
invest in securities of a limited number of issuers. As a result, the
performance of a particular investment or a small group of
investments may affect the Portfolio's performance more than if the
Portfolio were diversified. In addition, at times the Portfolio's
market sector, U.S. real estate securities, may underperform relative
to other sectors.

INVESTING IN REITS EXPOSES INVESTORS TO THE RISKS OF OWNING REAL
ESTATE DIRECTLY AS WELL AS TO RISKS THAT RELATE SPECIFICALLY TO THE
WAY IN WHICH REITS ARE ORGANIZED AND OPERATED. REITS GENERALLY INVEST
DIRECTLY IN REAL ESTATE (EQUITY REITS), IN MORTGAGES (MORTGAGE REITS)
OR IN SOME COMBINATION OF THE TWO (HYBRID REITS). THE PORTFOLIO WILL
INVEST PRIMARILY IN EQUITY REITS. OPERATING REITS REQUIRES
SPECIALIZED MANAGEMENT SKILLS AND THE PORTFOLIO INDIRECTLY BEARS REIT
MANAGEMENT EXPENSES ALONG WITH THE DIRECT EXPENSES OF THE PORTFOLIO.
INDIVIDUAL REITS MAY OWN A LIMITED NUMBER OF PROPERTIES AND MAY
CONCENTRATE IN A PARTICULAR REGION OR PROPERTY TYPE. REITS ALSO MUST
SATISFY SPECIFIC INTERNAL REVENUE CODE REQUIREMENTS IN ORDER TO
QUALIFY FOR THE TAX-FREE PASS THROUGH OF INCOME.

<TABLE>
<CAPTION>
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
PERFORMANCE (CLASS A SHARES)
<S> <C>
COMMENCED OPERATIONS ON FEBRUARY 24, 1995
1996 40.xx%
1997 28.xx%
1998 xx.xx%
HIGH (QUARTER)
10/96 - 12/96
16.71%
LOW (QUARTER)
10/97 - 12/97
2.17%
</TABLE>

3
<PAGE>

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

PRICE VOLATILITY

The value of your investment in a Portfolio is based on the market prices of the
securities the Portfolio holds. These prices change daily due to economic and
other events that affect markets generally, as well as those that affect
particular companies or governments. These price movements, sometimes called
volatility, may be greater or lesser depending on the types of securities the
Portfolio owns and the markets in which the securities trade. Over time, equity
securities have generally shown superior gains, although they have tended to be
more volatile in the short term. Fixed income securities, regardless of credit
quality, also experience price volatility, especially in response to interest
rate changes. As a result of price volatility, there is a risk that you may lose
money by investing in a Portfolio.

REAL ESTATE INVESTING

Each of the Portfolios invests in companies that are mainly in the real estate
business (that is, they either (i) derived at least 50% of their revenues or
profits from the ownership, construction, management, financing or sale of
residential, commercial or industrial real estate, or (ii) have at least 50% of
the fair market value of their assets invested residential, commercial or
industrial real estate). As a result, these companies (and, therefore, the
Portfolios) will experience the risks of investing in real estate directly. Real
estate is a cyclical business, highly sensitive to general and local economic
developments and characterized by intense competition and periodic overbuilding.
Real estate income and values may also be greatly affected by demographic
trends, such as population shifts or changing tastes on values. Government
actions, such as tax increases, zoning law changes or environmental regulations,
may also have a major impact on real estate. Changing interest rates and credit
quality requirements will also affect the cash flow of real estate companies and
their ability to meet capital needs.

EMERGING MARKET RISKS

The European Real Estate and Asian Real Estate Portfolios may invest in emerging
market countries, which are countries that major international financial
institutions, such as the World Bank, generally consider to be less economically
mature than developed nations, such as the United States or most nations in
Western Europe. Emerging market countries can include every nation in the world
except the United States, Canada, Japan, Australia, New Zealand, and most
countries located in Western Europe. Emerging market countries may be more
likely to experience political turmoil or rapid changes in economic conditions
than more developed countries, and the financial condition of issuers in
emerging market countries may be more precarious than in other countries. These
characteristics result in greater risk of price volatility in emerging market
countries, which may be heightened by currency fluctuations relative to the U.S.
dollar.

DERIVATIVES

4
<PAGE>

liquid securities to cover its obligations under those instruments. At certain
levels, this can cause the Portfolio to lose flexibility in managing its
investments properly, responding to shareholder redemption requests, or meeting
other obligations. If the Portfolio is in that position, it could be forced to
sell other securities that it wanted to retain.

BANK INVESTORS

An investment in a Portfolio is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.

YEAR 2000 RISK

TEMPORARY DEFENSIVE
INVESTMENTS

When MSDW Investment Management believes that changes in economic, financial or
political conditions warrant, each Portfolio may invest without limit in certain
short- and medium-term fixed income securities for temporary purposes. If MSDW
Investment Management incorrectly predicts the effects of these changes, such
defensive investments may adversely affect the Portfolios' performance.

PORTFOLIO TURNOVER

5
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE
- -------------------------------------------------------------------------------

These tables compare the performance of each Portfolio to an index of similar
securities. An index is a hypothetical measure of performance based on the ups
and downs of securities that make up a particular market. The index does not
show actual investment returns or reflect payment of management or brokerage
fees, which would lower the index's performance. The table for the U.S. Real
Estate Portfolio separately compares Class A and Class B shares to the index so
that you can compare performance for each class from its commencement date. The
index itself does not actually have two classes.

AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIOD ENDED DECEMBER 31, 1998)

<TABLE>
<CAPTION>
EUROPEAN REAL ESTATE PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS
ON OCTOBER 1, 1997) ON OCTOBER 1, 1997) GPR LIFE EUROPEAN REAL
ESTATE T.R. INDEX
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
PAST ONE YEAR
- -------------------------------------------------------------------------------------------------------------
PAST FIVE YEARS
- -------------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % %
</TABLE>

THE GPR LIFE EUROPEAN REAL ESTATE T.R. INDEX IS A EUROPEAN MARKET CAPITALIZATION
WEIGHTED INDEX OF LISTED PROPERTY/ REAL ESTATE SECURITIES MEASURING TOTAL
RETURN.

<TABLE>
<CAPTION>
ASIAN REAL ESTATE PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS GPR LIFE FAR EAST ASIA
ON OCTOBER 1, 1997) ON OCTOBER 1, 1997) REAL ESTATE T.R. INDEX
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
PAST ONE YEAR
- -------------------------------------------------------------------------------------------------------------
PAST FIVE YEARS
- -------------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % %
</TABLE>

THE GPR LIFE FAR EAST ASIA REAL ESTATE T.R. INDEX IS A FAR EAST MARKET
CAPITALIZATION WEIGHTED INDEX OF LISTED PROPERTY/ REAL ESTATE SECURITIES
MEASURING TOTAL RETURN.

<TABLE>
<CAPTION>
U.S REAL ESTATE PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS NAREIT EQUITY INDEX
ON FEBRUARY 24, 1995) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- ---------------------------------------------------------------------------------------------------------------------
PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

THE NAREIT EQUITY INDEX IS AN UNMANAGED MARKET WEIGHTED INDEX OF TAX QUALIFIED
REITS LISTED ON THE NEW YORK STOCK EXCHANGE, AMERICAN STOCK EXCHANGE AND THE
NASDAQ NATIONAL MARKET SYSTEM, INCLUDING DIVIDENDS.

1998 ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)

<TABLE>
<CAPTION>
EUROPEAN REAL ESTATE ASIAN REAL ESTATE U.S. REAL ESTATE
PORTFOLIO PORTFOLIO PORTFOLIO
MANAGEMENT FEES
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
CLASS A 0.80% 0.80% 0.80%
- ------------------------------------------------------------------------------------------------
CLASS B 0.80% 0.80% 0.80%

12B-1 FEE
- ------------------------------------------------------------------------------------------------
CLASS A NONE NONE NONE
- ------------------------------------------------------------------------------------------------
CLASS B 0.25% 0.25% 0.25%

OTHER EXPENSES
- ------------------------------------------------------------------------------------------------
CLASS A --% --% --%
- ------------------------------------------------------------------------------------------------
CLASS B --% --% --%

TOTAL ANNUAL FUND OPERATING EXPENSES
- ------------------------------------------------------------------------------------------------
CLASS A --% --% --%
- ------------------------------------------------------------------------------------------------
CLASS B --% --% --%
</TABLE>

MAXIMUM EXPENSES AFTER FEE WAIVERS/EXPENSE REIMBURSEMENTS

<TABLE>
<CAPTION>
EUROPEAN REAL ESTATE ASIAN REAL ESTATE U.S. REAL ESTATE
PORTFOLIO PORTFOLIO PORTFOLIO
CLASS A 1.00% 1.00% 1.00%
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
CLASS B 1.25% 1.25% 1.25%
</TABLE>

FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS ARE VOLUNTARY AND MSDW INVESTMENT
MANAGEMENT RESERVES THE RIGHT TO TERMINATE ANY WAIVER AND/OR REIMBURSEMENT AT
ANY TIME AND WITHOUT NOTICE.

7
<PAGE>
EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN EACH
PORTFOLIO WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS HAVING SIMILAR
INVESTMENT OBJECTIVES.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
EUROPEAN REAL ESTATE PORTFOLIO
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

ASIAN REAL ESTATE PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

U.S. REAL ESTATE PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------
INVESTMENT ADVISER
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
MANAGEMENT FEES
- -------------------------------------------------------------------------------

For the year ended December 31, 1998, MSDW Investment Management received from
each Portfolio the management fee set forth in the table below:

<TABLE>
<CAPTION>
EUROPEAN REAL ASIAN REAL ESTATE U.S. REAL ESTATE
ESTATE PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
---------------------------------------------------------
MANAGEMENT FEE PAID IN
FISCAL YEAR ENDED
DECEMBER 31, 1998 0.00% 0.00% 0.00% 0.00% 0.76% 0.76%
(NET OF WAIVERS AND AS A
PERCENTAGE OF AVERAGE
NET ASSETS)
</TABLE>

8
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
- -------------------------------------------------------------------------------

THE FOLLOWING INDIVIDUALS HAVE PRIMARY DAY-TO-DAY PORTFOLIO MANAGEMENT
RESPONSIBILITY FOR THE PORTFOLIOS:

EUROPEAN REAL ESTATE PORTFOLIO

JAN WILLEM DE GEUS

Jan Willem de Geus joined MSDW Investment Management in 1997 and is a Vice
President of MSDW Investment Management and Morgan Stanley. He is responsible
for MSDW Investment Management's real estate investment management business in
Europe, with a focus on real estate securities research. He has had primary
management responsibility for the Portfolio since it commenced operations in
1998. Before joining MSDW Investment Management, he was employed at the Dutch
Metalworkers Pensionfund (MPMA), where he worked for four years in the
international real estate department. At the MPMA he was involved in the
acquisition of direct real estate, was responsible for selecting REIT managers
in the United States, and was a portfolio manager of international real estate
securities. He graduated from the University of Nijmegen in 1991 with a
doctorate in city planning with a specialization in real estate and received a
masters degree in real estate investment from Pennsylvania State University in
1993. He is currently in the final stage of finishing his RBA (the Dutch
equivalent of an American CFA).

ASIAN REAL ESTATE PORTFOLIO

KIAT SENG SEAH

Kiat Seng Seah joined MSDW Investment Management's Singapore office in 1990 as a
portfolio manager/analyst specializing in the Asian equity markets. He is
currently a Principal of MSDW Investment Management and Morgan Stanley and is
responsible for the Asian real estate securities investment business. He has had
primary management responsibility for the Portfolio since it commenced
operations. Kiat Seng is a Chartered Financial Analyst and a qualified real
estate valuer who spent a total of four years as a real estate appraiser, first
for the New Zealand Government and then for the Singapore Ministry of Finance.
He was a Colombo Plan Scholar at the University of Auckland, New Zealand and
graduated with a degree in Property Administration.

U.S. REAL ESTATE PORTFOLIO

THEODORE R. BIGMAN AND DOUGLAS A. FUNKE

Theodore R. Bigman joined Morgan Stanley in 1995 and currently is a Principal of
MSDW Investment Management and Morgan Stanley. He has primary responsibility for
MSDW Investment Management's real estate securities business. Prior to joining
MSDW Investment Management, he was a Director at CS First Boston, where he
worked for eight years in the Real Estate Group. While at CS First Boston, Mr.
Bigman established and managed that firm's REIT effort, including primary
responsibility for $2.5 billion of initial public offerings by REITs. Mr. Bigman
graduated from Brandeis University in 1983 with a B.A. in Economics and received
his M.B.A. from Harvard University in 1987. Douglas A. Funke joined Morgan
Stanley in 1993 as a Financial Analyst. Currently, he is Vice President of MSDW
Investment Management and Morgan Stanley and is responsible for providing
research and analytical support for the group's real estate securities
investment business. Prior to joining MSDW Investment Management, he was a
member of Morgan Stanley's Interest Rate and Foreign Exchange Risk Management
Group, where he assisted in the execution of more than $3 billion of structured
financings and firm-related risk management projects. He graduated from the
University of Chicago in 1993 with a B.A. in Economics and Political Science. He
is a member of the National Association of Real Estate Investment Trusts and the
New York Society of Securities Analysts. Theodore R. Bigman has shared primary
responsibility for managing the Portfolio's assets since March 1995. Douglas A.
Funke has shared primary responsibility for managing the Portfolio's assets
since January 1999.

- -------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------

ABOUT NET ASSET VALUE

PRICING OF PORTFOLIO SHARES

HOW TO PURCHASE SHARES

You may purchase Class A shares and Class B shares of each Portfolio directly
from the Fund, from the Distributor or through certain third parties ("Financial
Intermediaries"). The minimum initial investment generally is $500,000 for Class
A shares and $100,000 for Class B shares of each Portfolio. [You may purchase
shares of the Portfolios on each day that the NYSE is open. However, on days
that the NYSE is open but banks are closed the Portfolios will accept purchases
only by check.]

The minimum additional investment generally is $1,000 for each account that you
have. If the value of your account falls below the minimum initial investment
amount for Class A shares or Class B shares as a result of share redemptions,
the Fund will notify you. Your account may be subject to involuntary conversion
from Class A shares to Class B shares or involuntary redemption in the case of
Class B shares if the value of your account remains below the minimum initial
investment amount for 60 consecutive days. MSDW Investment Management may waive
the minimum initial investment and involuntary conversion or redemption features
for certain investors, including individuals purchasing through a Financial
Intermediary.

10
<PAGE>

HOW TO REDEEM SHARES

You may redeem Portfolio shares directly from the Fund, through the Distributor
or through your Financial Intermediary, each as described above under Purchase
of Shares. The redemption price will be the net asset value per share calculated
at the next Pricing Time, which may be more or less than the purchase price of
your shares. The Fund will ordinarily distribute redemption proceeds in cash
within one business day of your redemption request, but may take up to seven
business days. However, if you purchased shares by check, the Fund will not
distribute redemption proceeds until it has collected your purchase payment,
which may take up to eight days. The Portfolios will honor redemptions but pay
them the following day on days that the NYSE is open but banks are closed. In
certain circumstances, for example, if payment of redemption proceeds in cash
would be detrimental to the remaining shareholders, a Portfolio may pay
redemption proceeds by a distribution-in-kind of readily marketable portfolio
securities.

EXCHANGE FEATURES

*PORTFOLIO IS CURRENTLY CLOSED TO NEW INVESTORS

+PORTFOLIO HAS NOT YET COMMENCED OPERATIONS

11
<PAGE>

DIVIDENDS AND DISTRIBUTIONS

Each Portfolio's policy is to distribute to shareholders substantially all of
its taxable net investment income in the form of quarterly dividends and to
distribute net capital gains on an annual basis.

TAXES

The dividends and distributions you receive from a Portfolio may be subject to
Federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are ordinary income and capital gains distributions are taxed
based on how long the Portfolio held the assets. A Portfolio may be able to pass
through to you a credit for foreign income taxes it pays. The Fund will tell you
annually how to treat dividends and distributions.

- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

12
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
EUROPEAN REAL ESTATE PORTFOLIO
- -------------------------------------------------------------------------------

13
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
ASIAN REAL ESTATE PORTFOLIO
- -------------------------------------------------------------------------------

14
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
U.S. REAL ESTATE PORTFOLIO
- -------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

SHAREHOLDER REPORTS

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
P.O. Box 2798
Boston, Massachusetts 02208-2798

FOR INFORMATION CALL 1-800-548-7786
<PAGE>

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

PROSPECTUS JANUARY , 1999
- -------------------------------------------------------------------------------

A PORTFOLIO OF [LOGO] MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.

INTERNATIONAL MAGNUM PORTFOLIO

THE INTERNATIONAL MAGNUM PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY
INVESTING PRIMARILY IN EQUITY SECURITIES OF NON-U.S. ISSUERS DOMICILED IN EAFE
COUNTRIES.

INVESTMENT ADVISER

Morgan Stanley Dean Witter Investment Management Inc.

DISTRIBUTOR

Morgan Stanley & Co. Incorporated

<TABLE>
<S> <C>
INVESTMENT SUMMARY
INTERNATIONAL MAGNUM PORTFOLIO 1
ADDITIONAL RISK FACTORS AND INFORMATION 2
PAST PERFORMANCE 4
FEES AND EXPENSES OF THE PORTFOLIO 4
INVESTMENT ADVISER 5
MANAGEMENT FEES 5
PORTFOLIO MANAGER 6
DISTRIBUTION OF PORTFOLIO SHARES 7
SHAREHOLDER INFORMATION 7
FINANCIAL HIGHLIGHTS 9
INTERNATIONAL MAGNUM PORTFOLIO 10
ACCOUNT REGISTRATION FORM
[TO BE ATTACHED]
</TABLE>

<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
INTERNATIONAL MAGNUM PORTFOLIO
- -------------------------------------------------------------------------------

THE INTERNATIONAL MAGNUM PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY
INVESTING PRIMARILY IN EQUITY SECURITIES OF NON-U.S. ISSUERS DOMICILED IN EAFE
COUNTRIES.

APPROACH

MSDW Investment Management seeks to achieve superior long-term returns by
creating a diversified portfolio of undervalued international equity securities.
To achieve this goal, MSDW Investment Management uses a combination of strategic
geographic asset allocation and fundamental, value oriented stock selection.

PROCESS

The Portfolio is managed using a two-part process combining the expertise of
investment teams based in New York, London, Tokyo and Singapore. The New
York-based portfolio management team decides upon the appropriate allocation of
the Portfolio's assets among Europe, Japan and developed Asia, including
Australia and New Zealand. Regional allocation decisions are based on a variety
of factors, including relative valuations, earnings expectations, macroeconomic
factors, as well as input from the regional stock selection teams and from MSDW
Investment Management's Asset Allocation Committee, which is made up of several
of MSDW Investment Management's most senior investment officers. Once the
allocations to Europe, Asia and Japan have been determined, three overseas
investment teams in London (for European stocks), Tokyo (for Japanese stocks)
and Singapore (for Asian stocks) decide which stocks to purchase for their
respective geographic regions. The regional portfolio management teams look for
stocks that they believe to be undervalued by the market. The regional
specialists analyze each company's finances, products and management, typically
meeting with each company's management before a stock is purchased for the
Portfolio. The Portfolio invests primarily in countries comprising the MSCI
Europe, Australasia, Far East (EAFE) Index (the "EAFE Index"). EAFE countries
include Japan, most nations in Western Europe and the more developed nations of
Asia, such as Australia, New Zealand, Hong Kong and Singapore. However, the
Portfolio also may invest up to 5% of its assets in countries not included in
the EAFE Index.

RISK

Investing in the International Magnum Portfolio may be appropriate for you if
you are willing to accept the risks and uncertainties of investing in the equity
securities of non-U.S. issuers in the hope of earning superior returns and
diversifying your investment portfolio. In general, prices of equity
securities are more volatile than those of fixed income securities.
The prices of equity securities will rise and fall in response to a
number of different factors. In particular, prices of equity
securities will respond to events which affect entire financial
markets or industries (changes in inflation or consumer demand, for
example) and to events that affect particular issuers (news about the
success or failure of a new product, for example). In addition, at
times the Portfolio's market sector, foreign equity securities, may
underperform relative to other sectors.

INVESTING IN FOREIGN COUNTRIES ENTAILS THE RISK THAT NEWS AND EVENTS
UNIQUE TO A COUNTRY OR REGION WILL AFFECT THOSE MARKETS AND THEIR
ISSUERS. THESE SAME EVENTS WILL NOT NECESSARILY HAVE AN EFFECT ON THE
U.S. ECONOMY OR SIMILAR ISSUERS LOCATED IN THE UNITED STATES. IN
ADDITION, THE PORTFOLIO'S INVESTMENTS IN FOREIGN COUNTRIES GENERALLY
WILL BE DENOMINATED IN FOREIGN CURRENCIES. AS A RESULT, CHANGES IN
THE VALUE OF A COUNTRY'S CURRENCY COMPARED TO THE U.S. DOLLAR MAY
AFFECT THE VALUE OF THE PORTFOLIO'S INVESTMENTS. THESE CHANGES MAY
HAPPEN SEPARATELY FROM AND IN RESPONSE TO EVENTS THAT DO NOT
OTHERWISE AFFECT THE VALUE OF THE SECURITY IN THE ISSUER'S HOME
COUNTRY. MSDW INVESTMENT MANAGEMENT MAY INVEST IN CERTAIN
INSTRUMENTS, SUCH AS DERIVATIVES, AND MAY USE CERTAIN TECHNIQUES,
SUCH AS HEDGING, TO MANAGE THESE RISKS. HOWEVER, MSDW INVESTMENT
MANAGEMENT CANNOT GUARANTEE THAT IT WILL BE PRACTICAL TO HEDGE THESE
RISKS IN CERTAIN MARKETS OR UNDER PARTICULAR CONDITIONS OR THAT IT
WILL SUCCEED IN DOING SO. THE RISKS OF INVESTING IN THE PORTFOLIO MAY
BE INTENSIFIED BECAUSE THE PORTFOLIO IS NON-DIVERSIFIED, WHICH MEANS THAT IT MAY
INVEST IN SECURITIES OF A LIMITED NUMBER OF ISSUERS. AS A RESULT, THE
PERFORMANCE OF A PARTICULAR INVESTMENT OR A SMALL GROUP OF INVESTMENTS MAY
AFFECT THE PORTFOLIO'S PERFORMANCE MORE THAN IF THE PORTFOLIO WERE DIVERSIFIED.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C>
COMMENCED OPERATIONS ON MARCH 15, 1996
1997 41.xx%
1998 xx.xx%
HIGH (QUARTER)
4/97 - 6/97
13.28%
LOW (QUARTER)
10/97 - 12/97
- -7.56%
</TABLE>

1
<PAGE>
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
ADDITIONAL RISK FACTORS AND INFORMATION
- -------------------------------------------------------------------------------

PRICE VOLATILITY

The value of your investment in the Portfolio is based on the market prices of
the securities the Portfolio holds. These prices change daily due to economic
and other events that affect markets generally, as well as those that affect
particular regions, countries, industries and companies. These price movements,
sometimes called volatility, may be greater or lesser depending on the types of
securities the Portfolio owns and the markets in which the securities trade.
Over time, equity securities have generally shown superior gains, although they
have tended to be more volatile than fixed income securities in the short term.
Fixed income securities, regardless of credit quality, also experience price
volatility, especially in response to interest rate changes. As a result of
price volatility, there is a risk that you may lose money by investing in the
Portfolio.

EMERGING MARKET RISKS

Emerging market countries are countries that major international financial
institutions, such as the World Bank, generally consider to be less economically
mature than developed nations, such as the United States or most nations in
Western Europe. Emerging market countries can include every nation in the world
except the United States, Canada, Japan, Australia, New Zealand, and most
countries located in Western Europe. Emerging market countries may be more
likely to experience political turmoil or rapid changes in economic conditions
than more developed countries, and the financial condition of issuers in
emerging market countries may be more precarious than in other countries. These
characteristics result in greater risk of price volatility in emerging market
countries, which may be heightened by currency fluctuations relative to the U.S.
dollar.

DERIVATIVES

BANK INVESTORS

An investment in the Portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.

YEAR 2000 RISK

2
<PAGE>

can be no assurance, however, that they will be successful. In addition, other
unaffiliated service providers may be faced with similar problems. MSDW
Investment Management and Morgan Stanley are monitoring their remedial efforts,
but there can be no assurance that they and the services they provide will not
be adversely affected.

TEMPORARY DEFENSIVE
INVESTMENTS

PORTFOLIO TURNOVER

3
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE
- -------------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURN (FOR THE YEAR ENDED DECEMBER 31, 1998)

<TABLE>
<CAPTION>
INTERNATIONAL MAGNUM PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS
ON MARCH 15, 1996) ON MARCH 15, 1996) MSCI EAFE INDEX
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % %
- ------------------------------------------------------------------------------------------------------
PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % %
</TABLE>

THE MSCI EAFE INDEX IS AN UNMANAGED INDEX OF COMMON STOCKS AND INCLUDES EUROPE,
AUSTRALASIA AND THE FAR EAST, INCLUDING DIVIDENDS NET OF WITHHOLDING TAXES.

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

FEES AND EXPENSES OF THE PORTFOLIO
- -------------------------------------------------------------------------------

1998 ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)

<TABLE>
<CAPTION>
INTERNATIONAL
MAGNUM PORTFOLIO
<S> <C>
MANAGEMENT FEES
- --------------------------------------------------------------------
CLASS A 0.80%
- --------------------------------------------------------------------
CLASS B 0.80%

12B-1 FEE
- --------------------------------------------------------------------
CLASS A NONE
- --------------------------------------------------------------------
CLASS B 0.25%

OTHER EXPENSES
- --------------------------------------------------------------------
CLASS A --%
- --------------------------------------------------------------------
CLASS B --%

TOTAL ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------
CLASS A --%
- --------------------------------------------------------------------
CLASS B --%
</TABLE>

MAXIMUM EXPENSES AFTER FEE WAIVERS/EXPENSE REIMBURSEMENTS

<TABLE>
<CAPTION>
INTERNATIONAL MAGNUM PORTFOLIO
<S> <C>
CLASS A 1.00%
- ----------------------------------------------------------------------------------
CLASS B 1.25%
</TABLE>

FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS ARE VOLUNTARY AND MSDW INVESTMENT
MANAGEMENT RESERVES THE RIGHT TO TERMINATE ANY WAIVER AND/OR REIMBURSEMENT AT
ANY TIME AND WITHOUT NOTICE.

4
<PAGE>
EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
PORTFOLIO WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS HAVING SIMILAR
INVESTMENT OBJECTIVES.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INTERNATIONAL MAGNUM PORTFOLIO
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------
INVESTMENT ADVISER
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
MANAGEMENT FEES
- -------------------------------------------------------------------------------

For the year ended December 31, 1998, MSDW Investment Management received from
the Portfolio the management fee set forth in the table below:

<TABLE>
<CAPTION>
INTERNATIONAL
MAGNUM
PORTFOLIO
-----------------
<S> <C> <C>
MANAGEMENT FEE CLASS A CLASS B
-----------------
PAID IN FISCAL YEAR ENDED
DECEMBER 31, 1998 0.61% 0.61%
(NET OF WAIVERS AND AS A
PERCENTAGE OF AVERAGE NET
ASSETS)
</TABLE>

5
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER
- -------------------------------------------------------------------------------

THE FOLLOWING INDIVIDUAL HAS PRIMARY DAY-TO-DAY PORTFOLIO MANAGEMENT
RESPONSIBILITY FOR THE PORTFOLIO:

INTERNATIONAL MAGNUM PORTFOLIO

FRANCINE J. BOVICH

Francine J. Bovich, a Managing Director of MSDW Investment Management and Morgan
Stanley, joined MSDW Investment Management in 1993. Previously, Ms. Bovich was a
Principal and Executive Vice President of Westwood Management Corp.
("Westwood"), a registered investment adviser. Ms. Bovich serves as the U.S.
Representative to the United Nations Investment Committee. She holds a B.A. in
Economics from Connecticut College and an M.B.A. in Finance from New York
University. Ms. Bovich has had primary responsibility for managing the Portfolio
since its inception.

- -------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------

ABOUT NET ASSET VALUE

The net asset value per share of a class of shares of the Portfolio is
determined by dividing the total market value of the Portfolio's investments and
other assets attributable to the class, less any liabilities attributable to the
class, by the total number of outstanding shares of that class of the Portfolio.
In making this calculation, the Portfolio generally values securities at market
price. If market prices are unavailable or may be unreliable because of events
occurring after the close of trading, fair value prices may be determined in
good faith using methods approved by the Board of Directors. The Portfolio may
hold portfolio securities that are listed on foreign exchanges. These securities
may trade on weekends or other days when the Portfolio does not calculate NAV.
As a result, the value of these investments may change on days when you cannot
purchase or sell shares.

PRICING OF PORTFOLIO SHARES

You may buy or sell (redeem) Class A and Class B shares of the Portfolio at the
net asset value next determined for the class after receipt of your order. The
Fund determines net asset value as of the close of the NYSE (normally 4:00 p.m.
Eastern Time) on each day that the NYSE is open for business (the "Pricing
Time").

HOW TO PURCHASE SHARES

7
<PAGE>
Certain Financial Intermediaries have made arrangements with the Fund so that
you may purchase shares at the price calculated at the next Pricing Time after
your Financial Intermediary receives your purchase order. Your Financial
Intermediary may charge an additional service or transaction fee.

HOW TO REDEEM SHARES

You may redeem Portfolio shares directly from the Fund, through the Distributor
or through your Financial Intermediary, each as described above under Purchase
of Shares. The redemption price will be the net asset value per share calculated
at the next Pricing Time, which may be more or less than the purchase price of
your shares. The Fund will ordinarily distribute redemption proceeds in cash
within one business day of your redemption request, but it may take up to seven
business days. However, if you purchased shares by check, the Fund will not
distribute redemption proceeds until it has collected your purchase payment,
which may take up to eight days. The Portfolio will honor redemptions but pay
them the following day on days that the NYSE is open but banks are closed. In
certain circumstances, for example, if payment of redemption proceeds in cash
would be detrimental to the remaining shareholders, the Portfolio may pay
redemption proceeds by a distribution-in-kind of readily marketable portfolio
securities.

EXCHANGE FEATURES

*PORTFOLIO IS CURRENTLY CLOSED TO NEW INVESTORS

+PORTFOLIO HAS NOT YET COMMENCED OPERATIONS

When you exchange for shares of another portfolio, your transaction will be
treated the same as an initial purchase. You will be subject to the same minimum
initial investment and account size as an initial purchase. Accordingly, you
will not necessarily receive the same class of shares that you tendered for
exchange. Your exchange price will be the price calculated at the next Pricing
Time after the Fund receives your exchange order. Frequent trades in your
account(s) can disrupt management of the Portfolio and raise its expenses.
Therefore, the Fund may bar a shareholder who trades excessively from making
further exchanges or purchases.

8
<PAGE>

DIVIDENDS AND DISTRIBUTIONS

The Portfolio's policy is to distribute to shareholders substantially all of its
taxable net investment income in the form of an annual dividend and to
distribute net capital gains on an annual basis.

TAXES

The dividends and distributions you receive from the Portfolio may be subject to
Federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are ordinary income and capital gains distributions are taxed
based on how long the Portfolio held the assets. The Portfolio may be able to
pass through to you a credit for foreign income taxes it pays. The Fund will
tell you annually how to treat dividends and distributions.

- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

The following financial highlights table is intended to help you understand the
financial performance of the Class A shares and Class B shares of the Portfolio
for the past five years or, if less than five years, the life of the Portfolio
or Class. Certain information reflects financial results for a single Portfolio
share. The total returns in the tables represent the rate that an investor would
have earned (or lost) on an investment in the Portfolio (assuming reinvestment
of all dividends and distributions). This information has been audited by
, whose report, along with the Fund's financial
statements, are incorporated by reference into the Fund's Statement of
Additional Information and are included in the Fund's December 31, 1998 Annual
Report to Shareholders.

9
<PAGE>
- ----------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
INTERNATIONAL MAGNUM PORTFOLIO
- -------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

In addition to this Prospectus, the Fund has a Statement of Additional
Information ("SAI"), dated ________, 1999, which contains additional, more
detailed information about the Fund and the Portfolio. The SAI is incorporated
by reference into this Prospectus and, therefore, legally forms a part of this
Prospectus.

SHAREHOLDER REPORTS

For additional Fund information, including information regarding investments
comprising the Fund's Portfolios, please call 1-800-548-7786 or visit the MSDW
Investment Management web site at www.

- --------.

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
P.O. Box 2798
Boston, Massachusetts 02208-2798

FOR INFORMATION CALL 1-800-548-7786
<PAGE>

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

PROSPECTUS JANUARY , 1999
- -------------------------------------------------------------------------------
PORTFOLIOS OF [LOGO] MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.

ASIAN EQUITY PORTFOLIO

THE ASIAN EQUITY PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF ASIAN ISSUERS.

JAPANESE EQUITY PORTFOLIO

THE JAPANESE EQUITY PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF JAPANESE ISSUERS.

INVESTMENT ADVISER

Morgan Stanley Dean Witter Investment Management Inc.

DISTRIBUTOR

Morgan Stanley & Co. Incorporated

<TABLE>
<S> <C>
INVESTMENT SUMMARY
ASIAN EQUITY PORTFOLIO 1
JAPANESE EQUITY PORTFOLIO 2
ADDITIONAL RISK FACTORS AND INFORMATION 3
PAST PERFORMANCE 5
FEES AND EXPENSES OF THE PORTFOLIOS 6
INVESTMENT ADVISER 7
MANAGEMENT FEES 7
PORTFOLIO MANAGERS 8
DISTRIBUTION OF PORTFOLIO SHARES 9
SHAREHOLDER INFORMATION 9
FINANCIAL HIGHLIGHTS 11
ASIAN EQUITY PORTFOLIO 12
JAPANESE EQUITY PORTFOLIO 13
ACCOUNT REGISTRATION FORM
[TO BE ATTACHED]
</TABLE>

<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
ASIAN EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

THE ASIAN EQUITY PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF ASIAN ISSUERS.

APPROACH

MSDW Investment Management seeks to achieve long-term capital appreciation by
investing in a diversified portfolio of equity securities of issuers in Asian
countries, excluding Japan. MSDW Investment Management employs a disciplined,
value-oriented approach to security selection, focusing on larger companies with
strong management teams. MSDW Investment Management evaluates top-down country
risk factors and opportunities when determining position sizes and overall
exposure to individual markets.

PROCESS

MSDW Investment Management emphasizes internal research of the leading companies
as the basis for stock selection. This research process encompasses analysis of
historical financial statements, identification of the potential for future
earnings and cash flows, valuation of key assets, discussions with analysts to
determine consensus expectations and an evaluation of the strength and depth of
management. Visits with management are central to this process. Depending on the
type of company, factors considered in selecting securities include price to
sales, price to earnings, price to cash flow, price to book value and price to
replacement value of assets. MSDW Investment Management considers valuation on
an absolute basis and relative to market average and comparable companies in the
region and emphasizes stocks where a catalyst can be identified which will
correct undervaluation. MSDW Investment Management tempers bottom-up stock
evaluation with a thorough analysis of risk factors and opportunities within
individual Asian countries. The team evaluates macroeconomic and political
factors when determining overall exposures within individual countries.

RISK

Investing in the Asian Equity Portfolio may be appropriate for you if you are
willing to accept the risks and uncertainties of investing in the equity
securities of issuers in emerging markets in the hope of earning superior
returns and diversifying your investment portfolio. In general, prices of equity
securities are more volatile than those of fixed income securities. The prices
of equity securities will rise and fall in response to a number of different
factors. In particular, prices of equity securities will respond to events which
affect entire financial markets or industries (changes in inflation or consumer
demand, for example) and to events that affect particular issuers (news about
the success or failure of a new product, for example). In addition,
at times the Portfolio's market sector, equity securities of Asian
issuers, may underperform relative to other sectors.

INVESTING IN ASIAN COUNTRIES, PARTICULARLY EMERGING MARKETS, ENTAILS
THE RISK THAT NEWS AND EVENTS UNIQUE TO ASIA AND ASIAN COUNTRIES WILL
AFFECT THOSE MARKETS AND THEIR ISSUERS. THESE SAME EVENTS WILL NOT
NECESSARILY HAVE AN EFFECT ON THE U.S. ECONOMY OR SIMILAR ISSUERS
LOCATED IN THE UNITED STATES. IN ADDITION, THE PORTFOLIO'S
INVESTMENTS IN ASIAN COUNTRIES GENERALLY WILL BE DENOMINATED IN
FOREIGN CURRENCIES. AS A RESULT, CHANGES IN THE VALUE OF A COUNTRY'S
CURRENCY COMPARED TO THE U.S. DOLLAR MAY AFFECT THE VALUE OF THE
PORTFOLIO'S INVESTMENTS. THESE CHANGES MAY HAPPEN SEPARATELY FROM AND
IN RESPONSE TO EVENTS THAT DO NOT OTHERWISE AFFECT THE VALUE OF THE
SECURITY IN THE ISSUER'S HOME COUNTRY. MSDW INVESTMENT MANAGEMENT MAY
INVEST IN CERTAIN INSTRUMENTS, SUCH AS DERIVATIVES, AND MAY USE
CERTAIN TECHNIQUES, SUCH AS HEDGING, TO MANAGE THESE RISKS. HOWEVER,
MSDW INVESTMENT MANAGEMENT CANNOT GUARANTEE THAT IT WILL BE PRACTICAL
TO HEDGE THESE RISKS IN CERTAIN MARKETS OR UNDER PARTICULAR
CONDITIONS OR THAT IT WILL SUCCEED IN DOING SO.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C>
COMMENCED OPERATIONS ON JULY 1,
1991
1992 xx.xx%
1993 106.xx%
1994 -16.xx%
1995 7.xx%
1996 3.xx%
1997 -48.xx%
1998 xx.xx%
HIGH (QUARTER)
10/93 - 12/93
49.56%
LOW (QUARTER)
10/97 - 12/97
-37.43%
</TABLE>

THE PORTFOLIO INVESTS PRIMARILY IN EMERGING MARKET COUNTRIES.
EMERGING MARKET COUNTRIES ARE COUNTRIES THAT MAJOR INTERNATIONAL
FINANCIAL INSTITUTIONS, SUCH AS THE WORLD BANK, GENERALLY CONSIDER TO
BE LESS ECONOMICALLY MATURE THAN DEVELOPED NATIONS, SUCH AS THE
UNITED STATES OR MOST NATIONS IN WESTERN EUROPE. EMERGING MARKET
COUNTRIES CAN INCLUDE EVERY NATION IN THE WORLD EXCEPT THE UNITED
STATES, CANADA, JAPAN, AUSTRALIA, NEW ZEALAND, AND MOST COUNTRIES
LOCATED IN WESTERN EUROPE. EMERGING MARKET COUNTRIES MAY BE MORE
LIKELY TO EXPERIENCE POLITICAL TURMOIL OR RAPID CHANGES IN ECONOMIC
CONDITIONS THAN MORE DEVELOPED COUNTRIES,

AND THE FINANCIAL CONDITION OF ISSUERS IN EMERGING MARKET COUNTRIES MAY BE MORE
PRECARIOUS THAN IN OTHER COUNTRIES. THESE CHARACTERISTICS RESULT IN GREATER RISK
OF PRICE VOLATILITY IN EMERGING MARKET COUNTRIES, WHICH MAY BE HEIGHTENED BY
CURRENCY FLUCTUATIONS RELATIVE TO THE U.S. DOLLAR.

1
<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
JAPANESE EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

THE JAPANESE EQUITY PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF JAPANESE ISSUERS.

APPROACH

MSDW Investment Management seeks to achieve long-term capital appreciation by
investing in a diversified portfolio of equity securities of Japanese issuers
that are undervalued relative to their intrinsic assets, cash flow and earnings
potential.

PROCESS

MSDW Investment Management conducts a quantitative screening of Japanese
companies, including both large-cap and small-cap issuers. The screening is
designed to identify undervalued issuers, based on price-to-book value,
price-to-cash flow and other value-oriented criteria. MSDW Investment Management
analysts conduct fundamental analysis on the 25% of companies that quantitative
screening indicate are most undervalued, with an emphasis on financial
structure, strategic value of assets, business franchise, product line and
management quality and focus. Company visits also are a normal part of the
investment process. The Portfolio closely monitors securities which are no
longer among the 25% most undervalued and sells the securities following a
material fundamental disappointment in earnings or when they are no longer among
the one-third most undervalued securities.

RISK

Investing in the Japanese Equity Portfolio may be appropriate for you if you are
willing to accept the risks and uncertainties of investing in the equity
securities of issuers in Japan in the hope of achieving superior returns and
diversifying your investment portfolio. In general, prices of equity securities
are more volatile than those of fixed income securities. The prices of equity
securities will rise and fall in response to a number of different factors. In
particular, prices of equity securities will respond to events which affect
entire financial markets or industries (changes in inflation or consumer demand,
for example) and to events that affect particular issuers (news about the
success or failure of a new product, for example). In addition, at times the
Portfolio's market sector, equity securities of Japanese issuers, may
underperform relative to other sectors.

FOREIGN INVESTING, PARTICULARLY INVESTMENT IN JAPANESE ISSUERS,
ENTAILS THE RISK THAT NEWS AND EVENTS UNIQUE TO JAPAN OR ITS
NEIGHBORS WILL AFFECT THOSE MARKETS AND THEIR ISSUERS. THESE SAME
EVENTS WILL NOT NECESSARILY HAVE AN EFFECT ON THE U.S. ECONOMY OR
SIMILAR ISSUERS LOCATED IN THE UNITED STATES. IN ADDITION, THE
PORTFOLIO'S INVESTMENTS GENERALLY WILL BE DENOMINATED IN FOREIGN
CURRENCIES. AS A RESULT, CHANGES IN THE VALUE OF A COUNTRY'S CURRENCY
COMPARED TO THE U.S. DOLLAR MAY AFFECT THE VALUE OF THE PORTFOLIO'S
INVESTMENTS. THESE CHANGES MAY HAPPEN SEPARATELY FROM AND IN RESPONSE
TO EVENTS THAT DO NOT OTHERWISE AFFECT THE VALUE OF THE SECURITY IN
THE ISSUER'S HOME COUNTRY. MSDW INVESTMENT MANAGEMENT MAY INVEST IN
CERTAIN INSTRUMENTS, SUCH AS DERIVATIVES, AND MAY USE CERTAIN
TECHNIQUES, SUCH AS HEDGING, TO MANAGE THESE RISKS. HOWEVER, MSDW
INVESTMENT MANAGEMENT CANNOT GUARANTEE THAT IT WILL BE PRACTICAL TO
HEDGE THESE RISKS IN CERTAIN MARKETS OR UNDER PARTICULAR CONDITIONS
OR THAT IT WILL SUCCEED IN DOING SO.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C>
COMMENCED OPERATIONS ON APRIL 25, 1994
1995 -4.xx%
1996 -1.xx%
1997 -9.xx%
1998 xx.xx%
HIGH (QUARTER)
4/97 - 6/97
25.45%
LOW (QUARTER)
10/97 - 12/97
-20.29%
</TABLE>

2
<PAGE>

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

ADDITIONAL RISK FACTORS AND INFORMATION
- -------------------------------------------------------------------------------

PRICE VOLATILITY

The value of your investment in a Portfolio is based on the market prices of the
securities the Portfolio holds. These prices change daily due to economic and
other events that affect markets generally, as well as those that affect
particular regions, countries, industries, companies or governments. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities the Portfolio owns and the markets in which the
securities trade. Over time, equity securities have generally shown superior
gains, although they have tended to be more volatile in the short term. Fixed
income securities, regardless of credit quality, also experience price
volatility, especially in response to interest rate changes. As a result of
market volatility, there is a risk that you might lose money by investing in a
Portfolio.

DERIVATIVES

BANK INVESTORS

An investment in a Portfolio is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.

YEAR 2000 RISK

3
<PAGE>

TEMPORARY DEFENSIVE
INVESTMENTS
When MSDW Investment Management believes that changes in economic, financial or
political conditions warrant, each Portfolio may invest without limit in certain
short- and medium-term fixed income securities for temporary purposes. If MSDW
Investment Management incorrectly predicts the effects of these changes, such
defensive investments may adversely affect the Portfolios' performance.

PORTFOLIO TURNOVER

4
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE
- -------------------------------------------------------------------------------

These tables compare the performance of each Portfolio to an index of similar
securities. An index is a hypothetical measure of performance based on the ups
and downs of securities that make up a particular market. The index does not
show actual investment returns or reflect payment of management or brokerage
fees, which would lower the index's performance. The tables separately compare
Class A and Class B shares to the index so that you can compare performance for
each class from its commencement date. The index itself does not actually have
two classes.

