<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1999
FILE NOS.: 33-59004
811-7548
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 /X/
POST-EFFECTIVE AMENDMENT NO. 9 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 /X/
AMENDMENT NO. 11 /X/
-------------------
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND
GROWTH SECURITIES
(A MASSACHUSETTS BUSINESS TRUST)
(FORMERLY NAMED DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600
BARRY FINK, ESQ.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)
------------------------
COPY TO:
DAVID M. BUTOWSKY, ESQ.
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 July 28, 1999 pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)
___ on (date) pursuant to paragraph (a) of rule 485.
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS - JULY 28, 1999
Morgan Stanley Dean Witter
GLOBAL DIVIDEND GROWTH SECURITIES
[COVER PHOTO]
A MUTUAL FUND THAT SEEKS TO PROVIDE REASONABLE CURRENT
INCOME AND LONG-TERM GROWTH OF INCOME AND CAPITAL
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this PROSPECTUS.
Any representation to the contrary is a criminal offense.
<PAGE>
CONTENTS
<TABLE>
<S> <C> <C>
The Fund Investment Objective........................................ 1
Principal Investment Strategies............................. 1
Principal Risks............................................. 1
Past Performance............................................ 3
Fees and Expenses........................................... 4
Additional Investment Strategy Information.................. 5
Additional Risk Information................................. 5
Fund Management............................................. 6
Shareholder Information Pricing Fund Shares......................................... 7
How to Buy Shares........................................... 7
How to Exchange Shares...................................... 8
How to Sell Shares.......................................... 10
Distributions............................................... 11
Tax Consequences............................................ 12
Share Class Arrangements.................................... 13
Financial Highlights ............................................................ 20
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]
GROWTH AND INCOME
An investment objective having the goal of selecting securities with the
potential to rise in price and pay out income.
[End Sidebar]
THE FUND
[ICON] INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
Morgan Stanley Dean Witter Global Dividend Growth Securities
seeks to provide reasonable current income and long-term
growth of income and capital.
[ICON] PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
The Fund will normally invest at least 65% of its total
assets in dividend paying equity securities of companies
located in various countries around the world. The Fund's
"Investment Manager," Morgan Stanley Dean Witter Advisors
Inc., seeks investments primarily in common stocks
(including depository receipts) of companies with a record
of paying dividends and potential for increasing dividends.
The Fund invests in at least three separate countries. The
percentage of the Fund's assets invested in particular
geographic sectors will shift from time to time in
accordance with the judgement of the Investment Manager.
Common Stock is a share ownership or equity interest in a
corporation. It may or may not pay dividends, as some
companies reinvest all of their profits back into their
businesses, while others pay out some of their profits to
shareholders as dividends. A depository receipt is generally
issued by a bank or financial institution and represents the
common stock or other equity securities of a foreign
company. The owner of a depository receipt holds rights to
the underlying securities, including the right to receive
dividends paid on the underlying security.
In addition, the Fund may invest in convertible and
fixed-income securities.
In pursuing the Fund's investment objective, the Investment
Manager has considerable leeway in deciding which
investments it buys, holds or sells on a day-to-day basis --
and which trading strategies it uses. For example, the
Investment Manager in its discretion may determine to use
some permitted trading strategies while not using others.
[ICON] PRINCIPAL RISKS
- --------------------------------------------------------------------------------
There is no assurance that the Fund will achieve its
investment objective. The Fund's share price will fluctuate
with changes in the market value of the Fund's portfolio
securities. When you sell Fund shares, they may be worth
less than what you paid for them and, accordingly, you can
lose money investing in this Fund.
COMMON STOCK AND OTHER EQUITY SECURITIES. A principal risk
of investing in the Fund is associated with its common stock
and other equity investments. In general, stock and other
equity security values fluctuate in response to activities
specific to the company as well as general market, economic
and political conditions. These prices can fluctuate widely
in response to these factors.
FOREIGN SECURITIES. The Fund's investments in foreign
securities (including depository receipts) involve risks
that are in addition to the risks associated with domestic
securities. One additional risk is currency risk. While the
price of Fund shares is quoted in U.S. dollars, the Fund
generally converts U.S. dollars to a foreign market's local
currency to purchase a security in that market. If the value
of that
1
<PAGE>
local currency falls relative to the U.S. dollar, the U.S.
dollar value of the foreign security will decrease. This is
true even if the foreign security's local price remains
unchanged.
Foreign securities also have risks related to economic and
political developments abroad, including 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. In particular, adverse political or economic
developments in a geographic region or a particular country
in which the Fund invests could cause a substantial decline
in value of the portfolio. Foreign companies, in general,
are not subject to the regulatory requirements of U.S.
companies and, as such, there may be less publicly available
information about these companies. Moreover, foreign
accounting, auditing and financial reporting standards
generally are different from those applicable to U.S.
companies. Finally, in the event of a default of any foreign
debt obligations, it may be more difficult for the Fund to
obtain or enforce a judgment against the issuers of the
securities.
Securities of foreign issuers may be less liquid than
comparable securities of U.S. issuers and, as such, their
price changes may be more volatile. Furthermore, foreign
exchanges and broker-dealers are generally subject to less
government and exchange scrutiny and regulation than their
U.S. counterparts.
Many European countries have adopted or are in the process
of adopting a single European currency, referred to as the
"euro." The consequences of the euro conversion for foreign
exchange rates, interest rates and the value of European
securities the Fund may purchase are presently unclear. The
consequences may adversely affect the value and/or increase
the volatility of securities held by the Fund.
OTHER RISKS. The performance of the Fund also will depend on
whether the Investment Manager 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 convertible and fixed-income
securities. For more information about these risks, see the
"Additional Risk Information" section.
Shares of the Fund are not bank deposits and are not
guaranteed or insured by the FDIC or any other government
agency.
2
<PAGE>
[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.
[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 5 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, as well as with an index of funds with
similar investment objectives. 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]
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
94 7.01%
95 19.91%
96 16.87%
97 11.71%
98 11.48%
</TABLE>
The bar chart reflects the performance of Class B shares;
the performance of the other Classes will differ because the
Classes have different ongoing fees. The performance
information in the bar chart does not reflect the deduction
of sales charges; if these amounts were reflected, returns
would be less than shown. Year-to-date total return as of
June 30, 1999 was 9.52%.
During the periods shown in the bar chart, the highest
return for a calendar quarter was 16.59% (quarter ended
December 31, 1998) and the lowest return for a calendar
quarter was -12.62% (quarter ended September 30, 1998).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1998)
- ---------------------------------------------------------------
PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
(SINCE
6/30/93)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------
Class A(1) 6.26% -- --
- ------------------------------------------------------------------------------
Class B 6.48% 13.08% 13.10%(4)
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Class C(1) 10.25% -- --
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Class D(1) 12.38% -- --
- ------------------------------------------------------------------------------
MSCI World Index(2) 24.80% 16.19% 15.97%(4)
- ------------------------------------------------------------------------------
Lipper Global Fund Index(3) 14.63% 11.22% 13.83%(4)
- ------------------------------------------------------------------------------
</TABLE>
1 Class A, Class C and Class D commenced operations on July 28, 1997.
2 The Morgan Stanley Capital International World Total Return Index (MSCI)
measures performance for a diverse range of global stock markets including
the U.S., Canada, Europe, Australia, New Zealand and the Far East. The
Index does not include any expenses, fees or charges. The Index is
unmanaged and should not be considered an investment.
3 The Lipper Global Funds Index is an equally-weighted performance index of
the largest qualifying funds (based on net assets) in the Lipper Global
Funds objective. The Index, which is adjusted for capital gains
distributions, is unmanaged and should not be considered an investment.
There are currently 30 funds represented in this index.
3
<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 March 31, 1999.
[End Sidebar]
[ICON] FEES AND EXPENSES
- --------------------------------------------------------------------------------
The table below briefly describes the fees and expenses that
you may pay if you buy and hold shares of the Fund. The Fund
offers four Classes of shares: Classes A, B, C and D. Each
Class has a different combination of fees, expenses and
other features. The Fund does not charge account or exchange
fees. See the "Share Class Arrangements" section for further
fee and expense information.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
- ------------------------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a
percentage of offering price) 5.25%(1) None None None
- ------------------------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a percentage based
on the lesser of the offering price or net asset value at
redemption) None(2) 5.00%(3) 1.00%(4) None
- ------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- ------------------------------------------------------------------------------------------------------------
Management fee 0.71% 0.71% 0.71% 0.71%
- ------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.22% 0.88% 0.95% None
- ------------------------------------------------------------------------------------------------------------
Other expenses 0.19% 0.19% 0.19% 0.19%
- ------------------------------------------------------------------------------------------------------------
Total annual Fund operating expenses 1.12% 1.78% 1.85% 0.90%
- ------------------------------------------------------------------------------------------------------------
</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.
This example shows what expenses you could pay over time.
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 $633 $862 $1110 $1817 $633 $862 $1110 $1817
- ---------------------------------------------------------- -----------------------------------------
CLASS B $681 $860 $1164 $2095 $181 $560 $ 964 $2095
- ---------------------------------------------------------- -----------------------------------------
CLASS C $288 $582 $1001 $2169 $188 $582 $1001 $2169
- ---------------------------------------------------------- -----------------------------------------
CLASS D $ 92 $287 $ 498 $1108 $ 92 $287 $ 498 $1108
- ---------------------------------------------------------- -----------------------------------------
</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.
4
<PAGE>
[ICON] ADDITIONAL INVESTMENT STRATEGY INFORMATION
- --------------------------------------------------------------------------------
This section provides additional information relating to the
Fund's principal strategies.
CONVERTIBLE SECURITIES AND FIXED-INCOME. The Fund may invest
up to 35% of its total assets in convertible debt
securities, convertible preferred securities, U.S.
government securities, fixed-income securities issued by
foreign governments and international organizations and
investment grade corporate debt securities (including zero
coupon securities).
DEFENSIVE INVESTING. The Fund may take temporary "defensive"
positions in attempting to respond to adverse market
conditions. The Fund may invest any amount of its assets in
cash or money market instruments in a defensive posture when
the Investment Manager believes it is advisable to do so.
Although taking a defensive posture is designed to protect
the Fund from an anticipated market downturn, it could have
the effect of reducing the benefit from any upswing in the
market. When the Fund takes a defensive position, it may not
achieve its investment objective.
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
- --------------------------------------------------------------------------------
As discussed in the "Principal Risks" section, a principal
risk of investing in the Fund is associated with its common
stock, other equity and fixed-income investments. 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.
There are no minimum rating or quality requirements with
respect to convertible securities in which the Fund may
invest and, thus, all or some of such securities may be
below investment grade. Securities rated below investment
grade are commonly known as "junk bonds" and have
speculative credit risk characteristics.
FIXED-INCOME SECURITIES. Principal risks of investing in the
Fund are associated with its fixed-income investments. All
fixed-income securities, such as corporate bonds, 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. (Zero coupon
securities are typically subject to greater price
fluctuations than comparable securities that pay interest.)
5
<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, has more than $136.9 billion in assets under management
or administration as of June 30, 1999.
[End Sidebar]
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.
YEAR 2000. The Fund could be adversely affected if the
computer systems necessary for the efficient operation of
the Investment Manager, the Fund's other service providers
and the markets and individual and governmental issuers in
which the Fund invests do not properly process and calculate
date-related information from and after January 1, 2000.
While year 2000-related computer problems could have a
negative effect on the Fund, the Investment Manager and
their affiliates are working hard to avoid any problems and
to obtain assurances from their service providers that they
are taking similar steps.
In addition, it is possible that the markets for securities
in which the Fund invests may be detrimentally affected by
computer failures throughout the financial services industry
beginning January 1, 2000. Improperly functioning trading
systems may result in settlement problems and liquidity
issues. Corporate and governmental data processing errors
also may result in production problems for individual
companies and overall economic uncertainties. Earnings of
individual issuers will be affected by remediation costs,
which may be substantial and may be reported inconsistently
in U.S. and foreign financial statements. Accordingly, the
Fund's investments may be adversely affected.
[ICON] FUND MANAGEMENT
- --------------------------------------------------------------------------------
The Fund has retained the Investment Manager -- Morgan
Stanley Dean Witter Advisors Inc. -- to provide
administrative services, manage its business affairs and
invest its assets, including the placing of orders for the
purchase and sale of portfolio securities. The Investment
Manager is a wholly-owned subsidiary of Morgan Stanley Dean
Witter & Co., a preeminent global financial services firm
that maintains leading market positions in each of its three
primary businesses: securities, asset management and credit
services. Its main business office is located at Two World
Trade Center, New York, New York 10048.
The Fund's portfolio is managed within the Investment
Manager's Growth and Income Group. Paul D. Vance, a Senior
Vice President of the Investment Manager and head of the
Growth and Income Group, has been the primary portfolio
manager of the Fund since it commenced operations on June
30, 1993 and is assisted by Matthew T. Haynes, a Vice
President of the Investment Manager and a member of the
Growth and Income Group. Mr. Vance and Mr. Haynes have been
portfolio managers with the Investment Manager for over five
years.
The Fund pays the Investment Manager a monthly management
fee as full compensation for the services and facilities
furnished to the Fund, and for Fund expenses assumed by the
Investment Manager. The fee is based on the Fund's average
daily net assets. For the fiscal year ended March 31, 1999,
the Fund accrued total compensation to the Investment
Manager amounting to 0.71% of the Fund's average daily net
assets.
6
<PAGE>
[Sidebar]
CONTACTING A FINANCIAL ADVISOR
If you are new to the Morgan Stanley Dean Witter Family of Funds and would like
to contact a Financial Advisor, call (800) THE-DEAN for the telephone number of
the Morgan Stanley Dean Witter office nearest you. You may also access our
office locator on our Internet site at:
www.deanwitter.com/funds
[End Sidebar]
SHAREHOLDER INFORMATION
[ICON] PRICING FUND SHARES
- --------------------------------------------------------------------------------
The price of Fund shares (excluding sales charges), called
"net asset value," is based on the value of the Fund's
portfolio securities. While the assets of each Class are
invested in a single portfolio of securities, the net asset
value of each Class will differ because the Classes have
different ongoing distribution fees.
