<PAGE>
Filed Pursuant to Rule 497(e)
Registration File No.: 33-37562
PROSPECTUS - MARCH 30, 1999
Morgan Stanley Dean Witter
----------------------------------------------------------------
MULTI-STATE MUNICIPAL SERIES TRUST
Consisting of ten separate fund portfolios:
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
EACH SERIES SEEKS TO PROVIDE A HIGH LEVEL OF CURRENT
INCOME EXEMPT FROM BOTH FEDERAL AND DESIGNATED STATE
INCOME TAXES CONSISTENT WITH PRESERVATION OF CAPITAL
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation
to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Overview ............................................. 1
The Arizona Series ........................... 2
The California Series ........................ 5
The Florida Series ........................... 8
The Massachusetts Series ..................... 11
The Michigan Series .......................... 14
The Minnesota Series ......................... 17
The New Jersey Series ........................ 20
The New York Series .......................... 23
The Ohio Series .............................. 26
The Pennsylvania Series ...................... 29
Additional Investment Strategy Information ... 32
Additional Risk Information .................. 33
Fund Management .............................. 35
Shareholder Information Pricing Series Shares ........................ 36
How to Buy Shares ............................ 36
How to Exchange Shares ....................... 39
How to Sell Shares ........................... 41
Distributions ................................ 43
Tax Consequences ............................. 44
Financial Highlights .............................................. 46
Our Family of Funds ............................... Inside Back Cover
</TABLE>
FUND CATEGORY
--------------
[ ] Growth
[ ] Growth and Income
[X] INCOME
[ ] Money Market
<PAGE>
OVERVIEW
Morgan Stanley Dean Witter Multi-State Municipal Series Trust is an
open-end, non-diversified mutual fund that consists of ten separate
fund portfolios --
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
A Series-by-Series summary begins on the next page. Each summary
provides a Series' investment objective, principal investment
strategies, principal risks, past performance, and fees and expenses.
Morgan Stanley Dean Witter Multi-State Municipal Series Trust is one
of Morgan Stanley Dean Witter's Income Funds. This category of mutual
fund has the goal of selecting securities to pay out income rather
than rise in value.
Shares of each Series are not bank deposits and are not guaranteed or
insured by any bank, governmental entity or the FDIC.
1
<PAGE>
THE ARIZONA SERIES
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- --------------------------------
The Arizona Series seeks to provide a high level of current income
exempt from both federal and Arizona state income taxes consistent
with preservation of capital. There is no guarantee that the Arizona
Series will achieve this objective.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGY
- ------------------------------------------
The Arizona Series will invest at least 80% of its assets in
securities that pay interest normally exempt from federal and Arizona
state income taxes. The Arizona Series' "Investment Manager," Morgan
Stanley Dean Witter Advisors Inc., generally invests in investment
grade, Arizona municipal obligations and obligations of U.S.
Governmental territories such as Puerto Rico. The municipal
obligations may only be rated investment grade by Moody's Investors
Service or Standard & Poor's Corporation or Fitch Investors Services,
LP or, if unrated, judged to be of comparable quality by the
Investment Manager at the time of purchase. There are no maturity
limitations on the Arizona Series' portfolio securities.
The Arizona Series may invest any amount of its assets in securities
that pay interest income subject to the "alternative minimum tax,"
and some taxpayers may have to pay tax on an Arizona Series
distribution of this income. The Arizona Series therefore may not be
a suitable investment for these investors. See the "Tax Consequences"
section for more details.
The Arizona Series may take temporary "defensive" positions in
attempting to respond to adverse market conditions. The Arizona
Series may invest any amount of its assets in taxable money market
instruments or in the highest grade municipal obligations issued in
other states when the Investment Manager believes it is advisable to
do so because of a defensive posture. Municipal obligations of other
states pay interest that is normally exempt from federal income tax
but not from Arizona income taxes. Defensive investing could have the
effect of reducing the Arizona Series' ability to provide tax exempt
income or otherwise meet its investment objective.
In addition to the securities described above, the Arizona Series may
also invest in private activity bonds, lease obligations and futures.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
- --------------------------
Credit and Interest Rate Risks. A principal risk of investing in the
Arizona Series is associated with its municipal investments,
particularly its concentration in municipal obligations of a single
state. Municipal obligations, as with all debt securities, are
2
<PAGE>
subject to two types of risks: credit risk and interest rate risk.
The "Additional Risk Information" section contains a general
discussion of credit and interest rate risks.
Unlike most fixed-income funds, the Arizona Series is subject to the
added credit risk of concentrating its investments in a single state
-- Arizona -- and its municipalities. Because the Arizona Series
concentrates its investments in securities issued by Arizona state
and local governments and government authorities, the Arizona Series
will be significantly affected by the political, economic and
regulatory developments concerning those issuers. Should any
difficulties develop concerning Arizona issuers ability to pay
principal and/or interest on their debt obligations, the Series'
value and yield could be adversely affected.
The Arizona Series is not limited as to the maturities of the
securities in which it may invest. Thus, a rise in the general level
of interest rates may cause the price of the Arizona Series'
portfolio securities, and the Arizona Series' share price, to fall
substantially. A table in the "Additional Risk Information" section
shows how interest rates affect bonds.
The Arizona Series is classified as "non-diversified" and therefore
may invest a greater percentage of its assets in the securities of
individual issuers than "diversified" mutual funds and a decline in
the value of those securities would cause the overall value of the
Series to decline to a greater degree.
The Arizona Series is also subject to other risk from its permissible
investments including the risk associated with private activity
bonds, lease obligations and futures.
[GRAPHIC OMITTED]
PAST PERFORMANCE
- ----------------------------
The bar chart and table below provide some indication of the Arizona
Series' performance history. The Arizona Series' past performance
does not indicate how the Arizona Series will perform in the future.
[GRAPHIC OMITTED]
[sidebar]
ANNUAL TOTAL RETURNS
This chart shows how the performance of the Arizona Series' shares has varied
from year to year over the past 7 calendar years.
[end sidebar]
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
1992 - 10.08%
1993 - 12.24%
1994 - (6.58)%
1995 - 17.31%
1996 - 2.92%
1997 - 7.56%
1998 - 5.39%
The performance information in the bar chart does not
reflect the deduction of sales charges; if these
amounts were reflected, returns would be less than
shown. During the periods shown in the bar chart, the
highest return for a calendar quarter was 7.20%
(quarter ended March 31, 1995) and the lowest return
for a calendar quarter was -6.43% (quarter ended March
31, 1994).
3
<PAGE>
[sidebar]
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Arizona Series' average annual returns with those of a
broad measure of market performance over time. The Arizona Series' returns
include the maximum applicable front-end sales charge.
[end sidebar]
AVERAGE ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED THE 1998 CALENDAR YEAR)
- -------------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 4/30/91)
- -------------------------------------------------------------------------------
Arizona Series 1.18% 4.18% 6.66%
- -------------------------------------------------------------------------------
Lehman Municipal Bond Index(1) 6.48% 6.22% 7.87%
- -------------------------------------------------------------------------------
(1) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or greater and a minimum credit
rating of Baa or BBB, as rated by Moody's Investors Service, Inc. or
Standard & Poor's Corp., respectively. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
[GRAPHIC OMITTED]
FEES AND EXPENSES
- -----------------------------
The table below briefly describes the Arizona Series' fees and
expenses that you may pay if you buy and hold shares of the Arizona
Series. The Arizona Series does not charge account or exchange fees.
[sidebar]
SHAREHOLDER FEES
These fees are paid directly from your investment.
[end sidebar]
SHAREHOLDER FEES
- -------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 4.0%
- -------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a percentage based
on the lesser of the offering price or net asset value at
redemption) None
- -------------------------------------------------------------------------------
ANNUAL ARIZONA SERIES OPERATING EXPENSES
- -------------------------------------------------------------------------------
Management fee 0.35%
- -------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.14%
- -------------------------------------------------------------------------------
Other expenses 0.16%
- -------------------------------------------------------------------------------
Total annual Arizona Series operating expenses 0.65%
- -------------------------------------------------------------------------------
[sidebar]
ANNUAL FUND
OPERATING EXPENSES
These expenses are deducted from the Arizona Series' assets and are based on
expenses paid for the fiscal year ended November 30, 1998.
[end sidebar]
EXAMPLE
This example is intended to help you compare the cost of investing in the
Arizona Series with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Arizona Series, your investment has a 5%
return each year, and the Arizona Series' 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.
EXPENSES OVER TIME:
- ---------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------
$465 $598 $743 $1,165
- ---------------------------------------
4
<PAGE>
THE CALIFORNIA SERIES
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- --------------------------------
The California Series seeks to provide a high level of current income
exempt from both federal and California state income taxes consistent
with preservation of capital. There is no guarantee that the
California Series will achieve this objective.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGY
- ------------------------------------------
The California Series will invest at least 80% of its assets in
securities that pay interest normally exempt from federal and
California state income taxes. The California Series' "Investment
Manager," Morgan Stanley Dean Witter Advisors Inc., generally invests
in investment grade, California municipal obligations and obligations
of U.S. Governmental territories such as Puerto Rico. The municipal
obligations may only be rated investment grade by Moody's Investors
Service or Standard & Poor's Corporation or Fitch Investors Services,
LP or, if unrated, judged to be of comparable quality by the
Investment Manager at the time of purchase. There are no maturity
limitations on the California Series' portfolio securities.
The California Series may invest any amount of its assets in
securities that pay interest income subject to the "alternative
minimum tax," and some taxpayers may have to pay tax on a California
Series distribution of this income. The California Series therefore
may not be a suitable investment for these investors. See the "Tax
Consequences" section for more details.
The California Series may take temporary "defensive" positions in
attempting to respond to adverse market conditions. The California
Series may invest any amount of its assets in taxable money market
instruments or in the highest grade municipal obligations issued in
other states when the Investment Manager believes it is advisable to
do so because of a defensive posture. Municipal obligations of other
states pay interest that is normally exempt from federal income tax
but not from California income taxes. Defensive investing could have
the effect of reducing the California Series' ability to provide tax
exempt income or otherwise meet its investment objective.
In addition to the securities described above, the California Series
may also invest in private activity bonds, lease obligations and
futures.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
- --------------------------
Credit and Interest Rate Risks. A principal risk of investing in the
California Series is associated with its municipal investments,
particularly its concentration in municipal obligations of a single
state. Municipal obligations, as with all debt securities, are
5
- ---- ----
<PAGE>
subject to two types of risks: credit risk and interest rate risk.
The "Additional Risk Information" section contains a general
discussion of credit and interest rate risks.
Unlike most fixed-income funds, the California Series is subject to
the added credit risk of concentrating its investments in a single
state -- California -- and its municipalities. Because the California
Series concentrates its investments in securities issued by
California state and local governments and government authorities,
the California Series will be significantly affected by the
political, economic and regulatory developments concerning those
issuers. Should any difficulties develop concerning California
issuers ability to pay principal and/or interest on their debt
obligations, the Series' value and yield could be adversely affected.
The California Series is not limited as to the maturities of the
securities in which it may invest. Thus, a rise in the general level
of interest rates may cause the price of the California Series'
portfolio securities, and the California Series' share price, to fall
substantially. A table in the "Additional Risk Information" section
shows how interest rates affect bonds.
The California Series is classified as "non-diversified" and
therefore may invest a greater percentage of its assets in the
securities of individual issuers than "diversified" mutual funds and
a decline in the value of those securities would cause the overall
value of the Series to decline to a greater degree.
The California Series is also subject to other risk from its
permissible investments including the risk associated with private
activity bonds, lease obligations and futures.
[GRAPHIC OMITTED]
PAST PERFORMANCE
- ----------------------------
The bar chart and table below provide some indication of the
California Series' performance history. The California Series' past
performance does not indicate how the California Series will perform
in the future.
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
1992 - 9.18%
1993 - 13.77%
1994 - (8.53)%
1995 - 19.25%
1996 - 4.75%
1997 - 8.43%
1998 - 6.03%
The performance information in the bar chart does not
reflect the deduction of sales charges; if these
amounts were reflected, returns would be less than
shown. During the periods shown in the bar chart, the
highest return for a calendar quarter was 8.46%
(quarter ended March 31, 1995) and the lowest return
for a calendar quarter was -7.10% (quarter ended March
31, 1994).
[sidebar]
ANNUAL TOTAL RETURNS
This chart shows how the performance of the California Series' shares has
varied from year to year over the past 7 calendar years.
[end sidebar]
6
<PAGE>
[sidebar]
AVERAGE ANNUAL TOTAL RETURNS
This table compares the California Series' average annual returns with those of
a broad measure of market performance over time. The California Series' returns
include the maximum applicable front-end sales charge.
[end sidebar]
AVERAGE ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED THE 1998 CALENDAR YEAR)
- -------------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 1/15/91)
- -------------------------------------------------------------------------------
California Series 1.79% 4.75% 7.43%
- -------------------------------------------------------------------------------
Lehman Municipal Bond Index1 6.48% 6.22% 7.92%
- -------------------------------------------------------------------------------
(1) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or greater and a minimum credit
rating of Baa or BBB, as rated by Moody's Investors Service, Inc. or
Standard & Poor's Corp., respectively. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
[GRAPHIC OMITTED]
FEES AND EXPENSES
- -----------------------------
The table below briefly describes the California Series' fees and
expenses that you may pay if you buy and hold shares of the
California Series. The California Series does not charge account or
exchange fees.
[sidebar]
SHAREHOLDER FEES
These fees are paid directly from your investment.
[end sidebar]
SHAREHOLDER FEES
- -------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 4.0%
- -------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a percentage based
on the lesser of the offering price or net asset value at
redemption) None
- -------------------------------------------------------------------------------
[sidebar]
ANNUAL FUND
OPERATING EXPENSES
These expenses are deducted from the California Series' assets and are based on
expenses paid for the fiscal year ended November 30, 1998.
[end sidebar]
ANNUAL CALIFORNIA SERIES OPERATING EXPENSES
- -------------------------------------------------------------------------------
Management fee 0.35%
- -------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.15%
- -------------------------------------------------------------------------------
Other expenses 0.09%
- -------------------------------------------------------------------------------
Total annual California Series operating expenses 0.59%
- -------------------------------------------------------------------------------
EXAMPLE
This example is intended to help you compare the cost of investing in the
California Series with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the California Series, your investment has a
5% return each year, and the California Series' 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.
EXPENSES OVER TIME:
-------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------
$459 $580 $712 $1,097
-------------------------------------
7
<PAGE>
THE FLORIDA SERIES
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- --------------------------------
The Florida Series seeks to provide a high level of current income
exempt from both federal and Florida state income taxes consistent
with preservation of capital. There is no guarantee that the Florida
Series will achieve this objective.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGY
- ------------------------------------------
The Florida Series will invest at least 80% of its assets in
securities that pay interest normally exempt from federal and the
Florida State intangible tax. (Florida does not impose an income tax
on individuals.) The Florida Series' "Investment Manager," Morgan
Stanley Dean Witter Advisors Inc., generally invests in investment
grade, Florida municipal obligations and obligations of U.S.
