<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 25, 1999
REGISTRATION NOS.: 33-46515
811-6608
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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. 12 /X/
------------------
TCW/DW LATIN AMERICAN GROWTH FUND
(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:
DAVID M. BUTOWSKY, ESQ.
GORDON ALTMAN BUTOWSKY
WEITZEN SHALOV & WEIN
114 WEST 47TH STREET
NEW YORK, NEW YORK 10036
-------------------
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 June 28, 1999 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
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<PAGE>
PROSPECTUS - JUNE 28, 1999
Morgan Stanley Dean Witter
LATIN AMERICAN GROWTH FUND
[COVER PHOTO]
A MUTUAL FUND THAT SEEKS LONG-TERM CAPITAL APPRECIATION
The Securities and Exchange Commission has not approved or disapproved these
Securities or passed upon
the adequacy of this Prospectus. Any representation to the contrary is a
criminal offense.
<PAGE>
CONTENTS
<TABLE>
<S> <C> <C>
The Fund Investment Objective.................................. 1
Principal Investment Strategies....................... 1
Principal Risks....................................... 2
Past Performance...................................... 4
Fees and Expenses..................................... 5
Additional Investment Strategy Information............ 6
Additional Risk Information........................... 7
Fund Management....................................... 9
Shareholder Information Pricing Fund Shares................................... 11
How to Buy Shares..................................... 11
How to Exchange Shares................................ 13
How to Sell Shares.................................... 14
Distributions......................................... 16
Tax Consequences...................................... 17
Share Class Arrangements.............................. 17
Financial Highlights ...................................................... 25
THIS PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE FUND.
PLEASE READ IT CAREFULLY AND KEEP IT FOR FUTURE REFERENCE.
</TABLE>
<PAGE>
(SIDEBAR)
CAPITAL APPRECIATION
AN INVESTMENT OBJECTIVE HAVING THE GOAL OF SELECTING SECURITIES WITH THE
POTENTIAL TO RISE IN PRICE RATHER THAN PAY OUT INCOME.
(END SIDEBAR)
THE FUND
[ICON] INVESTMENT OBJECTIVE
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Morgan Stanley Dean Witter Latin American Growth Fund seeks long-term
capital appreciation.
[ICON] PRINCIPAL INVESTMENT STRATEGIES
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The Fund will normally invest at least 65% of its total assets in common
stocks, and other equity securities (including depository receipts) of Latin
American companies. The Fund's "Sub-Advisor," TCW Funds Management, Inc.,
selects securities to buy, hold or sell for the Fund based on its view of
their potential for capital appreciation; current dividend income will not
be a factor. The Sub-Advisor primarily uses a "top-down" investment
approach, which begins with an evaluation of the country in which the
proposed investment is to be made. Following the country level review, the
Sub-Advisor conducts a fundamental analysis of specific securities,
industries and companies. The Fund's equity securities will predominately
consist of the common and preferred stock of companies listed on a
recognized securities exchange or traded in other regulated markets. The
Fund's assets will be allocated among the countries in Latin America in
accordance with the Sub-Advisor's judgment as to where the best investment
opportunities exist. However, the Sub-Advisor will normally invest in at
least three Latin American countries.
For the Fund's investment purposes, Latin America includes Argentina, the
Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, the
Dominican Republic, Ecuador, El Salvador, French Guinea, Guatemala, Guyana,
Haiti, Honduras, Jamaica, Mexico, the Netherlands Antilles, Nicaragua,
Panama, Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and
Venezuela. Latin American companies are organized in, have their securities
principally trading in markets located in, derive at least 50% of their
profits or revenues from business in, these countries or have depository
shares listed on securities exchanges or traded in other regulated markets
in the United States.
Common stock is a share ownership or equity interest in a corporation. It
may or may not pay dividends, as some companies reinvest all of their
profits back into their businesses, while others pay out some of their
profits to shareholders as dividends. A depository receipt is generally
issued by a bank or financial institution and represents the common stock or
other equity securities of a foreign company. The owner of a depositary
receipt holds rights to the underlying securities, including the right to
receive dividends paid on the underlying security.
In addition to the securities described above, the Fund may also invest in
Latin American convertible and debt securities (including zero coupon
securities and "junk bonds"), other investment companies, options and
futures, and forward currency contracts.
1
<PAGE>
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 strategies it uses. For example, the
Sub-Advisor in its discretion may determine to use some permitted trading
strategies while not using others.
[ICON] PRINCIPAL RISKS
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There is no assurance that the Fund will achieve its investment objective.
The Fund's share price will fluctuate with changes in the market value of
the Fund's portfolio securities. When you sell Fund shares, they may be
worth less than what you paid for them and, accordingly, you can lose money
investing in this Fund.
A principal risk of investing in the Fund is associated with its emphasis on
investments in Latin America. In general, stock values fluctuate in response
to activities specific to the company as well as general market, economic
and political conditions. Stock prices can fluctuate widely in response to
these factors.
FOREIGN SECURITIES/LATIN AMERICA. The Fund's investments in foreign
securities (including depository receipts) 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.
In addition, many of the currencies of Latin American countries have
experienced steady devaluations relative to the U.S. dollar, and major
devaluations have historically occurred in certain countries. Any
devaluations in the currencies in which the Fund's portfolio securities are
denominated may have a detrimental impact on the Fund. There is also a risk
that certain Latin American countries may restrict the free conversion of
their currencies into other currencies. Further, certain Latin American
currencies may not be internationally traded.
Foreign securities also have risks related to economic and political
developments abroad, including expropriations, confiscatory taxation,
exchange control regulation, limitations on the use or transfer of Fund
assets, and any effects of foreign social, economic or political
instability. Economic and political developments in Latin America may have
profound effects upon the value of the Fund's portfolio. In the event of
expropriation, nationalization or other complication, the Fund could lose
its entire investment in any one country. In addition, individual Latin
American countries may place restrictions on the ability of foreign entities
such as the Fund to invest in particular segments of the local economies.
Foreign companies, in general, are not subject to the regulatory
requirements of U.S. companies and, as such, there may be less publicly
available information about these companies. Moreover, foreign accounting,
auditing and financial reporting standards
2
<PAGE>
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. The
securities markets of Latin American countries are substantially smaller,
less developed, less liquid and more volatile than the major securities
markets in the United States. The limited size of many Latin American
securities markets and limited trading volume in issuers compared to volume
of trading in U.S. securities could cause prices to be erratic for reasons
apart from factors that affect the quality of the securities. For example,
limited market size may cause prices to be unduly influenced by traders who
control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets.
Furthermore, foreign exchanges and broker-dealers are generally subject to
less government and exchange scrutiny and regulation than their U.S.
counterparts. Also, differences in clearance and settlement procedures on
foreign markets may occasion delays in settlements of Fund trades effected
in such markets. Inability to dispose of portfolio securities due to
settlement delays could result in losses to the Fund due to subsequent
declines in value of the securities and the inability of the Fund to make
intended security purchases due to settlement problems could result in a
failure of the Fund to make potentially advantageous investments.
Most Latin American countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates have had and may continue to have very
negative effects on the economies and securities markets of certain Latin
American countries.
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 its assets in an individual corporation
or 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. The
Fund is also subject to other risks from its permissible investments
including the risks associated with its investments in convertible and debt
securities (including zero coupon securities and "junk bonds"), options and
futures, and forward currency contracts.
Shares of the Fund are not bank deposits and are not guaranteed or insured
by the FDIC or any other government agency.
3
<PAGE>
(SIDEBAR)
ANNUAL TOTAL RETURNS
THIS CHART SHOWS HOW THE PERFORMANCE OF THE FUND'S CLASS B SHARES HAS VARIED
FROM YEAR TO YEAR OVER THE PAST 6 CALENDAR YEARS.
AVERAGE ANNUAL
TOTAL RETURNS
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL RETURNS WITH THOSE OF A BROAD
MEASURE OF MARKET PERFORMANCE OVER TIME. THE FUND'S RETURNS INCLUDE THE MAXIMUM
APPLICABLE SALES CHARGE FOR EACH CLASS AND ASSUME YOU SOLD YOUR SHARES AT THE
END OF EACH PERIOD.
(END SIDEBAR)
[ICON] PAST PERFORMANCE
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The bar chart and table below provide some indication of the risks of
investing in the Fund. The Fund's past performance does not indicate how the
Fund will perform in the future.
ANNUAL TOTAL RETURNS - CALENDAR YEARS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1993 46.83%
'94 -23.73%
'95 -20.26%
'96 22.03%
'97 30.56%
'98 -38.99%
</TABLE>
The bar chart reflects the performance of Class B shares; the performance of the
other Classes will differ because the Classes have different ongoing fees. The
performance information in the bar chart does not reflect the deduction of sales
charges; if these amounts were reflected, returns would be less than shown.
During the periods shown in the bar chart, the highest return for a calendar
quarter was 33.58% (quarter ended December 31, 1993) and the lowest return for a
calendar quarter was -29.55% (quarter ended March 31, 1995). Year-to-date total
return as of March 31, 1999 was 7.79%.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1998)
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PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
(SINCE 12/30/92)
<S> <C> <C> <C>
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Class A(1) -41.78% N/A N/A
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Class B -42.04% -10.33% -2.36%(4)
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Class C(1) -39.64% N/A N/A
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Class D(1) -38.38% N/A N/A
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IFC Latin American Total Return
Index(2) -35.54% -5.94% 2.85%(4)
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Lipper Latin American Funds
Average(3) -37.86% -6.46% 1.95%(5)
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</TABLE>
1 Classes A, C and D commenced operations on July 28, 1997.
2 The International Finance Corporation (IFC) Latin America Total Return
Index is a benchmark for the Latin American Markets. The Index, which
includes Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela,
reflects restrictions on foreign investment. The Index does not include any
expenses or fees. The Index is unmanaged and should not be considered an
investment.
3 The Lipper Latin American Funds Average tracks the performance of the funds
whose primary trading markets or operations are concentrated in the Latin
American region or in a single country within the region, as reported by
Lipper Analytical Services.
4 For the period December 30, 1992 through December 31, 1998.
5 For the period December 31, 1992 through December 31, 1998.
4
<PAGE>
(SIDEBAR)
SHAREHOLDER FEES
THESE FEES ARE PAID DIRECTLY FROM YOUR INVESTMENT.
ANNUAL FUND
OPERATING EXPENSES
THESE EXPENSES ARE DEDUCTED FROM THE FUND'S ASSETS AND ARE BASED ON EXPENSES
PAID FOR THE FISCAL YEAR ENDED JANUARY 31, 1999.
(END SIDEBAR)
[ICON] FEES AND EXPENSES
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The table below briefly describes the fees and expenses that you may pay if
you buy and hold shares of the Fund. The Fund offers four Classes of shares:
Classes A, B, C and D. Each Class has a different combination of fees,
expenses and other features. The Fund does not charge account or exchange
fees. See the "Share Class Arrangements" section for further fee and expense
information.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C>
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SHAREHOLDER FEES
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Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 5.25%(1) None None None
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Maximum deferred sales charge (load) (as a percentage based
on the lesser of the offering price or net asset value at
redemption) None(2) 5.00%(3) 1.00%(4) None
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ANNUAL FUND OPERATING EXPENSES
- ----------------------------------------------------------------------------------------------------------------
Management fee 1.25% 1.25% 1.25% 1.25%
- ----------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.23% 1.00% 1.00% None
- ----------------------------------------------------------------------------------------------------------------
Other expenses 0.73% 0.73% 0.73% 0.73%
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Total annual Fund operating expenses 2.21% 2.98% 2.98% 1.98%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
1 Reduced for purchases of $25,000 and over.
2 Investments that are not subject to any sales charge at the time of
purchase are subject to a contingent deferred sales charge ("CDSC") of
1.00% that will be imposed if you sell your shares within one year after
purchase, except for certain specific circumstances.
3 The CDSC is scaled down to 1.00% during the sixth year, reaching zero
thereafter. See "Share Class Arrangements" for a complete discussion of the
CDSC.
4 Only applicable if you sell your shares within one year after purchase.
EXAMPLE
This example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund, your investment has
a 5% return each year, and the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, the tables below show
your costs at the end of each period based on these assumptions depending
upon whether or not you sell your shares at the end of each period.
<TABLE>
<CAPTION>
IF YOU SOLD YOUR SHARES: IF YOU HELD YOUR SHARES:
----------------------------------------- -----------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------- -----------------------------------------
CLASS A $224 $ 692 $1,186 $2,546 $224 $692 $1,186 $2,546
- ---------------------------------------------------------- -----------------------------------------
CLASS B $801 $1,221 $1,766 $3,296 $301 $921 $1,566 $3,296
- ---------------------------------------------------------- -----------------------------------------
CLASS C $401 $ 921 $1,566 $3,296 $301 $921 $1,566 $3,296
- ---------------------------------------------------------- -----------------------------------------
CLASS D $201 $ 621 $1,066 $2,303 $201 $621 $1,066 $2,303
- ---------------------------------------------------------- -----------------------------------------
</TABLE>
Long-term shareholders of Class B and Class C may pay more in sales charges,
including distribution fees, than the economic equivalent of the maximum
front end sales charges permitted by the NASD.
5
<PAGE>
[ICON] ADDITIONAL INVESTMENT STRATEGY INFORMATION
- --------------------------------------------------------------------------------
This section provides additional information relating to the Fund's
principal strategies.
CONVERTIBLE AND DEBT SECURITIES. The Fund may invest up to 35% of its assets
in Latin American convertible securities, which are bonds and other
securities convertible into common stock at a particular time and price, and
Latin American debt securities. The Latin American debt securities include:
(a) debt securities of companies organized in a country in Latin America or
for which the principal trading market is located in Latin America, (b)
"sovereign debt," which are debt securities issued or guaranteed by the
government of a country in Latin America, its agencies or instrumentalities,
or the central bank of such country, (c) debt securities denominated in a
Latin American currency issued by companies to finance operations in Latin
America, and (d) debt securities of Latin American companies.
Most debt securities in which the Fund invests are not rated; when rated,
the rating generally will be below investment grade. Any portion of the
Fund's debt securities may be below investment grade. Securities below
investment grade are commonly known as "junk bonds." These securities may
include "Rule 144A" securities, which are subject to resale restrictions.
The Fund, however, will not invest in debt securities that are in default in
payment of principal or interest.
INVESTMENT COMPANIES. The Fund may invest up to 10% of its assets in
securities issued by other investment companies. The Sub-Advisor may view
these investments as necessary to participate in certain foreign markets
where foreigners are prohibited from investing directly in the securities of
individual companies.
OPTIONS AND FUTURES. The Fund may invest in put and call options and futures
with respect to financial instruments, stock and interest rate indexes, and
U.S. and foreign currencies. The Fund may use options and futures to seek to
protect against a decline in securities or currency prices or an increase in
prices of securities or currencies that may be purchased, as well as to
protect against interest rate changes.
FORWARD CURRENCY CONTRACTS. The Fund's investments also may include forward
currency contracts, which involve the purchase or sale of a specific amount
of foreign currency at the current price with delivery at a specified future
date. The Fund may use these contracts to hedge against adverse price
movements in its portfolio securities and the currencies in which they are
denominated.
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.
6
<PAGE>
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.
[ICON] ADDITIONAL RISK INFORMATION
- --------------------------------------------------------------------------------
This section provides additional information relating to the principal risks
of investing in the Fund.
CONVERTIBLE SECURITIES. The Fund's investments in convertible securities
subject the Fund to the risks associated with both fixed-income securities
and common stocks. To the extent that a convertible security's investment
value is greater than its conversion value, its price will be likely to
increase when interest rates fall and decrease when interest rates rise, as
with a fixed-income security. If the conversion value exceeds the investment
value, the price of the convertible security will tend to fluctuate directly
with the price of the underlying equity security.
HIGH RISK DEBT SECURITIES. Principal risks of investing in the Fund are
associated with its debt investments. All fixed-income securities, such as
corporate and sovereign debt, are subject to two types of risk: credit risk
and interest rate risk. Credit risk refers to the possibility that the
issuer of a security will be unable to make interest payments and/or repay
the principal on its debt.
Interest rate risk refers to fluctuations in the value of a fixed-income
security resulting from changes in the general level of interest rates. When
the general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the
prices of most fixed-income securities go up. (Zero coupon securities are
typically subject to greater price fluctuations than comparable securities
that pay current interest.)
The Fund's investments in "junk bonds" pose significant risks. The prices of
these securities are likely to be more sensitive to adverse economic changes
or individual corporate developments than higher rated securities. During an
economic downturn or substantial period of rising interest rates, junk bond
issuers and, in particular, highly leveraged issuers may experience
financial stress that would adversely affect their ability to service their
principal and interest payment obligations, to meet their projected business
goals or to obtain additional financing. In the event of a default, the Fund
may incur additional expenses to seek recovery. The Rule 144A securities
could have the effect of increasing the level of Fund illiquidity to the
extent the Fund may be unable to find qualified institutional buyers
interested in purchasing the securities. In
7
<PAGE>
addition, periods of economic uncertainty and change probably would result
in an increased volatility of market prices of junk bond securities and a
corresponding volatility in the Fund's net asset value.
The Fund's investments in Latin American sovereign debt are subject to
unique credit risks. Certain Latin American countries are among the largest
debtors to commercial banks and foreign governments. At times, certain Latin
American countries have declared a moratorium on the payment of principal
and/or interest on external debt. The governmental entities that control the
repayment also may not be willing or able to repay the principal and/or
interest on the debt when it becomes due. Latin American governments may
default on their sovereign debt, which may require holders of that debt to
participate in debt rescheduling or additional lending to defaulting
governments. There is no bankruptcy proceeding by which defaulted sovereign
debt may be collected. These risks could have a severely negative impact on
the Fund's sovereign debt holdings and cause the value of the Fund's shares
to decline drastically.
The Fund's Latin American debt securities are also subject to the general
risks of investing in foreign securities. See the "FOREIGN SECURITIES/LATIN
AMERICA" paragraphs in the "Principal Risks" section for a discussion of
those risks.
INVESTMENT COMPANIES. Any Fund investment in an investment company is
subject to the underlying risk of that investment company's portfolio
securities. For example, if the investment company held common stocks, the
Fund also would be exposed to the risk of investing in common stocks. In
addition to the Fund's fees and expenses, the Fund would bear its share of
the investment company's fees and expenses.
OPTIONS AND FUTURES. If the Fund invests in options and/or futures, its
participation in these markets would subject the Fund's portfolio to certain
risks. The Sub-Advisor's predictions of movements in the direction of the
stock, currency 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.
FORWARD CURRENCY CONTRACTS. The Fund's participation in forward currency
contracts also involves risks. If the Sub-Advisor employs a strategy that
does not correlate well with the Fund's investments or the currencies in
which the investments are denominated, currency contracts could result in a
loss. The contracts also may increase the Fund's volatility and may involve
a significant risk.
8
<PAGE>
(SIDEBAR)
MORGAN STANLEY DEAN WITTER ADVISORS INC.
THE MANAGER IS A WHOLLY OWNED SUBSIDIARY OF MORGAN STANLEY DEAN WITTER ADVISORS
INC., WHICH IS WIDELY RECOGNIZED AS A LEADER IN THE MUTUAL FUND INDUSTRY.
TOGETHER, THE MANAGER AND MORGAN STANLEY DEAN WITTER ADVISORS INC. HAVE MORE
THAN $134.2 BILLION IN ASSETS UNDER MANAGEMENT OR ADMINISTRATION AS OF MAY 31,
1999.
(END SIDEBAR)
YEAR 2000. The Fund could be adversely affected if the computer systems
necessary for the efficient operation of the Investment Manager, the
Sub-Advisor and the Fund's other service providers, as well as the markets
and corporate and governmental issuers in which the Fund invests do not
properly process and calculate date-related information from and after
January 1, 2000. While Year 2000-related computer problems could have a
negative effect on the Fund, the Investment Manager, the Sub-Advisor and
their affiliates are working hard to avoid any problems and to obtain
assurances from their service providers that they are taking similar steps.
In addition, it is possible that the markets for securities in which the
Fund invests may be detrimentally affected by computer failures throughout
the financial services industry beginning January 1, 2000. Improperly
functioning trading systems may result in settlement problems and liquidity
issues. In addition, corporate and governmental data processing errors may
also result in production problems for individual companies and overall
economic uncertainties. Earnings or revenues of individual issuers will be
affected by remediation costs, which may be substantial and may be reported
inconsistently in U.S. and foreign financial statements. Accordingly, the
Fund's investments may be adversely affected.
[ICON] FUND MANAGEMENT
- --------------------------------------------------------------------------------
Effective June 28, 1999, the Fund has 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 Funds Management, Inc. -- to invest the Fund's assets, including the
placing of orders for the purchase and sale of portfolio securities. Prior
to June 28, 1999, TCW Funds Management, Inc. 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. The Manager's main business office is
located at Two World Trade Center, New York, NY 10048.
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,
California 90017.
9
<PAGE>
Michael P. Reilly, Managing Director of the Sub-Advisor, is the primary
portfolio manager of the Fund. Mr. Reilly has been a portfolio manager with
affiliated companies of the TCW Group 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 year ended
January 31, 1999 the Fund accrued aggregate total compensation to Morgan
Stanley Dean Witter Services Company Inc. (at that time the Fund's manager)
and TCW Funds Management, Inc. (at the time acting as the Fund's advisor,
rather than sub-advisor) of 1.25% of the Fund's average daily net assets
(0.75% to Morgan Stanley Dean Witter Services Company Inc. and 0.50% to TCW
Funds Management, Inc.).
10
<PAGE>
(SIDEBAR)
CONTACTING A FINANCIAL ADVISOR
IF YOU ARE NEW TO THE MORGAN STANLEY DEAN WITTER FAMILY OF FUNDS AND WOULD LIKE
TO CONTACT A FINANCIAL ADVISOR, CALL (800) THE-DEAN FOR THE TELEPHONE NUMBER OF
THE MORGAN STANLEY DEAN WITTER OFFICE NEAREST YOU. YOU MAY ALSO ACCESS OUR
OFFICE LOCATOR ON OUR
INTERNET SITE AT:
WWW.DEANWITTER.COM/FUNDS
(END SIDEBAR)
SHAREHOLDER INFORMATION
[ICON] PRICING FUND SHARES
- --------------------------------------------------------------------------------
The price of Fund shares (excluding sales charges), called "net asset
value," is based on the value of the Fund's portfolio securities. The net
asset value of each Class, however, will differ because the Classes have
different ongoing distribution fees.
The net asset value per share of the Fund is determined once daily at 4:00
p.m. Eastern time, on each day that the New York Stock Exchange is open (or,
on days when the New York Stock Exchange closes prior to 4:00 p.m., at such
earlier time). Shares will not be priced on days that the New York Stock
Exchange is closed.
The value of the Fund's portfolio securities is based on the securities'
market price when available. When a market price is not readily available,
including circumstances under which the Investment Manager 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. Due to the Fund's holdings of securities
that are primarily listed on foreign exchanges, the value of the Fund's
portfolio securities may change on days when you will not be able to
purchase or sell your shares.
An exception to the Fund's general policy of using market prices concerns
its short-term debt portfolio securities. Debt securities with remaining
maturities of sixty days or less at the time of purchase are valued at
amortized cost. However, if the cost does not reflect the securities' market
value, these securities will be valued at their fair value.
[ICON] HOW TO BUY SHARES
- --------------------------------------------------------------------------------
You may open a new account to buy Fund shares or buy additional Fund shares
for an existing account by contacting your Morgan Stanley Dean Witter
Financial Advisor or other authorized financial representative. Your
Financial Advisor will assist you, step-by-step, with the procedures to
invest in the Fund. You may also purchase shares directly by calling the
Fund's transfer agent and requesting an application.
Because every investor has different immediate financial needs and long-term
investment goals, the Fund offers investors four Classes of shares: Classes
A, B, C and D. Class D shares are only offered to a limited group of
investors. Each Class of shares offers a distinct structure of sales
charges, distribution and service fees, and other features that are designed
to address a variety of needs. Your Financial Advisor or other authorized
financial representative can help you decide which Class may be most
appropriate for you. When purchasing Fund shares, you must specify which
Class of shares you wish to purchase.
11
<PAGE>
(SIDEBAR)
EASYINVEST-SM-
A PURCHASE PLAN THAT ALLOWS YOU TO TRANSFER MONEY AUTOMATICALLY FROM YOUR
CHECKING OR SAVINGS ACCOUNT OR FROM A MONEY MARKET FUND ON A SEMI-MONTHLY,
MONTHLY OR QUARTERLY BASIS. CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL
ADVISOR FOR FURTHER INFORMATION ABOUT THIS SERVICE.
(END SIDEBAR)
When you buy Fund shares, the shares are purchased at the next share price
calculated (less any applicable front-end sales charge for Class A shares)
after we receive your purchase order. Your payment is due on the third
business day after you place your purchase order. We reserve the right to
reject any order for the purchase of Fund shares.
<TABLE>
<CAPTION>
MINIMUM INVESTMENT AMOUNTS
- ------------------------------------------------------------------------------------------------
MINIMUM INVESTMENT
----------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Regular Accounts: $ 1,000 $ 100
- ------------------------------------------------------------------------------------------------
Individual Retirement Accounts: Regular IRAs $ 1,000 $ 100
Education IRAs $500 $ 100
- ------------------------------------------------------------------------------------------------
EASYINVEST-SM- (Automatically from your checking
or savings account or Money Market
Fund) $100* $ 100*
- ------------------------------------------------------------------------------------------------
</TABLE>
* Provided your schedule of investments totals $1,000 in twelve months.
There is no minimum investment amount if you purchase Fund shares through:
(1) the Investment Manager's mutual fund asset allocation plan, (2) a
program, approved by the Fund's distributor, in which you pay an asset-based
fee for advisory, administrative and/or brokerage services, or (3)
employer-sponsored employee benefit plan accounts.
INVESTMENT OPTIONS FOR CERTAIN INSTITUTIONAL AND OTHER INVESTORS/CLASS D
SHARES. To be eligible to purchase Class D shares, you must qualify under
one of the investor categories specified in the "Share Class Arrangements"
section of this PROSPECTUS.
SUBSEQUENT INVESTMENTS SENT DIRECTLY TO THE FUND. In addition to buying
additional Fund shares for an existing account by contacting your Morgan
Stanley Dean Witter Financial Advisor, you may send a check directly to the
Fund. To buy additional shares in this manner:
- Write a "letter of instruction" to the Fund specifying the name(s) on the
account, the account number, the social security or tax identification
number, the Class of shares you wish to purchase and the investment amount
(which would include any applicable front-end sales charge). The letter
must be signed by the account owner(s).
- Make out a check for the total amount payable to: Morgan Stanley Dean
Witter Latin American Growth Fund.
- Mail the letter and check to Morgan Stanley Dean Witter Trust FSB at P.O.
Box 1040, Jersey City, NJ 07303.
12
<PAGE>
[ICON] HOW TO EXCHANGE SHARES
- --------------------------------------------------------------------------------
PERMISSIBLE FUND EXCHANGES. You may exchange shares of any Class of the Fund
for the same Class of any other continuously offered Multi-Class Fund, or
for shares of a No-Load Fund, a Money Market Fund, North American Government
Income Trust or Short-Term U.S. Treasury Trust, without the imposition of an
exchange fee. See the inside back cover of this PROSPECTUS for each Morgan
Stanley Dean Witter Fund's designation as a Multi-Class Fund, No-Load Fund
or Money Market Fund. If a Morgan Stanley Dean Witter Fund is not listed,
consult the inside back cover of that Fund's PROSPECTUS for its designation.
For the purpose of exchanges, shares of FSC Funds (subject to a front-end
sales charge) are treated as Class A shares of a Multi-Class Fund.
Exchanges may be made after shares of the Fund acquired by purchase have
been held for thirty days. There is no waiting period for exchanges of
shares acquired by exchange or dividend reinvestment. The current PROSPECTUS
for each Fund describes its investment objective(s), policies and investment
minimums, and should be read before investment.
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 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. Certain services normally available to shareholders of Money Market
Funds, including the check writing privilege, are not available for Money
Market Fund shares you acquire in an exchange.
TELEPHONE EXCHANGES. For your protection when calling Morgan Stanley Dean
Witter Trust FSB, we will employ reasonable procedures to confirm that
exchange instructions communicated over the telephone are genuine. These
procedures may include requiring various forms of personal identification
such as name, mailing address, social security or other tax identification
number. Telephone instructions also may be recorded.
Telephone instructions will be accepted if received by the Fund's transfer
agent between 9:00 a.m. and 4:00 p.m. Eastern time, on any day the New York
Stock Exchange is open
13
<PAGE>
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.
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.
FREQUENT EXCHANGES. A pattern of frequent exchanges may result in the Fund
limiting or prohibiting, at its discretion, additional purchases and/or
exchanges. The Fund will notify you in advance of limiting your exchange
privileges.
CDSC CALCULATIONS ON EXCHANGES. See the "Share Class Arrangements" section
of this PROSPECTUS for a further discussion of how applicable contingent
deferred sales charges (CDSCs) are calculated for shares of one Fund that
are exchanged for shares of another.
For further information regarding exchange privileges, you should contact
your Morgan Stanley Dean Witter Financial Advisor or call (800) 869-NEWS.
[ICON] HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You can sell some or all of your Fund shares at any time. If you sell Class
A, Class B or Class C shares, your net sale proceeds are reduced by the
amount of any applicable CDSC. Your shares will be sold at the next share
price calculated after we receive your order to sell as described below.
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
<S> <C>
- --------------------------------------------------------------------------------
Contact your To sell your shares, simply call your Morgan Stanley Dean
Financial Advisor Witter Financial Advisor or other authorized financial
representative.
------------------------------------------------------------
Payment will be sent to the address to which the account is
registered or deposited in your brokerage account.
[ICON]
- --------------------------------------------------------------------------------
By Letter You can also sell your shares by writing a "letter of
instruction" that includes:
- your account number;
- the dollar amount or the number of shares you wish to
sell;
- the Class of shares you wish to sell; and
- the signature of each owner as it appears on the account.
[ICON]
------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
<S> <C>
- --------------------------------------------------------------------------------
By Letter, If you are requesting payment to anyone other than the
continued registered owner(s) or that payment be sent to any address
other than the address of the registered owner(s) or
pre-designated bank account, you will need a signature
guarantee. You can obtain a signature guarantee from an
eligible guarantor acceptable to Morgan Stanley Dean Witter
Trust FSB. (You should contact Morgan Stanley Dean Witter
Trust FSB at (800) 869-NEWS for a determination as to
whether a particular institution is an eligible guarantor.)
A notary public CANNOT provide a signature guarantee.
Additional documentation may be required for shares held by
a corporation, partnership, trustee or executor.
------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at
P.O. Box 983, Jersey City, NJ 07303. If you hold share
certificates, you must return the certificates, along with
the letter and any required additional documentation.
------------------------------------------------------------
A check will be mailed to the name(s) and address in which
the account is registered, or otherwise according to your
instructions.
- --------------------------------------------------------------------------------
Systematic If your investment in all of the Morgan Stanley Dean Witter
Withdrawal Plan Family of Funds has a total market value of at least
$10,000, you may elect to withdraw amounts of $25 or more,
or in any whole percentage of a Fund's balance (provided the
amount is at least $25), on a monthly, quarterly,
semi-annual 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.
[ICON]
------------------------------------------------------------
Amounts withdrawn are subject to any applicable CDSC. A CDSC
may be waived under certain circumstances. See the Class B
waiver categories listed in the "Share Class Arrangements"
section of this Prospectus.
------------------------------------------------------------
To sign up for the Systematic Withdrawal Plan, contact your
Morgan Stanley Dean Witter Financial Advisor or call (800)
869-NEWS. You may terminate or suspend your plan at any
time. Please remember that withdrawals from the plan are
sales of shares, not Fund "distributions," and ultimately
may exhaust your account balance. The Fund may terminate or
revise the plan at any time.
- --------------------------------------------------------------------------------
</TABLE>
PAYMENT FOR SOLD SHARES. After we receive your complete instruction to sell
as described above, a check will be mailed to you within seven days,
although we will attempt to make payment within one business day. Payment
may also be sent to your brokerage account.
Payment may be postponed or the right to sell your shares suspended,
however, under unusual circumstances. If you request to sell shares that
were recently purchased by check, payment of the sale proceeds may be
delayed for the minimum time needed to verify that the check has been
honored (not more than fifteen days from the time we receive the check).
TAX CONSIDERATIONS. Normally, your sale of Fund shares is subject to federal
and state income tax. You should review the "Tax Consequences" section of
this PROSPECTUS and consult your own tax professional about the tax
consequences of a sale.
REINSTATEMENT PRIVILEGE. If you sell Fund shares and have not previously
exercised the reinstatement privilege, you may, within 35 days after the
date of sale, invest any portion of the proceeds in the same Class of Fund
shares at their net asset value and receive a pro rata credit for any CDSC
paid in connection with the sale.
15
<PAGE>
(SIDEBAR)
TARGETED DIVIDENDS-SM-
YOU MAY SELECT TO HAVE YOUR FUND DISTRIBUTIONS AUTOMATICALLY INVESTED IN OTHER
CLASSES OF FUND SHARES OR CLASSES OF ANOTHER MORGAN STANLEY DEAN WITTER FUND
THAT YOU OWN. CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL ADVISOR FOR
FURTHER INFORMATION ABOUT THIS SERVICE.
(END SIDEBAR)
INVOLUNTARY SALES. The Fund reserves the right, on sixty days' notice, to
sell the shares of any shareholder (other than shares held in an IRA or
403(b) Custodial Account) whose shares, due to sales by the shareholder,
have a value below $100, or in the case of an account opened through
EASYINVEST-SM-, if after 12 months the shareholder has invested
less than $1,000 in the account.
However, before the Fund sells your shares in this manner, we will notify
you and allow you sixty days to make an additional investment in an amount
that will increase the value of your account to at least the required amount
before the sale is processed. No CDSC will be imposed on any involuntary
sale.
MARGIN ACCOUNTS. If you have pledged your Fund shares in a margin account,
contact your Morgan Stanley Dean Witter Financial Advisor or other
authorized financial representative regarding restrictions on the sale of
such shares.
[ICON] DISTRIBUTIONS
- --------------------------------------------------------------------------------
The Fund passes substantially all of its earnings from income and capital
gains along to its investors as "distributions." The Fund earns income from
stocks and interest from fixed-income investments. These amounts are passed
along to Fund shareholders as "income dividend distributions." The Fund
realizes capital gains whenever it sells securities for a higher price than
it paid for them. These amounts may be passed along as "capital gain
distributions."
The Fund declares income dividends separately for each Class. Distributions
paid on Class A and Class D shares usually will be higher than for Class B
and Class C because distribution fees that Class B and Class C pay are
higher. Normally, income dividends are distributed to shareholders
semi-annually. Capital gains, if any, are usually distributed in June and
December. The Fund, however, may retain and reinvest any long-term capital
gains. The Fund may at times make payments from sources other than income or
capital gains that represent a return of a portion of your investment.
Distributions are reinvested automatically in additional shares of the same
Class and automatically credited to your account, unless you request in
writing that all distributions be paid in cash. If you elect the cash
option, the Fund will mail a check to you no later than seven business days
after the distribution is declared. No interest will accrue on uncashed
checks. If you wish to change how your distributions are paid, your request
should be received by the Fund's transfer agent, Morgan Stanley Dean Witter
Trust FSB, at least five business days prior to the record date of the
distributions.
16
<PAGE>
[ICON] TAX CONSEQUENCES
- --------------------------------------------------------------------------------
As with any investment, you should consider how your Fund investment will be
taxed. The tax information in this PROSPECTUS is provided as general
information. You should consult your own tax professional about the tax
consequences of an investment in the Fund.
Unless your investment in the Fund is through a tax-deferred retirement
account, such as a 401(k) plan or IRA, you need to be aware of the possible
tax consequences when:
- The Fund makes distributions; and
- You sell Fund shares, including an exchange to another 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 full 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 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.
[ICON] SHARE CLASS ARRANGEMENTS
- --------------------------------------------------------------------------------
The Fund offers several Classes of shares having different distribution
arrangements designed to provide you with different purchase options
according to your investment needs. Your Morgan Stanley Dean Witter
Financial Advisor or other authorized financial representative can help you
decide which Class may be appropriate for you.
