MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME, 485BPOS, 2000-02-08

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME
485BPOS, 2000-02-08

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 8, 2000
REGISTRATION NOS.: 33-46049
811-6572

================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 10 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ ]
AMENDMENT NO. 11 [X]
----------------
MORGAN STANLEY DEAN WITTER NORTH AMERICAN
GOVERNMENT INCOME TRUST
(A MASSACHUSETTS BUSINESS TRUST)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

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

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

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

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

COPY TO:

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

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

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after this Post-Effective Amendment becomes effective.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)

[ ] immediately upon filing pursuant to paragraph (b)
[X] on February 8, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a) of rule 485.

AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS

================================================================================
<PAGE>

PROSPECTUS - FEBRUARY 8, 2000

Morgan Stanley Dean Witter

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

NORTH AMERICAN GOVERNMENT INCOME TRUST

[GRAPHIC OMITTED]

A MUTUAL FUND THAT SEEKS TO EARN A HIGH
LEVEL OF CURRENT INCOME WHILE MAINTAINING
RELATIVELY LOW VOLATILITY OF PRINCIPAL

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

<PAGE>

CONTENTS

<TABLE>
<CAPTION>
<S> <C> <C>
The Fund Investment Objective ....................................... 1
Principal Investment Strategies ............................ 1
Principal Risks ............................................ 3
Past Performance ........................................... 7
Fees and Expenses .......................................... 8
Additional Investment Strategy Information ................. 8
Additional Risk Information ................................ 9
Fund Management ............................................ 10
Legal Proceedings .......................................... 11

Shareholder Information Pricing Fund Shares ........................................ 12
How to Buy Shares .......................................... 12
How to Exchange Shares ..................................... 14
How to Sell Shares ......................................... 16
Distributions .............................................. 17
Tax Consequences ........................................... 18

Financial Highlights .......................................................... 19

Our Family of Funds ............................................................. Inside Back Cover
</TABLE>

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

<PAGE>

THE FUND

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INVESTMENT OBJECTIVE
- --------------------

Morgan Stanley Dean Witter North American Government Income Trust (the "Fund")
seeks to earn a high level of current income while maintaining relatively low
volatility of principal.

[GRAPHIC OMITTED]

PRINCIPAL INVESTMENT STRATEGIES
- -------------------------------
The Fund will normally invest at least 65% of its total assets in fixed-income
securities issued or guaranteed by the United States, Canadian or Mexican
governments, their subdivisions, agencies or instrumentalities. These securities
are referred to generally as "government securities." In the case of the United
States and Canada, a substantial portion of these securities will be
mortgage-backed securities.

[sidebar]
INCOME
An investment objective having the goal of selecting securities to pay out
income rather than rise in price.
[end sidebar]

The Fund will normally invest at least 50% of its assets in U.S. government
securities, and no more than 25% each in Canadian or Mexican government
securities. The Fund will invest in fixed-income securities that are investment
grade; the Fund's investments in Canadian government securities, however, will
be rated at least A by Moody's Investors Services Inc. ("Moody's") or Standard &
Poor's Corporation ("S&P") or, if not rated, determined to be of comparable
quality by the Fund's "Sub-Advisor," TCW Investment Management Company.

The Sub-Advisor will allocate Fund assets among the three countries based on its
analysis of market, economic and political conditions in those countries. When
deciding whether to buy, hold or sell a security for the Fund, the Sub-Advisor
will consider various factors, such as changes in interest rates and currency
exchange rates, to attempt to take advantage of favorable investment
opportunities in each country. The Sub-Advisor expects that, under normal
circumstances, the weighted average maturity (or period until the next time the
interest rate is reset) of the Fund's investment securities will be no greater
than 3 years. In addition, the Fund will purchase Mexican government securities
that have remaining maturities of one year or less.

Mortgage-Backed Securities. One type of mortgage-backed security, in which the
Fund may invest, is a mortgage pass-through security. These securities represent
a participation interest in a pool of residential mortgage loans originated by
governmental or private lenders such as banks. They differ from conventional
debt securities, which provide for periodic payment of interest in fixed amounts
and principal payments at maturity or on specified call dates. Mortgage
pass-through securities provide for monthly payments that are a "pass-through"
of the monthly interest and principal payments made by the individual borrowers
on the pooled mortgage loans.

<PAGE>

The U.S. mortgage pass-through securities in which the Fund may invest include
those issued or guaranteed by the Government National Mortgage Association
("GNMA" or "Ginnie Mae"), the Federal National Mortgage Association ("FNMA" or
"Fannie Mae") and the Federal Home Loan Mortgage Corporation ("FHLMC" or
"Freddie Mac"). GNMA certificates are backed by the "full faith and credit" of
the United States. FNMA and FHLMC certificates are not backed by the full faith
and credit of the United States but the issuing agency or instrumentality has
the right to borrow, to meet its obligations, from an existing line of credit
with the U.S. Treasury.

Collateralized Mortgage Obligations. The Fund may invest in "CMOs" --
collateralized mortgage obligations. CMOs are debt obligations collateralized by
mortgage loans or mortgage pass-through securities (collectively "Mortgage
Assets"). Payments of principal and interest on the Mortgage Assets and any
reinvestment income are used to make payments on the CMOs. CMOs are issued in
multiple classes. Each class has a specific fixed or floating coupon rate and a
stated maturity or final distribution date. The principal and interest on the
Mortgage Assets may be allocated among the classes in a number of different
ways. Certain classes will, as a result of the collection, have more predictable
cash flows than others. As a general matter, the more predictable the cash flow,
the lower the yield relative to other Mortgage Assets. The less predictable the
cash flow, the higher the yield and the greater the risk. The Fund may invest in
any class of CMO.

Inverse Floaters. The Fund may invest up to 10% of its assets in inverse
floaters. An inverse floater has a coupon rate that moves in the direction
opposite to that of a designated interest rate index.

Stripped Mortgage-Backed Securities. The Fund may purchase stripped
mortgage-backed securities, which are usually structured in two classes. One
class entitles the holder to receive all or most of the interest but little or
none of the principal of a pool of Mortgage Assets (the interest-only or "IO"
Class), while the other class entitles the holder to receive all or most of the
principal but little or none of the interest (the principal-only or "PO" Class).

Other Securities. The Fund may invest up to 35% of its assets in securities that
are not government securities. This group of securities also will be issued by
U.S., Canadian or Mexican issuers and may include corporate debt securities and
securities backed by other assets, such as automobile or credit card receivables
or home equity loans. They are rated at least Aa by Moody's or AA by S&P or, if
not rated, determined to be of comparable quality by the Sub-Advisor.

Fixed-income securities are debt securities and can take the form of bonds,
notes or commercial paper. The issuer of the debt security borrows money from
the investor who buys the security. Most debt securities pay either fixed or
adjustable rates of interest at regular intervals until they mature, at which
point investors get their

<PAGE>

principal back. The Fund's fixed-income investments may include zero coupon
securities, which are purchased at a discount and either (i) pay no interest, or
(ii) accrue interest, but make no payments until maturity.

In addition, the Fund may invest in futures, options, reverse repurchase
agreements and dollar rolls.

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

[GRAPHIC OMITTED]

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

Fixed-Income Securities. All fixed-income securities are subject to two types of
risk: credit risk and interest rate risk. Credit risk refers to the possibility
that the issuer of a security will be unable to make interest payments and/or
repay the principal on its debt. While the Fund invests in investment grade
securities, these securities may have speculative characteristics.

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

Mortgage-Backed Securities. Mortgage-backed securities have different risk
characteristics than traditional debt securities. Although generally the value
of fixed-income securities increases during periods of falling interest rates
and decreases during periods of rising interest rates, this is not always the
case with mortgage-backed securities. This is due to the fact that principal on
underlying mortgages may be prepaid at any time as well as other factors.
Generally, prepayments will increase during a period of falling interest rates
and decrease during a period of rising interest rates. The rate of prepayments
also may be influenced by economic and other factors. Prepayment risk includes
the possibility that, as interest rates fall, securities with stated interest

<PAGE>

rates may have the principal prepaid earlier than expected, requiring the Fund
to invest the proceeds at generally lower interest rates.

Investments in mortgage-backed securities are made based upon, among other
things, expectations regarding the rate of prepayments on underlying mortgage
pools. Rates of prepayment, faster or slower than expected by the Sub-Advisor,
could reduce the Fund's yield, increase the volatility of the Fund and/or cause
a decline in net asset value. Certain mortgage-backed securities in which the
Fund may invest may be more volatile and less liquid than other traditional
types of debt securities. The Fund may be subject to a risk referred to as
"extension risk," which is the possibility that rising interest rates may cause
owners of the underlying mortgages to pay off their mortgages at a slower than
expected rate. This risk may effectively change a security that was short or
intermediate term into a long term security. Long term securities generally drop
in value more dramatically when the general level of interest rates goes up.

CMOs. Certain mortgage-backed securities in which the Fund may invest (e.g.,
certain classes of CMOs) may increase or decrease in value substantially with
changes in interest rates and/or the rates of prepayment. In addition, if the
collateral securing CMOs or any third party guarantees are insufficient to make
payments, the Fund could sustain a loss.

Inverse Floaters. Like most other fixed-income securities, the value of inverse
floaters will decrease as interest rates increase. They are more volatile,
however, than most other fixed-income securities because the coupon rate on an
inverse floater typically changes at a multiple of the change in the relevant
index rate. Thus, any rise in the index rate (as a consequence of an increase in
interest rates) causes a correspondingly greater drop in the coupon rate of an
inverse floater while a drop in the index rate causes a correspondingly greater
increase in the coupon of an inverse floater. The value of some inverse floaters
may also increase or decrease substantially because of changes in the rate of
prepayments.

Stripped Mortgage-Backed Securities. IOs tend to decrease in value substantially
if interest rates decline and prepayment rates become more rapid. POs tend to
decrease in value substantially if interest rates increase and the rate of
repayment decreases.

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

Foreign securities also have risks related to economic and political
developments abroad, including effects of foreign social, economic or political
instability. Foreign issuers, in general, are not subject to the regulatory
requirements of U.S. issuers and, as

<PAGE>

such, there may be less publicly available information about these issuers.
Moreover, foreign accounting, auditing and financial reporting standards
generally are different from those applicable to U.S. companies. Finally, in the
event of a default of any foreign debt obligations, it may be more difficult for
the Fund to obtain or enforce a judgment against the issuers of the securities.

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

The Mexican securities in which the Fund may invest are issued by a developing
country. Compared to the United States and other developed countries, developing
countries may have relatively unstable governments, economies based on only a
few industries and securities markets that trade a small number of securities.
Prices of these securities tend to be especially volatile and, in the past,
securities in these countries have offered greater potential loss than
securities of companies located in developed countries.

Canadian and Mexican Securities. The Canadian debt securities market is
significantly smaller than the U.S. debt securities market. In particular, the
Canadian mortgage-backed securities market is of recent origin, and, although
continued growth is anticipated, is less well developed and less liquid than its
U.S. counterpart.

Because the Fund intends to invest in Mexican debt instruments, investors in the
Fund should be aware of certain special considerations associated with investing
in debt obligations of the Mexican government.

The Mexican government has exercised and continues to exercise a significant
influence over many aspects of the private sector in Mexico. Mexican government
actions concerning the economy could have a significant effect on market
conditions and prices and yields of Mexican debt obligations, including those in
which the Fund invests. Mexico is currently a major debtor nation (among
developing countries) to commercial banks and foreign governments.

The value of the Fund's investments may be affected by changes in oil prices,
interest rates, taxation and other political or economic developments in Mexico,
including recent rates of inflation which have exceeded the rates of inflation
in the U.S. and Canada. The Fund can provide no assurance that future
developments in the Mexican economy will not impair the Fund's investment
flexibility, operations or ability to achieve its investment objective.

Non-Diversified Status. The Fund is a "non-diversified" mutual fund and, as
such, its investments are not required to meet certain diversification
requirements under federal law. Compared with "diversified" funds, the Fund may
invest a greater percentage of

<PAGE>

its assets in the securities of an individual governmental entity. Thus, the
Fund's assets may be invested in fewer securities than other funds. A decline in
the value of those investments would cause the Fund's overall value to decline
to a greater degree. The Fund's investments, however, are currently diversified
and may remain diversified in the future.

Other Risks. The performance of the Fund also will depend on whether the
Sub-Advisor is successful in pursuing the Fund's investment strategy. In
addition, the Fund is subject to other risks from its permissible investments
including those risks associated with futures, options and reverse repurchase
agreements and dollar rolls. For information about these risks, see the
"Additional Risk Information" section.

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

<PAGE>

[GRAPHIC OMITTED]

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

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

[sidebar]
ANNUAL TOTAL RETURNS
This chart shows how the performance of the Fund's shares has varied from year
to year over the past 7 calendar years.
[end sidebar]

ANNUAL TOTAL RETURNS -- CALENDAR YEARS

1993 ......................... 8.11%
'94 ......................... -15.59%
'95 ......................... 16.00%
'96 ......................... 4.01%
'97 ......................... 7.89%
'98 ......................... 6.75%
'99 ......................... 2.35%

During the periods shown in the bar chart, the highest return for a calendar
quarter was 5.65% (quarter ended June 30, 1995) and the lowest return for a
calendar quarter was -10.51% (quarter ended December 31, 1994).