Governmental territories such as Puerto Rico. The municipal
obligations may only be rated investment grade by Moody's Investors
Service or Standard & Poor's Corporation or Fitch Investors Services,
LP or, if unrated, judged to be of comparable quality by the
Investment Manager at the time of purchase. There are no maturity
limitations on the Florida Series' portfolio securities.
The Florida Series may invest any amount of its assets in securities
that pay interest income subject to the "alternative minimum tax,"
and some taxpayers may have to pay tax on a Florida Series
distribution of this income. The Florida Series therefore may not be
a suitable investment for these investors. See the "Tax Con-
sequences" section for more details. The Florida Series may take
temporary "defensive" positions in attempting to respond to adverse
market conditions. The Florida Series may invest any amount of its
assets in taxable money market instruments or in the highest grade
municipal obligations issued in other states when the Investment
Manager believes it is advisable to do so because of a defensive
posture. Municipal obligations of other states pay interest that is
normally exempt from federal income tax but not from the Florida
intangible tax. Defensive investing could have the effect of reducing
the Florida Series' ability to provide tax exempt income or otherwise
meet its investment objective.
In addition to the securities described above, the Florida Series may
also invest in private activity bonds, lease obligations and futures.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
- --------------------------
Credit and Interest Rate Risks. A principal risk of investing in the
Florida Series is associated with its municipal investments,
particularly its concentration in municipal obligations of a single
state. Municipal obligations, as with all debt securities, are
subject to two types of risks: credit risk and interest rate risk.
The "Additional Risk Information" section contains a general
discussion of credit and interest rate risks.
8
<PAGE>
Unlike most fixed-income funds, the Florida Series is subject to the
added credit risk of concentrating its investments in a single state
-- Florida -- and its municipalities. Because the Florida Series
concentrates its investments in securities issued by Florida state
and local governments and government authorities, the Florida Series
will be significantly affected by the political, economic and
regulatory developments concerning those issuers. Should any
difficulties develop concerning Florida issuers ability to pay
principal and/or interest on their debt obligations, the Series'
value and yield could be adversely affected.
The Florida Series is not limited as to the maturities of the
securities in which it may invest. Thus, a rise in the general level
of interest rates may cause the price of the Florida Series'
portfolio securities, and the Florida Series' share price, to fall
substantially. A table in the "Additional Risk Information" section
shows how interest rates affect bonds.
The Florida Series is classified as "non-diversified" and therefore
may invest a greater percentage of its assets in the securities of
individual issuers than "diversified" mutual funds and a decline in
the value of those securities would cause the overall value of the
Series to decline to a greater degree.
The Florida Series is also subject to other risk from its permissible
investments including the risk associated with private activity
bonds, lease obligations and futures.
[GRAPHIC OMITTED]
PAST PERFORMANCE
- ----------------------------
The bar chart and table below provide some indication of the Florida
Series' performance history. The Florida Series' past performance
does not indicate how the Florida Series will perform in the future.
[sidebar]
ANNUAL TOTAL RETURNS
This chart shows how the performance of the Florida Series' shares has varied
from year to year over the past 7 calendar years.
[end sidebar]
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
1992 - 9.98%
1993 - 13.05%
1994 - (6.23)%
1995 - 17.36%
1996 - 3.18%
1997 - 8.35%
1998 - 5.82%
The performance information in the bar chart does not
reflect the deduction of sales charges; if these
amounts were reflected, returns would be less than
shown. During the periods shown in the bar chart, the
highest return for a calendar quarter was 7.08%
(quarter ended March 31, 1995) and the lowest return
for a calendar quarter was -6.47% (quarter ended March
31, 1994).
9
<PAGE>
[sidebar]
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Florida Series' average annual returns with those of a
broad measure of market performance over time. The Florida Series' returns
include the maximum applicable front-end sales charge.
[end sidebar]
AVERAGE ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED THE 1998 CALENDAR YEAR)
- -------------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 1/15/91)
- -------------------------------------------------------------------------------
Florida Series 1.59% 4.56% 7.13%
- -------------------------------------------------------------------------------
Lehman Municipal Bond Index1 6.48% 6.22% 7.92%
- -------------------------------------------------------------------------------
(1) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or greater and a minimum credit
rating of Baa or BBB, as rated by Moody's Investors Service, Inc. or
Standard & Poor's Corp., respectively. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
[GRAPHIC OMITTED]
FEES AND EXPENSES
- -----------------------------
The table below briefly describes the Florida Series' fees and
expenses that you may pay if you buy and hold shares of the Florida
Series. The Florida Series does not charge account or exchange fees.
[sidebar]
SHAREHOLDER FEES
These fees are paid directly from your investment.
[end sidebar]
SHAREHOLDER FEES
- -------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 4.0%
- -------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a percentage based
on the lesser of the offering price or net asset value at
redemption) None
- -------------------------------------------------------------------------------
[sidebar]
ANNUAL FUND
OPERATING EXPENSES
These expenses are deducted from the Florida Series' assets and are based on
expenses paid for the fiscal year ended November 30, 1998.
[end sidebar]
ANNUAL FLORIDA SERIES OPERATING EXPENSES
- -------------------------------------------------------------------------------
Management fee 0.35%
- -------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.14%
- -------------------------------------------------------------------------------
Other expenses 0.13%
- -------------------------------------------------------------------------------
Total annual Florida Series operating expenses 0.62%
- -------------------------------------------------------------------------------
EXAMPLE
This example is intended to help you compare the cost of investing in the
Florida Series with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Florida Series, your investment has a 5%
return each year, and the Florida Series' 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.
EXPENSES OVER TIME
-----------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------
$462 $589 $728 $1,131
-----------------------------------
10
<PAGE>
THE MASSACHUSETTS SERIES
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- --------------------------------
The Massachusetts Series seeks to provide a high level of current
income exempt from both federal and Massachusetts state income taxes
consistent with preservation of capital. There is no guarantee that
the Massachusetts Series will achieve this objective.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGY
- ------------------------------------------
The Massachusetts Series will invest at least 80% of its assets in
securities that pay interest normally exempt from federal and
Massachusetts state income taxes. The Massachusetts Series'
"Investment Manager," Morgan Stanley Dean Witter Advisors Inc.,
generally invests in investment grade, Massachusetts municipal
obligations and obligations of U.S. Governmental territories such as
Puerto Rico. The municipal obligations may only be rated investment
grade by Moody's Investors Service or Standard & Poor's Corporation
or Fitch Investors Services, LP or, if unrated, judged to be of
comparable quality by the Investment Manager at the time of purchase.
There are no maturity limitations on the Massachusetts Series'
portfolio securities.
The Massachusetts Series may invest any amount of its assets in
securities that pay interest income subject to the "alternative
minimum tax," and some taxpayers may have to pay tax on a
Massachusetts Series distribution of this income. The Massachusetts
Series therefore may not be a suitable investment for these
investors. See the "Tax Consequences" section for more details.
The Massachusetts Series may take temporary "defensive" positions in
attempting to respond to adverse market conditions. The Massachusetts
Series may invest any amount of its assets in taxable money market
instruments or in the highest grade municipal obligations issued in
other states when the Investment Manager believes it is advisable to
do so because of a defensive posture. Municipal obligations of other
states pay interest that is normally exempt from federal income tax
but not from Massachusetts income tax. Defensive investing could have
the effect of reducing the Massachusetts Series' ability to provide
tax exempt income or otherwise meet its investment objective.
In addition to the securities described above, the Massachusetts
Series may also invest in private activity bonds, lease obligations
and futures.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
- --------------------------
Credit and Interest Rate Risks. A principal risk of investing in the
Massachusetts Series is associated with its municipal investments,
particularly its concentration in municipal obligations of a single
state. Municipal obligations, as with all debt securities, are
11
<PAGE>
subject to two types of risks: credit risk and interest rate risk.
The "Additional Risk Information" section contains a general
discussion of credit and interest rate risks.
Unlike most fixed-income funds, the Massachusetts Series is subject
to the added credit risk of concentrating its investments in a single
state -- Massachusetts -- and its municipalities. Because the
Massachusetts Series concentrates its investments in securities
issued by Massachusetts state and local governments and government
authorities, the Massachusetts Series will be significantly affected
by the political, economic and regulatory developments concerning
those issuers. Should any difficulties develop concerning
Massachusetts issuers ability to pay principal and/or interest on
their debt obligations, the Series' value and yield could be
adversely affected.
The Massachusetts Series is not limited as to the maturities of the
securities in which it may invest. Thus, a rise in the general level
of interest rates may cause the price of the Massachusetts Series'
portfolio securities, and the Massachusetts Series' share price, to
fall substantially. A table in the "Additional Risk Information"
section shows how interest rates affect bonds.
The Massachusetts Series is classified as "non-diversified" and
therefore may invest a greater percentage of its assets in the
securities of individual issuers than "diversified" mutual funds and
a decline in the value of those securities would cause the overall
value of the Series to decline to a greater degree.
The Massachusetts Series is also subject to other risk from its
permissible investments including the risk associated with private
activity bonds, lease obligations and futures.
[GRAPHIC OMITTED]
PAST PERFORMANCE
- ----------------------------
The bar chart and table below provide some indication of the
Massachusetts Series' performance history. The Massachusetts Series'
past performance does not indicate how the Massachusetts Series will
perform in the future.
[sidebar]
ANNUAL TOTAL RETURNS
This chart shows how the performance of the Massachusetts Series' shares has
varied from year to year over the past 7 calendar years.
[end sidebar]
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
1992 - 10.30%
1993 - 13.80%
1994 - (6.81)%
1995 - 18.31%
1996 - 3.28%
1997 - 8.88%
1998 - 5.52%
The performance information in the bar chart does not
reflect the deduction of sales charges; if these
amounts were reflected, returns would be less than
shown. During the periods shown in the bar chart, the
highest return for a calendar quarter was 7.83%
(quarter ended March 31, 1995) and the lowest return
for a calendar quarter was -6.86% (quarter ended March
31, 1994).
12
<PAGE>
[sidebar]
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Massachusetts Series' average annual returns with those
of a broad measure of market performance over time. The Massachusetts Series'
returns include the maximum applicable front-end sales charge.
[end sidebar]
AVERAGE ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED THE 1998 CALENDAR YEAR)
- -------------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 1/15/91)
- -------------------------------------------------------------------------------
Massachusetts Series 1.30% 4.66% 7.46%
- -------------------------------------------------------------------------------
Lehman Municipal Bond Index1 6.48% 6.22% 7.92%
- -------------------------------------------------------------------------------
(1) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or greater and a minimum credit
rating of Baa or BBB, as rated by Moody's Investors Service, Inc. or
Standard & Poor's Corp., respectively. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
[GRAPHIC OMITTED]
FEES AND EXPENSES
- -----------------------------
The table below briefly describes the Massachusetts Series' fees and
expenses that you may pay if you buy and hold shares of the
Massachusetts Series. The Massachusetts Series does not charge
account or exchange fees.
[sidebar]
SHAREHOLDER FEES
These fees are paid directly from your investment.
[end sidebar]
SHAREHOLDER FEES
- -------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 4.0%
- -------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a percentage based
on the lesser of the offering price or net asset value at
redemption) None
- -------------------------------------------------------------------------------
[sidebar]
ANNUAL FUND
OPERATING EXPENSES
These expenses are deducted from the Massachusetts Series' assets and are based
on expenses paid for the fiscal year ended November 30, 1998.
[end sidebar]
ANNUAL MASSACHUSETTS SERIES OPERATING EXPENSES
- -------------------------------------------------------------------------------
Management fee 0.35%
- -------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.15%
- -------------------------------------------------------------------------------
Other expenses 0.32%
- -------------------------------------------------------------------------------
Total annual Massachusetts Series operating expenses 0.82%
- -------------------------------------------------------------------------------
EXAMPLE
This example is intended to help you compare the cost of investing in the
Massachusetts Series with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Massachusetts Series, your
investment has a 5% return each year, and the Massachusetts Series' 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.
EXPENSES OVER TIME:
-------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------
$482 $650 $832 $1,358
-------------------------------------
13
<PAGE>
THE MICHIGAN SERIES
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- --------------------------------
The Michigan Series seeks to provide a high level of current income
exempt from both federal and Michigan state income taxes consistent
with preservation of capital. There is no guarantee that the Michigan
Series will achieve this objective.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGY
- ------------------------------------------
The Michigan Series will invest at least 80% of its assets in
securities that pay interest normally exempt from federal and
Michigan state income taxes. The Michigan Series' "Investment
Manager," Morgan Stanley Dean Witter Advisors Inc., generally invests
in investment grade, Michigan municipal obligations and obligations
of U.S. Governmental territories such as Puerto Rico. The municipal
obligations may only be rated investment grade by Moody's Investors
Service or Standard & Poor's Corporation or Fitch Investors Services,
LP or, if unrated, judged to be of comparable quality by the
Investment Manager at the time of purchase. There are no maturity
limitations on the Michigan Series' portfolio securities.
The Michigan Series may invest any amount of its assets in securities
that pay interest income subject to the "alternative minimum tax,"
and some taxpayers may have to pay tax on a Michigan Series
distribution of this income. The Michigan Series therefore may not be
a suitable investment for these investors. See the "Tax Consequences"
section for more details.
The Michigan Series may take temporary "defensive" positions in
attempting to respond to adverse market conditions. The Michigan
Series may invest any amount of its assets in taxable money market
instruments or in the highest grade municipal obligations issued in
other states when the Investment Manager believes it is advisable to
do so because of a defensive posture. Municipal obligations of other
states pay interest that is normally exempt from federal income tax
but not from Michigan income tax. Defensive investing could have the
effect of reducing the Michigan Series' ability to provide tax exempt
income or otherwise meet its investment objective.
In addition to the securities described above, the Michigan Series
may also invest in private activity bonds, lease obligations and
futures.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
- --------------------------
Credit and Interest Rate Risks. A principal risk of investing in the
Michigan Series is associated with its municipal investments,
particularly its concentration in municipal obligations of a single
state. Municipal obligations, as with all debt securities, are
14
<PAGE>
subject to two types of risks: credit risk and interest rate risk.
The "Additional Risk Information" section contains a general
discussion of credit and interest rate risks.
Unlike most fixed-income funds, the Michigan Series is subject to the
added credit risk of concentrating its investments in a single state
-- Michigan -- and its municipalities. Because the Michigan Series
concentrates its investments in securities issued by Michigan state
and local governments and government authorities, the Michigan Series
will be significantly affected by the political, economic and
regulatory developments concerning those issuers. Should any
difficulties develop concerning Michigan issuers ability to pay
principal and/or interest on their debt obligations, the Series'
value and yield could be adversely affected.