The general public is offered three Classes: Class A shares, Class B shares
and Class C shares, which differ principally in terms of sales charges and
ongoing expenses. A
17
<PAGE>
(SIDEBAR)
FRONT-END SALES CHARGE
OR FSC
AN INITIAL SALES CHARGE YOU PAY WHEN PURCHASING CLASS A SHARES THAT IS BASED ON
A PERCENTAGE OF THE OFFERING PRICE. THE PERCENTAGE DECLINES BASED UPON THE
DOLLAR VALUE OF CLASS A SHARES YOU PURCHASE. WE OFFER THREE WAYS TO REDUCE YOUR
CLASS A SALES CHARGES - THE COMBINED PURCHASE PRIVILEGE, RIGHT OF ACCUMULATION
AND LETTER OF INTENT.
(END SIDEBAR)
fourth Class, Class D shares, is offered only to a limited category of
investors. Shares that you acquire through reinvested distributions will not
be subject to any front-end sales charge or CDSC - contingent deferred sales
charge. Sales personnel may receive different compensation for selling each
Class of shares. The sales charges applicable to each Class provide for the
distribution financing of shares of that Class.
The chart below compares the sales charge and maximum annual 12b-1 fee
applicable to each Class:
<TABLE>
<CAPTION>
MAXIMUM
CLASS SALES CHARGE ANNUAL 12b-1 FEE
<S> <C> <C>
- ------------------------------------------------------------------
A Maximum 5.25% initial sales charge
reduced for purchase of $25,000 or more;
shares sold without an initial sales
charge are generally subject to a 1.0%
CDSC during first year 0.25%
- ------------------------------------------------------------------
B Maximum 5.0% CDSC during the first year
decreasing to 0% after six years 1.0%
- ------------------------------------------------------------------
C 1.0% CDSC during first year 1.0%
- ------------------------------------------------------------------
D None None
- ------------------------------------------------------------------
</TABLE>
CLASS A SHARES Class A shares are sold at net asset value plus an
initial sales charge of up to 5.25%. The initial sales charge is
reduced for purchases of $25,000 or more according to the schedule
below. Investments of $1 million or more are not subject to an initial
sales charge, but are generally subject to a contingent deferred sales
charge, or CDSC, of 1.0% on sales made within one year after the last
day of the month of purchase. The CDSC will be assessed in the same
manner and with the same CDSC waivers as with Class B shares. Class A
shares are also subject to a distribution (12b-1) fee of up to 0.25% of
the average daily net assets of the Class.
The offering price of Class A shares includes a sales charge (expressed as a
percentage of the offering price) on a single transaction as shown in the
following table:
<TABLE>
<CAPTION>
FRONT-END SALES CHARGE
----------------------------------------------
PERCENTAGE OF PUBLIC APPROXIMATE PERCENTAGE
AMOUNT OF SINGLE TRANSACTION OFFERING PRICE OF NET AMOUNT INVESTED
<S> <C> <C>
- ----------------------------------------------------------------------------------------
Less than $25,000 5.25% 5.54%
- ----------------------------------------------------------------------------------------
$25,000 but less than $50,000 4.75% 4.99%
- ----------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.00% 4.17%
- ----------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.00% 3.09%
- ----------------------------------------------------------------------------------------
$250,000 but less than $1 million 2.00% 2.04%
- ----------------------------------------------------------------------------------------
$1 million and over 0.00% 0.00%
- ----------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
The reduced sales charge schedule is applicable to purchases of Class A
shares in a single transaction by:
- A single account (including an individual, trust or fiduciary account).
- Family member accounts (limited to husband, wife and children under the
age of 21).
- Pension, profit sharing or other employee benefit plans of companies and
their affiliates.
- Tax-exempt organizations.
- Groups organized for a purpose other than to buy mutual fund shares.
COMBINED PURCHASE PRIVILEGE. You also will have the benefit of reduced sales
charges by combining purchases of Class A shares of the Fund in a single
transaction with purchases of Class A shares of other Multi-Class Funds and
shares of FSC Funds.
RIGHT OF ACCUMULATION. You also may benefit from a reduction of sales
charges if the cumulative net asset value of Class A shares of the Fund
purchased in a single transaction, together with shares of other Funds you
currently own which were previously purchased at a price including a
front-end sales charge (including shares acquired through reinvestment of
distributions), amounts to $25,000 or more. Also, if you have a cumulative
net asset value of all your Class A and Class D shares equal to at least $5
million (or $25 million for certain employee benefit plans), you are
eligible to purchase Class D shares of any Fund subject to the Fund's
minimum initial investment requirement.
You must notify your Morgan Stanley Dean Witter Financial Advisor or other
authorized financial representative (or Morgan Stanley Dean Witter Trust FSB
if you purchase directly through the Fund), at the time a purchase order is
placed, that the purchase qualifies for the reduced charge under the Right
of Accumulation. Similar notification must be made in writing when an order
is placed by mail. The reduced sales charge will not be granted if: (i)
notification is not furnished at the time of the order; or (ii) a review of
the records of Dean Witter Reynolds or other authorized dealer of Fund
shares or the Fund's transfer agent does not confirm your represented
holdings.
LETTER OF INTENT. The schedule of reduced sales charges for larger purchases
also will be available to you if you enter into a written "letter of
intent." A letter of intent provides for the purchase of Class A shares of
the Fund or other Multi-Class Funds or shares of FSC Funds within a thirteen
month period. The initial purchase under a letter of intent must be at least
5% of the stated investment goal. To determine the applicable sales charge
reduction, you may also include: (1) the cost of shares of other Morgan
Stanley Dean Witter Multi-Class Funds which were previously purchased at a
price including a front-end sales charge during the 90-day period prior to
the distributor receiving the letter of intent, and (2) the cost of shares
of other Funds you currently own acquired in exchange for shares of Funds
purchased during that period at a price including a front-
19
<PAGE>
end sales charge. You can obtain a letter of intent by contacting your
Morgan Stanley Dean Witter Financial Advisor or other authorized financial
representative, or by calling (800) 869-NEWS. If you do not achieve the
stated investment goal within the thirteen-month period, you are required to
pay the difference between the sales charges otherwise applicable and sales
charges actually paid, which may be deducted from your investment.
OTHER SALES CHARGE WAIVERS. In addition to investments of $1 million or
more, your purchase of Class A shares is not subject to a front-end sales
charge (or a CDSC upon sale) if your account qualifies under one of the
following categories:
- A trust for which Morgan Stanley Dean Witter Trust FSB provides
discretionary trustee services.
- Persons participating in a fee-based investment program (subject to all of
its terms and conditions, including mandatory sale or transfer
restrictions on termination) approved by the Fund's distributor pursuant
to which they pay an asset-based fee for investment advisory,
administrative and/or brokerage services.
- Employer-sponsored employee benefit plans, whether or not qualified under
the Internal Revenue Code, for which Morgan Stanley Dean Witter Trust FSB
serves as trustee or Dean Witter Reynolds' Retirement Plan Services serves
as recordkeeper under a written Recordkeeping Services Agreement ("MSDW
Eligible Plans") which have at least 200 eligible employees.
- A MSDW Eligible Plan whose Class B shares have converted to Class A
shares, regardless of the plan's asset size or number of eligible
employees.
- A client of a Morgan Stanley Dean Witter Financial Advisor who joined us
from another investment firm within six months prior to the date of
purchase of Fund shares, and you used the proceeds from the sale of shares
of a proprietary mutual fund of that Financial Advisor's previous firm
that imposed either a front-end or deferred sales charge to purchase Class
A shares, provided that: (1) you sold the shares not more than 60 days
prior to the purchase of Fund shares, and (2) the sale proceeds were
maintained in the interim in cash or a money market fund.
- Current or retired Directors/Trustees of the Morgan Stanley Dean Witter
Funds, such persons' spouses and children under the age of 21, and trust
accounts for which any of such persons is a beneficiary.
- Current or retired directors, officers and employees of Morgan Stanley
Dean Witter & Co. and any of its subsidiaries, such persons' spouses and
children under the age of 21 and trust accounts for which any of such
persons is a beneficiary.
20
<PAGE>
(SIDEBAR)
CONTINGENT DEFERRED SALES CHARGE OR CDSC
A FEE YOU PAY WHEN YOU SELL SHARES OF CERTAIN MORGAN STANLEY DEAN WITTER FUNDS
PURCHASED WITHOUT AN INITIAL SALES CHARGE. THIS FEE DECLINES THE LONGER YOU HOLD
YOUR SHARES AS SET FORTH IN THE TABLE.
(END SIDEBAR)
CLASS B SHARES Class B shares are offered at net asset value with no
initial sales charge but are subject to a contingent deferred sales
charge, or CDSC, as set forth in the table below. For the purpose of
calculating the CDSC, shares are deemed to have been purchased on the
last day of the month during which they were purchased.
<TABLE>
<CAPTION>
CDSC AS A PERCENTAGE
YEAR SINCE PURCHASE PAYMENT MADE OF AMOUNT REDEEMED
<S> <C>
- ----------------------------------------------------------------
First 5.0%
- ----------------------------------------------------------------
Second 4.0%
- ----------------------------------------------------------------
Third 3.0%
- ----------------------------------------------------------------
Fourth 2.0%
- ----------------------------------------------------------------
Fifth 2.0%
- ----------------------------------------------------------------
Sixth 1.0%
- ----------------------------------------------------------------
Seventh and thereafter None
- ----------------------------------------------------------------
</TABLE>
Each time you place an order to sell or exchange shares, shares with no CDSC
will be sold or exchanged first, then shares with the lowest CDSC will be
sold or exchanged next. For any shares subject to a CDSC, the CDSC will be
assessed on an amount equal to the lesser of the current market value or the
cost of the shares being sold.
CDSC WAIVERS. A CDSC, if otherwise applicable, will be waived in the case
of:
- Sales of shares held at the time you die or become disabled (within the
definition in Section 72(m)(7) of the Internal Revenue Code which relates
to the ability to engage in gainful employment), if the shares are: (i)
registered either in your name (not a trust) or in the names of you and
your spouse as joint tenants with right of survivorship; or (ii) held in a
qualified corporate or self-employed retirement plan, IRA or 403(b)
Custodial Account, provided in either case that the sale is requested
within one year of your death or initial determination of disability.
- Sales in connection with the following retirement plan "distributions:"
(i) lump-sum or other distributions from a qualified corporate or
self-employed retirement plan following retirement (or, in the case of a
"key employee" of a "top heavy" plan, following attainment of age 59 1/2);
(ii) distributions from an IRA or 403(b) Custodial Account following
attainment of age 59 1/2; or (iii) a tax-free return of an excess IRA
contribution (a "distribution" does not include a direct transfer of IRA,
403(b) Custodial Account or retirement plan assets to a successor
custodian or trustee).
- Sales of shares held for you as a participant in a MSDW Eligible Plan.
- Sales of shares in connection with the Systematic Withdrawal Plan of up to
12% annually of the value of each Fund from which plan sales are made. The
percentage is determined on the date you establish the Systematic
Withdrawal Plan and based on the
21
<PAGE>
next calculated share price. You may have this CDSC waiver applied in
amounts up to 1% per month, 3% per quarter, 6% semi-annually or 12%
annually. Shares with no CDSC will be sold first, followed by those with
the lowest CDSC. As such, the waiver benefit will be reduced by the amount
of your shares that are not subject to a CDSC. If you suspend your
participation in the plan, you may later resume plan payments without
requiring a new determination of the account value for the 12% CDSC Waiver.
All waivers will be granted only following the Distributor receiving
confirmation of your entitlement. If you believe you are eligible for a CDSC
waiver, please contact your Financial Advisor or call (800) 869-NEWS.
DISTRIBUTION FEE. Class B shares are subject to an annual 12b-1 fee of 1.0%
of the lesser of: (a) the average daily aggregate gross purchases by all
shareholders of the Fund's Class B shares since the inception of the Fund
(not including reinvestments of dividends or capital gains distributions),
less the average daily aggregate net asset value of the Fund's Class B
shares sold by all shareholders since the Fund's inception upon which a CDSC
has been imposed or waived, or (b) the average daily net assets of Class B.
CONVERSION FEATURE. After ten (10) years, Class B shares will convert
automatically to Class A shares of the Fund with no initial sales charge.
The ten year period runs from the last day of the month in which the shares
were purchased, or in the case of Class B shares acquired through an
exchange, from the last day of the month in which the original Class B
shares were purchased; the shares will convert to Class A shares based on
their relative net asset values in the month following the ten year period.
At the same time, an equal proportion of Class B shares acquired through
automatically reinvested distributions will convert to Class A shares on the
same basis. (Class B shares held before May 1, 1997, however, will convert
to Class A shares in May 2007).
In the case of Class B shares held in a MSDW Eligible Plan, the plan is
treated as a single investor and all Class B shares will convert to Class A
shares on the conversion date of the Class B shares of a Morgan Stanley Dean
Witter Fund purchased by that plan.
Currently, the Class B share conversion is not a taxable event; the
conversion feature may be cancelled if it is deemed a taxable event in the
future by the Internal Revenue Service.
If you exchange your Class B shares for shares of a Money Market Fund, a
No-Load Fund, North American Government Income Trust or Short-Term U.S.
Treasury Trust, the holding period for conversion is frozen as of the last
day of the month of the exchange and resumes on the last day of the month
you exchange back into Class B shares.
EXCHANGING SHARES SUBJECT TO A CDSC. There are special considerations when
you exchange Fund shares that are subject to a CDSC. When determining the
length of time you held the shares and the corresponding CDSC rate, any
period (starting at the end of
22
<PAGE>
the month) during which you held shares of a fund that does NOT charge a
CDSC WILL NOT BE COUNTED. Thus, in effect the "holding period" for purposes
of calculating the CDSC is frozen upon exchanging into a fund that does not
charge a CDSC.
For example, if you held Class B shares of the Fund in a regular account for
one year, exchanged to Class B of another Morgan Stanley Dean Witter
Multi-Class Fund for another year, then sold your shares, a CDSC rate of 4%
would be imposed on the shares based on a two year holding period - one year
for each Fund. However, if you had exchanged the shares of the Fund for a
Money Market Fund (which does not charge a CDSC) instead of the Multi-Class
Fund, then sold your shares, a CDSC rate of 5% would be imposed on the
shares based on a one year holding period. The one year in the Money Market
Fund would not be counted. Nevertheless, if shares subject to a CDSC are
exchanged for a Fund that does not charge a CDSC, you will receive a credit
when you sell the shares equal to the distribution (12b-1) fees, if any, you
paid on those shares while in that Fund up to the amount of any applicable
CDSC.
In addition, shares that are exchanged into or from a Morgan Stanley Dean
Witter Fund subject to a higher CDSC rate will be subject to the higher
rate, even if the shares are re-exchanged into a Fund with a lower CDSC
rate.
CLASS C SHARES Class C shares are sold at net asset value with no
initial sales charge but are subject to a CDSC of 1.0% on sales made
within one year after the last day of the month of purchase. The CDSC
will be assessed in the same manner and with the same CDSC waivers as
with Class B shares.
DISTRIBUTION FEE. Class C shares are subject to an annual distribution
(12b-1) fee of up to 1.0% of the average daily net assets of that Class. The
Class C shares' distribution fee may cause that Class to have higher
expenses and pay lower dividends than Class A or Class D shares. Unlike
Class B shares, Class C shares have no conversion feature and, accordingly,
an investor that purchases Class C shares may be subject to distribution
(12b-1) fees applicable to Class C shares for an indefinite period.
CLASS D SHARES Class D shares are offered without any sales charge on
purchases or sales and without any distribution (12b-1) fee. Class D
shares are offered only to investors meeting an initial investment
minimum of $5 million ($25 million for MSDW Eligible Plans) and the
following investor categories:
- Investors participating in the Investment Manager's mutual fund asset
allocation program (subject to all of its terms and conditions, including
mandatory sale or transfer restrictions on termination) pursuant to which
they pay an asset-based fee.
23
<PAGE>
- Persons participating in a fee-based investment program (subject to all of
its terms and conditions, including mandatory sale or transfer
restrictions on termination) approved by the Fund's distributor pursuant
to which they pay an asset-based fee for investment advisory,
administrative and/or brokerage services.
- Employee benefit plans maintained by Morgan Stanley Dean Witter & Co. or
any of its subsidiaries for the benefit of certain employees of Morgan
Stanley Dean Witter & Co. and its subsidiaries.
- Certain unit investment trusts sponsored by Dean Witter Reynolds.
- Certain other open-end investment companies whose shares are distributed
by the Fund's distributor.
MEETING CLASS D ELIGIBILITY MINIMUMS. To meet the $5 million ($25 million
for MSDW Eligible Plans) initial investment to qualify to purchase Class D
shares you may combine: (1) purchases in a single transaction of Class D
shares of the Fund and other continuously offered Morgan Stanley Dean Witter
Multi-Class Funds and/or (2) previous purchases of Class A and D shares of
Multi-Class Funds and shares of FSC Funds you currently own, along with
shares of Morgan Stanley Dean Witter Funds you currently own that you
acquired in exchange for those shares.
NO SALES CHARGES FOR REINVESTED CASH DISTRIBUTIONS If you receive a
cash payment representing an income dividend or capital gain and you
reinvest that amount in the applicable Class of shares by returning the
check within 30 days of the payment date, the purchased shares would
not be subject to an initial sales charge or CDSC.
PLAN OF DISTRIBUTION (RULE 12B-1 FEES) The Fund has adopted a Plan of
Distribution in accordance with Rule 12b-1 under the Investment Company
Act of 1940 with respect to the distribution of Class A, Class B and
Class C shares. The Plan allows the Fund to pay distribution fees for
the sale and distribution of these shares. It also allows the Fund to
pay for services to shareholders of Class A, Class B and Class C
shares. Because these fees are paid out of the Fund's assets on an
ongoing basis, over time these fees will increase the cost of your
investment in these Classes and may cost you more than paying other
types of sales charges.
24
<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. 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, whose report,
along with the Fund's financial statements, is included in the annual report,
which is available upon request.
<TABLE>
<CAPTION>
CLASS B
- ----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED JANUARY 31, 1999++ 1998*++ 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.09 $ 11.47 $ 9.48 $ 9.35 $ 16.05
- ----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.05 (0.09) (0.04) (0.06) (0.17)
Net realized and unrealized gain (loss) (4.90) 0.71 2.03 0.19 (6.21)
--------- --------- --------- --------- ---------
Total income (loss) from investment operations (4.85) 0.62 1.99 0.13 (6.38)
- ----------------------------------------------------------------------------------------------------------------------------
Less distributions from net realized gain -- -- -- -- (0.32)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.24 $ 12.09 $ 11.47 $ 9.48 $ 9.35
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ (40.12)% 5.41% 20.99% 1.39% (40.12)%
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ----------------------------------------------------------------------------------------------------------------------------
Expenses 2.98%(1) 2.81% 2.78% 2.98% 2.87%
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.49%(1) (0.64)% (0.29)% (0.61)% (1.46)%
- ----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $ 105,678 $ 272,710 $ 270,843 $ 261,066 $ 294,774
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 27% 30% 29% 64% 145%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Prior to July 28, 1997, the Fund issued one class of shares. All shares of the
Fund held prior to that date have been designated Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Reflects overall Fund ratios for investment income and non-class specific
expenses.
25
<PAGE>
<TABLE>
<CAPTION>
CLASS A
- ---------------------------------------------------------------------------------------------------------
FOR THE YEAR
ENDED FOR THE PERIOD JULY 28,
JANUARY 31, 1997*
SELECTED PER SHARE DATA: 1999 THROUGH JANUARY 31, 1998
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.14 $15.22
- ---------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.15 (0.07)
Net realized and unrealized loss (4.96) (3.01)
------------ --------
Total loss from investment operations (4.81) (3.08)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.33 $12.14
- ---------------------------------------------------------------------------------------------------------
TOTAL RETURN+ (39.62)% (20.24)%(1)
- ---------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ---------------------------------------------------------------------------------------------------------
Expenses 2.21%(3) 2.15%(2)
- ---------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.26%(3) (1.04)%(2)
- ---------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $58 $110
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate 27% 30%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS C++
- ---------------------------------------------------------------------------------------------------------
FOR THE YEAR
ENDED FOR THE PERIOD JULY 28,
JANUARY 31, 1997*
SELECTED PER SHARE DATA: 1999 THROUGH JANUARY 31, 1998
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.10 $15.22
- ---------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.06 (0.12)
Net realized and unrealized loss (4.92) (3.00)
------------ --------
Total loss from investment operations (4.86) (3.12)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.24 $12.10
- ---------------------------------------------------------------------------------------------------------
TOTAL RETURN+ (40.17)% (20.50)%(1)
- ---------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ---------------------------------------------------------------------------------------------------------
Expenses 2.98%(3) 2.91%(2)
- ---------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.49%(3) (1.76)%(2)
- ---------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $369 $792
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate 27% 30%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
26
<PAGE>
<TABLE>
<CAPTION>
CLASS D++
- -----------------------------------------------------------------------------------------------------------
FOR THE YEAR FOR THE PERIOD JULY 28,
ENDED 1997*
SELECTED PER SHARE DATA: JANUARY 31, 1999 THROUGH JANUARY 31, 1998
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $12.16 $15.22
- -----------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.16 (0.04)
Net realized and unrealized loss (4.97) (3.02)
-------- --------
Total loss from investment operations (4.81) (3.06)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.35 $12.16
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN+ (39.56)% (20.11)%(1)
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- -----------------------------------------------------------------------------------------------------------
Expenses 1.98%(3) 1.86%(2)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.49%(3) (0.52)%(3)
- -----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $5 $8
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 27% 30%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
27
<PAGE>
NOTES
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28
<PAGE>
NOTES
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29
<PAGE>
PROSPECTUS - JUNE 28, 1999
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.deanwitter.com/funds
Information about the Fund (including the STATEMENT OF ADDITIONAL INFORMATION)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (800) SEC-0330. Reports and
other information about the Fund are available on the SEC's Internet site
(www.sec.gov) and copies of this information may be obtained, upon payment of a
duplicating fee, by writing the Public Reference Section of the SEC, Washington,
DC 20549-6009.
TICKER SYMBOLS:
CLASS A: LATAX CLASS C: LATCX
CLASS B: LATBX CLASS D: LATDX
(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-6608)
Morgan Stanley Dean Witter
LATIN AMERICAN
GROWTH FUND
[BACK COVER PHOTO]
A MUTUAL FUND THAT SEEKS
LONG-TERM CAPITAL APPRECIATION
<PAGE>
MORGAN STANLEY
DEAN WITTER
LATIN AMERICAN
GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
JUNE 28, 1999
- --------------------------------------------------------------------------------
This STATEMENT OF ADDITIONAL INFORMATION is not a PROSPECTUS. The PROSPECTUS
(dated June 28, 1999) for Morgan Stanley Dean Witter Latin American Growth Fund
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 Latin American Growth Fund
Two World Trade Center
New York, New York 10048
(800) 869-NEWS
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
I. Fund History........................................................................ 4
II. Description of the Fund and Its Investments and Risks.............................. 4
A. Classification.................................................................... 4
B. Investment Strategies and Risks................................................... 4
C. Fund Policies/Investment Restrictions............................................. 12
III. Management of the Fund............................................................ 13
A. Board of Trustees................................................................. 13
B. Management Information............................................................ 14
C. Compensation...................................................................... 18
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, the Sub-Advisor and Fund Expenses
Paid by Third Parties........................................................... 21
D. Dealer Reallowances............................................................... 22
E. Rule 12b-1 Plan................................................................... 22
F. Other Service Providers........................................................... 26
VI. Brokerage Allocation and Other Practices........................................... 27
A. Brokerage Transactions............................................................ 27
B. Commissions....................................................................... 27
C. Brokerage Selection............................................................... 27
D. Directed Brokerage................................................................ 28
E. Regular Broker-Dealers............................................................ 28
VII. Capital Stock and Other Securities................................................ 28
VIII. Purchase, Redemption and Pricing of Shares....................................... 29
A. Purchase/Redemption of Shares..................................................... 30
B. Offering Price.................................................................... 31
IX. Taxation of the Fund and Shareholders.............................................. 33
X. Underwriters........................................................................ 33
XI. Calculation of Performance Data.................................................... 33
XII. Financial Statements.............................................................. 34
</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"--Chase Manhattan Bank.
"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 Latin American Growth Fund, 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 MSDW Advisors 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 ADVISORS"--Morgan Stanley Dean Witter Advisors, Inc., a wholly-owned
investment advisor subsidiary of MSDW.
"SUB-ADVISOR"--TCW Funds Management, Inc., 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.
3
<PAGE>
I. FUND HISTORY
- --------------------------------------------------------------------------------
The Fund was organized under the laws of the Commonwealth of Massachusetts
on February 25, 1992 as a Massachusetts business trust under the name TCW/DW
Latin American Growth Fund. 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 Latin American Growth Fund, 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 long-term capital appreciation.
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."
DEBT-TO-EQUITY CONVERSIONS. The Fund may participate with respect to up to
5% of its total assets in debt-to-equity conversions. Debt-to-equity conversion
programs are sponsored in varying degrees by certain Latin American countries
and permit investors to use external debt of a country to make equity
investments in local companies. Many conversion programs relate primarily to
investments in transportation, communication, utilities and similar
infrastructure related areas. The terms of the programs vary from country to
country, but include significant restrictions on the application of the proceeds
received in the conversion and on the repatriation of investment profits and
capital. In inviting conversion applications by holders of eligible debt, a
government will usually specify a mininum discount from par value that it will
accept for conversion. There can be no assurance that debt-to-equity conversion
programs will continue or be successful or that the Fund will be able to convert
all or any of its Latin American debt portfolio into equity investments.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may enter into
forward foreign currency exchange contracts ("FORWARD CONTRACTS") as a hedge
against fluctuations in future foreign exchange rates. The Fund may conduct its
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market, or through
entering into forward contracts to purchase or sell foreign currencies. A
forward contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded in the interbank market conducted directly between
currency traders (usually large, commercial and investment banks) and their
customers. Forward contracts only will be entered into with United States banks
and their foreign branches, foreign banks, insurance companies and other dealers
whose assets total $1 billion or more, or foreign banks whose assets total $1
billion or more. A forward contract generally has no deposit requirement, and no
commissions are charged at any stage for trades.
The Fund may enter into forward contracts under various circumstances. The
typical use of a forward contract is to "lock in" the price of a security in
U.S. dollars or some other foreign currency which the Fund is holding in its
portfolio. By entering into a forward contract for the purchase or sale, for a
fixed amount of dollars or other currency, of the amount of foreign currency
involved in the underlying security transactions, the Fund may be able to
protect itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar or other currency which is being used for
the security purchase and the foreign currency in which the security is
denominated during the period between the date on which the security is
purchased or sold and the date on which payment is made or received.
The Sub-Advisor also may from time to time utilize forward contracts for
other purposes. For example, they may be used to hedge a foreign security held
in the portfolio or a security which pays out
4
<PAGE>
principal tied to an exchange rate between the U.S. dollar and a foreign
currency, against a decline in value of the applicable foreign currency. They
also may be used to lock in the current exchange rate of the currency in which
those securities anticipated to be purchased are denominated. At times, the Fund
may enter into "cross-currency" hedging transactions involving currencies other
than those in which securities are held or proposed to be purchased are
denominated.
The Fund will not enter into forward currency contracts or maintain a net
exposure to these contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of the
value of the Fund's portfolio securities.
Although the Fund values its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. It will, however, do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the spread
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Fund at one rate,
while offering a lesser rate of exchange should the Fund desire to resell that
currency to the dealer.
The Fund may be limited in its ability to enter into hedging transactions
involving forward contracts by the Internal Revenue Code requirements relating
to qualification as a regulated investment company.
Forward currency contracts may limit gains on portfolio securities that
could otherwise be realized had they not been utilized and could result in
losses. The contracts also may increase the Fund's volatility and may involve a
significant amount of risk relative to the investment of cash.
OPTIONS AND FUTURES TRANSACTIONS. The Fund may engage in transactions in
listed 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 the U.S.) or other clearing corporation or exchange, the underlying security
or currency 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 or currency 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 or currency 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 or currency 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 and on the currencies in which they are denominated,
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 (or currencies) alone.
Moreover, the premium received will offset a portion of the potential loss
incurred by the Fund if the securities (or currencies) underlying the option
decline in value.
The Fund may be required, at any time during the option period, to deliver
the underlying security (or currency) 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.
5
<PAGE>
A call option is "covered" if the Fund owns the underlying security subject
to the option or has an absolute and immediate right to acquire that security
without additional cash consideration (or for additional consideration (in cash,
Treasury bills or other liquid portfolio securities) held in a segregated
account on the Fund's books) upon conversion or exchange of other securities
held in its portfolio. A call option is also covered if the Fund holds a call on
the same security as the call written where the exercise price of the call held
is (i) equal to or less than the exercise price of the call written or (ii)
greater than the exercise price of the call written if the difference is
maintained by the Fund in cash, Treasury bills or other liquid portfolio
securities in a segregated account on the Fund's books.
Options written by the Fund normally have expiration dates of from up to
eighteen months from the date written. The exercise price of a call option may
be below, equal to or above the current market value of the underlying security
at the time the option is written.
COVERED PUT WRITING. If the Fund writes a covered put option, it incurs an
obligation to buy the security underlying the option from the purchaser of the
put, at the option's exercise price at any time during the option period, at the
purchaser's election. Through the writing of a put option, the Fund would
receive income from the premium paid by purchasers. The potential gain on a
covered put option is limited to the premium received on the option (less the
commissions paid on the transaction). During the option period, the Fund may be
required, at any time, to make payment of the exercise price against delivery of
the underlying security (or currency). 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 operation of and limitations on covered put options in other respects are
substantially identical to those of call options.
PURCHASING CALL AND PUT OPTIONS. The Fund may purchase listed 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 or currency 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 or currency 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 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 will 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. The Fund will engage in OTC option transactions only with member
banks of the Federal Reserve System or primary dealers in U.S. Government
securities or with affiliates of such banks or dealers which have capital of at
least $50 million or whose obligations are guaranteed by an entity having
capital of at least $50 million.
RISKS OF OPTIONS TRANSACTIONS. The successful use of options depends on the
ability of the Sub-Advisor to forecast correctly interest rates, currency
exchange rates and/or market movements. If the market value of the portfolio
securities (or the currencies in which they are denominated) 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 (or the value of its denominated currency)
increase, but has retained the risk of loss should the price of the underlying
security (or the value of its denominated currency) 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
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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, currency
and index futures contracts that are traded on U.S. and foreign commodity
exchanges on such underlying securities as U.S. Treasury bonds, notes, bills and
GNMA Certificates and/or any foreign government fixed-income security, on
various currencies and on such indexes of U.S. 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 or currency 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 or currency
and protect against declines in the value of portfolio securities.
The Fund will purchase or sell index futures contracts for the purpose of
hedging some or all of its portfolio securities against changes in their prices.
If the Sub-Advisor anticipates that the prices of securities held by the Fund
may fall, the Fund may sell an index futures contract. Conversely, if the Fund
wishes to hedge against anticipated price rises in those securities which the
Fund intends to purchase, the Fund may purchase an index futures contract.
In addition, futures contracts will be bought or sold in order to close out
a short or long position maintained by the Fund in a corresponding futures
contract.
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
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the same aggregate amount of the specific type of security (currency) 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 (currency) 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 it has entered into, provided, however, that in the case of an
option that is in-the-money (the exercise price of the call (put) option is less
(more) than the market price of the underlying security) at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%.
However, there is no overall limitation on the percentage of the Fund's net
assets which may be subject to a hedge position.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS. The prices
of securities and indexes subject to futures contracts (and thereby the futures
contract prices) may correlate imperfectly with the behavior of the cash prices
of the Fund's portfolio securities (and the currencies in which they are
denominated). 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) 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
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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, currency exchange rate and/or
market movement trends by the Adviser 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. In addition,
limitations imposed by an exchange or board of trade on which futures contracts
are traded may compel or prevent the Fund from closing out a contract which may
result in reduced gain or increased loss to the Fund. The absence of a liquid
market in futures contracts might cause the Fund to make or take delivery of the
underlying securities (currencies) at a time when it may be disadvantageous to
do so.
Exchanges 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.
MONEY MARKET SECURITIES. The Fund may invest in various U.S. 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;
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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 15% 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 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 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.
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
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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 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 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 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
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<PAGE>
exceed 15% of the Fund's net assets. However, investing in Rule 144A securities
could have the effect of increasing the level of Fund illiquidity to the extent
the Fund, at a particular point in time, may be unable to find qualified
institutional buyers interested in purchasing such securities.
WARRANTS AND SUBSCRIPTION RIGHTS. The Fund may invest up to 5% of the value
of its net assets in warrants, including not more than 2% in warrants not listed
on either the New York or American Stock Exchange. A warrant is, in effect, an
option to purchase equity securities at a specific price, generally valid for a
specific period of time, and has no voting rights, pays no dividends and has no
rights with respect to the corporation issuing it. The Fund may acquire warrants
and subscription rights attached to other securities without reference to the
percentage limitations.
A subscription right is a privilege granted to existing shareholders of a
corporation to subscribe to shares of a new issue of common stock before it is
offered to the public. A subscription right normally has a life of two to four
weeks and a subscription price lower than the current market value of the common
stock. A subscription right is freely transferable. The Fund may invest up to 5%
of the value of its net assets in rights.
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 securities law. Compared with "diversified" funds,
the Fund may invest a greater percentage of its assets in the securities of an
individual corporation or governmental entity. Thus, the Fund's assets may be
concentrated 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.
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 cannot
recognize the year 2000, but revert to 1900 or some other date, due to the
manner in which dates were encoded and calculated. That failure could have a
negative impact on the handling of securities trades, pricing and account
services. The Investment Manager, the Sub-Advisor, the Distributor and the
Transfer Agent have been actively working on necessary changes to their own
computer systems to prepare for the year 2000 and expect that their systems will
be adapted before that date, but there can be no assurance that they will be
successful, or that interaction with other non-complying computer systems will
not impair their services at that time.
In addition, it is possible that the markets for securities in which the
Fund invests may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and liquidity issues. In
addition, corporate and governmental data processing errors may result in
production problems for individual companies and overall economic uncertainties.
Earnings of individual issuers will be affected by remediation costs, which may
be substantial and may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Fund's investments may be adversely affected.
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 long-term capital appreciation.
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The Fund may not:
1. Invest 25% or more of the value of its total assets in securities
of issuers in any one industry. This restriction does not apply to
obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities or to cash equivalents.
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 3 years
of continuous operation. This restriction does not apply to any obligation
of the United States Government, its agencies or instrumentalities.
3. 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.
4. Purchase oil, gas or other mineral leases, rights or royalty
contracts, or exploration or development programs, except that the Fund may
invest in the securities of companies which operate, invest in, or sponsor
these programs.
5. Purchase or sell commodities or commodities contracts except that
the Fund may purchase or sell futures contracts or options on futures.
6. Borrow money, except that the Fund may borrow from a bank for
temporary or emergency purposes, in amounts not exceeding 5% (taken at the
lower of cost or current value) of its total assets (not including the
amount borrowed).
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 Investment Company Act,
except insofar as the Fund may be deemed to have issued a senior security by
reason of: (a) entering into any repurchase agreement; (b) purchasing any
securities on a when-issued or delayed delivery basis; (c) purchasing or
selling 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
publicly distributed debt obligations; (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 short-term loans as are
necessary for the clearance of portfolio securities. The deposit or payment
by the Fund of initial or variation margin in connection with futures
contracts or related options thereon is not considered the purchase of a
security on margin.
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. (The Fund may invest in restricted securities subject to
the non-fundamental limitations contained in the Prospectus.)
13. Invest for the purpose of exercising control or management of any
other issuer.
As a non-fundamental policy, as to 75% of its total assets, purchase
more than 10% of all outstanding voting securities or any class of
securities of any one issuer.
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.
13
<PAGE>
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 their
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
or Sub-Advisor. All of the Trustees also serve as Independent Trustees of
"Discover Brokerage Index Series" a mutual fund for which the Manager is the
investment advisor.
The Trustees and executive officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with the
Manager or the Adviser, and with the 90 Morgan Stanley Dean Witter Funds and
Discover Brokerage Index Series are shown below.
