MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
485BPOS, 2000-12-27
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<PAGE>
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 27, 2000

                                                     REGISTRATION NOS.: 33-32519
                                                                        811-5975
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM N-1A
                             REGISTRATION STATEMENT
                        UNDER THE SECURITIES ACT OF 1933                     /X/
                        PRE-EFFECTIVE AMENDMENT NO.                          / /
                        POST-EFFECTIVE AMENDMENT NO. 15                      /X/
                                     AND/OR
              REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
                                  ACT OF 1940                                /X/
                                AMENDMENT NO. 16                             /X/

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

              MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
                        (A MASSACHUSETTS BUSINESS TRUST)
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

                             TWO WORLD TRADE CENTER
                            NEW YORK, NEW YORK 10048
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600

                                BARRY FINK, ESQ.
                             TWO WORLD TRADE CENTER
                            NEW YORK, NEW YORK 10048
                    (NAME AND ADDRESS OF AGENT FOR SERVICE)

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

                                    COPY TO:
                            STUART M. STRAUSS, ESQ.
                              MAYER, BROWN & PLATT
                                 1675 BROADWAY
                            NEW YORK, NEW YORK 10019

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

                 APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
 As soon as practicable after this Post-Effective Amendment becomes effective.

 IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)

             immediately upon filing pursuant to paragraph (b)
-------
   X         on December 29, 2000 pursuant to paragraph (b)
-------
             60 days after filing pursuant to paragraph (a)
-------
             on (date) pursuant to paragraph (a) of rule 485.
-------

           AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS

            -------------------------------------------------------
            -------------------------------------------------------
<PAGE>

                                                  PROSPECTUS - DECEMBER 29, 2000


Morgan Stanley Dean Witter
                                                       CAPITAL GROWTH SECURITIES

                                 [COVER PHOTO]

                               A MUTUAL FUND THAT SEEKS LONG-TERM CAPITAL GROWTH

  The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this PROSPECTUS. Any representation to
                      the contrary is a criminal offense.
<PAGE>
CONTENTS

<TABLE>
<S>                       <C>                                                     <C>
The Fund                  Investment Objective..................................                   1
                          Principal Investment Strategies.......................                   1
                          Principal Risks.......................................                   1
                          Past Performance......................................                   2
                          Fees and Expenses.....................................                   3
                          Additional Investment Strategy Information............                   4
                          Additional Risk Information...........................                   5
                          Fund Management.......................................                   6

Shareholder Information   Pricing Fund Shares...................................                   7
                          How to Buy Shares.....................................                   7
                          How to Exchange Shares................................                   9
                          How to Sell Shares....................................                  10
                          Distributions.........................................                  12
                          Tax Consequences......................................                  13
                          Share Class Arrangements..............................                  14

Financial Highlights      ......................................................                  21

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

                          THIS PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE FUND.
                          PLEASE READ IT CAREFULLY AND KEEP IT FOR FUTURE REFERENCE.
</TABLE>
<PAGE>
[Sidebar]
CAPITAL GROWTH
AN INVESTMENT OBJECTIVE HAVING THE GOAL OF SELECTING SECURITIES WITH THE
POTENTIAL TO RISE IN PRICE RATHER THAN PAY OUT INCOME.
[End Sidebar]

THE FUND

[ICON]  INVESTMENT OBJECTIVE
--------------------------------------------------------------------------------

           Morgan Stanley Dean Witter Capital Growth Securities seeks long-term
           capital growth.


[ICON]  PRINCIPAL INVESTMENT STRATEGIES
--------------------------------------------------------------------------------

                            The Fund will normally invest at least 65% of its
                            assets in common stocks (including depository
                            receipts). The Fund's "Investment Manager," Morgan
                            Stanley Dean Witter Advisors Inc., utilizes a
                            computerized screening process designed to find
                            companies that demonstrate in its view a history of
                            consistent improvement in earnings or cash flow and
                            revenues over the past several years, and that are
                            believed to have solid future earnings or cash flow
                            growth characteristics and attractive valuations.
                            Dividend income is not a primary consideration in
                            this stock selection process. Companies meeting
                            these requirements are potential candidates for
                            investment by the Fund. The Investment Manager may
           modify the screening process and/or may utilize additional or
           different screening processes in connection with the Fund's
           investments.


           In addition, the Fund may invest in fixed-income securities,
           convertible securities, real estate investment trusts (commonly known
           as "REITs") and foreign investments.


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

           In pursuing the Fund's investment objective, the Investment Manager
           has considerable leeway in deciding which investments it buys, holds
           or sells on a day-to-day basis -- and which trading strategies it
           uses. For example, the Investment Manager in its discretion may
           determine to use some permitted trading strategies while not using
           others.

[ICON]  PRINCIPAL RISKS
--------------------------------------------------------------------------------
           There is no assurance that the Fund will achieve its investment
           objective. The Fund's share price will fluctuate with changes in the
           market value of the Fund's portfolio securities. When you sell Fund
           shares, they may be worth less than what you paid for them and,
           accordingly, you can lose money investing in this Fund.
           A principal risk of investing in the Fund is associated with its
           common stock investments. In general, stock values fluctuate in
           response to activities specific to the company as well as general
           market, economic and political conditions. Stock prices can fluctuate
           widely in response to these factors.
           The performance of the Fund also will depend on whether or not the
           Investment Manager is successful in pursuing the Fund's investment
           strategy. The Fund is also

                                                                               1
<PAGE>

           subject to other risks from its permissible investments including the
           risks associated with its fixed-income securities, convertible
           securities, REITs and foreign investments. For more information about
           these risks, see the "Additional Risk Information" section.

           Shares of the Fund are not bank deposits and are not guaranteed or
[Sidebar]  insured by the FDIC or any other government agency.
ANNUAL TOTAL RETURNS
THIS CHART SHOWS HOW THE PERFORMANCE OF THE FUND'S CLASS B SHARES HAS VARIED
FROM YEAR TO YEAR OVER THE PAST 9 CALENDAR YEARS.

AVERAGE ANNUAL
TOTAL RETURNS
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS WITH THOSE OF A
BROAD MEASURE OF MARKET PERFORMANCE OVER TIME. THE FUND'S RETURNS INCLUDE THE
MAXIMUM APPLICABLE SALES CHARGE FOR EACH CLASS AND ASSUME YOU SOLD YOUR SHARES
AT THE END OF EACH PERIOD.

[End Sidebar]

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

ANNUAL TOTAL RETURNS - CALENDAR YEARS

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S>  <C>
1991 47.97%
'92  -0.47%
'93  -9.01%
'94  -3.03%
'95  31.28%
'96  10.67%
'97  25.20%
'98  16.98%
'99  30.09%
</TABLE>


The bar chart reflects the performance of Class B shares; the performance of the
other Classes will differ because the Classes have different ongoing fees. The
performance information in the bar chart does not reflect the deduction of sales
charges; if these amounts were reflected, returns would be less than shown.
Year-to-date total return as of September 30, 2000 was 8.03%.



           During the periods shown in the bar chart, the highest return for a
           calendar quarter was 25.60% (quarter ended December 31, 1999) and the
           lowest return for a calendar quarter was -14.99% (quarter ended
           September 30, 1998).



<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1999)
------------------------------------------------------------------------------
                                                                 LIFE OF FUND
                                     PAST 1 YEAR  PAST 5 YEARS  (SINCE 4/2/90)
<S>                                  <C>          <C>           <C>
------------------------------------------------------------------------------
 Class A(1)                            24.25%          --             --
------------------------------------------------------------------------------
 Class B                               25.15%        22.41%         14.44%
------------------------------------------------------------------------------
 Class C(1)                            29.63%          --             --
------------------------------------------------------------------------------
 Class D(1)                            31.41%          --             --
------------------------------------------------------------------------------
 S&P 500(2)                            21.04%        28.54%         19.13%
------------------------------------------------------------------------------
</TABLE>



1    Class A, C and D commenced operations on July 28, 1997.
2    The Standard & Poor's 500 Index (S&P 500-Registered Trademark-) is a
     broad-based index, the performance of which is based on the performance of
     500 widely-held common stocks chosen for market size, liquidity and
     industry group representation. The Index does not include any expenses,
     fees or charges. The Index is unmanaged and should not be considered an
     investment.


 2
<PAGE>
[Sidebar]
SHAREHOLDER FEES
THESE FEES ARE PAID DIRECTLY FROM YOUR INVESTMENT.

ANNUAL FUND
OPERATING EXPENSES
THESE EXPENSES ARE DEDUCTED FROM THE FUND'S ASSETS AND ARE BASED ON EXPENSES
PAID FOR THE FISCAL YEAR ENDED OCTOBER 31, 2000.

[End Sidebar]

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


<TABLE>
<CAPTION>
                                                              CLASS A   CLASS B   CLASS C   CLASS D
<S>                                                           <C>       <C>       <C>       <C>
---------------------------------------------------------------------------------------------------
 SHAREHOLDER FEES
---------------------------------------------------------------------------------------------------
 Maximum sales charge (load) imposed on purchases (as a
 percentage of offering price)                                 5.25%(1) None      None      None
---------------------------------------------------------------------------------------------------
 Maximum deferred sales charge (load)
 (as a percentage based on the lesser of the offering price
 or net asset value at redemption)                            None(2)    5.00%(3)  1.00%(4) None
---------------------------------------------------------------------------------------------------
 ANNUAL FUND OPERATING EXPENSES
---------------------------------------------------------------------------------------------------
 Management fee                                                0.63%     0.63%     0.63%     0.63%
---------------------------------------------------------------------------------------------------
 Distribution and service (12b-1) fees                         0.25%     1.00%     1.00%    None
---------------------------------------------------------------------------------------------------
 Other expenses                                                0.17%     0.17%     0.17%     0.17%
---------------------------------------------------------------------------------------------------
 Total annual Fund operating expenses                          1.05%     1.80%     1.80%     0.80%
---------------------------------------------------------------------------------------------------
</TABLE>


1    Reduced for purchases of $25,000 and over.
2    Investments that are not subject to any sales charge at the time of
     purchase are subject to a contingent deferred sales charge ("CDSC") of
     1.00% that will be imposed if you sell your shares within one year after
     purchase, except for certain specific circumstances.
3    The CDSC is scaled down to 1.00% during the sixth year, reaching zero
     thereafter. See "Share Class Arrangements" for a complete discussion of the
     CDSC.
4    Only applicable if you sell your shares within one year after purchase.

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

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


<TABLE>
<CAPTION>
                                      IF YOU SOLD YOUR SHARES:             IF YOU HELD YOUR SHARES:
                                 ----------------------------------   ----------------------------------
                                 1 YEAR  3 YEARS  5 YEARS  10 YEARS   1 YEAR  3 YEARS  5 YEARS  10 YEARS
                <S>              <C>     <C>      <C>      <C>        <C>     <C>      <C>      <C>
                ---------------------------------------------------   ----------------------------------
                 CLASS A          $626    $842    $1,074    $1,740     $626    $842    $1,074    $1,740
                ---------------------------------------------------   ----------------------------------
                 CLASS B          $683    $866    $1,175    $2,116     $183    $566    $  975    $2,116
                ---------------------------------------------------   ----------------------------------
                 CLASS C          $283    $566    $  975    $2,116     $183    $566    $  975    $2,116
                ---------------------------------------------------   ----------------------------------
                 CLASS D          $ 82    $255    $  444    $  990     $ 82    $255    $  444    $  990
                ---------------------------------------------------   ----------------------------------
</TABLE>


                                                                               3
<PAGE>
           Long-term shareholders of Class B and Class C may pay more in sales
           charges, including distribution fees, than the economic equivalent of
           the maximum front-end sales charges permitted by the NASD.

[ICON]  ADDITIONAL INVESTMENT STRATEGY INFORMATION
--------------------------------------------------------------------------------

           This section provides additional information relating to the Fund's
           principal investment strategies.



           OTHER INVESTMENTS. The Fund may invest up to 35% of its assets in
           U.S. Government securities, investment grade fixed-income securities,
           preferred securities, securities convertible into common stock and
           REITs. The Fund's fixed-income investments may include zero coupon
           securities, which are purchased at a discount and either (i) pay no
           interest, or (ii) accrue interest, but make no payments until
           maturity.



           FOREIGN SECURITIES. The Fund may also invest up to 25% of its net
           assets in foreign securities. This percentage limitation, however,
           does not apply to securities of foreign companies that are listed in
           the U.S. on a national securities exchange.


           DEFENSIVE INVESTING. The Fund may take temporary "defensive"
           positions in attempting to respond to adverse market conditions. The
           Fund may invest any amount of its assets in cash or money market
           instruments in a defensive posture when the Investment Manager
           believes it is advisable to do so. Although taking a defensive
           posture is designed to protect the Fund from an anticipated market
           downturn, it could have the effect of reducing the benefit from any
           upswing in the market. When the Fund takes a defensive position, it
           may not achieve its investment objective.

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


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


 4
<PAGE>
[ICON]  ADDITIONAL RISK INFORMATION
--------------------------------------------------------------------------------
           This section provides additional information relating to the
           principal risks of investing in the Fund.


           FIXED-INCOME SECURITIES. All fixed-income securities are subject to
           two types of risk: credit risk and interest rate risk. Credit risk
           refers to the possibility that the issuer of a security will be
           unable to make interest payments and/or repay the principal on its
           debt.


           Interest rate risk refers to fluctuations in the value of a
           fixed-income security resulting from changes in the general level of
           interest rates. When the general level of interest rates goes up, the
           prices of most fixed-income securities go down. When the general
           level of interest rates goes down, the prices of most fixed-income
           securities go up. (Zero coupon securities are typically subject to
           greater price fluctuations than comparable securities that pay
           interest.)

           CONVERTIBLE SECURITIES. The Fund also may invest a portion of its
           assets in convertible securities, which are securities that generally
           pay interest and may be converted into common stock. These securities
           may carry risks associated with both common stock and fixed-income
           securities.


           FOREIGN SECURITIES. The Fund's investments in foreign securities
           involve risks that are in addition to the risks associated with
           domestic securities. One additional risk is currency risk. While the
           price of Fund shares is quoted in U.S. dollars, the Fund generally
           converts U.S. dollars to a foreign market's local currency to
           purchase a security in that market. If the value of that local
           currency falls relative to the U.S. dollar, the U.S. dollar value of
           the foreign security will decrease. This is true even if the foreign
           security's local price remains unchanged.



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



           Securities of foreign issuers may be less liquid than comparable
           securities of U.S. issuers and, as such, their price changes may be
           more volatile. Furthermore, foreign exchanges and broker-dealers are
           generally subject to less government and exchange scrutiny and
           regulation than their U.S. counterparts. In addition, differences in


                                                                               5
<PAGE>

           clearance and settlement procedures in foreign markets may occasion
           delays in settlement of the Fund's trades effected in those markets
           and could result in losses to the Fund due to subsequent declines in
[Sidebar]  the value of the securities subject to the trades.
MORGAN STANLEY DEAN WITTER ADVISORS INC.
THE INVESTMENT MANAGER IS WIDELY RECOGNIZED AS A LEADER IN THE MUTUAL FUND
INDUSTRY AND TOGETHER WITH MORGAN STANLEY DEAN WITTER SERVICES
COMPANY INC., ITS WHOLLY-OWNED SUBSIDIARY, HAD APPROXIMATELY $150 BILLION IN
ASSETS UNDER MANAGEMENT AS OF NOVEMBER 30, 2000.

[End Sidebar]


           REITS. REITs pool investors' funds for investments primarily in
           commercial real estate properties. Like mutual funds, REITs have
           expenses, including advisory and administration fees, that are paid
           by their shareholders. As a result, you will absorb duplicate levels
           of fees when the Fund invests in REITs. The performance of any Fund
           REIT holdings ultimately depends on the types of real property in
           which the REITs invest and how well the property is managed. A
           general downturn in real estate values also can hurt REIT
           performance.


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

           The Fund's portfolio is managed within the Investment Manager's
           Growth Group. Peter Hermann, a Vice President of the Investment
           Manager has been the primary portfolio manager of the Fund since
           April 1996. Mr. Hermann has been a portfolio manager with the
           Investment Manager for over five years.


           The Fund pays the Investment Manager a monthly management fee as full
           compensation for the services and facilities furnished to the Fund,
           and for Fund expenses assumed by the Investment Manager. The fee is
           based on the Fund's average daily net assets. For the fiscal year
           ended October 31, 2000 the Fund accrued total compensation to the
           Investment Manager amounting to 0.63% of the Fund's average daily net
           assets.


 6
<PAGE>

[Sidebar]
CONTACTING A FINANCIAL ADVISOR
IF YOU ARE NEW TO THE MORGAN STANLEY DEAN WITTER FAMILY OF FUNDS AND WOULD LIKE
TO CONTACT A FINANCIAL ADVISOR, CALL (877) 937-MSDW (TOLL-FREE) FOR THE
TELEPHONE NUMBER OF THE MORGAN STANLEY DEAN WITTER OFFICE NEAREST YOU. YOU MAY
ALSO ACCESS OUR OFFICE LOCATOR ON OUR INTERNET SITE AT:
www.msdwadvice.com/funds

[End Sidebar]
SHAREHOLDER INFORMATION

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

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

           The value of the Fund's portfolio securities is based on the
           securities' market price when available. When a market price is not
           readily available, including circumstances under which the Investment
           Manager determines that a security's market price is not accurate, a
           portfolio security is valued at its fair value, as determined under
           procedures established by the Fund's Board of Trustees. In these
           cases, the Fund's net asset value will reflect certain portfolio
           securities' fair value rather than their market price. With respect
           to securities that are primarily listed on foreign exchanges, the
           value of the Fund's portfolio securities may change on days when you
           will not be able to purchase or sell your shares.

           An exception to the Fund's general policy of using market prices
           concerns its short-term debt portfolio securities. Debt securities
           with remaining maturities of sixty days or less at the time of
           purchase are valued at amortized cost. However, if the cost does not
           reflect the securities' market value, these securities will be valued
           at their fair value.

[ICON]  HOW TO BUY SHARES
--------------------------------------------------------------------------------
           You may open a new account to buy Fund shares or buy additional Fund
           shares for an existing account by contacting your Morgan Stanley Dean
           Witter Financial Advisor or other authorized financial
           representative. Your Financial Advisor will assist you, step-
           by-step, with the procedures to invest in the Fund. You may also
           purchase shares directly by calling the Fund's transfer agent and
           requesting an application.

           Because every investor has different immediate financial needs and
           long-term investment goals, the Fund offers investors four Classes of
           shares: Classes A, B, C and D. Class D shares are only offered to a
           limited group of investors. Each Class of shares offers a distinct
           structure of sales charges, distribution and service fees, and other
           features that are designed to address a variety of needs. Your
           Financial Advisor or other authorized financial representative can
           help you decide which Class may be most appropriate for you. When
           purchasing Fund shares, you must specify which Class of shares you
           wish to purchase.

                                                                               7
<PAGE>
[Sidebar]
EASYINVEST-SM-
A PURCHASE PLAN THAT ALLOWS YOU TO TRANSFER MONEY AUTOMATICALLY FROM YOUR
CHECKING OR SAVINGS ACCOUNT OR FROM A MONEY MARKET FUND ON A SEMI-MONTHLY,
MONTHLY OR QUARTERLY BASIS. CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL
ADVISOR FOR FURTHER INFORMATION ABOUT THIS SERVICE.
[End Sidebar]

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


<TABLE>
<CAPTION>
                                     MINIMUM INVESTMENT AMOUNTS
                                     -----------------------------------------------------------------------
                                                                                         MINIMUM INVESTMENT
                                                                                         -------------------
                                     INVESTMENT OPTIONS                                  INITIAL  ADDITIONAL
                                     <S>                             <C>                 <C>      <C>
                                     -----------------------------------------------------------------------
                                      Regular accounts                                   $1,000     $100
                                     -----------------------------------------------------------------------
                                      Individual Retirement
                                      Accounts:                      Regular IRAs        $1,000     $100
                                                                     Education IRAs      $  500     $100
                                     -----------------------------------------------------------------------
                                      EASYINVEST-SM-
                                      (Automatically from your
                                      checking or savings
                                      account or Money Market Fund)                      $  100*    $100*
                                     -----------------------------------------------------------------------
</TABLE>



*    Provided your schedule of investments totals $1,000 in twelve months.

           There is no minimum investment amount if you purchase Fund shares
           through: (1) the Investment Manager's mutual fund asset allocation
           plan, (2) a program, approved by the Fund's distributor, in which you
           pay an asset-based fee for advisory, administrative and/ or brokerage
           services, (3) the following programs approved by the Fund's
           distributor: (i) qualified state tuition plans described in
           Section 529 of the Internal Revenue Code and (ii) certain other
           investment programs that do not charge an asset-based fee, or
           (4) employer-sponsored employee benefit plan accounts.


           INVESTMENT OPTIONS FOR CERTAIN INSTITUTIONAL AND OTHER
           INVESTORS/CLASS D SHARES. To be eligible to purchase Class D shares,
           you must qualify under one of the investor categories specified in
           the "Share Class Arrangements" section of this PROSPECTUS.

           SUBSEQUENT INVESTMENTS SENT DIRECTLY TO THE FUND. In addition to
           buying additional Fund shares for an existing account by contacting
           your Morgan Stanley Dean Witter Financial Advisor, you may send a
           check directly to the Fund. To buy additional shares in this manner:

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

           - Make out a check for the total amount payable to: Morgan Stanley
             Dean Witter Capital Growth Securities.

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

 8
<PAGE>
[ICON]  HOW TO EXCHANGE SHARES
--------------------------------------------------------------------------------

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



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


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


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


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

           TELEPHONE EXCHANGES. For your protection when calling Morgan Stanley
           Dean Witter Trust FSB, we will employ reasonable procedures to
           confirm that exchange instructions communicated over the telephone
           are genuine. These procedures may include requiring various forms of
           personal identification such as name, mailing address, social
           security or other tax identification number. Telephone instructions
           also may be recorded.

                                                                               9
<PAGE>
           Telephone instructions will be accepted if received by the Fund's
           transfer agent between 9:00 a.m. and 4:00 p.m. Eastern time on any
           day the New York Stock Exchange is open for business. During periods
           of drastic economic or market changes, it is possible that the
           telephone exchange procedures may be difficult to implement, although
           this has not been the case with the Fund in the past.

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


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


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


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


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

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

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


<TABLE>
<CAPTION>
                OPTIONS             PROCEDURES
                <S>                 <C>
                --------------------------------------------------------------------------------
                 Contact your       To sell your shares, simply call your Morgan Stanley Dean
                 Financial Advisor  Witter Financial Advisor or other authorized financial
                                    representative.
                                    ------------------------------------------------------------
                 [ICON]             Payment will be sent to the address to which the account is
                                    registered, or deposited in your brokerage account.
                --------------------------------------------------------------------------------
</TABLE>


 10
<PAGE>


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


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

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

                                                                              11
<PAGE>
[Sidebar]
TARGETED DIVIDENDS-SM-
YOU MAY SELECT TO HAVE YOUR FUND DISTRIBUTIONS AUTOMATICALLY INVESTED IN OTHER
CLASSES OF FUND SHARES OR CLASSES OF ANOTHER MORGAN STANLEY DEAN WITTER FUND
THAT YOU OWN. CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL ADVISOR FOR
FURTHER INFORMATION ABOUT THIS SERVICE.
[End Sidebar]

           TAX CONSIDERATIONS. Normally, your sale of Fund shares is subject to
           federal and state income tax. You should review the "Tax
           Consequences" section of this PROSPECTUS and consult your own tax
           professional about the tax consequences of a sale.

           REINSTATEMENT PRIVILEGE. If you sell Fund shares and have not
           previously exercised the reinstatement privilege, you may, within 35
           days after the date of sale, invest any portion of the proceeds in
           the same Class of Fund shares at their net asset value and receive a
           pro rata credit for any CDSC paid in connection with the sale.

           INVOLUNTARY SALES. The Fund reserves the right, on sixty days'
           notice, to sell the shares of any shareholder (other than shares held
           in an IRA or 403(b) Custodial Account) whose shares, due to sales by
           the shareholder, have a value below $100, or in the case of an
           account opened through EASYINVEST-SM-, if after 12 months the
           shareholder has invested less than $1,000 in the account.

           However, before the Fund sells your shares in this manner, we will
           notify you and allow you sixty days to make an additional investment
           in an amount that will increase the value of your account to at least
           the required amount before the sale is processed. No CDSC will be
           imposed on any involuntary sale.

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

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

           The Fund declares income dividends separately for each Class.
           Distributions paid on Class A and Class D shares usually will be
           higher than for Class B and Class C because distribution fees that
           Class B and Class C pay are higher. Normally, income dividends are
           distributed to shareholders annually. Capital gains, if any, are
           usually distributed in December. The Fund, however, may retain and
           reinvest any long-term capital gains. The Fund may at times make
           payments from sources other than income or capital gains that
           represent a return of a portion of your investment.


           Distributions are reinvested automatically in additional shares of
           the same Class and automatically credited to your account, unless you
           request in writing that all distributions be paid in cash. If you
           elect the cash option, the Fund will mail a check to you no later
           than seven business days after the distribution is declared. However,
           if you


 12
<PAGE>

           purchase Fund shares through a Financial Advisor within three
           business days prior to the record date for the distribution, the
           distribution will automatically be paid to you in cash, even if you
           did not request to receive all distributions in cash. No interest
           will accrue on uncashed checks. If you wish to change how your
           distributions are paid, your request should be received by the Fund's
           transfer agent, Morgan Stanley Dean Witter Trust FSB, at least five
           business days prior to the record date of the distributions.