The net asset value per share of the Fund is determined once
daily at 4:00 p.m. Eastern time on each day that the New
York Stock Exchange is open (or, on days when the New York
Stock Exchange closes prior to 4:00 p.m., at such earlier
time). Shares will not be priced on days that the New York
Stock Exchange is closed.
The value of the Fund's portfolio securities is based on the
securities' market price when available. When a market price
is not readily available, including circumstances under
which the Investment Manager determines that a security's
market price is not accurate, a portfolio security is valued
at its fair value, as determined under procedures
established by the Fund's Board of Trustees. In these cases,
the Fund's net asset value will reflect certain portfolio
securities' fair value rather than their market price. In
addition, if the Fund holds securities 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.
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.
7
<PAGE>
[Sidebar]
EASYINVEST-SM-
A purchase plan that allows you to transfer money automatically from your
checking or savings account or from a Money Market Fund on a semi-monthly,
monthly or quarterly basis. Contact your Morgan Stanley Dean Witter Financial
Advisor for further information about this service.
[End Sidebar]
<TABLE>
<CAPTION>
MINIMUM INVESTMENT AMOUNTS
- ------------------------------------------------------------------------------------------------
MINIMUM INVESTMENT
----------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Regular Accounts $ 1,000 $ 100
- ------------------------------------------------------------------------------------------------
Individual Retirement Accounts: Regular IRAs $ 1,000 $ 100
Education IRAs $500 $ 100
- ------------------------------------------------------------------------------------------------
EASYINVEST-SM- (Automatically from your checking
or savings account or Money Market
Fund) $100* $ 100*
- ------------------------------------------------------------------------------------------------
</TABLE>
* Provided your schedule of investments totals $1,000 in twelve months.
There is no minimum investment amount if you purchase Fund
shares through: (1) the Investment Manager's mutual fund
asset allocation plan, (2) a program, approved by the Fund's
distributor, in which you pay an asset-based fee for
advisory, administrative and/or brokerage services, or (3)
employer-sponsored employee benefit plan accounts.
INVESTMENT OPTIONS FOR CERTAIN INSTITUTIONAL AND OTHER
INVESTORS/CLASS D SHARES. To be eligible to purchase Class D
shares, you must qualify under one of the investor
categories specified in the "Share Class Arrangements"
section of this PROSPECTUS.
SUBSEQUENT INVESTMENTS SENT DIRECTLY TO THE FUND. In
addition to buying additional Fund shares for an existing
account by contacting your Morgan Stanley Dean Witter
Financial Advisor, you may send a check directly to the
Fund. To buy additional shares in this manner:
- Write a "letter of instruction" to the Fund specifying the
name(s) on the account, the account number, the social
security or tax identification number, the Class of shares
you wish to purchase and the investment amount (which
would include any applicable front-end sales charge). The
letter must be signed by the account owner(s).
- Make out a check for the total amount payable to: Morgan
Stanley Dean Witter Global Dividend Growth Securities.
- Mail the letter and check to Morgan Stanley Dean Witter
Trust FSB at P.O. Box 1040, Jersey City, NJ 07303.
[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 purposes of exchanges,
shares of FSC Funds (subject to a front-end sales charge)
are treated as Class A shares of a Multi-Class Fund.
8
<PAGE>
Exchanges may be made after shares of the Fund acquired by
purchase have been held for thirty days. There is no waiting
period for exchanges of shares acquired by exchange or
dividend reinvestment. The current PROSPECTUS for each Fund
describes its investment objective(s), policies and
investment minimums, and should be read before investment.
EXCHANGE PROCEDURES. You can process an exchange by
contacting your Morgan Stanley Dean Witter Financial Advisor
or other authorized financial representative. Otherwise, you
must forward an exchange privilege authorization form to the
Fund's transfer agent -- Morgan Stanley Dean Witter Trust
FSB -- and then write the transfer agent or call (800)
869-NEWS to place an exchange order. You can obtain an
exchange privilege authorization form by contacting your
Financial Advisor or other authorized financial
representative or by calling (800) 869-NEWS. If you hold
share certificates, no exchanges may be processed until we
have received all applicable share certificates.
An exchange to any Morgan Stanley Dean Witter Fund (except a
Money Market Fund) is made on the basis of the next
calculated net asset values of the Funds involved after the
exchange instructions are accepted. When exchanging into a
Money Market Fund, the Fund's shares are sold at their next
calculated net asset value and the Money Market Fund's
shares are purchased at their net asset value on the
following business day.
The Fund may terminate or revise the exchange privilege upon
required notice. The check writing privilege is not
available for Money Market Fund shares you acquire in an
exchange.
TELEPHONE EXCHANGES. For your protection when calling Morgan
Stanley Dean Witter Trust FSB, we will employ reasonable
procedures to confirm that exchange instructions
communicated over the telephone are genuine. These
procedures may include requiring various forms of personal
identification such as name, mailing address, social
security or other tax identification number. Telephone
instructions also may be recorded.
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.
9
<PAGE>
FREQUENT EXCHANGES. A pattern of frequent exchanges may
result in the Fund limiting or prohibiting, at its
discretion, additional purchases and/or exchanges. The Fund
will notify you in advance of limiting your exchange
privileges.
CDSC CALCULATIONS ON EXCHANGES. See the "Share Class
Arrangements" section of this PROSPECTUS for a discussion of
how applicable contingent deferred sales charges (CDSCs) are
calculated for shares of one Morgan Stanley Dean Witter Fund
that are exchanged for shares of another.
FOR FURTHER INFORMATION REGARDING EXCHANGE PRIVILEGES, YOU
SHOULD CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL
ADVISOR OR CALL (800) 869-NEWS.
[ICON] HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You can sell some or all of your Fund shares at any time. If
you sell Class A, Class B or Class C shares, your net sale
proceeds are reduced by the amount of any applicable CDSC.
Your shares will be sold at the next 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.
------------------------------------------------------------
[ICON] Payment will be sent to the address to which the account is
registered or deposited in your brokerage account.
- --------------------------------------------------------------------------------
By Letter You can also sell your shares by writing a "letter of
instruction" that includes:
[ICON] - your account number;
- the dollar amount or the number of shares you wish to
sell;
- the Class of shares you wish to sell; and
- the signature of each owner as it appears on the account.
------------------------------------------------------------
If you are requesting payment to anyone other than the
registered owner(s) or that payment be sent to any address
other than the address of the registered owner(s) or
pre-designated bank account, you will need a signature
guarantee. You can obtain a signature guarantee from an
eligible guarantor acceptable to Morgan Stanley Dean Witter
Trust FSB. (You should contact Morgan Stanley Dean Witter
Trust FSB at (800) 869-NEWS for a determination as to
whether a particular institution is an eligible guarantor.)
A notary public CANNOT provide a signature guarantee.
Additional documentation may be required for shares held by
a corporation, partnership, trustee or executor.
------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at
P.O. Box 983, Jersey City, NJ 07303. If you hold share
certificates, you must return the certificates, along with
the letter and any required additional documentation.
------------------------------------------------------------
A check will be mailed to the name(s) and address in which
the account is registered, or otherwise according to your
instructions.
- --------------------------------------------------------------------------------
Systematic If your investment in all of the Morgan Stanley Dean Witter
Withdrawal Plan Family of Funds has a total market value of at least
[ICON] $10,000, you may elect to withdraw amounts of $25 or more,
or in any whole percentage of a Fund's balance (provided the
amount is at least $25), on a monthly, quarterly,
semi-annual or annual basis, from any Fund with a balance of
at least $1,000. Each time you add a Fund to the plan, you
must meet the plan requirements.
------------------------------------------------------------
Amounts withdrawn are subject to any applicable CDSC. A CDSC
may be waived under certain circumstances. See the Class B
waiver categories listed in the "Share Class Arrangements"
section of this PROSPECTUS.
------------------------------------------------------------
To sign up for the Systematic Withdrawal Plan, contact your
Morgan Stanley Dean Witter Financial Advisor or call (800)
869-NEWS. You may terminate or suspend your plan at any
time. Please remember that withdrawals from the plan are
sales of shares, not Fund "distributions," and ultimately
may exhaust your account balance. The Fund may terminate or
revise the plan at any time.
- --------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
PAYMENT FOR SOLD SHARES. After we receive your complete
instructions to sell, as described above, a check will be
mailed to you within seven days, although we will attempt to
make payment within one business day. Payment may also be
sent to your brokerage account.
Payment may be postponed or the right to sell your shares
suspended under unusual circumstances. If you request to
sell shares that were recently purchased by check, payment
of the sale proceeds may be delayed for the minimum time
needed to verify that the check has been honored (not more
than fifteen days from the time we receive the check).
[Sidebar]
TARGETED DIVIDENDS-SM-
You may select to have your Fund distributions automatically invested in other
Classes of Fund shares or Classes of another Morgan Stanley Dean Witter Fund
that you own. Contact your Morgan Stanley Dean Witter Financial Advisor for
further information about this service.
[End Sidebar]
TAX CONSIDERATIONS. Normally, your sale of Fund shares is
subject to federal and state income tax. You should review
the "Tax Consequences" section of this PROSPECTUS and
consult your own tax professional about the tax consequences
of a sale.
REINSTATEMENT PRIVILEGE. If you sell Fund shares and have
not previously exercised the reinstatement privilege, you
may, within 35 days after the date of sale, invest any
portion of the proceeds in the same Class of Fund shares at
their net asset value and receive a pro rata credit for any
CDSC paid in connection with the sale.
INVOLUNTARY SALES. The Fund reserves the right, on sixty
days' notice, to sell the shares of any shareholder (other
than shares held in an IRA or 403(b) Custodial Account)
whose shares, due to sales by the shareholder, have a value
below $100, or in the case of an account opened through
EASYINVEST -SM-, if after 12 months the shareholder has
invested less than $1,000 in the account.
However, before the Fund sells your shares in this manner,
we will notify you and allow you sixty days to make an
additional investment in an amount that will increase the
value of your account to at least the required amount before
the sale is processed. No CDSC will be imposed on any
involuntary sale.
MARGIN ACCOUNTS. If you have pledged your Fund shares in a
margin account, contact your Morgan Stanley Dean Witter
Financial Advisor or other authorized financial
representative regarding restrictions on the sale of such
shares.
[ICON] DISTRIBUTIONS
- --------------------------------------------------------------------------------
The Fund passes substantially all of its earnings from
income and capital gains along to its investors as
"distributions." The Fund earns income from stocks and
interest from fixed-income investments. These amounts are
passed along to Fund shareholders as "income dividend
distributions." The Fund realizes capital gains whenever it
sells securities for a higher price than it paid for them.
These amounts may be passed along as "capital gain
distributions."
The Fund declares income dividends separately for each
Class. Distributions paid on Class A and Class D shares will
usually 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
11
<PAGE>
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.
[ICON] TAX CONSEQUENCES
- --------------------------------------------------------------------------------
As with any investment, you should consider how your Fund
investment will be taxed. The tax information in this
PROSPECTUS is provided as general information. You should
consult your own tax professional about the tax consequences
of an investment in the Fund.
Unless your investment in the Fund is through a tax-deferred
retirement account, such as a 401(k) plan or IRA, you need
to be aware of the possible tax consequences when:
- The Fund makes distributions; and
- You sell Fund shares, including an exchange to another
Morgan Stanley Dean Witter Fund.
TAXES ON DISTRIBUTIONS. Your distributions are normally
subject to federal and state income tax when they are paid,
whether you take them in cash or reinvest them in Fund
shares. A distribution also may be subject to local income
tax. Any income dividend distributions and any short-term
capital gain distributions are taxable to you as ordinary
income. Any long-term capital gain distributions are taxable
as long-term capital gains, no matter how long you have
owned shares in the Fund.
Every January, you will be sent a statement (IRS Form
1099-DIV) showing the taxable distributions paid to you in
the previous year. The statement provides full information
on your dividends and capital gains for tax purposes.
TAXES ON SALES. Your sale of Fund shares normally is subject
to federal and state income tax and may result in a taxable
gain or loss to you. A sale also may be subject to local
income tax. Your exchange of Fund shares for shares of
another Morgan Stanley Dean Witter Fund is treated for tax
purposes like a sale of your original shares and a purchase
of your new shares. Thus, the exchange may, like a sale,
result in a taxable gain or loss to you and will give you a
new tax basis for your new shares.
12
<PAGE>
When you open your Fund account, you should provide your
social security or tax identification number on your
investment application. By providing this information, you
will avoid being subject to a federal backup withholding tax
of 31% on taxable distributions and redemption proceeds. Any
withheld amount would be sent to the IRS as an advance tax
payment.
[ICON] SHARE CLASS ARRANGEMENTS
- --------------------------------------------------------------------------------
The Fund offers several Classes of shares having different
distribution arrangements designed to provide you with
different purchase options according to your investment
needs. Your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative can help you
decide which Class may be appropriate for you.
The general public is offered three Classes: Class A shares,
Class B shares and Class C shares, which differ principally
in terms of sales charges and ongoing expenses. A 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>
ANNUAL
12b-1
CLASS SALES CHARGE FEE
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
A Maximum 5.25% initial sales charge reduced for purchase of $25,000 or more; shares sold
without an initial sales charge are generally subject to a 1.0% CDSC during the first year 0.25%
- -------------------------------------------------------------------------------------------------------
B Maximum 5.0% CDSC during the first year decreasing to 0% after six years 1.00%
- -------------------------------------------------------------------------------------------------------
C 1.0% CDSC during the first year 1.00%
- -------------------------------------------------------------------------------------------------------
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.
13
<PAGE>
[Sidebar]
FRONT-END SALES
CHARGE OR FSC
An initial sales charge you pay when purchasing Class A shares that is based on
a percentage of the offering price. The percentage declines based upon the
dollar value of Class A shares you purchase. We offer three ways to reduce your
Class A sales charges - the Combined Purchase Privilege, Right of Accumulation
and Letter of Intent.