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ---------------------------------------------- ------------------------------------------------------------------
<S> <C>
Michael Bozic (58) ........................... Vice Chairman of Kmart Corporation (since December, 1998);
Director Director or Trustee of the Morgan Stanley Dean Witter Funds and
c/o Kmart Corporation Discover Brokerage Index Series; formerly Chairman and Chief
3100 West Big Beaver Road Executive Officer of Levitz Furniture Corporation (November,
Troy, Michigan 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, Roe-
buck and Co.; Director of Eaglemark Financial Services, Inc. and
Weirton Steel Corporation.
Charles A. Fiumefreddo* (66) ................. Chairman, Director or Trustee and Chief Executive Officer of the
Chairman of the Board, Morgan Stanley Dean Witter Funds and Discover Brokerage Index
Chief Executive Officer and Trustee Series; formerly Chairman, Chief Executive Officer and Director of
Two World Trade Center the Investment Manager, the Distributor and MSDW Services Company;
New York, New York 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 (66) ........................... Director or Trustee of the Morgan Stanley Dean Witter Funds and
Director Discover Brokerage Index Series; formerly United States Senator
c/o Huntsman Corporation (R-Utah)(1974-1992) and Chairman, Senate Banking Committee
500 Huntsman Way (1980-1986); formerly Mayor of Salt Lake City, Utah (1971-1974);
Salt Lake City, Utah 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.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ---------------------------------------------- ------------------------------------------------------------------
<S> <C>
Wayne E. Hedien (65) ......................... Retired; Director or Trustee of the Morgan Stanley Dean Witter
Director Funds and Discover Brokerage Index Series; Director of The PMI
c/o Gordon Altman Butowsky Group, Inc. (private mortgage insurance); Trustee and Vice
Weitzen Shalov & Wein Chairman of The Field Museum of Natural History; formerly
Counsel to the Independent Directors associated with the Allstate Companies (1966-1994), most recently
114 West 47th Street as Chairman of The Allstate Corporation (March, 1993-December,
New York, New York 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 organiza-
tions.
Dr. Manuel H. Johnson (50) ................... Senior Partner, Johnson Smick International, Inc., a consulting
Trustee firm; Co-Chairman and a founder of the Group of Seven Council
c/o Johnson Smick International, Inc. (G7C), an international economic commission; Chairman of the Audit
1133 Connecticut Avenue, N.W. Committee and Director or Trustee of the Morgan Stanley Dean
Washington, D.C. Witter Funds and Discover Brokerage Index Series; Director of
NASDAQ, 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.
Michael E. Nugent (63) ....................... General Partner, Triumph Capital, L.P., a private investment
Trustee partnership; Chairman of the Insurance Committee and Director or
c/o Triumph Capital, L.P. Trustee of the Morgan Stanley Dean Witter Funds and Discover
237 Park Avenue New York, Brokerage Index Series; formerly Vice President, Bankers Trust
New York Company and BT Capital Corporation (1984-1988); Director of
various business organizations.
Philip J. Purcell* (55) ...................... Chairman of the Board of Directors and Chief Executive Officer of
Director MSDW, Dean Witter Reynolds and Novus Credit Services Inc.;
1585 Broadway Director of the Distributor; Director or Trustee of the Morgan
New York, New York Stanley Dean Witter Funds and Discover Brokerage Index Series;
Director and/or officer of various MSDW subsidiaries.
John L. Schroeder (68) ....................... Retired; Chairman of the Derivatives Committee and Director or
Trustee Trustee of the Morgan Stanley Dean Witter Funds and Discover
c/o Gordon Altman Butowsky Brokerage Index Series; Director of Citizens Utilities Company
Weitzen Shalov & Wein (telecommunications, gas, electric and water utilities company);
Counsel to the Independent Trustees formerly Executive Vice President and Chief Investment Officer of
114 West 47th Street the Home Insurance Company (August, 1991-September, 1995).
New York, New York
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ---------------------------------------------- ------------------------------------------------------------------
<S> <C>
Mitchell M. Merin (45) ....................... President and Chief Operating Officer of Asset Management of MSDW
President (since December, 1998); President and Director (since April, 1997)
Two World Trade Center and Chief Executive Officer (since June, 1998) of the Investment
New York, New York 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 and Discover Brokerage Index Series (since May,
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 and Discover Brokerage Index
Series (May, 1997-April, 1999), and Executive Vice President of
Dean Witter, Discover & Co.
Barry Fink (44) .............................. Senior Vice President (since March, 1997), Secretary and General
Vice President, Counsel (since February, 1997) and Director (since July, 1998) of
Secretary and General Counsel the Investment Manager and MSDW Services Company; Senior Vice
Two World Trade Center President (since March, 1997) and Assistant Secretary and
New York, New York 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); Vice
President, Secretary and General Counsel of Discover Brokerage
Index Series; previously First Vice President (June, 1993-Febru-
ary, 1997), Vice President and Assistant Secretary and Assistant
General Counsel of the Manager and MSDW Advisors and Assistant
Secretary of the Morgan Stanley Dean Witter Funds.
Michael P. Reilly (35) ....................... Managing Director of the Sub-Advisor, Trust Company of the West
Vice President and TCW Asset Management Company.
865 South Figueroa Street
Los Angeles, California
Thomas F. Caloia (53) ........................ First Vice President and Assistant Treasurer of the Investment
Treasurer Manager, the Distributer and MSDW Services Company; Treasurer of
Two World Trade Center the Morgan Stanley Dean Witter Funds and Discover Brokerage Index
New York, New York Series.
</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 and 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 are Vice Presidents of the Fund.
16
<PAGE>
In addition, FRANK BRUTTOMESSO, MARILYN K. CRANNEY, 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 TODD LEBO,
Vice President and Assistant General Counsel of the Investment Manager and MSDW
Services Company, are Assistant Secretaries of the Fund.
INDEPENDENT TRUSTEES AND THE COMMITTEES. Law and regulation establish both
general guidelines and specific duties for the Independent Trustees. The Morgan
Stanley Dean Witter Funds seek as Independent Trustees individuals of
distinction and experience in business and finance, government service or
academia; these are people whose advice and counsel are in demand by others and
for whom there is often competition. To accept a position on the Funds' Boards,
such individuals may reject other attractive assignments because the Funds make
substantial demands on their time. All of the Independent Trustees serve as
members of the Audit Committee. In addition, three of the Trustees, including
two Independent Trustees, serve as members of the Derivatives Committee and the
Insurance Committee.
The Independent Trustees are charged with recommending to the full Board
approval of management, advisory and administration contracts, Rule 12b-1 plans
and distribution and underwriting agreements; continually reviewing Fund
performance; checking on the pricing of portfolio securities, brokerage
commissions, transfer agent costs and performance, and trading among Funds in
the same complex; and approving fidelity bond and related insurance coverage and
allocations, as well as other matters that arise from time to time. The
Independent Trustees are required to select and nominate individuals to fill any
Independent Trustee vacancy on the Board of any Fund that has a Rule 12b-1 plan
of distribution. Most of the Morgan Stanley Dean Witter Funds have a Rule 12b-1
plan.
The Audit Committee is charged with recommending to the full Board the
engagement or discharge of the Fund's independent 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 TRUSTEES FOR TCW/DW
FUNDS. The Independent Trustees and the Funds' management believe that having
the same Independent 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 Trustees for each of the Funds or even of
sub-groups of Funds. They believe that having the same individuals serve as
Independent 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 Trustees arriving at conflicting decisions regarding operations and
management of the Funds and avoids the cost and confusion that would likely
ensue. Finally, having the same Independent Trustees serve on all Fund Boards
enhances the ability of each Fund to obtain, at modest cost to each separate
Fund, the services of Independent Trustees, of the caliber, experience and
business acumen of the individuals who serve as Independent 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
17
<PAGE>
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 or Committees of the
Board of Trustees attended by the Trustee (the Fund pays the Chairman of the
Audit Committee an additional annual fee of $750, and the Chairmen of the
Derivatives and Insurance Committees additional annual fees of $500). If a Board
meeting and a Committee meeting, 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,
the Sub-Advisor or an affiliated company receive no compensation or expense
reimbursement from the Fund for their services as Trustee. Dr. Johnson serves as
the Chairman of the Audit Committee.
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 25,
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 fee paid by the Fund to the Chairman of the
Audit Committee and the Chairman of the Independent Trustees remained unchanged.
The following table illustrates the compensation that the Fund paid to its
Independent Trustees for the fiscal year ended January 31, 1999.
FUND COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
FROM THE
NAME OF INDEPENDENT TRUSTEE FUND
- --------------------------- ------------
<S> <C>
John C. Argue.............. $5,600
Dr. Manuel H. Johnson...... 5,600
Michael E. Nugent.......... 5,600
John L. Schroeder.......... 5,800
</TABLE>
At such time as the Fund has paid fees to the 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 Trustees and the Committees as were held by the
other Morgan Stanley Dean Witter Funds during the calendar year ended December
31, 1998, it is estimated that the compensation paid to each Independent Trustee
during such fiscal year will be $1,650 and an additional $750 to Dr. Johnson who
serves as Chairman of the Audit Committee.
The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1998 for services
to the 90 Morgan Stanley Dean Witter that were in operation at December 31,
1998. No compensation was paid to the Fund's Independent Trustees by Discover
Brokerage Index Series for the calendar year ended December 31, 1998.
18
<PAGE>
CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS
<TABLE>
<CAPTION>
TOTAL CASH
COMPENSATION
FOR SERVICES
TO
85 MORGAN
NAME OF STANLEY DEAN
INDEPENDENT TRUSTEE WITTER FUNDS
- ------------------------ ------------
<S> <C>
Michael Bozic........... $120,150
Edwin J. Garn........... 132,450
Wayne E. Hedien......... 132,350
Dr. Manuel H. Johnson... 155,681
Michael E. Nugent....... 159,731
John L. Schroeder....... 160,731
</TABLE>
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 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 or 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 or 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, 1998, 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,
1998.
RETIREMENT BENEFITS FROM ALL MORGAN STANLEY DEAN WITTER FUNDS
<TABLE>
<CAPTION>
FOR ALL ADOPTING FUNDS
---------------------------
ESTIMATED
CREDITED RETIREMENT
YEARS ESTIMATED BENEFITS ESTIMATED ANNUAL
OF SERVICE PERCENTAGE ACCRUED AS BENEFITS UPON
AT OF EXPENSES RETIREMENT(2)
NAME OF RETIREMENT ELIGIBLE BY ALL FROM ALL
INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION ADOPTING FUNDS ADOPTING FUNDS
- ---------------------------- ------------ ------------ -------------- ------------------
<S> <C> <C> <C> <C>
Michael Bozic............... 10 60.44% $22,377 $52,250
Edwin J. Garn............... 10 60.44 35,225 52,250
Wayne E. Hedien............. 9 51.37 41,979 44,413
Dr. Manuel H. Johnson....... 10 60.44 14,047 52,250
Michael E. Nugent........... 10 60.44 25,336 52,250
John L. Schroeder........... 8 50.37 45,117 44,343
</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
- --------------------------------------------------------------------------------
The following owned 5% or more of the outstanding shares of Class A on June
10, 1999: Resources Trust Co. Trust IRA u/a dated 01/12/95 for the benefit of
Robert A Lincoln, P.O. Box 5900, Denver, CO 80217-5900--5.61% and Dean Witter
Reynolds Custodian for Raymond E Dutcher IRA Standard/Rollover dated 06/01/87,
1909 Hill Top Road, Raleigh, NC--5.02%. The following owned 5% or more of the
outstanding shares of Class C on June 1, 1999: Dean Witter Reynolds Custodian
for Dr. Young D. Kong, FBO Young D. Kong MD, VIP plus PFT Sharing, Ocean Grove,
New Jersey 07756--10.55%. The following owned 5% or more of the outstanding
shares of Class D on June 10, 1999: Morgan Stanley Dean Witter Advisors Inc.
Attn: Maurice Bendrihem, Two World Trade Center, 70th Floor, New York, New York
10048-0203--99.8%.
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. MANAGEMENT, INVESTMENT ADVICE 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,
New York 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 Funds Management, Inc., 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 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: 0.75% of the
portion of daily net assets not exceeding $500 million; and 0.72% of the portion
of daily net assets exceeding $500 million. The management fee is allocated
among the Classes pro rata based on the net assets of the Fund attributable to
each Class. 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 Funds Management, Inc. pursuant to an advisory agreement
between the Fund and TCW Funds Management, Inc. As part of an overall
consolidation of the TCW/DW Family of Funds and the Morgan
20
<PAGE>
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 Funds Management, Inc. 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 July 31, 1997, 1998 and 1999, Services
Company accrued total compensation under the old management agreement in the
amounts of $1,930,277, $2,394,923 and $1,476,124, respectively. For the same
periods, TCW Funds Management, Inc. accrued total compensation in its capacity
of adviser to the Fund in the amounts of $1,286,852, $1,596,615 and $984,082,
respectively.
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 Distributor also pays certain expenses in connection with the distribution
of the Fund's shares, including the costs of preparing, printing and
distributing advertising or promotional materials, and the costs of printing and
distributing prospectuses and supplements thereto used in connection with the
offering and sale of the Fund's shares. The Fund bears the costs of initial
typesetting, printing and distribution of prospectuses and supplements thereto
to shareholders. The Fund also bears the costs of registering the Fund and its
shares under federal and state securities laws and pays filing fees in
accordance with state securities laws.
The Fund and the Distributor have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act. Under the
Distribution Agreement, the Distributor uses its best efforts in rendering
services to the Fund, but in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations, the Distributor is
not liable to the Fund or any of its shareholders for any error of judgment or
mistake of law or for any act or omission or for any losses sustained by the
Fund or its shareholders.
C. SERVICES PROVIDED BY THE INVESTMENT MANAGER, THE SUB-ADVISOR AND FUND
EXPENSES PAID BY THIRD PARTIES
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 Manager maintains certain
of the Fund's books and records and furnishes, at its own expense, the office
space, facilities, equipment, clerical help, bookkeeping and certain legal
services as the Fund may reasonably require in the conduct of its business,
including the preparation of prospectuses, proxy statements and reports required
to be filed with federal and state securities commissions (except insofar as the
participation or assistance of independent 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.
21
<PAGE>
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. These expenses will be allocated among
the four Classes of shares pro rata based on the net assets of the Fund
attributable to each Class, except as described below. Such expenses include,
but are not limited to: expenses of the Plan of Distribution pursuant to Rule
12b-1; charges and expenses of any registrar, custodian, stock transfer and
dividend disbursing agent; brokerage commissions; taxes; engraving and printing
share certificates; registration costs of the Fund and its shares under federal
and state securities laws; the cost and expense of printing, including
typesetting, and distributing prospectuses of the Fund and supplements thereto
to the Fund's shareholders; all expenses of shareholders' and Trustees' meetings
and of preparing, printing and mailing of proxy statements and reports to
shareholders; fees and travel expenses of Trustees or members of any advisory
board or committee who are not employees of the Investment Manager or the
Sub-Advisor or any corporate affiliate of either; 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 or the Sub-Advisor (not including compensation
or expenses of attorneys who are employees of the Investment Manager or the
Sub-Advisor); 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 12b-1 fees relating to a particular Class will be allocated directly to that
Class. In addition, other expenses associated with a particular Class (except
advisory or custodial fees) may be allocated directly to that Class, provided
that such expenses are reasonably identified as specifically attributable to
that Class and the direct allocation to that Class is approved by the Trustees.
The Management Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the 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 who are not parties to the Management Agreement or the Sub-Advisory
Agreement or are "independent Trustees," which votes must be cast in person at a
meeting called for the purpose of voting on such approval.
D. DEALER REALLOWANCES
Upon notice to selected broker-dealers, the Distributor may reallow up to
the full applicable front-end sales charge during periods specified in such
notice. During periods when 90% or more of the sales charge is reallowed, such
selected broker-dealers may be deemed to be underwriters as that term is defined
in the Securities Act.
E. RULE 12b-1 PLAN
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the
Investment Company Act (the "Plan") pursuant to which each Class, other than
Class D, pays the Distributor compensation accrued daily and payable monthly at
the following annual rates: 0.25% and 1.0% of the average daily net assets of
Class A and Class C, respectively, and, with respect to Class B, 1.0% of the
lesser of: (a) the average daily aggregate gross sales of the Fund's Class B
shares since the inception of the Fund (not including reinvestment of dividends
or capital gains distributions), less the average daily aggregate net
22
<PAGE>
asset value of the Fund's Class B shares redeemed since the Fund's inception
upon which a contingent deferred sales charge has been imposed or upon which
such charge has been waived; or (b) the average daily net assets of Class B
shares.
The Distributor also receives the proceeds of front-end sales charges
("FSCs") and of contingent deferred sales charges ("CDSCs") imposed on certain
redemptions of shares, which are separate and apart from payments made pursuant
to the Plan. The Distributor has informed the Fund that it and/or Dean Witter
Reynolds received the proceeds of CDSCs and FSCs, for the last three fiscal
years ended January 31, in approximate amounts as provided in the table below
(the Distributor did not retain any of these amounts).
<TABLE>
<CAPTION>
1999 1998 1997
----------------- ------------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Class A............................ FSCs:(1) $ 1,799 FSCs: $ 6,000 FSCs: N/A(2)
CDSCs: $ 2 CDSCs: $ 0 CDSCs: N/A(2)
Class B............................ CDSCs: $916,003 CDSCs: $1,105,599 CDSCs: $997,000
Class C............................ CDSCs: $ 2,365 CDSCs: $ 339 CDSCs: N/A(2)
</TABLE>
- ------------------------
(1) FSCs apply to Class A only.
(2) This Class commenced operations on July 28, 1997.
The Distributor has informed the Fund that the entire fee payable by Class A
and a portion of the fees payable by each of Class B and Class C each year
pursuant to the Plan equal to 0.25% of such Class' average daily net assets are
currently each characterized as a "service fee" under the Rules of the National
Association of Securities Dealers, Inc. (of which the Distributor is a member).
The "service fee" is a payment made for personal service and/or the maintenance
of shareholder accounts. The remaining portion of the Plan fees payable by a
Class, if any, is characterized as an "asset-based sales charge" as such is
defined by the Rules of the Association.
Under the Plan and as required by Rule 12b-1, the Trustees receive and
review promptly after the end of each calendar quarter a written report provided
by the Distributor of the amounts expended under the Plan and the purpose for
which such expenditures were made. Class B shares of the Fund accrued amounts
payable to the Distributor under the Plan, during the fiscal year ended January
31, 1999, of $1,960,820. This amount is equal to 1.00% of the average daily net
assets of Class B for the fiscal year and was calculated pursuant to Clause (b)
of the compensation formula under the Plan. For the fiscal year ended January
31, 1999, Class A and Class C shares of the Fund accrued payments under the Plan
amounting to $213 and $6,369, respectively, which amounts are equal to 0.23% and
1.00% of the average daily net assets of Class A and Class C, respectively, for
the fiscal year.
The Plan was adopted in order to permit the implementation of the Fund's
method of distribution. Under this distribution method the Fund offers four
Classes, each with a different distribution arrangement.
With respect to Class A shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from proceeds of the FSC, commissions for the
sale of Class A shares, currently a gross sales credit of up to 5.0% of the
amount sold (except as provided in the following sentence) and an annual
residual commission, currently a residual of up to 0.25% of the current value of
the respective accounts for which they are the Financial Advisors or dealers of
record in all cases. On orders of $1 million or more (for which no sales charge
was paid) or net asset value purchases by employer-sponsored employee benefit
plans, whether or not qualified under the Internal Revenue Code, for which the
Transfer Agent serves as Trustee or Dean Witter Reynolds Retirement Plan
Services serves as recordkeeper pursuant to a written Recordkeeping Services
Agreement ("MSDW Eligible Plans"), MSDW Advisors compensates Financial Advisors
by paying them, from its own funds, a gross sales credit of 1.0% of the amount
sold.
With respect to Class B shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the sale
of Class B shares, currently a gross sales credit of up to 5.0% of the amount
sold (except as provided in the following sentence) and an annual residual
commission, currently a residual of up to 0.25% of the current value (not
including reinvested dividends
23
<PAGE>
or distributions) of the amount sold in all cases. In the case of Class B shares
purchased on or after July 28, 1997 by MSDW Eligible Plans, Dean Witter Reynolds
compensates its Financial Advisors by paying them, from its own funds, a gross
sales credit of 3.0% of the amount sold.
With respect to Class C shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the sale
of Class C shares, currently a gross sales credit of up to 1.0% of the amount
sold and an annual residual commission, currently up to 1.0% of the current
value of the respective accounts for which they are the Financial Advisors of
record.
With respect to Class D shares other than shares held by participants in
MSDW Advisors' mutual fund asset allocation program, the MSDW Advisors
compensates Dean Witter Reynolds' Financial Advisors by paying them, from its
own funds, commissions for the sale of Class D shares, currently a gross sales
credit of up to 1.0% of the amount sold. There is a chargeback of 100% of the
amount paid if the Class D shares are redeemed in the first year and a
chargeback of 50% of the amount paid if the Class D shares are redeemed in the
second year after purchase. The Investment Manager also compensates Dean Witter
Reynolds' Financial Advisors by paying them, from its own funds, an annual
residual commission, currently up to 0.10% of the current value of the
respective accounts for which they are the Financial Advisors of record (not
including accounts of participants in MSDW Advisors' mutual fund asset
allocation program).
The gross sales credit is a charge which reflects commissions paid by Dean
Witter Reynolds to its Financial Advisors and Dean Witter Reynolds'
Fund-associated distribution-related expenses, including sales compensation, and
overhead and other branch office distribution-related expenses including (a) the
expenses of operating Dean Witter Reynolds' branch offices in connection with
the sale of Fund shares, including lease costs, the salaries and employee
benefits of operations and sales support personnel, utility costs,
communications costs and the costs of stationery and supplies; (b) the costs of
client sales seminars; (c) travel expenses of mutual fund sales coordinators to
promote the sale of Fund shares; and (d) other expenses relating to branch
promotion of Fund sales.
The distribution fee that the Distributor receives from the Fund under the
Plan, in effect, offsets distribution expenses incurred under the Plan on behalf
of the Fund and, in the case of Class B shares, opportunity costs, such as the
gross sales credit and an assumed interest charge thereon ("carrying charge").
In the Distributor's reporting of the distribution expenses to the Fund, in the
case of Class B shares, such assumed interest (computed at the "broker's call
rate") has been calculated on the gross credit as it is reduced by amounts
received by the Distributor under the Plan and any contingent deferred sales
charges received by the Distributor upon redemption of shares of the Fund. No
other interest charge is included as a distribution expense in the Distributor's
calculation of its distribution costs for this purpose. The broker's call rate
is the interest rate charged to securities brokers on loans secured by
exchange-listed securities.
The Fund is authorized to reimburse expenses incurred or to be incurred in
promoting the distribution of the Fund's Class A and Class C shares and in
servicing shareholder accounts. Reimbursement will be made through payments at
the end of each month. The amount of each monthly payment may in no event exceed
an amount equal to a payment at the annual rate of 0.25%, in the case of Class
A, and 1.0%, in the case of Class C, of the average net assets of the respective
Class during the month. No interest or other financing charges, if any, incurred
on any distribution expenses on behalf of Class A and Class C will be
reimbursable under the Plan. With respect to Class A, in the case of all
expenses other than expenses representing the service fee, and, with respect to
Class C, in the case of all expenses other than expenses representing a gross
sales credit or a residual to Financial Advisors and other authorized financial
representatives, such amounts shall be determined at the beginning of each
calendar quarter by the Trustees, including, a majority of the Independent
Trustees. Expenses representing the service fee (for Class A) or a gross sales
credit or a residual to Financial Advisors and other authorized financial
representatives (for Class C) may be reimbursed without prior determination. In
the event that the Distributor proposes that monies shall be reimbursed for
other than such expenses, then in making quarterly determinations of the amounts
that may be reimbursed by the Fund, the Distributor
24
<PAGE>
will provide and the Trustees will review a quarterly budget of projected
distribution expenses to be incurred on behalf of the Fund, together with a
report explaining the purposes and anticipated benefits of incurring such
expenses. The Trustees will determine which particular expenses, and the
portions thereof, that may be borne by the Fund, and in making such a
determination shall consider the scope of the Distributor's commitment to
promoting the distribution of the Fund's Class A and Class C shares.
Each Class paid 100% of the amounts accrued under the Plan with respect to
that Class for the fiscal year ended January 31, 1999 to the Distributor. The
Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to
the Plan, $41,025,810 on behalf of Class B since the inception of the Plan. It
is estimated that this amount was spent in approximately the following ways: (i)
6.60% ($2,707,050)-- advertising and promotional expenses; (ii) 0.62%
($254,170)--printing and mailing of prospectuses for distribution to other than
current shareholders; and (iii) 92.78% ($38,064,590)--other expenses, including
the gross sales credit and the carrying charge, of which 13.12% ($4,993,616)
represents carrying charges, 35.53% ($13,526,028) represents commission credits
to Dean Witter Reynolds branch offices and other selected broker-dealers for
payments of commissions to Financial Advisors and other authorized financial
representatives, and 51.35% ($19,544,946) represents overhead and other branch
office distribution-related expenses. The amounts accrued by Class A and a
portion of the amounts accrued by Class C under the Plan during the fiscal year
ended January 31, 1999 were service fees. The remainder of the amounts accrued
by Class C were for expenses which relate to compensation of sales personnel and
associated overhead expenses.
In the case of Class B shares, at any given time, the expenses of
distributing shares of the Fund may be more or less than the total of (i) the
payments made by the Fund pursuant to the Plan; and (ii) the proceeds of CDSCs
paid by investors upon redemption of shares. For example, if $1 million in
expenses in distributing Class B shares of the Fund had been incurred and
$750,000 had been received as described in (i) and (ii) above, the excess
expense would amount to $250,000. The Distributor has advised the Fund that in
the case of Class B shares the excess distribution expenses, including the
carrying charge designed to approximate the opportunity costs incurred by Dean
Witter Reynolds which arise from it having advanced monies without having
received the amount of any sales charges imposed at the time of sale of the
Fund's Class B shares, totaled $19,612,473 as of January 31, 1999 (the end of
the Fund's fiscal year), which was equal to 18.56% of the net assets of Class B
on such date. Because there is no requirement under the Plan that the
Distributor be reimbursed for all distribution expenses with respect to Class B
shares or any requirement that the Plan be continued from year to year, this
excess amount does not constitute a liability of the Fund. Although there is no
legal obligation for the Fund to pay expenses incurred in excess of payments
made to the Distributor under the Plan and the proceeds of CDSCs paid by
investors upon redemption of shares, if for any reason the Plan is terminated,
the Trustees will consider at that time the manner in which to treat such
expenses. Any cumulative expenses incurred, but not yet recovered through
distribution fees or CDSCs, may or may not be recovered through future
distribution fees or CDSCs.
In the case of Class A and Class C shares, expenses incurred pursuant to the
Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net
assets of Class A or Class C, respectively, will not be reimbursed by the Fund
through payments in any subsequent year, except that expenses representing a
gross sales commission credited to Morgan Stanley Dean Witter Financial Advisors
and other authorized financial representatives at the time of sale may be
reimbursed in the subsequent calendar year. The Distributor has advised the Fund
that there were no such expenses that may be reimbursed in the subsequent
calender year. No interest or other financing charges will be incurred on any
Class A or Class C distribution expenses incurred by the Distributor under the
Plan or on any unreimbursed expenses due to the Distributor pursuant to the
Plan.
No interested person of the Fund nor any Independent Trustee has any direct
financial interest in the operation of the Plan except to the extent that the
Distributor, the Manager, Dean Witter Reynolds, MSDW Advisors 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.
25
<PAGE>
On an annual basis, the Trustees, including a majority of the Independent
Trustees, consider whether the Plan should be continued. Prior to approving the
last continuation of the Plan, the Trustees requested and received from the
Distributor and reviewed all the information which they deemed necessary to
arrive at an informed determination. In making their determination to continue
the Plan, the Trustees considered: (1) the Fund's experience under the Plan and
whether such experience indicates that the Plan is operating as anticipated; (2)
the benefits the Fund had obtained, was obtaining and would be likely to obtain
under the Plan, including that: (a) the Plan is essential in order to give Fund
investors a choice of alternatives for payment of distribution and service
charges and to enable the Fund to continue to grow and avoid a pattern of net
redemptions which, in turn, are essential for effective investment management;
and (b) without the compensation to individual brokers and the reimbursement of
distribution and account maintenance expenses of Dean Witter Reynolds' branch
offices made possible by the 12b-1 fees, Dean Witter Reynolds could not
establish and maintain an effective system for distribution, servicing of Fund
shareholders and maintenance of shareholder accounts; and (3) what services had
been provided and were continuing to be provided under the Plan to the Fund and
its shareholders. Based upon their review, the Trustees, including each of the
Independent Trustees, determined that continuation of the Plan would be in the
best interest of the Fund and would have a reasonable likelihood of continuing
to benefit the Fund and its shareholders. In the Trustees' quarterly review of
the Plan, they will consider its continued appropriateness and the level of
compensation provided therein.
The Plan may not be amended to increase materially the amount to be spent
for the services described therein without approval by the shareholders of the
affected Class or Classes of the Fund, and all material amendments to the Plan
must also be approved by the Trustees in the manner described above. The Plan
may be terminated at any time, without payment of any penalty, by vote of a
majority of the Independent Trustees or by a vote of a majority of the
outstanding voting securities of the Fund (as defined in the Investment Company
Act) on not more than thirty days' written notice to any other party to the
Plan. So long as the Plan is in effect, the election and nomination of
Independent Trustees shall be committed to the discretion of the Independent
Trustees.
F. OTHER SERVICE PROVIDERS
(1) TRANSFER AGENT/DIVIDEND-PAYING AGENT
Morgan Stanley Dean Witter Trust FSB is the Transfer Agent for the Fund's
shares and the Dividend Disbursing Agent for payment of dividends and
distributions on Fund shares and Agent for shareholders under various investment
plans. The principal business address of the Transfer Agent is Harborside
Financial Center, Plaza Two, Jersey City, New Jersey 07311.
(2) CUSTODIAN AND INDEPENDENT ACCOUNTANTS
The Bank of New York, 90 Washington Street, New York, New York 10286, 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 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.
26
<PAGE>
VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
- --------------------------------------------------------------------------------
A. BROKERAGE TRANSACTIONS
Subject to the general supervision of the Trustees, the Investment Manager
and/or Sub-Advisor is responsible for decisions to buy and sell securities for
the Fund, the selection of brokers and dealers to effect the transactions, and
the negotiation of brokerage commissions, if any. Purchases and sales of
securities on a stock exchange are effected through brokers who charge a
commission for their services. In the over-the-counter market, securities are
generally traded on a "net" basis with dealers acting as principal for their own
accounts without a stated commission, although the price of the security usually
includes a profit to the dealer. The Fund also expects that securities will be
purchased at times in underwritten offerings where the price includes a fixed
amount of compensation, generally referred to as the underwriter's concession or
discount. On occasion, the Fund may also purchase certain money market
instruments directly from an issuer, in which case no commissions or discounts
are paid.
For the fiscal years ended January 31, 1997, 1998 and 1999, the Fund paid a
total of $561,946, $600,660 and $591,538, respectively, in brokerage
commissions.
B. COMMISSIONS
Consistent with the policy described above, 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 Manager by
any amount of the brokerage commissions it may pay to an affiliated broker or
dealer.
During the fiscal years ended January 31, 1997, 1998 and 1999 there were no
brokerage fees paid to Dean Witter Reynolds. During the period June 1, 1997
through January 31, 1998 and during the fiscal year ended January 31, 1999, the
Fund paid a total of $3,901 and $13,262, respectively, in brokerage commissions
to Morgan Stanley & Co., which broker-dealer became an affiliate of the Manager
on May 31, 1997 upon consummation of the merger of Dean Witter, Discover & Co.
with Morgan Stanley Group Inc. During the fiscal year ended January 31, 1999,
the brokerage commissions paid to Morgan Stanley & Co. represented approximately
2.24% of the total brokerage commissions paid by the Fund for this period and
were paid on account of transactions having an aggregate dollar value equal to
approximately 2.25% of the aggregate dollar value of all portfolio transactions
of the Fund during the year for which commissions were paid.
C. BROKERAGE SELECTION
The policy of the Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions. Consistent with this
policy, when securities transactions are effected on a stock exchange, the
Fund's policy is to pay commissions which are considered fair and reasonable
without necessarily determining that the lowest possible commissions are paid in
all circumstances. The Fund believes that a requirement always to seek the
lowest possible commission cost could impede effective portfolio management and
preclude the Fund and the Investment Manager and/or Sub-Advisor from obtaining a
high quality of brokerage and research services. In seeking to determine the
reasonableness of brokerage commissions paid in any transaction, the Investment
Manager and/or Sub-Advisor relies upon its
27
<PAGE>
experience and knowledge regarding commissions generally charged by various
brokers and on its judgment in evaluating the brokerage and research services
received from the broker effecting the transaction. These determinations are
necessarily subjective and imprecise, as in most cases an exact dollar value for
those services is not ascertainable.
In seeking to implement the Fund's policies, the Investment Manager and
Sub-Advisor effects 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 Sub-Advisor. Such services
may include, but are not limited to, any one or more of the following: reports
on industries and companies, economic analyses and review of business
conditions, portfolio strategy, analytic computer software, account performance
services, computer terminals and various trading and/ or quotation equipment.
They also include advice from broker-dealers as to the value of securities,
availability of securities, availability of buyers, and availability of sellers.
In addition, they include recommendations as to purchase and sale of individual
securities and timing of such transactions. 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 its other clients and may not in all cases benefit the
Fund directly.
The Investment Manager and Sub-Advisor currently serves as investment
advisors to a number of clients, including other investment companies, and may
in the future act as investment advisor to others. It is the practice of the
Investment Manager and Sub-Advisor to cause purchase and sale transactions to be
allocated among the Fund and others whose assets it manages in such manner as it
deems equitable. In making such allocations among the Fund and other client
accounts, various factors may be considered, including the respective investment
objectives, the relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment, the size of investment
commitments generally held and the opinions of the persons responsible for
managing the portfolios of the Fund and other client accounts. In the case of
certain initial and secondary public offerings, the Investment Manager utilizes
a pro rata allocation process based on the size of the funds involved and the
number of shares available from the public offering.
D. DIRECTED BROKERAGE
During the fiscal year ended January 31, 1999, the Fund paid $579,813 in
brokerage commissions in connection with transactions in the aggregate amount of
$167,721,535 to brokers because of research services provided.
E. REGULAR BROKER-DEALERS
During the fiscal year ended January 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.
VII. CAPITAL STOCK AND OTHER SECURITIES
- --------------------------------------------------------------------------------
The shareholders of the Fund are entitled to a full vote for each full share
of beneficial interest held. The Fund is authorized to issue an unlimited number
of shares of beneficial interest. All shares of beneficial interest of the Fund
are of $0.01 par value and are equal as to earnings, assets and voting
privileges except that each Class will have exclusive voting privileges with
respect to matters relating to distribution expenses borne solely by such Class
or any other matter in which the interests of one Class differ from the
interests of any other Class. In addition, Class B shareholders will have the
right to vote on any proposed material increase in Class A's expenses, if such
proposal is submitted separately to Class A shareholders. Also, Class A, Class B
and Class C bear expenses related to the distribution of their respective
shares.
28
<PAGE>
The Fund's Declaration of Trust permits the Trustees to authorize the
creation of additional series of shares (the proceeds of which would be invested
in separate, independently managed portfolios) and additional Classes of shares
within any series. The Trustees have not presently authorized any such
additional series or Classes of shares other than as set forth in the
PROSPECTUS.
The Fund is not required to hold annual meetings of shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the Investment Company Act or the Declaration of
Trust. Under certain circumstances, the Trustees may be removed by action of the
Trustees or by the shareholders. In addition, under certain circumstances the
shareholders may call a meeting to remove 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.
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. Under certain circumstances the Trustees may be removed by action of the
Trustees. The shareholders also have the right under certain circumstances to
remove the Trustees in accordance with the provisions of Section 16(c) of the
Investment Company Act of 1940. 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.
VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
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A. PURCHASE/REDEMPTION OF SHARES
Information concerning how Fund shares are offered to the public (and how
they are redeemed and exchanged) is provided in the Fund's PROSPECTUS.