[sidebar]
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Fund's average annual returns with those of a broad
measure of market performance over time.
[end sidebar]

AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1999)
- -------------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 7/31/92)
- -------------------------------------------------------------------------------
Morgan Stanley Dean Witter
North American Government
Income Trust 2.35% 7.30% 4.05%
- -------------------------------------------------------------------------------
Lehman Brothers Short (1-5)
U.S. Government Index(1) 1.96% 6.74% 5.60%
- -------------------------------------------------------------------------------

(1) The Lehman Brothers Short (1-5) U.S. Government Index measures the
performance of all U.S. Government agency and U.S. Treasury securities with
maturities of one to five years. The Index does not include any expenses,
fees or charges. The Index is unmanaged and should not be considered an
investment.

<PAGE>

[GRAPHIC OMITTED]

FEES AND EXPENSES
- -----------------
The table below briefly describes the fees and expenses that you may pay if you
buy and hold shares of the Fund. The Fund does not impose any initial or
deferred sales charges and does not charge account or exchange fees.

[sidebar]
ANNUAL FUND OPERATING EXPENSES
These expenses are deducted from the Fund's assets and are based on expenses
paid for the fiscal year ended October 31, 1999.
[end sidebar]

ANNUAL FUND OPERATING EXPENSES
- -----------------------------------------------
Management fee 0.65%
- -----------------------------------------------
Distribution and service (12b-1) fees 0.73%
- -----------------------------------------------
Other expenses 0.43%
- -----------------------------------------------
Total annual Fund operating expenses 1.81%
- -----------------------------------------------

EXAMPLE

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

The example assumes that you invest $10,000 in the Fund, your investment has a
5% return each year, and the Fund's operating expenses remain the same. Although
your actual costs may be higher or lower, the table below shows your costs at
the end of each period based on these assumptions

1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------
$184 $569 $980 $2,127
- -------------------------------------------------------------

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

[GRAPHIC OMITTED]

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

Options and Futures. The Fund may invest in put and call options and futures
with respect to financial instruments and interest rate indexes. The Fund may
use options and futures to facilitate allocation of the Fund's investments among
asset classes, to increase or decrease the Fund's exposure to a bond market, to
generate income or to seek to protect against a decline in securities or an
increase in prices of securities that may be purchased.

Reverse Repurchase Agreements and Dollar Rolls. The Fund may use reverse
repurchase agreements and dollar rolls as part of its investment strategy.
Reverse repurchase

<PAGE>

agreements involve sales by the Fund of portfolio assets concurrently with an
agreement by the Fund to repurchase the same assets at a later date at a fixed
price. The Fund may enter into dollar rolls in which the Fund sells securities
for delivery in the current month and simultaneously contracts to repurchase
substantially similar (same type and coupon) securities on a specified future
date.

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

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

[GRAPHIC OMITTED]

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

Options and Futures. If the Fund invests in options and/or futures, its
participation in these markets would subject it to certain risks. The Investment
Manager's or Sub-Advisor's predictions of movements in the direction of the
stock, bond or interest rate markets may be inaccurate, and the adverse
consequences to the Fund (e.g., a reduction in the Fund's net asset value or a
reduction in the amount of income available for distribution) may leave the Fund
in a worse position than if these strategies were not used. Other risks inherent
in the use of options and futures include, for example, the possible imperfect
correlation between the price of options and 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. Certain options may be
over-the-counter options, which are options negotiated with dealers; there is no
secondary market for these investments.

Reverse Repurchase Agreements and Dollar Rolls. Reverse repurchase agreements
and dollar rolls involve the risk that the market value of the securities the
Fund is obligated to repurchase under the agreement may decline below the
repurchase price. In the event the buyer of securities under a reverse
repurchase agreement or dollar roll files for bankruptcy or becomes insolvent,
the Fund's use of proceeds of the agreement may

<PAGE>

be restricted pending a determination by the other party, or its trustee or
receiver, whether to enforce the Fund's obligation to repurchase the securities.
Reverse repurchase agreements and dollar rolls are speculative techniques
involving leverage, and are considered borrowings by the Fund.

[GRAPHIC OMITTED]

FUND MANAGEMENT
- ----------------
Effective June 28, 1999, the Fund retained the Investment Manager - Morgan
Stanley Dean Witter Advisors Inc. - to provide administrative services, manage
its business affairs and supervise the investment of its assets. The Investment
Manager has, in turn, contracted with the Sub-Advisor - TCW Investment
Management Company - to invest the Funds assets, including the placing of orders
for the purchase and sale of portfolio securities. Prior to June 28, 1999, TCW
Investment Management Company acted as the Fund's advisor and Morgan Stanley
Dean Witter Services Company Inc., a wholly-owned subsidiary of the Investment
Manager, served as the Fund's manager. The Investment Manager is a wholly-owned
subsidiary of Morgan Stanley Dean Witter & Co., a preeminent global financial
services firm that maintains leading market positions in each of its three
primary businesses: securities, asset management and credit services. Its main
business office is located at Two World Trade Center, New York, NY 10048.

[sidebar]
MORGAN STANLEY DEAN WITTER ADVISORS INC.
The Investment Manager is widely recognized as a leader in the mutual fund
industry and together with Morgan Stanley Dean Witter Services Company Inc.,
its wholly-owned subsidiary, had approximately $145 billion in assets under
management as of December 31, 1999.
[end sidebar]

The Sub-Advisor, together with its affiliated companies, manages approximately
$70 billion primarily for institutional investors. The Sub-Advisor is a
wholly-owned subsidiary of TCW Group, Inc., whose direct and indirect
subsidiaries provide a variety of trust, investment management and investment
advisory services. The Sub-Advisor's main business office is located at 865
South Figueroa Street, Suite 1800, Los Angeles, CA 90017.

Philip A. Barach and Jeffrey E. Gundlach, Group Managing Directors of the
Sub-Advisor and Frederick H. Horton, Managing Directors of the Sub-Advisor, are
the Fund's primary portfolio managers, and, with the exception of Mr. Horton,
have been so since the Fund's inception in July 1992. Mr. Horton has been a
primary portfolio manager of the Fund since December, 1994. Messrs. Barach,
Gundlach, Goldberg and Horton have each been portfolio managers with affiliates
of the Sub-Advisor for over five years.

The Fund pays the Investment Manager a monthly management fee as full
compensation for the services and facilities furnished to the Fund, and for Fund
expenses assumed by the Investment Manager. The fee is based on the Fund's
average daily net assets. The Investment Manager pays the Sub-Advisor monthly
compensation equal to 40% of this fee. For the fiscal period November 1, 1998
through June 25, 1999,

<PAGE>

the Fund accrued aggregate total compensation to Morgan Stanley Dean Witter
Services Company Inc. (at that time the Fund's manager) and TCW Investment
Management Company (at that time acting as the Fund's advisor, rather than
sub-advisor) in the amount of 0.65% of the Fund's average daily net assets
(0.39% to Morgan Stanley Dean Witter Services Company Inc. and 0.26% to TCW
Investment Management Company). For the fiscal period June 28, 1999 through
October 31, 1999 the Fund accrued aggregate total compensation to the Investment
Manager in the amount of 0.65% of the Fund's average daily net assets on an
annualized basis.

[GRAPHIC OMITTED]

LEGAL PROCEEDINGS
- -----------------
Several class action lawsuits, which have been consolidated, were instituted in
1995 in the United States District Court, in New York, against the Fund, some of
its Trustees and officers, its underwriter and distributor, the Sub-Advisor, the
former manager, and other defendants, by certain shareholders of the Fund. The
consolidated amended complaint asserts claims under the Securities Act of 1933
and generally alleges that the defendants made inadequate and misleading
disclosures in the prospectuses for the Fund, in particular as such disclosures
relate to the nature and risks of the Fund's investments in mortgage-backed
securities and Mexican securities. The plaintiffs also challenge certain fees
paid by the Fund as excessive. Damages are sought in an unspecified amount.

All defendants moved to dismiss the consolidated amended complaint, and on May
8, 1996 the motions to dismiss were denied. The defendants moved for reargument
and on August 28, 1996 the Court issued a second opinion which granted the
motion to dismiss in part. On December 4, 1996, the defendants filed a renewed
motion to dismiss which was denied by the Court on November 20, 1997. The Court
has also certified a plaintiff class pursuant to the Federal Rules of Civil
Procedure. On January 19, 2000, the court preliminarily approved a stipulation
of settlement disposing of the litigation, subject to a hearing on the fairness
of the settlement scheduled for April 2000. The Sub-Advisor and the Investment
Manager believe that the litigation will not have a material adverse effect on
their ability to perform under their respective agreements with the Fund or a
material adverse effect on the Fund and its shareholders.

<PAGE>

SHAREHOLDER INFORMATION

[GRAPHIC OMITTED]

PRICING FUND SHARES
- -------------------
The price of Fund shares, called "net asset value," is based on the value of the
Fund's portfolio securities.

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

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

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

[GRAPHIC OMITTED]

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

[sidebar]
CONTACTING A FINANCIAL ADVISOR
If you are new to the Morgan Stanley Dean Witter Family of Funds and would like
to contact a Financial Advisor, call (877) 937-MSDW (toll-free) for the
telephone number of the Morgan Stanley Dean Witter office nearest you. You may
also access our office locator on our Internet site at:
www.msdw.com/individual/funds
[end sidebar]

When you buy Fund shares, the shares are purchased at the next share price
calculated after we receive your purchase order. Your payment is due on the
third business day after you place your purchase order. We reserve the right to
reject any order for the purchase of Fund shares.

<PAGE>

[sidebar]
EASYINVEST(SM)
A purchase plan that allows you to transfer money automatically from your
checking or savings account or from a Money Market Fund on a semi-monthly,
monthly or quarterly basis. Contact your Morgan Stanley Dean Witter Financial
Advisor for further information about this service.
[end sidebar]

MINIMUM INVESTMENT AMOUNTS
- -------------------------------------------------------------------------------
MINIMUM INVESTMENT
--------------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
- -------------------------------------------------------------------------------
Regular accounts $1,000 $100
- -------------------------------------------------------------------------------
Individual Retirement Accounts: Regular IRAs $1,000 $100
Education IRAs $500 $100
- -------------------------------------------------------------------------------
EasyInvest(SM)
(Automatically from your
checking or savings account
or Money Market Fund) $100* $100*
- -------------------------------------------------------------------------------

* 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.

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

o Write a "letter of instruction" to the Fund specifying the name(s) on the
account, the account number, the social security or tax identification
number, and the investment amount. 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 North American Government Income Trust.

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

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 the Fund to pay distribution
fees of up to 0.75% for the sale and distribution of these shares. It also
allows the Fund to pay for services to shareholders. Because these fees are paid
out of the Fund's assets on an ongoing basis, over time these fees will increase
the cost of your investment and may cost you more than paying other types of
sales charges.

<PAGE>

[GRAPHIC OMITTED]

HOW TO EXCHANGE SHARES
- ----------------------
Permissible Fund Exchanges. You may only exchange shares of the Fund for shares
of other continuously offered Morgan Stanley Dean Witter Funds if your Fund
shares were acquired in an exchange of shares initially purchased in a
Multi-Class Fund or an FSC Fund (subject to a front-end sales charge). In that
case, the shares may be subsequently re-exchanged for shares of the same Class
of any Multi-Class Fund or FSC Fund or for shares of a No-Load Fund, a Money
Market Fund or Short-Term U.S. Treasury Trust. Of course, if an exchange is not
permitted, you may sell shares of the Fund and buy another Fund's shares with
the proceeds.

See the inside back cover of this Prospectus for each Morgan Stanley Dean Witter
Fund's designation as a Multi-Class Fund, FSC 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. An exchange privilege account also may be maintained for you if you
acquired Fund shares in exchange for shares of various Morgan Stanley Dean
Witter Funds that were formerly part of the TCW/DW family of funds.

The current Prospectus for each fund describes its investment objective(s),
policies and investment minimums, and should be read before investing. Since
exchanges are available only into continuously offered Morgan Stanley Dean
Witter Funds, exchanges are not available into any new Morgan Stanley Dean
Witter Fund during its initial offering period, or when shares of a particular
Morgan Stanley Dean Witter Fund are not being offered for purchase.

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

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

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

<PAGE>

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

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

Exchanging Shares of Another Fund Subject to a Contingent Deferred Sales Charge
("CDSC"). There are special considerations when you exchange shares subject to a
CDSC of another Morgan Stanley Dean Witter Fund for shares of the Fund. When
determining the length of time you held the shares and the corresponding CDSC
rate, any period (starting at the end of the month) during which you held shares
of the Fund will not be counted. Thus, in effect the "holding period" for
purposes of calculating the CDSC is frozen upon exchanging into the Fund.
Nevertheless, if shares subject to a CDSC are exchanged for shares of the Fund,
you will receive a credit when you sell the shares equal to the distribution
(12b-1) fees, if any, you paid on those shares while in the Fund up to the
amount of any applicable CDSC. See the Prospectus of the Fund that charges the
CDSC for more details.

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

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

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

Limitations on Exchanges. Certain patterns of exchanges may result in the Fund
limiting or prohibiting, at its discretion, additional purchases and/or
exchanges. Determinations in this regard may be made based on the frequency or
dollar amount of previous exchanges. The Fund 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.

<PAGE>

[GRAPHIC OMITTED]

HOW TO SELL SHARES
- ------------------
You can sell some or all of your Fund shares at any time. Your shares will be
sold at the next price calculated after we receive your order to sell as
described below.

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

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

<PAGE>

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

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

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

However, before the Fund sells your shares in this manner, we will notify you
and allow you sixty days to make an additional investment in an amount that will
increase the value of your account to at least the required amount before the
sale is processed.

[GRAPHIC OMITTED]

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

[sidebar]
TARGETED DIVIDENDS(SM)
You may select to have your Fund 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]

Normally, income dividends are distributed to shareholders monthly. Capital
gains, if any, are usually distributed in December. The Fund, however, may
retain and reinvest any long-term capital gains. The Fund may at times make
payments from sources other than income or capital gains that represent a return
of a portion of your investment.