AVERAGE ANNUAL TOTAL RETURN (FOR THE YEAR ENDED DECEMBER 31, 1998)

<TABLE>
<CAPTION>
ASIAN EQUITY PORTFOLIO
CLASS A CLASS B MSCI COMBINED FAR EAST FREE
(COMMENCED OPERATIONS (COMMENCED OPERATIONS EX-JAPAN INDEX
ON JULY 1, 1991) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
PAST ONE YEAR
- ---------------------------------------------------------------------------------------------------------------------
PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION
</TABLE>

THE MSCI COMBINED FAR EAST FREE EX-JAPAN INDEX IS AN UNMANAGED INDEX OF COMMON
STOCKS AND INCLUDES INDONESIA, HONG KONG, MALAYSIA, THE PHILIPPINES, KOREA,
SINGAPORE, TAIWAN AND THAILAND (INCLUDING DIVIDENDS).

<TABLE>
<CAPTION>
JAPANESE EQUITY PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS MSCI JAPAN INDEX
ON APRIL 25, 1994) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
PAST ONE YEAR
- ---------------------------------------------------------------------------------------------------------------------
PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION
</TABLE>

THE MSCI JAPAN INDEX IS AN UNMANAGED INDEX OF COMMON STOCKS (INCLUDES
DIVIDENDS).

1998 ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)

<TABLE>
<CAPTION>
ASIAN EQUITY JAPANESE EQUITY
PORTFOLIO PORTFOLIO
MANAGEMENT FEES
<S> <C> <C>
- -------------------------------------------------------------------------
CLASS A 0.80% 0.80%
- -------------------------------------------------------------------------
CLASS B 0.80% 0.80%

12B-1 FEE
- -------------------------------------------------------------------------
CLASS A NONE NONE
- -------------------------------------------------------------------------
CLASS B 0.25% 0.25%

OTHER EXPENSES
- -------------------------------------------------------------------------
CLASS A --%* --%
- -------------------------------------------------------------------------
CLASS B --%* --%

TOTAL ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------------------------
CLASS A --% --%
- -------------------------------------------------------------------------
CLASS B --% --%
</TABLE>

* OTHER EXPENSES FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 WOULD HAVE BEEN
% IF CERTAIN EXPENSES RELATED TO THE PORTFOLIO'S INVESTMENT ACTIVITIES HAD
BEEN INCLUDED.

MAXIMUM EXPENSES AFTER FEE WAIVERS/EXPENSE REIMBURSEMENTS

<TABLE>
<CAPTION>
ASIAN EQUITY JAPANESE EQUITY
PORTFOLIO PORTFOLIO
CLASS A 1.00% 1.00%
<S> <C> <C>
- -------------------------------------------------------------------------
CLASS B 1.25% 1.25%
</TABLE>

FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS ARE VOLUNTARY AND MSDW INVESTMENT
MANAGEMENT RESERVES THE RIGHT TO TERMINATE ANY WAIVER AND/OR REIMBURSEMENT AT
ANY TIME AND WITHOUT NOTICE.

6
<PAGE>
EXAMPLE
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN EACH
PORTFOLIO WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS HAVING SIMILAR
INVESTMENT OBJECTIVES.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
ASIAN EQUITY PORTFOLIO
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $

JAPANESE EQUITY PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------
INVESTMENT ADVISER
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
MANAGEMENT FEES
- -------------------------------------------------------------------------------

For the year ended December 31, 1998, MSDW Investment Management received from
each Portfolio the management fee set forth in the table below:

<TABLE>
<CAPTION>
ASIAN
EQUITY JAPANESE
PORTFOLIO EQUITY
PORTFOLIO
-------------------------------------
<S> <C> <C> <C> <C>
MANAGEMENT FEE CLASS A CLASS B CLASS A CLASS B
-------------------------------------
PAID IN FISCAL YEAR ENDED
DECEMBER 31, 1998 0.61% 0.61% 0.72% 0.72%
(NET OF WAIVERS AND AS A
PERCENTAGE OF AVERAGE NET
ASSETS)
</TABLE>

7
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
- -------------------------------------------------------------------------------

THE FOLLOWING INDIVIDUALS HAVE PRIMARY DAY-TO-DAY PORTFOLIO MANAGEMENT
RESPONSIBILITY FOR THE PORTFOLIOS:

ASIAN EQUITY PORTFOLIO

TIMOTHY JENSEN AND ASHUTOSH SINHA

Timothy Jensen joined MSDW Investment Management in 1998. He is a Principal of
MSDW Investment Management and Morgan Stanley and a senior member of MSDW
Investment Management's emerging markets group focusing primarily on the East
Asian markets. Prior to joining MSDW Investment Management, he was a Partner at
Ardsley Partners, where he managed a portion of the emerging markets assets.
Prior to that, he was a Vice President at Bankers Trust where he was responsible
for a Latin American equity portfolio. He graduated from Harvard College with a
B.A. in History and received an M.B.A. in Finance from UCLA. Ashutosh Sinha
joined MSDW Investment Management in 1995. He is a Vice President of MSDW
Investment Management and Morgan Stanley and a member of MSDW Investment
Management's emerging markets group focusing primarily on the East Asian and
Middle Eastern markets. Prior to joining MSDW Investment Management, he spent
two years at SBI Funds Management Ltd., where he was an analyst for the India
Magnum Fund. Previous to that, he worked for three years as a consultant for
Citicorp Overseas Software Ltd. He graduated from IIT, Kanpur with a degree in
Electrical Engineering and received an M.B.A from the Indian Institute of
Management, Calcutta. Mr. Jensen and Mr. Sinha have shared primary
responsibility for managing the Asian Equity Portfolio since August 1998.

JAPANESE EQUITY PORTFOLIO

JOHN R. ALKIRE AND KUNIHIKO SUGIO

John R. Alkire is a Managing Director of MSDW Investment Management and Morgan
Stanley. He has been primarily responsible for managing the Portfolio's assets
since June 1997. Mr. Alkire joined MSDW Investment Management in 1981 to
initiate foreign equity sales and trading to Pacific basin institutions. He was
appointed President of Morgan Stanley Investment Advisory, Japan in October
1993. Prior to 1993, he specialized in Japanese warrants and cash equity sales
and trading to Japanese financial institutions in the Tokyo office. Mr. Alkire
is a graduate of University of Victoria Canada. Kunihiko Sugio, a Principal of
MSDW Investment Management and Morgan Stanley, joined MSDW Investment Management
in December 1993 and manages dedicated Japanese equity portfolios. He has been
primarily responsible for managing the Portfolio's assets since its inception in
1995. Prior to joining MSDW Investment Management, he worked with Baring
International Investment Management, Tokyo, where he was a Director and fund
manager. He graduated from Wakayama Kokuritsu University.

- -------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------
ABOUT NET ASSET VALUE

PRICING OF PORTFOLIO SHARES

HOW TO PURCHASE SHARES

You may purchase Class A shares and Class B shares of each Portfolio directly
from the Fund, from the Distributor or through certain third parties ("Financial
Intermediaries"). [You may purchase shares of the Portfolios on each day that
the NYSE is open. However, on days that the NYSE is open but banks are closed
the Portfolio will accept purchases only by check.]

9
<PAGE>
purchase shares at the price calculated at the next Pricing Time after your
Financial Intermediary receives your purchase order. Your Financial Intermediary
may charge an additional service or transaction fee.

HOW TO REDEEM SHARES

EXCHANGE FEATURES
You may exchange Portfolio shares for shares of the other available portfolios
of the Fund. To obtain a prospectus for another portfolio, call the Fund at
1-800-548-7786 or contact your Financial Intermediary. If you purchased
Portfolio shares through a Financial Intermediary, certain portfolios may be
unavailable for exchange. Contact your Financial Intermediary to determine which
portfolios are available for exchange. The Fund currently consists of the
following portfolios:

*PORTFOLIO IS CURRENTLY CLOSED TO NEW INVESTORS

+PORTFOLIO HAS NOT YET COMMENCED OPERATIONS

10
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Each Portfolio's policy is to distribute to shareholders substantially all of
its taxable net investment income in the form of an annual dividend and to
distribute net capital gains on an annual basis.

TAXES

The dividends and distributions you receive from a Portfolio may be subject to
Federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are ordinary income and capital gains distributions are taxed
based on how long the Portfolio held the assets. A Portfolio may be able to pass
through to you a credit for foreign income taxes it pays. The Fund will tell you
annually how to treat dividends and distributions.

- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

The following financial highlights tables are intended to help you understand
the financial performance of the Class A shares and Class B shares of each
Portfolio for the past five years or, if less than five years, the life of the
Portfolio or Class. Certain information reflects financial results for a single
Portfolio share. The total returns in the tables represent the rate that an
investor would have earned (or lost) on an investment in each Portfolio
(assuming reinvestment of all dividends and distributions). This information has
been audited by , whose report, along with the Fund's financial
statements, are incorporated by reference into the Fund's Statement of
Additional Information and are included in the Fund's December 31, 1998 Annual
Report to Shareholders.

11
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
ASIAN EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

12
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
JAPANESE EQUITY PORTFOLIO
- -------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

SHAREHOLDER REPORTS

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
P.O. Box 2798
Boston, Massachusetts 02208-2798

FOR INFORMATION CALL 1-800-548-7786
<PAGE>

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

PROSPECTUS JANUARY , 1999
- -------------------------------------------------------------------------------

PORTFOLIOS OF [LOGO] MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.

CHINA GROWTH PORTFOLIO

THE CHINA GROWTH PORTFOLIO SEEKS TO PROVIDE LONG-TERM CAPITAL APPRECIATION BY
INVESTING PRIMARILY IN EQUITY SECURITIES OF ISSUERS IN THE PEOPLE'S REPUBLIC OF
CHINA, HONG KONG AND TAIWAN.

GOLD PORTFOLIO

THE GOLD PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING PRIMARILY
IN THE EQUITY SECURITIES OF FOREIGN AND DOMESTIC ISSUERS ENGAGED IN GOLD-RELATED
ACTIVITIES.

MICROCAP PORTFOLIO

THE MICROCAP PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN GROWTH ORIENTED EQUITY SECURITIES OF SMALL CORPORATIONS.

INVESTMENT ADVISER
Morgan Stanley Dean Witter Investment Management Inc.

DISTRIBUTOR
Morgan Stanley & Co. Incorporated

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC. (THE "FUND") IS A NO-LOAD
MUTUAL FUND THAT IS DESIGNED TO MEET THE INVESTMENT NEEDS OF DISCERNING
INVESTORS WHO PLACE A PREMIUM ON QUALITY AND PERSONAL SERVICE. THE FUND MAKES
AVAILABLE TO INSTITUTIONAL INVESTORS A SERIES OF PORTFOLIOS WHICH BENEFIT FROM
THE INVESTMENT EXPERTISE AND COMMITMENT TO EXCELLENCE ASSOCIATED WITH MORGAN
STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC. ("MSDW INVESTMENT MANAGEMENT")
AND ITS AFFILIATES. THIS PROSPECTUS OFFERS CLASS A AND CLASS B SHARES OF THE
PORTFOLIOS LISTED ABOVE (EACH A "PORTFOLIO" AND COLLECTIVELY THE "PORTFOLIOS").
THE CHINA GROWTH AND MICROCAP PORTFOLIOS CURRENTLY ARE NOT BEING OFFERED. THE
GOLD PORTFOLIO IS CURRENTLY CLOSED TO NEW INVESTORS WITH THE EXCEPTION OF
CERTAIN MORGAN STANLEY EMPLOYEES AND CUSTOMERS, CERTAIN TAX-QUALIFIED RETIREMENT
PLANS AND OTHER INVESTMENT COMPANIES ADVISED BY MSDW INVESTMENT MANAGEMENT.

<TABLE>
<S> <C>
INVESTMENT SUMMARY
CHINA GROWTH PORTFOLIO 1
GOLD PORTFOLIO 2
MICROCAP PORTFOLIO 3
ADDITIONAL RISK FACTORS AND INFORMATION 4
PAST PERFORMANCE 6
FEES AND EXPENSES OF THE PORTFOLIOS 7
INVESTMENT ADVISER 8
MANAGEMENT FEES 8
PORTFOLIO MANAGERS 9
DISTRIBUTION OF PORTFOLIO SHARES 10
SHAREHOLDER INFORMATION 10
FINANCIAL HIGHLIGHTS 12
GOLD PORTFOLIO 13
ACCOUNT REGISTRATION FORM
[TO BE ATTACHED]
</TABLE>

<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
CHINA GROWTH PORTFOLIO
- -------------------------------------------------------------------------------

THE CHINA GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN EQUITY SECURITIES OF ISSUERS IN THE PEOPLE'S REPUBLIC OF CHINA,
HONG KONG AND TAIWAN.

APPROACH

MSDW Investment Management seeks to maximize long-term capital appreciation by
investing in the equity securities of issuers located in The People's Republic
of China, Hong Kong and Taiwan that exhibit strong or accelerating earnings
growth. In addition, the Portfolio may also invest in securities of issuers
located in other Asian countries, such as Singapore, Malaysia, the Philippines,
Indonesia, Korea, Vietnam and Thailand.

PROCESS

MSDW Investment Management relies on its research capabilities, analytical
resources and experience to identify well established companies with consistent
or rising earnings growth records and that present accelerating growth
prospects. MSDW Investment Management rigorously studies company developments,
including changes in strategy, management focus and results, and closely
monitors analysts' expectations to ascertain issuers that have the potential for
positive earnings surprises versus consensus expectations.

RISK

Investing in the China Growth Portfolio may be appropriate for you if you are
willing to accept the risks and uncertainties of investing in the equity
securities of issuers in China and other foreign countries in the hope of
earning superior returns. In general, prices of equity securities are more
volatile than those of fixed income securities. The prices of equity securities
will rise and fall in response to a number of different factors. In particular,
prices of equity securities will respond to events that affect entire financial
markets or industries (changes in inflation or consumer demand, for example) and
to events that affect particular issuers (news about the success or failure of a
new product, for example). In addition, at times the Portfolio's market sector,
equity securities of Chinese issuers, may underperform relative to other
sectors.

INVESTING IN FOREIGN COUNTRIES, PARTICULARLY EMERGING MARKETS,
ENTAILS THE RISK THAT NEWS AND EVENTS UNIQUE TO A COUNTRY OR REGION
WILL AFFECT THOSE MARKETS AND THEIR ISSUERS. THESE SAME EVENTS WILL
NOT NECESSARILY HAVE AN EFFECT ON THE U.S. ECONOMY OR SIMILAR ISSUERS
LOCATED IN THE UNITED STATES. IN ADDITION, THE PORTFOLIO'S
INVESTMENTS IN FOREIGN COUNTRIES GENERALLY WILL BE DENOMINATED IN
FOREIGN CURRENCIES. AS A RESULT, CHANGES IN THE VALUE OF A COUNTRY'S
CURRENCY COMPARED TO THE U.S. DOLLAR MAY AFFECT THE VALUE OF THE
PORTFOLIO'S INVESTMENTS. THESE CHANGES MAY HAPPEN SEPARATELY FROM AND
IN RESPONSE TO EVENTS THAT DO NOT OTHERWISE AFFECT THE VALUE OF THE
SECURITY IN THE ISSUER'S HOME COUNTRY. MSDW INVESTMENT MANAGEMENT MAY
INVEST IN CERTAIN INSTRUMENTS, SUCH AS DERIVATIVES, AND MAY USE
CERTAIN TECHNIQUES, SUCH AS HEDGING, TO MANAGE THESE RISKS. HOWEVER,
MSDW INVESTMENT MANAGEMENT CANNOT GUARANTEE THAT IT WILL BE PRACTICAL
TO HEDGE THESE RISKS IN CERTAIN MARKETS OR UNDER PARTICULAR
CONDITIONS OR THAT IT WILL SUCCEED IN DOING SO. THE RISKS OF
INVESTING IN THE PORTFOLIO MAY BE INTENSIFIED BECAUSE THE PORTFOLIO
IS NON-DIVERSIFIED, WHICH MEANS THAT IT MAY INVEST IN SECURITIES OF A
LIMITED NUMBER OF ISSUERS. AS A RESULT, THE PERFORMANCE OF A
PARTICULAR INVESTMENT OR A SMALL GROUP OF INVESTMENTS MAY AFFECT THE
PORTFOLIO'S PERFORMANCE MORE THAN IF THE PORTFOLIO WERE DIVERSIFIED.

A BAR CHART SHOWING THE PERFORMANCE OF THE PORTFOLIO IS NOT PROVIDED BECAUSE, AS
OF DECEMBER 31, 1998, THE CHINA GROWTH PORTFOLIO HAD NOT COMMENCED OPERATIONS.

1
<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
GOLD PORTFOLIO
- -------------------------------------------------------------------------------

THE GOLD PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING PRIMARILY
IN EQUITY SECURITIES OF ISSUERS ENGAGED IN GOLD-RELATED ACTIVITIES.

APPROACH

MSDW Investment Management and Sun Valley Gold seek to maximize long-term
capital appreciation by investing in domestic and foreign companies engaged in
the exploration, mining, fabrication, processing, distribution or trading of
gold and, to a lesser extent, other precious metals.

PROCESS

MSDW Investment Management and Sun Valley Gold employ a flexible investment
program in an attempt to identify securities of issuers engaged in gold-related
activities that offer the potential for capital appreciation. MSDW Investment
Management and Sun Valley Gold evaluate various countries and regions based on
factors such as political stability and economic outlook. Based on this
evaluation, they select particular countries and issuers for investment by the
Portfolio. Because most of the world's gold production is outside of the United
States, the Portfolio frequently invests in securities of foreign issuers,
particularly those located in Canada, Australia and South Africa.

RISK

Investing in the Gold Portfolio may be appropriate for you if you are willing to
accept the risks and uncertainties of investing in a portfolio of equity
securities of foreign and domestic issuers engaged in gold-related activities.
In general, prices of equity securities are more volatile than those of fixed
income securities. The prices of equity securities will rise and fall in
response to a number of different factors. In particular, prices of equity
securities will respond to events that affect entire financial markets or
industries (changes in inflation or consumer demand, for example) and to events
that affect particular issuers (news about the success or failure of a new
product, for example). The Portfolio's concentration in investments
in gold-related issuers may expose it to risks unique to that
industry. In addition, at times the Portfolio's market sector,
securities of gold-related related issuers, may underperform relative
to other sectors.

TO THE EXTENT THAT THE PORTFOLIO INVESTS IN SECURITIES OF FOREIGN
ISSUERS, THERE IS THE RISK THAT NEWS AND EVENTS UNIQUE TO A COUNTRY OR
REGION WILL AFFECT THOSE MARKETS AND THEIR ISSUERS. THESE SAME EVENTS
WILL NOT NECESSARILY HAVE AN EFFECT ON THE U.S. ECONOMY OR SIMILAR
ISSUERS LOCATED IN THE UNITED STATES. IN ADDITION, THE PORTFOLIO'S
INVESTMENTS IN FOREIGN COUNTRIES GENERALLY WILL BE DENOMINATED IN
FOREIGN CURRENCIES. AS A RESULT, CHANGES IN THE VALUE OF A COUNTRY'S
CURRENCY COMPARED TO THE U.S. DOLLAR MAY AFFECT THE VALUE OF A
PORTFOLIO'S INVESTMENTS. THESE CHANGES MAY HAPPEN SEPARATELY FROM AND
IN RESPONSE TO EVENTS THAT DO NOT OTHERWISE AFFECT THE VALUE OF THE
SECURITY IN THE ISSUER'S HOME COUNTRY. MSDW INVESTMENT MANAGEMENT MAY
INVEST IN CERTAIN INSTRUMENTS, SUCH AS DERIVATIVES, AND MAY USE
CERTAIN TECHNIQUES, SUCH AS HEDGING, TO MANAGE THESE RISKS. HOWEVER,
MSDW INVESTMENT MANAGEMENT CANNOT GUARANTEE THAT IT WILL BE PRACTICAL
TO HEDGE THESE RISKS IN CERTAIN MARKETS OR UNDER PARTICULAR CONDITIONS
OR THAT IT WILL SUCCEED IN DOING SO.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PERFORMANCE (CLASS A SHARES)
<S> <C>
Commenced operations on February 1,
1994
1995 13.21%
1996 16.94%
1997 -55.64%
HIGH (QUARTER)
mo/yr--mo/yr
xx.xx%
LOW (QUARTER)
mo/yr--mo/yr
xx.xx%
</TABLE>

2
<PAGE>

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

INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
MICROCAP PORTFOLIO
- -------------------------------------------------------------------------------

THE MICROCAP PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING
PRIMARILY IN GROWTH-ORIENTED EQUITY SECURITIES OF SMALL COMPANIES.

APPROACH

MSDW Investment Management seeks to maximize long-term capital appreciation by
investing in small, growth-oriented domestic and, to a limited extent, foreign
companies. The universe of eligible companies generally includes those with
[annual gross revenues of $150 million or less or market capitalizations of $250
million or less.]

PROCESS

MSDW Investment Management employs a flexible investment program in an attempt
to identify issuers early in their life cycle with the potential for long-term
growth. MSDW Investment Management uses its judgment and research capabilities
to assess economic, industry, market and company developments to identify
promising companies that are expected to benefit from new technology or new
products or services. In addition, MSDW Investment Management looks for special
developments, such as research discoveries, changes in customer demand,
rejuvenated management or basic changes in the economic environment.

RISK

Investing in the MicroCap Portfolio may be appropriate for you if you are
willing to accept the risks and uncertainties of investing in a portfolio of
equity securities of small issuers. In general, prices of equity securities are
more volatile than those of fixed income securities. The prices of equity
securities will rise and fall in response to a number of different factors. In
particular, prices of equity securities will respond to events that affect
entire financial markets or industries (changes in inflation or consumer demand,
for example) and to events that affect particular issuers (news about the
success or failure of a new product, for example).

THE RISK OF INVESTING IN EQUITY SECURITIES IS INTENSIFIED IN THE CASE
OF THE SMALL COMPANIES IN WHICH THE PORTFOLIO INVESTS. MARKET PRICES
FOR SUCH COMPANIES' EQUITY SECURITIES TEND TO BE MORE VOLATILE THAN
THOSE OF LARGER, MORE ESTABLISHED COMPANIES. SMALL COMPANIES MAY
THEMSELVES BE MORE VULNERABLE TO ECONOMIC OR COMPANY SPECIFIC
PROBLEMS. IN ADDITION, AT TIMES THE PORTFOLIO'S MARKET SECTOR, EQUITY
SECURITIES OF SMALLER ISSUERS, MAY UNDER PERFORM RELATIVE TO OTHER
SECTORS.

TO THE EXTENT THAT THE PORTFOLIO INVESTS IN SECURITIES OF FOREIGN
ISSUERS, THERE IS THE RISK THAT NEWS AND EVENTS UNIQUE TO A COUNTRY OR
REGION WILL AFFECT THOSE MARKETS AND THEIR ISSUERS. THESE SAME EVENTS
WILL NOT NECESSARILY HAVE AN EFFECT ON THE U.S. ECONOMY OR SIMILAR
ISSUERS LOCATED IN THE UNITED STATES. IN ADDITION, THE PORTFOLIO'S
INVESTMENTS IN FOREIGN COUNTRIES GENERALLY WILL BE DENOMINATED IN
FOREIGN CURRENCIES. AS A RESULT, CHANGES IN THE VALUE OF A COUNTRY'S
CURRENCY COMPARED TO THE U.S. DOLLAR MAY AFFECT THE VALUE OF THE
PORTFOLIO'S INVESTMENTS. THESE CHANGES MAY HAPPEN SEPARATELY FROM AND
IN RESPONSE TO EVENTS THAT DO NOT OTHERWISE AFFECT THE VALUE OF THE
SECURITY IN THE ISSUER'S HOME COUNTRY. MSDW INVESTMENT MANAGEMENT MAY
INVEST IN CERTAIN INSTRUMENTS, SUCH AS DERIVATIVES, AND MAY USE
CERTAIN TECHNIQUES, SUCH AS HEDGING, TO MANAGE THESE RISKS. HOWEVER,
MSDW INVESTMENT MANAGEMENT CANNOT GUARANTEE THAT IT WILL BE PRACTICAL
TO HEDGE THESE RISKS IN CERTAIN MARKETS OR UNDER PARTICULAR CONDITIONS
OR THAT IT WILL SUCCEED IN DOING SO. THE RISKS OF INVESTING IN THE
PORTFOLIO MAY BE INTENSIFIED BECAUSE THE PORTFOLIO IS NON-DIVERSIFIED,
WHICH MEANS THAT IT MAY INVEST IN SECURITIES OF A LIMITED NUMBER OF
ISSUERS. AS A RESULT, THE PERFORMANCE OF A PARTICULAR INVESTMENT OR A
SMALL GROUP OF INVESTMENTS MAY AFFECT THE PORTFOLIO'S PERFORMANCE MORE
THAN IF THE PORTFOLIO WERE DIVERSIFIED.

A BAR CHART SHOWING THE PERFORMANCE OF THE PORTFOLIO IS NOT PROVIDED BECAUSE, AS
OF DECEMBER 31, 1998, THE MICROCAP PORTFOLIO HAD NOT COMMENCED OPERATIONS.

3
<PAGE>

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

ADDITIONAL RISK FACTORS AND INFORMATION
- -------------------------------------------------------------------------------

PRICE VOLATILITY

The value of your investment in a Portfolio is based on the market prices of the
securities the Portfolio holds. These prices change daily due to economic and
other events that affect markets generally, as well as those that affect
particular regions, countries, industries or companies. These price movements,
sometimes called volatility, may be greater or lesser depending on the types of
securities the Portfolio owns and the markets in which the securities trade.
Over time, equity securities have generally shown superior gains, although they
have tended to be more volatile than fixed income securities in the short term.
Fixed income securities, regardless of credit quality, also experience price
volatility, especially in response to interest rate changes. As a result of
price volatility, there is a risk that you may lose money by investing in a
Portfolio.

EMERGING MARKET RISKS

Emerging market countries are countries that major international financial
institutions, such as the World Bank, generally consider to be less economically
mature than developed nations, such as the United States or most nations in
Western Europe. Emerging market countries can include every nation in the world
except the United States, Canada, Japan, Australia, New Zealand, and most
countries located in Western Europe. Emerging market countries may be more
likely to experience political turmoil or rapid changes in economic conditions
than more developed countries, and the financial condition of issuers in
emerging market countries may be more precarious than in other countries. These
characteristics result in greater risk of price volatility in emerging market
countries, which may be heightened by currency fluctuations relative to the U.S.
dollar.

DERIVATIVES

4
<PAGE>

BANK INVESTORS

An investment in a Portfolio is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.

YEAR 2000 RISK

The advisory and distribution services that MSDW Investment Management and
Morgan Stanley & Co. Incorporated ("Morgan Stanley") provide to the Fund depend
on the smooth operation of their computer systems. Many computer and software
systems in use today cannot recognize the year 2000, but revert to 1900 or some
other date, due to the manner in which dates were encoded and calculated. That
failure could have a negative impact on the handling of securities trades,
pricing and account services. MSDW Investment Management and Morgan Stanley have
been actively working on necessary changes to their own computer systems to deal
with the year 2000 problem and expect that their systems will be adapted before
that date. There can be no assurance, however, that they will be successful. In
addition, other unaffiliated service providers may be faced with similar
problems. MSDW Investment Management and Morgan Stanley are monitoring their
remedial efforts, but there can be no assurance that they and the services they
provide will not be adversely affected. In addition, it is possible that the
markets for securities in which the Portfolios invest may be detrimentally
affected by computer failures throughout the financial services industry
beginning January 1, 2000. Improperly functioning trading systems may result in
settlement problems and liquidity issues. In addition, corporate and
governmental data processing errors may result in production problems for
individual companies and overall economic uncertainties. Earnings of individual
issuers will be affected by remediation costs, which may be substantial and may
be reported inconsistently in U.S. and foreign financial statements.
Accordingly, the Portfolios' investments may be adversely affected.

TEMPORARY DEFENSIVE
INVESTMENTS

When MSDW Investment Management believes that changes in economic, financial or
political conditions warrant, each Portfolio may invest without limit in certain
short- and medium-term fixed income securities for temporary purposes. If MSDW
Investment Management incorrectly predicts the effects of these changes, such
defensive investments may adversely affect the Portfolio's performance.

PORTFOLIO TURNOVER

5
<PAGE>

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

PAST PERFORMANCE
- -------------------------------------------------------------------------------

This table compares the performance of the Gold Portfolio to an index of similar
securities. An index is a hypothetical measure of performance based on the ups
and downs of securities that make up a particular market. The index does not
show actual investment returns or reflect payment of management or brokerage
fees, which would lower the index's performance. The table separately compares
Class A and Class B shares to the index so that you can compare performance for
each class from its commencement date. The index itself does not actually have
two classes.

AVERAGE ANNUAL TOTAL RETURN (FOR THE YEAR ENDED DECEMBER 31, 1998)

<TABLE>
<CAPTION>
GOLD PORTFOLIO PHILADELPHIA GOLD AND SILVER
INDEX
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS
ON FEBRUARY 1, 1994) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
PAST ONE YEAR % % % %
- -----------------------------------------------------------------------------------------------------------------
PAST FIVE YEARS % % % %
- -----------------------------------------------------------------------------------------------------------------
SINCE INCEPTION % % % %
</TABLE>

THE PHILADELPHIA GOLD AND SILVER INDEX IS AN UNMANAGED INDEX COMPRISED OF THE
LEADING COMPANIES INVOLVED IN THE MINING OF GOLD AND SILVER.

As of December 31, 1998, the China Growth and MicroCap Portfolios had not yet
commenced operations.

6
<PAGE>

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

FEES AND EXPENSES OF THE PORTFOLIOS
- -------------------------------------------------------------------------------

1998 ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)

<TABLE>
<CAPTION>
CHINA GROWTH GOLD MICROCAP
PORTFOLIO+ PORTFOLIO PORTFOLIO+
<S> <C> <C> <C>
----------------------------------------------
MANAGEMENT FEES
- --------------------------------------------------------------------------------
CLASS A 1.25% 1.00% 1.00%
- --------------------------------------------------------------------------------
CLASS B 1.25% 1.00% 1.00%

12B-1 FEE
- --------------------------------------------------------------------------------
CLASS A NONE NONE NONE
- --------------------------------------------------------------------------------
CLASS B 0.25% 0.25% 0.25%

OTHER EXPENSES
- --------------------------------------------------------------------------------
CLASS A --% --% --%
- --------------------------------------------------------------------------------
CLASS B --% --% --%

TOTAL ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------
CLASS A --% --% --%
- --------------------------------------------------------------------------------
CLASS B --% --% --%
</TABLE>

+ ESTIMATED. AS OF DECEMBER 31, 1998, THE PORTFOLIO HAD NOT YET COMMENCED
OPERATIONS.

MAXIMUM EXPENSES AFTER FEE WAIVERS/EXPENSE REIMBURSEMENTS

<TABLE>
<CAPTION>
CHINA GROWTH GOLD MICROCAP
PORTFOLIO PORTFOLIO PORTFOLIO
CLASS A 1.75% 1.25% 1.45%
<S> <C> <C> <C>
- -------------------------------------------------------------------------
CLASS B --% 1.50% 1.70%
</TABLE>

FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS ARE VOLUNTARY AND MSDW INVESTMENT
MANAGEMENT RESERVES THE RIGHT TO TERMINATE ANY WAIVER AND/OR REIMBURSEMENT AT
ANY TIME AND WITHOUT NOTICE.

7
<PAGE>
EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN EACH
PORTFOLIO WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS HAVING SIMILAR
INVESTMENT OBJECTIVES.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
CHINA GROWTH PORTFOLIO
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $
GOLD PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $
MICROCAP PORTFOLIO
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------
INVESTMENT ADVISER
- -------------------------------------------------------------------------------

As sub-adviser to the Gold Portfolio, Sun Valley Gold Company provides
investment advice and portfolio management services, makes the Gold Portfolio's
day-to-day investment decisions, arranges for the execution of portfolio
transactions and generally manages the Gold Portfolio's investments. Sun Valley
Gold Company, with principal offices at 620 Sun Valley Road, Sun Valley, Idaho
83340, specializes in the management of gold-related investments. At December
31, 1998, Sun Valley Gold Company managed investments totaling in excess of $
million.

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

MANAGEMENT FEES
- -------------------------------------------------------------------------------

For the year ended December 31, 1998, MSDW Investment Management received from
each Portfolio the management fee set forth in the table below:

<TABLE>
<CAPTION>
CHINA
GROWTH GOLD MICROCAP
PORTFOLIO+ PORTFOLIO PORTFOLIO+
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------
MANAGEMENT FEE CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
---------------------------------------------------------
PAID IN FISCAL YEAR
ENDED
DECEMBER 31, 1998 0.90% 0.90% 0.65% 0.65% 1.05% 1.05%
(NET OF WAIVERS AND AS A
PERCENTAGE OF AVERAGE
NET ASSETS)
</TABLE>

+ESTIMATED. AS OF DECEMBER 31, 1998, THE PORTFOLIO HAD NOT YET COMMENCED
OPERATIONS.

8
<PAGE>

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

PORTFOLIO MANAGERS
- -------------------------------------------------------------------------------

THE FOLLOWING INDIVIDUALS HAVE PRIMARY DAY-TO-DAY PORTFOLIO MANAGEMENT
RESPONSIBILITY FOR THE PORTFOLIOS:

CHINA GROWTH PORTFOLIO

EAN WAH CHIN AND JAMES CHENG

Ms. Chin is Managing Director of Morgan Stanley, and is responsible for MSDW
Investment Management's regional Asia ex-Japan operations based in Singapore.
She has shared primary portfolio management responsibility for the Portfolio
since its inception. Prior to joining Morgan Stanley in 1986, Ms. Chin spent
eight years with the Monetary Authority of Singapore and the Government of
Singapore Investment Corporation, where she was a portfolio manager for one of
the largest portfolios in Asia. Ms. Chin was an ASEAN scholar educated at the
University of Singapore. Mr. Cheng is a Principal of Morgan Stanley. Mr. Cheng
has shared primary portfolio management responsibility for the Portfolio since
its inception. He joined MSDW Investment Management in 1988 as a Portfolio
Manager for Asian markets and is currently responsible for investments in Hong
Kong, China, Taiwan, and South Korea. Prior to joining Morgan Stanley, he was
affiliated with American Express and with Arthur Andersen, where he spent three
years as an auditor/consultant. Mr. Cheng holds an M.B.A. from the University of
Michigan, Ann Arbor.

GOLD PORTFOLIO

PETER F. PALMEDO

Peter F. Palmedo, the President of Sun Valley Gold Company since its inception
in January, 1992, has had primary portfolio management responsibility for the
Portfolio since its inception. He has also served as President of Sun Valley
Gold Trading, Inc., a registered broker-dealer, since its inception in January,
1992, and of Mad River Management since September, 1989. Prior thereto, Mr.
Palmedo worked at Morgan Stanley in the institutional equity department and
specialized in portfolio risk management, derivatives and the development and
analysis of long-dated options, synthetic options and options embedded in
securities. He received a B.A. in Business and Finance from Hampshire College in
1979.

MICROCAP PORTFOLIO

MARGARET K. JOHNSON

Margaret K. Johnson is a Principal of MSDW Investment Management and Morgan
Stanley and a Portfolio Manager in the Institutional Equity Group. She joined
MSDW Investment Management in 1984 and worked as an Analyst in the Marketing and
Fiduciary Advisor areas. Ms. Johnson became an Equity Analyst in 1986 and a
Portfolio Manager in 1989. Prior to joining Morgan Stanley, she worked for the
New York City PBS affiliate, WNET, Channel 13. She holds a B.A. degree from Yale
College and is a Chartered Financial Analyst. Ms. Johnson has had primary
responsibility for managing the Portfolio's assets since April 1991.

PRICING OF PORTFOLIO SHARES

HOW TO PURCHASE SHARES

You may purchase Class A shares and Class B shares of each Portfolio directly
from the Fund, from the Distributor or through certain third parties ("Financial
Intermediaries"). [You may purchase shares of the Portfolios on each day that
the NYSE is open. However, on days that the NYSE is open but banks are closed
the Portfolios will accept purchases only by check.]

10
<PAGE>

Time after the Fund receives your order from the Distributor or your Financial
Intermediary. Certain Financial Intermediaries have made arrangements with the
Fund so that you may purchase shares at the price calculated at the next Pricing
Time after your Financial Intermediary receives your purchase order. Your
Financial Intermediary may charge an additional service or transaction fee.

HOW TO REDEEM SHARES

You may redeem Portfolio shares directly from the Fund, through the Distributor
or through your Financial Intermediary, each as described above under Purchase
of Shares. The redemption price will be the net asset value per share calculated
at the next Pricing Time, which may be more or less than the purchase price of
your shares. The Fund will ordinarily distribute redemption proceeds in cash
within one business day of your redemption request, but it may take up to seven
business days. However, if you purchased shares by check, the Fund will not
distribute redemption proceeds until it has collected your purchase payment,
which may take up to eight days. The Portfolios will honor redemptions but pay
them the following day on days that the NYSE is open but banks are closed. In
certain circumstances, for example, if payment of redemption proceeds in cash
would be detrimental to the remaining shareholders, the Portfolio may pay
redemption proceeds by a distribution-in-kind of readily marketable portfolio
securities.

*PORTFOLIO IS CURRENTLY CLOSED TO NEW INVESTORS

+PORTFOLIO HAS NOT YET COMMENCED OPERATIONS

11
<PAGE>
DIVIDENDS AND DISTRIBUTIONS

It is the policy of each of the China Growth and MicroCap Portfolio's to
distribute to shareholders substantially all of its taxable net investment
income in the form of an annual dividend. The Gold Portfolio's policy is to
distribute to shareholders substantially all of its taxable net investment
income in the form of quarterly dividends. Each Portfolio's policy is to
distribute to shareholders net capital gains on an annual basis.

The Fund automatically reinvests all distributions in additional shares.
However, you may elect to receive distributions in cash by giving written notice
to the Fund or your Financial Intermediary or by checking the appropriate box in
the Distribution Option section on the Account Registration Form.

TAXES

The dividends and distributions you receive from a Portfolio may be subject to
Federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are ordinary income and capital gains distributions are taxed
based on how long the Portfolio held the assets. A Portfolio may be able to pass
through to you a credit for foreign income taxes it pays. The Fund will tell you
annually how to treat dividends and distributions.

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

The following financial highlights tables are intended to help you understand
the financial performance of the Class A shares and Class B shares of the Gold
Portfolio for the past five years or, if less than five years, the life of the
Portfolio or Class. Certain information reflects financial results for a single
Portfolio share. The total returns in the tables represent the rate that an
investor would have earned (or lost) on an investment in the Portfolio (assuming
reinvestment of all dividends and distributions). This information has been
audited by , whose report, along with the Fund's financial
statements, are incorporated by reference into the Fund's Statement of
Additional Information and are included in the Fund's December 31, 1998 Annual
Report to Shareholders.

12
<PAGE>
- ----------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
GOLD PORTFOLIO
- -------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

In addition to this Prospectus, the Fund has a Statement of Additional
Information ("SAI"), dated ________, 1999, which contains additional, more
detailed information about the Fund and the Portfolio. The SAI is incorporated
by reference into this Prospectus and, therefore, legally forms a part of this
Prospectus.

SHAREHOLDER REPORTS

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
P.O. Box 2798
Boston, Massachusetts 02208-2798

FOR INFORMATION CALL 1-800-548-7786
<PAGE>
- -------------------------------------------------------------------------------
PROSPECTUS JANUARY , 1999
- -------------------------------------------------------------------------------

A PORTFOLIO OF [LOGO] MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.

ACTIVE INTERNATIONAL ALLOCATION PORTFOLIO

THE ACTIVE INTERNATIONAL ALLOCATION PORTFOLIO SEEKS LONG-TERM CAPITAL
APPRECIATION BY INVESTING PRIMARILY IN ACCORDANCE WITH COUNTRY AND SECTOR
WEIGHTINGS DETERMINED BY THE INVESTMENT ADVISER IN EQUITY SECURITIES OF NON-U.S.
ISSUERS WHICH, IN THE AGGREGATE, REPLICATE BROAD MARKET INDICES.

INVESTMENT ADVISER

Morgan Stanley Dean Witter Investment Management Inc.

DISTRIBUTOR

Morgan Stanley & Co. Incorporated

<TABLE>
<S> <C>
INVESTMENT SUMMARY
ACTIVE INTERNATIONAL ALLOCATION PORTFOLIO 1
ADDITIONAL RISK FACTORS AND INFORMATION 2
PAST PERFORMANCE 3
FEES AND EXPENSES OF THE PORTFOLIO 4
INVESTMENT ADVISER 5
MANAGEMENT FEES 5
PORTFOLIO MANAGER 6
DISTRIBUTION OF PORTFOLIO SHARES 7
SHAREHOLDER INFORMATION 7
FINANCIAL HIGHLIGHTS 9
ACTIVE INTERNATIONAL ALLOCATION PORTFOLIO 10
ACCOUNT REGISTRATION FORM
[TO BE ATTACHED]
</TABLE>

<PAGE>
- ----------------------------
INVESTMENT SUMMARY
- -------------------------------------------------------------------------------
ACTIVE INTERNATIONAL ALLOCATION PORTFOLIO
- -------------------------------------------------------------------------------

THE ACTIVE INTERNATIONAL ALLOCATION PORTFOLIO SEEKS LONG-TERM CAPITAL
APPRECIATION BY INVESTING PRIMARILY IN ACCORDANCE WITH COUNTRY AND SECTOR
WEIGHTINGS DETERMINED BY MSDW INVESTMENT MANAGEMENT IN EQUITY SECURITIES OF
NON-U.S. ISSUERS WHICH, IN THE AGGREGATE, REPLICATE BROAD MARKET INDICES.

APPROACH

MSDW Investment Management seeks to maintain a diversified portfolio of
international equity securities based on a top-down approach that emphasizes
country and sector selection and weighting rather than individual stock
selection. MSDW Investment Management capitalizes on the significance of country
and sector selection in international equity portfolio returns by over and
underweighting countries based on three factors: (i) valuation; (ii) fundamental
change; and (iii) short-term market momentum/technicals.

PROCESS

MSDW Investment Management's Active International Allocation team analyzes both
the global economic environment and the economies of the industrialized
countries comprising the MSCI Europe, Australasia, Far East (EAFE) Index. EAFE
countries include Japan, most nations in Western Europe and the more developed
nations of Asia, such as Australia, New Zealand, Hong Kong and Singapore. MSDW
Investment Management views each EAFE country and major sectors as unique
investment opportunities and evaluates prospects for value, growth, inflation,
interest rates, corporate earnings, liquidity and risk characteristics, investor
sentiment and currency outlook. After determining to invest in an EAFE country,
MSDW Investment Management establishes overweight, underweight or neutral
positions relative to the EAFE Index. Within the EAFE countries or sectors
selected for investment, MSDW Investment Management purchases optimized baskets
of equity securities designed to track the local market index within a specified
tolerance. The Portfolio does not invest in securities of U.S. issuers. MSDW
Investment Management considers an issuer to be from a particular EAFE country
if (i) its principal securities trading market is in that country; (ii) alone or
on a consolidated basis it derives 50% or more of its annual revenue from either
goods produced, sales made or services performed in that country; or (iii) it is
organized under the laws of, and has a principal office in, that country.

RISK

Investing in the Active International Allocation Portfolio may be appropriate
for you if you are willing to accept the risks and uncertainties of investing in
the equity securities of issuers in foreign countries, on a very diversified
basis, in the hope of earning superior returns and to diversify your portfolio.
In general, prices of equity securities are more volatile than those
of fixed income securities. The prices of equity securities will rise
and fall in response to a number of different factors. In particular,
prices of equity securities will respond to events which affect
entire financial markets or industries (changes in inflation or
consumer demand, for example) and to events that affect particular
issuers (news about the success or failure of a new product, for
example). In addition, at times the Portfolio's market sector,
foreign equity securities, may underperform relative to other
sectors.

<TABLE>
<CAPTION>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PERFORMANCE (CLASS A SHARES)
<S> <C>
Commenced operations on January 17,
1992
1993 30.72%
1994 -0.52%
1995 10.57%
1996 9.71%
1997 8.61%
1998 x.xx%
HIGH (QUARTER)
4/98 - 6/98
13.25%
LOW (QUARTER)
7/92 - 9/92
-6.17%
</TABLE>

1
<PAGE>

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

ADDITIONAL RISK FACTORS AND INFORMATION
- -------------------------------------------------------------------------------

PRICE VOLATILITY

The value of your investment in the Portfolio is based on the market prices of
the securities the Portfolio holds. These prices change daily due to economic
and other events that affect markets generally, as well as those that affect
particular regions, countries, industires and companies. These price movements,
sometimes called volatility, may be greater or lesser depending on the types of
securities the Portfolio owns and the markets in which the securities trade.
Over time, equity securities have generally shown superior gains, although they
have tended to be more volatile than fixed income securities in the short term.
Fixed income securities, regardless of credit quality, also experience price
volatility, especially in response to interest rate changes. As a result of
price volatility, there is a risk that you may lose money by investing in the
Portfolio.