The Michigan Series is not limited as to the maturities of the
securities in which it may invest. Thus, a rise in the general level
of interest rates may cause the price of the Michigan Series'
portfolio securities, and the Michigan Series' share price, to fall
substantially. A table in the "Additional Risk Information" section
shows how interest rates affect bonds.
The Michigan Series is classified as "non-diversified" and therefore
may invest a greater percentage of its assets in the securities of
individual issuers than "diversified" mutual funds and a decline in
the value of those securities would cause the overall value of the
Series to decline to a greater degree.
The Michigan Series is also subject to other risk from its
permissible investments including the risk associated with private
activity bonds, lease obligations and futures.
[GRAPHIC OMITTED]
PAST PERFORMANCE
- ----------------------------
The bar chart and table below provide some indication of the Michigan
Series' performance history. The Michigan Series' past performance
does not indicate how the Michigan Series will perform in the future.
[sidebar]
ANNUAL TOTAL RETURNS
This chart shows how the performance of the Michigan Series' shares has varied
from year to year over the past 7 calendar years.
[end sidebar]
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
1992 - 10.05%
1993 - 13.21%
1994 - (6.96)%
1995 - 18.48%
1996 - 3.50%
1997 - 8.08%
1998 - 5.93%
The performance information in the bar chart does not
reflect the deduction of sales charges; if these
amounts were reflected, returns would be less than
shown. During the periods shown in the bar chart, the
highest return for a calendar quarter was 7.51%
(quarter ended March 31, 1995) and the lowest return
for a calendar quarter was -6.69% (quarter ended March
31, 1994).
15
<PAGE>
[sidebar]
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Michigan Series' average annual returns with those of a
broad measure of market performance over time. The Michigan Series' returns
include the maximum applicable front-end sales charge.
[end sidebar]
AVERAGE ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED THE 1998 CALENDAR YEAR)
- -------------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 1/15/91)
- -------------------------------------------------------------------------------
Michigan Series 1.69% 4.63% 7.35%
- -------------------------------------------------------------------------------
Lehman Municipal Bond Index1 6.48% 6.22% 7.92%
- -------------------------------------------------------------------------------
(1) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or greater and a minimum credit
rating of Baa or BBB, as rated by Moody's Investors Service, Inc. or
Standard & Poor's Corp., respectively. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
[GRAPHIC OMITTED]
FEES AND EXPENSES
- -----------------------------
The table below briefly describes the Michigan Series' fees and
expenses that you may pay if you buy and hold shares of the Michigan
Series. The Michigan Series does not charge account or exchange fees.
[sidebar]
SHAREHOLDER FEES
These fees are paid directly from your investment.
[end sidebar]
SHAREHOLDER FEES
- -------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 4.0%
- -------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a percentage based
on the lesser of the offering price or net asset value at
redemption) None
- -------------------------------------------------------------------------------
[sidebar]
ANNUAL FUND
OPERATING EXPENSES
These expenses are deducted from the Michigan Series' assets and are based on
expenses paid for the fiscal year ended November 30, 1998.
[end sidebar]
ANNUAL MICHIGAN SERIES OPERATING EXPENSES
- -------------------------------------------------------------------------------
Management fee 0.35%
- -------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.15%
- -------------------------------------------------------------------------------
Other expenses 0.28%
- -------------------------------------------------------------------------------
Total annual Michigan Series operating expenses 0.78%
- -------------------------------------------------------------------------------
EXAMPLE
This example is intended to help you compare the cost of investing in the
Michigan Series with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Michigan Series, your investment has a
5% return each year, and the Michigan Series' 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.
EXPENSES OVER TIME:
-------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------
$478 $638 $811 $1,313
-------------------------------------
16
<PAGE>
THE MINNESOTA SERIES
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- --------------------------------
The Minnesota Series seeks to provide a high level of current income
exempt from both federal and Minnesota state income taxes consistent
with preservation of capital. There is no guarantee that the
Minnesota Series will achieve this objective.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGY
- ------------------------------------------
The Minnesota Series will invest at least 80% of its assets in
securities that pay interest normally exempt from federal and
Minnesota state personal income taxes. The Minnesota Series'
"Investment Manager," Morgan Stanley Dean Witter Advisors Inc.,
generally invests in investment grade, Minnesota municipal
obligations. The municipal obligations may only be rated investment
grade by Moody's Investors Service or Standard & Poor's Corporation
or Fitch Investors Services, LP or, if unrated, judged to be of
comparable quality by the Investment Manager at the time of purchase.
While the Minnesota Series may only invest some of its assets in
non-Minnesota municipal obligations, the ability of the Minnesota
Series' to invest in such non-Minnesota municipal obligations is
limited by Minnesota Tax Law. There are no maturity limitations on
the Minnesota Series' portfolio securities.
The Minnesota Series may invest any amount of its assets in
securities that pay interest income subject to the federal
"alternative minimum tax." This income, along with other income, may
also be subject to the Minnesota Alternative Minimum Tax. Some
taxpayers may have to pay tax on a Minnesota Series distribution of
this income. The Minnesota Series therefore may not be a suitable
investment for these investors. See the "Tax Consequences" section
for more details.
The Minnesota Series may take temporary "defensive" positions in
attempting to respond to adverse market conditions. Subject to
Minnesota Tax Law requirements, the Minnesota Series may invest any
amount of its assets in taxable money market instruments or in the
highest grade municipal obligations issued in other states when the
Investment Manager believes it is advisable to do so because of a
defensive posture. Municipal obligations of other states pay interest
that is normally exempt from federal income tax but not from
Minnesota income tax. Defensive investing could have the effect of
reducing the Minnesota Series' ability to provide tax exempt income
or otherwise meet its investment objective.
In addition to the securities described above, the Minnesota Series
may also invest in private activity bonds, lease obligations and
futures.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
- --------------------------
Credit and Interest Rate Risks. A principal risk of investing in the
Minnesota Series is associated with its municipal investments,
particularly its concentration in municipal obligations of a single
state. Municipal obligations, as with all debt securities, are
subject to two types of risks: credit risk and interest rate risk.
The "Additional Risk Information" section contains a general
discussion of credit and interest rate risks.
17
<PAGE>
Unlike most fixed-income funds, the Minnesota Series is subject to
the added credit risk of concentrating its investments in a single
state -- Minnesota -- and its municipalities. Because the Minnesota
Series concentrates its investments in securities issued by Minnesota
state and local governments and government authorities, the Minnesota
Series will be significantly affected by the political, economic and
regulatory developments concerning those issuers. Should any
difficulties develop concerning Minnesota issuers ability to pay
principal and/or interest on their debt obligations, the Series'
value and yield could be adversely affected.
The Minnesota Series is not limited as to the maturities of the
securities in which it may invest. Thus, a rise in the general level
of interest rates may cause the price of the Minnesota Series'
portfolio securities, and the Minnesota Series' share price, to fall
substantially. A table in the "Additional Risk Information" section
shows how interest rates affect bonds.
Taxation Risk. In accordance with Minnesota legislation enacted in
1995, income dividend distributions that would otherwise be exempt
from Minnesota personal income tax in the case of individuals,
estates and trusts may become subject to that tax if the exemption of
that income were judicially determined to discriminate against
interstate commerce.
The Minnesota Series is classified as "non-diversified" and therefore
may invest a greater percentage of its assets in the securities of
individual issuers than "diversified" mutual funds and a decline in
the value of those securities would cause the overall value of the
Series to decline to a greater degree.
The Minnesota Series is also subject to other risk from its
permissible investments including the risk associated with private
activity bonds, lease obligations and futures.
[GRAPHIC OMITTED]
PAST PERFORMANCE
- ----------------------------
The bar chart and table below provide some indication of the
Minnesota Series' performance history. The Minnesota Series' past
performance does not indicate how the Minnesota Series will perform
in the future.
[sidebar]
ANNUAL TOTAL RETURNS
This chart shows how the performance of the Minnesota Series' shares has varied
from year to year over the past 7 calendar years.
[end sidebar]
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
1992 - 9.00%
1993 - 13.05%
1994 - (7.12)%
1995 - 18.13%
1996 - 3.78%
1997 - 7.22%
1998 - 5.07%
The performance information in the bar chart does not
reflect the deduction of sales charges; if these
amounts were reflected, returns would be less than
shown. During the periods shown in the bar chart, the
highest return for a calendar quarter was 7.38%
(quarter ended March 31, 1995) and the lowest return
for a calendar quarter was -6.64% (quarter ended March
31, 1994).
18
<PAGE>
[sidebar]
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Minnesota Series' average annual returns with those of
a broad measure of market performance over time.The Minnesota Series' returns
include the maximum applicable front-end sales charge.
[end sidebar]
AVERAGE ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED THE 1998 CALENDAR YEAR)
- -------------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 1/15/91)
- -------------------------------------------------------------------------------
Minnesota Series 0.87% 4.02% 6.48%
- -------------------------------------------------------------------------------
Lehman Municipal Bond Index1 6.48% 6.22% 7.92%
- -------------------------------------------------------------------------------
(1) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or greater and a minimum credit
rating of Baa or BBB, as rated by Moody's Investors Service, Inc. or
Standard & Poor's Corp., respectively. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
[GRAPHIC OMITTED]
FEES AND EXPENSES
- -----------------------------
The table below briefly describes the Minnesota Series' fees and
expenses that you may pay if you buy and hold shares of the Minnesota
Series. The Minnesota Series does not charge account or exchange
fees.
[sidebar]
SHAREHOLDER FEES
These fees are paid directly from your investment.
[end sidebar]
SHAREHOLDER FEES
- -------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 4.0%
- -------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a percentage based
on the lesser of the offering price or net asset value at
redemption) None
- -------------------------------------------------------------------------------
[sidebar]
ANNUAL FUND
OPERATING EXPENSES
These expenses are deducted from the Minnesota Series' assets and are based on
expenses paid for the fiscal year ended November 30, 1998.
[end sidebar]
ANNUAL MINNESOTA SERIES OPERATING EXPENSES
- -------------------------------------------------------------------------------
Management fee 0.35%
- -------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.15%
- -------------------------------------------------------------------------------
Other expenses 0.49%
- -------------------------------------------------------------------------------
Total annual Minnesota Series operating expenses 0.99%
- -------------------------------------------------------------------------------
EXAMPLE
This example is intended to help you compare the cost of investing in the
Minnesota Series with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Minnesota Series, your investment has a
5% return each year, and the Minnesota Series' 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.
EXPENSES OVER TIME:
-------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------
$499 $701 $920 $1,547
-------------------------------------
19
<PAGE>
THE NEW JERSEY SERIES
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- --------------------------------
The New Jersey Series seeks to provide a high level of current income
exempt from both federal and New Jersey state income taxes consistent
with preservation of capital. There is no guarantee that the New
Jersey Series will achieve this objective.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGY
- ------------------------------------------
The New Jersey Series will invest at least 80% of its assets in
securities that pay interest normally exempt from federal and New
Jersey state income taxes. The New Jersey Series' "Investment
Manager," Morgan Stanley Dean Witter Advisors Inc., generally invests
in investment grade, New Jersey municipal obligations and obligations
of U.S. Governmental territories such as Puerto Rico. The municipal
obligations may only be rated investment grade by Moody's Investors
Service or Standard & Poor's Corporation or Fitch Investors Services,
LP or, if unrated, judged to be of comparable quality by the
Investment Manager at the time of purchase. There are no maturity
limitations on the New Jersey Series' portfolio securities.
The New Jersey Series may invest any amount of its assets in
securities that pay interest income subject to the "alternative
minimum tax," and some taxpayers may have to pay tax on a New Jersey
Series distribution of this income. The New Jersey Series therefore
may not be a suitable investment for these investors. See the "Tax
Consequences" section for more details.
The New Jersey Series may take temporary "defensive" positions in
attempting to respond to adverse market conditions. The New Jersey
Series may invest any amount of its assets in taxable money market
instruments or in the highest grade municipal obligations issued in
other states when the Investment Manager believes it is advisable to
do so because of a defensive posture. Municipal obligations of other
states pay interest that is normally exempt from federal income tax
but not from New Jersey income tax. Defensive investing could have
the effect of reducing the New Jersey Series' ability to provide tax
exempt income or otherwise meet its investment objective.
In addition to the securities described above, the New Jersey Series
may also invest in private activity bonds, lease obligations and
futures.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
- --------------------------
Credit and Interest Rate Risks. A principal risk of investing in the
New Jersey Series is associated with its municipal investments,
particularly its concentration in municipal obligations of a single
state. Municipal obligations, as with all debt securities, are
20
<PAGE>
subject to two types of risks: credit risk and interest rate risk.
The "Additional Risk Information" section contains a general
discussion of credit and interest rate risks.
Unlike most fixed-income funds, the New Jersey Series is subject to
the added credit risk of concentrating its investments in a single
state -- New Jersey -- and its municipalities. Because the New Jersey
Series concentrates its investments in securities issued by New
Jersey state and local governments and government authorities, the
New Jersey Series will be significantly affected by the political,
economic and regulatory developments concerning those issuers. Should
any difficulties develop concerning New Jersey issuers ability to pay
principal and/or interest on their debt obligations, the Series'
value and yield could be adversely affected.
The New Jersey Series is not limited as to the maturities of the
securities in which it may invest. Thus, a rise in the general level
of interest rates may cause the price of the New Jersey Series'
portfolio securities, and the New Jersey Series' share price, to fall
substantially. A table in the "Additional Risk Information" section
shows how interest rates affect bonds.
The New Jersey Series is classified as "non-diversified" and
therefore may invest a greater percentage of its assets in the
securities of individual issuers than "diversified" mutual funds and
a decline in the value of those securities would cause the overall
value of the Series to decline to a greater degree.
The New Jersey Series is also subject to other risk from its
permissible investments including the risk associated with private
activity bonds, lease obligations and futures.
[GRAPHIC OMITTED]
PAST PERFORMANCE
- ----------------------------
The bar chart and table below provide some indication of the New
Jersey Series' performance history. The New Jersey Series' past
performance does not indicate how the New Jersey Series will perform
in the future.
[sidebar]
ANNUAL TOTAL RETURNS
This chart shows how the performance of the New Jersey Series' shares has
varied from year to year over the past 7 calendar years.
[end sidebar]
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
1992 - 10.08%
1993 - 12.81%
1994 - (7.12)%
1995 - 17.55%
1996 - 3.34%
1997 - 9.07%
1998 - 5.86%
The performance information in the bar chart does not
reflect the deduction of sales charges; if these
amounts were reflected, returns would be less than
shown. During the periods shown in the bar chart, the
highest return for a calendar quarter was 7.20%
(quarter ended March 31, 1995) and the lowest return
for a calendar quarter was -6.52% (quarter ended March
31, 1994).
21
<PAGE>
[sidebar]
AVERAGE ANNUAL TOTAL RETURNS
This table compares the New Jersey Series' average annual returns with those of
a broad measure of market performance over time. The New Jersey Series' returns
include the maximum applicable front-end sales charge.