TRANSFER AGENT AS AGENT. With respect to the redemption or repurchase of
Fund shares, the application of proceeds to the purchase of new shares in the
Fund or any other Morgan Stanley Dean Witter 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
29
<PAGE>
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.
TRANSFERS OF SHARES. In the event a shareholder requests a transfer of Fund
shares to a new registration, the shares will be transferred without sales
charge at the time of transfer. With regard to the status of shares which are
either subject to the CDSC or free of such charge (and with regard to the length
of time shares subject to the charge have been held), any transfer involving
less than all of the shares in an account will be made on a pro rata basis (that
is, by transferring shares in the same proportion that the transferred shares
bear to the total shares in the account immediately prior to the transfer). The
transferred shares will continue to be subject to any applicable CDSC as if they
had not been so transferred.
EXCHANGING SHARES OF CLASSES WITH A CDSC
When exchanging shares of a Class of the Fund that imposes a CDSC, shares
that are not subject to a CDSC because they were (i) purchased more than one
year ago (for Class A and Class C) or six years ago (for Class B) or (ii)
acquired through reinvestment of dividends or distributions (all such shares
referred to as "Free Shares") will be exchanged first. After exchanging such
Free Shares the shares subject to a CDSC that were held the longest will be
exchanged next. Shares purchased during the same month are deemed to be held for
the same length of time. (For shares held for the same length of time but
subject to different CDSC rates, the shares with the lower CDSC rate will be
exchanged first.) When exchanging shares subject to a CDSC, you should know that
the CDSC rate will be calculated on such exchanged shares based on the lesser
of: (a) the purchase price of those shares; or (b) their current net asset value
at the time of the exchange. Accordingly, any appreciation in value on such
exchanged shares are not subject to a CDSC. When exchanging a portion of shares
deemed to be held for the same length of time, shares representing any
appreciation in value (and therefore, such shares will not be subject to any
CDSC) will be exchanged first.
B. OFFERING PRICE
The Fund's Class B, Class C and Class D shares are offered at net asset
value per share and the Class A shares are offered at net asset value per share
plus any applicable FSC which is distributed among the Fund's distributor, Dean
Witter Reynolds and other authorized dealers as described in Section "V.
Management, Investment Advice and Other Services--F. Rule 12b-1 Plan." The price
of Fund shares, called "net asset value," is based on the value of the Fund's
portfolio securities. Net asset value per share of each Class is calculated by
dividing the value of the portion of the Fund's securities and other assets
attributable to that Class, less the liabilities attributable to that Class, by
the number of shares of that Class outstanding. The assets of each Class of
shares are invested in a single portfolio. The net asset value of each Class,
however, will differ because the Classes have different ongoing fees.
In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
stock exchange is valued at its latest sale price on that exchange, prior to the
time when assets are valued; if there were no sales that day, the security is
valued at the latest bid price (in cases where a security is traded on more than
one exchange, the security is valued on the exchange designated as the primary
market pursuant to procedures adopted by the Trustees); and (2) all other
portfolio securities for which over-the-counter market quotations are readily
available are valued at the latest bid price. When market quotations are not
readily available, including circumstances under which it is determined by the
Investment Manager or 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.
30
<PAGE>
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.
Listed options on debt securities are valued at the latest sale price on the
exchange on which they are listed unless no sales of such options have taken
place that day, in which case they will be valued at the mean between their
latest bid and asked prices. Unlisted options on debt securities and all options
on equity securities are valued at the mean between their latest bid and asked
prices. Futures are valued at the latest sale price on the commodities exchange
on which they trade unless the Trustees determine such price does not reflect
their market value, in which case they will be valued at their fair value as
determined in good faith under procedures established by and under the
supervision of the Trustees.
IX. TAXATION OF THE FUND AND SHAREHOLDERS
- --------------------------------------------------------------------------------
The Fund generally will make two basic types of distributions: ordinary
dividends and long-term capital gain distributions. These two types of
distributions are reported differently on a shareholder's income tax return and
they are also subject to different rates of tax. The tax treatment of the
investment activities of the Fund will affect the amount and timing and
character of the distributions made by the Fund. Tax issues relating to the Fund
are not generally a consideration for shareholders such as tax exempt entities
and tax-advantaged retirement vehicles such as an IRA or 401(k) plan.
Shareholders are urged to consult their own tax professionals regarding specific
questions as to federal, state or local taxes.
INVESTMENT COMPANY TAXATION. The Fund intends to remain qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986. As such, the Fund will not be subject to federal income tax on its net
investment income and capital gains, if any, to the extent that it distributes
such income and capital gains to its shareholders.
The Fund generally intends to distribute sufficient income and gains so that
the Fund will not pay corporate income tax on its earnings. The Fund also
generally intends to distribute to its shareholders in each calendar year a
sufficient amount of ordinary income and capital gains to avoid the imposition
of a 4% excise tax. However, the Fund may instead determine to retain all or
part of any net long-term capital gains in any year for reinvestment. In such
event, the Fund will pay federal income tax (and possibly excise tax) on such
retained gains.
Gains or losses on sales of securities by the Fund will be long-term capital
gains or losses if the securities have a tax holding period of more than one
year. Gains or losses on the sale of securities with a tax holding period of one
year or less will be short-term gains or losses.
31
<PAGE>
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 Adviser 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 Taxpayer Relief Act of 1997 reduced the
maximum tax on long-term capital gains applicable to individuals from 28% to
20%.
Shareholders are generally taxed on any ordinary dividend or capital gain
distributions from the Fund in the year they are actually distributed. However,
if any such dividends or distributions are declared in October, November or
December and paid in January then such amounts will be treated for tax purposes
as received by the shareholders on December 31, to shareholders of record of
such month.
Subject to certain exceptions, a corporate shareholder may be eligible for a
70% dividends received deduction to the extent that the Fund earns and
distributes qualifying dividends from its investments. Distributions of net
capital gains by the Fund will not be eligible for the dividends received
deduction.
Shareholders who are not citizens or residents of the United States and
certain foreign entities may be subject to withholding of United States tax on
distributions made by the Fund of investment income and short term capital
gains.
After the end of each calendar year, shareholders will be sent 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. Any loss realized by shareholders upon a
32
<PAGE>
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 "total return" in advertisements
and sales literature. These figures are computed separately for Class A, Class
B, Class C and Class D shares. The Fund's "average annual total return"
represents an annualization of the Fund's total return over a particular period
and is computed by finding the annual percentage rate which will result in the
ending redeemable value of a hypothetical $1,000 investment made at the
beginning of a one, five or ten year period, or for the period from the date of
commencement of operations, if shorter than any of the foregoing. The ending
redeemable value is reduced by any contingent deferred sales charge ("CDSC") at
the end of the one, five, ten year or other period. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involves a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment (which in the case of Class A shares is reduced by the Class A
initial sales charge), taking a root of the quotient (where the root is
equivalent to the number of years in the period) and subtracting 1 from the
result. Based on this calculation the average annual total returns for Class B
for the one year and the life of the Fund (which commenced on December 30, 1992)
periods ended January 31, 1999 were -43.11% and -4.57%, respectively. The
average annual total returns of Class A for the fiscal year ended January 31,
1999 and for the period July 28, 1997 (inception of the Class) through January
31, 1999 were -42.79% and -40.50%, respectively. The average annual total
returns of Class C for the fiscal year ended January 31, 1999 and for the period
July 28, 1997 (inception of the Class) through January 31, 1999 were -40.76% and
- -38.84%, respectively. The average annual total returns of Class D for the
fiscal year ended January 31, 1999 and for the period July 28, 1997 (inception
of the Class) through January 31, 1999 were -39.56% and -38.22%, respectively.
In addition, the Fund may advertise its total return for each Class over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. These calculations may or may not reflect the
imposition of the maximum front-end sales charge for Class A or the deduction of
the CDSC for each of Class B and Class C which, if reflected, would reduce the
performance quoted. For example, the average annual total return of the Fund may
be calculated in the manner described above,
33
<PAGE>
but without deduction for any applicable sales charge. Based on this
calculation, the average annual total returns of Class B for the one year, and
the life of the Fund (which commenced on December 30, 1992) periods ended
January 31, 1999 were -40.12% and -4.57%, respectively. The average annual total
returns of Class A for the fiscal year ended January 31, 1999 and for the period
July 28, 1997 through January 31, 1999 were -39.62% and -38.33%, respectively.
The average annual total returns of Class C for the fiscal year ended January
31, 1999 and for the period July 28, 1997 through January 31, 1999 were -40.17%
and -38.84%, respectively. The average annual total returns of Class D for the
fiscal year ended January 31, 1999 and for the period July 28, 1997 through
January 31, 1999 were -39.56% and -38.22%, respectively.
In addition, the Fund may compute its aggregate total return for each Class
for specified periods by determining the aggregate percentage rate which will
result in the ending value of a hypothetical $1,000 investment made at the
beginning of the period. For the purpose of this calculation, it is assumed that
all dividends and distributions are reinvested. The formula for computing
aggregate total return involves a percentage obtained by dividing the ending
value (without reduction for any sales charge) by the initial $1,000 investment
and subtracting 1 from the result. Based on their foregoing calculation, the
total returns for Class B for the one year five year and the life of the Fund
(which commenced on December 30, 1992) periods ended January 31, 1999 were
- -40.12%, -53.64% and -24.80%, respectively. The total returns of Class A for the
fiscal year ended January 31, 1999 and for the period July 28, 1997 through
January 31, 1999 were -39.62% and -51.84%, respectively. The total returns of
Class C for the fiscal year ended January 31, 1999 and for the period July 28,
1997 through January 31, 1999 were -40.17% and -52.43%, respectively. The total
returns of Class D for the fiscal year ended January 31, 1999 and for the period
July 28, 1997 through January 31, 1999 were -39.56% and -51.71%, respectively.
The Fund may also advertise the growth of hypothetical investments of
$10,000, $50,000 and $100,000 in each Class of shares of the Fund by adding 1 to
the Fund's aggregate total return to date (expressed as a decimal and without
taking into account the effect of any applicable CDSC) and multiplying by
$9,475, $48,000 and $97,000 in the case of Class A (investments of $10,000,
$50,000 and $100,000 adjusted for the initial sales charge) or by $10,000,
$50,000 and $100,000 in the case of each of Class B, Class C and Class D, as the
case may be. Investments of $10,000, $50,000 and $100,000 in each Class at
inception of the Class would have declined to the following amounts at January
31, 1999:
<TABLE>
<CAPTION>
INVESTMENT AT INCEPTION OF:
INCEPTION -------------------------------
CLASS DATE: $10,000 $50,000 $100,000
- ------------ --------- ------- -------- --------
<S> <C> <C> <C> <C>
Class A..... 7/28/97 $4,563 $23,117 $46,715
Class B..... 12/30/92 7,520 37,600 75,200
Class C..... 7/28/97 4,757 23,785 47,570
Class D..... 7/28/97 4,829 24,145 48,290
</TABLE>
The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by recognized organizations.
XII. FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
EXPERTS. The financial statements of the Fund for the fiscal year ended
January 31, 1999 included in this STATEMENT OF ADDITIONAL INFORMATION and
incorporated by reference in the PROSPECTUS are included herein 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.
34
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS JANUARY 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS (84.6%)
ARGENTINA (12.9%)
ALCOHOLIC BEVERAGES
92,200 Quilmes Industrial S.A. (ADR)....................................................... $ 737,600
------------
BANKING
80,598 Banco de Galicia y Buenos Aires S.A. de C.V. (ADR).................................. 906,728
58,950 Banco Frances del Rio de La Plato S.A. (ADR)........................................ 921,094
------------
1,827,822
------------
INTEGRATED OIL COMPANIES
145,474 Yacimentos Petroliferos Fiscales S.A. (ADR)......................................... 4,636,984
------------
MULTI-SECTOR COMPANIES
709,774 Perez Companc S.A. (Class B)........................................................ 2,893,457
------------
OIL/GAS TRANSMISSION
63,700 Transportadora de Gas del Sur S.A. (ADR)............................................ 609,131
------------
STEEL/IRON ORE
152,280 Siderar S.A.I.C. (Class A).......................................................... 220,892
------------
TELECOMMUNICATIONS
52,140 Telecom Argentina Stet - France Telecom S.A. (ADR).................................. 1,238,325
63,135 Telefonica de Argentina S.A. (ADR).................................................. 1,558,645
------------
2,796,970
------------
TOTAL ARGENTINA..................................................................... 13,722,856
------------
BRAZIL (21.9%)
BANKING
3,997,156 Banco Itau S.A. (Pref.)............................................................. 1,197,216
------------
BUILDING MATERIALS
3,469,000 Companhia Cimento Portland Itau (Pref.)............................................. 242,998
------------
CELLULAR TELEPHONE
49,422,000 Tele Celular Sul Participacoes S.A.*................................................ 38,917
268,758,140 Tele Celular Sul Participacoes S.A. (Pref.)*........................................ 412,875
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
49,422,000 Telemig Celular Participacoes S.A.*................................................. $ 34,619
268,758,140 Telemig Celular Participacoes S.A. (Pref.)*......................................... 190,857
49,422,000 Telesudeste Celular Participacoes S.A.*............................................. 78,550
40,777,469 Telesudeste Celular Participacoes S.A. (Pref.)*..................................... 118,195
------------
874,013
------------
ELECTRIC UTILITIES
106,623 Companhia Energetica de Minas Gerais S.A. (Pref.) (ADR)............................. 1,319,460
272,800,000 Companhia Paranaense de Energia - Copel (Class B) (Pref.)........................... 1,070,114
10,515,000 Eletropaulo Metropolitana (Pref.)................................................... 181,295
------------
2,570,869
------------
INTEGRATED OIL COMPANIES
27,896,000 Petroleo Brasileiro S.A. (Pref.).................................................... 1,846,257
------------
MULTI-SECTOR COMPANIES
2,652,300 Itausa Investimentos Itau S.A. (Pref.).............................................. 896,913
------------
OTHER METALS/MINERALS
281,528 Companhia Vale do Rio Doce (Class A) (Pref.)........................................ 4,217,480
266,358 Companhia Vale do Rio Doce S.A. 12/31/99 (Debentures)*.............................. --
------------
4,217,480
------------
OTHER TELECOMMUNICATIONS
49,422,000 Embratel Participacoes S.A.*........................................................ 310,141
173,348,140 Embratel Participacoes S.A. (Pref.)*................................................ 1,942,839
49,422,000 Tele Centro Sul Participacoes S.A.*................................................. 171,903
268,758,140 Tele Centro Sul Participacoes S.A. (Pref.)*......................................... 1,791,721
20,752,000 Tele Norte Leste Participacoes S.A.*................................................ 112,281
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
35
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS JANUARY 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
153,477,469 Tele Norte Leste Participacoes S.A. (Pref.)*........................................ $ 1,534,775
49,422,000 Telesp Participacoes S.A.*.......................................................... 465,569
268,758,140 Telesp Participacoes S.A. (Pref.)*.................................................. 4,674,054
------------
11,003,283
------------
PAPER
37,960,000 Votorantim Celulose e Papel S.A. (Pref.)............................................ 421,778
------------
TOTAL BRAZIL........................................................................ 23,270,807
------------
CHILE (5.2%)
ALCOHOLIC BEVERAGES
38,100 Vina Concha Y Toro (ADR)............................................................ 928,688
------------
BANKING
76,040 Banco Santander Chile (ADR)......................................................... 1,064,560
------------
BEVERAGES - NON-ALCOHOLIC
83,240 Embotelladora Andina S.A. (Series A) (ADR).......................................... 1,165,360
------------
ELECTRIC UTILITIES
31,020 Gener S.A. (ADR).................................................................... 418,770
------------
FOOD CHAINS
62,560 Distribucion Y Servicio D&S S.A. (ADR).............................................. 672,520
------------
MAJOR PHARMACEUTICALS
71,450 Laboratorio Chile S.A. (ADR)........................................................ 857,400
------------
TELECOMMUNICATIONS
20,968 Compania de Telecommunicaciones de Chile S.A. (ADR)................................. 427,223
------------
TOTAL CHILE......................................................................... 5,534,521
------------
COLOMBIA (1.9%)
ALCOHOLIC BEVERAGES
342,370 Bavaria S.A......................................................................... 1,256,802
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
BANKING
141,300 Banco de Bogota..................................................................... $ 397,965
68,335 Bancolombia S.A. (ADR).............................................................. 328,862
------------
726,827
------------
TOTAL COLOMBIA...................................................................... 1,983,629
------------
MEXICO (41.2%)
ALCOHOLIC BEVERAGES
130,860 Fomento Economico Mexicano S.A. de C.V. (ADR)....................................... 2,895,277
2,045,600 Grupo Modelo S.A. de C.V. (Series C)................................................ 4,552,732
------------
7,448,009
------------
BEVERAGES - NON-ALCOHOLIC
82,400 Coca-Cola Femsa S.A. (ADR).......................................................... 1,035,150
------------
BUILDING MATERIALS
368,770 Apasco S.A. de C.V.................................................................. 1,332,114
------------
CONSUMER SUNDRIES
1,213,300 Kimberly-Clark de Mexico S.A. de C.V. (A Shares).................................... 3,508,655
------------
MEDIA CONGLOMERATES
215,290 Grupo Televisa S.A. de C.V. (GDR)................................................... 5,516,806
------------
MULTI-SECTOR COMPANIES
253,799 Grupo Carso S.A. de C.V. (Series A1)................................................ 726,428
------------
PACKAGED FOODS
1,938,200 Grupo Industrial Bimbo S.A. de C.V. (Series A)...................................... 3,768,510
12,740 Grupo Industrial Maseca S.A. de C.V. (ADR).......................................... 155,269
244,600 Grupo Industrial Maseca S.A. de C.V. (B Shares)..................................... 202,787
------------
4,126,566
------------
RETAIL
5,388,918 Cifra S.A. de C.V. (Series C)....................................................... 5,988,869
791,200 Organizacion Soriana S.A. de C.V. (Series B)........................................ 2,334,868
------------
8,323,737
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
36
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS JANUARY 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS
228,778 Telefonos de Mexico S.A. de C.V. (Series L) (ADR)................................... $ 11,696,275
------------
TOTAL MEXICO........................................................................ 43,713,740
------------
PERU (1.5%)
BUILDING MATERIALS
554,799 Cementos Lima, S.A.................................................................. 575,347
------------
PRECIOUS METALS
160,369 Compania de Minas Buenaventura S.A. (B Shares)...................................... 974,093
------------
TOTAL PERU.......................................................................... 1,549,440
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL COMMON AND PREFERRED STOCKS
(IDENTIFIED COST $100,493,613) (a)........................................................ 84.6 % 89,774,993
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 15.4 16,335,027
------ -------------
NET ASSETS................................................................................ 100.0 % $ 106,110,020
------ -------------
------ -------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
GDR Global Depository Receipt.
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $10,330,116 and the
aggregate gross unrealized depreciation is $21,048,736, resulting in net
unrealized depreciation of $10,718,620.
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JANUARY 31, 1999:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO IN DELIVERY APPRECIATION/
RECEIVE EXCHANGE FOR DATE DEPRECIATION
- ----------------------------------------------------
<S> <C> <C> <C>
MXN 965,275 $ 95,185 02/01/99 $ 85
MXN 1,080,847 $ 107,376 02/02/99 (700)
-----
Net unrealized depreciation... $(615)
-----
-----
</TABLE>
CURRENCY ABBREVIATION:
<TABLE>
<S> <C>
MXN Mexican Peso.
</TABLE>
SUMMARY OF INVESTMENTS
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
---------------------------------------------------------------------------------
<S> <C> <C>
Alcoholic Beverages................................................................ $10,371,099 9.8 %
Banking............................................................................ 4,816,425 4.5
Beverages - Non-Alcoholic.......................................................... 2,200,510 2.1
Building Materials................................................................. 2,150,459 2.0
Cellular Telephone................................................................. 874,013 0.8
Consumer Sundries.................................................................. 3,508,655 3.3
Electric Utilities................................................................. 2,989,639 2.8
Food Chains........................................................................ 672,520 0.6
Integrated Oil Companies........................................................... 6,483,241 6.1
Major Pharmaceuticals.............................................................. 857,400 0.8
Media Conglomerates................................................................ 5,516,806 5.2
Multi-Sector Companies............................................................. 4,516,798 4.3
Oil/Gas Transmission............................................................... 609,131 0.6
Other Metals/Minerals.............................................................. 4,217,480 4.0
Other Telecommunications........................................................... 11,003,283 10.4
Packaged Foods..................................................................... 4,126,566 3.9
Paper.............................................................................. 421,778 0.4
Precious Metals.................................................................... 974,093 0.9
Retail............................................................................. 8,323,737 7.8
Steel/Iron Ore..................................................................... 220,892 0.2
Telecommunications................................................................. 14,920,468 14.1
----------- ---
$89,774,993 84.6 %
----------- ---
----------- ---
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
---------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks...................................................................... $67,716,166 63.8 %
Preferred Stocks................................................................... 22,058,827 20.8
----------- ---
$89,774,993 84.6 %
----------- ---
----------- ---
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
37
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $100,493,613).............................................................. $ 89,774,993
Cash.......................................................................................... 15,982,330
Receivable for:
Investments sold.......................................................................... 1,384,207
Dividends................................................................................. 207,441
Shares of beneficial interest sold........................................................ 32,325
Interest.................................................................................. 27,666
Prepaid expenses and other assets............................................................. 67,477
------------
TOTAL ASSETS............................................................................. 107,476,439
------------
LIABILITIES:
Payable for:
Investments purchased..................................................................... 602,521
Shares of beneficial interest repurchased................................................. 372,157
Plan of distribution fee.................................................................. 96,924
Management fee............................................................................ 72,734
Investment advisory fee................................................................... 48,489
Accrued expenses and other payables........................................................... 173,594
------------
TOTAL LIABILITIES........................................................................ 1,366,419
------------
NET ASSETS............................................................................... $106,110,020
------------
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................... $229,904,609
Net unrealized depreciation................................................................... (10,874,590)
Net investment loss........................................................................... (854,690)
Accumulated net realized loss................................................................. (112,065,309)
------------
NET ASSETS............................................................................... $106,110,020
------------
------------
CLASS A SHARES:
Net Assets.................................................................................... $58,091
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 7,929
NET ASSET VALUE PER SHARE................................................................ $7.33
------------
------------
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET
ASSET VALUE)........................................................................... $7.74
------------
------------
CLASS B SHARES:
Net Assets.................................................................................... $105,678,293
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 14,598,716
NET ASSET VALUE PER SHARE................................................................ $7.24
------------
------------
CLASS C SHARES:
Net Assets.................................................................................... $368,797
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 50,934
NET ASSET VALUE PER SHARE................................................................ $7.24
------------
------------
CLASS D SHARES:
Net Assets.................................................................................... $4,839
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 658
NET ASSET VALUE PER SHARE................................................................ $7.35
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
38
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 1999
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $515,400 foreign withholding tax)........................................... $ 6,516,477
Interest...................................................................................... 306,528
------------
TOTAL INCOME............................................................................. 6,823,005
------------
EXPENSES
Plan of distribution fee (Class A shares)..................................................... 213
Plan of distribution fee (Class B shares)..................................................... 1,960,820
Plan of distribution fee (Class C shares)..................................................... 6,369
Management fee................................................................................ 1,476,124
Investment advisory fee....................................................................... 984,082
Transfer agent fees and expenses.............................................................. 547,257
Custodian fees................................................................................ 391,563
Foreign exchange provisional tax.............................................................. 139,879
Shareholder reports and notices............................................................... 120,949
Professional fees............................................................................. 83,776
Registration fees............................................................................. 80,214
Trustees' fees and expenses................................................................... 31,118
Other......................................................................................... 36,594
------------
TOTAL EXPENSES........................................................................... 5,858,958
------------
NET INVESTMENT INCOME.................................................................... 964,047
------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss on:
Investments............................................................................... (14,274,867)
Foreign exchange transactions............................................................. (3,117,469)
------------
NET LOSS................................................................................. (17,392,336)
------------
Net change in unrealized appreciation/depreciation on:
Investments............................................................................... (69,549,574)
Translation of forward foreign currency contracts, other assets and liabilities
denominated in foreign currencies....................................................... 1,237,888
------------
NET DEPRECIATION......................................................................... (68,311,686)
------------
NET LOSS................................................................................. (85,704,022)
------------
NET DECREASE.................................................................................. $(84,739,975)
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
39
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
JANUARY 31, 1999 JANUARY 31, 1998*
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss)...................... $ 964,047 $ (2,058,685)
Net realized gain (loss).......................... (17,392,336) 25,945,579
Net change in unrealized appreciation............. (68,311,686) (8,606,911)
---------------------- ----------------------
NET INCREASE (DECREASE)...................... (84,739,975) 15,279,983
Net decrease from transactions in shares of
beneficial interest............................. (82,770,172) (12,503,040)
---------------------- ----------------------
NET INCREASE (DECREASE)...................... (167,510,147) 2,776,943
NET ASSETS:
Beginning of period............................... 273,620,167 270,843,224
---------------------- ----------------------
END OF PERIOD
(INCLUDING A NET INVESTMENT LOSS OF $854,690
AND $733,256, RESPECTIVELY)................... $ 106,110,020 $ 273,620,167
---------------------- ----------------------
---------------------- ----------------------
</TABLE>
- ---------------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
40
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999
1. ORGANIZATION AND ACCOUNTING POLICIES
TCW/DW Latin American Growth Fund (the "Fund") 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
long-term capital appreciation. The Fund seeks to achieve its objective by
investing primarily in equity securities of Latin American issuers. The Fund was
organized as a Massachusetts business trust on February 25, 1992 and commenced
operations on December 30, 1992. On July 28, 1997, the Fund commenced offering
three additional classes of shares, with the then current shares designated as
Class B shares.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (in
cases where securities are traded on more than one exchange, the securities are
valued on the exchange designated as the primary market pursuant to procedures
adopted by the Trustees); (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by TCW Funds Management, Inc. (the "Adviser") 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
41
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999, CONTINUED
similar factors); and (4) short-term debt securities having a maturity date of
more than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date
except for certain dividends on foreign securities which are recorded as soon as
the Fund is informed after the ex-dividend date. Discounts are accreted over the
life of the respective securities. Interest income is accrued daily.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities, other assets and liabilities and forward foreign currency
contracts are translated at the exchange rates prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the
exchange rates prevailing on the respective dates of such transactions. The
resultant exchange gains and losses are included in the Statement of Operations
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.
E. FORWARD 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.
42
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999, CONTINUED
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.
2. MANAGEMENT AGREEMENT
Pursuant to a Management Agreement, the Fund pays Morgan Stanley Dean Witter
Services Company, Inc. (the "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: 0.75% to the portion of
daily net assets not exceeding $500 million and 0.72% to the portion of the
daily net assets exceeding $500 million.
Under the terms of the Management Agreement, the Manager maintains certain of
the Fund's book 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 Manager. The Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
3. INVESTMENT ADVISORY AGREEMENT
Pursuant to an Investment Advisory Agreement, the Fund pays the Adviser an
advisory fee, accrued daily and payable monthly, by applying the following
annual rates to the net assets of the Fund determined as of the close of each
business day: 0.50% to the portion of daily net assets not exceeding $500
million and 0.48% to the portion of the daily net assets exceeding $500 million.
43
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999, CONTINUED
Under the terms of the Investment Advisory Agreement, the Fund has retained the
Adviser to invest the Fund's assets, including placing orders for the purchase
and sale of portfolio securities. The Adviser obtains and evaluates such
information and advice relating to the economy, securities markets, and specific
securities as it considers necessary or useful to continuously manage the assets
of the Fund in a manner consistent with its investment objective. In addition,
the Adviser pays the salaries of all personnel, including officers of the Fund
who are employees of the Adviser.
4. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Manager. The Fund has adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The Plan
provides that the Fund will pay the Distributor a fee which is accrued daily and
paid monthly at the following annual rates: (i) Class A -- up to 0.25% of the
average daily net assets of Class A; (ii) Class B -- 1.0% of the lesser of: (a)
the average daily aggregate gross sales of the Class B shares since the
inception of the Fund (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net asset value of the Class B
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or waived; or (b) the average daily net assets of
Class B; and (iii) Class C -- up to 1.0% of the average daily net assets of
Class C. In the case of Class A shares, amounts paid under the Plan are paid to
the Distributor for services provided. In the case of Class B and Class C
shares, amounts paid under the Plan are paid to the Distributor for (1) services
provided and the expenses borne by it and others in the distribution of the
shares of these Classes, including the payment of commissions for sales of these
Classes and incentive compensation to, and expenses of, Morgan Stanley Dean
Witter Financial Advisors, and others who engage in or support distribution of
the shares or who service shareholder accounts, including overhead and telephone
expenses; (2) printing and distribution of prospectuses and reports used in
connection with the offering of these shares to other than current shareholders;
and (3) preparation, printing and distribution of sales literature and
advertising materials. In addition, the Distributor may utilize fees paid
pursuant to the Plan, in the case of Class B shares, to compensate Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Manager and Distributor, and other
selected broker-dealers for their opportunity costs in advancing such amounts,
which compensation would be in the form of a carrying charge on any unreimbursed
expenses.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future
44
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999, CONTINUED
distribution fees from the Fund pursuant to the Plan and contingent deferred
sales charges paid by investors upon redemption of Class B shares. Although
there is no legal obligation for the Fund to pay expenses incurred in excess of
payments made to the Distributor under the Plan and the proceeds of contingent
deferred sales charges paid by investors upon redemption of shares, if for any
reason the Plan is terminated, the Trustees will consider at that time the
manner in which to treat such expenses. The Distributor has advised the Fund
that such excess amounts, including carrying charges, totaled $19,612,473 at
January 31, 1999.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended January 31, 1999, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.23% and
1.0%, respectively.
The Distributor has informed the Fund that for the year ended January 31, 1999,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class A shares, Class B shares and Class C shares of $2, $916,003 and
$2,365, respectively and received $1,799 in front-end sales charges from sales
of the Fund's Class A shares. The respective shareholders pay such charges which
are not an expense of the Fund.
5. SECURITY TRANSACTIONS AND TRANSACTION WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended January 31, 1999 aggregated
$50,543,050 and $144,265,887, respectively.
For the year ended January 31, 1999, the Fund incurred brokerage commissions of
$13,262 with Morgan Stanley & Co., Inc., an affiliate of the Manager and
Distributor, for portfolio transactions executed on behalf of the Fund.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Manager and
Distributor, is the Fund's transfer agent. At January 31, 1999, the Fund had
transfer agent fees and expenses payable of approximately $370.
45
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999, CONTINUED
6. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
JANUARY 31, 1999 JANUARY 31, 1998*
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold............................................................. 14,534 $ 136,263 10,002 $ 142,946
Redeemed......................................................... (15,663) (144,192) (944) (11,957)
----------- -------------- ----------- ------------
Net increase (decrease) - Class A................................ (1,129) (7,929) 9,058 130,989
----------- -------------- ----------- ------------
CLASS B SHARES
Sold............................................................. 2,410,988 25,661,963 5,890,546 80,346,802
Redeemed......................................................... (10,363,817) (108,304,032) (6,955,022) (93,949,547)
----------- -------------- ----------- ------------
Net decrease - Class B........................................... (7,952,829) (82,642,069) (1,064,476) (13,602,745)
----------- -------------- ----------- ------------
CLASS C SHARES
Sold............................................................. 27,783 283,451 72,243 1,050,903
Redeemed......................................................... (42,306) (403,625) (6,786) (92,205)
----------- -------------- ----------- ------------
Net increase (decrease) -- Class C............................... (14,523) (120,174) 65,457 958,698
----------- -------------- ----------- ------------
CLASS D SHARES
Sold............................................................. -- -- 658 10,018
----------- -------------- ----------- ------------
Net decrease in Fund............................................. (7,968,481) $ (82,770,172) (989,303) $(12,503,040)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
- ---------------------
* For Class A, C, and D shares, for the period July 28, 1997, (issue date)
through January 31, 1998.
7. FEDERAL INCOME TAX STATUS
At January 31, 1999, the Fund had a net capital loss carryover of approximately
$96,436,000, which may be used to offset future capital gains to the extent
provided by regulations, which is available through January 31 of the following
years:
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
- ----------------------------------------------------------------------
2004 2005 2007
- ---------------------- ---------------------- ----------------------
<S> <C> <C>
$73,539 $ 19,839 $ 3,058
</TABLE>
Capital and foreign currency losses incurred after October 31 ("post-October"
losses) within the taxable year are deemed to arise on the first business day of
the Fund's next taxable year. The Fund incurred and will elect to defer net
capital and foreign currency losses of approximately $11,321,000 and $855,000,
respectively, during fiscal 1999.
As of January 31, 1999, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales and post-October losses.
The Fund had permanent book/tax differences primarily attributable to foreign
currency losses, a net operating loss and tax adjustments on passive
46
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999, CONTINUED
foreign investment companies sold by the Fund. To reflect reclassifications
arising from the permanent differences, paid-in-capital was charged $1,634,943,
accumulated net investment loss was charged $1,085,481 and accumulated net
realized loss was credited $2,720,424.
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 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 January 31, 1999, the Fund had outstanding forward contracts to facilitate
settlements of foreign currency denominated portfolio transactions.
At January 31, 1999, the Fund's cash balance consisted principally of interest
bearing deposits with Chase Manhattan Bank N.A., the Fund's custodian.
9. SUBSEQUENT EVENT
On February 25, 1999, the Board of Trustees of the Fund recommended that the
Fund engage Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"), an
affiliate of the Manager, to serve as the Fund's new investment manager and that
a new investment management agreement between the Fund and MSDW Advisors be
submitted to shareholders for approval. Under the new agreement, MSDW Advisors
would be responsible for all the services presently provided by both the Manager
and the Adviser. The compensation paid to MSDW Advisors would be equal to the
total compensation presently paid to both the Manager and the Adviser.
Additionally, on February 25, 1999, the Board of Trustees recommended that a new
sub-advisory agreement between MSDW Advisors and the present Adviser be
submitted to shareholders for approval. Under the new sub-advisory agreement,
MSDW Advisors would pay the new sub-adviser monthly compensation equal to 40% of
the compensation it receives under the new investment management agreement.
47
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JANUARY 31,
--------------------------------------------------------------------------
1999++ 1998*++ 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of
period....................... $ 12.09 $ 11.47 $ 9.48 $ 9.35 $ 16.05
----------- ---------- ---------- ----------- ----------
Income (loss) from investment
operations:
Net investment income
(loss)..................... 0.05 (0.09) (0.04) (0.06) (0.17)
Net realized and unrealized
gain (loss)................ (4.90) 0.71 2.03 0.19 (6.21)
----------- ---------- ---------- ----------- ----------
Total income (loss) from
investment operations........ (4.85) 0.62 1.99 0.13 (6.38)
----------- ---------- ---------- ----------- ----------
Less distributions from net
realized gain................ -- -- -- -- (0.32)
----------- ---------- ---------- ----------- ----------
Net asset value, end of
period....................... $ 7.24 $ 12.09 $ 11.47 $ 9.48 $ 9.35
----------- ---------- ---------- ----------- ----------
----------- ---------- ---------- ----------- ----------
TOTAL RETURN+................. (40.12)% 5.41% 20.99% 1.39% (40.12)%
RATIOS TO AVERAGE NET ASSETS:
Expenses...................... 2.98%(1) 2.81% 2.78% 2.98% 2.87%
Net investment income
(loss)....................... 0.49%(1) (0.64)% (0.29)% (0.61)% (1.46)%
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.................... $105,678 $272,710 $270,843 $261,066 $294,774
Portfolio turnover rate....... 27% 30% 29% 64% 145%
</TABLE>
- ---------------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
48
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD JULY
ENDED 28, 1997* THROUGH
JANUARY 31, 1999 JANUARY 31, 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 12.14 $ 15.22
------ ------
Income (loss) from investment operations:
Net investment income (loss)....................................... 0.15 (0.07)
Net realized and unrealized loss................................... (4.96) (3.01)
------ ------
Total loss from investment operations................................. (4.81) (3.08)
------ ------
Net asset value, end of period........................................ $ 7.33 $ 12.14
------ ------
------ ------
TOTAL RETURN+......................................................... (39.62)% (20.24)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 2.21%(3) 2.15%(2)
Net investment income (loss).......................................... 1.26%(3) (1.04)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $58 $110
Portfolio turnover rate............................................... 27% 30%
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 12.10 $ 15.22
------ ------
Income (loss) from investment operations:
Net investment income (loss)....................................... 0.06 (0.12)
Net realized and unrealized loss................................... (4.92) (3.00)
------ ------
Total loss from investment operations................................. (4.86) (3.12)
------ ------
Net asset value, end of period........................................ $ 7.24 $ 12.10
------ ------
------ ------
TOTAL RETURN+......................................................... (40.17)% (20.50)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 2.98%(3) 2.91%(2)
Net investment income (loss).......................................... 0.49%(3) (1.76)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $369 $792
Portfolio turnover rate............................................... 27% 30%
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
49
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 28, 1997*
ENDED THROUGH
JANUARY 31, 1999 JANUARY 31, 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 12.16 $ 15.22
------- -------
Income (loss) from investment operations:
Net investment income (loss)....................................... 0.16 (0.04)
Net realized and unrealized loss................................... (4.97) (3.02)
------- -------
Total loss from investment operations................................. (4.81) (3.06)
------- -------
Net asset value, end of period........................................ $ 7.35 $ 12.16
------- -------
------- -------
TOTAL RETURN+......................................................... (39.56)% (20.11)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.98%(3) 1.86%(2)
Net investment income (loss).......................................... 1.49%(3) (0.52)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $5 $8
Portfolio turnover rate............................................... 27% 30%
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
50
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF TCW/DW LATIN AMERICAN GROWTH FUND
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 TCW/DW Latin American Growth Fund
(the "Fund") at January 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 periods
indicated, 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 January
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
MARCH 12, 1999
51
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
(PROPOSED TO BE RENAMED
"MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND")
PART C OTHER INFORMATION
Item 23. EXHIBITS
1(a). Declaration of Trust of the Registrant, dated February 25, 1992, is
incorporated by reference to Exhibit 1 of Post-Effective Amendment
No. 4 to the Registration Statement on Form N-1A, filed on March
27, 1996.