EMERGING MARKET RISKS

Emerging market countries are countries that major international financial
institutions, such as the World Bank, generally consider to be less economically
mature than developed nations, such as the United States or most nations in
Western Europe. Emerging market countries can include every nation in the world
except the United States, Canada, Japan, Australia, New Zealand, and most
countries located in Western Europe. Emerging market countries may be more
likely to experience political turmoil or rapid changes in economic conditions
than more developed countries, and the financial condition of issuers in
emerging market countries may be more precarious than in other countries. These
characteristics result in greater risk of price volatility in emerging market
countries, which may be heightened by currency fluctuations relative to the U.S.
dollar.

DERIVATIVES

BANK INVESTORS

An investment in the Portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.

2
<PAGE>

YEAR 2000 RISK

TEMPORARY DEFENSIVE

INVESTMENTS

PORTFOLIO TURNOVER

Consistent with its investment policies, a Portfolio will purchase and sell
securities without regard to the effect on portfolio turnover. Higher portfolio
turnover (e.g. over 100% per year) will cause the Portfolio to incur additional
transaction costs and may result in taxable gains being passed through to
shareholders.

This table compares the performance of the Portfolio to an index of similar
securities. An index is a hypothetical measure of performance based on the ups
and downs of securities that make up a particular market. The index does not
show actual investment returns or reflect payment of management or brokerage
fees, which would lower the index's performance. The table separately compares
Class A and Class B shares to the index so that you can compare performance for
each class from its commencement date. The index itself does not actually have
two classes.

- -------------------------------------------------------------------------------
PAST PERFORMANCE
- -------------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURN (FOR THE YEAR ENDED DECEMBER 31, 1998)

<TABLE>
<CAPTION>
ACTIVE INTERNATIONAL ALLOCATION PORTFOLIO
CLASS A CLASS B
(COMMENCED OPERATIONS (COMMENCED OPERATIONS MSCI EAFE INDEX
ON JANUARY 17, 1992) ON JANUARY 2, 1996) CLASS A CLASS B
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
PAST ONE YEAR --% --% --% --%
- ---------------------------------------------------------------------------------------------------------------------
PAST FIVE YEARS --% --% --% --%
- ---------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION --% --% --% --%
</TABLE>

THE MSCI EAFE INDEX IS AN UNMANAGED INDEX OF COMMON STOCKS AND INCLUDES EUROPE,
AUSTRALASIA AND THE FAR EAST, INCLUDING DIVIDENDS NET OF WITHHOLDING TAXES.

<PAGE>
- --------------------------------------------------------------------------------
FEES AND EXPENSES OF THE PORTFOLIO
- -------------------------------------------------------------------------------

1998 ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)

<TABLE>
<CAPTION>
ACTIVE INTERNATIONAL ALLOCATION PORTFOLIO
<S> <C>
MANAGEMENT FEES
- ---------------------------------------------------------------------------------------------
CLASS A 0.65%
- ---------------------------------------------------------------------------------------------
CLASS B 0.65%

12B-1 FEE
- ---------------------------------------------------------------------------------------------
CLASS A NONE
- ---------------------------------------------------------------------------------------------
CLASS B 0.25%

OTHER EXPENSES
- ---------------------------------------------------------------------------------------------
CLASS A --%
- ---------------------------------------------------------------------------------------------
CLASS B --%

TOTAL ANNUAL FUND OPERATING EXPENSES
- ---------------------------------------------------------------------------------------------
CLASS A --%
- ---------------------------------------------------------------------------------------------
CLASS B --%
</TABLE>

MAXIMUM EXPENSES AFTER FEE WAIVERS/EXPENSE REIMBURSEMENTS

<TABLE>
<CAPTION>
ACTIVE INTERNATIONAL ALLOCATION PORTFOLIO
<S> <C>
CLASS A 0.80%
- ---------------------------------------------------------------------------------------------
CLASS B 1.05%
</TABLE>

FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS ARE VOLUNTARY AND MSDW INVESTMENT
MANAGEMENT RESERVES THE RIGHT TO TERMINATE ANY WAIVER AND/OR REIMBURSEMENT AT
ANY TIME AND WITHOUT NOTICE.

4
<PAGE>
EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
PORTFOLIO WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS HAVING SIMILAR
INVESTMENT OBJECTIVES.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
ACTIVE INTERNATIONAL ALLOCATION PORTFOLIO
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------
CLASS A $ $ $ $
- ----------------------------------------------------------------------
CLASS B $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------
INVESTMENT ADVISER
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
MANAGEMENT FEES
- -------------------------------------------------------------------------------

For the year ended December 31, 1998, MSDW Investment Management received from
the Portfolio the management fee set forth in the table below:

<TABLE>
<CAPTION>
ACTIVE
INTERNATIONAL
ALLOCATION
PORTFOLIO
-----------------
<S> <C> <C>
MANAGEMENT FEE CLASS A CLASS B
-----------------
PAID IN FISCAL YEAR ENDED
DECEMBER 31, 1998 0.35% 0.35%
(NET OF WAIVERS AND AS A
PERCENTAGE OF AVERAGE NET
ASSETS)
</TABLE>

5
<PAGE>

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

PORTFOLIO MANAGERS
- -------------------------------------------------------------------------------

THE FOLLOWING INDIVIDUAL HAS PRIMARY DAY-TO-DAY PORTFOLIO MANAGEMENT
RESPONSIBILITY FOR THE PORTFOLIO:

ACTIVE INTERNATIONAL ALLOCATION PORTFOLIO

ANN D. THIVIERGE AND BARTON M. BIGGS

Ann D. Thivierge is a Managing Director of MSDW Investment Management and Morgan
Stanley. She is a member of MSDW Investment Management's asset allocation
committee, primarily representing the Total Fund Management team since its
inception in 1991. Ms. Thivierge joined MSDW Investment Management in 1986 and
holds a B.A. in International Relations from James Madison College, Michigan
State University, and an M.B.A. in Finance from New York University. Barton M.
Biggs has been Chairman and a director of MSDW Investment Management since 1980
and a Managing Director of Morgan Stanley since 1975. He is also a director and
chairman of various registered investment companies to which MSDW Investment
Management and certain of its affiliates provide investment advisory services.
Mr. Biggs holds a B.A. from Yale University and an M.B.A. from New York
University. Ms. Thivierge and Mr. Biggs have shared primary responsibility for
managing the Portfolio since June 1995.

- -------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------

ABOUT NET ASSET VALUE

The net asset value per share of a class of shares of the Portfolio is
determined by dividing the total market value of the Portfolio's investments and
other assets attributable to the class, less any liabilities attributable to the
class, by the total number of outstanding shares of that class of the Portfolio.
In making this calculation, the Portfolio generally values securities at market
price. If market prices are unavailable or may be unreliable because of events
occurring after the close of trading, fair value prices may be determined in
good faith using methods approved by the Board of Directors. The Portfolio may
hold portfolio securities that are listed on foreign exchanges. These securities
may trade on weekends or other days when the Portfolio does not calculate NAV.
As a result, the value of these investments may change on days when you cannot
purchase or sell shares.

PRICING OF PORTFOLIO SHARES

7
<PAGE>
HOW TO REDEEM SHARES

You may redeem Portfolio shares directly from the Fund, through the Distributor
or through your Financial Intermediary, each as described above under Purchase
of Shares. The redemption price will be the net asset value per share calculated
at the next Pricing Time, which may be more or less than the purchase price of
your shares. The Fund will ordinarily distribute redemption proceeds in cash
within one business day of your redemption request, but it may take up to seven
business days. However, if you purchased shares by check, the Fund will not
distribute redemption proceeds until it has collected your purchase payment,
which may take up to eight days. The Portfolio will honor redemptions but pay
them the following day on days that the NYSE is open but banks are closed. In
certain circumstances, for example, if payment of redemption proceeds in cash
would be detrimental to the remaining shareholders, the Portfolio may pay
redemption proceeds by a distribution-in-kind of readily marketable portfolio
securities.

EXCHANGE FEATURES

*PORTFOLIO IS CURRENTLY CLOSED TO NEW INVESTORS

+PORTFOLIO HAS NOT YET COMMENCED OPERATIONS

When you exchange for shares of another portfolio, your transaction will be
treated the same as an initial purchase. You will be subject to the same minimum
initial investment and account size as an initial purchase. Accordingly, you
will not necessarily receive the same class of shares that you tendered for
exchange. Your exchange price will be the price calculated at the next Pricing
Time after the Fund receives your exchange order. Frequent trades in your
account(s) can disrupt management of the Portfolio and raise its expenses.
Therefore, the Fund may bar a shareholder who trades excessively from making
further exchanges or purchases.

8
<PAGE>
DIVIDENDS AND DISTRIBUTIONS

TAXES
The dividends and distributions you receive from the Portfolio may be subject to
Federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are ordinary income and capital gains distributions are taxed
based on how long the Portfolio held the assets. The Portfolio may be able to
pass through to you a credit for foreign income taxes it pays. The Fund will
tell you annually how to treat dividends and distributions.

- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

The following financial highlights table is intended to help you understand the
financial performance of the Class A shares and Class B shares of the Portfolio
for the past five years or, if less than five years, the life of the Portfolio
or Class. Certain information reflects financial results for a single Portfolio
share. The total returns in the tables represent the rate that an investor would
have earned (or lost) on an investment in the Portfolio (assuming reinvestment
of all dividends and distributions). This information has been audited by
, whose report, along with the Fund's financial statements,
are incorporated by reference into the Fund's Statement of Additional
Information and are included in the Fund's December 31, 1998 Annual Report to
Shareholders.

9
<PAGE>

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

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
ACTIVE INTERNATIONAL ALLOCATION PORTFOLIO
- -------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

In addition to this Prospectus, the Fund has a Statement of Additional
Information ("SAI"), dated ________, 1999, which contains additional, more
detailed information about the Fund and the Portfolio. The SAI is incorporated
by reference into this Prospectus and, therefore, legally forms a part of this
Prospectus.

SHAREHOLDER REPORTS

For additional Fund information, including information regarding investments
comprising the Fund's Portfolios, please call 1-800-548-7786 or visit the MSDW
Investment Management web site at www. .

You may obtain the SAI, and Shareholder Reports without charge by contacting the
Fund at the toll-free number above. If you purchased shares through a Financial
Intermediary, you may also obtain these documents, without charge, by contacting
your Financial Intermediary.

Information about the Fund, including the SAI, and the annual and semi-annual
reports, may be obtained from the Securities and Exchange Commission in any of
the following ways. (1) In person: you may review and copy documents in the
Commission's Public Reference Room in Washington D.C. (for information call
1-800-SEC-0330); (2) On-line: you may retrieve information from the Commission's
web site at "http://www.sec.gov"; or (3) By mail: you may request documents,
upon payment of a duplicating fee, by writing to Securities and Exchange
Commission, Public Reference Section, Washington, D.C. 20549-6009. To aid you in
obtaining this information, the Fund's Investment Company Act registration
number is 811-05624.

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
P.O. Box 2798
Boston, Massachusetts 02208-2798

FOR INFORMATION CALL 1-800-548-7786
<PAGE>

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION

This statement of additional information is not a prospectus. It should be read
in conjunction with a prospectus for the applicable portfolio, which may be
obtained by calling the Morgan Stanley Dean Witter Institutional Fund, Inc. (the
"Fund") Services Group at 1-800-548-7786.

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

TABLE OF CONTENTS

<TABLE>
<S> <C>
PAGE
-----
INVESTMENT OBJECTIVES AND POLICIES...... 2
INVESTMENT LIMITATIONS.................. 23
PURCHASE OF SHARES...................... 25
REDEMPTION OF SHARES.................... 27
ACCOUNT POLICIES AND FEATURES........... 28
MANAGEMENT OF THE FUND.................. 30
INVESTMENT ADVISORY AND OTHER
SERVICES.............................. 33
DISTRIBUTIONS OF SHARES................. 35
BROKERAGE PRACTICES..................... 35
GENERAL INFORMATION..................... 37
TAXES................................... 38
CONTROL PERSONS AND PRINCIPAL HOLDERS OF
SECURITIES............................ 42
PERFORMANCE............................. 43
DESCRIPTION OF RATINGS.................. 47
</TABLE>

The Fund's audited financial statements for the fiscal year ended December 31,
1998, including notes thereto and the report of are incorporated by
reference herein from the Fund's Annual Report. A copy of the Fund's Annual
Report to Shareholders must accompany the delivery of this Statement of
Additional Information. The China Growth, Mortgage-Backed Securities and
MicroCap Portfolios had not commenced operations at December 31, 1998. You may
obtain the Fund's most recent Annual Report by calling the Morgan Stanley Dean
Witter Institutional Fund, Inc. Services Group at 1-800-548-7786.

STATEMENT OF ADDITIONAL INFORMATION, DATED , 1999

- Prospectus for the European Real Estate Portfolio, Asian Real Estate
Portfolio and U.S. Real Estate Portfolio, dated , 1999

- Prospectus for the Asian Equity Portfolio and Japanese Equity Portfolio,
dated , 1999

- Prospectus for the Emerging Markets Portfolio, Emerging Markets Debt
Portfolio and Latin American Portfolio, dated , 1999

- Prospectus for the Global Equity Portfolio, International Equity
Portfolio, International Small Cap Portfolio and European Equity
Portfolio, dated , 1999

- Prospectus for the U.S. Equity Plus Portfolio, dated , 1999

- Prospectus for the International Magnum Portfolio, dated ,
1999

- Prospectus for the Fixed Income Portfolio, Municipal Bond Portfolio,
Mortgage-Backed Securities Portfolio, Money Market Portfolio and Municipal
Money Market Portfolio, dated , 1999

- Prospectus for the Equity Growth Portfolio, Aggressive Equity Portfolio,
Emerging Growth Portfolio, Value Equity Portfolio and Technology
Portfolio, dated , 1999

- Prospectus for the Global Fixed Income Portfolio and High Yield Portfolio,
dated , 1999

- Prospectus for the Active International Allocation Portfolio, dated
, 1999

- Prospectus for the Technology Portfolio, dated , 1999

- Prospectus for the China Growth Portfolio, Gold Portfolio and MicroCap
Portfolio, dated , 1999

1
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
GLOBAL AND INTERNATIONAL EQUITY PORTFOLIOS

<TABLE>
<CAPTION>
ACTIVE
INTER-
NATIONAL ASIAN EUROPEAN
ALLO- ASIAN REAL CHINA EMERGING EUROPEAN REAL
CATION EQUITY ESTATE GROWTH MARKETS EQUITY ESTATE
<S> <C> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------
EQUITY SECURITIES:
Common Stocks.......... X X X X X X X
Depositary Receipts.... X X X X X X X
Preferred Stocks....... X X X X X X X
Rights................. X X X X X X X
Warrants............... X X X X X X X
Convertible
Securities............ X X X X X X X
Partnerships........... X X X X X X X
Investment Company
Securities............ X X X X X X X
Real Estate
Investing............. X X
--REITS................ X X
--Specialized Ownership
Vehicles.............. X X
FIXED INCOME SECURITIES:
Investment Grade
Securities............ X X X X X X
High Yield
Securities............ X
U.S. Government
Securities............ X X ?
Agencies............... X ?
Corporate Debt......... X X X X X
Money Market
Instruments........... X X X X X X X
Mortgage Related
Securities............
--MBSs.................
--CMOs................. ? ?
--SMBSs................
Repurchase Agreements.. X X X X X X X
Municipals.............
Asset-Backeds.......... ?
Loan Participations and
Assignments........... X
Temporary Investments.. X X X X X X X
Zero Coupons, Pay-In-
Kind Securities or
Deferred Payment
Securities............ X X X X X X
Floaters............... X X X X X X
Inverse Floaters....... X X X X X X
FOREIGN INVESTMENT:
Foreign Equity
Securities............ X X X X X X X
Foreign Government
Fixed Income
Securities............ X X X X X X
Foreign Corporate Fixed
Income Securities..... X X X
Emerging Market Country
Securities............ X X X X X X X
Russian Securities..... X
Foreign Currency
Transactions.......... X X X X X X X
Brady Bonds............ X X X X X
Investment Funds....... X X X X X X X

INTER- INTER- INTER-
GLOBAL NATIONAL NATIONAL NATIONAL JAPANESE LATIN
EQUITY GOLD EQUITY MAGNUM SMALL CAP EQUITY AMERICAN

EQUITY SECURITIES:
Common Stocks.......... X X X X X X X

Depositary Receipts.... X X X X X X X

Preferred Stocks....... X X X X X X X

Rights................. X X X X X X X

Warrants............... X X X X X X X

Convertible
Securities............ X X X X X X X

Partnerships........... X X X X X X X

Investment Company
Securities............ X X X X X X X

Real Estate
Investing.............
--REITS................
--Specialized Ownership
Vehicles..............
FIXED INCOME SECURITIES:
Investment Grade
Securities............ X X X X

High Yield
Securities............ X

U.S. Government
Securities............ X X
Agencies............... X
Corporate Debt......... X X X X

Money Market
Instruments........... X X X X X X X

Mortgage Related
Securities............
--MBSs.................
--CMOs.................
--SMBSs................
Repurchase Agreements.. X X X X X X X

Municipals.............
Asset-Backeds..........
Loan Participations and
Assignments........... X

Temporary Investments.. X X X X X X X

Zero Coupons, Pay-In-
Kind Securities or
Deferred Payment
Securities............ X X X X

Floaters............... X X X X

Inverse Floaters....... X X X X

FOREIGN INVESTMENT:
Foreign Equity
Securities............ X X X X X X X

Foreign Government
Fixed Income
Securities............ X X X X

Foreign Corporate Fixed
Income Securities.....
Emerging Market Country
Securities............ X X X X X X

Russian Securities.....
Foreign Currency
Transactions.......... X X X X X X X

Brady Bonds............ X X X X

Investment Funds....... X X X X X X X

</TABLE>

2
<PAGE>

GLOBAL AND INTERNATIONAL EQUITY PORTFOLIOS (CONTINUED)

INTER- INTER- INTER-
GLOBAL NATIONAL NATIONAL NATIONAL JAPANESE LATIN
EQUITY GOLD EQUITY MAGNUM SMALL CAP EQUITY AMERICAN

OTHER SECURITIES AND
INVESTMENT TECHNIQUES:
Loans of Portfolio
Securities............ X X X X X X X

Non-Publicly Traded
Securities, Private
Placements and
Restricted
Securities............ X X X X X X X

When-Issued and Delayed
Delivery Securities... X X X X X X X

Borrowing for
Investment Purposes... X

Reverse Repurchase
Agreements............
Short Sales............ X

Structured
Investments........... X X X X X X X

DERIVATIVE PRODUCTS:
Futures Contracts...... X X X X X X X

Forward Contracts...... X X X X X X X

Option Transactions.... X X X X X X X

Swaps.................. X X X X X X X

</TABLE>

U.S. EQUITY PORTFOLIOS

<TABLE>
<CAPTION>
AGGRESSIVE EMERGING
EQUITY GROWTH EQUITY GROWTH MICROCAP TECHNOLOGY
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------
EQUITY SECURITIES:
Common Stocks...................... X X X X X
Depositary Receipts................ X X X X X
Preferred Stocks................... X X X X X
Rights............................. X X X X X
Warrants........................... X X X X X
Convertible Securities............. X X X X X
Partnerships.......................
Investment Company Securities...... X X X X X
Real Estate Investing..............
--REITS............................
--Specialized Ownership Vehicles...
FIXED INCOME SECURITIES:
Investment Grade Securities........ X X X X X
High Yield Securities.............. X
U.S. Government Securities......... X X X X X
Agencies........................... X X X X X
Corporate Bonds.................... X X X X X
Money Market Instruments........... X X X X X

U.S. EQUITY PLUS U.S. REAL ESTATE VALUE EQUITY
<S> <C> <C> <C>

EQUITY SECURITIES:
Common Stocks...................... X X X
Depositary Receipts................ ? X X
Preferred Stocks................... X X X
Rights............................. X X X
Warrants........................... X X X
Convertible Securities............. X X X
Partnerships.......................
Investment Company Securities...... X X X
Real Estate Investing.............. X
--REITS............................ X
--Specialized Ownership Vehicles... X
FIXED INCOME SECURITIES:
Investment Grade Securities........ X X X
High Yield Securities.............. ?
U.S. Government Securities......... X X X
Agencies........................... X X X
Corporate Bonds.................... X X? X
Money Market Instruments........... X X X
</TABLE>

3
<PAGE>

U.S. EQUITY PORTFOLIOS (CONTINUED)

<TABLE>
<CAPTION>
AGGRESSIVE EMERGING EQUITY
EQUITY GROWTH GROWTH
<S> <C> <C> <C>
-------------------------------------
FIXED INCOME SECURITIES: (CONTINUED)
Mortgage Related Securities..........................................................
--MBSs...............................................................................
--CMOs...............................................................................
--SMBSs..............................................................................
Repurchase Agreements................................................................ X X X
Municipals...........................................................................
Asset-Backeds........................................................................
Loan Participations and Assignments..................................................
Temporary Investments................................................................ X X X
Zero Coupons, Pay-In-Kind Securities or Deferred Payment Securities.................. X X X
Floaters............................................................................. X X X
Inverse Floaters..................................................................... X X X
FOREIGN INVESTMENT:
Foreign Equity Securities............................................................ X X X
Foreign Bonds........................................................................
Emerging Market Country Securities...................................................
Russian Securities...................................................................
Foreign Currency Transactions........................................................ X X X
Brady Bonds..........................................................................
Investment Funds.....................................................................
OTHER SECURITIES AND INVESTMENT TECHNIQUES:
Loans of Portfolio Securities........................................................ X X X
Non-Publicly Traded Securities, Private Placements and Restricted Securities......... X X X
When-Issued and Delayed Delivery Securities.......................................... X X X
Borrowing for Investment Purposes....................................................
Reverse Repurchase Agreements........................................................
Short Sales.......................................................................... X
Structured Investments............................................................... X X X
DERIVATIVE PRODUCTS:
Futures Contracts.................................................................... X X X
Forward Contracts.................................................................... X X X
Option Transactional................................................................. X X X
Swaps................................................................................ X X X

<CAPTION>
U.S. EQUITY
MICROCAP TECHNOLOGY PLUS
<S> <C> <C>

FIXED INCOME SECURITIES: (CONTINUED)
Mortgage Related Securities..........................................................
--MBSs...............................................................................
--CMOs...............................................................................
--SMBSs..............................................................................
Repurchase Agreements................................................................ X X X
Municipals...........................................................................
Asset-Backeds........................................................................
Loan Participations and Assignments..................................................
Temporary Investments................................................................ X X X
Zero Coupons, Pay-In-Kind Securities or Deferred Payment Securities.................. X X X
Floaters............................................................................. X X X
Inverse Floaters..................................................................... X X X
FOREIGN INVESTMENT:
Foreign Equity Securities............................................................ X X X
Foreign Bonds........................................................................ X
Emerging Market Country Securities................................................... X
Russian Securities...................................................................
Foreign Currency Transactions........................................................ X X X
Brady Bonds..........................................................................
Investment Funds..................................................................... X
OTHER SECURITIES AND INVESTMENT TECHNIQUES:
Loans of Portfolio Securities........................................................ X X X
Non-Publicly Traded Securities, Private Placements and Restricted Securities......... X X X
When-Issued and Delayed Delivery Securities.......................................... X X X
Borrowing for Investment Purposes.................................................... X X
Reverse Repurchase Agreements........................................................
Short Sales.......................................................................... X
Structured Investments............................................................... X X X
DERIVATIVE PRODUCTS:
Futures Contracts.................................................................... X X
Forward Contracts.................................................................... X X
Option Transactional................................................................. X X
Swaps................................................................................ X X

<CAPTION>
U.S. REAL VALUE
ESTATE EQUITY

FIXED INCOME SECURITIES: (CONTINUED)
Mortgage Related Securities..........................................................
--MBSs...............................................................................
--CMOs............................................................................... ?
--SMBSs..............................................................................
Repurchase Agreements................................................................ X X
Municipals...........................................................................
Asset-Backeds........................................................................ ?
Loan Participations and Assignments..................................................
Temporary Investments................................................................ X X
Zero Coupons, Pay-In-Kind Securities or Deferred Payment Securities.................. X X
Floaters............................................................................. X X
Inverse Floaters..................................................................... X X
FOREIGN INVESTMENT:
Foreign Equity Securities............................................................ X X
Foreign Bonds........................................................................ X
Emerging Market Country Securities................................................... X
Russian Securities...................................................................
Foreign Currency Transactions........................................................ X X
Brady Bonds..........................................................................
Investment Funds..................................................................... X
OTHER SECURITIES AND INVESTMENT TECHNIQUES:
Loans of Portfolio Securities........................................................ X X
Non-Publicly Traded Securities, Private Placements and Restricted Securities......... X X
When-Issued and Delayed Delivery Securities.......................................... X X
Borrowing for Investment Purposes....................................................
Reverse Repurchase Agreements........................................................
Short Sales..........................................................................
Structured Investments............................................................... X X
DERIVATIVE PRODUCTS:
Futures Contracts.................................................................... X X
Forward Contracts.................................................................... X X
Option Transactional................................................................. X X
Swaps................................................................................ X X
</TABLE>

4
<PAGE>
FIXED INCOME AND MONEY MARKET PORTFOLIOS

<TABLE>
<CAPTION>
EMERGING GLOBAL
MARKETS FIXED FIXED
DEBT INCOME INCOME HIGH YIELD
<S> <C> <C> <C> <C>
--------------------------------------------------
EQUITY SECURITIES:
Common Stocks................................................................. X
Depositary Receipts........................................................... X ?
Preferred Stocks.............................................................. X
Rights........................................................................ X
Warrants...................................................................... X
Convertible Securities........................................................ X
Partnerships..................................................................
Investment Company Securities................................................. X X X X
Real Estate Investing.........................................................
--REITs.......................................................................
--Specialized Ownership Vehicles..............................................
FIXED INCOME SECURITIES:
Investment Grade Securities................................................... X X X X
High Yield Securities......................................................... X X
U.S. Government Securities.................................................... X X X
Agencies...................................................................... X X X ?
Corporate Debt................................................................ X X X X
Money Market Instruments...................................................... X X X X
Mortgage Related Securities................................................... X
--MBSs........................................................................ X X X X
--CMOs........................................................................ X X X X
--SMBSs....................................................................... X ?
Repurchase Agreements......................................................... X X X X
Municipals.................................................................... ?
Asset-Backeds................................................................. X X X
Loan Participations and Assignments........................................... X ?
Temporary Investments......................................................... X X X X
Zero Coupons, Pay-In-Kind Securities or Deferred Payment Securities........... X X X X
Floaters...................................................................... X X X X
Inverse Floaters.............................................................. X X X X
FOREIGN INVESTMENT:
Foreign Equity Securities.....................................................
Foreign Bonds................................................................. X X X X
Emerging Market Country Securities............................................ X X
Russian Securities............................................................
Foreign Currency Transactions................................................. X X X X
Brady Bonds................................................................... X
Investment Funds.............................................................. X

<CAPTION>
MORTGAGE- MUNICIPAL
BACKED MUNICIPAL MONEY MONEY
SECURITIES BOND MARKET MARKET
<S> <C> <C> <C> <C>
EQUITY SECURITIES:
Common Stocks.................................................................
Depositary Receipts...........................................................
Preferred Stocks..............................................................
Rights........................................................................
Warrants......................................................................
Convertible Securities........................................................
Partnerships..................................................................
Investment Company Securities................................................. X X X X
Real Estate Investing.........................................................
--REITs.......................................................................
--Specialized Ownership Vehicles..............................................
FIXED INCOME SECURITIES:
Investment Grade Securities................................................... X X X X
High Yield Securities.........................................................
U.S. Government Securities.................................................... X X X X
Agencies...................................................................... X X X
Corporate Debt................................................................ X X X
Money Market Instruments...................................................... X X X X
Mortgage Related Securities................................................... X
--MBSs........................................................................ X X X
--CMOs........................................................................ X ? ?
--SMBSs....................................................................... X ?
Repurchase Agreements......................................................... X X X X
Municipals.................................................................... X X
Asset-Backeds................................................................. X
Loan Participations and Assignments...........................................
Temporary Investments......................................................... X X X X
Zero Coupons, Pay-In-Kind Securities or Deferred Payment Securities........... X X X X
Floaters...................................................................... X X X X
Inverse Floaters.............................................................. X X
FOREIGN INVESTMENT:
Foreign Equity Securities.....................................................
Foreign Bonds.................................................................
Emerging Market Country Securities............................................
Russian Securities............................................................
Foreign Currency Transactions.................................................
Brady Bonds...................................................................
Investment Funds..............................................................
</TABLE>

5
<PAGE>

FIXED INCOME AND MONEY MARKET PORTFOLIOS (CONTINUED)

<TABLE>
<CAPTION>
EMERGING GLOBAL
MARKETS FIXED FIXED
DEBT INCOME INCOME HIGH YIELD
<S> <C> <C> <C> <C>
--------------------------------------------------
OTHER SECURITIES AND INVESTMENT TECHNIQUES:
Loans of Portfolio Securities................................................. X X X X
Non-Publicly Traded Securities, Private Placements and Restricted
Securities................................................................... X X X X
When-Issued and Delayed Delivery Securities................................... X X X X
Borrowing for Investment Purposes............................................. X
Reverse Repurchase Agreements.................................................
Short Sales................................................................... X
Structured Investments........................................................ X X X X
DERIVATIVE PRODUCTS:
Futures Contracts............................................................. X X X X
Forward Contracts............................................................. X X X X
Option Transactions........................................................... X X X X
Swaps......................................................................... X X X X

<CAPTION>
MORTGAGE- MUNICIPAL

BACKED MUNICIPAL MONEY MONEY

SECURITIES BOND MARKET MARKET

OTHER SECURITIES AND INVESTMENT TECHNIQUES:
Loans of Portfolio Securities................................................. X X
Non-Publicly Traded Securities, Private Placements and Restricted
Securities................................................................... X X X X

When-Issued and Delayed Delivery Securities................................... X X X X

Borrowing for Investment Purposes.............................................
Reverse Repurchase Agreements.................................................
Short Sales...................................................................
Structured Investments........................................................ X X
DERIVATIVE PRODUCTS:
Futures Contracts............................................................. X X
Forward Contracts............................................................. X X
Option Transactions........................................................... X X
Swaps......................................................................... X X
</TABLE>

6
<PAGE>
EQUITY SECURITIES

Equity Securities generally represent an ownership interest in an issuer, or may
be convertible into or represent a right to acquire an ownership interest in an
issuer. While there are many types of Equity Securities, prices of all equity
securities will fluctuate. Economic, political and other events may affect the
prices of broad equity markets. For example, changes in inflation or consumer
demand may affect the prices of all Equity Securities in the United States.
Similar events also may affect the prices of particular equity securities. For
example, news about the success or failure of a new product may affect the price
of a particular issuer's Equity Securities.

COMMON STOCKS. Common Stocks represent an ownership interest in a corporation,
entitling the stockholder to voting rights and receipt of dividends paid based
on proportionate ownership.

DEPOSITARY RECEIPTS. Depositary Receipts represent an ownership interest in
securities of foreign companies (an "underlying issuer") that are deposited with
a depositary. Depositary Receipts are not necessarily denominated in the same
currency as the underlying securities. Depositary Receipts include American
Depositary Receipts ("ADRs"), Global Depositary Receipts ("GDRs") and other
types of Depositary Receipts (which, together with ADRs and GDRs, are
hereinafter collectively referred to as "Depositary Receipts"). ADRs are
dollar-denominated Depositary Receipts typically issued by a U.S. financial
institution which evidence an ownership interest in a security or pool of
securities issued by a foreign issuer. ADRs are listed and traded in the United
States. GDRs and other types of Depositary Receipts are typically issued by
foreign banks or trust companies, although they also may be issued by U.S.
financial institutions, and evidence ownership interests in a security or pool
of securities issued by either a foreign or a U.S. corporation. Generally,
Depositary Receipts in registered form are designed for use in the U.S.
securities market and Depositary Receipts in bearer form are designed for use in
securities markets outside the United States.

Depositary Receipts may be "sponsored" or "unsponsored." Sponsored Depositary
Receipts are established jointly by a depositary and the underlying issuer,
whereas unsponsored Depositary Receipts may be established by a depositary
without participation by the underlying issuer. Holders of unsponsored
Depositary Receipts generally bear all the costs associated with establishing
unsponsored Depositary Receipts. In addition, the issuers of the securities
underlying unsponsored Depository Receipts are not obligated to disclose
material information in the United States and, therefore, there may be less
information available regarding such issuers and there may not be a correlation
between such information and the market value of the Depositary Receipts. For
purposes of a Portfolio's investment policies, the Portfolio's investments in
Depositary Receipts will be deemed to be an investment in the underlying
securities, except that ADRs may be deemed to be issued by a U.S. issuer.

PREFERRED STOCKS. Preferred Stocks are securities that evidence ownership in a
corporation and pay a fixed or variable stream of dividends. Preferred Stocks
have a preference over Common Stocks in the event of the liquidation of an
issuer and usually do not carry voting rights. Because Preferred Stocks pay a
fixed or variable stream of dividends they have many of the characteristics of a
Fixed Income Security and are, therefore, included in both the definition of
Equity Security and Fixed Income Security.

RIGHTS. Rights represent the right, but not the obligation, for a fixed period
of time to purchase additional shares of an issuer's Common Stock at the time of
a new issuance, usually at a price below the initial offering price of the
Common Stock and before the Common Stock is offered to the general public.
Rights are usually freely transferrable. The risk of investing in a Right is
that the Right may expire prior to the market value of the Common Stock
exceeding the price fixed by the Right.

WARRANTS. Warrants give holders the right, but not the obligation, to buy
Common Stock of an issuer at a given price, usually higher than the market price
at the time of issuance, during a specified period. Warrants are usually freely
transferrable. The risk of investing in a Warrant is that the Warrant may expire
prior to the market value of the Common Stock exceeding the price fixed by the
Warrant.

CONVERTIBLE SECURITIES. Convertible Securities are securities that may be
exchanged under certain circumstances for a fixed number of shares of Common
Stock or other Equity Securities. Convertible Securities generally represent a
feature of some other type of security, such as a Fixed Income Security or
Preferred Stock, so that, for example, a Convertible Fixed Income Security would
be a Fixed Income Security that is convertible into Common Stock. Convertible
Securities may be viewed as an investment in the current security or the
security into which the Convertible Security may be exchanged and, therefore,
are included in both the definition of Equity Security and Fixed Income
Security.

INVESTMENT COMPANY SECURITIES. Investment Company Securities are securities of
other open-end or closed-end investment companies. The Investment Company Act of
1940, as amended (the "1940 Act"), generally prohibits an Underlying Fund from
acquiring more than 3% of the outstanding voting shares of an investment company
and limits such investments to no more than 5% of the Portfolio's total assets
in any one investment company and no more than 10% in any combination of
investment companies. To the extent a Portfolio invests a portion of its assets
in Investment Company Securities, those assets will be subject to the risks of
the purchased investment company's portfolio securities. The Portfolio also will
bear it's proportionate share of the expenses of the purchased investment
company in addition to its own expenses.

REAL ESTATE INVESTING. Investments in securities of issuers engaged in the real
estate industry entail special risks and considerations. In particular,
securities of such issuers may be subject to risks associated with the direct
ownership of real estate. These

7
<PAGE>

risks include: the cyclical nature of real estate values, risks related to
general and local economic conditions, overbuilding and increased competition,
increases in property taxes and operating expenses, demographic trends and
variations in rental income, changes in zoning laws, casualty or condemnation
losses, environmental risks, regulatory limitations on rents, changes in
neighborhood values, changes in the appeal of properties to tenants, increases
in interest rates and other real estate capital market influences. Generally,
increases in interest rates will increase the costs of obtaining financing,
which could directly and indirectly decrease the value of the Portfolios'
investments.

REITS. Real Estate Investment Trusts ("REITs") pool investors' funds for
investment primarily in income producing real estate or real estate related
loans or interests. A REIT is not taxed on income distributed to its
shareholders or unitholders if it complies with regulatory requirements relating
to its organization, ownership, assets and income, and with a regulatory
requirement that it distribute to its shareholders or unitholders at least 95%
of its taxable income for each taxable year. Generally, REITs can be classified
as Equity REITs, Mortgage REITs or Hybrid REITs. Equity REITs invest the
majority of their assets directly in real property and derive their income
primarily from rents and capital gains from appreciation realized through
property sales. Equity REITs are further categorized according to the types of
real estate securities they own, e.g., apartment properties, retail shopping
centers, office and industrial properties, hotels, health-care facilities,
manufactured housing and mixed-property types. Mortgage REITs invest the
majority of their assets in real estate mortgages and derive their income
primarily from interest payments. Hybrid REITs combine the characteristics of
both Equity and Mortgage REITs.

A shareholder in any of the Portfolios, by investing in REITs indirectly through
the Portfolio, will bear not only his proportionate share of the expenses of the
Portfolio, but also, indirectly, the management expenses of underlying REITs.
REITs may be affected by changes in the value of their underlying properties and
by defaults by borrowers or tenants. Mortgage REITs may be affected by the
quality of the credit extended. Furthermore, REITs are dependent on specialized
management skills. Some REITs may have limited diversification and may be
subject to risks inherent in investments in a limited number of properties, in a
narrow geographic area, or in a single property type. REITs depend generally on
their ability to generate cash flow to make distributions to shareholders or
unitholders, and may be subject to defaults by borrowers and to
self-liquidations. In addition, the performance of a REIT may be affected by its
failure to qualify for tax-free pass-through of income, or its failure to
maintain exemption from registration under the 1940 Act.

SPECIALIZED OWNERSHIP VEHICLES. Specialized ownership vehicles pool investors'
funds for investment primarily in income-producing real estate or real estate
related loans or interests. Such specialized ownership vehicles in which the
Portfolios may invest include property unit trusts, REITs and other similar
specialized investment vehicles. Investments in such specialized ownership
vehicles may have favorable or unfavorable legal, regulatory or tax implications
for a Portfolio and, to the extent such vehicles are structured similarly to
investment funds, may cause the Portfolios' shareholders to indirectly bear
certain additional operating expenses.

FIXED INCOME SECURITIES

Fixed Income Securities generally represent an issuer's obligation to repay
money that it has borrowed together with interest on the amount borrowed. Fixed
Income Securities come in many varieties and may differ in the way that interest
is calculated, the amount and frequency of payments, the type of collateral, if
any, and some Fixed Income Securities may have other novel features such as
conversion rights. Prices of Fixed Income Securities fluctuate and, in
particular, are subject to credit risk and market risk. Credit risk is the
possibility that an issuer may be unable to meet scheduled interest and
principal payments. Market risk is the possibility that a change in interest
rates or the market's perception of the issuer's prospects may adversely affect
the value of a fixed income security. Economic, political and other events also
may affect the prices of broad fixed income markets. Generally, the values of
Fixed Income Securities vary inversely with changes in interest rates, so that
during periods of falling interest rates the values of outstanding Fixed Income
Securities generally rise and during periods of rising interest rates, the
values of such securities generally decline. Prepayments also will affect the
maturity and value of Fixed Income Securities. Prepayments generally rise in
response to a decline in interest rates as debtors take advantage of the
opportunity to refinance their obligations. When this happens, a Portfolio may
be forced to reinvest in lower yielding Fixed Income Securities.

The length of time to the final payment, or maturity, of a Fixed Income Security
also affects its price volatility. While securities with longer maturities tend
to produce higher yields, the prices of longer maturity securities are subject
to greater market fluctuation, especially as a result of changes in interest
rates. Traditionally, term to maturity has been used as a barometer of a Fixed
Income Security's sensitivity to interest rate changes. However, this measure
considers only the time until final payment and takes no account of the pattern
of payments prior to maturity. Duration is a more precise measure of the
expected life of a Fixed Income Security that combines consideration of yield,
coupon, interest payments, final maturity and call features and measures the
expected life of a Fixed Income Security on a present value basis. The duration
of a Fixed Income Security ordinarily is shorter than its maturity.

INVESTMENT GRADE SECURITIES. Investment Grade Securities are Fixed Income
Securities rated by one or more of the rating agencies in one of the four
highest rating categories at the time of purchase (e.g., AAA, AA, A or BBB by
Standard & Poor's Ratings Group ("S&P") or Fitch Investors Service, Inc.
("Fitch"), or Aaa, Aa, A or Baa by Moody's Investors Service, Inc. ("Moody's"))
or determined to be of equivalent quality by Morgan Stanley Dean Witter
Investment Management Inc. ("MSDW Investment Management"). Securities rated BBB
or Baa represent the lowest of four levels of Investment Grade Securities and

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are regarded as borderline between definitely sound obligations and those in
which the speculative element begins to predominate. Ratings assigned to Fixed
Income Securities represent only the opinion of the rating agency assigning the
rating and are not dispositive of the credit risk associated with the purchase
of a particular Fixed Income Security. Moreover, market risk also will affect
the prices of even the highest rated Fixed Income Securities so that their
prices may rise or fall even if the issuer's capacity to repay its obligations
remains unchanged.

HIGH YIELD SECURITIES. High Yield Securities are generally considered to
include Fixed Income Securities rated below the four highest rating categories
at the time of purchase (e.g., Ba through C by Moody's or BB through D by S&P)
and unrated securities considered by MSDW Investment Management to be of
equivalent quality. High Yield Securities are not considered investment grade
and are commonly referred to as junk bonds or high yield, high risk securities.

While High Yield Securities offer higher yields, they carry a high degree of
credit risk and are considered speculative by the major credit rating agencies.
High Yield Securities are often issued by smaller, less credit worthy issuers,
or by highly leveraged (indebted) issuers that are generally less able than more
established or less leveraged issuers to make scheduled payments of interest and
principal. In comparison to Investment Grade Securities, the price movement of
these securities is influenced less by changes in interest rates and more by the
financial and business position of the issuer. The values of High Yield
Securities are more volatile and may react with greater sensitivity to market
changes.

U.S. GOVERNMENT SECURITIES. U.S. Government Securities are Fixed Income
Securities that are backed by the full faith and credit of the U.S. Government
as to the payment of both principal and interest. U.S. Government Securities may
include securities issued by the U.S. Treasury and securities issued by federal
agencies and U.S. Government sponsored instrumentalities.

AGENCIES. Agencies are Fixed Income Securities which are not guaranteed by, or
backed by the full faith and credit of the U.S. Government, but which are
issued, sponsored or guaranteed by a federal agency or federally sponsored
agency such as the Student Loan Marketing Association, Resolution Funding
Corporation, or any of several other agencies.

CORPORATES. Corporates are Fixed Income Securities issued by private
businesses. Holders, as creditors, have a prior legal claim over holders of
Equity Securities of the issuer as to both income and assets for the principal
and interest due the holder.

MONEY MARKET INSTRUMENTS. Money Market Instruments are high quality short-term
fixed income securities. Money Market Instruments may include obligations of
governments, government agencies, banks, corporations and special purpose
entities and Repurchase Agreements relating to these obligations. Certain Money
Market Instruments may be denominated in a foreign currency.

MORTGAGE RELATED SECURITIES. Mortgage related securities are securities that,
directly or indirectly, represent a participation in, or are secured by and
payable from, mortgage loans on real property. Mortgage related securities
include collateralized mortgage obligations and mortgage-backed securities
issued or guaranteed by agencies or instrumentalities of the U.S. Government or
by private sector entities.

MORTGAGE-BACKED SECURITIES. With mortgage-backed securities ("MBSs"), many
mortgagee's obligations to make monthly payments to their lending institution
are pooled together and passed through to investors. The pools are assembled by
various governmental, Government-related and private organizations. A Portfolio
may invest in securities issued or guaranteed by Government National Mortgage
Association ("GNMA" or "Ginnie Mae"), Federal Home Loan Mortgage Corporation
("FHLMC" or "Freddie Mac"), Fannie Mae, private issuers and other government
agencies. MBSs issued by non-agency issuers, whether or not such securities are
subject to guarantees, may entail greater risk, since private issuers may not be
able to meet their obligations under the policies. If there is no guarantee
provided by the issuer, a Portfolio will purchase only MBSs which at the time of
purchase are rated investment grade by one or more NRSROs or, if unrated, are
deemed by MSDW Investment Management to be of comparable quality.