[End Sidebar]
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
----------------------------------------------
AMOUNT OF SINGLE PERCENTAGE OF APPROXIMATE PERCENTAGE
TRANSACTION PUBLIC OFFERING PRICE OF AMOUNT INVESTED
<S> <C> <C>
- ----------------------------------------------------------------------------------------
Less than $25,000 5.25% 5.54%
- ----------------------------------------------------------------------------------------
$25,000 but less than $50,000 4.75% 4.99%
- ----------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.00% 4.17%
- ----------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.00% 3.09%
- ----------------------------------------------------------------------------------------
$250,000 but less than $1 million 2.00% 2.04%
- ----------------------------------------------------------------------------------------
$1 million and over 0 0
- ----------------------------------------------------------------------------------------
</TABLE>
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
14
<PAGE>
order; or (ii) a review of the records of Dean Witter
Reynolds or other authorized dealer of Fund shares or the
Fund's transfer agent does not confirm your represented
holdings.
LETTER OF INTENT. The schedule of reduced sales charges for
larger purchases also will be available to you if you enter
into a written "letter of intent." A letter of intent
provides for the purchase of Class A shares of the Fund or
other Multi-Class Funds or shares of FSC Funds within a
thirteen-month period. The initial purchase under a letter
of intent must be at least 5% of the stated investment goal.
To determine the applicable sales charge reduction, you may
also include: (1) the cost of shares of other Morgan Stanley
Dean Witter Funds which were previously purchased at a price
including a front-end sales charge during the 90-day period
prior to the distributor receiving the letter of intent, and
(2) the cost of shares of other Funds you currently own
acquired in exchange for shares of Funds purchased during
that period at a price including a front-end sales charge.
You can obtain a letter of intent by contacting your Morgan
Stanley Dean Witter Financial Advisor or other authorized
financial representative or by calling (800) 869-NEWS. If
you do not achieve the stated investment goal within the
thirteen-month period, you are required to pay the
difference between the sales charges otherwise applicable
and sales charges actually paid, which may be deducted from
your investment.
OTHER SALES CHARGE WAIVERS. In addition to investments of $1
million or more, your purchase of Class A shares is not
subject to a front-end sales charge (or CDSC upon sale) if
your account qualifies under one of the following
categories:
- A trust for which Morgan Stanley Dean Witter Trust FSB
provides discretionary trustee services.
- Persons participating in a fee-based investment program
(subject to all of its terms and conditions, including
mandatory sale or transfer restrictions on termination)
approved by the Fund's distributor pursuant to which they
pay an asset-based fee for investment advisory,
administrative and/or brokerage services.
- Employer-sponsored employee benefit plans, whether or not
qualified under the Internal Revenue Code, for which
Morgan Stanley Dean Witter Trust FSB serves as trustee or
Dean Witter Reynolds' Retirement Plan Services serves as
recordkeeper under a written Recordkeeping Services
Agreement ("MSDW Eligible Plans") which have at least 200
eligible employees.
- A MSDW Eligible Plan whose Class B shares have converted
to Class A shares, regardless of the plan's asset size or
number of eligible employees.
- A client of a Morgan Stanley Dean Witter Financial Advisor
who joined us from another investment firm within six
months prior to the date of purchase of Fund shares, and
you used the proceeds from the sale of shares of a
proprietary mutual fund of that Financial Advisor's
previous firm that imposed either a front-end or deferred
sales charge to purchase Class A shares, provided that:
(1) you sold the shares not more than 60 days prior to the
purchase of Fund shares, and (2) the sale proceeds were
maintained in the interim in cash or a money market fund.
15
<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]
- 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.
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>
YEAR SINCE PURCHASE PAYMENT MADE CDSC AS A PERCENTAGE OF AMOUNT REDEEMED
<S> <C>
- --------------------------------------------------------------------------------------------
First 5.0%
- --------------------------------------------------------------------------------------------
Second 4.0%
- --------------------------------------------------------------------------------------------
Third 3.0%
- --------------------------------------------------------------------------------------------
Fourth 2.0%
- --------------------------------------------------------------------------------------------
Fifth 2.0%
- --------------------------------------------------------------------------------------------
Sixth 1.0%
- --------------------------------------------------------------------------------------------
Seventh and thereafter None
- --------------------------------------------------------------------------------------------
</TABLE>
Each time you place an order to sell or exchange shares,
shares with no CDSC will be sold or exchanged first, then
shares with the lowest CDSC will be sold or exchanged next.
For any shares subject to a CDSC, the CDSC will be assessed
on an amount equal to the lesser of the current market value
or the cost of the shares being sold.
CDSC WAIVERS. A CDSC, if otherwise applicable, will be
waived in the case of:
- Sales of shares held at the time you die or become
disabled (within the definition in Section 72(m)(7) of the
Internal Revenue Code which relates to the ability to
engage in gainful employment), if the shares are: (i)
registered either in your name (not a trust) or in the
names of you and your spouse as joint tenants with right
of survivorship; or (ii) held in a qualified corporate or
self-employed retirement plan, IRA or 403(b) Custodial
Account, provided in either case that the sale is
requested within one year of your death or initial
determination of disability.
- Sales in connection with the following retirement plan
"distributions": (i) lump-sum or other distributions from
a qualified corporate or self-employed retirement plan
following retirement (or, in the case of a "key employee"
of a "top heavy" plan, following attainment of age 59
1/2); (ii) distributions from an IRA or 403(b) Custodial
Account following attainment of age 59 1/2; or (iii) a
tax-free return of an excess IRA contribution (a
"distribution" does not include a direct transfer of IRA,
403(b) Custodial Account or retirement plan assets to a
successor custodian or trustee).
- Sales of shares held for you as a participant in a MSDW
Eligible Plan.
16
<PAGE>
- Sales of shares in connection with the Systematic
Withdrawal Plan of up to 12% annually of the value of each
Fund from which plan sales are made. The percentage is
determined on the date you establish the Systematic
Withdrawal Plan and based on the next calculated share
price. You may have this CDSC waiver applied in amounts up
to 1% per month, 3% per quarter, 6% semi-annually or 12%
annually. Shares with no CDSC will be sold first, followed
by those with the lowest CDSC. As such, the waiver benefit
will be reduced by the amount of your shares that are not
subject to a CDSC. If you suspend your participation in
the plan, you may later resume plan payments without
requiring a new determination of the account value for the
12% CDSC waiver.
All waivers will be granted only following the Distributor
receiving confirmation of your entitlement. If you believe
you are eligible for a CDSC waiver, please contact your
Financial Advisor or call (800) 869-NEWS.
DISTRIBUTION FEE. Class B shares are subject to an annual
12b-1 fee of 1.0% of the lesser of: (a) the average daily
aggregate gross purchases by all shareholders of the Fund's
Class B shares since the inception of the Fund (not
including reinvestments of dividends or capital gains
distributions), less the average daily aggregate net asset
value of the Fund's Class B shares sold by all shareholders
since the Fund's inception upon which a CDSC has been
imposed or waived or (b) the average daily net assets of
Class B.
CONVERSION FEATURE. After ten (10) years, Class B shares
will convert automatically to Class A shares of the Fund
with no initial sales charge. The ten year period runs from
the last day of the month in which the shares were
purchased, or in the case of Class B shares acquired through
an exchange, from the last day of the month in which the
original Class B shares were purchased; the shares will
convert to Class A shares based on their relative net asset
values in the month following the ten year period. At the
same time, an equal proportion of Class B shares acquired
through automatically reinvested distributions will convert
to Class A shares on the same basis. (Class B shares held
before May 1, 1997, however, will convert to Class A shares
in May 2007.)
In the case of Class B shares held in a MSDW Eligible Plan,
the plan is treated as a single investor and all Class B
shares will convert to Class A shares on the conversion date
of the Class B shares of a Morgan Stanley Dean Witter Fund
purchased by that plan.
Currently, the Class B share conversion is not a taxable
event; the conversion feature may be cancelled if it is
deemed a taxable event in the future by the Internal Revenue
Service.
If you exchange your Class B shares for shares of a Money
Market Fund, a No-Load Fund, North American Government
Income Trust or Short-Term U.S. Treasury Trust, the holding
period for conversion is frozen as of the last day of the
month of the exchange and resumes on the last day of the
month you exchange back into Class B shares.
EXCHANGING SHARES SUBJECT TO A CDSC. There are special
considerations when you exchange Fund shares that are
subject to a CDSC. When determining the length
17
<PAGE>
of time you held the shares and the corresponding CDSC rate,
any period (starting at the end of the month) during which
you held shares of a fund that does NOT charge a CDSC WILL
NOT BE COUNTED. Thus, in effect the "holding period" for
purposes of calculating the CDSC is frozen upon exchanging
into a fund that does not charge a CDSC.
For example, if you held Class B shares of the Fund for one
year, exchanged to Class B of another Morgan Stanley Dean
Witter Multi-Class Fund for another year, then sold your
shares, a CDSC rate of 4% would be imposed on the shares
based on a two year holding period -- one year for each
Fund. However, if you had exchanged the shares of the Fund
for a Money Market Fund (which does not charge a CDSC)
instead of the Multi-Class Fund, then sold your shares, a
CDSC rate of 5% would be imposed on the shares based on a
one year holding period. The one year in the Money Market
Fund would not be counted. Nevertheless, if shares subject
to a CDSC are exchanged for a Fund that does not charge a
CDSC, you will receive a credit when you sell the shares
equal to the distribution (12b-1) fees, if any, you paid on
those shares while in that Fund up to the amount of any
applicable CDSC.
In addition, shares that are exchanged into or from a Morgan
Stanley Dean Witter Fund subject to a higher CDSC rate will
be subject to the higher rate, even if the shares are
re-exchanged into a Fund with a lower CDSC rate.
CLASS C SHARES Class C shares are sold at net asset value
with no initial sales charge but are subject to a CDSC of
1.0% on sales made within one year after the last day of the
month of purchase. The CDSC will be assessed in the same
manner and with the same CDSC waivers as with Class B
shares.
DISTRIBUTION FEE. Class C shares are subject to an annual
distribution (12b-1) fee of up to 1.0% of the average daily
net assets of that Class. The Class C shares' distribution
fee may cause that Class to have higher expenses and pay
lower dividends than Class A or Class D shares. Unlike Class
B shares, Class C shares have no conversion feature and,
accordingly, an investor that purchases Class C shares may
be subject to distribution (12b-1) fees applicable to Class
C shares for an indefinite period.
CLASS D SHARES Class D shares are offered without any
sales charge on purchases or sales and without any
distribution (12b-1) fee. Class D shares are offered only to
investors meeting an initial investment minimum of $5
million ($25 million for MSDW Eligible Plans) and the
following investor categories:
- Investors participating in the Investment Manager's mutual
fund asset allocation program (subject to all of its terms
and conditions, including mandatory sale or transfer
restrictions on termination) pursuant to which they pay an
asset-based fee.
- Persons participating in a fee-based investment program
(subject to all of its terms and conditions, including
mandatory sale or transfer restrictions on termination)
approved by the Fund's distributor pursuant to which they
pay an asset-based fee for investment advisory,
administrative and/or brokerage services.
18
<PAGE>
- 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 certain MSDW Eligible Plans) initial
investment to qualify to purchase Class D shares you may
combine: (1) purchases in a single transaction of Class D
shares of the Fund and other Morgan Stanley Dean Witter
Multi-Class Funds and/or (2) previous purchases of Class A
and Class D shares of Multi-Class Funds and shares of FSC
Funds you currently own, along with shares of Morgan Stanley
Dean Witter Funds you currently own that you acquired in
exchange for those shares.
NO SALES CHARGES FOR REINVESTED CASH DISTRIBUTIONS If you
receive a cash payment representing an income dividend or
capital gain and you reinvest that amount in the applicable
Class of shares by returning the check within 30 days of the
payment date, the purchased shares would not be subject to
an initial sales charge or CDSC.
PLAN OF DISTRIBUTION (RULE 12b-1 FEES) The Fund has
adopted a Plan of Distribution in accordance with Rule 12b-1
under the Investment Company Act of 1940 with respect to the
distribution of Class A, Class B and Class C shares. The
Plan allows the Fund to pay distribution fees for the sale
and distribution of these shares. It also allows the Fund to
pay for services to shareholders of Class A, Class B and
Class C shares. Because these fees are paid out of the
Fund's assets on an ongoing basis, over time these fees will
increase the cost of your investment in these Classes and
may cost you more than paying other types of sales charges.
19
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the past 5 fiscal years of the Fund.
Certain information reflects financial results for a single Fund share.
The total returns in the table represent the rate an investor would
have earned or lost on an investment in the Fund (assuming reinvestment
of all dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, whose
report, along with the Fund's financial statements, is included in the
annual report, which is available upon request.
<TABLE>
<CAPTION>
CLASS B SHARES
- -------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED MARCH 31, 1999++ 1998*++ 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.44 $ 13.30 $ 12.86 $ 11.41 $ 10.81
- -------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.10 0.11 0.12 0.13 0.14
Net realized and unrealized gain (loss) (0.06) 2.79 1.44 1.96 0.88
---------- ------- ------- ------- -------
Total income from investment operations 0.04 2.90 1.56 2.09 1.02
- -------------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.07) (0.12) (0.13) (0.15) (0.14)
Net realized gain (1.22) (1.64) (0.99) (0.49) (0.28)
---------- ------- ------- ------- -------
Total dividends and distributions (1.29) (1.76) (1.12) (0.64) (0.42)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.19 $ 14.44 $ 13.30 $ 12.86 $ 11.41
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 0.42% 23.41% 12.58% 18.77% 9.60%
- -------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- -------------------------------------------------------------------------------------------------------------------------
Expenses 1.78%(1) 1.71% 1.75% 1.85% 1.97%
- -------------------------------------------------------------------------------------------------------------------------
Net investment income 0.74%(1) 0.80% 0.93% 1.05% 1.22%
- -------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in millions $ 3,343 $ 3,812 $ 3,038 $ 2,434 $ 1,854
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate % 47 51% 40% 40% 32%
- -------------------------------------------------------------------------------------------------------------------------
</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.