[end sidebar]
AVERAGE ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED THE 1998 CALENDAR YEAR)
- -------------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 1/15/91)
- -------------------------------------------------------------------------------
New Jersey Series 1.63% 4.57% 7.25%
- -------------------------------------------------------------------------------
Lehman Municipal Bond Index1 6.48% 6.22% 7.92%
- -------------------------------------------------------------------------------
(1) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or greater and a minimum credit
rating of Baa or BBB, as rated by Moody's Investors Service, Inc. or
Standard & Poor's Corp., respectively. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
[GRAPHIC OMITTED]
FEES AND EXPENSES
- -----------------------------
The table below briefly describes the New Jersey Series' fees and
expenses that you may pay if you buy and hold shares of the New
Jersey Series. The New Jersey Series does not charge account or
exchange fees.
[sidebar]
SHAREHOLDER FEES
These fees are paid directly from your investment.
[end sidebar]
SHAREHOLDER FEES
- -------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 4.0%
- -------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a percentage based
on the lesser of the offering price or net asset value at
redemption) None
- -------------------------------------------------------------------------------
[sidebar]
ANNUAL FUND
OPERATING EXPENSES
These expenses are deducted from the New Jersey Series' assets and are based on
expenses paid for the fiscal year ended November 30, 1998.
[end sidebar]
ANNUAL NEW JERSEY SERIES OPERATING EXPENSES
- -------------------------------------------------------------------------------
Management fee 0.35%
- -------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.14%
- -------------------------------------------------------------------------------
Other expenses 0.18%
- -------------------------------------------------------------------------------
Total annual New Jersey Series operating expenses 0.67%
- ------------------------------------------------------------------------------
EXAMPLE
This example is intended to help you compare the cost of investing in the New
Jersey Series with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the New Jersey Series, your investment has a
5% return each year, and the New Jersey Series' 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.
<TABLE>
EXPENSES OVER TIME:
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$467 $604 $754 $1,188
------------------------------------
</TABLE>
22
<PAGE>
THE NEW YORK SERIES
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- --------------------------------
The New York Series seeks to provide a high level of current income
exempt from both federal and New York state income taxes consistent
with preservation of capital. There is no guarantee that the New York
Series will achieve this objective.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGY
- ------------------------------------------
The New York Series will invest at least 80% of its assets in
securities that pay interest normally exempt from federal and New
York state income taxes. The New York Series' "Investment Manager,"
Morgan Stanley Dean Witter Advisors Inc., generally invests in
investment grade, New York municipal obligations and obligations of
U.S. Governmental territories such as Puerto Rico. The municipal
obligations may only be rated investment grade by Moody's Investors
Service or Standard & Poor's Corporation or Fitch Investors Services,
LP or, if unrated, judged to be of comparable quality by the
Investment Manager at the time of purchase. There are no maturity
limitations on the New York Series' portfolio securities.
The New York Series may invest any amount of its assets in securities
that pay interest income subject to the "alternative minimum tax,"
and some taxpayers may have to pay tax on a New York Series
distribution of this income. The New York Series therefore may not be
a suitable investment for these investors. See the "Tax Consequences"
section for more details.
The New York Series may take temporary "defensive" positions in
attempting to respond to adverse market conditions. The New York
Series may invest any amount of its assets in taxable money market
instruments or in the highest grade municipal obligations issued in
other states when the Investment Manager believes it is advisable to
do so because of a defensive posture. Municipal obligations of other
states pay interest that is normally exempt from federal income tax
but not from New York income tax. Defensive investing could have the
effect of reducing the New York Series' ability to provide tax exempt
income or otherwise meet its investment objective.
In addition to the securities described above, the New York Series
may also invest in private activity bonds, lease obligations and
futures.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
- --------------------------
Credit and Interest Rate Risks. A principal risk of investing in the
New York Series is associated with its municipal investments,
particularly its concentration in municipal obligations of a single
state. Municipal obligations, as with all debt securities, are
23
<PAGE>
subject to two types of risks: credit risk and interest rate risk.
The "Additional Risk Information" section contains a general
discussion of credit and interest rate risks.
Unlike most fixed-income funds, the New York Series is subject to the
added credit risk of concentrating its investments in a single state
-- New York -- and its municipalities. Because the New York Series
concentrates its investments in securities issued by New York state
and local governments and government authorities, the New York Series
will be significantly affected by the political, economic and
regulatory developments concerning those issuers. Should any
difficulties develop concerning New York issuers ability to pay
principal and/or interest on their debt obligations, the Series'
value and yield could be adversely affected.
The New York Series is not limited as to the maturities of the
securities in which it may invest. Thus, a rise in the general level
of interest rates may cause the price of the New York Series'
portfolio securities, and the New York Series' share price, to fall
substantially. A table in the "Additional Risk Information" section
shows how interest rates affect bonds.
The New York Series is classified as "non-diversified" and therefore
may invest a greater percentage of its assets in the securities of
individual issuers than "diversified" mutual funds and a decline in
the value of those securities would cause the overall value of the
Series to decline to a greater degree.
The New York Series is also subject to other risk from its
permissible investments including the risk associated with private
activity bonds, lease obligations and futures.
[GRAPHIC OMITTED]
PAST PERFORMANCE
- ----------------------------
The bar chart and table below provide some indication of the New York
Series' performance history. The New York Series' past performance
does not indicate how the New York Series will perform in the future.
[sidebar]
ANNUAL TOTAL RETURNS
This chart shows how the performance of the New York Series' shares has varied
from year to year over the past 7 calendar years.
[end sidebar]
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
1992 - 9.28%
1993 - 13.85%
1994 - (8.16)%
1995 - 19.31%
1996 - 3.68%
1997 - 9.19%
1998 - 6.06%
The performance information in the bar chart does not
reflect the deduction of sales charges; if these
amounts were reflected, returns would be less than
shown. During the periods shown in the bar chart, the
highest return for a calendar quarter was 7.49%
(quarter ended March 31, 1995) and the lowest return
for a calendar quarter was -6.78% (quarter ended March
31, 1994).
24
<PAGE>
[sidebar]
AVERAGE ANNUAL TOTAL RETURNS
This table compares the New York Series' average annual returns with those of a
broad measure of market performance over time. The New York Series' returns
include the maximum applicable front-end sales charge.
[end sidebar]
AVERAGE ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED THE 1998 CALENDAR YEAR)
- -------------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 1/15/91)
- -------------------------------------------------------------------------------
New York Series 1.81% 4.78% 7.52%
- -------------------------------------------------------------------------------
Lehman Municipal Bond Index1 6.48% 6.22% 7.92%
- -------------------------------------------------------------------------------
(1) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or greater and a minimum credit
rating of Baa or BBB, as rated by Moody's Investors Service, Inc. or
Standard & Poor's Corp., respectively. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
[GRAPHIC OMITTED]
FEES AND EXPENSES
- -----------------------------
The table below briefly describes the New York Series' fees and
expenses that you may pay if you buy and hold shares of the New York
Series. The New York Series does not charge account or exchange fees.
[sidebar]
SHAREHOLDER FEES
These fees are paid directly from your investment.
[end sidebar]
SHAREHOLDER FEES
- -------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 4.0%
- -------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a percentage based
on the lesser of the offering price or net asset value at
redemption) None
- -------------------------------------------------------------------------------
[sidebar]
ANNUAL FUND
OPERATING EXPENSES
These expenses are deducted from the New York Series' assets and are based on
expenses paid for the fiscal year ended November 30, 1998.
[end sidebar]
- -------------------------------------------------------------------------------
ANNUAL NEW YORK SERIES OPERATING EXPENSES
- -------------------------------------------------------------------------------
Management fee 0.35%
- -------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.14%
- -------------------------------------------------------------------------------
Other expenses 0.35%
- -------------------------------------------------------------------------------
Total annual New York Series operating expenses 0.84%
- -------------------------------------------------------------------------------
EXAMPLE
This example is intended to help you compare the cost of investing in the New
York Series with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the New York Series, your investment has a
5% return each year, and the New York Series' 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.
EXPENSES OVER TIME:
-------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------
$484 $656 $842 $1,380
-------------------------------------
25
<PAGE>
THE OHIO SERIES
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- --------------------------------
The Ohio Series seeks to provide a high level of current income
exempt from both federal and Ohio state income taxes consistent with
preservation of capital. There is no guarantee that the Ohio Series
will achieve this objective.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGY
- ------------------------------------------
The Ohio Series will invest at least 80% of its assets in securities
that pay interest normally exempt from federal and Ohio state income
taxes. The Ohio Series' "Investment Manager," Morgan Stanley Dean
Witter Advisors Inc., generally invests in investment grade, Ohio
municipal obligations and obligations of U.S. Governmental
territories such as Puerto Rico. The municipal obligations may only
be rated investment grade by Moody's Investors Service or Standard &
Poor's Corporation or Fitch Investors Services, LP or, if unrated,
judged to be of comparable quality by the Investment Manager at the
time of purchase. There are no maturity limitations on the Ohio
Series' portfolio securities.
The Ohio Series may invest any amount of its assets in securities
that pay interest income subject to the "alternative minimum tax,"
and some taxpayers may have to pay tax on an Ohio Series distribution
of this income. The Ohio Series therefore may not be a suitable
investment for these investors. See the "Tax Consequences" section
for more details.
The Ohio Series may take temporary "defensive" positions in
attempting to respond to adverse market conditions. The Ohio Series
may invest any amount of its assets in taxable money market
instruments or in the highest grade municipal obligations issued in
other states when the Investment Manager believes it is advisable to
do so because of a defensive posture. Municipal obligations of other
states pay interest that is normally exempt from federal income tax
but not from Ohio income tax. Defensive investing could have the
effect of reducing the Ohio Series' ability to provide tax exempt
income or otherwise meet its investment objective.
In addition to the securities described above, the Ohio Series may
also invest in private activity bonds, lease obligations and futures.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
- --------------------------
Credit and Interest Rate Risks. A principal risk of investing in the
Ohio Series is associated with its municipal investments,
particularly its concentration in municipal obligations of a single
state. Municipal obligations, as with all debt securities, are
26
<PAGE>
subject to two types of risks: credit risk and interest rate risk.
The "Additional Risk Information" section contains a general
discussion of credit and interest rate risks.
Unlike most fixed-income funds, the Ohio Series is subject to the
added credit risk of concentrating its investments in a single state
-- Ohio -- and its municipalities. Because the Ohio Series
concentrates its investments in securities issued by Ohio state and
local governments and government authorities, the Ohio Series will be
significantly affected by the political, economic and regulatory
developments concerning those issuers. Should any difficulties
develop concerning Ohio issuers ability to pay principal and/or
interest on their debt obligations, the Series' value and yield could
be adversely affected.
The Ohio Series is not limited as to the maturities of the securities
in which it may invest. Thus, a rise in the general level of interest
rates may cause the price of the Ohio Series' portfolio securities,
and the Ohio Series' share price, to fall substantially. A table in
the "Additional Risk Information" section shows how interest rates
affect bonds.
The Ohio Series is classified as "non-diversified" and therefore may
invest a greater percentage of its assets in the securities of
individual issuers than "diversified" mutual funds and a decline in
the value of those securities would cause the overall value of the
Series to decline to a greater degree.
The Ohio Series is also subject to other risk from its permissible
investments including the risk associated with private activity
bonds, lease obligations and futures.
[GRAPHIC OMITTED]
PAST PERFORMANCE
- ----------------------------
The bar chart and table below provide some indication of the Ohio
Series' performance history. The Ohio Series' past performance does
not indicate how the Ohio Series will perform in the future.
[sidebar]
ANNUAL TOTAL RETURNS
This chart shows how the performance of the Ohio Series' shares has varied from
year to year over the past 7 calendar years.
[end sidebar]
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
1992 - 9.81%
1993 - 14.10%
1994 - (7.39)%
1995 - 18.43%
1996 - 3.74%
1997 - 8.13%
1998 - 5.49%
The performance information in the bar chart does not
reflect the deduction of sales charges; if these
amounts were reflected, returns would be less than
shown. During the periods shown in the bar chart, the
highest return for a calendar quarter was 7.53%
(quarter ended March 31, 1995) and the lowest return
for a calendar quarter was -6.87% (quarter ended March
31, 1994).
27
<PAGE>
[sidebar]
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Ohio Series' average annual returns with those of a
broad measure of market performance over time. The Ohio Series' returns include
the maximum applicable front-end sales charge.
[end sidebar]
AVERAGE ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED THE 1998 CALENDAR YEAR)
- -------------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 1/15/91)
- -------------------------------------------------------------------------------
Ohio Series 1.27% 4.50% 7.20%
- -------------------------------------------------------------------------------
Lehman Municipal Bond Index1 6.48% 6.22% 7.92%
- -------------------------------------------------------------------------------
(1) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or greater and a minimum credit
rating of Baa or BBB, as rated by Moody's Investors Service, Inc. or
Standard & Poor's Corp., respectively. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
[GRAPHIC OMITTED]
FEES AND EXPENSES
- -----------------------------
The table below briefly describes the Ohio Series' fees and expenses
that you may pay if you buy and hold shares of the Ohio Series. The
Ohio Series does not charge account or exchange fees.
[sidebar]
SHAREHOLDER FEES
These fees are paid directly from your investment.
[end sidebar]
SHAREHOLDER FEES
- -------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 4.0%
- -------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a percentage based
on the lesser of the offering price or net asset value at
redemption) None
- -------------------------------------------------------------------------------
[sidebar]
ANNUAL FUND
OPERATING EXPENSES
These expenses are deducted from the Ohio Series' assets and are based on
expenses paid for the fiscal year ended November 30, 1998.
[end sidebar]
ANNUAL OHIO SERIES OPERATING EXPENSES
- -------------------------------------------------------------------------------
Management fee 0.35%
- -------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.14%
- -------------------------------------------------------------------------------
Other expenses 0.26%
- -------------------------------------------------------------------------------
Total annual Ohio Series operating expenses 0.75%
- -------------------------------------------------------------------------------
EXAMPLE
This example is intended to help you compare the cost of investing in the Ohio
Series with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Ohio Series, your investment has a 5% return
each year, and the Ohio Series' 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.
EXPENSES OVER TIME:
------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------
$475 $629 $795 $1,279
------------------------------------
28
<PAGE>
THE PENNSYLVANIA SERIES
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- --------------------------------
The Pennsylvania Series seeks to provide a high level of current
income exempt from both federal and Pennsylvania state income taxes
consistent with preservation of capital. There is no guarantee that
the Pennsylvania Series will achieve this objective.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGY
- ------------------------------------------
The Pennsylvania Series will invest at least 80% of its assets in
securities that pay interest normally exempt from federal and
Pennsylvania state income taxes. The Pennsylvania Series' "Investment
Manager," Morgan Stanley Dean Witter Advisors Inc., generally invests
in investment grade, Pennsylvania municipal obligations and
obligations of U.S. Governmental territories such as Puerto Rico. The
municipal obligations may only be rated investment grade by Moody's
Investors Service or Standard & Poor's Corporation or Fitch Investors
Services, LP or, if unrated, judged to be of comparable quality by
the Investment Manager at the time of purchase. There are no maturity
limitations on the Pennsylvania Series' portfolio securities.