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

           Unless your investment in the Fund is through a tax-deferred
           retirement account, such as a 401(k) plan or IRA, you need to be
           aware of the possible tax consequences when:

           - The Fund makes distributions; and

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

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

           Every January, you will be sent a statement (IRS Form 1099-DIV)
           showing the taxable distributions paid to you in the previous year.
           The statement provides information on your dividends and capital
           gains for tax purposes.

           TAXES ON SALES. Your sale of Fund shares normally is subject to
           federal and state income tax and may result in a taxable gain or loss
           to you. A sale also may be subject to local income tax. Your exchange
           of Fund shares for shares of another Morgan Stanley Dean Witter Fund
           is treated for tax purposes like a sale of your original shares and a
           purchase of your new shares. Thus, the exchange may, like a sale,
           result in a taxable gain or loss to you and will give you a new tax
           basis for your new shares.

           When you open your Fund account, you should provide your social
           security or tax identification number on your investment application.
           By providing this information, you will avoid being subject to a
           federal backup withholding tax of 31% on taxable distributions and
           redemption proceeds. Any withheld amount would be sent to the IRS as
           an advance tax payment.

                                                                              13
<PAGE>
[Sidebar]
FRONT-END SALES
CHARGE OR FSC
AN INITIAL SALES CHARGE YOU PAY WHEN PURCHASING CLASS A SHARES THAT IS BASED ON
A PERCENTAGE OF THE OFFERING PRICE. THE PERCENTAGE DECLINES BASED UPON THE
DOLLAR VALUE OF CLASS A SHARES YOU PURCHASE. WE OFFER THREE WAYS TO REDUCE YOUR
CLASS A SALES CHARGES - THE COMBINED PURCHASE PRIVILEGE, RIGHT OF ACCUMULATION
AND LETTER OF INTENT.
[End Sidebar]

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

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


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


<TABLE>
<CAPTION>
                                                                     MAXIMUM
                CLASS  SALES CHARGE                              ANNUAL 12B-1 FEE
                <S>    <C>                                       <C>
                -----------------------------------------------------------------
                 A     Maximum 5.25% initial sales charge
                       reduced for purchase of $25,000 or more;
                       shares sold without an initial sales
                       charge are generally subject to a 1.0%
                       CDSC during the first year                        0.25%
                -----------------------------------------------------------------
                 B     Maximum 5.0% CDSC during the first year
                       decreasing to 0% after six years                  1.0%
                -----------------------------------------------------------------
                 C     1.0% CDSC during the first year                   1.0%
                -----------------------------------------------------------------
                 D     None                                           None
                -----------------------------------------------------------------
</TABLE>

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

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

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

 14
<PAGE>
           The reduced sales charge schedule is applicable to purchases of
           Class A shares in a single transaction by:

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

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

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

           - Tax-exempt organizations.

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

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


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



           You must notify your Morgan Stanley Dean Witter Financial Advisor or
           other authorized financial representative (or Morgan Stanley Dean
           Witter Trust FSB if you purchase directly through the Fund), at the
           time a purchase order is placed, that the purchase qualifies for the
           reduced sales charge under the Right of Accumulation. Similar
           notification must be made in writing when an order is placed by mail.
           The reduced sales charge will not be granted if: (i) notification is
           not furnished at the time of the order; or (ii) a review of the
           records of Dean Witter Reynolds or other authorized dealer of Fund
           shares or the Fund's transfer agent does not confirm your represented
           holdings.



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


                                                                              15
<PAGE>
           including a front-end sales charge. You can obtain a letter of intent
           by contacting your Morgan Stanley Dean Witter Financial Advisor or
           other authorized financial representative, or by calling
           (800) 869-NEWS. If you do not achieve the stated investment goal
           within the thirteen-month period, you are required to pay the
           difference between the sales charges otherwise applicable and sales
           charges actually paid, which may be deducted from your investment.

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

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

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


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



           - Employer-sponsored employee benefit plans, whether or not qualified
             under the Internal Revenue Code, for which Morgan Stanley Dean
             Witter Trust FSB serves as trustee or Morgan Stanley Dean Witter's
             Retirement Plan Services serves as recordkeeper under a written
             Recordkeeping Services Agreement (MSDW Eligible Plans) which have
             at least 200 eligible employees.


           - An MSDW Eligible Plan whose Class B shares have converted to
             Class A shares, regardless of the plan's asset size or number of
             eligible employees.

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


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


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

 16
<PAGE>
[Sidebar]
CONTINGENT DEFERRED SALES
CHARGE OR CDSC
A FEE YOU PAY WHEN YOU SELL SHARES OF CERTAIN MORGAN STANLEY DEAN WITTER FUNDS
PURCHASED WITHOUT AN INITIAL SALES CHARGE. THIS FEE DECLINES THE LONGER YOU HOLD
YOUR SHARES AS SET FORTH IN THE TABLE.
[End Sidebar]

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

<TABLE>
<CAPTION>
                                                                               CDSC AS A PERCENTAGE
                                     YEAR SINCE PURCHASE PAYMENT MADE           OF AMOUNT REDEEMED
                                     <S>                                       <C>
                                     --------------------------------------------------------------
                                      First                                                5.0%
                                     --------------------------------------------------------------
                                      Second                                               4.0%
                                     --------------------------------------------------------------
                                      Third                                                3.0%
                                     --------------------------------------------------------------
                                      Fourth                                               2.0%
                                     --------------------------------------------------------------
                                      Fifth                                                2.0%
                                     --------------------------------------------------------------
                                      Sixth                                                1.0%
                                     --------------------------------------------------------------
                                      Seventh and thereafter                        None
                                     --------------------------------------------------------------
</TABLE>

           Each time you place an order to sell or exchange shares, shares with
           no CDSC will be sold or exchanged first, then shares with the lowest
           CDSC will be sold or exchanged next. For any shares subject to a
           CDSC, the CDSC will be assessed on an amount equal to the lesser of
           the current market value or the cost of the shares being sold.

           CDSC WAIVERS. A CDSC, if otherwise applicable, will be waived in the
           case of:

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

           - Sales in connection with the following retirement plan
             "distributions:" (i) lump-sum or other distributions from a
             qualified corporate or self-employed retirement plan following
             retirement (or, in the case of a "key employee" of a "top heavy"
             plan, following attainment of age 59 1/2); (ii) distributions from
             an IRA or 403(b) Custodial Account following attainment of age
             59 1/2; or (iii) a tax-free return of an excess IRA contribution (a
             "distribution" does not include a direct transfer of IRA,
             403(b) Custodial Account or retirement plan assets to a successor
             custodian or trustee).

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


           - Sales of shares in connection with the Systematic Withdrawal Plan
             of up to 12% annually of the value of each fund from which Plan
             sales are made. The percentage is determined on the date you
             establish the Systematic Withdrawal Plan and based on the next
             calculated share price. You may have this CDSC waiver applied in
             amounts up to 1% per month, 3% per quarter, 6% semi-annually or 12%
             annually. Shares with no CDSC will be sold first, followed by those
             with the lowest CDSC. As such, the waiver


                                                                              17
<PAGE>

             benefit will be reduced by the amount of your shares that are not
             subject to a CDSC. If you suspend your participation in the Plan,
             you may later resume Plan payments without requiring a new
             determination of the account value for the 12% CDSC waiver.



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


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

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

           DISTRIBUTION FEE. Class B shares are subject to an annual 12b-1 fee
           of 1.0% of the lesser of: (a) the average daily aggregate gross
           purchases by all shareholders of the Fund's Class B shares since the
           inception of the Fund (not including reinvestments of dividends or
           capital gains distributions), less the average daily aggregate net
           asset value of the Fund's Class B shares sold by all shareholders
           since the Fund's inception upon which a CDSC has been imposed or
           waived, or (b) the average daily net assets of Class B.

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

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

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

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

 18
<PAGE>
           EXCHANGING SHARES SUBJECT TO A CDSC. There are special considerations
           when you exchange Fund shares that are subject to a CDSC. When
           determining the length of time you held the shares and the
           corresponding CDSC rate, any period (starting at the end of the
           month) during which you held shares of a fund that does NOT charge a
           CDSC WILL NOT BE COUNTED. Thus, in effect the "holding period" for
           purposes of calculating the CDSC is frozen upon exchanging into a
           fund that does not charge a CDSC.


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



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


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

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

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

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

                                                                              19
<PAGE>

           - Persons participating in a fee-based investment program (subject to
             all of its terms and conditions, including termination fees,
             mandatory sale or transfer restrictions on termination) approved by
             the Fund's distributor pursuant to which they pay an asset-based
             fee for investment advisory, administrative and/or brokerage
             services. With respect to Class D shares held through the Morgan
             Stanley Dean Witter Choice Program, at such time as those Fund
             shares are no longer held through the program, the shares will be
             automatically converted into Class A shares (which are subject to
             higher expenses than Class D shares) based on the then current
             relative net asset values of the two classes.



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


           - Employee benefit plans maintained by Morgan Stanley Dean Witter &
             Co. or any of its subsidiaries for the benefit of certain employees
             of Morgan Stanley Dean Witter & Co. and its subsidiaries.

           - Certain unit investment trusts sponsored by Dean Witter Reynolds.

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

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


           MEETING CLASS D ELIGIBILITY MINIMUMS. To meet the $5 million
           ($25 million for MSDW Eligible Plans) initial investment to qualify
           to purchase Class D shares you may combine: (1) purchases in a single
           transaction of Class D shares of the Fund and other Morgan Stanley
           Dean Witter Multi-Class Funds; and/or (2) previous purchases of
           Class A and Class D shares of Multi-Class Funds and shares of FSC
           Funds you currently own, along with shares of Morgan Stanley Dean
           Witter Funds you currently own that you acquired in exchange for
           those shares.


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


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


 20
<PAGE>
FINANCIAL HIGHLIGHTS


The financial highlights table is intended to help you understand the Fund's
financial performance for the periods indicated. Certain information reflects
financial results for a single Fund share throughout each year. The total
returns in the table represent the rate an investor would have earned or lost on
an investment in the Fund (assuming reinvestment of all dividends and
distributions).



The information for the fiscal year ended October 31, 2000 has been audited by
Deloitte & Touche LLP, independent auditors, whose report, along with the Fund's
financial statements, is included in the annual report, which is available upon
request. The financial highlights for the prior fiscal periods have been audited
by other independent accountants.



<TABLE>
<CAPTION>
                                                                                           FOR THE PERIOD
                                                    FOR THE YEAR ENDED OCTOBER 31,         JULY 28, 1997*
                                                   ---------------------------------          THROUGH
                                                    2000         1999         1998        OCTOBER 31, 1997
<S>                                                <C>          <C>          <C>          <C>
----------------------------------------------------------------------------------------------------------
 CLASS A SHARES++
----------------------------------------------------------------------------------------------------------

 SELECTED PER SHARE DATA
----------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period              $16.91       $14.68       $18.75            $18.10
----------------------------------------------------------------------------------------------------------
 INCOME (LOSS) FROM INVESTMENT OPERATIONS:
    Net investment loss                             (0.03)       (0.04)       (0.11)            (0.04)
    Net realized and unrealized gain (loss)          3.11         3.98        (0.55)             0.69
                                                   ------       ------       ------            ------
 Total income (loss) from investment
 operations                                          3.08         3.94        (0.66)             0.65
----------------------------------------------------------------------------------------------------------
 Less distributions from net realized gain          (4.43)       (1.71)       (3.41)               --
----------------------------------------------------------------------------------------------------------
 Net asset value, end of period                    $15.56       $16.91       $14.68            $18.75
----------------------------------------------------------------------------------------------------------

 TOTAL RETURN+                                      20.43 %      29.74 %      (2.84)%            3.59 %(1)
----------------------------------------------------------------------------------------------------------

 RATIOS TO AVERAGE NET ASSETS:
----------------------------------------------------------------------------------------------------------
 Expenses                                            1.05 %(3)    1.06 %(3)    1.09 %(3)         1.12 %(2)
----------------------------------------------------------------------------------------------------------
 Net investment loss                                (0.21)%(3)   (0.28)%(3)   (0.69)%(3)        (0.82)%(2)
----------------------------------------------------------------------------------------------------------

 SUPPLEMENTAL DATA:
----------------------------------------------------------------------------------------------------------
 Net assets, end of period, in thousands           $6,908       $5,212       $3,403            $1,684
----------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                              376 %        557 %        230 %             123 %(1)
----------------------------------------------------------------------------------------------------------
</TABLE>


* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

                                                                              21
<PAGE>


<TABLE>
<CAPTION>
                                                                    FOR THE YEAR ENDED OCTOBER 31,
                                                   ----------------------------------------------------------------
                                                    2000++        1999++        1998++       1997*++         1996
<S>                                                <C>           <C>           <C>           <C>           <C>
-------------------------------------------------------------------------------------------------------------------
 CLASS B SHARES
-------------------------------------------------------------------------------------------------------------------

 SELECTED PER SHARE DATA:
-------------------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period              $  16.58      $  14.53      $  18.71      $  16.98      $  14.40
-------------------------------------------------------------------------------------------------------------------
 INCOME (LOSS) FROM INVESTMENT OPERATIONS:
    Net investment loss                               (0.15)        (0.17)        (0.23)        (0.21)        (0.11)
    Net realized and unrealized gain (loss)            3.04          3.93         (0.54)         4.68          2.69
                                                   --------      --------      --------      --------      --------
 Total income (loss) from investment
 operations                                            2.89          3.76         (0.77)         4.47          2.58
-------------------------------------------------------------------------------------------------------------------
 Less distributions from net realized gain            (4.43)        (1.71)        (3.41)        (2.74)           --
-------------------------------------------------------------------------------------------------------------------
 Net asset value, end of period                    $  15.04      $  16.58      $  14.53      $  18.71      $  16.98
-------------------------------------------------------------------------------------------------------------------

 TOTAL RETURN+                                        19.50 %       28.70 %       (3.56)%       31.21 %       17.92 %
-------------------------------------------------------------------------------------------------------------------

 RATIOS TO AVERAGE NET ASSETS:
-------------------------------------------------------------------------------------------------------------------
 Expenses                                              1.80 %(1)     1.86 %(1)     1.84 %(1)     1.84 %        1.84 %
-------------------------------------------------------------------------------------------------------------------
 Net investment loss                                  (0.96)%(1)    (1.08)%(1)    (1.44)%(1)    (1.26)%       (0.64)%
-------------------------------------------------------------------------------------------------------------------

 SUPPLEMENTAL DATA:
-------------------------------------------------------------------------------------------------------------------
 Net assets, end of period, in thousands           $504,311      $469,991      $441,787      $522,276      $506,571
-------------------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                                376 %         557 %         230 %         123 %          72 %
-------------------------------------------------------------------------------------------------------------------
</TABLE>


* Prior to July 28, 1997, the Fund issued one class of shares. All shares of the
Fund held prior to that date, other than shares held by certain employee benefit
plans established by Dean Witter Reynolds Inc., have been designated as Class B
shares. Shares held by those employee benefit plans prior July 28, 1997 have
been designated Class D shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Reflects overall Fund ratios for investment income and non-class specific
expenses.

 22
<PAGE>

<TABLE>
<CAPTION>
                                                                                           FOR THE PERIOD
                                                    FOR THE YEAR ENDED OCTOBER 31,         JULY 28, 1997*
                                                   ---------------------------------          THROUGH
                                                    2000         1999         1998        OCTOBER 31, 1997
<S>                                                <C>          <C>          <C>          <C>
----------------------------------------------------------------------------------------------------------
 CLASS C SHARES++
----------------------------------------------------------------------------------------------------------

 SELECTED PER SHARE DATA:
----------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period              $16.64       $14.53       $18.71            $18.10
----------------------------------------------------------------------------------------------------------
 INCOME (LOSS) FROM INVESTMENT OPERATIONS:
    Net investment loss                             (0.15)       (0.12)       (0.23)            (0.07)
    Net realized and unrealized gain (loss)          3.06         3.94        (0.54)             0.68
                                                   ------       ------       ------            ------
 Total income (loss) from investment
 operations                                          2.91         3.82        (0.77)             0.61
----------------------------------------------------------------------------------------------------------
 Less distributions from net realized gain          (4.43)       (1.71)       (3.41)               --
----------------------------------------------------------------------------------------------------------
 Net asset value, end of period                    $15.12       $16.64       $14.53            $18.71
----------------------------------------------------------------------------------------------------------

 TOTAL RETURN+                                      19.56 %      29.17 %      (3.56)%            3.37 %(1)
----------------------------------------------------------------------------------------------------------

 RATIOS TO AVERAGE NET ASSETS:
----------------------------------------------------------------------------------------------------------
 Expenses                                            1.80 %(3)    1.53 %(3)    1.84 %(3)         1.85 %(2)
----------------------------------------------------------------------------------------------------------
 Net investment loss                                (0.96)%(3)   (0.75)%(3)   (1.44)%(3)        (1.54)%(2)
----------------------------------------------------------------------------------------------------------

 SUPPLEMENTAL DATA:
----------------------------------------------------------------------------------------------------------
 Net assets, end of period, in thousands           $2,433         $692         $964              $389
----------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                              376 %        557 %        230 %             123 %(1)
----------------------------------------------------------------------------------------------------------
</TABLE>

* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

                                                                              23
<PAGE>

<TABLE>
<CAPTION>
                                                                                           FOR THE PERIOD
                                                    FOR THE YEAR ENDED OCTOBER 31,         JULY 28, 1997*
                                                   ---------------------------------          THROUGH
                                                    2000         1999         1998        OCTOBER 31, 1997
<S>                                                <C>          <C>          <C>          <C>
----------------------------------------------------------------------------------------------------------
 CLASS D SHARES++
----------------------------------------------------------------------------------------------------------

 SELECTED PER SHARE DATA:
----------------------------------------------------------------------------------------------------------
 Net asset value, beginning of period              $ 17.01      $ 14.73      $ 18.76           $18.10
----------------------------------------------------------------------------------------------------------
 INCOME (LOSS) FROM INVESTMENT OPERATIONS:
    Net investment income (loss)                      0.01        (0.01)       (0.07)           (0.02)
    Net realized and unrealized gain (loss)           3.13         4.00        (0.55)            0.68
                                                   -------      -------      -------           ------
 Total income (loss) from investment
 operations                                           3.14         3.99        (0.62)            0.66
----------------------------------------------------------------------------------------------------------
 Less distributions from net realized gain           (4.43)       (1.71)       (3.41)              --
----------------------------------------------------------------------------------------------------------
 Net asset value, end of period                    $ 15.72      $ 17.01      $ 14.73           $18.76
----------------------------------------------------------------------------------------------------------

 TOTAL RETURN+                                       20.74 %      30.00 %      (2.59)%           3.65 %(1)
----------------------------------------------------------------------------------------------------------

 RATIOS TO AVERAGE NET ASSETS:
----------------------------------------------------------------------------------------------------------
 Expenses                                             0.80 %(3)    0.86 %(3)    0.84 %(3)        0.82 %(2)
----------------------------------------------------------------------------------------------------------
 Net investment income (loss)                         0.04 %(3)   (0.08)%(3)   (0.44)%(3)       (0.50)%(2)
----------------------------------------------------------------------------------------------------------

 SUPPLEMENTAL DATA:
----------------------------------------------------------------------------------------------------------
 Net assets, end of period, in thousands           $60,792      $39,785      $38,840          $36,863
----------------------------------------------------------------------------------------------------------
 Portfolio turnover rate                               376 %        557 %        230 %            123 %(1)
----------------------------------------------------------------------------------------------------------
</TABLE>

* The date shares were first issued. Shareholders who held shares of the Fund
prior to July 28, 1997 (the date the Fund converted to a multiple class share
structure) should refer to the Financial Highlights of Class B to obtain the
historical per share data and ratio information of their shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

 24
<PAGE>
MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS

        The Morgan Stanley Dean Witter Family of Funds offers investors a wide
        range of investment choices. Come on in and meet the family!

--------------------------------------------------------------------------------
 GROWTH FUNDS
---------------------------------

GROWTH FUNDS
Aggressive Equity Fund

All Star Growth Fund

American Opportunities Fund
Capital Growth Securities
Developing Growth Securities
Growth Fund
Market Leader Trust
Mid-Cap Equity Trust

New Discoveries Fund

Next Generation Trust
Small Cap Growth Fund
Special Value Fund

Tax-Managed Growth Fund

21st Century Trend Fund

THEME FUNDS
Financial Services Trust
Health Sciences Trust
Information Fund
Natural Resource Development Securities

Technology Fund


GLOBAL/INTERNATIONAL FUNDS
Competitive Edge Fund - "Best Ideas"
 Portfolio
European Growth Fund
Fund of Funds - International Portfolio
International Fund
International SmallCap Fund
Japan Fund
Latin American Growth Fund
Pacific Growth Fund

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

 GROWTH & INCOME FUNDS

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


GROWTH & INCOME FUNDS

Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
Equity Fund
Fund of Funds - Domestic Portfolio

Income Builder Fund

S&P 500 Index Fund
S&P 500 Select Fund
Strategist Fund
Total Market Index Fund
Total Return Trust
Value Fund
Value-Added Market Series/Equity Portfolio

THEME FUNDS
Real Estate Fund
Utilities Fund

GLOBAL FUNDS
Global Dividend Growth Securities
Global Utilities Fund

--------------------------------------------------------------------------------
 INCOME FUNDS
---------------------------------

GOVERNMENT INCOME FUNDS
Federal Securities Trust
Short-Term U.S. Treasury Trust
U.S. Government Securities Trust

DIVERSIFIED INCOME FUNDS
Diversified Income Trust

CORPORATE INCOME FUNDS
High Yield Securities
Intermediate Income Securities
Short-Term Bond Fund (NL)

GLOBAL INCOME FUNDS
North American Government Income Trust
World Wide Income Trust

TAX-FREE INCOME FUNDS
California Tax-Free Income Fund
Hawaii Municipal Trust (FSC)
Limited Term Municipal Trust (NL)
Multi-State Municipal Series Trust (FSC)
New York Tax-Free Income Fund
Tax-Exempt Securities Trust

--------------------------------------------------------------------------------
 MONEY MARKET FUNDS
---------------------------------

TAXABLE MONEY MARKET FUNDS
Liquid Asset Fund (MM)
U.S. Government Money Market Trust (MM)

TAX-FREE MONEY MARKET FUNDS
California Tax-Free Daily Income Trust (MM)

New York Municipal Money Market Trust (MM)

Tax-Free Daily Income Trust (MM)


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


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

                                                  PROSPECTUS - DECEMBER 29, 2000


Additional information about the Fund's investments is available in the Fund's
ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS. In the Fund's ANNUAL REPORT, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. The
Fund's STATEMENT OF ADDITIONAL INFORMATION also provides additional information
about the Fund. The STATEMENT OF ADDITIONAL INFORMATION is incorporated herein
by reference (legally is part of this PROSPECTUS). For a free copy of any of
these documents, to request other information about the Fund, or to make
shareholder inquiries, please call:

                                 (800) 869-NEWS

You also may obtain information about the Fund by calling your Morgan Stanley
Dean Witter Financial Advisor or by visiting our Internet site at:
www.msdw.com/individual/funds


Information about the Fund (including the STATEMENT OF ADDITIONAL INFORMATION)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (202) 942-8090. Reports and
other information about the Fund are available on the EDGAR Database on the
SEC's Internet site (www.sec.gov) and copies of this information may be
obtained, after paying a duplicating fee, by electronic request at the following
E-mail address: [email protected], or by writing the Public Reference Section
of the SEC, Washington, DC 20549-0102.


 TICKER SYMBOLS:


  CLASS A:   CAPAX      CLASS C:   CAPCX
--------------------  --------------------

  CLASS B:   CAPBX      CLASS D:   CAPDX
--------------------  --------------------



(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-5975)

Morgan Stanley Dean Witter
                                                       CAPITAL GROWTH SECURITIES

                               [BACK COVER PHOTO]

                                                        A MUTUAL FUND THAT SEEKS
                                                        LONG-TERM CAPITAL GROWTH
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION


DECEMBER 29, 2000

                                                           MORGAN STANLEY DEAN
                                                           WITTER
                                                           CAPITAL GROWTH
                                                           SECURITIES

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


    This STATEMENT OF ADDITIONAL INFORMATION is not a PROSPECTUS. The PROSPECTUS
(dated December 29, 2000) for Morgan Stanley Dean Witter Capital Growth
Securities may be obtained without charge from the Fund at its address or
telephone number listed below or from Dean Witter Reynolds at any of its branch
offices.