20
<PAGE>
<TABLE>
<CAPTION>
FOR THE FOR THE PERIOD
YEAR ENDED JULY 28, 1997*
MARCH 31, THROUGH MARCH
1999 31, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------------------------
CLASS A SHARES++
- ------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
- ------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.43 $ 14.91
- ------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.17 0.09
Net realized and unrealized gain (loss) (0.04) 0.62
----------- -------
Total income from investment operations 0.13 0.71
- ------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.14) (0.16)
Net realized gain (1.22) (1.03)
----------- -------
Total dividends and distributions (1.36) (1.19)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.20 $ 14.43
- ------------------------------------------------------------------------------------------------
TOTAL RETURN+ 1.10% 5.77%(1)
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ------------------------------------------------------------------------------------------------
Expenses 1.12%(3) 1.17%(2)
- ------------------------------------------------------------------------------------------------
Net investment income 1.39%(3) 1.02%(2)
- ------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $35,673 $13,027
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate 47% 51%(1)
- ------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES++
- ---------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA:
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.42 $ 14.91
- ---------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.08 0.02
Net realized and unrealized gain (loss) (0.05) 0.62
---------- ------------
Total income from investment operations 0.03 0.64
- ---------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.06) (0.10)
Net realized gain (1.22) (1.03)
---------- ------------
Total dividends and distributions (1.28) (1.13)
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.17 $ 14.42
- ---------------------------------------------------------------------------------------------
TOTAL RETURN+ 0.37% 5.26%(1)
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ---------------------------------------------------------------------------------------------
Expenses 1.85%(3) 1.92%(2)
- ---------------------------------------------------------------------------------------------
Net investment income 0.66%(3) 0.24%(2)
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $13,664 $9,711
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate 47% 51%(1)
- ---------------------------------------------------------------------------------------------
</TABLE>
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
21
<PAGE>
<TABLE>
<CAPTION>
CLASS D SHARES++
- ------------------------------------------------------------------------------------------------
FOR THE FOR THE PERIOD
YEAR ENDED JULY 28, 1997*
MARCH 31, THROUGH MARCH
SELECTED PER SHARE DATA: 1999 31, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.44 $ 14.91
- ------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.20 0.11
Net realized and unrealized gain (loss) (0.05) 0.62
----------- -------
Total income from investment operations 0.15 0.73
- ------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (0.16) (0.17)
Net realized gain (1.22) (1.03)
----------- -------
Total dividends and distributions (1.38) (1.20)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.21 $ 14.44
- ------------------------------------------------------------------------------------------------
TOTAL RETURN+ 1.27% 5.97%(1)
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ------------------------------------------------------------------------------------------------
Expenses 0.90%(3) 0.92%(2)
- ------------------------------------------------------------------------------------------------
Net investment income 1.61%(3) 1.21%(2)
- ------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $63,013 $20,032
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate 47% 51%(1)
- ------------------------------------------------------------------------------------------------
</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.
22
<PAGE>
NOTES
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23
<PAGE>
NOTES
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24
<PAGE>
MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS
The Morgan Stanley Dean Witter Family of Funds offers investors a wide
range of investment choices. Come on in and meet the family!
- --------------------------------------------------------------------------------
GROWTH FUNDS
- --------------------------------
GROWTH FUNDS
Aggressive Equity Fund
American Opportunities Fund
Capital Growth Securities
Developing Growth Securities
Equity Fund
Growth Fund
Market Leader Trust
Mid-Cap Equity Trust
Small Cap Growth Fund
Special Value Fund
Value Fund
THEME FUNDS
Financial Services Trust
Health Sciences Trust
Information Fund
Natural Resource Development Securities
Precious Metals and Minerals Trust
GLOBAL/INTERNATIONAL FUNDS
Competitive Edge Fund - "Best Ideas" Portfolio
European Growth Fund
Fund of Funds - International Portfolio
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
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 Return Trust
Value-Added Market Series/Equity Portfolio
THEME FUNDS
Global Utilities Fund
Real Estate Fund
Utilities Fund
GLOBAL FUNDS
Global Dividend Growth Securities
- --------------------------------------------------------------------------------
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)
N.Y. 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>
MORGAN STANLEY DEAN WITTER
GLOBAL DIVIDEND GROWTH SECURITIES
[Sidebar]
TICKER SYMBOLS:
Class A: GLBAX
- -------------------
Class B: GLBBX
- -------------------
Class C: GLBCX
- -------------------
Class D: GLBDX
- -------------------
[End Sidebar]
Additional information about the Fund's investments is
available in the Fund's ANNUAL AND SEMI-ANNUAL REPORTS TO
SHAREHOLDERS. In the Fund's ANNUAL REPORT, you will find a
discussion of the market conditions and investment
strategies that significantly affected the Fund's
performance during its last fiscal year. The Fund's
STATEMENT OF ADDITIONAL INFORMATION also provides additional
information about the Fund. The STATEMENT OF ADDITIONAL
INFORMATION is incorporated herein by reference (legally is
part of this PROSPECTUS). For a free copy of any of these
documents, to request other information about the Fund, or
to make shareholder inquiries, please call:
(800) 869-NEWS
You also may obtain information about the Fund by calling
your Morgan Stanley Dean Witter Financial Advisor or by
visiting our Internet site at:
WWW.DEANWITTER.COM/FUNDS
Information about the Fund (including the STATEMENT OF
ADDITIONAL INFORMATION) can be viewed and copied at the
Securities and Exchange Commission's Public Reference Room
in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (800)
SEC-0330. Reports and other information about the Fund are
available on the SEC's Internet site (www.sec.gov), and
copies of this information may be obtained, upon payment of
a duplicating fee, by writing the Public Reference Section
of the SEC, Washington, DC 20549-6009.
(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-7548)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION MORGAN STANLEY
JULY 28, 1999 DEAN WITTER GLOBAL
DIVIDEND GROWTH SECURITIES
- ----------------------------------------------------------------------
This STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. The PROSPECTUS
(dated July 28, 1999) for the Morgan Stanley Dean Witter Global Dividend Growth
Securities may be obtained without charge from the Fund at its address or
telephone number listed below or from Dean Witter Reynolds at any of its branch
offices.
Morgan Stanley Dean Witter
Global Dividend Growth Securities
Two World Trade Center
New York, New York 10048
(800) 869-NEWS
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
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................................. 15
A. Board of Trustees................................... 15
B. Management Information.............................. 15
C. Compensation........................................ 19
IV. Control Persons and Principal Holders of Securities.... 21
V. Investment Management and Other Services............... 21
A. Investment Manager and Sub-Advisor.................. 21
B. Principal Underwriter............................... 22
C. Services Provided by the Investment Manager and Fund
Expenses Paid.......................................... 22
D. Dealer Reallowances................................. 23
E. Rule 12b-1 Plan..................................... 23
F. Other Service Providers............................. 27
VI. Brokerage Allocation and Other Practices............... 28
A. Brokerage Transactions.............................. 28
B. Commissions......................................... 28
C. Brokerage Selection................................. 29
D. Directed Brokerage.................................. 30
E. Regular Broker-Dealers.............................. 30
VII. Capital Stock and Other Securities..................... 30
VIII. Purchase, Redemption and Pricing of Shares............. 31
A. Purchase/Redemption of Shares....................... 31
B. Offering Price...................................... 31
IX. Taxation of the Fund and Shareholders.................. 32
X. Underwriters........................................... 34
XI. Calculation of Performance Data........................ 34
XII. Financial Statements................................... 35
2
<PAGE>
GLOSSARY OF SELECTED DEFINED TERMS
- --------------------------------------------------------------------------------
The terms defined in this glossary are frequently used in this STATEMENT OF
ADDITIONAL INFORMATION (other terms used occasionally are defined in the text of
the document).
"CUSTODIAN"--The Bank of New York.
"DEAN WITTER REYNOLDS"--Dean Witter Reynolds Inc., a wholly-owned broker-dealer
subsidiary of MSDW.
"DISTRIBUTOR"--Morgan Stanley Dean Witter Distributors Inc., a wholly-owned
broker-dealer subsidiary of MSDW.
"FINANCIAL ADVISORS"--Morgan Stanley Dean Witter authorized financial services
representatives.
"FUND"--Morgan Stanley Dean Witter Global Dividend Growth Securities, a
registered open-end investment company.
"INVESTMENT MANAGER"--Morgan Stanley Dean Witter Advisors Inc., a wholly-owned
investment advisor subsidiary of MSDW.
"INDEPENDENT TRUSTEES"--Trustees who are not "interested persons" (as defined by
the Investment Company Act) of the Fund.
"MORGAN STANLEY & CO."--Morgan Stanley & Co. Incorporated, a wholly-owned
broker-dealer subsidiary of MSDW.
"MORGAN STANLEY DEAN WITTER FUNDS"--Registered investment companies (i) for
which the Investment Manager serves as the investment advisor and (ii) that hold
themselves out to investors as related companies for investment and investor
services.
"MSDW"--Morgan Stanley Dean Witter & Co., a preeminent global financial services
firm.
"MSDW SERVICES COMPANY"--Morgan Stanley Dean Witter Services Company Inc., a
wholly-owned fund services subsidiary of the Investment Manager.
"TRANSFER AGENT"--Morgan Stanley Dean Witter Trust FSB, a wholly-owned transfer
agent subsidiary of MSDW.
"TRUSTEES"--The Board of Trustees of the Fund.
3
<PAGE>
I. FUND HISTORY
- --------------------------------------------------------------------------------
The Fund was organized as a "Massachusetts business trust" under the laws of
the Commonwealth of Massachusetts on January 12, 1993 under the name Dean Witter
Global Dividend Growth Securities. Effective June 22, 1998, the Fund's name was
changed to Morgan Stanley Dean Witter Global Dividend Growth Securities.
II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
- --------------------------------------------------------------------------------
A. CLASSIFICATION
The Fund is an open-end, diversified management investment company whose
investment objective is to seek to provide reasonable current income and
long-term growth of income and capital.
B. INVESTMENT STRATEGIES AND RISKS
The following discussion of the Fund's investment strategies and risks
should be read with the sections of the Fund's PROSPECTUS titled "Principal
Investment Strategies," "Principal Risks," "Additional Investment Strategy
Information" and "Additional Risk Information."
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may enter into
forward U.S. dollar and foreign currency exchange contracts ("FORWARD
CONTRACTS") as a hedge against fluctuations in future foreign exchange rates.
The Fund may conduct its 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 or foreign banks, insurance
companies and other dealers whose assets total $1 billion or more. A forward
contract generally has no deposit requirement, and no commissions are charged at
any stage for trades.
The Fund may enter into forward contracts under various circumstances. The
typical use of a forward contract is to "lock in" the price of a security in
U.S. dollars or some other foreign currency which the Fund is holding in its
portfolio. By entering into a forward contract for the purchase or sale, for a
fixed amount of dollars or other currency, of the amount of foreign currency
involved in the underlying security transactions, the Fund may be able to
protect itself against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar or other currency which is being used for
the security purchase and the foreign currency in which the security is
denominated during the period between the date on which the security is
purchased or sold and the date on which payment is made or received.
The Investment Manager also may from time to time utilize forward contracts
for other purposes. For example, they may be used to hedge a foreign security
held in the portfolio or a security which pays out principal tied to an exchange
rate between the U.S. dollar and a foreign currency, against a decline in value
of the applicable foreign currency. They also may be used to lock in the current
exchange rate of the currency in which those securities anticipated to be
purchased are denominated. At times, the Fund may enter into "cross-currency"
hedging transactions involving currencies other than those in which securities
are held or proposed to be purchased are denominated.
The Fund will not enter into forward currency contracts or maintain a net
exposure to these contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of currency in excess of the value of the
Fund's portfolio securities.
Although the Fund values its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. It will, however, do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the spread
between the prices at
4
<PAGE>
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to the Fund at one rate, while offering a lesser rate
of exchange should the Fund desire to resell that currency to the dealer.
The Fund may be limited in its ability to enter into hedging transactions
involving forward contracts by the Internal Revenue Code requirements relating
to qualification as a regulated investment company.
Forward currency contracts may limit gains on portfolio securities that
could otherwise be realized had they not been utilized and could result in
losses. The contracts also may increase the Fund's volatility and may involve a
significant amount of risk relative to the investment of cash.
OPTION AND FUTURES TRANSACTIONS. The Fund may engage in transactions in
listed and OTC options on eligible portfolio securities and stock indexes.
Listed options are issued or guaranteed by the exchange on which they are traded
or by a clearing corporation such as the Options Clearing Corporation ("OCC").
Ownership of a listed call option gives the Fund the right to buy from the OCC
(in 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 the U.S. dollar and foreign currencies, 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 underlying the option decline in value.
The Fund may be required, at any time during the option period, to deliver
the underlying security (or currency) against payment of the exercise price on
any calls it has written. This obligation is terminated upon the expiration of
the option period or at such earlier time when the writer effects a closing
purchase transaction. A closing purchase transaction is accomplished by
purchasing an option of the same series as the option previously written.
However, once the Fund has been assigned an exercise notice, the Fund will be
unable to effect a closing purchase transaction.
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
(or currency) 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
5
<PAGE>
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. 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.
OPTIONS ON FOREIGN CURRENCIES. The Fund may purchase and write options on
foreign currencies for purposes similar to those involved with investing in
forward foreign currency exchange contracts.
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.
RISKS OF OPTIONS TRANSACTIONS. The successful use of options depends on the
ability of the Investment Manager to forecast correctly interest rates and/or
market movements. If the market value of the portfolio securities (or
currencies) 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 currency) increase,
but has retained the risk of loss should the price of the underlying security
(or currency) decline. The covered put writer also retains the risk of loss
should the market value of the underlying security (or currency) 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 (or currencies) 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 (or currencies) 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
6
<PAGE>
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.