The Pennsylvania Series may invest any amount of its assets in
securities that pay interest income subject to the "alternative
minimum tax," and some taxpayers may have to pay tax on a
Pennsylvania Series distribution of this income. The Pennsylvania
Series therefore may not be a suitable investment for these
investors. See the "Tax Consequences" section for more details.
The Pennsylvania Series may take temporary "defensive" positions in
attempting to respond to adverse market conditions. The Pennsylvania
Series may invest any amount of its assets in taxable money market
instruments or in the highest grade municipal obligations issued in
other states when the Investment Manager believes it is advisable to
do so because of a defensive posture. Municipal obligations of other
states pay interest that is normally exempt from federal income tax
but not from Pennsylvania income tax. Defensive investing could have
the effect of reducing the Pennsylvania Series' ability to provide
tax exempt income or otherwise meet its investment objective.
In addition to the securities described above, the Pennsylvania
Series may also invest in private activity bonds, lease obligations
and futures.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
- --------------------------
Credit and Interest Rate Risks. A principal risk of investing in the
Pennsylvania Series is associated with its municipal investments,
particularly its concentration in municipal obligations of a single
state. Municipal obligations, as with all debt securities, are
29
<PAGE>
subject to two types of risks: credit risk and interest rate risk.
The "Additional Risk Information" section contains a general
discussion of credit and interest rate risks.
Unlike most fixed-income funds, the Pennsylvania Series is subject to
the added credit risk of concentrating its investments in a single
state -- Pennsylvania -- and its municipalities. Because the
Pennsylvania Series concentrates its investments in securities issued
by Pennsylvania state and local governments and government
authorities, the Pennsylvania Series will be significantly affected
by the political, economic and regulatory developments concerning
those issuers. Should any difficulties develop concerning
Pennsylvania issuers ability to pay principal and/or interest on
their debt obligations, the Series' value and yield could be
adversely affected.
The Pennsylvania Series is not limited as to the maturities of the
securities in which it may invest. Thus, a rise in the general level
of interest rates may cause the price of the Pennsylvania Series'
portfolio securities, and the Pennsylvania Series' share price, to
fall substantially. A table in the "Additional Risk Information"
section shows how interest rates affect bonds.
The Pennsylvania Series is classified as "non-diversified" and
therefore may invest a greater percentage of its assets in the
securities of individual issuers than "diversified" mutual funds and
a decline in the value of those securities would cause the overall
value of the Series to decline to a greater degree.
The Pennsylvania Series is also subject to other risk from its
permissible investments including the risk associated with private
activity bonds, lease obligations and futures.
[GRAPHIC OMITTED]
PAST PERFORMANCE
- ----------------------------
The bar chart and table below provide some indication of the
Pennsylvania Series' performance history. The Pennsylvania Series'
past performance does not indicate how the Pennsylvania Series will
perform in the future.
[sidebar]
ANNUAL TOTAL RETURNS
This chart shows how the performance of the Pennsylvania Series' shares has
varied from year to year over the past 7 calendar years.
[end sidebar]
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
1992 - 10.41%
1993 - 13.16%
1994 - (6.88)%
1995 - 17.62%
1996 - 3.59%
1997 - 8.51%
1998 - 5.05%
The performance information in the bar chart does not
reflect the deduction of sales charges; if these
amounts were reflected, returns would be less than
shown. During the periods shown in the bar chart, the
highest return for a calendar quarter was 7.39%
(quarter ended March 31, 1995) and the lowest return
for a calendar quarter was -7.11% (quarter ended March
31, 1994).
30
<PAGE>
[sidebar]
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Pennsylvania Series' average annual returns with those
of a broad measure of market performance over time. The Pennsylvania Series'
returns include the maximum applicable front-end sales charge.
[end sidebar]
AVERAGE ANNUAL TOTAL RETURNS (FOR THE PERIODS ENDED THE 1998 CALENDAR YEAR)
- -------------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 1/15/91)
- -------------------------------------------------------------------------------
Pennsylvania Series 0.85% 4.42% 7.12%
- -------------------------------------------------------------------------------
Lehman Municipal Bond Index1 6.48% 6.22% 7.92%
- -------------------------------------------------------------------------------
(1) The Lehman Brothers Municipal Bond Index tracks the performance of
municipal bonds with maturities of 2 years or greater and a minimum credit
rating of Baa or BBB, as rated by Moody's Investors Service, Inc. or
Standard & Poor's Corp., respectively. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
[GRAPHIC OMITTED]
FEES AND EXPENSES
- -----------------------------
The table below briefly describes the Pennsylvania Series' fees and
expenses that you may pay if you buy and hold shares of the
Pennsylvania Series. The Pennsylvania Series does not charge account
or exchange fees.
[sidebar]
SHAREHOLDER FEES
These fees are paid directly from your investment.
[end sidebar]
SHAREHOLDER FEES
- -------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 4.0%
- -------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a percentage based
on the lesser of the offering price or net asset value at
redemption) None
- -------------------------------------------------------------------------------
[sidebar]
ANNUAL FUND
OPERATING EXPENSES
These expenses are deducted from the Pennsylvania Series' assets and are based
on expenses paid for the fiscal year ended November 30, 1998.
[end sidebar]
ANNUAL PENNSYLVANIA SERIES OPERATING EXPENSES
- -------------------------------------------------------------------------------
Management fee 0.35%
- -------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.15%
- -------------------------------------------------------------------------------
Other expenses 0.14%
- -------------------------------------------------------------------------------
Total annual Pennsylvania Series operating expenses 0.64%
- -------------------------------------------------------------------------------
EXAMPLE
This example is intended to help you compare the cost of investing in the
Pennsylvania Series with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Pennsylvania Series, your
investment has a 5% return each year, and the Pennsylvania Series' 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.
EXPENSES OVER TIME:
-------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------
$464 $595 $738 $1,154
-------------------------------------
31
<PAGE>
[GRAPHIC OMITTED]
ADDITIONAL INVESTMENT STRATEGY INFORMATION
- ---------------------------------------------------------
The investment objective of each Series is to seek to provide a high
level of current income exempt from both federal and respective state
income taxes consistent with preservation of capital. There is no
guarantee that each Series will achieve its objective.
This section provides additional information concerning each of the
Series' principal investments. In pursuing each Series' 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 investment strategies it uses. For example, the Investment
Manager in its discretion may determine to use some permitted
investment strategies while not using others.
Each Series' policy of investing at least eighty percent of its
assets in securities the interest on which is exempt from federal
income taxes and income taxes of the designated state is fundamental.
The fundamental policies may not be changed without shareholder
approval.
Municipal Obligations. Each Series may invest in municipal
obligations, which are securities issued by state and local
governments. These securities typically are "general obligation" or
"revenue" bonds, notes or commercial paper. The general obligation
securities are secured by the issuer's faith and credit, as well as
its taxing power, for payment of principal and interest. Revenue
bonds, however, are generally payable from a specific revenue source.
They are issued for a wide variety of projects such as financing
public utilities, housing units, airports and highways, and schools.
The Fund's municipal obligation investments may include zero coupon
securities, which pay no interest to the Fund.
Private Activity Bonds. Each Series may invest more than 25% of its
assets in municipal obligations known as private activity bonds.
These securities include, for example, housing, industrial
development and pollution control revenue, electric utility,
manufacturing, and transportation facilities.
Lease Obligations. Included within the revenue bonds category are
participations in lease obligations or installment purchase contracts
of municipalities. Generally, state and local agencies or authorities
issue lease obligations to acquire equipment and facilities for
public and private purposes.
Futures. Each Series may purchase and sell in put and call futures
with respect to financial instruments and municipal bond indexes.
Futures may be used to seek to hedge against interest rate changes.
Fund Structure. The Fund may seek to achieve its investment
objectives by investing all of its assets in another mutual fund. The
other fund would have substantially the same investment objectives
and policies as the Fund.
32
<PAGE>
[GRAPHIC OMITTED]
ADDITIONAL RISK INFORMATION
- ----------------------------------------
Credit and Interest Rate Risk. A principal risk of investing in each
Series is associated with its fixed-income investments. All
fixed-income securities, such as municipal obligations, 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 goes down. When the general
level of interest rates goes down, the prices of most fixed-income
securities goes up. (Zero coupon securities are typically subject to
greater price fluctuations than comparable securities that pay
current interest.) As merely illustrative of the relationship between
fixed-income securities and interest rates, the following table shows
how interest rates affect bond prices.
HOW INTEREST RATES AFFECT BOND PRICES
- -------------------------------------------------------------------------------
PRICE PER $1,000 OF A MUNICIPAL BOND IF
INTEREST RATES:
---------------------------------------
INCREASE* DECREASE**
---------------------------------------
BOND MATURITY COUPON 1% 2% 1% 2%
- -------------------------------------------------------------------------------
1 Year 1999 3.00% $990 $981 $1,010 $1,020
- -------------------------------------------------------------------------------
5 Years 2003 3.75% $956 $914 $1,046 $1,095
- -------------------------------------------------------------------------------
10 Years 2008 4.10% $922 $852 $1,085 $1,180
- -------------------------------------------------------------------------------
20 Years 2018 4.90% $883 $785 $1,138 $1,302
- -------------------------------------------------------------------------------
30 Years 2028 4.95% $861 $749 $1,175 $1,396
- -------------------------------------------------------------------------------
Source: Municipal Market Data (a division of Thomson Financial Municipal
Group): "Aaa" yield curve as of 12/31/98
* Assumes no effect from market discount calculation.
** Assumes bonds are non-callable.
In addition, the table is an illustration and does not represent expected
yields or share price changes of any Morgan Stanley Dean Witter mutual fund.
Private Activity Bonds. The issuers of private activity bonds in which a
particular Series may invest may be negatively impacted by conditions affecting
either the general credit of the user of the private activity project or the
project itself. Conditions such as regulatory and environmental restrictions
and economic downturns may lower the need for these facilities and the ability
of users of the project to pay for the facilities. This could cause a decline
in the Series' value. The Series' private activity bond holdings also may pay
interest subject to the alternative minimum tax. See the "Tax Consequences"
section for more details.
33
<PAGE>
Lease Obligations. Lease obligations may have risks not normally associated
with general obligation or other revenue bonds. Leases, and installment
purchase or conditional sale contracts (which may provide for title to the
leased asset to pass eventually to the issuer) have developed as a means for
governmental issuers to acquire property and equipment without the necessity of
complying with the constitutional and statutory requirements generally
applicable for the issuance of debt. Certain lease obligations contain
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for that purpose by the appropriate legislative body on an annual
or other periodic basis. Consequently, continued lease payments on those lease
obligations containing "non-appropriation" clauses are dependent on future
legislative actions. If these legislative actions do not occur, the holders of
the lease obligation may experience difficulty in exercising their rights,
including disposition of the property.
Bond Insurance Risk. Many of the municipal obligations that each Series invests
in will be covered by insurance at the time of issuance or at a later date.
Such insurance covers the remaining term of the security. Insured municipal
obligations would generally be assigned a lower rating if the rating were based
primarily on the credit quality of the issuer without regard to the insurance
feature. If the claims-paying ability of the insurer were downgraded, the
ratings on the municipal obligations it insures may also be downgraded.
Futures. If a Series purchases or sells futures, its participation in these
markets would subject the Series' portfolio to certain risks. The Investment
Manager's predictions of movements in the direction of interest rate markets
may be inaccurate, and the adverse consequences to the Series (e.g., a
reduction in the Series' net asset value or a reduction in the amount of income
available for distribution) may leave the Series' in a worse position than if
these strategies were not used. Other risks inherent in the use of futures
include, for example, the possible imperfect correlation between the price of
futures contracts and movements in the prices of the securities being hedged,
and the possible absence of a liquid secondary market for any particular
instrument. The risk of imperfect correlations may be increased by the fact
that futures contracts in which the Series may invest are taxable securities
rather than tax-exempt securities. The prices of taxable securities may not
move in a similar manner to prices of tax-exempt securities.
Non-Diversified Status. Each Series is classified as "non-diversified" and, as
such, its investments are not required to meet certain diversification
requirements under federal law. Compared with "diversified" funds, each Series
may invest a greater percentage of its assets in the securities of an
individual issuer. Thus, each Series' assets may be concentrated in fewer
securities than other funds. A decline in the value of those investments would
cause each Series' overall value to decline to a greater degree.
Year 2000. Each Series could be adversely affected if the computer systems
necessary for the efficient operation of the Investment Manager, the Series'
other service
34
<PAGE>
providers and the markets and individual and governmental issuers in which each
Series invests do not properly process and calculate date-related information
from and after January 1, 2000. While year 2000-related computer problems could
have a negative effect on a Series, the Investment Manager and affiliates are
working hard to avoid any problems and to obtain assurances from their service
providers that they are taking similar steps.
[sidebar]
MORGAN STANLEY DEAN WITTER ADVISORS INC.
The Investment Manager is widely recognized as a leader in the mutual fund
industry and together with Morgan Stanley Dean Witter Services Company Inc.,
its wholly-owned subsidiary, has more than $126.2 billion in assets under
management or administration as of February 28, 1999.
[end sidebar]
[GRAPHIC OMITTED]
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, New York 10048.
Each Series' portfolio is managed within the Investment
Manager's Tax-Exempt Fixed-Income Group. James F. Willison, a
Senior Vice President of the Investment Manager has been the
primary portfolio manager of each Series since the Fund's
inception and has been a portfolio manager with the Investment
Manager for over five years.
Each Series pays the Investment Manager a monthly management fee
as full compensation for the services and facilities furnished
to the Series, and for Series expenses assumed by the Investment
Manager. The fee is based on each Series' average daily net
assets. For the fiscal year ended November 30, 1998, each Series
accrued total compensation to the Investment Manager amounting
to 0.35% of the Series' average daily net assets.
35
<PAGE>
SHAREHOLDER INFORMATION
[GRAPHIC OMITTED]
PRICING SERIES SHARES
- ---------------------------------
The price of Series shares (excluding sales charges), called "net
asset value," is based on the value of a Series' portfolio
securities.
The net asset value per share of each Series 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 (except for short-term
taxable debt securities and certain other investments) are valued by
an outside independent pricing service. The service uses a
computerized grid matrix of tax-exempt securities and its evaluations
in determining what it believes is the fair value of the portfolio
securities. The Fund's Board of Trustees believes that timely and
reliable market quotations are generally not readily available to the
Fund to value tax-exempt securities and the valuations that the
pricing service supplies are more likely to approximate the fair
value of the securities.
Short-term debt portfolio 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.