MBSs are issued or guaranteed by private sector originators of or investors in
mortgage loans and structured similarly to governmental pass-through securities.
Because private pass-throughs typically lack a guarantee by an entity having the
credit status of a governmental agency or instrumentality, however, they are
generally structured with one or more of the types of credit enhancement
described below. Fannie Mae and FHLMC obligations are not backed by the full
faith and credit of the U.S. Government as GNMA certificates are. FHLMC
securities are supported by its right to borrow from the U.S. Treasury. Each of
GNMA, Fannie Mae and FHLMC guarantees timely distributions of interest to
certificate holders. Each of GNMA and Fannie Mae also guarantees timely
distributions of scheduled principal. FHLMC has in the past guaranteed only the
ultimate collection of principal of the underlying mortgage loan, however, FHLMC
has now issued MBSs (FHLMC Gold PCS) which also guarantee timely payment of
monthly principal reductions. Resolution Funding Corporation ("REFCORP)
obligations are backed, as to principal payments, by zero coupon U.S. Treasury
bonds, and as to interest payment, ultimately by the U.S. Treasury.

There are two methods of trading MBSs. A specified pool transaction is a trade
in which the pool number of the security to be delivered on the settlement date
is known at the time the trade is made. This is in contrast with the typical MBS
transaction, called a TBA (to be announced) transaction, in which the type of
MBS to be delivered is specified at the time of trade but the

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actual pool numbers of the securities that will be delivered are not known at
the time of the trade. The pool numbers of the pools to be delivered at
settlement will be announced shortly before settlement takes place. The terms of
the TBA trade may be made more specific if desired. Generally, agency
pass-through MBSs are traded on a TBA basis.

Like fixed income securities in general, MBSs will generally decline in price
when interest rates rise. Rising interest rates also tend to discourage
refinancings of home mortgages, with the result that the average life of MBSs
held by a Portfolio may be lengthened. As average life extends, price volatility
generally increases. This extension of average life causes the market price of
the MBSs to decrease further than if their average lives were fixed. However,
when interest rates fall, mortgages may not enjoy as large a gain in market
value due to prepayment risk because additional mortgage prepayments must be
reinvested at lower interest rates. Faster prepayment will shorten the average
life and slower prepayments will lengthen it. However, it is possible to
determine what the range of the average life movement could be and to calculate
the effect that it will have on the price of the MBS. In selecting MBSs, MSDW
Investment Management looks for those that offer a higher yield to compensate
for any variation in average maturity. If the underlying mortgage assets
experience greater than anticipated prepayments of principal, a Portfolio may
fail to fully recoup its initial investment in these securities, even if the
security is in one of the highest rating categories. A Portfolio may invest,
without limit, in MBSs issued by private issuers when MSDW Investment Management
deems that the quality of the investment, the quality of the issuer, and market
conditions warrant such investments. Securities issued by private issuers will
be rated investment grade by Moody's or S&P or be deemed by MSDW Investment
Management to be of comparable investment quality.

FANNIE MAE CERTIFICATES. Fannie Mae is a federally chartered and privately
owned corporation organized and existing under the Federal National Mortgage
Association Charter Act of 1938. The obligations of Fannie Mae are not backed by
the full faith and credit of the U.S. Government.

Each Fannie Mae certificate represents a pro rata interest in one or more pools
of mortgage loans insured by the Federal Housing Administration under the
Housing Act, or Title V of the Housing Act of 1949 ("FHA Loans"), or guaranteed
by the Department of Veteran Affairs under the Servicemen's Readjustment Act of
1944, as amended ("VA Loans") or conventional mortgage loans (i.e., mortgage
loans that are not insured or guaranteed by any governmental agency) of the
following types: (i) fixed rate level payment mortgage loans; (ii) fixed rate
growing equity mortgage loans; (iii) fixed rate graduated payment mortgage
loans; (iv) variable rate California mortgage loans; (v) other adjustable rate
mortgage loans; and (vi) fixed rate and adjustable mortgage loans secured by
multi-family projects.

FREDDIE MAC CERTIFICATES. Freddie Mac is a corporate instrumentality of the
United States created pursuant to the Emergency Home Finance Act of 1970, as
amended (the "FHLMC Act"). The obligations of Freddie Mac are obligations solely
of Freddie Mac and are not backed by the full faith and credit of the U.S.
Government.

Freddie Mac certificates represent a pro rata interest in a group of mortgage
loans (a "Freddie Mac Certificate group") purchased by Freddie Mac. The mortgage
loans underlying the Freddie Mac Certificates consist of fixed rate or
adjustable rate mortgage loans with original terms to maturity of between ten
and thirty years, substantially all of which are secured by first liens on
one-to-four-family residential properties or multi-family projects. Each
mortgage loan must meet the applicable standards set forth in the FHLMC Act. A
Freddie Mac Certificate group may include whole loans, participation interests
in whole loans and undivided interests in whole loans and participations
comprising another Freddie Mac Certificate group.

GINNIE MAE CERTIFICATES. Ginnie Mae is a wholly-owned corporate
instrumentality of the United States within the Department of Housing and Urban
Development. The National Housing Act of 1934, as amended (the "Housing Act"),
authorizes Ginnie Mae to guarantee the timely payment of the principal and
interest on certificates that are based on and backed by a pool of FHA Loans, VA
Loans or by pools of other eligible mortgage loans. The Housing Act provides
that the full faith and credit of the U.S. Government is pledged to the payment
of all amounts that may be required to be paid under any guaranty. In order to
meet its obligations under such guaranty, Ginnie Mae is authorized to borrow
from the U.S. Treasury with no limitations as to amount.

Each Ginnie Mae certificate represents a pro rata interest in one or more of the
following types of mortgage loans: (i) fixed rate level payment mortgage loans;
(ii) fixed rate graduated payment mortgage loans; (iii) fixed rate growing
equity mortgage loans; (iv) fixed rate mortgage loans secured by manufactured
(mobile) homes; (v) mortgage loans on multi-family residential properties under
construction; (vi) mortgage loans on completed multi-family projects; (vii)
fixed rate mortgage loans as to which escrowed funds are used to reduce the
borrower's monthly payments during the early years of the mortgage loans
("buydown" mortgage loans); (viii) mortgage loans that provide for adjustments
in payments based on periodic changes in interest rates or in other payment
terms of the mortgage loans; and (ix) mortgage-backed serial notes. All of these
mortgage loans will be FHA Loans or VA loans and, except as otherwise specified
above, will be fully-amortizing loans secured by first liens on one-
to-four-family housing units.

COLLATERALIZED MORTGAGE OBLIGATIONS. Collateralized mortgage obligations
("CMOs") are debt obligations or multiclass pass-through certificates issued by
agencies or instrumentalities of the U.S. Government or by private originators
or investors in mortgage loans. They are backed by mortgage-backed securities
(discussed below) or whole loans (all such assets, the "Mortgage Assets") and
are evidenced by a series of bonds or certificates issued in multiple classes.
Each class of a CMO, often referred to

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as a "tranche," may be issued with a specific fixed or floating coupon rate and
has a stated maturity or final scheduled distribution date. The principal and
interest on the underlying Mortgage Assets may be allocated among the several
classes of a series of CMOs in many ways. Interest is paid or accrues on CMOs on
a monthly, quarterly or semi-annual basis.

CMOs may be issued by agencies or instrumentalities of the U.S. Government, or
by private originators of, or investors in, mortgage loans, including savings
and loan associations, mortgage bankers, commercial banks, investment banks and
special purpose subsidiaries of the foregoing. CMOs that are issued by private
sector entities and are backed by assets lacking a guarantee of an entity having
the credit status of a governmental agency or instrumentality are generally
structured with one or more types of credit enhancement as described below. An
issuer of CMOs may elect to be treated for federal income tax purposes as a Real
Estate Mortgage Investment Conduit (a "REMIC"). An issuer of CMOs issued after
1991 must elect to be treated as a REMIC or it will be taxable as a corporation
under rules regarding taxable mortgage pools.

The principal and interest on the Mortgage Assets may be allocated among the
several classes of a CMO in many ways. The general goal in allocating cash flows
on Mortgage Assets to the various classes of a CMO is to create certain tranches
on which the expected cash flows have a higher degree of predictability than do
the underlying Mortgage Assets. As a general matter, the more predictable the
cash flow is on a particular CMO tranche, the lower the anticipated yield on
that tranche at the time of issue will be relative to prevailing market yields
on Mortgage Assets. As part of the process of creating more predictable cash
flows on certain tranches of a CMO, one or more tranches generally must be
created that absorb most of the changes in the cash flows on the underlying
Mortgage Assets. The yields on these tranches are generally higher than
prevailing market yields on other mortgage related securities with similar
average lives. Principal prepayments on the underlying Mortgage Assets may cause
the CMOs to be retired substantially earlier than their stated maturities or
final scheduled distribution dates. Because of the uncertainty of the cash flows
on these tranches, the market prices and yields of these tranches are more
volatile. In addition, some inverse floating rate obligation CMOs exhibit
extreme sensitivity to changes in prepayments. As a result, the yield to
maturity of these CMOs is sensitive not only to changes in interest rates, but
also to changes in prepayment rates on the related underlying Mortgage Assets.

Included within the category of CMOs are PAC Bonds. PAC Bonds are a type of CMO
tranche or series designed to provide relatively predictable payments, provided
that, among other things, the actual prepayment experience on the underlying
Mortgage Assets falls within a predefined range. If the actual prepayment
experience on the underlying Mortgage Assets is faster or slower than the
predefined range or if deviations from other assumptions occur, payments on the
PAC Bond may be earlier or later than predicted and the yield may rise or fall.
The magnitude of the predefined range varies from one PAC Bond to another; a
narrower range increases the risk that prepayments on the PAC Bond will be
greater or smaller than predicted. Because of these features, PAC Bonds
generally are less subject to the risk of prepayment than are other types of
mortgage related securities.

STRIPPED MORTGAGE-BACKED SECURITIES. Stripped Mortgage-Backed Securities
("SMBSs") are multi-class mortgage securities issued by agencies or
instrumentalities of the U.S. Government and private originators of, or
investors in, mortgage loans. SMBSs are usually structured with two classes that
receive different proportions of the interest and principal distributions on a
pool of Mortgage Assets. In some cases, one class will receive all of the
interest ("interest-only" or "IO class"), while the other class will receive all
of the principal ("principal-only" or "PO class"). The yield to maturity on IO
classes and PO classes is extremely sensitive to the rate of principal payments
(including prepayments) on the related underlying Mortgage Assets, and
significant changes in the rate of principal repayments will have a
corresponding effect on the SMBSs yield to maturity.

CREDIT ENHANCEMENT. Mortgage related securities are often backed by a pool
of assets representing the obligations of a number of parties. To lessen the
effect of failure by obligors on underlying assets to make payments, these
securities may have various types of credit support. Credit support falls into
two primary categories: (i) liquidity protection, and (ii) protection against
losses resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection generally refers to the provision of advances, typically by
the entity administering the pool of assets, to ensure that the pass-through of
payments due on the underlying pool occurs in a timely fashion. Protection
against losses resulting from ultimate default enhances the likelihood of
ultimate payment of the obligations on at least a portion of the assets in the
pool. Such protection may be provided through guarantees, insurance policies or
letters of credit obtained by the issuer or sponsor from third parties (referred
to herein as "third party credit support"), through various means of structuring
the transaction or through a combination of such approaches.

The ratings of mortgage related securities for which third party credit
enhancement provides liquidity protection or protection against losses from
default are generally dependent upon the continued creditworthiness of the
provider of the credit enhancement. The ratings of such securities could decline
in the event of deterioration in the creditworthiness of the credit enhancement
provider even in cases where the delinquency and loss experience on the
underlying pool of assets is better than expected.

Examples of credit support arising out of the structure of the transaction
include "senior-subordinated securities" (multiple class securities with one or
more classes subordinate to other classes as to the payment of principal and
interest thereon, with defaults on the underlying assets being borne first by
the holders of the most subordinated class), creation of "reserve funds" (where
cash or investments, sometimes funded from a portion of the payments on the
underlying assets, are held in reserve against future losses) and
"over-collateralization" (where the scheduled payments on, or the principal
amount of, the underlying assets exceed those required to make payment of the
securities and pay any servicing or other fees). The degree of credit support
provided for

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each security is generally based on historical information with respect to the
level of credit risk associated with the underlying assets. Delinquency or loss
in excess of that which is anticipated could adversely affect the return on an
investment in such a security.

REPURCHASE AGREEMENTS. Repurchase Agreements are transactions in which a
Portfolio purchases a security or basket of securities and simultaneously
commits to resell that security or basket to the seller (a bank, broker or
dealer) at a mutually agreed upon date and price. The resale price reflects the
purchase price plus an agreed upon market rate of interest which is unrelated to
the coupon rate or date of maturity of the purchased security. Repurchase
Agreements may be viewed as a fully collateralized loan of money by the
Portfolio to the seller at a mutually agreed upon rate and price. The term of
these agreements is usually from overnight to one week, and never exceeds one
year. Repurchase Agreements with a term of over seven days are considered
illiquid.

In these transactions, the Portfolio receives as collateral securities that have
a market value at least equal to the purchase price (including accrued interest)
of the Repurchase Agreement, and this value is maintained during the term of the
agreement. These securities are held by the Portfolio's Custodian or an approved
third party for the benefit of the Portfolio until repurchased. Repurchase
Agreements permit a Portfolio to remain fully invested while retaining overnight
flexibility to pursue investments of a longer-term nature. If the seller
defaults and the collateral value declines, the Portfolio might incur a loss. If
bankruptcy proceedings are commenced with respect to the seller, the Portfolio's
realization upon the collateral may be delayed or limited.

Pursuant to an order expected to be issued by the Securities and Exchange
Commission (the "SEC"), the Portfolios may pool their daily uninvested cash
balances in order to invest in Repurchase Agreements on a joint basis with other
investment companies advised by MSDW Investment Management. By entering into
Repurchase Agreements on a joint basis, the Portfolios expect to incur lower
transaction costs and potentially obtain higher rates of interest on such
Repurchase Agreements. Each Portfolio's participation in the income from jointly
purchased Repurchase Agreements will be based on that Portfolio's percentage
share in the total Repurchase Agreement. The Portfolios' ability to invest in
Repurchase Agreements on a joint basis will be contingent upon issuance of the
order by the SEC described above.

MUNICIPALS. Municipal securities ("Municipals") are debt obligations issued by
local, state and regional governments that provide interest income that is
exempt from federal income taxes. Municipals include both municipal bonds (those
securities with maturities of five years or more) and municipal notes (those
securities with maturities of less than five years). Municipal bonds are issued
for a wide variety of reasons: to construct public facilities, such as airports,
highways, bridges, schools, hospitals, mass transportation, streets, water and
sewer works; to obtain funds for operating expenses; to refund outstanding
municipal obligations; and to loan funds to various public institutions and
facilities. Certain industrial development bonds are also considered municipal
bonds if their interest is exempt from federal income taxes. Industrial
development bonds are issued by or on behalf of public authorities to obtain
funds for various privately-operated manufacturing facilities, housing, sports
arenas, convention centers, airports, mass transportation systems and water, gas
or sewer works. Industrial development bonds are ordinarily dependent on the
credit quality of a private user, not the public issuer.

ASSET-BACKED SECURITIES. Asset-Backed Securities ("Asset-Backeds") are
securities collateralized by shorter-term loans such as automobile loans, home
equity loans, equipment or computer leases or credit card receivables. The
payments from the collateral are passed through to the security holder. The
collateral underlying Asset-Backeds tends to have prepayment rates that usually
do not vary with interest rates. In addition, the short-term nature of the loans
reduces the impact of any change in prepayment level. However, it is possible
that prepayments (on automobile loans and other collateral) will alter the cash
flow on Asset-Backeds and it is not possible to determine in advance the actual
final maturity date or average life. Faster prepayment will shorten the average
life and slower prepayment will lengthen it. However, it is possible to
determine what the range of that movement could be and to calculate the effect
that it will have on the price of the security. The maturity of Asset-Backeds
will be based on the expected average life of the instrument. In selecting these
securities, MSDW Investment Management will look for those securities that offer
a higher yield to compensate for any variation in average maturity.

PREFERRED STOCKS. Preferred Stocks are securities that evidence ownership in a
corporation and pay a fixed or variable stream of dividends. Preferred Stocks
have a preference over Common Stocks in the event of the liquidation of an
issuer and usually do not carry voting rights. Because Preferred Stocks
represent an ownership interest in the issuer they have many of the
characteristics of an Equity Security and are, therefore, included in both the
definition of Fixed Income Security and Equity Security.

CONVERTIBLE SECURITIES. Convertible Securities are securities that may be
exchanged under certain circumstances for a fixed number of shares of Common
Stock or other Equity Securities. Convertible Securities generally represent a
feature of some other type of security, such as a Fixed Income Security or
Preferred Stock, so that, for example, a Convertible Fixed Income Security would
be a Fixed Income Security that is convertible into Common Stock. Prices of
Convertible Fixed Income Securities frequently are more volatile than
non-Convertible Fixed Income Securities. Convertible Securities may be viewed as
an investment in the current security or the security into which the Convertible
Security may be exchanged and, therefore, are included in both the definition of
Fixed Income Security or Equity Security.

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LOAN PARTICIPATIONS AND ASSIGNMENTS. Loan Participations are interests in loans
or other direct debt instruments ("Loans") relating to amounts owed by a
corporate, governmental or other borrower to another party. Loans may represent
amounts owed to lenders or lending syndicates, to suppliers of goods or services
(trade claims or other receivables), or to other parties ("Lenders") and may be
fixed rate or floating rate. Loans also may be arranged through private
negotiations between an issuer of sovereign debt obligations and Lenders.

A Portfolio's investments in Loans are expected in most instances to be in the
form of a participation in Loans ("Participations") and assignments of all or a
portion of Loans ("Assignments") from third parties. In the case of a
Participation, a Portfolio will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the Lender selling the
Participation and only upon receipt by the Lender of the payments from the
borrower. In the event of an insolvency of the Lender selling a Participation, a
Portfolio may be treated as a general creditor of the Lender and may not benefit
from any set-off between the Lender and the borrower. Certain Participations may
be structured in a manner designed to avoid purchasers of Participations being
subject to the credit risk of the Lender with respect to the Participation. Even
under such a structure, in the event of a Lender's insolvency, the Lender's
servicing of the Participation may be delayed and the assignability of the
Participation may be impaired. A Portfolio will acquire Participations only if
the Lender interpositioned between a Portfolio and the borrower is determined by
MSDW Investment Management to be creditworthy.

When a Portfolio purchases Assignments from Lenders it will acquire direct
rights against the borrower on the Loan. However, because Assignments are
arranged through private negotiations between potential assignees and potential
assignors, the rights and obligations acquired by a Portfolio as the purchaser
of an Assignment may differ from, and be more limited than, those held by the
assigning Lender. Because there is no liquid market for such securities, it is
likely that such securities could be sold only to a limited number of
institutional investors. The lack of a liquid secondary market may have an
adverse impact on the value of such securities and a Portfolio's ability to
dispose of particular Assignments or Participations when necessary to meet a
Portfolio's liquidity needs or in response to a specific economic event, such as
a deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for Assignments and Participations also may make it more
difficult for a Portfolio to assign a value to these securities for purposes of
valuing a Portfolio's securities and calculating its NAV.

Loan Participations and Assignments involve a risk of loss in case of default or
insolvency of the borrower. In addition, they may offer less legal protection to
a Portfolio in the event of fraud or misrepresentation and may involve a risk of
insolvency of the Lender. Certain Loan Participations and Assignments may also
include standby financing commitments that obligate the investing Portfolio to
supply additional cash to the borrower on demand. Participations involving
emerging market country issuers may relate to Loans as to which there has been
or currently exists an event of default or other failure to make payment when
due, and may represent amounts owed to Lenders that are themselves subject to
political and economic risks, including the risk of currency devaluation,
expropriation, or failure. Such Loan Participations and Assignments present
additional risk of default or loss.

TEMPORARY INVESTMENTS. When MSDW Investment Management believes that changes in
economic, financial or political conditions make it advisable, each Portfolio
may invest up to 100% of its assets in cash and certain short- and medium-term
Fixed Income Securities for temporary defensive purposes. These Temporary
Investments may consist of obligations of the U.S. or foreign governments, their
agencies or instrumentalities; Money Market Instruments; and instruments issued
by international development agencies.

ZERO COUPONS, PAY-IN-KIND SECURITIES OR DEFERRED PAYMENT SECURITIES. Zero
Coupon, Pay-In-Kind and Deferred Payment Securities are all types Fixed Income
Securities where the holder does not receive periodic cash payments of interest
or principal. Generally, these securities are subject to greater price
volatility and lesser liquidity in the event of adverse market conditions than
comparably rated securities paying cash interest at regular intervals. Although
a Portfolio will not receive cash periodic coupon payments on these securities,
the Portfolio may be deemed to have received interest income, or "phantom
income" during the life of the obligation. The Portfolio may have to pay taxes
on this phantom income, although it has not received any cash payment.

ZERO COUPONS. Zero Coupons are fixed income securities that do not make
regular interest payments. Instead, Zero Coupons are sold at a discount from
their face value. The difference between a Zero Coupon's issue or purchase price
and its face value represents the imputed interest an investor will earn if the
obligation is held until maturity. Zero Coupons may offer investors the
opportunity to earn a higher yield than that available on ordinary
interest-paying obligations of similar credit quality and maturity.

PAY-IN-KIND SECURITIES. Pay-In-Kind Securities are securities that have
interest payable by delivery of additional securities. Upon maturity, the holder
is entitled to receive the aggregate par value of the securities.

DEFERRED PAYMENT SECURITIES. Deferred Payment Securities are securities
that remain Zero Coupons until a predetermined date, at which time the stated
coupon rate becomes effective and interest becomes payable at regular intervals.

FLOATERS. Floaters are Fixed Income Securities with a rate of interest that
varies with changes in specified market rates or indices, such as the prime
rate, or at specified intervals. Certain Floaters may carry a demand feature
that permits the holder to

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tender them back to the issuer of the underlying instrument, or to a third
party, at par value prior to maturity. When the demand feature of certain
Floaters represents an obligation of a foreign entity, the demand feature will
be subject to certain risks discussed under "Foreign Investment."

INVERSE FLOATERS. Inverse floating rate obligations ("Inverse Floaters") are
Fixed Income Securities that have coupon rates that vary inversely at a multiple
of a designated floating rate, such as LIBOR (London Inter-Bank Offered Rate).
Any rise in the reference rate of an Inverse Floater (as a consequence of an
increase in interest rates) causes a drop in the coupon rate while any drop in
the reference rate of an Inverse Floater causes an increase in the coupon rate.
Inverse Floaters may exhibit substantially greater price volatility than fixed
rate obligations having similar credit quality, redemption provisions and
maturity, and Inverse Floater CMOs exhibit greater price volatility than the
majority of other mortgage-related securities.

EURODOLLAR AND YANKEE DOLLAR OBLIGATIONS. The Portfolios may invest in
Eurodollar and Yankee dollar obligations. Eurodollar bank obligations are
dollar-denominated certificates of deposit and time deposits issued outside the
U.S. capital markets by foreign branches of U.S. banks and by foreign banks.
Yankee dollar bank obligations are dollar-denominated obligations issued in the
U.S. capital markets by foreign banks.

Eurodollar and Yankee dollar obligations are subject to the same risks as
domestic issues but Eurodollar (and to a limited extent, Yankee dollar)
obligations are also subject to certain sovereign risks. One such risk is the
possibility that a sovereign country might prevent capital, in the form of
dollars, from flowing across its borders. Other risks include adverse political
and economic developments; the extent and quality of government regulations of
financial markets and institutions; the imposition of foreign withholding taxes;
and the expropriation or nationalization of foreign issuers.

FOREIGN INVESTMENT

Investing in foreign securities involves certain special considerations which
are not typically associated with investing in the Equity Securities or Fixed
Income Securities of U.S. issuers. Foreign issuers are not generally subject to
uniform accounting, auditing and financial reporting standards and may have
policies that are not comparable to those of domestic issuers. As a result,
there may be less information available about foreign issuers than about
domestic issuers. Securities of some foreign issuers are generally less liquid
and more volatile than securities of comparable domestic issuers. There is
generally less government supervision and regulation of stock exchanges, brokers
and listed issuers than in the United States. In addition, with respect to
certain foreign countries, there is a possibility of expropriation or
confiscatory taxation, political and social instability, or diplomatic
developments which could affect U.S. investments in those countries. The costs
of investing in foreign countries frequently is higher than the costs of
investing in the United States. Although MSDW Investment Management endeavors to
achieve the most favorable execution costs in portfolio transactions, fixed
commissions on many foreign stock exchanges are generally higher than negotiated
commissions on U.S. exchanges.

Investments in securities of foreign issuers generally are denominated in
foreign currencies. Accordingly, the value of a Portfolio's assets, as measured
in U.S. dollars may be affected favorably or unfavorably by changes in currency
exchange rates and in exchange control regulations. A Portfolio may incur costs
in connection with conversions between various currencies.

FOREIGN EQUITY SECURITIES. Foreign Equity Securities are Equity Securities of
an issuer in a foreign country.

FOREIGN FIXED INCOME SECURITIES. Foreign Fixed Income Securities are Fixed
Income Securities issued by a foreign government, government-related or a
private issuer in a foreign country.

RUSSIAN SECURITIES. The registration, clearing and settlement of securities
transactions involving Russian issuers are subject to significant risks not
normally associated with securities transactions in the United States and other
more developed markets. Ownership of Equity Securities in Russian companies is
evidenced by entries in a company's share register (except where shares are held
through depositories that meet the requirements of the 1940 Act) and the
issuance of extracts from the register or, in certain limited cases, by formal
share certificates. However, Russian share registers are frequently unreliable
and a Portfolio could possibly lose its registration through oversight,
negligence or fraud. Moreover, Russia lacks a centralized registry to record
securities transactions and registrars located throughout Russia or the
companies themselves maintain share registers. Registrars are under no
obligation to provide extracts to potential purchasers in a timely manner or at
all and are not necessarily subject to effective state supervision. In addition,
while registrars are liable under law for losses resulting from their errors, it
may be difficult for a Portfolio to enforce any rights it may have against the
registrar or issuer of the securities in the event of loss of share
registration. Although Russian companies with more than 1,000 shareholders are
required by Russian law to employ an independent registrar, in practice, such
companies have not always followed this law. Because of this lack of
independence of registrars, management of a Russian company may be able to exert
considerable influence over who can purchase and sell the company's shares by
illegally instructing the registrar to refuse to record transactions on the
share register. Furthermore, these

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practices may prevent a Portfolio from investing in the securities of certain
Russian companies deemed suitable by the Adviser and could cause a delay in the
sale of Russian Securities by the Portfolio if the company deems a purchaser
unsuitable, which may expose the Portfolio to potential loss on its investment.

In light of the risks described above, the Board Directors of the Fund has
approved certain procedures concerning the Fund's investments in Russian
Securities. Among these procedures is a requirement that a Portfolio will not
invest in the Equity Securities of a Russian company unless that issuer's
registrar has entered into a contract with the Fund's sub-custodian containing
certain protective conditions, including, among other things, the
sub-custodian's right to conduct regular share confirmations on behalf of the
Portfolio. This requirement will likely have the effect of precluding
investments in certain Russian companies that a Portfolio would otherwise make.

FOREIGN CURRENCY TRANSACTIONS. The U.S. dollar value of the assets of the
Portfolios, to the extent they invest in securities denominated in foreign
currencies, may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations, and the Portfolios may
incur costs in connection with conversions between various currencies. The
Portfolios may conduct their foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, but also may enter into forward contracts to purchase or sell
foreign currencies. A foreign currency forward contract involves an obligation
to purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are traded in the
interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage for such
trades.

The Portfolios may enter into foreign currency forward contracts in several
circumstances. When a Portfolio enters into a contract for the purchase or sale
of a security denominated in a foreign currency, or when a Portfolio anticipates
the receipt in a foreign currency of dividends or interest payments on a
security which it holds, the Portfolio may desire to "lock-in" the U.S. dollar
price of the security or the U.S. dollar equivalent of such dividend or interest
payment, as the case may be. By entering into a forward contract for a fixed
amount of dollars, for the purchase or sale of the amount of foreign currency
involved in the underlying transactions, the Portfolio will be able to protect
itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the subject foreign currency during the
period between the date on which the security is purchased or sold, or on which
the dividend or interest payment is declared, and the date on which such
payments are made or received. Additionally, when any of the Portfolios
anticipates that the currency of a particular foreign country may suffer a
substantial decline against the U.S. dollar, it may enter into a forward
contract for a fixed amount of dollars, to sell the amount of foreign currency
approximating the value of some or all of such Portfolio's securities
denominated in such foreign currency.

The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible since the future value of
securities in foreign currencies will change as a consequence of market
movements in the value of these securities between the date on which the forward
contract is entered into and the date it matures. The projection of short-term
currency market movement is extremely difficult, and the successful execution of
a short-term hedging strategy is highly uncertain. None of the Portfolios intend
to enter into such forward contracts to protect the value of portfolio
securities on a continuous basis. The Portfolios will not enter into such
forward contracts or maintain a net exposure to such contracts where the
consummation of the contracts would obligate such Portfolio to deliver an amount
of foreign currency in excess of the value of such Portfolio's securities or
other assets denominated in that currency.

Under normal circumstances, consideration of the prospect for currency parities
will be incorporated into the long-term investment decisions made with regard to
overall diversification strategies. However, the management of the Fund believes
that it is important to have the flexibility to enter into such forward
contracts when it determines that the best interests of the performance of each
Portfolio will thereby be served. Except under circumstances where a segregated
account is not required under the 1940 Act or the rules adopted thereunder, the
Fund's Custodian will place cash or liquid securities into a segregated account
of a Portfolio in an amount equal to the value of such Portfolio's total assets
committed to the consummation of forward currency exchange contracts. If the
value of the securities placed in the segregated account declines, additional
cash or securities will be placed in the account on a daily basis so that the
value of the account will be equal to the amount of such Portfolio's commitments
with respect to such contracts.

The Portfolios generally will not enter into a forward contract with a term of
greater than one year. At the maturity of a forward contract, a Portfolio may
either sell the portfolio security and make delivery of the foreign currency, or
it may retain the security and terminate its contractual obligation to deliver
the foreign currency by purchasing an "offsetting" contract with the same
currency trader obligating it to purchase, on the same maturity date, the same
amount of the foreign currency.

It is impossible to forecast with absolute precision the market value of a
particular portfolio security at the expiration of the contract. Accordingly, it
may be necessary for a Portfolio to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency that such Portfolio is
obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency.

If a Portfolio retains the portfolio security and engages in an offsetting
transaction, such Portfolio will incur a gain or a loss (as described below) to
the extent that there has been movement in forward contract prices. Should
forward prices decline during

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the period between a Portfolio entering into a forward contract for the sale of
a foreign currency and the date it enters into an offsetting contract for the
purchase of the foreign currency, such Portfolio will realize a gain to the
extent that the price of the currency it has agreed to sell exceeds the price of
the currency it has agreed to purchase. Should forward prices increase, such
Portfolio would suffer a loss to the extent that the price of the currency it
has agreed to purchase exceeds the price of the currency it has agreed to sell.

The Portfolios are not required to enter into such transactions with regard to
their foreign currency-denominated securities. It also should be realized that
this method of protecting the value of portfolio securities against a decline in
the value of a currency does not eliminate fluctuations in the underlying prices
of the securities. It simply establishes a rate of exchange which one can
achieve at some future point in time. Additionally, although such contracts tend
to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time, they tend to limit any potential gain which might
result should the value of such currency increase.

FOREIGN CURRENCY WARRANTS. Portfolios may invest in foreign currency
warrants, which entitle the holder to receive from the issuer an amount of cash
(generally, for warrants issued in the U.S., in U.S. dollars) which is
calculated pursuant to a predetermined formula and based on the exchange rate
between a specified foreign currency and the U.S. dollar as of the exercise date
of the warrant. Foreign currency warrants generally are exercisable upon their
issuance and expire as of a specified date and time.

Foreign currency warrants have been issued in connection with U.S.
dollar-denominated debt offerings by major corporate issuers in an attempt to
reduce the foreign currency exchange risk which, from the point of view of
prospective purchasers of the securities, is inherent in the international
fixed-income marketplace. Foreign currency warrants may attempt to reduce the
foreign exchange risk assumed by purchasers of a security by, for example,
providing for a supplemental payment in the event that the U.S. dollar
depreciates against the value of a major foreign currency such as the Japanese
Yen or German Deutschmark. The formula used to determine the amount payable upon
exercise of a foreign currency warrant may make the warrant worthless unless the
applicable foreign currency exchange rate moves in a particular direction (E.G.,
unless the U.S. dollar appreciates or depreciates against the particular foreign
currency to which the warrant is linked or indexed). Foreign currency warrants
are severable from the debt obligations with which they may be offered, and may
be listed on exchanges.

Foreign currency warrants may be exercisable only in certain minimum amounts,
and an investor wishing to exercise warrants who possesses less than the minimum
number required for exercise may be required either to sell the warrants or to
purchase additional warrants, thereby incurring additional transaction costs. In
the case of any exercise of warrants, there may be a delay between the time a
holder of warrants gives instructions to exercise and the time the exchange rate
relating to exercise is determined, during which time the exchange rate could
change significantly, thereby affecting both the market and cash settlement
values of the warrants being exercised. The expiration date of the warrants may
be accelerated if the warrants should be delisted from an exchange or if their
trading should be suspended permanently, which would result in the loss of any
remaining "time value" of the warrants (I.E., the difference between the current
market value and the exercise value of the warrants), and, in the case where the
warrants were "out-of-the-money," in a total loss of the purchase price of the
warrants.

Foreign currency warrants are generally unsecured obligations of their issuers
and are not standardized foreign currency options issued by the OCC. Unlike
foreign currency options issued by the OCC, the terms of foreign exchange
warrants generally will not be amended in the event of governmental or
regulatory actions affecting exchange rates or in the event of the imposition of
other regulatory controls affecting the international currency markets. The
initial public offering price of foreign currency warrants is generally
considerably in excess of the price that a commercial user of foreign currencies
might pay in the interbank market for a comparable option involving
significantly larger amounts of foreign currencies. Foreign currency warrants
are subject to complex political or economic factors.

PRINCIPAL EXCHANGE RATE LINKED SECURITIES. Principal exchange rate linked
securities are debt obligations the principal on which is payable at maturity in
an amount that may vary based on the exchange rate between the U.S. dollar and a
particular foreign currency at or about that time. The return on "standard"
principal exchange rate linked securities is enhanced if the foreign currency to
which the security is linked appreciates against the U.S. dollar, and is
adversely affected by increases in the foreign exchange value of the U.S.
dollar; "reverse" principal exchange rate linked securities are like the
"standard" securities, except that their return is enhanced by increases in the
value of the U.S. dollar and adversely impacted by increases in the value of
foreign currency. Interest payments on the securities are generally made in U.S.
dollars at rates that reflect the degree of foreign currency risk assumed or
given up by the purchaser of the notes (I.E., at relatively higher interest
rates if the purchaser has assumed some Portfolios that invest in emerging
markets may also be exposed to an extra degree of custodial and/or market risk,
especially where the securities purchased are not traded on an official exchange
or where ownership records regarding the securities are maintained by an
unregulated entity (or even the issuer itself).

EMERGING MARKET COUNTRY SECURITIES. An emerging market country security is one
issued by a foreign government or private issuer that has one or more of the
following characteristics: (i) its principal securities trading market is in an
emerging market country, (ii) alone or on a consolidated basis it derives 50% or
more of its annual revenue from either goods produced, sales made or services
performed in emerging markets, or (iii) it is organized under the laws of, and
has a principal office in, an emerging market country.

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Emerging market describes any country which is generally considered to be an
emerging or developing country by major organizations in the international
financial community, such as the International Bank for Reconstruction and
Development (more commonly known as the World Bank) and the International
Finance Corporation. There are currently over 150 countries which are generally
considered to be emerging or developing countries by the international financial
community. Emerging markets can include every nation in the world except the
United States, Canada, Japan, Australia, New Zealand and most nations located in
Western Europe.

The economies of individual emerging market countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product, rate of inflation, currency depreciation, capital reinvestment,
resource self-sufficiency and balance of payments position. Further, the
economies of developing countries generally are heavily dependent upon
international trade and, accordingly, have been, and may continue to be,
adversely affected by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures. These economies also
have been, and may continue to be, adversely affected by economic conditions in
the countries with which they trade.

Prior governmental approval for foreign investments may be required under
certain circumstances in some emerging countries, and the extent of foreign
investment in certain fixed income securities and domestic companies may be
subject to limitation in other emerging countries. Foreign ownership limitations
also may be imposed by the charters of individual companies in emerging
countries to prevent, among other concerns, violation of foreign investment
limitations. Repatriation of investment income, capital and the proceeds of
sales by foreign investors may require governmental registration and/or approval
in some emerging countries. A Portfolio could be adversely affected by delays
in, or a refusal to grant, any required governmental registration of approval
for such repatriation. Any investment subject to such repatriation controls will
be considered illiquid if it appears reasonably likely that this process will
take more than seven days.

Investing in emerging market countries may entail purchasing securities issued
by or on behalf of entities that are insolvent, bankrupt, in default or
otherwise engaged in an attempt to reorganize or reschedule their obligations,
and in entities that have little or no proven credit rating or credit history.
In any such case, the issuer's poor or deteriorating financial condition may
increase the likelihood that the investing Portfolio will experience losses or
diminution in available gains due to bankruptcy, insolvency or fraud. With
respect to any emerging market country, there is the possibility of
nationalization, expropriation or confiscatory taxation, political changes,
government regulation, social instability or diplomatic developments (including
war) that could affect adversely the economies of such countries or the value of
a Portfolio's investments in those countries. In addition, it may be difficult
to obtain and enforce a judgment in a court outside the United States.

Portfolios that invest in emerging markets may also be exposed to an extra
degree of custodial and/or market risk, especially where the securities
purchased are not traded on an official exchange or where ownership records
regarding the securities are maintained by an unregulated entity (or even the
issuer itself).

BRADY BONDS. Brady Bonds are Fixed Income Securities that are created through
the exchange of existing commercial bank loans to foreign entities for new
obligations in connection with debt restructuring under a plan introduced by
Nicholas F. Brady when he was the U.S. Secretary of the Treasury. Brady Bonds
have only been issued in recent years, and, accordingly, do not have a long
payment history. They may be collateralized or uncollateralized and issued in
various currencies (although most are U.S. dollar-denominated) and they are
actively traded in the over-the-counter secondary market. The Portfolios will
invest in Brady Bonds only if they are consistent with the Portfolio's quality
specifications. However, Brady Bonds should be viewed as speculative in light of
the history of defaults with respect to commercial bank loans by public and
private entities of countries issuing Brady Bonds.

INVESTMENT FUNDS. Some emerging market countries have laws and regulations that
currently preclude direct investment in the securities of their companies.
However, indirect investment in the securities of companies listed and traded on
the stock exchanges in these countries is permitted by certain emerging market
countries through Investment Funds that have been specifically authorized. A
Portfolio may invest in these Investment Funds subject to the provisions of the
1940 Act, as applicable, and other applicable laws.

EUROPEAN CURRENCY TRANSITION. On January 1, 1999, the European Monetary Union
(EMU) implemented a new currency unit, the Euro, which is expected to reshape
financial markets, banking systems and monetary policies in Europe and other
parts of the world. Implementation of this plan will mean that financial
transactions and market information, including share quotations and company
accounts, in participating countries will be denominated in Euros. Monetary
policy for participating countries will be uniformly managed by a new central
bank, the European Central Bank (ECB).

The transition to the Euro may change the economic environment and behavior of
investors, particularly in European markets. For example, the process of
implementing the Euro may adversely affect financial markets world-wide and may
result in changes in the relative strength and value of the U.S. dollar or other
major currencies, as well as possible adverse tax consequences. The transition
to the Euro is likely to have a significant impact on fiscal and monetary policy
in the participating countries and may produce unpredictable effects on trade
and commerce generally. These resulting uncertainties could create increased
volatility in financial markets world-wide.

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OTHER SECURITIES

LOANS OF PORTFOLIO SECURITIES. Each Portfolio may lend its investment
securities to qualified institutional investors that need to borrow securities
in order to complete certain transactions, such as covering short sales,
avoiding failures to deliver securities or completing arbitrage operations. By
lending its investment securities, a Portfolio attempts to increase its net
investment income through the receipt of interest of the loan. Any gain or loss
in the market price of the securities loaned that might occur during the term of
the loan would be for the account of the Portfolio. Each Portfolio may lend its
investment securities to qualified brokers, dealers, domestic and foreign banks
or other financial institutions, so long as the terms, structure and the
aggregate amount of such loans are not inconsistent with the 1940 Act or the
Rules and Regulations or interpretations of the SEC thereunder, which currently
require that (i) the borrower pledge and maintain with the Portfolio collateral
consisting of liquid, unencumbered assets having a value at all times not less
than 100% of the value of the securities loaned; (ii) the borrower add to such
collateral whenever the price of the securities loaned rises (i.e., the borrower
"marks to market" on a daily basis); (iii) the loan be made subject to
termination by the Portfolio at any time; and (iv) the Portfolio receive
reasonable interest on the loan (which may include the Portfolio investing any
cash collateral in interest bearing short-term investments), any distributions
on the loaned securities and any increase in their market value. There may be
risks of delay in recovery of the securities or even loss of rights in the
collateral should the borrower of the securities fail financially. However,
loans will be made only to borrowers deemed by MSDW Investment Management to be
of good standing and when, in the judgment of MSDW Investment Management, the
consideration which can be earned currently from such securities loans justifies
the attendant risk. All relevant facts and circumstances, including the
creditworthiness of the broker, dealer or institution, will be considered in
making decisions with respect to the lending of securities, subject to review by
the Board of Directors.

At the present time, the staff of the SEC does not object if an investment
company pays reasonable negotiated fees in connection with loaned securities, so
long as such fees are set forth in a written contract and approved by the
investment company's Board of Directors. In addition, voting rights may pass
with the loaned securities, but if a material event will occur affecting an
investment on loan, the loan must be called and the securities voted.

NON-PUBLICLY TRADED SECURITIES, PRIVATE PLACEMENTS AND RESTRICTED
SECURITIES. The Portfolios may invest in securities that are neither listed on
a stock exchange nor traded over-the-counter, including privately placed and
restricted securities. Such unlisted securities may involve a higher degree of
business and financial risk that can result in substantial losses. As a result
of the absence of a public trading market for these securities, they may be less
liquid than publicly traded securities. Although these securities may be resold
in privately negotiated transactions, the prices realized from these sales could
be less that those originally paid by the Portfolio or less than what may be
considered the fair value of such securities. Furthermore, companies whose
securities are not publicly traded may not be subject to the disclosure and
other investor protection requirements which might be applicable if their
securities were publicly traded. If such securities are required to be
registered under the securities laws of one or more jurisdictions before being
sold, the Portfolio may be required to bear the expenses of registration.

As a general matter, a Portfolio may not invest more than 15% of its net assets
in illiquid securities, such as securities for which there is not readily
available secondary market or securities that are restricted from sale to the
public without registration. However, certain Restricted Securities can be
offered and sold to qualified institutional buyers under Rule 144A under the
1933 Act ("Rule 144A Securities") and may be deemed to be liquid under
guidelines adopted by the Fund's Board of Directors. The Portfolios may invest
without limit in liquid Rule 144A Securities. Rule 144A Securities may become
illiquid if qualified institutional buyers are not interested in acquiring the
securities. Investors should note that investment of 5% of a Portfolio's total
assets in Restricted Securities may be considered a speculative activity and may
involve greater risk and expense to that Portfolio.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. When-Issued and Delayed Delivery
Securities are securities purchased with payment and delivery taking place in
the future in order to secure what is considered to be an advantageous yield or
price at the time of the transaction. Delivery of and payment for these
securities may take as long as a month or more after the date of the purchase
commitment, but will take place no more than 120 days after the trade date. The
payment obligation and the interest rates that will be received are each fixed
at the time a Portfolio enters into the commitment and no interest accrues to
the Portfolio until settlement. Thus, it is possible that the market value at
the time of settlement could be higher or lower than the purchase price if the
general level of interest rates has changed. When a Portfolio agrees to purchase
When-Issued or delayed delivery securities, its custodian will place cash or
liquid securities in a segregated account in an amount equal to the Portfolio's
commitment to purchase these securities.