The markets in foreign currency options are relatively new and the Fund's
ability to establish and close out positions on such options is subject to the
maintenance of a liquid secondary market. There can be no assurance that a
liquid secondary market will exist for a particular option at any specific time.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of the
option position may vary with changes in the value of either or both currencies
and have no relationship to the investment merits of a foreign security. Because
foreign currency transactions occurring in the interbank market involve
substantially larger amounts than those that may be involved in the use of
foreign currency options, investors may be disadvantaged by having to deal in an
odd lot market (generally consisting of transactions of less than $1 million)
for the underlying foreign currencies at prices that are less favorable than for
round lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis. Quotation
information available is generally representative of very large transactions in
the interbank market and thus may not reflect relatively smaller transactions
(i.e., less than $1 million) where rates may be less favorable. The interbank
market in foreign currencies is a global, around-the-clock market. To the extent
that the U.S. options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that are not reflected in the options market.
STOCK INDEX OPTIONS. The Fund may invest in options on broadly based
indexes. Options on stock indexes are similar to options on stock except that,
rather than the right to take or make delivery of stock at a specified price, an
option on a stock index gives the holder the right to receive, upon exercise of
the option, an amount of cash if the closing level of the stock index upon which
the option is based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option. This amount of cash is equal to
such difference between the closing price of the index and the exercise price of
the option expressed in dollars times a specified multiple. The writer of the
option is obligated, in return for the premium received, to make delivery of
this amount.
RISKS OF OPTIONS ON INDEXES. Because exercises of stock index options are
settled in cash, the Fund could not, if it wrote a call option, provide in
advance for its potential settlement obligations by acquiring and holding the
underlying securities. A call writer can offset some of the risk of its writing
position by holding a diversified portfolio of stocks similar to those on which
the underlying index is based. However, most investors cannot, as a practical
matter, acquire and hold a portfolio containing exactly the same stocks as the
underlying index, and, as a result, bear a risk that the value of the securities
held will vary from the value of the index. Even if an index call writer could
assemble a stock portfolio that exactly reproduced the composition of the
underlying index, the writer still would not be fully covered from a risk
standpoint because of the "timing risk" inherent in writing index options.
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level on the date when the option is exercised. As with
other kinds of options, the writer will not learn that it had been assigned
until the next business day, at the earliest. The time lag between exercise and
notice of assignment poses no risk for the writer of a covered call on a
specific underlying security, such as a common stock, because there the writer's
obligation is to deliver the underlying security, not to pay its value as of a
fixed time in the past. So long as the writer already owns the underlying
security, it can satisfy its settlement obligations by simply delivering it, and
the risk that its value may have declined since the exercise date is
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borne by the exercising holder. In contrast, even if the writer of an index call
holds stocks that exactly match the composition of the underlying index, it will
not be able to satisfy its assignment obligations by delivering those stocks
against payment of the exercise price. Instead, it will be required to pay cash
in an amount based on the closing index value on the exercise date; and by the
time it learns that it has been assigned, the index may have declined, with a
corresponding decrease in the value of its stock portfolio. This "timing risk"
is an inherent limitation on the ability of index call writers to cover their
risk exposure by holding stock positions.
A holder of an index option who exercises it before the closing index value
for that day is available runs the risk that the level of the underlying index
may subsequently change. If a change causes the exercised option to fall
out-of-the-money, the exercising holder will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
If dissemination of the current level of an underlying index is interrupted,
or if trading is interrupted in stocks accounting for a substantial portion of
the value of an index, the trading of options on that index will ordinarily be
halted. If the trading of options on an underlying index is halted, an exchange
may impose restrictions prohibiting the exercise of such options.
FUTURES CONTRACTS. The Fund may purchase and sell interest rate and 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 the U.S.
dollar and foreign currencies, and on such indexes of U.S. and foreign
securities as may exist or come into existence.
A futures contract purchaser incurs an obligation to take delivery of a
specified amount of the obligation underlying the contract at a specified time
in the future for a specified price. A seller of a futures contract incurs an
obligation to deliver the specified amount of the underlying obligation at a
specified time in return for an agreed upon price. The purchase of a futures
contract enables the Fund, during the term of the contract, to lock in a price
at which it may purchase a security and protect against a rise in prices pending
purchase of portfolio securities. The sale of a futures contract enables the
Fund to lock in a price at which it may sell a security and protect against
declines in the value of portfolio securities.
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
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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. Also, prices of futures contracts may not
move in tandem with the changes in prevailing interest rates and/or market
movements against which the Fund seeks a hedge. A correlation may also be
distorted (a) temporarily, by short-term traders' seeking to profit from the
difference between a contract or security price objective and their cost of
borrowed funds; (b) by investors in futures contracts electing to close out
their contracts through offsetting transactions rather than meet margin deposit
requirements; (c) by investors in futures contracts opting to make or take
delivery of underlying securities rather than engage in closing transactions,
thereby reducing 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 Investment Manager may still
not result in a successful hedging transaction.
There is no assurance that a liquid secondary market will exist for futures
contracts and related options in which the Fund may invest. In the event a
liquid market does not exist, it may not be possible to close out a futures
position and, in the event of adverse price movements, the Fund would continue
to be required to make daily cash payments of variation margin. The absence of a
liquid market in futures contracts might cause the Fund to make or take delivery
of the underlying securities at a time when it may be disadvantageous to do so.
Exchanges also limit the amount by which the price of a futures contract may
move on any day. If the price moves equal the daily limit on successive days,
then it may prove impossible to liquidate a futures position until the daily
limit moves have ceased. In the event of adverse price movements, the Fund would
continue to be required to make daily cash payments of variation margin on open
futures positions. In these situations, if the Fund has insufficient cash, it
may have to sell portfolio securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so. In addition,
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the Fund may be required to take or make delivery of the instruments underlying
interest rate futures contracts it holds at a time when it is disadvantageous to
do so. The inability to close out options and futures positions could also have
an adverse impact on the Fund's ability to effectively hedge its portfolio.
Futures contracts and options thereon which are purchased or sold on foreign
commodities exchanges may have greater price volatility than their U.S.
counterparts. Furthermore, foreign commodities exchanges may be less regulated
and under less governmental scrutiny than U.S. exchanges. Brokerage commissions,
clearing costs and other transaction costs may be higher on foreign exchanges.
Greater margin requirements may limit the Fund's ability to enter into certain
commodity transactions on foreign exchanges. Moreover, differences in clearance
and delivery requirements on foreign exchanges may occasion delays in the
settlement of the Fund's transactions effected on foreign exchanges.
In the event of the bankruptcy of a broker through which the Fund engages in
transactions in futures or options thereon, the Fund could experience delays
and/or losses in liquidating open positions purchased or sold through the broker
and/or incur a loss of all or part of its margin deposits with the broker.
If the Fund maintains a short position in a futures contract or has sold a
call option in a futures contract, it will cover this position by holding, in a
segregated account maintained on the books of the Fund, cash, U.S. government
securities or other liquid portfolio securities equal in value (when added to
any initial or variation margin on deposit) to the market value of the
securities underlying the futures contract or the exercise price of the option.
Such a position may also be covered by owning the securities underlying the
futures contract (in the case of a stock index futures contract a portfolio of
securities substantially replicating the relevant index), or by holding a call
option permitting the Fund to purchase the same contract at a price no higher
than the price at which the short position was established.
In addition, if the Fund holds a long position in a futures contract or has
sold a put option on a futures contract, it will hold cash, U.S. government
securities or other liquid portfolio securities equal to the purchase price of
the contract or the exercise price of the put option (less the amount of initial
or variation margin on deposit) in a segregated account maintained on the books
of the Fund. Alternatively, the Fund could cover its long position by purchasing
a put option on the same futures contract with an exercise price as high or
higher than the price of the contract held by the Fund.
MONEY MARKET SECURITIES. In addition to the short-term fixed-income
securities in which the Fund may otherwise invest, the Fund may invest in
various money market securities for cash management purposes or when assuming a
temporary defensive position, which among others may include commercial paper,
bank acceptances, bank obligations, corporate debt securities certificates of
deposit, U.S. Government securities and obligations of savings institutions.
Such securities are limited to:
U.S. GOVERNMENT SECURITIES. Obligations issued or guaranteed as to
principal and interest by the United States or its agencies (such as the
Export-Import Bank of the United States, Federal Housing Administration and
Government National Mortgage Association) or its instrumentalities (such as the
Federal Home Loan Bank), including Treasury bills, notes and bonds;
BANK OBLIGATIONS. Obligations (including certificates of deposit, time
deposits and bankers' acceptances) of banks subject to regulation by the U.S.
Government and having total assets of $1 billion or more, and instruments
secured by such obligations, not including obligations of foreign branches of
domestic banks except to the extent below;
EURODOLLAR CERTIFICATES OF DEPOSIT. Eurodollar certificates of deposit
issued by foreign branches of domestic banks having total assets of $1 billion
or more;
OBLIGATIONS OF SAVINGS INSTITUTIONS. Certificates of deposit of savings
banks and savings and loan associations, having total assets of $1 billion or
more;
FULLY INSURED CERTIFICATES OF DEPOSIT. Certificates of deposit of banks and
savings institutions, having total assets of less than $1 billion. If the
principal amount of the obligation is federally insured by
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the Bank Insurance Fund or the Savings Association Insurance Fund (each of which
is administered by the FDIC), limited to $100,000 principal amount per
certificate and to 10% or less of the Fund's total assets in all such
obligations and in all illiquid assets, in the aggregate; and
COMMERCIAL PAPER. Commercial paper rated within the two highest grades by
Standard & Poor's Corporation ("S&P") or the two highest grades by Moody's
Investors Service, Inc. ("Moody's") or, if not rated, issued by a company having
an outstanding debt issue rated at least AA by S&P or Aa by Moody's; and
REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements. When
cash may be available for only a few days, it may be invested by the Fund in
repurchase agreements until such time as it may otherwise be invested or used
for payments of obligations of the Fund. These agreements, which may be viewed
as a type of secured lending by the Fund, typically involve the acquisition by
the Fund of debt securities from a selling financial institution such as a bank,
savings and loan association or broker-dealer. The agreement provides that the
Fund will sell back to the institution, and that the institution will
repurchase, the underlying security serving as collateral at a specified price
and at a fixed time in the future, usually not more than seven days from the
date of purchase. The collateral will be marked-to-market daily to determine
that the value of the collateral, as specified in the agreement, does not
decrease below the purchase price plus accrued interest. If such decrease
occurs, additional collateral will be requested and, when received, added to the
account to maintain full collateralization. The Fund will accrue interest from
the institution until the time when the repurchase is to occur. Although this
date is deemed by the Fund to be the maturity date of a repurchase agreement,
the maturities of securities subject to repurchase agreements are not subject to
any limits.
While repurchase agreements involve certain risks not associated with direct
investments in debt securities, the Fund follows procedures designed to minimize
such risks. These procedures include effecting repurchase transactions only with
large, well-capitalized and well-established financial institutions whose
financial condition will be continually monitored by the Investment Manager
subject to procedures established by the Trustees. In addition, as described
above, the value of the collateral underlying the repurchase agreement will be
at least equal to the repurchase price, including any accrued interest earned on
the repurchase agreement. In the event of a default or bankruptcy by a selling
financial institution, the Fund will seek to liquidate such collateral. However,
the exercising of the Fund's right to liquidate such collateral could involve
certain costs or delays and, to the extent that proceeds from any sale upon a
default of the obligation to repurchase were less than the repurchase price, the
Fund could suffer a loss.
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.
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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 Investment Manager determines that issuance of the security is probable. At
that time, the Fund will record the transaction and, in determining its net
asset value, will reflect the value of the security daily. At that time, the
Fund will also establish a segregated account on the Fund's books in which it
will maintain cash or cash equivalents or other liquid portfolio securities
equal in value to recognized commitments for such securities.
The value of the Fund's commitments to purchase the securities of any one
issuer, together with the value of all securities of such issuer owned by the
Fund, may not exceed 5% of the value of the Fund's total assets at the time the
initial commitment to purchase such securities is made. An increase in the
percentage of the Fund's assets committed to the purchase of securities on a
"when, as and if issued" basis may increase the volatility of its net asset
value. The Fund may also sell securities on a "when, as and if issued" basis
provided that the issuance of the security will result automatically from the
exchange or conversion of a security owned by the Fund at the time of sale.
PRIVATE PLACEMENTS. The Fund may invest up to 15% of its net assets in
securities which are subject to restrictions on resale because they have not
been registered under the Securities Act of 1933 (the "SECURITIES ACT"), or
which are otherwise not readily marketable. (Securities eligible for resale
pursuant to Rule 144A under the Securities Act, and determined to be liquid
pursuant to the procedures discussed in the following paragraph, are not subject
to the foregoing restriction.) These securities are generally referred to as
private placements or restricted securities. Limitations on the resale of these
securities may have an adverse effect on their marketability, and may prevent
the Fund from disposing of them promptly at reasonable prices. The Fund may have
to bear the expense of registering the securities for resale and the risk of
substantial delays in effecting the registration.
Rule 144A permits the Fund to sell restricted securities to qualified
institutional buyers without limitation. The Investment Manager, 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 is limited by the Fund's investment
restrictions to 15% of the Fund's net assets.
WARRANTS AND SUBSCRIPTION RIGHTS. The Fund may acquire warrants and
subscription rights. 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.
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A subscription right is a privilege granted to existing shareholders of a
corporation to subscribe to shares of a new issue of common stock before it is
offered to the public. A subscription right normally has a life of two to four
weeks and a subscription price lower than the current market value of the common
stock. A subscription right is freely transferable.
OTHER INVESTMENT VEHICLES. The Fund may acquire shares in other investment
companies. In addition, the Fund may invest in real estate investment trusts,
which pool investors' funds for investments primarily in commercial real estate
properties. Investment in other investment companies may be the sole or most
practical means by which the Fund may participate in certain securities markets,
and investment in real estate investment trusts may be the most practical
available means for the Fund to invest in the real estate industry (the Fund is
prohibited from investing in real estate directly). As a shareholder in an
investment company or real estate investment trust, the Fund would bear its
ratable share of that entity's expenses, including its advisory and
administration fees. At the same time the Fund would continue to pay its own
investment management fees and other expenses, as a result of which the Fund and
its shareholders in effect will be absorbing duplicate levels of fees with
respect to investments in other investment companies and in real estate
investment trusts.