1(b). Instrument Establishing and Designating Additional Classes is
incorporated by reference to Exhibit 1 of Post-Effective Amendment
No. 6 to the Registration Statement on Form N-1A, filed on July 22,
1997.
1(c). Form of Amendment dated June 25, 1999 to the Declaration of Trust
of the Registrant, to be filed herein.
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. 9 to the Registration Statement on Form N-1A, filed
on May 28, 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, to
be filed herein.
4(b). Form of Sub-Advisory Agreement between Morgan Stanley Dean Witter
Advisors Inc. and TCW Funds Management Inc., dated June 28, 1999,
to be filed herein.
5(a). Amended Distribution Agreement between the Registrant and Morgan
Stanley Dean Witter Distributors Inc., dated June 22, 1998, to be
filed herein.
5(b). Selected Dealer Agreement between Morgan Stanley Dean Witter
Distributors Inc. and Dean Witter Reynolds Inc. is incorporated by
reference to Exhibit 6(b) of Post-Effective No. 4 to the
Registration Statement on Form N-1A, filed on March 27, 1996.
6. Not Applicable.
7. Custody Agreement between the Registrant and The Bank of New York
is incorporated by reference to Exhibit 8(a) of Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A, filed
on March 27, 1996.
1
<PAGE>
8(a) Amended and Restated Transfer Agency and Service Agreement is
incorporated by reference to Exhibit 8 to Post-Effective Amendment
No. 8 to the Registration Statement on Form N-1A, filed on March
30,1999.
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, to be filed herein.
9(a). Opinion of Sheldon Curtis, Esq., dated September 14, 1992, is
incorporated by reference to Exhibit 9(a) to Post-Effective
Amendment No. 9 to the Registration Statement on Form N-1A, filed
on May 28, 1999.
9(b). Opinion of Lane, Altman & Owens LLP, Massachusetts Counsel, dated
September 10, 1992, is incorporated by reference to Exhibit 9(b) to
Post-Effective Amendment No. 9 to the Registration Statement on
Form N-1A, filed on May 28, 1999.
10. Consent of Independent Accountants.
11. Not Applicable.
12. Not Applicable.
13. Form of 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, to be filed herein.
14. Amended Multi-Class Plan pursuant to Rule 18f-3, dated
June 22, 1998, to be filed herein.
Other Powers of Attorney of Trustees are incorporated by reference to
Exhibit (Other) of Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A, filed on March 27, 1996 and
filed herein.
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
2
<PAGE>
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 maintain insurance to indemnify any such person for any act for which
Registrant itself is not permitted to indemnify him.
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.
3
<PAGE>
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 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:
4
<PAGE>
<TABLE>
CLOSED-END INVESTMENT COMPANIES
<C> <S>
(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 Aggressive Equity Fund
(6) Morgan Stanley Dean Witter American Opportunities Fund
(7) Morgan Stanley Dean Witter Balanced Growth Fund
(8) Morgan Stanley Dean Witter Balanced Income Fund
(9) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(10) Morgan Stanley Dean Witter California Tax-Free Income Fund
(11) Morgan Stanley Dean Witter Capital Growth Securities
(12) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS PORTFOLIO"
(13) Morgan Stanley Dean Witter Convertible Securities Trust
(14) Morgan Stanley Dean Witter Developing Growth Securities Trust
(15) Morgan Stanley Dean Witter Diversified Income Trust
(16) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(17) Morgan Stanley Dean Witter Equity Fund
(18) Morgan Stanley Dean Witter European Growth Fund Inc.
(19) Morgan Stanley Dean Witter Federal Securities Trust
(20) Morgan Stanley Dean Witter Financial Services Trust
(21) Morgan Stanley Dean Witter Fund of Funds
(22) Morgan Stanley Dean Witter Global Dividend Growth Securities
(23) Morgan Stanley Dean Witter Global Utilities Fund
(24) Morgan Stanley Dean Witter Growth Fund
</TABLE>
5
<PAGE>
<TABLE>
<C> <S>
(25) Morgan Stanley Dean Witter Hawaii Municipal Trust
(26) Morgan Stanley Dean Witter Health Sciences Trust
(27) Morgan Stanley Dean Witter High Yield Securities Inc.
(28) Morgan Stanley Dean Witter Income Builder Fund
(29) Morgan Stanley Dean Witter Information Fund
(30) Morgan Stanley Dean Witter Intermediate Income Securities
(31) Morgan Stanley Dean Witter International Fund
(32) Morgan Stanley Dean Witter International SmallCap Fund
(33) Morgan Stanley Dean Witter Japan Fund
(34) Morgan Stanley Dean Witter Latin American Growth Fund
(35) Morgan Stanley Dean Witter Limited Term Municipal Trust
(36) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(37) Morgan Stanley Dean Witter Market Leader Trust
(38) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(39) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(40) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(41) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(42) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(43) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(44) Morgan Stanley Dean Witter North American Government Income Trust
(45) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(46) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
(47) Morgan Stanley Dean Witter Real Estate Fund
(48) Morgan Stanley Dean Witter S&P 500 Index Fund
(49) Morgan Stanley Dean Witter S&P 500 Select Fund
(50) Morgan Stanley Dean Witter Select Dimensions Investment Series
(51) Morgan Stanley Dean Witter Select Municipal Reinvestment 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 Return Trust
(60) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(61) Morgan Stanley Dean Witter U.S. Government Securities Trust
(62) Morgan Stanley Dean Witter Utilities Fund
(63) Morgan Stanley Dean Witter Value-Added Market Series
(64) Morgan Stanley Dean Witter Value Fund
(65) Morgan Stanley Dean Witter Variable Investment Series
(66) Morgan Stanley Dean Witter World Wide Income Trust
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- -------------------- ----------------------------------------------------------
<S> <C>
Mitchell M. Merin President and Chief Operating Officer of Asset Management
President, Chief of Morgan Stanley Dean Witter & Co. ("MSDW); Chairman,
Executive Officer and Chief Executive Officer and Director of Morgan
Director 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 and Discover Brokerage Index Series;
Executive Vice President and Director of Dean Witter
Reynolds Inc. ("DWR"); Director of various MSDW
subsidiaries.
Joseph J. McAlinden Vice President of the Morgan Stanley Dean Witter Funds
Executive Vice President and Discover Brokerage Index Series; Director of MSDW
and Chief Investment Trust.
Officer
Ronald E. Robison President MSDW Trust; Executive Vice President, Chief
Executive Vice President, Administrative Officer and Director of MSDW Services;
Chief Administrative Vice President of the Morgan Stanley Dean Witter Funds
Officer and Director and Discover Brokerage Index Series.
Edward C. Oelsner, III
Executive Vice President
Barry Fink Assistant Secretary of DWR; Senior Vice President,
Senior Vice President, Secretary, General Counsel and Director of MSDW
Secretary, General Services; Senior Vice President, Assistant Secretary and
Counsel and Director Assistant General Counsel of MSDW Distributors; Vice
President, Secretary and General Counsel of the Morgan
Stanley Dean Witter Funds and Discover
Brokerage Index Series.
Peter M. Avelar Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the High
Yield Group
Mark Bavoso Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Douglas Brown
Senior Vice President
7
<PAGE>
<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>
Rosalie Clough
Senior Vice President
and Director of Marketing
Richard Felegy
Senior Vice President
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
Senior Vice President Distributors and MSDW Trust and Director of MSDW Trust;
Vice President of the Morgan Stanley Dean Witter Funds
and Discover Brokerage Index Series.
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 and Discover Brokerage Index Series.
Kevin Hurley Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Jenny Beth Jones Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Michelle Kaufman Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
John B. Kemp, III President of MSDW Distributors.
Senior Vice President
Anita H. Kolleeny Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of Sector
Rotation
Jonathan R. Page Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Money
Market Group
8
<PAGE>
<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>
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
Jayne M. Stevlingson 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
Frank Bruttomesso First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
Thomas F. Caloia First Vice President and Assistant Treasurer of
First Vice President MSDW Services; Assistant Treasurer of MSDW
and Assistant Distributors; Treasurer and Chief Financial and Accounting
Treasurer Officer of the Morgan Stanley Dean Witter Funds and
Discover Brokerage Index Series.
Thomas Chronert
First Vice President
9
<PAGE>
<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>
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, the Morgan Stanley Dean
Witter Funds and Discover Brokerage Index Series.
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
Lou Anne D. McInnis First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
Carsten Otto First Vice President and Assistant Secretary of MSDW
First Vice President Services; Assistant Secretary of MSDW Distributors, the
and Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
Ruth Rossi First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
James P. Wallin
First Vice President
Robert Abreu
Vice President
Dale Albright
Vice President
Joan G. Allman
Vice President
10
<PAGE>
<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>
Andrew Arbenz
Vice President
Joseph Arcieri Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Armon Bar-Tur
Vice President
Raymond Basile
Vice President
Nancy Belza
Vice President
Maurice Bendrihem
Vice President and
Assistant Controller
Dale Boettcher
Vice President
Ronald Caldwell
Vice President
Joseph Cardwell
Vice President
Liam Carroll
Vice President
Philip Casparius
Vice President
Aaron Clark
Vice President
William Connerly
Vice President
David Dineen
Vice President
Sheila Finnerty Vice President of Morgan Stanley Dean Witter Prime
Vice President Income Trust
11
<PAGE>
<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>
Jeffrey D. Geffen
Vice President
Sandra Gelpieryn
Vice President
Charmaine George
Vice President
Michael Geringer
Vice President
Gail Gerrity
Vice President
Ellen Gold
Vice President
Stephen Greenhut
Vice President
Trey Hancock
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
Kevin Jung Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Carol Espejo-Kane
Vice President
Nancy Karole-Kennedy
Vice President
Doug Ketterer
Vice President
Paula LaCosta Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
12
<PAGE>
<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>
Kimberly LaHart
Vice President
Thomas Lawlor
Vice President
Todd Lebo Vice President and Assistant Secretary of MSDW
Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
Gerard J. Lian Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Nancy Login
Vice President
Sharon Loguercio
Vice President
Steven MacNamara
Vice President
Catherine Maniscalco Vice President of Morgan Stanley Dean Witter Natural
Vice President Resource Development Securities Inc.
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
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
13
<PAGE>
<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>
Richard Norris
Vice President
Anne Pickrell Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Dawn Rorke
Vice President
John Roscoe Vice President of Morgan Stanley Dean Witter
Vice President Real Estate Fund
Hugh Rose
Vice President
Robert Rossetti Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Carl F. Sadler
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.
Peter J. Seeley Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Robert Stearns
Vice President
Naomi Stein
Vice President
Michael Strayhorn
Vice President
Kathleen H. Stromberg Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Marybeth Swisher
Vice President
14
<PAGE>
<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>
Michael Thayer
Vice President
Robert Vanden Assem
Vice President
David Walsh
Vice President
Alice Weiss Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
John Wong
Vice President
</TABLE>
The principal address of MSDW Advisors, MSDW Services, MSDW Distributors,
DWR, the Morgan Stanley Dean Witter Funds and Discover Brokerage Index Series 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:
<TABLE>
<C> <S>
(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 Aggressive Equity Fund
(6) Morgan Stanley Dean Witter American Opportunities Fund
(7) Morgan Stanley Dean Witter Balanced Growth Fund
(8) Morgan Stanley Dean Witter Balanced Income Fund
(9) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(10) Morgan Stanley Dean Witter California Tax-Free Income Fund
(11) Morgan Stanley Dean Witter Capital Growth Securities
(12) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS PORTFOLIO"
(13) Morgan Stanley Dean Witter Convertible Securities Trust
(14) Morgan Stanley Dean Witter Developing Growth Securities Trust
(15) Morgan Stanley Dean Witter Diversified Income Trust
(16) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(17) Morgan Stanley Dean Witter Equity Fund
(18) Morgan Stanley Dean Witter European Growth Fund Inc.
(19) Morgan Stanley Dean Witter Federal Securities Trust
(20) Morgan Stanley Dean Witter Financial Services Trust
15
<PAGE>
(21) Morgan Stanley Dean Witter Fund of Funds
(22) Morgan Stanley Dean Witter Global Dividend Growth Securities
(23) Morgan Stanley Dean Witter Global Utilities Fund
(24) Morgan Stanley Dean Witter Growth Fund
(25) Morgan Stanley Dean Witter Hawaii Municipal Trust
(26) Morgan Stanley Dean Witter Health Sciences Trust
(27) Morgan Stanley Dean Witter High Yield Securities Inc.
(28) Morgan Stanley Dean Witter Income Builder Fund
(29) Morgan Stanley Dean Witter Information Fund
(30) Morgan Stanley Dean Witter Intermediate Income Securities
(31) Morgan Stanley Dean Witter International Fund
(32) Morgan Stanley Dean Witter International SmallCap Fund
(33) Morgan Stanley Dean Witter Japan Fund
(34) Morgan Stanley Dean Witter Latin American Growth Fund
(35) Morgan Stanley Dean Witter Limited Term Municipal Trust
(36) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(37) Morgan Stanley Dean Witter Market Leader Trust
(38) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(39) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(40) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(41) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(42) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(43) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(44) Morgan Stanley Dean Witter North American Government Income Trust
(45) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(46) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
(47) Morgan Stanley Dean Witter Prime Income Trust
(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 Short-Term Bond Fund
(52) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(53) Morgan Stanley Dean Witter Small Cap Growth Fund
(54) Morgan Stanley Dean Witter Special Value Fund
(55) Morgan Stanley Dean Witter Strategist Fund
(56) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(57) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(58) Morgan Stanley Dean Witter Total Return Trust
(59) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(60) Morgan Stanley Dean Witter U.S. Government Securities Trust
(61) Morgan Stanley Dean Witter Utilities Fund
(62) Morgan Stanley Dean Witter Value-Added Market Series
(63) Morgan Stanley Dean Witter Value Fund
(64) Morgan Stanley Dean Witter Variable Investment Series
(65) Morgan Stanley Dean Witter World Wide Income Trust
</TABLE>
(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.
16
<PAGE>
Name Positions and Office with MSDW Distributors
- ---- -------------------------------------------
Michael T. Gregg Vice President and Assistant Secretary.
James F. Higgins Director
Fredrick K. Kubler Senior Vice President, Assistant Secretary and Chief
Compliance Officer.
Philip J. Purcell Director
John Schaeffer Director
Charles Vadala Senior Vice President and Financial Principal.
Item 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained by the Investment Manager at its offices, except records relating to
holders of shares issued by the Registrant, which are maintained by the
Registrant's Transfer Agent, at its place of business as shown in the
prospectus.
Item 29. MANAGEMENT SERVICES
Registrant is not a party to any such management-related service contract.
Item 30. UNDERTAKINGS
Registrant hereby undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
17
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York on the 25th day of June, 1999.
TCW/DW LATIN AMERICAN GROWTH FUND
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 Chief Executive Officer,
Trustee and Chairman
By /s/ Charles A. Fiumefreddo 06/25/99
---------------------------
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By /s/ Thomas F. Caloia 06/25/99
---------------------------
Thomas F. Caloia
(3) Majority of the Trustees
Charles A. Fiumefreddo (Chairman) Richard M. DeMartini
Thomas J. Larkin, Jr. Marc I. Stern
By /s/ Barry Fink 06/25/99
---------------------------
Barry Fink
Attorney-in-Fact
John C. Argue Michael E. Nugent
Manuel H. Johnson John L. Schroeder
By /s/ David M. Butowsky 06/25/99
---------------------------
David M. Butowsky
Attorney-in-Fact
</TABLE>
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
(PROPOSED TO BE RENAMED
"MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND")
EXHIBIT INDEX
1. Form of Amendment dated June 25, 1999 to the Declaration of Trust
of the Registrant.
4 (a). Form of Investment Management Agreement between the Registrant and
Morgan Stanley Dean Witter Advisors Inc., dated June 28, 1999.
4 (b) Form of Sub-Advisory Agreement between Morgan Stanley Dean Witter
Advisors Inc. and TCW Funds Management Inc., dated June 28, 1999.
5. Amended Distribution Agreement between the Registrant and
Morgan Stanley Dean Witter Distributors Inc., dated June 22,
1998.
8. Amended and Restated Services Agreement between Morgan Stanley Dean
Witter Advisors Inc. and Morgan Stanley Dean Witter Services
Company Inc., dated June 22, 1998.
10. Consent of Independent Accountants.
13. Form of 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.
14. Amended Multi-Class Plan pursuant to Rule 18f-3, dated June 22,
1998.
Other Powers of Attorney - Messrs. Garn, Bozic, Purcell and Hedien
<PAGE>
CERTIFICATE
The undersigned hereby certifies that he is the Secretary of TCW/DW Latin
American Growth Fund (the "Trust"), an unincorporated business trust organized
under the laws of the Commonwealth of Massachusetts, that annexed hereto is an
Amendment to the Declaration of Trust of the Trust adopted by the Trustees of
the Trust on February 25, 1999 as provided in Section 9.3 of the said
Declaration, said Amendment to take effect on June 28, 1999, and I do hereby
further certify that such amendment has not been amended and is on the date
hereof in full force and effect.
Dated this 25th day of June, 1999.
----------------------
Barry Fink
Secretary
<PAGE>
AMENDMENT
Dated: June 25, 1999
To be Effective: June 28, 1999
TO
TCW/DW LATIN AMERICAN GROWTH FUND
DECLARATION OF TRUST
DATED
FEBRUARY 25, 1992
<PAGE>
Amendment dated June 25, 1999 to the Declaration of Trust
(the "Declaration") of TCW/DW Latin American Growth Fund (the "Trust")
dated February 25, 1992
WHEREAS, the Trust was established by the Declaration on the date
hereinabove set forth under the laws of the Commonwealth of Massachusetts; and
WHEREAS, the Trustees of the Trust have deemed it advisable to change the
name of the Trust to "Morgan Stanley Dean Witter Latin American Growth Fund,"
such change to be effective on June 28,1999;
NOW, THEREFORE:
1. Section 1.1 of Article I of the Declaration is hereby amended so that
that Section shall read in its entirety as follows:
"Section 1.1. NAME. The name of the Trust created hereby is the
Morgan Stanley Dean Witter Latin American Growth Fund and so far as
may be practicable the Trustees shall conduct the Trust's
activities, execute all documents and sue or be sued under that
name, which name (and the word "Trust" whenever herein used) shall
refer to the Trustees as Trustees, and not as individuals, or
personally, and shall not refer to the officers, agents, employees
or Shareholders of the Trust. Should the Trustees determine that the
use of such name is not advisable, they may use such other name for
the Trust as they deem proper and the Trust may hold its property
and conduct its activities under such other name."
2. Subsection (o) of Section 1.2 of Article I of the Declaration is hereby
amended so that that subsection shall read in its entirety as follows:
"Section 1.2. DEFINITIONS...
"(o) "TRUST" means the Morgan Stanley Dean Witter Latin American
Growth Fund."
3. Section 11.7 of Article I of the Declaration is hereby amended so that
that section shall read as follows:
"Section 11.7. USE OF THE NAME "MORGAN STANLEY DEAN WITTER." Morgan
Stanley Dean Witter & Co. ("MSDW") has consented to the use by the
Trust of the identifying name "Morgan Stanley Dean Witter," which is
a property right of MSDW. The Trust will only use the name "Morgan
Stanley Dean Witter" as a component of its name and for no other
purpose, and will not purport to grant to any third party the right
to use the name "Morgan Stanley Dean Witter" for any purpose. MSDW,
or any corporate affiliate of MSDW, may use or grant to others the
right to use
<PAGE>
the name "Morgan Stanley Dean Witter," or any combination or
abbreviation thereof, as all or a portion of a corporate or business
name or for any commercial purpose, including a grant of such right
to any other investment company. At the request of MSDW or any
corporate affiliate of MSDW, the Trust will take such action as may
be required to provide its consent to the use of the name "Morgan
Stanley Dean Witter," or any combination or abbreviation thereof, by
MSDW or any corporate affiliate of MSDW, or by any person to whom
MSDW or a corporate affiliate of MSDW shall have granted the right
to such use. Upon the termination of any investment advisory
agreement into which a corporate affiliate of MSDW and the Trust may
enter, the Trust shall, upon request of MSDW or any corporate
affiliate of MSDW, cease to use the name "Morgan Stanley Dean
Witter" as a component of its name, and shall not use the name, or
any combination or abbreviation thereof, as part of its name or for
any other commercial purpose, and shall cause its officers, Trustees
and Shareholders to take any and all actions which MSDW or any
corporate affiliate of MSDW may request to effect the foregoing and
to reconvey to MSDW any and all rights to such name."
4. The Trustees of the Trust hereby reaffirm the Declaration, as amended,
in all respects.
5. This Amendment may be executed in more than one counterpart, each of
which shall be deemed an original, but all of which together shall constitute
one and the same document.
<PAGE>
IN WITNESS WHEREOF, the undersigned, the Trustees of the Trust, have executed
this instrument this ___ day of ______ , 1999.
<TABLE>
<S> <C>
- -------------------------------- --------------------------------
John C. Argue, as Trustee Thomas E. Larkin, Jr., as Trustee
and not individually and not individually
c/o Argue, Pearson, Harbison & Meyers 865 South Figueroa Street
801 South Flower Street Los Angeles, CA 90017
Los Angeles, CA 90017
- -------------------------------- --------------------------------
Richard M. DeMartini, as Trustee Michael E. Nugent, as Trustee
and not individually and not individually
Two World Trade Center c/o Triumph Capital, L.P.
New York, New York 10048 237 Park Avenue
New York, NY 10017
- -------------------------------- --------------------------------
Charles A. Fiumefreddo, as Trustee John L. Schroeder, as Trustee
and not individually and not individually
Two World Trade Center c/o Gordon, Altman, Butowsky,
New York, NY 10048 Weitzen, Shavlov & Wein
Counsel to the Independent Trustees
114 West 47th Street
New York, NY 10036
--------------------------------
Marc I. Stern, as Trustee
and not individually
865 South Figueroa Street
Los Angeles, CA 90017
- --------------------------------
Dr. Manuel H. Johnson, as Trustee
and not individually
c/o Johnson Smick International Inc.
1133 Connecticut Avenue, NW
Washington, D.C. 20036
</TABLE>
<PAGE>
STATE OF NEW YORK )
)ss.:
COUNTY OF NEW YORK )
On this day of June, 1999, JOHN C. ARGUE, THOMAS E. LARKIN, RICHARD
M. DEMARTINI, CHARLES A. FIUMEFREDDO, MANUEL H. JOHNSON, MICHAEL E. NUGENT, MARC
I. STERN and JOHN L. SCHROEDER, known to me to be the individuals described in
and who executed the foregoing instrument, personally appeared before me and
they severally acknowledged the foregoing instrument to be their free act and
deed.
----------------------
Notary Public
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 28th day of June, 1999 by and between Morgan
Stanley Dean Witter Latin American Growth Fund, a Massachusetts business
trust (hereinafter called the "Fund"), and Morgan Stanley Dean Witter
Advisors Inc., a Delaware corporation (hereinafter called the "Investment
Manager"):
WHEREAS, The Fund is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (the "Act"); and
WHEREAS, The Investment Manager is registered as an investment advisor
under the Investment Advisors Act of 1940, and engages in the business of
acting as investment advisor; and
WHEREAS, The Fund desires to retain the Investment Manager to render
management and investment advisory services in the manner and on the terms and
conditions hereinafter set forth; and
WHEREAS, The Investment Manager desires to be retained to perform services
on said terms and conditions:
Now, Therefore, this Agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual covenants hereinafter
contained, the Fund and the Investment Manager agree as follows:
1. The Fund hereby retains the Investment Manager to act as investment
manager of the Fund and, subject to the supervision of the Board of Trustees,
to supervise the investment activities of the Fund as hereinafter set forth.
Without limiting the generality of the foregoing, the Investment Manager shall
obtain and evaluate such information and advice relating to the economy,
securities and commodities markets and securities and commodities as it deems
necessary or useful to discharge its duties hereunder; shall continuously
manage the assets of the Fund in a manner consistent with the investment
objectives and policies of the Fund; shall determine the securities and
commodities to be purchased, sold or otherwise disposed of by the Fund and the
timing of such purchases, sales and dispositions; and shall take such further
action, including the placing of purchase and sale orders on behalf of the
Fund, as the Investment Manager shall deem necessary or appropriate. The
Investment Manager shall also furnish to or place at the disposal of the Fund
such of the information, evaluations, analyses and opinions formulated or
obtained by the Investment Manager in the discharge of its duties as the Fund
may, from time to time, reasonably request.
2. The Investment Manager may, at its own expense, enter into a
Sub-Advisory Agreement with a Sub-Advisor to make determinations as to certain
or all of the securities and commodities to be purchased, sold or otherwise
disposed of by the Fund and the timing of such purchases, sales and
dispositions and to take such further action, including the placing of purchase
and sale orders on behalf of the Fund, as the Sub-Advisor, in consultation with
the Investment Manager, shall deem necessary or appropriate; provided that the
Investment Manager shall be responsible for monitoring compliance by such
Sub-Advisor with the investment policies and restrictions of the Fund and with
such other limitations or directions as the Trustees of the Fund may from time
to time prescribe.
3. The Investment Manager shall, at its own expense, maintain such staff
and employ or retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary or useful to the performance
of its obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Investment Manager shall be deemed to
include persons employed or otherwise retained by the Investment Manager to
furnish statistical and other factual data, advice regarding economic factors
and trends, information with respect to technical and scientific developments,
and such other information, advice and assistance as the Investment Manager may
desire. The Investment Manager shall, as agent for the Fund, maintain the
Fund's records and books of account (other than those maintained by the Fund's
transfer agent, registrar, custodian and other agencies). All such books and
records so maintained shall be the property of the Fund and, upon request
therefor, the Investment Manager shall surrender to the Fund such of the books
and records so requested.
1
C60036-LATINAGIMA
<PAGE>
4. The Fund will, from time to time, furnish or otherwise make available
to the Investment Manager such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as the Investment
Manager may reasonably require in order to discharge its duties and obligations
hereunder.
5. The Investment Manager shall bear the cost of rendering the investment
management and supervisory services to be performed by it under this Agreement,
and shall, at its own expense, pay the compensation of the officers and
employees, if any, of the Fund, and provide such office space, facilities and
equipment and such clerical help and bookkeeping services as the Fund shall
reasonably require in the conduct of its business. The Investment Manager shall
also bear the cost of telephone service, heat, light, power and other utilities
provided to the Fund.
6. The Fund assumes and shall pay or cause to be paid all other expenses
of the Fund, including without limitation; fees pursuant to any plan of
distribution that the Fund may adopt; the charges and expenses of any
registrar, any custodian or depository appointed by the Fund for the
safekeeping of its cash, portfolio securities or commodities and other
property, and any stock transfer or dividend agent or agents appointed by the
Fund; brokers' commissions chargeable to the Fund in connection with portfolio
transactions to which the Fund is a party; all taxes, including securities or
commodities issuance and transfer taxes, and fees payable by the Fund to
federal, state or other governmental agencies; the cost and expense of
engraving or printing certificates representing shares of the Fund; all costs
and expenses in connection with the registration and maintenance of
registration of the Fund and its shares with the Securities and Exchange
Commission and various states and other jurisdictions (including filing fees
and legal fees and disbursements of counsel); the cost and expense of printing,
including typesetting, and distributing prospectuses and statements of
additional information of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and Trustees' meetings and of
preparing, printing and mailing proxy statements and reports to shareholders;
fees and travel expenses of trustees or members of any advisory board or
committee who are not employees of the Investment Manager or any corporate
affiliate of the Investment Manager; all expenses incident to the payment of
any dividend, distribution, withdrawal or redemption, whether in shares or in
cash; charges and expenses of any outside service used for pricing of the
Fund's shares; charges and expenses of legal counsel, including counsel to the
Trustees of the Fund who are not interested persons (as defined in the Act) of
the Fund or the Investment Manager, and of independent accountants, in
connection with any matter relating to the Fund; membership dues of industry
associations; interest payable 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
related thereto); and all other charges and costs of the Fund's operation
unless otherwise explicitly provided herein.
7. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Investment Manager, the Fund shall pay to the
Investment Manager monthly compensation determined by applying the following
annual rates to the Fund's average daily net assets: 1.25% of average daily net
assets up to $500 million and 1.20% of average daily net assets in excess of
$500 million. Except as hereinafter set forth, compensation under this
Agreement shall be calculated and accrued daily and the amounts of the daily
accruals shall be paid monthly. Such calculations shall be made by applying
1/365ths of the annual rates to the Fund's net assets each day determined as of
the close of business on that day or the last previous business day. If this
Agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of the
month this Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fees as set forth above.
Subject to the provisions of paragraph 8 hereof, payment of the Investment
Manager's compensation for the preceding month shall be made as promptly as
possible after completion of the computations contemplated by paragraph 8
hereof.
8. In the event the operating expenses of the Fund, including amounts
payable to the Investment Manager pursuant to paragraph 6 hereof, for any
fiscal year ending on a date on which this Agreement
2
<PAGE>
is in effect, exceed the expense limitations applicable to the Fund imposed by
state securities laws or regulations thereunder, as such limitations may be
raised or lowered from time to time, the Investment Manager shall reduce its
management fee to the extent of such excess and, if required, pursuant to any
such laws or regulations, will reimburse the Fund for annual operating expenses
in excess of any expense limitation that may be applicable; provided, however,
there shall be excluded from such expenses the amount of any interest, taxes,
brokerage commissions, distribution fees and extraordinary expenses (including
but not limited to legal claims and liabilities and litigations costs and any
indemnification related thereto) paid or payable by the Fund. Such reduction,
if any, shall be computed and accrued daily, shall be settled on a monthly
basis, and shall be based upon the expense limitation applicable to the Fund as
at the end of the last business day of the month. Should two or more such
expense limitations be applicable as at the end of the last business day of the
month, that expense limitation which results in the largest reduction in the
Investment Manager's fee shall be applicable.
For purposes of this provision, should any applicable expense limitation
be based upon the gross income of the Fund, such gross income shall include,
but not be limited to, interest on debt securities in the Fund's portfolio
accrued to and including the last day of the Fund's fiscal year, and dividends
declared on equity securities in the Fund's portfolio, the record dates for
which fall on or prior to the last day of such fiscal year, but shall not
include gains from the sale of securities.
9. The Investment Manager will use its best efforts in the supervision and
management of the investment activities of the Fund, but in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, the Investment Manager shall not be liable to the Fund
or any of its investors for any error of judgment or mistake of law or for any
act or omission by the Investment Manager or for any losses sustained by the
Fund or its investors.
10. Nothing contained in this Agreement shall prevent the Investment
Manager or any affiliated person of the Investment Manager from acting as
investment advisor or manager for any other person, firm or corporation and
shall not in any way bind or restrict the Investment Manager or any such
affiliated person from buying, selling or trading any securities or commodities
for their own accounts or for the account of others for whom they may be
acting. Nothing in this Agreement shall limit or restrict the right of any
Director, officer or employee of the Investment Manager to engage in any other
business or to devote his time and attention in part to the management or other
aspects of any other business whether of a similar or dissimilar nature.
11. This Agreement shall remain in effect until April 30, 2000 and from
year to year thereafter provided such continuance is approved at least annually
by the vote of holders of a majority, as defined in the Investment Company Act
of 1940, as amended (the "Act"), of the outstanding voting securities of the
Fund or by the Trustees of the Fund; provided, that in either event such
continuance is also approved annually by the vote of a majority of the Trustees
of the Fund who are not parties to this Agreement or "interested persons" (as
defined in the Act) of any such party, which vote must be cast in person at a
meeting called for the purpose of voting on such approval; provided, however,
that (a) the Fund may, at any time and without the payment of any penalty,
terminate this Agreement upon thirty days' written notice to the Investment
Manager, either by majority vote of the Trustees of the Fund or by the vote of
a majority of the outstanding voting securities of the Fund; (b) this Agreement
shall immediately terminate in the event of its assignment (to the extent
required by the Act and the rules thereunder) unless such automatic
terminations shall be prevented by an exemptive order of the Securities and
Exchange Commission; and (c) the Investment Manager may terminate this
Agreement without payment of penalty on thirty days' written notice to the
Fund. Any notice under this Agreement shall be given in writing, addressed and
delivered, or mailed post-paid, to the other party at the principal office of
such party.
12. This Agreement may be amended by the parties without the vote or
consent of the shareholders of the Fund to supply any omission, to cure,
correct or supplement any ambiguous, defective or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal laws or regulations, but neither the Fund
nor the Investment Manager shall be liable for failing to do so.
3
<PAGE>
13. This Agreement shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Act, the latter shall control.
14. The Investment Manager and the Fund each agree that the name "Morgan
Stanley Dean Witter," which comprises a component of the Fund's name, is a
property right of Morgan Stanley Dean Witter & Co. ("MSDW"), the parent of the
Investment Manager. The Fund agrees and consents that (i) it will only use the
name "Morgan Stanley Dean Witter" as a component of its name and for no other
purpose, (ii) it will not purport to grant to any third party the right to use
the name "Morgan Stanley Dean Witter" for any purpose, (iii) MSDW, or any
corporate affiliate of MSDW, may use or grant to others the right to use the
name "Morgan Stanley Dean Witter," or any combination or abbreviation thereof,
as all or a portion of a corporate or business name or for any commercial
purpose, including a grant of such right to any other investment company, (iv)
at the request of MSDW or any corporate affiliate of MSDW, the Fund will take
such action as may be required to provide its consent to the use of the name
"Morgan Stanley Dean Witter," or any combination or abbreviation thereof, by
MSDW or any corporate affiliate of MSDW, or by any person to whom MSDW or a
corporate affiliate of MSDW shall have granted the right to such use, and (v)
upon the termination of any investment advisory agreement into which a
corporate affiliate of MSDW and the Fund may enter, or upon termination of
affiliation of the Investment Manager with its parent, the Fund shall, upon
request of MSDW or any corporate affiliate of MSDW, cease to use the name
"Morgan Stanley Dean Witter" as a component of its name, and shall not use the
name, or any combination or abbreviation thereof, as a part of its name or for
any other commercial purpose, and shall cause its officers, trustees and
shareholders to take any and all actions which MSDW or any corporate affiliate
of MSDW, may request to effect the foregoing and to reconvey to MSDW any and
all rights to such name.