BORROWING FOR INVESTMENT PURPOSES. Borrowing for investment purposes creates
leverage which is a speculative characteristic. Portfolios authorized to borrow
will do so only when MSDW Investment Management believes that borrowing will
benefit the Portfolio after taking into account considerations such as the costs
of borrowing and the likely investment returns on securities purchased with
borrowed funds. Borrowing by a Portfolio will create the opportunity for
increased net income but, at the same time, will involve special risk
considerations. Leverage that results from borrowing will magnify declines as
well as increases in a Portfolio's net asset value per share and net yield. Each
Portfolio that engages in borrowing expects that all of its borrowing will be
made on a secured basis. The Portfolio's Custodian will either segregate the
assets securing the borrowing for the benefit of

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the lenders or arrangements will be made with a suitable sub-custodian. If
assets used to secure the borrowing decrease in value, a Portfolio may be
required to pledge additional collateral to the lender in the form of cash or
securities to avoid liquidation of those assets.

REVERSE REPURCHASE AGREEMENTS. Under a Reverse Repurchase Agreement, a
Portfolio sells a security and promises to repurchase that security at an agreed
upon future date and price. The price paid to repurchase the security reflects
interest accrued during the term of the agreement. The Portfolio will establish
a separate custodial account holding cash and other liquid assets in an amount
not less than the purchase obligations of the agreement. Reverse Repurchase
Agreements may be viewed as a speculative form of borrowing called leveraging. A
Portfolio may invest in reverse repurchase agreements if (i) interest earned
from leveraging exceeds the interest expense of the original reverse repurchase
transaction and (ii) proceeds from the transaction are not invested for longer
than the term of the Reverse Repurchase Agreement.

SHORT SALES. A short sale is a transaction in which the Portfolio sells
securities it owns or has the right to acquire at no added cost (i.e., "against
the box") or does not own (but has borrowed) in anticipation of a decline in the
market price of the securities. To deliver the securities to the buyer, the
Portfolio arranges through a broker to borrow the securities and, in so doing,
the Portfolio becomes obligated to replace the securities borrowed at their
market price at the time of replacement. When selling short, the Portfolio
intends to replace the securities at a lower price and therefore, profit from
the difference between the cost to replace the securities and the proceeds
received from the sale of the securities. When the Portfolio makes a short sale,
the proceeds it receives from the sale will be held on behalf of a broker until
the Portfolio replaces the borrowed securities. The Portfolio may have to pay a
premium to borrow the securities and must pay any dividends or interest payable
on the securities until they are replaced.

The Portfolio's obligation to replace the securities borrowed in connection with
a short sales will be secured by collateral deposited with the broker that
consists of cash or other liquid securities. In addition, the Portfolio will
place in a segregated account with its Custodian an amount of cash or other
liquid securities equal to the difference, if any, between (i) the market value
of the securities sold at the time they were sold short, and (ii) any cash or
other liquid securities deposited as collateral with the broker in connection
with the short sale. Short sales by the Portfolio involve certain risk and
special considerations. If MSDW Investment Management incorrectly predicts that
the price of the borrowed security will decline, the Portfolio will have to
replace the securities with securities with a greater value than the amount
received from the sale. As a result, losses from short sales differ from losses
that could be incurred from a purchase of a security, because losses from short
sales may be unlimited, whereas losses from purchases can equal only the total
amount invested.

STRUCTURED INVESTMENTS. Structured Investments are securities that are
convertible into, or the value of which is based upon the value of, other fixed
income or equity securities or indices upon certain terms and conditions. The
amount a Portfolio receives when it sells a Structured Investment or at maturity
of a Structured Investment is not fixed, but is based on the price of the
underlying security or index. Particular Structured Investments may be designed
so that they move in conjunction with or differently from their underlying
security or index in terms of price and volatility. It is impossible to predict
whether the underlying index or price of the underlying security will rise or
fall, but prices of the underlying indices and securities (and, therefore, the
prices of Structured Investments) will be influenced by the same types of
political and economic events that affect particular issuers of fixed income and
equity securities and capital markets generally. Structured Investments also may
trade differently from their underlying securities. Structured Investments
generally trade on the secondary market, which is fairly developed and liquid.
However, the market for such securities may be shallow compared to the market
for the underlying securities or the underlying index. Accordingly, periods of
high market volatility may affect the liquidity of Structured Investments,
making high volume trades possible only with discounting.

Structured Investments are a relatively new innovation and may be designed to
have various combinations of equity and fixed income characteristics. The
following sections describe four of the more common types of Structured
Investments. The Portfolios may invest in other Structured Investments,
including those that may be developed in the future, to the extent that the
Structured Investments are otherwise consistent with a Portfolio's investment
objective and policies.

PERCS. Preferred Equity Redemption Cumulative Stock ("PERCS") technically
is preferred stock with some characteristics of common stock. PERCS are
mandatorily convertible into common stock after a period of time, usually three
years, during which the investors' capital gains are capped, usually at 30%.
Commonly, PERCS may be redeemed by the issuer at any time or if the issuer's
common stock is trading at a specified price level or better. The redemption
price starts at the beginning of the PERCS duration period at a price that is
above the cap by the amount of the extra dividends the PERCS holder is entitled
to receive relative to the common stock over the duration of the PERCS and
declines to the cap price shortly before maturity of the PERCS. In exchange for
having the cap on capital gains and giving the issuer the option to redeem the
PERCS at any time or at the specified common stock price level, a Portfolio may
be compensated with a substantially higher dividend yield than that on the
underlying common stock. Investors that seek current income find PERCS
attractive because PERCS provide a high dividend income than that paid with
respect to a company's common stock.

ELKS. Equity-Linked Securities ("ELKS") differ from ordinary debt
securities, in that the principal amount received at maturity is not fixed but
is based on the price of the issuer's common stock. ELKS are debt securities
commonly issued in fully registered form for a term of three years under an
indenture trust. At maturity, the holder of ELKS will be entitled to receive a

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principal amount equal to the lesser of a cap amount, commonly in the range of
30% to 55% greater than the current price of the issuer's common stock, or the
average closing price per share of the issuer's common stock , subject to
adjustment as a result of certain dilution events, for the 10 trading days
immediately prior to maturity. Unlike PERCS, ELKS are commonly not subject to
redemption prior to maturity. ELKS usually bear interest during the three-year
term at a substantially higher rate than the dividend yield on the underlying
common stock. In exchange for having the cap on the return that might have been
received as capital gains on the underlying common stock, a Portfolio may be
compensated with the higher yield, contingent on how well the underlying common
stock does. Investors that seek current income, find ELKS attractive because
ELKS provide a higher dividend income than that paid with respect to a company's
common stock. The return on ELKS depends on the creditworthiness of the issuer
of the securities, which may be the issuer of the underlying securities or a
third party investment banker or other lender. The creditworthiness of such
third party issuer of ELKS may, and often does, exceed the creditworthiness of
the issuer of the underlying securities. The advantage of using ELKS over
traditional equity and debt securities is that the former are income producing
vehicles that may provide a higher income than the dividend income on the
underlying equity securities while allowing some participation in the capital
appreciation of the underlying equity securities. Another advantage of using
ELKS is that they may be used for hedging to reduce the risk of investing in the
generally more volatile underlying equity securities.

LYONS. Liquid Yield Option Notes ("LYONs") differ from ordinary debt
securities, in that the amount received prior to maturity is not fixed but is
based on the price of the issuer's common stock. LYONs are zero-coupon notes
that sell at a large discount from face value. For an investment in LYONs, the
Portfolio will not receive any interest payments until the notes mature,
typically in 15 to 20 years, when the notes are redeemed at face, or par, value.
The yield on LYONs, typically, is lower-than-market rate for debt securities of
the same maturity, due in part to the fact that the LYONs are convertible into
common stock of the issuer at any time at the option of the holder of the LYONs.
Commonly, the LYONs are redeemable by the issuer at any time after an initial
period or if the issuer's common stock is trading at a specified price level or
better or, at the option of the holder, upon certain fixed dates. The redemption
price typically is the purchase price of the LYONs plus accrued original issue
discount to the date of redemption, which amounts to the lower-than-market
yield. A Portfolio will receive only the lower-than-market yield unless the
underlying common stock increases in value at a substantial rate. LYONs are
attractive to investors when it appears that they will increase in value due to
the rise in value of the underlying common stock.

STRUCTURED NOTES. Structured Notes are derivative securities for which the
amount of principal repayment and/or interest payments is based upon the
movement of one or more "factors." These factors include, but are not limited
to, currency exchange rates, interest rates (such as the prime lending rate and
LIBOR) and stock indices, such as the S&P 500. In some cases, the impact of the
movements of these factors may increase or decrease through the use of
multipliers or deflators. Structured Notes may be designed to have particular
quality and maturity characteristics and may vary from money market quality to
below investment grade. Depending on the factor used and the use of multipliers
or deflators, however, changes in interest rates and movement of the factor may
cause significant price fluctuations or may cause particular Structured Notes to
become illiquid. The Portfolios will use Structured Notes to tailor their
investments to the specific risks and returns the Adviser wishes to accept while
avoiding or reducing certain other risks.

DERIVATIVES

The Portfolios are permitted to utilize various exchange-traded and
over-the-counter derivative instruments and derivative securities, both for
hedging and non-hedging purposes. Permitted derivative products include, but are
not limited to futures contracts ("futures"); forward contracts ("forwards");
options; swaps, caps, collars and floors; structured notes; and other derivative
products yet to be developed, so long as these new products are used in a manner
consistent with the objectives of the Portfolios. These derivative products may
be based upon a wide variety of underlying rates, indices, instruments,
securities and other products, such as interest rates, foreign currencies,
foreign and domestic fixed income and equity securities, groups or "baskets" of
securities and securities indices (for each derivative product, the
"underlying"). Exclusive of forward foreign currency contracts and any
derivative products used for hedging purposes, each Portfolio will limit its use
of derivative products to 33 1/3% of its total assets, measured by the aggregate
notional amount of outstanding derivative products.

The Portfolios may use derivative products under a number of different
circumstances to further their investment objectives. For example, a Portfolio
may purchase derivatives to gain exposure to a market quickly in response to
changes in the Portfolio's investment strategy, upon the inflow of investable
cash or when the derivative provides greater liquidity than the underlying
market. A Portfolio may also use derivatives when it is restricted from directly
owning the "underlying" or when derivatives provide a pricing advantage or lower
transaction costs. The Portfolios also may purchase combinations of derivatives
in order to gain exposure to an investment in lieu of actually purchasing such
investment. Derivatives may also be used by a Portfolio for hedging or risk
management purposes and in other circumstances when MSDW Investment Management
believes it advantageous to do so consistent with the Portfolio's investment
objectives and policies. The Portfolios will not use derivatives in a manner
that creates leverage, except to the extent that the use of leverage is
expressly permitted by a particular Portfolio's investment policies, and then
only in a manner consistent with such policies.

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The use of derivative products is a highly specialized activity which involves
investment techniques and risks different from those associated with ordinary
portfolio securities transactions. If MSDW Investment Management is incorrect in
forecasts of market values, interest rates, and currency exchange rates, the
investment performance of the Portfolios will be less favorable than it would
have been if these investment techniques had not been used.

Some of the derivative products in which the Portfolios may invest and some of
the risks related thereto are described in further detail below.

FUTURES CONTRACTS (FUTURES) AND FORWARD CONTRACTS (FORWARDS). The Portfolios
may purchase and sell futures contracts, including futures on securities
indices, baskets of securities, foreign currencies and interest rates of the
type generally known as financial futures. These are standardized contracts that
are bought and sold on organized exchanges. A futures contract obligates a party
to buy or sell a specific amount of the "underlying," such as a particular
foreign currency, on a specified future date at a specified price or to settle
the value in cash.

The Portfolios may also purchase and sell forward contracts, such as forward
rate agreements and other financial forward contracts. The Portfolios may also
use foreign currency forward contracts which are separately discussed under
"Foreign Currency Transactions." These forward contracts are privately
negotiated and are bought and sold in the over-the-counter market. Like a
future, a forward contract obligates a party to buy or sell a specific amount of
the underlying on a specified future date at a specified price. The terms of the
forward contract are customized. Forward contracts, like other over-the-counter
contracts that are negotiated directly with an individual counterparty, subject
the Portfolio to the risk of counterparty default.

In some cases, the Portfolios may be able to use either futures contracts,
forward contracts or exchange-traded or over-the-counter options to accomplish
similar purposes. In all cases, the Portfolios will uses these products only as
permitted by applicable laws and regulations. Some of the ways in which the
Portfolios may utilize futures contracts, forward contracts and related options
are as follows:

The Portfolios may sell securities index futures contracts and/or index options
thereon in anticipations of or during a market decline to attempt to offset the
decrease in market value of investments in its portfolio, or may purchase
securities index futures or options in order to gain market exposure. There
currently are limited securities index futures and options on such futures in
many countries, particularly emerging markets. The nature of the strategies
adopted by MSDW Investment Management, and the extent to which those strategies
are used, may depend on the development of such markets. The Portfolios may also
purchase and sell foreign currency rates or to adjust their exposure to a
particular currency.

The Portfolio may engage in transactions in interest rate futures and related
products. The value of these contracts rises and falls inversely with change in
interest rates. The Portfolios may engage in such transactions to hedge their
holdings of debt instruments against future changes in interest rates or for
other purposes.

Gains and losses on futures contracts, forward contracts and related options
depend on MSDW Investment Management's ability to predict correctly the
direction of movement of securities prices, interest rates and other economic
factors. Other risks associated with the use of these instruments include (i)
imperfect correlation between the change in market value of investments held by
a Portfolio and the prices of derivative products relating to investments
purchased or sold by the Portfolio, and (ii) possible lack of a liquid secondary
market for a derivative product and the resulting inability to close out a
position. The risk that a Portfolio will be unable to close out a position will
be minimized by only entering into transactions for which there appears to be a
liquid exchange or secondary market. In some strategies, the risk of loss in
trading on futures and related transactions can be substantial, due both to the
low margin deposits required and the extremely high degree of leverage involved
in pricing.

Under rules adopted by the Commodity Futures Trading Commission (the "CFTC"),
each Portfolio may, without registering with the CFTC as a Commodity Pool
Operator, enter into futures contracts and options thereon for both hedging and
non-hedging purposes, provided that not more than 5% of such Portfolio's total
assets at the time of entering the transaction are required as margin and option
premiums to secure obligations under such contracts relating to non-bona fide
hedging activities.

OPTIONS. The Portfolios may seek to increase their returns or may hedge their
portfolio investments through options transactions with respect to individual
securities, indices or baskets in which such Portfolios may invest; other
financial instruments; and foreign currency. Various options may be purchased
and sold on either the exchange-traded or over-the-counter markets.

Each Portfolio may purchase put and call options. Purchasing a put option gives
a Portfolio the right, but not the obligation, to sell the underlying (such as a
securities index or a particular foreign currency) at the exercise price either
on a specific date or during a specified exercise period. The purchaser pays a
premium to the seller (also known as the writer) of the option.

Each Portfolio also may write put and call options on investments held in its
portfolio, as well as foreign currency options. A Portfolio that has written an
option receives a premium that increases the Portfolio's return on the
underlying in the event the option expires unexercised or is closed out at a
profit. However, by writing a call option, a Portfolio will limit its
opportunity to profit from an increase in the market value of the underlying
above the exercise price of the option. By writing a put option, a Portfolio
will be exposed to the amount by which the price of the underlying is less than
the strike price.

By writing an option, a Portfolio incurs an obligation either to buy (in the
case of a put option) or sell (in the case of a call option) the underlying from
the purchaser of the option at the option's exercise price, upon exercise by the
purchaser. Pursuant to

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guidelines established by the Board of Directors, the Portfolios may only write
options that are "covered." A covered call option means that until the
expiration of the option, the Portfolio will either earmark or segregate
sufficient liquid assets to cover its obligations under the option or will
continue to own (i) the underlying; (ii) securities or instruments convertible
or exchangeable without the payment of any consideration into the underlying; or
(iii) a call option on the same underlying with a strike price no higher than
the price at which the underlying was sold pursuant to a short option position.
In the case of a put option, the Portfolio will either earmark or segregate
sufficient liquid assets to cover its obligations under the option or will own
another put option on the same underlying with an equal or higher strike price.

There currently are limited options markets in many countries, particularly
emerging market countries, and the nature of the strategies adopted by MSDW
Investment Management and the extent to which those strategies are used will
depend on the development of these options markets. The primary risks associated
with the Portfolios' use of options as described include (i) imperfect
correlation between the change in market value of investments held, purchased or
sold by a Portfolio and the prices of options relating to such investments, and
(ii) possible lack of a liquid secondary market for an option.

INTEREST RATE, CURRENCY, COMMODITY AND EQUITY SWAPS, CAPS, COLLARS AND
FLOORS. Swaps are privately negotiated over-the-counter derivative products in
which two parties agree to exchange payment streams calculated in relation to a
rate, index, instrument or certain securities and a particular "notional
amount." As with many of the other derivative products available to the
Portfolios, the underlying may include an interest rate (fixed or floating), a
currency exchange rate, a commodity price index, and a security, securities
index or a combination thereof. A great deal of flexibility is possible in the
way the products may be structured, with the effect being that the parties may
have exchanged amounts equal to the return on one rate, index or group of
securities for another. For example, in a simple fixed-to-floating interest rate
swap, one party makes payments equivalent to a fixed interest rate, and the
other make payments equivalent to a specified interest rate index. A Portfolio
may engage in simple or more complex swap transactions involving a wide variety
of underlyings. The currency swaps that the Portfolios may enter will generally
involve an agreement to pay interest streams in one currency based on a
specified index in exchange for receiving interest streams denominated in
another currency. Such swaps may involve initial and final exchange that
correspond to the agreed upon notional amount.

Caps, collars and floors are privately-negotiated option-based derivative
products. A Portfolio may use one or more of these products in addition to or in
lieu of a swap involving a similar rate or index. As in the case of a put or
call option, the buyer of a cap or floor pays a premium to the writer. In
exchange for that premium, the buyer receives the right to a payment equal to
the differential if the specified index or rate rises above (in the case of a
cap) or falls below (in the case of a floor) a pre-determined strike level. As
in the case of swaps, obligations under caps and floors are calculated based
upon an agreed notional amount, and like most swaps (other than foreign currency
swaps), the entire notional amount is not exchanged and thus is not at risk. A
collar is a combination product in which the same party, such as the Portfolio,
buys a cap from and sells a floor to the other party. As with put and call
options, the amount at risk is limited for the buyer, but, if the cap or floor
in not hedged or covered, may be unlimited for the seller. Under current market
practice, caps, collars and floors between the same two parties are generally
documented under the same "master agreement." In some cases, options and forward
agreements may also be governed by the same master agreement. In the event of a
default, amounts owed under all transactions entered into under, or covered by,
the same master agreement would be netted and only a single payment would be
made.

Swaps, caps, collars and floors are credit-intensive products. A Portfolio that
enters into a swap transaction bears the risk of default, i.e. nonpayment, by
the other party. The guidelines under which each Portfolio enters derivative
transactions, along with some features of the transactions themselves, are
intended to reduce these risks to the extent reasonably practicable, although
they cannot eliminate the risks entirely. Under guidelines established by the
Board of Directors, a Portfolio may enter into swaps only with parties that meet
certain credit rating guidelines. Consistent with current market practices, a
Portfolio will generally enter into swap transactions on a net basis, and all
swap transactions with the same party will be documented under a single master
agreement to provide for net payment upon default. In addition, a Portfolio's
obligations under an agreement will be accrued daily (offset against any amounts
owing to the Portfolio) and any accrued, but unpaid, net amounts owed to the
other party to a master agreement will be covered by the maintenance of a
segregated account consisting of cash or liquid securities.

Interest rate and total rate of return (fixed income or equity) swaps generally
do not involve the delivery of securities, other underlying assets, or
principal. In such case, if the other party to an interest rate or total rate of
return swap defaults, a Portfolio's risk of loss will consist of the payments
that a Portfolio is contractually entitled to receive from the other party. This
may not be true for currency swaps that require the delivery of the entire
notional amount of one designated currency in exchange for the other. If there
is a default by the other party, a Portfolio may have contractual remedies
pursuant to the agreements related to the transaction.

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INVESTMENT LIMITATIONS

FUNDAMENTAL LIMITATIONS

Each current Portfolio has adopted the following restrictions which are
fundamental policies and may not be changed without the approval of the lesser
of: (i) at least 67% of the voting securities of the Portfolio present at a
meeting if the holders of more than 50% of the outstanding voting securities of
the Portfolio are present or represented by proxy; or (ii) more than 50% of the
outstanding voting securities of the Portfolio. Each Portfolio of the Fund will
not:

(1) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (except this shall not prevent the
Portfolio from purchasing or selling options or futures contracts or from
investing in securities or other instruments backed by physical commodities),
and except that the Gold Portfolio may invest in gold bullion in accordance with
its investment objectives and policies;

(2) purchase or sell real estate, although it may purchase and sell
securities of companies that deal in real estate and may purchase and sell
securities that are secured by interests in real estate;

(3) lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this limitation
does not apply to purchases of debt securities or repurchase agreements;

(4) except with respect to the Global Fixed Income, Emerging Markets,
Emerging Markets Debt, China Growth, International Magnum, Latin American,
MicroCap, Aggressive Equity, European Real Estate, Asian Real Estate, Technology
and U.S. Real Estate Portfolios (i) purchase more than 10% of any class of the
outstanding voting securities of any issuer and (ii) purchase securities of an
issuer (except obligations of the U.S. Government and its agencies and
instrumentalities) if as a result, with respect to 75% of its total assets, more
than 5% of the Portfolio's total assets, at market value, would be invested in
the securities of such issuer;

(5) issue senior securities and will not borrow, except from banks and as a
temporary measure for extraordinary or emergency purposes and then, in no event,
in excess of 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings), except that each of the Emerging Markets
Debt and Latin American Portfolios may borrow from banks and other entities, and
the Technology Portfolio may borrow from banks, in an amount not in excess of
33 1/3% of its total assets (including the amount borrowed) less liabilities in
accordance with its investment objectives and policies;

(6) underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the 1933 Act in
the disposition of restricted securities;

(7) acquire any securities of companies within one industry if, as a result
of such acquisition, more than 25% of the value of the Portfolio's total assets
would be invested in securities of companies within such industry; provided,
however, that there shall be no limitation on the purchase of obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities, or (in
the case of the Money Market Portfolio or the Municipal Money Market Portfolio)
instruments issued by U.S. Banks, except that (i) the Latin American Portfolio
may invest more than 25% of its total assets in companies involved in the
telecommunications industry or financial services industry; (ii) the Gold
Portfolio will invest more than 25% of its total assets in securities of
companies in the group of industries involved in gold-related or
precious-metals-related activities, as described in its prospectus, and may
invest more than 25% of its total assets in one or more of the industries that
are a part of such group of industries, as described in its prospectus; (iii)
each of the Asian Real Estate, European Real Estate and U.S. Real Estate
Portfolios will invest more than 25% of its total assets in the Asian, European
and U.S. real estate industries, respectively, as described in their
prospectuses; and (iv) the Technology Portfolio will invest more than 25% of its
assets in securities of companies in the technology or technology-related
industries; and

(8) write or acquire options or interests in oil, gas or other mineral
exploration or development programs.

NON-FUNDAMENTAL LIMITATIONS

In addition, each current Portfolio of the Fund has adopted non-fundamental
investment limitations as stated below and in their respective Prospectuses.
Such limitations may be changed without shareholder approval. Each current
Portfolio of the Fund will not:

(1) purchase on margin or sell short, except (i) that the Emerging Markets
Debt, Latin American, Aggressive Equity and Technology Portfolios may from time
to time sell securities short without limitation but consistent with applicable
legal requirements as stated in its Prospectus; (ii) that each Portfolio, except
the Money Market and Municipal Money Market Portfolios, may enter into option
transactions and futures contracts as described in its Prospectus; and (iii) as
specified above in fundamental investment limitation number (1) above;

(2) except for the High Yield Portfolio, purchase or retain securities of an
issuer if those officers and Directors of the Fund or its investment adviser
owning more than 1/2 of 1% of such securities together own more than 5% of such
securities;

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(3) pledge, mortgage, or hypothecate any of its assets to an extent greater
than 10% of its total assets at fair market value, except that the High Yield
Portfolio may pledge, mortgage or hypothecate a maximum of 50% of its assets,
not counting assets segregated to comply with coverage requirements under
Section 18(f) of the 1940 Act, and the SEC's rules, regulations, orders, and
interpretations thereunder;

(4) invest for the purpose of exercising control over management of any
company;

(5) except for the U.S. Real Estate, European Real Estate and Asian Real
Estate Portfolios, invest in real estate limited partnership interests, and the
U.S. Real Estate, European Real Estate and Asian Real Estate Portfolios may not
invest in such interests that are not publicly traded;

(6) make loans except (i) by purchasing bonds, debentures or similar
obligations (including repurchase agreements, subject to the limitations as
described in the respective Prospectuses) that are publicly distributed, except
that the High Yield Portfolio also may purchase such securities that are not
publicly distributed; (ii) by lending its portfolio securities to banks,
brokers, dealers and other financial institutions so long as such loans are not
inconsistent with the 1940 Act or the Rules and Regulations or interpretations
of the SEC thereunder; and (iii) the High Yield Portfolio may lend securities to
institutional investors in addition to entities described in (ii);

(7) borrow money, except from banks for extraordinary or emergency purposes,
and then only in amounts up to 10% of the value of the Portfolio's total assets,
or purchase securities while borrowings exceed 5% of its total assets, except
that (i) the Latin American, Emerging Markets Debt and Technology Portfolios may
borrow in accordance with fundamental investment limitation number (5) above;
and (ii) the High Yield Portfolio may borrow up to 33 1/3% of its total assets
in the aggregate, including reverse repurchase agreements; and

The Fixed Income and Value Equity Portfolios will only issue shares for
securities or assets other than cash in a bona fide reorganization, statutory
merger, or in other acquisitions of portfolio securities (except for municipal
debt securities issued by state political subdivisions or their agencies or
instrumentalities) which (i) meet their respective investment objectives; and
(ii) are acquired for investment and not for resale.

Each of the Global Fixed Income, Emerging Markets, Emerging Markets Debt, China
Growth, Latin American, Aggressive Equity, European Real Estate, Asian Real
Estate and U.S. Real Estate Portfolios will diversify its holdings so that, at
the close of each quarter of its taxable year, (i) at least 50% of the market
value of the Portfolio's total assets is represented by cash (including cash
items and receivables), U.S. Government securities, and other securities, with
such other securities limited, in respect of any one issuer, for purposes of
this calculation to an amount not greater than 5% of the value of the
Portfolio's total assets and 10% of the outstanding voting securities of such
issuer; and (ii) not more than 25% of the value of its total assets is invested
in the securities of any one issuer (other than U.S. Government securities).

With respect to fundamental investment limitation number (7), the Fund will
determine industry concentration in accordance with the classifications of
industries based on the Industry Numbers from the Standard Industrial
Classification Manual as prepared by the Office of Management and Budget, except
that (i) with respect to the Money Market, Municipal Money Market and High Yield
Portfolios, (a) financial service companies will be classified according to the
end users of their services, for example, automobile finance, bank finance and
diversified finance will each be considered a separate industry and (b) asset-
backed securities will be classified according to the underlying assets securing
such securities; and (ii) with respect to the High Yield Portfolio, utility
companies will be classified according to their services, for example, electric,
gas, gas transmission, and telephone will be treated as separate industries.

In accordance with fundamental investment limitation number (7), the Latin
American Portfolio will only invest more than 25% of its total assets in
companies involved in the telecommunications industry or financial services
industry if the Board of Directors determines that the Latin American markets
are dominated by securities of issuers in such industries and that, in light of
the anticipated return, investment quality, availability and liquidity of the
issuers in such industries, the Portfolio's ability to achieve its investment
objective would, in light of the investment policies and limitations, be
materially adversely affected if the Portfolio was not able to invest greater
than 25% of its total assets in such industries. As stated in the Prospectus,
the Board of Directors has made the foregoing determination and, accordingly,
the Latin American Portfolio will invest between 25% and 40% of its assets in
securities of issuers engaged in the telecommunications industry.

The percentage limitations contained in these restrictions apply at the time of
purchase of securities. Future Portfolios of the Fund may adopt different
limitations.

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PURCHASE OF SHARES

You may purchase shares of each Portfolio, except the Money Market and Municipal
Money Market Portfolios, on any day the New York Stock Exchange ("NYSE") is
open. You may purchase shares of the Money Market and Municipal Money Market
Portfolios on days that the NYSE and the Fund's custodian bank are open. Each
Portfolio reserves the right in its sole discretion (i) to suspend the offering
of its shares; (ii) to reject purchase orders when in the judgment of management
such rejection is in the best interest of the Fund; and (iii) to reduce or waive
the minimum for initial and subsequent investments for certain accounts such as
employee benefit plans or under circumstances where certain economies can be
achieved in sales of a Portfolio's shares. The International Equity Portfolio is
currently closed to new investors with the exception of certain Morgan Stanley &
Co. Incorporated ("Morgan Stanley") customers, employees of Morgan Stanley,
certain tax-qualified retirement plans and other investment companies advised by
MSDW Investment Management and its affiliates. The Gold Portfolio also is closed
to new investors.

Class A shares and Class B shares of each Portfolio, except the Municipal Money
Market and International Small Cap Portfolios, may be purchased at the net asset
value per share next determined after receipt by the Fund of a purchase order as
described under "Methods of Purchase." However, the International Small Cap
Portfolio may impose a 1% transaction fee. CLASS B SHARES OF MONEY MARKET
PORTFOLIO ARE AVAILABLE FOR PURCHASE ONLY THROUGH FINANCIAL INTERMEDIARIES (AS
DISCUSSED BELOW) THAT HAVE MADE ARRANGEMENTS WITH THE FUND. The net asset value
per share of each Portfolio is calculated on days that the NYSE is open for
business. Net asset value per share is determined (i) for each non-money market
Portfolio, as of the close of trading of the NYSE (normally 4:00 p.m. Eastern
Time); (ii) for the Money Market Portfolio, as of 12:00 noon Eastern Time; and
(ii) for the Municipal Money Market Portfolio, as of 11:00 a.m. Eastern Time
(for each Portfolio, the "Pricing Time").

MINIMUM INVESTMENT

The minimum initial investment is $500,000 for Class A shares and $100,000 for
Class B shares of each non-money market Portfolio. The minimum initial
investment is $100,000 for Class A shares of each money market Portfolio. There
is no minimum initial investment for Class B shares of the Money Market
Portfolio. These minimums may be waived at MSDW Investment Management's
discretion for certain types of investors, including trust departments, brokers,
dealers, agents, financial planners, financial services firms, investment
advisers or various retirement and deferred compensation plans ("Financial
Intermediaries"); certain accounts managed by MSDW Investment Management and its
affiliates ("Managed Accounts"); and certain employees and customers of Morgan
Stanley and its affiliates. The Fund's determination of an investor's
eligibility to purchase shares of a given class will take precedence over the
investor's selection of a class.

METHODS OF PURCHASE

You may purchase shares directly from the Fund by Federal Funds wire, by bank
wire or by check, however, on days that the NYSE is open but the custodian bank
is closed, you may only purchase shares by check. Investors may also invest in
the Portfolios by purchasing shares through Financial Intermediaries that have
made arrangements with Morgan Stanley. Class B shares of the Money Market
Portfolio may only be purchased through Financial Intermediaries. Some Financial
Intermediaries may charge an additional service or transaction fee. If a
purchase is canceled due to nonpayment or because your check does not clear, you
will be responsible for any loss the Fund or its agents incur. If you are
already a shareholder, the Fund may redeem shares from your account(s) to
reimburse the Fund or its agents for any loss. In addition, you may be
prohibited or restricted from making future investments in the Fund.

FEDERAL FUNDS WIRE. Purchases may be made by having your bank wire Federal
Funds to the Fund's bank account. Federal Funds purchase orders will be accepted
only on a day on which the Fund and The Chase Manhattan Bank ("Chase Bank") are
open for business. Your bank may charge a service fee for wiring Federal Funds.
In order to ensure proper handling of your purchase by Federal Funds wire,
please follow these steps.

1. Place your order by telephoning the Fund at 1-800-548-7786. A Fund
representative will request certain purchase information and provide you
with a confirmation number.

2. Instruct your bank to wire the specified amount to the Fund's Wire
Concentration Bank Account as follows:

The Chase Manhattan Bank
One Manhattan Plaza
New York, NY 10081-1000
ABA# 021000021
DDA# 910-2-733293
Attn: Morgan Stanley Dean Witter Institutional Fund, Inc.
Ref: (Portfolio name, your account number, your account name)

Please call the Fund at 1-800-548-7786 prior to wiring funds.

3. Complete and sign an Account Registration Form and mail it to the
address shown thereon.

25
<PAGE>
When a purchase order is received prior to the Pricing Time and Federal Funds
are received prior to the regular close of the Federal Funds Wire Control Center
("FFWCC") (normally 6:00 p.m. Eastern Time) the purchase will be executed at the
net asset value computed on the date of receipt. Purchases for which an order is
received after the Pricing Time or for which Federal Funds are received after
the regular close of the FFWCC will be executed at the net asset value next
determined. Certain institutional investors and financial institutions have
entered into an agreement with Morgan Stanley pursuant to which they may place
orders prior to the Pricing Time, but make payment in Federal Funds for those
shares the following business day.

BANK WIRE. A purchase of shares by bank wire must follow the same procedure as
for a Federal Funds wire, described above. However, depending on the time the
bank wire is sent and the bank handling the wire, money transferred by bank wire
may or may not be converted into Federal Funds prior to the close of the FFWCC.
Prior to conversion to Federal Funds and receipt by the Fund, an investor's
money will not be invested.

CHECK. An account may be opened by completing and signing an Account
Registration Form and mailing it, together with a check payable to "Morgan
Stanley Dean Witter Institutional Fund, Inc. -- [Portfolio name]" to:

Morgan Stanley Dean Witter Institutional Fund, Inc.
P.O. Box 2798
Boston, Massachusetts 02208-2798

The Fund ordinarily is credited with Federal Funds within one business day of
deposit of a check. Thus, a purchase of shares by check ordinarily will be
credited to your account at the net asset value per share of each of the
Portfolios determined on the next business day after receipt. An investor's
money will not be invested prior to crediting of Federal Funds.

INVESTMENT THROUGH FINANCIAL INTERMEDIARIES. Certain Financial Intermediaries
have made arrangements with the Fund to receive purchase and redemption orders
from underlying beneficial owners, such as retirement plan participants,
generally on each business day. Each business evening, the Financial
Intermediary aggregates all orders received from underlying beneficial owners
prior to the Pricing Time on that business day, and places a net purchase and/or
redemption order(s) by the morning of the next business day. These orders
normally are executed at the net asset value that was computed for each
Portfolio as of the close of the previous business day.

ADDITIONAL INVESTMENTS. You may purchase additional shares for your account at
any time by purchasing shares at net asset value by any of the methods described
above. The minimum additional investment generally is $1,000 per Portfolio,
except that there is no minimum for Class B shares of the Money Market
Portfolio. The minimum additional investment may be lower for certain accounts
described above under "Minimum Investment." For purchases directly from the
Fund, your account name, the Portfolio name and the class selected must be
specified in the letter or wire to assure proper crediting to your account.

INVOLUNTARY CONVERSION AND REDEMPTION OF NEW ACCOUNT SHARES

Class A and Class B shares of each non-money market Portfolio may be subject to
the involuntary conversion and redemption features described below. Shares of
the money market Portfolios are not subject to involuntary conversion or
redemption. The conversion and redemption features may be waived at MSDW
Investment Management's discretion for shares held in a Managed Account and
shares purchased through a Financial Intermediary. Accounts that were open prior
to January 2, 1996 are not subject to involuntary conversion or redemption. The
Fund reserves the right to modify or terminate the conversion or redemption
features of the shares at any time upon 60 days notice to shareholders.

CONVERSION FROM CLASS A TO CLASS B SHARES. If the value of an account
containing Class A shares of a non-money market Portfolio falls below $500,000
(but remains at or above $100,000) because of shareholder redemption(s), the
Fund will notify the shareholder, and if the account value remains below
$500,000 (but remains at or above $100,000) for a continuous 60-day period, the
Class A shares in such account will convert to Class B shares and will be
subject to the distribution fee and other features applicable to Class B shares.
The Fund will not convert Class A shares to Class B shares based solely upon
changes in the market that reduce the net asset value of shares. Under current
tax law, conversion between share classes is not a taxable event to the
shareholder.

CONVERSION FROM CLASS B TO CLASS A SHARES. If the value of an account
containing Class B shares of a non-money market Portfolio increases to $500,000
or more, whether due to shareholder purchases or market activity, the Class B
shares will convert to Class A shares. Class B shares purchased through a
Financial Intermediary that has entered into an arrangement with the Fund for
the purchase of such shares may not be converted. Under current tax law, such
conversion is not a taxable event to the shareholder. Class A shares converted
from Class B shares are subject to the same minimum account size requirements as
are applicable to accounts containing Class A shares described above.

INVOLUNTARY REDEMPTION OF SHARES. If the value of an account falls below
$100,000 because of shareholder redemption(s), the Fund will notify the
shareholder, and if the account value remains below $100,000 for a continuous
60-day period, the shares in such account will be subject to redemption by the
Fund. The Fund will not redeem shares based solely upon changes in the market
that reduce the net asset value of shares. If redeemed, redemption proceeds will
be promptly paid to the shareholder.

26
<PAGE>
REDEMPTION OF SHARES

The Fund normally makes payment for all shares redeemed within one business day
of receipt of the request, and in no event more than seven days after receipt of
a redemption request in good order. However, payments to investors redeeming
shares which were purchased by check will not be made until payment for the
purchase has been collected, which may take up to eight days after the date of
purchase. The Fund may suspend the right of redemption or postpone the date of
payment (i) during any period that the NYSE is closed, or trading on the NYSE is
restricted as determined by the SEC; (ii) during any period when an emergency
exists as defined by the rules of the SEC as a result of which it is not
practicable for a Portfolio to dispose of securities it owns, or fairly to
determine the value of its assets; and (iii) for such other periods as the SEC
may permit.

Class A shares of each Portfolio and Class B shares of each Portfolio, except
the International Small Cap and Municipal Money Market Portfolios, may be
redeemed at any time and without charge at the net asset value per share next
determined after receipt by the Fund of a redemption order as described under
"Methods of Redemption," except that the International Small Cap Portfolio may
impose a 1% transaction fee. Redemption proceeds may be more or less than the
purchase price of your shares depending on, among other factors, the market
value of the investment securities held by a Portfolio.

METHODS OF REDEMPTION

You may redeem shares directly from the Fund by mail or by telephone. HOWEVER,
SHARES PURCHASED THROUGH A FINANCIAL INTERMEDIARY MUST BE REDEEMED THROUGH A
FINANCIAL INTERMEDIARY. Certain Financial Intermediaries may charge an
additional service or transaction fee.

BY MAIL. Each Portfolio will redeem shares upon receipt of a redemption request
in "good order." Redemption requests may be sent by regular mail to Morgan
Stanley Dean Witter Institutional Fund, Inc., P.O. Box 2798, Boston,
Massachusetts 02208-2798 or, by overnight courier, to Morgan Stanley Dean Witter
Institutional Fund, Inc., c/o Chase Global Funds Services Company, 73 Tremont
Street, Boston, Massachusetts 02108-3913.

"Good order" means that the request to redeem shares must include the following:

1. A letter of instruction or a stock assignment specifying the class and
number of shares or dollar amount to be redeemed, signed by all
registered owners of the shares in the exact names in which they are
registered;

2. Any required signature guarantees; and

3. Other supporting legal documents, if required, in the case of estates,
trusts, guardianships, custodianships, corporations, pension and
profit-sharing plans and other organizations.

Redemption requests received in "good order" prior to the Pricing Time will be
executed at the net asset value computed on the date of receipt. Redemption
requests received after the Pricing Time will be executed at the next determined
net asset value. Shareholders who are uncertain of requirements for redemption
by mail should consult with a Fund representative.

BY TELEPHONE. If you have previously elected the Telephone Redemption Option on
the Account Registration Form, you can redeem Portfolio shares by calling the
Fund and requesting that the redemption proceeds be mailed to you or wired to
your bank. Please contact one of the Fund's representatives for further details.
To change the commercial bank or account designated to receive redemption
proceeds, send a written request to the Fund at the address above. Requests to
change the bank or account must be signed by each shareholder and each signature
must be guaranteed. The telephone redemption option may be difficult to
implement at times, particularly during volatile market conditions. If you
experience difficulty in making a telephone redemption, you may redeem shares by
mail as described above.

The Fund and the Transfer Agent will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine. These procedures
include requiring the investor to provide certain personal identification
information at the time an account is opened and prior to effecting each
telephone transaction. In addition, all telephone transaction requests will be
recorded and investors may be required to provide additional telecopied written
instructions regarding transactions requests. Neither the Fund nor the Transfer
Agent will be responsible for any loss, liability, cost or expense for following
instructions received by telephone that either of them reasonably believes to be
genuine.

REDEMPTION THROUGH FINANCIAL INTERMEDIARIES. Certain Financial Intermediaries
have made arrangements with the Fund to accept redemption request from
underlying beneficial owners. These redemptions may be processed in the same way
as purchases made through Financial Intermediaries, as described above.

FURTHER REDEMPTION INFORMATION

If the Board of Directors determines that it would be detrimental to the best
interests of the remaining shareholders of a Portfolio to make payment in cash,
the Fund may pay redemption proceeds in whole or in part by a
distribution-in-kind of readily marketable portfolio securities in accordance
with applicable SEC rules. Shareholders may incur brokerage charges on the sale
of securities received from a distribution-in-kind.

27
<PAGE>
No charge is made by any Portfolio for redemptions, except for the 1%
transaction fee that may be assessed upon redemption by the International Small
Cap Portfolio. Any redemption may be more or less than the shareholder's cost
depending on the market value of the securities held by the Portfolio.

To protect your account and the Fund from fraud, signature guarantees are
required for certain redemptions. Signature guarantees enable the Fund to verify
the identity of the person who has authorized a redemption from your account.
Signature guarantees are required in connection with: (i) all redemptions,
regardless of the amount involved, when the proceeds are to be paid to someone
other than the registered owner(s) and/or registered address; and (ii) share
transfer requests. An "eligible guarantor institution" may include a bank, a
trust company, a credit union or savings and loan association, a member firm of
a domestic stock exchange, or a foreign branch of any of the foregoing. Notaries
public are not acceptable guarantors. The signature guarantees must appear
either: (i) on the written request for redemption; (ii) on a separate instrument
for assignment ("stock power") which should specify the total number of shares
to be redeemed; or (iii) on all stock certificates tendered for redemption and,
if shares held by the Fund are also being redeemed, on the letter or stock
power.

The Fund has made an election with the SEC pursuant to Rule 18f-1 under the 1940
Act to pay in cash all redemptions requested by any shareholder of record
limited in amount during any 90-day period to the lesser of $250,000 or 1% of
the net assets of a Portfolio at the beginning of such period. Such commitment
is irrevocable without the prior approval of the SEC. Redemptions in excess of
the above limits may be paid in whole or in part in portfolio securities or in
cash, as the Board of Directors may deem advisable as being in the best
interests of the Fund. If redemptions are paid in portfolio securities, such
securities will be valued as set forth under "Valuation of Shares." A redeeming
shareholder normally will incur brokerage expenses in converting these
securities to cash.

ACCOUNT POLICIES AND FEATURES

EXCHANGE FEATURES

You may exchange shares of each Portfolio that you own for shares of any other
available Portfolio(s) of the Fund, subject to certain limitations. Any such
exchange will be based on the respective net asset values of the shares
involved. There is no sales commission or sales charge of any kind. You cannot
exchange for shares of the International Equity or Gold Portfolios because they
are currently closed to new investors. In addition, certain Portfolios are not
operational or may be unavailable to shareholders who purchased Portfolio shares
through a Financial Intermediary. Contact your Financial Intermediary to
determine which Portfolios are available for exchange.

Before you make an exchange, you should read the prospectus of the Portfolio(s)
in which you seek to invest. The class of shares you receive in exchange will be
determined in the same manner as any other purchase of shares, including minimum
initial investment and account size requirements, and will not be based on the
class of shares you surrender for the exchange. Exchange transactions are
treated as a redemption followed by a purchase. Therefore, an exchange will be
considered a taxable event for shareholders subject to tax. Exchange
transactions will be processed at the net asset value per share next determined
after receipt of the request.