Distributions are reinvested automatically in additional shares of the Fund and
automatically credited to your account, unless you request in writing that all
distributions be paid in cash. If you elect the cash option, the Fund will mail
a check to you no later than seven business days after the distribution is
declared. No interest will accrue on uncashed checks. If you wish to change how
your distributions are paid, your

<PAGE>

request should be received by the Fund's transfer agent, Morgan Stanley Dean
Witter Trust FSB, at least five business days prior to the record date of the
distributions.

[GRAPHIC OMITTED]

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

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

o The Fund makes distributions; and

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

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

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

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

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

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 fiscal years of the Fund. Certain
information reflects financial results for a single Fund share throughout each
year. The total returns in the table represent the rate an investor would have
earned or lost on an investment in the Fund (assuming reinvestment of all
dividends and distributions).

This information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Fund's financial statements, is
included in the annual report, which is available upon request.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA:
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $8.60 $8.59 $8.39 $8.33 $8.89
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.44 0.49 0.44 0.47 0.69
Net realized and unrealized gain (loss) (0.09) (0.05) 0.19 0.04 (0.59)
-------- -------- ------- ------- -------
Total income from investment operations 0.35 0.44 0.63 0.51 0.10
- ------------------------------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income (0.38) (0.43) (0.43) (0.45) --
Paid-in-capital (0.07) -- -- -- (0.66)
-------- -------- ------- ------- -------
Total dividends and distributions (0.45) (0.43) (0.43) (0.45) (0.66)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.50 $8.60 $8.59 $8.39 $8.33
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 4.30% 5.13% 7.80% 6.38% 1.61%
- ------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ------------------------------------------------------------------------------------------------------------------
Expenses 1.81%(1) 1.69%(1) 1.65% 1.64% 1.59%
- ------------------------------------------------------------------------------------------------------------------
Net investment income 5.11% 5.52% 5.18% 5.71% 8.28%
- ------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $120,303 $150,441 $212,040 $350,530 $658,307
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 43% 8% -- 13% 44%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

+ 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%.

<PAGE>
MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS

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

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GROWTH FUNDS GROWTH FUNDS Health Sciences Trust

Aggressive Equity Fund Information Fund

American Opportunities Fund Natural Resource Development Securities

Capital Growth Securities GLOBAL/INTERNATIONAL FUNDS

Developing Growth Securities Competitive Edge Fund - "Best Ideas" Portfolio

Growth Fund European Growth Fund

Market Leader Trust Fund of Funds - International Portfolio

Mid-Cap Equity Trust International Fund

Next Generation Trust International SmallCap Fund

Small Cap Growth Fund Japan Fund

Special Value Fund Latin American Growth Fund

21st Century Trend Fund Pacific Growth Fund

THEME FUNDS

Financial Services Trust
- ---------------------------------------------------------------------------------------------------------------------------------
GROWTH & INCOME FUNDS Balanced Growth Fund Total Market Index Fund

Balanced Income Fund Total Return Trust

Convertible Securities Trust Value Fund

Dividend Growth Securities Value/Added Market Series/Equity Portfolio

Equity Fund THEME FUNDS

Fund of Funds - Domestic Portfolio Real Estate Fund

Income Builder Fund Utilities Fund

Mid-Cap Dividend Growth Securities GLOBAL FUNDS

S&P 500 Index Fund Global Dividend Growth Securities

S&P 500 Select Fund Global Utilities Fund

Strategist Fund
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME FUNDS GOVERNMENT INCOME FUNDS GLOBAL INCOME FUNDS

Federal Securities Trust North American Government Income Trust

Short-Term U.S. Treasury Trust World Wide Income Trust

U.S. Government Securities Trust TAX-FREE INCOME FUNDS

DIVERSIFIED INCOME FUNDS California Tax-Free Income Fund

Diversified Income Trust Hawaii Municipal Trust(FSC)

CORPORATE INCOME FUNDS Limited Term Municipal Trust(NL)

High Yield Securities Multi-State Municipal Series Trust(FSC)

Intermediate Income Securities New York Tax-Free Income Fund

Short-Term Bond Fund(NL) Tax-Exempt Securities Trust
- ---------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS TAXABLE MONEY MARKET FUNDS TAX-FREE MONEY MARKET FUNDS

Liquid Asset Fund(MM) California Tax-Free Daily Income Trust(MM)

U.S. Government Money Market Trust(MM) New York Municipal Money Market Trust(MM)

Tax-Free Daily Income Trust(MM)
</TABLE>

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

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

PROSPECTUS - FEBRUARY 8, 2000

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

(800) 869-NEWS

You also may obtain information about the Fund by calling your Morgan Stanley
Dean Witter Financial Advisor or by visiting our Internet site at:

WWW.MSDW.COM/INDIVIDUAL/FUNDS

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

TICKER SYMBOL:
NGTVX

(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-6572)

Morgan Stanley Dean Witter

NORTH AMERICAN
GOVERNMENT INCOME TRUST

[GRAPHIC OMITTED]

A MUTUAL FUND THAT SEEKS TO EARN A HIGH LEVEL OF CURRENT INCOME WHILE
MAINTAINING RELATIVELY LOW VOLATILITY OF PRINCIPAL

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION MORGAN STANLEY DEAN WITTER
NORTH AMERICAN
FEBRUARY 8, 2000 GOVERNMENT
INCOME TRUST

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

This Statement of Additional Information is not a Prospectus. The
Prospectus dated February 8, 2000 for Morgan Stanley Dean Witter North American
Government Income Trust may be obtained without charge from the Fund at its
address or telephone number listed below or from Dean Witter Reynolds at any of
its branch offices.

Morgan Stanley Dean Witter North American Government Income Trust
Two World Trade Center
New York, New York 10048
(800) 869-NEWS

<PAGE>

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

<TABLE>
<CAPTION>
<S> <C> <C>
I. Fund History ........................................................... 4
II. Description of the Fund and Its Investments and Risks .................. 4
A. Classification .................................................. 4
B. Investment Strategies and Risks ................................. 4
C. Fund Policies/Investment Restrictions ........................... 12
III. Management of the Fund ................................................. 13
A. Board of Trustees ............................................... 13
B. Management Information .......................................... 13
C. Compensation .................................................... 17
IV. Control Persons and Principal Holders of Securities .................... 20
V. Management, Investment Advice and Other Services ....................... 20
A. The Investment Manager and Sub-Advisor .......................... 20
B. Principal Underwriter ........................................... 21
C. Services Provided by the Investment Manager and the Sub-Advisor . 21
D. Rule 12b-1 Plan ................................................. 22
E. Other Service Providers ......................................... 24
VI. Brokerage Allocation and Other Practices ............................... 24
A. Brokerage Transactions .......................................... 24
B. Commissions ..................................................... 25
C. Brokerage Selection ............................................. 25
D. Directed Brokerage .............................................. 26
E. Regular Broker-Dealers .......................................... 26
VII. Capital Stock and Other Securities ..................................... 26
VIII. Purchase, Redemption and Pricing of Shares ............................. 26
A. Purchase/Redemption of Shares ................................... 26
B. Offering Price .................................................. 27
IX. Taxation of the Fund and Shareholders .................................. 27
X. Underwriters ........................................................... 29
XI. Calculation of Performance Data ........................................ 29
XII. Financial Statements ................................................... 30
</TABLE>

2
<PAGE>

GLOSSARY OF SELECTED DEFINED TERMS

The terms defined in this glossary are frequently used in this Statement
of Additional Information (other terms used occasionally are defined in the
text of the document).

"Custodian " -- The Bank of New York.

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

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

"Financial Advisors " -- Morgan Stanley Dean Witter authorized financial
services representatives.

"Fund " -- Morgan Stanley Dean Witter North American Government Income
Trust, a registered open-end investment company.

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

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

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

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

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

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

"Sub-Advisor " -- TCW Investment Management Company, a wholly-owned
subsidiary of TCW.

"TCW " -- The TCW Group, Inc., a preeminent investment management and
investment advisory services firm.

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

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

<PAGE>

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

The Fund was organized under the laws of the Commonwealth of Massachusetts
on February 19, 1992 as a Massachusetts business trust under the name "TCW/DW
North American Government Income Trust." On February 25, 1999 the Fund's
Trustees adopted an Amendment to the Fund's Declaration of Trust changing the
name of the Fund to Morgan Stanley Dean Witter North American Government Income
Trust, effective June 28, 1999.

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

A. CLASSIFICATION

The Fund is an open-end, non-diversified management investment company
whose investment objective is to earn a high level of current income while
maintaining relatively low volatility of principal.

B. INVESTMENT STRATEGIES AND RISKS

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

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may enter into
forward foreign currency exchange contracts ("forward contracts") to facilitate
settlement or in an attempt to limit the effect of changes in the relationship
between the U.S. dollar and the foreign currency during the period between the
date on which the security is purchased or sold and the date on which payment
is made or received. The Fund may conduct its foreign currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market, or through entering into forward
contracts to purchase or sell foreign currencies. A forward contract involves
an obligation to purchase or sell a specific currency at a future date, which
may be any fixed number of days from the date of the contract agreed upon by
the parties, at a price set at the time of the contract. These contracts are
traded in the interbank market conducted directly between currency traders
(usually large commercial and investment banks) and their customers. Forward
contracts will only be entered into with United States banks and their foreign
branches, insurance companies or other dealers or foreign banks whose assets
total $1 billion or more. A forward contract generally has no deposit
requirement, and no commissions are charged at any stage for trades.

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

Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. It will, however, do so from time to time, and investors
should be aware of the costs of currency conversion. Although foreign exchange
dealers do not charge a fee for conversion, they do realize a profit based on
the spread between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer.

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

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

OPTION AND FUTURES TRANSACTIONS. The Fund may engage in transactions in
listed and OTC options on eligible portfolio securities and stock indexes.
Listed options are issued or guaranteed by the exchange on which they are
traded or by a clearing corporation such as the Options Clearing Corporation
("OCC"). Ownership of a listed call option gives the Fund the right to buy from
the OCC (in

4
<PAGE>

the U.S.) or other clearing corporation or exchange, the underlying security
covered by the option at the stated exercise price (the price per unit of the
underlying security) by filing an exercise notice prior to the expiration date
of the option. The writer (seller) of the option would then have the obligation
to sell to the OCC (in the U.S.) or other clearing corporation or exchange, the
underlying security at that exercise price prior to the expiration date of the
option, regardless of its then current market price. Ownership of a listed put
option would give the Fund the right to sell the underlying security to the OCC
(in the U.S.) or other clearing corporation or exchange, at the stated exercise
price. Upon notice of exercise of the put option, the writer of the put would
have the obligation to purchase the underlying security from the OCC (in the
U.S.) or other clearing corporation or exchange, at the exercise price.

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

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

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

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

Covered Put Writing. A writer of a covered put incurs an obligation to buy
the security underlying the option from the purchaser of the put, at the
option's exercise price at any time during the option period, at the
purchaser's election. Through the writing of a put option, the Fund would
receive income from the premium paid by purchasers. The potential gain on a
covered put option is limited to the premium received on the option (less the
commissions paid on the transaction). At any time during the option period, the
Fund may be required to make payment of the exercise price against delivery of
the underlying security. A put option is "covered" if the Fund maintains cash,
Treasury bills or other liquid portfolio securities with a value equal to the
exercise price in a segregated account on the Fund's books, or holds a put on
the same security as the put written where the exercise price of the put held
is equal to or greater than the exercise price of the put written. The
aggregate value of the obligations underlying puts may not exceed 50% of the
Fund's net assets.

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

OTC Options. OTC options are purchased from or sold (written) to dealers
or financial institutions which have entered into direct agreements with the
Fund. With OTC options, such variables as expiration

5
<PAGE>

date, exercise price and premium will be agreed upon between the Fund and the
transacting dealer, without the intermediation of a third party such as the
OCC. The Fund may engage in OTC option transactions only with member banks of
the Federal Reserve Bank System or primary dealers in U.S. Government
securities or with affiliates of such banks or dealers.

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

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

In the event of the bankruptcy of a broker through which the Fund engages
in transactions in options, the Fund could experience delays and/or losses in
liquidating open positions purchased or sold through the broker and/or incur a
loss of all or part of its margin deposits with the broker. In the case of OTC
options, if the transacting dealer fails to make or take delivery of the
securities underlying an option it has written, in accordance with the terms of
that option, due to insolvency or otherwise, the Fund would lose the premium
paid for the option as well as any anticipated benefit of the transaction.

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

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

Futures Contracts. The Fund may purchase and sell interest rate and index
futures contracts that are traded on U.S. commodity exchanges on such
underlying securities as U.S. Treasury bonds, notes, bills, GNMA Certificates
and on any foreign government fixed-income security, and on such indexes of
U.S. securities (and, if applicable, foreign securities) as may exist or come
into existence.

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

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<PAGE>

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

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

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

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

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

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

Risks of Transactions in Futures Contracts and Related Options. The prices
of securities and indexes subject to futures contracts (and thereby the futures
contract prices) may correlate imperfectly with the behavior of the cash prices
of the Fund's securities. Also, prices of futures contracts may not move in
tandem with the changes in prevailing interest rates, market movements and/or
currency exchange rates against which the Fund seeks a hedge. A correlation may
also be distorted (a)

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<PAGE>

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

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

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

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

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

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

In addition, if the Fund holds a long position in a futures contract or
has sold a put option on a futures contract, it will hold cash, U.S. government
securities or other liquid portfolio securities equal to the purchase price of
the contract or the exercise price of the put option (less the amount of
initial or variation margin on deposit) in a segregated account maintained on
the books of the Fund. Alternatively, the Fund could cover its long position by
purchasing a put option on the same futures contract with an exercise price as
high or higher than the price of the contract held by the Fund.