15. The Declaration of Trust establishing Morgan Stanley Dean Witter
Latin American Growth Fund, dated February 25, 1992, on June 28, 1999, a copy
of which, together with all amendments thereto (the "Declaration"), is on
file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name Morgan Stanley Dean Witter Latin American Growth Fund
refers to the Trustees under the Declaration collectively as Trustees, but
not as individuals or personally; and no Trustee, shareholder, officer,
employee or agent of Morgan Stanley Dean Witter Latin American Growth Fund
shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or
otherwise, in connection with the affairs of said Morgan Stanley Dean Witter
Latin American Growth Fund, but the Trust Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, on June 28, 1999, in New York, New York.
MORGAN STANLEY DEAN WITTER
LATIN AMERICAN GROWTH FUND
By:
------------------------------------
Attest:
- ------------------------------------
MORGAN STANLEY DEAN WITTER ADVISORS INC.
By:
------------------------------------
Attest:
- ------------------------------------
4
<PAGE>
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 28th day of June, 1999 by and between Morgan
Stanley Dean Witter Advisors Inc., a Delaware corporation (herein referred to
as the "Investment Manager"), and TCW Funds Management, Inc., a California
Corporation, (herein referred to as the "Sub-Advisor").
WHEREAS, Morgan Stanley Dean Witter Latin American Growth Fund (herein
referred to as the "Fund") is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (the "Act"); and
WHEREAS, the Investment Manager has entered into an Investment Management
Agreement with the Fund (the "Investment Management Agreement") wherein the
Investment Manager has agreed to provide investment management services to the
Fund; and
WHEREAS, the Sub-Advisor is registered as an investment advisor under the
Investment Advisors Act of 1940, and engages in the business of acting as an
investment advisor; and
WHEREAS, the Investment Manager desires to retain the services of the
Sub-Advisor to render investment advisory services for the Fund in the manner
and on the terms and conditions hereinafter set forth; and
WHEREAS, the Sub-Advisor desires to be retained by the Investment Manager
to perform services on said terms and conditions:
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Subject to the supervision of the Fund, its officers and Trustees, and
the Investment Manager, and in accordance with the investment objectives,
policies and restrictions set forth in the then-current Registration Statement
relating to the Fund, and such investment objectives, policies and restrictions
from time to time prescribed by the Trustees of the Fund and communicated by
the Investment Manager to the Sub-Advisor, the Sub-Advisor agrees to provide
the Fund with investment advisory services with respect to the Fund's
investments to obtain and evaluate such information and advice relating to the
economy, securities markets and securities as it deems necessary or useful to
discharge its duties hereunder; to continuously manage the assets of the Fund
in a manner consistent with the investment objective and policies of the Fund;
to make decisions as to foreign currency matters and make determinations as to
forward foreign exchange contracts and options and futures contracts in foreign
currencies; shall determine the securities to be purchased, sold or otherwise
disposed of by the Fund and the timing of such purchases, sales and
dispositions; to take such further action, including the placing of purchase
and sale orders on behalf of the Fund, as it shall deem necessary or
appropriate; to furnish to or place at the disposal of the Fund and the
Investment Manager such of the information, evaluations, analyses and opinions
formulated or obtained by it in the discharge of its duties as the Fund and the
Investment Manager may, from time to time, reasonably request. The Investment
Manager and the Sub-Advisor shall each make its officers and employees
available to the other from time to time at reasonable times to review
investment policies of the Fund and to consult with each other.
2. The Sub-Advisor shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as it shall
from time to time determine to be necessary or useful to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Sub-Advisor shall be deemed to
include persons employed or otherwise retained by the Sub-Advisor to furnish
statistical and other factual data, advice regarding economic factors and
trends, information with respect to technical and scientific developments, and
such other information, advice and assistance as the Investment Manager may
desire. The Sub-Advisor shall maintain whatever records as may be required to
be maintained by it under the Act. All such records so maintained shall be made
available to the Fund, upon the request of the Investment Manager or the Fund.
3. The Fund will, from time to time, furnish or otherwise make available
to the Sub-Advisor such financial reports, proxy statements and other
information relating to the business and affairs of the Fund
1
C60036-LATINAGSUB
<PAGE>
as the Sub-Advisor may reasonably require in order to discharge its duties and
obligations hereunder or to comply with any applicable law and regulations and
the investment objectives, policies and restrictions from time to time
prescribed by the Trustees of the Fund.
4. The Sub-Advisor shall bear the cost of rendering the investment
advisory services to be performed by it under this Agreement, and shall, at its
own expense, pay the compensation of the officers and employees, if any, of the
Fund, employed by the Sub-Advisor, and such clerical help and bookkeeping
services as the Sub-Advisor shall reasonably require in performing its duties
hereunder.
5. The Fund assumes and shall pay or cause to be paid all other expenses
of the Fund, including, without limitation: any fees paid to the Investment
Manager; fees pursuant to any plan of distribution that the Fund may adopt; the
charges and expenses of any registrar, any custodian, sub-custodian or
depository appointed by the Fund for the safekeeping of its cash, portfolio
securities and other property, and any stock transfer or dividend agent or
agents appointed by the Fund; brokers' commissions chargeable to the Fund in
connection with portfolio securities transactions to which the Fund is a party;
all taxes, including securities issuance and transfer taxes, and fees payable
by the Fund to federal, state or other governmental agencies or pursuant to any
foreign laws; the cost and expense of engraving or printing certificates
representing shares of the Fund; all costs and expenses in connection with the
registration and maintenance of registration of the Fund and its shares with
the Securities and Exchange Commission and various states and other
jurisdictions or pursuant to any foreign laws (including filing fees and legal
fees and disbursements of counsel); 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 proxy statements and reports to
shareholders; fees and travel expenses of Trustees or members of any advisory
board or committee who are not employees of the Investment Manager or
Sub-Advisor; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption whether in shares or in cash; charges
and expenses of any outside service used for pricing of the Fund's shares;
charges and expenses of legal counsel, including counsel to the Trustees of the
Fund who are not interested persons (as defined in the Act) of the Fund, the
Investment Manager or the Sub-Advisor, and of independent accountants, in
connection with any matter relating to the Fund; membership dues of industry
associations; interest payable 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
related thereto); and all other charges and costs of the Fund's operation
unless otherwise explicitly provided herein.
6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Sub-Advisor, the Investment Manager shall pay to the
Sub-Advisor monthly compensation equal to 40% of its monthly compensation
receivable pursuant to the Investment Management Agreement. Any subsequent
change in the Investment Management Agreement which has the effect of raising
or lowering the compensation of the Investment Manager will have the
concomitant effect of raising or lowering the fee payable to the Sub-Advisor
under this Agreement. In addition, if the Investment Manager has undertaken in
the Fund's Registration Statement as filed under the Act (the "Registration
Statement") or elsewhere to waive all or part of its fee under the Investment
Management Agreement, the Sub-Advisor's fee payable under this Agreement will
be proportionately waived in whole or in part. The calculation of the fee
payable to the Sub-Advisor pursuant to this Agreement will be made, each month,
at the time designated for the monthly calculation of the fee payable to the
Investment Manager pursuant to the Investment Management Agreement. If this
Agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for the part of the
month this Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fee as set forth above. Subject to the provisions of
paragraph 7 hereof, payment of the Sub-Advisor's compensation for the preceding
month shall be made as promptly as possible after completion of the
computations contemplated by paragraph 7 hereof.
7. In the event the operating expenses of the Fund, including amounts
payable to the Investment Manager pursuant to the Investment Management
Agreement, for any fiscal year ending on a date on which this Agreement is in
effect, exceed the expense limitations applicable to the Fund imposed by state
2
<PAGE>
securities laws or regulations thereunder, as such limitations may be raised or
lowered from time to time, the Sub-Advisor shall reduce its advisory fee to the
extent of 40% of such excess and, if required, pursuant to any such laws or
regulations, will reimburse the Investment Manager for annual operating
expenses in the amount of 40% of such excess of any expense limitation that may
be applicable, it being understood that the Investment Manager has agreed to
effect a reduction and reimbursement of 100% of such excess in accordance with
the terms of the Investment Management Agreement; provided, however, there
shall be excluded from such expenses the amount of any interest, taxes,
brokerage commissions, distribution fees and extraordinary expenses (including
but not limited to legal claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by the Fund. Such reduction,
if any, shall be computed and accrued daily, shall be settled on a monthly
basis, and shall be based upon the expense limitation applicable to the Fund as
at the end of the last business day of the month. Should two or more such
expense limitations be applicable as at the end of the last business day of the
month, that expense limitation which results in the largest reduction in the
Investment Manager's fee or the largest expense reimbursement shall be
applicable. For purposes of this provision, should any applicable expense
limitation be based upon the gross income of the Fund, such gross income shall
include, but not be limited to, interest on debt securities in the Fund's
portfolio accrued to and including the last day of the Fund's fiscal year, and
dividends declared on equity securities in the Fund's portfolio, the record
dates for which fall on or prior to the last day of such fiscal year, but shall
not include gains from the sale of securities.
8. The Sub-Advisor will use its best efforts in the performance of
investment activities on behalf of the Fund, but in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, the Sub-Advisor shall not be liable to the Investment
Manager or the Fund or any of its investors for any error of judgment or
mistake of law or for any act or omission by the Sub-Advisor or for any losses
sustained by the Fund or its investors.
9. It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, director, officer or employee of,
or be otherwise interested in, the Sub-Advisor, and in any person controlled by
or under common control with the Sub-Advisor, and that the Sub-Advisor and any
person controlled by or under common control with the Sub-Advisor may have an
interest in the Fund. It is also understood that the Sub-Advisor and any
affiliated persons thereof or any persons controlled by or under common control
with the Sub-Advisor have and may have advisory, management service or other
contracts with other organizations and persons, and may have other interests
and businesses, and further may purchase, sell or trade any securities or
commodities for their own accounts or for the account of others for whom they
may be acting.
10. This Agreement shall remain in effect until April 30, 2000 and from
year to year thereafter provided such continuance is approved at least annually
by the vote of holders of a majority, as defined in the Act, of the outstanding
voting securities of the Fund or by the Trustees of the Fund; provided, that in
either event such continuance is also approved annually by the vote of a
majority of the Trustees of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party, which vote must
be cast in person at a meeting called for the purpose of voting on such
approval; provided, however, that (a) the Fund may, at any time and without the
payment of any penalty, terminate this Agreement upon thirty days' written
notice to the Investment Manager and the Sub-Advisor, either by majority vote
of the Trustees of the Fund or by the vote of a majority of the outstanding
voting securities of the Fund; (b) this Agreement shall immediately terminate
in the event of its assignment (within the meaning of the Act) unless such
automatic termination shall be prevented by an exemptive order of the
Securities and Exchange Commission; (c) this Agreement shall immediately
terminate in the event of the termination of the Investment Management
Agreement; (d) the Investment Manager may terminate this Agreement without
payment of penalty on thirty days' written notice to the Fund and the
Sub-Advisor and; (e) the Sub-Advisor may terminate this Agreement without the
payment of penalty on thirty days' written notice to the Fund and the
Investment Manager. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed post-paid, to the other party at the
principal office of such party.
11. This Agreement may be amended by the parties without the vote or
consent of the shareholders of the Fund to supply any omission, to cure,
correct or supplement any ambiguous, defective or
3
<PAGE>
inconsistent provision hereof, or if they deem it necessary to conform this
Agreement to the requirements of applicable federal laws or regulations, but
neither the Fund, the Investment Manager nor the Sub-Advisor shall be liable
for failing to do so.
12. This Agreement shall be construed in accordance with the law of the
State of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
MORGAN STANLEY DEAN WITTER
ADVISORS INC.
By:-------------------------------------
Attest:
--------------------------------------
TCW FUNDS MANAGEMENT, INC.
By:-------------------------------------
Attest:
--------------------------------------
Accepted and agreed to as of the day and year first above written:
MORGAN STANLEY DEAN WITTER
LATIN AMERICAN GROWTH FUND
By:-------------------------------------
Attest:
- ---------------------------------------
4
<PAGE>
MORGAN STANLEY DEAN WITTER FUNDS
DISTRIBUTION AGREEMENT
AGREEMENT made as of this 28th day of July, 1997, and amended as of June 22,
1998, between each of the open-end investment companies to which Morgan Stanley
Dean Witter Advisors Inc. acts as investment manager, that are listed on
Schedule A, as may be amended from time to time (each, a "Fund" and
collectively, the "Funds"), and Morgan Stanley Dean Witter Distributors Inc., a
Delaware corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, each Fund is registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and it is in the
interest of each Fund to offer its shares for sale continuously, and
WHEREAS, each Fund and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of each Fund's transferable
shares, of $0.01 par value (the "Shares"), to commence on the date listed above,
in order to promote the growth of each Fund and facilitate the distribution of
its shares.
NOW, THEREFORE, the parties agree as follows:
SECTION 1. APPOINTMENT OF THE DISTRIBUTOR.
(a) Each Fund hereby appoints the Distributor as the principal underwriter
and distributor of the Fund to sell Shares to the public on the terms set forth
in this Agreement and that Fund's prospectus and the Distributor hereby accepts
such appointment and agrees to act hereunder. Each Fund, during the term of this
Agreement, shall sell Shares to the Distributor upon the terms and conditions
set forth herein.
(b) The Distributor agrees to purchase Shares, as principal for its own
account, from each Fund and to sell Shares as principal to investors, and
securities dealers, including Dean Witter Reynolds Inc. ("DWR"), an affiliate of
the Distributor, upon the terms described herein and in that Fund's prospectus
(the "Prospectus") and statement of additional information included in the
Fund's registration statement (the "Registration Statement") most recently filed
from time to time with the Securities and Exchange Commission (the "SEC") and
effective under the Securities Act of 1933, as amended (the "1933 Act"), and the
1940 Act or as the Prospectus may be otherwise amended or supplemented and filed
with the SEC pursuant to Rule 497 under the 1933 Act.
SECTION 2. EXCLUSIVE NATURE OF DUTIES. The Distributor shall be the
exclusive principal underwriter and distributor of each Fund, except that the
exclusive rights granted to the Distributor to sell the Shares shall not apply
to Shares issued by each Fund: (i) in connection with the merger or
consolidation of any other investment company or personal holding company with
the Fund or the acquisition by purchase or otherwise of all (or substantially
all) the assets or the outstanding shares of any such company by the Fund; (ii)
pursuant to reinvestment of dividends or capital gains distributions; or (iii)
pursuant to the reinstatement privilege afforded redeeming shareholders.
SECTION 3. PURCHASE OF SHARES FROM EACH FUND. The Shares are offered in
four classes (each, a "Class"), as described in the Prospectus, as amended or
supplemented from time to time.
(a) The Distributor shall have the right to buy from each Fund the Shares of
the particular class needed, but not more than the Shares needed (except for
clerical errors in transmission), to fill unconditional orders for Shares of the
applicable class placed with the Distributor by investors or securities dealers.
The price which the Distributor shall pay for the Shares so purchased from the
Fund shall be the net asset value, determined as set forth in the Prospectus,
used in determining the public offering price on which such orders were based.
(b) The Shares are to be resold by the Distributor at the public offering
price of Shares of the applicable class as set forth in the Prospectus, to
investors or to securities dealers, including DWR, who
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<PAGE>
have entered into selected dealer agreements with the Distributor upon the terms
and conditions set forth in Section 7 hereof ("Selected Dealers").
(c) Each Fund shall have the right to suspend the sale of the Shares at
times when redemption is suspended pursuant to the conditions set forth in
Section 4(f) hereof. Each Fund shall also have the right to suspend the sale of
the Shares if trading on the New York Stock Exchange shall have been suspended,
if a banking moratorium shall have been declared by federal or New York
authorities, or if there shall have been some other extraordinary event which,
in the judgment of a Fund, makes it impracticable to sell its Shares.
(d) Each Fund, or any agent of a Fund designated in writing by the Fund,
shall be promptly advised of all purchase orders for Shares received by the
Distributor. Any order may be rejected by a Fund; provided, however, that a Fund
will not arbitrarily or without reasonable cause refuse to accept orders for the
purchase of Shares. The Distributor will confirm orders upon their receipt, and
each Fund (or its agent) upon receipt of payment therefor and instructions will
deliver share certificates for such Shares or a statement confirming the
issuance of Shares. Payment shall be made to the Fund in New York Clearing House
funds. The Distributor agrees to cause such payment and such instructions to be
delivered promptly to the Fund (or its agent).
(e) With respect to Shares sold by any Selected Dealer, the Distributor is
authorized to direct each Fund's transfer agent to receive instructions directly
from the Selected Dealer on behalf of the Distributor as to registration of
Shares in the names of investors and to confirm issuance of the Shares to such
investors. The Distributor is also authorized to instruct the transfer agent to
receive payment directly from the Selected Dealer on behalf of the Distributor,
for prompt transmittal to each Fund's custodian, of the purchase price of the
Shares. In such event the Distributor shall obtain from the Selected Dealer and
maintain a record of such registration instructions and payments.
SECTION 4. REPURCHASE OR REDEMPTION OF SHARES.
(a) Any of the outstanding Shares of a Fund may be tendered for redemption
at any time, and each Fund agrees to redeem its Shares so tendered in accordance
with the applicable provisions set forth in its Prospectus. The price to be paid
to redeem the Shares shall be equal to the net asset value determined as set
forth in the Prospectus less any applicable contingent deferred sales charge
("CDSC"). Upon any redemption of Shares the Fund shall pay the total amount of
the redemption price in New York Clearing House funds in accordance with
applicable provisions of the Prospectus.
(b) The redemption by a Fund of any of its Class A Shares purchased by or
through the Distributor will not affect the applicable front-end sales charge
secured by the Distributor or any Selected Dealer in the course of the original
sale, except that if any Class A Shares are tendered for redemption within seven
business days after the date of the confirmation of the original purchase, the
right to the applicable front-end sales charge shall be forfeited by the
Distributor and the Selected Dealer which sold such Shares.
(c) The proceeds of any redemption of Class A, Class B or Class C Shares
shall be paid by each Fund as follows: (i) any applicable CDSC shall be paid to
the Distributor or to the Selected Dealer, or, when applicable, pursuant to the
Rules of the Association of the National Association of Securities Dealers, Inc.
("NASD"), retained by the Fund and (ii) the balance shall be paid to the
redeeming shareholders, in each case in accordance with applicable provisions of
its Prospectus in New York Clearing House funds. The Distributor is authorized
to direct a Fund to pay directly to the Selected Dealer any CDSC payable by a
Fund to the Distributor in respect of Class A, Class B, or Class C Shares sold
by the Selected Dealer to the redeeming shareholders.
(d) The Distributor is authorized, as agent for the Fund, to repurchase
Shares, represented by a share certificate which is delivered to any office of
the Distributor in accordance with applicable provisions set forth in each
Fund's Prospectus. The Distributor shall promptly transmit to the transfer agent
of the Fund for redemption all Shares so delivered. The Distributor shall be
responsible for the accuracy of instructions transmitted to the Fund's transfer
agent in connection with all such repurchases.
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<PAGE>
(e) The Distributor is authorized, as agent for each Fund, to repurchase
Shares held in a shareholder's account with a Fund for which no share
certificate has been issued, upon the telephonic request of the shareholders, or
at the discretion of the Distributor. The Distributor shall promptly transmit to
the transfer agent of the Fund, for redemption, all such orders for repurchase
of Shares. Payment for Shares repurchased may be made by a Fund to the
Distributor for the account of the shareholder. The Distributor shall be
responsible for the accuracy of instructions transmitted to the Fund's transfer
agent in connection with all such repurchases.
(f) Redemption of its Shares or payment by a Fund may be suspended at times
when the New York Stock Exchange is closed, when trading on said Exchange is
restricted, when an emergency exists as a result of which disposal by a Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for a Fund fairly to determine the value of its net assets, or
during any other period when the SEC, by order, so permits.
(g) With respect to its Shares tendered for redemption or repurchase by any
Selected Dealer on behalf of its customers, the Distributor is authorized to
instruct the transfer agent of a Fund to accept orders for redemption or
repurchase directly from the Selected Dealer on behalf of the Distributor and to
instruct the Fund to transmit payments for such redemptions and repurchases
directly to the Selected Dealer on behalf of the Distributor for the account of
the shareholder. The Distributor shall obtain from the Selected Dealer, and
shall maintain, a record of such orders. The Distributor is further authorized
to obtain from the Fund, and shall maintain, a record of payment made directly
to the Selected Dealer on behalf of the Distributor.
SECTION 5. DUTIES OF THE FUND.
(a) Each Fund shall furnish to the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of its Shares, including one
certified copy, upon request by the Distributor, of all financial statements
prepared by the Fund and examined by independent accountants. Each Fund shall,
at the expense of the Distributor, make available to the Distributor such number
of copies of its Prospectus as the Distributor shall reasonably request.
(b) Each Fund shall take, from time to time, but subject to the necessary
approval of its shareholders, all necessary action to fix the number of its
authorized Shares and to register Shares under the 1933 Act, to the end that
there will be available for sale such number of Shares as investors may
reasonably be expected to purchase.
(c) Each Fund shall use its best efforts to pay the filing fees for an
appropriate number of its Shares to be sold under the securities laws of such
states as the Distributor and the Fund may approve. Any qualification to sell
its Shares in a state may be withheld, terminated or withdrawn by a Fund at any
time in its discretion. As provided in Section 8(c) hereof, such filing fees
shall be paid by the Fund. The Distributor shall furnish any information and
other material relating to its affairs and activities as may be required by a
Fund in connection with the sale of its Shares in any state.
(d) Each Fund shall, at the expense of the Distributor, furnish, in
reasonable quantities upon request by the Distributor, copies of its annual and
interim reports.
SECTION 6. DUTIES OF THE DISTRIBUTOR.
(a) The Distributor shall sell shares of each Fund through DWR and may sell
shares through other securities dealers and its own Financial Advisors, and
shall devote reasonable time and effort to promote sales of the Shares, but
shall not be obligated to sell any specific number of Shares. The services of
the Distributor hereunder are not exclusive and it is understood that the
Distributor may act as principal underwriter for other registered investment
companies, so long as the performance of its obligations hereunder is not
impaired thereby. It is also understood that Selected Dealers, including DWR,
may also sell shares for other registered investment companies.
3
<PAGE>
(b) Neither the Distributor nor any Selected Dealer shall give any
information or make any representations, other than those contained in the
Registration Statement or related Prospectus and any sales literature
specifically approved by the appropriate Fund.
(c) The Distributor agrees that it will at all times comply with the
applicable terms and limitations of the Rules of the Association of the NASD.
SECTION 7. SELECTED DEALERS AGREEMENTS.
(a) The Distributor shall have the right to enter into selected dealer
agreements with Selected Dealers for the sale of Shares. In making agreements
with Selected Dealers, the Distributor shall act only as principal and not as
agent for a Fund. Shares sold to Selected Dealers shall be for resale by such
dealers only at the public offering price set forth in the Prospectus. With
respect to Class A Shares, in such agreement the Distributor shall have the
right to fix the portion of the applicable front-end sales charge which may be
allocated to the Selected Dealers.
(b) Within the United States, the Distributor shall offer and sell Shares
only to Selected Dealers that are members in good standing of the NASD.
(c) The Distributor shall adopt and follow procedures, as approved by each
Fund, for the confirmation of sales of its Shares to investors and Selected
Dealers, the collection of amounts payable by investors and Selected Dealers on
such sales, and the cancellation of unsettled transactions, as may be necessary
to comply with the requirements of the NASD, as such requirements may from time
to time exist.
SECTION 8. PAYMENT OF EXPENSES.
(a) Each Fund shall bear all costs and expenses of the Fund, including fees
and disbursements of legal counsel including counsel to the Directors/Trustees
of each Fund who are not interested persons (as defined in the 1940 Act) of the
Fund or the Distributor, and independent accountants, in connection with the
preparation and filing of any required Registration Statements and Prospectuses
and all amendments and supplements thereto, and the expense of preparing,
printing, mailing and otherwise distributing prospectuses and statements of
additional information, annual or interim reports or proxy materials to
shareholders.
(b) The Distributor shall bear all expenses incurred by it in connection
with its duties and activities under this Agreement including the payment to
Selected Dealers of any sales commissions, service fees and other expenses for
sales of a Fund's Shares (except such expenses as are specifically undertaken
herein by a Fund) incurred or paid by Selected Dealers, including DWR. The
Distributor shall bear the costs and expenses of preparing, printing and
distributing any supplementary sales literature used by the Distributor or
furnished by it for use by Selected Dealers in connection with the offering of
the Shares for sale. Any expenses of advertising incurred in connection with
such offering will also be the obligation of the Distributor. It is understood
and agreed that, so long as a Fund's Plan of Distribution pursuant to Rule 12b-1
under the 1940 Act ("Rule 12b-1 Plan") continues in effect, any expenses
incurred by the Distributor hereunder may be paid in accordance with the terms
of such Rule 12b-1 Plan.
(c) Each Fund shall pay the filing fees, and, if necessary or advisable in
connection therewith, bear the cost and expense of qualifying each Fund as a
broker or dealer, in such states of the United States or other jurisdictions as
shall be selected by the Fund and the Distributor pursuant to Section 5(c)
hereof and the cost and expenses payable to each such state for continuing to
offer Shares therein until the Fund decides to discontinue selling Shares
pursuant to Section 5(c) hereof.
SECTION 9. INDEMNIFICATION.
(a) Each Fund shall indemnify and hold harmless the Distributor and each
person, if any, who controls the Distributor against any loss, liability, claim,
damage or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, claim, damage or expense and reasonable counsel
fees incurred in connection therewith) arising by reason of any person acquiring
any Shares, which may be based upon the 1933 Act, or on any other statute or at
common law, on the ground that the Registration Statement or related Prospectus
and Statement of Additional Information, as from time to time amended
4
<PAGE>
and supplemented, or the annual or interim reports to shareholders of a Fund,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading, unless such statement or omission was made in reliance
upon, and in conformity with, information furnished to the Fund in connection
therewith by or on behalf of the Distributor; provided, however, that in no case
(i) is the indemnity of a Fund in favor of the Distributor and any such
controlling persons to be deemed to protect the Distributor or any such
controlling persons thereof against any liability to a Fund or its security
holders to which the Distributor or any such controlling persons would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties or by reason of reckless disregard of its
obligations and duties under this Agreement; or (ii) is a Fund to be liable
under its indemnity agreement contained in this paragraph with respect to any
claim made against the Distributor or any such controlling persons, unless the
Distributor or any such controlling persons, as the case may be, shall have
notified the Fund in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall have
been served upon the Distributor or uch controlling persons (or after the
Distributor or such controlling persons shall have received notice of such
service on any designated agent), but failure to notify the Fund of any such
claim shall not relieve it from any liability which it may have to the person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. Each Fund will be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the defense,
of any such suit brought to enforce any such liability, but if a Fund elects to
assume the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Distributor or such controlling person or persons, defendant
or defendants in the suit. In the event the Fund elects to assume the defense of
any such suit and retain such counsel, the Distributor or such controlling
person or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, but, in case the Fund does
not elect to assume the defense of any such suit, it will reimburse the
Distributor or such controlling person or persons, defendant or defendants in
the suit, for the reasonable fees and expenses of any counsel retained by them.
Each Fund shall promptly notify the Distributor of the commencement of any
litigation or proceedings against it or any of its officers or
Directors/Trustees in connection with the issuance or sale of the Shares.
(b) (i) The Distributor shall indemnify and hold harmless each Fund and each
of its Directors/ Trustees and officers and each person, if any, who controls
the Fund against any loss, liability, claim, damage, or expense described in the
indemnity contained in subsection (a) of this Section, but only with respect to
statements or omissions made in reliance upon, and in conformity with,
information furnished to a Fund in writing by or on behalf of the Distributor
for use in connection with the Registration Statement or related Prospectus and
Statement of Additional Information, as from time to time amended, or the annual
or interim reports to shareholders.
(ii) The Distributor shall indemnify and hold harmless each Fund and
each Fund's transfer agent, individually and in its capacity as the Fund's
transfer agent, from and against any claims, damages and liabilities which arise
as a result of actions taken pursuant to instructions from, or on behalf of, the
Distributor to: (1) redeem all or a part of shareholder accounts in the Fund
pursuant to Section 4(g) hereof and pay the proceeds to, or as directed by, the
Distributor for the account of each shareholder whose Shares are so redeemed;
and (2) register Shares in the names of investors, confirm the issuance thereof
and receive payment therefor pursuant to Section 3(e) hereof.
(iii) In case any action shall be brought against a Fund or any person
so indemnified by this Section 9(b) in respect of which indemnity may be sought
against the Distributor, the Distributor shall have the rights and duties given
to a Fund, and the Fund and each person so indemnified shall have the rights and
duties given to the Distributor, by the provisions of subsection (a) of this
Section 9.
(c) If the indemnification provided for in this Section 9 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to herein, then each indemnifiying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
benefits received by a Fund on the one hand and the Distributor on the other
from the
5
<PAGE>
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of a Fund on the one hand and the Distributor on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by a Fund on the one hand and the Distributor on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Fund bear to the total
compensation received by the Distributor, in each case as set forth in the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by a Fund or the Distributor and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Each Fund and the Distributor agree that it would not be
just and equitable ifcontribution were determined by pro rata allocation or by
any other method of allocation which does not take into account the equitable
considerations referred to above. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to above shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such claim. Notwithstanding the
provisions of this subsection (c), the Distributor shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Shares distributed by it to the public were offered to the public exceeds
the amount of any damages which it has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
SECTION 10. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement
shall remain in force until April 30, 1999, and thereafter, but only so long as
such continuance is specifically approved at least annually by (i) the Board of
Directors/Trustees of each Fund, or by the vote of a majority of the outstanding
voting securities of the Fund, cast in person or by proxy, and (ii) a majority
of those Directors/ Trustees who are not parties to this Agreement or interested
persons of any such party and who have no direct or indirect financial interest
in this Agreement or in the operation of the Fund's Rule 12b-1 Plan or in any
agreement related thereto, cast in person at a meeting called for the purpose of
voting upon such approval.
This Agreement may be terminated at any time without the payment of any
penalty, by the Directors/ Trustees of a Fund, by a majority of the
Directors/Trustees of a Fund who are not interested persons of the Fund and who
have no direct or indirect financial interest in this Agreement, or by vote of a
majority of the outstanding voting securities of a Fund, or by the Distributor,
on sixty days' written notice to the other party. This Agreement shall
automatically terminate in the event of its assignment.
The terms "vote of a majority of the outstanding voting securities,"
"assignment" and "interested person," when used in this Agreement, shall have
the respective meanings specified in the 1940 Act.
SECTION 11. AMENDMENTS OF THIS AGREEMENT. This Agreement may be amended by
the parties only if such amendment is specifically approved by (i) the
Directors/Trustees of a Fund, or by the vote of a majority of outstanding voting
securities of a Fund, and (ii) a majority of those Directors/Trustees of a Fund
who are not parties to this Agreement or interested persons of any such party
and who have no direct or indirect financial interest in this Agreement or in
any Agreement related to the Fund's Rule 12b-1 Plan, cast in person at a meeting
called for the purpose of voting on such approval.
SECTION 12. ADDITIONAL FUNDS. If at any time another Fund desires to
appoint the Distributor as its principal underwriter and distributor under this
Agreement, it shall notify the Distributor in writing. If the Distributor is
willing to serve as the Fund's principal underwriter and distributor under this
Agreement, it shall notify the Fund in writing, whereupon such other Fund shall
become a Fund hereunder.
SECTION 13. GOVERNING LAW. This Agreement shall be construed in accordance
with the law of the State of New York and the applicable provisions of the 1940
Act. To the extent the applicable law of the
6
<PAGE>
State of New York, or any of the provisions herein, conflicts with the
applicable provisions of the 1940 Act, the latter shall control.
SECTION 14. PERSONAL LIABILITY. With respect to any Fund that is organized
as an unincorporated business trust under the laws of the Commonwealth of
Massachusetts, its Declaration of the Trust (each, a "Declaration") is on file
in the office of the Secretary of the Commonwealth of Massachusetts. Each
Declaration provides that the name of the Fund refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally; and
no Trustee, shareholder, officer, employee or agent of any Fund shall be held to
any personal liability, nor shall resort be had to their private property for
the satisfaction of any obligation or claim or otherwise, in connection with the
affairs of any Fund, but the Trust Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, as amended, on June 22, 1998 in New York, New York.
ON BEHALF OF THE FUNDS SET FORTH ON
SCHEDULE A, ATTACHED HERETO
By: ..................................
MORGAN STANLEY DEAN WITTER
DISTRIBUTORS INC.
By: ..................................
7
<PAGE>
MORGAN STANLEY DEAN WITTER FUNDS
DISTRIBUTION AGREEMENT
SCHEDULE A
AT JUNE 28, 1999
<TABLE>
<C> <S>
1) Morgan Stanley Dean Witter Aggressive Equity Fund
2) Morgan Stanley Dean Witter American Opportunities Fund
3) Morgan Stanley Dean Witter Balanced Growth Fund
4) Morgan Stanley Dean Witter Balanced Income Fund
5) Morgan Stanley Dean Witter California Tax-Free Income Fund
6) Morgan Stanley Dean Witter Capital Growth Securities
7) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS" PORTFOLIO
8) Morgan Stanley Dean Witter Convertible Securities Trust
9) Morgan Stanley Dean Witter Developing Growth Securities Trust
10) Morgan Stanley Dean Witter Diversified Income Trust
11) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
12) Morgan Stanley Dean Witter Equity Fund
13) Morgan Stanley Dean Witter European Growth Fund Inc.
14) Morgan Stanley Dean Witter Federal Securities Trust
15) Morgan Stanley Dean Witter Financial Services Trust
16) Morgan Stanley Dean Witter Fund of Funds
17) Morgan Stanley Dean Witter Global Dividend Growth Securities
18) Morgan Stanley Dean Witter Global Utilities Fund
19) Morgan Stanley Dean Witter Growth Fund
20) Morgan Stanley Dean Witter Health Sciences Trust
21) Morgan Stanley Dean Witter High Yield Securities Inc.
22) Morgan Stanley Dean Witter Income Builder Fund
23) Morgan Stanley Dean Witter Information Fund
24) Morgan Stanley Dean Witter Intermediate Income Securities
25) Morgan Stanley Dean Witter International Fund
26) Morgan Stanley Dean Witter International SmallCap Fund
27) Morgan Stanley Dean Witter Japan Fund
28) Morgan Stanley Dean Witter Latin American Growth Fund
29) Morgan Stanley Dean Witter Managers Focus Fund
30) Morgan Stanley Dean Witter Market Leader Trust
31) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
32) Morgan Stanley Dean Witter Mid-Cap Equity Trust
33) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
34) Morgan Stanley Dean Witter New York Tax-Free Income Fund
35) Morgan Stanley Dean Witter North American Government Income Trust
36) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
37) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
38) Morgan Stanley Dean Witter Real Estate Fund
39) Morgan Stanley Dean Witter Small Cap Growth Fund
40) Morgan Stanley Dean Witter Special Value Fund
41) Morgan Stanley Dean Witter S&P 500 Index Fund
42) Morgan Stanley Dean Witter S&P 500 Select Fund
43) Morgan Stanley Dean Witter Strategist Fund
44) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
45) Morgan Stanley Dean Witter Total Return Trust
46) Morgan Stanley Dean Witter U.S. Government Securities Trust
47) Morgan Stanley Dean Witter Utilities Fund
48) Morgan Stanley Dean Witter Value-Added Market Series
49) Morgan Stanley Dean Witter Value Fund
50) Morgan Stanley Dean Witter Worldwide High Income Fund
51) Morgan Stanley Dean Witter World Wide Income Trust
</TABLE>
8
<PAGE>
SERVICES AGREEMENT
AGREEMENT made as of the 17th day of April, 1995, and amended as of June 22,
1998, by and between Morgan Stanley Dean Witter Advisors Inc., a Delaware
corporation (herein referred to as "MSDW Advisors"), and Morgan Stanley Dean
Witter Services Company Inc., a Delaware corporation (herein referred to as
"MSDW Services").