Exchange requests may be made either by mail or telephone. Exchange requests by
mail should be sent to Morgan Stanley Dean Witter Institutional Fund, Inc., P.O.
Box 2798, Boston, Massachusetts 02208-2798. Telephone exchanges will be accepted
only if the certificates for the shares to be exchanged are held by the Fund for
the account of the shareholder and the registration of the two accounts will be
identical. The telephone exchange privilege is automatic and made available
without shareholder election. Exchanges may be subject to limitations as to
amounts or frequency, and to other restrictions established by the Board of
Directors to assure that such exchanges do not disadvantage the Fund and its
shareholders. The exchange privilege may be modified or terminated by the Fund
at any time upon 60-days notice to shareholders.

TRANSFER OF SHARES

Shareholders may transfer Portfolio shares to another person by making a written
request to the Fund. The request should clearly identify the account and number
of shares to be transferred, and include the signature of all registered owners
and all stock certificates, if any, which are subject to the transfer. It may
not be possible to transfer shares purchased through a Financial Intermediary.
The signature on the letter of request, the stock certificate or any stock power
must be guaranteed in the same manner as described under "Redemption of Shares."
As in the case of redemptions, the written request must be received in good
order before any transfer can be made. Transferring shares may affect the
eligibility of an account for a given class of the Portfolio's shares and may
result in involuntary conversion or redemption of such shares.

VALUATION OF SHARES

The net asset value per share of a class of shares of each of the non-money
market Portfolios is determined by dividing the total market value of the
Portfolio's investments and other assets attributable to such class, less all
liabilities attributable to such class, by the total number of outstanding
shares of such class of the Portfolio. Net asset value is calculated separately
for each class of a Portfolio. Net asset value per share of the non-money market
Portfolios is determined as of the close of the NYSE (normally 4:00 p.m. Eastern
Time) on each day that the NYSE is open for business. The NYSE will be closed on
the following days: New

28
<PAGE>

Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Price
information on listed securities is taken from the exchange where the security
is primarily traded. Portfolio securities generally are valued at their market
value. Securities listed on a U.S. securities exchange for which market
quotations are available generally are valued at the last quoted sale price on
the day the valuation is made. Securities listed on a foreign exchange generally
are valued at their closing price. Unlisted securities and listed securities not
traded on the valuation date and for which market quotations are not readily
available generally are valued at a price within a range not exceeding the
current asked price nor less than the current bid price. The current bid and
asked prices are determined based on the average of the bid and asked prices
quoted on such valuation date by reputable brokers.

Bonds and other fixed income securities are valued according to the broadest and
most representative market, which will ordinarily be the over-the-counter
market. Net asset value includes interest on fixed income securities, which is
accrued daily unless collection is in doubt. In addition, bonds and other fixed
income securities may be valued on the basis of prices provided by a pricing
service when such prices are believed to reflect the fair market value of such
securities. The prices provided by a pricing service are determined without
regard to bid or last sale prices, but take into account institutional-size
trading in similar groups of securities and any developments related to the
specific securities. Securities not priced in this manner are valued at the most
recently quoted bid price or, when securities exchange valuations are used, at
the latest quoted sale price on the day of valuation. If there is no such
reported sale, the latest quoted bid price will be used. Securities purchased
with remaining maturities of 60 days or less are valued at amortized cost, if it
approximates market value. In the event that amortized cost does not approximate
market value, market prices as determined above will be used.

The value of other assets and securities for which quotations are not readily
available (including certain restricted and unlisted securities) and those
securities for which it is inappropriate to determine prices in accordance with
the above-stated procedures are determined in good faith at fair value using
methods determined by the Board of Directors. For purposes of calculating net
asset value per share, all assets and liabilities initially expressed in foreign
currencies generally will be converted into U.S. dollars at the mean of the bid
and asked price of such currencies against the U.S. dollar as quoted by a major
bank.

Although the legal rights of Class A and Class B shares will be identical, the
different expenses borne by each class will result in different net asset values
and dividends for the class. Dividends will differ by approximately the amount
of the distribution expense accrual differential among the classes. The net
asset value of Class B shares will generally be lower than the net asset value
of Class A shares as a result of the distribution expense charged to Class B
shares.

The net asset value per share of each of the Money Market and Municipal Money
Market Portfolios is determined by subtracting the Portfolio's liabilities
(including accrued expenses and dividends payable) from the total value of the
Portfolio's investments and other assets and dividing the result by the total
number of outstanding shares of the Portfolio. The net asset value per share of
the Municipal Money Market Portfolio and the Money Market Portfolio are
determined as of 11:00 a.m. and 12:00 noon (Eastern Time), respectively, on the
days on which the NYSE is open. For purposes of calculating each money market
Portfolio's net asset value per share, securities are valued by the "amortized
cost" method of valuation, which does not take into account unrealized gains or
losses. This involves valuing an instrument at its cost and thereafter assuming
a constant amortization to maturity of any discount or premium, regardless of
the impact of fluctuating interest rates on the market value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which the value, as determined by the amortized cost, is higher or lower
than the price the Portfolio would receive if it sold the instrument.

29
<PAGE>
MANAGEMENT OF THE FUND

OFFICERS AND DIRECTORS

The Fund's officers, under the supervision of the Board of Directors, manage the
day-to-day operations of the Fund. The Directors set broad policies for the Fund
and choose its officers. Two Directors and all of the officers of the Fund are
directors, officers or employees of MSDW Investment Management, Morgan Stanley
or Chase Global Funds Services Company ("Chase Global"). Directors and officers
of the Fund are also directors and officers of some or all of the other
investment companies managed, administered, advised or distributed by MSDW
Investment Management or its affiliates. The other Directors have no affiliation
with MSDW Investment Management, Morgan Stanley or Chase Global. A list of the
Directors and officers of the Fund and a brief statement of their present
positions and principal occupations during the past five years is set forth
below:

<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH FUND PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
- --------------------------------------- ---------------------- --------------------------------------------------
<S> <C> <C>
Barton M. Biggs (66)* Chairman and Director Chairman, Director and Managing Director of Morgan
1221 Avenue of the Americas Stanley Dean Witter Investment Management Inc.
New York, NY 10020 and Morgan Stanley Dean Witter Management
Limited; Managing Director of Morgan Stanley &
Co. Incorporated; Director of Rand McNally
Company; Member of the Yale Development Board;
Chairman and Director of various U.S. registered
investment companies managed by Morgan Stanley
Dean Witter Investment Management Inc.

Michael F. Klein (40)* Director and President Principal of Morgan Stanley & Co. Incorporated and
1221 Avenue of the Americas Morgan Stanley Dean Witter Investment Management
New York, NY 10020 Inc; President and Director of various U.S.
registered investment companies managed by
Morgan Stanley Dean Witter Investment Management
Inc.; Previously practiced law with the New York
firm of Rogers & Wells.

John D. Barrett, II (63) Director Chairman and Director of Barrett Associates, Inc.
521 Fifth Avenue (investment counseling); Director of the
New York, NY 10135 Ashforth Company (real estate); Director of
Morgan Stanley Dean Witter Universal Funds, Inc.
and Morgan Stanley Dean Witter Strategic Adviser
Fund, Inc.

Gerard E. Jones (62) Director Partner in Richards & O'Neil LLP (law firm);
43 Arch Street Director of Morgan Stanley Dean Witter Universal
Greenwich, CT 06830 Funds, Inc. and Morgan Stanley Dean Witter
Strategic Adviser Fund, Inc.

Andrew McNally IV (59) Director Director of Allendale Insurance Co., Mercury
8255 North Central Park Avenue Finance (consumer finance); Zenith Electronics,
Skokie, IL 60076 Hubbell, Inc. (industrial electronics); Director
of Morgan Stanley Dean Witter Universal Funds,
Inc. and Morgan Stanley Dean Witter Strategic
Adviser Fund, Inc.; Formerly, Chairman and Chief
Executive Officer of Rand McNally & Company
(publishing).

Samuel T. Reeves (64) Director Chairman of the Board and CEO, Pinacle L.L.C.
8211 North Fresno Street (investments); Director, Pacific Gas and
Fresno, CA 93720 Electric and PG&E Enterprises (utilities);
Director of Morgan Stanley Dean Witter Universal
Funds, Inc. and Morgan Stanley Dean Witter
Strategic Adviser Fund, Inc.

Fergus Reid (66) Director Chairman and Chief Executive Officer of LumeLite
85 Charles Colman Blvd Plastics Corporation (injection molding);
Pawling, NY 12564 Trustee and Director of Vista Mutual Fund Group;
Director of Morgan Stanley Dean Witter Universal
Funds, Inc. and Morgan Stanley Dean Witter
Strategic Adviser Fund, Inc.
</TABLE>

30
<PAGE>

<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH FUND PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
- --------------------------------------- ---------------------- --------------------------------------------------
<S> <C> <C>
Frederick O. Robertshaw (65) Director Of Counsel, Copple, Chamberlin and Boehm, P.C.
2800 North Central Avenue Formerly of Counsel, Bryan, Cave LLP; (law
Phoenix, AZ 85004 firms). Director of Morgan Stanley Dean Witter
Universal Funds, Inc. and Morgan Stanley Dean
Witter Strategic Adviser Fund, Inc.

Harold J. Schaaff, Jr. (38)* Vice President Principal of Morgan Stanley & Co. Incorporated and
1221 Avenue of the Americas of Morgan Stanley Dean Witter Investment
New York, NY 10020 Management Inc.; General Counsel and Secretary
of Morgan Stanley Dean Witter Investment
Management Inc.; Vice President of various U.S.
registered investment companies managed by
Morgan Stanley Dean Witter Investment Management
Inc.

Joseph P. Stadler (44)* Vice President Principal of Morgan Stanley & Co. Incorporated and
1221 Avenue of the Americas Morgan Stanley Dean Witter Investment Management
New York, NY 10020 Inc.; Previously with Price Waterhouse LLP (now
PricewaterhouseCoopers LLP) (accounting); Vice
President of various U.S. registered investment
companies managed by Morgan Stanley Dean Witter
Investment Management Inc.

Stefanie V. Chang (32)* Vice President Vice President of Morgan Stanley & Co.
1221 Avenue of the Americas Incorporated and Morgan Stanley Dean Witter
New York, NY 10020 Investment Management Inc.; Vice President of
various U.S. registered investment companies
managed by Morgan Stanley Dean Witter Investment
Management Inc. Previously practiced law with
the New York law firm of Rogers & Wells.

Valerie Y. Lewis (43)* Secretary Vice President of Morgan Stanley & Co.
1221 Avenue of the Americas Incorporated and Morgan Stanley Dean Witter
New York, NY 10020 Investment Management Inc.; Previously with
Citicorp (banking); Secretary of various U.S.
registered investment companies managed by
Morgan Stanley Dean Witter Investment Management
Inc.

Karl O. Hartmann (44) Assistant Secretary Senior Vice President, Secretary and General
73 Tremont Street Counsel of Chase Global Funds Services Company;
Boston, MA 02108-3913 Previously, President, Secretary and General
Counsel, Leland, O'Brien, Rubinstein Associates,
Inc. (investments).

Joanna Haigney (32) Treasurer Assistant Vice President, Senior Manager of Fund
73 Tremont Street Administration and Compliance Services of Chase
Boston, MA 02108-3913 Global Funds Services Company; Treasurer of
various U.S. registered investment companies
managed by Morgan Stanley Dean Witter Investment
Management Inc. Previously with Coopers &
Lybrand LLP.

Belinda Brady ( ) Assistant Treasurer [
73 Tremont Street
Boston, MA 02108-3913 ]
</TABLE>

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

* "Interested Person" within the meaning of the 1940 Act.

COMPENSATION OF DIRECTORS AND OFFICERS

Effective June 28, 1995, the Fund and other funds managed by MSDW Investment
Management (the "Fund Complex") will pay each of the Directors who is not an
"interested person" an annual aggregate fee of $55,000, plus out-of-pocket
expenses. The Fund Complex will pay each of the members of the Fund's Audit
Committee, which consists of the Fund's Directors who are not "interested
persons," an additional annual aggregate fee of $10,000 for serving on such
committee. Directors' fees will be allocated among the funds in the Fund Complex
in proportion to their respective average net assets. For the fiscal year ended
December 31, 1998, the Fund paid approximately $ in Directors' fees and
expenses. Directors who are also officers or

31
<PAGE>

affiliated persons receive no remuneration from the Fund for their services as
Directors. The Fund's officers and employees are paid by MSDW Investment
Management or its agents. As of March 31, 1998, to Fund management's knowledge,
the Directors and officers of the Fund, as a group, owned more than 1% of the
outstanding common stock of the following portfolio of the Fund: 2.2% Latin
American Portfolio -- Class A Shares.

The Fund maintains an unfunded Deferred Compensation Plan which allows each
independent Director to defer payment of all, or a portion, of the fees he or
she receives for attending meetings of the Board of Directors throughout the
year. Each eligible Director generally may elect to have the deferred amounts
credited with a return equal to either of the following: (i) a rate equal to the
prevailing rate for 90-day U.S. Treasury Bills, or (ii) a rate equal to the
total return on one or more portfolios of the Fund or other funds in the Fund
Complex selected by the Director. Distributions generally are in the form of
equal annual installments over a period of five years beginning on the first day
of the year following the year in which the Director's service terminates,
except that the Board of Directors, in its sole discretion, may accelerate or
extend such distribution schedule. The Fund intends that the Deferred
Compensation Plan shall be maintained at all times on an unfunded basis for
federal income tax purposes under the Internal Revenue Code of 1986, as amended
(the "Code"). The rights of an eligible Director and the beneficiaries to the
amounts held under the Deferred Compensation Plan are unsecured and such amounts
are subject to the claims of the creditors of the Fund.

The following table shows aggregate compensation paid to each of the Fund's
Directors by the Fund and the Fund Complex, respectively, in the fiscal year
ended December 31, 1998.

COMPENSATION TABLE

<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE FROM FUND
COMPENSATION AND FUND COMPLEX
NAME OF PERSON, POSITION FROM FUND PAYABLE TO DIRECTORS
- -------------------------------------------------- ------------- ------------------------------
<S> <C> <C>
Barton M. Biggs,
Director and Chairman of the Board............... None None
Michael F. Klein,
Director and President........................... None None
John D. Barrett, II $68,900
Director......................................... $ 63,379 for service on three Boards
Gerard E. Jones, $86,000
Director......................................... $ 63,379 for service on four Boards
Andrew McNally, IV+ $71,100
Director......................................... $ 65,930 for service on three Boards
Samuel T. Reeves,+ $75,840
Director......................................... $ 65,930 for service on three Boards
Fergus Reid,+ $86,000
Director......................................... $ 63,379 for service on four Boards
Frederick O. Robertshaw, $71,100
Director......................................... $ 65,930 for service on three Boards
</TABLE>

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

+ Messrs. McNally, Reeves and Reid have elected, pursuant to the deferred
compensation plan, to defer all of their compensation received from the Fund
for the fiscal year ended December 31, 1998.

32
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES

INVESTMENT ADVISER

MSDW Investment Management is a wholly-owned subsidiary of Morgan Stanley Dean
Witter & Co. ("MSDW"). The principal offices of MSDW are located at 1585
Broadway, New York, NY 10036, and the principal offices of MSDW Investment
Management are located at 1221 Avenue of the Americas, New York, NY 10020. MSDW
Investment Management provides investment advice and portfolio management
services pursuant to an Investment Advisory Agreement and, subject to the
supervision of the Fund's Board of Directors, makes each of the Portfolio's
day-to-day investment decisions, arranges for the execution of portfolio
transactions and generally manages each of the Portfolio's investments. Pursuant
to the Investment Advisory Agreement, MSDW Investment Management is entitled to
receive from the Class A and Class B shares of each Portfolio an annual
management fee, payable quarterly, equal to the percentage of average daily net
assets set forth in the table below. MSDW Investment Management has voluntarily
agreed to a reduction in the fees payable to it and to reimburse the Portfolios,
if necessary, if such fees would cause the total annual operating expenses of
each Portfolio to exceed the percentage of average daily net assets set forth in
the table below. MSDW Investment Management reserves the right to terminate any
of its fee waivers and/or expense reimbursements at any time in its sole
discretion.

The following table shows, for each of the Class A and Class B shares of each
Portfolio, (i) the contractual advisory fee as a percentage of average daily net
assets; (ii) the advisory fee paid for each of the past three fiscal years; and
(iii) the maximum total operating expenses after voluntary fee waivers.

<TABLE>
<CAPTION>
CONTRACTUAL
ADVISORY FEE ADVISORY FEE PAID
(AS A (AFTER VOLUNTARY FEE WAIVERS)
PERCENTAGE OF -------------------------------------------------------
AVERAGE DAILY YEAR ENDED YEAR ENDED YEAR ENDED
PORTFOLIO NET ASSETS) DECEMBER 31, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
- ----------------------------------------------- ------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Emerging Markets Portfolio
Emerging Markets Debt Portfolio
Latin American Portfolio
Active International Allocation Portfolio
Asian Equity Portfolio
Asian Real Estate Portfolio
China Growth Portfolio
European Equity Portfolio
European Real Estate Portfolio
Global Equity Portfolio
Gold Portfolio
International Equity Portfolio
International Magnum Portfolio
International Small Cap Portfolio
Japanese Equity Portfolio
Aggressive Equity Portfolio
Emerging Growth Portfolio
Equity Growth Portfolio
MicroCap Portfolio
Technology Portfolio
U.S. Equity Plus Portfolio
U.S. Real Estate Portfolio
Value Equity Portfolio
Fixed Income Portfolio
Global Fixed Income Portfolio
High Yield Portfolio
Mortgage-Backed Securities Portfolio
Municipal Bond Portfolio
Money Market Portfolio
Municipal Money Market Portfolio

<CAPTION>
TOTAL OPERATING
EXPENSES AFTER
VOLUNTARY FEE
WAIVERS (AS A
PERCENTAGE OF
AVERAGE DAILY
PORTFOLIO NET ASSETS)
- ----------------------------------------------- ---------------
<S> <C>
Emerging Markets Portfolio
Emerging Markets Debt Portfolio
Latin American Portfolio
Active International Allocation Portfolio
Asian Equity Portfolio
Asian Real Estate Portfolio
China Growth Portfolio
European Equity Portfolio
European Real Estate Portfolio
Global Equity Portfolio
Gold Portfolio
International Equity Portfolio
International Magnum Portfolio
International Small Cap Portfolio
Japanese Equity Portfolio
Aggressive Equity Portfolio
Emerging Growth Portfolio
Equity Growth Portfolio
MicroCap Portfolio
Technology Portfolio
U.S. Equity Plus Portfolio
U.S. Real Estate Portfolio
Value Equity Portfolio
Fixed Income Portfolio
Global Fixed Income Portfolio
High Yield Portfolio
Mortgage-Backed Securities Portfolio
Municipal Bond Portfolio
Money Market Portfolio
Municipal Money Market Portfolio
</TABLE>

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

* No fee waivers were necessary for this portfolio because total operating
expenses did not exceed the expense limitation.

INVESTMENT SUB-ADVISER

Sun Valley Gold Company ("Sun Valley"), with principal offices at 620 Sun Valley
Road, Sun Valley, Idaho, serves as the investment sub-adviser of the Gold
Portfolio, pursuant to a sub-advisory agreement among the Fund, MSDW Investment
Management and Sun Valley (the "Sub-Advisory Agreement"). MSDW Investment
Management and Sun Valley have entered into an indemnification agreement under
which, generally, Sun Valley has agreed to indemnify MSDW Investment Management
and the Fund for claims or losses in connection with any failure by Sun Valley
to comply with its obligations under the Sub-Advisory Agreement or related
agreements or any act or omission that amounts to negligence, misfeasance or bad
faith, and

33
<PAGE>

MSDW Investment Management has agreed to indemnify Sun Valley for claims or
losses in connection with any failure by MSDW Investment Management to comply
with its obligations under the Sub-Advisory Agreement or related agreements. As
compensation for sub-advisory services for the fiscal years ended December 31,
1998, December 31, 1997 and December 31, 1996, Sun Valley earned fees of
approximately $ , $106,000 and $110,000, respectively, and from such fees
voluntarily waived fees of $ , $46,000 and $52,000, respectively.

PRINCIPAL UNDERWRITER

Morgan Stanley serves as principal underwriter to the Fund. For information
relating to the services provided by Morgan Stanley see "Distribution of
Shares."

FUND ADMINISTRATION

MSDW Investment Management also provides administrative services to the Fund
pursuant to an Administration Agreement. The services provided under the
Administration Agreement are subject to the supervision of the officers and the
Board of Directors of the Fund and include day-to-day administration of matters
related to the corporate existence of the Fund, maintenance of records,
preparation of reports, supervision of the Fund's arrangements with its
custodian, and assistance in the preparation of the Fund's registration
statement under federal laws. The Administration Agreement also provides that
MSDW Investment Management, through its agents, will provide dividend disbursing
and transfer agent services to the Fund. For its services under the
Administration Agreement, the Fund pays MSDW Investment Management a monthly fee
which on an annual basis equals 0.15% of the average daily net assets of each
Portfolio.

SUB-ADMINISTRATOR. Under an agreement between MSDW Investment Management and
Chase Bank, Chase Global, a corporate affiliate of Chase Bank, provides certain
administrative services to the Fund. MSDW Investment Management supervises and
monitors the administrative services provided by Chase Global. Their services
are also subject to the supervision of the officers and Board of Directors of
the Fund. Chase Global provides operational and administrative services to
investment companies with approximately $161 billion in assets and having
approximately 216,918 shareholder accounts as of March 31, 1998. Chase Global's
business address is 73 Tremont Street, Boston, Massachusetts 02108-3913.

CUSTODIAN

Chase Bank, located at 73 Tremont Street, Boston, MA and its subsidiary, Morgan
Stanley Trust Company ("MSTC"), Brooklyn, NY, act as the Fund's custodians for
domestic and foreign assets. Neither Chase Bank nor MSTC is affiliated with MSDW
Investment Management or Morgan Stanley. Chase Bank and MSTC employ
subcustodians who were approved by the Directors of the Fund in accordance with
Rule 17f-5 adopted by the SEC under the 1940 Act. In the selection of foreign
subcustodians, the Directors consider a number of factors, including, but not
limited to, the reliability and financial stability of the institution, the
ability of the institution to provide efficiently the custodial services
required for the Fund, and the reputation of the institution in the particular
country or region.

DIVIDEND DISBURSING AND TRANSFER AGENT

Chase Global, 73 Tremont Street, Boston, MA, 02108-3913, provides dividend
disbursing and transfer agency for the Fund pursuant to the Sub-Administration
Agreement.

INDEPENDENT ACCOUNTANTS

, located at 1177 Avenue of the Americas, New York, NY,
serves as independent accountants for the Fund and audits the annual financial
statements of each Portfolio.

FUND COUNSEL

Morgan, Lewis & Bockius LLP, located at 1701 Market Street, Philadelphia, PA
19103, acts as the Fund's legal counsel.

YEAR 2000

The management and distribution services provided to the Fund by MSDW Investment
Management and Morgan Stanley depend on the smooth functioning of their computer
systems. Many computer software systems in use today cannot recognize the year
2000, but revert to 1900 or some other date, due to the manner in which dates
were encoded and calculated. That failure could have a negative impact on the
handling of securities trades, pricing and account services. MSDW Investment
Management and Morgan Stanley have been actively working on necessary changes to
their own computer systems to deal with the year 2000 problem and expect that
their systems will be adapted before that date. There can be no assurance,
however, that they will be successful. In addition, other unaffiliated service
providers may be faced with similar problems. MSDW Investment Management and
Morgan Stanley are monitoring their remedial efforts, however, there can be no
assurance that they and the services they provide will not be adversely
affected.

34
<PAGE>
DISTRIBUTION OF SHARES

Morgan Stanley, a wholly-owned subsidiary of MSDW, serves as the Fund's
exclusive distributor of Portfolio shares pursuant to a Distribution Agreement.
In addition, to promote the sale of Fund shares, the Fund has adopted a Plan of
Distribution with respect to the Class B shares of each Portfolio (except the
Municipal Money Market and International Small Cap Portfolios which do not offer
Class B shares) under Rule 12b-1 of the 1940 Act (each, a "Plan"). Under each
Plan Morgan Stanley is entitled to receive as compensation from each Portfolio a
fee, which is accrued daily and paid quarterly, at an annual rate of 0.25% of
the average daily net assets of the Class B shares. Each Plan is designed to
compensate Morgan Stanley for its services in connection with distributing
shares of all Portfolios. Morgan Stanley may retain any portion of the fees it
does not expend in meeting its obligations to the Fund. Morgan Stanley may
compensate financial intermediaries, plan fiduciaries and administrators for
providing distribution-related services, including account maintenance services,
to shareholders (including, where applicable, underlying beneficial owners) of
Class B shares.

The Plans for the Class B shares were most recently approved by the Fund's Board
of Directors, including those directors who are not "interested persons" of the
Fund and who have no direct or indirect financial interest in the operation of a
Plan or in any agreements related thereto, on June 25, 1998.

For the fiscal year ended December 31, 1998 Morgan Stanley spent 12b-1 fees
received from the Portfolios pursuant to the Plan in the following ways:

<TABLE>
<CAPTION>
TOTAL DOLLAR AMOUNT OF 12B-1 FEES SPENT
DURING
FISCAL YEAR ENDED DECEMBER 31, 1998
-------------------------------------------
<S> <C>
Advertising.....................................................
Printing and mailing of prospectuses to other than current
shareholders...................................................
Compensation to underwriters....................................
Compensation to broker-dealers..................................
Compensation to sales personnel.................................
Interest, carrying, or other financing charges..................
Shareholder servicing...........................................
</TABLE>

BROKERAGE PRACTICES

PORTFOLIO TRANSACTIONS

MSDW Investment Management, as each Portfolio's investment adviser, is
responsible for decisions to buy and sell securities for each Portfolio, for
broker-dealer selection and for negotiation of commission rates. 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 profit to the dealer. In underwritten offerings, securities are
purchased at a fixed price which includes an amount of compensation to the
underwriter, generally referred to as the underwriter's concession or discount.
When securities are purchased or sold directly from or to an issuer, no
commissions or discounts are paid.

On occassion, a Portfolio may purchase certain money market instruments directly
from an issuer without payment of a commission or concession. Money market
instruments 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 anticipates that certain of its transactions involving foreign
securities will be effected on 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.

MSDW Investment Management serves as investment adviser to a number of clients,
including other investment companies. MSDW Investment Management attempts to
equitably allocate purchase and sale transactions amont the Portfolios of the
Fund and other client accounts. To that end, MSDW Investment Management
considers various factors, including respective investment objectives, relative
size of portfolio holdings of the same or comparable securities, availability of
cash for investment, size of investment commitments generally held and the
opinions of the persons responsible for managing the Portfolios of the Fund and
other client accounts.

MSDW Investment Management selects the brokers or dealers that will execute the
purchases and sales of investment securities for each Portfolio. MSDW Investment
Management seeks the best execution for all portfolio transactions. A Portfolio
may pay higher commission rates than the lowest available when MSDW Investment
Management believes it is reasonable to do so in light of the value of the
research, statistical, and pricing services provided by the broker effecting the
transaction. In seeking to determine the reasonableness of brokerage commissions
paid in any transaction, MSDW Investment Management relies upon its experience
and knowledge regarding commissions generally charged by various brokers and on
its judgement in evaluating the brokerage and research services received from
the broker effecting the transaction. MSDW Investment Management is unable to
ascertain the value of these services due to the subjective nature of their
determinations.

In cases where suitable price and execution are obtainable from more than one
broker or dealer, MSDW Investment Management may place portfolio transactions
with those who also furnish research and other services to the Fund and MSDW

35
<PAGE>

Investment Management. Such services may include 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. MSDW Investment Management may use these
research services to service all of its accounts and may not use all of these
services in connection with providing investment advice to the Portfolios. While
the receipt of such information and services would generally reduce the amount
of research or services otherwise performed by MSDW Investment Management and
thus reduce its expenses, the value of such reduction is indeterminable and
therefore will not reduce the fees paid to MSDW Investment Management.

It is not the Fund's practice to direct brokerage or principal business on the
basis of sales of Portfolio shares which may be made through intermediary
brokers or dealers. However, MSDW Investment Management may, consistent with
NASD rules, place portfolio orders with qualified broker-dealers who recommend
the applicable Portfolio to their clients or who act as agents in the purchase
of shares of the Portfolio for their clients.

Subject to the overriding objective of obtaining the best execution of orders,
the Fund may use broker-dealer affiliates of MSDW Investment Management ot
effect Portfolio brokerage transactions under procedures adopted by the Fund's
Board of Directors. Pursuant to these procedures, MSDW Investment Management
uses two broker-dealer affiliates, Morgan Stanley and Dean Witter Reynolds
("DWR"), each of which is wholly owned by MSDW for such transactions, the
commission rates and other remuneration paid to Morgan Stanley or DWR must be
fair and reasonable in comparison to those of other broker-dealers for
comparable transactions involving similar securities being purchased or sold
during a comparable time period. 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.

For the fiscal years ended December 31, 1996, 1997, and 1998, the Fund paid
brokerage commissions of approximately $17,014,335, $26,051,356 and $ ,
respectively. For the fiscal years ended December 31, 1996, 1997 and 1998, the
Fund paid in the aggregate $826,686, $1,060,894 and $ , respectively, as
brokerage commissions to Morgan Stanley, an affiliated borker-dealer, which
represented 5%, 4.10% and % of the total amount of brokerage commissions
paid in each respective period. For the fiscal year ended December 31, 1998, the
Fund paid in the aggregate $ as brokerage commissions to Dean Witter
Reynolds, Inc. ("DWR"), an affiliated broker-dealer which represented % of
the total amount of brokerage commissions paid in the period. For the fiscal
years ended December 31, 1996, 1997 and 1998, the Fund paid $0, $0 and $ ,
respectively, as brokerage commissions to Sun Valley Gold Trading, Inc., a
broker-dealer affiliated with the Sub-Adviser.

<TABLE>
<CAPTION>
BROKERAGE COMMISSIONS PAID DURING FISCAL YEAR ENDED DECEMBER 31, 1998
----------------------------------------------------------------------------------------
COMMISSIONS PAID TO MORGAN STANLEY COMMISSIONS PAID TO DWR
-------------------------------------------- ----------------------------
TOTAL PERCENT OF PERCENT OF PERCENT OF
COMMISSIONS TOTAL TOTAL TOTAL BROKERED TOTAL TOTAL
PORTFOLIO PAID COMMISSIONS COMMISSIONS TRANSACTIONS COMMISSIONS COMMISSIONS
- ------------------------------- ------------ ------------ -------------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Emerging Markets
Emerging Markets Debt
Latin American
Active International Allocation
Asian Equity
Asian Real Estate
China Growth
European Equity
European Real Estate
Global Equity
Gold
International Equity
International Magnum
International Small Cap
Japanese Equity
Aggressive Equity
Emerging Growth
Equity Growth
MicroCap
Technology
U.S. Equity Plus
U.S. Real Estate
Value Equity
Fixed Income
Global Fixed Income
High Yield
Mortgage-Backed Securities
Municipal Bond
Money Market
Municipal Money Market

<CAPTION>
PERCENT OF
TOTAL BROKERED
PORTFOLIO TRANSACTIONS
- ------------------------------- --------------
<S> <C>
Emerging Markets
Emerging Markets Debt
Latin American
Active International Allocation
Asian Equity
Asian Real Estate
China Growth
European Equity
European Real Estate
Global Equity
Gold
International Equity
International Magnum
International Small Cap
Japanese Equity
Aggressive Equity
Emerging Growth
Equity Growth
MicroCap
Technology
U.S. Equity Plus
U.S. Real Estate
Value Equity
Fixed Income
Global Fixed Income
High Yield
Mortgage-Backed Securities
Municipal Bond
Money Market
Municipal Money Market
</TABLE>

36
<PAGE>

<TABLE>
<CAPTION>
BROKERAGE COMMISSION PAID DURING FISCAL YEARS ENDED DECEMBER 31, 1997 AND
1996
--------------------------------------------------------------------------
FISCAL YEAR ENDED DECEMBER 31, 1997 FISCAL YEAR ENDED DECEMBER 31, 1996
------------------------------------ ------------------------------------
PORTFOLIO TOTAL MORGAN STANLEY DWR TOTAL MORGAN STANLEY DWR
- ------------------------------- --------- -------------- --------- --------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Emerging Markets
Emerging Markets Debt
Latin American
Active International Allocation
Asian Equity
Asian Real Estate
China Growth
European Equity
European Real Estate
Global Equity
Gold
International Equity
International Magnum
International Small Cap
Japanese Equity
Aggressive Equity
Emerging Growth
Equity Growth
MicroCap
Technology
U.S. Equity Plus
U.S. Real Estate
Value Equity
Fixed Income
Global Fixed Income
High Yield
Mortgage-Backed Securities
Municipal Bond
Money Market
Municipal Money Market
</TABLE>

PORTFOLIO TURNOVER. The Portfolios generally do not invest for short-term
trading purposes, however, when circumstances warrant, each Portfolio may sell
investment securities without regard to the length of time they have been held.
Market conditions in a given year could result in a higher or lower portfolio
turnover rate than expected and the Portfolios will not consider portfolio
turnover rate a limiting factor in making investment decisions consistent with
their investment objectives and policies. Higher portfolio turnover (e.g., over
100%) necessarily will cause the Portfolios to pay correspondingly increased
brokerage and trading costs. In addition to transaction costs, higher portfolio
turnover may result in the realization of capital gains. As discussed under
"Taxes," to the extent net short-term capital gains are realized, any
distributions resulting from such gains are considered ordinary income for
federal income tax purposes. [Insert sentence re: recent or anticipated changes
in portfolio turnover.]

GENERAL INFORMATION

FUND HISTORY

The Fund was incorporated pursuant to the laws of the State of Maryland on June
16, 1988 under the name Morgan Stanley Institutional Fund, Inc. The Fund filed a
registration statement with the SEC registering itself as an open-end management
investment company offering diversified and non-diversified series under the
1940 Act and its shares under the Securities Act of 1933, as amended, and
commenced operations on November 15, 1988. Effective December 1, 1998, the Fund
changed its name to Morgan Stanley Dean Witter Institutional Fund, Inc.

DESCRIPTION OF SHARES AND VOTING RIGHTS

The Fund's Amended and Restated Articles of Incorporation permit the Directors
to issue 40 billion shares of common stock, par value $.001 per share, from an
unlimited number of classes or series of shares. The Fund currently consists of
shares of thirty Portfolios. Each Portfolio offers Class A and Class B shares
except that the Municipal Money Market and International Small Cap Portfolios
offer only Class A shares.

The shares of each Portfolio of the Fund are fully paid and nonassessable, and
have no preference as to conversion, exchange, dividends, retirement or other
features. Portfolio shares have no pre-emptive rights. The shares of the Fund
have non-cumulative voting rights, which means that the holders of more than 50%
of the shares voting for the election of Directors can elect 100% of the
Directors if they choose to do so. Shareholders are entitled to one vote for
each full share held (and a fractional vote for each fractional share held),
then standing in their name on the books of the Fund.

37
<PAGE>
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

The Fund's policy is to distribute substantially all of each Portfolio's net
investment income, if any. The Fund may also distribute any net realized capital
gains in the amount and at the times that will avoid both income (including
taxable gains) taxes on it and the imposition of the federal excise tax on
income and capital gains (see "Taxes"). However, the Fund may also choose to
retain net realized capital gains and pay taxes on such gains. The amounts of
any income dividends or capital gains distributions cannot be predicted.

Any dividend or distribution paid shortly after the purchase of shares of a
Portfolio by an investor may have the effect of reducing the per share net asset
value of that Portfolio by the per share amount of the dividend or distribution.
Furthermore, such dividends or distributions, although in effect a return of
capital, are subject to income taxes for shareholders subject to tax as set
forth herein and in the applicable Prospectus.

As set forth in the Prospectuses, unless you elect otherwise in writing, all
dividends and capital gains distributions for a class of shares are
automatically reinvested in additional shares of the same class of the Portfolio
at net asset value (as of the business day following the record date). This
automatic reinvestment of dividends and distributions will remain in effect
until you notify the Fund in writing at least three days prior to the record
date that either the Income Option (income dividends in cash and capital gains
distributions reinvested in shares at net asset value) or the Cash Option (both
income dividends and capital gains distributions in cash) has been elected.

TAXES

The following is a summary of certain federal income tax considerations
generally affecting the Fund, Portfolios and their shareholders that are not
described in the Prospectuses. No attempt is made to present a detailed
explanation of the federal, state or local tax treatment of the Fund, Portfolios
or shareholders, and the discussion here and in the Prospectuses is not intended
to be a substitute for careful tax planning.

The following discussion of federal income tax consequences is based on the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
issued thereunder as in effect on the date of this Statement of Additional
Information. New legislation, as well as administrative changes or court
decisions, may significantly change the conclusions expressed herein, and may
have a retroactive effect with respect to the transactions contemplated herein.

Each Portfolio within the Fund is generally treated as a separate corporation
for federal income tax purposes. Thus, the provisions of the Code generally will
be applied to each Portfolio separately, rather than to the Fund as a whole.

REGULATED INVESTMENT COMPANY QUALIFICATION

Each Portfolio intends to qualify and elect to be treated for each taxable year
as a regulated investment company ("RIC") under Subchapter M of the Code. In
order to so qualify, each Portfolio must, among other things, (i) derive at
least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock, securities or foreign currencies, and certain other
related income, including, generally, certain gains from options, futures and
forward contracts; and (ii) diversify its holdings so that, at the end of each
fiscal quarter of the Portfolio's taxable year, (a) at least 50% of the market
value of the Portfolio's total assets is represented by cash and cash items,
U.S. Government securities, securities of other RICs, and other securities, with
such other securities limited, in respect to any one issuer, to an amount not
greater than 5% of the value of the Portfolio's total assets or 10% of the
outstanding voting securities of such issuer, and (b) not more than 25% of the
value of its total assets are invested in the securities (other than U.S.
Government securities or securities of other RICs) of any one issuer or two or
more issuers which the Portfolio controls and which are engaged in the same,
similar, or related trades or business. For purposes of the 90% of gross income
requirement described above, foreign currency gains which are not directly
related to a Portfolio's principal business of investing in stock or securities
(or options or futures with respect to stock or securities) may be excluded from
income that qualifies under the 90% requirement.

In addition to the requirements described above, in order to qualify as a RIC, a
Portfolio must distribute at least 90% of its net investment income (which
generally includes dividends, taxable interest, and the excess of net short-term
capital gains over net long-term capital losses less operating expenses) and at
least 90% of its net tax-exempt interest income, for each tax year, if any, to
its shareholders. If a Portfolio meets all of the RIC requirements, it will not
be subject to federal income tax on any of its net investment income or capital
gains that it distributes to shareholders.

If a Portfolio fails to qualify as a RIC for any year, all of its income will be
subject to tax at corporate rates, and its distributions
(including capital gains distributions) will be taxable as ordinary income
dividends to its shareholders to the extent of the Portfolio's current and
accumulated earnings and profits, and will be eligible for the corporate
dividends received deduction for corporate shareholders.

GENERAL TAX TREATMENT OF QUALIFYING RICS AND SHAREHOLDERS

Each Portfolio intends to distribute substantially all of its taxable net
investment income (including, for this purpose, net short-term capital gain) to
shareholders. Dividends from a Portfolio's net investment income are taxable to
shareholders as ordinary

38
<PAGE>
income, whether received in cash or in additional shares. Such dividends paid by
a Portfolio generally will not qualify for the dividends-received deduction for
corporate shareholders. Each Portfolio will report annually to its shareholders
the amount of dividend income qualifying for such treatment.

Each Portfolio will decide whether to distribute or to retain all or part of any
net capital gains (the excess of net long-term capital gains over net short-term
capital losses) in any year for reinvestment. Distributions of net capital gain
are taxable to shareholders as a long-term capital gain regardless of how long
shareholders have held their shares. Each Portfolio will send reports annually
to shareholders regarding the federal income tax status of all distributions
made during the preceding year. If any such gains are retained, the Portfolio
will pay federal income tax thereon, and, if the Portfolio makes an election,
the shareholders will include such undistributed gains in their income, will
increase their tax basis in Portfolio shares by 65% of the amount included in
their income and will be able to claim their share of the tax paid by the
Portfolio as a refundable credit.

Dividends and other distributions declared by a Portfolio in October, November
or December of any year and payable to shareholders of record on a date in such
month will be deemed to have been paid by the Portfolio and received by
shareholders on December 31 of that year if the distributions are paid by the
Portfolio at any time during the following January.

A gain or loss realized by a shareholder on the sale, exchange or redemption of
shares of a Portfolio held as a capital asset will be capital gain or loss, and
such gain or loss will be long-term if the holding period for the shares exceeds
12 months and otherwise will be short-term. Any loss realized on a sale,
exchange or redemption of shares of a Portfolio will be disallowed to the extent
the shares disposed of are replaced within the 61-day period beginning 30 days
before and ending 30 days after the shares are disposed of. Any loss realized by
a shareholder on the disposition of shares held 6 months or less is treated as a
long-term capital loss to the extent of any distributions of net long-term
capital gains received by the shareholder with respect to such shares or any
inclusion of undistributed capital gain with respect to such shares.

The conversion of Class A shares to Class B shares will not be a taxable event
to the shareholder.

Each Portfolio will generally be subject to a nondeductible 4% federal excise
tax to the extent it fails to distribute by the end of any calendar year at
least 98% of its ordinary income for that year and 98% of its capital gain net
income (the excess of short- and long-term capital gains over short- and
long-term capital losses) for the one-year period ending on October 31 of that
year, plus certain other amounts. Each Portfolio intends to make sufficient
distributions or deemed distributions of its ordinary income and capital gain
net income (the excess of short-term and long-term capital gain over short-term
and long-term capital losses, including any available capital loss
carryforwards), prior to the end of each calendar year to avoid liability for
federal excise tax.

The Fund may be required to withhold and remit to the U.S. Treasury 31% of any
dividends, capital gains distributions and redemption proceeds paid to any
individual or certain other non-corporate shareholder (i) who has failed to
provide a correct taxpayer identification number (generally an individual's
social security number or non-individual's employer identification number) on
the Account Registration Form; (ii) who is subject to backup withholding by the
Internal Revenue Service; or (iii) who has not certified to the Fund that such
shareholder is not subject to backup withholding. This backup withholding is not
an additional tax, and any amounts withheld may be credited against the
shareholder's ultimate U.S. tax liability.

A Section 1256 position held by a Portfolio will generally be marked-to-market
(i.e. treated as if it were sold for fair market value) on the last business day
of the Fund's fiscal year, and all gain or loss associated with fiscal year
transactions and mark-to-market positions at fiscal year end (except certain
currency gain or loss covered by Section 988 of the Code) will generally be
treated as 60% long-term capital gain or loss and 40% short-term capital gain or
loss. The effect of Section 1256 mark-to-market rules may be to accelerate
income or to convert what otherwise would have been long-term capital gains into
short-term capital gains or short-term capital losses into long-term capital
losses within a Portfolio. The acceleration of income on Section 1256 positions
may require a Portfolio to accrue taxable income without the corresponding
receipt of cash. In order to generate cash to satisfy the distribution
requirements of the Code, a Portfolio may be required to dispose of portfolio
securities that it otherwise would have continued to hold or to use cash flows
from other sources. Any or all of these rules may, therefore, affect the amount,
character and timing of income earned and, in turn, distributed to shareholders
by a Portfolio.

As discussed above, in order for each Portfolio to continue to qualify for
federal income tax treatment as a RIC, at least 90% of its gross income for a
taxable year must be derived from certain qualifying income, including
dividends, interest, income derived from loans of securities, and gains from the
sale or other disposition of stock, securities or foreign currencies, or other
related income, including gains from options, futures and forward contracts,
derived with respect to its business of investing in stock, securities or
currencies. Any net gain realized from the closing out of futures contracts will
therefore generally be qualifying income for purposes of the 90% requirement.

SPECIAL RULES FOR CERTAIN FOREIGN CURRENCY AND DERIVATIVES TRANSACTIONS. In
general, gains from foreign currencies and from foreign currency options,
foreign currency futures and forward foreign exchange contracts relating to
investments in stock, securities or foreign currencies are currently considered
to be qualifying income for purposes of determining whether the Portfolio
qualifies as a RIC. It is unclear, however, who will be treated as the issuer of
certain foreign currency instruments or how foreign currency options, futures,
or forward foreign currency contracts will be valued for purposes of the
regulated investment company diversification requirements applicable to the
Portfolio. The Portfolio may request a private letter ruling from the Internal
Revenue Service on some or all of these issues.