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

<PAGE>
TABLE OF CONTENTS
--------------------------------------------------------------------------------


<TABLE>
<S>                                                           <C>
I. Fund History.............................................    4

II. Description of the Fund and Its Investments and Risks...    4
  A. Classification.........................................    4
  B. Investment Strategies and Risks........................    4
  C. Fund Policies/Investment Restrictions..................   13

III. Management of the Fund.................................   14
  A. Board of Trustees......................................   14
  B. Management Information.................................   14
  C. Compensation...........................................   19

IV. Control Persons and Principal Holders of Securities.....   21

V. Investment Management and Other Services.................   21
  A. Investment Manager.....................................   21
  B. Principal Underwriter..................................   22
  C. Services Provided by the Investment Manager............   22
  D. Dealer Reallowances....................................   23
  E. Rule 12b-1 Plan........................................   23
  F. Other Service Providers................................   28
  G. Codes of Ethics........................................   28

VI. Brokerage Allocation and Other Practices................   28
  A. Brokerage Transactions.................................   28
  B. Commissions............................................   29
  C. Brokerage Selection....................................   29
  D. Directed Brokerage.....................................   30
  E. Regular Broker-Dealers.................................   30

VII. Capital Stock and Other Securities.....................   30

VIII. Purchase, Redemption and Pricing of Shares............   31
  A. Purchase/Redemption of Shares..........................   31
  B. Offering Price.........................................   32

IX. Taxation of the Fund and Shareholders...................   33

X. Underwriters.............................................   35

XI. Calculation of Performance Data.........................   35

XII. Financial Statements...................................   36
</TABLE>


                                       2
<PAGE>
GLOSSARY OF SELECTED DEFINED TERMS
--------------------------------------------------------------------------------

    The terms defined in this glossary are frequently used in this STATEMENT OF
ADDITIONAL INFORMATION (other terms used occasionally are defined in the text of
the document).

"CUSTODIAN"--The Bank of New York.

"DEAN WITTER REYNOLDS"--Dean Witter Reynolds Inc., a wholly-owned broker-dealer
subsidiary of MSDW.

"DISTRIBUTOR"--Morgan Stanley Dean Witter Distributors Inc., a wholly-owned
broker-dealer subsidiary of MSDW.

"FINANCIAL ADVISORS"--Morgan Stanley Dean Witter authorized financial services
representatives.


"FUND"--Morgan Stanley Dean Witter Capital Growth Securities, a registered
open-end investment company.


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


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


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

"MORGAN STANLEY DEAN WITTER FUNDS"--Registered investment companies (i) for
which the Investment Manager serves as the investment advisor and (ii) that hold
themselves out to investors as related companies for investment and investor
services.

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

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

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

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

                                       3
<PAGE>
I. FUND HISTORY
--------------------------------------------------------------------------------

    The Fund was organized as a Massachusetts business trust, under a
Declaration of Trust, on December 8, 1989, with the name Dean Witter Capital
Growth Securities. Effective June 22, 1998, the Fund's name was changed to
Morgan Stanley Dean Witter Capital Growth Securities.

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

A. CLASSIFICATION

    The Fund is an open-end, diversified management investment company whose
investment objective is long-term capital growth.

B. INVESTMENT STRATEGIES AND RISKS

    The following discussion of the Fund's investment strategies and risks
should be read with the sections of the Fund's PROSPECTUS titled "Principal
Investment Strategies," "Principal Risks," "Additional Investment Strategy
Information," and "Additional Risk Information."

    FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS.  The Fund may enter into
forward foreign currency exchange contracts ("forward contracts") as a hedge
against fluctuations in future foreign exchange rates. The Fund may conduct its
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market, or through
entering into forward contracts to purchase or sell foreign currencies. A
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 and investment banks) and their
customers. Forward contracts only will be entered into with United States banks
and their foreign branches, insurance companies and other dealers or foreign
banks whose assets total $1 billion or more. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage for trades.

    The Fund may enter into forward contracts under various circumstances. The
typical use of a forward contract is to "lock in" the price of a security in
U.S. dollars or some other foreign currency which the Fund is holding in its
portfolio. By entering into a forward contract for the purchase or sale, for a
fixed amount of dollars or other currency, of the amount of foreign currency
involved in the underlying security transactions, the Fund may be able to
protect itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar or other currency which is being used for
the security purchase and the foreign currency in which the security is
denominated during the period between the date on which the security is
purchased or sold and the date on which payment is made or received.

    The Investment Manager also may from time to time utilize forward contracts
for other purposes. For example, they may be used to hedge a foreign security
held in the portfolio or a security which pays out principal tied to an exchange
rate between the U.S. dollar and a foreign currency, against a decline in value
of the applicable foreign currency. They also may be used to lock in the current
exchange rate of the currency in which those securities anticipated to be
purchased are denominated. At times, the Fund may enter into "cross-currency"
hedging transactions involving currencies other than those in which securities
are held or proposed to be purchased are denominated.

    The Fund will not enter into forward currency contracts or maintain a net
exposure to these contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of the
value of the Fund's portfolio securities.

    Although the Fund values its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. It will, however, do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the spread
between the prices at

                                       4
<PAGE>
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to the Fund at one rate, while offering a lesser rate
of exchange should the Fund desire to resell that currency to the dealer.

    The Fund may be limited in its ability to enter into hedging transactions
involving forward contracts by the Internal Revenue Code requirements relating
to qualification as a regulated investment company.

    Forward currency contracts may limit gains on portfolio securities that
could otherwise be realized had they not been utilized and could result in
losses. The contracts also may increase the Fund's volatility and may involve a
significant amount of risk relative to the investment of cash.

    OPTIONS AND FUTURES TRANSACTIONS.  The Fund may engage in transactions in
listed options. Listed options are issued or guaranteed by the exchange on which
they are traded or by a clearing corporation such as the Options Clearing
Corporation ("OCC"). Ownership of a listed call option gives the Fund the right
to buy from the OCC (in the U.S.) or other clearing corporation or exchange, the
underlying security covered by the option at the stated exercise price (the
price per unit of the underlying security) by filing an exercise notice prior to
the expiration date of the option. The writer (seller) of the option would then
have the obligation to sell to the OCC (in the U.S.) or other clearing
corporation or exchange, the underlying security at that exercise price prior to
the expiration date of the option, regardless of its then current market price.
Ownership of a listed put option would give the Fund the right to sell the
underlying security to the OCC (in the U.S.) or other clearing corporation or
exchange, at the stated exercise price. Upon notice of exercise of the put
option, the writer of the put would have the obligation to purchase the
underlying security from the OCC (in the U.S.) or other clearing corporation or
exchange, at the exercise price.

    COVERED CALL WRITING.  The Fund is permitted to write covered call options
on portfolio securities without limit. The Fund will receive from the purchaser,
in return for a call it has written, a "premium;" i.e., the price of the option.
Receipt of these premiums may better enable the Fund to earn a higher level of
current income than it would earn from holding the underlying securities alone.
Moreover, the premium received will offset a portion of the potential loss
incurred by the Fund if the securities underlying the option decline in value.

    The Fund may be required, at any time during the option period, to deliver
the underlying security against payment of the exercise price on any calls it
has written. This obligation is terminated upon the expiration of the option
period or at such earlier time when the writer effects a closing purchase
transaction. A closing purchase transaction is accomplished by purchasing an
option of the same series as the option previously written. However, once the
Fund has been assigned an exercise notice, the Fund will be unable to effect a
closing purchase transaction.

    A call option is "covered" if the Fund owns the underlying security subject
to the option or has an absolute and immediate right to acquire that security
without additional cash consideration (or for additional consideration (in cash,
Treasury bills or other liquid portfolio securities) held in a segregated
account on the Fund's books) upon conversion or exchange of other securities
held in its portfolio. A call option is also covered if the Fund holds a call on
the same security as the call written where the exercise price of the call held
is (i) equal to or less than the exercise price of the call written or
(ii) greater than the exercise price of the call written if the difference is
maintained by the Fund in cash, Treasury bills or other liquid portfolio
securities in a segregated account on the Fund's books.

    Options written by the Fund normally have expiration dates of from up to
eighteen months from the date written. The exercise price of a call option may
be below, equal to or above the current market value of the underlying security
at the time the option is written.

    COVERED PUT WRITING.  A writer of a covered put option incurs an obligation
to buy the security underlying the option from the purchaser of the put, at the
option's exercise price at any time during the option period, at the purchaser's
election. Through the writing of a put option, the Fund would receive income
from the premium paid by purchasers. The potential gain on a covered put option
is limited to the premium received on the option (less the commissions paid on
the transaction). During the option

                                       5
<PAGE>
period, the Fund may be required, at any time, to make payment of the exercise
price against delivery of the underlying security. A put option is "covered" if
the Fund maintains cash, Treasury bills or other liquid portfolio securities
with a value equal to the exercise price in a segregated account on the Fund's
books, or holds a put on the same security as the put written where the exercise
price of the put held is equal to or greater than the exercise price of the put
written. The aggregate value of the obligations underlying puts may not exceed
50% of the Fund's assets. The operation of and limitations on covered put
options in other respects are substantially identical to those of call options.

    PURCHASING CALL AND PUT OPTIONS.  The Fund may purchase listed call and put
options in amounts equaling up to 5% of its total assets. The purchase of a call
option would enable the Fund, in return for the premium paid to lock in a
purchase price for a security during the term of the option. The purchase of a
put option would enable the Fund, in return for a premium paid, to lock in a
price at which it may sell a security during the term of the option.

    RISKS OF OPTIONS TRANSACTIONS.  The successful use of options depends on the
ability of the Investment Manager to forecast correctly interest rates and/or
market movements. If the market value of the portfolio securities upon which
call options have been written increases, the Fund may receive a lower total
return from the portion of its portfolio upon which calls have been written than
it would have had such calls not been written. During the option period, the
covered call writer has, in return for the premium on the option, given up the
opportunity for capital appreciation above the exercise price should the market
price of the underlying security increase, but has retained the risk of loss
should the price of the underlying security decline. The covered put writer also
retains the risk of loss should the market value of the underlying security
decline below the exercise price of the option less the premium received on the
sale of the option. In both cases, the writer has no control over the time when
it may be required to fulfill its obligation as a writer of the option. Prior to
exercise or expiration, an option position can only be terminated by entering
into a closing purchase or sale transaction. Once an option writer has received
an exercise notice, it cannot effect a closing purchase transaction in order to
terminate its obligation under the option and must deliver or receive the
underlying securities at the exercise price.

    The Fund's ability to close out its position as a writer of an option is
dependent upon the existence of a liquid secondary market on option exchanges.
There is no assurance that such a market will exist.

    In the event of the bankruptcy of a broker through which the Fund engages in
transactions in options, the Fund could experience delays and/or losses in
liquidating open positions purchased or sold through the broker and/or incur a
loss of all or part of its margin deposits with the broker.

    Each of the exchanges has established limitations governing the maximum
number of call or put options on the same underlying security which may be
written by a single investor, whether acting alone or in concert with others
(regardless of whether such options are written on the same or different
exchanges or are held or written on one or more accounts or through one or more
brokers). An exchange may order the liquidation of positions found to be in
violation of these limits and it may impose other sanctions or restrictions.
These position limits may restrict the number of listed options which the Fund
may write.

    The hours of trading for options may not conform to the hours during which
the underlying securities are traded. To the extent that the option markets
close before the markets for the underlying securities, significant price and
rate movements can take place in the underlying markets that cannot be reflected
in the option markets.

    There can be no assurance that a liquid secondary market will exist for a
particular option at any specific time.

    STOCK INDEX OPTIONS.  The Fund may invest in options on broadly based
indexes. Options on stock indexes are similar to options on stock except that,
rather than the right to take or make delivery of stock at a specified price, an
option on a stock index gives the holder the right to receive, upon exercise of
the option, an amount of cash if the closing level of the stock index upon which
the option is based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option. This amount of

                                       6
<PAGE>
cash is equal to such difference between the closing price of the index and the
exercise price of the option expressed in dollars times a specified multiple.
The writer of the option is obligated, in return for the premium received, to
make delivery of this amount.

    RISKS OF OPTIONS ON INDEXES.  Because exercises of stock index options are
settled in cash, the Fund could not, if it wrote a call option, provide in
advance for its potential settlement obligations by acquiring and holding the
underlying securities. A call writer can offset some of the risk of its writing
position by holding a diversified portfolio of stocks similar to those on which
the underlying index is based. However, most investors cannot, as a practical
matter, acquire and hold a portfolio containing exactly the same stocks as the
underlying index, and, as a result, bear a risk that the value of the securities
held will vary from the value of the index. Even if an index call writer could
assemble a stock portfolio that exactly reproduced the composition of the
underlying index, the writer still would not be fully covered from a risk
standpoint because of the "timing risk" inherent in writing index options.

    When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level on the date when the option is exercised. As with
other kinds of options, the writer will not learn that it had been assigned
until the next business day, at the earliest. The time lag between exercise and
notice of assignment poses no risk for the writer of a covered call on a
specific underlying security, such as a common stock, because there the writer's
obligation is to deliver the underlying security, not to pay its value as of a
fixed time in the past. So long as the writer already owns the underlying
security, it can satisfy its settlement obligations by simply delivering it, and
the risk that its value may have declined since the exercise date is borne by
the exercising holder. In contrast, even if the writer of an index call holds
stocks that exactly match the composition of the underlying index, it will not
be able to satisfy its assignment obligations by delivering those stocks against
payment of the exercise price. Instead, it will be required to pay cash in an
amount based on the closing index value on the exercise date; and by the time it
learns that it has been assigned, the index may have declined, with a
corresponding decrease in the value of its stock portfolio. This "timing risk"
is an inherent limitation on the ability of index call writers to cover their
risk exposure by holding stock positions.

    A holder of an index option who exercises it before the closing index value
for that day is available runs the risk that the level of the underlying index
may subsequently change. If a change causes the exercised option to fall
out-of-the-money, the exercising holder will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.

    If dissemination of the current level of an underlying index is interrupted,
or if trading is interrupted in stocks accounting for a substantial portion of
the value of an index, the trading of options on that index will ordinarily be
halted. If the trading of options on an underlying index is halted, an exchange
may impose restrictions prohibiting the exercise of such options.

    FUTURES CONTRACTS.  The Fund may purchase and sell interest rate and stock
index futures contracts that are traded on U.S. commodity exchanges on such
underlying securities as U.S. Treasury bonds, notes, bills and GNMA Certificates
and such indexes as the S&P 500 Index, the Moody's Investment-Grade Corporate
Bond Index and the New York Stock Exchange Composite Index.

    A futures contract purchaser incurs an obligation to take delivery of a
specified amount of the obligation underlying the contract at a specified time
in the future for a specified price. A seller of a futures contract incurs an
obligation to deliver the specified amount of the underlying obligation at a
specified time in return for an agreed upon price. The purchase of a futures
contract enables the Fund, during the term of the contract, to lock in a price
at which it may purchase a security and protect against a rise in prices pending
purchase of portfolio securities. The sale of a futures contract enables the
Fund to lock in a price at which it may sell a security and protect against
declines in the value of portfolio securities.

                                       7
<PAGE>
    Although most futures contracts call for actual delivery or acceptance of
securities, the contracts usually are closed out before the settlement date
without the making or taking of delivery. Index futures contracts provide for
the delivery of an amount of cash equal to a specified dollar amount times the
difference between the index value at the open or close of the last trading day
of the contract and the futures contract price. A futures contract sale is
closed out by effecting a futures contract purchase for the same aggregate
amount of the specific type of security and the same delivery date. If the sale
price exceeds the offsetting purchase price, the seller would be paid the
difference and would realize a gain. If the offsetting purchase price exceeds
the sale price, the seller would pay the difference and would realize a loss.
Similarly, a futures contract purchase is closed out by effecting a futures
contract sale for the same aggregate amount of the specific type of security and
the same delivery date. If the offsetting sale price exceeds the purchase price,
the purchaser would realize a gain, whereas if the purchase price exceeds the
offsetting sale price, the purchaser would realize a loss. There is no assurance
that the Fund will be able to enter into a closing transaction.

    MARGIN.  If the Fund enters into a futures contract, it is initially
required to deposit an "initial margin" of cash or U.S. Government securities or
other liquid portfolio securities ranging from approximately 2% to 5% of the
contract amount. Initial margin requirements are established by the exchanges on
which futures contracts trade and may, from time to time, change. In addition,
brokers may establish margin deposit requirements in excess of those required by
the exchanges.


    Initial margin in futures transactions is different from margin in
securities transactions in that initial margin does not involve the borrowing of
funds by a broker's client but is, rather, a good faith deposit on the futures
contract which will be returned to the Fund upon the proper termination of the
futures contract. The margin deposits made are marked to market daily and the
Fund may be required to make subsequent deposits of cash or U.S. Government
securities or other liquid portfolio securities, called "variation margin,"
which are reflective of price fluctuations in the futures contract.


    OPTIONS ON FUTURES CONTRACTS.  The Fund may purchase and write call and put
options on futures contracts and enter into closing transactions with respect to
such options to terminate an existing position. An option on a futures contract
gives the purchaser the right (in return for the premium paid), and the writer
the obligation, to assume a position in a futures contract (a long position if
the option is a call and a short position if the option is a put) at a specified
exercise price at any time during the term of the option. Upon exercise of the
option, the delivery of the futures position by the writer of the option to the
holder of the option is accompanied by delivery of the accumulated balance in
the writer's futures margin account, which represents the amount by which the
market price of the futures contract at the time of exercise exceeds, in the
case of a call, or is less than, in the case of a put, the exercise price of the
option on the futures contract.

    The writer of an option on a futures contract is required to deposit initial
and variation margin pursuant to requirements similar to those applicable to
futures contracts. Premiums received from the writing of an option on a futures
contract are included in initial margin deposits.

    LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS ON FUTURES.  The Fund may not
enter into futures contracts or purchase related options thereon if, immediately
thereafter, the amount committed to margin plus the amount paid for premiums for
unexpired options on futures contracts exceeds 5% of the value of the Fund's
total assets, after taking into account unrealized gains and unrealized losses
on such contracts it has entered into, provided, however, that in the case of an
option that is in-the-money (the exercise price of the call (put) option is less
(more) than the market price of the underlying security) at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%.
However, there is no overall limitation on the percentage of the Fund's net
assets which may be subject to a hedge position.

    RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS.  The prices
of securities and indexes subject to futures contracts (and thereby the futures
contract prices) may correlate imperfectly with the behavior of the cash prices
of the Fund's portfolio securities. Also, prices of futures contracts may not
move in tandem with the changes in prevailing interest rates and market
movements against which the Fund seeks a hedge. A correlation may also be
distorted (a) temporarily, by short-term traders'

                                       8
<PAGE>
seeking to profit from the difference between a contract or security price
objective and their cost of borrowed funds; (b) by investors in futures
contracts electing to close out their contracts through offsetting transactions
rather than meet margin deposit requirements; (c) by investors in futures
contracts opting to make or take delivery of underlying securities rather than
engage in closing transactions, thereby reducing liquidity of the futures
market; and (d) temporarily, by speculators who view the deposit requirements in
the futures markets as less onerous than margin requirements in the cash market.
Due to the possibility of price distortion in the futures market and because of
the possible imperfect correlation between movements in the prices of securities
and movements in the prices of futures contracts, a correct forecast of interest
rate and/or market movement trends by the Investment Manager may still not
result in a successful hedging transaction.

    There is no assurance that a liquid secondary market will exist for futures
contracts and related options in which the Fund may invest. In the event a
liquid market does not exist, it may not be possible to close out a futures
position and, in the event of adverse price movements, the Fund would continue
to be required to make daily cash payments of variation margin. The absence of a
liquid market in futures contracts might cause the Fund to make or take delivery
of the underlying securities at a time when it may be disadvantageous to do so.

    Exchanges also limit the amount by which the price of a futures contract may
move on any day. If the price moves equal the daily limit on successive days,
then it may prove impossible to liquidate a futures position until the daily
limit moves have ceased. In the event of adverse price movements, the Fund would
continue to be required to make daily cash payments of variation margin on open
futures positions. In these situations, if the Fund has insufficient cash, it
may have to sell portfolio securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so. In addition, the
Fund may be required to take or make delivery of the instruments underlying
interest rate futures contracts it holds at a time when it is disadvantageous to
do so. The inability to close out options and futures positions could also have
an adverse impact on the Fund's ability to effectively hedge its portfolio.

    Futures contracts and options thereon which are purchased or sold on foreign
commodities exchanges may have greater price volatility than their U.S.
counterparts. Furthermore, foreign commodities exchanges may be less regulated
and under less governmental scrutiny than U.S. exchanges. Brokerage commissions,
clearing costs and other transaction costs may be higher on foreign exchanges.
Greater margin requirements may limit the Fund's ability to enter into certain
commodity transactions on foreign exchanges. Moreover, differences in clearance
and delivery requirements on foreign exchanges may occasion delays in the
settlement of the Fund's transactions effected on foreign exchanges.

    In the event of the bankruptcy of a broker through which the Fund engages in
transactions in futures or options thereon, the Fund could experience delays
and/or losses in liquidating open positions purchased or sold through the broker
and/or incur a loss of all or part of its margin deposits with the broker.

    If the Fund maintains a short position in a futures contract or has sold a
call option in a futures contract, it will cover this position by holding, in a
segregated account maintained on the books of the Fund, cash, U.S. government
securities or other liquid portfolio securities equal in value (when added to
any initial or variation margin on deposit) to the market value of the
securities underlying the futures contract or the exercise price of the option.
Such a position may also be covered by owning the securities underlying the
futures contract (in the case of a stock index futures contract a portfolio of
securities substantially replicating the relevant index), or by holding a call
option permitting the Fund to purchase the same contract at a price no higher
than the price at which the short position was established.

    In addition, if the Fund holds a long position in a futures contract or has
sold a put option on a futures contract, it will hold cash, U.S. government
securities or other liquid portfolio securities equal to the purchase price of
the contract or the exercise price of the put option (less the amount of initial
or

                                       9
<PAGE>
variation margin on deposit) in a segregated account maintained on the books of
the Fund. Alternatively, the Fund could cover its long position by purchasing a
put option on the same futures contract with an exercise price as high or higher
than the price of the contract held by the Fund.

    MONEY MARKET SECURITIES.  The Fund may invest in various money market
securities for cash management purposes or when assuming a temporary defensive
position, which among others may include commercial paper, bank acceptances,
bank obligations, corporate debt securities, certificates of deposit, U.S.
Government securities, obligations of savings institutions and repurchase
agreements. Such securities are limited to:

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

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

    EURODOLLAR CERTIFICATES OF DEPOSIT.  Eurodollar certificates of deposit
issued by foreign branches of domestic banks having total assets of $1 billion
or more;

    OBLIGATIONS OF SAVINGS INSTITUTIONS.  Certificates of deposit of savings
banks and savings and loan associations, having total assets of $1 billion or
more;

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

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

    REPURCHASE AGREEMENTS.  The Fund may invest in repurchase agreements. When
cash may be available for only a few days, it may be invested by the Fund in
repurchase agreements until such time as it may otherwise be invested or used
for payments of obligations of the Fund. These agreements, which may be viewed
as a type of secured lending by the Fund, typically involve the acquisition by
the Fund of debt securities from a selling financial institution such as a bank,
savings and loan association or broker-dealer. The agreement provides that the
Fund will sell back to the institution, and that the institution will
repurchase, the underlying security serving as collateral at a specified price
and at a fixed time in the future, usually not more than seven days from the
date of purchase. The collateral will be marked-to-market daily to determine
that the value of the collateral, as specified in the agreement, does not
decrease below the purchase price plus accrued interest. If such decrease
occurs, additional collateral will be requested and, when received, added to the
account to maintain full collateralization. The Fund will accrue interest from
the institution until the time when the repurchase is to occur. Although this
date is deemed by the Fund to be the maturity date of a repurchase agreement,
the maturities of securities subject to repurchase agreements are not subject to
any limits.


    While repurchase agreements involve certain risks not associated with direct
investments in debt securities, the Fund follows procedures approved by the
Trustees, designed to minimize such risks. These procedures include effecting
repurchase transactions only with large, well-capitalized and well-established
financial institutions whose financial condition will be continually monitored
by the Investment Manager. In addition, as described above, the value of the
collateral underlying the repurchase


                                       10
<PAGE>

agreement will be at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement. In the event of a default or
bankruptcy by a selling financial institution, the Fund will seek to liquidate
such collateral. However, the exercising of the Fund's right to liquidate such
collateral could involve certain costs or delays and, to the extent that
proceeds from any sale upon a default of the obligation to repurchase were less
than the repurchase price, the Fund could suffer a loss.



    ZERO COUPON TREASURY SECURITIES.  A portion of the fixed-income securities
purchased by the Fund may be "zero coupon" securities. These are securities
which have been stripped of their unmatured interest coupons and receipts or
which are certificates representing interests in such stripped debt obligations
and coupons. Such securities are purchased at a discount from their face amount,
giving the purchaser the right to receive their full value at maturity. A zero
coupon security pays no interest to its holder during its life. Its value to an
investor consists of the difference between its face value at the time of
maturity and the price for which it was acquired, which is generally an amount
significantly less than its face value (sometimes referred to as a "deep
discount" price).


    The interest earned on such securities is, implicitly, automatically
compounded and paid out at maturity. While such compounding at a constant rate
eliminates the risk of receiving lower yields upon reinvestment of interest if
prevailing interest rates decline, the owner of a zero coupon security will be
unable to participate in higher yields upon reinvestment of interest received if
prevailing interest rates rise. For this reason, zero coupon securities are
subject to substantially greater market price fluctuations during periods of
changing prevailing interest rates than are comparable debt securities which
make current distributions of interest. Current federal tax law requires that a
holder (such as the Fund) of a zero coupon security accrue a portion of the
discount at which the security was purchased as income each year even though the
Fund receives no interest payments in cash on the security during the year.


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


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

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

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

                                       11
<PAGE>
    At the time the Fund makes the commitment to purchase or sell securities on
a when-issued, delayed delivery or forward commitment basis, it will record the
transaction and thereafter reflect the value, each day, of such security
purchased, or if a sale, the proceeds to be received, in determining its net
asset value. At the time of delivery of the securities, their value may be more
or less than the purchase or sale price. An increase in the percentage of the
Fund's assets committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis may increase the volatility of its net
asset value. The Fund will also establish a segregated account on the Fund's
books in which it will continually maintain cash or cash equivalents or other
liquid portfolio securities equal in value to commitments to purchase securities
on a when-issued, delayed delivery or forward commitment basis.