WHEREAS, MSDW Advisors has entered into separate agreements (each such
agreement being herein referred to as an "Investment Management Agreement") with
certain investment companies as set forth on Schedule A (each such investment
company being herein referred to as a "Fund" and, collectively, as the "Funds")
pursuant to which MSDW Advisors is to perform, or supervise the performance of,
among other services, administrative services for the Funds (and, in the case of
Funds with multiple portfolios, the Series or Portfolios of the Funds (such
Series and Portfolio being herein individually referred to as "a Series" and,
collectively, as "the Series"));
WHEREAS, MSDW Advisors desires to retain MSDW Services to perform the
administrative services as described below; and
WHEREAS, MSDW Services desires to be retained by MSDW Advisors to perform
such administrative services:
Now, therefore, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. MSDW Services agrees to provide administrative services to each Fund as
hereinafter set forth. Without limiting the generality of the foregoing, MSDW
Services shall (i) administer the Fund's business affairs and supervise the
overall day-to-day operations of the Fund (other than rendering investment
advice); (ii) provide the Fund with full administrative services, including the
maintenance of certain books and records, such as journals, ledger accounts and
other records required under the Investment Company Act of 1940, as amended (the
"Act"), the notification to the Fund and MSDW Advisors of available funds for
investment, the reconciliation of account information and balances among the
Fund's custodian, transfer agent and dividend disbursing agent and MSDW
Advisors, and the calculation of the net asset value of the Fund's shares; (iii)
provide the Fund with the services of persons competent to perform such
supervisory, administrative and clerical functions as are necessary to provide
effective operation of the Fund; (iv) oversee the performance of administrative
and professional services rendered to the Fund by others, including its
custodian, transfer agent and dividend disbursing agent, as well as accounting,
auditing and other services; (v) provide the Fund with adequate general office
space and facilities; (vi) assist in the preparation and the printing of the
periodic updating of the Fund's registration statement and prospectus (and, in
the case of an open-end Fund, the statement of additional information), tax
returns, proxy statements, and reports to its shareholders and the Securities
and Exchange Commission; and (vii) monitor the compliance of the Fund's
investment policies and restrictions.
In the event that MSDW Advisors enters into an Investment Management
Agreement with another investment company, and wishes to retain MSDW Services to
perform administrative services hereunder, it shall notify MSDW Services in
writing. If MSDW Services is willing to render such services, it shall notify
MSDW Advisors in writing, whereupon such other Fund shall become a Fund as
defined herein.
2. MSDW Services shall, at its own expense, maintain such staff and employ
or retain such personnel and consult with such other persons as it shall from
time to time determine to be necessary or useful to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of MSDW Services shall be deemed to include
officers of MSDW Services and persons employed or otherwise retained by MSDW
Services (including officers and employees of MSDW Advisors, with the consent of
MSDW Advisors) to furnish services, statistical and other factual data,
information with respect to technical and scientific developments, and such
other information, advice and assistance as MSDW Services may desire. MSDW
Services shall maintain each Fund's records and books of account
1
<PAGE>
(other than those maintained by the Fund's transfer agent, registrar, custodian
and other agencies). All such books and records so maintained shall be the
property of the Fund and, upon request therefor, MSDW Services shall surrender
to MSDW Advisors or to the Fund such of the books and records so requested.
3. MSDW Advisors will, from time to time, furnish or otherwise make
available to MSDW Services such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as MSDW Services
may reasonably require in order to discharge its duties and obligations to the
Fund under this Agreement or to comply with any applicable law and regulation or
request of the Board of Directors/Trustees of the Fund.
4. For the services to be rendered, the facilities furnished, and the
expenses assumed by MSDW Services, MSDW Advisors shall pay to MSDW Services
monthly compensation calculated daily (in the case of an open-end Fund) or
weekly (in the case of a closed-end Fund) by applying the annual rate or rates
set forth on Schedule B to the net assets of each Fund. Except as hereinafter
set forth, (i) in the case of an open-end Fund, compensation under this
Agreement shall be calculated by applying 1/365th of the annual rate or rates to
the Fund's or the Series' daily net assets determined as of the close of
business on that day or the last previous business day and (ii) in the case of a
closed-end Fund, compensation under this Agreement shall be calculated by
applying the annual rate or rates to the Fund's average weekly net assets
determined as of the close of the last business day of each week. If this
Agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of the
month this Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fees as set forth on Schedule B. Subject to the
provisions of paragraph 5 hereof, payment of MSDW Services' compensation for the
preceding month shall be made as promptly as possible after completion of the
computations contemplated by paragraph 5 hereof.
5. In the event the operating expenses of any open-end Fund and/or any
Series thereof, or of InterCapital Income Securities Inc., including amounts
payable to MSDW Advisors pursuant to the Investment Management Agreement, for
any fiscal year ending on a date on which this Agreement is in effect, exceed
the expense limitations applicable to the Fund and/or any Series thereof imposed
by state securities laws or regulations thereunder, as such limitations may be
raised or lowered from time to time, or, in the case of InterCapital Income
Securities Inc. or Morgan Stanley Dean Witter Variable Investment Series or any
Series thereof, the expense limitation specified in the Fund's Investment
Management Agreement, the fee payable hereunder shall be reduced on a pro rata
basis in the same proportion as the fee payable by the Fund under the Investment
Management Agreement is reduced.
6. MSDW Services shall bear the cost of rendering the administrative
services to be performed by it under this Agreement, and shall, at its own
expense, pay the compensation of the officers and employees, if any, of the Fund
employed by MSDW Services, and such clerical help and bookkeeping services as
MSDW Services shall reasonably require in performing its duties hereunder.
7. MSDW Services will use its best efforts in the performance of
administrative activitives on behalf of each Fund, but in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, MSDW Services shall not be liable to the Fund or any of
its investors for any error of judgment or mistake of law or for any act or
omission by MSDW Services or for any losses sustained by the Fund or its
investors. It is understood that, subject to the terms and conditions of the
Investment Management Agreement between each Fund and MSDW Advisors, MSDW
Advisors shall retain ultimate responsibility for all services to be performed
hereunder by MSDW Services. MSDW Services shall indemnify MSDW Advisors and hold
it harmless from any liability that MSDW Advisors may incur arising out of any
act or failure to act by MSDW Services in carrying out its responsibilities
hereunder.
8. It is understood that any of the shareholders, Directors/Trustees,
officers and employees of the Fund may be a shareholder, director, officer or
employee of, or be otherwise interested in, MSDW Services, and in any person
controlling, controlled by or under common control with MSDW Services, and that
MSDW Services and any person controlling, controlled by or under common control
with MSDW
2
<PAGE>
Services may have an interest in the Fund. It is also understood that MSDW
Services and any affiliated persons thereof or any persons controlling,
controlled by or under common control with MSDW Services have and may have
advisory, management, administration service or other contracts with other
organizations and persons, and may have other interests and businesses, and
further may purchase, sell or trade any securities or commodities for their own
accounts or for the account of others for whom they may be acting.
9. This Agreement shall continue until April 30, 1999, and thereafter shall
continue automatically for successive periods of one year unless terminated by
either party by written notice delivered to the other party within 30 days of
the expiration of the then-existing period. Notwithstanding the foregoing, this
Agreement may be terminated at any time, by either party on 30 days' written
notice delivered to the other party. In the event that the Investment Management
Agreement between any Fund and MSDW Advisors is terminated, this Agreement will
automatically terminate with respect to such Fund.
10. This Agreement may be amended or modified by the parties in any manner
by written agreement executed by each of the parties hereto.
11. This Agreement may be assigned by either party with the written consent
of the other party.
12. This Agreement shall be construed and interpreted in accordance with the
laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, as amended, on June 22, 1998 in New York, New York.
<TABLE>
<S> <C>
MORGAN STANLEY DEAN WITTER ADVISORS INC.
By: -----------------------------------------
Attest:
- ---------------------------------------------
MORGAN STANLEY DEAN WITTER SERVICES COMPANY
INC.
By: -----------------------------------------
Attest:
- ---------------------------------------------
</TABLE>
3
<PAGE>
SCHEDULE A
MORGAN STANLEY DEAN WITTER FUNDS
AS AMENDED AS OF JUNE 28, 1999
OPEN-END FUNDS
<TABLE>
<C> <S>
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 Aggressive Equity Fund
6. Morgan Stanley Dean Witter American Opportunities Fund
7. Morgan Stanley Dean Witter Balanced Growth Fund
8. Morgan Stanley Dean Witter Balanced Income Fund
9. Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
10. Morgan Stanley Dean Witter California Tax-Free Income Fund
11. Morgan Stanley Dean Witter Capital Growth Securities
12. Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS" Portfolio
13. Morgan Stanley Dean Witter Convertible Securities Trust
14. Morgan Stanley Dean Witter Developing Growth Securities Trust
15. Morgan Stanley Dean Witter Diversified Income Trust
16. Morgan Stanley Dean Witter Dividend Growth Securities Inc.
17. Morgan Stanley Dean Witter Equity Fund
18. Morgan Stanley Dean Witter European Growth Fund Inc.
19. Morgan Stanley Dean Witter Federal Securities Trust
20. Morgan Stanley Dean Witter Financial Services Trust
21. Morgan Stanley Dean Witter Fund of Funds
(i) Domestic Portfolio
(ii) International Portfolio
22. Morgan Stanley Dean Witter Global Dividend Growth Securities
23. Morgan Stanley Dean Witter Global Utilities Fund
24. Morgan Stanley Dean Witter Growth Fund
25. Morgan Stanley Dean Witter Hawaii Municipal Trust
26. Morgan Stanley Dean Witter Health Sciences Trust
27. Morgan Stanley Dean Witter High Yield Securities Inc.
28. Morgan Stanley Dean Witter Income Builder Fund
29. Morgan Stanley Dean Witter Information Fund
30. Morgan Stanley Dean Witter Intermediate Income Securities
31. Morgan Stanley Dean Witter International Fund
32. Morgan Stanley Dean Witter International SmallCap Fund
33. Morgan Stanley Dean Witter Japan Fund
34. Morgan Stanley Dean Witter Latin American Growth Fund
35. Morgan Stanley Dean Witter Limited Term Municipal Trust
36. Morgan Stanley Dean Witter Liquid Asset Fund Inc.
37. Morgan Stanley Dean Witter Managers Focus Fund
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 North American Government Income Trust
</TABLE>
A-1
<PAGE>
<TABLE>
<C> <S>
46. Morgan Stanley Dean Witter Pacific Growth Fund Inc.
47. Morgan Stanley Dean Witter Precious Metals and Minerals Trust
48. Morgan Stanley Dean Witter Real Estate Fund
49. Morgan Stanley Dean Witter Select Dimensions Investment Series
(i) American Opportunities Portfolio
(ii) Balanced Growth Portfolio
(iii) Developing Growth Portfolio
(iv) Diversified Income Portfolio
(v) Dividend Growth Portfolio
(vi) Emerging Markets Portfolio
(vii) Global Equity Portfolio
(viii) Growth Portfolio
(ix) Mid-Cap Growth Portfolio
(x) Money Market Portfolio
(xi) North American Government Securities Portfolio
(xii) Utilities Portfolio
(xiii) Value-Added Market Portfolio
50. Morgan Stanley Dean Witter Select Municipal Reinvestment Fund
51. Morgan Stanley Dean Witter Short-Term Bond Fund
52. Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
53. Morgan Stanley Dean Witter SmallCap Growth Fund
54. Morgan Stanley Dean Witter Special Value Fund
55. Morgan Stanley Dean Witter Strategist Fund
56. Morgan Stanley Dean Witter S&P 500 Index Fund
57. Morgan Stanley Dean Witter S&P 500 Select 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 Return Trust
61. Morgan Stanley Dean Witter U.S. Government Securities Trust
62. Morgan Stanley Dean Witter U.S. Government Money Market Trust
63. Morgan Stanley Dean Witter Utilities Fund
64. Morgan Stanley Dean Witter Value Fund
65. Morgan Stanley Dean Witter Value-Added Market Series
66. Morgan Stanley Dean Witter Variable Investment Series
(i) Aggressive Equity Portfolio
(ii) Capital Growth Portfolio
(iii) Competitive Edge "Best Ideas" Portfolio
(iv) Dividend Growth Portfolio
(v) Equity Portfolio
(vi) European Growth Portfolio
(vii) Global Dividend Growth Portfolio
(viii) High Yield Portfolio
(ix) Income Builder Portfolio
(x) Money Market Portfolio
(xi) Quality Income Plus Portfolio
(xii) Pacific Growth Portfolio
(xiii) S&P 500 Index Portfolio
(xiv) Short-Term Bond Portfolio
(xv) Strategist Portfolio
(xvi) Utilities Portfolio
67. Morgan Stanley Dean Witter World Wide Income Trust
68. Morgan Stanley Dean Witter Worldwide High Income Fund
</TABLE>
A-2
<PAGE>
CLOSED-END FUNDS
<TABLE>
<C> <S>
69. Morgan Stanley Dean Witter High Income Advantage Trust
70. Morgan Stanley Dean Witter High Income Advantage Trust II
71. Morgan Stanley Dean Witter High Income Advantage Trust III
72. Morgan Stanley Dean Witter Income Securities Inc.
73. Morgan Stanley Dean Witter Government Income Trust
74. Morgan Stanley Dean Witter Insured Municipal Bond Trust
75. Morgan Stanley Dean Witter Insured Municipal Trust
76. Morgan Stanley Dean Witter Insured Municipal Income Trust
77. Morgan Stanley Dean Witter California Insured Municipal Income Trust
78. Morgan Stanley Dean Witter Insured Municipal Securities
79. Morgan Stanley Dean Witter Insured California Municipal Securities
80. Morgan Stanley Dean Witter Quality Municipal Investment Trust
81. Morgan Stanley Dean Witter Quality Municipal Income Trust
82. Morgan Stanley Dean Witter Quality Municipal Securities
83. Morgan Stanley Dean Witter California Quality Municipal Securities
84. Morgan Stanley Dean Witter New York Quality Municipal Securities
</TABLE>
A-3
<PAGE>
SCHEDULE B
MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC.
SCHEDULE OF ADMINISTRATIVE FEES
AS AMENDED AS OF JUNE 28, 1999
Monthly compensation calculated daily by applying the following annual rates
to a fund's daily net assets:
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
- ------------------
<S> <C>
Morgan Stanley Dean Witter Balanced Income Fund 0.060% of the daily net assets.
Morgan Stanley Dean Witter California Tax-Free Income Fund 0.055% of the portion of the daily net assets not exceeding $500
million; 0.0525% of the portion of the daily net assets exceeding
$500 million but not exceeding $750 million; 0.050% of the
portion of the daily net assets exceeding $750 million but not
exceeding $1 billion; 0.0475% of the portion of the daily net
assets exceeding $1 billion but not exceeding $1.25 billion; and
0.045% of the portion of the daily net assets exceeding $1.25
billion.
Morgan Stanley Dean Witter Convertible Securities Trust 0.060% of the portion of the daily net assets not exceeding $750
million; 0.055% of the portion of the daily net assets exceeding
$750 million but not exceeding $1 billion; 0.050% of the portion
of the daily net assets of the exceeding $1 billion but not
exceeding $1.5 billion; 0.0475% of the portion of the daily net
assets exceeding $1.5 billion but not exceeding $2 billion;
0.045% of the portion of the daily net assets exceeding $2
billion but not exceeding $3 billion; and 0.0425% of the portion
of the daily net assets exceeding $3 billion.
Morgan Stanley Dean Witter Diversified Income Trust 0.040% of the daily net assets.
Morgan Stanley Dean Witter Federal Securities Trust 0.055% of the portion of the daily net assets not exceeding $1
billion; 0.0525% of the portion of the daily net assets exceeding
$1 billion but not exceeding $1.5 billion; 0.050% of the portion
of the daily net assets exceeding $1.5 billion but not exceeding
$2 billion; 0.0475% of the portion of the daily net assets
exceeding $2 billion but not exceeding $2.5 billion; 0.045% of
the portion of the daily net assets exceeding $2.5 billion but
not exceeding $5 billion; 0.0425% of the portion of the daily net
assets exceeding $5 billion but not exceeding $7.5 billion;
0.040% of the portion of the daily net assets exceeding $7.5
billion but not exceeding $10 billion; 0.0375% of the portion of
the daily net assets exceeding $10 billion but not exceeding
$12.5 billion; and 0.035% of the portion of the daily net assets
exceeding $12.5 billion.
Morgan Stanley Dean Witter 0.035% of the daily net assets.
Hawaii Municipal Trust
</TABLE>
B-1
<PAGE>
<TABLE>
<S> <C>
Morgan Stanley Dean Witter 0.050% of the portion of the daily net assets not exceeding $500
High Yield Securities Inc. million; 0.0425% of the portion of the daily net assets exceeding
$500 million but not exceeding $750 million; 0.0375% of the
portion of the daily net assets exceeding $750 million but not
exceeding $1 billion; 0.035% of the portion of the daily net
assets exceeding $1 billion but not exceeding $2 billion; 0.0325%
of the portion of the daily net assets exceeding $2 billion but
not exceeding $3 billion; and 0.030% of the portion of daily net
assets exceeding $3 billion.
Morgan Stanley Dean Witter Intermediate Income Securities 0.060% of the portion of the daily net assets not exceeding $500
million; 0.050% of the portion of the daily net assets exceeding
$500 million but not exceeding $750 million; 0.040% of the
portion of the daily net assets exceeding $750 million but not
exceeding $1 billion; and 0.030% of the portion of the daily net
assets exceeding $1 billion.
Morgan Stanley Dean Witter Limited Term Municipal Trust 0.050% of the daily net assets.
Morgan Stanley Dean Witter 0.035% of the daily net assets.
Multi-State Municipal Series Trust
(10 Series)
Morgan Stanley Dean Witter 0.055% of the portion of the daily net assets not exceeding $500
New York Tax-Free Income Fund million; and 0.0525% of the portion of the daily net assets
exceeding $500 million.
Morgan Stanley Dean Witter 0.039% of the portion of the daily net assets not exceeding $3
North American Government billion; and 0.036% of the portion of the daily net assets
Income Trust exceeding $3 billion.
Morgan Stanley Dean Witter Select Dimensions Investment Series--
Diversified Income Portfolio 0.040% of the daily net assets.
North American Government Securities Portfolio 0.039% of the daily net assets.
Morgan Stanley Dean Witter Select Municipal Reinvestment Fund 0.050% of the daily net assets.
Morgan Stanley Dean Witter 0.070% of the daily net assets.
Short-Term Bond Fund
Morgan Stanley Dean Witter 0.035% of the daily net assets.
Short-Term U.S. Treasury Trust
Morgan Stanley Dean Witter 0.050% of the portion of the daily net assets not exceeding $500
Tax-Exempt Securities Trust million; 0.0425% of the portion of the daily net assets exceeding
$500 million but not exceeding $750 million; 0.0375% of the
portion of the daily net assets exceeding $750 million but not
exceeding $1 billion; and 0.035% of the portion of the daily net
assets exceeding $1 billion but not exceeding $1.25 billion;
.0325% of the portion of the daily net assets exceeding $1.25
billion.
</TABLE>
B-2
<PAGE>
<TABLE>
<S> <C>
Morgan Stanley Dean Witter 0.050% of the portion of the daily net assets not exceeding $1
U.S. Government Securities Trust billion; 0.0475% of the portion of the daily net assets exceeding
$1 billion but not exceeding $1.5 billion; 0.045% of the portion
of the daily net assets exceeding $1.5 billion but not exceeding
$2 billion; 0.0425% of the portion of the daily net assets
exceeding $2 billion but not exceeding $2.5 billion; 0.040% of
the portion of the daily net assets exceeding $2.5 billion but
not exceeding $5 billion; 0.0375% of the portion of the daily net
assets exceeding $5 billion but not exceeding $7.5 billion;
0.035% of the portion of the daily net assets exceeding $7.5
billion but not exceeding $10 billion; 0.0325% of the portion of
the daily net assets exceeding $10 billion but not exceeding
$12.5 billion; and 0.030% of the portion of the daily net assets
exceeding $12.5 billion.
Morgan Stanley Dean Witter Variable Investment Series--
High Yield Portfolio 0.050% of the portion of the daily net assets not exceeding $500
million; and 0.0425% of the daily net assets exceeding $500
million.
Quality Income Plus Portfolio 0.050% of the portion of the daily the net assets up to $500
million; and 0.045% of the portion of the daily net assets
exceeds $500 million.
Short-Term Bond Portfolio 0.045% of the daily net assets.
Morgan Stanley Dean Witter 0.075% of the portion of the daily net assets up to $250 million;
World Wide Income Trust 0.060% of the portion of the daily net assets exceeding $250
million but not exceeding $500 million; 0.050% of the portion of
the daily net assets of the exceeding $500 million but not
exceeding $750 million; 0.040% of the portion of the daily net
assets exceeding $750 million but not exceeding $1 billion; and
0.030% of the portion of the daily net assets exceeding $1
billion.
Morgan Stanley Dean Witter Worldwide High Income Fund 0.060% of the daily net assets.
EQUITY FUNDS
Morgan Stanley Dean Witter Aggressive Equity Fund 0.075% of the daily net assets.
Morgan Stanley Dean Witter American Opportunities Fund 0.0625% of the portion of the daily net assets not exceeding $250
million; 0.050% of the portion of the daily net assets exceeding
$250 million but not exceeding $2.25 billion; 0.0475% of the
portion of the daily net assets exceeding $2.25 billion but not
exceeding $3.5 billion; 0.0450% of the portion of the daily net
assets exceeding $3.5 billion but not exceeding $4.5 billion; and
0.0425% of the portion of the daily net assets exceeding $4.5
billion.
Morgan Stanley Dean Witter Balanced Growth Fund 0.060% of the portion of the daily net assets not exceeding $500
million; and 0.0575% of the portion of the daily net assets
exceeding $500 million.
</TABLE>
B-3
<PAGE>
<TABLE>
<S> <C>
Morgan Stanley Dean Witter Capital Growth Securities 0.065% of the portion of the daily net assets not exceeding $500
million; 0.055% of the portion exceeding $500 million but not
exceeding $1 billion; 0.050% of the portion of the daily net
assets exceeding $1 billion but not exceeding $1.5 billion; and
0.0475% of the portion of the daily net assets exceeding $1.5
billion.
Morgan Stanley Dean Witter Competitive Edge Fund, 0.065% of the portion of the daily net assets not exceeding $1.5
"BEST IDEAS" Portfolio billion; and 0.0625% of the portion of the daily net assets
exceeding $1.5 billion.
Morgan Stanley Dean Witter Developing Growth Securities Trust 0.050% of the portion of the daily net assets not exceeding $500
million; and 0.0475% of the portion of the daily net assets
exceeding $500 million.
Morgan Stanley Dean Witter Dividend Growth Securities Inc. 0.0625% of the portion of the daily net assets not exceeding $250
million; 0.050% of the portion of the daily net assets exceeding
$250 million but not exceeding $1 billion; 0.0475% of the portion
of the daily net assets exceeding $1 billion but not exceeding $2
billion; 0.045% of the portion of the daily net assets exceeding
$2 billion but not exceeding $3 billion; 0.0425% of the portion
of the daily net assets exceeding $3 billion but not exceeding $4
billion; 0.040% of the portion of the daily net assets exceeding
$4 billion but not exceeding $5 billion; 0.0375% of the portion
of the daily net assets exceeding $5 billion but not exceeding $6
billion; 0.035% of the portion of the daily net assets exceeding
$6 billion but not exceeding $8 billion; 0.0325% of the portion
of the daily net assets exceeding $8 billion but not exceeding
$10 billion; 0.030% of the portion of the daily net assets
exceeding $10 billion but not exceeding $15 billion; and 0.0275%
of the portion of the daily net assets exceeding $15 billion.
Morgan Stanley Dean Witter 0.051% of the daily net assets.
Equity Fund
Morgan Stanley Dean Witter European Growth Fund Inc. 0.057% of the portion of the daily net assets not exceeding $500
million; 0.054% of the portion of the daily net assets exceeding
$500 million but not exceeding $2 billion; and 0.051% of the
portion of the daily net assets exceeding $2 billion.
Morgan Stanley Dean Witter Financial Services Trust 0.075% of the portion of the daily net assets not exceeding $500
million; and 0.0725% of the portion of the daily net assets
exceeding $500 million.
Morgan Stanley Dean Witter
Fund of Funds--
Domestic Portfolio None
International Portfolio None
</TABLE>
B-4
<PAGE>
<TABLE>
<S> <C>
Morgan Stanley Dean Witter Global Dividend Growth Securities 0.075% of the portion of the daily net assets not exceeding $1
billion; 0.0725% of the portion of the daily net assets exceeding
$1 billion but not exceeding $1.5 billion; 0.070% of the portion
of the daily net assets exceeding $1.5 billion but not exceeding
$2.5 billion; 0.0675% of the portion of the daily net assets
exceeding $2.5 billion but not exceeding $3.5 billion; 0.0650% of
the portion of the daily net assets exceeding $3.5 billion but
not exceeding $4.5 billion; and 0.0625% of the portion of the
daily net assets exceeding $4.5 billion.
Morgan Stanley Dean Witter 0.065% of the portion of the daily net assets not exceeding $500
Global Utilities Fund million; 0.0625% of the portion of the daily net assets exceeding
$500 million but not exceeding $1 billion; and 0.060% of the
portion of the daily net assets exceeding $1 billion.
Morgan Stanley Dean Witter 0.048% of the portion of daily net assets not exceeding $750
Growth Fund million; 0.045% of the portion of daily net assets exceeding $750
million but not exceeding $1.5 billion; and 0.042% of the portion
of daily net assets exceeding $1.5 billion.
Morgan Stanley Dean Witter 0.10% of the portion of daily net assets not exceeding $500
Health Sciences Trust million; and 0.095% of the portion of daily net assets exceeding
$500 million.
Morgan Stanley Dean Witter 0.075% of the portion of the net assets not exceeding $500
Income Builder Fund million; and 0.0725% of the portion of daily net assets exceeding
$500 million.
Morgan Stanley Dean Witter 0.075% of the portion of the daily net assets not exceeding $500
Information Fund million; and 0.0725% of the portion of the daily net assets
exceeding $500 million.
Morgan Stanley Dean Witter International Fund 0.060% of the daily net assets.
Morgan Stanley Dean Witter International SmallCap Fund 0.069% of the daily net assets.
Morgan Stanley Dean Witter 0.057% of the daily net assets.
Japan Fund
Morgan Stanley Dean Witter 0.075% of the portion of the daily net assets not exceeding $500
Latin American Growth Fund million; and 0.0725% of the portion of the daily net assets
exceeding $500 million.
Morgan Stanley Dean Witter 0.0625% of the daily net assets.
Managers Focus Fund
Morgan Stanley Dean Witter 0.075% of the daily net assets.
Market Leader Trust
Morgan Stanley Dean Witter 0.075 of the daily net assets.
Mid-Cap Dividend Growth Securities
</TABLE>
B-5
<PAGE>
<TABLE>
<S> <C>
Morgan Stanley Dean Witter 0.035% of the portion of the daily net assets not exceeding $500
Mid-Cap Equity Trust million; and 0.0325% of the portion of the daily net assets
exceeding $500 million.
Morgan Stanley Dean Witter Natural Resource Development 0.0625% of the portion of the daily net assets not exceeding $250
Securities Inc. million and 0.050% of the portion of the daily net assets
exceeding $250 million.
Morgan Stanley Dean Witter 0.057% of the portion of the daily net assets not exceeding $1
Pacific Growth Fund Inc. billion; 0.054% of the portion of the daily net assets exceeding
$1 billion but not exceeding $2 billion; and 0.051% of the
portion of the daily net assets exceeding $2 billion.
Morgan Stanley Dean Witter Precious Metals and 0.080% of the daily net assets.
Minerals Trust
Morgan Stanley Dean Witter 0.060% of the daily net assets.
Real Estate Fund
Morgan Stanley Dean Witter Select Dimensions Investment Series--
American Opportunities Portfolio 0.0625% of the portion of the daily net assets not exceeding $500
million; and 0.060% of the portion of the daily net assets
exceeding $500 million.
Balanced Growth Portfolio 0.065% of the daily net assets.
Developing Growth Portfolio 0.050% of the daily net assets.
Dividend Growth Portfolio 0.0625% of the portion of the daily net assets not exceeding $500
million; 0.050% of the portion of the daily net assets exceeding
$500 million but not exceeding $1 billion; and 0.0475% of the
portion of the daily net assets exceeding $1 billion.
Emerging Markets Portfolio 0.075% of the daily net assets.
Global Equity Portfolio 0.10% of the daily net assets.
Growth Portfolio 0.048% of the daily net assets.
Mid-Cap Growth Portfolio 0.075% of the daily net assets
Utilities Portfolio 0.065% of the daily net assets.
Value-Added Market Portfolio 0.050% of the daily net assets.
Morgan Stanley Dean Witter SmallCap Growth Fund 0.060% of the daily net assets.
Morgan Stanley Dean Witter Special Value Fund 0.075% of the portion of the daily net assets not exceeding $500
million; and 0.0725% of the portion of daily net assets exceeding
$500 million.
</TABLE>
B-6
<PAGE>
<TABLE>
<S> <C>
Morgan Stanley Dean Witter Strategist Fund 0.060% of the portion of the daily net assets not exceeding $500
million; 0.055% of the portion of the daily net assets exceeding
$500 million but not exceeding $1 billion; 0.050% of the portion
of the daily net assets exceeding $1 billion but not exceeding
$1.5 billion; 0.0475% of the portion of the daily net assets
exceeding $1.5 billion but not exceeding $2.0 billion; and 0.045%
of the portion of the daily net assets exceeding $2.0 billion.
Morgan Stanley Dean Witter 0.040% of the portion of the daily net assets not exceeding $1.5
S&P 500 Index Fund billion; 0.0375% of the portion of daily net assets exceeding
$1.5 billion but not exceeding $3 billion; and 0.035% of the
portion of daily net assets exceeding $3 billion.
Morgan Stanley Dean Witter 0.060% of the daily net assets.
S&P 500 Select Fund
Morgan Stanley Dean Witter 0.045% of the daily net assets.
Total Return Trust
Morgan Stanley Dean Witter Utilities Fund 0.065% of the portion of the daily net assets not exceeding $500
million; 0.055% of the portion of the daily net assets exceeding
$500 million but not exceeding $1 billion; 0.0525% of the portion
of the daily net assets exceeding $1 billion but not exceeding
$1.5 billion; 0.050% of the portion of the daily net assets
exceeding $1.5 billion but not exceeding $2.5 billion; 0.0475% of
the portion of the daily net assets exceeding $2.5 billion but
not exceeding $3.5 billion; 0.045% of the portion of the daily
net assets exceeding $3.5 but not exceeding $5 billion; and
0.0425% of the daily net assets exceeding $5 billion.
Morgan Stanley Dean Witter 0.060% of the daily net assets.
Value Fund
Morgan Stanley Dean Witter 0.050% of the portion of the daily net assets not exceeding $500
Value-Added Market Series million; 0.45% of the portion of the daily net assets exceeding
$500 million but not exceeding $1 billion; 0.0425% of the portion
of the daily net assets exceeding $1.0 billion but not exceeding
$2.0 billion; and 0.040% of the portion of the daily net assets
exceeding $2 billion.
Morgan Stanley Dean Witter Variable Investment Series--
Aggressive Equity Portfolio 0.075% of the daily net assets.
Capital Growth Portfolio 0.065% of the daily net assets.
Competitive Edge 0.065% of the daily net assets.
"Best Ideas" Portfolio
</TABLE>
B-7
<PAGE>
<TABLE>
<S> <C>
Dividend Growth Portfolio 0.0625% of the portion of the daily net assets not exceeding $500
million; 0.050% of the portion of the daily net assets exceeding
$500 million but not exceeding $1 billion; 0.0475% of the portion
of the daily net assets exceeding $1.0 billion but not exceeding
$2.0 billion; 0.045% of the portion of the daily net assets
exceeding $2 billion but not exceeding $3 billion; and 0.0425% of
the portion of the daily net assets exceeding $3 billion.
Equity Portfolio 0.050% of the portion of the daily net assets not exceeding $1
billion; and 0.0475% of the portion of the daily net assets
exceeding $1 billion.
European Growth Portfolio 0.057% of the portion of the daily net assets not exceeding $500
million; and 0.054% of the portion of the daily net assets
exceeding $500 million.
Global Dividend Growth Portfolio 0.075% of the portion of the daily net assets not exceeding $1
billion; and 0.0725% of the portion of daily net assets exceeding
$1 billion.
Income Builder Portfolio 0.075% of the daily net assets.
Pacific Growth Portfolio 0.057% of the daily net assets.
S&P 500 Index Portfolio 0.040% of the daily net assets.
Strategist Portfolio 0.050% of the portion of the daily net assets not exceeding $1.5
billion; and 0.0475% of the portion of the daily net assets
exceeding $1.5 billion.
Utilities Portfolio 0.065% of the portion of the daily net assets not exceeding $500
million; 0.055% of the portion of the daily net assets exceeding
$500 million but not exceeding $1 billion; and 0.0525% of the
portion of the daily net assets exceeding $1 billion.
MONEY MARKET FUNDS
- ------------------
Active Assets Trusts: 0.050% of the portion of the daily net assets not exceeding $500
(1) Active Assets Tax-Free Trust million; 0.0425% of the portion of the daily net assets exceeding
(2) Active Assets California $500 million but not exceeding $750 million; 0.0375% of the
Tax-Free Trust portion of the daily net assets exceeding $750 million but not
(3) Active Assets Government Securities Trust exceeding $1 billion; 0.035% of the portion of the daily net
assets exceeding $1 billion but not exceeding $1.5 billion;
0.0325% of the portion of the daily net assets exceeding $1.5
billion but not exceeding $2 billion; 0.030% of the portion of
the daily net assets exceeding $2 billion but not exceeding $2.5
billion; 0.0275% of the portion of the daily net assets exceeding
$2.5 billion but not exceeding $3 billion; and 0.025% of the
portion of the daily net assets exceeding $3 billion.
</TABLE>
B-8
<PAGE>
<TABLE>
<S> <C>
(4) Active Assets Money Trust 0.050% of the portion of the daily net assets not exceeding $500
million; 0.0425% of the portion of the daily net assets exceeding
$500 million but not exceeding $750 million; 0.0375% of the
portion of the daily net assets exceeding $750 million but not
exceeding $1 billion; 0.035% of the portion of the daily net
assets exceeding $1 billion but not exceeding $1.5 billion;
0.0325% of the portion of the daily net assets exceeding $1.5
billion but not exceeding $2 billion; 0.030% of the portion of
the daily net assets exceeding $2 billion but not exceeding $2.5
billion; 0.0275% of the portion of the daily net assets exceeding
$2.5 billion but not exceeding $3 billion; 0.025% of the portion
of the daily net assets exceeding $3 billion but not exceeding
$15 billion; 0.0249% of the portion of the daily net assets
exceeding $15 billion but not exceeding $17.5 billion; and
0.0248% of the portion of the daily net assets exceeding $17.5
billion.
Morgan Stanley Dean Witter California Tax-Free Daily 0.050% of the portion of the daily net assets not exceeding $500
Income Trust million; 0.0425% of the portion of the daily net assets exceeding
$500 million but not exceeding $750 million; 0.0375% of the
portion of the daily net assets exceeding $750 million but not
exceeding $1 billion; 0.035% of the portion of the daily net
assets exceeding $1 billion but not exceeding $1.5 billion;
0.0325% of the portion of the daily net assets exceeding $1.5
billion but not exceeding $2 billion; 0.030% of the portion of
the daily net assets exceeding $2 billion but not exceeding $2.5
billion; 0.0275% of the portion of the daily net assets exceeding
$2.5 billion but not exceeding $3 billion; and 0.025% of the
portion of the daily net assets exceeding $3 billion.
Morgan Stanley Dean Witter 0.050% of the portion of the daily net assets not exceeding $500
Liquid Asset Fund Inc. million; 0.0425% of the portion of the daily net assets exceeding
$500 million but not exceeding $750 million; 0.0375% of the
portion of the daily net assets exceeding $750 million but not
exceeding $1 billion; 0.035% of the portion of the daily net
assets exceeding $1 billion but not exceeding $1.35 billion;
0.0325% of the portion of the daily net assets exceeding $1.35
billion but not exceeding $1.75 billion; 0.030% of the portion of
the daily net assets exceeding $1.75 billion but not exceeding
$2.15 billion; 0.0275% of the portion of the daily net assets
exceeding $2.15 billion but not exceeding $2.5 billion; 0.025% of
the portion of the daily net assets exceeding $2.5 billion but
not exceeding $15 billion; 0.0249% of the portion of the daily
net assets exceeding $15 billion but not exceeding $17.5 billion;
and 0.0248% of the portion of the daily net assets exceeding
$17.5 billion.
