<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 30, 2000
REGISTRATION NOS.: 33-46515
811-6608
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
<TABLE>
<S> <C>
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 11 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY
ACT OF 1940 / /
AMENDMENT NO. 13 /X/
</TABLE>
------------------
MORGAN STANLEY DEAN WITTER 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:
STUART M. STRAUSS, ESQ.
MAYER, BROWN & PLATT
1675 BROADWAY
NEW YORK, NEW YORK 10019
-------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
this Post-Effective Amendment becomes effective.
-------------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
_____ immediately upon filing pursuant to paragraph (b)
___X_ on March 31, 2000 pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)
_____ on (date) pursuant to paragraph (a) of rule 485.
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS - MARCH 31, 2000
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................................... 10
How to Buy Shares..................................... 10
How to Exchange Shares................................ 12
How to Sell Shares.................................... 13
Distributions......................................... 15
Tax Consequences...................................... 16
Share Class Arrangements.............................. 16
Financial Highlights ...................................................... 24
Our Family of Funds ...................................................... Inside Back Cover
THIS PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE FUND.
PLEASE READ IT CAREFULLY AND KEEP IT FOR FUTURE REFERENCE.
</TABLE>
<PAGE>
[Sidebar]
CAPITAL 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
- --------------------------------------------------------------------------------
Morgan Stanley Dean Witter Latin American Growth Fund seeks long-term
capital appreciation.
[ICON] PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
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. In determining which
securities to buy, hold or sell for the Fund, the Fund's "Sub-
Advisor," TCW Investment Management Company, selects securities 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:
(i) are organized in a Latin American country, (ii) have their
securities principally trading in markets located in Latin America or
(iii) 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 Latin America.
Common stock is a share ownership or equity interest in a
corporation. It may or may not pay dividends, as some companies
reinvest all of their profits back into their businesses, while
others pay out some of their profits to shareholders as dividends. A
depository receipt is generally issued by a bank or financial
institution and represents an ownership interest in the common stock
or other equity securities of a foreign company. The owner of a
depository 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
- --------------------------------------------------------------------------------
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 equity 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 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 (including depository receipts) also have risks
related to economic and political developments abroad, including
expropriations, confiscatory taxation, exchange control regulation,
limitations on the use or transfer of Fund assets, and any effects of
foreign social, economic or political instability. 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.
2
<PAGE>
Foreign companies, in general, are not subject to the regulatory
requirements of U.S. companies and, as such, there may be less
publicly available information about these companies. Moreover,
foreign accounting, auditing and financial reporting standards
generally are different from those applicable to U.S. companies.
Finally, in the event of a default of any foreign debt obligations,
it may be more difficult for the Fund to obtain or enforce a judgment
against the issuers of the securities.
Securities of foreign issuers may be less liquid than comparable
securities of U.S. issuers and, as such, their price changes may be
more volatile. 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 the value of the
securities. 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
have again very negative effects on the economies and securities
markets of certain Latin American countries.
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 Latin American convertible and debt securities
(including zero coupon securities and "junk bonds"), investment
companies, 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 7 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
- --------------------------------------------------------------------------------
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%
'99 53.12%
</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 37.16% (quarter ended December 31, 1999) and the lowest return for a
calendar quarter was -29.55% (quarter ended March 31, 1995).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1999)
- ------------------------------------------------------------------ LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 12/30/92)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
Class A(1) 46.56% N/A N/A
- ------------------------------------------------------------------------------------
Class B 48.12% 3.13% 4.12%
- ------------------------------------------------------------------------------------
Class C(1) 52.48% N/A N/A
- ------------------------------------------------------------------------------------
Class D(1) 54.85% N/A N/A
- ------------------------------------------------------------------------------------
IFCI(2) 61.82% 5.61% 9.72%(3)
- ------------------------------------------------------------------------------------
</TABLE>
1 Classes A, C and D commenced operations on July 28, 1997.
2 The International Finance Corporation's Investable (IFCI) Latin America
Total Return Index is a broad, neutral and historically consistent
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, fees or charges. The Index is unmanaged and should not be
considered an investment.
3 For the period December 31, 1992 through December 31, 1999.
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, 2000.
[End Sidebar]
[ICON] FEES AND EXPENSES
- --------------------------------------------------------------------------------
The table below briefly describes the fees and expenses that you may
pay if you buy and hold shares of the Fund. The Fund offers four
Classes of shares: Classes A, B, C and D. Each Class has a different
combination of fees, expenses and other features. The Fund does not
charge account or exchange fees. See the "Share Class Arrangements"
section for further fee and expense information.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
- -------------------------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 5.25%(1) None None None
- -------------------------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a percentage based
on the lesser of the offering price or net asset value at
redemption) None(2) 5.00%(3) 1.00%(4) None
- -------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------------------------------------------------------------
Management fee 1.25% 1.25% 1.25% 1.25%
- -------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.22% 1.00% 0.89% None
- -------------------------------------------------------------------------------------------------------------
Other expenses 0.81% 0.81% 0.81% 0.81%
- -------------------------------------------------------------------------------------------------------------
Total annual Fund operating expenses 2.28% 3.06% 2.95% 2.06%
- -------------------------------------------------------------------------------------------------------------
</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 $744 $1,200 $1,681 $3,003 $744 $1,200 $1,681 $3,003
--------------------------------------------------- ----------------------------------
CLASS B $809 $1,245 $1,806 $3,374 $309 $ 945 $1,606 $3,374
--------------------------------------------------- ----------------------------------
CLASS C $398 $ 913 $1,552 $3,271 $298 $ 913 $1,552 $3,271
--------------------------------------------------- ----------------------------------
CLASS D $209 $ 646 $1,108 $2,390 $209 $ 646 $1,108 $2,390
--------------------------------------------------- ----------------------------------
</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 Fund's
fixed-income investments may include zero coupon securities, which
are purchased at a discount and either (i) pay no interest or (ii)
accrue interest, but make no payments until maturity. 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 rated 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. When the Fund takes a defensive position, it may not achieve
its investment objective.
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 INVESTMENT MANAGER IS WIDELY RECOGNIZED AS A LEADER IN THE MUTUAL FUND
INDUSTRY AND TOGETHER WITH MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC., ITS
WHOLLY-OWNED SUBSIDIARY, HAD APPROXIMATELY $155 BILLION IN ASSETS UNDER
MANAGEMENT AS OF FEBRUARY 29, 2000.
[End Sidebar]
[ICON] FUND MANAGEMENT
- --------------------------------------------------------------------------------
Effective June 28, 1999, the Fund retained the Investment Manager --
Morgan Stanley Dean Witter Advisors Inc. -- to provide administrative
services, manage its business affairs and supervise the investment of
its assets. The Investment Manager has, in turn, contracted with the
Sub-Advisor -- TCW Investment Management Company -- to invest the
Fund's assets, including the placing of orders for the purchase and
sale of portfolio securities. Prior to June 28, 1999, TCW Investment
Management Company acted as the Fund's advisor and Morgan Stanley
Dean Witter Services Company Inc., a wholly-owned subsidiary of the
Investment Manager, served as the Fund's manager. The Investment
Manager is a wholly-owned subsidiary of Morgan Stanley Dean Witter &
Co., a preeminent global financial services firm that maintains
leading market positions in each of its three primary businesses:
securities, asset management and credit services. 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, CA 90017.
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 period February 1, 1999 through June 25, 1999, the
Fund accrued aggregate total compensation to Morgan Stanley Dean
Witter Services Company Inc. (at that time the Fund's manager) and
TCW Investment Management Company (at that time acting as the Fund's
advisor rather than sub-advisor) in the amount of 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 Investment Management
Company). For the fiscal period June 28, 1999 through January 31,
2000 the Fund accrued aggregate total compensation to the Investment
Manager in the amount of 1.25% of the Fund's average daily net
assets. Accordingly, for the entire fiscal year ended January 31,
2000, the Fund paid investment management/advisory fees equal to
1.25% of its average daily net assets.
9
<PAGE>
[Sidebar]
CONTACTING A FINANCIAL ADVISOR
IF YOU ARE NEW TO THE MORGAN STANLEY DEAN WITTER FAMILY OF FUNDS AND WOULD LIKE
TO CONTACT A FINANCIAL ADVISOR, CALL (877) 937-MSDW (TOLL-FREE) FOR THE
TELEPHONE NUMBER OF THE MORGAN STANLEY DEAN WITTER OFFICE NEAREST YOU. YOU MAY
ALSO ACCESS OUR OFFICE LOCATOR ON OUR INTERNET SITE AT:
www.msdw.com/individual/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. With respect to securities that are primarily listed on
foreign exchanges, the value of the Fund's portfolio securities may
change on days when you will not be able to purchase or sell your
shares.
An exception to the Fund's general policy of using market prices
concerns its short-term debt portfolio securities. Debt securities
with remaining maturities of sixty days or less at the time of
purchase are valued at amortized cost. However, if the cost does not
reflect the securities' market value, these securities will be valued
at their fair value.
[ICON] HOW TO BUY SHARES
- --------------------------------------------------------------------------------
You may open a new account to buy Fund shares or buy additional Fund
shares for an existing account by contacting your Morgan Stanley Dean
Witter Financial Advisor or other authorized financial
representative. Your Financial Advisor will assist you, step-
by-step, with the procedures to invest in the Fund. You may also
purchase shares directly by calling the Fund's transfer agent and
requesting an application.
Because every investor has different immediate financial needs and
long-term investment goals, the Fund offers investors four Classes of
shares: Classes A, B, C and D. Class D shares are only offered to a
limited group of investors. Each Class of shares offers a distinct
structure of sales charges, distribution and service fees, and other
features that are designed to address a variety of needs. Your
Financial Advisor or other authorized financial representative can
help you decide which Class may be most appropriate for you. When
purchasing Fund shares, you must specify which Class of shares you
wish to purchase.
10
<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>
<TABLE>
<S> <C>
* Provided your schedule of investments totals $1,000 in
twelve months.
</TABLE>
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.
11
<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. Since exchanges are available only into
continuously offered Morgan Stanley Dean Witter Funds, exchanges are
not available into any new Morgan Stanley Dean Witter Fund during its
initial offering period, or when shares of a particular Morgan
Stanley Dean Witter Fund are not being offered for purchase.
EXCHANGE PROCEDURES. You can process an exchange by contacting your
Morgan Stanley Dean Witter Financial Advisor or other authorized
financial representative. Otherwise, you must forward an exchange
privilege authorization form to the Fund's transfer agent - Morgan
Stanley Dean Witter Trust FSB - and then write the transfer agent or
call (800) 869-NEWS to place an exchange order. You can obtain an
exchange privilege authorization form by contacting your Financial
Advisor or other authorized financial representative or by calling
(800) 869-NEWS. If you hold share certificates, no exchanges may be
processed until we have received all applicable share certificates.
An exchange to any Fund (except a Money Market Fund) is made on the
basis of the next calculated net asset values of the Funds involved
after the exchange instructions are accepted. When exchanging into a
Money Market Fund, the Fund's shares are sold at their next
calculated net asset value and the Money Market Fund's shares are
purchased at their net asset value on the following business day.
The Fund may terminate or revise the exchange privilege upon required
notice. The check writing privilege is not available for Money Market
Fund shares you acquire in an exchange.
TELEPHONE EXCHANGES. For your protection when calling Morgan Stanley
Dean Witter Trust FSB, we will employ reasonable procedures to
confirm that exchange instructions communicated over the telephone
are genuine. These procedures may include requiring various forms of
personal identification such as name, mailing address, social
security or other tax identification number. Telephone instructions
also may be recorded.
12
<PAGE>
Telephone instructions will be accepted if received by the Fund's
transfer agent between 9:00 a.m. and 4:00 p.m. Eastern time on any
day the New York Stock Exchange is open for business. During periods
of drastic economic or market changes, it is possible that the
telephone exchange procedures may be difficult to implement, although
this has not been the case with the Fund in the past.
MARGIN ACCOUNTS. If you have pledged your Fund shares in a margin
account, contact your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative regarding restrictions on
the exchange of such shares.
TAX CONSIDERATIONS OF EXCHANGES. If you exchange shares of the Fund
for shares of another Morgan Stanley Dean Witter Fund there are
important tax considerations. For tax purposes, the exchange out of
the Fund is considered a sale of Fund shares - and the exchange into
the other Fund is considered a purchase. As a result, you may realize
a capital gain or loss.
You should review the "Tax Consequences" section and consult your own
tax professional about the tax consequences of an exchange.
LIMITATIONS ON EXCHANGES. Certain patterns of exchanges may result in
the Fund limiting or prohibiting, at its discretion, additional
purchases and/or exchanges. Determinations in this regard may be made
based on the frequency or dollar amount of previous exchanges. The
Fund will notify you in advance of limiting your exchange privileges.
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]
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
-------------------------------------------------------------------------------------
<S> <C>
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]
------------------------------------------------------------
If you are requesting payment to anyone other than the
registered owner(s) or that payment be sent to any address
other than the address of the registered owner(s) or pre-
designated bank account, you will need a signature
guarantee. You can obtain a signature guarantee from an
eligible guarantor acceptable to Morgan Stanley Dean Witter
Trust FSB. (You should contact Morgan Stanley Dean Witter
Trust FSB at (800) 869-NEWS for a determination as to
whether a particular institution is an eligible guarantor.)
A notary public CANNOT provide a signature guarantee.
Additional documentation may be required for shares held by
a corporation, partnership, trustee or executor.
------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at
P.O. Box 983, Jersey City, NJ 07303. If you hold share
certificates, you must return the certificates, along with
the letter and any required additional documentation.
------------------------------------------------------------
A check will be mailed to the name(s) and address in which
the account is registered, or otherwise according to your
instructions.
-------------------------------------------------------------------------------------
Systematic If your investment in all of the Morgan Stanley Dean Witter
Withdrawal Plan Family of Funds has a total market value of at least
$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, your sale will not be effected
until it has been verified that the check has been honored.
TAX CONSIDERATIONS. Normally, your sale of Fund shares is subject to
federal and state income tax. You should review the "Tax
Consequences" section of this PROSPECTUS and consult your own tax
professional about the tax consequences of a sale.
14
<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]
REINSTATEMENT PRIVILEGE. If you sell Fund shares and have not
previously exercised the reinstatement privilege, you may, within
35 days after the date of sale, invest any portion of the proceeds in
the same Class of Fund shares at their net asset value and receive a
pro rata credit for any CDSC paid in connection with the sale.
INVOLUNTARY SALES. The Fund reserves the right, on sixty days'
notice, to sell the shares of any shareholder (other than shares held
in an IRA or 403(b) Custodial Account) whose shares, due to sales by
the shareholder, have a value below $100, or in the case of an
account opened through EASYINVEST-SM-, if after 12 months the
shareholder has invested less than $1,000 in the account.
However, before the Fund sells your shares in this manner, we will
notify you and allow you sixty days to make an additional investment
in an amount that will increase the value of your account to at least
the required amount before the sale is processed. No CDSC will be
imposed on any involuntary sale.
MARGIN ACCOUNTS. If you have pledged your Fund shares in a margin
account, contact your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative regarding restrictions on
the sale of such shares.
[ICON] DISTRIBUTIONS
- --------------------------------------------------------------------------------
The Fund passes substantially all of its earnings from income and
capital gains along to its investors as "distributions." The Fund
earns income from stocks and interest from fixed-income investments.
These amounts are passed along to Fund shareholders as "income
dividend distributions." The Fund realizes capital gains whenever it
sells securities for a higher price than it paid for them. These
amounts may be passed along as "capital gain distributions."
The Fund declares income dividends separately for each Class.
Distributions paid on Class A and Class D shares usually will be
higher than for Class B and Class C because distribution fees that
Class B and Class C pay are higher. Normally, income dividends are
distributed to shareholders 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.
15
<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
to you as long-term capital gains, no matter how long you have owned
shares in the Fund.
If more than 50% of the Fund's assets are invested in foreign
securities at the end of any fiscal year, the Fund may elect to
permit shareholders to take a credit or deduction on their federal
income tax return for foreign taxes paid by the Fund.
Every January, you will be sent a statement (IRS Form 1099-DIV)
showing the taxable distributions paid to you in the previous year.
The statement provides information on your dividends and capital
gains for tax purposes.
TAXES ON SALES. Your sale of Fund shares normally is subject to
federal and state income tax and may result in a taxable gain or loss
to you. A sale also may be subject to local income tax. Your exchange
of Fund shares for shares of another 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.
16
<PAGE>
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 termination fees,
mandatory sale or transfer restrictions on termination) approved by
the Fund's distributor pursuant to which they pay an asset-based
fee for investment advisory, administrative and/or brokerage
services.
- 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.
- An MSDW Eligible Plan whose Class B shares have converted to
Class A shares, regardless of the plan's asset size or number of
eligible employees.
- A client of a Morgan Stanley Dean Witter Financial Advisor who
joined us from another investment firm within six months prior to
the date of purchase of Fund shares, and you used the proceeds from
the sale of shares of a proprietary mutual fund of that Financial
Advisor's previous firm that imposed either a front-end or deferred
sales charge to purchase Class A shares, provided that: (1) you
sold the shares not more than 60 days prior to the purchase of Fund
shares, and (2) the sale proceeds were maintained in the interim in
cash or a money market fund.
- Current or retired Directors/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 an MSDW Eligible
Plan.
- Sales of shares in connection with the Systematic Withdrawal Plan
of up to 12% annually of the value of each Fund from which plan
sales are made. The percentage is determined on the date you
establish the Systematic Withdrawal Plan and based on the
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.
- Sales of shares if you simultaneously invest the proceeds in the
Investment Manager's mutual fund asset allocation program, pursuant
to which investors pay an asset-based fee. Any shares you acquire
in connection with the Investment Manager's mutual fund asset
allocation program are subject to all of the terms and conditions
of that program, including termination fees, mandatory sale or
transfer restrictions on termination.
All waivers will be granted only following the Fund's distributor
receiving confirmation of your entitlement. If you believe you are
eligible for a CDSC waiver, please contact your Financial Advisor or
call (800) 869-NEWS.
DISTRIBUTION FEE. Class B shares are subject to an annual 12b-1 fee
of 1.0% of the lesser of: (a) the average daily aggregate gross
purchases by all shareholders of the Fund's Class B shares since the
inception of the Fund (not including reinvestments of dividends or
capital gain distributions), less the average daily aggregate net
asset value of the Fund's Class B shares sold by all shareholders
since the Fund's inception upon which a CDSC has been imposed or
waived, or (b) the average daily net assets of Class B.
CONVERSION FEATURE. After ten (10) years, Class B shares will convert
automatically to Class A shares of the Fund with no initial sales
charge. The ten year period runs from the last day of the month in
which the shares were purchased, or in the case of Class B shares
acquired through an exchange, from the last day of the month in which
the original Class B shares were purchased; the shares will convert
to Class A shares based on their relative net asset values in the
month following the ten year period. At the same time, an equal
proportion of Class B shares acquired through automatically
reinvested distributions will convert to Class A shares on the same
basis. (Class B shares held before May 1, 1997, however, will convert
to Class A shares in May 2007).
In the case of Class B shares held in an MSDW Eligible Plan, the plan
is treated as a single investor and all Class B shares will convert
to Class A shares on the conversion date of the Class B shares of a
Morgan Stanley Dean Witter Fund purchased by that plan.
Currently, the Class B share conversion is not a taxable event; the
conversion feature may be cancelled if it is deemed a taxable event
in the future by the Internal Revenue Service.
If you exchange your Class B shares for shares of a Money Market
Fund, a No-Load Fund, North American Government Income Trust or
Short-Term U.S. Treasury Trust, the holding period for conversion is
frozen as of the last day of the month of the exchange and resumes on
the last day of the month you exchange back into Class B shares.
22
<PAGE>
EXCHANGING SHARES SUBJECT TO A CDSC. There are special considerations
when you exchange Fund shares that are subject to a CDSC. When
determining the length of time you held the shares and the
corresponding CDSC rate, any period (starting at the end of the
month) during which you held shares of a fund that does NOT charge a
CDSC WILL NOT BE COUNTED. Thus, in effect the "holding period" for
purposes of calculating the CDSC is frozen upon exchanging into a
fund that does not charge a CDSC.
For example, if you held Class B shares of the Fund 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 termination fees, 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 termination fees,
mandatory sale or transfer restrictions on termination) approved by
the Fund's distributor pursuant to which they pay an asset-based
fee for investment advisory, administrative and/or brokerage
services.
- Employee benefit plans maintained by Morgan Stanley Dean Witter &
Co. or any of its subsidiaries for the benefit of certain employees
of Morgan Stanley Dean Witter & Co. and its subsidiaries.
- Certain unit investment trusts sponsored by Dean Witter Reynolds.
- Certain other open-end investment companies whose shares are
distributed by the Fund's distributor.
- Investors who were shareholders of the Dean Witter Retirement
Series on September 11, 1998 for additional purchases for their
former Dean Witter Retirement Series accounts.
MEETING CLASS D ELIGIBILITY MINIMUMS. To meet the $5 million
($25 million for MSDW Eligible Plans) initial investment to qualify
to purchase Class D shares you may combine: (1) purchases in a single
transaction of Class D shares of the Fund and other Morgan Stanley
Dean Witter Multi-Class Funds and/or (2) previous purchases of
Class A and 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 throughout each
year. The total returns in the table represent the rate an investor would have
earned or lost on an investment in the Fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Fund's financial statements, is
included in the annual report, which is available upon request.
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
JANUARY 31, 2000 JANUARY 31, 1999 JANUARY 31, 1998
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
CLASS A SHARES++
- ------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.33 $12.14 $15.22
- ------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.01) 0.15 (0.07)
Net realized and unrealized gain (loss) 4.94 (4.96) (3.01)
------ ------ ------
Total income (loss) from investment operations 4.93 (4.81) (3.08)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.26 $ 7.33 $12.14
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 66.71% (39.62)% (20.24)%(1)
- ------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ------------------------------------------------------------------------------------------------------------------
Expenses 2.28%(3) 2.21 %(3) 2.15 %(2)
- ------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.16%(3) 1.26 %(3) (1.04)%(2)
- ------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $751 $58 $110
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 59% 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.
24
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JANUARY 31, 2000++ 1999++ 1998*++ 1997 1996
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
- ------------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.24 $12.09 $11.47 $ 9.48 $ 9.35
- ------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.06) 0.05 (0.09) (0.04) (0.06)
Net realized and unrealized gain (loss) 4.81 (4.90) 0.71 2.03 0.19
-------- -------- -------- -------- --------
Total income (loss) from investment operations 4.75 (4.85) 0.62 1.99 0.13
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.99 $ 7.24 $12.09 $11.47 $ 9.48
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 65.19 % (40.12)% 5.41 % 20.99 % 1.39 %
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ------------------------------------------------------------------------------------------------------------------------
Expenses 3.06 %(1) 2.98 %(1) 2.81 % 2.78 % 2.98 %
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.62)%(1) 0.49 %(1) (0.64)% (0.29)% (0.61)%
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $136,699 $105,678 $272,710 $270,843 $261,066
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 59 % 27 % 30 % 29 % 64 %
- ------------------------------------------------------------------------------------------------------------------------
</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>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
JANUARY 31, 2000 JANUARY 31, 1999 JANUARY 31, 1998
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
CLASS C SHARES++
- ------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.24 $12.10 $15.22
- ------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.06) 0.06 (0.12)
Net realized and unrealized gain (loss) 4.84 (4.92) (3.00)
------ ------ ------
Total income (loss) from investment operations 4.78 (4.86) (3.12)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.02 $ 7.24 $12.10
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 65.47 % (40.17) % (20.50)%(1)
- ------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ------------------------------------------------------------------------------------------------------------------
Expenses 2.95 %(3) 2.98 %(3) 2.91 %(2)
- ------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.51)%(3) 0.49 %(3) (1.76)%(2)
- ------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $776 $369 $792
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 59 % 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>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
JANUARY 31, 2000 JANUARY 31, 1999 JANUARY 31, 1998
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
CLASS D SHARES++
- ------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.35 $12.16 $15.22
- ------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.02) 0.16 (0.04)
Net realized and unrealized gain (loss) 4.97 (4.97) (3.02)
------ ------ ------
Total income (loss) from investment operations 4.95 (4.81) (3.06)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.30 $ 7.35 $12.16
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 66.80% (39.56)% (20.11)%(1)
- ------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ------------------------------------------------------------------------------------------------------------------
Expenses 2.06%(3) 1.98 %(3) 1.86 %(2)
- ------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.38%(3) 1.49 %(3) (0.52)%(2)
- ------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $588 $5 $8
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 59% 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
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
28
<PAGE>
MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS
The Morgan Stanley Dean Witter Family of Funds offers
investors a wide range of investment choices. Come on
in and meet the family!
- --------------------------------------------------------------------------------
GROWTH FUNDS
- ---------------------------------
GROWTH FUNDS
Aggressive Equity Fund
American Opportunities Fund
Capital Growth Securities
Developing Growth Securities
Growth Fund
Market Leader Trust
Mid-Cap Equity Trust
Next Generation Trust
Small Cap Growth Fund
Special Value Fund
Tax-Managed Growth Fund
21st Century Trend Fund
THEME FUNDS
Financial Services Trust
Health Sciences Trust
Information Fund
Natural Resource Development Securities
GLOBAL/INTERNATIONAL FUNDS
Competitive Edge Fund - "Best Ideas"
Portfolio
European Growth Fund
Fund of Funds - International Portfolio
International Fund
International SmallCap Fund
Japan Fund
Latin American Growth Fund
Pacific Growth Fund
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUNDS
- ---------------------------------
Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
Equity Fund
Fund of Funds - Domestic Portfolio
Income Builder Fund
Mid-Cap Dividend Growth Securities
S&P 500 Index Fund
S&P 500 Select Fund
Strategist Fund
Total Market Index Fund
Total Return Trust
Value Fund
Value-Added Market Series/Equity Portfolio
THEME FUNDS
Real Estate Fund
Utilities Fund
GLOBAL FUNDS
Global Dividend Growth Securities
Global Utilities Fund
- --------------------------------------------------------------------------------
INCOME FUNDS
- ---------------------------------
GOVERNMENT INCOME FUNDS
Federal Securities Trust
Short-Term U.S. Treasury Trust
U.S. Government Securities Trust
DIVERSIFIED INCOME FUNDS
Diversified Income Trust
CORPORATE INCOME FUNDS
High Yield Securities
Intermediate Income Securities
Short-Term Bond Fund (NL)
GLOBAL INCOME FUNDS
North American Government Income Trust
World Wide Income Trust
TAX-FREE INCOME FUNDS
California Tax-Free Income Fund
Hawaii Municipal Trust (FSC)
Limited Term Municipal Trust (NL)
Multi-State Municipal Series Trust (FSC)
New York Tax-Free Income Fund
Tax-Exempt Securities Trust
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
- ---------------------------------
TAXABLE MONEY MARKET FUNDS
Liquid Asset Fund (MM)
U.S. Government Money Market Trust (MM)
TAX-FREE MONEY MARKET FUNDS
California Tax-Free Daily Income Trust (MM)
New York Municipal Money Market Trust (MM)
Tax-Free Daily Income Trust (MM)
There may be Funds created after this PROSPECTUS was published. Please
consult the inside back cover of a new fund's prospectus for its
designation, e.g., Multi-Class Fund or Money Market Fund.
Unless otherwise noted, each listed Morgan Stanley Dean Witter Fund,
except for North American Government Income Trust and Short-Term U.S.
Treasury Trust, is a Multi-Class Fund. A Multi-Class Fund is a mutual
fund offering multiple Classes of shares. The other types of funds are:
NL - No-Load (Mutual) Fund; MM - Money Market Fund; FSC - A mutual fund
sold with a front-end sales charge and a distribution (12b-1) fee.
<PAGE>
PROSPECTUS - MARCH 31, 2000
Additional information about the Fund's investments is available in the Fund's
ANNUAL and SEMI-ANNUAL REPORTS TO SHAREHOLDERS. In the Fund's ANNUAL REPORT, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. The
Fund's Statement of Additional Information also provides additional information
about the Fund. The Statement of Additional Information is incorporated herein
by reference (legally is part of this PROSPECTUS). For a free copy of any of
these documents, to request other information about the Fund, or to make
shareholder inquiries, please call:
(800) 869-NEWS
You also may obtain information about the Fund by calling your Morgan Stanley
Dean Witter Financial Advisor or by visiting our Internet site at:
www.msdw.com/individual/funds
Information about the Fund (including the STATEMENT OF ADDITIONAL INFORMATION)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (202) 942-8090. Reports and
other information about the Fund are available on the EDGAR Database on the
SEC's Internet site (www.sec.gov) and copies of this information may be
obtained, after paying a duplicating fee, by electronic request at the following
e-mail address: [email protected], or by writing the Public Reference Section
of the SEC, Washington, DC 20549-0102.
TICKER SYMBOLS:
CLASS A: 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
MARCH 31, 2000
- --------------------------------------------------------------------------------
This STATEMENT OF ADDITIONAL INFORMATION is not a PROSPECTUS. The PROSPECTUS
(dated March 31, 2000) 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.................. 13
III. Management of the Fund................................. 14
A. Board of Trustees...................................... 14
B. Management Information................................. 14
C. Compensation........................................... 18
IV. Control Persons and Principal Holders of Securities..... 20
V. Management, Investment Advice and Other Services......... 21
A. The Investment Manager and Sub-Advisor................. 21
B. Principal Underwriter.................................. 22
C. Services Provided by the Investment Manager and
Sub-Advisor.......................................... 22
D. Dealer Reallowances.................................... 23
E. Rule 12b-1 Plan........................................ 23
F. Other Service Providers................................ 27
G. Codes of Ethics........................................ 28
VI. Brokerage Allocation and Other Practices................ 28
A. Brokerage Transactions................................. 28
B. Commissions............................................ 28
C. Brokerage Selection.................................... 29
D. Directed Brokerage..................................... 29
E. Regular Broker-Dealers................................. 30
VII. Capital Stock and Other Securities..................... 30
VIII. Purchase, Redemption and Pricing of Shares............ 30
A. Purchase/Redemption of Shares.......................... 30
B. Offering Price......................................... 31
IX. Taxation of the Fund and Shareholders................... 32
X. Underwriters............................................. 34
XI. Calculation of Performance Data......................... 34
XII. Financial Statements................................... 35
</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 Investment Management Company, a wholly-owned subsidiary of
TCW.