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

    The value of the Fund's commitments to purchase the securities of any one
issuer, together with the value of all securities of such issuer owned by the
Fund, may not exceed 5% of the value of the Fund's net assets at the time the
initial commitment to purchase such securities is made. An increase in the
percentage of the Fund's assets committed to the purchase of securities on a
"when, as and if issued" basis may increase the volatility of its net asset
value. The Fund may also sell securities on a "when, as and if issued" basis
provided that the issuance of the security will result automatically from the
exchange or conversion of a security owned by the Fund at the time of sale.

    PRIVATE PLACEMENTS.  The Fund may invest up to 10% of its total assets in
securities which are subject to restrictions on resale because they have not
been registered under the Securities Act of 1933 (the "Securities Act"), or
which are otherwise not readily marketable. (Securities eligible for resale
pursuant to Rule 144A under the Securities Act, and determined to be liquid
pursuant to the procedures discussed in the following paragraph, are not subject
to the foregoing restriction.) These securities are generally referred to as
private placements or restricted securities. Limitations on the resale of these
securities may have an adverse effect on their marketability, and may prevent
the Fund from disposing of them promptly at reasonable prices. The Fund may have
to bear the expense of registering the securities for resale and the risk of
substantial delays in effecting the registration.

    Rule 144A permits the Fund to sell restricted securities to qualified
institutional buyers without limitation. The Investment Manager, pursuant to
procedures adopted by the Trustees, will make a determination as to the
liquidity of each restricted security purchased by the Fund. If a restricted
security is determined to be "liquid," the security will not be included within
the category "illiquid securities," which may not exceed 10% of the Fund's total
assets. However, investing in Rule 144A securities could have the effect of
increasing the level of Fund illiquidity to the extent the Fund, at a particular
point in time, may be unable to find qualified institutional buyers interested
in purchasing such securities.

    WARRANTS AND SUBSCRIPTION RIGHTS.  The Fund may acquire warrants and
subscription rights attached to other securities. A warrant is, in effect, an
option to purchase equity securities at a specific price, generally valid for a
specific period of time, and has no voting rights, pays no dividends and has no
rights with respect to the corporation issuing it.

    A subscription right is a privilege granted to existing shareholders of a
corporation to subscribe to shares of a new issue of common stock before it is
offered to the public. A subscription right normally has a life of two to four
weeks and a subscription price lower than the current market value of the common
stock.

                                       12
<PAGE>

    UNIT OFFERINGS.  The Fund may also purchase unit offerings (where corporate
debt securities are offered as a unit with convertible securities, preferred or
common stocks, warrants, or any combination thereof).


C. FUND POLICIES/INVESTMENT RESTRICTIONS


    The investment objective, policies and restrictions listed below have been
adopted by the Fund as fundamental policies. Under the Investment Company Act of
1940, as amended (the "Investment Company Act"), a fundamental policy may not be
changed without the vote of a majority of the outstanding voting securities of
the Fund. The Investment Company Act defines a majority as the lesser of
(a) 67% or more of the shares present at a meeting of shareholders, if the
holders of 50% of the outstanding shares of the Fund are present or represented
by proxy; or (b) more than 50% of the outstanding shares of the Fund. For
purposes of the following restrictions: (i) all percentage limitations apply
immediately after a purchase or initial investment; and (ii) any subsequent
change in any applicable percentage resulting from market fluctuations or other
changes in total or net assets does not require elimination of any security from
the portfolio.


    The Fund will:

         1. Seek long-term capital growth.

    The Fund may not:

         1. As to 75% of its total assets, invest more than 5% of the value of
    its total assets in the securities of any one issuer (other than obligations
    issued, or guaranteed by, the United States Government, its agencies or
    instrumentalities).

         2. As to 75% of its total assets, purchase more than 10% of all
    outstanding voting securities or any class of securities of any one issuer.

         3. Invest 25% or more of the value of its total assets in securities of
    issuers in any one industry. This restriction does not apply to obligations
    issued or guaranteed by the United States Government, its agencies or
    instrumentalities.

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

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

         6. Purchase or sell commodities or commodity contracts, except that the
    Fund may purchase or sell (write) interest rate and stock and bond index
    futures contracts and related options thereon.

         7. Borrow money, except that the Fund may borrow from a bank for
    temporary or emergency purposes in amounts not exceeding 5% (taken at the
    lower of cost or current value) of its total assets (not including the
    amount borrowed).

         8. Pledge its assets or assign or otherwise encumber them, except to
    secure permitted borrowings. For the purpose of this restriction, collateral
    arrangements with respect to the writing of options and collateral
    arrangements with respect to initial or variation margin for futures are not
    deemed to be pledges of assets.

         9. Issue senior securities as defined in the Investment Company Act,
    except insofar as the Fund may be deemed to have issued a senior security by
    reason of (a) entering into any repurchase agreement; (b) purchasing any
    securities on a when-issued or delayed delivery basis; (c) purchasing or
    selling futures contracts; (d) borrowing money; or (e) lending portfolio
    securities.

                                       13
<PAGE>
        10. Make loans of money or securities, except: (a) by the purchase of
    publicly distributed debt obligations; (b) by investment in repurchase
    agreements; or (c) by lending its portfolio securities.

        11. Make short sales of securities.

        12. Purchase securities on margin, except for short-term loans as are
    necessary for the clearance of portfolio securities. The deposit or payment
    by the Fund of initial or variation margin in connection with futures
    contracts or related options thereon is not considered the purchase of a
    security on margin.

        13. Engage in the underwriting of securities, except insofar as the Fund
    may be deemed an underwriter under the Securities Act in disposing of a
    portfolio security.

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

        15. Invest more than 10% of its total assets in "illiquid securities"
    (securities for which market quotations are not readily available) and
    repurchase agreements which have a maturity of longer than seven days.

        16. Invest more than 5% of the value of its total assets in securities
    of issuers having a record, together with predecessors, of less than 3 years
    of continuous operation. This restriction shall not apply to any obligation
    of the United States Government, its agencies or instrumentalities.

        17. Purchase oil, gas or other mineral leases, rights or royalty
    contracts or exploration or development programs, except that the Fund may
    invest in the securities of companies which operate, invest in, or sponsor
    these programs.


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


    Notwithstanding any other investment policy or restriction, the Fund may
seek to achieve its investment objective by investing all or substantially all
of its assets in another investment company having substantially the same
investment objective and policies as the Fund.

PORTFOLIO TURNOVER


    For the fiscal years ended October 31, 1999 and 2000, the Fund's portfolio
turnover rates were 557% and 376%, respectively. This variation resulted from
the portfolio manager's response to varying market conditions during these
periods.


III. MANAGEMENT OF THE FUND
--------------------------------------------------------------------------------

A. BOARD OF TRUSTEES

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

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

B. MANAGEMENT INFORMATION


    TRUSTEES AND OFFICERS.  The Board of the Fund consists of nine (9) Trustees.
These same individuals also serve as directors or trustees for all of the Morgan
Stanley Dean Witter Funds. Six Trustees (67% of the total number) have no
affiliation or business connection with the Investment Manager or any of its


                                       14
<PAGE>

affiliated persons and do not own any stock or other securities issued by the
Investment Manager's parent company, MSDW. These are the "non-interested" or
"independent" Trustees. The other three Trustees (the "management Trustees") are
affiliated with the Investment Manager.



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



<TABLE>
<CAPTION>
  NAME, AGE, POSITION WITH FUND AND ADDRESS     PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
---------------------------------------------  -----------------------------------------------
<S>                                            <C>
Michael Bozic (59) ..........................  Retired; Director or Trustee of the Morgan
Trustee                                        Stanley Dean Witter Funds; formerly Vice
c/o Mayer, Brown & Platt                       Chairman of Kmart Corporation (December
Counsel to the Independent Trustees            1998-October 2000); formerly Chairman and Chief
1675 Broadway                                  Executive Officer of Levitz Furniture
New York, New York                             Corporation (November 1995-November 1998) and
                                               President and Chief Executive Officer of Hills
                                               Department Stores (May 1991-July 1995); for-
                                               merly variously Chairman, Chief Executive
                                               Officer, President and Chief Operating Officer
                                               (1987-1991) of the Sears Merchandise Group of
                                               Sears, Roebuck and Co.; Director of Weirton
                                               Steel Corporation.
Charles A. Fiumefreddo* (67) ................  Chairman, Director or Trustee and Chief
Chairman of the Board,                         Executive Officer of the Morgan Stanley Dean
Chief Executive Officer and Trustee            Witter Funds; formerly Chairman, Chief
Two World Trade Center                         Executive Officer and Director of the
New York, New York                             Investment Manager, the Distributor and MSDW
                                               Services Company; Executive Vice President and
                                               Director of Dean Witter Reynolds; Chairman and
                                               Director of the Transfer Agent; formerly
                                               Director and/or officer of various MSDW
                                               subsidiaries (until June 1998).
Edwin J. Garn (68) ..........................  Director or Trustee of the Morgan Stanley Dean
Trustee                                        Witter Funds; formerly United States Senator
c/o Summit Ventures LLC                        (R- Utah)(1974-1992) and Chairman, Senate
1 Utah Center                                  Banking Committee (1980-1986); formerly Mayor
201 S. Main St.                                of Salt Lake City, Utah (1971-1974); formerly
Salt Lake City, Utah                           Astronaut, Space Shuttle Discovery
                                               (April 12-19, 1985); Vice Chairman, Huntsman
                                               Corporation (chemical company); Director of
                                               Franklin Covey (time management systems), BMW
                                               Bank of North America, Inc. (industrial loan
                                               corporation), United Space Alliance (joint ven-
                                               ture between Lockheed Martin and the Boeing
                                               Company) and Nuskin Asia Pacific (multilevel
                                               marketing); member of the Utah Regional
                                               Advisory Board of Pacific Corp.; member of the
                                               board of various civic and charitable
                                               organizations.
</TABLE>


                                       15
<PAGE>


<TABLE>
<CAPTION>
  NAME, AGE, POSITION WITH FUND AND ADDRESS     PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
---------------------------------------------  -----------------------------------------------
<S>                                            <C>
Wayne E. Hedien (66) ........................  Retired; Director or Trustee of the Morgan
Trustee                                        Stanley Dean Witter Funds; Director of The PMI
c/o Mayer, Brown & Platt                       Group, Inc. (private mortgage insurance);
Counsel to the Independent Trustees            Trustee and Vice Chairman of The Field Museum
1675 Broadway                                  of Natural History; formerly associated with
New York, New York                             the Allstate Companies (1966-1994), most
                                               recently as Chairman of The Allstate
                                               Corporation (March 1993-December 1994) and
                                               Chairman and Chief Executive Officer of its
                                               wholly-owned subsidiary, Allstate Insurance
                                               Company (July 1989-December 1994); director of
                                               various other business and charitable
                                               organizations.
James F. Higgins* (52) ......................  Chairman of the Private Client Group of MSDW
Trustee                                        (since August 2000); Director of the Transfer
Two World Trade Center                         Agent and Dean Witter Realty Inc.; Director or
New York, New York                             Trustee of the Morgan Stanley Dean Witter Funds
                                               (since June 2000); previously President and
                                               Chief Operating Officer of the Private Client
                                               Group of MSDW (May 1999-August 2000), President
                                               and Chief Operating Officer of Individual
                                               Securities of MSDW (February 1997-May 1999),
                                               President and Chief Operating Officer of Dean
                                               Witter Securities of MSDW (1995-February 1997),
                                               and President and Chief Operating Officer of
                                               Dean Witter Financial (1989-1995) and Direc-
                                               tor (1985-1997) of Dean Witter Reynolds.
Dr. Manuel H. Johnson (51) ..................  Senior Partner, Johnson Smick
Trustee                                        International, Inc., a consulting firm;
c/o Johnson Smick International, Inc.          Co-Chairman and a founder of the Group of Seven
1133 Connecticut Avenue, N.W.                  Council (G7C), an international economic
Washington, D.C.                               commission; Chairman of the Audit Committee and
                                               Director or Trustee of the Morgan Stanley Dean
                                               Witter Funds; Director of Greenwich Capital
                                               Markets, Inc. (broker-dealer), Independence
                                               Standards Board (private sector organization
                                               governing independence of auditors) and
                                               NVR, Inc. (home construction); Chairman and
                                               Trustee of the Financial Accounting Foundation
                                               (oversight organization of the Financial
                                               Accounting Standards Board); formerly Vice
                                               Chairman of the Board of Governors of the
                                               Federal Reserve System and Assistant Secretary
                                               of the U.S. Treasury.
Michael E. Nugent (64) ......................  General Partner, Triumph Capital, L.P., a
Trustee                                        private investment partnership; Chairman of the
c/o Triumph Capital, L.P.                      Insurance Committee and Director or Trustee of
237 Park Avenue                                the Morgan Stanley Dean Witter Funds; formerly
New York, New York                             Vice President, Bankers Trust Company and BT
                                               Capital Corporation; director of various
                                               business organizations.
</TABLE>


                                       16
<PAGE>


<TABLE>
<CAPTION>
  NAME, AGE, POSITION WITH FUND AND ADDRESS     PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
---------------------------------------------  -----------------------------------------------
<S>                                            <C>
Philip J. Purcell* (57) .....................  Chairman of the Board of Directors and Chief
Trustee                                        Executive Officer of MSDW, Dean Witter Reynolds
1585 Broadway                                  and Novus Credit Services Inc.; Director of the
New York, New York                             Distributor; Director or Trustee of the Morgan
                                               Stanley Dean Witter Funds; Director of American
                                               Airlines, Inc. and its parent company, AMR
                                               Corporation; Director and/ or officer of
                                               various MSDW subsidiaries.
John L. Schroeder (70) ......................  Retired; Chairman of the Derivatives Committee
Trustee                                        and Director or Trustee of the Morgan Stanley
c/o Mayer, Brown & Platt                       Dean Witter Funds; Director of Citizens
Counsel to the Independent Trustees            Communications Company (telecommunications
1675 Broadway                                  company); formerly Executive Vice President and
New York, New York                             Chief Investment Officer of the Home Insurance
                                               Company (August 1991-September 1995).
Mitchell M. Merin (47) ......................  President and Chief Operating Officer of Asset
President                                      Management of MSDW (since December 1998);
Two World Trade Center                         President and Director (since April 1997) and
New York, New York                             Chief Executive Officer (since June 1998) of
                                               the Investment Manager and MSDW Services
                                               Company; Chairman, Chief Executive Officer and
                                               Director of the Distributor (since June 1998);
                                               Chairman and Chief Executive Officer (since
                                               June 1998) and Director (since January 1998) of
                                               the Transfer Agent; Director of various MSDW
                                               subsidiaries; President of the Morgan Stanley
                                               Dean Witter Funds (since May 1999); Trustee of
                                               various Van Kampen investment companies (since
                                               December 1999); previously Chief Strategic
                                               Officer of the Investment Manager and MSDW
                                               Services Company and Executive Vice President
                                               of the Distributor (April 1997-June 1998), Vice
                                               President of the Morgan Stanley Dean Witter
                                               Funds (May 1997-April 1999), and Executive Vice
                                               President of Dean Witter, Discover & Co.
Barry Fink (45) .............................  General Counsel of Asset Management of MSDW
Vice President, Secretary                      (since May 2000); Executive Vice President
and General Counsel                            (since December 1999) and Secretary and General
Two World Trade Center                         Counsel (since February 1997) and Director
New York, New York                             (since July 1998) of the Investment Manager and
                                               MSDW Services Company; Vice President,
                                               Secretary and General Counsel of the Morgan
                                               Stanley Dean Witter Funds (since February
                                               1997); Vice President and Secretary of the
                                               Distributor; previously, Senior Vice President
                                               (March 1997-December 1999), First Vice
                                               President, Assistant Secretary and Assistant
                                               General Counsel of the Investment Manager and
                                               MSDW Services Company.
Peter Hermann (40) ..........................  Vice President of the Investment Manager; Vice
Vice President                                 President of various Morgan Stanley Dean Witter
Two World Trade Center                         Funds.
New York, New York
</TABLE>


                                       17
<PAGE>


<TABLE>
<CAPTION>
  NAME, AGE, POSITION WITH FUND AND ADDRESS     PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
---------------------------------------------  -----------------------------------------------
<S>                                            <C>
Thomas F. Caloia (54) .......................  First Vice President and Assistant Treasurer of
Treasurer                                      the Investment Manager, the Distributor and
Two World Trade Center                         MSDW Services Company; Treasurer of the Morgan
New York, New York                             Stanley Dean Witter Funds.
</TABLE>


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


    In addition, RONALD E. ROBISON, Executive Vice President, Chief
Administrative Officer and Director of the Investment Manager and MSDW Services
Company, ROBERT S. GIAMBRONE, Senior Vice President of the Investment Manager,
MSDW Services Company, the Distributor and the Transfer Agent and Director of
the Transfer Agent, JOSEPH J. MCALINDEN, Executive Vice President and Chief
Investment Officer of the Investment Manager and Director of the Transfer Agent,
KENTON J. HINCHLIFFE and IRA N. ROSS, Senior Vice Presidents of the Investment
Manager, and PAUL D. VANCE, Senior Vice President and Director of the Growth &
Income Group of the Investment Manager, are Vice Presidents of the Fund.



    In addition, LOU ANNE D. MCINNIS, CARSTEN OTTO and RUTH ROSSI, Senior Vice
Presidents and Assistant General Counsels of the Investment Manager and MSDW
Services Company, MARILYN K. CRANNEY and TODD LEBO, First Vice Presidents and
Assistant General Counsels of the Investment Manager and MSDW Services Company,
and NATASHA KASSIAN, Vice President and Assistant General Counsel of the
Investment Manager and MSDW Services Company, are Assistant Secretaries of the
Fund.



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



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



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



    The board of each fund has a Derivatives Committee to approve parameters for
and monitor the activities of the Fund with respect to derivative investments,
if any, made by the fund.



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


                                       18
<PAGE>

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


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

C. COMPENSATION

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


    The following table illustrates the compensation that the Fund paid to its
Independent Trustees for the fiscal year ended October 31, 2000.


                               FUND COMPENSATION


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


                                       19
<PAGE>
    The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1999 for services
to the 93 Morgan Stanley Dean Witter Funds that were in operation at
December 31, 1999.

            CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS

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


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


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

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

                                       20
<PAGE>

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


   RETIREMENT BENEFITS FROM THE FUND AND ALL MORGAN STANLEY DEAN WITTER FUNDS


<TABLE>
<CAPTION>
                                FOR ALL ADOPTING FUNDS
                             ----------------------------                              ESTIMATED ANNUAL
                               ESTIMATED                     RETIREMENT BENEFITS           BENEFITS
                               CREDITED                      ACCRUED AS EXPENSES      UPON RETIREMENT(2)
                                 YEARS        ESTIMATED    -----------------------  -----------------------
                             OF SERVICE AT  PERCENTAGE OF               BY ALL       FROM       FROM ALL
                              RETIREMENT      ELIGIBLE     BY THE      ADOPTING       THE       ADOPTING
NAME OF INDEPENDENT TRUSTEE  (MAXIMUM 10)   COMPENSATION    FUND        FUNDS        FUND        FUNDS
---------------------------  -------------  -------------  -------  --------------  -------  --------------
<S>                          <C>            <C>            <C>      <C>             <C>      <C>
Michael Bozic.............            10         60.44%    $  390    $     20,933   $  967    $     50,588
Edwin J. Garn.............            10         60.44        563          31,737      967          50,675
Wayne E. Hedien...........             9         51.37        732          39,566      822          43,000
Dr. Manuel H. Johnson.....            10         60.44        368          13,129    1,420          75,520
Michael E. Nugent.........            10         60.44        626          23,175    1,269          67,209
John L. Schroeder.........             8         50.37      1,147          41,558      987          52,994
</TABLE>


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

(2) Based on current levels of compensation. Amount of annual benefits also
    varies depending on the Trustee's elections described in Footnote (1) on
    page 20.

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


    The following owned 5% or more of the outstanding Class A shares of the Fund
as of December 7, 2000: Morgan Stanley Dean Witter Trust FSB, Trustee for Alban
Charitable Remainder Unitrust, P.O. Box 503, Jersey City, N.J. 07311--11.333%,
Kowalski Companies Inc., Tax Deferred Plan for Non-Unionized Employees, P.O. Box
957, Jersey City, N.J. 07303-0957--6.881% and Beatus Pension Trust, U/A dated
3/1/71 B.L. Beatus, Trustee, 6669 Corsica, Memphis TN 38120-3405--5.891%. The
following owned 5% or more of the outstanding Class C shares of the Fund as of
December 7, 2000: John D. Drake & Virginia L. Drake JTTEN, P.O. Box 1448, Chico,
CA 95927-1448--12.282% and Rose L. Holk, Trustee of the Survivors Trust of the
Holk Family Trust dated 5/4/89, 1021 Fairgrove Circle, Camarillo, CA
93010-1317--6.003%. The following owned 5% or more of the outstanding Class D
shares of the Fund as of December 7, 2000: Mellon Bank N.A., Mutual Funds, P.O.
Box 3198, Pittsburgh, PA 15230, as trustee of the Morgan Stanley Dean Witter
START Plan, an employee benefit plan established under Sections 401(a) and
401(k) of the Internal Revenue Code for the benefit of certain employees of MSDW
and its subsidiaries--90.907%.


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

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

A. INVESTMENT MANAGER

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


    Pursuant to an Investment Management Agreement (the "Management Agreement")
with the Investment Manager, the Fund has retained the Investment Manager to
provide administrative services and manage the investment of the Fund's assets,
including the placing of orders for the purchase and


                                       21
<PAGE>

sale of portfolio securities. The Fund pays the Investment Manager monthly
compensation calculated daily by applying the following annual rates to the net
assets of the Fund determined as of the close of each business day: 0.65% to the
portion of daily net assets not exceeding $500 million; 0.55% to the portion of
daily net assets exceeding $500 million but not exceeding $1 billion; 0.50% to
the portion of daily net assets exceeding $1 billion but not exceeding $1.5
billion; and 0.475% to the portion of daily net assets exceeding $1.5 billion.
The management fee is allocated among the Classes pro rata based on the net
assets of the Fund attributable to each Class. For the fiscal years ended
October 31, 1998, 1999 and 2000, the Investment Manager accrued total
compensation under the Management Agreement in the amounts of $3,513,517,
$3,390,339, and $3,760,671, respectively.


    The Investment Manager has retained its wholly-owned subsidiary, MSDW
Services Company, to perform administrative services for the Fund.

B. PRINCIPAL UNDERWRITER

    The Fund's principal underwriter is the Distributor (which has the same
address as the Investment Manager). In this capacity, the Fund's shares are
distributed by the Distributor. The Distributor has entered into a selected
dealer agreement with Dean Witter Reynolds, which through its own sales
organization sells shares of the Fund. In addition, the Distributor may enter
into similar agreements with other selected broker-dealers. The Distributor, a
Delaware corporation, is a wholly-owned subsidiary of MSDW.

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

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

C. SERVICES PROVIDED BY THE INVESTMENT MANAGER

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


    Under the terms of the Management Agreement, in addition to managing the
Fund's investments, the Investment Manager maintains certain of the Fund's books
and records and furnishes, at its own expense, the office space, facilities,
equipment, clerical help, bookkeeping and certain legal services as the Fund may
reasonably require in the conduct of its business, including the preparation of
prospectuses, proxy statements and reports required to be filed with federal and
state securities commissions (except insofar as the participation or assistance
of independent auditors and attorneys is, in the opinion of the Investment
Manager, necessary or desirable). In addition, the Investment Manager pays the


                                       22
<PAGE>

salaries of all personnel, including officers of the Fund, who are employees of
the Investment Manager. The Investment Manager also bears the cost of telephone
service, heat, light, power and other utilities provided to the Fund.



    Expenses not expressly assumed by the Investment Manager under the
Management Agreement or by the Distributor, will be paid by the Fund. These
expenses will be allocated among the four Classes of shares pro rata based on
the net assets of the Fund attributable to each Class, except as described
below. Such expenses include, but are not limited to: expenses of the Plan of
Distribution pursuant to Rule 12b-1; charges and expenses of any registrar,
custodian, stock transfer and dividend disbursing agent; brokerage commissions;
taxes; engraving and printing share certificates; registration costs of the Fund
and its shares under federal and state securities laws; the cost and expense of
printing, including typesetting, and distributing prospectuses of the Fund and
supplements thereto to the Fund's shareholders; all expenses of shareholders'
and Trustees' meetings and of preparing, printing and mailing of proxy
statements and reports to shareholders; fees and travel expenses of Trustees or
members of any advisory board or committee who are not employees of the
Investment Manager or any corporate affiliate of the Investment Manager; all
expenses incident to any dividend, withdrawal or redemption options; charges and
expenses of any outside service used for pricing of the Fund's shares; fees and
expenses of legal counsel, including counsel to the Trustees who are not
interested persons of the Fund or of the Investment Manager (not including
compensation or expenses of attorneys who are employees of the Investment
Manager); fees and expenses of the Fund's independent auditors; membership dues
of industry associations; interest on Fund borrowings; postage; insurance
premiums on property or personnel (including officers and Trustees) of the Fund
which inure to its benefit; extraordinary expenses (including, but not limited
to, legal claims and liabilities and litigation costs and any indemnification
relating thereto); and all other costs of the Fund's operation. The 12b-1 fees
relating to a particular Class will be allocated directly to that Class. In
addition, other expenses associated with a particular Class (except advisory or
custodial fees) may be allocated directly to that Class, provided that such
expenses are reasonably identified as specifically attributable to that Class
and the direct allocation to that Class is approved by the Trustees.