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<PAGE>

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

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

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

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

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

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

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

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

While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Fund follows procedures designed to
minimize such risks. These procedures include effecting repurchase transactions
only with large, well-capitalized and well-established financial institutions
whose financial condition will be continually monitored by the Investment
Manager and/or Sub-Advisor subject to procedures established by the Trustees.
In addition, as described above, the value of the collateral underlying the
repurchase agreement will be at least equal to the repurchase price, including
any accrued interest earned on the repurchase agreement. In the event of a
default or bankruptcy by a selling financial institution, the Fund will seek to
liquidate such collateral. However, the exercising of the Fund's right to
liquidate such collateral could involve certain costs or delays and, to the
extent that proceeds from any sale upon a default of the obligation to
repurchase were less than the

9
<PAGE>

repurchase price, the Fund could suffer a loss. It is the current policy of the
Fund not to invest in repurchase agreements that do not mature within seven
days if any such investment, together with any other illiquid assets held by
the Fund, amounts to more than 15% of its net assets.

REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS. The Fund may use reverse
repurchase agreements as part of its investment strategy and may also use
dollar rolls as part of its investment strategy.

Reverse repurchase agreements involve sales by the Fund of assets
concurrently with an agreement by the Fund to repurchase the same assets at a
later date at a fixed price. Reverse repurchase agreements involve the risk
that the market value of the securities the Fund is obligated to purchase under
the agreement may decline below the repurchase price. In the event the buyer of
securities under a reverse repurchase agreement files for bankruptcy or becomes
insolvent, the Fund's use of the proceeds of the agreement may be restricted
pending a determination by the other party, or its trustee or receiver, whether
to enforce the Fund's obligation to repurchase the securities.

Dollar rolls involve the Fund selling securities for delivery in the
current month and simultaneously contracting to repurchase substantially
similar (same type and coupon) securities on a specified future date. During
the roll period, the Fund will forgo principal and interest paid on the
securities. The Fund is compensated by the difference between the current sales
price and the lower forward price for the future purchase (often referred to as
the "drop") as well as by the interest earned on the cash proceeds of the
initial sale.

Reverse repurchase agreements and dollar rolls are speculative techniques
involving leverage and are considered borrowings by the Fund.

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

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

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

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

At the time the Fund makes the commitment to purchase or sell securities
on a when-issued, delayed delivery or forward commitment basis, it will record
the transaction and thereafter reflect the

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<PAGE>

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

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

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

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

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

YEAR 2000. The investment management services provided to the Fund by the
Investment Manager and the Sub-Advisor and the services provided to
shareholders by the Distributor and the Transfer Agent depend on the smooth
functioning of their computer systems. Many computer software systems in use
today were designed in such a way that they may not be able to recognize the
year 2000, but revert to 1900 or some other date, due to the manner in which
dates were encoded and calculated. That failure could have a negative impact on
the handling of securities trades, pricing and account services.

Improperly functioning trading systems may result in settlement problems
and liquidity issues. Corporate and governmental data processing errors could
result in production problems for individual issuers and overall economic
uncertainties. Operations ran smoothly from the last week in December through
the first few weeks of January, but the year 2000 issue may yet have an adverse
impact on financial market participants and other entities, including the
issuers whose securities are contained in the Fund's portfolio.

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<PAGE>

C. FUND POLICIES/INVESTMENT RESTRICTIONS

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

The Fund will:

1. Seek to earn a high level of current income while maintaining
relatively low volatility of principal.

The Fund may not:

1. Invest 25% or more of the value of its total assets in securities of
issuers in any one industry, except that the Fund will concentrate in
mortgage-backed securities (unless it has adopted a temporary
"defensive" posture). This restriction does not apply to obligations
issued or guaranteed by the United States Government, its agencies or
instrumentalities.

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

3. Purchase or sell commodities or commodities contracts except that the
Fund may purchase and sell financial futures contracts and related
options thereon.

4. Purchase or sell real estate or interests therein (including limited
partnership interests), although the Fund may purchase securities of
issuers which engage in real estate operations and securities secured by
real estate or interests therein.

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

6. Borrow money, except that the Fund (i) may borrow from a bank for
temporary or emergency purposes in amounts not exceeding 5% (taken at
the lower of cost or current value) of its total assets (not including
the amount borrowed), and (ii) may engage in reverse repurchase
agreements and dollar rolls.

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

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

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

10. Make short sales of securities.

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

12
<PAGE>

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

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

As a non-fundamental policy, the Fund may not, as to 75% of its total
assets, purchase more than 10% of the voting securities of any issuer.

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

A. BOARD OF TRUSTEES

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

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

B. MANAGEMENT INFORMATION

TRUSTEES AND OFFICERS. The Board of the Fund consists of eight (8)
Trustees. These same individuals also serve as trustees for all of the Morgan
Stanley Dean Witter Funds. Six Trustees (75% of the total number) have no
affiliation or business connection with the Investment Manager or any of its
affiliated persons and do not own any stock or other securities issued by the
Investment Manager's parent company, MSDW or the Sub-Advisor's parent company,
TCW. These are the "disinterested" or "independent" Trustees. The other two
Trustees (the "Management Trustees") are affiliated with the Investment
Manager.

The Trustees and executive officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with the
Investment Manager or the Sub-Advisor, and with the 93 Morgan Stanley Dean
Witter Funds are shown below.

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- --------------------------------------------------
<S> <C>
Michael Bozic (59) ........................ Vice Chairman of Kmart Corporation (since
Trustee December 1998); Director or Trustee of the Morgan
c/o Kmart Corporation Stanley Dean Witter Funds; formerly Chairman
3100 West Big Beaver Road and Chief Executive Officer of Levitz Furniture
Troy, Michigan Corporation (November 1995-November 1998) and
President and Chief Executive Officer of Hills
Department Stores (May 1991-July 1995); formerly
variously Chairman, Chief Executive Officer,
President and Chief Operating Officer (1987-1991)
of the Sears Merchandise Group of Sears, Roebuck
and Co.; Director of Weirton Steel Corporation.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
Charles A. Fiumefreddo* (66) .............. Chairman, Director or Trustee and Chief Executive
Chairman of the Board, Officer of the Morgan Stanley Dean Witter Funds;
Chief Executive Officer and Trustee formerly Chairman, Chief Executive Officer and
Two World Trade Center Director of the Investment Manager, the Distributor
New York, New York and MSDW Services Company; Executive Vice
President and Director of Dean Witter Reynolds;
Chairman and Director of the Transfer Agent;
formerly Director and/or officer of various MSDW
subsidiaries (until June 1998).

Edwin J. Garn (67) ........................ Director or Trustee of the Morgan Stanley Dean
Trustee Witter Funds; formerly United States Senator (R-
c/o Huntsman Corporation Utah) (1974-1992) and Chairman, Senate Banking
500 Huntsman Way Committee (1980-1986); formerly Mayor of Salt
Salt Lake City, Utah Lake City, Utah (1971-1974); formerly Astronaut,
Space Shuttle Discovery (April 12-19, 1985); Vice
Chairman, Huntsman Corporation (chemical
company); Director of Franklin Covey (time
management systems), BMW Bank of North
America, Inc. (industrial loan corporation), United
Space Alliance (joint venture between Lockheed
Martin and the Boeing Company) and Nuskin Asia
Pacific (multilevel marketing); member of the board
of various civic and charitable organizations.

Wayne E. Hedien (65) ...................... Retired; Director or Trustee of the Morgan Stanley
Trustee Dean Witter Funds; Director of The PMI Group,
c/o Mayer, Brown & Platt Inc. (private mortgage insurance); Trustee and
Counsel to the Independent Trustees Vice Chairman of The Field Museum of Natural
1675 Broadway History; formerly associated with the Allstate
New York, New York Companies (1966-1994), most recently as
Chairman of The Allstate Corporation (March 1993-
December 1994) and Chairman and Chief
Executive Officer of its wholly-owned subsidiary,
Allstate Insurance Company (July 1989-December
1994); director of various other business and
charitable organizations.

Dr. Manuel H. Johnson (50) ................ Senior Partner, Johnson Smick International, Inc.,
Trustee a consulting firm; Co-Chairman and a founder of
c/o Johnson Smick International, Inc. the Group of Seven Council (G7C), an international
1133 Connecticut Avenue, N.W. economic commission; Chairman of the Audit
Washington, D.C. Committee and Director or Trustee of the Morgan
Stanely Dean Witter Funds; Director of Greenwich
Capital Markets, Inc. (broker-dealer) and NVR, Inc.
(home construction); Chairman and Trustee of the
Financial Accounting Foundation (oversight
organization of the Financial Accounting Standards
Board); formerly Vice Chairman of the Board of
Governors of the Federal Reserve System (1986-
1990) and Assistant Secretary of the U.S. Treasury.
</TABLE>

14
<PAGE>

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
Michael E. Nugent (63) .................... General Partner, Triumph Capital, L.P., a private
Trustee investment partnership; Chairman of the Insurance
c/o Triumph Capital, L.P. Committee and Director or Trustee of the Morgan
237 Park Avenue Stanley Dean Witter Funds; formerly Vice
New York, New York President, Bankers Trust Company and BT Capital
Corporation (1984-1988); director of various
business organizations.

Philip J. Purcell* (56) ................... Chairman of the Board of Directors and Chief
Trustee Executive Officer of MSDW, Dean Witter Reynolds
1585 Broadway and Novus Credit Services Inc.; Director of the
New York, New York Distributor; Director or Trustee of the Morgan
Stanley Dean Witter Funds; Director of American
Airlines, Inc. and its parent company, AMR
Corporation; Director and/or officer of various
MSDW subsidiaries.

John L. Schroeder (69) .................... Retired; Chairman of the Deriatives Committee
Trustee and Director or Trustee of the Morgan Stanley
c/o Mayer, Brown & Platt Dean Witter Funds; Director of Citizens Utilities
Counsel to the Independent Trustees Company (telecommunications, gas, electric and
1675 Broadway water utilities company); formerly Executive Vice
New York, New York President and Chief Investment Officer of Home
Insurance Company (August 1991-September
1995).

Mitchell M. Merin (46) .................... President and Chief Operating Officer of Asset
President Management of MSDW (since December 1998);
Two World Trade Center President and Director (since April 1997) and Chief
New York, New York Executive Officer (since June 1998) of the
Investment Manager and MSDW Services
Company; Chairman, Chief Executive Officer and
Director of the Distributor (since June 1998);
Chairman and Chief Executive Officer (since June
1998) and Director (since January 1998) of the
Transfer Agent; Director of various MSDW
subsidiaries; President of the Morgan Stanley Dean
Witter Funds (since May 1999); Trustee of various
Van Kampen investment companies (since
December 1999); previously Chief Strategic Officer
of the Investment Manager and MSDW Services
Company and Executive Vice President of the
Distributor (April 1997-June 1998), Vice President
of the Morgan Stanley Dean Witter Funds (May
1997-April 1999), and Executive Vice President of
Dean Witter, Discover & Co.
</TABLE>

15
<PAGE>

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
Barry Fink (45) ........................... Executive Vice President (since December 1999)
Vice President, and Secretary and General Counsel (since
Secretary and General Counsel February 1997) and Director (since July 1998) of
Two World Trade Center the Investment Manager and MSDW Services
New York, New York Company; Executive Vice President (since
December 1999) and Assistant Secretary and
Assistant General Counsel (since February 1997)
of the Distributor; Assistant Secretary of Dean
Witter Reynolds (since August 1996); Vice
President, Secretary and General Counsel of the
Morgan Stanley Dean Witter Funds (since February
1997); previously Senior Vice President (March
1997-December 1999), First Vice President (June
1993-February 1997), Vice President and Assistant
Secretary and Assistant General Counsel of the
Investment Manager and MSDW Services
Company, Senior Vice President of the Distributor
(March 1997-December 1999) and Assistant
Secretary of the Morgan Stanley Dean Witter
Funds.

Philip A. Barach (47) ..................... Group Managing Director and Chief Investment
Vice President Officer--Investment Grade Fixed-Income of the
865 South Figueroa Street Sub-Advisor, Trust Company of the West and TCW
Los Angeles, California Asset Management Company.

Jeffrey E. Gundlach (40) .................. Group Managing Director and Chairman, Multi-
Vice President Strategy Fixed Income Committee of the Sub-
865 South Figueroa Street Advisor, Trust Company of the West and TCW
Los Angeles, California Asset Management Company.

Frederick H. Horton (41) .................. Managing Director of the Sub-Advisor, Trust
Vice President Company of the West and TCW Asset Management
865 South Figueroa Street Company.
Los Angeles, California

Thomas F. Caloia (53) ..................... First Vice President and Assistant Treasurer of the
Treasurer Investment Manager, the Distributor and MSDW
Two World Trade Center Services Company; Treasurer of the Morgan
New York, New York Stanley Dean Witter Funds.
</TABLE>

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

In addition, Ronald E. Robison, Executive Vice President, Chief
Administrative Officer and Director of the Investment Manager and MSDW Services
Company, Robert S. Giambrone, Senior Vice President of the Investment Manager,
MSDW Services Company, the Distributor and the Transfer Agent and Director of
the Transfer Agent, and Joseph J. McAlinden, Executive Vice President and Chief
Investment Officer of the Investment Manager and Director of the Transfer
Agent, are Vice Presidents of the Fund.