"TCW"--The TCW Group, Inc., a preeminent investment management and investment
advisory services firm.
"TRANSFER AGENT"--Morgan Stanley Dean Witter Trust FSB, a wholly-owned transfer
agent subsidiary of MSDW.
"TRUSTEES"--The Board of Trustees of the Fund.
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. As a "non-diversified"
mutual fund, the Fund's 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.
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 minimum 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
4
<PAGE>
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 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.
5
<PAGE>
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.
A call option is "covered" if the Fund owns the underlying security subject
to the option or has an absolute and immediate right to acquire that security
without additional cash consideration (or for additional consideration (in cash,
Treasury bills or other liquid portfolio securities) held in a segregated
account on the Fund's books) upon conversion or exchange of other securities
held in its portfolio. A call option is also covered if the Fund holds a call on
the same security as the call written where the exercise price of the call held
is (i) equal to or less than the exercise price of the call written or
(ii) greater than the exercise price of the call written if the difference is
maintained by the Fund in cash, Treasury bills or other liquid portfolio
securities in a segregated account on the Fund's books.
Options written by the Fund normally have expiration dates of from up to
eighteen months from the date written. The exercise price of a call option may
be below, equal to or above the current market value of the underlying security
at the time the option is written.
COVERED PUT WRITING. A writer of a covered put option incurs an obligation
to buy the security underlying the option from the purchaser of the put, at the
option's exercise price at any time during the option period, at the purchaser's
election. Through the writing of a put option, the Fund would receive income
from the premium paid by purchasers. The potential gain on a covered put option
is limited to the premium received on the option (less the commissions paid on
the transaction). During the option 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
6
<PAGE>
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 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.
7
<PAGE>
Although most futures contracts call for actual delivery or acceptance of
securities, the contracts usually are closed out before the settlement date
without the making or taking of delivery. Index futures contracts provide for
the delivery of an amount of cash equal to a specified dollar amount times the
difference between the index value at the open or close of the last trading day
of the contract and the futures contract price. A futures contract sale is
closed out by effecting a futures contract purchase for the same aggregate
amount of the specific type of security (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
8
<PAGE>
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 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. 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 also limit the amount by which the price of a futures contract may
move on any day. If the price moves equal the daily limit on successive days,
then it may prove impossible to liquidate a futures position until the daily
limit moves have ceased. In the event of adverse price movements, the Fund would
continue to be required to make daily cash payments of variation margin on open
futures positions. In these situations, if the Fund has insufficient cash, it
may have to sell portfolio securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so. In addition, the
Fund may be required to take or make delivery of the instruments underlying
interest rate futures contracts it holds at a time when it is disadvantageous to
do so. The inability to close out options and futures positions could also have
an adverse impact on the Fund's ability to effectively hedge its portfolio.
Futures contracts and options thereon which are purchased or sold on foreign
commodities exchanges may have greater price volatility than their U.S.
counterparts. Furthermore, foreign commodities exchanges may be less regulated
and under less governmental scrutiny than U.S. exchanges. Brokerage commissions,
clearing costs and other transaction costs may be higher on foreign exchanges.
Greater margin requirements may limit the Fund's ability to enter into certain
commodity transactions on foreign exchanges. Moreover, differences in clearance
and delivery requirements on foreign exchanges may occasion delays in the
settlement of the Fund's transactions effected on foreign exchanges.
In the event of the bankruptcy of a broker through which the Fund engages in
transactions in futures or options thereon, the Fund could experience delays
and/or losses in liquidating open positions purchased or sold through the broker
and/or incur a loss of all or part of its margin deposits with the broker.
If the Fund maintains a short position in a futures contract or has sold a
call option in a futures contract, it will cover this position by holding, in a
segregated account maintained on the books of the Fund, cash, U.S. government
securities or other liquid portfolio securities equal in value (when added to
any initial or variation margin on deposit) to the market value of the
securities underlying the futures contract or the exercise price of the option.
Such a position may also be covered by owning the securities underlying the
futures contract (in the case of a stock index futures contract a portfolio of
securities substantially replicating the relevant index), or by holding a call
option permitting the Fund to purchase the same contract at a price no higher
than the price at which the short position was established.
In addition, if the Fund holds a long position in a futures contract or has
sold a put option on a futures contract, it will hold cash, U.S. government
securities or other liquid portfolio securities equal to
9
<PAGE>
the purchase price of the contract or the exercise price of the put option (less
the amount of initial or variation margin on deposit) in a segregated account
maintained on the books of the Fund. Alternatively, the Fund could cover its
long position by purchasing a put option on the same futures contract with an
exercise price as high or higher than the price of the contract held by the
Fund.
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;
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
10
<PAGE>
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
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
11
<PAGE>
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 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. The Fund may invest up to 5% of the value of its net assets in rights.
YEAR 2000. The investment management services provided to the Fund by the
Investment Manager and the Sub-Advisor and the services provided to shareholders
by the Distributor and the Transfer Agent depend on the smooth functioning of
their computer systems. Many computer software systems in use today were
designed in such a way that they may not be able to recognize the year 2000, but
revert to 1900 or some other date, due to the manner in which dates were encoded
and calculated. That failure could have a negative impact on the handling of
securities trades, pricing and account services.
Improperly functioning trading systems may result in settlement problems and
liquidity issues. Corporate and governmental data processing errors could result
in production problems for individual issuers and overall economic
uncertainties. Operations ran smoothly from the last week in December through
the first few weeks of January, but the year 2000 issue may yet have an adverse
impact on financial market participants and other entities, including the
issuers whose securities are contained in the Fund's portfolio.
12
<PAGE>
C. FUND POLICIES/INVESTMENT RESTRICTIONS
The investment objective, policies and restrictions listed below have been
adopted by the Fund as fundamental policies. Under the Investment Company Act of
1940 (the "Investment Company Act"), a fundamental policy may not be changed
without the vote of a majority of the outstanding voting securities of the Fund.
The Investment Company Act defines a majority as the lesser of (a) 67% or more
of the shares present at a meeting of shareholders, if the holders of 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b) more
than 50% of the outstanding shares of the Fund. For purposes of the following
restrictions: (i) all percentage limitations apply immediately after a purchase
or initial investment; and (ii) any subsequent change in any applicable
percentage resulting from market fluctuations or other changes in total or net
assets does not require elimination of any security from the portfolio.
The Fund will:
1. Seek long-term capital appreciation.
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.
13
<PAGE>
12. Engage in the underwriting of securities, except insofar as the
Fund may be deemed an underwriter under the Securities Act in disposing of a
portfolio security. (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, the Fund may
not 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.
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.
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 Morgan Stanley Dean Witter Funds (there
were 93 such Funds as of the calendar year ended December 31, 1999), are shown
below.
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ----------------------------------------- -----------------------------------------------------
<S> <C>
Michael Bozic (59) ..................... Vice Chairman of Kmart Corporation (since December
Director 1998); Director or Trustee of the Morgan Stanley Dean
c/o Kmart Corporation Witter Funds; formerly Chairman and Chief Executive
3100 West Big Beaver Road 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,
Roebuck and Co.; Director of Weirton Steel
Corporation.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ----------------------------------------- -----------------------------------------------------
<S> <C>
Charles A. Fiumefreddo* (66) ........... Chairman, Director or Trustee and Chief Executive
Chairman of the Board, Officer of the Morgan Stanley Dean Witter Funds;
Chief Executive Officer and Trustee formerly Chairman, Chief Executive Officer and
Two World Trade Center Director of the Investment Manager, the Distributor
New York, New York and MSDW Services Company; Executive Vice President
and Director of Dean Witter Reynolds; Chairman and
Director of the Transfer Agent; formerly Director
and/or officer of various MSDW subsidiaries (until
June 1998).
Edwin J. Garn (67) ..................... Director or Trustee of the Morgan Stanley Dean Witter
Director Funds; formerly United States Senator
c/o Huntsman Corporation (R-Utah)(1974-1992) and Chairman, Senate Banking
500 Huntsman Way Committee (1980-1986); formerly Mayor of Salt Lake
Salt Lake City, Utah City, Utah (1971-1974); formerly Astronaut, Space
Shuttle Discovery (April 12-19, 1985); Vice Chairman,
Huntsman Corporation (chemical company); Director of
Franklin Covey (time management systems), BMW Bank of
North America, Inc. (industrial loan corporation),
United Space Alliance (joint venture between Lock-
heed Martin and the Boeing Company) and Nuskin Asia
Pacific (multilevel marketing); member of the board
of various civic and charitable organizations.
Wayne E. Hedien (66) ................... Retired; Director or Trustee of the Morgan Stanley
Director Dean Witter Funds; Director of The PMI Group, Inc.
c/o Mayer, Brown & Platt (private mortgage insurance); Trustee and Vice
Counsel to the Independent Trustees Chairman of The Field Museum of Natural History;
1675 Broadway formerly associated with the Allstate Companies
New York, New York (1966-1994), most recently as Chairman of The
Allstate Corporation (March 1993-December 1994) and
Chairman and Chief Executive Officer of its
wholly-owned subsidiary, Allstate Insurance Company
(July 1989-December 1994); director of various other
business and charitable organizations.
Dr. Manuel H. Johnson (51) ............. Senior Partner, Johnson Smick International, Inc., a
Trustee consulting firm; Co-Chairman and a founder of the
c/o Johnson Smick International, Inc. Group of Seven Council (G7C), an international
1133 Connecticut Avenue, N.W. economic commission; Chairman of the Audit Committee
Washington, D.C. and Director or Trustee of the Morgan Stanley Dean
Witter Funds; Director of Greenwich Capital
Markets, Inc. (broker-dealer) and NVR, Inc. (home
construction); Chairman and Trustee of the Financial
Accounting Foundation (oversight organization of the
Financial Accounting Standards Board); formerly Vice
Chairman of the Board of Governors of the Federal
Reserve System (1986-1990) and Assistant Secretary of
the U.S. Treasury.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ----------------------------------------- -----------------------------------------------------
<S> <C>
Michael E. Nugent (63) ................. General Partner, Triumph Capital, L.P., a private
Trustee investment partnership; Chairman of the Insurance
c/o Triumph Capital, L.P. Committee and Director or Trustee of the Morgan
237 Park Avenue New York, Stanley Dean Witter Funds; formerly Vice President,
New York Bankers Trust Company and BT Capital Corporation
(1984-1988); Director of various business
organizations.
Philip J. Purcell* (56) ................ Chairman of the Board of Directors and Chief
Trustee Executive Officer of MSDW, Dean Witter Reynolds and
1585 Broadway Novus Credit Services Inc.; Director of the
New York, New York Distributor; Director or Trustee of the Morgan
Stanley Dean Witter Funds; Director of American
Airlines, Inc. and its parent company, AMR
Corporation; Director and/or officer of various MSDW
subsidiaries.
John L. Schroeder (69) ................. Retired; Chairman of the Derivatives Committee and
Trustee Director or Trustee of the Morgan Stanley Dean Witter
c/o Mayer, Brown & Platt Funds; Director of Citizens Utilities Company
Counsel to the Independent Trustees (telecommunications, gas, electric and water
1675 Broadway utilities company); formerly Executive Vice President
New York, New York and Chief Investment Officer of the Home Insurance
Company (August 1991-September 1995).
Mitchell M. Merin (46) ................. President and Chief Operating Officer of Asset
President Management of MSDW (since December 1998); President
Two World Trade Center and Director (since April 1997) and Chief Executive
New York, New York Officer (since June 1998) of the Investment Manager
and MSDW Services Company; Chairman, Chief Executive
Officer and Director of the Distributor (since
June 1998); Chairman and Chief Executive Officer
(since June 1998) and Director (since January 1998)
of the Transfer Agent; Director of various MSDW
subsidiaries; President of the Morgan Stanley Dean
Witter Funds (since May 1999); Trustee of various Van
Kampen investment companies (since December 1999);
previously Chief Strategic Officer of the Investment
Manager and MSDW Services Company and Executive Vice
President of the Distributor (April 1997-June 1998),
Vice President of the Morgan Stanley Dean Witter
Funds (May 1997-April 1999), and Executive Vice
President of Dean Witter, Discover & Co.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ----------------------------------------- -----------------------------------------------------
<S> <C>
Barry Fink (45) ........................ Executive Vice President (since December 1999) and
Vice President, Secretary and General Counsel (since February 1997)
Secretary and General Counsel and Director (since July 1998) of the Investment
Two World Trade Center Manager and MSDW Services Company; Executive Vice
New York, New York President (since December 1999) and Assistant
Secretary and Assistant General Counsel (since
February 1997) of the Distributor; Assistant
Secretary of Dean Witter Reynolds (since August
1996); Vice President, Secretary and General Counsel
of the Morgan Stanley Dean Witter Funds (since
February 1997); previously Senior Vice President
(March 1997-December 1999), First Vice President
(June 1993-February 1997), Vice President and
Assistant Secretary and Assistant General Counsel of
the Investment Manager and MSDW Services Company,
Senior Vice President of the Distributor (March
1997-December 1999), and Assistant Secretary of the
Morgan Stanley Dean Witter Funds.
Michael P. Reilly (36) ................. Managing Director of the Sub-Advisor, Trust Company
Vice President of the West and TCW Asset Management Company.
865 South Figueroa Street
Los Angeles, California
Thomas F. Caloia (54) .................. First Vice President and Assistant Treasurer of the
Treasurer Investment Manager, the Distributer and MSDW Services
Two World Trade Center Company; Treasurer of the Morgan Stanley Dean Witter
New York, New York Funds.
</TABLE>
- ------------
*Denotes Trustees who are "interested persons" of the Fund as defined by the
Investment Company Act.
In addition, RONALD E. ROBISON, Executive Vice President, Chief
Administrative Officer and Director of the Investment Manager and MSDW Services
Company, ROBERT S. GIAMBRONE, Senior Vice President of the Investment Manager,
MSDW Services Company, the Distributor and the Transfer Agent and Director of
the Transfer Agent, and JOSEPH J. MCALINDEN, Executive Vice President and Chief
Investment Officer of the Investment Manager and Director of the Transfer Agent,
are Vice Presidents of the Fund.
In addition, MARILYN K. CRANNEY, TODD LEBO, LOU ANNE D. MCINNIS, CARSTEN
OTTO and RUTH ROSSI, First Vice Presidents and Assistant General Counsels of the
Investment Manager and MSDW Services Company, and NATASHA KASSIAN, Assistant
Vice President and Assistant General Counsel of the Investment Manager and MSDW
Services Company, are Assistant Secretaries of the Fund.
INDEPENDENT DIRECTORS/TRUSTEES AND THE COMMITTEES. Law and regulation
establish both general guidelines and specific duties for the independent
directors/trustees. The Morgan Stanley Dean Witter Funds seek as independent
directors/trustees individuals of distinction and experience in business and
finance, government service or academia; these are people whose advice and
counsel are in demand by others and for whom there is often competition. To
accept a position on the Funds' boards, such individuals may reject other
attractive assignments because the Funds make substantial demands on their time.
All of the independent directors/trustees serve as members of the Audit
Committee. In addition, three of the directors/trustees, including two
independent directors/trustees, serve as members of the Derivatives Committee
and the Insurance Committee.
The independent directors/trustees are charged with recommending to the full
board approval of management, advisory and administration contracts, Rule 12b-1
plans and distribution and underwriting
17
<PAGE>
agreements; continually reviewing Fund performance; checking on the pricing of
portfolio securities, brokerage commissions, transfer agent costs and
performance, and trading among Funds in the same complex; and approving fidelity
bond and related insurance coverage and allocations, as well as other matters
that arise from time to time. The independent directors/trustees are required to
select and nominate individuals to fill any independent director/trustee vacancy
on the board of any Fund that has a Rule 12b-1 plan of distribution. Most of the
Morgan Stanley Dean Witter Funds have a Rule 12b-1 plan.
The Audit Committee is charged with recommending to the full board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing engagement;
approving professional services provided by the independent accountants and
other accounting firms prior to the performance of the services; reviewing the
independence of the independent accountants; considering the range of audit and
non-audit fees; reviewing the adequacy of the Fund's system of internal
controls; and preparing and submitting Committee meeting minutes to the full
board.
The board of each Fund has a Derivatives Committee to approve parameters for
and monitor the activities of the Fund with respect to derivative investments,
if any, made by the Fund.
Finally, the board of each Fund has formed an Insurance Committee to review
and monitor the insurance coverage maintained by the Fund.
ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT DIRECTORS/TRUSTEES FOR
ALL MORGAN STANLEY DEAN WITTER FUNDS. The independent directors/trustees and
the Funds' management believe that having the same independent
directors/trustees for each of the Morgan Stanley Dean Witter Funds avoids the
duplication of effort that would arise from having different groups of
individuals serving as independent directors/trustees for each of the Funds or
even of sub-groups of Funds. They believe that having the same individuals serve
as independent directors/trustees of all the Funds tends to increase their
knowledge and expertise regarding matters which affect the Fund complex
generally and enhances their ability to negotiate on behalf of each Fund with
the Fund's service providers. This arrangement also precludes the possibility of
separate groups of independent directors/trustees arriving at conflicting
decisions regarding operations and management of the Funds and avoids the cost
and confusion that would likely ensue. Finally, having the same independent
directors/trustees serve on all Fund boards enhances the ability of each Fund to
obtain, at modest cost to each separate Fund, the services of independent
directors/trustees, of the caliber, experience and business acumen of the
individuals who serve as independent directors/trustees of the Morgan Stanley
Dean Witter Funds.
TRUSTEE AND OFFICER INDEMNIFICATION. The Fund's Declaration of Trust
provides that no Trustee, officer, employee or agent of the Fund is liable to
the Fund or to a shareholder, nor is any Trustee, officer, employee or agent
liable to any third persons in connection with the affairs of the Fund, except
as such liability may arise from his/her or its own bad faith, willful
misfeasance, gross negligence or reckless disregard of his/her or its duties. It
also provides that all third persons shall look solely to the Fund property for
satisfaction of claims arising in connection with the affairs of the Fund. With
the exceptions stated, the Declaration of Trust provides that a Trustee,
officer, employee or agent is entitled to be indemnified against all liability
in connection with the affairs of the Fund.
C. COMPENSATION
The Fund pays each Independent Trustee an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Trustees, the Independent
Trustees or Committees of the Board of Trustees attended by the Trustee (the
Fund pays the Chairman of the Audit Committee an additional annual fee of $750,
and the Chairmen of the Derivatives and Insurance Committees additional annual
fees of $500). If a Board meeting and a meeting of the Independent Trustees or a
Committee meeting, or a meeting of the Independent Trustees and/or more than one
Committee meeting, take place on a single day, the Trustees are paid a single
meeting fee by the Fund. The Fund also reimburses such Trustees for travel and
other out-of-pocket expenses incurred by them in connection with attending such
meetings.
18
<PAGE>
Trustees and officers of the Fund who are or have been employed by the
Investment Manager or an affiliated company receive no compensation or expense
reimbursement from the Fund for their services as Trustee.
At their June 8, 1999 meeting, shareholders elected or re-elected, as
appropriate, the following eight individuals to the Fund's Board of Trustees to
serve for indefinite terms: Michael Bozic, Charles A. Fiumefreddo, Edwin Jacob
(Jake) Garn, Wayne E. Hedien, Dr. Manuel H. Johnson, Michael E. Nugent, Philip
J. Purcell and John L. Schroeder. Messrs. Fiumefreddo, Johnson, Nugent and
Schroeder previously served as Trustees of the Fund and were previously elected
by shareholders. Messrs. Bozic, Garn, Hedien and Purcell previously held
directorships or trusteeships with the other Morgan Stanley Dean Witter Funds
and were elected to replace Messrs. John C. Argue, Richard M. DeMartini, Thomas
E. Larkin and Marc I. Stern who resigned as Trustees. Messrs. Bozic, Garn,
Hedien and Purcell commenced service at the time the new Investment Management
Agreement took effect on June 28, 1999. Prior to the effectiveness of the
election of Messrs. Bozic, Garn, Hedien and Purcell and the resignation of
Messrs. Argue, DeMartini, Larkin and Stern, the Fund paid each Independent
Trustee an annual fee of $2,225 plus a per meeting fee of $200 for meetings of
the Board of Trustees or committees of the Board attended by the Trustee.
The following table illustrates the compensation that the Fund paid to its
current Independent Trustees for the fiscal year ended January 31, 2000.
FUND COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
- --------------------------- -------------
<S> <C>
Michael Bozic............................................... $1,050
Edwin J. Garn............................................... 1,050
Wayne E. Hedien............................................. 1,050
Dr. Manuel H. Johnson....................................... 3,638
Michael E. Nugent........................................... 3,408
John L. Schroeder........................................... 3,408
</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, 1999, it is estimated that the compensation paid to each
Independent Trustee during such fiscal year will be $1,550 and an additional
$750 to Dr. Johnson who serves as Chairman of the Audit Committee and an
additional $500 to each of Messrs. Nugent and Schroeder, who serve as Chairmen
of the Insurance Committee and the Derivatives Committee, respectively.
The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1999 for services
to the 93 Morgan Stanley Dean Witter Funds that were in operation at
December 31, 1999.
CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS
<TABLE>
<CAPTION>
TOTAL CASH COMPENSATION
NAME OF FOR SERVICES TO 93 MORGAN
INDEPENDENT TRUSTEE STANLEY DEAN WITTER FUNDS
- ------------------- -------------------------
<S> <C>
Michael Bozic............................................... $134,600
Edwin J. Garn............................................... 138,700
Wayne E. Hedien............................................. 138,700
Dr. Manuel H. Johnson....................................... 208,638
Michael E. Nugent........................................... 193,324
John L. Schroeder........................................... 193,324
</TABLE>
19
<PAGE>
As of the date of this STATEMENT OF ADDITIONAL INFORMATION, 55 of the Morgan
Stanley Dean Witter Funds, not including the Fund, have adopted a retirement
program under which an independent director/trustee who retires after serving
for at least five years (or such lesser period as may be determined by the
Board) as an independent director/trustee of any Morgan Stanley Dean Witter Fund
that has adopted the retirement program (each such Fund referred to as an
"Adopting Fund" and each such director/trustee referred to as an "Eligible
Trustee") is entitled to retirement payments upon reaching the eligible
retirement age (normally, after attaining age 72). Annual payments are based
upon length of service.
Currently, upon retirement, each Eligible Trustee is entitled to receive
from the Adopting Fund, commencing as of his or her retirement date and
continuing for the remainder of his or her life, an annual retirement benefit
(the "Regular Benefit") equal to 30.22% of his or her Eligible Compensation plus
0.5036667% of such Eligible Compensation for each full month of service as an
independent director/ trustee of any Adopting Fund in excess of five years up to
a maximum of 60.44% after ten years of service. The foregoing percentages may be
changed by the Board(1). "Eligible Compensation" is one-fifth of the total
compensation earned by such Eligible Trustee for service to the Adopting Fund in
the five year period prior to the date of the Eligible Trustee's retirement.
Benefits under the retirement program are accrued as expenses on the books of
the Adopting Funds. Such benefits are not secured or funded by the Adopting
Funds.
The following table illustrates the retirement benefits accrued to the
Fund's Independent Trustees by the 55 Morgan Stanley Dean Witter Funds (not
including the Fund) for the year ended December 31, 1999, and the estimated
retirement benefits for the Independent Trustees, to commence upon their
retirement, from the 55 Morgan Stanley Dean Witter Funds as of December 31,
1999.
RETIREMENT BENEFITS FROM ALL MORGAN STANLEY DEAN WITTER FUNDS
<TABLE>
<CAPTION>
FOR ALL ADOPTING FUNDS
------------------------------
ESTIMATED
CREDITED YEARS ESTIMATED RETIREMENT BENEFITS ESTIMATED ANNUAL
OF SERVICE AT PERCENTAGE OF ACCRUED AS EXPENSES BENEFITS UPON RETIREMENT
NAME OF RETIREMENT ELIGIBLE BY ALL FROM ALL
INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION ADOPTING FUNDS ADOPTING FUNDS(2)
- ------------------- -------------- ------------- ------------------- ------------------------
<S> <C> <C> <C> <C>
Michael Bozic.......... 10 60.44% $ 20,933 $ 50,588
Edwin J. Garn.......... 10 60.44 31,737 50,675
Wayne E. Hedien........ 9 51.37 39,566 43,000
Dr. Manuel H.
Johnson............... 10 60.44 13,129 75,520
Michael E. Nugent...... 10 60.44 23,175 67,209
John L. Schroeder...... 8 50.37 41,558 52,994
</TABLE>
- ------------------------
(1) An Eligible Trustee may elect alternative payments of his or her retirement
benefits based upon the combined life expectancy of the Eligible Trustee
and his or her spouse on the date of such Eligible Trustee's retirement. In
addition, the Eligible Trustee may elect that the surviving spouse's
periodic payment of benefits will be equal to a lower percentage of the
periodic amount when both spouses were alive. The amount estimated to be
payable under this method, through the remainder of the later of the lives
of the Eligible Trustee and spouse, will be the actuarial equivalent of the
Regular Benefit.
(2) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in Footnote (1)
above.
IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------
The following owned 5% or more of the outstanding Class A shares of the Fund
as of March 8, 2000: Dean Witter Reynolds Cust for Inez L. Roberts, IRA Rollover
Dated 03/09/98, 22043 Vernon Ridge Drive, Ivanhoe IL 60060-5318--9.491%. The
following owned 5% or more of the outstanding Class D shares of the Fund on
March 8, 2000: Hare & Co., c/o The Bank of New York, P.O. Box 11203, New
York, NY 10286-1203--99.341%.
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.
20
<PAGE>
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,
NY 10048. The Investment Manager is a wholly-owned subsidiary of MSDW, a
Delaware corporation. MSDW is a preeminent global financial services firm that
maintains leading market positions in each of its three primary businesses:
securities, asset management and credit services.
The Sub-Advisor is TCW Investment Management Company, a wholly-owned
subsidiary of TCW, whose direct and indirect subsidiaries provide a variety of
trust, investment management and investment advisory services. The Sub-Advisor
is headquartered at 865 South Figueroa Street, Suite 1800, Los Angeles, CA
90017. Robert A. Day, who is Chairman of the Board of Directors of TCW, may be
deemed to be a control person of the Sub-Advisor by virtue of the aggregate
ownership by Mr. Day and his family of more than 25% of the outstanding voting
stock of TCW. The Sub-Advisor was retained to provide sub-advisory services to
the Fund effective June 28, 1999.
Pursuant to an Investment Management Agreement (the "Management Agreement")
with the Investment Manager, the Fund has retained the Investment Manager to
provide administrative services, manage its business affairs and supervise the
investment of the Fund's assets. The Fund pays the Investment Manager monthly
compensation calculated daily by applying the following annual rates to the net
assets of the Fund determined as of the close of each business day: 1.25% of the
portion of daily net assets not exceeding $500 million; and 1.20% 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 Investment Management Company pursuant to an advisory
agreement between the Fund and TCW Investment Management Company. As part of an
overall consolidation of the TCW/DW Family of Funds and the Morgan Stanley Dean
Witter Family of Funds, the Fund's Board of Trustees recommended on
February 25, 1999 and shareholders of the Fund approved on June 8, 1999 the
Investment Management Agreement between the Fund and the Investment Manager. The
Board also recommended and shareholders also approved the Sub-Advisory Agreement
between the Investment Manager and TCW Investment Management Company. The fee
rate under the Management Agreement with the Investment Manager is identical to
the total aggregate fee rate in effect under the previous management and
advisory agreements. For the fiscal years ended January 31, 1998 and 1999 and
for the period February 1, 1999 through June 25, 1999, MSDW Services Company
accrued total compensation under the old management agreement in the amounts of
$2,394,923, $1,476,124, and $374,012, respectively. For the same periods, TCW
Investment Management Company accrued total compensation in its capacity of
adviser to the Fund in the amounts of $1,596,615, $984,082, and $249,342,
respectively.
For the fiscal period June 28, 1999 through January 31, 2000, the Investment
Manager accrued total compensation under the new Investment Management Agreement
in the amount of $956,902 of which $382,761 was paid to TCW Investment
Management Company under the new Sub-Advisory Agreement. Combined, such total
fee paid by the Fund for the fiscal year ended January 31, 2000 was $1,580,256.
21
<PAGE>
B. PRINCIPAL UNDERWRITER
The Fund's principal underwriter is the Distributor (which has the same
address as the Investment Manager). In this capacity, the Fund's shares are
distributed by the Distributor. The Distributor has entered into a selected
dealer agreement with Dean Witter Reynolds, which through its own sales
organization sells shares of the Fund. In addition, the Distributor may enter
into similar agreements with other selected broker-dealers. The Distributor, a
Delaware corporation, is a wholly-owned subsidiary of MSDW.
The Distributor bears all expenses it may incur in providing services under
the Distribution Agreement. These expenses include the payment of commissions
for sales of the Fund's shares and incentive compensation to Financial Advisors,
the cost of educational and/or business-related trips, and educational and/or
promotional and business-related expenses. The Distributor also pays certain
expenses in connection with the distribution of the Fund's shares, including the
costs of preparing, printing and distributing advertising or promotional
materials, and the costs of printing and distributing prospectuses and
supplements thereto used in connection with the offering and sale of the Fund's
shares. The Fund bears the costs of initial typesetting, printing and
distribution of prospectuses and supplements thereto to shareholders. The Fund
also bears the costs of registering the Fund and its shares under federal and
state securities laws and pays filing fees in accordance with state securities
laws.