39
<PAGE>
Under Code Section 988, special rules are provided for certain transactions in a
foreign currency other than the taxpayer's functional currency (i.e., unless
certain special rules apply, currencies other than the U.S. dollar). In general,
foreign currency gains or losses from forward contracts, from futures contracts
that are not "regulated futures contracts", and from unlisted options will be
treated as ordinary income or loss under Code Section 988. Also, certain foreign
exchange gains or losses derived with respect to foreign fixed-income securities
are also subject to Section 988 treatment. In general, therefore, Code Section
988 gains or losses will increase or decrease the amount of the Portfolio's
investment company taxable income available to be distributed to shareholders as
ordinary income, rather than increasing or decreasing the amount of the
Portfolio's net capital gain.

If the Portfolio invests in an entity which is classified as a "passive foreign
investment company" ("PFIC") for U.S. tax purposes, the application of certain
technical tax provisions applying to such companies could result in the
imposition of federal income tax with respect to such investments at the
Portfolio level which could not be eliminated by distributions to shareholders.
The U.S. Treasury issued proposed regulation section 1.1291-8 which establishes
a mark-to-market regime which allows investment companies investing in PFIC's to
avoid most, if not all, of the difficulties posed by the PFIC rules. The
mark-to-market regime was codified by the Taxpayer Relief Act of 1997. In any
event, it is not anticipated that any taxes on a Portfolio with respect to
investments in PFIC's would be significant.

A Portfolio's investment in options, swaps and related transactions, futures
contracts and forward contracts, options on futures contracts and stock indices
and certain other securities, including transactions involving actual or deemed
short sales or foreign exchange gains or losses are subject to many complex and
special tax rules. For example, over-the-counter options on debt securities and
equity options, including options on stock and on narrow-based stock indexes,
will be subject to tax under Section 1234 of the Code, generally producing a
long-term or short-term capital gain or loss upon exercise, lapse or closing out
of the option or sale of the underlying stock or security. By contrast, a
Portfolio's treatment of certain other options, futures and forward contracts
entered into by a Portfolio is generally governed by Section 1256 of the Code.
These "Section 1256" positions generally include listed options on debt
securities, options on broad-based stock indexes, options on securities indexes,
options on futures contracts, regulated futures contracts and certain foreign
currency contracts and options thereon.

When a Portfolio holds options or futures contracts which substantially diminish
their risk of loss with respect to other positions (as might occur in some
hedging transactions), this combination of positions could be treated as a
"straddle" for tax purposes, resulting in possible deferral of losses,
adjustments in the holding periods of Portfolio securities and conversion of
short-term capital losses into long-term capital losses. Certain tax elections
exist for mixed straddles (i.e., straddles comprised of at least one Section
1256 position and at least one non-Section 1256 position) which may reduce or
eliminate the operation of these straddle rules.

SPECIAL TAX CONSIDERATIONS RELATING TO MUNICIPAL BOND AND MUNICIPAL MONEY MARKET
PORTFOLIOS

Each of the Municipal Bond Portfolio and the Municipal Money Market Portfolio
will qualify to pay "exempt interest dividends" to its shareholders, provided
that, at the close of each quarter of its taxable year, at least 50% of the
value of its total assets consist of obligations the interest on which is exempt
from federal income tax. Current federal tax law limits the types and volume of
bonds qualifying for federal income tax exemption of interest, which may have an
effect on the ability of these Portfolios to purchase sufficient amounts of
tax-exempt securities to satisfy this requirement. Any loss on the sale or
exchange of shares of the Municipal Bond Portfolio or the Municipal Money Market
Portfolio held for six months or less will be disallowed to the extent of any
exempt-interest dividends received by the selling shareholder with respect to
such shares.

In addition, for the Municipal Bond Portfolio and the Municipal Money Market
Portfolio, exempt-interest dividends are excludable from a shareholder's gross
income for regular Federal income tax purposes. Exempt-interest dividends may,
nevertheless, be subject to the alternative minimum tax imposed by Section 55 of
the Code (the "Alternative Minimum Tax") or the environmental tax imposed by
Section 59A of the Code (the "Environmental Tax"). The Alternative Minimum Tax
is imposed at the rate of up to 28% in the case of non-corporate taxpayers and
at the rate of 20% in the case of corporate taxpayers, to the extent it exceeds
the taxpayer's regular tax liability. The Environmental Tax is imposed at the
rate of 0.12% and applies only to corporate taxpayers. The Alternative Minimum
Tax and the Environmental Tax may be affected by the receipt of exempt-interest
dividends in two circumstances. First, exempt-interest dividends derived from
certain "private activity bonds" issued after August 7, 1986, will generally be
an item of tax preference and therefore potentially subject to the Alternative
Minimum Tax and the Environmental Tax. The Portfolios intend, when possible, to
avoid investing in private activity bonds. Second, in the case of
exempt-interest dividends received by corporate shareholders, all
exempt-interest dividends, regardless of when the bonds from which they are
derived were issued or whether they are derived from private activity bonds,
will be included in the corporation's "adjusted current earnings," as defined in
Section 56(g) of the Code, in calculating the corporation's alternative minimum
taxable income for purposes of determining the Alternative Minimum Tax and the
Environmental Tax.

40
<PAGE>
The percentage of income that constitutes "exempt-interest dividends" will be
determined for each year for the Municipal Bond Portfolio and the Municipal
Money Market Portfolio and will be applied uniformly to all dividends declared
with respect to the Portfolios during that year. This percentage may differ from
the actual percentage for any particular day.

Interest on indebtedness incurred or continued by shareholders to purchase or
carry shares of the Municipal Bond Portfolio or the Municipal Money Market
Portfolio will not be deductible for federal income tax purposes. The deduction
otherwise allowable to property and casualty insurance companies for "losses
incurred" will be reduced by an amount equal to a portion of exempt-interest
dividends received or accrued during any taxable year. Foreign corporations
engaged in a trade or business in the United States will be subject to a "branch
profits tax" on their "dividend equivalent amount" for the taxable year, which
will include exempt-interest dividends. Certain Subchapter S corporations may
also be subject to taxes on their "passive investment income," which could
include exempt-interest dividends. Up to 85% of the Social Security benefits or
railroad retirement benefits received by an individual during any taxable year
will be included in the gross income of such individual if the individual's
"modified adjusted gross income" (which includes exempt-interest dividends) plus
one-half of the Social Security benefits or railroad retirement benefits
received by such individual during that taxable year exceeds the base amount
described in Section 86 of the Code.

Entities or persons who are "substantial users" (or persons related to
"substantial users") of facilities financed by industrial development bonds or
private activity bonds should consult their tax advisors before purchasing
shares of the Municipal Bond Portfolio or the Municipal Money Market Portfolio.
"Substantial user" is defined generally for these purposes as including a
"non-exempt person" who regularly uses in trade or business a part of a facility
financed from the proceeds of such bonds.

Issuers of bonds purchased by the Municipal Bond Portfolio (or the beneficiary
of such bonds) may have made certain representations or covenants in connection
with the issuance of such bonds to satisfy certain requirements of the Code that
must be satisfied subsequent to the issuance of such bonds. Investors should be
aware that exempt-interest dividends derived from such bonds may become subject
to federal income taxation retroactively to the date thereof if such
representations are determined to have been inaccurate or if the issuer of such
bonds (or the beneficiary of such bonds) fails to comply with such covenants.

The state and local tax consequences of an investment in either the Municipal
Bond or Municipal Money Market Portfolios may differ from the federal
consequences described above and shareholders are urged to consult their tax
advisers with respect to such aspects.

SPECIAL TAX CONSIDERATIONS RELATING TO FOREIGN INVESTMENTS

Gains or losses attributable to foreign currency contracts, or to fluctuations
in exchange rates that occur between the time a Portfolio accrues interest or
other receivables or accrues expenses or other liabilities denominated in a
foreign currency and the time the Portfolio actually collects such receivables
or pays such liabilities are treated as ordinary income or ordinary loss to the
Portfolio. Similarly, gains or losses on disposition of debt securities
denominated in a foreign currency attributable to fluctuations in the value of
the foreign currency between the date of acquisition of the security and the
date of disposition also are treated as ordinary gain or loss to the Portfolio.
These gains or losses increase or decrease the amount of a Portfolio's net
investment income available to be distributed to its shareholders as ordinary
income.

It is expected that each Portfolio will be subject to foreign withholding taxes
with respect to its dividend and interest income from foreign countries, and a
Portfolio may be subject to foreign income taxes with respect to other income.
So long as more than 50% in value of a Portfolio's total assets at the close of
the taxable year consists of stock or securities of foreign corporations, the
Portfolio may elect to treat certain foreign income taxes imposed on it for U.S.
federal income tax purposes as paid directly by its shareholders. A Portfolio
will make such an election only if it deems it to be in the best interest of its
shareholders and will notify shareholders in writing each year if it makes an
election and of the amount of foreign income taxes, if any, to be treated as
paid by the shareholders. If a Portfolio makes the election, shareholders will
be required to include in income their proportionate share of the amount of
foreign income taxes treated as imposed on the Portfolio and will be entitled to
claim either a credit (subject to the limitations discussed below) or, if they
itemize deductions, a deduction, for their shares of the foreign income taxes in
computing their federal income tax liability.

Certain foreign governments levy withholding or other taxes on dividend and
interest income. Although in some countries a portion of these taxes are
recoverable, the non-recovered portion of foreign withholding taxes will reduce
the income received from investments in such countries. Except in the case of
the International Equity, Global Equity, European Equity, Japanese Equity, Asian
Equity, Global Fixed Income, International Fixed Income, International Magnum,
International Small Cap, Latin American and China Growth Portfolios, it is not
expected that a Portfolio or its shareholders would be able to claim a credit
for U.S. tax purposes with respect to any such foreign taxes. However, these
foreign withholding taxes may not have a significant impact on such Portfolios,
because each Portfolio's investment objective is to seek long-term capital
appreciation and any dividend or interest income should be considered
incidental.

41
<PAGE>
Shareholders who choose to utilize a credit (rather than a deduction) for
foreign taxes will be subject to a number of complex limitations regarding the
availability and utilization of the credit. Because of these limitations,
shareholders may be unable to claim a credit for the full amount of their
proportionate shares of the foreign income taxes paid by a Portfolio.
Shareholders are urged to consult their tax advisors regarding the application
of these rules to their particular circumstances.

TAXES AND FOREIGN SHAREHOLDERS

Taxation of a shareholder who, as to the United States, is a nonresident alien
individual, a foreign trust or estate, a foreign corporation, or a foreign
partnership ("Foreign Shareholder") depends on whether the income from the
Portfolio is "effectively connected" with a U.S. trade or business carried on by
such shareholder.

If the income from a Portfolio is not effectively connected with a U.S. trade or
business carried on by a Foreign Shareholder, distributions of net investment
income plus the excess of net short-term capital gains over net long-term
capital losses will be subject to U.S. withholding tax at the rate of 30% (or
such lower treaty rate as may be applicable) upon the gross amount of the
dividend. Furthermore, Foreign Shareholders will generally be exempt from U.S.
federal income tax on gains realized on the sale of shares of a Portfolio,
distributions of net long-term capital gains, and amounts retained by the Fund
which are designated as undistributed capital gains.

If the income from a Portfolio is effectively connected with a U.S. trade or
business carried on by a Foreign Shareholder, then distributions from the
Portfolio and any gains realized upon the sale of shares of the Portfolio, will
be subject to U.S. federal income tax at the rates applicable to U.S. citizens
and residents or domestic corporations.

A Portfolio may be required to withhold U.S. federal income tax on distributions
that are otherwise exempt from withholding tax (or taxable at a reduced treaty
rate) unless the Foreign Shareholder complies with Internal Revenue Service
certification requirements.

The tax consequences to a Foreign Shareholder entitled to claim the benefits of
an applicable tax treaty may differ from those described here. Furthermore,
Foreign Shareholders are strongly urged to consult their own tax advisors with
respect to the particular tax consequences to them of an investment in a
Portfolio, including the potential application of the provisions of the Foreign
Investment in Real Estate Property Tax Act of 1980, as amended.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

CONTROL PERSONS

The following shareholders may be deemed to control the following Portfolios
because they are record owners of 25% or more of the outstanding shares of that
Portfolio of the Fund as of [date not more than 30 days prior to filing]. For
each control person, the following table provides the name, address, percentage
of outstanding shares of such Portfolio owned and, if a company, that company's
state of incorporation and parent corporation if any.

[CHASE TO PROVIDE: NAME
ADDRESS
PERCENTAGE OF PORTFOLIO OWNED
IF A COMPANY, GIVE THE JURISDICTION UNDER THE LAWS OF WHICH IT
IS
ORGANIZED]

PRINCIPAL HOLDERS

The following shareholders are record owners of 5% or more of the outstanding
shares of any class of Portfolio shares as of [date not more than 30 days prior
to filing]. For each principal holder, the following table provides the name,
address, percentage of outstanding shares of such classes owned and, if a
company, that company's state of incorporation and parent corporation if any.

[CHASE TO PROVIDE: NAME
ADDRESS
PERCENTAGE OF CLASS OF SHARES OWNED
IF A COMPANY, GIVE THE JURISDICTION UNDER THE LAWS OF WHICH IT
IS
ORGANIZED]

42
<PAGE>
PERFORMANCE INFORMATION

The Fund may from time to time quote various performance figures to illustrate
the Portfolios' past performance.

Performance quotations by investment companies are subject to rules adopted by
the SEC, which require the use of standardized performance quotations. In the
case of total return, non-standardized performance quotations may be furnished
by the Fund but must be accompanied by certain standardized performance
information computed as required by the SEC. Current yield and average annual
compounded total return quotations used by the Fund are based on the
standardized methods of computing performance mandated by the SEC. An
explanation of those and other methods used by the Fund to compute or express
performance follows.

TOTAL RETURN

From time to time each Portfolio, except the Money Market and Municipal Money
Market Portfolios, may advertise total return for each class of shares of the
Portfolio. Total return figures are based on historical earnings and are not
intended to indicate future performance. The average annual total return is
determined by finding the average annual compounded rates of return over 1-, 5-,
and 10-year periods (or over the life of the Portfolio) that would equate an
initial hypothetical $1,000 investment to its ending redeemable value. The
calculation assumes that all dividends and distributions are reinvested when
paid. The quotation assumes the amount was completely redeemed at the end of
each 1-, 5-, and 10-year period (or over the life of the Portfolio) and the
deduction of all applicable Fund expenses on an annual basis.

The average annual compounded rates of return (unless otherwise noted) for the
Fund's Portfolios for the one year and five year periods ended December 31, 1998
and for the period from inception through December 31, 1998 are as follows:

<TABLE>
<CAPTION>
AVERAGE
AVERAGE ANNUAL
INCEPTION ONE ANNUAL SINCE
NAME OF PORTFOLIO+ DATE YEAR FIVE YEARS INCEPTION
- ------------------------------------------------------------ ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Active International Allocation
Class A................................................... 1/17/92 8.61% 11.37% 8.69%
Class B................................................... 1/02/96 8.35% N/A 7.65%
Aggressive Equity
Class A................................................... 3/08/95 33.31% N/A 41.36%
Class B................................................... 1/02/96 32.90% N/A 36.62%
Asian Equity
Class A................................................... 7/01/91 (48.29)% (0.14)% 4.16%
Class B................................................... 1/02/96 (48.48)% N/A (27.21)%
Asian Real Estate
Class A................................................... 10/01/97 (19.92)% N/A N/A
Class B................................................... 10/01/97 (19.70)% N/A N/A
Emerging Growth
Class A................................................... 11/01/89 11.36% 8.88% 11.88%
Class B................................................... 1/02/96 11.13% N/A 7.30%
Emerging Markets
Class A................................................... 9/25/92 (1.03)% 10.23% 10.13%
Class B................................................... 1/02/96 (1.31)% N/A 4.69%
Emerging Markets Debt
Class A................................................... 2/01/94 18.29% N/A 18.77%
Class B................................................... 1/02/96 18.05% N/A 32.46%
Equity Growth
Class A................................................... 4/02/91 31.32% 21.86% 19.07%
Class B................................................... 1/02/96 31.05% N/A 30.53%
European Equity
Class A................................................... 4/02/93 17.88% N/A 19.25%
Class B................................................... 1/02/96 17.73% N/A 19.25%
European Real Estate
Class A................................................... 10/01/97 (4.76)% N/A N/A
Class B................................................... 10/01/97 (4.76)% N/A N/A
Fixed Income
Class A................................................... 5/15/91 9.54% 7.54% 8.53%
Class B................................................... 1/02/96 9.48% N/A 6.89%
Global Equity
Class A................................................... 7/15/92 23.75% 22.71% 20.03%
Class B................................................... 1/02/96 23.37% N/A 22.74%
Global Fixed Income
Class A................................................... 5/01/91 1.50% 6.91% 7.42%
</TABLE>

43
<PAGE>

<TABLE>
<CAPTION>
AVERAGE
AVERAGE ANNUAL
INCEPTION ONE ANNUAL SINCE
NAME OF PORTFOLIO+ DATE YEAR FIVE YEARS INCEPTION
- ------------------------------------------------------------ ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Class B................................................... 1/02/96 1.29% N/A 3.68%
Gold
Class A................................................... 2/01/94 (55.64)% N/A (14.67)%
Class B................................................... 1/02/96 (55.17)% N/A (28.74)%
High Yield
Class A................................................... 9/28/92 15.87% 13.98% 13.46%
Class B................................................... 1/02/96 15.48% N/A 14.94%
International Equity
Class A................................................... 8/04/89 13.91% 20.19% 12.19%
Class B................................................... 1/02/96 13.57% N/A 16.07%
International Magnum
Class A................................................... 3/15/96 6.58% N/A 8.28%
Class B................................................... 3/15/96 6.33% N/A 7.94%
International Small Cap
Class A................................................... 12/15/92 (0.55)% 12.76% 12.84%
Japanese Equity
Class A................................................... 4/25/94 (9.23)% N/A (4.38)%
Class B................................................... 1/02/96 (9.64)% N/A (5.75)%
Latin American
Class A................................................... 1/18/95 41.28% N/A 24.70%
Class B................................................... 1/02/96 40.37% N/A 41.47%
Municipal Bond
Class A................................................... 1/18/95 7.25% N/A 6.66%
Class B................................................... 1/02/96 (0.01)%[*] N/A N/A
Technology
Class A................................................... 9/16/96 37.27% N/A 34.80%
Class B................................................... 9/16/96 36.90% N/A 34.52%
U.S. Equity Plus
Class A................................................... 7/31/97 3.94% N/A N/A
Class B................................................... 7/31/97 3.93% N/A N/A
U.S. Real Estate
Class A................................................... 2/24/95 27.62% N/A 30.92%
Class B................................................... 1/02/96 27.21% N/A 32.66%
Value Equity
Class A................................................... 1/31/90 29.20% 18.64% 14.89%
Class B................................................... 1/02/96 28.70% N/A 23.56%
</TABLE>

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

+ The China Growth, Mortgage-Backed Securities and MicroCap Portfolios had not
commenced operations as of December 31, 1998.

[* Per share amounts for the year ended December 31, 1997 and for the period
ended November 5, 1997 are based on average shares outstanding. As of
November 5, 1997 and for the period from March 19 through October 30, 1997,
there were no outstanding Class B shares for the Municipal Bond Portfolio.]

These figures were calculated according to the following formula:

where:

<TABLE>
<C> <C> <S>
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of hypothetical $1,000 payment made at the beginning
of the 1-, 5-, or 10-year periods at the end of the 1-, 5-, or 10-year
periods (or fractional portion thereof).
</TABLE>

CALCULATION OF YIELD FOR NON-MONEY MARKET PORTFOLIOS

From time to time certain of the Fund's Portfolios may advertise yield.

Current yield reflects the income per share earned by a Portfolio's investments.

Current yield is determined by dividing the net investment income per share
earned during a 30-day base period by the maximum offering price per share on
the last day of the period and annualizing the result. Expenses accrued for the
period include any fees charged to all shareholders during the base period.

44
<PAGE>

The respective current yields for certain of the Fund's Portfolios for the
30-day period ended December 31, 1998 were as follows:

<TABLE>
<CAPTION>
CLASS A
PORTFOLIO NAME SHARES
- ------------------------------------------------------------------------------------------------------------ ---------
<S> <C> <C>
Emerging Markets Debt....................................................................................... 10.24%
Fixed Income................................................................................................ 5.95%
Global Fixed Income......................................................................................... 4.87%
High Yield.................................................................................................. 8.34%
Municipal Bond.............................................................................................. 4.20%

PORTFOLIO NAME CLASS B SHARES

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

<S> <C>
Emerging Markets Debt....................................................................................... 9.95%

Fixed Income................................................................................................ 5.80%

Global Fixed Income......................................................................................... 4.72%

High Yield.................................................................................................. 8.10%

Municipal Bond.............................................................................................. --%

</TABLE>

These figures were obtained using the following formula:

<TABLE>
<S> <C> <C>
Yield = 2[(a - b + 1)(6) -
1]
-------------------
cd
</TABLE>

CALCULATION OF YIELD FOR MONEY MARKET PORTFOLIOS

The current yield of the Money Market and Municipal Money Market Portfolios is
calculated daily on a base period return for a hypothetical account having a
beginning balance of one share for a particular period of time (generally 7
days). The return is determined by dividing the net change (exclusive of any
capital changes in such account) by its average net asset value for the period,
and then multiplying it by 365/7 to determine the annualized current yield. The
calculation of net change reflects the value of additional shares purchased with
the dividends by the Portfolio, including dividends on both the original share
and on such additional shares. The current yields of the Money Market and
Municipal Money Market Portfolios for the 7-day period ended December 31, 1998
were 5.25% and 3.40%, respectively. An effective yield, which reflects the
effects of compounding and represents an annualization of the current yield with
all dividends reinvested, may also be calculated for each Portfolio by dividing
the base period return by 7, adding 1 to the quotient, raising the sum to the
365th power, and subtracting 1 from the result. The effective yields of the
Money Market and Municipal Money Market Portfolios for the 7-day period ended
December 31, 1998 were 5.39% and 3.46%, respectively.

The yield of a Portfolio will fluctuate. The annualization of a week's dividend
is not a representation by the Portfolio as to what an investment in the
Portfolio will actually yield in the future. Actual yields will depend on such
variables as investment quality, average maturity, the type of instruments the
Portfolio invests in, changes in interest rates on instruments, changes in the
expenses of the Fund and other factors. Yields are one basis investors may use
to analyze the Portfolios of the Fund, and other investment vehicles; however,
yields of other investment vehicles may not be comparable because of the factors
set forth in the preceding sentence, differences in the time periods compared,
and differences in the methods used in valuing portfolio instruments, computing
net asset value and calculating yield.

[TAXABLE EQUIVALENT YIELDS FOR THE MUNICIPAL BOND AND MUNICIPAL MONEY MARKET
PORTFOLIOS

It is easy to calculate your own taxable equivalent yield if you know your tax
bracket. The formula is:

<TABLE>
<S> <C> <C>
Tax Free Yield = Your Taxable Equivalent Yield
1 - Your Tax Bracket
</TABLE>

For example, if you are in the 28% tax bracket and can earn a tax-free yield of
7.5%, the taxable equivalent yield would be 10.42%.

The table below indicates the advantages of investments in Municipal Bonds for
certain investors. Tax-exempt rates of interest payable on a Municipal Bond
(shown at the top of each column) are equivalent to the taxable yields set forth
opposite the respective income tax levels, based on income tax rates effective
for the tax year 1997 under the Internal Revenue Code. There can, of course, be
no guarantee that the Municipal Bond Portfolio or Municipal Money Market
Portfolio will achieve a specific yield. Also, it is possible that some portion
of the Portfolio's dividends may be subject to Federal income taxes. A
substantial portion, if not all, of such dividends may be subject to state and
local taxes.

TAXABLE EQUIVALENT YIELD TABLE

<TABLE>
<CAPTION>
SAMPLE LEVEL OF FEDERAL
TAXABLE INCOME INCOME TAXABLE EQUIVALENT RATES BASED ON TAX-EXEMPT YIELD OF:
- ------------------------------------ TAX ------------------------------------------------------------------
JOINT RETURN SINGLE RETURN BRACKETS 3% 4% 5% 6% 7% 8% 9% 10% 11%
- ----------------- ----------------- ----- ----- ----- ----- ----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-39,000 $0-23,350 15.0 % 3.5 % 4.7 % 5.9 % 7.1 % 8.2 % 9.4 % 10.6 % 11.8 % 12.9 %
39,000-94,250 23,350-56,550 28.0 4.2 5.6 6.9 8.3 9.7 11.1 10.6 % 13.9 15.3
94,250-143,600 56,550-117,950 31.0 4.3 5.8 7.2 8.7 10.1 11.6 12.5 14.5 15.9
143,600-256,500 117,950-256,500 36.0 4.7 6.3 7.8 9.4 10.9 12.5 13.0 15.6 17.2
over 256,500 over 256,500 39.6 5.0 6.6 8.3 9.9 11.6 13.2 14.1 16.6 18.2
</TABLE>

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

* Net amount subject to 1997 Federal Income Tax after deductions and exemptions,
not indexed for 1996 income tax rates.

45
<PAGE>

The taxable equivalent yields for the Municipal Money Market and Municipal Bond
Portfolios for the seven days ended December 31, 1997 assuming a Federal income
tax rate of 39.6% (maximum rate), were 5.60% and 6.16%, respectively. The
taxable equivalent effective yields for the Municipal Money Market and Municipal
Bond Portfolios for the seven days ended December 31, 1997, assuming the same
tax rate, were 5.68% and 6.27%, respectively.]

GENERAL PERFORMANCE INFORMATION

Each Portfolio's performance will fluctuate, unlike bank deposits or other
investments which pay a fixed yield for a stated period of time. Past
performance is not necessarily indicative of future return. Actual performance
will depend on such variables as portfolio quality, average portfolio maturity,
the type of portfolio instruments acquired, changes in interest rates, portfolio
expenses and other factors. Performance is one basis investors may use to
analyze a Portfolio as compared to other funds and other investment vehicles.
However, performance of other funds and other investment vehicles may not be
comparable because of the foregoing variables, and differences in the methods
used in valuing their portfolio instruments, computing net asset value and
determining performance.

From time to time, a Portfolio's performance may be compared to other mutual
funds tracked by financial or business publications and periodicals. For
example, Morningstar, Inc. may be quoted in advertising materials. Morningstar,
Inc. is a mutual fund rating service that rates mutual funds on the basis of
risk-adjusted performance. Rankings that compare the performance of funds to one
another in appropriate categories over specific periods of time may also be
quoted in advertising.

Portfolio advertising may include data on historical returns of the capital
markets in the United States compiled or published by Ibbotson Associates of
Chicago, Illinois ("Ibbotson"), including returns on common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the Consumer Price Index), and combinations of various capital
markets. The performance of these capital markets is based on the returns of
different indices. The Portfolios may use the performance of these capital
markets in order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical investment
in any of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
Portfolios. The Portfolios may also compare their performance to that of other
compilations or indices that may be developed and made available in the future.

The Portfolios may include in advertisements, charts, graphs or drawings which
illustrate the potential risks and rewards of investment in various investment
vehicles, including but not limited to, foreign securities, stocks, bonds,
treasury bills and shares of a Portfolio. In addition, advertisements may
include a discussion of certain attributes or benefits to be derived by an
investment in a Portfolio and/or other mutual funds, shareholder profiles and
hypothetical investor scenarios, timely information on financial management, tax
and retirement planning and various investment alternatives. Advertisements may
include lists of representative Morgan Stanley clients. The Portfolios may also
from time to time include discussions or illustrations of the effects of
compounding in advertisements. "Compounding" refers to the fact that, if
dividends or other distributions on a Portfolio investment are reinvested by
being paid in additional Portfolio shares, any future income or capital
appreciation of a Portfolio would increase the value, not only of the original
investment in the Portfolio, but also of the additional Portfolio shares
received through reinvestment.

The Portfolios may include in their advertisements, discussions or illustrations
of the potential investment goals of a prospective investor (including materials
that describe general principles of investing, such as asset allocation,
diversification, risk tolerance, goal setting, questionnaires designed to help
create a personal financial profile, worksheets used to project savings needs
based on assumed rates of inflation and hypothetical rates of return and action
plans offering investment alternatives), investment management techniques,
policies or investment suitability of a Portfolio (such as value investing,
market timing, dollar cost averaging, asset allocation, constant ratio transfer,
automatic account rebalancing, the advantages and disadvantages of investing in
tax-deferred and taxable investments). Advertisements and sales materials
relating to a Portfolio may include information regarding the background and
experience of its portfolio managers; the resources, expertise and support made
available to the portfolio managers by Morgan Stanley; and the portfolio
manager's goals, strategies and investment techniques.

The Portfolios' advertisements may discuss economic and political conditions of
the United States and foreign countries, the relationship between sectors of the
U.S., a foreign, or the global economy and the U.S., a foreign, or the global
economy as a whole and the effects of inflation. The Portfolios' advertisements
may include discussions and illustrations of the growth potential of various
global markets including, but not limited to, Africa, Asia, Europe, Latin
America, North America, South America, Emerging Markets and individual
countries. These discussions may include the past performance of the various
markets or market sectors; forecasts of population, gross national product and
market performance; and the underlying data which supports such forecasts. From
time to time, advertisements, sales literature, communications to shareholders
or other materials may summarize the substance of information contained in the
Portfolios' shareholder reports (including the investment composition of a
Portfolio), as well as the views of Morgan Stanley as to current market,
economic, trade and interest rate trends, legislative, regulatory and monetary
developments, investment strategies and related matters believed to be of
relevance to a Portfolio.

The Portfolios may quote various measures of volatility and benchmark
correlation in advertising. The Portfolios may compare these measures to those
of other funds. Measures of volatility seek to compare the historical share
price fluctuations or total

46
<PAGE>
returns to those of a benchmark. Measures of benchmark correlation indicate how
valid a comparative benchmark may be. Measures of volatility and correlation may
be calculated using averages of historical data. A Portfolio may also advertise
its current interest rate sensitivity, duration, weighted average maturity or
similar maturity characteristics.

The Portfolios may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program, an
investor invests a fixed dollar amount in a Portfolio at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when prices
are low. While such a strategy does not assure a profit or guard against loss in
a declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
during periods of low price levels.

ADVISER'S USE OF COMPANIES COMPRISING THE S&P 500 INDEX

MSDW Investment Management uses the 500 companies included in the S&P 500 Index
as the universe of potential investments for the U.S. Equity Plus Portfolio. The
U.S. Equity Plus Portfolio is not sponsored, endorsed, sold or promoted by S&P,
a division of The McGraw-Hill Companies, Inc. S&P makes no representation or
warranty, express or implied, to investors in the U.S. Equity Plus Portfolio or
any member of the public regarding the advisability of investing in the U.S.
Equity Plus Portfolio or the ability of the S&P 500 Index to track general stock
market performance. S&P's only relationship to MSDW Investment Management is the
licensing of certain trademarks and trade names of S&P and of the S&P 500 Index
which is determined, composed and calculated by S&P without regard to MSDW
Investment Management or the U.S. Equity Plus Portfolio. S&P has no obligation
to take the needs of MSDW Investment Management or the investors in the U.S.
Equity Plus Portfolio into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for, does not participate
in and has no obligation or liability in connection with the management,
administration or marketing of the U.S. Equity Plus Portfolio.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR COMPLETENESS OF THE S&P 500 INDEX OR
ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS,
OMISSIONS OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO THE PERFORMANCE OF THE ADVISER OR THE U.S. EQUITY PLUS PORTFOLIO, AND
EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY
LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS) ARISING OUT OF ANY USE OF THE S&P 500 INDEX OR ANY DATA
INCLUDED THEREIN, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

DESCRIPTION OF RATINGS

DESCRIPTION OF COMMERCIAL PAPER AND BOND RATINGS

EXCERPTS FROM MOODY'S DESCRIPTION OF BOND RATINGS: Aaa -- Bonds which are rated
Aaa are judged to be of the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt-edged." Interest payments
are protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues. Aa -- Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear somewhat larger
than Aaa securities. A -- Bonds which are rated A possess many favorable
investment attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility to
impairment some time in the future. Baa -- Bonds which are rated Baa are
considered as medium-grade obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well. Ba -- Bonds which are rated Ba are judged to have
speculative elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate, and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class. B -- Bonds which are
rated B generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small. Moody's applies numerical modifiers
1, 2 and 3 in each generic voting classification from Aa through B. The modifier
1 indicates that the security ranks at a higher end of the rating category;
modifier 2 indicates a mid-range rating; and the modifier 3 indicates that the
issue ranks at the lower end of the rating category. Caa -- Bonds which are
rated Caa are of poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest. Ca -- Bonds
which are rated Ca

47
<PAGE>
represent obligations which are speculative in a high degree. Such issues are
often in default or have other marked shortcomings. C -- Bonds which are rated C
are the lowest rated class of bonds, and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.

EXCERPTS FROM S&P'S DESCRIPTION OF BOND RATINGS: AAA -- Bonds rated AAA have
the highest rating assigned by Standard & Poor's to a debt obligation and
indicate an extremely strong capacity to pay principal and interest. AA -- Bonds
rated AA have a very strong capacity to pay interest and repay principal and
differ from the highest rated issues only to a small degree. A -- Bonds rated A
have a strong capacity to pay interest and repay principal although they are
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions than bonds in higher rated categories. BBB -- Bonds rated
BBB are regarded as having an adequate capacity to pay interest and repay
principal. Whereas they normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than for debt in higher rated categories. BB, B, CCC, CC -- Debt rated BB, B,
CCC, CC and C is regarded, on balance, as predominantly speculative with respect
to capacity to pay interest and repay principal in accordance with the terms of
the obligation. BB indicates the lowest degree of speculation and C the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions. C -- The rating C may be used to cover a
situation where a bankruptcy petition has been filed or similar action has been
taken, but payments on this obligation are being continued. D -- Debt rated D is
in default, and payment of interest and/or repayment of principal is in arrears.

DESCRIPTION OF MOODY'S RATINGS OF STATE AND MUNICIPAL NOTES: Moody's ratings
for state and municipal notes and other short-term obligations are designated
Moody's Investment Grade ("MIG"). Symbols used are as follows: MIG-1 -- best
quality, enjoying strong protection from established cash flows of funds for
their servicing or from established broad-based access to the market for
refinancing, or both; MIG-2 -- high quality with margins of protection ample
although not so large as in the preceding group; MIG-3 -- favorable quality,
with all security elements accounted for but lacking the undeniable strength of
the preceding grades.

DESCRIPTION OF MOODY'S HIGHEST COMMERCIAL PAPER RATING: Prime-1 ("Pl") --
Judged to be of the best quality. Their short-term debt obligations carry the
smallest degree of investment risk.

EXCERPT FROM S&P'S RATING OF MUNICIPAL NOTE ISSUES: SP-l+ -- very strong
capacity to pay principal and interest; SP-2-- strong capacity to pay principal
and interest.

DESCRIPTION OF S&P'S HIGHEST COMMERCIAL PAPER RATINGS: A-l+ -- this designation
indicates the degree of safety regarding timely payment is extremely strong. A-1
- -- this designation indicates the degree of safety regarding timely payment is
strong.

FINANCIAL STATEMENTS

The Fund's audited financial statements for the fiscal year ended December 31,
1998, including notes thereto and the report of are
herein incorporated by reference from the Fund's Annual Report. A copy of the
Fund's Annual Report to Shareholders must accompany the delivery of this
Statement of Additional Information. The China Growth, Mortgage-Backed
Securities and MicroCap Portfolios had not commenced operations at December 31,
1998.

48
<PAGE>

PART C. OTHER INFORMATION

Item 23. Exhibits

(a)(1) Registrant's Articles of Amendment and Restatement, incorporated
by reference to Exhibit 1(a) to Post-Effective Amendment No. 26
to the Registrant's Registration Statement on Form N-1A
(Registration No. 33-23166), filed with the Securities and
Exchange Commission via EDGAR (Accession No. 0000912057-
95-008594) on October 13, 1995.

(a)(2) Registrant's Articles Supplementary to Registrant's Articles of
Amendment and Restatement (reclassifying shares), incorporated
by reference to Exhibit 1(b) to Post-Effective Amendment No. 30
to Registrant's Registration Statement on Form N-1A
(Registration No. 33-23166), filed with the Securities and
Exchange Commission via EDGAR (Accession No.
0000912057-96-010828) on May 24, 1996.

(a)(3) Registrant's Articles Supplementary to Registrant's Articles of
Amendment and Restatement (adding new Technology Portfolio),
incorporated by reference to Exhibit 1(c) to Post-Effective
Amendment No. 30 to Registrant's Registration Statement on Form
N-1A (Registration No. 33-23166), filed with the Securities and
Exchange Commission via EDGAR (Accession No.
0000912057-96-010828) on May 24, 1996.

(a)(4) Registrant's Articles Supplementary to Registrant's Articles of
Amendment and Restatement (adding U.S. Equity Plus Portfolio),
incorporated by reference to Exhibit 1(d) to Post-Effective
Amendment No. 38 to Registrant's Registration Statement on Form
N-1A (Registration No. 33-23166), filed with the Securities and
Exchange Commission via EDGAR (Accession No. 0001047469-98-
008051)on February 27, 1998.

(a)(5) Registrant's Articles Supplementary to Registrant's Articles of
Amendment and Restatement (adding European Real Estate and Asian
Real Estate Portfolios), incorporated by reference to Exhibit
1(e) to Post-Effective Amendment No. 38 to Registrant's
Registration Statement on Form N-1A (Registration No. 33-23166),
filed with the Securities and Exchange Commission via EDGAR
(Accession No. 00001047469-98-008051) on February 27, 1998.

(a)(6) Registrant's Articles Supplementary to Registrant's Articles of
Amendment and Restatement (adding Class B shares to the Money
Market Portfolio), incorporated by reference to Exhibit 1(f) to
Post-Effective Amendment No. 38 to Registrant's Registration
Statement on Form N-1A (Registration No. 33-23166), filed with
the Securities and Exchange Commission via EDGAR (Accession No.
00001047469- 98-008051) on February 27, 1998.

(a)(7) Articles of Amendment to Registrant's Articles of Amendment and
Restatement (Active Country Allocation Portfolio name changed to
Active International Portfolio), filed herewith.

(a)(8) Articles of Amendment to Registrant's Articles of Amendment and
Restatement (Active International Portfolio name changed to
Active International Allocation Portfolio), filed herewith.

(a)(9) Articles of Amendment to Registrant's Articles of Amendment and
Restatement (changing corporate name to Morgan Stanley Dean
Witter Institutional Fund, Inc.), filed herewith.

<PAGE>

(b) Amended and Restated By-Laws, incorporated by reference to
Exhibit 2 to Post- Effective Amendment No. 33 to Registrant's
Registration Statement on Form N- 1A (Registration No.
33-23166), filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000912057-97-007488) on February 28,
1997.

(c)(1) Specimen Security with respect to Morgan Stanley Institutional
Fund, Inc. Class A shares incorporated by reference to Exhibit
1(a) (Amended and Restated Articles of Incorporation), as
amended to date to Post-Effective Amendment No. 26 to
Registrant's Registration Statement (Registration No. 33-23166),
filed with the Securities and Exchange Commission via EDGAR
(Accession No. 0000912057-95-008594) on October 13, 1995 and
Exhibit 2 (Amended and Restated By-Laws), as amended to date to
Post-Effective Amendment No. 33 to Registrant's Registration
Statement, filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000912057-97-007488) on February 28,
1997.

(c)(2) Specimen Security with respect to Morgan Stanley Institutional
Fund, Inc. Class B shares incorporated by reference to Exhibit
1(a) (Amended and Restated Articles of Incorporation), as
amended to date to Post-Effective Amendment No. 26 to
Registrant's Registration Statement (Registration No. 33-23166),
filed with the Securities and Exchange Commission via EDGAR
(Accession No. 0000912057- 95-008594) on October 13, 1995 and
Exhibit 2 (Amended and Restated By- Laws), as amended to date to
Post-Effective Amendment No. 33 to Registrant's Registration
Statement, filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000912057-97-007488) on February 28,
1997.

(d)(1) Investment Advisory Agreement between Registrant and Morgan
Stanley Asset Management Inc., filed herewith.

(d)(2) Investment Sub-Advisory Agreement among Registrant, Morgan
Stanley Asset Management Inc. and Sun Valley Gold Company (with
respect to the Gold Portfolio) is incorporated by reference to
Exhibit 5(i) to Post-Effective Amendment No. 25 to Registrant's
Registration Statement on Form N-1A (Registration No. 33-23166),
filed with the Securities and Exchange Commission via EDGAR
(Accession No. 0000912057-95-005830) on August 1, 1995.

(d)(3) Supplement to Investment Advisory Agreement between Registrant
and Morgan Stanley Asset Management Inc. (adding the U.S. Equity
Plus Portfolio), is incorporated by reference to Exhibit 5(q) to
Post-Effective Amendment No. 38 to Registrant's Registration
Statement on Form N-1A (Registration No. 33-23166), filed with
the Securities and Exchange Commission via EDGAR (Accession No.
0001047469-98-008051) on February 27, 1998.

(d)(4) Supplement to Investment Advisory Agreement between Registrant
and Morgan Stanley Asset Management Inc. (adding the Asian and
European Real Estate Portfolios), is incorporated by reference
to Exhibit 5(r) to Post-Effective Amendment No. 38 to
Registrant's Registration Statement on Form N-1A (Registration
No. 33-23166), filed with the Securities and Exchange Commission
via EDGAR (Accession No. 0001047469-98-008051) on February 27,
1998.

-2-

<PAGE>

(e)(1) Distribution Agreement between Registrant and Morgan Stanley &
Co. Incorporated., incorporated by reference to Exhibit 6(a) to
Post-Effective Amendment No. 25 to Registrant's Registration
Statement on Form N-1A (Registration No. 33-23166), filed with
the Securities and Exchange Commission via EDGAR (Accession No.
0000912057-95-005830) on August 1, 1995.

(e)(2) Supplement to Distribution Agreement between Registrant and
Morgan Stanley & Co. Incorporated, incorporated by reference to
Exhibit 6(b) to Post-Effective Amendment No. 29 to Registrant's
Registration Statement on Form N-1A (Registration No. 33-23166),
filed with the Securities and Exchange Commission via EDGAR
(Accession No. 0000912057-96-007390) on April 30, 1996.

(f) Not Applicable.

(g)(1) Mutual Fund Domestic Custody Agreement between Registrant
and United States Trust Company, incorporated by reference to
Exhibit 8(a) to Post-Effective Amendment No. 25 to Registrant's
Registration Statement on Form N-1A (Registration No. 33-23166),
filed with the Securities and Exchange Commission via EDGAR
(Accession No. 0000912057-95-005830) August 1, 1995.

(g)(2) International Custody Agreement between Registrant and Morgan
Stanley Trust Company, incorporated by reference to Exhibit 8(b)
to Post-Effective Amendment No. 25 to Registrant's Registration
Statement on Form N-1A (Registration No. 33-23166), filed with
the Securities and Exchange Commission via EDGAR (Accession No.
0000912057-95-005830) on August 1, 1995.

(g)(3) Amendment to International Custody Agreement between Registrant
and Morgan Stanley Trust Company, incorporated by reference to
Exhibit 8(c) to Post- Effective Amendment No. 30 to Registrant's
Registration Statement on Form N- 1A (Registration No.
33-23166), filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000912057-96-010828) on May 24, 1996.

(h)(1) Administration Agreement between Registrant and Morgan Stanley
Asset Management Inc., incorporated by reference to Exhibit 9(a)
to Post-Effective Amendment No. 25 to Registrant's Registration
Statement on Form N-1A (Registration No. 33-23166), filed with
the Securities and Exchange Commission via EDGAR (Accession No.
0000912057-95-005830) on August 1, 1995.

(h)(2) Administration Agreement between Registrant and United States
Trust Company, incorporated by reference to Exhibit 9(b) to
Post-Effective Amendment No. 25 to Registrant's Registration
Statement on Form N-1A (Registration No. 33-23166), filed with
the Securities and Exchange Commission via EDGAR (Accession No.
0000912057-95-005830) on August 1, 1995.

(i) Opinion of Counsel, incorporated by reference to Exhibit 10 to
Post-Effective Amendment No. 25 to Registrant's Registration
Statement on Form N-1A (Registration No. 33-23166), filed with
the Securities and Exchange Commission via EDGAR (Accession No.
0000912057-95-005830) on August 1, 1995.

-3-

<PAGE>

(j) Consent of Accountant, to be filed by amendment.

(k) None.

(l) Purchase Agreement, incorporated by reference to Exhibit 13 to
Post-Effective Amendment No. 25 to Registrant's Registration
Statement on Form N-1A (Registration No. 33-23166), filed with
the Securities and Exchange Commission via EDGAR (Accession No.
0000912057-95-005830) on August 1, 1995.