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

INDEPENDENT DIRECTORS/TRUSTEES AND THE COMMITTEES. Law and regulation
establish both general guidelines and specific duties for the independent
directors/trustees. The Morgan Stanley Dean Witter Funds seek as independent
directors/trustees individuals of distinction and experience in business

16
<PAGE>

and finance, government service or academia; these are people whose advice and
counsel are in demand by others and for whom there is often competition. To
accept a position on the Funds' boards, such individuals may reject other
attractive assignments because the Funds make substantial demands on their
time. All of the independent directors/trustees serve as members of the Audit
Committee. In addition, three of the directors/trustees, including two
independent directors/trustees, serve as members of the Derivatives Committee
and the Insurance Committee.

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

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

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

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

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

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

C. COMPENSATION

The Fund pays each Independent Trustee an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Trustees, the Independent
Trustees or Committees of the Board of Trustees

17
<PAGE>

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

At their June 8, 1999 meeting, shareholders elected or re-elected, as
appropriate, the following eight individuals to the Fund's Board of Trustees to
serve for indefinite terms: Michael Bozic, Charles A. Fiumefreddo, Edwin Jacob
(Jake) Garn, Wayne E. Hedien, Dr. Manuel H. Johnson, Michael E. Nugent, Philip
J. Purcell and John L. Schroeder. Messrs. Fiumefreddo, Johnson, Nugent and
Schroeder previously served as Trustees of the Fund and were previously elected
by shareholders. Messrs. Bozic, Garn, Hedien and Purcell previously held
directorships or trusteeships with the other Morgan Stanley Dean Witter Funds
and were elected to replace Messrs. Argue, DeMartini, Larkin and Stern who
resigned as Trustees. Messrs. Bozic, Garn, Hedien and Purcell commenced service
at the time the new Investment Management Agreement took effect on June 28,
1999. Prior to the effectiveness of the election of Messrs. Bozic, Garn, Hedien
and Purcell and the resignation of Messrs. Argue, DeMartini, Larkin and Stern,
the Fund paid each Independent Trustee an annual fee of $2,225 plus a per
meeting fee of $200 for meetings of the Board of Trustees or committees of the
Board attended by the Trustee.

The following table illustrates the compensation that the Fund paid to
those of its Independent Trustees who were Trustees of the Fund on October 31,
1999, for the fiscal year ended on that date.

FUND COMPENSATION

AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
- ------------------------------- -------------
Michael Bozic ................. $ 700
Edwin J. Garn ................. 700
Wayne E. Hedien ............... 700
Dr. Manuel H. Johnson ......... 4,400
Michael E. Nugent ............. 4,233
John L. Schroeder ............. 4,233

At such time as the Fund has paid fees to the Fund's Independent Trustees
for a full fiscal year at the lower current compensation rates set forth above,
and assuming that during such fiscal year the Fund holds the same number of
meetings of the board, the independent directors/trustees and the Committees as
were held by the other Morgan Stanley Dean Witter Funds during the calendar
year ended December 31, 1999, it is estimated that the compensation paid to
each Independent Trustee during such fiscal year will be $1,550 and an
additional $750 to Dr. Johnson who serves as Chairman of the Audit Committee
and an additional $500 to each of Messrs. Nugent and Schroeder, who serve as
the Chairman of the Insurance Committee and the Derivatives Committee,
respectively.

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

18
<PAGE>

CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS

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

As of the date of this Statement of Additional Information, 55 of the
Morgan Stanley Dean Witter Funds, not including the Fund, have adopted a
retirement program under which an independent director/trustee who retires
after serving for at least five years (or such lesser period as may be
determined by the Board) as an independent director/trustee of any Morgan
Stanley Dean Witter Fund that has adopted the retirement program (each such
Fund referred to as an "Adopting Fund" and each such trustee referred to as an
"Eligible Trustee") is entitled to retirement payments upon reaching the
eligible retirement age (normally, after attaining age 72), Annual payments are
based upon length of service.

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

The following table illustrates the retirement benefits accrued to the
Fund's Independent Trustees by the 55 Morgan Stanley Dean Witter Funds (not
including the Fund) for the year ended December 31, 1999, and the estimated
retirement benefits for the Independent Trustees, to commence upon their
retirement, from the 55 Morgan Stanley Dean Witter Funds as of December 31,
1999.

RETIREMENT BENEFITS FROM ALL MORGAN STANLEY DEAN WITTER FUNDS

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

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

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

19
<PAGE>

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

No persons owned 5% or more of the shares of the Fund as of January 4,
2000.

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

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

A. INVESTMENT MANAGER AND SUB-ADVISOR

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

The Sub-Advisor is TCW Investment Management Company, a wholly-owned
subsidiary of TCW, whose direct and indirect subsidiaries provide a variety of
trust, investment management and investment advisory services. The Sub-Advisor
is headquartered at 865 South Figueroa Street, Suite 1800, Los Angeles,
California 90017. Robert A. Day, who is Chairman of the Board of Directors of
TCW, may be deemed to be a control person of the Sub-Advisor by virtue of the
aggregate ownership by Mr. Day and his family of more than 25% of the
outstanding voting stock of TCW. The Sub-Advisor was retained to provide
sub-advisory services to the Fund effective June 28, 1999.

Pursuant to an Investment Management Agreement (the "Management Agreement")
with the Investment Manager, the Fund has retained the Investment Manager to
provide administrative services, manage its business affairs and supervise the
investment of the Fund's assets. The Fund pays the Investment Manager monthly
compensation calculated daily by applying the following annual rates to the net
assets of the Fund determined as of the close of each business day: 0.65% to the
portion of daily net assets not exceeding $500 million; and 0.60% to the portion
of daily net assets exceeding $500 million. The Investment Manager has retained
its wholly-owned subsidiary, MSDW Services Company, to perform administrative
services for the Fund.

Under a Sub-Advisory Agreement (the "Sub-Advisory Agreement ") between the
Sub-Advisor and the Investment Manager, the Sub-Advisor provides the Fund with
investment advice and portfolio management relating to the Fund's investments
in securities, subject to the overall supervision of the Investment Manager.
The Investment Manager pays the Sub-Advisor monthly compensation equal to 40%
of the Investment Manager's fee.

Prior to June 28, 1999, the Fund was managed by MSDW Services Company,
pursuant to a management agreement between the Fund and MSDW Services Company
and was advised by TCW Investment Management Company pursuant to an advisory
agreement between the Fund and TCW Investment Management Company. As part of an
overall consolidation of the TCW/DW Family of Funds and the Morgan Stanley Dean
Witter Family of Funds, the Fund's Board of Trustees recommended on February
25, 1999 and shareholders of the Fund approved on June 8, 1999 the Investment
Management Agreement between the Fund and the Investment Manager. The Board
also recommended and shareholders also approved the Sub-Advisory Agreement
between the Investment Manager and TCW Investment Management Company. The fee
rate under the Management Agreement with the Investment Manager is identical to
the total aggregate fee rate in effect under the previous management and
advisory agreements. For the fiscal years ended October 31, 1997 and 1998 and
the fiscal period November 1, 1998 through June 28, 1999, MSDW Services Company
accrued total compensation under the former management agreement in the amounts
of $1,052,959, $697,150 and $363,182, respectively. For the same periods, TCW
Investment Management Company accrued total compensation in its former capacity
of adviser to the Fund in the amounts of $701,973, $464,767 and $242,121,
respectively. For the fiscal period June 28, 1999 through October 31, 1999, the
Investment Manager accrued total compensation under the new Investment
Management Agreement in the amount of $293,087, of which $117,235 was paid to
the sub-advisor.

20
<PAGE>

B. PRINCIPAL UNDERWRITER

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

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

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

C. SERVICES PROVIDED BY THE INVESTMENT MANAGER AND THE SUB-ADVISOR

The Investment Manager supervises the investment of the Fund's assets. The
Investment Manager obtains and evaluates the information and advice relating to
the economy, securities markets, and specific securities as it considers
necessary or useful to continuously oversee the management of the assets of the
Fund in a manner consistent with its investment objective.

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

Pursuant to the Sub-Advisory Agreement, the Sub-Advisor has been retained,
subject to the overall supervision of the Investment Manager, to continuously
furnish investment advice concerning individual security selections, asset
allocations and overall economic trends.

Expenses not expressly assumed by the Investment Manager or the
Sub-Advisor under the Management Agreement and the Sub-Advisory Agreement or by
the Distributor, will be paid by the Fund. Such expenses include, but are not
limited to: expenses of the Plan of Distribution pursuant to Rule 12b-1;
charges and expenses of any registrar, custodian, stock transfer and dividend
disbursing agent; brokerage commissions; taxes; engraving and printing share
certificates; registration costs of the Fund and its shares under federal and
state securities laws; the cost and expense of printing, including typesetting,
and distributing prospectuses of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and Trustees' meetings and of
preparing, printing and mailing of proxy statements and reports to
shareholders; fees and travel expenses of Trustees or

21
<PAGE>

members of any advisory board or committee who are not employees of the
Investment Manager or the Sub-Advisor or any corporate affiliate of the
Investment Manager or the Sub-Advisor; all expenses incident to any dividend,
withdrawal or redemption options; charges and expenses of any outside service
used for pricing of the Fund's shares; fees and expenses of legal counsel,
including counsel to the Trustees who are not interested persons of the Fund or
of the Investment Manager (not including compensation or expenses of attorneys
who are employees of the Investment Manager); fees and expenses of the Fund's
independent accountants; membership dues of industry associations; interest on
Fund borrowings; postage; insurance premiums on property or personnel
(including officers and Trustees) of the Fund which inure to its benefit;
extraordinary expenses (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification relating thereto); and
all other costs of the Fund's operation.

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

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

D. RULE 12B-1 PLAN

In accordance with a Plan of Distribution pursuant to Rule 12b-1 under the
Investment Company Act between the Fund and the Distributor, the Distributor
provides certain services in connection with the promotion of sales of Fund
shares (the "Plan").

The Plan provides that the Distributor bears the expense of all
promotional and distribution related activities on behalf of the Fund, except
for expenses that the Trustees determine to reimburse, as described below. The
following activities and services may be provided by the Distributor under the
Plan: (1) compensation to and expenses of Dean Witter Reynolds' Financial
Advisors and other Selected Broker-Dealers' account executives and other
employees, including overhead and telephone expenses (expenses of Financial
Advisors may include compensation in the form of special sales incentives for
Financial Advisors such as receipt of educational and/or business-related trips
or reimbursement of educational and/or promotional and business-related
expenses.); (2) sales incentives and bonuses to sales representatives and to
marketing personnel in connection with promoting sales of the Fund's shares;
(3) expenses incurred in connection with promoting sales of the Fund's shares;
(4) preparing and distributing sales literature; and (5) providing advertising
and promotional activities, including direct mail solicitation and television,
radio, newspaper, magazine and other media advertisements.

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

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

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

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<PAGE>

The Fund is authorized to reimburse specific expenses incurred or to be
incurred in promoting the distribution of the Fund's shares. Reimbursement is
made through payments at the end of each month. The amount of each monthly
payment may in no event exceed an amount equal to a payment at the annual rate
of 0.75 of 1% of the Fund's average daily net assets during the month. No
interest or other financing charges will be incurred for which reimbursement
payments under the Plan will be made. In addition, no interest charges, if any,
incurred on any distribution expenses will be reimbursable under the Plan. In
the case of all expenses other than expenses representing a residual to
Financial Advisors and other authorized financial representatives, such amounts
shall be determined at the beginning of each calendar quarter by the Trustees,
including a majority of the Independent 12b-1 Trustees. Expenses representing a
residual to Financial Advisors and other authorized financial representatives,
may be reimbursed without prior determination. In the event that the
Distributor proposes that monies shall be reimbursed for other than such
expenses, then in making quarterly determinations of the amounts that may be
expended by the Fund, the Investment Manager provides and the Trustees review a
quarterly budget of projected incremental distribution expenses to be incurred
on behalf of the Fund, together with a report explaining the purposes and
anticipated benefits of incurring such expenses. The Trustees determine which
particular expenses, and the portions thereof, that may be borne by the Fund,
and in making such a determination shall consider the scope of the
Distributor's commitment to promoting the distribution of the Fund's shares.

The Fund accrued a total of $1,014,667 pursuant to the Plan of
Distribution for the fiscal year ended October 31, 1999. It is estimated that
the amounts paid by the Fund for distribution were for expenses which relate to
compensation of sales personnel and associated overhead expenses.

Under the Plan, the Distributor uses its best efforts in rendering
services to the Fund, but in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations, the Distributor is
not liable to the Fund or any of its shareholders for any error of judgment or
mistake of law or for any act or omission or for any losses sustained by the
Fund or its shareholders.

Under the Plan, the Distributor provides the Fund, for review by the
Trustees, and the Trustees review, promptly after the end of each calendar
quarter, a written report regarding the incremental distribution expenses
incurred on behalf of the Fund during such calendar quarter, which report
includes (1) an itemization of the types of expenses and the purposes
therefore; (2) the amounts of such expenses; and (3) a description of the
benefits derived by the Fund. In the Trustees' quarterly review of the Plan
they consider its continued appropriateness and the level of compensation
provided therein.

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

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

23
<PAGE>

determined that continuation of the Plan would be in the best interest of the
Fund and would have a reasonable likelihood of continuing to benefit the Fund
and its shareholders. In the Trustees' quarterly review of the Plan, they will
consider its continued appropriateness and the level of compensation provided
therein.

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

E. OTHER SERVICE PROVIDERS

(1) TRANSFER AGENT/DIVIDEND-PAYING AGENT

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

(2) CUSTODIAN AND INDEPENDENT ACCOUNTANTS

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

PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, NY
10036, serves as the independent accountants of the Fund. The independent
accountants are responsible for auditing the annual financial statements of the
Fund.

(3) AFFILIATED PERSONS

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

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

A. BROKERAGE TRANSACTIONS

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

During the fiscal years ended October 31, 1997, 1998 and 1999, the Fund
paid no brokerage commissions.