The Fund and the Distributor have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act. Under the
Distribution Agreement, the Distributor uses its best efforts in rendering
services to the Fund, but in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations, the Distributor is
not liable to the Fund or any of its shareholders for any error of judgment or
mistake of law or for any act or omission or for any losses sustained by the
Fund or its shareholders.
C. SERVICES PROVIDED BY THE INVESTMENT MANAGER AND SUB-ADVISOR
The Investment Manager supervises the investment of the Fund's assets. The
Investment Manager obtains and evaluates the information and advice relating to
the economy, securities markets, and specific securities as it considers
necessary or useful to continuously oversee the management of the assets of the
Fund in a manner consistent with its investment objective.
Under the terms of the Management Agreement, the 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.
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'
22
<PAGE>
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 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
23
<PAGE>
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>
2000 1999 1998
----------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Class A...................... FSCs:(1) $ 3,307 FSCs:(1) $ 1,799 FSCs:(1) $ 6,000
CDSCs: $ 0 CDSCs: $ 2 CDSCs: $ 0
Class B...................... CDSCs: $310,386 CDSCs: $916,003 CDSCs: $1,105,599
Class C...................... CDSCs: $ 1,443 CDSCs: $ 2,365 CDSCs: $ 339
</TABLE>
- ------------------------
(1) FSCs apply to Class A only.
The Distributor has informed the Fund that the entire fee payable by
Class A and a portion of the fees payable by each of Class B and Class C each
year pursuant to the Plan equal to 0.25% of such Class' average daily net assets
are currently each characterized as a "service fee" under the Rules of the
National Association of Securities Dealers, Inc. (of which the Distributor is a
member). The "service fee" is a payment made for personal service and/or the
maintenance of shareholder accounts. The remaining portion of the Plan fees
payable by a Class, if any, is characterized as an "asset-based sales charge" as
such is defined by the Rules of the Association.
Under the Plan and as required by Rule 12b-1, the Trustees receive and
review promptly after the end of each calendar quarter a written report provided
by the Distributor of the amounts expended under the Plan and the purpose for
which such expenditures were made. Class B shares of the Fund accrued amounts
payable to the Distributor under the Plan, during the fiscal year ended
January 31, 2000, of $1,253,425. 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, 2000, Class A and Class C shares of the Fund accrued payments under
the Plan amounting to $946 and $4,723, respectively, which amounts are equal to
0.22% and 0.89% 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 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.
24
<PAGE>
With respect to Class D shares other than shares held by participants in
MSDW Advisors' mutual fund asset allocation program, the Investment Manager
compensates Dean Witter Reynolds' Financial Advisors by paying them, from its
own funds, commissions for the sale of Class D shares, currently a gross sales
credit of up to 1.0% of the amount sold. There is a chargeback of 100% of the
amount paid if the Class D shares are redeemed in the first year and a
chargeback of 50% of the amount paid if the Class D shares are redeemed in the
second year after purchase. The Investment Manager also compensates Dean Witter
Reynolds' Financial Advisors by paying them, from its own funds, an annual
residual commission, currently up to 0.10% of the current value of the
respective accounts for which they are the Financial Advisors of record (not
including accounts of participants in 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 Investment Manager pays a retention fee to Financial Advisors at an
annual rate of 0.05% of the value of shares of the Fund sold after January 1,
2000 and held for at least one year. Shares purchased through the reinvestment
of dividends will be eligible for a retention fee, provided that such dividends
were earned on shares otherwise eligible for a retention fee payment. Shares
owned in variable annuities, closed-end fund shares and shares held in 401(k)
plans where the Transfer Agent or Dean Witter Reynolds' Retirement Plan Services
is either recordkeeper or trustee are not eligible for a retention fee.
For the first year only, the retention fee is paid on any shares of the Fund
sold after January 1, 2000 and held by shareholders on December 31, 2000.
The retention fees are paid by the Investment Manager from its own assets,
which may include profits from investment management fees payable under the
Management Agreement as well as from borrowed funds.
The distribution fee that the Distributor receives from the Fund under the
Plan, in effect, offsets distribution expenses incurred under the Plan on behalf
of the Fund and, in the case of Class B shares, opportunity costs, such as the
gross sales credit and an assumed interest charge thereon ("carrying charge").
These expenses may include the cost of Fund-related educational and/or
business-related trips or payment of Fund-related educational and/or promotional
expenses of Financial Advisors. 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
25
<PAGE>
authorized financial representatives, such amounts shall be determined at the
beginning of each calendar quarter by the Trustees, including, a majority of the
Independent Trustees. Expenses representing the service fee (for Class A) or a
gross sales credit or a residual to Financial Advisors and other authorized
financial representatives (for Class C) may be reimbursed without prior
determination. In the event that the Distributor proposes that monies shall be
reimbursed for other than such expenses, then in making quarterly determinations
of the amounts that may be reimbursed by the Fund, the Distributor will provide
and the Trustees will review a quarterly budget of projected distribution
expenses to be incurred on behalf of the Fund, together with a report explaining
the purposes and anticipated benefits of incurring such expenses. The Trustees
will determine which particular expenses, and the portions thereof, that may be
borne by the Fund, and in making such a determination shall consider the scope
of the Distributor's commitment to promoting the distribution of the Fund's
Class A and Class C shares.
Each Class paid 100% of the amounts accrued under the Plan with respect to
that Class for the fiscal year ended January 31, 2000 to the Distributor. The
Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to
the Plan, $42,990,807 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) 7.63% ($3,281,386)--advertising and promotional expenses; (ii) 0.64%
($276,639)--printing and mailing of prospectuses for distribution to other than
current shareholders; and (iii) 91.72% ($39,432,782)--other expenses, including
the gross sales credit and the carrying charge, of which 14.83% ($5,848,965)
represents carrying charges, 35.26% ($13,903,700) 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 49.90% ($19,680,117) 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, 2000 were service fees. The remainder of the amounts accrued
by Class C were for expenses which relate to compensation of sales personnel and
associated overhead expenses.
In the case of Class B shares, at any given time, the expenses of
distributing shares of the Fund may be more or less than the total of (i) the
payments made by the Fund pursuant to the Plan; and (ii) the proceeds of CDSCs
paid by investors upon redemption of shares. For example, if $1 million in
expenses in distributing Class B shares of the Fund had been incurred and
$750,000 had been received as described in (i) and (ii) above, the excess
expense would amount to $250,000. The Distributor has advised the Fund that in
the case of Class B shares the excess distribution expenses, including the
carrying charge designed to approximate the opportunity costs incurred by Dean
Witter Reynolds which arise from it having advanced monies without having
received the amount of any sales charges imposed at the time of sale of the
Fund's Class B shares, totaled $19,948,905 as of January 31, 2000 (the end of
the Fund's fiscal year), which was equal to 14.59% 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 unreimbursed expenses representing a gross sales commission credited to
Morgan Stanley Dean Witter Financial Advisors and other authorized financial
representatives at the time of sale totaled $1,151 in the case of Class C at
December 31, 1999 (end of the
26
<PAGE>
calendar year), which amount was equal to 0.15% of the net assets of Class C on
such date, and that there were no such expenses that may be reimbursed in the
subsequent year in the case of Class A on such date. No interest or other
financing charges will be incurred on any Class A or Class C distribution
expenses incurred by the Distributor under the Plan or on any unreimbursed
expenses due to the Distributor pursuant to the Plan.
No interested person of the Fund nor any Independent Trustee has any direct
financial interest in the operation of the Plan except to the extent that the
Distributor, the 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.
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, NJ 07311.
(2) CUSTODIAN AND INDEPENDENT ACCOUNTANTS
Chase Manhattan Bank, Chase Plaza, New York, NY 10005, is the Custodian of
the Fund's assets. Any of the Fund's cash balances with the Custodian in excess
of $100,000 are unprotected by federal deposit insurance. These balances may, at
times, be substantial.
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, NY 10036,
serves as the independent accountants of the Fund. The independent accountants
are responsible for auditing the annual financial statements of the Fund.
27
<PAGE>
(3) AFFILIATED PERSONS
The Transfer Agent is an affiliate of the Investment Manager, and of the
Distributor. As Transfer Agent and Dividend Disbursing Agent, the Transfer
Agent's responsibilities include maintaining shareholder accounts, disbursing
cash dividends and reinvesting dividends, processing account registration
changes, handling purchase and redemption transactions, mailing prospectuses and
reports, mailing and tabulating proxies, processing share certificate
transactions, and maintaining shareholder records and lists. For these services,
the Transfer Agent receives a per shareholder account fee from the Fund and is
reimbursed for its out-of-pocket expenses in connection with such services.
G. CODES OF ETHICS
The Fund, the Investment Manager, the Sub-Advisor and the Distributor have
each adopted a Code of Ethics pursuant to Rule 17j-1 under the Investment
Company Act. The Codes of Ethics are designed to detect and prevent improper
personal trading. The Codes of Ethics permit personnel subject to the Codes to
invest in securities, including securities that may be purchased, sold or held
by the Fund, subject to a number of restrictions and controls including
prohibitions against purchases of securities in an Initial Public Offering and a
preclearance requirement with respect to personal securities transactions.
VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
- --------------------------------------------------------------------------------
A. BROKERAGE TRANSACTIONS
Subject to the general supervision of the Trustees, the Investment Manager
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, 1998, 1999 and 2000, the Fund paid a
total of $600,660, $591,538 and $350,544, respectively, in brokerage
commissions.
B. COMMISSIONS
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, 1998, 1999 and 2000 there were no
brokerage fees paid to Dean Witter Reynolds. During the period June 1, 1997
through January 31, 1998 and during the fiscal years ended January 31, 1999 and
January 31, 2000, the Fund paid a total of $3,901, $13,262 and $5,159,
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, 2000, the brokerage
commissions paid to Morgan Stanley & Co. represented approximately 1.47% of the
total brokerage
28
<PAGE>
commissions paid by the Fund for this period and were paid on account of
transactions having an aggregate dollar value equal to approximately 1.28% 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 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.
The Fund anticipates that certain of its transactions involving foreign
securities will be effected on foreign securities exchanges. Fixed commissions
on such transactions are generally higher than negotiated commissions on
domestic transactions. There is also generally less government supervision and
regulation of foreign securities exchanges and brokers in the United States.
In seeking to implement the Fund's policies, the Investment Manager and
Sub-Advisor effect transactions with those brokers and dealers who the
Investment Manager and/or Sub-Advisor believes provide the most favorable prices
and are capable of providing efficient executions. If the Investment Manager
and/or Sub-Advisor believes the prices and executions are obtainable from more
than one broker or dealer, it may give consideration to placing portfolio
transactions with those brokers and dealers who also furnish research and other
services to the Fund or the Investment Manager and 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 serve 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.
D. DIRECTED BROKERAGE
During the fiscal year ended January 31, 2000, the Fund paid $350,544 in
brokerage commissions in connection with transactions in the aggregate amount of
$125,573,443 to brokers because of research services provided.
29
<PAGE>
E. REGULAR BROKER-DEALERS
During the fiscal year ended January 31, 2000, the Fund purchased American
depository receipts (ADRs) issued by Banco Santander, which issuer was among the
ten brokers or ten dealers that executed transactions for or with the Fund in
the largest dollar amounts during the year. At January 31, 2000, the Fund held
ADRs issued by Banco Santander with a market value of $568,643.
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.
The Fund's Declaration of Trust permits the Trustees to authorize the
creation of additional series of shares (the proceeds of which would be invested
in separate, independently managed portfolios) and additional Classes of shares
within any series. The Trustees have not presently authorized any such
additional series or Classes of shares other than as set forth in the
PROSPECTUS.
The Fund is not required to hold annual meetings of shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the Investment Company Act or the Declaration of
Trust. Under certain circumstances, the Trustees may be removed by action of the
Trustees. In addition, under certain circumstances, the shareholders may call a
meeting to remove the Trustees and the Fund is required to provide assistance in
communicating with shareholders about such a meeting. The voting rights of
shareholders are not cumulative, so that holders of more than 50 percent of the
shares voting can, if they choose, elect all Trustees being selected, while the
holders of the remaining shares would be unable to elect any Trustees.
Under Massachusetts law, shareholders of a business trust may, under certain
limited circumstances, be held personally liable as partners for the obligations
of the Fund. However, the Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Fund, requires that notice
of such Fund obligations include such disclaimer, and provides for
indemnification out of the Fund's property for any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its obligations.
Given the above limitations on shareholder personal liability, and the nature of
the Fund's assets and operations, the possibility of the Fund being unable to
meet its obligations is remote and thus, in the opinion of Massachusetts counsel
to the Fund, the risk to Fund shareholders of personal liability is remote.
The Trustees themselves have the power to alter the number and the terms of
office of the Trustees (as provided for in the Declaration of Trust), and they
may at any time lengthen or shorten their own terms or make their terms of
unlimited duration and appoint their own successors, provided that always at
least a majority of the Trustees has been elected by the shareholders of the
Fund.
VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
- --------------------------------------------------------------------------------
A. PURCHASE/REDEMPTION OF SHARES
Information concerning how Fund shares are offered to the public (and how
they are redeemed and exchanged) is provided in the Fund's PROSPECTUS.
TRANSFER AGENT AS AGENT. With respect to the redemption or repurchase of
Fund shares, the application of proceeds to the purchase of new shares in the
Fund or any other Morgan Stanley Dean
30
<PAGE>
Witter Fund and the general administration of the exchange privilege, the
Transfer Agent acts as agent for the Distributor and for the shareholder's
authorized broker-dealer, if any, in the performance of such functions. With
respect to exchanges, redemptions or repurchases, the Transfer Agent shall be
liable for its own negligence and not for the default or negligence of its
correspondents or for losses in transit. The Fund shall not be liable for any
default or negligence of the Transfer Agent, the Distributor or any authorized
broker-dealer.
The Distributor and any authorized broker-dealer have appointed the Transfer
Agent to act as their agent in connection with the application of proceeds of
any redemption of Fund shares to the purchase of shares of any other
continuously offered Morgan Stanley Dean Witter Fund and the general
administration of the exchange privilege. No commission or discounts will be
paid to the Distributor or any authorized broker-dealer for any transaction
pursuant to the exchange privilege.
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.
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.
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.
31
<PAGE>
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. The following discussion is
only a summary of certain tax considerations generally affecting the Fund and
shareholders of the Fund, and is not intended as a substitute for careful tax
planning. 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.
Gains or losses on the Fund's transactions in listed non-equity options,
futures and options on futures generally are treated as 60% long-term and 40%
short-term. When the Fund engages in options and futures transactions, various
tax rules may accelerate or defer recognition or certain gains and losses,
change the character of certain gains or losses, or alter the holding period of
other investments held by the fund. The application of these rules would
therefore also affect the amount, timing and character of distributions made by
the Fund.
The Fund's foreign currency gains or losses from forward contracts, futures
contracts that are not "regulated futures contracts," and unlisted options, and
certain other foreign currency gains or losses derived with respect to
fixed-income securities, are treated as ordinary income or loss. In general,
such foreign currency gains or losses will increase or decrease the amount of
the Fund's income available to
32
<PAGE>
be distributed to shareholders as ordinary income, rather than increasing or
decreasing the amount of the Fund's net capital gain. Additionally, if such
foreign currency losses exceed other ordinary income during a taxable year, the
Fund would not be able to make ordinary income distributions for the year.
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. In
addition, if the Fund invests in an equity security of a non-U.S. corporation
classified as a "passive foreign investment company" for U.S. tax purposes, the
application of certain technical tax provisions applying to investments in such
companies may result in the Fund being required to accrue income in respect of
the security without any receipt of cash attributable to such income. 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 maximum tax rate on long-term capital gains
realized by non-corporate shareholders is 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 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 gain 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 gain
distribution. Furthermore, such dividends and capital gain 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
33
<PAGE>
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 gains
or losses. Under current law, the maximum tax rate on long-term capital gains
realized by non-corporate shareholders is 20%. Any loss realized by shareholders
upon a sale or redemption of shares within six months of the date of their
purchase will be treated as a long-term capital loss to the extent of any
distributions of net long-term capital gains with respect to such shares during
the six-month period.
Gain or loss on the sale or redemption of shares in the Fund is measured by
the difference between the amount received and the tax basis of the shares.
Shareholders should keep records of investments made (including shares acquired
through reinvestment of dividends and distributions) so they can compute the tax
basis of their shares. Under certain circumstances a shareholder may compute and
use an average cost basis in determining the gain or loss on the sale or
redemption of shares.
Exchanges of Fund shares for shares of any other continuously offered Morgan
Stanley Dean Witter Fund are also subject to similar tax treatment. Such an
exchange is treated for tax purposes as a sale of the original shares in the
first fund, followed by the purchase of shares in the second fund.
If a shareholder realizes a loss on the redemption or exchange of a fund's
shares and reinvests in that fund's shares within 30 days before or after the
redemption or exchange, the transactions may be subject to the "wash sale"
rules, resulting in a postponement of the recognition of such loss for tax
purposes.
X. UNDERWRITERS
- --------------------------------------------------------------------------------
The Fund's shares are offered to the public on a continuous basis. The
Distributor, as the principal underwriter of the shares, has certain obligations
under the Distribution Agreement concerning the distribution of the shares.
These obligations and the compensation the Distributor receives are described
above in the sections titled "Principal Underwriter" and "Rule 12b-1 Plan".
XI. CALCULATION OF PERFORMANCE DATA
- --------------------------------------------------------------------------------
From time to time, the Fund may quote its "total return" in advertisements
and sales literature. These figures are computed separately for Class A,
Class B, Class C and Class D shares. The Fund's "average annual total return"
represents an annualization of the Fund's total return over a particular period
and is computed by finding the annual percentage rate which will result in the
ending redeemable value of a hypothetical $1,000 investment made at the
beginning of a one, five or ten year period, or for the period from the date of
commencement of operations, if shorter than any of the foregoing. The ending
redeemable value is reduced by any contingent deferred sales charge ("CDSC") at
the end of the one, five, ten year or other period. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involves a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment (which in the case of Class A shares is reduced by the Class A
initial sales charge), taking a root of the quotient (where the root is
equivalent to the number of years in the period) and subtracting 1 from the
result. Based on this calculation the average annual 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, 2000 were 60.19%, 4.72%, 3.11%,
respectively. The average annual total returns of Class A for the fiscal year
ended January 31, 2000 and for the period July 28, 1997 (inception of the Class)
through January 31, 2000 were 57.96% and -10.32%, respectively. The average
annual total returns of Class C for the fiscal year ended January 31, 2000 and
for the period July 28, 1997 (inception of the Class) through January 31, 2000
were 64.47% and -9.09%, respectively. The average annual total returns of
Class D for the fiscal year ended January 31, 2000 and for the period July 28,
1997 (inception of the Class) through January 31, 2000 were 66.80% and -8.25,
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,
34
<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, five
year and the life of the Fund (which commenced on December 30, 1992) periods
ended January 31, 2000 were 65.19%, 5.05%, and 3.11%, respectively. The average
annual total returns of Class A for the fiscal year ended January 31, 2000 and
for the period July 28, 1997 through January 31, 2000 were 66.71% and -8.37%,
respectively. The average annual total returns of Class C for the fiscal year
ended January 31, 2000 and for the period July 28, 1997 through January 31, 2000
were 65.47% and -9.09%, respectively. The average annual total returns of
Class D for the fiscal year ended January 31, 2000 and for the period July 28,
1997 through January 31, 2000 were 66.80% and -8.25%, 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, 2000 were
65.19%, 27.91% and 24.23%, respectively. The total returns of Class A for the
fiscal year ended January 31, 2000 and for the period July 28, 1997 through
January 31, 2000 were 66.71% and -19.71%, respectively. The total returns of
Class C for the fiscal year ended January 31, 2000 and for the period July 28,
1997 through January 31, 2000 were 65.47% and -21.29%, respectively. The total
returns of Class D for the fiscal year ended January 31, 2000 and for the period
July 28, 1997 through January 31, 2000 were 66.80% and -19.45%, respectively.
The Fund may also advertise the growth of hypothetical investments of
$10,000, $50,000 and $100,000 in each Class of shares of the Fund by adding 1 to
the Fund's aggregate total return to date (expressed as a decimal and without
taking into account the effect of any applicable CDSC) and multiplying by
$9,475, $48,000 and $97,000 in the case of Class A (investments of $10,000,
$50,000 and $100,000 adjusted for the initial sales charge) or by $10,000,
$50,000 and $100,000 in the case of each of Class B, Class C and Class D, as the
case may be. Investments of $10,000, $50,000 and $100,000 in each Class at
inception of the Class would have grown or declined to the following amounts at
January 31, 2000:
<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 $ 7,607 $38,539 $ 77,881
Class B............................................. 12/30/92 12,423 62,115 124,230
Class C............................................. 7/28/97 7,871 39,355 78,710
Class D............................................. 7/28/97 8,055 40,275 80,550
</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, 2000 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.
35
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS JANUARY 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS AND RIGHTS (96.6%)
ARGENTINA (8.9%)
BUILDING MATERIALS
129,695 Juan Minetti S.A.*................................................................ $ 267,212
------------
DIVERSIFIED FINANCIAL SERVICES
276,280 CEI Citicorp Holdings S.A.*....................................................... 1,135,681
------------
INTERNATIONAL BANKS
73,723 Banco de Galicia y Buenos Aires S.A. de C.V. (Class B) (ADR)...................... 1,363,875
53,040 Banco Frances del Rio de La Plato S.A. (ADR)...................................... 1,206,660
------------
2,570,535
------------
INTERNET SERVICES
19,400 El Sitio, Inc.*................................................................... 461,962
4,900 Impsat Fiber Networks (ADR)*...................................................... 83,300
------------
545,262
------------
OIL & GAS PRODUCTION
101,335 PC Holdings S.A. (Class B) (ADR)*................................................. 1,881,031
------------
REAL ESTATE
157,901 Inversiones y Representaciones S.A. (Class B)..................................... 505,359
------------
STEEL/IRON ORE
566,500 Siderca S.A.I.C. (Class A)........................................................ 1,150,168
------------
TELECOMMUNICATIONS
55,120 Telecom Argentina Stet - France Telecom S.A. (Class B) (ADR)...................... 2,049,775
59,235 Telefonica de Argentina S.A. (Class B) (ADR)...................................... 2,262,037
------------
4,311,812
------------
TOTAL ARGENTINA................................................................... 12,367,060
------------
BRAZIL (37.2%)
ALCOHOLIC BEVERAGES
168,145 Companhia Cervejaria Brahma (ADR)................................................. 2,196,394
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CELLULAR TELEPHONE
56,500 Telesp Celular Participacoes S.A. (ADR) (Pref.)................................... $ 2,252,938
30,822,000 Telesudeste Celular Participacoes S.A............................................. 148,498
30,530 Telesudeste Celular Participacoes S.A. (ADR) (Pref.).............................. 1,476,889
------------
3,878,325
------------
ELECTRIC UTILITIES
61,400,000 Centrais Eletricas Brasileiras S.A. (Class B) (Pref.)............................. 1,198,762
2,042,400,000 Companhia de Electricidade do Estado Rio de Janeiro*.............................. 583,542
70,533 Companhia Energetica de Minas Gerais S.A. (ADR) (Pref.)........................... 1,201,265
51,340 Companhia Paranaense de Energia - Copel (ADR) (Pref.)............................. 413,929
------------
3,397,498
------------
INTEGRATED OIL COMPANIES
32,626,000 Petroleo Brasileiro S.A. (Pref.).................................................. 7,457,371
------------
INTERNATIONAL BANKS
281,900,000 Banco Bradesco S.A. (Pref.)....................................................... 2,307,316
18,304,920 Banco Bradesco S.A. (Rights)*..................................................... 78,040
26,853,560 Banco Itau S.A. (Pref.)........................................................... 1,895,545
45,325 Uniao de Bancos Brasileiros S.A. (GDR)............................................ 1,155,788
------------
5,436,689
------------
MULTI-SECTOR COMPANIES
621,600 Itausa Investimentos Itau S.A. (Pref.)............................................ 592,000
14,567 Itausa Investimentos Itau S.A. (Rights)*.......................................... 3,264
------------
595,264
------------
OTHER METALS/MINERALS
129,608 Companhia Vale do Rio Doce (Class A) (Pref.)...................................... 3,630,476
266,358 Companhia Vale do Rio Doce S.A. (Debentures)*..................................... --
------------
3,630,476
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
36
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS JANUARY 31, 2000, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OTHER TELECOMMUNICATIONS
205,848 Embratel Participacoes S.A. (ADR) (Pref.)......................................... $ 4,425,732
29,985 Tele Centro Sul Participacoes S.A. (ADR).......................................... 2,473,763
20,752,000 Tele Norte Leste Participacoes S.A................................................ 353,423
162,975 Tele Norte Leste Participacoes S.A. (ADR) (Pref.)................................. 4,043,817
198,378 Telesp Participacoes S.A. (ADR) (Pref.)........................................... 5,752,962
------------
17,049,697
------------
PAPER
13,940,000 Votorantim Celulose e Papel S.A. (Pref.).......................................... 527,143
------------
SPECIALTY STEELS
86,610 Gerdau S.A. (ADR)................................................................. 2,462,972
------------
STEEL/IRON ORE
145,700 Usinas Siderurgicas de Minas Gerais S.A. (Class A) (Pref.)........................ 857,059
------------
TELECOMMUNICATIONS
22,780 Telecomunicacoes Brasileiras S.A. - Telebras (ADR) (Pref.)........................ 2,961,400
------------
TOBACCO
176,700 Souza Cruz S.A.................................................................... 1,153,252
------------
TOTAL BRAZIL...................................................................... 51,603,540
------------
CHILE (5.7%)
AGRICULTURAL CHEMICALS
14,960 Sociedad Quimica y Minera de Chile S.A. (ADR)..................................... 480,590
------------
ALCOHOLIC BEVERAGES
29,350 Compania Cervecerias Unidas S.A. (ADR)............................................ 917,187
30,050 Vina Concha Y Toro S.A. (ADR)..................................................... 1,292,150
------------
2,209,337
------------
BEVERAGES - NON-ALCOHOLIC
38,190 Embotelladora Andina S.A. (Series A) (ADR)........................................ 656,391
------------
CONTAINERS/PACKAGING
24,700 Cristalerias de Chile S.A. (ADR).................................................. 484,737
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
ELECTRIC UTILITIES
14,000 Chilectra S.A. (ADR).............................................................. $ 266,437
22,720 Gener S.A. (ADR).................................................................. 315,240
------------
581,677
------------
FOOD CHAINS
34,790 Distribucion Y Servicio D&S S.A. (ADR)............................................ 704,498
------------
INTERNATIONAL BANKS
35,820 Banco Santander Chile (ADR)....................................................... 568,643
36,750 Banco Santiago S.A. (ADR)......................................................... 822,281
------------
1,390,924
------------
OTHER PHARMACEUTICALS
33,120 Laboratorio Chile S.A. (ADR)...................................................... 778,320
------------
TELECOMMUNICATIONS
34,818 Cia de Telecommunicaciones de Chile S.A. (ADR).................................... 689,832
------------
TOTAL CHILE....................................................................... 7,976,306
------------
COLOMBIA (1.0%)
ALCOHOLIC BEVERAGES
278,370 Bavaria S.A....................................................................... 1,393,959
------------
MEXICO (41.4%)
ALCOHOLIC BEVERAGES
1,306,800 Grupo Modelo S.A. de C.V. (Series C).............................................. 3,011,499
------------
BEVERAGES - NON-ALCOHOLIC
41,350 Coca-Cola Femsa S.A. (ADR)........................................................ 630,587
105,210 Fomento Economico Mexicano, S.A. de C.V. (ADR).................................... 4,326,761
------------
4,957,348
------------
BROADCASTING
133,730 Grupo Televisa S.A. de C.V. (GDR)*................................................ 7,422,015
------------
BUILDING MATERIALS
207,970 Apasco S.A. de C.V................................................................ 1,214,423
146,627 Cemex S.A. de C.V. (ADR) *........................................................ 3,207,466
------------
4,421,889
------------
DIVERSIFIED MANUFACTURING
299,700 ALFA S.A. (Class A)............................................................... 1,118,797
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
37
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS JANUARY 31, 2000, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
FINANCE COMPANIES
88,500 Grupo Financiero Banamex Accival, S.A. de C.V. (Banacci)*......................... $ 357,138
------------
MULTI-SECTOR COMPANIES
675,600 DESC S.A. de C.V. (Series B)*..................................................... 512,864
------------
OTHER METALS/MINERALS
305,400 Grupo Mexico S.A. (Series B)...................................................... 1,652,790
------------
OTHER SPECIALTY STORES
3,722,818 Cifra S.A. de C.V. (Series C)*.................................................... 6,203,403
731,700 Organizacion Soriana S.A. de C.V. (Series B)...................................... 2,853,554
------------
9,056,957
------------
PACKAGE GOODS/COSMETICS
809,600 Kimberly-Clark de Mexico S.A. de C.V. (A Shares).................................. 2,490,428
------------
SPECIALTY FOODS/CANDY
1,583,578 Grupo Industrial Bimbo S.A. de C.V. (Series A)*................................... 2,661,864
------------
TELECOMMUNICATIONS
171,293 Telefonos de Mexico S.A. de C.V. (Series L) (ADR)................................. 18,242,704
------------
TEXTILES
377,279 Grupo Carso S.A. de C.V. (Series A1).............................................. 1,553,965
------------
TOTAL MEXICO...................................................................... 57,460,258
------------
PERU (1.9%)
BUILDING MATERIALS
337,322 Cementos Lima, S.A................................................................ 386,948
------------
INTERNATIONAL BANKS
32,800 Credicorp Ltd. (ADR).............................................................. 391,550
------------
PRECIOUS METALS
42,015 Compania de Minas Buenaventura S.A. (ADR)......................................... 787,781
------------
TELECOMMUNICATIONS
63,315 Telefonica del Peru S.A. (ADR).................................................... 1,032,826
------------
TOTAL PERU........................................................................ 2,599,105
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SPAIN (0.5%)
INTERNET SERVICES
3,440 Terra Networks, S.A.*............................................................. $ 290,421
4,650 Terra Networks, S.A. (ADR)*....................................................... 406,876
------------
TOTAL SPAIN....................................................................... 697,297
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL COMMON AND PREFERRED STOCKS AND RIGHTS
(IDENTIFIED COST $93,248,282) (a)......................................................... 96.6% 134,097,525
OTHER ASSETS IN EXCESS OF LIABILITIES..................................................... 3.4 4,715,747
----- -------------
NET ASSETS................................................................................ 100.0% $ 138,813,272
----- -------------
----- -------------
</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 $44,173,507 and the
aggregate gross unrealized depreciation is $3,324,264, resulting in net
unrealized appreciation of $40,849,243.