[sidebar]
CONTACTING A FINANCIAL ADVISOR
If you are new to the Morgan Stanley Dean Witter Family of Funds and would like
to contact a Financial Advisor, call (800) THE-DEAN for the telephone number of
the Morgan Stanley Dean Witter office nearest you. You may also access our
office locator on our Internet site at: www.deanwitter.com/funds
[end sidebar]
[GRAPHIC OMITTED]
HOW TO BUY SHARES
- ------------------------------
You may open a new account to buy Series shares or buy
additional Series 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
Series. You may also purchase shares directly by calling the
Fund's transfer agent and requesting an application.
When you buy Series shares, the shares are purchased at the next
share price calculated (less any applicable front-end sales
charge) after we receive your investment order in proper form.
We reserve the right to reject any order for the purchase of
Series shares.
36
<PAGE>
[sidebar]
EASYINVESTSM
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]
MINIMUM INVESTMENT AMOUNTS
- --------------------------------------------------------
MINIMUM INVESTMENT
------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
- --------------------------------------------------------
Regular accounts: $1,000 $100
- --------------------------------------------------------
EasyInvestSM
(Automatically from your
checking or savings
account Money Market Fund) $ 100* $100*
- --------------------------------------------------------
* Provided your schedule of investments totals $1,000 in twelve months.
There is no minimum investment amount if you purchase Fund shares through: (1)
the Investment Manager's mutual fund asset allocation plan, (2) a program,
approved by the Fund's distributor, in which you pay an asset-based fee for
advisory, administrative and/or brokerage services, or (3) employer-sponsored
employee benefit plan accounts.
Three Day Settlement. Series shares are sold through the Fund's distributor,
Morgan Stanley Dean Witter Distributors Inc., on a normal three business day
basis; that is, your payment for any Series shares is due on the third business
day (settlement day) after you place a purchase order.
Advisory, Administrative or Brokerage Programs. There is no minimum investment
amount if you purchase Fund shares through: (1) the Investment Manager's mutual
fund asset allocation plan, or (2) a program, approved by the Series'
distributor, in which you pay an asset-based fee for advisory, administrative
and/or brokerage services.
Subsequent Investments Sent Directly to the Fund. In addition to buying
additional Series shares for an existing account by contacting your Morgan
Stanley Dean Witter Financial Advisor, you may send a check directly to a
Series. To buy additional shares in this manner:
o Write a "letter of instruction" to the Series specifying the name(s) on
the account, the account number, the social security or tax identification
number, and the investment amount (which would include any applicable
front-end sales charge). The letter must be signed by the account
owner(s).
o Make out a check for the total amount payable to: Morgan Stanley Dean
Witter Multi-State Municipal Series Trust (name of Series).
o Mail the letter and check to Morgan Stanley Dean Witter Trust FSB at P.O.
Box 1040, Jersey City, NJ 07303.
Sales Charges. Shares of each Series are sold at net asset value plus an
initial sales charge of up to 4.0%. The initial sales charge is reduced for
purchases of $25,000 or more according to the schedule below. A Series' shares
are also subject to a distribution (12b-1) fee of up to 0.15% of the average
daily net assets of the Series.
37
<PAGE>
The offering price of Series shares includes a sales charge
(expressed as a percentage of the offering price) on a single
transaction as shown in the following table:
[sidebar]
FRONT-END SALES CHARGE OR FSC An initial sales charge you pay when purchasing a
Series' shares that is based on a percentage of the offering price. The
percentage declines based upon the dollar value of the Series' shares you
purchase. We offer three ways to reduce your sales charges -- the Combined
Purchase Privilege, Right of Accumulation and Letter of Intent.
[end sidebar]
<TABLE>
<CAPTION>
FRONT-END SALES CHARGE
---------------------------------------------
PERCENTAGE OF APPROXIMATE PERCENTAGE
AMOUNT OF SINGLE TRANSACTION PUBLIC OFFERING PRICE OF AMOUNT INVESTED
- -------------------------------------------------------------------------------------
<S> <C> <C>
Less than $25,000 4.00% 4.17%
- -------------------------------------------------------------------------------------
$25,000 but less than $50,000 3.50% 3.63%
- -------------------------------------------------------------------------------------
$50,000 but less than $100,000 3.25% 3.36%
- -------------------------------------------------------------------------------------
$100,000 but less than $250,000 2.75% 2.83%
- -------------------------------------------------------------------------------------
$250,000 but less than $500,000 2.50% 2.56%
- -------------------------------------------------------------------------------------
$500,000 but less than $1 million 1.75% 1.78%
- -------------------------------------------------------------------------------------
$1 million and over 0.50% 0.50%
- -------------------------------------------------------------------------------------
</TABLE>
The reduced sales charge schedule is applicable to purchases of Series shares
in a single transaction by:
o A single account (including an individual, trust or fiduciary account).
o Family member accounts (limited to husband, wife and children under the
age of 21).
o Pension, profit sharing or other employee benefit plans of companies and
their affiliates.
o Tax-Exempt Organizations
o Groups organized for a purpose other than to buy mutual fund shares.
Combined Purchase Privilege. You also will have the benefit of reduced sales
charges by combining purchases of shares of a Series in a single transaction
with purchases of another Series Class A shares of Multi-Class Funds and shares
of other FSC Funds.
Right of Accumulation. You also may benefit from a reduction of sales charges
if the cumulative net asset value of shares of a Series purchased in a single
transaction, together with shares of another Series or 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.
You must notify your Morgan Stanley Dean Witter Financial Advisor or other
authorized financial representative (or Morgan Stanley Dean Witter Trust FSB if
you purchase directly through the Fund), at the time a purchase order is
placed, that the purchase qualifies for the reduced charge under the Right of
Accumulation. Similar notification must be made in writing when an order is
placed by mail. The reduced sales charge will not be granted if: (1)
notification is not furnished at the time of the order; or (2) a
38
<PAGE>
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 shares of any Series or shares of
Multi-Class Funds or shares of other FSC Funds within a thirteen-month period.
The initial purchase under a letter of intent must be at least 5% of the stated
investment goal. To determine the applicable sales charge reduction, you may
also include: (1) the cost of shares of other Morgan Stanley Dean Witter Funds
which were previously purchased at a price including a front-end sales charge
during the 90-day period prior to the Distributor receiving the letter of
intent, and (2) the cost of shares of other Funds you currently own acquired in
exchange for shares of Funds purchased during that period at a price including
a front-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.
Sales Charge Waivers. Your purchase of Fund shares is not subject to a sales
charge if your account qualifies under one of the following categories:
o Current or retired Directors/Trustees of the Morgan Stanley Dean Witter
Funds, such persons' spouses and children under the age of 21, and trust
accounts for which any of such individuals is a beneficiary.
o Current or retired directors, officers and employees of Morgan Stanley
Dean Witter & Co. and any of its subsidiaries, such persons' spouses and
children under the age of 21, and trust accounts for which any of such
individuals is a beneficiary.
PLAN OF DISTRIBUTION The Fund has adopted a Plan of Distribution in accordance
with Rule 12b-1 under the Investment Company Act of 1940. The Plan allows a
Series to pay distribution fees of 0.15% for the distribution of these shares.
It also allows a Series to pay for services to shareholders. Because these fees
are paid out of a Series' assets on an ongoing basis, over time these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
We reserve the right to reject any order for the purchase of Series shares.
[GRAPHIC OMITTED]
HOW TO EXCHANGE SHARES
- ------------------------------------
Permissible Fund Exchanges. You may exchange shares of a Series for
shares of any other Series, for shares of another FSC Fund (subject
to a front-end sales charge), for Class A shares of any continuously
offered Multi-Class Fund, or for shares of a No-Load Fund, a Money
Market Fund or Short-Term U.S. Treasury Trust, without the imposition
39
<PAGE>
of an exchange fee. See the inside back cover of this Prospectus for
each Morgan Stanley Dean Witter Fund's designation as a Multi-Class
Fund, No-Load Fund or Money Market Fund. If a Morgan Stanley Dean
Witter Fund is not listed, consult the inside back cover of that
Fund's Prospectus for its designation. For purposes of exchanges,
shares of FSC Funds are treated as Class A shares of a Multi-Class
Fund.
Exchanges may be made after shares of a Series 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
objectives, policies and investment minimums, and should be read
before investment.
Exchange Procedures. You can process an exchange by contacting your
Morgan Stanley Dean Witter Financial Advisor or other authorized
financial representative. Otherwise, you must forward an exchange
privilege authorization form to a Series' 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, a Series' shares
are sold at their next calculated net asset value and the Money
Market Fund's shares are purchased at their net asset value on the
following business day.
The Fund may terminate or revise the exchange privilege upon required
notice. Certain services normally available to shareholders of Money
Market Funds, including the check writing privilege, are not
available for Money Market Fund shares you acquire in an exchange.
Telephone Exchanges. For your protection when calling Morgan Stanley
Dean Witter Trust FSB, we will employ reasonable procedures to
confirm that exchange instructions communicated over the telephone
are genuine. These procedures may include requiring various forms of
personal identification such as name, mailing address, social
security or other tax identification number. Telephone instructions
also may be recorded.
Telephone instructions will be accepted if received by the Fund's
transfer agent between 9:00 a.m. and 4:00 p.m. Eastern time, on any
day the New York Stock Exchange is open for business. During periods
of drastic economic or market changes, it is possible that the
telephone exchange procedures may be difficult to implement, although
this has not been the case with the Fund in the past.
40
<PAGE>
Margin Accounts. If you have pledged your Fund shares in a margin
account, contact your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative regarding restrictions on
the exchange of such shares.
Tax Considerations of Exchanges. If you exchange shares of a Series
for shares of another Series or another Morgan Stanley Dean Witter
Fund there are important tax considerations. For tax purposes, the
exchange out of a Series is considered a sale of Series shares -- and
the exchange into the other Fund is considered a purchase. As a
result, you may realize a capital gain or loss.
You should review the "Tax Consequences" section and consult your own
tax professional about the tax consequences of an exchange.
Frequent Exchanges. A pattern of frequent exchanges may result in a
Series limiting or prohibiting, at its discretion, additional
purchases and/or exchanges. The Series will notify you in advance of
limiting your exchange privileges.
For further information regarding exchange privileges, you should
contact your Morgan Stanley Dean Witter Financial Advisor or call
(800) 869-NEWS.
HOW TO SELL SHARES
- -------------------------------
You can sell some or all of your Series shares at any time. Your
shares will be sold at the next price calculated after we receive
your order in proper form to sell as described below.
[sidebar]
SYSTEMATIC WITHDRAWAL PLAN This plan allows you to withdraw money automatically
from your Series account at regular intervals. Contact your Morgan Stanley Dean
Witter Financial Advisor for more details.
[end sidebar]
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
- --------------------- ------------------------------------------------------------------------------------------
<S> <C>
Contact Your To sell your shares, simply call your Morgan Stanley Dean Witter Financial Advisor or
Financial Advisor other authorized financial representative.
------------------------------------------------------------------------------------------
[GRAPHIC OMITTED] Payment will be sent to the address to which the account is registered or deposited in
your brokerage account.
- --------------------- ------------------------------------------------------------------------------------------
Systematic If your investment in all of the Morgan Stanley Dean Witter Family of Funds has a total
Withdrawal Plan market value of at least $10,000, you may elect to withdraw amounts of $25 or more,
or in any whole percentage of a Fund's (or Series') balance (provided the amount is at
[GRAPHIC OMITTED] least $25), on a monthly, quarterly, semi-annual or annual basis, from any Fund (or
Series) with a balance of at least $1,000. Each time you add a Fund to the plan, you must
meet the plan requirements.
------------------------------------------------------------------------------------------
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>
41
<PAGE>
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
- ------------- ------------------------------------------------------------------------------------------
<S> <C>
By Letter You can also sell your shares by writing a "letter of instruction" that includes:
o your account number;
[GRAPHIC o the dollar amount or the number of shares you wish to sell; and
OMITTED] o the signature of each owner as it appears on the account.
------------------------------------------------------------------------------------------
If you are requesting payment to anyone other than the registered owner(s) or that
payment be sent to any address other than the address of the registered owner(s) or
pre-designated bank account, you will need a signature guarantee. You can generally
obtain a signature guarantee from an eligible guarantor acceptable to Morgan Stanley
Dean Witter Trust FSB. (You should contact Morgan Stanley Dean Witter Trust FSB at
(800) 869-NEWS for a determination as to whether a particular institution is an eligible
guarantor.) A notary public cannot provide a signature guarantee. Additional
documentation may be required for shares held by a corporation, partnership, trustee
or executor.
------------------------------------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at P.O. Box 983, Jersey City,
New Jersey 07303. If you hold share certificates, you must return the certificates, along
with the letter and any required additional documentation.
------------------------------------------------------------------------------------------
A check will be mailed to the name(s) and address in which the account is registered, or
otherwise according to your instructions.
------------------------------------------------------------------------------------------
</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,
however, under unusual circumstances. If you request to sell shares
that were recently purchased by check, payment of the sale proceeds
may be delayed for the minimum time needed to verify that the check
has been honored (not more than fifteen days from the time we receive
the check).
Reinstatement Privilege. If you sell Series 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 Series shares at their net asset value.
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 EasyInvestSM, 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.
42
<PAGE>
Margin Accounts. Certain restrictions may apply to Series shares
pledged in margin accounts with Dean Witter Reynolds or another
authorized broker-dealer of Series shares. If you hold Series shares
in this manner, please contact your Morgan Stanley Dean Witter
Financial Advisor or other authorized financial representative for
more details.
[sidebar]
TARGETED DIVIDENDS(SM)
You may select to have your Series distributions automatically invested in
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]
[GRAPHIC OMITTED]
DISTRIBUTIONS
- ------------------------
Each Series passes substantially all of its earnings from income and
capital gains along to its investors as "distributions." A Series
earns interest from fixed-income investments. These amounts are
passed along to Series shareholders as "income dividend
distributions." A Series 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."
Normally, income dividends are declared on each day the New York
Stock Exchange is open for business and income dividends are
distributed to shareholders monthly. Any capital gains are
distributed in December; if a second capital gain distribution is
necessary, it is usually paid in January of the following year. Each
Series, however, may retain and reinvest any long-term capital gains.
Each Series 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 a
Series and automatically credited to your account, unless you request
in writing that all distributions be paid in cash. If you elect the
cash option, processing of your dividend checks begins immediately
following the monthly payment date, and the Fund will mail a monthly
dividend check to you normally during the first seven days of the
following month. 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.
43
<PAGE>
[GRAPHIC OMITTED]
TAX CONSEQUENCES
- ----------------------------
As with any investment, you should consider how your Fund's
investment in any particular Fund Series 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 a particular Series.
You need to be aware of the possible tax consequences when:
o A Series makes distributions; and
o You sell Series shares, including an exchange to another Morgan
Stanley Dean Witter Fund or Series.