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<PAGE>

B. COMMISSIONS

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

During the fiscal years ended October 31, 1997, 1998 and 1999, the Fund
did not effect any principal transactions with Dean Witter Reynolds.

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

C. BROKERAGE SELECTION

The policy of the Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions.

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

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

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<PAGE>

D. DIRECTED BROKERAGE

During the fiscal year ended October 31, 1999, the Fund did not pay any
brokerage commissions to brokers because of research services provided.

E. REGULAR BROKER-DEALERS

During the fiscal year ended October 31, 1999, the Fund did not purchase
securities issued by brokers or dealers that were among the ten brokers or the
ten dealers that executed transactions for or with the Fund in the largest
dollar amounts during the year. At October 31, 1999, the Fund did not own any
securities issued by any of such issuers.

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

The shareholders of the Fund are entitled to a full vote for each full
share of beneficial interest held. The Fund is authorized to issue an unlimited
number of shares of beneficial interest. All shares of beneficial interest of
the Fund are of $0.01 par value and are equal as to earnings, assets and voting
privileges.

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

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

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

All of the Trustees have been elected by the shareholders of the Fund,
most recently at a Special Meeting of Shareholders held on June 8, 1999. The
Trustees themselves have the power to alter the number and the terms of office
of the Trustees (as provided for in the Declaration of Trust), and they may at
any time lengthen or shorten their own terms or make their terms of unlimited
duration and appoint their own successors, provided that always at least a
majority of the Trustees has been elected by the shareholders of the Fund.

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

A. PURCHASE/REDEMPTION OF SHARES

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

26
<PAGE>

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

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

B. OFFERING PRICE

The price of Fund shares, called "net asset value," is based on the value
of the Fund's portfolio securities. Net asset value per Fund share is
calculated by dividing the value of the Fund's securities and other assets,
less the liabilities, by the number of shares outstanding.

In the calculation of the Fund's net asset value all portfolio securities
for which over-the-counter market quotations are readily available are valued
at the latest bid price. When market quotations are not readily available,
including circumstances under which it is determined by the Investment Manager
or the Sub-Advisor that sale or bid prices are not reflective of a security's
market value, portfolio securities are valued at their fair value as determined
in good faith under procedures established by and under the general supervision
of the Fund's Trustees. For valuation purposes, quotations of foreign portfolio
securities, other assets and liabilities and forward contracts stated in
foreign currency are translated into U.S. dollar equivalents at the prevailing
market rates prior to the close of the New York Stock Exchange.

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

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

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

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

The Fund generally will make two basic types of distributions: ordinary
dividends and long-term capital gain distributions. These two types of
distributions are reported differently on a shareholder's income tax return and
they are also subject to different rates of tax. The tax treatment of the
investment activities of the Fund will affect the amount and timing and
character of the distributions made by the

27
<PAGE>

Fund. Tax issues relating to the Fund are not generally a consideration for
shareholders such as tax exempt entities and tax-advantaged retirement vehicles
such as an IRA or 401(k) plan. Shareholders are urged to consult their own tax
professionals regarding specific questions as to federal, state or local taxes.

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

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

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

Under certain tax rules, the Fund may be required to accrue a portion of
any discount at which certain securities are purchased as income each year even
though the Fund receives no payments in cash on the security during the year.
To the extent that the Fund invests in such securities, it would be required to
pay out such accrued discount as an income distribution in each year in order
to avoid taxation at the Fund level. Such distributions will be made from the
available cash of the Fund or by liquidation of portfolio securities if
necessary. If a distribution of cash necessitates the liquidation of portfolio
securities, the Investment Manager and/or Sub-Advisor will select which
securities to sell. The Fund may realize a gain or loss from such sales. In the
event the Fund realizes net capital gains from such transactions, its
shareholders may receive a larger capital gain distribution, if any, than they
would in the absence of such transactions.

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

Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder
has held the Fund's shares and regardless of whether the distribution is
received in additional shares or in cash. The maximum tax on long-term capital
gains applicable to individuals is 20%.

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

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

28
<PAGE>

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

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

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

In general, a sale of shares results in capital gain or loss, and for
individual shareholders, is taxable at a federal rate dependent upon the length
of time the shares were held. A redemption of a shareholder's Fund shares is
normally treated as a sale for tax purposes. Fund shares held for a period of
one year or less will, for tax purposes, generally result in short-term gains
or losses and those held for more than one year generally result in long-term
gain or loss. Under current law, the maximum tax on long-term capital gains is
20%. Any loss realized by shareholders upon a sale or redemption of shares
within six months of the date of their purchase will be treated as a long-term
capital loss to the extent of any distributions of net long-term capital gains
with respect to such shares during the six-month period.

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

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

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

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

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

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

From time to time the Fund may quote its "yield" and/or its "total return"
in advertisements and sales literature.

Yield is calculated for any 30-day period as follows: the amount of
interest income for each security in the Fund's portfolio is determined as
described below; the total for the entire portfolio constitutes the Fund's
gross income for the period. Expenses accrued during the period are subtracted
to arrive at "net investment income." The resulting amount is divided by the
product of the maximum offering price per

29
<PAGE>

share on the last day of the period (reduced by any undeclared earned income
per share that is expected to be declared shortly after the end of the period)
multiplied by the average number of Fund shares outstanding during the period
that were entitled to dividends. This amount is added to 1 and raised to the
sixth power. 1 is then subtracted from the result and the difference is
multiplied by 2 to arrive at the annualized yield.

To determine interest income from debt obligations, a yield-to-maturity,
expressed as a percentage, is determined for obligations held at the beginning
of the period, based on the current market value of the security plus accrued
interest, generally as of the end of the month preceding the 30-day period, or,
for obligations purchased during the period, based on the cost of the security
(including accrued interest). The yield-to-maturity is multiplied by the market
value (plus accrued interest) for each security and the result is divided by
360 and multiplied by 30 days or the number of days the security was held
during the period, if less. Modifications are made for determining
yield-to-maturity on certain tax-exempt securities. For the 30-day period ended
October 31, 1999, the Fund's yield, calculated pursuant to the formula
described above was 4.49%.

The Fund's "average annual total return" represents an annualization of
the Fund's total return over a particular period and is computed by finding the
annual percentage rate which will result in the ending redeemable value of a
hypothetical $1,000 investment made at the beginning of a one, five or ten year
period, or for the period from the date of commencement of the Fund's
operations, if shorter than any of the foregoing. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involves a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment (which is reduced by the initial sales charge), taking a root of the
quotient (where the root is equivalent to the number of years in the period)
and subtracting 1 from the result. Based on this calculation, the average
annual total returns of the Fund for the one and five year periods ended
October 31, 1999 and for the period July 31, 1992 (commencement of operations)
through October 31, 1999 were 4.30%, 5.02% and 4.16%, respectively.

In addition, the Fund may compute its aggregate total return for specified
periods by determining the aggregate percentage rate which will result in the
ending value of a hypothetical $1,000 investment made at the beginning of the
period. For the purpose of this calculation, it is assumed that all dividends
and distributions are reinvested. The formula for computing aggregate total
return involves a percentage obtained by dividing the ending value (without
reduction for any sales charge) by the initial $1,000 investment and
subtracting 1 from the result. Based on this calculation, the Fund's total
returns for the one and five year periods ended October 31, 1999 and for the
period July 31, 1992 through October 31, 1999 were 4.30%, 27.78% and 34.35%,
respectively.

The Fund may also advertise the growth of hypothetical investments of
$10,000, $50,000 and $100,000 in shares of the Fund by adding 1 to the Fund's
aggregate total return to date and multiplying $10,000, $50,000 or $100,000.
Investments of $10,000, $50,000 and $100,000 in the Fund since inception would
have grown to $13,435, $67,175, and $134,350, respectively, at October 31,
1999.

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

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

EXPERTS. The financial statements of the Fund for the fiscal year ended
Ocrober 31, 1999 included in this Statement of Additional Information and
incorporated by reference in the Prospectus have been so included and
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

* * * * *

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

30
<PAGE>

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST
PORTFOLIO OF INVESTMENTS October 31, 1999

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U. S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (68.8%)
$ 2,422 Federal Home Loan Mortgage Corp. ARM ......................... 7.007% 03/01/25 $ 2,473,270
1,462 Federal Home Loan Mortgage Corp. PC GOLD ..................... 6.00 12/01/00 1,415,794
16,462 Federal National Mortgage Assoc. ............................. 7.00 07/01/03-01/01/04 16,525,785
575 Federal National Mortgage Assoc. ............................. 9.50 06/01/20 588,984
997 Government National Mortgage Assoc. II ARM ................... 6.00 * 996,009
14,949 Government National Mortgage Assoc. II ARM ................... 5.50 08/20/29 14,781,060
8,983 Government National Mortgage Assoc. II ARM ................... 6.00 07/20/29-09/20/29 8,975,302
4,033 Government National Mortgage Assoc. II ARM ................... 6.125+ 10/20/24-12/20/24 4,082,562
14,402 Government National Mortgage Assoc. II ARM ................... 6.375 06/20/22-06/20/25 14,558,060
18,162 Government National Mortgage Assoc. II ARM ................... 6.625 08/20/22 18,393,660
------------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (Identified Cost $82,414,325) ............... 82,790,486
------------
COLLATERALIZED MORTGAGE OBLIGATIONS (26.5%)
U.S. GOVERNMENT AGENCIES (22.8%)
8 Federal Home Loan Mortgage Corp. 1370 K (PAC I/O) ............ 1,089.16 09/15/22 179,944
4,985 Federal Home Loan Mortgage Corp. 2061 CD ..................... 7.50 02/15/27 4,985,356
13,416 Federal Home Loan Mortgage Corp. G 21M ....................... 6.50 10/25/23 12,543,998
960 Federal National Mortgage Assoc. 1993-163 A .................. 7.00 03/25/23 918,229
3,986 Federal National Mortgage Assoc. 1993-167 M (PAC) ............ 6.00 09/25/23 3,873,644
5,000 Federal National Mortgage Assoc. G96-1 PJ (PAC) .............. 7.50 11/17/25 4,968,750
------------
TOTAL U.S. GOVERNMENT AGENCIES (Identified Cost $28,856,765)....................................... 27,469,921
------------
PRIVATE ISSUES (3.7%)
2,940 Residential Funding Mortgage Security I, 1997-S12 A10 (PAC) .. 6.70 08/25/27 2,925,971
1,468 Resolution Trust Corp. 1991-6 C1 ............................. 9.00 09/25/28 1,469,559
------------
TOTAL PRIVATE ISSUES (Identified Cost $3,804,166).................................................. 4,395,530
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Identified Cost $32,660,931) ........................... 31,865,451
------------
SHORT-TERM INVESTMENT (5.0%)
REPURCHASE AGREEMENT
6,005 The Bank of New York (dated 10/29/99; proceeds $6,007,130) (a)
(Identified Cost $6,004,535).................................. 5.188 11/01/99 6,004,535
------------
TOTAL INVESTMENTS (Identified Cost $121,079,791) (b) .............................. 100.3 % 120,660,472

LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS .................................... (0.3) (357,733)
----- ------------
NET ASSETS ........................................................................ 100.0 % $120,302,739
===== ============
</TABLE>

- --------------
ARM Adjustable Rate Mortgage.
I/O Interest-only securities.
PAC Planned Amortization Class.
PC Participation Certificate.
* Security purchased on a forward commitment basis with an approximate
principal amount and no definite maturity date; the actual principal
amount and maturity date will be determined upon settlement.
+ A portion of this security is segregated in connection with a security
purchased on a forward commitment basis.
(a) Collateralized by $5,732,043 U.S. Treasury Bond 6.875% due 08/15/25
valued at $6,124,625.
(b) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$1,220,344 and the aggregate gross unrealized depreciation is $1,639,663,
resulting in net unrealized depreciation of $419,319.