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JANUARY 31, 2000:
<TABLE>
<CAPTION>
IN
CONTRACTS TO EXCHANGE DELIVERY UNREALIZED
RECEIVE FOR DATE DEPRECIATION
- ----------------------------------------------------
<S> <C> <C> <C>
MXN 2,379,983 $284,505 2/01/00 $(332)
MXN 3,427,905 $357,595 2/02/00 (149)
-----
Total unrealized
depreciation................... $(481)
=====
</TABLE>
CURRENCY ABBREVIATION:
<TABLE>
<S> <C>
MXN Mexican Peso.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
38
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
SUMMARY OF INVESTMENTS JANUARY 31, 2000
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- -----------------------------------------------------
<S> <C> <C>
Agricultural Chemicals.... $ 480,590 0.3%
Alcoholic Beverages....... 8,811,189 6.3
Beverages -
Non-Alcoholic........... 5,613,739 4.0
Broadcasting.............. 7,422,015 5.3
Building Materials........ 5,076,049 3.7
Cellular Telephone........ 3,878,325 2.8
Containers/Packaging...... 484,737 0.3
Diversified Financial
Services................ 1,135,681 0.8
Diversified
Manufacturing........... 1,118,797 0.8
Electric Utilities........ 3,979,175 2.9
Finance Companies......... 357,138 0.3
Food Chains............... 704,498 0.5
Integrated Oil
Companies............... 7,457,371 5.4
International Banks....... 9,789,698 7.1
Internet Services......... 1,242,559 0.9
Multi-Sector Companies.... 1,108,128 0.8
Oil & Gas Production...... 1,881,031 1.4
Other Metals/Minerals..... 5,283,266 3.8
Other Pharmaceuticals..... 778,320 0.6
Other Specialty Stores.... 9,056,957 6.5
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- -----------------------------------------------------
<S> <C> <C>
Other
Telecommunications...... $ 17,049,697 12.3%
Package Goods/Cosmetics... 2,490,428 1.8
Paper..................... 527,143 0.4
Precious Metals........... 787,781 0.6
Real Estate............... 505,359 0.4
Specialty Foods/Candy..... 2,661,864 1.9
Specialty Steels.......... 2,462,972 1.8
Steel/Iron Ore............ 2,007,227 1.4
Telecommunications........ 27,238,574 19.6
Textiles.................. 1,553,965 1.1
Tobacco................... 1,153,252 0.8
------------ -----
$134,097,525 96.6%
------------ -----
------------ -----
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
- -----------------------------------------------------
<S> <C> <C>
Common Stocks............. $ 93,021,617 67.0%
Preferred Stocks.......... 40,994,604 29.5
Rights.................... 81,304 0.1
------------ -----
$134,097,525 96.6%
------------ -----
------------ -----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
39
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $93,248,282)............................. $134,097,525
Cash........................................................ 5,120,689
Receivable for:
Dividends............................................... 678,688
Shares of beneficial interest sold...................... 134,944
Interest................................................ 13,424
Prepaid expenses and other assets........................... 45,085
------------
TOTAL ASSETS........................................... 140,090,355
------------
LIABILITIES:
Payable for:
Investments purchased................................... 792,714
Investment advisory fee................................. 154,908
Shares of beneficial interest repurchased............... 136,860
Plan of distribution fee................................ 122,713
Accrued expenses and other payables......................... 69,888
------------
TOTAL LIABILITIES...................................... 1,277,083
------------
NET ASSETS............................................. $138,813,272
============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................. $199,584,610
Net unrealized appreciation................................. 40,854,939
Accumulated net investment loss............................. (303,731)
Accumulated net realized loss............................... (101,322,546)
------------
NET ASSETS............................................. $138,813,272
============
CLASS A SHARES:
Net Assets.................................................. $750,601
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)... 61,244
NET ASSET VALUE PER SHARE.............................. $12.26
============
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE)...... $12.94
============
CLASS B SHARES:
Net Assets.................................................. $136,699,043
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)... 11,396,785
NET ASSET VALUE PER SHARE.............................. $11.99
============
CLASS C SHARES:
Net Assets.................................................. $775,708
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)... 64,557
NET ASSET VALUE PER SHARE.............................. $12.02
============
CLASS D SHARES:
Net Assets.................................................. $587,920
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)... 47,798
NET ASSET VALUE PER SHARE.............................. $12.30
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
40
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 2000
<TABLE>
<S> <C>
NET INVESTMENT LOSS:
INCOME
Dividends (net of $257,666 foreign withholding tax)......... $ 2,913,621
Interest.................................................... 165,254
-----------
TOTAL INCOME........................................... 3,078,875
-----------
EXPENSES
Plan of distribution fee (Class A shares)................... 946
Plan of distribution fee (Class B shares)................... 1,253,425
Plan of distribution fee (Class C shares)................... 4,723
Investment management fee................................... 956,902
Transfer agent fees and expenses............................ 429,499
Management fee.............................................. 374,012
Investment advisory fee..................................... 249,342
Custodian fees.............................................. 189,270
Shareholder reports and notices............................. 184,285
Professional fees........................................... 89,630
Registration fees........................................... 58,077
Trustees' fees and expenses................................. 17,755
Other....................................................... 60,764
-----------
TOTAL EXPENSES......................................... 3,868,630
-----------
NET INVESTMENT LOSS.................................... (789,755)
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain/loss on:
Investments............................................. 10,610,286
Foreign exchange transactions........................... (396,710)
-----------
NET GAIN............................................... 10,213,576
-----------
Net change in unrealized appreciation/depreciation on:
Investments............................................. 51,567,863
Translation of forward foreign currency contracts, other
assets and liabilities denominated in foreign
currencies............................................ 161,666
-----------
NET APPRECIATION....................................... 51,729,529
-----------
NET GAIN............................................... 61,943,105
-----------
NET INCREASE................................................ $61,153,350
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
41
<PAGE>
MORGAN STANLEY DEAN WITTER 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, 2000 JANUARY 31, 1999
- -----------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss)...................... $ (789,755) $ 964,047
Net realized gain (loss).......................... 10,213,576 (17,392,336)
Net change in unrealized
appreciation/depreciation....................... 51,729,529 (68,311,686)
------------ ------------
NET INCREASE (DECREASE)...................... 61,153,350 (84,739,975)
------------ ------------
Net decrease from transactions in shares of
beneficial interest............................. (28,450,098) (82,770,172)
------------ ------------
NET INCREASE (DECREASE)...................... 32,703,252 (167,510,147)
NET ASSETS:
Beginning of period............................... 106,110,020 273,620,167
------------ ------------
END OF PERIOD
(INCLUDING NET INVESTMENT LOSSES OF $303,731
AND $854,690, RESPECTIVELY)................... $138,813,272 $106,110,020
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
42
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2000
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Latin American Growth Fund (the "Fund"), formerly
TCW/DW Latin American Growth 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 converted to a multiple class
share structure.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity 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 Morgan Stanley Dean Witter Advisors Inc. (the "Investment
Manager") or TCW Investment Management Company (the "Sub-Advisor") that sale or
bid prices are not reflective of a security's market value, portfolio securities
are valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Trustees (valuation of
debt securities for which market quotations are not readily available may be
based upon current market prices of securities which are
43
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2000, CONTINUED
comparable in coupon, rating and maturity or an appropriate matrix utilizing
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.
44
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2000, 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. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
Pursuant to a new Investment Management Agreement that took effect June 28,
1999, the Fund pays the Investment Manager an investment 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: 1.25% to the
portion of daily net assets not exceeding $500 million and 1.20% to the portion
of the daily net assets exceeding $500 million.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's 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 Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
Under a new Sub-Advisory Agreement that took effect June 28, 1999 between the
Investment Manager and the Sub-Advisor, the Sub-Advisor provides the Fund with
investment advice and portfolio management relating to the Fund's investments in
securities, subject to the overall
45
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2000, CONTINUED
supervision of the Investment Manager. As compensation for its services provided
pursuant to the Sub-Advisory Agreement, the Investment Manager pays the
Sub-Advisor compensation equal to 40% of its monthly compensation.
Prior to June 28, 1999, pursuant to a Management Agreement with Morgan Stanley
Dean Witter Services Company Inc. (the "Former Manager"), the Fund paid the
Former Manager a management fee, accrued daily and payable monthly, by applying
the following annual rates to the net assets of the Fund determined as of the
close of each business day: 0.75% 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 maintained certain of
the Fund's books and records and furnished, at its own expense, office space,
facilities, equipment, clerical, bookkeeping and certain legal services and paid
the salaries of all personnel, including officers of the Fund who were employees
of the Manager. The Manager also bore the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
Prior to June 28, 1999, pursuant to an Investment Advisory Agreement with the
current Sub-Advisor, the Fund paid an investment 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.
Under the terms of the Investment Advisory Agreement, the Fund had retained the
current Sub-Advisor to invest the Fund's assets, including placing orders for
the purchase and sale of portfolio securities. The current Sub-Advisor obtained
and evaluated such information and advice relating to the economy, securities
markets, and specific securities as it considered necessary or useful to
continuously manage the assets of the Fund in a manner consistent with its
investment objective. In addition, the current Sub-Advisor paid the salaries of
all personnel, including officers of the Fund who were employees of the current
Sub-Advisor.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund will pay the
46
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2000, CONTINUED
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
Investment 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 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 $19,948,905 at January 31, 2000.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except
47
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2000, CONTINUED
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, 2000,
the distribution fee was accrued for Class A shares and Class C shares at the
annual rate of 0.22% and 0.89%, respectively.
The Distributor has informed the Fund that for the year ended January 31, 2000,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class B shares and Class C shares of $310,386 and $1,443, respectively,
and received $3,307 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.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended January 31, 2000 aggregated
$70,718,981 and $88,587,355, respectively.
For the year ended January 31, 2000, the Fund incurred brokerage commissions of
$5,159 with Morgan Stanley & Co., Inc., an affiliate of the Investment Manager
and Distributor, for the portfolio transactions executed on behalf of the Fund.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At January 31, 2000, the Fund had
transfer agent fees and expenses payable of approximately $5,300.
48
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2000, CONTINUED
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
JANUARY 31, 2000 JANUARY 31, 1999
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
CLASSS A SHARES
Sold................................................... 903,814 $ 9,285,862 14,534 $ 136,263
Redeemed............................................... (850,499) (8,815,570) (15,663) (144,192)
---------- ------------ ----------- ------------
Net increase (decrease) - Class A...................... 53,315 470,292 (1,129) (7,929)
---------- ------------ ----------- ------------
Class B SHARES
Sold................................................... 1,854,204 19,260,542 2,410,988 25,661,963
Redeemed............................................... (5,056,135) (48,993,518) (10,363,817) (108,304,032)
---------- ------------ ----------- ------------
Net decrease - Class B................................. (3,201,931) (29,732,976) (7,952,829) (82,642,069)
---------- ------------ ----------- ------------
Class C SHARES
Sold................................................... 59,774 653,992 27,783 283,451
Redeemed............................................... (46,151) (464,154) (42,306) (403,625)
---------- ------------ ----------- ------------
Net increase (decrease) - Class C...................... 13,623 189,838 (14,523) (120,174)
---------- ------------ ----------- ------------
Class D SHARES
Sold................................................... 119,896 1,532,077 -- --
Redeemed............................................... (72,756) (909,329) -- --
---------- ------------ ----------- ------------
Net increase - Class D................................. 47,140 622,748 -- --
---------- ------------ ----------- ------------
Net decrease in Fund................................... (3,087,853) $(28,450,098) (7,968,481) $(82,770,172)
========== ============ =========== ============
</TABLE>
6. FEDERAL INCOME TAX STATUS
At January 31, 2000, the Fund had a net capital loss carryover of approximately
$98,817,000, 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>
AMOUNT IN THOUSANDS
- ----------------------------------------
2004 2005 2007 2008
- ------- -------- -------- --------
<S> <C> <C> <C>
$73,539 $19,839 $3,058 $2,381
======= ======= ====== ======
</TABLE>
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 foreign
currency losses of approximately $99,000 during fiscal 2000.
As of January 31, 2000, the Fund had temporary book/tax differences attributable
to capital loss deferrals on wash sales, income from the mark-to-market of
passive foreign investment companies and post-October losses and permanent
book/tax differences primarily attributable to foreign currency losses and a net
operating loss. To reflect reclassifications arising from the permanent
differences, paid-in-capital was charged $1,869,901, accumulated net realized
loss was credited $529,187 and accumulated net investment loss was credited
$1,340,714.
49
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2000, CONTINUED
7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
The Fund may enter into forward foreign currency contracts ("forward contracts")
to facilitate settlement of foreign currency denominated portfolio transactions
or to manage foreign currency exposure associated with foreign currency
denominated securities.
Forward contracts involve elements of market risk in excess of the amounts
reflected in the Statement of Assets and Liabilities. The Fund bears the risk of
an unfavorable change in the foreign exchange rates underlying the forward
contracts. Risks may also arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their contracts.
At January 31, 2000, the Fund had outstanding forward contracts.
At January 31, 2000, the Fund's cash balance consisted principally of interest
bearing deposits with Chase Manhattan Bank N.A., the Fund's custodian.
At January 31, 2000, investment in securities of issuers in Brazil and Mexico
represented 37.2% and 41.4% of net assets, respectively. These investments, as
well as other non-U.S. investments which involve risks and considerations not
present with respect to U.S. securities may be affected by economic or political
developments in these regions.
50
<PAGE>
MORGAN STANLEY DEAN WITTER 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 PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
JANUARY 31, 2000 JANUARY 31, 1999 JANUARY 31, 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 7.33 $12.14 $15.22
------ ------ ------
Income (loss) from investment operations:
Net investment income (loss)............................. (0.01) 0.15 (0.07)
Net realized and unrealized gain (loss).................. 4.94 (4.96) (3.01)
------ ------ ------
Total income (loss) from investment operations.............. 4.93 (4.81) (3.08)
------ ------ ------
Net asset value, end of period.............................. $12.26 $ 7.33 $12.14
====== ====== ======
TOTAL RETURN+............................................... 66.71% (39.62)% (20.24)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 2.28%(3) 2.21 %(3) 2.15 %(2)
Net investment income (loss)................................ 0.16%(3) 1.26 %(3) (1.04)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $751 $58 $110
Portfolio turnover rate..................................... 59% 27 % 30 %
</TABLE>
- ---------------------
<TABLE>
<C> <S>
* 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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
51
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED JANUARY 31,
--------------------------------------------------------
2000++ 1999++ 1998*++ 1997 1996
- ------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 7.24 $12.09 $11.47 $ 9.48 $ 9.35
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income (loss)............................. (0.06) 0.05 (0.09) (0.04) (0.06)
Net realized and unrealized gain (loss).................. 4.81 (4.90) 0.71 2.03 0.19
-------- -------- -------- -------- --------
Total income (loss) from investment operations.............. 4.75 (4.85) 0.62 1.99 0.13
-------- -------- -------- -------- --------
Net asset value, end of period.............................. $11.99 $ 7.24 $12.09 $11.47 $ 9.48
======== ======== ======== ======== ========
TOTAL RETURN+............................................... 65.19 % (40.12)% 5.41 % 20.99 % 1.39 %
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 3.06 %(1) 2.98 %(1) 2.81 % 2.78 % 2.98 %
Net investment income (loss)................................ (0.62)%(1) 0.49%(1) (0.64)% (0.29)% (0.61)%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $136,699 $105,678 $272,710 $270,843 $261,066
Portfolio turnover rate..................................... 59 % 27 % 30 % 29 % 64 %
</TABLE>
- ---------------------
<TABLE>
<C> <S>
* 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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
52
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR THE
PERIOD
JULY 28,
FOR THE YEAR FOR THE YEAR 1997*
ENDED ENDED THROUGH
JANUARY 31, JANUARY 31, JANUARY 31,
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 7.24 $12.10 $15.22
------ ------ ------
Income (loss) from investment operations:
Net investment income (loss)............................. (0.06) 0.06 (0.12)
Net realized and unrealized gain (loss).................. 4.84 (4.92) (3.00)
------ ------ ------
Total income (loss) from investment operations.............. 4.78 (4.86) (3.12)
------ ------ ------
Net asset value, end of period.............................. $12.02 $ 7.24 $12.10
====== ====== ======
TOTAL RETURN+............................................... 65.47 % (40.17) % (20.50)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 2.95 %(3) 2.98 %(3) 2.91 %(2)
Net investment income (loss)................................ (0.51)%(3) 0.49 %(3) (1.76)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $776 $369 $792
Portfolio turnover rate..................................... 59 % 27 % 30 %
</TABLE>
- ---------------------
<TABLE>
<C> <S>
* 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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
53
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR THE
PERIOD
JULY 28,
FOR THE YEAR FOR THE YEAR 1997*
ENDED ENDED THROUGH
JANUARY 31, JANUARY 31, JANUARY 31,
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 7.35 $12.16 $15.22
------ ------ ------
Income (loss) from investment operations:
Net investment income (loss)............................. (0.02) 0.16 (0.04)
Net realized and unrealized gain (loss).................. 4.97 (4.97) (3.02)
------ ------ ------
Total income (loss) from investment operations.............. 4.95 (4.81) (3.06)
------ ------ ------
Net asset value, end of period.............................. $12.30 $ 7.35 $12.16
====== ====== ======
TOTAL RETURN+............................................... 66.80% (39.56)% (20.11)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 2.06%(3) 1.98 %(3) 1.86 %(2)
Net investment income (loss)................................ 0.38%(3) 1.49%(3) (0.52)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $588 $5 $8
Portfolio turnover rate..................................... 59% 27 % 30 %
</TABLE>
- ---------------------
<TABLE>
<C> <S>
* 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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
54
<PAGE>
<TABLE>
<S> <C>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH
FUND
REPORT OF INDEPENDENT ACCOUNTANTS
</TABLE>
TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER 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 Morgan Stanley Dean Witter Latin
American Growth Fund (the "Fund"), formerly TCW/DW Latin American Growth Fund,
at January 31, 2000, 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
accounting principles generally accepted in the United States. 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 auditing
standards generally accepted in the United States 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, 2000 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 14, 2000
55
<PAGE>
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, dated
July 28, 1997, 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). Amendment to the Declaration of Trust of the Registrant, dated
June 25, 1999, is incorporated by reference to Exhibit 1(c) of
Post-Effective Amendment No. 10 to the Registration Statement on
Form N-1A, filed on June 25, 1999.
2. Amended and Restated By-Laws of the Registrant, dated May 1,1999, is
incorporated by reference to Exhibit 2 of Post-Effective Amendment
No. 9 to the Registration Statement on Form N-1A, filed on
May 28, 1999.
3. Not Applicable.
4 (a). Investment Management Agreement between the Registrant and Morgan
Stanley Dean Witter Advisors Inc., dated June 28, 1999, is
incorporated by reference to Exhibit 4(a) of Post-Effective Amendment
No. 10 to the Registration Statement on Form N-1A, filed on
June 25, 1999.
4 (b). Sub-Advisory Agreement between Morgan Stanley Dean Witter Advisors
Inc. and TCW Investment Management Company, dated June 28, 1999,
is incorporated by reference to Exhibit 4(b) of Post-Effective
Amendment No. 10 to the Registration Statement on Form N-1A, filed on
June 25, 1999.
5 (a). Amended Distribution Agreement, dated June 22, 1998, is incorporated
by reference to Exhibit 5(a) of Post-Effective Amendment No. 10 to
the Registration Statement on Form N-1A, filed on June 25, 1999.
5 (b). Multi-Class Distribution Agreement is incorporated by reference to
Exhibit 6(b) of Post-Effective Amendment No. 4 to the Registration
Statement on Form N-1A, filed on July 22, 1997.
5 (c). Selected Dealers Agreement between Morgan Stanley Dean Witter
Distributors Inc. and Dean Witter Reynolds Inc. is incorporated by
reference to Exhibit 6(b) of Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A, filed on March 27, 1996.
6. Not Applicable.
1
<PAGE>
7. Custody Agreement between The Chase Manhattan Bank and the Registrant
is incorporated by reference to Exhibit 8(a) of Post-Effective
Amendment No. 4 to the Registration Statement on Form N-1A, filed on
March 27, 1996.
8 (a). Amended and Restated Transfer Agency and Service Agreement is
incorporated by reference to Exhibit 8 of 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, dated June 22, 1998, is
incorporated by reference to Exhibit 8(b) of Post-Effective Amendment
No. 10 to the Registration Statement on Form N-1A, filed on
June 25, 1999.
9 (a). Opinion of Sheldon Curtis, Esq., dated September 14, 1992, is
incorporated by reference to Exhibit 9(a) of Post-Effective Amendment
No. 9 to the Registration Statement on Form N-1A, filed on
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, filed herein.
11. Not Applicable.
12. Not Applicable.
13. Amended and Restated Plan of Distribution pursuant to Rule 12b-1,
dated June 28, 1999, is incorporated by reference to Exhibit 13
of Post-Effective Amendment No. 10 to the Registration Statement on
Form N-1A, filed on June 25, 1999.
14. Amended Multi-Class Plan pursuant to Rule 18f-3, dated June 22, 1998,
is incorporated by reference to Exhibit 14 of Post-Effective Amendment
No. 10 to the Registration Statement on Form N-1A, filed on
June 25, 1999.
15. Not Applicable.
16 (a). Code of Ethics of Morgan Stanley Dean Witter Advisors Inc., Morgan
Stanley Dean Witter Services Company Inc. and Morgan Stanley Dean
Witter Distributors Inc., filed herein.
16 (b). Code of Ethics of the Morgan Stanley Dean Witter Funds, filed herein.
16 (c). Code of Ethics of The TCW Group Inc., filed herein.
Other Powers of Attorney 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 to Exhibit (Other) of
Post-Effective Amendment No. 10 to the Registration Statement on
Form N-1A, filed on June 25, 1999.
2
<PAGE>
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.
None
Item 25. INDEMNIFICATION.
Pursuant to Section 5.3 of the Registrant's Declaration of Trust and under
Section 4.8 of the Registrant's By-Laws, the indemnification of the Registrant's
trustees, officers, employees and agents is permitted if it is determined that
they acted under the belief that their actions were in or not opposed to the
best interest of the Registrant, and, with respect to any criminal proceeding,
they had reasonable cause to believe their conduct was not unlawful. In
addition, indemnification is permitted only if it is determined that the actions
in question did not render them liable by reason of willful misfeasance, bad
faith or gross negligence in the performance of their duties or by reason of
reckless disregard of their obligations and duties to the Registrant. Trustees,
officers, employees and agents will be indemnified for the expense of litigation
if it is determined that they are entitled to indemnification against any
liability established in such litigation. The Registrant may also advance money
for these expenses provided that they give their undertakings to repay the
Registrant unless their conduct is later determined to permit indemnification.
Pursuant to Section 5.2 of the Registrant's Declaration of Trust and
paragraph 8 of the Registrant's Investment Management Agreement, neither the
Investment Manager nor any trustee, officer, employee or agent of the Registrant
shall be liable for any action or failure to act, except in the case of bad
faith, willful misfeasance, gross negligence or reckless disregard of duties to
the Registrant.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer, or controlling person of the Registrant
in connection with the successful defense of any action, suit or proceeding) is
asserted against the Registrant by such trustee, officer or controlling person
in connection with the shares being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act, and will
be governed by the final adjudication of such issue.
The Registrant hereby undertakes that it will apply the indemnification
provision of its by-laws in a manner consistent with Release 11330 of the
Securities and Exchange Commission under the Investment Company Act of 1940, so
long as the interpretation of Sections 17(h) and 17(i) of such Act remains in
effect.
Registrant, in conjunction with the Investment Manager, Registrant's
Trustees, and other registered investment management companies managed by the
Investment Manager, maintains insurance on behalf of any person who is or was a
Trustee, officer, employee, or agent of Registrant, or who is or was serving at
the request of Registrant as a trustee, director, officer, employee or agent of
another trust or corporation, against any liability asserted against him and
incurred by him or arising out of his position. However, in no event will
Registrant
3
<PAGE>
maintain insurance to indemnify any such person for any act for which Registrant
itself is not permitted to indemnify him.
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
See "The Fund and Its Management" in the Prospectus regarding the business
of the investment advisor. The following information is given regarding officers
of Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"). MSDW Advisors is
a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co.
The term "Morgan Stanley Dean Witter Funds" refers to the following
registered investment companies:
CLOSED-END INVESTMENT COMPANIES
(1) Morgan Stanley Dean Witter California Insured Municipal Income Trust
(2) Morgan Stanley Dean Witter California Quality Municipal Securities
(3) Morgan Stanley Dean Witter Government Income Trust
(4) Morgan Stanley Dean Witter High Income Advantage Trust
(5) Morgan Stanley Dean Witter High Income Advantage Trust II
(6) Morgan Stanley Dean Witter High Income Advantage Trust III
(7) Morgan Stanley Dean Witter Income Securities Inc.
(8) Morgan Stanley Dean Witter Insured California Municipal Securities
(9) Morgan Stanley Dean Witter Insured Municipal Bond Trust
(10) Morgan Stanley Dean Witter Insured Municipal Income Trust
(11) Morgan Stanley Dean Witter Insured Municipal Securities
(12) Morgan Stanley Dean Witter Insured Municipal Trust
(13) Morgan Stanley Dean Witter Municipal Income Opportunities Trust
(14) Morgan Stanley Dean Witter Municipal Income Opportunities Trust II
(15) Morgan Stanley Dean Witter Municipal Income Opportunities Trust III
(16) Morgan Stanley Dean Witter Municipal Income Trust
(17) Morgan Stanley Dean Witter Municipal Income Trust II
(18) Morgan Stanley Dean Witter Municipal Income Trust III
(19) Morgan Stanley Dean Witter Municipal Premium Income Trust
(20) Morgan Stanley Dean Witter New York Quality Municipal Securities
(21) Morgan Stanley Dean Witter Prime Income Trust
(22) Morgan Stanley Dean Witter Quality Municipal Income Trust
(23) Morgan Stanley Dean Witter Quality Municipal Investment Trust
(24) Morgan Stanley Dean Witter Quality Municipal Securities
OPEN-END INVESTMENT COMPANIES
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Institutional Money Trust
(4) Active Assets Money Trust
(5) Active Assets Premier Money Trust
(6) Active Assets Tax-Free Trust
(7) Morgan Stanley Dean Witter 21st Century Trend Fund
(8) Morgan Stanley Dean Witter Aggressive Equity Fund
(9) Morgan Stanley Dean Witter American Opportunities Fund
(10) Morgan Stanley Dean Witter Balanced Growth Fund
(11) Morgan Stanley Dean Witter Balanced Income Fund
4
<PAGE>
(12) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(13) Morgan Stanley Dean Witter California Tax-Free Income Fund
(14) Morgan Stanley Dean Witter Capital Growth Securities
(15) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS PORTFOLIO"
(16) Morgan Stanley Dean Witter Convertible Securities Trust
(17) Morgan Stanley Dean Witter Developing Growth Securities Trust
(18) Morgan Stanley Dean Witter Diversified Income Trust
(19) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(20) Morgan Stanley Dean Witter Equity Fund
(21) Morgan Stanley Dean Witter European Growth Fund Inc.
(22) Morgan Stanley Dean Witter Federal Securities Trust
(23) Morgan Stanley Dean Witter Financial Services Trust
(24) Morgan Stanley Dean Witter Fund of Funds
(25) Morgan Stanley Dean Witter Global Dividend Growth Securities
(26) Morgan Stanley Dean Witter Global Utilities Fund
(27) Morgan Stanley Dean Witter Growth Fund
(28) Morgan Stanley Dean Witter Hawaii Municipal Trust
(29) Morgan Stanley Dean Witter Health Sciences Trust
(30) Morgan Stanley Dean Witter High Yield Securities Inc.
(31) Morgan Stanley Dean Witter Income Builder Fund
(32) Morgan Stanley Dean Witter Information Fund
(33) Morgan Stanley Dean Witter Intermediate Income Securities
(34) Morgan Stanley Dean Witter International Fund
(35) Morgan Stanley Dean Witter International SmallCap Fund
(36) Morgan Stanley Dean Witter Japan Fund
(37) Morgan Stanley Dean Witter Latin American Growth Fund
(38) Morgan Stanley Dean Witter Limited Term Municipal Trust
(39) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(40) Morgan Stanley Dean Witter Market Leader Trust
(41) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(42) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(43) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(44) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(45) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(46) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(47) Morgan Stanley Dean Witter Next Generation Trust
(48) Morgan Stanley Dean Witter North American Government Income Trust
(49) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(50) Morgan Stanley Dean Witter Real Estate Fund
(51) Morgan Stanley Dean Witter S&P 500 Index Fund
(52) Morgan Stanley Dean Witter S&P 500 Select Fund
(53) Morgan Stanley Dean Witter Select Dimensions Investment Series
(54) Morgan Stanley Dean Witter Select Municipal Reinvestment Fund
(55) Morgan Stanley Dean Witter Short-Term Bond Fund
(56) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(57) Morgan Stanley Dean Witter Small Cap Growth Fund
(58) Morgan Stanley Dean Witter Special Value Fund
(59) Morgan Stanley Dean Witter Strategist Fund
(60) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(61) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(62) Morgan Stanley Dean Witter Tax-Managed Growth Fund
5
<PAGE>
(63) Morgan Stanley Dean Witter Total Market Index Fund
(64) Morgan Stanley Dean Witter Total Return Trust
(65) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(66) Morgan Stanley Dean Witter U.S. Government Securities Trust
(67) Morgan Stanley Dean Witter Utilities Fund
(68) Morgan Stanley Dean Witter Value-Added Market Series
(69) Morgan Stanley Dean Witter Value Fund
(70) Morgan Stanley Dean Witter Variable Investment Series
(71) Morgan Stanley Dean Witter World Wide Income Trust
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
President, Chief Management of Morgan Stanley Dean Witter & Co.