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

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

D. DEALER REALLOWANCES

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

E. RULE 12b-1 PLAN

    The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the
Investment Company Act (the "Plan") pursuant to which each Class, other than
Class D, pays the Distributor compensation accrued daily and payable monthly at
the following annual rates: 0.25% and 1.0% of the average daily net assets of
Class A and Class C, respectively, and, with respect to Class B, 1.0% of the
lesser of: (a) the average daily aggregate gross sales of the Fund's Class B
shares since the inception of the Fund (not including reinvestment of dividends
or capital gains distributions), less the average daily aggregate net

                                       23
<PAGE>
asset value of the Fund's Class B shares redeemed since the Fund's inception
upon which a contingent deferred sales charge has been imposed or upon which
such charge has been waived, or (b) the average daily net assets of Class B.

    The Distributor also receives the proceeds of front-end sales charges
("FSCs") and of contingent deferred sales charges ("CDSCs") imposed on certain
redemptions of shares, which are separate and apart from payments made pursuant
to the Plan. The Distributor has informed the Fund that it and/or Dean Witter
Reynolds received the proceeds of CDSCs and FSCs, for the last three fiscal
years ended October 31, in approximate amounts as provided in the table below
(the Distributor did not retain any of these amounts).


<TABLE>
<CAPTION>
                                      2000                    1999                    1998
                              ---------------------   ---------------------   ---------------------
<S>                           <C>         <C>         <C>         <C>         <C>         <C>
Class A.....................  FSCs:(1)       7,161    FSCs:(1)    $  2,211    FSCs:(1)    $  6,978
                                CDSCs:           0      CDSCs:    $  1,368      CDSCs:    $      0
Class B.....................    CDSCs:     142,910      CDSCs:    $208,271      CDSCs:    $278,936
Class C.....................    CDSCs:       1,358      CDSCs:    $    343      CDSCs:    $    620
</TABLE>


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

    The Distributor has informed the Fund that the entire fee payable by
Class A and a portion of the fees payable by each of Class B and Class C each
year pursuant to the Plan equal to 0.25% of such Class' average daily net assets
are currently each characterized as a "service fee" under the Rules of the
National Association of Securities Dealers, Inc. (of which the Distributor is a
member). The "service fee" is a payment made for personal service and/or the
maintenance of shareholder accounts. The remaining portion of the Plan fees
payable by a Class, if any, is characterized as an "asset-based sales charge" as
such is defined by the Rules of the Association.


    Under the Plan and as required by Rule 12b-1, the Trustees receive and
review promptly after the end of each calendar quarter a written report provided
by the Distributor of the amounts expended under the Plan and the purpose for
which such expenditures were made. Class B shares of the Fund accrued amounts
payable to the Distributor under the Plan, during the fiscal year ended
October 31, 2000, of $5,294,471. This amount is equal to 1.00% of the average
daily net assets of Class B for the fiscal year and was calculated pursuant to
clause (b) of the compensation formula under the Plan. For the fiscal year ended
October 31, 2000, Class A and Class C shares of the Fund accrued payments under
the Plan amounting to $17,105 and $17,344, respectively, which amounts are equal
to 0.25% and 1.00% of the average daily net assets of Class A and Class C,
respectively, for the fiscal year.


    The Plan was adopted in order to permit the implementation of the Fund's
method of distribution. Under this distribution method the Fund offers four
Classes, each with a different distribution arrangement.


    With respect to Class A shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from proceeds of the FSC, commissions for the
sale of Class A shares, currently a gross sales credit of up to 5.0% of the
amount sold (except as provided in the following sentence) and an annual
residual commission, currently a residual of up to 0.25% of the current value of
the respective accounts for which they are the Financial Advisors or dealers of
record in all cases. On orders of $1 million or more (for which no sales charge
was paid) or net asset value purchases by employer-sponsored employee benefit
plans, whether or not qualified under the Internal Revenue Code, for which the
Transfer Agent serves as Trustee or MSDW's Retirement Plan Services serves as
recordkeeper pursuant to a written Recordkeeping Services Agreement ("MSDW
Eligible Plans"), the Investment Manager compensates Financial Advisors by
paying them, from its own funds, a gross sales credit of 1.0% of the amount
sold.


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

                                       24
<PAGE>
or distributions) of the amount sold in all cases. In the case of Class B shares
purchased by MSDW Eligible Plans, Dean Witter Reynolds compensates its Financial
Advisors by paying them, from its own funds, a gross sales credit of 3.0% of the
amount sold.

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


    With respect to Class D shares other than shares held by participants in the
Investment Manager's mutual fund asset allocation program, and in the Morgan
Stanley Dean Witter Choice program, the Investment Manager compensates Dean
Witter Reynolds' Financial Advisors by paying them, from its own funds,
commissions for the sale of Class D shares, currently a gross sales credit of up
to 1.0% of the amount sold. There is a chargeback of 100% of the amount paid if
the Class D shares are redeemed in the first year and a chargeback of 50% of the
amount paid if the Class D shares are redeemed in the second year after
purchase. The Investment Manager also compensates Dean Witter Reynolds'
Financial Advisors by paying them, from its own funds, an annual residual
commission, currently up to 0.10% of the current value of the respective
accounts for which they are the Financial Advisors of record (not including
accounts of participants in the Investment Manager's mutual fund asset
allocation program and in the Morgan Stanley Dean Witter Choice program).



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


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

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

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


    The distribution fee that the Distributor receives from the Fund under the
Plan, in effect, offsets distribution expenses incurred under the Plan on behalf
of the Fund and, in the case of Class B shares, opportunity costs, such as the
gross sales credit and an assumed interest charge thereon ("carrying charge").
These expenses may include the cost of Fund-related educational and/or
business-related trips or payment of Fund-related educational and/or promotional
expenses of Financial Advisors. For example, the Distributor has implemented a
compensation program available only to Financial Advisors meeting specified
criteria under which certain marketing and/or promotional expenses of those
Financial Advisors are paid by the Distributor out of compensation it receives
under the Plan. In the Distributor's reporting of the distribution expenses to
the Fund, in the case of Class B shares, such assumed interest (computed at the
"broker's call rate") has been calculated on the gross credit as it is reduced
by amounts received by the Distributor under the Plan and any contingent
deferred sales charges received


                                       25
<PAGE>

by the Distributor upon redemption of shares of the Fund. No other interest
charge is included as a distribution expense in the Distributor's calculation of
its distribution costs for this purpose. The broker's call rate is the interest
rate charged to securities brokers on loans secured by exchange-listed
securities.


    The Fund is authorized to reimburse expenses incurred or to be incurred in
promoting the distribution of the Fund's Class A and Class C shares and in
servicing shareholder accounts. Reimbursement will be made through payments at
the end of each month. The amount of each monthly payment may in no event exceed
an amount equal to a payment at the annual rate of 0.25%, in the case of
Class A, and 1.0%, in the case of Class C, of the average net assets of the
respective Class during the month. No interest or other financing charges, if
any, incurred on any distribution expenses on behalf of Class A and Class C will
be reimbursable under the Plan. With respect to Class A, in the case of all
expenses other than expenses representing the service fee, and, with respect to
Class C, in the case of all expenses other than expenses representing a gross
sales credit or a residual to Financial Advisors and other authorized financial
representatives, such amounts shall be determined at the beginning of each
calendar quarter by the Trustees, including, a majority of the Independent
Trustees. Expenses representing the service fee (for Class A) or a gross sales
credit or a residual to Financial Advisors and other authorized financial
representatives (for Class C) may be reimbursed without prior determination. In
the event that the Distributor proposes that monies shall be reimbursed for
other than such expenses, then in making quarterly determinations of the amounts
that may be reimbursed by the Fund, the Distributor will provide and the
Trustees will review a quarterly budget of projected distribution expenses to be
incurred on behalf of the Fund, together with a report explaining the purposes
and anticipated benefits of incurring such expenses. The Trustees will determine
which particular expenses, and the portions thereof, that may be borne by the
Fund, and in making such a determination shall consider the scope of the
Distributor's commitment to promoting the distribution of the Fund's Class A and
Class C shares.


    Each Class paid 100% of the amounts accrued under the Plan with respect to
that Class for the fiscal year ended October 31, 2000 to the Distributor. The
Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to
the Plan, $79,997,620 on behalf of Class B since the inception of the Plan. It
is estimated that this amount was spent in approximately the following ways:
(i) 5.40% ($4,321,000)--advertising and promotional expenses; (ii) 0.53%
($420,505)--printing of prospectuses for distribution to other than current
shareholders; and (iii) 94.07% ($75,256,115)--other expenses, including the
gross sales credit and the carrying charge, of which 13.66% ($10,283,092)
represents carrying charges, 35.74% ($26,898,832) represents commission credits
to Dean Witter Reynolds branch offices and other selected broker-dealers for
payments of commissions to Financial Advisors and other authorized financial
representatives, and 50.60% ($38,074,191) represents overhead and other branch
office distribution-related expenses. The amounts accrued by Class A and a
portion of the amounts accrued by Class C under the Plan during the fiscal year
ended October 31, 2000 were service fees. The remainder of the amounts accrued
by Class C were for expenses which relate to compensation of sales personnel and
associated overhead expenses.



    In the case of Class B shares, at any given time, the expenses of
distributing shares of the Fund may be more or less than the total of (i) the
payments made by the Fund pursuant to the Plan; and (ii) the proceeds of CDSCs
paid by investors upon redemption of shares. For example, if $1 million in
expenses in distributing Class B shares of the Fund had been incurred and
$750,000 had been received as described in (i) and (ii) above, the excess
expense would amount to $250,000. The Distributor has advised the Fund that in
the case of Class B shares the excess distribution expenses, including the
carrying charge designed to approximate the opportunity costs incurred by Dean
Witter Reynolds which arise from it having advanced monies without having
received the amount of any sales charges imposed at the time of sale of the
Fund's Class B shares, totaled $14,037,176 as of October 31, 2000 (the end of
the Fund's fiscal year), which was equal to 2.78% of the net assets of Class B
on such date. Because there is no requirement under the Plan that the
Distributor be reimbursed for all distribution expenses with respect to Class B
shares or any requirement that the Plan be continued from year to year, this
excess amount does not constitute a liability of the Fund. Although there is no
legal obligation for the Fund to pay expenses incurred in excess of payments
made to the Distributor under the Plan and the


                                       26
<PAGE>
proceeds of CDSCs paid by investors upon redemption of shares, if for any reason
the Plan is terminated, the Trustees will consider at that time the manner in
which to treat such expenses. Any cumulative expenses incurred, but not yet
recovered through distribution fees or CDSCs, may or may not be recovered
through future distribution fees or CDSCs.


    In the case of Class A and Class C shares, expenses incurred pursuant to the
Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net
assets of Class A or Class C, respectively, will not be reimbursed by the Fund
through payments in any subsequent year, except that expenses representing a
gross sales commission credited to Morgan Stanley Dean Witter Financial Advisors
and other authorized financial representatives at the time of sale may be
reimbursed in the subsequent calendar year. The Distributor has advised the Fund
that unreimbursed expenses representing a gross sales commission credited to
Morgan Stanley Dean Witter Financial Advisors and other authorized financial
representatives at the time of sale totaled $382 in the case of Class C at
December 31, 1999 (the end of the calendar year), which amount was equal to .04%
of the net assets of Class C on such date, and that there were no such expenses
that may be reimbursed in the subsequent year in the case of Class A on such
date. No interest or other financing charges will be incurred on any Class A or
Class C distribution expenses incurred by the Distributor under the Plan or on
any unreimbursed expenses due to the Distributor pursuant to the Plan.


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


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


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

                                       27
<PAGE>
F. OTHER SERVICE PROVIDERS

(1) TRANSFER AGENT/DIVIDEND-PAYING AGENT

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


(2) CUSTODIAN AND INDEPENDENT AUDITORS


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


    Deloitte & Touche LLP, Two World Financial Center, New York, NY 10281,
serves as the independent auditors of the Fund. The independent auditors are
responsible for auditing the annual financial statements of the Fund.


(3) AFFILIATED PERSONS

    The Transfer Agent is an affiliate of the Investment Manager, and of the
Distributor. As Transfer Agent and Dividend Disbursing Agent, the Transfer
Agent's responsibilities include maintaining shareholder accounts, disbursing
cash dividends and reinvesting dividends, processing account registration
changes, handling purchase and redemption transactions, mailing prospectuses and
reports, mailing and tabulating proxies, processing share certificate
transactions, and maintaining shareholder records and lists. For these services,
the Transfer Agent receives a per shareholder account fee from the Fund and is
reimbursed for its out-of-pocket expenses in connection with such services.


G. CODES OF ETHICS



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


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

A. BROKERAGE TRANSACTIONS

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


    For the fiscal years ended October 31, 1998, 1999 and 2000, the Fund paid a
total of $2,160,391, $4,310,598 and $3,513,238, respectively, in brokerage
commissions.


                                       28
<PAGE>
B. COMMISSIONS

    Pursuant to an order of the SEC, the Fund may effect principal transactions
in certain money market instruments with Dean Witter Reynolds. The Fund will
limit its transactions with Dean Witter Reynolds to U.S. Government and
government agency securities, bank money instruments (i.e., certificates of
deposit and bankers' acceptances) and commercial paper. The transactions will be
effected with Dean Witter Reynolds only when the price available from Dean
Witter Reynolds is better than that available from other dealers.


    During the fiscal years ended October 31, 1998, 1999 and 2000, the Fund did
not effect any principal transactions with Dean Witter Reynolds.


    Brokerage transactions in securities listed on exchanges or admitted to
unlisted trading privileges may be effected through Dean Witter Reynolds, Morgan
Stanley & Co. and other affiliated brokers and dealers. In order for an
affiliated broker or dealer to effect any portfolio transactions on an exchange
for the Fund, the commissions, fees or other remuneration received by the
affiliated broker or dealer must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
an exchange during a comparable period of time. This standard would allow the
affiliated broker or dealer to receive no more than the remuneration which would
be expected to be received by an unaffiliated broker in a commensurate
arm's-length transaction. Furthermore, the Trustees, including the Independent
Trustees, have adopted procedures which are reasonably designed to provide that
any commissions, fees or other remuneration paid to an affiliated broker or
dealer are consistent with the foregoing standard. The Fund does not reduce the
management fee it pays to the Investment Manager by any amount of the brokerage
commissions it may pay to an affiliated broker or dealer.


    During the fiscal years ended October 31, 1998, 1999 and 2000, the Fund paid
a total of $91,353, $417,839 and $280,927, respectively, in brokerage
commissions to Dean Witter Reynolds. During the fiscal year ended October 31,
2000, the brokerage commissions paid to Dean Witter Reynolds represented
approximately 8.00% of the total brokerage commissions paid by the Fund during
the year and were paid on account of transactions having an aggregate dollar
value equal to approximately 7.89% of the aggregate dollar value of all
portfolio transactions of the Fund during the year for which commissions were
paid.



    During the fiscal years ended October 31, 1998, 1999 and 2000, the Fund paid
a total of $205,878, and $328,145 and $175,257, respectively, in brokerage
commissions to Morgan Stanley & Co. During the fiscal year ended October 31,
2000, the brokerage commissions paid to Morgan Stanley & Co. represented
approximately 4.99% of the total brokerage commissions paid by the Fund during
the year and were paid on account of transactions having an aggregate dollar
value equal to approximately 4.43% of the aggregate dollar value of all
portfolio transactions of the Fund during the year for which commissions were
paid.


C. BROKERAGE SELECTION

    The policy of the Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions. Consistent with this
policy, when securities transactions are effected on a stock exchange, the
Fund's policy is to pay commissions which are considered fair and reasonable
without necessarily determining that the lowest possible commissions are paid in
all circumstances. The Fund believes that a requirement always to seek the
lowest possible commission cost could impede effective portfolio management and
preclude the Fund and the Investment Manager from obtaining a high quality of
brokerage and research services. In seeking to determine the reasonableness of
brokerage commissions paid in any transaction, the Investment Manager relies
upon its experience and knowledge regarding commissions generally charged by
various brokers and on its judgment in evaluating the brokerage and research
services received from the broker effecting the transaction. These
determinations are necessarily subjective and imprecise, as in most cases an
exact dollar value for those services

                                       29
<PAGE>
is not ascertainable. The Fund anticipates that certain of its transactions
involving foreign securities will be effected on foreign securities exchanges.
Fixed commissions on such transactions are generally higher than negotiated
commissions on domestic transactions. There is also generally less government
supervision and regulation of foreign securities exchanges and brokers than in
the United States.

    In seeking to implement the Fund's policies, the Investment Manager effects
transactions with those brokers and dealers who the Investment Manager believes
provide the most favorable prices and are capable of providing efficient
executions. If the Investment Manager believes the prices and executions are
obtainable from more than one broker or dealer, it may give consideration to
placing portfolio transactions with those brokers and dealers who also furnish
research and other services to the Fund or the Investment Manager. The services
may include, but are not limited to, any one or more of the following:
information as to the availability of securities for purchase or sale;
statistical or factual information or opinions pertaining to investment; wire
services; and appraisals or evaluations of portfolio securities. The information
and services received by the Investment Manager from brokers and dealers may be
of benefit to the Investment Manager in the management of accounts of some of
its other clients and may not in all cases benefit the Fund directly.


    The Investment Manager currently serves as investment manager to a number of
clients, including other investment companies, and may in the future act as
investment manager or advisor to others. It is the practice of the Investment
Manager to cause purchase and sale transactions to be allocated among the Fund
and others whose assets it manages in such manner as it deems equitable. In
making such allocations among the Fund and other client accounts, various
factors may be considered, including the respective investment objectives, the
relative size of portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments
generally held and the opinions of the persons responsible for managing the
portfolios of the Fund and other client accounts. In the case of certain initial
and secondary public offerings, the Investment Manager utilizes a pro rata
allocation process based on the size of the relevant funds and/or client
accounts involved and the number of shares available from the public offering.


D. DIRECTED BROKERAGE


    During the fiscal year ended October 31, 2000, the Fund paid $3,054,037 in
brokerage commissions in connection with transactions in the aggregate amount of
$2,446,441,107 to brokers because of research services provided.


E. REGULAR BROKER-DEALERS


    During the fiscal year ended October 31, 2000, the Fund purchased securities
issued by Lehman Brothers Holdings, Inc. which issuer was among the ten brokers
or ten dealers which executed transactions for or with the Fund in the largest
dollar amounts during the period. At October 31, 2000, the Fund held securities
issued by Lehman Brothers Holdings, Inc. with a market value of $2,580,000.


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

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

                                       30
<PAGE>
    The Fund's Declaration of Trust permits the Trustees to authorize the
creation of additional series of shares (the proceeds of which would be invested
in separate, independently managed portfolios) and additional Classes of shares
within any series. The Trustees have not presently authorized any such
additional series or Classes of shares other than as set forth in the
PROSPECTUS.

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

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


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


VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
--------------------------------------------------------------------------------

A. PURCHASE/REDEMPTION OF SHARES

    Information concerning how Fund shares are offered to the public (and how
they are redeemed and exchanged) is provided in the Fund's PROSPECTUS.

    TRANSFER AGENT AS AGENT.  With respect to the redemption or repurchase of
Fund shares, the application of proceeds to the purchase of new shares in the
Fund or any other Morgan Stanley Dean Witter Funds and the general
administration of the exchange privilege, the Transfer Agent acts as agent for
the Distributor and for the shareholder's authorized broker-dealer, if any, in
the performance of such functions. With respect to exchanges, redemptions or
repurchases, the Transfer Agent shall be liable for its own negligence and not
for the default or negligence of its correspondents or for losses in transit.
The Fund shall not be liable for any default or negligence of the Transfer
Agent, the Distributor or any authorized broker-dealer.

    The Distributor and any authorized broker-dealer have appointed the Transfer
Agent to act as their agent in connection with the application of proceeds of
any redemption of Fund shares to the purchase of shares of any other Morgan
Stanley Dean Witter Fund and the general administration of the exchange
privilege. No commission or discounts will be paid to the Distributor or any
authorized broker-dealer for any transaction pursuant to the exchange privilege.

                                       31
<PAGE>
    TRANSFERS OF SHARES.  In the event a shareholder requests a transfer of Fund
shares to a new registration, the shares will be transferred without sales
charge at the time of transfer. With regard to the status of shares which are
either subject to the CDSC or free of such charge (and with regard to the length
of time shares subject to the charge have been held), any transfer involving
less than all of the shares in an account will be made on a pro rata basis (that
is, by transferring shares in the same proportion that the transferred shares
bear to the total shares in the account immediately prior to the transfer). The
transferred shares will continue to be subject to any applicable CDSC as if they
had not been so transferred.


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


B. OFFERING PRICE

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


    In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange, NASDAQ, or
other exchange is valued at its latest sale price, prior to the time when assets
are valued; if there were no sales that day, the security is valued at the
latest bid price (in cases where a security is traded on more than one exchange,
the security is valued on the exchange designated as the primary market pursuant
to procedures adopted by the Trustees); and (2) all other portfolio securities
for which over-the-counter market quotations are readily available are valued at
the latest bid price. When market quotations are not readily available,
including circumstances under which it is determined by the Investment Manager
that sale or bid prices are not reflective of a security's market value,
portfolio securities are valued at their fair value as determined in good faith
under procedures established by and under the general supervision of the Fund's
Trustees. For valuation purposes, quotations of foreign portfolio securities,
other assets and liabilities and forward contracts stated in foreign currency
are translated into U.S. dollar equivalents at the prevailing market rates prior
to the close of the New York Stock Exchange.


    Short-term debt securities with remaining maturities of sixty days or less
at the time of purchase are valued at amortized cost, unless the Trustees
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Trustees.

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

    Listed options on debt securities are valued at the latest sale price on the
exchange on which they are listed unless no sales of such options have taken
place that day, in which case they will be valued at the mean between their
latest bid and asked prices. Unlisted options on debt securities and all options
on equity securities are valued at the mean between their latest bid and asked
prices. Futures are valued

                                       32
<PAGE>
at the latest sale price on the commodities exchange on which they trade unless
the Trustees determine such price does not reflect their market value, in which
case they will be valued at their fair value as determined in good faith under
procedures established by and under the supervision of the Trustees.

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

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


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


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

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


    Gains or losses on sales of securities by the Fund will be long-term capital
gains or losses if the securities have a tax holding period of more than one
year at the time of such sale. Gains or losses on the sale of securities with a
tax holding period of one year or less will be short-term capital gains or
losses. Special tax rules may change the normal treatment of gains and losses
recognized by the Fund when the Fund invests in foreign currency exchange
contracts, options, futures transactions, and non-U.S. corporations classified
as "passive foreign investment companies." Those special tax rules can, among
other things, affect the treatment of capital gain or loss as long-term or
short-term and may result in ordinary income or loss rather than capital gain or
loss. The application of these special rules would therefore also affect the
character of distributions made by the Fund.



    Under certain tax rules, the Fund may be required to accrue a portion of any
discount at which certain securities are purchased as income each year even
though the Fund receives no payments in cash on the security during the year. To
the extent that the Fund invests in such securities, it would be required to pay
out such income as an income distribution in each year in order to avoid
taxation at the Fund level. Such distributions will be made from the available
cash of the Fund or by liquidation of portfolio securities if necessary. If a
distribution of cash necessitates the liquidation of portfolio securities,


                                       33
<PAGE>
the Investment Manager will select which securities to sell. The Fund may
realize a gain or loss from such sales. In the event the Fund realizes net
capital gains from such transactions, its shareholders may receive a larger
capital gain distribution, if any, than they would in the absence of such
transactions.

    TAXATION OF DIVIDENDS AND DISTRIBUTIONS.  Shareholders normally will have to
pay federal income taxes, and any state and/or local income taxes, on the
dividends and other distributions they receive from the Fund. Such dividends and
distributions, to the extent that they are derived from net investment income or
short-term capital gains, are taxable to the shareholder as ordinary income
regardless of whether the shareholder receives such payments in additional
shares or in cash.


    Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder has
held the Fund's shares and regardless of whether the distribution is received in
additional shares or in cash. Under current law, the maximum tax rate on long-
term capital gains realized by non-corporate shareholders generally is 20%. A
special lower tax rate of 18% on long-term capital gains is available to
non-corporate shareholders to the extent the distributions of long-term capital
gains are derived from securities which the Fund purchased after December 31,
2000, and held for more than five years.


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

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


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



    After the end of each calendar year, shareholders will be sent information
on their dividends and capital gain distributions for tax purposes, including
the portion taxable as ordinary income, the portion taxable as long-term capital
gains, and the amount of any dividends eligible for the federal dividends
received deduction for corporations.


    PURCHASES AND REDEMPTIONS AND EXCHANGES OF FUND SHARES.  Any dividend or
capital gains distribution received by a shareholder from any investment company
will have the effect of reducing the net asset value of the shareholder's stock
in that company by the exact amount of the dividend or capital gains
distribution. Furthermore, such dividends and capital gains distributions are
subject to federal income taxes. If the net asset value of the shares should be
reduced below a shareholder's cost as a result of the payment of dividends or
the distribution of realized long-term capital gains, such payment or
distribution would be in part a return of the shareholder's investment but
nonetheless would be taxable to the shareholder. Therefore, an investor should
consider the tax implications of purchasing Fund shares immediately prior to a
distribution record date.