YEAR 2000. The investment management services provided to the Fund by the
Investment Manager and the services provided to shareholders by the Distributor
and the Transfer Agent depend on the smooth functioning of their computer
systems. Many computer software systems in use today cannot recognize the year
2000, but revert to 1900 or some other date, due to the manner in which dates
were encoded and calculated. That failure could have a negative impact on the
handling of securities trades, pricing and account services. The Investment
Manager, the Distributor and the Transfer Agent have been actively working on
necessary changes to their own computer systems to prepare for the year 2000 and
expect that their systems will be adapted before that date, but there can be no
assurance that they will be successful, or that interaction with other
non-complying computer systems will not impair their services at that time.
In addition, it is possible that the markets for securities in which the
Fund invests may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and liquidity issues. In
addition, corporate and governmental data processing errors may result in
production problems for individual companies and overall economic uncertainties.
Earnings of individual issuers will be affected by remediation costs, which may
be substantial and may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Fund's investments may be adversely affected.
C. FUND POLICIES/INVESTMENT RESTRICTIONS
The investment objective, policies and restrictions listed below have been
adopted by the Fund as fundamental policies. Under the Investment Company Act of
1940 (the "INVESTMENT COMPANY ACT"), a fundamental policy may not be changed
without the vote of a majority of the outstanding voting securities of the Fund.
The Investment Company Act defines a majority as the lesser of (a) 67% or more
of the shares present at a meeting of shareholders, if the holders of 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b) more
than 50% of the outstanding shares of the Fund. For purposes of the following
restrictions: (i) all percentage limitations apply immediately after a purchase
or initial investment; and (ii) any subsequent change in any applicable
percentage resulting from market fluctuations or other changes in total or net
assets does not require elimination of any security from the portfolio.
The Fund will:
1. Seek to provide reasonable current income and long-term growth of income
and capital.
The Fund MAY NOT:
1. As to 75% of its total assets, invest more than 5% of the value of its
total assets in the securities of any one issuer (other than obligations issued
or guaranteed by the United States Government, its agencies or
instrumentalities).
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2. 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.
3. Invest more than 5% of the value of its total assets in securities of
issuers having a record, together with predecessors, of less than three years of
continuous operation. This restriction shall not apply to any obligation issued
or guaranteed by the United States Government, its agencies or
instrumentalities.
4. As of 75% of its total assets, purchase more than 10% of the voting
securities, or more than 10% of any class of securities, of any issuer.
5. Purchase or sell real estate or interests therein, although the Fund may
purchase securities of issuers which engage in real estate operations and
securities secured by real estate or interests therein.
6. Purchase oil, gas or other mineral leases, rights or royalty contracts
or exploration or development programs, except that the Fund may invest in the
securities of companies which operate, invest in, or sponsor such programs.
7. Borrow money, except that the Fund may borrow from a bank for temporary
or emergency purposes in amounts not exceeding 5% (taken at the lower of cost or
current value) of its total assets (not including the amount borrowed).
8. Pledge its assets or assign or otherwise encumber them except to secure
permitted borrowings. For the purpose of this restriction, collateral
arrangements with respect to the writing of options and collateral arrangements
with respect to initial or variation margin for futures are not deemed to be
pledges of assets.
9. Issue senior securities as defined in the Investment Company Act, except
insofar as the Fund may be deemed to have issued a senior security by reason of
(a) entering into any repurchase or reverse repurchase agreement; (b) purchasing
any securities on a when-issued or delayed delivery basis; (c) purchasing or
selling futures contracts, forward foreign exchange contracts or options; (d)
borrowing money in accordance with restrictions described above; or (e) lending
portfolio securities.
10. Make loans of money or securities, except: (a) by the purchase of
publicly distributed debt obligations; (b) by investment in repurchase
agreements; or (c) by lending its portfolio securities.
11. Make short sales of securities.
12. Purchase securities on margin, except for such short-term loans as are
necessary for the clearance of portfolio securities. The deposit or payment by
the Fund of initial or variation margin in connection with futures contracts or
related options thereon is not considered the purchase of a security on margin.
13. Engage in the underwriting of securities, except insofar as the Fund may
be deemed an underwriter under the Securities Act in disposing of a portfolio
security.
14. Invest for the purpose of exercising control or management of any one
issuer.
15. Purchase securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets or in
accordance with the provisions of Section 12(d) of the Investment Company Act
and any rules promulgated thereunder.
16. Purchase or sell commodities or commodities contracts except that the
Fund may purchase or sell futures contracts or options on futures.
As a non-fundamental policy, the Fund will not invest in other investment
companies in reliance on Sections 12(d)(1)(F), 12(d)(1)(G) or 12(d)(1)(J) of the
Investment Company Act.
Notwithstanding any other investment policy or restriction, the Fund may
seek to achieve its investment objective by investing all or substantially all
of its assets in another investment company having substantially the same
investment objective and policies as the Fund.
14
<PAGE>
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 directors or trustees for all of
the Morgan Stanley Dean Witter Funds. Six Trustees (75% of the total number)
have no affiliation or business connection with the Investment Manager or any of
its affiliated persons and do not own any stock or other securities issued by
the Investment Manager's parent company, MSDW. These are the "non-interested" or
"independent" Trustees. The other two Trustees (the "MANAGEMENT TRUSTEES") are
affiliated with the Investment Manager. All of the Trustees also serve as
Trustees of "DISCOVER BROKERAGE INDEX SERIES," a mutual fund for which the
Investment Manager is the investment advisor.
The Trustees and executive officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with the
Investment Manager, and with the 90 Morgan Stanley Dean Witter Funds and
Discover Brokerage Index Series, are shown below.
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------ ----------------------------------------------------------
<S> <C>
Michael Bozic (58) ................................... Vice Chairman of Kmart Corporation (since December, 1998);
Trustee Director or Trustee of the Morgan Stanley Dean Witter
c/o Kmart Corporation Funds and Discover Brokerage Index Series; formerly
3100 West Big Beaver Road Chairman and Chief Executive Officer of Levitz Furniture
Troy, Michigan Corporation (November, 1995-November, 1998) and President
and Chief Executive Officer of Hills Department Stores
(May, 1991-July, 1995); formerly variously Chairman, Chief
Executive Officer, President and Chief Operating Officer
(1987-1991) of the Sears Merchandise Group of Sears,
Roebuck and Co.; Director of Eaglemark Financial Services,
Inc. and Weirton Steel Corporation.
Charles A. Fiumefreddo* (66) ......................... Chairman, Director or Trustee and Chief Executive Officer
Chairman of the Board, of the Morgan Stanley Dean Witter Funds and Discover
Chief Executive Officer and Trustee Brokerage Index Series; formerly Chairman, Chief Executive
Two World Trade Center Officer and Director of the Investment Manager, the
New York, New York Distributor and MSDW Services Company; Executive Vice
President and Director of Dean Witter Reynolds; Chairman
and Director of the Transfer Agent; formerly Director
and/or officer of various MSDW subsidiaries (until June,
1998).
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------ ----------------------------------------------------------
<S> <C>
Edwin J. Garn (67) ................................... Director or Trustee of the Morgan Stanley Dean Witter
Trustee Funds and Discover Brokerage Index Series; formerly United
c/o Huntsman Corporation States Senator (R-Utah)(1974-1992) and Chairman, Senate
500 Huntsman Way Banking 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 Lockheed Martin and the Boeing
Company) and Nuskin Asia Pacific (multilevel marketing);
member of the board of various civic and charitable
organizations.
Wayne E. Hedien (65) ................................. Retired; Director or Trustee of the Morgan Stanley Dean
Trustee Witter Funds and Discover Brokerage Index Series; Director
c/o Mayer, Brown & Platt of The PMI Group, Inc. (private mortgage insurance);
Counsel to the Independent Trustees Trustee and Vice Chairman of The Field Museum of Natural
1675 Broadway History; 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 (50) ........................... Senior Partner, Johnson Smick International, Inc., a
Trustee consulting firm; Co-Chairman and a founder of the Group of
c/o Johnson Smick International, Inc. Seven Council (G7C), an international economic commission;
1133 Connecticut Avenue, N.W. Chairman of the Audit Committee and Director or Trustee of
Washington, D.C. the Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series; 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.
Michael E. Nugent (63) ............................... General Partner, Triumph Capital, L.P., a private invest-
Trustee ment partnership; Chairman of the Insurance Committee and
c/o Triumph Capital, L.P. Director or Trustee of the Morgan Stanley Dean Witter
237 Park Avenue Funds and Discover Brokerage Index Series; formerly Vice
New York, New York President, Bankers Trust Company and BT Capital
Corporation (1984-1988); director of various business
organizations.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------ ----------------------------------------------------------
<S> <C>
Philip J. Purcell* (56) .............................. Chairman of the Board of Directors and Chief Executive
Trustee Officer of MSDW, Dean Witter Reynolds and Novus Credit
1585 Broadway Services Inc.; Director of the Distributor; Director or
New York, New York Trustee of the Morgan Stanley Dean Witter Funds and
Discover Brokerage Index Series; 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 and Discover Brokerage Index Series; Director of
Counsel to the Independent Trustees Citizens Utilities Company (telecommunications, gas,
1675 Broadway electric and water utilities company); formerly Executive
New York, New York Vice President and Chief Investment Officer of the Home
Insurance Company (August, 1991-September, 1995).
Mitchell M. Merin (45) ............................... President and Chief Operating Officer of Asset Management
President of MSDW (since December, 1998); President and Director
Two World Trade Center (since April, 1997) and Chief Executive Officer (since
New York, New York 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 and Discover Brokerage Index Series (since
May, 1999); previously Chief Strategic Officer of the
Investment Manager and MSDW Services Company and Executive
Vice President of the Distributor (April, 1997-June,
1998), Vice President of the Morgan Stanley Dean Witter
Funds and Discover Brokerage Index Series (May,
1997-April, 1999), and Executive Vice President of Dean
Witter, Discover & Co.
Barry Fink (44) ...................................... Senior Vice President (since March, 1997) and Secretary
Vice President, and General Counsel (since February, 1997) and Director
Secretary and General Counsel (since July, 1998) of the Investment Manager and MSDW
Two World Trade Center Services Company; Senior Vice President (since March,
New York, New York 1997) 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); Vice President, Secretary and General Counsel of
Discover Brokerage Index Series; previously First Vice
President (June, 1993-February, 1997), Vice President and
Assistant Secretary and Assistant General Counsel of the
Investment Manager and MSDW Services Company and Assistant
Secretary of the Morgan Stanley Dean Witter Funds.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------------------ ----------------------------------------------------------
<S> <C>
Paul D. Vance (63) ................................... Senior Vice President of the Investment Manager; Vice
Vice President President of several of the Morgan Stanley Dean Witter
Two World Trade Center Funds.
New York, New York
Thomas F. Caloia (53) ................................ First Vice President and Assistant Treasurer of the
Treasurer Investment Manager, the Distributor and MSDW Services
Two World Trade Center Company; Treasurer of the Morgan Stanley Dean Witter Funds
New York, New York and Discover Brokerage Index Series.
</TABLE>
- ------------------------
* Denotes Trustees who are "interested persons" of the Fund as defined in 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,
and KENTON J. HINCHLIFFE, RONALD J. WOROBEL and IRA N. ROSS, Senior Vice
Presidents of the Investment Manager, are Vice Presidents of the Fund.
In addition, FRANK BRUTTOMESSO, MARILYN K. CRANNEY, LOU ANNE D. MCINNIS,
CARSTEN OTTO and RUTH ROSSI, First Vice Presidents and Assistant General
Counsels of the Investment Manager and MSDW Services Company, and TODD LEBO,
Vice President and Assistant General Counsel of the Investment Manager and MSDW
Services Company, are Assistant Secretaries of the Fund.
INDEPENDENT DIRECTORS/TRUSTEES AND THE COMMITTEES. Law and regulation
establish both general guidelines and specific duties for the independent
directors/trustees. The Morgan Stanley Dean Witter Funds seek as independent
directors/trustees individuals of distinction and experience in business and
finance, government service or academia; these are people whose advice and
counsel are in demand by others and for whom there is often competition. To
accept a position on the Funds' boards, such individuals may reject other
attractive assignments because the Funds make substantial demands on their time.
All of the independent directors/trustees serve as members of the Audit
Committee. In addition, three of the directors/trustees, including two
independent directors/trustees, serve as members of the Derivatives Committee
and the Insurance Committee.
The independent directors/trustees are charged with recommending to the full
board approval of management, advisory and administration contracts, Rule 12b-1
plans and distribution and underwriting agreements; continually reviewing Fund
performance; checking on the pricing of portfolio securities, brokerage
commissions, transfer agent costs and performance, and trading among Funds in
the same complex; and approving fidelity bond and related insurance coverage and
allocations, as well as other matters that arise from time to time. The
independent directors/trustees are required to select and nominate individuals
to fill any independent directors 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.
18
<PAGE>
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.
C. COMPENSATION
The Fund pays each Independent Trustee an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Trustees, the Independent
Trustees or Committees of the Board of Trustees attended by the Trustee (the
Fund pays the Chairman of the Audit Committee an additional annual fee of $750,
and the Chairmen of the Derivatives and Insurance Committees additional annual
fees of $500). If a Board meeting and a meeting of the Independent Trustees or a
Committee meeting, or a meeting of the Independent Trustees and/or more than one
Committee meeting, take place on a single day, the Trustees are paid a single
meeting fee by the Fund. The Fund also reimburses such Trustees for travel and
other out-of-pocket expenses incurred by them in connection with attending such
meetings. Trustees and officers of the Fund who are or have been employed by the
Investment Manager or an affiliated company receive no compensation or expense
reimbursement from the Fund for their services as Trustee.