Executive Officer and ("MSDW); Chairman, Chief Executive Officer and Director
Director of Morgan Stanley Dean Witter Distributors Inc. ("MSDW
Distributors") and Morgan Stanley Dean Witter Trust FSB
("MSDW Trust"); President, Chief Executive Officer and
Director of Morgan Stanley Dean Witter Services Company
Inc. ("MSDW Services"); President of the Morgan Stanley
Dean Witter Funds; Executive Vice President and Director
of Dean Witter Reynolds Inc. ("DWR"); Director of various
MSDW subsidiaries; Trustee of various Van Kampen investment
companies.
Barry Fink Assistant Secretary of DWR; Executive Vice President,
Executive Vice President, Secretary, General Counsel and Director of MSDW Services;
Secretary, General Executive Vice President, Assistant Secretary and Assistant
Counsel and Director General Counsel of MSDW Distributors; Vice President,
Secretary and General Counsel of the Morgan Stanley Dean
Witter Funds.
Joseph J. McAlinden Vice President of the Morgan Stanley Dean Witter Funds;
Executive Vice President Director of MSDW Trust.
and Chief Investment
Officer
Ronald E. Robison Executive Vice President, Chief Administrative Officer
Executive Vice President, and Director of MSDW Services; Vice President of the
Chief Administrative Morgan Stanley Dean Witter Funds.
Officer and Director
Edward C. Oelsner, III
Executive Vice President
Joseph R. Arcieri Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
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
Sheila A. Finnerty Vice President of Morgan Stanley Dean Witter Prime
Senior Vice President Income Trust.
Edward F. Gaylor Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Robert S. Giambrone Senior Vice President of MSDW Services, MSDW
Senior Vice President Distributors and MSDW Trust and Director of MSDW Trust;
Vice President of the Morgan Stanley Dean Witter Funds.
Rajesh K. Gupta Vice President of various Morgan Stanley Dean Witter
Senior Vice President, Funds.
Director of the Taxable
Fixed Income Group and
Chief Administrative Officer -
Investments
Kenton J. Hinchliffe Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Kevin Hurley Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Jenny Beth Jones Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Michelle Kaufman Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
John B. Kemp, III President of MSDW Distributors.
Senior Vice President
Anita H. Kolleeny Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of Sector
Rotation
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>
Jonathan R. Page Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Money
Market Group
Ira N. Ross Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Guy G. Rutherfurd, Jr. Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Growth
Group
Rochelle G. Siegel Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
James Solloway
Senior Vice President
Katherine H. Stromberg Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Paul D. Vance Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Growth
and Income Group
Elizabeth A. Vetell
Senior Vice President
and Director of Shareholder
Communication
James F. Willison Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the
Tax-Exempt Fixed
Income Group
Raymond A. Basile
First Vice President
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.
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>
Thomas Chronert
First Vice President
Marilyn K. Cranney Assistant Secretary of DWR; First Vice President and
First Vice President Assistant Secretary of MSDW Services; Assistant
and Assistant Secretary Secretary of MSDW Distributors and the Morgan Stanley
Dean Witter Funds.
Salvatore DeSteno First Vice President of MSDW Services.
First Vice President
Peter W. Gurman
First Vice President
Michael Interrante First Vice President and Controller of MSDW Services;
First Vice President Assistant Treasurer of MSDW Distributors; First Vice
and Controller President and Treasurer of MSDW Trust.
David Johnson
First Vice President
Stanley Kapica
First Vice President
Douglas J. Ketterer
First Vice President
Todd Lebo First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors and
Assistant Secretary the Morgan Stanley Dean Witter Funds.
Lou Anne D. McInnis First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors and
Assistant Secretary the Morgan Stanley Dean Witter Funds.
Carsten Otto First Vice President and Assistant Secretary of MSDW
First Vice President Services; Assistant Secretary of MSDW Distributors and
and Assistant Secretary the Morgan Stanley Dean Witter Funds.
Carl F. Sadler
First Vice President
Ruth Rossi First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors and
Assistant Secretary the Morgan Stanley Dean Witter Funds.
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>
James P. Wallin
First Vice President
Robert Abreu
Vice President
Dale Albright
Vice President
Joan G. Allman
Vice President
Andrew Arbenz Vice President of Morgan Stanley Dean Witter Global
Vice President Utilities Fund.
Armon Bar-Tur Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Maurice Bendrihem
Vice President and
Assistant Controller
Thomas A. Bergeron
Vice President
Philip Bernstein
Vice President
Dale Boettcher
Vice President
Michelina Calandrella
Vice President
Ronald Caldwell
Vice President
Joseph Cardwell
Vice President
Liam Carroll
Vice President
Philip Casparius
Vice President
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>
Annette Celenza
Vice President
Aaron Clark
Vice President
William Connerly
Vice President
Michael J. Davey
Vice President
David Dineen Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Glen H. Frey Vice President of Morgan Stanley Dean Witter Information
Vice President Fund.
Jeffrey D. Geffen
Vice President
Sandra Gelpieryn
Vice President
Charmaine George
Vice President
Michael Geringer
Vice President
Gail Gerrity-Burke
Vice President
Peter Gewirtz
Vice President
Ellen Gold
Vice President
Stephen Greenhut
Vice President
Trey Hancock
Vice President
Laury A. Haskamp
Vice President
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>
Matthew T. Haynes Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Peter Hermann Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
David T. Hoffman
Vice President
Thomas G. Hudson II
Vice President
Kevin Jung Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Carol Espejo-Kane
Vice President
Nancy Karole-Kennedy
Vice President
Paula LaCosta Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Kimberly LaHart
Vice President
Thomas Lawlor
Vice President
Gerard J. Lian Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Cameron J. Livingstone
Vice President
Nancy Login
Vice President
Sharon Loguercio
Vice President
Steven MacNamara
Vice President
Catherine Maniscalco Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
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>
Peter R. McDowell
Vice President
Albert McGarity
Vice President
Teresa McRoberts Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Mark Mitchell
Vice President
Julie Morrone Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Mary Beth Mueller
Vice President
David Myers Vice President of Morgan Stanley Dean Witter Natural
Vice President Resource Development Securities Inc.
James Nash
Vice President
Richard Norris
Vice President
Hilary A. O'Neill
Vice President
Mori Paulson
Vice President
Anne Pickrell
Vice President
Frances Roman
Vice President
Dawn Rorke
Vice President
John Roscoe Vice President of Morgan Stanley Dean Witter
Vice President Real Estate Fund.
Hugh Rose
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>
Robert Rossetti Vice President of Morgan Stanley Dean Witter Competitive
Vice President Edge Fund.
Sally Sancimino
Vice President
Deborah Santaniello
Vice President
Patrice Saunders
Vice President
Howard A. Schloss Vice President of Morgan Stanley Dean Witter Federal
Vice President Securities Trust.
Alison M. Sharkey
Vice President
Peter J. Seeley Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Ronald B. Silvestri Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Robert Stearns
Vice President
Naomi Stein
Vice President
William Stevens
Vice President
Michael Strayhorn
Vice President
Marybeth Swisher
Vice President
Michael Thayer
Vice President
Robert Vanden Assem
Vice President
David Walsh
Vice President
15
<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>
Alice Weiss Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
John Wong
Vice President
</TABLE>
The principal address of MSDW Advisors, MSDW Services, MSDW Distributors,
DWR, and the Morgan Stanley Dean Witter Funds is Two World Trade Center, New
York, New York 10048. The principal address of MSDW is 1585 Broadway, New York,
New York 10036. The principal address of MSDW Trust is 2 Harborside Financial
Center, Jersey City, New Jersey 07311.
Item 27. PRINCIPAL UNDERWRITERS
(a) Morgan Stanley Dean Witter Distributors Inc. ("MSDW Distributors"), a
Delaware corporation, is the principal underwriter of the Registrant. MSDW
Distributors is also the principal underwriter of the following investment
companies:
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Institutional Money Trust
(4) Active Assets Money Trust
(5) Active Assets Premier Money Trust
(6) Active Assets Tax-Free Trust
(7) Morgan Stanley Dean Witter 21st Century Trend Fund
(8) Morgan Stanley Dean Witter Aggressive Equity Fund
(9) Morgan Stanley Dean Witter American Opportunities Fund
(10) Morgan Stanley Dean Witter Balanced Growth Fund
(11) Morgan Stanley Dean Witter Balanced Income Fund
(12) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(13) Morgan Stanley Dean Witter California Tax-Free Income Fund
(14) Morgan Stanley Dean Witter Capital Growth Securities
(15) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS PORTFOLIO"
(16) Morgan Stanley Dean Witter Convertible Securities Trust
(17) Morgan Stanley Dean Witter Developing Growth Securities Trust
(18) Morgan Stanley Dean Witter Diversified Income Trust
(19) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(20) Morgan Stanley Dean Witter Equity Fund
(21) Morgan Stanley Dean Witter European Growth Fund Inc.
(22) Morgan Stanley Dean Witter Federal Securities Trust
(23) Morgan Stanley Dean Witter Financial Services Trust
(24) Morgan Stanley Dean Witter Fund of Funds
(25) Morgan Stanley Dean Witter Global Dividend Growth Securities
(26) Morgan Stanley Dean Witter Global Utilities Fund
(27) Morgan Stanley Dean Witter Growth Fund
(28) Morgan Stanley Dean Witter Hawaii Municipal Trust
(29) Morgan Stanley Dean Witter Health Sciences Trust
16
<PAGE>
(30) Morgan Stanley Dean Witter High Yield Securities Inc.
(31) Morgan Stanley Dean Witter Income Builder Fund
(32) Morgan Stanley Dean Witter Information Fund
(33) Morgan Stanley Dean Witter Intermediate Income Securities
(34) Morgan Stanley Dean Witter International Fund
(35) Morgan Stanley Dean Witter International SmallCap Fund
(36) Morgan Stanley Dean Witter Japan Fund
(37) Morgan Stanley Dean Witter Latin American Growth Fund
(38) Morgan Stanley Dean Witter Limited Term Municipal Trust
(39) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(40) Morgan Stanley Dean Witter Market Leader Trust
(41) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(42) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(43) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(44) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(45) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(46) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(47) Morgan Stanley Dean Witter Next Generation Trust
(48) Morgan Stanley Dean Witter North American Government Income Trust
(49) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(50) Morgan Stanley Dean Witter Prime Income Trust
(51) Morgan Stanley Dean Witter Real Estate Fund
(52) Morgan Stanley Dean Witter S&P 500 Index Fund
(53) Morgan Stanley Dean Witter S&P 500 Select Fund
(54) Morgan Stanley Dean Witter Short-Term Bond Fund
(55) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(56) Morgan Stanley Dean Witter Small Cap Growth Fund
(57) Morgan Stanley Dean Witter Special Value Fund
(58) Morgan Stanley Dean Witter Strategist Fund
(59) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(60) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(61) Morgan Stanley Dean Witter Tax-Managed Growth Fund
(62) Morgan Stanley Dean Witter Total Market Index Fund
(63) Morgan Stanley Dean Witter Total Return Trust
(64) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(65) Morgan Stanley Dean Witter U.S. Government Securities Trust
(66) Morgan Stanley Dean Witter Utilities Fund
(67) Morgan Stanley Dean Witter Value-Added Market Series
(68) Morgan Stanley Dean Witter Value Fund
(69) Morgan Stanley Dean Witter Variable Investment Series
(70) Morgan Stanley Dean Witter World Wide Income Trust
(b) The following information is given regarding directors and officers of MSDW
Distributors not listed in Item 26 above. The principal address of MSDW
Distributors is Two World Trade Center, New York, New York 10048. Other than Mr.
Purcell, who is a Trustee of the Registrant, none of the following persons has
any position or office with the Registrant.
17
<PAGE>
NAME POSITIONS AND OFFICE WITH MSDW DISTRIBUTORS
Michael T. Gregg Vice President and Assistant Secretary.
James F. Higgins Director
Philip J. Purcell Director
John Schaeffer Director
Charles Vadala Senior Vice President and Financial Principal.
Item 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained by the Investment Manager at its offices, except records relating to
holders of shares issued by the Registrant, which are maintained by the
Registrant's Transfer Agent, at its place of business as shown in the
prospectus.
Item 29. MANAGEMENT SERVICES
Registrant is not a party to any such management-related service contract.
Item 30. UNDERTAKINGS
Registrant hereby undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
18
<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 30th day of March, 2000.
MORGAN STANLEY DEAN WITTER
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. 11 has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
(1) Principal Executive Officer Chairman, Chief Executive Officer
and Trustee
By: /s/ Charles A. Fiumefreddo 03/30/00
--------------------------
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By: /s/ Thomas F. Caloia 03/30/00
--------------------
Thomas F. Caloia
(3) Majority of the Trustees
Charles A. Fiumefreddo (Chairman)
Philip J. Purcell
By: /s/ Barry Fink 03/30/00
--------------
Barry Fink
Attorney-in-Fact
Michael Bozic Manuel H. Johnson
Edwin J. Garn Michael E. Nugent
Wayne E. Hedien John L. Schroeder
By: /s/ David M. Butowsky 03/30/00
---------------------
David M. Butowsky
Attorney-in-Fact
</TABLE>
<PAGE>
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
EXHIBIT INDEX
10. Consent of Independent Accountants.
16 (a). Code of Ethics of Morgan Stanley Dean Witter Advisors Inc., Morgan
Stanley Dean Witter Services Company Inc. and Morgan Stanley Dean
Witter Distributors Inc.
16 (b). Code of Ethics of the Morgan Stanley Dean Witter Funds.
16 (c). Code of Ethics of The TCW Group Inc.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form N-1A of
our report dated March 14, 2000, relating to the financial statements and
financial highlights of Morgan Stanley Dean Witter Latin American Growth Fund,
which appears in such Registration Statement. We also consent to the
references to us under the headings "Custodian and Independent Accountants,"
"Experts" and "Financial Highlights" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
March 27, 2000
<PAGE>
CODE OF ETHICS
- ------------------------
(Print Name)
MORGAN STANLEY DEAN WITTER ADVISORS INC.
MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC.
MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC.
Effective September 1, 1994 (as amended through March 1, 2000)
I. INTRODUCTION
Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"), a subsidiary of
Morgan Stanley Dean Witter & Co., is an investment adviser or manager of a
group of investment companies, referred to herein as the "Morgan Stanley
Dean Witter Funds." MSDW Advisors also serves as investment adviser to other
clients, including corporate pension funds, other institutions and
individuals ("MSDW Advisors Managed Accounts").
This Code of Ethics is adopted by MSDW Advisors in keeping with the general
principles and objectives set forth in Sections II and III below, and to
enforce the highest legal and ethical standards in light of its fiduciary
obligations to the Morgan Stanley Dean Witter Fund shareholders and to MSDW
Advisors' other clients. It has also been adopted by Morgan Stanley Dean
Witter Services Company Inc. ("Services"), a wholly owned subsidiary of MSDW
Advisors, and by Morgan Stanley Dean Witter Distributors Inc.
("Distributors"), a wholly-owned subsidiary of Morgan Stanley Dean Witter &
Co.), to apply to their Directors, officers and employees.
Employees, officers and Directors of MSDW Advisors, Services and
Distributors are also referred to the Morgan Stanley Dean Witter Policy
Statement on Insider Trading (attached), which is incorporated in this Code.
II. GENERAL PRINCIPLES
A. SHAREHOLDER AND CLIENT INTERESTS COME FIRST
Every officer, director or employee of MSDW Advisors, Services and
Distributors owes a fiduciary duty to the shareholders of the Morgan
Stanley Dean Witter Funds and to all other clients of MSDW Advisors. This
means that in every decision relating to investments, employees and
affiliates must recognize the needs and interests of the Morgan Stanley
Dean Witter Fund shareholders and other MSDW Advisors clients, and be
certain that at all times the interests of the shareholders and other
clients are placed ahead of any personal interest.
B. AVOID ACTUAL AND POTENTIAL CONFLICTS OF INTEREST
The restrictions and requirements of this Code of Ethics are designed to
prevent behavior which conflicts, potentially conflicts or raises the
appearance of actual or potential conflict with the interests of the
shareholders of the Morgan Stanley Dean Witter Funds and MSDW Advisors
Managed Account clients. It is of the utmost importance that the
personal securities transactions of employees and affiliates be
conducted in a manner consistent with both the letter and spirit of this
Code of Ethics, including these principles. Only then can an individual,
and MSDW Advisors, Services and Distributors as a whole, be certain to
avoid any actual or potential conflict of interest or any abuse of an
individual's position of trust and responsibility.
<PAGE>
C. AVOID UNDUE PERSONAL BENEFIT
MSDW Advisors, Services and Distributors employees and affiliates should
ensure that they do not acquire undue personal benefit or advantage as a
result of the performance of their normal duties as they relate to the
Morgan Stanley Dean Witter Funds and other MSDW Advisors clients.
Consistent with the first principle that the interests of the Morgan
Stanley Dean Witter Fund shareholders and other MSDW Advisors clients
must always come first is the fundamental standard that undue personal
advantage deriving from the management by MSDW Advisors of other
people's money is to be avoided.
III. OBJECTIVE
The Securities and Exchange Commission's code of ethics rule contained in
the Investment Company Act of 1940 makes it unlawful for certain persons
associated with investment advisers or principal underwriters of investment
companies to engage in conduct which is deceitful, fraudulent, or
manipulative, or which involves false or misleading statements, in
connection with the purchase or sale of a security held or proposed to be
acquired by an investment company. In addition, Section 204A of the
Investment Advisers Act of 1940 requires investment advisers to establish,
maintain and enforce written policies and procedures designed to prevent
misuse of material non-public information. The objective of this Code is to
maintain the behavior of certain individuals associated with MSDW Advisors,
Services and Distributors (herein called "Access Persons") within the
general principles set forth above, as well as to prevent such persons from
engaging in conduct proscribed by the code of ethics rule and Section 204A
of the Investment Advisers Act. The Compliance Officer or Compliance
Coordinator in MSDW Advisors Risk Management Department will identify all
Access Persons and notify them of their reporting obligations at the time
they become an Access Person. Access Persons include all directors,
officers and employees of MSDW Advisors, Services or Distributors except
those directors and officers of Distributors who meet the following three
criteria: (i) they do not devote substantially all working time to the
activities of MSDW Advisors, Services or Distributors; (ii) they do not, in
connection with their regular functions and duties, participate in, obtain
information with respect to, or make recommendations as to, the purchase
and sale of securities; and (iii) they do not have access to information
regarding the day-to-day investment activities of MSDW Advisors, Services
or Distributors (those Directors and officers must, however, file quarterly
transaction reports pursuant to Section V., sub-section D., below). An
Officer or employee of MSDW Advisors, Distributors or Services on leave is
not considered an Access Person hereunder, provided that during the period
such person is on leave, subparagraphs (ii) and (iii) in the preceding
sentence are applicable.
IV. GROUNDS FOR DISQUALIFICATION FROM EMPLOYMENT
Pursuant to the terms of Section 9 of the Investment Company Act of 1940, no
director, officer or employee of MSDW Advisors, Services or Distributors may
become, or continue to remain, an officer, director or employee, without an
exemptive order issued by the Securities and Exchange Commission, if such
director, officer or employee is, or becomes:
A. within the past ten years convicted of any felony or misdemeanor
involving the purchase or sale of any security or arising out of the
officer's or employee's conduct as an affiliated person, salesman or
employee of any investment company, bank, insurance company or entity or
person required to be registered under the Commodity Exchange Act; or
B. permanently or temporarily enjoined by any court from acting as an
affiliated person, salesman or employee of any investment company, bank,
insurance company or entity or person required to be registered under the
Commodity Exchange Act, or from engaging in or continuing any conduct or
practice in connection with any such activity or in connection with the
purchase or sale of any security.
2
<PAGE>
It is your obligation to immediately report any conviction or injunction to
the General Counsel of MSDW Advisors.
V. PERSONAL TRANSACTIONS IN SECURITIES
A. PROHIBITED CONDUCT
No Access Person shall buy or sell any security for his own account or
for an account in which he has, or as a result of the transaction
acquires, any direct or indirect beneficial ownership (referred to herein
as a "personal transaction") unless:
1. advance clearance of the transaction has been obtained; and
2. the transaction is reported in writing to MSDW Advisors in accordance
with the requirements of sub-section D below.
B. RESTRICTIONS AND LIMITATIONS ON PERSONAL SECURITIES TRANSACTIONS
The following restrictions and limitations govern investments and
personal securities transactions by Access Persons. Unless otherwise
indicated, all restrictions and limitations are applicable to all Access
Persons:
1. Securities purchased may not be sold at a profit until at least 60
days from the purchase trade date. In addition, securities sold may
not be purchased at a lower price until at least 60 days from the
sale trade date. Any violation will result in disgorgement of all
profits from the transactions.
2. No foreign security may be purchased unless the security is listed on
a U.S. Stock Exchange or can be held as an American Depository
Receipt (ADR).
3. No short sales are permitted.
4. No transactions in options or futures are permitted.
5. No Access Person may acquire any security in an Initial Public
Offering (IPO).
6a. Private placements of any kind may only be acquired with special
permission of the Code of Ethics Review Committee, and, if approved,
will be subject to continuous monitoring for possible future
conflict. Any Access Person wishing to request approval for private
placements must complete an MSDW Advisors Private Placement Approval
Request Form and submit the form to MSDW Advisors' Risk Management
Department. A copy of MSDW Advisors Private Placement Approval
Request Form, which may be revised at any time, is attached as
Exhibit A. Where the Code of Ethics Review Committee approves any
acquisition of private placements, its decision and reasons for
supporting the decision will be documented in a written report, which
is to be kept for five years in MSDW Advisors' Risk Management
Department after the end of the fiscal year in which the approval was
granted.
6b. Any Access Person who has a personal position in an issuer through a
private placement must affirmatively disclose that interest if such
Access Person is involved in consideration of any subsequent
investment decision regarding any security of that issuer or an
affiliate by any Morgan Stanley Dean Witter Fund or MSDW Advisors
Managed Account. In such event, the final investment decision shall
be independently reviewed by MSDW Advisor's Chief Investment Officer.
Written records of any such circumstance shall be maintained and sent
to the MSDW Advisors' Risk Management Department.
7. Access Persons with MSDW Online accounts are permitted to trade ONLY
between the hours of 9:30 a.m. and 4:00 p.m. (New York time). Trading
after hours is prohibited.
3
<PAGE>
THE FOLLOWING RESTRICTIONS, 8a, 8b AND 8c, APPLY ONLY TO (I) PORTFOLIO
MANAGERS (AND ALL PERSONS REPORTING TO PORTFOLIO MANAGERS) AND
(II) PERSONNEL IN THE MSDW ADVISORS TRADING DEPARTMENT.
8a. No purchase or sale transactions may be made in any security by any
portfolio manager (or person reporting to a portfolio manager) for a
period of thirty (30) days before or after that security is bought or
sold by any Morgan Stanley Dean Witter Fund (other than Morgan
Stanley Dean Witter Value-Added Market Series, Morgan Stanley Dean
Witter Select Dimensions Investment Series--Value-Added Portfolio,
Morgan Stanley Dean Witter Index Funds, or Portfolios) or MSDW
Advisors Managed Account for which such portfolio manager (or the
portfolio manager to whom such person reports) serves in that
capacity.
8b. No purchase or sale transactions may be made in any security traded
through the MSDW Advisors trading department by any person employed
in the MSDW Advisors trading department for a period of seven (7)
days before or after that security is bought or sold by any Morgan
Stanley Dean Witter Fund (other than Morgan Stanley Dean Witter
Value-Added Market Series, Morgan Stanley Dean Witter Select
Dimensions Investment Series--Value-Added Portfolio, Morgan Stanley
Dean Witter Index Funds, or Portfolios) or MSDW Advisors Managed
Account.
8c. Any transactions by persons described in (a) and (b) above within
such enumerated period will be required to be reversed, if
applicable, and any profits or, at the discretion of the Code of
Ethics Review Committee, any differential between the sale price of
the individual security transaction and the subsequent purchase or
sale price by a relevant MSDW Fund during the enumerated period, will
be subject to disgorgement.
IMPORTANT: Regardless of the limited applicability of Restriction 8,
MSDW Advisors' Risk Management Department monitors all transactions
by ALL Access Persons in order to ascertain any pattern of conduct
which may evidence conflicts or potential conflicts with the
principles and objectives of this Code, including a pattern of
frontrunning. On a quarterly basis, MSDW Advisors' Risk Management
Department will provide the MSDW Funds Boards of Directors with a
written report that (i) describes issues that arose during the
previous quarter under this Code and if applicable, each MSDW Funds'
Sub-Adviser's Code, including but not limited to, information about
material violations and sanctions imposed in response to the material
violations, and (ii) certifies that MSDW Advisors has adopted
procedures reasonably necessary to prevent Access Persons from
violating this Code.
C. ADVANCE CLEARANCE REQUIREMENT
1. PROCEDURES
(a) FROM WHOM OBTAINED
Subject to the limitations and restrictions of B above, advance
clearance of a personal transaction in a security must be
obtained from any two of the following officers of MSDW Advisors:
(1) CEO/President
(2) Chief Investment Officer
(3) Chief Administrative Officer
(4) General Counsel
(5) any other person so designated by the CEO or President,
provided, however, that no more than ten persons, at any
time, may be Clearing Officers.
4
<PAGE>
These officers are referred to in this Code as "Clearing
Officers."
Prior to obtaining the two signatures from the Clearing Officers,
the form must be approved by the MSDW Advisors Department
responsible for the type of security for which permission is
being sought, as follows:
<TABLE>
<S> <C>
1. Equity Trading --Equity Trading Department
2. Fixed-Income Corporate --Manager,Corporate Fixed-Income
Bonds
3. Municipal Bonds --Manager, Municipal Fixed-Income
4. Non-Investment Grade --Manager, High Yield Fixed-Income
("Junk") Bonds
5. Collateralized Mortgage --Manager, Government Fixed-Income
Obligations (CMOs) and
other non-exempt Mortgage
and Asset-Backed Securities
6. Convertible Securities --Manager, Convertible Securities
</TABLE>
Prior to obtaining the Clearing Officers' signatures the form
also must be reviewed and initialed by the MSDW Advisors' Risk
Management Department. A copy of MSDW Advisors Securities
Transaction Approval Form, which may be revised at any time, is
attached as Exhibit B.
The Clearing Officers will not sign unless the approvals of the
relevant investment department and MSDW Advisors' Risk Management
Department are indicated on the form. MSDW Advisors' Risk
Management Department has implemented procedures reasonably
designed to monitor purchases and sales effected pursuant to the
aforementioned pre-clearance procedures.
(b) TIME OF CLEARANCE
All approved securities transactions, whether executed through AN
MSDW BROKERAGE ACCOUNT OR AN MSDW ONLINE ACCOUNT, must take
place, prior to 4:00 p.m. EST, on the same day that the complete
advance clearance is obtained. If the transaction is not
completed on the date of clearance, a new clearance must be
obtained, including one for any uncompleted portion.
Post-approval is NOT PERMITTED under the Code of Ethics. If it is
determined that a trade was completed before approval, it will be
considered a violation of the Code of Ethics.
(c) PERMITTED BROKERAGE ACCOUNTS
ALL SECURITIES TRANSACTIONS MUST BE THROUGH AN MSDW BROKERAGE
ACCOUNT OR AN MSDW ONLINE ACCOUNT; NO OTHER BROKERAGE ACCOUNTS
ARE PERMITTED UNLESS SPECIAL PERMISSION IS OBTAINED. If you
maintain accounts outside of MSDW, you must immediately transfer
your accounts to a MSDW branch. Failure to do so will be
considered a significant violation of the Code of Ethics. In the
event permission is granted to maintain an outside brokerage
account, it is the responsibility of the employee to arrange for
duplicate confirmations of all securities transactions and
monthly brokerage statements to be sent to the MSDW Advisors'
Risk Management Department.
Prior to opening an MSDW ONLINE ACCOUNT, Access Persons must
obtain approval from MSDW Advisors' Risk Management Department.
NO employee may open an MSDW Online account unless a completed
and signed copy of their MSDW Online account application and MSDW
Employee Account Request Form is submitted to MSDW Advisors' Risk
Management Department for approval. NO employee may apply for an
5
<PAGE>
MSDW ONLINE ACCOUNT ONLINE. A copy of the MSDW Employee Account
Request Form, which may be revised at any time, is attached as
Exhibit C.
(d) FORM
Clearance must be obtained by completing and signing the
Securities Transaction Approval Form provided for that purpose by
MSDW Advisors and obtaining the signature of the correct
Department indicated in sub-section C.1 (a) and any two of the
Clearing Officers. The form must also indicate the name of the
individual's Financial Advisor and the Branch Office Number,
whether the account is an MSDW Online Account, as well as other
required information.
If you have more than one account under your control, indicate on
the approval sheet for which account the trade is intended.
ADDITIONALLY, PLEASE ADVISE YOUR FINANCIAL ADVISOR OR MSDW ONLINE
TO SEND DUPLICATE COPIES OF YOUR CONFIRMATION SLIPS AND BROKER
STATEMENTS TO THE MSDW Advisors' Risk Management Department FOR
EACH ACCOUNT UNDER YOUR CONTROL.