    In general, a sale of shares results in capital gain or loss, and for
individual shareholders, is taxable at a federal rate dependent upon the length
of time the shares were held. A redemption of a shareholder's Fund shares is
normally treated as a sale for tax purposes. Fund shares held for a period of
one year or less at the time of such sale or redemption will, for tax purposes,
generally result in short-term capital gains or losses and those held for more
than one year generally result in long-term capital gains or losses. Under
current law, the maximum tax rate on long-term capital gains realized by
non-corporate shareholders generally is 20%. A special lower tax rate of 18% on
long-term capital gains is available for non-corporate shareholders who
purchased shares after December 31, 2000, and held such shares for more than
five years. This special lower tax rate of 18% for five-year property does not
apply to non-corporate shareholders holding Fund shares which were purchased on
or prior to December 31, 2000,


                                       34
<PAGE>

unless such shareholders make an election to treat the Fund shares as being sold
and reacquired on January 1, 2001. A shareholder making such election may
realize capital gains or losses. Any loss realized by shareholders upon a sale
or redemption of shares within six months of the date of their purchase will be
treated as a long-term capital loss to the extent of any distributions of net
long-term capital gains with respect to such shares during the six-month period.


    Gain or loss on the sale or redemption of shares in the Fund is measured by
the difference between the amount received and the tax basis of the shares.
Shareholders should keep records of investments made (including shares acquired
through reinvestment of dividends and distributions) so they can compute the tax
basis of their shares. Under certain circumstances a shareholder may compute and
use an average cost basis in determining the gain or loss on the sale or
redemption of shares.

    Exchanges of Fund shares for shares of another fund, including shares of
other Morgan Stanley Dean Witter Funds, are also subject to similar tax
treatment. Such an exchange is treated for tax purposes as a sale of the
original shares in the first fund, followed by the purchase of shares in the
second fund.

    If a shareholder realizes a loss on the redemption or exchange of a fund's
shares and reinvests in that fund's shares within 30 days before or after the
redemption or exchange, the transactions may be subject to the "wash sale"
rules, resulting in a postponement of the recognition of such loss for tax
purposes.

X. UNDERWRITERS
--------------------------------------------------------------------------------


    The Fund's shares are offered to the public on a continuous basis. The
Distributor, as the principal underwriter of the shares, has certain obligations
under the Distribution Agreement concerning the distribution of the shares.
These obligations and the compensation the Distributor receives are described
above in the sections titled "Principal Underwriter" and "Rule 12b-1 Plan."


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


    From time to time, the Fund may quote its "total return" in advertisements
and sales literature. These figures are computed separately for Class A,
Class B, Class C and Class D shares. The Fund's "average annual total return"
represents an annualization of the Fund's total return over a particular period
and is computed by finding the annual percentage rate which will result in the
ending redeemable value of a hypothetical $1,000 investment made at the
beginning of a one, five or ten year period, or for the period from the date of
commencement of operations, if shorter than any of the foregoing. The ending
redeemable value is reduced by any contingent deferred sales charge ("CDSC") at
the end of the one, five, ten year or other period. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involves a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment (which in the case of Class A shares is reduced by the Class A
initial sales charge), taking a root of the quotient (where the root is
equivalent to the number of years in the period) and subtracting 1 from the
result. The average annual total returns for Class B for the one year, five year
and ten year periods ended October 31, 2000 were 14.97%, 17.87% and 15.09%,
respectively. The average annual total returns of Class A for the fiscal year
ended October 31, 2000 and for the period July 28, 1997 (inception of the Class)
through October 31, 2000 were 14.11% and 13.01%, respectively. The average
annual total returns of Class C for the fiscal year ended October 31, 2000 and
for the period July 28, 1997 (inception of the Class) through October 31, 2000
were 18.65% and 14.15%, respectively. The average annual total returns of
Class D for the fiscal year ended October 31, 2000 and for the period July 28,
1997 (inception of the Class) through October 31, 2000 were 20.74% and 15.16%,
respectively.



    In addition, the Fund may advertise its total return for each Class over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. These calculations may or may not reflect the
imposition of the maximum front-end sales charge for Class A or the deduction of
the CDSC for each of Class B and Class C which, if reflected, would reduce the
performance quoted. For


                                       35
<PAGE>

example, the average annual total return of the Fund may be calculated in the
manner described above, but without deduction for any applicable sales charge.
Based on this calculation, the average annual total returns of Class B for the
one year, five year and the ten year periods ended October 31, 2000, were
19.50%, 18.08% and 15.09%, respectively. Based on this calculation, the average
annual total returns of Class A for the fiscal year ended October 31, 2000 and
for the period July 28, 1997 through October 31, 2000 were 20.43% and 14.89%,
respectively, the average annual total returns of Class C for the fiscal year
ended October 31, 2000 and for the period July 28, 1997 through October 31, 2000
were 19.56% and 14.15%, respectively, and the average annual total returns of
Class D for the fiscal year ended October 31, 2000 and for the period July 28,
1997 through October 31, 2000 were 20.74% and 15.16%, respectively.



    In addition, the Fund may compute its aggregate total return for each
Class for specified periods by determining the aggregate percentage rate which
will result in the ending value of a hypothetical $1,000 investment made at the
beginning of the period. For the purpose of this calculation, it is assumed that
all dividends and distributions are reinvested. The formula for computing
aggregate total return involves a percentage obtained by dividing the ending
value (without reduction for any sales charge) by the initial $1,000 investment
and subtracting 1 from the result. Based on the foregoing calculation, the total
returns for Class B for the one year, five year and the ten year periods ended
October 31, 2000, were 19.50%, 129.50% and 307.82%, respectively. Based on the
foregoing calculation, the total returns of Class A for the fiscal year ended
October 31, 2000 and for the period July 28, 1997 through October 31, 2000 were
20.43% and 57.26%, respectively, the total returns of Class C for the fiscal
year ended October 31, 2000 and for the period July 28, 1997 through
October 31, 2000 were 19.56% and 53.96%, respectively, and the total returns of
Class D for the fiscal year ended October 31, 2000 and for the period July 28,
1997 through October 31, 2000 were 20.74% and 58.47%, respectively.



    The Fund may also advertise the growth of hypothetical investments of
$10,000, $50,000 and $100,000 in each Class of shares of the Fund by adding 1 to
the Fund's aggregate total return to date (expressed as a decimal and without
taking into account the effect of any applicable CDSC) and multiplying by
$9,475, $48,000 and $97,000 in the case of Class A (investments of $10,000,
$50,000 and $100,000 adjusted for the initial sales charge) or by $10,000,
$50,000 and $100,000 in the case of each of Class B, Class C and Class D, as the
case may be. Investments of $10,000, $50,000 and $100,000 in each Class at
inception of the Class would have grown to the following amounts at October 31,
2000:



<TABLE>
<CAPTION>
                                                       INVESTMENT AT INCEPTION OF:
                                         INCEPTION   --------------------------------
CLASS                                      DATE:     $10,000     $50,000    $100,000
-----                                    ---------   --------   ---------   ---------
<S>                                      <C>         <C>        <C>         <C>
Class A...............................   07/28/97    $14,900    $ 75,485    $152,542
Class B...............................   04/02/90     37,478     187,390     374,780
Class C...............................   07/28/97     15,396      76,980     153,960
Class D...............................   07/28/97     15,847      79,235     158,470
</TABLE>



    The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by recognized organizations.


XII. FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


    EXPERTS.  The financial statements of the Fund for the fiscal year ended
October 31, 2000 included in this STATEMENT OF ADDITIONAL INFORMATION and
incorporated by reference in the PROSPECTUS have been so included and
incorporated in reliance on the report of Deloitte & Touche LLP, independent
auditors, given on the authority of said firm as experts in auditing and
accounting.


                                   * * * * *

    This STATEMENT OF ADDITIONAL INFORMATION and the PROSPECTUS do not contain
all of the information set forth in the REGISTRATION STATEMENT the Fund has
filed with the SEC. The complete REGISTRATION STATEMENT may be obtained from the
SEC.

                                       36
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000

<TABLE>
<CAPTION>
NUMBER OF
 SHARES                                                                                                VALUE
----------------------------------------------------------------------------------------------------------------
<C>        <S>                                                                                      <C>
           COMMON STOCKS (93.6%)
           AEROSPACE & DEFENSE (1.4%)
 120,000   Boeing Co..............................................................................  $  8,137,500
                                                                                                    ------------
           AIRLINES (0.2%)
  35,000   AMR Corp.*.............................................................................     1,146,250
                                                                                                    ------------
           ALTERNATIVE POWER GENERATION (1.4%)
  25,000   AES Corp. (The)*.......................................................................     1,412,500
  85,000   Calpine Corp.*.........................................................................     6,709,687
                                                                                                    ------------
                                                                                                       8,122,187
                                                                                                    ------------
           APPAREL/FOOTWEAR (0.4%)
  50,000   Timberland Co. (Class A)*..............................................................     2,581,250
                                                                                                    ------------
           BEVERAGES: NON-ALCOHOLIC (0.9%)
 150,000   Pepsi Bottling Group, Inc. (The).......................................................     5,193,750
                                                                                                    ------------
           COMPUTER COMMUNICATIONS (1.9%)
  60,000   Avocent Corp.*.........................................................................     4,256,250
  40,000   Cisco Systems, Inc.*...................................................................     2,155,000
  30,000   Emulex Corp.*..........................................................................     4,406,250
                                                                                                    ------------
                                                                                                      10,817,500
                                                                                                    ------------
           COMPUTER PERIPHERALS (1.1%)
  50,000   EMC Corp.*.............................................................................     4,453,125
  15,000   Network Appliance, Inc.*...............................................................     1,785,000
                                                                                                    ------------
                                                                                                       6,238,125
                                                                                                    ------------
           COMPUTER PROCESSING HARDWARE (1.0%)
  50,000   Sun Microsystems, Inc.*................................................................     5,543,750
                                                                                                    ------------
           CONTRACT DRILLING (1.3%)
  35,000   ENSCO International Inc................................................................     1,163,750
  40,000   Noble Drilling Corp.*..................................................................     1,662,500
  50,000   Rowan Companies, Inc.*.................................................................     1,259,375
  60,000   Transocean Sedco Forex Inc.............................................................     3,180,000
                                                                                                    ------------
                                                                                                       7,265,625
                                                                                                    ------------
           DRUGSTORE CHAINS (2.0%)
 250,000   Walgreen Co............................................................................    11,406,250
                                                                                                    ------------
           ELECTRONIC COMPONENTS (1.4%)
 125,000   Amphenol Corp. (Class A)*..............................................................     8,031,250
                                                                                                    ------------
           ELECTRONIC EQUIPMENT/INSTRUMENTS (4.8%)
 125,000   PerkinElmer, Inc.......................................................................    14,937,500
 175,000   Tektronix, Inc.........................................................................    12,468,750
                                                                                                    ------------
                                                                                                      27,406,250
                                                                                                    ------------
           ELECTRONICS/APPLIANCE STORES (0.8%)
  75,000   RadioShack Corp........................................................................     4,471,875
                                                                                                    ------------
<CAPTION>
NUMBER OF
 SHARES                                                                                                VALUE
----------------------------------------------------------------------------------------------------------------
<C>        <S>                                                                                      <C>
           FINANCE/RENTAL/LEASING (2.1%)
 150,000   AmeriCredit Corp.*.....................................................................  $  4,031,250
 125,000   Capital One Financial Corp.............................................................     7,890,625
                                                                                                    ------------
                                                                                                      11,921,875
                                                                                                    ------------
           FINANCIAL CONGLOMERATES (3.7%)
 200,000   AXA Financial, Inc.....................................................................    10,812,500
 200,000   Citigroup, Inc.........................................................................    10,525,000
                                                                                                    ------------
                                                                                                      21,337,500
                                                                                                    ------------
           FINANCIAL PUBLISHING/SERVICES (1.6%)
 175,000   SunGard Data Systems Inc.*.............................................................     8,946,875
                                                                                                    ------------
           FOOD RETAIL (2.0%)
 500,000   Kroger Co.*............................................................................    11,281,250
                                                                                                    ------------
           GAS DISTRIBUTORS (1.3%)
 125,000   Equitable Resources, Inc...............................................................     7,250,000
                                                                                                    ------------
           HOSPITAL/NURSING MANAGEMENT (2.4%)
 350,000   HCA - The Healthcare Corp..............................................................    13,978,125
                                                                                                    ------------
           INDUSTRIAL CONGLOMERATES (4.8%)
 200,000   General Electric Co....................................................................    10,962,500
 175,000   Tyco International Ltd. (Bermuda)......................................................     9,920,312
 100,000   United Technologies Corp...............................................................     6,981,250
                                                                                                    ------------
                                                                                                      27,864,062
                                                                                                    ------------
           INSURANCE BROKERS/SERVICES (1.9%)
  85,000   Marsh & McLennan Companies, Inc........................................................    11,113,750
                                                                                                    ------------
           INTEGRATED OIL (2.2%)
  40,000   BP Amoco PLC (ADR) (United Kingdom)....................................................     2,037,500
 100,000   Exxon Mobil Corp.......................................................................     8,918,750
  25,000   Murphy Oil Corp........................................................................     1,448,437
                                                                                                    ------------
                                                                                                      12,404,687
                                                                                                    ------------
           INTERNET SOFTWARE/SERVICES (1.2%)
 100,000   BEA Systems, Inc.*.....................................................................     7,175,000
                                                                                                    ------------
           INVESTMENT BANKS/BROKERS (1.5%)
 125,000   Edwards (A.G.), Inc....................................................................     6,343,750
  40,000   Lehman Brothers Holdings, Inc..........................................................     2,580,000
                                                                                                    ------------
                                                                                                       8,923,750
                                                                                                    ------------
           MAJOR BANKS (2.2%)
 100,000   PNC Financial Services Group, Inc......................................................     6,687,500
 125,000   Wells Fargo & Co.......................................................................     5,789,062
                                                                                                    ------------
                                                                                                      12,476,562
                                                                                                    ------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS
                                       37
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
NUMBER OF
 SHARES                                                                                                VALUE
----------------------------------------------------------------------------------------------------------------
<C>        <S>                                                                                      <C>
           MANAGED HEALTH CARE (4.5%)
 450,000   Oxford Health Plans, Inc.*.............................................................  $ 15,187,500
  50,000   Trigon Healthcare, Inc.*...............................................................     3,584,375
  60,000   Wellpoint Health Networks, Inc.*.......................................................     7,016,250
                                                                                                    ------------
                                                                                                      25,788,125
                                                                                                    ------------
           MEDICAL DISTRIBUTORS (1.9%)
 250,000   AmeriSource Health Corp. (Class A)*....................................................    10,859,375
                                                                                                    ------------
           MEDICAL SPECIALTIES (1.1%)
 175,000   Cooper Companies, Inc..................................................................     6,256,250
                                                                                                    ------------
           METAL FABRICATIONS (0.8%)
  60,000   Shaw Group Inc. (The)*.................................................................     4,890,000
                                                                                                    ------------
           MISCELLANEOUS COMMERCIAL SERVICES (0.6%)
  85,000   Concord EFS, Inc.*.....................................................................     3,511,562
                                                                                                    ------------
           MULTI-LINE INSURANCE (2.1%)
 125,000   American International Group, Inc......................................................    12,250,000
                                                                                                    ------------
           OIL & GAS PIPELINES (3.2%)
 120,000   Coastal Corp. (The)....................................................................     9,052,500
 200,000   Dynegy, Inc. (Class A).................................................................     9,262,500
                                                                                                    ------------
                                                                                                      18,315,000
                                                                                                    ------------
           OIL & GAS PRODUCTION (2.0%)
 100,000   Anardarko Petroleum Corp...............................................................     6,405,000
 250,000   Chesapeake Energy Corp.*...............................................................     1,406,250
  50,000   Newfield Exploration Co.*..............................................................     1,887,500
  50,000   Noble Affiliates, Inc..................................................................     1,834,375
                                                                                                    ------------
                                                                                                      11,533,125
                                                                                                    ------------
           OIL REFINING/MARKETING (0.8%)
 135,000   Valero Refining and Marketing Corp.....................................................     4,463,437
                                                                                                    ------------
           OILFIELD SERVICES/EQUIPMENT (0.2%)
  40,000   Weatherford International, Inc.*.......................................................     1,460,000
                                                                                                    ------------
           PACKAGED SOFTWARE (6.3%)
  50,000   Check Point Software Technologies Ltd. (Israel)*.......................................     7,918,750
  35,000   i2 Technologies, Inc.*.................................................................     5,950,000
  60,000   Mercury Interactive Corp.*.............................................................     6,660,000
 200,000   Rational Software Corp.*...............................................................    11,937,500
  35,000   Siebel Systems, Inc.*..................................................................     3,672,813
                                                                                                    ------------
                                                                                                      36,139,063
                                                                                                    ------------
<CAPTION>
NUMBER OF
 SHARES                                                                                                VALUE
----------------------------------------------------------------------------------------------------------------
<C>        <S>                                                                                      <C>
           PHARMACEUTICALS: GENERIC DRUGS (0.9%)
 125,000   IVAX Corp.*............................................................................  $  5,437,500
                                                                                                    ------------
           PHARMACEUTICALS: MAJOR (6.9%)
 135,000   Abbott Laboratories....................................................................     7,129,688
 185,000   American Home Products Corp............................................................    11,747,500
 135,000   Merck & Co., Inc.......................................................................    12,141,563
 200,000   Pfizer Inc.............................................................................     8,637,500
                                                                                                    ------------
                                                                                                      39,656,251
                                                                                                    ------------
           PHARMACEUTICALS: OTHER (2.6%)
  40,000   Forest Laboratories, Inc.*.............................................................     5,300,000
 150,000   Shire Pharmaceuticals Group PLC (ADR) (United Kingdom)*................................     9,431,250
                                                                                                    ------------
                                                                                                      14,731,250
                                                                                                    ------------
           PROPERTY - CASUALTY INSURERS (5.4%)
 225,000   ACE, Ltd. (Bermuda)....................................................................     8,831,250
 125,000   Chubb Corp. (The)......................................................................    10,554,688
 200,000   Everest Re Group, Ltd. (Bermuda).......................................................    11,725,000
                                                                                                    ------------
                                                                                                      31,110,938
                                                                                                    ------------
           REAL ESTATE INVESTMENT TRUSTS (0.7%)
 100,000   Boston Properties, Inc.................................................................     4,050,000
                                                                                                    ------------
           SAVINGS BANKS (2.2%)
 225,000   Golden West Financial Corp.............................................................    12,614,063
                                                                                                    ------------
           SEMICONDUCTORS (0.2%)
  25,000   Integrated Device Technology, Inc.*....................................................     1,407,813
                                                                                                    ------------
           SPECIALTY INSURANCE (3.2%)
 125,000   MGIC Investment Corp...................................................................     8,515,625
 125,000   XL Capital Ltd. (Class A) (Bermuda)....................................................     9,609,375
                                                                                                    ------------
                                                                                                      18,125,000
                                                                                                    ------------
           TELECOMMUNICATION EQUIPMENT (1.2%)
  60,000   Comverse Technology, Inc.*.............................................................     6,705,000
                                                                                                    ------------
           TOBACCO (1.3%)
 200,000   Philip Morris Companies, Inc...........................................................     7,325,000
                                                                                                    ------------

           TOTAL COMMON STOCKS
           (COST $442,167,506)....................................................................   537,663,750
                                                                                                    ------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS
                                       38
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS                                                                                              VALUE
----------------------------------------------------------------------------------------------------------------
<C>        <S>                                                                                      <C>
           SHORT-TERM INVESTMENT (a) (7.2%)
           U.S. GOVERNMENT AGENCY
$ 41,150   Student Loan Mortgage Assoc. 6.45% due 11/01/00
             (COST $41,150,000)...................................................................  $ 41,150,000
                                                                                                    ------------
</TABLE>

<TABLE>
<S>                                                                                         <C>     <C>
TOTAL INVESTMENTS
(COST $483,317,506) (B)...................................................................  100.8%    578,813,750

LIABILITIES IN EXCESS OF OTHER ASSETS.....................................................   (0.8)     (4,369,099)
                                                                                            -----   -------------

NET ASSETS................................................................................  100.0%  $ 574,444,651
                                                                                            -----   -------------
                                                                                            -----   -------------
</TABLE>

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

ADR  American Depository Receipt.
 *   Non-income producing security.
(a)  Purchased on a discount basis. The interest rate shown has been adjusted to
     reflect a money market equivalent yield.
(b)  The aggregate cost for federal income tax purposes approximates the
     aggregate cost for book purposes. The aggregate gross unrealized
     appreciation is $96,679,245 and the aggregate gross unrealized depreciation
     is $1,183,001, resulting in net unrealized appreciation of $95,496,244.

                       SEE NOTES TO FINANCIAL STATEMENTS
                                       39
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000

<TABLE>
<S>                                                                                             <C>
ASSETS:
Investments in securities, at value
  (cost $483,317,506).........................................................................  $578,813,750
Cash..........................................................................................        63,168
Receivable for:
    Investments sold..........................................................................    34,424,887
    Shares of beneficial interest sold........................................................       486,278
    Dividends.................................................................................        64,813
Prepaid expenses and other assets.............................................................         6,252
                                                                                                ------------
     TOTAL ASSETS.............................................................................   613,859,148
                                                                                                ------------
LIABILITIES:
Payable for:
    Investments purchased.....................................................................    38,031,234
    Shares of beneficial interest repurchased.................................................       463,740
    Plan of distribution fee..................................................................       453,731
    Investment management fee.................................................................       325,397
Accrued expenses and other payables...........................................................       140,395
                                                                                                ------------
     TOTAL LIABILITIES........................................................................    39,414,497
                                                                                                ------------
     NET ASSETS...............................................................................  $574,444,651
                                                                                                ============
COMPOSITION OF NET ASSETS:
Paid-in-capital...............................................................................  $423,561,455
Net unrealized appreciation...................................................................    95,496,244
Accumulated net investment loss...............................................................       (51,569)
Accumulated undistributed net realized gain...................................................    55,438,521
                                                                                                ------------
     NET ASSETS...............................................................................  $574,444,651
                                                                                                ============
CLASS A SHARES:
Net Assets....................................................................................    $6,907,677
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE).....................................       443,935
     NET ASSET VALUE PER SHARE................................................................        $15.56
                                                                                                ============
     MAXIMUM OFFERING PRICE PER SHARE,
       (NET ASSET VALUE PLUS 5.54% OF NET
         ASSET VALUE).........................................................................        $16.42
                                                                                                ============
CLASS B SHARES:
Net Assets....................................................................................  $504,311,463
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE).....................................    33,527,979
     NET ASSET VALUE PER SHARE................................................................        $15.04
                                                                                                ============
CLASS C SHARES:
Net Assets....................................................................................    $2,433,276
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE).....................................       160,972
     NET ASSET VALUE PER SHARE................................................................        $15.12
                                                                                                ============
CLASS D SHARES:
Net Assets....................................................................................   $60,792,235
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE).....................................     3,868,320
     NET ASSET VALUE PER SHARE................................................................        $15.72
                                                                                                ============
</TABLE>

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000

<TABLE>
<S>                                                                                             <C>
NET INVESTMENT LOSS:

INCOME
Dividends (net of $11,337 foreign withholding tax)............................................  $  2,775,179
Interest......................................................................................     2,206,377
                                                                                                ------------

     TOTAL INCOME.............................................................................     4,981,556
                                                                                                ------------

EXPENSES
Plan of distribution fee (Class A shares).....................................................        17,105
Plan of distribution fee (Class B shares).....................................................     5,294,471
Plan of distribution fee (Class C shares).....................................................        17,344
Investment management fee.....................................................................     3,760,671
Transfer agent fees and expenses..............................................................       650,826
Shareholder reports and notices...............................................................       111,862
Registration fees.............................................................................        86,804
Professional fees.............................................................................        73,794
Custodian fees................................................................................        68,924
Trustees' fees and expenses...................................................................        15,805
Other.........................................................................................        11,199
                                                                                                ------------

     TOTAL EXPENSES...........................................................................    10,108,805
                                                                                                ------------

     NET INVESTMENT LOSS......................................................................    (5,127,249)
                                                                                                ------------

NET REALIZED AND UNREALIZED GAIN:
Net realized gain.............................................................................    67,890,012
Net change in unrealized appreciation.........................................................    37,777,782
                                                                                                ------------

     NET GAIN.................................................................................   105,667,794
                                                                                                ------------

NET INCREASE..................................................................................  $100,540,545
                                                                                                ============
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS
                                       40
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
                                                                            FOR THE YEAR      FOR THE YEAR
                                                                               ENDED             ENDED
                                                                          OCTOBER 31, 2000  OCTOBER 31, 1999
------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>               <C>
INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment loss.....................................................   $  (5,127,249)     $ (5,225,051)
Net realized gain.......................................................      67,890,012       152,060,838
Net change in unrealized appreciation...................................      37,777,782       (15,097,438)
                                                                           -------------      ------------

     NET INCREASE.......................................................     100,540,545       131,738,349
                                                                           -------------      ------------

DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAIN:
Class A shares..........................................................      (1,452,888)         (401,300)
Class B shares..........................................................    (124,572,319)      (51,411,180)
Class C shares..........................................................        (214,295)          (98,960)
Class D shares..........................................................     (10,594,159)       (4,282,604)
                                                                           -------------      ------------

     TOTAL DISTRIBUTIONS................................................    (136,833,661)      (56,194,044)
                                                                           -------------      ------------
Net increase (decrease) from transactions in shares of beneficial
  interest..............................................................      95,058,623       (44,859,929)
                                                                           -------------      ------------

     NET INCREASE.......................................................      58,765,507        30,684,376

NET ASSETS:
Beginning of period.....................................................     515,679,144       484,994,768
                                                                           -------------      ------------

     END OF PERIOD
    (INCLUDING ACCUMULATED NET INVESTMENT LOSSES OF $51,569 AND $52,319,
    RESPECTIVELY).......................................................   $ 574,444,651      $515,679,144
                                                                           =============      ============
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS
                                       41
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000

1. ORGANIZATION AND ACCOUNTING POLICIES

Morgan Stanley Dean Witter Capital Growth Securities (the "Fund") is registered
under the Investment Company Act of 1940, as amended (the "Act"), as a
diversified, open-end management investment company. The Fund's investment
objective is long-term capital growth. The Fund was organized as a Massachusetts
business trust on December 8, 1989 and commenced operations on April 2, 1990. On
July 28, 1997, the Fund converted to a multiple class share structure.