SEE NOTES TO FINANCIAL STATEMENTS

<PAGE>

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999

ASSETS:
Investments in securities, at value
(identified cost $121,079,791)........................... $ 120,660,472
Cash ...................................................... 567
Receivable for:
Interest ............................................... 672,408
Shares of beneficial interest sold ..................... 210,225
Principal paydowns ..................................... 101,665
Prepaid expenses and other assets ......................... 48,893
-------------
TOTAL ASSETS ........................................... 121,694,230
-------------
LIABILITIES:
Payable for:
Investment purchased ................................... 996,550
Shares of beneficial interest repurchased .............. 116,720
Plan of distribution fee .............................. 77,054
Investment management fee ............................. 69,374
Accrued expenses .......................................... 131,793
Contingencies (Note 9) ................................... --
-------------
TOTAL LIABILITIES ..................................... 1,391,491
-------------
NET ASSETS ............................................. $ 120,302,739
=============
COMPOSITION OF NET ASSETS:
Paid-in-capital ........................................... $ 353,735,641
Net unrealized depreciation .............................. (419,319)
Accumulated net realized loss ............................ (233,013,583)
-------------
NET ASSETS ............................................. $ 120,302,739
=============
NET ASSET VALUE PER SHARE,
14,156,093 shares outstanding
(unlimited shares authorized of $.01 par value) ......... $8.50
=====

SEE NOTES TO FINANCIAL STATEMENTS

32
<PAGE>

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST
FINANCIAL STATEMENTS, continued

STATEMENT OF OPERATIONS
For the year ended October 31, 1999

NET INVESTMENT INCOME:
INTEREST INCOME ............................... $ 9,553,179
-----------
EXPENSES
Plan of distribution fee ...................... 1,014,667
Management fee ................................ 363,182
Investment management fee ..................... 293,087
Transfer agent fees and expenses .............. 246,580
Investment advisory fee ....................... 242,121
Shareholder reports and notices ............... 137,955
Professional fees ............................. 107,675
Registration fees ............................. 31,977
Trustees' fees and expenses ................... 25,243
Custodian fees ............................... 11,783
Other ......................................... 21,603
-----------
TOTAL EXPENSES ............................. 2,495,873
Less: expense offset ......................... (10,849)
-----------
NET EXPENSES ............................... 2,485,024
-----------
NET INVESTMENT INCOME ..................... 7,068,155
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss ............................ (3,955,389)
Net change in unrealized depreciation ......... 2,776,303
-----------
NET LOSS ................................... (1,179,086)
-----------
NET INCREASE ................................. $ 5,889,069
===========

SEE NOTES TO FINANCIAL STATEMENTS

33
<PAGE>

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST
FINANCIAL STATEMENTS, continued

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1999 OCTOBER 31, 1998
- -------------------------------------------------------------------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................. $ 7,068,155 $ 9,864,231
Net realized loss ..................................... (3,955,389) (790,110)
Net change in unrealized depreciation ................. 2,776,303 (70,301)
------------- -------------
NET INCREASE ...................................... 5,889,069 9,003,820
------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ................................. (6,221,679) (8,875,486)
Paid-in-capital ....................................... (1,056,747) --
------------- -------------
TOTAL DIVIDENDS AND DISTRIBUTIONS ..................... (7,278,426) (8,875,486)
------------- -------------
Net decrease from transactions in shares of beneficial
interest ............................................ (28,748,862) (61,727,111)
------------- -------------
NET DECREASE ...................................... (30,138,219) (61,598,777)
NET ASSETS:
Beginning of period ................................... 150,440,958 212,039,735
------------- -------------
END OF PERIOD
(Including undistributed net investment income of
$0 and $622,302, respectively)..................... $ 120,302,739 $ 150,440,958
============= =============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS

34
<PAGE>

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 1999

1. ORGANIZATION AND ACCOUNTING POLICIES

Morgan Stanley Dean Witter North American Government Income Trust (the "Fund"),
formerly TCW/DW North American Government Income Trust, is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a non-diversified,
open-end management investment company. The Fund's investment objective is to
earn a high level of income while maintaining relatively low volatility of
principal. The Fund was organized as a Massachusetts business trust on February
19, 1992 and commenced operations on July 31, 1992.

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

The following is a summary of significant accounting policies:

A. VALUATION OF INVESTMENTS -- (1) portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (2) when market
quotations are not readily available, including circumstances under which it is
determined by Morgan Stanley Dean Witter Advisors Inc. (the "Investment
Manager") or TCW Funds Management, Inc. (the "Sub-Advisor") that sale or bid
prices are not reflective of a security's market value, portfolio securities
are valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Trustees (valuation of
debt securities for which market quotations are not readily available may be
based upon current market prices of securities which are comparable in coupon,
rating and maturity or an appropriate matrix utilizing similar factors); and
(3) short-term debt securities having a maturity date of more than sixty days
at time of purchase are valued on a mark-to-market basis until sixty days prior
to maturity and thereafter at amortized cost based on their value on the 61st
day. Short-term debt securities having a maturity date of sixty days or less at
the time of purchase are valued at amortized cost.

B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
The Fund amortizes premiums and accretes discounts based on the respective life
of the securities. Interest income is accrued daily.

C. FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities, other assets and liabilities and forward foreign
currency contracts are translated at the exchange rates prevailing at the end
of the

35
<PAGE>

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 1999, continued

period; and (2) purchases, sales, income and expenses are translated at the
exchange rates prevailing on the respective dates of such transactions. The
resultant exchange gains and losses are included in the Statement of Operations
as realized and unrealized gain/loss on foreign exchange transactions. Pursuant
to U.S. Federal income tax regulations, certain foreign exchange gains/losses
included in realized and unrealized gain/loss are included in or are a
reduction of ordinary income for federal income tax purposes. The Fund does not
isolate that portion of the results of operations arising as a result of
changes in the foreign exchange rates from the changes in the market prices of
the securities.

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

E. DOLLAR ROLLS -- The Fund may enter into dollar rolls in which the Fund sells
securities for delivery and simultaneously contracts to repurchase
substantially similar securities at the current sales price on a specified
future date. The difference between the current sale price and the lower
forward price for the future purchase (often referred to as the "drop") is
amortized over the life of the dollar roll.

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

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

36
<PAGE>

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 1999, continued

2. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS

Pursuant to a new Investment Management Agreement that took effect June 28,
1999, the Fund pays the Investment Manager a management fee, accrued daily and
payable monthly, by applying the following annual rate to the net assets of the
Fund determined as of the close of each business day: 0.65% to the portion of
the daily net assets not exceeding $500 million and 0.60% to the portion of the
daily net assets exceeding $500 million.

Under the terms of the Agreement, in addition to managing the Fund's
Investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services,
heat, light, power and other utilities provided to the Fund.

Under a New Sub-Advisory Agreement that took effect June 28, 1999 between the
Investment Manager and the Sub-Advisor, the Sub-Advisor provides the Fund with
investment advice and portfolio management relating to the Fund's investments
in securities, subject to the overall supervision of the Investment Manager. As
compensation for its services provided pursuant to the Sub-Advisory Agreement,
the Investment Manager pays the Sub-Advisor compensation equal to 40% of its
monthly compensation.

Prior to June 28, 1999, pursuant to a Management Agreement with Morgan Stanley
Dean Witter Services Company Inc. (the "Former Manager"), the Fund paid the
Former Manager a management fee, accrued daily and payable monthly, by applying
the following annual rates to the net assets of the Fund determined as of the
close of each business day: 0.39% to the portion of daily net assets not
exceeding $3 billion and 0.36% to the portion of daily net assets exceeding $3
billion. Effective May 1, 1999, the Agreement was amended to 0.39% to the
portion of the daily net assets not exceeding $500 million and 0.36% to the
portion of the daily net assets exceeding $500 million.

Under the terms of the Management Agreement, the Former Manager maintained
certain of the Fund's books and records and furnished, at its own expense,
office space, facilities, equipment, clerical, bookkeeping and certain legal
services and paid the salaries of all personnel, including officers of the Fund
who were employees of the Former Manager. The Former Manager also bore the cost
of telephone services, heat, light, power and other utilities provided to the
Fund.

Prior to June 28, 1999, pursuant to an Investment Advisory Agreement with the
current Sub-Advisor, the Fund paid an advisory fee, accrued daily and payable
monthly, by applying the following annual rates to

37
<PAGE>

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 1999, continued

the net assets of the Fund determined as of the close of each business day:
0.26% to the portion of average daily net assets not exceeding $3 billion and
0.24% to the portion of average daily net assets exceeding $3 billion.
Effective May 1, 1999, the Agreement was amended to 0.26% to the portion of the
daily net assets not exceeding $500 million and 0.24% to the portion of the
daily net assets exceeding $500 million.

Under the terms of the Investment Advisory Agreement, the Fund had retained the
current Sub-Advisor to invest the Fund's assets, including placing orders for
the purchase and sale of portfolio securities. The current Sub-Advisor obtained
and evaluated such information and advice relating to the economy, securities
markets, and specific securities as it considered necessary or useful to
continuously manage the assets of the Fund in a manner consistent with its
investment objective. In addition, the current Sub-Advisor paid the salaries of
all personnel, including officers of the Fund, who were employees of the
current Sub-Advisor.

3. PLAN OF DISTRIBUTION

Morgan Stanley Dean Witter Distributors Inc. (the "Distributor"), an affiliate
of the Investment Manager, is the distributor of the Fund's shares and, in
accordance with a Plan of Distribution (the "Plan") pursuant to Rule 12b-1
under the Act, finances certain expenses in connection with the distribution of
shares of the Fund.

Under the Plan, the Distributor bears the expense of all promotional and
distribution related activities on behalf of the Fund, except for expenses that
the Trustees determine to reimburse, as described below. The following
activities and services may be provided by the Distributor, Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and Distributor,
its affiliates or other selected broker-dealers under the Plan: (1)
compensation to, and expenses of Morgan Stanley Dean Witter Financial Advisors
and others, including overhead and telephone expenses; (2) sales incentives and
bonuses to sales representatives and to marketing personnel in connection with
promoting sales of the Fund's shares; (3) expenses incurred in connection with
promoting sales of the Fund's shares; (4) preparing and distributing sales
literature; and (5) providing advertising and promotional activities, including
direct mail solicitation and television, radio, newspaper, magazine and other
media advertisements.

The Fund is authorized to reimburse the Distributor for specific expenses the
Distributor incurs or plans to incur in promoting the distribution of the
Fund's shares. The amount of each monthly reimbursement payment may in no event
exceed an amount equal to a payment at the annual rate of 0.75% of the Fund's
average daily net assets during the month. Expenses incurred pursuant to the
Plan in any fiscal year in

38
<PAGE>

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 1999, continued

excess of 0.75% of the Fund's average daily net assets will not be reimbursed
by the Fund through payments accrued in any subsequent fiscal year. For the
year ended October 31, 1999, the distribution fee was accrued at the annual
rate of 0.73%.

4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES

The cost of purchases and proceeds from sales/prepayments of portfolio
securities, excluding short-term investments, for the year ended October 31,
1999 were as follows:

SALES/
PURCHASES PREPAYMENTS
--------- -----------
U.S. Government Agencies ......... $48,928,710 $52,777,867
Private Issue CMOs ............... -- 7,912,028

Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager
and Distributor, is the Fund's transfer agent. At October 31, 1999, the Fund
had transfer agent fees and expenses payable of approximately $4,700.

5. SHARES OF BENEFICIAL INTEREST

Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1999 OCTOBER 31, 1998
------------------------------------ ------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Sold .............................. 10,687,742 $ 91,592,005 8,261,398 $ 71,093,361
Reinvestment of dividends ......... 627,075 5,382,544 760,095 6,519,534
Repurchased ....................... (14,660,742) (125,723,411) (16,198,924) (139,340,006)
----------- -------------- ----------- --------------
Net decrease ...................... (3,345,925) $ (28,748,862) (7,177,431) $ (61,727,111)
=========== ============== =========== ==============
</TABLE>

6. FEDERAL INCOME TAX STATUS

At October 31, 1999, the Fund had a net capital loss carryover of approximately
$233,014,000 which may be used to offset future capital gains to the extent
provided by regulations, which is available through October 31 of the following
years:

AMOUNT IN THOUSANDS
- ------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007
---- ---- ---- ---- ---- ----
$53,086 $160,560 $14,716 $2,013 $152 $2,487
======= ======== ======= ====== ==== ======

39
<PAGE>

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 1999, continued

As of October 31, 1999, the Fund had permanent book/tax differences primarily
attributable to foreign currency losses. To reflect reclassifications arising
from these differences, accumulated undistributed net investment income was
charged and accumulated net realized loss was credited $1,468,778.

7. REVERSE REPURCHASE AND DOLLAR ROLL AGREEMENTS

Reverse repurchase and dollar roll agreements involve the risk that the market
value of the securities the Fund is obligated to repurchase under the agreement
may decline below the repurchase price. In the event the buyer of securities
under a reverse repurchase or dollar roll agreement files for bankruptcy or
becomes insolvent, the Fund's use of proceeds of the agreement may be
restricted pending a determination by the other party, its trustee or receiver,
whether to enforce the Fund's obligation to repurchase the securities.

Reverse repurchase agreements are collateralized by Fund securities with a
market value in excess of the Fund's obligation under the contract.

8. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS

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

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

At October 31, 1999, there were no outstanding forward contracts.

9. LITIGATION

Several class action lawsuits, which have been consolidated for pretrial
purposes, were instituted in 1995 in the United States District Court, in New
York, against the Fund, some of its Trustees and officers, its underwriter and
distributor, the Sub-Advisor, the Former Manager, and other defendants, by
certain shareholders of the Fund. The consolidated amended complaint asserts
claims under the Securities Act of 1933 and generally alleges that the
defendants made inadequate and misleading disclosures in the prospectuses for
the Fund, in particular as such disclosures relate to the nature and risks of
the Fund's investments in mortgage-backed securities and Mexican securities.
The plaintiffs also challenge certain

40
<PAGE>

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS October 31, 1999, continued

fees paid by the Fund as excessive. Damages are sought in an unspecified
amount. All defendants have moved to dismiss the consolidated amended
complaint, and on May 8, 1996 the motions to dismiss were denied. The
defendants moved for reargument and on August 28, 1996 the Court issued a
second opinion which granted the motion to dismiss in part. On December 4, 1996
the defendants filed a renewed motion to dismiss which was denied by the Court
on November 20, 1997. The Court has also certified a plaintiff class pursuant
to the Federal Rules of Civil Procedure. The ultimate outcome of these matters
is not presently determinable, and no provision has been made in the Fund's
financial statements for the effect, if any, of such matters.

41
<PAGE>

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST
FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31
------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------- ---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............. $8.60 $8.59 $8.39 $8.33 $8.89
----- ----- ----- ----- -----
Income (loss) from investment operations:
Net investment income ........................... 0.44 0.49 0.44 0.47 0.69
Net realized and unrealized gain (loss) ......... (0.09) (0.05) 0.19 0.04 (0.59)
----- ----- ----- ----- ------
Total income from investment operations .......... 0.35 0.44 0.63 0.51 0.10
----- ----- ----- ----- ------
Less dividends and distributions from:
Net investment income ........................... (0.38) (0.43) (0.43) (0.45) --
Paid-in-capital ................................. (0.07) -- -- -- (0.66)
----- ----- ----- ----- -----
Total dividends and distributions ................ (0.45) (0.43) (0.43) (0.45) (0.66)
----- ----- ----- ----- -----
Net asset value, end of period ................... $8.50 $8.60 $8.59 $8.39 $8.33
===== ===== ===== ===== =====
TOTAL RETURN+ .................................... 4.30% 5.13% 7.80% 6.38% 1.61%
RATIOS TO AVERAGE NET ASSETS:
Expenses ......................................... 1.81%(1) 1.69%(1) 1.65% 1.64% 1.59%
Net investment income ............................ 5.11% 5.52% 5.18% 5.71% 8.28%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .......... $120,303 $150,441 $212,040 $350,530 $658,307
Portfolio turnover rate .......................... 43% 8% -- 13% 44%
</TABLE>

- -------------
+ 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%.