(e) FILING
After all required signatures are obtained, the Securities
Transaction Approval Form must be filed with the Risk Management
Department of MSDW Advisors by noon of the day following
execution of the trade for filing in the respective individual's
Code of Ethics file. A copy is retained by the employee for his
or her records. (If a preclearance request is denied, a copy of
the form will be maintained with MSDW Advisors' Risk Management
Department.)
2. FACTORS CONSIDERED IN CLEARANCE OF PERSONAL TRANSACTIONS
In addition to the limitations and restrictions set forth under B
above, the Clearing Officers, in keeping with the general principles
and objectives of this Code of Ethics, may refuse to grant clearance
of a personal transaction in their sole discretion without being
required to specify any reason for the refusal. Generally, the
Clearing Officers will consider the following factors in determining
whether or not to clear a proposed transaction:
(a) Whether the amount or the nature of the transaction or person
making it is likely to affect the price or market of the
security.
(b) Whether the individual making the proposed purchase or sale is
likely to benefit from purchases or sales being made or
considered on behalf of any Morgan Stanley Dean Witter Fund or
client.
(c) Whether the transaction is non-volitional on the part of the
individual.
3. EXEMPT SECURITIES
(a) The securities listed below are exempt from the restrictions of
sub-sections (B) (1) and (7), the advance clearance requirement
of sub-section C AND the quarterly and annual reporting
requirements of sub-section D. Therefore, it is not necessary to
obtain advance clearance for personal transactions in any of the
following securities nor is it necessary to report such
securities in the quarterly transaction reports or annual
securities holdings list:
(i) U.S. Government Securities;
(ii) Bank Certificates of Deposit;
(iii) Bankers' Acceptances;
6
<PAGE>
(iv) Commercial Paper;
(v) Purchases which are part of an automatic dividend
reinvestment plan (All employees with dividend reinvestment
plans must submit a memorandum to MSDW Advisors' Risk
Management Department and sales must be pre-approved); and
(vi) Open-end investment companies (mutual funds) (Closed-end
funds must be pre-approved).
(b) In addition, the following securities are exempt from the
restrictions of sub-sections B (1) and (7) and the advance
clearance requirement of sub-section C, but are subject to the
quarterly and annual reporting requirements of sub-section D:
(i) Unit Investment Trusts; and
(ii) Morgan Stanley Dean Witter & Co. stock (including exercise
of stock option grants), due to the fact that it may not be
purchased by any actively managed Morgan Stanley Dean Witter
Fund (other than index-type funds) or for any MSDW Advisors
Managed Account. The restrictions imposed by Morgan Stanley
Dean Witter & Co. on Senior Management and other persons in
connection with transactions in Morgan Stanley Dean Witter &
Co. stock are not affected by the exemption of Morgan Stanley
Dean Witter & Co. stock from the advance clearance
requirements of this Code, and continue in effect to the
extent applicable.
4. ACCOUNTS COVERED
Advance clearance must be obtained for any personal transaction in a
security by an Access Person if such Access Person has, or as a
result of the transaction acquires, any direct or indirect beneficial
ownership in the security.
The term "beneficial ownership" is defined by rules of the SEC which
will be applicable in all cases. Generally, under the SEC rules, a
person is regarded as having beneficial ownership of securities held
in the name of:
(a) a husband, wife or a minor child; OR
(b) a relative sharing the same house; OR
(c) anyone else if the Access Person:
(i) obtains benefits substantially equivalent to ownership of the
securities; or
(ii) can obtain ownership of the securities immediately or at
some future time.
5. EXEMPTION FROM CLEARANCE REQUIREMENT
Clearance is not required for any account over which the Access
Person has no influence or control. In case of doubt the Access
Person may state on the Securities Transaction Approval Form that he
or she disclaims any beneficial ownership in the securities involved.
D. REPORT OF TRANSACTIONS
1. TRANSACTIONS AND ACCOUNTS COVERED
(a) All securities transactions, except for transactions involving
exempt securities listed in Section V., sub-section C.3. (a) of
this Code must be reported in the next quarterly transaction
report after the transaction is effected. In addition, any new
brokerage account(s) opened during the quarter as well as the
date(s) the account(s) was opened must be reported.
7
<PAGE>
(b) EVERY ACCESS PERSON MUST FILE A REPORT WHEN DUE EVEN IF SUCH
PERSON MADE NO PURCHASES OR SALES OF SECURITIES DURING THE PERIOD
COVERED BY THE REPORT.
(c) Directors and officers who, pursuant to Section III, are exempt
from preclearance ARE subject to the quarterly reporting
requirements.
2. TIME OF REPORTING
(a) INITIAL HOLDINGS REPORT
Each Access Person must, at the time of becoming an Access
Person, provide an initial holdings report to the Compliance
Officer or Compliance Coordinator disclosing (i) all securities
beneficially owned by the Access Person listing the title of the
security, number of shares held, and principal amount of the
security (any privately-placed securities held must be reported)
(ii) the name of the broker dealer or financial institution where
the Access Person maintains a personal account and (iii) the date
the report is submitted by the Access Person. New employees will
be required to provide a listing of all non-exempt securities
holdings as of the date of commencement of employment as well as
a listing of all outside brokerage accounts. This report must be
provided no later than 10 days after a person becomes an Access
Person.
(b) QUARTERLY TRANSACTION REPORTS
Each Access Person must submit a quarterly report of all
securities transactions, except for transactions involving exempt
securities listed in Section V., sub-section C.3. (a) of this
Code, and any new accounts(s) opened during the quarter as well
as the date(s) the account(s) was opened within 10 calendar days
after the end of each calendar quarter.
(c) ANNUAL HOLDINGS REPORTS
The January Annual Listing of Securities Holdings Report requires
all Access Persons to provide an annual listing of holdings of
(i) all securities beneficially owned listing the title of the
security, number of shares held, and principal amount of the
security as of December 31 of the preceding year, except
securities exempt from pre-clearance AND reporting under Section
V., sub-section C. 3(a), (ii) the name of any broker dealer or
financial institution where the account(s) are maintained, as of
December 31 of the preceding year (a current listing will also be
required upon the effectiveness of this Code) and (iii) the date
the Report is submitted by the Access Person. The information
must be current as of a date not more than 30 days before the
report is submitted.
3. FORM OF REPORTING
The initial holdings report, quarterly transaction report and the
annual listing of holdings report must be on the appropriate forms
provided by MSDW Advisors or may consist of broker statements
(attached to the Report form or, if an MSDW account, the broker
statements formerly sent to MSDW Advisors' Risk Management
Department) which provide at least the same information. In the event
that MSDW Advisors already maintains a record of the required
information, an Access Person may satisfy this requirement by
(i) confirming in writing (which may include e-mail) the accuracy and
completeness of the record and disclose the beneficial ownership of
securities (if any) not listed on the account statement and
(ii) recording the date of the confirmation. Copies of MSDW Advisors'
initial holdings report, quarterly transaction report and the annual
listing of holdings report, which may be revised at any time, are
attached as Exhibits D, E, and F, respectively.
8
<PAGE>
4. RESPONSIBILITY TO REPORT
The responsibility for taking the initiative to report is imposed on
each individual required to make a report. Any effort by MSDW
Advisors to facilitate the reporting process does not change or alter
that responsibility.
5. WHERE TO FILE REPORT
All reports must be filed with the Risk Management Department of MSDW
Advisors.
6. RESPONSIBILITY TO REVIEW
MSDW Advisors' Risk Management Department's Compliance Officer or
Compliance Coordinator will review all initial holdings reports,
quarterly transaction reports, and annual listing of holdings reports
filed by Access Persons.
VI. REVIEW COMMITTEE
A Code of Ethics Review Committee, consisting of the CEO/ President, Chief
Investment Officer and the General Counsel of MSDW Advisors, will review and
consider any proper request of an Access Person for relief or exemption from
any restriction, limitation or procedure contained herein, which
restriction, limitation or procedure is claimed to cause a hardship for such
Access Person. The committee shall meet on an ad hoc basis, as deemed
necessary upon written request by an Access Person, stating the basis for
his or her request for relief. The committee's decision is solely within its
complete discretion.
VII. SERVICE AS DIRECTOR
No Access Person may serve on the board of any company without prior
approval of the Code of Ethics Review Committee. If such approval is
granted, it will be subject to the implementation of Chinese Wall
procedures to isolate investment personnel serving as directors from making
investment decisions for Morgan Stanley Dean Witter Funds or MSDW Advisors
Managed Accounts concerning the company in question.
VIII. GIFTS
No Access Person shall accept, directly or indirectly, anything of value,
including gifts and gratuities, in excess of $100 per year from any person
or entity that does business with any Morgan Stanley Dean Witter Fund or
MSDW Advisors Managed Account, not including occasional meals or tickets
to theater or sporting events or other similar entertainment.
IX. SANCTIONS
Upon discovering a violation of this Code, MSDW Advisors may impose such
sanctions as it deems appropriate, including, but not limited to, a
reprimand (orally or in writing), demotion, and suspension or termination of
employment. The CEO of MSDW Advisors, in his sole discretion, is authorized
to determine the choice of sanctions to be imposed in specific cases,
including termination of employment of any employee.
X. EFFECTIVE DATE
All employees, officers and Directors of MSDW Advisors, Services and
Distributors (whether or not Access Persons) are required to sign a copy of
this Code indicating their agreement to abide by the terms of this Code.
In addition, all employees, officers and Directors of MSDW Advisors, Services
and Distributors will be required to certify annually that (i) they have read
and understand the terms of this Code of Ethics and recognize the
responsibilities and obligations incurred by their being subject to this
Code, and (ii) they are in compliance with the requirements of this Code of
Ethics, including but
9
<PAGE>
not limited to the reporting of all brokerage accounts, the preclearance for
Access Persons and all non-exempt personal securities transactions in
accordance with this Code.
XI. EMPLOYEE CERTIFICATION
I have read and understand the terms of the above Code of Ethics. I
recognize the responsibilities and obligations, including but not limited to
my quarterly transaction, annual listing of holdings, and initial holdings
reporting obligations, incurred by me as a result of my being subject to
this Code of Ethics. I hereby agree to abide by the above Code of Ethics.
- -------------------------------------- ------------------------
(Signature) (Date)
- --------------------------------------
(Print name)
10
<PAGE>
EXHIBIT A
MORGAN STANLEY DEAN WITTER ADVISORS
PRIVATE PLACEMENT APPROVAL REQUEST
(ATTACH A COPY OF THE PRIVATE PLACEMENT MEMORANDUM, OFFERING MEMORANDUM OR ANY
OTHER RELEVANT DOCUMENTS)
______________________________ ____________________________
NAME (PLEASE PRINT) DEPARTMENT & JOB TITLE
1. Name of the sponsor's corporation, partnership or other entity (the
"Private Placement"):
___________________________________________________________________________
2. Is the sponsor's corporation or partnership: | | Public | | Private
3. Type of security or fund: _________________________________________________
4. Nature of participation (e.g. Stockholder, General Partner, Limited
Partner). Indicate all applicable:
___________________________________________________________________________
5. Planned date of transaction: ______________________________________________
6. Size of offering (if a fund, size of fund): _______________________________
7. Size of your participation (number of units/shares and dollar amount):
___________________________________________________________________________
8. Would the investment carry limited or unlimited liability?
| | Limited | | Unlimited
9. Would the investment require any use of MSDW Advisors' premises, facilities
or materials? | | Yes | | No
If "yes," please describe: ________________________________________________
10. Are other MSDW Advisors' personnel or clients involved? | | Yes | | No
If "yes," please describe: ________________________________________________
11. Describe the business to be conducted by the Private Placement:
___________________________________________________________________________
If Private Placement is a fund:
- Describe investment objectives of the fund (e.g. value, growth, core or
specialty)
_______________________________________________________________________
- Is this a permissible investment for an account or fund that you
manage? | | Yes | | No
If "yes", please describe which client or fund:
_______________________________________________________________________
12. Will you participate in any investment decisions for the Private Placement?
| | Yes | | No
If "Yes," please describe:
___________________________________________________________________________
13. Describe how you became aware of this Private Placement:
___________________________________________________________________________
14. Has this private placement been made available to an account or fund that
you manage? IF no, state why:
___________________________________________________________________________
15. To the best of your knowledge, will this Private Placement result in an
initial public offering ("IPO")? | | YES | | NO
- --------------------------------------------------------------------------------
I understand that approval, if granted, is based upon the information provided
herein and I agree to observe any conditions imposed upon such approval, I will
notify MSDW Advisors Risk Management Department in writing if any aspect of the
Private Placement is proposed to be changed (e.g., investment focus of fund,
compensation, involvement in organization's management) and I hereby acknowledge
that such changes may require further approvals, or disinvestment by me.
I represent (i) that I have read and understand the MSDW Advisors' Code of
Ethics (the "Code") with respect to personal trading and recognize that I am
subject thereto; (ii) that the above trade is in compliance with the Code;
(iii) that to the best of my knowledge that the above trade does not
represent a conflict of interest, or an appearance of a conflict of interest,
with any MSDW Client or MSDW Fund; and (iv) that I have no knowledge of any
pending client orders in this security nor is the above trade in a related
security which indirectly would result in a transaction in a security in
which there are pending client orders. Furthermore, I acknowledge that no
action should be taken by me to effect the trade(s) listed above until I have
received formal approval.
Signature_________________________ Date: ___________________
Date Received by Risk Management: _________________________
Approved: ________ Disapproved: __________ Date: ___________________
<PAGE>
EXHIBIT B
SECURITIES TRANSACTION APPROVAL FORM
MORGAN STANLEY DEAN WITTER ADVISORS INC.
MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC.
MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC.
<TABLE>
<S><C>
- ---------------------------------------------------------------------------------------------------------------------------
PRINT NAME DEPARTMENT NAME OF PORTFOLIO MANAGER TO WHOM YOU REPORT
IF INVESTMENT DEPARTMENT COMPLETE BOX ->
- ---------------------------------------------------------------------------------------------------------------------------
DEAN WITTER ACCOUNT NO./MSDW NAME OF FINANCIAL ADVISOR DEANWITTER BRANCH/MSDW ONLINE
ONLINE ACCOUNT NO.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
REQUEST FOR PERMISSION TO ENGAGE IN PERSONAL TRANSACTION
--------------------------------------------------------
I hereby request permission to effect a transaction in the security as
indicated below for my own account or other account in which I have a beneficial
interest or legal title. THE APPROVAL WILL BE EFFECTIVE ONLY FOR A TRANSACTION
COMPLETED PRIOR TO THE CLOSE OF BUSINESS ON THE DAY OF APPROVAL. ANY
TRANSACTION, OR PORTION THEREOF, NOT SO COMPLETED WILL REQUIRE A NEW APPROVAL.
NOTE: A SEPARATE FORM MUST BE USED FOR EACH SECURITY TRANSACTION. ADVISE YOUR
FINANCIAL ADVISOR/MSDW ONLINE TO SUPPLY DUPLICATE CONFIRMS AND STATEMENTS ON ALL
TRANSACTIONS TO: MORGAN STANLEY DEAN WITTER ADVISORS INC., RISK MANAGEMENT
DEPARTMENT, TWO WORLD TRADE CENTER, NEW YORK, N.Y. 10048
I AM FAMILIAR WITH AND AGREE TO ABIDE BY THE REQUIREMENTS SET FORTH IN THE
MORGAN STANLEY DEAN WITTER ADVISORS INC. CODE OF ETHICS AND PARTICULARLY THE
FOLLOWING:
1. In the case of a purchase, I agree that I will not sell the security at
a profit for a minimum of sixty days from the date of the purchase
transaction. In the case of a sale, I agree that I will not purchase
the security at a profit for a minimum of sixty days from the date of
the sale transaction. Any violation will result in disgorgement of all
profits from the transaction.
2. I represent that this security: (A) is not involved in an Initial
Public Offering (IPO) and (B) does not involve a short sale, futures or
option transaction.
3. For any private placement, I am aware that specific pre-approval must
be obtained from the Morgan Stanley Dean Witter Advisors Inc. Code of
Ethics Review Committee.
4. For (A) EQUITY PORTFOLIO MANAGERS AND PERSONS REPORTING TO EQUITY
PORTFOLIO MANAGERS: I am aware that I must obtain the equity
security's description page from Bloomberg and attach the
description to this preapproval form and a signature from Joe
McAlinden or Rajesh Gupta as one of my Approving Officers (in
their absence I shall obtain the initials of my immediate
supervisor). I am aware that in certain cases I may be
required to disgorge any profits from a transaction if a
Morgan Stanley Dean Witter Fund buys or sells the same
security within 30 days preceding or subsequent to my
transaction (see Section V.B. (7) of the Code of Ethics for a
complete description of the scope of this restriction).
(B) PORTFOLIO MANAGERS AND PERSONS REPORTING TO PORTFOLIO
MANAGERS: I am aware that I must obtain a signature from Joe
McAlinden or Rajesh Gupta as one of my Approving Officers (in
their absence I shall obtain the initials of my immediate
supervisor). I am aware that in certain cases I may be
required to disgorge any profits from a transaction if a
Morgan Stanley Dean Witter Fund buys or sells the same
security within 30 days preceding or subsequent to my
transaction (see Section V.B. (7) of the Code of Ethics for a
complete description of the scope of this restriction).
(C) PERSONNEL IN THE MORGAN STANLEY DEAN WITTER ADVISORS INC.
TRADING DEPARTMENT: I am aware that in certain cases I may be
required to disgorge any profits from a transaction if a
Morgan Stanley Dean Witter Fund buys or sells the same
security within 7 days preceding or subsequent to my
transaction (see Section V.B.(7) of the Code of Ethics for a
complete description of the scope of this restriction).
- --------------------------------------------------------------------------------
A. PURCHASE
<TABLE>
<S><C>
-----------------------------------------------------------------------------------------------------------
NAME OF SECURITY/SYMBOL CUSIP NUMBER FOR FIXED INCOME SECURITIES ONLY
-----------------------------------------------------------------------------------------------------------
NUMBER OF SHARES OR ORDER PRICE EXECUTION PRICE TOTAL PRICE
PRINCIPAL AMOUNT
-----------------------------------------------------------------------------------------------------------
HAVE YOU SOLD ANY SHARES OF THIS SECURITY WITHIN THE PAST SIXTY DAYS? NO | | YES | | IF YES, AT WHAT PRICE PER SHARE? $
- ------------------------------------------------------------------------------------------------------------------------------------
B. SALE
-----------------------------------------------------------------------------------------------------------
NAME OF SECURITY/SYMBOL CUSIP NUMBER FOR FIXED INCOME SECURITIES ONLY
-----------------------------------------------------------------------------------------------------------
NUMBER OF SHARES OR ORDER PRICE EXECUTION PRICE TOTAL PRICE DATE ACQUIRED UNIT PRICE AT
PRINCIPAL AMOUNT ACQUISITION
- ------------------------------------------------------------------------------------------------------------------------------------
| | CHECK BOX IF THE SECURITY IS OFFERED THROUGH A PRIVATE DATE: YOUR SIGNATURE:
PLACEMENT. IF SO, CONTACT THE MORGAN STANLEY DEAN WITTER
ADVISORS INC. RISK MANAGEMENT DEPARTMENT FIRST.
- ------------------------------------------------------------------------------------------------------------------------------------
PERMISSION: GRANTED:________ DATE: TRADING DEPARTMENT SIGNATURE: IF APPLICABLE, RISK MANAGEMENT
DEPARTMENT REVIEW:
DENIED: ________ _________________
- ------------------------------------------------------------------------------------------------------------------------------------
DATE: SIGNATURE - APPROVING OFFICER: DATE: SIGNATURE - APPROVING OFFICER:
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*IF SHARES BEING SOLD WERE PURCHASED ON MORE THAN ONE DATE, EACH ACQUISITION
DATE MUST BE LISTED FOR PURPOSES OF DETERMINING THE 60-DAY HOLDING PERIOD. THE
WHITE COPY OF THIS PREAPPROVAL FORM MUST BE RETURNED TO THE RISK MANAGEMENT
DEPARTMENT BY NOON OF THE DAY FOLLOWING EXECUTION OF THE TRADE.
WHITE -- RISK MANAGEMENT PINK -- EMPLOYEE COPY
<PAGE>
<TABLE>
<S><C>
EXHIBIT C
MORGAN STANLEY DEAN WITTER ADVISORS ("MSDW ADVISORS")
MSDW EMPLOYEE REQUEST FORM FOR
OPENING AN MSDW ONLINE BROKERAGE ACCOUNT
Please complete this form for all "employee accounts" you intend to maintain at Morgan Stanley
Dean Witter Online, Inc. ("MSDW Online"). Please make additional copies of this page as necessary
in order to include information for all your accounts. After MSDW Advisors' Risk Management
Department's review, this form will be returned to you.
_________________________________ ____________________________ _______________________
PRINT NAME EMPLOYEE ID # FAX #
_________________________________ __________________________________________________________
SOCIAL SECURITY # DEPARTMENT/BRANCH #
Check one of the following:
| | I am an MSDW employee | | I am a subcontractor/vendor
_______________________________________________________________________________
ACCOUNT INFORMATION
_______________________________________________________________________________
The following MSDW Online account is currently open or will be opened.
Account Title:______________________________________________________________
MSDW Online Account Number:_________________________________________________
(TO BE COMPLETED BY MSDW ONLINE)
Employee's relationship to account owner:___________________________________
| | This account is NOT independently managed; I am involved in the
investment decisions.(2)
| | This account is independently managed; I am NOT involved in the
investment decisions.(3)
Name of investment manager and relationship, if any:________________________
_______________________________________________________________________________
By signing below, you agree to abide by MSDW Advisors Employee Trading Policy and any desk or
division trading policy applicable to you with respect to any account maintained at MSDW Online.
DATE:_____________________________ SIGNATURE:_____________________________
PLEASE SEND DUPLICATE STATEMENTS & TRADE CONFIRMATIONS TO:
__________________________________________________________
MSDW ADVISORS
2 WORLD TRADE CENTER, 70TH FLOOR
NEW YORK, NY 10048
ATTN: RISK MANAGEMENT DEPARTMENT
_________________________________________________________________________________________________
TO MSDW ONLINE:
Pursuant to NYSE Rule 407, please accept this form as notification that MSDW Advisors has
approved the employee named above to maintain the account titled above with your firm. The
employee has a beneficial interest in such account. This account must be placed in the
appropriate employee account range, i.e., MSDW Advisors, Morgan Stanley Dean Witter Services
Company and Morgan Stanley Dean Witter Distributors, in order to permit appropriate review by
MSDW Advisors.
DATE:_____________________________ APPROVED BY: _______________________________
SIGNATURE
_______________________________
PRINT NAME
MSDW ADVISORS RISK MANAGEMENT
(1) An "employee" account means any brokerage account owned or controlled, in whole or in part,
directly or indirectly by you, whether held in your name individually, or jointly with
others, or not in your name at all. Refer to Section V. subsection C.4 Accounts Covered under
MSDW Advisors' Code of Ethics for further clarification. If you are unsure as to whether an
account is an employee account, MSDW Advisors, MSDW Services Company and MSDW Distributors
employees should call the Risk Management Department at 212-392-1534.
(2) Your participation in the selection of any investment, including mutual funds, means that the
account is NOT independently managed.
(3) You must not be involved in investment selections through recommendation, advice, and prior
review or otherwise, or you must be a passive beneficiary of the account in order to
represent that you are not involved in investment decisions for the account.
</TABLE>
<PAGE>
<TABLE>
<S><C>
EXHIBIT D
MORGAN STANLEY DEAN WITTER ADVISORS INC.
MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC.
MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC.
LISTING OF SECURITIES HOLDINGS AND BROKERAGE ACCOUNTS (INITIAL)
===============================================================
I hereby certify that the following is a complete listing of all securities
beneficially owned by me AS OF THE DATE HEREOF. I also hereby certify that, set forth below, is a
listing of all brokerage accounts and any other accounts holding securities maintained by me.
NOTE: The term "securities" includes all stocks, bonds, derivatives, private
placements, limited partnership interests, etc. Failure to fully disclose all securities, whether
or not held in a Morgan Stanley Dean Witter brokerage account or Morgan Stanley Dean Witter
Online account, will be considered a violation of the Code of Ethics.
=================================================================================================
TYPE OF SECURITY NUMBER OF
SHARES OR YEAR
I. TITLE OF SECURITY (Indicate if security PRINCIPAL ACQUIRED
is a Private AMOUNT
Placement etc.)
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
(Use additional sheet if necessary)
=================================================================================================
II. NAME OF BROKERAGE ACCOUNT LOCATION ACCOUNT NUMBER
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
(Use additional sheet if necessary)
_______________________________ __/__/__
(Sign Name) (Date)
_______________________________
(Print Name)
</TABLE>
<PAGE>
EXHIBIT E
MORGAN STANLEY DEAN WITTER ADVISORS INC.
MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC.
MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC.
QUARTERLY SECURITIES TRANSACTIONS - CONFIDENTIAL REPORT
_______________________________________________________
XXXXQUARTER 2000/ XXX.,XXX.,XXX.
The following lists all transactions in securities in which I had any direct or
indirect beneficial ownership during the last calendar quarter (excluding
securities exempted by Section V., sub-section C.3.(a) of the Morgan Stanley
Dean Witter Advisors Code of Ethics (revised March 1, 2000).
ANY TRANSACTIONS IN UNIT INVESTMENT TRUSTS OR MORGAN STANLEY DEAN WITTER & CO.
STOCK (INCLUDING EXERCISE OF STOCK OPTION GRANTS) MUST BE REPORTED ON THIS FORM.
IF ALL TRANSACTIONS LISTED BELOW WERE EXECUTED THROUGH MSDW AND ALL THE
APPLICABLE INFORMATION IS REFLECTED IN THE CONFIRMS PREVIOUSLY SENT, INDICATE SO
ON THIS FORM. *Use reverse side if additional space is needed.
IF NO TRANSACTIONS TOOK PLACE, WRITE "NONE".
<TABLE>
<CAPTION>
<S><C>
DATE OF NUMBER OF TITLE OF SECURITY UNIT PRICE TOTAL PRICE BROKER
TRANSACTION SHARES OR (INCLUDING, IF APPLICABLE,
PRINCIPAL INTEREST AND MATURITY RATE)
AMOUNT
Purchases and Acquisitions
__________________________
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
Sales and Other Acquisitions
____________________________
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________
</TABLE>
1) Did you submit a pre-approval request form for each of the securities
transactions listed above? YES___ NO___
2) Which DWR branch maintains your account? ____________________________________
3) Who is your Financial Advisor at the Branch? ________________________________
4) (For MSDW Advisors and Distributors Directors and Officers only) To your
knowledge, are you the beneficial owner of more than 1/2 of 1% of the
outstanding securities of any issuer? YES___ NO___
If yes, please specify: _____________________________________________________
_____________________________________________________________________________
5) HAVE YOU RECEIVED WRITTEN PERMISSION TO MAINTAIN BROKERAGE ACCOUNT FOR YOU OR
A MEMBER OF YOUR IMMEDIATE FAMILY AT A BROKER-DEALER OTHER THAN DWR? YES___
NO___
6) IF "YES", HAVE ALL TRANSACTIONS BEEN PRECLEARED AND REPORTED AS
REQUIRED BY THE CODE OF ETHICS? YES___ NO___
7) HAVE YOU OPENED ANY NEW ACCOUNTS THIS QUARTER? YES___ NO___ IF "YES", WHAT
DATE WAS THIS ACCOUNT(S) OPENED?_____________________________________________
_____________________________________________________________________________
WHAT IS THE NAME OF THE BROKER DEALER OR FINANCIAL INSTITUTION WITH WHOM YOU
ESTABLISHED THE ACCOUNT? ____________________________________________________
Date: ____/____/____ Name: _____________________ Signed: ______________________
RETURN THIS FORM TO: MORGAN STANLEY DEAN WITTER ADVISORS RISK MANAGEMENT
DEPARTMENT, 2 WTC/7O, BY 00/00/00. REV (03/00)
<PAGE>
EXHIBIT F
MORGAN STANLEY DEAN WITTER ADVISORS INC.
MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC.
MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC.
ANNUAL LISTING OF SECURITIES HOLDINGS AND BROKERAGE ACCOUNTS
================================================================================
I hereby certify that the following is a complete listing of all securities
(other than open-end mutual funds and other exempt securities as described in
Section V., sub-section C.3. (a) of the Code of Ethics) beneficially owned (as
defined in Section V., sub-section C.4 of the Code of Ethics) by me AS OF THE
DATE HEREOF. I also hereby certify that, set forth below, is a listing of all
brokerage accounts and any other accounts holding securities maintained by me. I
also hereby certify that, the information contained below is current as of the
date indicated below.
NOTE: The term "securities" includes all stocks, bonds, derivatives,
private placements, limited partnership interests, etc. ANY TRANSACTIONS IN UNIT
INVESTMENT TRUSTS OR MORGAN STANLEY DEAN WITTER & CO. STOCK (INCLUDING EXERCISE
OF STOCK OPTION GRANTS) MUST BE REPORTED ON THIS FORM. Failure to fully disclose
all securities holdings, whether or not held in a Morgan Stanley Dean Witter
brokerage account or MSDW Online Account, will be considered a violation of the
Code of Ethics.
<TABLE>
<CAPTION>
<S><C>
NUMBER OF
SHARES OR YEAR
I. TITLE OF SECURITY TYPE OF SECURITY PRINCIPAL ACQUIRED
AMOUNT
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
(Use additional sheet if necessary)
II. NAME OF BROKERAGE ACCOUNT LOCATION ACCOUNT NUMBER
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________
(Use additional sheet if necessary)
______________________________ __/__/__
(Sign Name) (Date)
</TABLE>
______________________________
(Print Name)
PLEASE RETURN THIS FORM TO : MORGAN STANLEY DEAN WITTER ADVISORS' RISK
MANAGEMENT DEPARTMENT, 2 WTC /7O, BY 00/10/00.