Taxes on Distributions. Your income dividend distributions are
normally exempt from federal and the designated state's personal
income taxes -- to the extent they are derived from that state's
municipal obligations or obligations of governments of Puerto Rico,
the Virgin Islands or Guam. (With respect to the Minnesota Series,
however, income dividend distributions are generally exempt from
Minnesota personal income tax only if they are derived from Minnesota
sources, such as obligations of the State of Minnesota and its
municipalities.) Income derived from other portfolio securities may
be subject to federal, state and/or local income taxes. (Florida,
however, does not impose income tax on individuals.)
Income derived from some municipal securities is subject to the
federal "alternative minimum tax." Certain tax-exempt securities, the
proceeds of which are used to finance private, for-profit
organizations, are subject to this special tax system that ensures
that individuals pay at least some federal taxes. Although interest
on these securities is generally exempt from federal income tax, some
taxpayers who have many tax deductions or exemptions nevertheless may
have to pay tax on the income. (In addition, Minnesota imposes an
"alternative minimum tax" on individuals, estates and trusts that is
based on their federal alternative minimum taxable income and certain
other items.)
If you borrow money to purchase shares of any Series, the interest on
the borrowed money is generally not deductible for personal income
tax purposes.
Each Series may derive gains in part from municipal obligations the
Series purchased below their principal or face values. All, or a
portion, of these gains may be taxable to you as ordinary income
rather than capital gains.
If a Series makes any capital gain distributions, those distributions
will normally be subject to federal and state income tax when they
are paid, whether you take them in cash or reinvest them in Series
shares. (Ohio and New Jersey Series capital gain distributions,
however, are exempt from Ohio and New Jersey state income tax,
respectively.) Any short-term capital gain distributions are taxable
to you as ordinary income. Any long-term capital gain distributions
are taxable to you as long-term capital
44
<PAGE>
gains, no matter how long you have owned shares in a Series.
(Minnesota and Pennsylvania, however, do not distinguish between
short-term and long-term capital gains.)
Pennsylvania Series Only. Shares in the Pennsylvania Series may be
subject to an "intangible personal property" tax. A Pennsylvania
State statute purports to authorize most counties to impose this tax,
and some counties may levy the tax even though it is under
constitutional challenge in the courts. While the Pennsylvania Series
will invest predominately in securities that would not be subject to
the tax, the remaining fraction of the Pennsylvania Series'
investments would be subject to the intangible personal property tax.
Every January, you will be sent a statement (IRS Form 1099-DIV)
showing the distributions paid to you in the previous year. The
statement provides full information on your dividends and capital
gains for tax purposes.
Taxes on Sales. Your sale of Series shares normally is subject to
federal and state income tax and may result in a taxable gain or loss
to you. (Gains from the sale of New Jersey Series shares, however,
are exempt from New Jersey income tax.) A sale also may be subject to
local income tax. Your exchange of Series shares for shares of
another Morgan Stanley Dean Witter Fund or Series 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
sale proceeds. Any withheld amount would be sent to the IRS as an
advance tax payment.
45
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each Series'
financial performance for the past 5 years. Certain information reflects
financial results for a single Series share. The total returns in the table
represent the rate an investor would have earned or lost on an investment in a
Series (assuming reinvestment of all dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, whose report,
along with each Series' financial statements, is included in the annual report,
which is available upon request.
ARIZONA SERIES
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30 1998 1997 1996 1995 1994
- ----------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.64 $10.59 $10.65 $ 9.42 $ 10.72
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 0.51 0.53 0.54 0.54 0.55
Net realized and unrealized gain (loss) 0.17 0.05 (0.06) 1.23 (1.29)
--------- --------- --------- --------- -------
Total from investment operations 0.68 0.58 0.48 1.77 (0.74)
- ------------------------------------------- --------- --------- --------- --------- -------
Dividends to shareholders (0.51) (0.53) (0.54) (0.54) (0.55)
Distributions to shareholders -- -- -- -- (0.01)
--------- --------- --------- --------- -------
Total dividends and distributions (0.51) (0.53) (0.54) (0.54) (0.56)
- ------------------------------------------- --------- --------- --------- --------- -------
Net asset value, end of period 10.81 10.64 10.59 10.65 9.42
- ------------------------------------------- --------- --------- --------- --------- -------
TOTAL RETURN+ 6.56% 5.64% 4.63% 19.21% (7.16)%
- ------------------------------------------- --------- --------- --------- --------- -------
Net assets end of period (000's) $41,655 $41,891 $46,248 $50,290 $47,628
- ------------------------------------------- --------- --------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(AFTER EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- --------- --------- --------- -------
Expenses 0.65%(1) 0.66%(1) 0.65%(1) 0.65%(1) 0.62%
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 4.77% 5.04% 5.12% 5.33% 5.33%
- ------------------------------------------- --------- --------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(BEFORE EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- --------- --------- --------- -------
Expenses 0.65%(1) 0.66%(1) 0.65%(1) 0.65%(1) 0.63%
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 4.77% 5.04% 5.12% 5.33% 5.32%
- ------------------------------------------- --------- --------- --------- --------- -------
Portfolio turnover rate 30% 2% 9% 6% 11%
- ------------------------------------------- --------- --------- --------- --------- -------
</TABLE>
+ Does not reflect the deduction of sales load. Calculated based on the net
asset value as of the last business day of the period.
(1) Does not reflect the effect of expense offset of 0.01%.
46
<PAGE>
CALIFORNIA SERIES
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30 1998 1997 1996 1995 1994
- ----------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.96 $ 10.81 $ 10.67 $ 9.38 $ 11.00
- ------------------------------------------- --------- -------- -------- --------- --------
Net investment income 0.54 0.55 0.56 0.56 0.58
Net realized and unrealized gain (loss) 0.26 0.15 0.14 1.29 (1.48)
--------- -------- -------- --------- --------
Total from investment operations 0.80 0.70 0.70 1.85 (0.90)
- ------------------------------------------- --------- -------- -------- --------- --------
Dividends to shareholders (0.54) (0.55) (0.56) (0.56) (0.58)
Distributions to shareholders -- -- -- -- (0.14)
--------- -------- -------- --------- --------
Total dividends and distributions (0.54) (0.55) (0.56) (0.56) (0.72)
- ------------------------------------------- --------- -------- -------- --------- --------
Net asset value, end of period 11.22 10.96 10.81 10.67 9.38
- ------------------------------------------- --------- -------- -------- --------- --------
TOTAL RETURN+ 7.58% 6.55% 6.76% 20.15% (8.65)%
- ------------------------------------------- --------- -------- -------- --------- --------
Net assets end of period (000's) $105,175 $104,209 $113,859 $117,769 $112,450
- ------------------------------------------- --------- -------- -------- --------- --------
RATIOS TO AVERAGE NET ASSETS
(AFTER EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- -------- -------- --------- --------
Expenses 0.59%(1) 0.59% 0.59% 0.60%(1) 0.58%
- ------------------------------------------- --------- -------- -------- --------- --------
Net investment income 4.87% 5.08% 5.28% 5.50% 5.59%
- ------------------------------------------- --------- -------- -------- --------- --------
RATIOS TO AVERAGE NET ASSETS
(BEFORE EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- -------- -------- --------- --------
Expenses 0.59%(1) 0.59% 0.59% 0.60%(1) 0.59%
- ------------------------------------------- --------- -------- -------- --------- --------
Net investment income 4.87% 5.08% 5.28% 5.50% 5.58%
- ------------------------------------------- --------- -------- -------- --------- --------
Portfolio turnover rate 24% 17% 19% 5% 12%
- ------------------------------------------- --------- -------- -------- --------- --------
</TABLE>
+ Does not reflect the deduction of sales load. Calculated based on the net
asset value as of the last business day of the period.
(1) Does not reflect the effect of expense offset of 0.01%.
47
<PAGE>
FLORIDA SERIES
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30 1998 1997 1996 1995 1994
- ----------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.97 $10.86 $ 10.88 $ 9.60 $ 10.93
- ------------------------------------------- --------- ------- --------- --------- -------
Net investment income 0.52 0.54 0.55 0.56 0.56
Net realized and unrealized gain (loss) 0.28 0.11 (0.02) 1.28 (1.33)
--------- ------- --------- --------- -------
Total from investment operations 0.80 0.65 0.53 1.84 (0.77)
- ------------------------------------------- --------- ------- --------- --------- -------
Dividends to shareholders (0.52) (0.54) (0.55) (0.56) (0.56)
Distributions to shareholders -- -- -- -- --
--------- ------- --------- --------- -------
Total dividends and distributions (0.52) (0.54) (0.55) (0.56) (0.56)
- ------------------------------------------- --------- ------- --------- --------- -------
Net asset value, end of period 11.25 10.97 10.86 10.88 9.60
- ------------------------------------------- --------- ------- --------- --------- -------
TOTAL RETURN+ 7.58% 6.10% 5.03% 19.54% (7.29)%
- ------------------------------------------- --------- ------- --------- --------- -------
Net assets end of period (000's) $61,262 $65,088 $70,542 $74,058 $71,458
- ------------------------------------------- --------- ------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(AFTER EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- ------- --------- --------- -------
Expenses 0.62%(1) 0.62% 0.62%(1) 0.63%(1) 0.61%
- ------------------------------------------- --------- ------- --------- --------- -------
Net investment income 4.69% 5.02% 5.13% 5.34% 5.34%
- ------------------------------------------- --------- ------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(BEFORE EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- ------- --------- --------- -------
Expenses 0.62%(1) 0.62% 0.62%(1) 0.63%(1) 0.62%
- ------------------------------------------- --------- ------- --------- --------- -------
Net investment income 4.69% 5.02% 5.13% 5.34% 5.33%
- ------------------------------------------- --------- ------- --------- --------- -------
Portfolio turnover rate 26% 7% 25% 8% 3%
- ------------------------------------------- --------- ------- --------- --------- -------
</TABLE>
+ Does not reflect the deduction of sales load. Calculated based on the net
asset value as of the last business day of the period.
(1) Does not reflect the effect of expense offset of 0.01%.
48
<PAGE>
MASSACHUSETTS SERIES
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30 1998 1997 1996 1995 1994
- ------------------------------------------- --------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.10 $10.92 $10.97 $9.60 $11.08
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 0.51 0.53 0.57 0.57 0.56
Net realized and unrealized gain (loss) 0.25 0.18 (0.03) 1.37 (1.38)
--------- --------- --------- --------- -------
Total from investment operations 0.76 0.71 0.54 1.94 (0.82)
- ------------------------------------------- --------- --------- --------- --------- -------
Dividends to shareholders (0.51) (0.53) (0.57) (0.57) (0.56)
Distributions to shareholders (0.02) -- (0.02) -- (0.10)
--------- --------- --------- --------- -------
Total dividends and distributions (0.53) (0.53) (0.59) (0.57) (0.66)
- ------------------------------------------- --------- --------- --------- --------- -------
Net asset value, end of period 11.33 11.10 10.92 10.97 9.60
- ------------------------------------------- --------- --------- --------- --------- -------
TOTAL RETURN+ 7.03% 6.68% 5.07% 20.58% (7.71)%
- ------------------------------------------- --------- --------- --------- --------- -------
Net assets end of period (000's) $15,236 $14,561 $16,021 $16,954 $15,507
- ------------------------------------------- --------- --------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(AFTER EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- --------- --------- --------- -------
Expenses 0.83%(1) 0.79%(1) 0.50%(1) 0.50%(1) 0.50%
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 4.55% 4.85% 5.23% 5.39% 5.35%
- ------------------------------------------- --------- --------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(BEFORE EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- --------- --------- --------- -------
Expenses 0.83%(1) 0.81%(1) 0.82%(1) 0.79%(1) 0.78%
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 4.55% 4.83% 4.91% 5.11% 5.07%
- ------------------------------------------- --------- --------- --------- --------- -------
Portfolio turnover rate 31% 10% 11% 7% 10%
- ------------------------------------------- --------- --------- --------- --------- -------
</TABLE>
+ Does not reflect the deduction of sales load. Calculated based on the net
asset value as of the last business day of the period.
(1) Does not reflect the effect of expense offset of 0.01%.
49
<PAGE>
MICHIGAN SERIES
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30 1998 1997 1996 1995 1994
- ----------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.94 $ 10.78 $ 10.81 $ 9.46 $ 11.05
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 0.51 0.53 0.56 0.57 0.56
Net realized and unrealized gain (loss) 0.25 0.16 (0.03) 1.35 (1.41)
--------- --------- --------- --------- -------
Total from investment operations 0.76 0.69 0.53 1.92 (0.85)
- ------------------------------------------- --------- --------- --------- --------- -------
Dividends to shareholders (0.51) (0.53) (0.56) (0.57) (0.56)
Distributions to shareholders -- -- -- -- (0.18)
--------- --------- --------- --------- -------
Total dividends and distributions (0.51) (0.53) (0.56) (0.57) (0.74)
- ------------------------------------------- --------- --------- --------- --------- -------
Net asset value, end of period 11.19 10.94 10.78 10.81 9.46
- ------------------------------------------- --------- --------- --------- --------- -------
TOTAL RETURN+ 7.23% 6.52% 5.09% 20.69% (8.07)%
- ------------------------------------------- --------- --------- --------- --------- -------
Net assets end of period (000's) $17,759 $19,512 $20,863 $21,673 $19,831
- ------------------------------------------- --------- --------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(AFTER EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- --------- --------- --------- -------
Expenses 0.78%(1) 0.72%(1) 0.50%(1) 0.50%(1) 0.50%
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 4.63% 4.95% 5.27% 5.49% 5.44%
- ------------------------------------------- --------- --------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(BEFORE EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- --------- --------- --------- -------
Expenses 0.78%(1) 0.74%(1) 0.76%(1) 0.77%(1) 0.75%
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 4.63% 4.93% 5.01% 5.22% 5.19%
- ------------------------------------------- --------- --------- --------- --------- -------
Portfolio turnover rate 40% 3% 5% 22% 9%
- ------------------------------------------- --------- --------- --------- --------- -------
</TABLE>
+ Does not reflect the deduction of sales load. Calculated based on the net
asset value as of the last business day of the period.
(1) Does not reflect the effect of expense offset of 0.01%.