SEE NOTES TO FINANCIAL STATEMENTS

42
<PAGE>

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST
REPORT OF INDEPENDENT ACCOUNTANTS

TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Morgan Stanley Dean Witter North
American Government Income Trust (the "Fund"), formerly TCW/DW North American
Government Income Trust, at October 31, 1999, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
December 13, 1999

<PAGE>

MORGAN STANLEY DEAN WITTER NORTH AMERICAN GOVERNMENT INCOME TRUST

PART C OTHER INFORMATION

Item 23. Exhibits
--------

1 (a). Declaration of Trust of the Registrant, dated February 19, 1992, is
incorporated by reference to Exhibit 1 of Post-Effective Amendment
No. 4 to the Registration Statement on Form N-1A, filed on January 25,
1996.

1 (b). Amendment dated May 18, 1992 to the Declaration of Trust of the
Registrant, is incorporated by reference to Exhibit 1(b) of Post-
Effective Amendment No. 4 to the Registration Statement on Form N-1A,
filed on January 25, 1996.

1 (c). Form of Amendment dated June 25, 1999 to the Declaration of Trust of
the Registrant, is incorporated by reference to Exhibit 1(c) of Post-
Effective Amendment No. 9 to the Registration Statement on Form N-1A,
filed on June 24, 1999.

2. Amended and Restated By-Laws of the Registrant, dated May 1, 1999, is
incorporated by reference to Exhibit 2 of Post-Effective Amendment
No. 8 to the Registration Statement on Form N-1A, filed on April 26,
1999.

3. Not Applicable.

4 (a). Form of Investment Management Agreement between the Registrant and
Morgan Stanley Dean Witter Advisors Inc., dated June 28, 1999, is
incorporated by reference to Exhibit 4(a) of Post-Effective Amendment
No. 9 to the Registration Statement on Form N-1A, filed on June 24,
1999.

4 (b). Form of Sub-Advisory Agreement between Morgan Stanley Dean Witter
Advisors Inc. and TCW Funds Management Inc., dated June 28, 1999, is
incorporated by reference to Exhibit 4(b) of Post-Effective Amendment
No. 9 to the Registration Statement on Form N-1A, filed on June 24,
1999.

5 (a). Amended Distribution Agreement between the Registrant and Morgan
Stanley Dean Witter Distributors Inc., dated June 22, 1998, is
incorporated by reference to Exhibit 5(a) of Post-Effective Amendment
No. 9 to the Registration Statement on Form N-1A, filed on June 24,
1999.

5 (b). Selected Dealers Agreement between Morgan Stanley Dean Witter
Distributors Inc. and Dean Witter Reynolds Inc., dated January 4,
1993, is incorporated by reference to Exhibit 6(c) of Post-Effective
No. 4 to the Registration Statement on Form N-1A, filed on January 25,
1996.

6. Not Applicable.

7 (a). Custody Agreement, dated June 2, 1992, between the Registrant and The
Bank of New York is incorporated by reference to Exhibit 8(a) of Post-
Effective Amendment No. 4 to the Registration Statement on Form N-1A,
filed on January 25, 1996.

1
<PAGE>

7 (b). Amendment, dated April 17, 1996, to the Custody Agreement between the
Registration and The Bank of New York is incorporated by reference to
Exhibit 8 of Post-Effective Amendment No. 5 to the Registration
Statement on Form N-1A, filed on February 4, 1997.

8 (a). Amended and Restated Transfer Agency and Service Agreement, dated
June 22, 1998, is incorporated by reference to Exhibit 8 to Post-
Effective Amendment No. 7 to the Registration Statement on Form N-1A,
filed on November 25, 1998.

8 (b). Amended and Restated Services Agreement between Morgan Stanley Dean
Witter Advisors Inc. and Morgan Stanley Dean Witter Services Company
Inc., dated June 22, 1998, is incorporated by reference to
Exhibit 8(b) of Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A, filed on June 24, 1999.

9 (a). Opinion of Sheldon Curtis, Esq., dated September 14, 1992, is
incorporated by reference to Exhibit 9(a) of Post-Effective Amendment
No. 9 to the Registration Statement on Form N-1A, filed on June 24,
1999.

9 (b). Opinion of Lane, Altman & Owens LLP, Massachusetts Counsel, dated
September 10, 1992, is incorporated by reference to Exhibit 9(b) of
Post-Effective Amendment No. 9 to the Registration Statement on Form
N-1A, filed on June 24, 1999.

10. Consent of Independent Accountants, filed herein.

11. Not Applicable.

12. Not Applicable.

13. Amended and Restated Plan of Distribution pursuant to Rule 12b-1
between the Registrant and Morgan Stanley Dean Witter Distributors
Inc., dated June 28, 1999, is incorporated by reference to Exhibit 13
of Post-Effective Amendment No. 9 to the Registration Statement on
Form N-1A, filed on June 24, 1999.

Other Powers of Attorney of Trustees are incorporated by reference to
Exhibit (Other) of Post-Effective Amendment No. 4 on Form N-1A, filed
on January 25, 1996, and Exhibit (Other) of Post-Effective Amendment
No. 9 to the Registration Statement on Form N-1A, filed on June 24,
1999.

<PAGE>

Item 24. Persons Controlled by or Under Common Control with the Fund.
------------------------------------------------------------

None

Item 25. Indemnification.
----------------

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

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

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer, or controlling person of the Registrant
in connection with the successful defense of any action, suit or proceeding) is
asserted against the Registrant by such trustee, officer or controlling person
in connection with the shares being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act, and will
be governed by the final adjudication of such issue.

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

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

<PAGE>

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

Item 26. Business and Other Connections of Investment Advisor
----------------------------------------------------

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

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

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

Open-end Investment Companies
- -----------------------------
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Money Trust
(4) Active Assets Tax-Free Trust
(5) Morgan Stanley Dean Witter 21st Century Trend Fund
(6) Morgan Stanley Dean Witter Aggressive Equity Fund
(7) Morgan Stanley Dean Witter American Opportunities Fund
(8) Morgan Stanley Dean Witter Balanced Growth Fund
(9) Morgan Stanley Dean Witter Balanced Income Fund
(10) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(11) Morgan Stanley Dean Witter California Tax-Free Income Fund

<PAGE>

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

<PAGE>

(63) Morgan Stanley Dean Witter U.S. Government Securities Trust
(64) Morgan Stanley Dean Witter Utilities Fund
(65) Morgan Stanley Dean Witter Value-Added Market Series
(66) Morgan Stanley Dean Witter Value Fund
(67) Morgan Stanley Dean Witter Variable Investment Series
(68) Morgan Stanley Dean Witter World Wide Income Trust

<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- -------------------------------------------------
<S> <C>
Mitchell M. Merin President and Chief Operating Officer of Asset
President, Chief Management of Morgan Stanley Dean Witter & Co.
Executive Officer and ("MSDW); Chairman, Chief Executive Officer and
Director Director of Morgan Stanley Dean Witter Distributors
Inc. ("MSDW Distributors") and Morgan Stanley Dean
Witter Trust FSB ("MSDW Trust"); President, Chief
Executive Officer and Director of Morgan Stanley
Dean Witter Services Company Inc. ("MSDW Services");
President of the Morgan Stanley Dean Witter Funds;
Executive Vice President and Director of Dean Witter
Reynolds Inc. ("DWR"); Director of various MSDW
subsidiaries; Trustee of various Van Kampen investment
companies.

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

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

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

Edward C. Oelsner, III
Executive Vice President

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

Peter M. Avelar Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the High
Yield Group
</TABLE>

<PAGE>

Douglas Brown
Senior Vice President

Rosalie Clough
Senior Vice President
and Director of Marketing

Richard Felegy
Senior Vice President

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

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

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

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

Kenton J. Hinchliffe Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.

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

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

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

John B. Kemp, III President of MSDW Distributors.
Senior Vice President
</TABLE>

<PAGE>

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

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

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

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

James Solloway
Senior Vice President

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

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

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

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

Raymond A. Basile
First Vice President
</TABLE>

<PAGE>

Thomas Chronert
First Vice President

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

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

Peter W. Gurman
First Vice President

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

David Johnson
First Vice President

Stanley Kapica
First Vice President

Douglas J. Ketterer
First Vice President

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

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

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

Carl F. Sadler
First Vice President
</TABLE>

<PAGE>

James P. Wallin
First Vice President

Robert Abreu
Vice President

Dale Albright
Vice President

Joan G. Allman
Vice President

Andrew Arbenz
Vice President

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

Nancy Belza
Vice President

Maurice Bendrihem
Vice President and
Assistant Controller

Thomas A. Bergeron
Vice President

Philip Bernstein
Vice President

Dale Boettcher
Vice President

Michelina Calandrella
Vice President

Ronald Caldwell
Vice President

Joseph Cardwell
Vice President
</TABLE>

<PAGE>

Philip Casparius
Vice President

Annette Celenza
Vice President

Aaron Clark
Vice President

William Connerly
Vice President

Michael J. Davey
Vice President

David Dineen
Vice President

Glen H. Frey
Vice President

Jeffrey D. Geffen
Vice President

Sandra Gelpieryn
Vice President

Charmaine George
Vice President

Michael Geringer
Vice President

Gail Gerrity-Burke
Vice President

Peter Gewirtz
Vice President

Ellen Gold
Vice President

Stephen Greenhut
Vice President
</TABLE>

<PAGE>

Laury A. Haskamp
Vice President

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

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

David T. Hoffman
Vice President

Thomas G. Hudson II
Vice President

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

Carol Espejo-Kane
Vice President

Nancy Karole-Kennedy
Vice President

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

Kimberly LaHart
Vice President

Thomas Lawlor
Vice President

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

Cameron J. Livingstone
Vice President

Nancy Login
Vice President

Sharon Loguercio
Vice President
</TABLE>

<PAGE>

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

Peter R. McDowell
Vice President

Albert McGarity
Vice President

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

Mark Mitchell
Vice President

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

Mary Beth Mueller
Vice President

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

James Nash
Vice President

Richard Norris
Vice President

Hilary A. O'Neill
Vice President

Anne Pickrell
Vice President

Frances Roman
Vice President

Dawn Rorke
Vice President

John Roscoe Vice President of Morgan Stanley Dean Witter
Vice President Real Estate Fund
</TABLE>

<PAGE>

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

Sally Sancimino
Vice President

Deborah Santaniello
Vice President

Patrice Saunders
Vice President

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

Alison M. Sharkey
Vice President

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

Ronald B. Silvestri
Vice President

Robert Stearns
Vice President

Naomi Stein
Vice President

Michael Strayhorn
Vice President

Marybeth Swisher
Vice President

Michael Thayer
Vice President

Robert Vanden Assem
Vice President

David Walsh
Vice President
</TABLE>

<PAGE>

John Wong
Vice President
</TABLE>

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

Item 27. Principal Underwriters
----------------------

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

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

<PAGE>

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

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

Name Positions and Office with MSDW Distributors
- ---- -------------------------------------------
Michael T. Gregg Vice President and Assistant Secretary.

James F. Higgins Director

Philip J. Purcell Director

<PAGE>

John Schaeffer Director

Charles Vadala Senior Vice President and Financial Principal.

Item 28. Location of Accounts and Records
--------------------------------

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

Item 29. Management Services
-------------------

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

Item 30. Undertakings
------------

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

<PAGE>

SIGNATURES
----------

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 has duly caused this Post-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and State of New
York on the 8th day of February, 2000.

MORGAN STANLEY DEAN WITTER NORTH
AMERICAN GOVERNMENT INCOME TRUST

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

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 10 has been signed below by the following persons
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
(1) Principal Executive Officer Chairman, Chief Executive Officer,
and Trustee

By: /s/ Charles A. Fiumefreddo
--------------------------- 2/8/00
Charles A. Fiumefreddo

(2) Principal Financial Officer Treasurer and Principal Accounting
Officer

By: /s/ Thomas F. Caloia
--------------------------- 2/8/00
Thomas F. Caloia

(3) Majority of the Trustees

Charles A. Fiumefreddo (Chairman)
Philip J. Purcell

By: /s/ Barry Fink
--------------------------- 2/8/00
Barry Fink
Attorney-in-Fact

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

By: /s/ David M. Butowsky
---------------------------- 2/8/00
David M. Butowsky
Attorney-in-Fact
</TABLE>

<PAGE>

MORGAN STANLEY DEAN WITTER
NORTH AMERICAN GOVERNMENT INCOME TRUST

EXHIBIT INDEX

10. Consent of Independent Accountants.

<PAGE>

Consent of Independent Accountants

We hereby consent to the use in this Registration Statement on Form N-1A of our
report dated December 13, 1999, relating to the financial statements and
financial highlights of Morgan Stanley Dean Witter North American Government
Income Trust, which appears in such Registration Statement. We also consent to
the references to us under the headings "Custodian and Independent Accountants"
and "Experts" in such Registration Statement.

/s/PricewaterhouseCoopers LLP
--------------------------
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
February 8, 2000