<PAGE>
MORGAN STANLEY DEAN WITTER FUNDS
CODE OF ETHICS
I. INTRODUCTION
This Code of Ethics is adopted by the investment companies listed on
Schedule A attached hereto, which list may be amended from time to time
(each a "Fund" and collectively the "Morgan Stanley Dean Witter Funds" or
the "Funds"), in compliance with Rule 17j-1 promulgated by the Securities
and Exchange Commission ("SEC") under the Investment Company Act of 1940, as
amended. This Code covers all persons who are "Access Persons," as that term
is defined in Rule 17j-1. To the extent that any such individuals are
"Access Persons" under the Code of Ethics of the Funds' Investment Advisor,
Investment Manager, or Sub-Advisor, as applicable (any such entity herein
referred to as "Investment Advisor"), whose Codes have also been established
pursuant to Rule 17j-1, compliance by such individuals with the provisions
of the Code of the applicable Investment Advisor shall constitute compliance
with this Code.
II. PERSONAL TRANSACTIONS
A. REPORTS OF TRANSACTIONS - INDEPENDENT DIRECTORS/TRUSTEES
An Independent Director/Trustee of a Morgan Stanley Dean Witter Fund
shall report quarterly to the Fund any personal transaction in a security if
he or she knows or should know at the time of entering into the transaction
that: (a) the Fund has engaged in a transaction in the same security within
the last 15 days, or is engaging in such transaction or is going to engage
in a transaction in the same security in the next 15 days, or (b) the Fund
or its Investment Advisor has within the last 15 days considered a
transaction in the same security or is considering a transaction in the
security or within the next 15 days is going to consider a transaction in
the security.
B. REPORTS OF TRANSACTIONS, BROKERAGE ACCOUNTS AND HOLDINGS - ACCESS
PERSONS WHO ARE NOT INDEPENDENT DIRECTORS/ TRUSTEES
An Access Person who is not an Independent Director/Trustee of a Morgan
Stanley Dean Witter Fund shall report all non-exempt securities transactions
and new brokerage accounts on a quarterly basis.
An Access Person who is not an Independent Director/Trustee of a Morgan
Stanley Dean Witter Fund shall provide an annual listing of holdings of (i)
all securities beneficially owned as of December 31 of the preceding year,
except securities exempt from pre-clearance and reporting under Section D.,
(2) hereof listing the title of the security, number of shares held, and
principal amount of the security, (ii) the name of any broker dealer or
financial institution where the account(s) are maintained, as of December 31
of the preceding year (a current listing will also be required upon the
effectiveness of this Code) and (iii) the date the Report is submitted by
the Access Person. The information must be current as of a date not more
than 30 days before the report is submitted. New Access Persons, who are not
Independent Directors/Trustees of a Morgan Stanley Dean Witter Fund, will be
required to provide a listing of all non-exempt securities holdings, with
the information set forth above, as of the date of commencement of
employment as well as a listing of all outside brokerage accounts no later
than ten days after that person becomes an Access Person.
C. REPORTS OF TRANSACTIONS, BROKERAGE ACCOUNTS AND HOLDINGS - GENERAL
Any quarterly report required under A or B above must be made within ten
days after the end of the calendar quarter in which the personal transaction
occurred. The report may be made on the form provided by the Investment
Advisor or may consist of a broker statement that provides at least the same
information. In the event that MSDW Advisors already maintains a record of
the required information, an Access Person may satisfy this requirement by
(i) confirming in writing (which may include e-mail) the accuracy and
completeness of the record and disclose the beneficial ownership of
<PAGE>
securities (if any) not listed on the account statement and (ii) recording
the date of the confirmation. Copies of the Investment Advisor's forms,
which may be revised at any time, are attached.
The Funds' Compliance Officer will identify and advise all Access
Persons, including the Independent Directors/Trustees, subject to the
reporting requirement under A or B above, of their reporting requirement.
Each report required under A or B above will be submitted for review by the
Compliance Officer or Compliance Coordinator in the Risk Management
Department of the Investment Advisor.
D. DEFINITIONS AND EXEMPTIONS
(1) DEFINITIONS
For purposes of this Code the term "personal transaction" means the
purchase or sale, or other acquisition or disposition, of a security for
the account of the individual making the transaction or for an account in
which he or she has, or as a result of the transaction acquires, any
direct or indirect beneficial ownership in a security.
The term "beneficial ownership" is defined by rules of the SEC.
Generally, under SEC rules a person is regarded as having beneficial
ownership of securities held in the name of:
(a) a husband, wife, or minor child;
(b) a relative sharing the same house;
(c) anyone else if the access person -
(i) obtains benefits substantially equivalent to ownership of the
securities; or
(ii) can obtain ownership of the securities immediately or at
some future time.
The term "Access Person" is defined by rules of the SEC as (i) any
director, officer, or general partner of a fund or of a fund's investment
adviser, or any employee of a fund or of a fund's investment adviser who,
in connection with his or her regular functions or duties, participates
in the selection of a fund's portfolio securities or who has access to
information regarding a fund's future purchases or sales of portfolio
securities; or (ii) any director, officer, or general partner of a
principal underwriter who in the ordinary course of business, makes,
participates in or obtains information regarding, the purchase or sale of
securities for the fund for which the principal underwriter acts, or
whose functions or duties in the ordinary course of business relate to
the making of any recommendation to the fund regarding the purchase or
sale of securities.
(2) EXEMPTIONS
No report is required for a personal transaction in any of the
following securities:
(i) Securities issued by the U.S. Government;
(ii) Bank certificates of deposit;
(iii) Bankers' acceptances;
(iv) Commercial paper;
(v) Open-end mutual fund shares.
Also, no report is required with respect to any account over which
the access person has no influence or control.
III. CODE VIOLATIONS
Any officer of a Morgan Stanley Dean Witter Fund who discovers a
violation or apparent violation of this Code by an access person shall bring
the matter to the attention of the Chief Executive Officer or General
Counsel of the Fund who shall then report the matter to the Board of
Directors or the Board of Trustees, as the case may be, of the fund. The
Board shall determine
<PAGE>
whether a violation has occurred and, if it so finds, may impose such
sanctions, if any, as it considers appropriate.
IV. ADMINISTRATION OF CODE OF ETHICS
On a quarterly basis, the Board of Directors or the Board of Trustees of
each of the Funds shall be provided with a written report by each of the
Funds and the Investment Advisors, that describes any new issues arising
under the Code of Ethics, including information on material violations of
the Code of Ethics or procedures and sanctions imposed, and certifies that
each Fund and the Investment Advisors have adopted procedures reasonably
necessary to prevent Access Persons from violating the Code of Ethics.
Rev. March 1, 2000
<PAGE>
COMPLIANCE
TCW
EMPLOYEE POLICY
MARCH 2000
- ------------------------
I. INTRODUCTION
The TCW Group, Inc. is the parent of several companies which act as
investment adviser or manager of investment companies, corporate pension
funds, other institutions and individuals. As used in this Code of Ethics,
"TCW" refers to The TCW Group, Inc., all of its subsidiaries and affiliated
partnerships that are investment advisers registered with the Securities and
Exchange Commission, and Trust Company of the West.
This Code of Ethics is based on the principle that the officers, directors
and employees of TCW owe a fiduciary duty to, among others, TCW's clients.
In light of this fiduciary duty, you should conduct yourself in all
circumstances in accordance with the following general principles:
- You must at all times place the interests of TCW's clients before your own
interests.
- You must conduct all of your personal investment transactions consistent
with this Code and in such a manner as to avoid any actual or potential
conflict of interest or any abuse of your position of trust and
responsibility.
- You should adhere to the fundamental standard that investment advisory
personnel should not take inappropriate advantage of their positions to
their personal benefit.
Although it is sometimes difficult to determine what behavior is necessary or
appropriate to adhere to these general principles, this Code contains several
guidelines for proper conduct. However, the effectiveness of TCW's policies
regarding ethics depends on the judgment and integrity of its employees
rather than on any set of written rules. Accordingly, you must be sensitive
to the general principles involved and to the purposes of the Code in
addition to the specific guidelines and examples set forth below. If you are
uncertain as to whether a real or apparent conflict exists in any particular
situation between your interests and those of TCW's clients, you should
consult the Chief Compliance Officer immediately.
II. PERSONAL INVESTMENT TRANSACTIONS POLICY
Laws and ethical standards impose on TCW and its employees duties to avoid
conflicts of interest between their personal investment transactions and
transactions TCW makes on behalf of its customers. In view of the
sensitivity of this issue, it is important to avoid even the appearance of
impropriety. The following personal investment transaction policies are
designed to reduce the possibilities for such conflicts and or inappropriate
appearances, while at the same time preserving reasonable flexibility and
privacy in personal securities transactions.
Except as otherwise noted, TCW's restrictions on personal investment
transactions apply to all Covered Persons. "COVERED PERSONS" include all TCW
directors, officers and employees, except directors who (i) do not devote
substantially all working time to the activities of TCW, and (ii) do not
have access to information about the day-to-day investment activities of
TCW. Every employee should consider himself or herself a Covered Person
unless otherwise specifically exempted by the Approving Officers or unless
he or she falls within a class exempted by the Approving Officers. In
addition, this policy governs your investments in securities. "SECURITIES"
include any interest or instrument commonly known as a security, including
stocks, bonds, options, warrants, financial commodities, other derivative
products and interests in privately placed offerings and limited
partnerships.
<PAGE>
GENERAL PRINCIPLES REGARDING SECURITIES TRANSACTIONS OF COVERED PERSONS AND
TCW DIRECTORS
No Covered Person or TCW director may purchase or sell, directly or
indirectly, for his or her own account, or any account in which he or she
may have a beneficial interest:
- Any security (or related option or warrant) that to his or her knowledge
TCW is buying or selling for its clients, until such buying or selling is
completed or canceled.
- Any security (or related option or warrant) that to his or her knowledge
is under active consideration for purchase or sale by TCW for its clients.
The term "BENEFICIAL INTEREST" is defined by rules of the SEC. Generally,
under the SEC rules, a person is regarded as having a beneficial interest
in securities held in the name of:
- A husband, wife or a minor child;
- A relative sharing the same house;
- Anyone else if the Covered Person:
(i) obtains benefits substantially equivalent to ownership of the
securities;
(ii) can obtain ownership of the securities immediately or at some future
time; or
(iii) can vote or dispose of the securities.
If you act as a fiduciary with respect to funds and accounts managed outside
of TCW (for example, if you act as the executor of an estate for which you
make investment decisions), you will have a beneficial interest in the assets
of that fund or account. Accordingly, any securities transactions you make on
behalf of that fund or account will be subject to the general trading
restrictions set forth above. You should review the restrictions on your
ability to act as a fiduciary outside of TCW set forth under "OUTSIDE
ACTIVITIES -- OUTSIDE FIDUCIARY APPOINTMENTS."
PRECLEARANCE PROCEDURES
Each Covered Person must obtain preclearance for any personal investment
transaction in a security if such Covered Person has, or as a result of the
transaction acquires, any direct or indirect beneficial ownership in the
security. Preclearance is not necessary for exempt securities or Outside
Fiduciary Accounts. "EXEMPT SECURITIES" are securities (or securities
obtained in transactions) described on page C6. "OUTSIDE FIDUCIARY ACCOUNTS"
are certain fiduciary accounts outside of TCW for which you have received
TCW's approval to act as fiduciary and which TCW has determined qualify to be
treated as Outside Fiduciary Accounts under this Personal Investment
Transactions Policy. Separate certification procedures will apply for
securities transactions executed on behalf of Outside Fiduciary Accounts in
lieu of preclearance.
You must obtain preclearance for all non-exempt securities transactions by
completing and signing the Request for Personal Investment Transactions
Approval Form provided for that purpose by TCW and by obtaining the signature
of Andrew McManus, the TCW Personal Investment Transactions Administrator
and, for foreign offices, the additional signatories designated on the form.
You will be required to make certain certifications each time you trade a
security, including that you have no knowledge that would violate the general
trading principles set forth above. See Exhibit C-A for a sample copy of the
Request for Personal Investment Transactions Approval Forms for domestic and
foreign preclearance. Since the form may change over time, you should ask
Andrew McManus or his designee for supplies of the current form. The form is
also available on Westnet, TCW's intranet site.
2
<PAGE>
You must complete an approved securities transaction by the end of the
business day following the day that you obtain preclearance. If the
transaction is not completed within these time requirements, you must obtain
a new preclearance, including one for any uncompleted portion of the
transaction. Post-approval is NOT PERMITTED under this Code of Ethics. If TCW
determines that you completed a trade before approval or after the clearance
expires, you will be considered to be in violation of the Code.
Note that preclearance will ordinarily be given on the day you request it
unless (a) you are located in a U.S. office and are seeking to buy a foreign
security that must be precleared through a foreign office, or (b) you are
located in a foreign office and your request reaches the U.S. office at a
time when Andrew McManus is not on duty or cannot obtain all of the required
U.S. clearances because of the time of receipt. Preclearance for these
requests will ordinarily be given on the next business day.
TRADING RESTRICTIONS
In addition to the more general restrictions discussed above, TCW has adopted
other restrictions on personal investment transactions. Except as otherwise
noted below, the trading restrictions do not apply to Outside Fiduciary
Accounts.
NO COVERED PERSON MAY:
- Enter into an uncovered short sale.
- Write an uncovered option.
- Acquire any non-exempt security in an initial public offering (IPO).
(Remember -- under NASD rules, you may also be prohibited from
participating in ANY public offering that is a "hot issue.")
- Purchase or sell, directly or indirectly, for his or her own account or
for any account in which he or she may have a beneficial interest
(including through an Outside Fiduciary Account), any security that is
subject to a firm-wide restriction or a department restriction by his or
her department.
NO INVESTMENT PERSONNEL MAY:
- Purchase securities offered in a private placement (other than those
sponsored by TCW) except with the prior approval of the Approving
Officers. "INVESTMENT PERSONNEL" include any portfolio manager or
securities analyst or securities trader who provide information or advice
to a portfolio manager or who help execute a portfolio manager's
decisions. "APPROVING OFFICERS" are (i) one of Alvin Albe or Marc Stern
AND (ii) one of Michael Cahill or Hilary Lord. In considering approval,
the Approving Officers will take into consideration whether the investment
opportunity you have been offered should be reserved for TCW's clients and
whether the opportunity is being offered to you by virtue of your position
with TCW. If you or your department want to purchase on behalf of a TCW
client the security of an issuer or its affiliate where you have a
beneficial interest (including through an Outside Fiduciary Account) in
the securities of that issuer through a private placement, you must first
disclose your interest to an Approving Officer. In such event, the
Approving Officers will independently review the proposed investment
decision. Written records of any such circumstance should be sent to
Hilary Lord.
NO PORTFOLIO MANAGER WHO MANAGES A REGISTERED INVESTMENT COMPANY OR ANY
ASSOCIATED SECURITIES ANALYST OR SECURITIES TRADER MAY:
- Profit from the purchase or sale, or sale and purchase, of the same (or
equivalent) securities within 60 calendar days. Securities analysts or
securities traders who provide information and advice to any portfolio
manager who manages a registered investment company or who help execute
the portfolio manager's decisions are also subject to this short-term
trading restriction. Because of TCW's portfolio management support
structure, securities analysts and traders should assume that they are
subject to this trading restriction unless they have received confirmation
to the contrary from the
3
<PAGE>
Chief Compliance Officer. Note that a person's status or duties may change
which could result in him or her subsequently being subject to this
trading restriction. If you have any questions resulting from such a
change, you should consult with the Chief Compliance Officer. You should
also note that this prohibition would effectively limit the utility of
options trading and short sales of securities and could make legitimate
hedging activities less available. ANY PROFITS REALIZED ON SUCH SHORT TERM
TRADES WILL HAVE TO BE DISGORGED.
NO PORTFOLIO MANAGER MAY:
- Purchase or sell any security for his or her own account or any Outside
Fiduciary Account for a period of seven days BEFORE that security is
bought or sold on behalf of any TCW client for which the portfolio manager
serves as portfolio manager. VIOLATION OF THIS PROHIBITION WILL REQUIRE
REVERSAL OF THE TRANSACTION AND ANY RESULTING PROFITS WILL BE SUBJECT TO
DISGORGEMENT.
- Purchase any security for his or her own account or any Outside Fiduciary
Account for a period of seven days AFTER that security is sold or sell any
security for his or her own account or any Outside Fiduciary Account for a
period of seven days AFTER that security is bought on behalf of any TCW
client for which the portfolio manager serves as portfolio manager. In
addition, any portfolio manager who manages a registered investment
company may not PURCHASE or SELL any security for his or her own account
or any Outside Fiduciary Account for the period of seven days AFTER that
security is bought or sold on behalf of registered investment company for
which the portfolio manager serves as investment manager. VIOLATION OF
THESE PROHIBITIONS WILL REQUIRE REVERSAL OF THE TRANSACTION AND ANY
RESULTING PROFITS WILL BE SUBJECT TO DISGORGEMENT.
Any profits subject to disgorgement will be given to a charity selected by
TCW or under TCW's direction.
SECURITIES OR TRANSACTIONS EXEMPT FROM PERSONAL INVESTMENT TRANSACTIONS
POLICY
The following securities or transactions are exempt from some aspects of the
personal investment transactions policy:
(a) U.S. Government Securities.
(b) Bank Certificates of Deposit.
(c) Bankers' Acceptances.
(d) Commercial Paper or other high quality short-term debt instruments
(investment grade, maturity not greater than one year).
(e) Shares in open-end investment companies (mutual funds).
(f) Securities purchased on behalf of a Covered Person for an account over
which the Covered Person has no direct or indirect influence or control.
(g) Securities purchased through an automatic dividend reinvestment plan.
(h) Security purchases effected upon the exercise of rights issued by the
issuer pro rata to all holders of a class of its securities, to the
extent such rights were acquired from such issuer, and sales of such
rights so acquired.
(i) Stock index futures and nonfinancial commodities (e.g., pork belly
contracts).
4
<PAGE>
(j) Interests in TCW-sponsored limited partnerships or other TCW-sponsored
private placements.
(k) Securities acquired in connection with the exercise of an option. The
purchase or writing (sale) of an option is not an exempt transaction.
It is not necessary to preclear personal transactions for any exempt
securities or transactions. However, it still is necessary to report such
securities (other than securities exempt under clauses (a), (b), (c), (d),
(e) or (f) above) in the quarterly transaction reports or annual securities
holdings list. Personal investment transactions in exempt securities are
still subject to TCW's policy on inside information.
REPORTING OF TRANSACTIONS
I. COVERED PERSONS
QUARTERLY REPORTS. All Covered Persons must file with the Compliance
Department quarterly reports of personal investment transactions (Exhibit
C-B) BY THE 10TH DAY OF JANUARY, APRIL, JULY AND OCTOBER or, if that day is
not a business day, then the first business day thereafter. In each
quarterly report, the Covered Person must report ALL personal investment
transactions in which he or she has a beneficial interest and which were
transacted during the quarter other than transactions in U.S. government
securities, bank certificates of deposit, bankers' acceptances, commercial
paper, high quality short-term debt instruments or shares of open-end mutual
funds. EVERY COVERED PERSON MUST FILE A QUARTERLY REPORT WHEN DUE EVEN IF
SUCH PERSON MADE NO PURCHASES OR SALES OF SECURITIES DURING THE PERIOD
COVERED BY THE REPORT. You are charged with the responsibility for making
the quarterly reports. Any effort by TCW to facilitate the reporting process
does not change or alter that responsibility.
The report must be on the form provided by TCW. Since the form may change
over time, you should ask Andrew McManus or his designee for supplies of the
current form.
BROKER STATEMENTS AND TRADE CONFIRMATIONS. All Covered Persons are required
to direct brokers of accounts in which they have a beneficial interest to
supply to TCW, on a timely basis, duplicate copies of trade confirmations
and copies of periodic broker account statements. This requirement does not
apply to Outside Fiduciary Accounts. To maximize the protection of your
privacy, you should direct your brokers to send this information to:
Trust Company of the West
P.O. Box 71940
Los Angeles, CA 90017
II. OFFICERS OF TCW INVESTMENT MANAGEMENT COMPANY AND ALL TCW INVESTMENT
PERSONNEL
Officers of TCW Investment Management Company and all TCW Investment
Personnel are required to file the following reports in addition to those
above.
INITIAL HOLDINGS REPORTS. All TCW Investment Personnel and "ACCESS PERSONS"
of TCW Investment Management Company (the investment adviser to TCW managed
mutual funds), are required to submit an Initial Holdings Report listing ALL
securities in which the person has a beneficial interest other than U.S.
government securities, bank certificates of deposit, bankers' acceptances,
commercial paper, high quality short-term debt instruments or shares of
mutual funds within 10 DAYS of becoming either TCW Investment Personnel or
an Access Person of TCW Investment Management Company. An "ACCESS PERSON" of
TCW Investment Management Company is either a Director, President, Executive
Vice President, Managing Director or Senior Vice President of the company.
ANNUAL HOLDINGS REPORTS. All TCW Investment Personnel and "ACCESS PERSONS"
of TCW Investment Management Company are required to file an Annual Holdings
Report which provides a listing of ALL securities in which the person is a
beneficial interest as of December 31 of the preceding year, other than U.S.
government securities, bank certificates of deposit, bankers' acceptances,
commercial paper, high quality short-term debt securities or shares of
mutual funds.
5
<PAGE>
See the reference table below for a summary of reporting requirements.
REPORTING REQUIREMENTS REFERENCE TABLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
<S> <C>
If you are a "COVERED PERSON" [all TCW Then you must file:
directors, officers and employees]. (1) Personal Investment Transactions
Approval Form prior to trading;
(2) Quarterly Reports;
(3) Broker Statements and Trade
Confirmations; and
(4) an Annual Compliance Certification.
- ------------------------------------------------------------------------------------------
If you are considered TCW "INVESTMENT In addition to the requirements for "COVERED
PERSONNEL" [portfolio manager, securities PERSON," you must file:
analyst or a securities trader]. (1) an Initial Holdings Report; and
(2) an Annual Holdings Report.
- ------------------------------------------------------------------------------------------
If you are an "ACCESS PERSON" of TCW In addition to the requirements for "COVERED
Investment Management Company [Director, PERSON", you must file:
President, Executive Vice President, (1) an Initial Holdings Report; and
Managing Director or Senior Vice President]. (2) an Annual Holdings Report.
- ------------------------------------------------------------------------------------------
</TABLE>
If you have any questions about the Personal Investment Transactions Policy,
call Andrew McManus, Hilary Lord or Michael Cahill.
III. POLICY STATEMENT ON INSIDER TRADING
The professionals and staff of TCW occasionally come into possession of
material, non-public information (often called "INSIDE INFORMATION").
Various federal and state laws, regulations and court decisions, as well as
general ethical and moral standards, impose certain duties with respect to
the use of this inside information. The violation of these duties could
subject both TCW and the individuals involved to severe civil and criminal
penalties and the resulting damage to reputation. TCW views seriously any
violation of this policy statement. Violations constitute grounds for
disciplinary sanctions, including dismissal.
Within an organization or affiliated group of organizations, courts may
attribute one employee's knowledge of inside information to another
employee or group that later trades in the affected security, even if there
had been no actual communication of this knowledge. Thus, by buying or
selling a particular security in the normal course of business, TCW
personnel other than those with actual knowledge of inside information
could inadvertently subject TCW to liability. Alternatively, someone
obtaining inside information in a legitimate set of circumstances may
inadvertently restrict the legitimate trading activities of other persons
within the company.
The risks in this area can be significantly reduced through the
conscientious use of a combination of trading restrictions and information
barriers designed to confine material non-public information to a given
individual, group or department (so-called "CHINESE WALLS"). One purpose of
this Policy Statement is to establish a workable procedure for applying
these techniques in ways that offer significant protection to TCW and its
personnel, while providing flexibility to carry on TCW's investment
management activities on behalf of our clients.
SEE THE ATTACHED REFERENCE TABLE IF YOU HAVE ANY QUESTIONS ON THIS POLICY OR
WHO TO CONSULT IN CERTAIN SITUATIONS.
6
<PAGE>
TCW POLICY ON INSIDER TRADING
Trading Prohibition -- No officer, director or employee of TCW may buy or
sell a security (or a related option or warrant) in a company, either for
themselves or on behalf of others, while in possession of material,
non-public information about the company. This means that you may not buy or
sell securities for yourself or anyone, including your spouse, a relative,
friend, or client and you may not recommend that anyone else buy or sell a
security of a company on the basis of inside information regarding that
company.
Communication Prohibition -- No officer, director or employee of TCW may
communicate material, non-public information to others who have no official
need to know. This is known as "tipping," which is also a violation of the
insider trading laws, even if the "tipper" did not personally benefit.
Therefore, you should not discuss such information acquired on the job with
your spouse or with friends, relatives, clients, or anyone else outside of
TCW except on a need-to-know basis relative to your duties at TCW. If you
convey material non-public information to another person, even inadvertently,
it is possible that the other person if he or she trades on such information
would violate insider trading laws. This is known as "tippee liability." You
should remember that you may obtain material, non-public information about
entities sponsored by TCW, like its mutual funds.
WHAT IS MATERIAL INFORMATION?
Information is "material" when a reasonable investor would consider it
important in making an investment decision. Generally, this is information
whose disclosure could reasonably be expected to have an effect on the price
of a company's securities. The general test is whether a reasonable investor
would consider it important in deciding whether or not to buy or sell a
security in the company. The information could be positive or negative.
Whether something is material must be evaluated relative to the company in
whose securities a trade is being considered -- a multi-million dollar
contract may be immaterial to Boeing but material to a smaller capitalization
company. Some examples of material information are: dividend changes,
earnings results, changes in previously released earnings estimates,
significant merger, joint venture or acquisition proposals or agreements,
stock buy back proposals, tender offers, rights offerings, new product
releases or schedule changes, significant accounting write-offs or charges,
credit rating changes, changes in capital structure (e.g. stock splits),
accounting changes, major technological discoveries or break throughs, major
capital investment plans, major contract awards or cancellations,
governmental investigations, major litigation or disposition of litigation,
liquidity problems, and extraordinary management developments or changes.
Material information may also relate to the market for a company's
securities. Information about a significant order to purchase or sell
securities may, in some contexts, be deemed material. Similarly,
pre-publication information regarding reports to be issued in the financial
press may also be deemed material. For example, the Supreme Court upheld the
criminal convictions of insider traders who capitalized on pre-publication
information about the Wall Street Journal's "HEARD ON THE STREET" column.
Since there is no clear or "bright line" definition of what is material,
assessments sometimes require a fact specific inquiry. For this reason, if
you have questions about whether information is material, please direct them
to the Director of Research or your Department Head and, if further inquiry
is desired or required, the Chief Compliance Officer or the General Counsel.
WHAT IS NON-PUBLIC INFORMATION?
Information is "PUBLIC" when it has been disseminated broadly to investors in
the marketplace. Tangible evidence of dissemination is the best indication
that the information is public. For example, information is public after it
has become available to the general public through a public filing with
7
<PAGE>
the SEC or some other governmental agency, the Dow Jones "tape," release by
Standard & Poors or Reuters or publication in the Wall Street Journal or some
other publication of general circulation. Information remains non-public
until a reasonable time elapses after it is disseminated. While there is no
specific rule, generally trading 24 hours after the public dissemination of
information would not be prohibited (though the wait period may be shorter
where a press release is involved).
WHAT ARE SOME EXAMPLES OF HOW TCW PERSONNEL COULD OBTAIN INSIDE INFORMATION
AND WHAT YOU SHOULD DO IN THESE CASES?
In the context of TCW's business, the following are some examples of how a
person could come into possession of insider information:
(a) BOARD OF DIRECTORS SEATS
TCW officers, directors and employees are sometimes asked to sit on the
Board of Directors of public companies -- sometimes in connection with
their duties at TCW and sometimes not. These public companies will
generally have restrictions on their Board members' trading in the
companies' securities except during specified "window periods" following
the public dissemination of financial information. As noted elsewhere in
the Code of Ethics, service as a director of a non-TCW company requires
approval and, if approval is given, it will be subject to the
implementation of procedures to safeguard against potential conflicts of
interest or insider trading, such as Chinese Wall procedures or placing
the securities on a restricted list. Cases of fund managers sitting on
Boards of public companies have been highlighted in the press and have
underlined that the effect of inadequate safeguards could be to
inadvertently render securities "illiquid" in the hands of TCW. In order
to mitigate against this risk, anyone sitting on a board of public
company should consider the Chinese Wall Procedures below as applicable
to them and should abide by them. If the Board seat is held in
connection with TCW clients and there is some legitimate need to
communicate the information, the Chief Compliance Officer or General
Counsel should be contacted to determine whether to redefine the scope
of the Chinese Wall or place the securities on restricted status.
(b) DEAL-SPECIFIC INFORMATION
Under certain circumstances, an employee may receive insider information
for a legitimate purpose in the context of a transaction in which a TCW
entity or account is a potential participant. This "DEAL-SPECIFIC
INFORMATION" may be used by the department to which it was given for the
purpose for which it was given. Generally, if a confidentiality
agreement is to be signed, it should be assumed that insider information
is included. However, even in the absence of a confidentiality
agreement, insider information may be received. This type of information
may be given in connection with TCW's making a direct investment in a
company in the form of equity or debt; it may also involve a purchase by
TCW of a debt or equity security in a secondary transaction or in the
form of a participation. This type of situation typically arises in
mezzanine financings, loan participations, bank debt financings, venture
capital financing, purchases of distressed securities, oil and gas
investments and purchases of substantial blocks of stock from insiders.
YOU SHOULD REMEMBER THAT EVEN THOUGH THE INVESTMENT FOR WHICH THE
DEAL-SPECIFIC INFORMATION IS BEING RECEIVED MAY NOT BE A PUBLICLY TRADED
SECURITY, THE COMPANY MAY HAVE OTHER CLASSES OF PUBLICLY TRADED
SECURITIES THAT ARE PUBLICLY TRADED AND THE RECEIPT OF THE INFORMATION
BY TCW CAN AFFECT THE ABILITY OF OTHER PARTS OF THE ORGANIZATION TO
TRADE IN THOSE SECURITIES. For the foregoing reasons, if you are to
receive any deal-specific information on a company with any class of
publicly traded securities, please contact the TCW product attorney for
your area, who will then obtain the necessary preclearance from the
Chief Compliance Officer or the General Counsel.