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

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

The following is a summary of significant accounting policies:

A. VALUATION OF INVESTMENTS -- (1) an equity portfolio security listed or traded
on the New York or American Stock Exchange, NASDAQ, or other domestic or foreign
stock exchange is valued at its latest sale price, prior to the time when assets
are valued; if there were no sales that day, the security is valued at the
latest bid price (in cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated as the primary
market pursuant to procedures adopted by the Trustees); (2) all other portfolio
securities for which over-the-counter market quotations are readily available
are valued at the latest available bid price; (3) when market quotations are not
readily available, including circumstances under which it is determined by
Morgan Stanley Dean Witter Advisors Inc. (the "Investment Manager"), that sale
or bid prices are not reflective of a security's market value, portfolio
securities are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Trustees; and
(4) short-term debt securities having a maturity date of more than sixty days at
time of purchase are valued on a mark-to-market basis until sixty days prior to
maturity and thereafter at amortized cost based on their value on the 61st day.
Short-term debt securities having a maturity date of sixty days or less at the
time of purchase are valued at amortized cost.

                                       42
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED

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

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

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

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

2. INVESTMENT MANAGEMENT AGREEMENT

Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined at the close of
each business day: 0.65% to the portion of daily net assets not exceeding $500
million; 0.55% to the portion of daily net assets exceeding $500 million but not
exceeding $1 billion; 0.50% to the portion of daily net assets exceeding $1
billion but not exceeding $1.5 billion; and 0.475% to the portion of daily net
assets exceeding $1.5 billion.

3. PLAN OF DISTRIBUTION

Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution

                                       43
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED

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

In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts totaled
$14,037,176 at October 31, 2000.

In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended October 31, 2000, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.25% and
1.0%, respectively.

The Distributor has informed the Fund that for the year ended October 31, 2000,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class B shares and Class C shares of $142,910 and $1,358, respectively
and received $7,161 in front-end sales charges from sales of the Fund's Class A
shares. The respective shareholders pay such charges which are not an expense of
the Fund.

                                       44
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED

4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES

The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended October 31, 2000 aggregated
$2,042,172,183 and $2,119,253,907, respectively.

For the year ended October 31, 2000 the Fund incurred $280,927 in brokerage
commissions with Dean Witter Reynolds Inc. ("DWR"), an affiliate of the
Investment Manager and Distributor, for portfolio transactions executed on
behalf of the Fund. At October 31, 2000, the Fund's payable for investments
purchased and receivable for investments sold included unsettled trades with DWR
of $2,777,755 and $1,839,411, respectively.

For the year ended October 31, 2000, the Fund incurred brokerage commissions of
$175,257 with Morgan Stanley & Co., Inc., an affiliate of the Investment Manager
and Distributor, for portfolio transactions executed on behalf of the Fund. At
October 31, 2000, the Fund's payable for investments purchased included
unsettled trades with Morgan Stanley & Co., Inc. of $1,301,125.

Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At October 31, 2000 the Fund had
transfer agent fees and expenses payable of approximately $700.

The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended October 31, 2000 included
in Trustees' fees and expenses in the Statement of Operations amounted to
$3,544. At October 31, 2000, the Fund had an accrued pension liability of
$51,569 which is included in accrued expenses in the Statement of Assets and
Liabilities.

                                       45
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED

5. SHARES OF BENEFICIAL INTEREST

Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
                                                                          FOR THE YEAR                 FOR THE YEAR
                                                                              ENDED                       ENDED
                                                                        OCTOBER 31, 2000             OCTOBER 31, 1999
                                                                   ---------------------------  --------------------------
                                                                     SHARES         AMOUNT        SHARES        AMOUNT
                                                                   -----------  --------------  -----------  -------------
<S>                                                                <C>          <C>             <C>          <C>
CLASS A SHARES
Sold.............................................................     282,896   $   4,539,795      143,069   $   2,289,077
Reinvestment of distributions....................................      98,235       1,410,649       28,595         388,035
Redeemed.........................................................    (245,359)     (3,822,339)     (95,316)     (1,520,516)
                                                                   ----------   -------------   ----------   -------------
Net increase - Class A...........................................     135,772       2,128,105       76,348       1,156,596
                                                                   ----------   -------------   ----------   -------------

CLASS B SHARES
Sold.............................................................   4,308,162      68,137,512    2,423,634      37,639,071
Reinvestment of distributions....................................   8,403,850     117,401,782    3,655,137      48,978,844
Redeemed.........................................................  (7,529,809)   (117,971,824)  (8,138,374)   (126,956,990)
                                                                   ----------   -------------   ----------   -------------
Net increase (decrease) - Class B................................   5,182,203      67,567,470   (2,059,603)    (40,339,075)
                                                                   ----------   -------------   ----------   -------------

CLASS C SHARES
Sold.............................................................     129,880       2,025,557       33,309         503,728
Reinvestment of distributions....................................      13,398         188,105        5,482          73,451
Redeemed.........................................................     (23,863)       (361,966)     (63,569)       (976,649)
                                                                   ----------   -------------   ----------   -------------
Net increase (decrease) - Class C................................     119,415       1,851,696      (24,778)       (399,470)
                                                                   ----------   -------------   ----------   -------------

CLASS D SHARES
Sold.............................................................   1,932,874      31,620,646    1,114,224      17,761,834
Reinvestment of distributions....................................     732,012      10,592,214      302,202       4,119,023
Redeemed.........................................................  (1,135,708)    (18,701,508)  (1,714,336)    (27,158,837)
                                                                   ----------   -------------   ----------   -------------
Net increase (decrease) - Class D................................   1,529,178      23,511,352     (297,910)     (5,277,980)
                                                                   ----------   -------------   ----------   -------------
Net increase (decrease) in Fund..................................   6,966,568   $  95,058,623   (2,305,943)  $ (44,859,929)
                                                                   ==========   =============   ==========   =============
</TABLE>

6. FEDERAL INCOME TAX STATUS

As of October 31, 2000, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales and permanent book/tax
differences attributable to a net operating loss. To reflect reclassifications
arising from the permanent differences, accumulated undistributed net realized
gain was charged and accumulated net investment loss was credited $5,127,999.

                                       46
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
                                                                                                                  FOR THE PERIOD
                                                                        FOR THE YEAR ENDED OCTOBER 31,            JULY 28, 1997*
                                                                    --------------------------------------           THROUGH
                                                                      2000           1999           1998         OCTOBER 31, 1997
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>            <C>            <C>            <C>
CLASS A SHARES++

SELECTED PER SHARE DATA:

Net asset value, beginning of period.........................        $16.91         $14.68         $18.75             $18.10
                                                                     ------         ------         ------             ------

Income (loss) from investment operations:
   Net investment loss.......................................         (0.03)         (0.04)         (0.11)             (0.04)
   Net realized and unrealized gain (loss)...................          3.11           3.98          (0.55)              0.69
                                                                     ------         ------         ------             ------

Total income (loss) from investment operations...............          3.08           3.94          (0.66)              0.65
                                                                     ------         ------         ------             ------

Less distributions from net realized gain....................         (4.43)         (1.71)         (3.41)           --
                                                                     ------         ------         ------             ------

Net asset value, end of period...............................        $15.56         $16.91         $14.68             $18.75
                                                                     ======         ======         ======             ======

TOTAL RETURN+................................................         20.43 %        29.74 %        (2.84)%             3.59 %(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses.....................................................          1.05 %(3)      1.06 %(3)      1.09 %(3)          1.12 %(2)

Net investment loss..........................................         (0.21)%(3)     (0.28)%(3)     (0.69)%(3)         (0.82)%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands......................        $6,908         $5,212         $3,403             $1,684

Portfolio turnover rate......................................           376 %          557 %          230 %              123 %(1)
</TABLE>

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

 *   The date shares were first issued.
++   The per share amounts were computed using an average number of shares
     outstanding during the period.
 +   Does not reflect the deduction of sales charge. Calculated based on the net
     asset value as of the last business day of the period.
(1)  Not annualized.
(2)  Annualized.
(3)  Reflects overall Fund ratios for investment income and non-class specific
     expenses.

                       SEE NOTES TO FINANCIAL STATEMENTS
                                       47
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL HIGHLIGHTS, CONTINUED

<TABLE>
<CAPTION>
                                                        FOR THE YEAR ENDED OCTOBER 31,
                                     --------------------------------------------------------------------
                                      2000++         1999++         1998++        1997*++          1996
---------------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>            <C>            <C>            <C>
CLASS B SHARES

SELECTED PER SHARE DATA:

Net asset value, beginning of
period                               $  16.58       $  14.53       $  18.71       $  16.98       $  14.40
                                     --------       --------       --------       --------       --------

Income (loss) from investment
operations:
   Net investment loss........          (0.15)         (0.17)         (0.23)         (0.21)         (0.11)
   Net realized and unrealized
   gain (loss)................           3.04           3.93          (0.54)          4.68           2.69
                                     --------       --------       --------       --------       --------

Total income (loss) from
investment operations.........           2.89           3.76          (0.77)          4.47           2.58
                                     --------       --------       --------       --------       --------

Less distributions from net
realized gain.................          (4.43)         (1.71)         (3.41)         (2.74)         --
                                     --------       --------       --------       --------       --------

Net asset value, end of
period........................       $  15.04       $  16.58       $  14.53       $  18.71       $  16.98
                                     ========       ========       ========       ========       ========

TOTAL RETURN+.................          19.50 %        28.70 %        (3.56)%        31.21 %        17.92 %

RATIOS TO AVERAGE NET ASSETS:
Expenses......................           1.80 %(1)      1.86 %(1)      1.84 %(1)      1.84 %         1.84 %

Net investment loss...........          (0.96)%(1)     (1.08)%(1)     (1.44)%(1)     (1.26)%        (0.64)%

SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.....................       $504,311       $469,991       $441,787       $522,276       $506,571

Portfolio turnover rate.......            376 %          557 %          230 %          123 %           72 %
</TABLE>

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

 *   Prior to July 28, 1997, the Fund issued one class of shares. All shares of
     the Fund held prior to that date, other than shares held by certain
     employee benefit plans established by Dean Witter Reynolds Inc., have been
     designated as Class B shares. Shares held by those employee benefit plans
     prior July 28, 1997 have been designated Class D shares.
++   The per share amounts were computed using an average number of shares
     outstanding during the period.
 +   Does not reflect the deduction of sales charge. Calculated based on the net
     asset value as of the last business day of the period.
(1)  Reflects overall Fund ratios for investment income and non-class specific
     expenses.

                       SEE NOTES TO FINANCIAL STATEMENTS
                                       48
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL HIGHLIGHTS, CONTINUED

<TABLE>
<CAPTION>
                                                                                                                  FOR THE PERIOD
                                                                       FOR THE YEAR ENDED OCTOBER 31,             JULY 28, 1997*
                                                              -------------------------------------------------      THROUGH
                                                                   2000             1999             1998        OCTOBER 31, 1997
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>              <C>              <C>              <C>
CLASS C SHARES++

SELECTED PER SHARE DATA:

Net asset value, beginning of period........................      $16.64           $14.53           $18.71            $18.10
                                                                  ------           ------           ------            ------

Income (loss) from investment operations:
   Net investment loss......................................       (0.15)           (0.12)           (0.23)            (0.07)
   Net realized and unrealized gain (loss)..................        3.06             3.94            (0.54)             0.68
                                                                  ------           ------           ------            ------

Total income (loss) from investment operations..............        2.91             3.82            (0.77)             0.61
                                                                  ------           ------           ------            ------

Less distributions from net realized gain...................       (4.43)           (1.71)           (3.41)               --
                                                                  ------           ------           ------            ------

Net asset value, end of period..............................      $15.12           $16.64           $14.53            $18.71
                                                                  ======           ======           ======            ======

TOTAL RETURN+...............................................       19.56 %          29.17 %          (3.56)%            3.37 %(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses....................................................        1.80 %(3)        1.53 %(3)        1.84 %(3)         1.85 %(2)

Net investment loss.........................................       (0.96)%(3)       (0.75)%(3)       (1.44)%(3)        (1.54)%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.....................      $2,433             $692             $964              $389

Portfolio turnover rate.....................................         376 %            557 %            230 %             123 %(1)
</TABLE>

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

 *   The date shares were first issued.
++   The per share amounts were computed using an average number of shares
     outstanding during the period.
 +   Does not reflect the deduction of sales charge. Calculated based on the net
     asset value as of the last business day of the period.
(1)  Not annualized.
(2)  Annualized.
(3)  Reflects overall Fund ratios for investment income and non-class specific
     expenses.

                       SEE NOTES TO FINANCIAL STATEMENTS
                                       49
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL HIGHLIGHTS, CONTINUED

<TABLE>
<CAPTION>
                                                                                                                 FOR THE PERIOD
                                                                       FOR THE YEAR ENDED OCTOBER 31,            JULY 28, 1997*
                                                                   --------------------------------------           THROUGH
                                                                     2000           1999           1998         OCTOBER 31, 1997
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>            <C>            <C>            <C>
CLASS D SHARES++

SELECTED PER SHARE DATA:

Net asset value, beginning of period........................       $ 17.01        $ 14.73        $ 18.76              $ 18.10
                                                                   -------        -------        -------              -------

Income (loss) from investment operations:
   Net investment income (loss).............................          0.01          (0.01)         (0.07)               (0.02)
   Net realized and unrealized gain (loss)..................          3.13           4.00          (0.55)                0.68
                                                                   -------        -------        -------              -------

Total income (loss) from investment operations..............          3.14           3.99          (0.62)                0.66
                                                                   -------        -------        -------              -------

Less distributions from net realized gain...................         (4.43)         (1.71)         (3.41)            --
                                                                   -------        -------        -------              -------

Net asset value, end of period..............................       $ 15.72        $ 17.01        $ 14.73              $ 18.76
                                                                   =======        =======        =======              =======

TOTAL RETURN+...............................................         20.74 %        30.00 %        (2.59)%               3.65 %(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses....................................................          0.80 %(3)      0.86 %(3)      0.84 %(3)            0.82 %(2)

Net investment income (loss)................................          0.04 %(3)     (0.08)%(3)     (0.44)%(3)           (0.50)%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.....................       $60,792        $39,785        $38,840              $36,863

Portfolio turnover rate.....................................           376 %          557 %          230 %                123 %(1)
</TABLE>

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

 *   The date shares were first issued. Shareholders who held shares of the Fund
     prior to July 28, 1997 (the date the Fund converted to a multiple class
     share structure) should refer to the Financial Highlights of Class B to
     obtain the historical per share data and ratio information of their shares.
++   The per share amounts were computed using an average number of shares
     outstanding during the period.
 +   Calculated based on the net asset value as of the last business day of the
     period.
(1)  Not annualized.
(2)  Annualized.
(3)  Reflects overall Fund ratios for investment income and non-class specific
     expenses.

                       SEE NOTES TO FINANCIAL STATEMENTS
                                       50
<PAGE>

MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying statement of assets and liabilities of Morgan
Stanley Dean Witter Capital Growth Securities (the "Fund"), including the
portfolio of investments, as of October 31, 2000, and the related statements of
operations and changes in net assets, and the financial highlights for the year
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit. The statement of changes in net assets for the year ended October 31,
1999 and the financial highlights for each of the respective stated periods
ended October 31, 1999 were audited by other independent accountants whose
report, dated December 8, 1999, expressed an unqualified opinion on that
statement and financial highlights.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2000, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Morgan
Stanley Dean Witter Capital Growth Securities as of October 31, 2000, the
results of its operations, the changes in its net assets, and the financial
highlights for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.

Deloitte & Touche LLP
NEW YORK, NEW YORK
DECEMBER 11, 2000

                      2000 FEDERAL TAX NOTICE (UNAUDITED)

       During the fiscal year ended October 31, 2000, the Fund paid to
       its shareholders $1.57 per share from long-term capital gains.

                                       51
<PAGE>

MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
CHANGE IN INDEPENDENT ACCOUNTANTS

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

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

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

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

                                       52
<PAGE>


MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
REPORT OF INDEPENDENT ACCOUNTANTS

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



In our opinion, the statement of changes in net assets and the financial
highlights of Morgan Stanley Dean Witter Capital Growth Securities (the "Fund")
(not presented separately herein) present fairly, in all material respects, the
changes in its net assets for the year ended October 31, 1999 and the financial
highlights for each of the years in the period ended October 31, 1999, in
conformity with generally accepted accounting principles. This financial
statement and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above. We have not
audited the financial statements or financial highlights of the Fund for any
period subsequent to October 31, 1999.



PricewaterhouseCoopers LLP


1177 AVENUE OF THE AMERICAS


NEW YORK, NEW YORK 10036
DECEMBER 8, 1999


                                       53
<PAGE>


              MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
                            PART C OTHER INFORMATION

ITEM 23. EXHIBITS
-------  -----------------------------------------------------------------------

1(a).    Declaration of Trust of the Registrant, dated December 7, 1989, is
         incorporated by reference to Exhibit 1 of Post-Effective Amendment No.
         7 to the Registration Statement on Form N-1A, filed on January 25,
         1996.

1(b).    Instrument Establishing and Designating Additional Classes dated July
         28, 1997, is incorporated by reference to Exhibit 1 of Post-Effective
         Amendment No. 9 to the Registration Statement on Form N-1A, filed on
         July 18, 1997.

1(c).    Amendment, dated June 22, 1998, to the Declaration of Trust of the
         Registrant is incorporated by reference to Exhibit 1 of Post-Effective
         Amendment No. 11 to the Registration Statement on Form N-1A, filed on
         December 18, 1998.

2.       Amended and Restated By-Laws of the Registrant, dated May 1, 1999, is
         incorporated by reference to Exhibit 2 of Post-Effective Amendment No.
         14 to the Registration Statement on Form N-1A, filed on January 31,
         2000.

3.       Not applicable.

4.       Amended Investment Management Agreement between the Registrant and
         Morgan Stanley Dean Witter Advisors Inc., dated April 30, 1998, is
         incorporated by reference to Exhibit 5 of Post-Effective Amendment No.
         11 to the Registration Statement on Form N-1A, filed on December 18,
         1998.

5(a).    Amended Distribution Agreement between the Registrant and Morgan
         Stanley Dean Witter Distributors Inc., dated June 22, 1998, is
         incorporated by reference to Exhibit 6 of Post-Effective Amendment No.
         11 to the Registration Statement on Form N-1A, filed on December 18,
         1998.

5(b).    Selected Dealer Agreement between Morgan Stanley Dean Witter
         Distributors Inc. and Dean Witter Reynolds Inc., dated January 4, 1993,
         is incorporated by reference to Exhibit 6(b) of Post-Effective
         Amendment No. 5 to the Registration Statement on Form N-1A, filed on
         December 21, 1993.

5(c).    Omnibus Selected Dealer Agreement between Morgan Stanley Dean Witter
         Distributors Inc. and National Financial Services Corporation, dated
         October 17, 1998, is incorporated by reference to Exhibit 6(b) of
         Post-Effective Amendment No. 11 to the Registration Statement of Form
         N-1A, filed on December 18, 1998.

6.       Amended and Restated Retirement Plan for Non-Interested Trustees or
         Directors, dated May 8, 1997, is incorporated by reference to Exhibit 6
         of Post-Effective Amendment No. 14 to the Registration Statement on
         Form N-1A, filed on January 31, 2000.

7(a).    Custodian Agreement between The Bank of New York and the Registrant,
         dated September 20, 1991, is incorporated by reference to Exhibit 8 of
         Post-Effective Amendment No. 7 to the Registration Statement on Form
         N-1A filed on January 25, 1996.
<PAGE>


7(b).    Amendment to the Custody Agreement dated April 17, 1996 is incorporated
         by reference to Exhibit 8 of Post-Effective Amendment No. 8 to the
         Registration Statement on Form N-1A, filed on December 19, 1996.

8(a).    Amended and Restated Transfer Agency Agreement between the Registrant
         and Morgan Stanley Dean Witter Trust FSB, dated September 1, 2000, is
         filed herein.

8(b).    Amended Services Agreement between Morgan Stanley Dean Witter Advisors
         Inc. and Morgan Stanley Dean Witter Services Company Inc., dated June
         22, 1998, is incorporated by reference to Exhibit 9 of Post-Effective
         Amendment No. 11 to the Registration Statement on Form N-1A, filed on
         December 18, 1998.

9(a).    Opinion of Sheldon Curtis, Esq., dated January 20, 1990, is
         incorporated by reference to Exhibit 9(a) of Post-Effective Amendment
         No. 14 to the Registration Statement on Form N-1A, filed on January 31,
         2000.

9(b)     Opinion of Gaston & Snow, dated January 19, 1990, is incorporated by
         reference to Exhibit 9(b) of Post-Effective Amendment No. 14 to the
         Registration Statement on Form N-1A, filed on January 31, 2000.

10(a).   Consent of Independent Auditors, filed herein.

10(b).   Consent of PricewaterhouseCoopers LLP, filed herein.

11.      Not applicable.

12.      Not applicable.

13.      Amended and Restated Plan of Distribution pursuant to Rule 12b-1
         between the Registrant and Morgan Stanley Dean Witter Distributors
         Inc., dated July 28, 1997, is incorporated by reference to Exhibit 15
         of Post-Effective Amendment No. 9 to the Registration Statement on Form
         N-1A, filed on July 18, 1997.

14.      Not Applicable.

15.      Amended Multiple Class Plan pursuant to Rule 18f-3, dated December 1,
         2000, filed herein.

16.(a)   Code of Ethics of Morgan Stanley Dean Witter Advisors Inc., Morgan
         Stanley Dean Witter Services Company Inc. and Morgan Stanley Dean
         Witter Distributors Inc., filed herein.

16.(b)   Code of Ethics of the Morgan Stanley Dean Witter Funds, filed herein.

Other.   Powers of Attorney of Trustees are incorporated by reference to Exhibit
         (Other) of Post-Effective Amendment No. 6 to the Registration Statement
         on Form N-1A, filed on December 13, 1994 and Exhibit (Other) of
         Post-Effective Amendment No. 10 to the Registration Statement on Form
         N-1A, filed on December 23, 1997. Power of Attorney for James F.
         Higgins, filed herein.
<PAGE>


Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.

              None

Item 25. INDEMNIFICATION.

             Pursuant to Section 5.3 of the Registrant's Declaration of Trust
and under Section 4.8 of the Registrant's By-Laws, the indemnification of the
Registrant's trustees, officers, employees and agents is permitted if it is
determined that they acted under the belief that their actions were in or not
opposed to the best interest of the Registrant, and, with respect to any
criminal proceeding, they had reasonable cause to believe their conduct was not
unlawful. In addition, indemnification is permitted only if it is determined
that the actions in question did not render them liable by reason of willful
misfeasance, bad faith or gross negligence in the performance of their duties or
by reason of reckless disregard of their obligations and duties to the
Registrant. Trustees, officers, employees and agents will be indemnified for the
expense of litigation if it is determined that they are entitled to
indemnification against any liability established in such litigation. The
Registrant may also advance money for these expenses provided that they give
their undertakings to repay the Registrant unless their conduct is later
determined to permit indemnification.

             Pursuant to Section 5.2 of the Registrant's Declaration of Trust
and paragraph 8 of the Registrant's Investment Management Agreement, neither the
Investment Manager nor any trustee, officer, employee or agent of the Registrant
shall be liable for any action or failure to act, except in the case of bad
faith, willful misfeasance, gross negligence or reckless disregard of duties to
the Registrant.

             Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") 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 connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such trustee,
officer or controlling person in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act, and will be governed by the final adjudication of such
issue.

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

             Registrant, in conjunction with the Investment Manager,
Registrant's Trustees, and other registered investment management companies
managed by the Investment Manager, maintains insurance on behalf of any person
who is or was a Trustee, officer, employee, or agent of Registrant, or who is or
was serving at the request of Registrant as a trustee, director, officer,
employee or agent of another trust or corporation, against any liability
asserted against him and incurred by him or arising out of his position.
However, in no event will Registrant
<PAGE>


maintain insurance to indemnify any such person for any act for which Registrant
itself is not permitted to indemnify him.

Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR

         See "The Fund and Its Management" in the Prospectus regarding the
business of the investment advisor. The following information is given regarding
officers of Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"). MSDW
Advisors is a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co.

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

CLOSED-END INVESTMENT COMPANIES
(1)      Morgan Stanley Dean Witter California Insured Municipal Income Trust
(2)      Morgan Stanley Dean Witter California Quality Municipal Securities
(3)      Morgan Stanley Dean Witter Government Income Trust
(4)      Morgan Stanley Dean Witter High Income Advantage Trust
(5)      Morgan Stanley Dean Witter High Income Advantage Trust II
(6)      Morgan Stanley Dean Witter High Income Advantage Trust III
(7)      Morgan Stanley Dean Witter Income Securities Inc.
(8)      Morgan Stanley Dean Witter Insured California Municipal Securities
(9)      Morgan Stanley Dean Witter Insured Municipal Bond Trust
(10)     Morgan Stanley Dean Witter Insured Municipal Income Trust
(11)     Morgan Stanley Dean Witter Insured Municipal Securities
(12)     Morgan Stanley Dean Witter Insured Municipal Trust
(13)     Morgan Stanley Dean Witter Municipal Income Opportunities Trust
(14)     Morgan Stanley Dean Witter Municipal Income Opportunities Trust II
(15)     Morgan Stanley Dean Witter Municipal Income Opportunities Trust III
(16)     Morgan Stanley Dean Witter Municipal Income Trust
(17)     Morgan Stanley Dean Witter Municipal Income Trust II
(18)     Morgan Stanley Dean Witter Municipal Income Trust III
(19)     Morgan Stanley Dean Witter Municipal Premium Income Trust
(20)     Morgan Stanley Dean Witter New York Quality Municipal Securities
(21)     Morgan Stanley Dean Witter Prime Income Trust
(22)     Morgan Stanley Dean Witter Quality Municipal Income Trust
(23)     Morgan Stanley Dean Witter Quality Municipal Investment Trust
(24)     Morgan Stanley Dean Witter Quality Municipal Securities

OPEN-END INVESTMENT COMPANIES
(1)      Active Assets California Tax-Free Trust
(2)      Active Assets Government Securities Trust
(3)      Active Assets Institutional Money Trust
(4)      Active Assets Money Trust
(5)      Active Assets Premier Money Trust
(6)      Active Assets Tax-Free Trust
(7)      Morgan Stanley Dean Witter 21st Century Trend Fund
(8)      Morgan Stanley Dean Witter Aggressive Equity Fund
(9)      Morgan Stanley Dean Witter All Star Growth Fund
(10)     Morgan Stanley Dean Witter American Opportunities Fund
(11)     Morgan Stanley Dean Witter Balanced Growth Fund

<PAGE>


(12)     Morgan Stanley Dean Witter Balanced Income Fund
(13)     Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(14)     Morgan Stanley Dean Witter California Tax-Free Income Fund
(15)     Morgan Stanley Dean Witter Capital Growth Securities
(16)     Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS
         PORTFOLIO"
(17)     Morgan Stanley Dean Witter Convertible Securities Trust
(18)     Morgan Stanley Dean Witter Developing Growth Securities Trust
(19)     Morgan Stanley Dean Witter Diversified Income Trust
(20)     Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(21)     Morgan Stanley Dean Witter Equity Fund
(22)     Morgan Stanley Dean Witter European Growth Fund Inc.
(23)     Morgan Stanley Dean Witter Federal Securities Trust
(24)     Morgan Stanley Dean Witter Financial Services Trust
(25)     Morgan Stanley Dean Witter Fund of Funds
(26)     Morgan Stanley Dean Witter Global Dividend Growth Securities
(27)     Morgan Stanley Dean Witter Global Utilities Fund
(28)     Morgan Stanley Dean Witter Growth Fund
(29)     Morgan Stanley Dean Witter Hawaii Municipal Trust
(30)     Morgan Stanley Dean Witter Health Sciences Trust
(31)     Morgan Stanley Dean Witter High Yield Securities Inc.
(32)     Morgan Stanley Dean Witter Income Builder Fund
(33)     Morgan Stanley Dean Witter Information Fund
(34)     Morgan Stanley Dean Witter Intermediate Income Securities
(35)     Morgan Stanley Dean Witter International Fund
(36)     Morgan Stanley Dean Witter International SmallCap Fund
(37)     Morgan Stanley Dean Witter Japan Fund
(38)     Morgan Stanley Dean Witter Latin American Growth Fund
(39)     Morgan Stanley Dean Witter Limited Term Municipal Trust
(40)     Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(41)     Morgan Stanley Dean Witter Market Leader Trust
(42)     Morgan Stanley Dean Witter Mid-Cap Equity Trust
(43)     Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(44)     Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(45)     Morgan Stanley Dean Witter New Discoveries Fund
(46)     Morgan Stanley Dean Witter New York Municipal Money Market Trust
(47)     Morgan Stanley Dean Witter New York Tax-Free Income Fund
(48)     Morgan Stanley Dean Witter Next Generation Trust
(49)     Morgan Stanley Dean Witter North American Government Income Trust
(50)     Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(51)     Morgan Stanley Dean Witter Real Estate Fund
(52)     Morgan Stanley Dean Witter S&P 500 Index Fund
(53)     Morgan Stanley Dean Witter S&P 500 Select Fund
(54)     Morgan Stanley Dean Witter Select Dimensions Investment Series
(55)     Morgan Stanley Dean Witter Select Municipal Reinvestment Fund
(56)     Morgan Stanley Dean Witter Short-Term Bond Fund
(57)     Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(58)     Morgan Stanley Dean Witter Small Cap Growth Fund
(59)     Morgan Stanley Dean Witter Special Value Fund
(60)     Morgan Stanley Dean Witter Strategist Fund
(61)     Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(62)     Morgan Stanley Dean Witter Tax-Free Daily Income Trust

<PAGE>


(63)     Morgan Stanley Dean Witter Tax-Managed Growth Fund
(64)     Morgan Stanley Dean Witter Technology Fund
(65)     Morgan Stanley Dean Witter Total Market Index Fund
(66)     Morgan Stanley Dean Witter Total Return Trust
(67)     Morgan Stanley Dean Witter U.S. Government Money Market Trust
(68)     Morgan Stanley Dean Witter U.S. Government Securities Trust
(69)     Morgan Stanley Dean Witter Utilities Fund
(70)     Morgan Stanley Dean Witter Value-Added Market Series
(71)     Morgan Stanley Dean Witter Value Fund
(72)     Morgan Stanley Dean Witter Variable Investment Series
(73)     Morgan Stanley Dean Witter World Wide Income Trust
<TABLE>
<CAPTION>
NAME AND POSITION WITH              OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN                 OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC.                AND NATURE OF CONNECTION
--------------------                -----------------------------------------------------------------------
<S>                                 <C>
Mitchell M. Merin                   President and Chief Operating Officer of Asset
President, Chief                    Management of Morgan Stanley Dean Witter & Co.
Executive Officer and               ("MSDW); Chairman, Chief Executive Officer and Director
Director                            of Morgan Stanley Dean Witter  Distributors Inc. ("MSDW  Distributors")
                                    and Morgan Stanley Dean Witter Trust FSB ("MSDW Trust"); President,
                                    Chief Executive Officer and Director of Morgan Stanley Dean Witter
                                    Services Company Inc. ("MSDW Services"); President of the Morgan Stanley
                                    Dean Witter Funds; Executive Vice President and Director of Dean Witter
                                    Reynolds Inc. ("DWR"); Director of various MSDW subsidiaries; Trustee of
                                    various Van Kampen investment companies.

Barry Fink                          General Counsel of Asset Management of MSDW;
Executive Vice President,           Executive Vice President, Secretary, General Counsel
Secretary, General Counsel          and Director of MSDW Services; Vice President and
and Director                        Secretary of MSDW Distributors; Vice President, Secretary and General
                                    Counsel of the Morgan Stanley Dean Witter Funds.

Joseph J. McAlinden                 Vice President of the Morgan Stanley Dean Witter Funds;
Executive Vice President            Director of MSDW Trust.
and Chief Investment
Officer

Ronald E. Robison                   Executive Vice President, Chief Administrative Officer
Executive Vice President,           and Director of MSDW Services; Vice President of the
Chief Administrative                Morgan Stanley Dean Witter Funds.
Officer and Director

Edward C. Oelsner, III
Executive Vice President

Joseph R. Arcieri                   Vice President of various Morgan Stanley Dean Witter
Senior Vice President               Funds.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH              OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN                 OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC.                AND NATURE OF CONNECTION
--------------------                -----------------------------------------------------------------------
<S>                                 <C>
Peter M. Avelar                     Vice President of various Morgan Stanley Dean Witter
Senior Vice President               Funds.
and Director of the High
Yield Group

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


Douglas Brown
Senior Vice President

Rosalie Clough
Senior Vice President
and Director of Marketing

Richard G. DeSalvo
Senior Vice President
and Director of Investment
Management Services

Richard Felegy
Senior Vice President

Sheila A. Finnerty                  Vice President of Morgan Stanley Dean Witter Prime
Senior Vice President               Income Trust.

Edward F. Gaylor                    Vice President of various Morgan Stanley Dean Witter
Senior Vice President               Funds.
Director of the Research
Group

Robert S. Giambrone                 Senior Vice President of MSDW Services, MSDW
Senior Vice President               Distributors and MSDW Trust and Director of MSDW Trust;
                                    Vice President of the Morgan Stanley
                                    Dean Witter Funds.

Rajesh K. Gupta                     Management and Vice President of various Morgan
Senior Vice President               Stanley Dean Witter Funds.
Director of the Taxable
Fixed Income Group and
Chief Administrative Officer -
Investments

Kenton J. Hinchliffe                Vice President of various Morgan Stanley Dean Witter
Senior Vice President               Funds.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH              OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN                 OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC.                AND NATURE OF CONNECTION
--------------------                -----------------------------------------------------------------------
<S>                                 <C>
Kevin Hurley                        Vice President of various Morgan Stanley Dean Witter
Senior Vice President               Funds.

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

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

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

Anita H. Kolleeny                   Vice President of various Morgan Stanley Dean Witter
Senior Vice President               Funds.
and Director of Sector
Rotation

Lou Anne D. McInnis                 Senior Vice President and Assistant Secretary of MSDW
Senior Vice President and           Services; Assistant Secretary of MSDW Distributors and
Assistant Secretary                 the Morgan Stanley Dean Witter Funds.

Carsten Otto                        Senior Vice President and Assistant Secretary of MSDW
Senior Vice President               Services; Assistant Secretary of MSDW Distributors and
and Assistant Secretary             the Morgan Stanley Dean Witter Funds.

Jonathan R. Page                    Vice President of various Morgan Stanley Dean Witter
Senior Vice President               Funds.
and Director of the Money
Market Group

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

Ruth Rossi                          Senior Vice President and Assistant Secretary of MSDW
Senior Vice President and           Services; Assistant Secretary of MSDW Distributors
and Assistant Secretary             the Morgan Stanley Dean Witter Funds.

Guy G. Rutherfurd, Jr.              Vice President of various Morgan Stanley Dean Witter
Senior Vice President               Funds.
and Director of the Growth
Group

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

James Solloway Jr.
Senior Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH              OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN                 OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC.                AND NATURE OF CONNECTION
--------------------                -----------------------------------------------------------------------
<S>                                 <C>
Katherine H. Stromberg              Vice President of various Morgan Stanley Dean Witter
Senior Vice President               Funds.

Paul D. Vance                       Vice President of various Morgan Stanley Dean Witter
Senior Vice President               Funds.
and Director of the Growth
and Income Group

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

James P. Wallin
Senior Vice President

James F. Willison                   Vice President of various Morgan Stanley Dean Witter
Senior Vice President               Funds.
and Director of the
Tax-Exempt Fixed
Income Group

Raymond A. Basile
First Vice President

Thomas F. Caloia                    First Vice President and Assistant Treasurer of
First Vice President                MSDW Services; Assistant Treasurer of MSDW
and Assistant                       Distributors; Treasurer and Chief Financial and Accounting
Treasurer                           Officer of the Morgan Stanley Dean Witter Funds.

Thomas Chronert
First Vice President

Richard Colville                    First Vice President and Controller of MSDW Services;
First Vice President                Assistant Treasurer of MSDW Distributors; First Vice
and Controller                      President and Treasurer of MSDW Trust.

Marilyn K. Cranney                  Assistant Secretary of DWR; First Vice President and
First Vice President                Assistant Secretary of MSDW Services; Assistant
and Assistant Secretary             Secretary  of MSDW  Distributors  and the Morgan  Stanley  Dean  Witter
                                    Funds.

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

David Johnson
First Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH              OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN                 OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC.                AND NATURE OF CONNECTION
--------------------                -----------------------------------------------------------------------
<S>                                 <C>
Stanley Kapica
First Vice President

Douglas J. Ketterer
First Vice President

Todd Lebo                           First Vice President and Assistant Secretary of MSDW
First Vice President and            Services; Assistant Secretary of MSDW Distributors and
Assistant Secretary                 the Morgan Stanley Dean Witter Funds.

Carl F. Sadler
First Vice President

Robert Abreu
Vice President

Dale Albright
Vice President

Joan G. Allman
Vice President

Andrew Arbenz                       Vice President of Morgan Stanley Dean Witter Global
Vice President                      Utilities Fund.

Sean Aurigemma
Vice President

Armon Bar-Tur                       Vice President of various Morgan Stanley Dean Witter
Vice President                      Funds.

Thomas A. Bergeron
Vice President

Philip Bernstein
Vice President

Dale Boettcher
Vice President

Michelina Calandrella
Vice President

Ronald Caldwell
Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH              OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN                 OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC.                AND NATURE OF CONNECTION
--------------------                -----------------------------------------------------------------------
<S>                                 <C>
Joseph Cardwell
Vice President

Christie Carr-Waldron
Vice President

Liam Carroll
Vice President

Philip Casparius
Vice President

Annette Celenza
Vice President

Aaron Clark                         Vice President of Morgan Stanley Dean Witter Market
Vice President                      Leader Trust

William Connerly
Vice President

Virginia Connors
Vice President

Michael J. Davey
Vice President

David Dineen                        Vice President of various Morgan Stanley Dean Witter
Vice President                      Funds.

Michele Eng
Vice President

June Ewers
Vice President

Jeffrey D. Geffen                   Vice President of Morgan Stanley Dean Witter U.S.
Vice President                      Government Securities Trust

Sandra Gelpieryn
Vice President

Charmaine George
Vice President

Michael Geringer
Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH              OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN                 OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC.                AND NATURE OF CONNECTION
--------------------                -----------------------------------------------------------------------
<S>                                 <C>
Gail Gerrity Burke
Vice President

Peter Gewirtz
Vice President

Mina Gitsevich
Vice President

Ellen Gold
Vice President

Amy Golub
Vice President

Stephen Greenhut
Vice President

Joan Hamilton
Vice President

Trey Hancock
Vice President

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

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

David T. Hoffman
Vice President

Thomas G. Hudson II
Vice President

Linda Jones
Vice President

Norman Jones
Vice President

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

Carol Espejo-Kane
Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH              OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN                 OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC.                AND NATURE OF CONNECTION
--------------------                -----------------------------------------------------------------------
<S>                                 <C>
Nancy Karole Kennedy
Vice President

Natasha Kassian                     Vice President and Assistant Secretary of MSDW
Vice President and                  Services; Assistant Secretary of MSDW Distributors and
Assistant Secretary                 the Morgan Stanley Dean Witter Funds.

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

Kimberly LaHart
Vice President

Thomas Lawlor
Vice President

Lester Lay
Vice President

Phuong Le
Vice President

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

Cameron J. Livingstone
Vice President

Nancy Login Cole
Vice President

Sharon Loguercio
Vice President

Stephanie Lovinger
Vice President

Steven MacNamara
Vice President

Catherine Maniscalco                Vice President of various Morgan Stanley Dean Witter
Vice President                      Funds.

Peter R. McDowell
Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH              OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN                 OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC.                AND NATURE OF CONNECTION
--------------------                -----------------------------------------------------------------------
<S>                                 <C>
Albert McGarity
Vice President

Teresa McRoberts                    Vice President of various Morgan Stanley Dean Witter
Vice President                      Funds.

Mark Mitchell
Vice President

Thomas Moore
Vice President

Julie Morrone                       Vice President of various Morgan Stanley Dean Witter
Vice President                      Funds.

Mary Beth Mueller
Vice President

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

James Nash
Vice President

Daniel Niland
Vice President

Richard Norris
Vice President

Hilary A. O'Neill
Vice President

Steven Orlov
Vice President

Mori Paulsen
Vice President

Mary Anne Picciotto
Vice President

Anne Pickrell
Vice President

Christine Reisch
Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH              OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN                 OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC.                AND NATURE OF CONNECTION
--------------------                -----------------------------------------------------------------------
<S>                                 <C>
Reginald Rigaud
Vice President

Frances Roman
Vice President

Dawn Rorke
Vice President

John Roscoe                         Vice President of various Morgan Stanley Dean Witter
Vice President                      Funds.

Hugh Rose
Vice President

Robert Rossetti                     Vice President of Morgan Stanley Dean Witter Competitive
Vice President                      Edge Fund.

Sally Sancimino                     Vice President of various Morgan Stanley Dean Witter
Vice President                      Funds.

Deborah Santaniello
Vice President

Patrice Saunders
Vice President

Donna Savoca
Vice President

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

Alison M. Sharkey
Vice President

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

George Silfen
Vice President

Ronald B. Silvestri                 Vice President of various Morgan Stanley Dean Witter
Vice President                      Funds.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH              OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN                 OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC.                AND NATURE OF CONNECTION
--------------------                -----------------------------------------------------------------------
<S>                                 <C>
Herbert Simon
Vice President

Martha Slezak
Vice President

Frank Smith
Vice President

Otha Smith
Vice President

Stuart Smith
Vice President

Robert Stearns
Vice President

Naomi Stein
Vice President

William Stevens
Vice President

Michael Strayhorn
Vice President

Marybeth Swisher
Vice President

Michael Thayer
Vice President

Bradford Thomas
Vice President

Barbara Toich
Vice President

Robert Vanden Assem
Vice President

Frank Vindigni
Vice President

David Walsh
Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH              OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN                 OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC.                AND NATURE OF CONNECTION
--------------------                -----------------------------------------------------------------------
<S>                                 <C>
Alice Weiss                         Vice President of various Morgan Stanley Dean Witter
Vice President                      Funds.

John Wong
Vice President
</TABLE>

         The principal address of MSDW Advisors, MSDW Services, MSDW
Distributors, DWR, and the Morgan Stanley Dean Witter Funds is Two World Trade
Center, New York, New York 10048. The principal address of MSDW is 1585
Broadway, New York, New York 10036. The principal address of MSDW Trust is 2
Harborside Financial Center, Jersey City, New Jersey 07311.

Item 27.    PRINCIPAL UNDERWRITERS

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

(1)      Active Assets California Tax-Free Trust
(2)      Active Assets Government Securities Trust
(3)      Active Assets Institutional Money Trust
(4)      Active Assets Money Trust
(5)      Active Assets Premier Money Trust
(6)      Active Assets Tax-Free Trust
(7)      Morgan Stanley Dean Witter 21st Century Trend Fund
(8)      Morgan Stanley Dean Witter Aggressive Equity Fund
(9)      Morgan Stanley Dean Witter All Star Growth Fund
(10)     Morgan Stanley Dean Witter American Opportunities Fund
(11)     Morgan Stanley Dean Witter Balanced Growth Fund
(12)     Morgan Stanley Dean Witter Balanced Income Fund
(13)     Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(14)     Morgan Stanley Dean Witter California Tax-Free Income Fund
(15)     Morgan Stanley Dean Witter Capital Growth Securities
(16)     Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS
         PORTFOLIO"
(17)     Morgan Stanley Dean Witter Convertible Securities Trust
(18)     Morgan Stanley Dean Witter Developing Growth Securities Trust
(19)     Morgan Stanley Dean Witter Diversified Income Trust
(20)     Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(21)     Morgan Stanley Dean Witter Equity Fund
(22)     Morgan Stanley Dean Witter European Growth Fund Inc.
(23)     Morgan Stanley Dean Witter Federal Securities Trust
(24)     Morgan Stanley Dean Witter Financial Services Trust
(25)     Morgan Stanley Dean Witter Fund of Funds
(26)     Morgan Stanley Dean Witter Global Dividend Growth Securities
(27)     Morgan Stanley Dean Witter Global Utilities Fund
(28)     Morgan Stanley Dean Witter Growth Fund
(29)     Morgan Stanley Dean Witter Hawaii Municipal Trust

<PAGE>


(30)     Morgan Stanley Dean Witter Health Sciences Trust
(31)     Morgan Stanley Dean Witter High Yield Securities Inc.
(32)     Morgan Stanley Dean Witter Income Builder Fund
(33)     Morgan Stanley Dean Witter Information Fund
(34)     Morgan Stanley Dean Witter Intermediate Income Securities
(35)     Morgan Stanley Dean Witter International Fund
(36)     Morgan Stanley Dean Witter International SmallCap Fund
(37)     Morgan Stanley Dean Witter Japan Fund
(38)     Morgan Stanley Dean Witter Latin American Growth Fund
(39)     Morgan Stanley Dean Witter Limited Term Municipal Trust
(40)     Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(41)     Morgan Stanley Dean Witter Market Leader Trust
(42)     Morgan Stanley Dean Witter Mid-Cap Equity Trust
(43)     Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(44)     Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(45)     Morgan Stanley Dean Witter New Discoveries Fund
(46)     Morgan Stanley Dean Witter New York Municipal Money Market Trust
(47)     Morgan Stanley Dean Witter New York Tax-Free Income Fund
(48)     Morgan Stanley Dean Witter Next Generation Trust
(49)     Morgan Stanley Dean Witter North American Government Income Trust
(50)     Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(51)     Morgan Stanley Dean Witter Prime Income Trust
(52)     Morgan Stanley Dean Witter Real Estate Fund
(53)     Morgan Stanley Dean Witter S&P 500 Index Fund
(54)     Morgan Stanley Dean Witter S&P 500 Select Fund
(55)     Morgan Stanley Dean Witter Short-Term Bond Fund
(56)     Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(57)     Morgan Stanley Dean Witter Small Cap Growth Fund
(58)     Morgan Stanley Dean Witter Special Value Fund
(59)     Morgan Stanley Dean Witter Strategist Fund
(60)     Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(61)     Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(62)     Morgan Stanley Dean Witter Tax-Managed Growth Fund
(63)     Morgan Stanley Dean Witter Technology Fund
(64)     Morgan Stanley Dean Witter Total Market Index Fund
(65)     Morgan Stanley Dean Witter Total Return Trust
(66)     Morgan Stanley Dean Witter U.S. Government Money Market Trust
(67)     Morgan Stanley Dean Witter U.S. Government Securities Trust
(68)     Morgan Stanley Dean Witter Utilities Fund
(69)     Morgan Stanley Dean Witter Value-Added Market Series
(70)     Morgan Stanley Dean Witter Value Fund
(71)     Morgan Stanley Dean Witter Variable Investment Series
(72)     Morgan Stanley Dean Witter World Wide Income Trust

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


Name                       Positions and Office With MSDW Distributors
----                       --------------------------------------------

James F. Higgins           Director

Philip J. Purcell          Director

John Schaeffer             Director

Charles Vadala             Senior Vice President and Financial Principal.

Item 28.   LOCATION OF ACCOUNTS AND RECORDS

      All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained by the Investment Manager at its offices, except records relating to
holders of shares issued by the Registrant, which are maintained by the
Registrant's Transfer Agent, at its place of business as shown in the
prospectus.

Item 29.   MANAGEMENT SERVICES

      Registrant is not a party to any such management-related service contract.

Item 30.   UNDERTAKINGS

      Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.


<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York on the 27th day of December, 2000.

                        MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES


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

      Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 15 has been signed below by the following persons
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

         Signatures                                  Title                       Date
         ----------                                  -----                       ----
<S>                                                  <C>                         <C>
(1) Principal Executive Officer                      Chief Executive Officer,
                                                     Trustee and Chairman
By     /s/ Charles A. Fiumefreddo
    ----------------------------------------                                     12/27/00
           Charles A. Fiumefreddo

(2) Principal Financial Officer                      Treasurer and Principal
                                                     Accounting Officer
By     /s/ Thomas F. Caloia
    ----------------------------------------                                     12/27/00
           Thomas F. Caloia

(3) Majority of the Trustees

    Charles A. Fiumefreddo (Chairman)
    Philip J. Purcell
    James F. Higgins

By     /s/ Barry Fink
    ----------------------------------------                                     12/27/00
           Barry Fink
           Attorney-in-Fact

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


By     /s/ David M. Butowsky
    ----------------------------------------                                     12/27/00
           David M. Butowsky
           Attorney-in-Fact
</TABLE>

<PAGE>


             MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES-


                                 EXHIBIT INDEX


8(a).    Amended and Restated Transfer Agency and Services Agreement, dated
         September 1, 2000, between the Registrant and Morgan Stanley Dean
         Witter Trust FSB.

10(a).   Consent of Independent Auditors.

10(b).   Consent of PricewaterhouseCoopers LLP.

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

16(a).   Code of Ethics of Morgan Stanley Dean Witter Advisors, Inc., Morgan
         Stanley Dean Witter Services Company Inc., and Morgan Stanley Dean
         Witter Distributors Inc.

16(b).   Code of Ethics of the Morgan Stanley Dean Witter Funds.

Other.   Power of Attorney for James F. Higgins.




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