50
<PAGE>
MINNESOTA SERIES
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30 1998 1997 1996 1995 1994
- ----------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.70 $ 10.60 $ 10.61 $ 9.28 $ 10.78
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 0.48 0.49 0.54 0.54 0.55
Net realized and unrealized gain (loss) 0.13 0.10 (0.01) 1.33 (1.42)
--------- --------- --------- --------- -------
Total from investment operations 0.61 0.59 0.53 1.87 (0.87)
- ------------------------------------------- --------- --------- --------- --------- -------
Dividends to shareholders (0.49) (0.49) (0.54) (0.54) (0.55)
Distributions to shareholders -- -- -- -- (0.08)
--------- --------- --------- --------- -------
Total dividends and distributions (0.49) (0.49) (0.54) (0.54) (0.63)
- ------------------------------------------- --------- --------- --------- --------- -------
Net asset value, end of period 10.82 10.70 10.60 10.61 9.28
- ------------------------------------------- --------- --------- --------- --------- -------
TOTAL RETURN+ 5.77% 5.76% 5.21% 20.60% (8.42)%
- ------------------------------------------- --------- --------- --------- --------- -------
Net assets end of period (000's) $8,417 $8,742 $9,923 $11,230 $9,793
- ------------------------------------------- --------- --------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(AFTER EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- --------- --------- --------- -------
Expenses 0.99%(1) 0.94%(1) 0.50%(1) 0.50%(1) 0.50%
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 4.49% 4.68% 5.21% 5.35% 5.41%
- ------------------------------------------- --------- --------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(BEFORE EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- --------- --------- --------- -------
Expenses 0.99%(1) 0.97%(1) 0.96%(1) 0.98%(1) 0.91%
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 4.49% 4.65% 4.75% 4.88% 5.00%
- ------------------------------------------- --------- --------- --------- --------- -------
Portfolio turnover rate 20% --% 5% 3% 14%
- ------------------------------------------- --------- --------- --------- --------- -------
</TABLE>
+ Does not reflect the deduction of sales load. Calculated based on the net
asset value as of the last business day of the period.
(1) Does not reflect the effect of expense offset of 0.01%.
51
<PAGE>
NEW JERSEY SERIES
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30 1998 1997 1996 1995 1994
- ----------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.88 $ 10.70 $ 10.73 $ 9.47 $ 10.94
- ------------------------------------------- --------- ------- --------- --------- -------
Net investment income 0.53 0.53 0.55 0.56 0.55
Net realized and unrealized gain (loss) 0.27 0.18 (0.03) 1.26 (1.39)
--------- ------- --------- --------- -------
Total from investment operations 0.80 0.71 0.52 1.82 (0.84)
- ------------------------------------------- --------- ------- --------- --------- -------
Dividends to shareholders (0.53) (0.53) (0.55) (0.56) (0.55)
Distributions to shareholders -- -- -- -- (0.08)
--------- ------- --------- --------- -------
Total dividends and distributions (0.53) (0.53) (0.55) (0.56) (0.63)
- ------------------------------------------- --------- ------- --------- --------- -------
Net asset value, end of period 11.15 10.88 10.70 10.73 9.47
- ------------------------------------------- --------- ------- --------- --------- -------
TOTAL RETURN+ 7.49% 6.99% 4.93% 19.60% (7.96)%
- ------------------------------------------- --------- ------- --------- --------- -------
Net assets end of period (000's) $41,803 $41,520 $44,829 $47,889 $45,497
- ------------------------------------------- --------- ------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(AFTER EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- ------- --------- --------- -------
Expenses 0.67%(1) 0.66% 0.66%(1) 0.67%(1) 0.64%
- ------------------------------------------- --------- ------- --------- --------- -------
Net investment income 4.77% 5.02% 5.23% 5.42% 5.38%
- ------------------------------------------- --------- ------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(BEFORE EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- ------- --------- --------- -------
Expenses 0.67%(1) 0.66% 0.66%(1) 0.67%(1) 0.65%
- ------------------------------------------- --------- ------- --------- --------- -------
Net investment income 4.77% 5.02% 5.23% 5.42% 5.37%
- ------------------------------------------- --------- ------- --------- --------- -------
Portfolio turnover rate 21% 14% 5% 14% 6%
- ------------------------------------------- --------- ------- --------- --------- -------
</TABLE>
+ Does not reflect the deduction of sales load. Calculated based on the net
asset value as of the last business day of the period.
(1) Does not reflect the effect of expense offset of 0.01%.
52
<PAGE>
NEW YORK SERIES
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30 1998 1997 1996 1995 1994
- ----------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.11 $ 10.90 $ 10.88 $ 9.46 $ 11.03
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 0.52 0.53 0.56 0.56 0.57
Net realized and unrealized gain (loss) 0.30 0.21 0.02 1.42 (1.52)
--------- --------- --------- --------- -------
Total from investment operations 0.82 0.74 0.58 1.98 (0.95)
- ------------------------------------------- --------- --------- --------- --------- -------
Dividends to shareholders (0.52) (0.53) (0.56) (0.56) (0.57)
Distributions to shareholders -- -- -- -- (0.05)
--------- --------- --------- --------- -------
Total dividends and distributions (0.52) (0.53) (0.56) (0.56) (0.62)
- ------------------------------------------- --------- --------- --------- --------- -------
Net asset value, end of period 11.41 11.11 10.90 10.88 9.46
- ------------------------------------------- --------- --------- --------- --------- -------
TOTAL RETURN+ 7.50% 7.06% 5.46% 21.40% (8.96)%
- ------------------------------------------- --------- --------- --------- --------- -------
Net assets end of period (000's) $12,013 $12,586 $14,020 $14,388 $14,522
- ------------------------------------------- --------- --------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(AFTER EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- --------- --------- --------- -------
Expenses 0.84%(1) 0.82%(1) 0.50%(1) 0.50%(1) 0.50%
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 4.57% 4.84% 5.25% 5.43% 5.48%
- ------------------------------------------- --------- --------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(BEFORE EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- --------- --------- --------- -------
Expenses 0.84%(1) 0.84%(1) 0.84%(1) 0.85%(1) 0.82%
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 4.57% 4.82% 4.91% 5.09% 5.16%
- ------------------------------------------- --------- --------- --------- --------- -------
Portfolio turnover rate 33% 4% 22% 24% 14%
- ------------------------------------------- --------- --------- --------- --------- -------
</TABLE>
+ Does not reflect the deduction of sales load. Calculated based on the net
asset value as of the last business day of the period.
(1) Does not reflect the effect of expense offset of 0.01%.
53
<PAGE>
OHIO SERIES
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30 1998 1997 1996 1995 1994
- ----------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.94 $ 10.77 $ 10.80 $ 9.42 $ 10.97
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 0.52 0.53 0.55 0.56 0.55
Net realized and unrealized gain (loss) 0.21 0.17 (0.03) 1.38 (1.43)
--------- --------- --------- --------- -------
Total from investment operations 0.73 0.70 0.52 1.94 (0.88)
- ------------------------------------------- --------- --------- --------- --------- -------
Dividends to shareholders (0.52) (0.53) (0.55) (0.56) (0.55)
Distributions to shareholders -- -- -- -- (0.12)
--------- --------- --------- --------- -------
Total dividends and distributions (0.52) (0.53) (0.55) (0.56) (0.67)
- ------------------------------------------- --------- --------- --------- --------- -------
Net asset value, end of period 11.15 10.94 10.77 10.80 9.42
- ------------------------------------------- --------- --------- --------- --------- -------
TOTAL RETURN+ 6.84% 6.67% 5.04% 21.02% (8.34)%
- ------------------------------------------- --------- --------- --------- --------- -------
Net assets end of period (000's) $18,580 $18,476 $21,207 $23,104 $20,693
- ------------------------------------------- --------- --------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(AFTER EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- --------- --------- --------- -------
Expenses 0.75%(1) 0.73%(1) 0.50%(1) 0.50%(1) 0.50%
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 4.70% 4.90% 5.23% 5.42% 5.31%
- ------------------------------------------- --------- --------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(BEFORE EXPENSES WERE ASSUMED)
- ------------------------------------------- --------- --------- --------- --------- -------
Expenses 0.75%(1) 0.74%(1) 0.75%(1) 0.77%(1) 0.71%
- ------------------------------------------- --------- --------- --------- --------- -------
Net investment income 4.70% 4.89% 4.98% 5.16% 5.10%
- ------------------------------------------- --------- --------- --------- --------- -------
Portfolio turnover rate 37% 5% 32% 19% 18%
- ------------------------------------------- --------- --------- --------- --------- -------
</TABLE>
+ Does not reflect the deduction of sales load. Calculated based on the net
asset value as of the last business day of the period.
(1) Does not reflect the effect of expense offset of 0.01%.
54
<PAGE>
PENNSYLVANIA SERIES
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30 1998 1997 1996 1995 1994
- ----------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.97 $ 10.85 $ 10.85 $ 9.56 $ 11.01
- ------------------------------------------- ------- ------- --------- --------- -------
Net investment income 0.53 0.54 0.55 0.55 0.56
Net realized and unrealized gain (loss) 0.18 0.14 -- 1.29 (1.39)
------- ------- --------- --------- -------
Total from investment operations 0.71 0.68 0.55 1.84 (0.83)
- ------------------------------------------- ------- ------- --------- --------- -------
Dividends to shareholders (0.53) (0.54) (0.55) (0.55) (0.56)
Distributions to shareholders -- (0.02) -- -- (0.06)
------- ------- --------- --------- -------
Total dividends and distributions (0.53) (0.56) (0.55) (0.55) (0.62)
- ------------------------------------------- ------- ------- --------- --------- -------
Net asset value, end of period 11.15 10.97 10.85 10.85 9.56
- ------------------------------------------- ------- ------- --------- --------- -------
TOTAL RETURN+ 6.60% 6.53% 5.27% 19.65% (7.84)%
- ------------------------------------------- ------- ------- --------- --------- -------
Net assets end of period (000's) $53,808 $44,056 $47,055 $53,935 $47,557
- ------------------------------------------- ------- ------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(AFTER EXPENSES WERE ASSUMED)
- ------------------------------------------- ------- ------- --------- --------- -------
Expenses 0.64% 0.66% 0.65%(1) 0.66%(1) 0.64%
- ------------------------------------------- ------- ------- --------- --------- -------
Net investment income 4.75% 5.01% 5.17% 5.29% 5.37%
- ------------------------------------------- ------- ------- --------- --------- -------
RATIOS TO AVERAGE NET ASSETS
(BEFORE EXPENSES WERE ASSUMED)
- ------------------------------------------- ------- ------- --------- --------- -------
Expenses 0.64% 0.66% 0.65%(1) 0.66%(1) 0.66%
- ------------------------------------------- ------- ------- --------- --------- -------
Net investment income 4.75% 5.01% 5.17% 5.29% 5.35%
- ------------------------------------------- ------- ------- --------- --------- -------
Portfolio turnover rate 26% 8% --% 8% 19%
- ------------------------------------------- ------- ------- --------- --------- -------
</TABLE>
+ Does not reflect the deduction of sales load. Calculated based on the net
asset value as of the last business day of the period.
(1) Does not reflect the effect of expense offset of 0.01%.
55
<PAGE>
NOTES
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56
<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
American Value Fund
Capital Growth Securities
Developing Growth Securities
Equity Fund
Growth Fund
Market Leader Trust
Mid-Cap Growth Fund
Special Value Fund
Value Fund
THEME FUNDS
Financial Services Trust
Health Sciences Trust
Information Fund
Natural Resource Development Securities
Precious Metals and Minerals Trust
GLOBAL/INTERNATIONAL FUNDS
Competitive Edge Fund - "Best Ideas" Portfolio
European Growth Fund
Fund of Funds - International Portfolio
Global Dividend Growth Securities
International SmallCap Fund
Japan Fund
Pacific Growth Fund
- --------------------------------------------------------------------------------
GROWTH & INCOME FUNDS
Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
Fund of Funds - Domestic Portfolio
Income Builder Fund
Mid-Cap Dividend Growth Securities
S&P 500 Index Fund
S&P 500 Select Fund
Strategist Fund
Value-Added Market Series/Equity Portfolio
THEME FUNDS
Global Utilities Fund
Real Estate Fund
Utilities Fund
- --------------------------------------------------------------------------------
INCOME FUNDS
GOVERNMENT INCOME FUNDS
Federal Securities Trust
Short-Term U.S. Treasury Trust
U.S. Government Securities Trust
DIVERSIFIED INCOME FUNDS
Diversified Income Trust
CORPORATE INCOME FUNDS
High Yield Securities
Intermediate Income Securities
Short-Term Bond Fund(NL)
GLOBAL INCOME FUNDS
World Wide Income Trust
TAX-FREE INCOME FUNDS
California Tax-Free Income Fund
Hawaii Municipal Trust(FSC)
Limited Term Municipal Trust(NL)
Multi-State Municipal Series Trust(FSC)
New York Tax-Free Income Fund
Tax-Exempt Securities Trust
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
TAXABLE MONEY MARKET FUNDS
Liquid Asset Fund(MM)
U.S. Government Money Market Trust(MM)
TAX-FREE MONEY MARKET FUNDS
California Tax-Free Daily Income Trust(MM)
N.Y. Municipal Money Market Trust(MM)
Tax-Free Daily Income Trust(MM)
- --------------------------------------------------------------------------------
NEW FUNDS
There may be Funds created after this Prospectus was published. Please consult
the inside front cover of a new Fund's Prospectus for its designation, e.g.,
Multi-Class Fund or Money Market Fund.
Unless otherwise noted, each listed Morgan Stanley Dean Witter Fund, except for
Short-Term U.S. Treasury Trust, is a Multi-Class Fund. A Multi-Class Fund is a
mutual fund offering multiple Classes of shares. The other types of Funds are:
NL -- No-Load (Mutual) Fund; MM -- Money Market Fund; FSC -- A mutual fund sold
with a front-end sales charge and a distribution (12b-1) fee.
<PAGE>
PROSPECTUS - MARCH 30, 1999
Additional information about each Series' 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 a Series' performance during the Fund's
last fiscal year. The Fund's Statement of Additional Information also provides
additional information about each Series, including investment and risk
information concerning municipal obligations of each relevant state. 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 (TOLL FREE)
You also may obtain information about the Fund by calling your Morgan Stanley
Dean Witter Financial Advisor or by visiting our Internet site at:
WWW.DEANWITTER.COM/FUNDS
Information about the Fund (including the Statement of Additional Information)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (800) SEC-0330. Reports and
other information about a Series are available on the SEC's Internet site at
(www.sec.gov), and copies of this information may be obtained, upon payment of
a duplicating fee, by writing the Public Reference Section of the SEC,
Washington, DC 20549-6009.
TICKER SYMBOLS:
Arizona DWAZX
- -------------------------------
California DWCAX
- -------------------------------
Florida DWFLX
- -------------------------------
Massachusetts DWMAX
- -------------------------------
Michigan DWMIX
- -------------------------------
Minnesota DWMNX
- -------------------------------
New Jersey DWNJX
- -------------------------------
New York DWNYX
- -------------------------------
Ohio DWOHX
- -------------------------------
Pennsylvania DWPAX
- -------------------------------
(INVESTMENT COMPANY ACT FILE NO. 811-6208)
Morgan Stanley Dean Witter
MULTI-STATE MUNICIPAL
SERIES TRUST
Consisting of ten separate
fund portfolios:
Arizona Series
California Series
Florida Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
Ohio Series
Pennsylvania Series
EACH SERIES SEEKS TO PROVIDE A HIGH LEVEL OF CURRENT INCOME EXEMPT FROM BOTH
FEDERAL AND DESIGNATED STATE INCOME TAXES CONSISTENT WITH PRESERVATION OF
CAPITAL