The following table illustrates the compensation that the Fund paid to its
Independent Trustees for the fiscal year ended March 31, 1999.
FUND COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
- -------------------------------------------------------------- ---------------
<S> <C>
Michael Bozic................................................. $1,500
Edwin J. Garn................................................. 1,700
Wayne E. Hedien............................................... 1,700
Dr. Manuel H. Johnson......................................... 1,650
Michael E. Nugent............................................. 1,700
John L. Schroeder............................................. 1,700
</TABLE>
19
<PAGE>
The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1998 for services
to the 90 Morgan Stanley Dean Witter Funds that were in operation at December
31, 1998. No compensation was paid to the Fund's Independent Trustees by
Discover Brokerage Index Series for the calendar year ended December 31, 1998.
CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS
<TABLE>
<CAPTION>
TOTAL CASH
COMPENSATION
FOR SERVICES
TO 90 MORGAN
STANLEY DEAN
NAME OF INDEPENDENT TRUSTEE WITTER FUNDS
- --------------------------- -------------
<S> <C>
Michael Bozic.............. $120,150
Edwin J. Garn.............. 132,450
Wayne E. Hedien............ 132,350
Dr. Manuel H. Johnson...... 155,681
Michael E. Nugent.......... 159,731
John L. Schroeder.......... 160,731
</TABLE>
As of the date of this STATEMENT OF ADDITIONAL INFORMATION, 55 of the Morgan
Stanley Dean Witter Funds, 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 or Trustee of any Adopting Fund in excess of five years up
to a maximum of 60.44% after ten years of service. The foregoing percentages may
be changed by the Board.(1) "ELIGIBLE COMPENSATION" is one-fifth of the total
compensation earned by such Eligible Trustee for service to the Adopting Fund in
the five year period prior to the date of the Eligible Trustee's retirement.
Benefits under the retirement program are accrued as expenses on the books of
the Adopting Funds. Such benefits are not secured or funded by the Adopting
Funds.
20
<PAGE>
The following table illustrates the retirement benefits accrued to the
Fund's Independent Trustees by the Fund for the fiscal year ended March 31, 1999
and by the 55 Morgan Stanley Dean Witter Funds (including the Fund) for the
fiscal year ended December 31, 1998, and the estimated retirement benefits for
the Independent Trustees, to commence upon their retirement, from the Fund as of
fiscal year ended March 31, 1999 and from the 55 Morgan Stanley Dean Witter
Funds as of the calendar year ended December 31, 1998.
RETIREMENT BENEFITS FROM THE FUND AND
ALL MORGAN STANLEY DEAN WITTER FUNDS
<TABLE>
<CAPTION>
RETIREMENT ESTIMATED ANNUAL
BENEFITS BENEFITS
FOR ALL ADOPTING FUNDS ACCRUED AS UPON RETIREMENT
----------------------------- EXPENSES FROM ALL
ESTIMATED BY ALL ADOPTING FUNDS(2)
CREDITED ADOPTING FUNDS -----------------------
YEARS OF ESTIMATED --------------- FROM
SERVICE AT PERCENTAGE OF BY BY ALL FROM ALL
RETIREMENT ELIGIBLE THE ADOPTING THE ADOPTING
NAME OF INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION FUND FUNDS FUND FUNDS
- ----------------------------------- ------------ -------------- ---- --------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Michael Bozic...................... 10 60.44% 416 $22,377 997 $52,250
Edwin J. Garn...................... 10 60.44 718 35,225 997 52,250
Wayne E. Hedien.................... 9 51.37 778 41,979 848 44,413
Dr. Manuel H. Johnson.............. 10 60.44 279 14,047 997 52,250
Michael E. Nugent.................. 10 60.44 533 25,336 997 52,250
John L. Schroeder.................. 8 50.37 840 45,117 838 44,343
</TABLE>
- ------------------------
1 An Eligible Trustee may elect alternative payments of his or her retirement
benefits based upon the combined life expectancy of the Eligible Trustee and
his or her spouse on the date of such Eligible Trustee's retirement. 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. In addition, the Eligible
Trustee may elect that the surviving spouse's periodic payment of benefits
will be equal to either 50% or 100% of the previous periodic amount, an
election that, respectively, increases or decreases the previous periodic
amounts so that the resulting payments 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 on page
20 of this Statement of Additional Information.
IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------
The following persons owned 5% or more of the outstanding Class A shares of
the Fund as of July 6, 1999: Morgan Stanley Dean Witter Trust as Trustee, VVP
America, P.O. Box 957, Jersey City, NJ 07303-0957--16.237%. The following owned
5% or more of the outstanding Class D shares of the Fund on July 6, 1999: MAC &
Co. A/C DWRF 8604892, Mellon Bank N.A., Mutual Funds Operations, P.O. Box 3198,
Pittsburgh, PA 15230-3198--66.307%.
As of the date of this STATEMENT OF ADDITIONAL INFORMATION, the aggregate
number of shares of beneficial interest of the Fund owned by the Fund's officers
and Trustees as a group was less than 1% of the Fund's shares of beneficial
interest outstanding.
V. INVESTMENT MANAGEMENT AND OTHER SERVICES
- --------------------------------------------------------------------------------
A. INVESTMENT MANAGER
The Investment Manager to the Fund is Morgan Stanley Dean Witter Advisors
Inc., a Delaware corporation, whose address is Two World Trade Center, New York,
New York 10048. The Investment Manager is a wholly-owned subsidiary of MSDW, a
Delaware corporation. MSDW is a preeminent global financial services firm that
maintains leading market positions in each of its three primary businesses:
securities, asset management and credit services.
21
<PAGE>
Pursuant to an Investment Management Agreement (the "MANAGEMENT AGREEMENT")
with the Investment Manager, the Fund has retained the Investment Manager to
provide administrative services, manage its business affairs and supervise the
investment of the Fund's assets. The Fund pays the Investment Manager monthly
compensation calculated daily by applying the following annual rates to the net
assets of the Fund determined as of the close of each business day: 0.75% of the
portion of such daily net assets not exceeding $1 billion; 0.725% of the portion
of such daily net assets exceeding $1 billion, but not exceeding $1.5 billion;
0.70% of the portion of such daily net assets exceeding $1.5 billion, but not
exceeding $2.5 billion; 0.675% of the portion of such daily net assets exceeding
$2.5 billion, but not exceeding $3.5 billion; 0.65% of the portion of such daily
net assets exceeding $3.5 billion but not exceeding $4.5 billion; and 0.625% of
the portion of such daily net assets exceeding $4.5 billion. The management fee
is allocated among the Classes pro rata based on the net assets of the Fund
attributable to each Class. The Fund accrued total compensation to the
Investment Manager of $19,649,426, $25,372,172 and $25,829,311, during the
fiscal years ended March 31, 1997, 1998 and 1999, respectively.
The Investment Manager has retained its wholly-owned subsidiary, MSDW
Services Company, to perform administrative services for the Fund.
B. PRINCIPAL UNDERWRITER
The Fund's principal underwriter is the Distributor (which has the same
address as the Investment Manager). In this capacity, the Fund's shares are
distributed by the Distributor. The Distributor has entered into a selected
dealer agreement with Dean Witter Reynolds, which through its own sales
organization sells shares of the Fund. In addition, the Distributor may enter
into similar agreements with other selected broker-dealers. The Distributor, a
Delaware corporation, is a wholly-owned subsidiary of MSDW.
The Distributor bears all expenses it may incur in providing services under
the Distribution Agreement. These expenses include the payment of commissions
for sales of the Fund's shares and incentive compensation to Financial Advisors.
The 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 FUND EXPENSES PAID BY THIRD
PARTIES
The Investment Manager supervises the investment of the Fund's assets. The
Investment Manager obtains and evaluates the information and advice relating to
the economy, securities markets, and specific securities as it considers
necessary or useful to continuously oversee the management of the assets of the
Fund in a manner consistent with its investment objectives.
Under the terms of the Management Agreement, the Investment Manager also
maintains certain of the Fund's books and records and furnishes, at its own
expense, the office space, facilities, equipment, clerical help, bookkeeping and
certain legal services as the Fund may reasonably require in the conduct of its
business, including the preparation of prospectuses, proxy statements and
reports required to be filed with federal and state securities commissions
(except insofar as the participation or assistance of independent accountants
and attorneys is, in the opinion of the Investment Manager, necessary or
22
<PAGE>
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.
Expenses not expressly assumed by the Investment Manager under the
Management Agreement or by the Distributor, will be paid by the Fund. These
expenses will be allocated among the four Classes of shares pro rata based on
the net assets of the Fund attributable to each Class, except as described
below. Such expenses include, but are not limited to: expenses of the Plan of
Distribution pursuant to Rule 12b-1; charges and expenses of any registrar,
custodian, stock transfer and dividend disbursing agent; brokerage commissions;
taxes; engraving and printing share certificates; registration costs of the Fund
and its shares under federal and state securities laws; the cost and expense of
printing, including typesetting, and distributing prospectuses of the Fund and
supplements thereto to the Fund's shareholders; all expenses of shareholders'
and Trustees' meetings and of preparing, printing and mailing of proxy
statements and reports to shareholders; fees and travel expenses of Trustees or
members of any advisory board or committee who are not employees of the
Investment Manager or any corporate affiliate of the Investment Manager; all
expenses incident to any dividend, withdrawal or redemption options; charges and
expenses of any outside service used for pricing of the Fund's shares; fees and
expenses of legal counsel, including counsel to the Trustees who are not
interested persons of the Fund or of the Investment Manager (not including
compensation or expenses of attorneys who are employees of the Investment
Manager); fees and expenses of the Fund's independent 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 Investment Manager is not liable to the Fund or any
of its investors for any act or omission by the Investment Manager or for any
losses sustained by the Fund or its investors.
The Management Agreement will remain in effect from year to year provided
continuance of the Management Agreement is approved at least annually by the
vote of the holders of a majority, as defined in the Investment Company Act, of
the outstanding shares of the Fund, or by the Trustees; provided that in either
event such continuance is approved annually by the vote of a majority of the
Trustees who are not parties to the Management 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
23
<PAGE>
asset value of the Fund's Class B shares redeemed since the Fund's inception
upon which a contingent deferred sales charge has been imposed or upon which
such charge has been waived; or (b) the Fund's average daily net assets of Class
B.
The Distributor also receives the proceeds of front-end sales charges
("FSCS") and of contingent deferred sales charges ("CDSCS") imposed on certain
redemptions of shares, which are separate and apart from payments made pursuant
to the Plan. The Distributor has informed the Fund that it and/or Dean Witter
Reynolds received the proceeds of CDSCs and FSCs, for the last three fiscal
years ended March 31, in approximate amounts as provided in the table below (the
Distributor did not retain any of these amounts).
<TABLE>
<CAPTION>
1999 1998 1997
------------------------ ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Class A............................ FSCs:(1) $ 86,379 FSCs: $ 183,817 FSCs: N/A(2)
CDSCs: $ 337 CDSCs: $ 4 CDSCs: N/A(2)
Class B............................ CDSCs: $ 5,108,028 CDSCs: $ 4,749,932 CDSCs: $ 3,916,777
Class C............................ CDSCs: $ 11,342 CDSCs: $ 5,208 CDSCs: N/A(5)
</TABLE>
- ------------------------------
1 FSCs apply to Class A only.
2 This Class commenced operations on July 28, 1997.
The Distributor has informed the Fund that the entire fee payable by Class A
and a portion of the fees payable by each of Class B and Class C each year
pursuant to the Plan equal to 0.25% of such Class' average daily net assets are
currently each characterized as a "service fee" under the Rules of the National
Association of Securities Dealers, Inc. (of which the Distributor is a member).
The "service fee" is a payment made for personal service and/or the maintenance
of shareholder accounts. The remaining portion of the Plan fees payable by a
Class, if any, is characterized as an "asset-based sales charge" as such is
defined by the Rules of the Association.
Under the Plan and as required by Rule 12b-1, the Trustees receive and
review promptly after the end of each calendar quarter a written report provided
by the Distributor of the amounts expended under the Plan and the purpose for
which such expenditures were made. Class B shares of the Fund accrued amounts
payable to the Distributor under the Plan, during the fiscal year ended March
31, 1999, of $31,148,040. This amount is equal to 0.88% of the average daily net
assets of Class B. For the fiscal year ended March 31, 1999, Class A and Class C
shares of the Fund accrued payments under the Plan amounting to $56,340 and
$114,981, respectively, which amounts are equal to 0.22% and 0.95% 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"), the Investment Manager compensates Financial
Advisors by paying them, from its own funds, a gross sales credit of 1.0% of the
amount sold.
With respect to Class B shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the sale
of Class B shares, currently a gross sales credit of up to 5.0% of the amount
sold (except as provided in the following sentence) and an annual residual
commission, currently a residual of up to 0.25% of the current value (not
including reinvested dividends
24
<PAGE>
or distributions) of the amount sold in all cases. In the case of Class B shares
purchased by MSDW Eligible Plans, Dean Witter Reynolds compensates its Financial
Advisors by paying them, from its own funds, a gross sales credit of 3.0% of the
amount sold.
With respect to Class C shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the sale
of Class C shares, currently a gross sales credit of up to 1.0% of the amount
sold and an annual residual commission, currently up to 1.0% of the current
value of the respective accounts for which they are the Financial Advisors of
record.
With respect to Class D shares other than shares held by participants in the
Investment Manager's mutual fund asset allocation program, the Investment
Manager compensates Dean Witter Reynolds's 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's Financial Advisors by paying them, from its own funds, an annual
residual commission, currently up to 0.10% of the current value of the
respective accounts for which they are the Financial Advisors of record (not
including accounts of participants in the Investment Manager's mutual fund asset
allocation program).