</TABLE>
B-9
<PAGE>
<TABLE>
<S> <C>
Morgan Stanley Dean Witter 0.050% of the portion of the daily net assets not exceeding $500
New York Municipal Money million; 0.0425% of the portion of the daily net assets exceeding
Market Trust $500 million but not exceeding $750 million; 0.0375% of the
portion of the daily net assets exceeding $750 million but not
exceeding $1 billion; 0.035% of the portion of the daily net
assets exceeding $1 billion but not exceeding $1.5 billion;
0.0325% of the portion of the daily net assets exceeding $1.5
billion but not exceeding $2 billion; 0.030% of the portion of
the daily net assets exceeding $2 billion but not exceeding $2.5
billion; 0.0275% of the portion of the daily net assets exceeding
$2.5 billion but not exceeding $3 billion; and 0.025% of the
portion of the daily net assets exceeding $3 billion.
Morgan Stanley Dean Witter Select Dimensions Investment Series-- 0.050% of the daily net assets.
Money Market Portfolio
Morgan Stanley Dean Witter 0.050% of the portion of the daily net assets not exceeding $500
Tax-Free Daily Income Trust million; 0.0425% of the portion of the daily net assets exceeding
$500 million but not exceeding $750 million; 0.0375% of the
portion of the daily net assets exceeding $750 million but not
exceeding $1 billion; 0.035% of the portion of the daily net
assets exceeding $1 billion but not exceeding $1.5 billion;
0.0325% of the portion of the daily net assets exceeding $1.5
billion but not exceeding $2 billion; 0.030% of the portion of
the daily net assets exceeding $2 billion but not exceeding $2.5
billion; 0.0275% of the portion of the daily net assets exceeding
$2.5 billion but not exceeding $3 billion; and 0.025% of the
portion of the daily net assets exceeding $3 billion.
Morgan Stanley Dean Witter U.S. Government Money Market Trust 0.050% of the portion of the daily net assets not exceeding $500
million; 0.0425% of the portion of the daily net assets exceeding
$500 million but not exceeding $750 million; 0.0375% of the
portion of the daily net assets exceeding $750 million but not
exceeding $1 billion; 0.035% of the portion of the daily net
assets exceeding $1 billion but not exceeding $1.5 billion;
0.0325% of the portion of the daily net assets exceeding $1.5
billion but not exceeding $2 billion; 0.030% of the portion of
the daily net assets exceeding $2 billion but not exceeding $2.5
billion; 0.0275% of the portion of the daily net assets exceeding
$2.5 billion but not exceeding $3 billion; and 0.025% of the
portion of the daily net assets exceeding $3 billion.
Morgan Stanley Dean Witter Variable Investment Series-- Money 0.050% of the portion of the daily net assets not exceeding $500
Market Portfolio million; 0.0425% of the portion of the daily net assets exceeding
$500 million but not exceeding $750 million; and 0.0375% of the
portion of the daily net assets exceeding $750 million.
</TABLE>
B-10
<PAGE>
Monthly compensation calculated weekly by applying the following annual
rates to a fund's weekly net assets:
<TABLE>
<CAPTION>
CLOSED-END FUNDS
- ----------------
<S> <C>
Morgan Stanley Dean Witter Government Income 0.060% of the average weekly net assets.
Trust
Morgan Stanley Dean Witter 0.075% of the portion of the average weekly net assets not
High Income Advantage Trust exceeding $250 million; 0.060% of the portion of average
weekly net assets exceeding $250 million and not exceeding
$500 million; 0.050% of the portion of average weekly net
assets exceeding $500 million and not exceeding $750
million; 0.040% of the portion of average weekly net assets
exceeding $750 million and not exceeding $1 billion; and
0.030% of the portion of average weekly net assets exceeding
$1 billion.
Morgan Stanley Dean Witter 0.075% of the portion of the average weekly net assets not
High Income Advantage Trust II exceeding $250 million; 0.060% of the portion of average
weekly net assets exceeding $250 million and not exceeding
$500 million; 0.050% of the portion of average weekly net
assets exceeding $500 million and not exceeding $750
million; 0.040% of the portion of average weekly net assets
exceeding $750 million and not exceeding $1 billion; and
0.030% of the portion of average weekly net assets exceeding
$1 billion.
Morgan Stanley Dean Witter 0.075% of the portion of the average weekly net assets not
High Income Advantage Trust III exceeding $250 million; 0.060% of the portion of average
weekly net assets exceeding $250 million and not exceeding
$500 million; 0.050% of the portion of average weekly net
assets exceeding $500 million and not exceeding $750
million; 0.040% of the portion of the average weekly net
assets exceeding $750 million and not exceeding $1 billion;
and 0.030% of the portion of average weekly net assets
exceeding $1 billion.
Morgan Stanley Dean Witter Income Securities 0.050% of the average weekly net assets.
Inc.
Morgan Stanley Dean Witter Insured Municipal 0.035% of the average weekly net assets.
Bond Trust
Morgan Stanley Dean Witter Insured Municipal 0.035% of the average weekly net assets.
Trust
Morgan Stanley Dean Witter Insured Municipal 0.035% of the average weekly net assets.
Income Trust
Morgan Stanley Dean Witter California Insured 0.035% of the average weekly net assets.
Municipal Income Trust
Morgan Stanley Dean Witter Quality Municipal 0.035% of the average weekly net assets.
Investment Trust
</TABLE>
B-11
<PAGE>
<TABLE>
<S> <C>
Morgan Stanley Dean Witter 0.035% of the average weekly net assets.
New York Quality Municipal Securities
Morgan Stanley Dean Witter Quality Municipal 0.035% of the average weekly net assets.
Income Trust
Morgan Stanley Dean Witter Quality Municipal 0.035% of the average weekly net assets.
Securities
Morgan Stanley Dean Witter California Quality 0.035% of the average weekly net assets.
Municipal Securities
Morgan Stanley Dean Witter Insured Municipal 0.035% of the average weekly net assets.
Securities
Morgan Stanley Dean Witter Insured California 0.035% of the average weekly net assets.
Municipal Securities
</TABLE>
B-12
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 10 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
March 12, 1999, relating to the financial statements and financial highlights
of TCW/DW Latin American Growth Fund, which appears in such Statement of
Additional Information, and to the incorporation by reference of our report
into the Prospectus which constitutes part of this Registration Statement.
We also consent to the references to us under the headings "Custodian and
Independent Accountants" and "Experts" in such Statement of Additional
Information and to the reference to us under the heading "Financial
Highlights" in such Prospectus.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
June 24, 1999
<PAGE>
AMENDED AND RESTATED PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
WHEREAS, Morgan Stanley Dean Witter Latin American Growth Fund (the "Fund")
is engaged in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, on July 28, 1997, the Fund most recently amended and restated a
Plan of Distribution pursuant to Rule 12b-1 under the Act which had initially
been adopted on October 30, 1992, and the Trustees then determined that there
was a reasonable likelihood that adoption of the Plan of Distribution, as then
amended and restated, would benefit the Fund and its shareholders; and
WHEREAS, the Trustees believe that continuation of said Plan of
Distribution, as amended and restated herein, is reasonably likely to continue
to benefit the Fund and its shareholders; and
WHEREAS, on October 30, 1992, the Fund and Dean Witter Reynolds Inc.
("DWR") entered into a Distribution Agreement pursuant to which the Fund
employed DWR as distributor of the Fund's shares; and
WHEREAS, on January 4, 1993, the Fund and DWR substituted Morgan Stanley
Dean Witter Distributors Inc. (the "Distributor") in the place of DWR as
distributor of the Fund's shares; and
WHEREAS, the Fund, DWR and the Distributor intend that DWR will continue to
promote the sale of Fund shares and provide personal services to Fund
shareholders with respect to their holdings of Fund shares; and
WHEREAS, the Fund and the Distributor entered into a separate Distribution
Agreement dated as of July 28, 1997 (in the place of a Distributon Agreement
dated as of July 28, 1997, which Agreement superseded a Distribution Agreement
dated May 31, 1997, which Agreement in turn superseded an Agreement dated June
30, 1993), pursuant to which the Fund has employed the Distributor in such
capacity during the continuous offering of shares of the Fund.
NOW, THEREFORE, the Fund hereby amends the Plan of Distribution previously
adopted and amended and restated, and the Distributor hereby agrees to the terms
of said Plan of Distribution (the "Plan"), as amended herein, in accordance with
Rule 12b-1 under the Act on the following terms and conditions with respect to
the Class A, Class B and Class C shares of the Fund:
1(a)(i). With respect to Class A and Class C shares of the Fund, the
Distributor hereby undertakes to directly bear all costs of rendering the
services to be performed by it under this Plan and under the Distribution
Agreement, except for those specific expenses that the Trustees determine to
reimburse as hereinafter set forth.
1(a)(ii). The Fund is hereby authorized to reimburse the Distributor, DWR,
its affiliates and other broker-dealers for distribution expenses incurred by
them specifically on behalf of Class A and Class C shares of the Fund.
Reimbursement will be made through payments at the end of each month. The amount
of each monthly payment may in no event exceed an amount equal to a payment at
the annual rate of 0.25%, in the case of Class A, and 1.0%, in the case of Class
C, of the average net assets of the respective Class during the month. With
respect to Class A, in the case of all expenses other than expenses representing
the service fee and, with respect to Class C, in the case of all expenses other
than expenses representing a gross sales credit or a residual to account
executives, such amounts shall be determined at the beginning of each calendar
quarter by the Trustees, including a majority of the Trustees who are not
"interested persons" of the Fund, as defined in the Act. Expenses representing
the service fee (for Class A) or a gross sales credit or a residual to account
executives (for Class C) may be reimbursed without prior determination. In the
event that the Distributor proposes that monies shall be reimbursed for other
than such expenses, then in making the quarterly determinations of the amounts
that may be expended by the Fund, the Distributor shall provide, and the
Trustees shall review, a quarterly budget of projected distribution expenses to
be incurred by the Distributor, DWR, its affiliates or other broker-dealers on
behalf of the Fund together with a report explaining the purposes and
anticipated benefits of incurring
<PAGE>
such expenses. The Trustees shall determine the particular expenses, and the
portion thereof that may be borne by the Fund, and in making such determination
shall consider the scope of the Distributor's commitment to promoting the
distribution of the Fund's Class A and Class C shares directly or through DWR,
its affiliates or other broker-dealers.
1(a)(iii). If, as of the end of any calendar year, the actual expenses
incurred by the Distributor, DWR, its affiliates and other broker-dealers on
behalf of Class A or Class C shares of the Fund (including accrued expenses and
amounts reserved for incentive compensation and bonuses) are less than the
amount of payments made by such Class pursuant to this Plan, the Distributor
shall promptly make appropriate reimbursement to the appropriate Class. If,
however, as of the end of any calendar year, the actual expenses (other than
expenses representing a gross sales credit) of the Distributor, DWR, its
affiliates and other broker-dealers are greater than the amount of payments made
by Class A or Class C shares of the Fund pursuant to this Plan, such Class will
not reimburse the Distributor, DWR, its affiliates or other broker-dealers for
such expenses through payments accrued pursuant to this Plan in the subsequent
fiscal year. Expenses representing a gross sales credit may be reimbursed in the
subsequent calendar year.
1(b). With respect to Class B shares of the Fund, the Fund shall pay to the
Distributor, as the distributor of securities of which the Fund is the issuer,
compensation for distribution of its Class B shares at the rate of the lesser of
(i) 1.0% per annum of the average daily aggregate sales of the Fund's Class B
shares since the Fund's inception (not including reinvestment of dividends and
capital gains distributions from the Fund) less the average daily aggregate net
asset value of the Fund's Class B shares redeemed since the Fund's inception
upon which a contingent deferred sales charge has been imposed or upon which
such charge has been waived, or (ii) 1.0% per annum of the average daily net
assets of Class B. Such compensation shall be calculated and accrued daily and
paid monthly or at such other intervals as the Trustees shall determine.
The Distributor may direct that all or any part of the amounts receivable
by it under this Plan be paid directly to DWR, its affiliates or other
broker-dealers who provide distribution and shareholder services. All payments
made hereunder pursuant to the Plan shall be in accordance with the terms and
limitations of the Rules of the Association of the National Association of
Securities Dealers, Inc.
2. With respect to expenses incurred by each Class, the amount set forth in
paragraph 1 of this Plan shall be paid for services of the Distributor, DWR its
affiliates and other broker-dealers it may select in connection with the
distribution of the Fund's shares, including personal services to shareholders
with respect to their holdings of Fund shares, and may be spend by the
Distributor, DWR, its affiliates and such broker-dealers on any activities or
expenses related to the distribution of the Fund's shares or services to
shareholders, including, but not limited to: compensation to, and expenses of,
account executives or other employees of the Distributor, DWR, its affiliates or
other broker-dealers; overhead and other branch office distribution-related
expenses and telephone expenses of persons who engage in or support distribution
of shares or who provide personal services to shareholders; printing of
prospectuses and reports for other than existing shareholders; preparation,
printing and distribution of sales literature and advertising materials and,
with respect to Class B, opportunity costs in incurring the foregoing expenses
(which may be calculated as a carrying charge on the excess of the distribution
expenses incurred by the Distributor, DWR, its affiliates or other
broker-dealers over distribution revenues received by them, such excess being
hereinafter referred to as "carryover expenses"). The overhead and other branch
office distribution-related expenses referred to in this paragraph 2 may
include: (a) the expenses operating the branch offices of the Distributor or
other broker-dealers, including DWR, in connection with the sale of the Fund
shares, including lease costs, the salaries and employee benefits of operations
and sales support personnel, utility costs, communications costs and the costs
of stationery and supplies; (b) the costs of client sales seminars; (c) travel
expenses of mutual fund sales coordinators to promote the sale of Fund shares;
and (d) other expenses relating to branch promotion of Fund sales. Payments may
also be made with respect to distribution expenses incurred in connection with
the distribution of shares, including personal services to shareholders with
respect to holdings of such shares, of an investment company whose assets are
acquired by the Fund in a tax-free reorganization, provided that, with respect
to Class B, carryover expenses as a percentage of Fund assets will not be
materially increased thereby. It is
2
<PAGE>
contemplated that, with respect to Class A shares, the entire fee set forth in
paragraph 1(a) will be characterized as a service fee within the meaning of the
National Association of Securities Dealers, Inc. guidelines and that, with
respect to Class B and Class C shares, payments at the annual rate of 0.25% will
be so characterized.
3. This Plan, as amended and restated, shall not take effect with respect
to any particular Class until it has been approved, together with any related
agreements, by votes of a majority of the Board of Trustees of the Fund and of
the Trustees who are not "interested persons" of the Fund (as defined in the
Act) and have no direct financial interest in the operation of this Plan or any
agreements related to it (the "Rule 12b-1 Trustees"), cast in person at a
meeting (or meetings) called for the purpose of voting on this Plan and such
related agreements.
4. This Plan shall continue in effect with respect to each Class until
April 30, 2000, and from year to year thereafter, provided such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in paragraph 3 hereof.
5. The Distributor shall provide to the Trustees of the Fund and the
Trustees shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made. In this regard,
the Trustees shall request the Distributor to specify such items of expenses as
the Trustees deem appropriate. The Trustees shall consider such items as they
deem relevant in making the determinations required by paragraph 4 hereof.
6. This Plan may be terminated at any time with respect to a Class by vote
of a majority of the Rule 12b-1 Trustees, or by vote of a majority of the
outstanding voting securities of the Fund. The Plan may remain in effect with
the respect to a particular Class even if the Plan has been terminated in
accordance with this paragraph 6 with respect to any other Class. In the event
of any such termination or in the event of nonrenewal, the Fund shall have no
obligation to pay expenses which have been incurred by the Distributor, DWR, its
affiliates or other broker-dealers in excess of payments made by the Fund
pursuant to this Plan. However, with respect to Class B, this shall not preclude
consideration by the Trustees of the manner in which such excess expenses shall
be treated.
7. This Plan may not be amended with respect to any Class to increase
materially the amount each Class may spend for distribution provided in
paragraph 1 hereof unless such amendment is approved by a vote of at least a
majority (as defined in the Act) of the outstanding voting securities of that
Class, and no material amendment to the Plan shall be made unless approved in
the manner provided for approval in paragraph 3 hereof. Class B shares will have
the right to vote on any material increase in the fee set forth in paragraph
1(a) above affecting Class A shares.
8. While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Trustees who are not interested persons.
9. The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to paragraph 5 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
10. The Declaration of Trust establishing Morgan Stanley Dean Witter Latin
American Growth Fund, dated February 25, 1992, a copy of which, together with
all amendments thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name Morgan
Stanley Dean Witter Latin American Growth Fund refers to the Trustees under the
Declaration collectively as Trustees but not as individuals or personally; and
no Trustee, shareholder, officer, employee or agent of Morgan Stanley Dean
Witter Latin American Growth Fund shall be held to any personal liability, nor
shall resort be had to their private property for this satisfaction of any
obligation or claim or otherwise, in connection with the affairs of said Morgan
Stanley Dean Witter Latin American Growth Fund, but the Trust Estate only shall
be liable.
3
<PAGE>
IN WITNESS WHEREOF, the Fund, the Distributor and DWR have executed this
amended and restated Plan of Distribution as of the day and year set forth
below in New York, New York.
Date: October 30, 1992
As Amended on January 4, 1993,
April 28, 1993, October 26, 1995,
July 28, 1997 and June 28, 1999
Attest: MORGAN STANLEY DEAN WITTER
LATIN AMERICAN GROWTH FUND
- ----------------------------------
By:
-------------------------------
Attest: MORGAN STANLEY DEAN WITTER
DISTRIBUTORS INC.
- ----------------------------------
By:
-------------------------------
Attest: DEAN WITTER REYNOLDS INC.
- ----------------------------------
By:
-------------------------------
4
<PAGE>
MORGAN STANLEY DEAN WITTER FUNDS
MULTIPLE CLASS PLAN
PURSUANT TO RULE 18f-3
INTRODUCTION
This plan (the "Plan") is adopted pursuant to Rule 18f-3(d) of the
Investment Company Act of 1940, as amended (the "1940 Act"), effective as of
July 28, 1997, and amended as of June 22, 1998. The Plan relates to shares of
the open-end investment companies to which Morgan Stanley Dean Witter Advisors
Inc. acts as investment manager, that are listed on Schedule A, as may be
amended from time to time (each, a "Fund" and collectively, the "Funds"). The
Funds are distributed pursuant to a system (the "Multiple Class System") in
which each class of shares (each, a "Class" and collectively, the "Classes") of
a Fund represents a pro rata interest in the same portfolio of investments of
the Fund and differs only to the extent outlined below.
I. DISTRIBUTION ARRANGEMENTS
One or more Classes of shares of the Funds are offered for purchase by
investors with the sales load structures described below. In addition, pursuant
to Rule 12b-1 under the 1940 Act, the Funds have each adopted a Plan of
Distribution (the "12b-1 Plan") under which shares of certain Classes are
subject to the service and/or distribution fees ("12b-1 fees") described below.
1. CLASS A SHARES
Class A shares are offered with a front-end sales load ("FESL"). The
schedule of sales charges applicable to a Fund and the circumstances under which
the sales charges are subject to reduction are set forth in each Fund's current
prospectus. As stated in each Fund's current prospectus, Class A shares may be
purchased at net asset value (without a FESL): (i) in the case of certain large
purchases of such shares; and (ii) by certain limited categories of investors,
in each case, under the circumstances and conditions set forth in each Fund's
current prospectus. Class A shares purchased at net asset value may be subject
to a contingent deferred sales charge ("CDSC") on redemptions made within one
year of purchase. Further information relating to the CDSC, including the manner
in which it is calculated, is set forth in paragraph 6 below. Class A shares are
also subject to payments under each Fund's 12b-1 Plan to reimburse Morgan
Stanley Dean Witter Distributors Inc., Dean Witter Reynolds Inc. ("DWR"), its
affiliates and other broker-dealers for distribution expenses incurred by them
specifically on behalf of the Class, assessed at an annual rate of up to 0.25%
of average daily net assets. The entire amount of the 12b-1 fee represents a
service fee within the meaning of National Association of Securities Dealers,
Inc. ("NASD") guidelines.
2. CLASS B SHARES
Class B shares are offered without a FESL, but will in most cases be subject
to a six-year declining CDSC which is calculated in the manner set forth in
paragraph 6 below. Class B shares purchased by certain qualified
employer-sponsored benefit plans are subject to a three-year declining CDSC
which is calculated in the manner set forth in paragraph 6 below. The schedule
of CDSC charges applicable to each Fund is set forth in each Fund's current
prospectus. With the exception of certain of the Funds which have a different
formula described below (Morgan Stanley Dean Witter American Value Fund, Morgan
Stanley Dean Witter Natural Resource Development Securities Inc., Morgan Stanley
Dean Witter Strategist Fund and Morgan
1
<PAGE>
Stanley Dean Witter Dividend Growth Securities Inc.)(1), Class B shares are also
subject to a fee under each Fund's respective 12b-1 Plan, assessed at the annual
rate of up to 1.0% of either: (a) the lesser of (i) the average daily aggregate
gross sales of the Fund's Class B shares since the inception of the Fund (not
including reinvestment of dividends or capital gains distributions), less the
average daily aggregate net asset value of the Fund's Class B shares redeemed
since the Fund's inception upon which a CDSC has been imposed or waived, or (ii)
the average daily net assets of Class B; or (b) the average daily net assets of
Class B. A portion of the 12b-1 fee equal to up to 0.25% of the Fund's average
daily net assets is characterized as a service fee within the meaning of the
NASD guidelines and the remaining portion of the 12b-1 fee, if any, is
characterized as an asset-based sales charge. Also, Class B shares have a
conversion feature ("Conversion Feature") under which such shares convert to
Class A shares after a certain holding period. Details of the Conversion Feature
are set forth in Section IV below.
3. CLASS C SHARES
Class C shares are offered without imposition of a FESL, but will in most
cases be subject to a CDSC of 1.0% on redemptions made within one year after
purchase. Further information relating to the CDSC is set forth in paragraph 6
below. In addition, Class C shares, under each Fund's 12b-1 Plan, are subject to
12b-1 payments to reimburse Morgan Stanley Dean Witter Distributors Inc., DWR,
its affiliates and other broker-dealers for distribution expenses incurred by
them specifically on behalf of the Class, assessed at the annual rate of up to
1.0% of the average daily net assets of the Class. A portion of the 12b-1 fee
equal to up to 0.25% of the Fund's average daily net assets is characterized as
a service fee within the meaning of NASD guidelines. Unlike Class B shares,
Class C shares do not have the Conversion Feature.
4. CLASS D SHARES
Class D shares are offered without imposition of a FESL, CDSC or a 12b-1 fee
for purchases of Fund shares by (i) investors meeting an initial minimum
investment requirement and (ii) certain other limited categories of investors,
in each case, as may be approved by the Boards of Directors/Trustees of the
Funds and as disclosed in each Fund's current prospectus.
5. ADDITIONAL CLASSES OF SHARES
The Boards of Directors/Trustees of the Funds have the authority to create
additional Classes, or change existing Classes, from time to time, in accordance
with Rule 18f-3 under the 1940 Act.
- ------------
(1)The payments under the 12b-1 Plan for each of Morgan Stanley Dean Witter
American Value Fund, Morgan Stanley Dean Witter Natural Resource Development
Securities Inc. and Morgan Stanley Dean Witter Dividend Growth Securities Inc.
are assessed at the annual rate of 1.0% of the lesser of: (a) the average daily
aggregate gross sales of the Fund's Class B shares since the inception of the
Fund's Plan (not including reinvestment of dividends or capital gains
distributions), less the average daily aggregate net asset value of the Fund's
Class B shares redeemed since the Plan's inception upon which a contingent
deferred sales charge has been imposed or waived, or (b) the average daily net
assets of Class B attributable to shares issued, net of related shares redeemed,
since inception of the Plan. The payments under the 12b-1 Plan for the Morgan
Stanley Dean Witter Strategist Fund are assessed at the annual rate of: (i) 1%
of the lesser of (a) the average daily aggregate gross sales of the Fund's Class
B shares since the effectiveness of the first amendment of the Plan on November
8, 1989 (not including reinvestment of dividends or capital gains
distributions), less the average daily aggregate net asset value of the Fund's
Class B shares redeemed since the effectiveness of the first amended Plan, upon
which a contingent deferred sales charge has been imposed or waived, or (b) the
average daily net assets of Class B attributable to shares issued, net of
related shares redeemed, since the effectiveness of the first amended Plan; plus
(ii) 0.25% of the average daily net assets of Class B attributable to shares
issued, net of related shares redeemed, prior to effectiveness of the first
amended Plan.
2
<PAGE>
6. CALCULATION OF THE CDSC
Any applicable CDSC is calculated based upon the lesser of net asset value
of the shares at the time of purchase or at the time of redemption. The CDSC
does not apply to amounts representing an increase in share value due to capital
appreciation and shares acquired through the reinvestment of dividends or
capital gains distributions. The CDSC schedule applicable to a Fund and the
circumstances in which the CDSC is subject to waiver are set forth in each
Fund's prospectus.
II. EXPENSE ALLOCATIONS
Expenses incurred by a Fund are allocated among the various Classes of
shares pro rata based on the net assets of the Fund attributable to each Class,
except that 12b-1 fees relating to a particular Class are allocated directly to
that Class. In addition, other expenses associated with a particular Class
(except advisory or custodial fees), may be allocated directly to that Class,
provided that such expenses are reasonably identified as specifically
attributable to that Class and the direct allocation to that Class is approved
by the Fund's Board of Directors/Trustees.
III. CLASS DESIGNATION
All shares of the Funds held prior to July 28, 1997 (other than the shares
held by certain employee benefit plans established by DWR and its affiliate, SPS
Transaction Services, Inc., shares of Funds offered with a FESL, and shares of
Morgan Stanley Dean Witter Balanced Growth Fund and Morgan Stanley Dean Witter
Balanced Income Fund) have been designated Class B shares. Shares held prior to
July 28, 1997 by such employee benefit plans have been designated Class D
shares. Shares held prior to July 28, 1997 of Funds offered with a FESL have
been designated Class D shares. In addition, shares of Morgan Stanley Dean
Witter American Value Fund purchased prior to April 30, 1984, shares of Morgan
Stanley Dean Witter Strategist Fund purchased prior to November 8, 1989 and
shares of Morgan Stanley Dean Witter Natural Resource Development Securities
Inc. and Morgan Stanley Dean Witter Dividend Growth Securities Inc. purchased
prior to July 2, 1984 (with respect to such shares of each Fund, including such
proportion of shares acquired through reinvestment of dividends and capital
gains distributions as the total number of shares acquired prior to each of the
preceding dates in this sentence bears to the total number of shares purchased
and owned by the shareholder of that Fund) have been designated Class D shares.
Shares of Morgan Stanley Dean Witter Balanced Growth Fund and Morgan Stanley
Dean Witter Balanced Income Fund held prior to July 28, 1997 have been
designated Class C shares except that shares of Morgan Stanley Dean Witter
Balanced Growth Fund and Morgan Stanley Dean Witter Balanced Income Fund held
prior to July 28, 1997 that were acquired in exchange for shares of an
investment company offered with a CDSC have been designated Class B shares and
those that were acquired in exchange for shares of an investment company offered
with a FESL have been designated Class A shares.
IV. THE CONVERSION FEATURE
Class B shares held before May 1, 1997 will convert to Class A shares in
May, 2007, except that Class B shares which were purchased before July 28, 1997
by trusts for which Morgan Stanley Dean Witter Trust FSB ("MSDW Trust") provides
discretionary trustee services converted to Class A shares on August 29, 1997
(the CDSC was not applicable to such shares upon the conversion). In all other
instances, Class B shares of each Fund will automatically convert to Class A
shares, based on the relative net asset values of the shares of the two Classes
on the conversion date, which will be approximately ten (10) years after the
date of the original purchase. Conversions will be effected once a month. The 10
year period will be calculated from the last day of the month in which the
shares were purchased or, in the case of Class B shares acquired through an
exchange or a series of exchanges, from the last day of the month in which the
original Class B shares were purchased, provided that shares originally
purchased before May 1, 1997 will convert to Class A shares in May, 2007. Except
as set forth below, the conversion of shares purchased on or after May 1, 1997
will take place in the month following the tenth anniversary of the purchase.
There will also be converted at that time such proportion of Class B shares
acquired through automatic reinvestment of dividends owned by the shareholder as
the total number of his or her Class B shares converting at the time bears to
the total number of outstanding Class B shares purchased and owned by the
shareholder. In the case of Class B shares held by a 401(k) plan or other plan
qualified under Section 401(a) of the Internal Revenue Code (the "Code") and
3
<PAGE>
for which MSDW Trust serves as Trustee or DWR's Retirement Plan Services serves
as recordkeeper pursuant to a written Recordkeeping Services Agreement, all
Class B shares will convert to Class A shares on the conversion date of the
first shares of a Fund purchased by that plan. In the case of Class B shares
previously exchanged for shares of an "Exchange Fund" (as such term is defined
in the prospectus of each Fund), the period of time the shares were held in the
Exchange Fund (calculated from the last day of the month in which the Exchange
Fund shares were acquired) is excluded from the holding period for conversion.
If those shares are subsequently re-exchanged for Class B shares of a Fund, the
holding period resumes on the last day of the month in which Class B shares are
reacquired.
Effectiveness of the Conversion Feature is subject to the continuing
availability of a ruling of the Internal Revenue Service or an opinion of
counsel to the effect that (i) the conversion of shares does not constitute a
taxable event under the Code; (ii) Class A shares received on conversion will
have a basis equal to the shareholder's basis in the converted Class B shares
immediately prior to the conversion; and (iii) Class A shares received on
conversion will have a holding period that includes the holding period of the
converted Class B shares. The Conversion Feature may be suspended if the Ruling
or opinion is no longer available. In such event, Class B shares would continue
to be subject to Class B fees under the applicable Fund's 12b-1 Plan.
V. EXCHANGE PRIVILEGES
Shares of each Class may be exchanged for shares of the same Class of the
other Funds and for shares of certain other investment companies without the
imposition of an exchange fee as described in the prospectuses and statements of
additional information of the Funds. The exchange privilege of each Fund may be
terminated or revised at any time by the Fund upon such notice as may be
required by applicable regulatory agencies as described in each Fund's
prospectus.
VI. VOTING
Each Class shall have exclusive voting rights on any matter that relates
solely to its 12b-1 Plan, except that Class B shareholders will have the right
to vote on any proposed material increase in Class A's expenses, including
payments under the Class A 12b-1 Plan, if such proposal is submitted separately
to Class A shareholders. If the amount of expenses, including payments under the
Class A 12b-1 Plan, is increased materially without the approval of Class B
shareholders, the Fund will establish a new Class A for Class B shareholders
whose shares automatically convert on the same terms as applied to Class A
before the increase. In addition, each Class shall have separate voting rights
on any matter submitted to shareholders in which the interests of one Class
differ from the interests of any other Class.
4
<PAGE>
MORGAN STANLEY DEAN WITTER FUNDS
MULTIPLE CLASS PLAN PURSUANT TO RULE 18f-3
SCHEDULE A
AT JUNE 28, 1999
<TABLE>
<C> <S>
1) Morgan Stanley Dean Witter Aggressive Equity Fund
2) Morgan Stanley Dean Witter American Opportunities Fund
3) Morgan Stanley Dean Witter Balanced Growth Fund
4) Morgan Stanley Dean Witter Balanced Income Fund
5) Morgan Stanley Dean Witter California Tax-Free Income Fund
6) Morgan Stanley Dean Witter Capital Growth Securities
7) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS" PORTFOLIO
8) Morgan Stanley Dean Witter Convertible Securities Trust
9) Morgan Stanley Dean Witter Developing Growth Securities Trust
10) Morgan Stanley Dean Witter Diversified Income Trust
11) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
12) Morgan Stanley Dean Witter Equity Fund
13) Morgan Stanley Dean Witter European Growth Fund Inc.
14) Morgan Stanley Dean Witter Federal Securities Trust
15) Morgan Stanley Dean Witter Financial Services Trust
16) Morgan Stanley Dean Witter Fund of Funds
17) Morgan Stanley Dean Witter Global Dividend Growth Securities
18) Morgan Stanley Dean Witter Global Utilities Fund
19) Morgan Stanley Dean Witter Growth Fund
20) Morgan Stanley Dean Witter Health Sciences Trust
21) Morgan Stanley Dean Witter High Yield Securities Inc.
22) Morgan Stanley Dean Witter Income Builder Fund
23) Morgan Stanley Dean Witter Information Fund
24) Morgan Stanley Dean Witter Intermediate Income Securities
25) Morgan Stanley Dean Witter International Fund
26) Morgan Stanley Dean Witter International SmallCap Fund
27) Morgan Stanley Dean Witter Japan Fund
28) Morgan Stanley Dean Witter Latin American Growth Fund
29) Morgan Stanley Dean Witter Managers Focus Fund
30) Morgan Stanley Dean Witter Market Leader Trust
31) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
32) Morgan Stanley Dean Witter Mid-Cap Equity Trust
33) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
34) Morgan Stanley Dean Witter New York Tax-Free Income Fund
35) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
36) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
37) Morgan Stanley Dean Witter Real Estate Fund
38) Morgan Stanley Dean Witter Small Cap Growth Fund
39) Morgan Stanley Dean Witter Special Value Fund
40) Morgan Stanley Dean Witter S&P 500 Index Fund
41) Morgan Stanley Dean Witter S&P 500 Select Fund
42) Morgan Stanley Dean Witter Strategist Fund
43) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
44) Morgan Stanley Dean Witter Total Return Trust
45) Morgan Stanley Dean Witter U.S. Government Securities Trust
46) Morgan Stanley Dean Witter Utilities Fund
47) Morgan Stanley Dean Witter Value-Added Market Series
48) Morgan Stanley Dean Witter Value Fund
49) Morgan Stanley Dean Witter Worldwide High Income Fund
50) Morgan Stanley Dean Witter World Wide Income Trust
</TABLE>
5
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Edwin J. Garn, whose signature appears
below, constitutes and appoints David M. Butowsky, Ronald M. Feiman and Stuart
M. Strauss, or any of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution among himself and each of the persons appointed
herein, for him and in his name, place and stead, in any and all capacities, to
sign any amendments to any registration statement of MORGAN STANLEY DEAN WITTER
LATIN AMERICAN GROWTH FUND, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, may lawfully do or cause to be done by virtue hereof.
Dated: June 28, 1999
--------------
/s/ Edwin J. Garn
-----------------
Edwin J. Garn
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Michael Bozic, whose signature appears
below, constitutes and appoints David M. Butowsky, Ronald M. Feiman and Stuart
M. Strauss, or any of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution among himself and each of the persons appointed
herein, for him and in his name, place and stead, in any and all capacities, to
sign any amendments to any registration statement of MORGAN STANLEY DEAN WITTER
LATIN AMERICAN GROWTH FUND, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, may lawfully do or cause to be done by virtue hereof.
Dated: June 28, 1999
-------------
/s/ Michael Bozic
---------------------------
Michael Bozic
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Philip J. Purcell, whose signature
appears below, constitutes and appoints Marilyn K. Cranney and Barry Fink, or
either of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution among himself and each of the persons appointed herein,
for him and in his name, place and stead, in any and all capacities, to sign any
amendments to any registration statement of MORGAN STANLEY DEAN WITTER LATIN
AMERICAN GROWTH FUND, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them, may lawfully do or cause to be done by virtue hereof.
Dated: June 28, 1999
-------------
/s/ Philip J. Purcell
---------------------
Philip J. Purcell
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Wayne E. Hedien, whose signature
appears below, constitutes and appoints David M. Butowsky, Ronald M. Feiman and
Stuart M. Strauss, or any of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution among himself and each of the persons
appointed herein, for him and in his name, place and stead, in any and all
capacities, to sign any amendments to any registration statement of MORGAN
STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, may lawfully do or cause to be
done by virtue hereof.
Dated: June 28, 1999
-------------
/s/ Wayne E. Hedien
-------------------
Wayne E. Hedien