(m)(1) Distribution Plan with respect to the Class B shares (the "Class
B Plan") of the Active Country Allocation Portfolio,
incorporated by reference to Exhibit 15 to Post-Effective
Amendment No. 33 to Registrant's Registration Statement on Form
N-1A (Registration No. 33-23166), filed with Securities and
Exchange Commission via EDGAR (Accession No.
0000912057-97-007488) on February 28, 1997. The following Class
B Plans have been omitted because they are substantially
identical to the one incorporated by reference herein. The
omitted Class B Plans differ from the Class B Plan incorporated
by reference herein only with respect to the portfolio to which
the Class B Plan relates: Fixed Income, Global Fixed Income,
Municipal Bond, Mortgage-Backed Securities, High Yield, Value
Equity, Gold, Global Equity, International Equity, Asian Equity,
European Equity, Japanese Equity, Latin American, Emerging
Markets, Emerging Markets Debt, China Growth, Equity Growth,
Emerging Growth, MicroCap, Aggressive Equity, U.S. Real Estate,
International Magnum, Technology, U.S. Equity Plus, European
Real Estate, Asian Real Estate and Money Market Portfolios.

(n) Financial Data Schedules, filed herewith.

(o) 18f-3 Plan, incorporated by reference to Exhibit 19 to Post-
Effective Amendment No. 33 to Registrant's Registration
Statement on Form N-1A (Registration No. 33- 23166), filed with
the Securities and Exchange Commission via EDGAR (Accession No.
0000912057-97-007488) on February 28, 1997.

(p) Powers of Attorney, incorporated by reference to Exhibit 24 to
Post-Effective Amendment No. 38 to Registrant's Registration
Statement on Form N-1A (Registration No. 33-23166), filed with
the Securities and Exchange Commission via EDGAR (Accession No.
00001047469-98-008051) on February 27, 1998.

Item 24. Persons controlled by or under common control with registrant

Provide a list or diagram of all persons directly or
indirectly controlled by or under common control with the registrant. For any
person controlled by another person, disclose the percentage of voting
securities owned by the immediately controlling person or other basis of that
person's control. For each company, also provide the state or other sovereign
power under the laws of which the company is organized.

None.

-4-

<PAGE>

Item 25. Indemnification

State the general effect of any contract, arrangements or
statute under which any director, officer, underwriter or affiliated person of
the registrant is insured or indemnified against any liability incurred in their
official capacity, other than insurance provided by any director, officer,
affiliated person, or underwriter for their own protection.

Reference is made to Article SEVENTH of the Registrant's
Articles of Incorporation. Insofar as indemnification for liability may be
permitted to trustees, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a trustee, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

Item 26. Business and other connections of the investment adviser.

Describe any other business, profession, vocation or
employment of a substantial nature in which the investment adviser and each
director, officer or partner of the investment adviser, is or has been, engaged
within the last two fiscal years for his or her own account or in the capacity
of director, officer, employee, partner or trustee. (Disclose the name and
principal business address of any company for which a person listed above serves
in the capacity of director, officer, employee, partner or trustee, and the
nature of the relationship.)

<TABLE>
<CAPTION>
NAME AND POSITION WITH MSDW
INVESTMENT MANAGEMENT, INC. NAME OF OTHER COMPANY POSITION WITH OTHER COMPANY
--------------------------- --------------------- ---------------------------
<S> <C> <C>
Barton M. Biggs Morgan Stanley & Co. Managing Director
Chairman, Director and Incorporated
Managing Director

Dennis G. Sherva Morgan Stanley & Co. Managing Director
Director and Managing Incorporated
Director

Harold J. Schaaff, Jr. Morgan Stanley & Co. Principal
General Counsel, Incorporated
Secretary and Principal

Donald P. Ryan Morgan Stanley & Co. Principal
Compliance Officer and Incorporated
Principal

Alexander C. Frank Morgan Stanley & Co. Managing Director
Treasurer Incorporated
</TABLE>

-5-

<PAGE>

<S> <C> <C>
Marna C. Whittington Miller Anderson & Sherrerd, LLP Executive Committee Member
Chief Operating Officer,
Managing Director and
Member of Executive
Committee

Richard B. Worley Miller Anderson & Sherrerd, LLP Portfolio Manager and Executive
President, Director, Committee Member
Portfolio Manager and
Member of Executive
Committee
MAS Fund Distribution, Inc. Registered Representative

Morgan Stanley & Co. Managing Director
Incorporated

Peter D. Caldecott Morgan Stanley Dean Witter Managing Director
Managing Director and Investment Management Limited
Member of Executive
Committee

Thomas L. Bennett Morgan Stanley & Co. Managing Director
Member of Executive Incorporated
Committee and Portfolio
Manager

MAS Fund Distribution, Inc. Director
Miller Anderson & Sherrerd, LLP Portfolio Manager and Executive
Committee Member

Frank P. L. Minard Morgan Stanley & Co. Managing Director
Managing Director and Incorporated
Member of Executive
Committee

Alan E. Goldberg Morgan Stanley & Co. Managing Director
Member of Executive Incorporated
Committee
</TABLE>

In addition, MSDW Investment Management acts as
investment adviser or sub-adviser to the following registered investment
companies: American Advantage International Equity Fund; Fountain Square
International Equity Fund; The Latin American Discovery Fund, Inc.; The
Malaysia Fund, Inc.; Morgan Stanley Africa Investment Fund, Inc.; Morgan
Stanley Asia-Pacific Fund, Inc.; Morgan Stanley Emerging Markets Debt Fund,
Inc.; Morgan Stanley Emerging Markets Fund, Inc.; Morgan Stanley Global
Opportunity Bond Fund, Inc.; Morgan Stanley High Yield Fund, Inc.; Morgan
Stanley Russia and New Europe Fund, Inc.; Morgan Stanley India Investment
Fund, Inc.; certain portfolios of Morgan Stanley Dean Witter Universal Funds,
Inc.; Morgan Stanley Dean Witter Strategic Adviser Fund, Inc.; The Pakistan
Investment Fund, Inc.; The Thai Fund, Inc.; The Turkish Investment Fund,
Inc.; Aggressive Growth and Asset Allocation Fund, Inc.; Accounts of
Principal Variable Contracts Fund, Inc.; certain portfolios of the SunAmerica
Series Trust; Fortis Series Fund, Inc. - Global Asset Allocation Series;
Morgan Stanley Dean Witter International Fund; Morgan Stanley Dean Witter
Internatinonal Small Cap Fund; Morgan Stanley Dean Witter Pacific Growth
Fund, Inc.; Morgan Stanley Dean Witter Real Estate Fund; Morgan Stanley Dean
Witter Variable Investment Series - Pacific Growth Portfolio; Morgan Stanley
Dean Witter Japan Fund, Inc.; Morgan Stanley Dean Witter European Growth Fund
Inc.; Morgan Stanley Dean Witter Variable Investment Series - European Growth
Portfolio; Morgan Stanley Dean Witter Growth Fund; Morgan Stanley Dean Witter
Select Dimensions Investment Series - The Growth Portfolio; Morgan Stanley
Dean Witter Worldwide High Income Fund; Endeavor Series Trust - Endeavor
Money Market Portfolio; Endeavor Series Trust - Endeavor Asset Allocation
Portfolio; EQ Advisors Trust - Morgan Stanley Emerging Markets Equity
Portfolio; Frank Russell Investment Company - Diversified Equity Fund; Frank
Russell Investment Company - Equity I Fund; NASL Series Trust - Global Equity
Trust; New England Zenith Fund - Morgan Stanley International Magnum Equity
Series; North American Funds - Global Equity Fund; Pacific Select Fund - The
International Portfolio; Pacific Select Fund - Real Estate Investment Tusut
("REIT") Portfolio; SEI Institutional Investments Trust - Emerging Markets
Equity Fund; SEI Institutional International Trust - Emerging Markets Equity
Portfolio; Style Select Series Inc. - Large Cap Blend Portfolio; TCW/DW
Emerging Markets Opportunities Trust; Van Kampen World Portfolio Series Trust
- -Global Government Securities Fund; Van Kampen Life Investment Trust - Global
Equity Fund; Van Kampen Life Investment Trust - Real Estate Securities Fund;
Van Kampen Global Managed Assets Fund; Van Kampen Real Estate Securities
Fund; certain portfolios of the Van Kampen Series Fund, Inc.

-6-

<PAGE>

Describe any other business, profession, vocation or
employment of a substantial nature in which the investment sub-adviser, and each
director, officer or partner of the investment sub-adviser, is or has been,
engaged within the last two fiscal years, for his or her own account or in the
capacity of director, officer, employee, partner or trustee. (Disclose the name
and principal business address of any company for which a person listed above
serves in the capacity of director, officer, employee, partner or trustee, and
the nature of the relationship.)

During the last two fiscal years, no director or officer of
Sun Valley Gold Company , the Registrant's investment sub-adviser, has engaged
in any other business, profession, vocation or employment of a substantial
nature other than that of the business of investment management and, through
affiliates, investment banking.

Item 27. Principal underwriters

(a) State the name of each investment company (other than the
registrant) for which each principal underwriter currently distributing
securities of the registrant also acts as a principal underwriter, depositor or
investment adviser.

Morgan Stanley & Co. Incorporated acts as distributor for
Morgan Stanley Dean Witter Institutional Fund, Inc., Morgan
Stanley Dean Witter Universal Funds, Inc. and Morgan Stanley
Dean Witter Strategic Adviser Fund, Inc., all registered
open-end management investment companies.

(b) Provide the information with respect to each director,
officer or partner of each principal underwriter named in answer to item 20.

<TABLE>
<CAPTION>
POSITION AND
OFFICES POSITION AND
NAME AND PRINCIPAL WITH PRINCIPAL OFFICES WITH
BUSINESS ADDRESS* UNDERWRITER REGISTRANT
------------------ -------------- ------------
<S> <C> <C>
Barton M. Biggs Director Chairman and Director

Bruce D. Fiedorek Director and Vice Chairman

Richard B. Fisher Director and Chairman of
the Board

Takeo Kani Director

Peter F. Karches Director, President and
Chief Operating Officer

John J. Mack Director

Robert A. Metzler Director

Stephan F. Newhouse Director and Vice Chairman

Ralph L. Pellecchio Director, General Counsel
and Secretary

Joseph R. Perella Director

Robert G. Scott Director and Chief Financial
Officer

John S. Wadsworth, Jr. Director

Sir David Alan Walker Director

J. Steven W. Ward Director
</TABLE>

------------------------
* 1585 Broadway
New York, New York 10036

Item 28. Location of accounts and records

State the name and address of each person maintaining
principal possession of each account, book or other document required to be
maintained by section 31(a) of the 1940 act [15 U.S.C. 80a-30(a)] and the rules
under that section.

Chase Global Funds Services Company, Registrant's sub-transfer
agent and sub-dividend disbursing agent, P.O. Box 2798, Boston, Massachusetts,
02208-2798, maintains physical possession of each such account, book or other
document of the Fund.

In particular, with respect to the records required by Rule
31a-1(b)(1), Chase Global Funds Services Company maintains physical possession
of all journals containing itemized daily records of all purchases and sales of

-7-

<PAGE>

securities, including sales and redemptions of Fund securities, and also
maintains physical possession all receipts and deliveries of securities
(including certificate numbers if such detail is not recorded by custodian or
transfer agent), all receipts and disbursements of cash, and all other debts and
credits.

In addition, Morgan Stanley Dean Witter Investment
Management Inc., Registrant's investment adviser and administrator, 1221
Avenue of the Americas, New York, New York 10020, maintains possession of the
Fund's corporate organizational records, in addition to certain other records
required by Rule 31a-1(b).

Item 29. Management services

Provide a summary of the substantive provisions of any
management-related service contract not discussed in part A or part B,
disclosing the parties to the contract and the total amount paid and by whom,
for the fund's last three fiscal years.

Not Applicable.

Item 30. Undertakings

In initial registration statements filed under the securities
act, provide an undertaking to file an amendment to the registration statement
with certified financial statements showing the initial capital received before
accepting subscriptions from more than 25 persons if the fund intends to raise
its initial capital under section 14(A)(3)[15U.S.C. 80A-14(A)(3)].

Not Applicable.

-8-

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended
(the "1933 Act"), and the Investment Company Act of 1940, as amended, the
Registrant has duly caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, duly authorized, in the City of New
York and State of New York on January 26, 1999.

MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.

By: /S/ MICHAEL F. KLEIN
--------------------------------
Michael F. Klein
President and Director

Pursuant to the requirements of the 1933 Act, this Amendment to the
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/S/ MICHAEL F. KLEIN Director, President January 26, 1999
- --------------------------------------------
Michael F. Klein (Principal Executive
Officer)

*/S/ BARTON M. BIGGS Director (Chairman) January 26, 1999
- --------------------------------------------
Barton M. Biggs

*/S/ FERGUS REID Director January 26, 1999
- --------------------------------------------
Fergus Reid

*/S/ FREDERICK O. ROBERTSHAW Director January 26, 1999
- --------------------------------------------
Frederick O. Robertshaw

*/S/ ANDREW MCNALLY IV Director January 26, 1999
- --------------------------------------------
Andrew McNally IV

*/S/ JOHN D. BARRETT II Director January 26, 1999
- --------------------------------------------
John D. Barrett II

*/S/ GERARD E. JONES Director January 26, 1999
- --------------------------------------------
Gerard E. Jones

*/S/ SAMUEL T. REEVES Director January 26, 1999
- --------------------------------------------
Samuel T. Reeves

/S/ JOANNA M. HAIGNEY Treasurer January 26, 1999
- --------------------------------------------
Joanna M. Haigney
</TABLE>

*By: /S/ MICHAEL F. KLEIN
Michael F. Klein
Attorney-In-Fact

<PAGE>

MORGAN STANLEY INSTITUTIONAL FUND, INC.

INDEX OF EXHIBITS

<TABLE>
<CAPTION>
EDGAR
EXHIBIT
NUMBER DOCUMENT
- ------- --------
<S> <C> <C>
(a)(1) Registrant's Articles of Amendment and Restatement,
incorporated by reference to Exhibit 1(a) to Post-Effective
Amendment No. 26 to the Registrant's Registration Statement on
Form N-1A (Registration No. 33-23166), filed with the Securities
and Exchange Commission via EDGAR (Accession No.
0000912057-95-008594) on October 13, 1995.

(a)(3) Registrant's Articles Supplementary to Registrant's Articles of
Amendment and Restatement (adding new Technology Portfolio),
incorporated by reference to Exhibit 1(c) to Post- Effective
Amendment No. 30 to Registrant's Registration Statement on Form
N-1A (Registration No. 33-23166), filed with the Securities and
Exchange Commission via EDGAR (Accession No.
0000912057-96-010828) on May 24, 1996.

(a)(4) Registrant's Articles Supplementary to Registrant's Articles of
Amendment and Restatement (adding U.S. Equity Plus Portfolio),
incorporated by reference to Exhibit 1(d) to Post- Effective
Amendment No. 38 to Registrant's Registration Statement on Form
N-1A (Registration No. 33-23166), filed with the Securities and
Exchange Commission via EDGAR (Accession No.
0001047469-98-008051)on February 27, 1998.

(a)(6) Registrant's Articles Supplementary to Registrant's Articles of
Amendment and Restatement (adding Class B shares to the Money
Market Portfolio), incorporated by reference to Exhibit 1(f) to
Post-Effective Amendment No. 38 to Registrant's Registration
Statement on Form N- 1A (Registration No. 33-23166), filed with
the Securities and Exchange Commission via EDGAR (Accession No.
00001047469-98-008051) on February 27, 1998.

EX-99.(a)(7) Articles of Amendment to Registrant's Articles of Amendment and
Restatement (Active Country Allocation Portfolio name changed to
Active International Portfolio), filed herewith.

EX-99.(a)(8) Articles of Amendment to Registrant's Articles of Amendment and
Restatement (Active International Portfolio name changed to
Active International Allocation Portfolio), filed herewith.

EX-99.(a)(9) Articles of Amendment to Registrant's Articles of Amendment and
Restatement (changing corporate name to Morgan Stanley Dean
Witter Institutional Fund, Inc.), filed herewith.

(b) Amended and Restated By-Laws, incorporated by reference to
Exhibit 2 to Post-Effective Amendment No. 33 to Registrant's
Registration Statement on Form N-1A (Registration No. 33-23166),
filed with the Securities and Exchange Commission via EDGAR
(Accession No. 0000912057-97-007488) on February 28, 1997.
</TABLE>

<PAGE>

<S> <C> <C>
(c)(1) Specimen Security with respect to Morgan Stanley Institutional
Fund, Inc. Class A shares incorporated by reference to Exhibit
1(a) (Amended and Restated Articles of Incorporation), as
amended to date to Post-Effective Amendment No. 26 to
Registrant's Registration Statement (Registration No. 33-23166),
filed with the Securities and Exchange Commission via EDGAR
(Accession No. 0000912057-95-008594) on October 13, 1995 and
Exhibit 2 (Amended and Restated By-Laws), as amended to date to
Post-Effective Amendment No. 33 to Registrant's Registration
Statement, filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000912057-97-007488) on February 28,
1997.

(c)(2) Specimen Security with respect to Morgan Stanley Institutional
Fund, Inc. Class B shares incorporated by reference to Exhibit
1(a) (Amended and Restated Articles of Incorporation), as
amended to date to Post-Effective Amendment No. 26 to
Registrant's Registration Statement (Registration No. 33-23166),
filed with the Securities and Exchange Commission via EDGAR
(Accession No. 0000912057-95-008594) on October 13, 1995 and
Exhibit 2 (Amended and Restated By-Laws), as amended to date to
Post-Effective Amendment No. 33 to Registrant's Registration
Statement, filed with the Securities and Exchange Commission via
EDGAR (Accession No. 0000912057-97-007488) on February 28,
1997.

EX-99.(d)(1) Investment Advisory Agreement between Registrant and Morgan
Stanley Asset Management Inc., filed herewith.

(f) Not Applicable.
</TABLE>

<PAGE>

<S> <C> <C>
(g)(1) Mutual Fund Domestic Custody Agreement between Registrant and
United States Trust Company, incorporated by reference to
Exhibit 8(a) to Post-Effective Amendment No. 25 to Registrant's
Registration Statement on Form N-1A (Registration No. 33-23166),
filed with the Securities and Exchange Commission via EDGAR
(Accession No. 0000912057-95- 005830) August 1, 1995.

(g)(2) International Custody Agreement between Registrant and [Morgan
Stanley Trust Company], incorporated by reference to Exhibit
8(b) to Post-Effective Amendment No. 25 to Registrant's
Registration Statement on Form N-1A (Registration No. 33-23166),
filed with the Securities and Exchange Commission via EDGAR
(Accession No. 0000912057-95- 005830) on August 1, 1995.

(g)(3) Amendment to International Custody Agreement between Registrant
and [Morgan Stanley Trust Company], incorporated by reference to
Exhibit 8(c) to Post-Effective Amendment No. 30 to Registrant's
Registration Statement on Form N-1A (Registration No. 33-23166),
filed with the Securities and Exchange Commission via EDGAR
(Accession No. 0000912057-96- 010828) on May 24, 1996.

(j) Consent of Accountant, to be filed by amendment.

(k) None.

<PAGE>

<S> <C> <C>
(m)(1) Distribution Plan with respect to the Class B shares (the "Class
B Plan") of the Active Country Allocation Portfolio,
incorporated by reference to Exhibit 15 to Post-Effective
Amendment No. 33 to Registrant's Registration Statement on Form
N-1A (Registration No. 33-23166), filed with Securities and
Exchange Commission via EDGAR (Accession No.
0000912057-97-007488) on February 28, 1997. The following Class
B Plans have been omitted because they are substantially
identical to the one incorporated by reference herein. The
omitted Class B Plans differ from the Class B Plan incorporated
by reference herein only with respect to the portfolio to which
the Class B Plan relates: Fixed Income, Global Fixed Income,
Municipal Bond, Mortgage-Backed Securities, High Yield, Value
Equity, Gold, Global Equity, International Equity, Asian Equity,
European Equity, Japanese Equity, Latin American, Emerging
Markets, Emerging Markets Debt, China Growth, Equity Growth,
Emerging Growth, MicroCap, Aggressive Equity, U.S. Real Estate,
International Magnum, Technology, U.S. Equity Plus, European
Real Estate, Asian Real Estate and Money Market Portfolios.

EX-27. (n) Financial Data Schedules, filed herewith.

(o) 18f-3 Plan, incorporated by reference to Exhibit 19 to Post-
Effective Amendment No. 33 to Registrant's Registration
Statement on Form N-1A (Registration No. 33-23166), filed with
the Securities and Exchange Commission via EDGAR (Accession No.
0000912057-97- 007488) on February 28, 1997.

<PAGE>

Exhibit (a)(7)

ARTICLES OF AMENDMENT
TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
MORGAN STANLEY INSTITUTIONAL FUND, INC.

MORGAN STANLEY INSTITUTIONAL FUND, INC. (the "Corporation"), a corporation
organized under the laws of the State of Maryland, having its principal place of
business at 1221 Avenue of the Americas, New York, New York 10020, does hereby
certify to the State Department of Assessments and Taxation of Maryland that:

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

SECOND: Pursuant to the authority contained in Section 2-605(a)(4) of the
Maryland General Corporation Law and under authority contained in Article TENTH
of the Articles of Incorporation of the Corporation, a majority of the full
Board of Directors by resolution passed June 25, 1998, have changed the name of
the class of stock designated the "Active Country Allocation Portfolio" to the
"Active International Portfolio."

THIRD: Pursuant to the requirements of Section 2-607 of the Maryland
General Corporation Law, the Board of Directors has determined to file of record
these Articles of Amendment, which Amendment is limited to changes expressly
permitted by Section 2-605 of the Maryland General Corporation Law to be made
without action by the stockholders and which Amendment is solely for the purpose
of changing the name of two classes of stock of the Corporation.

FOURTH: Article FIFTH, Section 3 of the Articles of Incorporation of the
Corporation is hereby amended to read in its entirety as follows:

Pursuant to Section 2-105 of the Maryland General Corporation Law, the
Board of Directors of the Corporation shall have the power to designate one or
more classes of shares of Common Stock, to fix the number of shares in any such
class and to classify or reclassify any unissued shares with respect to such
class. Any such class (subject to any applicable rule, regulation or order of
the Securities and Exchange Commission or other applicable law or regulation)
shall have such preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, terms and conditions
of redemption and other characteristics as the Board may determine in the
absence of contrary determination set forth herein. The aforesaid power shall
include the power to create, by classifying or reclassifying unissued shares in
the aforesaid manner, one or more classes in addition to those initially
designated as named below. Subject to such aforesaid power, the Board of
Directors has designated thirty-two portfolios of the Corporation and for each
has designated two classes of

<PAGE>

shares of Common Stock except the Municipal Money Market and International Small
Cap Portfolios. The names of such classes and the number of shares of Common
Stock classified and allocated to these classes are as follows:

NUMBER OF SHARES
OF COMMON STOCK
NAME OF CLASS CLASSIFIED AND ALLOCATED
- ------------- ------------------------

Money Market Portfolio - Class A . . . . . . . . . . . . . 4,000,000,000 shares
Money Market Portfolio - Class B . . . . . . . . . . . . . 2,000,000,000 shares
Municipal Money Market Portfolio - Class A . . . . . . . . 4,000,000,000 shares
Emerging Growth Portfolio - Class A. . . . . . . . . . . . . 500,000,000 shares
Emerging Growth Portfolio - Class B. . . . . . . . . . . . . 500,000,000 shares
International Equity Portfolio - Class A . . . . . . . . . . 500,000,000 shares
International Equity Portfolio - Class B . . . . . . . . . . 500,000,000 shares
Value Equity Portfolio - Class A . . . . . . . . . . . . . . 500,000,000 shares
Value Equity Portfolio - Class B . . . . . . . . . . . . . . 500,000,000 shares
Fixed Income Portfolio - Class A . . . . . . . . . . . . . . 500,000,000 shares
Fixed Income Portfolio - Class B . . . . . . . . . . . . . . 500,000,000 shares
Balanced Portfolio - Class A . . . . . . . . . . . . . . . . 500,000,000 shares
Balanced Portfolio - Class B . . . . . . . . . . . . . . . . 500,000,000 shares
Global Equity Portfolio - Class A. . . . . . . . . . . . . . 500,000,000 shares
Global Equity Portfolio - Class B. . . . . . . . . . . . . . 500,000,000 shares
Global Fixed Income Portfolio - Class A. . . . . . . . . . . 500,000,000 shares
Global Fixed Income Portfolio - Class B. . . . . . . . . . . 500,000,000 shares
European Equity Portfolio - Class A. . . . . . . . . . . . . 500,000,000 shares
European Equity Portfolio - Class B. . . . . . . . . . . . . 500,000,000 shares
Equity Growth Portfolio - Class A. . . . . . . . . . . . . . 500,000,000 shares
Equity Growth Portfolio - Class B. . . . . . . . . . . . . . 500,000,000 shares
Asian Equity Portfolio - Class A . . . . . . . . . . . . . . 500,000,000 shares
Asian Equity Portfolio - Class B . . . . . . . . . . . . . . 500,000,000 shares
Active International Portfolio - Class A . . . . . . . . . . 500,000,000 shares
Active International Portfolio - Class B . . . . . . . . . . 500,000,000 shares
International Small Cap Portfolio - Class A. . . . . . . . 1,000,000,000 shares
High Yield Portfolio - Class A . . . . . . . . . . . . . . . 500,000,000 shares
High Yield Portfolio - Class B . . . . . . . . . . . . . . . 500,000,000 shares
Emerging Markets Portfolio - Class A . . . . . . . . . . . . 500,000,000 shares
Emerging Markets Portfolio - Class B . . . . . . . . . . . . 500,000,000 shares
Small Cap Value Equity Portfolio - Class A . . . . . . . . . 500,000,000 shares
Small Cap Value Equity Portfolio - Class B . . . . . . . . . 500,000,000 shares
Emerging Markets Debt Portfolio - Class A. . . . . . . . . . 500,000,000 shares
Emerging Markets Debt Portfolio - Class B. . . . . . . . . . 500,000,000 shares
Mortgage-Backed Securities Portfolio - Class A . . . . . . . 500,000,000 shares
Mortgage-Backed Securities Portfolio - Class B . . . . . . . 500,000,000 shares
Municipal Bond Portfolio - Class A . . . . . . . . . . . . . 500,000,000 shares

<PAGE>

Municipal Bond Portfolio - Class B . . . . . . . . . . . . . 500,000,000 shares
Japanese Equity Portfolio - Class A. . . . . . . . . . . . . 500,000,000 shares
Japanese Equity Portfolio - Class B. . . . . . . . . . . . . 500,000,000 shares
Gold Portfolio - Class A . . . . . . . . . . . . . . . . . . 500,000,000 shares
Gold Portfolio - Class B . . . . . . . . . . . . . . . . . . 500,000,000 shares
China Growth Portfolio - Class A . . . . . . . . . . . . . . 500,000,000 shares
China Growth Portfolio - Class B . . . . . . . . . . . . . . 500,000,000 shares
Latin American Portfolio - Class A . . . . . . . . . . . . . 500,000,000 shares
Latin American Portfolio - Class B . . . . . . . . . . . . . 500,000,000 shares
Aggressive Equity Portfolio - Class A. . . . . . . . . . . . 500,000,000 shares
Aggressive Equity Portfolio - Class B. . . . . . . . . . . . 500,000,000 shares
U.S. Real Estate Portfolio - Class A . . . . . . . . . . . . 500,000,000 shares
U.S. Real Estate Portfolio - Class B . . . . . . . . . . . . 500,000,000 shares
MicroCap Portfolio - Class A . . . . . . . . . . . . . . . . 500,000,000 shares
MicroCap Portfolio - Class B . . . . . . . . . . . . . . . . 500,000,000 shares
International Magnum Portfolio - Class A . . . . . . . . . . 500,000,000 shares
International Magnum Portfolio - Class B . . . . . . . . . . 500,000,000 shares
Technology Portfolio - Class A . . . . . . . . . . . . . . . 500,000,000 shares
Technology Portfolio - Class B . . . . . . . . . . . . . . . 500,000,000 shares
U.S. Equity Plus Portfolio - Class A . . . . . . . . . . . . 500,000,000 shares
U.S. Equity Plus Portfolio - Class B . . . . . . . . . . . . 500,000,000 shares
Asian Real Estate Portfolio - Class A. . . . . . . . . . . . 500,000,000 shares
Asian Real Estate Portfolio - Class B. . . . . . . . . . . . 500,000,000 shares
European Real Estate Portfolio - Class A . . . . . . . . . . 500,000,000 shares
European Real Estate Portfolio - Class B . . . . . . . . . . 500,000,000 shares

FIFTH: These Articles of Amendment shall be effective as of the time the
State Department of Assessments and Taxation of Maryland accepts these Articles
of Amendment of record.

<PAGE>

IN WITNESS WHEREOF, Morgan Stanley Institutional Fund, Inc. has caused
these Articles of Amendment to be signed in its corporate name and on its behalf
by its President and its corporate seal to be hereunto affixed and attested by
its Secretary as of the 17th day of July, 1998.

MORGAN STANLEY INSTITUTIONAL FUND, INC.

By: /s/ Michael F. Klein
---------------------------
Michael F. Klein
President

[SEAL]

Attest:

/s/ Valerie Y. Lewis
- -----------------------
Valerie Y. Lewis
Secretary

<PAGE>

THE UNDERSIGNED, President of Morgan Stanley Institutional Fund, Inc.,
who executed on behalf of said corporation the foregoing Articles of Amendment
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said corporation, the foregoing Articles of Amendment to be the
corporate act of said corporation and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth herein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.

/s/ Michael F. Klein
------------------------
Michael F. Klein
President

<PAGE>

Exhibit (a)(8)

ARTICLES OF AMENDMENT
TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
MORGAN STANLEY INSTITUTIONAL FUND, INC.

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

SECOND: Pursuant to the authority contained in Section 2-605(a)(4) of the
Maryland General Corporation Law and under authority contained in Article TENTH
of the Articles of Incorporation of the Corporation, a majority of the full
Board of Directors by resolution passed June 25, 1998, have changed the name of
the class of stock designated the "Active International Portfolio" to the
"Active International Allocation Portfolio."

FOURTH: Article FIFTH, Section 3 of the Articles of Incorporation of the
Corporation is hereby amended to read in its entirety as follows:

<PAGE>

NUMBER OF SHARES
OF COMMON STOCK
NAME OF CLASS CLASSIFIED AND ALLOCATED
- ------------- ------------------------

Money Market Portfolio - Class A . . . . . . . . . . . . . 4,000,000,000 shares
Money Market Portfolio - Class B . . . . . . . . . . . . . 2,000,000,000 shares
Municipal Money Market Portfolio - Class A . . . . . . . . 4,000,000,000 shares
Emerging Growth Portfolio - Class A. . . . . . . . . . . . . 500,000,000 shares
Emerging Growth Portfolio - Class B. . . . . . . . . . . . . 500,000,000 shares
International Equity Portfolio - Class A . . . . . . . . . . 500,000,000 shares
International Equity Portfolio - Class B . . . . . . . . . . 500,000,000 shares
Value Equity Portfolio - Class A . . . . . . . . . . . . . . 500,000,000 shares
Value Equity Portfolio - Class B . . . . . . . . . . . . . . 500,000,000 shares
Fixed Income Portfolio - Class A . . . . . . . . . . . . . . 500,000,000 shares
Fixed Income Portfolio - Class B . . . . . . . . . . . . . . 500,000,000 shares
Balanced Portfolio - Class A . . . . . . . . . . . . . . . . 500,000,000 shares
Balanced Portfolio - Class B . . . . . . . . . . . . . . . . 500,000,000 shares
Global Equity Portfolio - Class A. . . . . . . . . . . . . . 500,000,000 shares
Global Equity Portfolio - Class B. . . . . . . . . . . . . . 500,000,000 shares
Global Fixed Income Portfolio - Class A. . . . . . . . . . . 500,000,000 shares
Global Fixed Income Portfolio - Class B. . . . . . . . . . . 500,000,000 shares
European Equity Portfolio - Class A. . . . . . . . . . . . . 500,000,000 shares
European Equity Portfolio - Class B. . . . . . . . . . . . . 500,000,000 shares
Equity Growth Portfolio - Class A. . . . . . . . . . . . . . 500,000,000 shares
Equity Growth Portfolio - Class B. . . . . . . . . . . . . . 500,000,000 shares
Asian Equity Portfolio - Class A . . . . . . . . . . . . . . 500,000,000 shares
Asian Equity Portfolio - Class B . . . . . . . . . . . . . . 500,000,000 shares
Active International Allocation Portfolio - Class A. . . . . 500,000,000 shares
Active International Allocation Portfolio - Class B. . . . . 500,000,000 shares
International Small Cap Portfolio - Class A. . . . . . . . 1,000,000,000 shares
High Yield Portfolio - Class A . . . . . . . . . . . . . . . 500,000,000 shares
High Yield Portfolio - Class B . . . . . . . . . . . . . . . 500,000,000 shares
Emerging Markets Portfolio - Class A . . . . . . . . . . . . 500,000,000 shares
Emerging Markets Portfolio - Class B . . . . . . . . . . . . 500,000,000 shares
Small Cap Value Equity Portfolio - Class A . . . . . . . . . 500,000,000 shares
Small Cap Value Equity Portfolio - Class B . . . . . . . . . 500,000,000 shares
Emerging Markets Debt Portfolio - Class A. . . . . . . . . . 500,000,000 shares
Emerging Markets Debt Portfolio - Class B. . . . . . . . . . 500,000,000 shares
Mortgage-Backed Securities Portfolio - Class A . . . . . . . 500,000,000 shares
Mortgage-Backed Securities Portfolio - Class B . . . . . . . 500,000,000 shares
Municipal Bond Portfolio - Class A . . . . . . . . . . . . . 500,000,000 shares

<PAGE>

FIFTH: These Articles of Amendment shall be effective as of the time the
State Department of Assessments and Taxation of Maryland accepts these Articles
of Amendment of record.

<PAGE>

MORGAN STANLEY INSTITUTIONAL FUND, INC.

By: /s/ Michael F. Klein
------------------------------
Michael F. Klein
President

[SEAL]

Attest:

/s/ Valerie Y. Lewis
- --------------------
Valerie Y. Lewis
Secretary

<PAGE>

/s/ Michael F. Klein
-----------------------------
Michael F. Klein
President

<PAGE>

Exhibit (a)(9)

ARTICLES OF AMENDMENT
TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
MORGAN STANLEY INSTITUTIONAL FUND, INC.

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

SECOND: Pursuant to the authority contained in Section 2-605(a)(4) of the
Maryland General Corporation Law, a majority of the full Board of Directors by
resolution passed on September 19, 1998, have changed the name of the
Corporation to Morgan Stanley Dean Witter Institutional Fund, Inc.

FOURTH: Article SECOND, of the Amended and Restated Articles of
Incorporation of the Corporation is hereby amended to read in its entirety as
follows:

The name of the Corporation is Morgan Stanley Dean Witter
Institutional Fund, Inc.

FIFTH: These Articles of Amendment shall be effective upon the later of
December 1, 1998 or the time the State Department of Assessments and Taxation of
Maryland accepts these Articles of Amendment of record.

<PAGE>

MORGAN STANLEY INSTITUTIONAL FUND, INC.

By: /s/ Michael F. Klein
---------------------------
Michael F. Klein
President

[SEAL]

Attest:

/s/ Valerie Y. Lewis
- -----------------------
Valerie Y. Lewis
Secretary

<PAGE>

/s/ Michael F. Klein
---------------------------
Michael F. Klein
President

<PAGE>

Exhibit (d)(1)

INVESTMENT ADVISORY AGREEMENT

AGREEMENT made this 1st day of May, 1997 by and between Morgan Stanley
Institutional Fund, Inc., a Maryland corporation (the "Fund") and Morgan Stanley
Asset Management Inc., a Delaware corporation (the "Adviser").

1. DUTIES OF ADVISER. The Fund hereby appoints the Adviser to act as
investment adviser to the Fund's Active Country Allocation Portfolio, Aggressive
Equity Portfolio, Asian Equity Portfolio, Balanced Portfolio, China Growth
Portfolio, Emerging Growth Portfolio, Emerging Markets Portfolio, Emerging
Markets Debt Portfolio, Equity Growth Portfolio, European Equity Portfolio,
Fixed Income Portfolio, Global Equity Portfolio, Global Fixed Income Portfolio,
Gold Portfolio, High Yield Portfolio, International Equity Portfolio,
International Magnum Portfolio, International Small Cap Portfolio, Japanese
Equity Portfolio, Latin American Portfolio, MicroCap Portfolio, Money Market
Portfolio, Mortgage-Backed Securities Portfolio, Municipal Bond Portfolio,
Municipal Money Market Portfolio, Small Cap Value Equity Portfolio, Technology
Portfolio, U.S. Real Estate Portfolio, Value Equity Portfolio and such other
portfolios as may be offered by the Fund (collectively, the "Portfolios"), for
the period and on such terms set forth in this Agreement. The Fund employs the
Adviser to manage the investment and reinvestment of the assets of the Fund's
Portfolios, to continuously review, supervise and administer the investment
program of each of the Portfolios, to determine in its discretion the securities
to be purchased or sold and the portion of each such Portfolio's assets to be
held uninvested, to provide the Fund with records concerning the Adviser's
activities which the Fund is required to maintain, and to render regular reports
to the Fund's officers and Board of Directors concerning the Adviser's discharge
of the foregoing responsibilities. The Adviser shall discharge the foregoing
responsibilities subject to the control of the officers and the Board of
Directors of the Fund, and in compliance with the objectives, policies and
limitations set forth in the Fund's prospectus and applicable laws and
regulations. The Adviser accepts such employment and agrees to render the
services and to provide, at its own expense, the office space, furnishings and
equipment and the personnel required by it to perform the services on the terms
and for the compensation provided herein.

2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of securities for
each of the Fund's Portfolios and is directed to use its best efforts to obtain
the best available price and most favorable execution, except as prescribed
herein. Unless and until otherwise directed by the Board of Directors of the
Fund, the Adviser may also be authorized to effect individual securities
transactions at commission rates in excess of the minimum commission rates
available, if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage or research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Fund.

1
<PAGE>

The execution of such transactions shall not be deemed to represent an unlawful
act or breach of any duty created by this Agreement or otherwise. The Adviser
will promptly communicate to the officers and Directors of the Fund such
information relating to portfolio transactions as they may reasonably request.

3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Section 1 of this Agreement, the Fund shall pay to the
Adviser at the end of each of the Fund's fiscal quarters, an advisory fee
calculated by applying a quarterly rate, based on the following annual
percentage rates, to each Portfolio's average daily net assets for the quarter:

Portfolio Contractual Rate of Advisory Fees
- --------- ---------------------------------
Active Country Allocation Portfolio 0.65%
Aggressive Equity Portfolio 0.80%
Asian Equity Portfolio 0.80%
Balanced Portfolio 0.50%
China Growth Portfolio 1.25%
Emerging Growth Portfolio 1.00%
Emerging Markets Portfolio 1.25%
Emerging Markets Debt Portfolio 1.00%
Equity Growth Portfolio 0.60%
European Equity Portfolio 0.80%
Fixed Income Portfolio 0.35%
Global Equity Portfolio 0.80%
Global Fixed Income Portfolio 0.40%
Gold Portfolio 1.00%
High Yield Portfolio 0.50%
International Equity Portfolio 0.80%
International Magnum Portfolio 0.80%
International Small Cap Portfolio 0.95%
Japanese Equity Portfolio 0.80%
Latin American Portfolio 1.10%
MicroCap Portfolio 1.00%
Money Market Portfolio 0.30%
Mortgage-Backed Securities Portfolio 0.35%
Municipal Bond Portfolio 0.35%
Municipal Money Market Portfolio 0.30%
Small Cap Value Equity Portfolio 0.85%
Technology Portfolio 1.00%
U.S. Real Estate Portfolio 0.80%
Value Equity Portfolio 0.50%

In the event of termination of this Agreement, the fee provided in this
Section shall be computed on the basis of the period ending on the last business
day on which this Agreement is

2
<PAGE>

in effect subject to a pro rata adjustment based on the number of days elapsed
in the current fiscal quarter as a percentage of the total number of days in
such quarter.

4. OTHER SERVICES. At the request of the Fund, the Adviser in its
discretion may make available to the Fund office facilities, equipment,
personnel and other services. Such office facilities, equipment, personnel and
services shall be provided for or rendered by the Adviser and billed to the Fund
at the Adviser's cost.

5. REPORTS. The Fund and the Adviser agree to furnish to each other
current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.

6. STATUS OF ADVISER. The services of the Adviser to the Fund are not to
be deemed exclusive, and the Adviser shall be free to render similar services to
others.

7. LIABILITY OF ADVISER. In the absence of (i) willful misfeasance, bad
faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the Investment Company Act of 1940 ("1940
Act"), the Adviser shall not be subject to any liability whatsoever to the Fund,
or to any shareholder of the Fund, for any error or judgment, mistake of law or
any other act or omission in the course of, or connected with, rendering
services hereunder including, without limitation, for any losses that may be
sustained in connection with the purchase, holding, redemption or sale of any
security on behalf of any Portfolio of the Fund.

8. PERMISSIBLE INTERESTS. Subject to and in accordance with the Articles
of Incorporation of the Fund and the Certificate of Incorporation of the
Adviser, Directors, officers, agents and shareholders of the Fund are or may be
interested in the Adviser (or any successor thereof) as Directors, officers,
agents, shareholders or otherwise; Directors, officers, agents and shareholders
of the Adviser are or may be interested in the Fund as Directors, officers,
shareholders or otherwise; and the Adviser (or any successor) is or may be
interested in the Fund as a shareholder or otherwise; and that the effect of any
such interrelationships shall be governed by said Articles of Incorporation,
Certificate of Incorporation and the provisions of the 1940 Act.

9. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall continue until the earlier of May 1, 1999 or the date of
the first annual or special meeting of the shareholders of the Fund and, if
approved by a majority of the outstanding voting securities of each Portfolio of
the Fund, thereafter shall continue for periods of one year so long as such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Board of Directors of the Fund who are not
parties to this

3
<PAGE>

Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Board of
Directors of the Fund or by vote of a majority of the outstanding voting
securities of each Portfolio of the Fund; PROVIDED HOWEVER, that if the holders
of any Portfolio fail to approve the Agreement as provided herein, the Adviser
may continue to serve in such capacity in the manner and to the extent permitted
by the 1940 Act and Rules thereunder. This Agreement may be terminated by any
Portfolio of the Fund at any time, without the payment of any penalty, by vote
of a majority of the entire Board of Directors of the fund or by vote of a
majority of the outstanding voting securities of the Portfolio on 60 days'
written notice to the Adviser. This Agreement may be terminated by the Adviser
at any time, without the payment of any penalty, upon 90 days' written notice to
the Fund. This agreement will automatically and immediately terminate in the
event of its assignment, PROVIDED that an assignment to a corporate successor to
all of substantially all of the Adviser's business or to a wholly-owned
subsidiary of such corporate successor which does not result in a change of
actual control of the Adviser's business shall not be deemed to be an assignment
for the purposes of this Agreement. Any notice under this Agreement shall be
given in writing, addressed and delivered or mailed postpaid, to the other party
at any office of such party and shall be deemed given when received by the
addressee.

As used in this Section 9, the terms "assignment," "interested persons,"and
"a vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section
2(a)(42) of the 1940 Act.

10. AMENDMENT OF AGREEMENT. This Agreement may be amended by mutual
consent, but the consent of the Fund must be approved (a) by vote of a majority
of those members of the Board of Directors of the Fund who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such amendment, and (b) by vote of a
majority of the outstanding voting securities of each Portfolio of the Fund.

11. USE OF NAME. The Fund agrees that if this Agreement is terminated and
the Adviser shall no longer be the adviser to the Fund, the Fund will, within a
reasonable period of time, change its name to delete reference to "Morgan
Stanley."

12. SEVERABILITY. If any provisions of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

13. APPLICABLE LAW. This Agreement shall be construed in accordance with
the laws of the State of New York, PROVIDED, HOWEVER, that nothing herein shall
be construed as being inconsistent with the 1940 Act.

14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.

4
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized as of the day and year
first written above.

MORGAN STANLEY ASSET MORGAN STANLEY
MANAGEMENT INC. INSTITUTIONAL FUND, INC.

By: /s/ Harold J. Schaaff, Jr. By: /s/ Michael F. Klein
------------------------------ ---------------------------
Name: Harold J. Schaaff, Jr. Name: Michael F. Klein
Title: Principal, General Title: President
Counsel and Secretary

<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
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<PAGE>
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<PAGE>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<PAGE>
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<NAME> MORGAN STANLEY INSTITUTIONAL FUND, INC.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

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