(c) CREDITORS' COMMITTEES
On occasion an investment may go into default and TCW is a significant
participant. In that case, TCW may be asked to participate on a
Creditors' Committee. Creditors' Committees
8
<PAGE>
are often involved in intensive negotiations involving restructuring,
work-outs, recapitalizations and other significant events that would
affect the company and are given access to insider information. TCW's
sitting on such a committee could substantially affect its ability to
trade in securities in the company and, therefore, before sitting on any
Creditors' Committee, you must first get the approval of the Chief
Compliance Officer or the General Counsel.
(d) INFORMATION ABOUT TCW PRODUCTS
Persons involved with the management of limited partnerships, trusts and
mutual funds (closed-end and open-end) which themselves issue securities
could come into possession of material information about those funds
that is not generally known to their investors or the public and that
could be considered inside information. For example, plans with respect
to dividends could be considered insider information and buying or
selling securities in a TCW product with knowledge that there will be an
imminent change in dividends would be a violation of the policy. Another
example would be if there were to be a large scale buying or selling
program or a sudden shift in allocation that was not generally known,
this could be considered inside information. However, normal portfolio
decisions or securities trading in the ordinary course would not
normally be considered inside information. Persons involved with
management of these funds and, in particular, portfolio managers and
investment personnel, but also support and administrative personnel
should be sensitive to the fact that they have access to such
information. Department Heads for each product area and the head of
mutual funds for TCW are responsible for notifying the Chief Compliance
Officer of this type of inside information so she can impose appropriate
restrictions, and advise her when the information becomes public or
stale, so that the restriction can be removed.
(e) CONTACTS WITH PUBLIC COMPANIES
For TCW, contacts with public companies represent an important part of
our research efforts. TCW makes investment decisions on the basis of the
firm's conclusions formed through such contacts and analysis of publicly
available information. Difficult legal issues arise, however, when, in
the course of these contacts, a TCW employee becomes aware of MATERIAL,
non public information. This could happen, for example, if a company's
Chief Financial Officer prematurely discloses quarterly results to an
analyst or an investor relations representative makes a selective
disclosure of adverse news to a handful of investors. In such
situations, TCW must make a judgment as to its further conduct. If an
issue arises in this area, a research analysts' notes could become
subject to scrutiny and they have become increasingly the target of
plaintiffs' attorneys in securities class actions.
This area is one of particular concern to the investment business and,
unfortunately, it is one with a great deal of legal uncertainty. In a
notable 1983 case, the U.S. Supreme Court recognized explicitly the
important role of analysts to ferret out and analyze information as
necessary for the preservation of a healthy market. It also recognized
that questioning of corporate officers and insiders is an important part
of this information gathering process. The Court thus framed narrowly
the situations in which analysts receiving insider information would be
required to "disclose or abstain" from trading (generally where the
corporate insider was disclosing for an improper purpose, such as
personal benefit, and the analyst knows it). However, the Securities and
Exchange Commission has declared publicly its disfavor with the case and
since then has brought enforcement proceedings indicating that they will
take strict action against what they see as "selective disclosures" by
corporate insiders to securities analysts, even where the corporate
insider was getting no personal benefit and was trying to correct market
misinformation. Thus, the status of company-to-analyst contacts has been
characterized as "a fencing match on a tightrope" and a noted securities
professor has said that the tightrope is now electrified.
9
<PAGE>
Because of this uncertainty, caution is the recommended course of
action. If an analyst receives what he or she believes is insider
information and if you feel you received it in violation of a corporate
insider's fiduciary duty or for his personal benefit, you should make
reasonable efforts to achieve public dissemination of the information
and restrict trading until then. The Director of Research or your
Department Head should be contacted if you have questions or doubts and
they will contact the Chief Compliance Officer or General Counsel if
required.
WHAT IS THE EFFECT OF RECEIVING INSIDE INFORMATION?
The person actually receiving the inside information is subject to the
trading and communication prohibitions discussed above. However, since TCW is
a company, questions arise as to how widely that information is to be
attributed throughout the company. Naturally, the wider the attribution, the
greater the restriction will be on other persons and departments within the
company. THEREFORE, ANYONE RECEIVING INSIDER INFORMATION SHOULD BE AWARE THAT
THE CONSEQUENCES CAN EXTEND WELL BEYOND THEMSELVES OR EVEN THEIR DEPARTMENTS.
In the event of receipt of insider information by an employee, the company
will generally adopt one of two postures: (1) place a "firm wide restriction"
on securities in the affected company which would bar any purchases or sales
of the securities by any department or person within TCW, whether for a
client or personal account (absent specific approval); or (2) establish a
"CHINESE WALL" around the individual or a select group or department. In
these cases, those persons falling within the Chinese Wall would be subject
to the trading prohibition and, except for need-to-know communications to
others within the Chinese Wall, the communication prohibition discussed
above. The breadth of the Chinese Wall and the persons included within it
would have to be determined on a case-by-case basis. In these circumstances,
the Chinese Wall procedures are designed to "isolate" the inside information
and access to it by an individual or select group in order to allow the
remainder of the company not to be affected by it. In any case where a
Chinese Wall is imposed, the Chinese Wall procedures discussed below must be
strictly observed.
DOES TCW MONITOR TRADING ACTIVITIES?
The Compliance Department conducts reviews of securities trading in
securities identified to it as securities in which TCW may be deemed to
possess insider information. The Compliance Department surveys transactions
effected by the Company, its employees and its client accounts for the
purpose of, among other things, identifying transactions that may violate
laws against insider trading and, when necessary, investigating such trades.
PENALTIES AND ENFORCEMENT BY SEC AND PRIVATE LITIGANTS
The Director of Enforcement of the SEC has said that the SEC pursues all
cases of insider trading regardless of the size of transaction and regardless
of the persons involved. Updated and improved detection, tracking and
surveillance technique in the past few years have strengthened enforcement
efforts by the SEC as well as the stock exchanges. This surveillance is done
routinely in many cases or can be based on informants in specific cases.
10
<PAGE>
Penalties for violations are severe for both the individual and possibly his
or her employer. These could include:
- giving up all profits made (or losses avoided) TREBLED.
- fines of up to $1 million
- jail up to 10 years
- civil lawsuits by shareholders of the company in question.
The regulators, the market and TCW view violations seriously.
WHAT YOU SHOULD DO IF YOU HAVE A QUESTION ABOUT INSIDE INFORMATION?
Before executing any trade for yourself or others, including clients of TCW,
you must consider whether you have access to material, non-public
information. If you believe you have received oral or written material,
non-public information, you should discuss the situation immediately with the
Chief Compliance Officer or the General Counsel. You should not discuss the
information with anyone else within or outside TCW. The Chief Compliance
Officer will, with the assistance of counsel as required, determine whether
the information is of a nature requiring restrictions on use and
dissemination and when any restrictions should be lifted.
TCW'S CHINESE WALL PROCEDURES
"BEFORE I BUILT A WALL I'D ASK TO KNOW WHAT WAS I WALLING IN OR WALLING OUT."
Robert Frost, MENDING WALL (1914)
The Securities and Exchange Commission has long recognized that procedures
designed to isolate material non-public information to specific individuals
or groups can be a legitimate means of curtailing attribution of knowledge of
this inside information to an entire company. These types of procedures are
typical in multi-service broker-dealer investment banking firms and are known
as "Chinese Wall procedures". In those situations where TCW believes insider
information can be isolated, the following Chinese Wall procedures would
apply. These Chinese Wall procedures are designed to "quarantine" or
"isolate" the individuals or select group of persons within the Chinese Wall.
IDENTIFICATION OF THE WALLED-IN INDIVIDUAL OR GROUP
The persons subject to the Chinese Wall procedures will be identified by name
or group designation. If the Chinese Wall procedures are applicable simply
because of someone serving on a Board of Directors of a public company in a
personal capacity, it is likely that the Chinese Wall will apply exclusively
to that individual, although in certain circumstances it may be appropriate
to expand the wall. Where the information is received as a result of being on
a Creditors' Committee, serving on a Board in a capacity related to TCW's
investment activities or receipt of deal-specific information, the walled-in
group will generally refer to the product management group associated with
the deal and, in some cases, related groups or groups that are highly
interactive with that group. Determination of the breadth of the Chinese Wall
is fact-specific and must be made by the Chief Compliance Officer or the
General Counsel. Therefore, as noted above, it is important to advise them if
you come into possession of material, non-public information.
ISOLATION OF INFORMATION
Fundamental to the concept of a Chinese Wall is that the inside formation be
effectively
11
<PAGE>
quarantined to the walled-in group. The two basic procedures that must be
followed to accomplish this are as follows:
(a) RESTRICTIONS ON COMMUNICATIONS
Communications regarding the inside information or the subject company
should only be held with persons within the walled-in group on a
need-to-know basis or with the General Counsel or Chief Compliance
Officer. Communications should be discreet and should not be held in the
halls, in the lunchroom or on cellular phones. In some cases it may be
appropriate to use code names for the subject company as a precautionary
measure. If persons outside the group are aware of your access to
information and ask you about the target company, they should be told
simply that you are not at liberty to discuss it. On occasion, it may be
desirable to discuss the matter with someone at TCW outside the group.
NO SUCH COMMUNICATIONS SHOULD BE HELD WITHOUT FIRST RECEIVING THE PRIOR
CLEARANCE OF THE CHIEF COMPLIANCE OFFICER OR THE GENERAL COUNSEL. IN
SUCH CASE, THE PERSON OUTSIDE THE GROUP AND POSSIBLY HIS OR HER ENTIRE
DEPARTMENT, WILL THEREUPON BE DESIGNATED AS "INSIDE THE WALL" AND WILL
BE SUBJECT TO ALL THE CHINESE WALL RESTRICTIONS IN THIS MEMO.
(b) RESTRICTIONS ON ACCESS TO INFORMATION
The files, computers and offices where confidential information is
physically stored should generally be made inaccessible to persons not
within the walled-in group. In certain circumstances, there is adequate
and physical segregation of the group whereby access would be very
limited. However, in other cases where there is less physical
segregation between the group and others, additional precautionary
measures should be taken to make sure that any confidential non-public
information is kept in files securely and not generally accessible.
TRADING ACTIVITIES BY PERSONS WITHIN THE WALL
Persons within the Chinese Wall are prohibited from buying or selling
securities in the subject company, whether on behalf of TCW, clients or
in personal transactions. This restriction would not apply in the
following two cases: (1) Where the affected persons have received
deal-specific information, the persons are permitted to use the
information to consummate the deal for which it was given; and (2) In
connection with a liquidation of a client account in full, the security
in the affected account may be liquidated if the client has specifically
instructed TCW to liquidate the account in its entirety and if no
confidential information has been shared with the client. In this
circumstance, TCW would attribute the purchase or sale as having been
effected at the direction of the client rather than pursuant to TCW's
discretionary authority and TCW would be acting merely in an executory
capacity -- again, assuming no confidential information has been shared
with the client. The liquidating portfolio manager should confirm to the
Compliance Department in connection with such a liquidation that no
confidential information has been shared with the client.
Note that if the transaction permitted under paragraph (a) is a
secondary trade (versus a direct company issuance), counsel should be
consulted to determine disclosure obligations to the counterpart of the
insider information in our possession.
TERMINATION OF CHINESE WALL PROCEDURES
When the information has been publicly disseminated and a reasonable
time has elapsed, or if the information has become stale, the Chinese
Wall procedures with respect to the information can generally be
eliminated. This is particularly true where the information was received
in an isolated circumstance such as an inadvertent disclosure to an
analyst or receipt of deal-specific information. However, persons who by
reason of an ongoing relationship or position with the company are more
exposed to the receipt of such information on a frequent basis (for
example, being a member of the Board of Directors or on a Creditors'
Committee) would ordinarily be subject to the Chinese Wall procedures on
a continuing basis and may be permitted to trade only during certain
"window periods" when the company permits such "access" persons to
trade.
12
<PAGE>
IT WILL BE THE RESPONSIBILITY OF EACH GROUP HEAD TO ENSURE THAT MEMBERS OF
HIS OR HER GROUP ARE ABIDING BY THESE CHINESE WALL PROCEDURES IN EVERY
INSTANCE.
REFERENCE TABLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
<S> <C>
IF YOU HAVE A QUESTION ABOUT................ YOU SHOULD CONTACT
- ------------------------------------------------------------------------------------------
Whether information is "material" or "non- First: The Director of Research or your
public" Department Head. If further inquiry is
needed or desired, Chief Compliance Officer
or General Counsel
- ------------------------------------------------------------------------------------------
Taking a Board of Directors Seat General Counsel or Chief Compliance Officer
(Pre-approval is required)
- ------------------------------------------------------------------------------------------
Obtaining deal-specific information TCW attorney responsible for product or
(preclearance is required) Chief Compliance Officer or General Counsel.
- ------------------------------------------------------------------------------------------
Sitting on a Creditors' Committee Chief Compliance Officer or General Counsel
(Pre-approval is required)
- ------------------------------------------------------------------------------------------
Inside information on TCW commingled funds Department Head for product area or for
(e.g. partnerships, masts, mutual funds) mutual funds (who will notify Chief
Compliance Officer)
- ------------------------------------------------------------------------------------------
Contacts with a public company First: The Director of Research or your
Department Head. If further inquiry is
needed or desired, Chief Compliance Officer
or General Counsel
- ------------------------------------------------------------------------------------------
This Policy in general Chief Compliance Officer or General Counsel
- ------------------------------------------------------------------------------------------
Setting up a Chinese Wall Chief Compliance Officer or General Counsel
- ------------------------------------------------------------------------------------------
Who is "within" or "outside" a Chinese Wall Chief Compliance Officer or General Counsel
- ------------------------------------------------------------------------------------------
Restricted Securities List Chief Compliance Officer or General Counsel
- ------------------------------------------------------------------------------------------
Terminating a Chinese Wall Chief Compliance Officer or General Counsel
- ------------------------------------------------------------------------------------------
</TABLE>
CERTAIN OPERATIONAL PROCEDURES IN CONNECTION WITH ENFORCEMENT OF INSIDER
INFORMATION AND INSIDER TRADING POLICIES
The following are certain operational procedures that will be followed to
ensure communication of insider trading policies to TCW's employees and
enforcement thereof by the Company.
(a) EDUCATION AND TRAINING
New Employees -- The policy is in the Employee Handbook as part of the
TCW Code of Ethics. Each new employee receives the Handbook from Human
Resources. Human Resources will have each new employee certify that he
or she: agrees to abide by the Code of Ethics (including the policy on
insider trading). Each new employee is required to view a Compliance
orientation tape which discusses, among other things, the policy.
Existing Employees -- There will be an annual Compliance session which
at least all officers are required to attend in person or by viewing a
video. The policy on insider information and trading will be discussed
at that session. Each employee will be required to annually certify
13
<PAGE>
that he has read and understands the term of the Code of Ethics for TCW
(including the policy on insider trading).
(b) MAINTENANCE OF RESTRICTED LIST
TCW will maintain a list of the securities for which TCW is generally
limited firm-wide from engaging in transactions -- the Restricted List.
This list is maintained by the Personal Securities Administrator, who
distributes it to the following personnel in all TCW offices: all
traders, portfolio managers, analysts, investment control, securities
clearance, as well as certain other individuals. This list is issued
whenever there is an addition, deletion or modification, as well as
periodically if there have been no changes. In some cases, the list may
note a partial restriction, e.g. restricted as to purchase, restricted
as to sale, or restricted as to a particular group or person. The
Personal Securities Administrator maintains an annotated copy of the
list which explains why each item is on it, and has a section giving the
history of every item that has been deleted. This Annotated List is
distributed to the General Counsel and the Chief Compliance Officer, as
well as any additional persons which either of them may approve. In
addition, there is a Limited Annotated List that only shows the
securities on the list because of the Special Credits Products and this
list is distributed to the General Counsel at Oaktree.
The Restricted List is updated whenever there is a change, which the
Personal Securities Administrator has confirmed should be added with the
General Counsel, the Chief Compliance Officer, or in certain cases the
in-house attorney who handles the Special Credits/ Section 13D issues.
The Chief Compliance Officer or General Counsel or someone one of them
designates must approve any exemption, which is then documented by the
Personal Securities Administrator.
(c) MAINTENANCE OF WATCH LIST
TCW will maintain a Watch List of those companies for which it has
material non-public information and it has instituted a Chinese Wall.
This list will be restricted in distribution to the Chief Compliance
Officer and her staff and the General Counsel, and such other persons as
the Chief Compliance Officer or General Counsel approve. It will be used
for the purpose of surveillance as described below. The list contains
information such as the contact person that resulted in the security's
being put on the list, the group(s) subject to the Chinese Wall, when a
security is put on the list or taken off when it should be reviewed to
see if it can be taken off (e.g. when confidentiality agreement
expires), why the security was added and deleted, and whether there is a
confidentiality agreement. See sample attached.
(d) SURVEILLANCE
The Compliance Department will periodically review trading in accounts
in shares of companies on the Watch List by TCW personnel, whether on
behalf of clients or in personal trading, and by TCW in its proprietary
accounts. If the Chief Compliance Officer determines that there has been
any unusual trading that warrants further investigation, she will
coordinate a review. If any impropriety is found, the Chief Compliance
Officer will report it to the General Counsel and the President of The
TCW Group, Inc., and such other persons as she may deem appropriate.
14
<PAGE>
(e) CONSENT TO SERVICE ON BOARDS OF DIRECTORS AND CREDITORS' COMMITTEES
In order to monitor situations where material, non-public information
may become available by reason of a board position, employees are
required to obtain consent for accepting positions on non-TCW boards of
directors. See Code of Ethics. Similarly, consent is required for
employees to sit on Creditors' Committees. See Policy Statement and
Procedures on Insider Information and Insider Trading. The General
Counsel or Chief Compliance Officer will grant any such approvals and it
will be documented by the Personal Securities Administrator.
IV. GIFTS, PAYMENTS, AND PREFERENTIAL TREATMENT
GIFTS RECEIVED BY EMPLOYEES
No employee should solicit, receive, or participate in any arrangement
leading to a gift to himself or herself, relatives, or friends, or any
business in which any of them have a substantial interest, in consideration
of past, present or prospective business conducted with TCW. As a general
rule, you should not accept gifts of more than DE MINIMIS value from present
or prospective clients, providers of goods or services or others with which
TCW has dealings. While there is no absolute definition of DE MINIMIS, you
should exercise good judgment to assure that no gift that is excessive in
value is accepted. You should immediately report any offer of an improper
gift to Hilary Lord.
The term "GIFT" includes, but is not limited to, substantial favors, money,
credit, special discounts on goods or services, free services, loans of
goods or money, excessive entertainment events, trips, hotel expenses,
excessive entertainment food or beverages, or anything else of value. Gifts
to an employee's immediate family are included in this policy. THE RECEIPT
OF CASH GIFTS BY EMPLOYEES IS ABSOLUTELY PROHIBITED.
If you believe that you cannot reject or return a gift without potentially
damaging friendly relations between a third party and TCW, you should report
the gift and its estimated dollar value in writing to Hilary Lord, who may
require that the gift be donated to charity.
GIFTS AND ENTERTAINMENT GIVEN BY EMPLOYEES
It is acceptable for you to give gifts or favors of nominal value to the
extent they are appropriate and suitable under the circumstances, meet the
standards of ethical business conduct, and involve no element of
concealment. Entertainment that is reasonable and appropriate for the
circumstances is an accepted practice to the extent that it is both
necessary and incidental to the performance of TCW's business.
POLITICAL CONTRIBUTIONS
It is the policy of TCW to comply fully with federal and state election
campaign laws. You are responsible for monitoring your own political
contributions to be certain that they comply with all applicable laws.
OTHER CODES OF ETHICS
You should be aware that sometimes a client imposes more stringent codes of
ethics than those set forth above. If you are subject to a client's code of
ethics, you should abide by it.
V. OUTSIDE ACTIVITIES
OUTSIDE EMPLOYMENT
Each employee is expected to devote his or her full time and ability to
TCW's interests during regular working hours and such additional time as may
be properly required. TCW discourages employees from holding outside
employment, including consulting. If you are considering taking outside
employment, you must submit a written request to your Department Head. The
request must include the name of the business, type of business, type of
work to be performed, and the days and hours that the work will be
performed. If your Department Head approves your request, it will be
submitted to Alvin Albe for final approval.
15
<PAGE>
An employee may not engage in outside employment that: (a) interferes,
competes, or conflicts with the interest of TCW; (b) encroaches on normal
working time or otherwise impairs performance; (c) implies TCW's sponsorship
or support of an outside organization; or (d) reflects directly or
indirectly adversely on TCW. Corporate policy prohibits outside employment
in the securities brokerage industry. Employees must abstain from
negotiating, approving or voting on any transaction between TCW and any
outside organization with which they are affiliated, whether as a
representative of TCW or the outside organization except in the ordinary
course of their providing services for TCW and on a fully disclosed basis.
If you have an approved second job, you are not eligible to receive
compensation during an absence from work which is the result of an injury on
the second job and outside employment will not be considered an excuse for
poor job performance, absenteeism, tardiness or refusal to work overtime.
Should any of these situations occur, approval may be withdrawn.
Any other outside activity or venture that is not covered by the foregoing,
but that may raise questions, should be cleared with Alvin Albe.
SERVICE AS DIRECTOR
No officer, portfolio manager, investment analyst or securities trader may
serve as a director or in a similar capacity of any non-TCW company or
institution, whether or not it is part of your role at TCW, without prior
approval of the Approving Officers. You do not need approval to serve on the
board of a private family corporation for your family or any charitable,
professional, civic or nonprofit entities that are not clients of TCW and
have no business relations with TCW. If you receive approval, it will be
subject to the implementation of procedures to safeguard against potential
conflicts of interest, such as Chinese Wall procedures or placing securities
of the company on a restricted list. TCW may withdraw approval if senior
management concludes that withdrawal is in TCW's interest. Also, if you
serve in a director capacity which does not require approval but
circumstances later change which would require such approval (e.g. the
company enters into business relations with TCW or becomes a client), you
must then get approval. See the attached sample of a Report on Outside
Directorships which you should use to seek any approval (Exhibit C-F).
FIDUCIARY APPOINTMENTS
No employee may accept appointments as executor, trustee, guardian,
conservator, general partner or other fiduciary, or any appointment as a
consultant in connection with fiduciary or active money management matters,
without the prior approval of the Approving Officers. This policy does not
apply to appointments involving personal estates or service on the board of
a charitable, civic, or nonprofit company where the Access Person does not
act as an investment adviser for the entity's assets. If TCW grants you
approval to act as a fiduciary for an account outside TCW, it may determine
that the account qualifies as an Outside Fiduciary Account. Securities
traded by you as a fiduciary will be subject to the TCW Personal Investment
Transactions Policy.
COMPENSATION, CONSULTING FEES AND HONORARIUMS
If you have received proper approval to serve in an outside organization or
to engage in other outside employment, you may retain all compensation paid
for such service unless otherwise provided by the terms of the approval. You
should report the amount of this compensation to Alvin Albe. You may not
retain compensation received for services on boards of directors or as
officers of corporations where you serve in the course of your employment
activities with TCW. You may also retain honorariums received by you for
publications, public speaking appearances, instruction courses at
educational institutions, and similar activities. You should direct any
questions concerning the permissible retention of compensation to Alvin
Albe.
16
<PAGE>
PARTICIPATION IN PUBLIC AFFAIRS
TCW encourages its employees to support community activities and political
processes. Normally, voluntary efforts take place outside of regular
business hours. If voluntary efforts require corporate time, you should
obtain prior approval from Alvin Albe. If you wish to accept an appointive
office, or run for elective office, you must first obtain approval from
Alvin Albe. You must campaign for an office on your own time and may not use
TCW property or services for such purposes without proper reimbursement to
TCW.
In all cases, employees participating in political activities do so as
individuals and not as representatives of TCW. To prevent any interpretation
of sponsorship or endorsement by TCW, you should not use either the TCW name
or its address in material you mail or funds you collect, nor, except as
necessary biographical information, should TCW be identified in any
advertisements or literature.
SERVING AS TREASURER OF CLUBS, CHURCHES, LODGES
An employee may act as treasurer of clubs, churches, lodges, or similar
organizations. However, you should keep funds belonging to such
organizations in separate accounts and not commingle them in any way with
the your personal funds or TCW's funds.
VI. OTHER EMPLOYEE CONDUCT
PERSONAL FINANCIAL RESPONSIBILITY
It is important that employees properly manage their personal finances,
particularly in matters of credit. Imprudent personal financial management
may affect job performance and lead to more serious consequences for
employees in positions of trust. In particular, you are not permitted to
borrow from clients, or from providers of goods or services with whom TCW
deals, except those who engage in lending in the usual course of their
business and then only on terms offered to others in similar circumstances,
without special treatment. This prohibition does not preclude borrowing from
individuals related to you by blood or marriage.
TAKING ADVANTAGE OF A BUSINESS OPPORTUNITY THAT RIGHTFULLY BELONGS TO TCW
Employees must not take for their own advantage an opportunity that
rightfully belongs to TCW. Whenever TCW has been actively soliciting a
business opportunity, or the opportunity has been offered to it, or TCW's
funds, facilities or personnel have been used in pursuing the opportunity,
that opportunity rightfully belongs to TCW and not to employees who may be
in a position to divert the opportunity for their own benefits.
Examples of improperly taking advantage of a corporate opportunity include:
- Selling information to which an employee has access because of his/her
position.
- Acquiring any real or personal property interest or right when TCW is
known to be interested in the property in question.
- Receiving a commission or fee on a transaction which would otherwise
accrue to TCW.
- Diverting business or personnel from TCW.
17
<PAGE>
CORPORATE PROPERTY OR SERVICES
Employees are not permitted to act as principal for either themselves or
their immediate families in the supply of goods, properties, or services to
TCW, unless approved by Alvin Albe. Purchase or acceptance of corporate
property or use of the services of other employees for personal purposes are
also prohibited. This would include the use of inside counsel for personal
legal advice absent approval from the General Counsel or use of outside
counsel for personal legal advice at TCW's expense.
USE OF TCW STATIONERY
It is inappropriate for employees to use official corporate stationery for
either personal correspondence or other non-job-related purposes.
GIVING ADVICE TO CLIENTS
TCW cannot practice law or provide legal advice. You should avoid statements
that might be interpreted as legal advice. You should refer questions in this
area to Michael Cahill. You should also avoid giving clients advice on tax
matters, the preparation of tax returns, or investment decisions, except as
may be appropriate in the performance of an official fiduciary or advisory
responsibility, or as otherwise required in the ordinary course of your
duties.
VII. CONFIDENTIALITY
All information relating to past, current and prospective clients is highly
confidential and is not to be discussed with anyone outside the
organization under any circumstance. One of the most sensitive and
difficult areas in TCW's daily business activities involves information
regarding investment plans or programs and possible or actual securities
transactions by TCW.
Consequently, all employees will be required to sign and adhere to a
Confidentiality Agreement (Exhibit C-G).
VIII. EXEMPTIVE RELIEF
The Approving Officers, consisting of (i) one of Alvin Albe or Marc Stern
AND(ii) one of Michael Cahill or Hilary Lord, will review and consider any
proper request of a Covered Person for relief or exemption from any
remedy, restriction, limitation or procedure contained in this Code of
Ethics which is claimed to cause a hardship for such Covered Person or
which may involve an unforeseen or involuntary situation where no abuse is
involved. Exemptions of any nature may be given on a specific basis or a
class basis, as the Approving Officers determine. The Approving Officers
may also grant exemption from Covered Person status to any person or class
of persons it determines do not warrant such status. Under appropriate
circumstances, the Approving Officers may authorize a personal transaction
involving a security subject to actual or prospective purchase or sale for
TCW clients, where the personal transaction would be very unlikely to
affect a highly institutional market, where the TCW officer or employee is
not in possession of Inside Information, or for other reasons sufficient
to satisfy the Approving Officers that the transaction does not represent
a conflict of interest, involve the misuse of inside information or convey
the appearance of impropriety. The Approving Officers shall meet on an ad
hoc basis, as deemed necessary upon written request by an Access Person,
stating the basis for his or her request for relief. The Approving
Officers' decision is solely within their complete discretion.
IX. SANCTIONS
Upon discovering a violation of this Code, TCW may impose such sanctions as
it deems appropriate, including, but not limited to, a reprimand (orally or
in writing), a reversal of any improper transaction and disgorgement of the
profits from the transaction, demotion, and suspension or termination of
employment.
18
<PAGE>
X. ANNUAL COMPLIANCE CERTIFICATION
TCW will require all Covered Persons and TCW directors to certify annually
that (i) they have read and understand the terms of this Code of Ethics and
recognize the responsibilities and obligations incurred by their being
subject to this Code, and (ii) they are in compliance with the requirements
of this Code, including but not limited to the personal investment
transactions policies contained in this Code (Exhibit C-E).
CODE OF ETHICS
EMPLOYEE CERTIFICATION
I have read and understand the terms of the Code of Ethics of The TCW Group,
Inc. dated March 2000, as amended. I recognize the responsibilities and
obligations incurred by me as a result of my being subject to this Code of
Ethics. I hereby agree to abide by the Code of Ethics.
- -------------------------------------- ------------------------
(Signature) (Date)
- --------------------------------------
(Print name)
19
<PAGE>
EXHIBITS
Request for Personal Investment Transactions Approval
Quarterly Report of Personal Investment Transactions
Initial Holdings Report
Annual Holdings Report
Annual Compliance Certification
Report on Outside Directorships and Officerships
Confidentiality Agreement
20