The gross sales credit is a charge which reflects commissions paid by Dean
Witter Reynolds to its Financial Advisors and Dean Witter Reynolds's
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's branch offices in connection with
the sale of Fund shares, including lease costs, the salaries and employee
benefits of operations and sales support personnel, utility costs,
communications costs and the costs of stationery and supplies; (b) the costs of
client sales seminars; (c) travel expenses of mutual fund sales coordinators to
promote the sale of Fund shares; and (d) other expenses relating to branch
promotion of Fund sales.
The distribution fee that the Distributor receives from the Fund under the
Plan, in effect, offsets distribution expenses incurred under the Plan on behalf
of the Fund and, in the case of Class B shares, opportunity costs, such as the
gross sales credit and an assumed interest charge thereon ("CARRYING CHARGE").
In the Distributor's reporting of the distribution expenses to the Fund, in the
case of Class B shares, such assumed interest (computed at the "BROKER'S CALL
RATE") has been calculated on the gross credit as it is reduced by amounts
received by the Distributor under the Plan and any contingent deferred sales
charges received by the Distributor upon redemption of shares of the Fund. No
other interest charge is included as a distribution expense in the Distributor's
calculation of its distribution costs for this purpose. The broker's call rate
is the interest rate charged to securities brokers on loans secured by
exchange-listed securities.
The Fund is authorized to reimburse expenses incurred or to be incurred in
promoting the distribution of the Fund's Class A and Class C shares and in
servicing shareholder accounts. Reimbursement will be made through payments at
the end of each month. The amount of each monthly payment may in no event exceed
an amount equal to a payment at the annual rate of 0.25%, in the case of Class
A, and 1.0%, in the case of Class C, of the average net assets of the respective
Class during the month. No interest or other financing charges, if any, incurred
on any distribution expenses on behalf of Class A and Class C will be
reimbursable under the Plan. With respect to Class A, in the case of all
expenses other than expenses representing the service fee, and, with respect to
Class C, in the case of all expenses other than expenses representing a gross
sales credit or a residual to Financial Advisors and other authorized financial
representatives, such amounts shall be determined at the beginning of each
calendar quarter by the Trustees, including, a majority of the Independent
Trustees. Expenses representing the service fee (for Class A) or a gross sales
credit or a residual to Financial Advisors and other authorized financial
representatives (for Class C) may be reimbursed without prior determination. In
the event that the Distributor proposes that monies shall be reimbursed for
other than such expenses, then in making quarterly determinations of the amounts
that may be reimbursed by the Fund, the Distributor
25
<PAGE>
will provide and the Trustees will review a quarterly budget of projected
distribution expenses to be incurred on behalf of the Fund, together with a
report explaining the purposes and anticipated benefits of incurring such
expenses. The Trustees will determine which particular expenses, and the
portions thereof, that may be borne by the Fund, and in making such a
determination shall consider the scope of the Distributor's commitment to
promoting the distribution of the Fund's Class A and Class C shares.
Each Class paid 100% of the amounts accrued under the Plan with respect to
that Class for the fiscal year ended March 31, 1999 to the Distributor. The
Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to
the Plan, $218,612,041 on behalf of Class B since the inception of the Fund. It
is estimated that this amount was spent in approximately the following ways: (i)
2.49% ($5,443,897)-- advertising and promotional expenses; (ii) 0.37%
($812,966)--printing of prospectuses for distribution to other than current
shareholders; and (iii) 97.14% ($212,355,178)--other expenses, including the
gross sales credit and the carrying charge, of which 7.66% ($16,272,611)
represents carrying charges, 34.69% ($73,655,714) represents commission credits
to Dean Witter Reynolds branch offices and other selected broker-dealers for
payments of commissions to Financial Advisors and other selected broker-dealer
representatives, 49.09% ($104,256,638) represents overhead and other branch
office distribution-related expenses, and 8.56% ($18,170,215) represents excess
distribution expenses of Dean Witter World Wide Investment Trust, the net assets
of which were combined with those of the Fund on June 8, 1998 pursuant to an
Agreement and Plan of Reorganization. The amounts accrued by Class A and a
portion of the amounts accrued by Class C under the Plan during the fiscal year
ended March 31, 1999 were service fees. The remainder of the amounts accrued by
Class C were for expenses which relate to compensation of sales personnel and
associated overhead expenses.
In the case of Class B shares, at any given time, the expenses of
distributing shares of the Fund may be more or less than the total of (i) the
payments made by the Fund pursuant to the Plan; and (ii) the proceeds of CDSCs
paid by investors upon redemption of shares. For example, if $1 million in
expenses in distributing Class B shares of the Fund had been incurred and
$750,000 had been received as described in (i) and (ii) above, the excess
expense would amount to $250,000. The Distributor has advised the Fund that in
the case of Class B shares the excess distribution expenses, including the
carrying charge designed to approximate the opportunity costs incurred by Dean
Witter Reynolds which arise from it having advanced monies without having
received the amount of any sales charges imposed at the time of sale of the
Fund's Class B shares, totaled $73,697,610 as of March 31, 1999 (the end of the
Fund's fiscal year), which was equal to 2.20% 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 broker-dealer 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 broker-dealer
representatives at the time of sale totaled $0 in the case of Class C at
December 31, 1998 (the end of the calendar year), which amount was equal to
0.00% 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
26
<PAGE>
of Class A on such date. No interest or other financing charges will be incurred
on any Class A or Class C distribution expenses incurred by the Distributor
under the Plan or on any unreimbursed expenses due to the Distributor pursuant
to the Plan.
No interested person of the Fund nor any Independent Trustee has any direct
financial interest in the operation of the Plan except to the extent that the
Distributor, the Investment Manager, Dean Witter Reynolds, MSDW Services Company
or certain of their employees may be deemed to have such an interest as a result
of benefits derived from the successful operation of the Plan or as a result of
receiving a portion of the amounts expended thereunder by the Fund.
On an annual basis, the Trustees, including a majority of the Independent
Trustees, consider whether the Plan should be continued. Prior to approving the
last continuation of the Plan, the Trustees requested and received from the
Distributor and reviewed all the information which they deemed necessary to
arrive at an informed determination. In making their determination to continue
the Plan, the Trustees considered: (1) the Fund's experience under the Plan and
whether such experience indicates that the Plan is operating as anticipated; (2)
the benefits the Fund had obtained, was obtaining and would be likely to obtain
under the Plan, including that: (a) the Plan is essential in order to give Fund
investors a choice of alternatives for payment of distribution and service
charges and to enable the Fund to continue to grow and avoid a pattern of net
redemptions which, in turn, are essential for effective investment management;
and (b) without the compensation to individual brokers and the reimbursement of
distribution and account maintenance expenses of Dean Witter Reynolds's branch
offices made possible by the 12b-1 fees, Dean Witter Reynolds could not
establish and maintain an effective system for distribution, servicing of Fund
shareholders and maintenance of shareholder accounts; and (3) what services had
been provided and were continuing to be provided under the Plan to the Fund and
its shareholders. Based upon their review, the Trustees, including each of the
Independent Trustees, 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
The Chase Manhattan Bank, One Chase Plaza, New York, New York 10005 is the
Custodian of the Fund's assets. The Custodian has contracted with various
foreign banks and depositaries to hold portfolio securities of non-U.S. issuers
on behalf of the Fund. 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.
27
<PAGE>
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036, serves as the independent accountants of the Fund. The independent
accountants are responsible for auditing the annual financial statements of the
Fund.
(3) AFFILIATED PERSONS
The Transfer Agent is an affiliate of the Investment Manager, and of the
Distributor. As Transfer Agent and Dividend Disbursing Agent, the Transfer
Agent's responsibilities include maintaining shareholder accounts, disbursing
cash dividends and reinvesting dividends, processing account registration
changes, handling purchase and redemption transactions, mailing prospectuses and
reports, mailing and tabulating proxies, processing share certificate
transactions, and maintaining shareholder records and lists. For these services,
the Transfer Agent receives a per shareholder account fee from the Fund and is
reimbursed for its out-of-pocket expenses in connection with such services.
VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
- --------------------------------------------------------------------------------
A. BROKERAGE TRANSACTIONS
Subject to the general supervision of the Trustees, the Investment Manager
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 non-affiliated dealers acting as principal for their own
accounts without a stated commission, although the price of the security usually
includes a profit to the dealer. The Fund also expects that securities will be
purchased at times in underwritten offerings where the price includes a fixed
amount of compensation, generally referred to as the underwriter's concession or
discount. Options and futures transactions will usually be effected through a
broker and a commission will be charged. On occasion, the Fund may also purchase
certain money market instruments directly from an issuer, in which case no
commissions or discounts are paid.
For the fiscal years ended March 31, 1997, 1998 and 1999, the Fund paid a
total of $5,066,393, $8,255,524 and $8,228,978, respectively, in brokerage
commissions.
B. COMMISSIONS
Pursuant to an order of the SEC, the Fund may effect principal transactions
in certain money market instruments with Dean Witter Reynolds. The Fund will
limit its transactions with Dean Witter Reynolds to U.S. Government and
government agency securities, bank money instruments (i.e., certificates of
deposit and bankers' acceptances) and commercial paper. The transactions will be
effected with Dean Witter Reynolds only when the price available from Dean
Witter Reynolds is better than that available from other dealers.
During the fiscal years ended March 31, 1997, 1998 and 1999, the Fund did
not effect any principal transactions with Dean Witter Reynolds.
Brokerage transactions in securities listed on exchanges or admitted to
unlisted trading privileges may be effected through Dean Witter Reynolds, Morgan
Stanley & Co. and other affiliated brokers and dealers. In order for an
affiliated broker or dealer to effect any portfolio transactions on an exchange
for the Fund, the commissions, fees or other remuneration received by the
affiliated broker or dealer must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
an exchange during a comparable period of time. This standard would allow the
affiliated broker or dealer to receive no more than the remuneration which would
be expected to be received by an unaffiliated broker in a commensurate
arm's-length transaction. Furthermore, the Trustees, including the Independent
Trustees, have adopted procedures which are reasonably designed to provide that
any commissions, fees or other remuneration paid to an affiliated broker or
dealer are consistent with the foregoing standard. The Fund does not reduce the
management fee it pays to the Investment Manager by any amount of the brokerage
commissions it may pay to an affiliated broker or dealer.
During the fiscal years ended March 31, 1997, 1998 and 1999, the Fund paid a
total of $169,351, $174,060 and $92,945, respectively, in brokerage commissions
to Dean Witter Reynolds. During the
28
<PAGE>
fiscal year ended March 31, 1999, the brokerage commissions paid to Dean Witter
Reynolds represented approximately 1.13% of the total brokerage commissions paid
by the Fund during the year and were paid on account of transactions having an
aggregate dollar value equal to approximately 3.11% of the aggregate dollar
value of all portfolio transactions of the Fund during the year for which
commissions were paid.
During the period June 1, 1997 through March 31, 1998 and during the fiscal
year ended March 31, 1999, the Fund paid a total of $1,211,197 and $1,498,179,
respectively, in brokerage commissions to Morgan Stanley & Co., which
broker-dealer became an affiliate of the Investment 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 March 31, 1999, the brokerage
commissions paid to Morgan Stanley & Co. represented approximately 18.21% of the
total brokerage commissions paid by the Fund for this period and were paid on
account of transactions having an aggregate dollar value equal to approximately
18.60% of the aggregate dollar value of all portfolio transactions of the Fund
during the year for which commissions were paid.
C. BROKERAGE SELECTION
The policy of the Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions. Consistent with this
policy, when securities transactions are effected on a stock exchange, the
Fund's policy is to pay commissions which are considered fair and reasonable
without necessarily determining that the lowest possible commissions are paid in
all circumstances. The Fund believes that a requirement always to seek the
lowest possible commission cost could impede effective portfolio management and
preclude the Fund and the Investment Manager from obtaining a high quality of
brokerage and research services. In seeking to determine the reasonableness of
brokerage commissions paid in any transaction, the Investment Manager relies
upon its experience and knowledge regarding commissions generally charged by
various brokers and on its judgment in evaluating the brokerage and research
services received from the broker effecting the transaction. These
determinations are necessarily subjective and imprecise, as in most cases an
exact dollar value for those services is not ascertainable.
The Fund anticipates that certain of its transactions involving foreign
securities will be effected on foreign securities exchanges. Fixed commissions
on such transactions are generally higher than negotiated commissions on
domestic transactions. There is also generally less government supervision and
regulation of foreign securities exchanges and brokers than in the United
States.
In seeking to implement the Fund's policies, the Investment Manager effects
transactions with those brokers and dealers who the Investment Manager believes
provide the most favorable prices and are capable of providing efficient
executions. If the Investment Manager believes the prices and executions are
obtainable from more than one broker or dealer, it may give consideration to
placing portfolio transactions with those brokers and dealers who also furnish
research and other services to the Fund or the Investment Manager. The services
may include, but are not limited to, any one or more of the following:
information as to the availability of securities for purchase or sale;
statistical or factual information or opinions pertaining to investment; wire
services; and appraisals or evaluations of portfolio securities. The information
and services received by the Investment Manager from brokers and dealers may be
of benefit to the Investment Manager in the management of accounts of some of
its other clients and may not in all cases benefit the Fund directly.
The Investment Manager currently serve as advisors to a number of clients,
including other investment companies, and may in the future act as investment
manager or advisor to others. It is the practice of the Investment Manager to
cause purchase and sale transactions to be allocated among the Fund and others
whose assets it manages in such manner as it deems equitable. In making such
allocations among the Fund and other client accounts, various factors may be
considered, including the respective investment objectives, the relative size of
portfolio holdings of the same or comparable securities, the availability of
cash for investment, the size of investment commitments generally held and the
opinions of the persons responsible for managing the portfolios of the Fund and
other client accounts. In the case of certain initial and secondary public
offerings, the Investment Manager utilizes a pro rata allocation process based
on the size of the Morgan Stanley Dean Witter Funds involved and the number of
shares available from the public offering.
29
<PAGE>
D. DIRECTED BROKERAGE
During the fiscal year ended March 31, 1999, the Fund paid $6,645,056 in
brokerage commissions in connection with transactions in the aggregate amount of
$2,962,395,525 to brokers because of research services provided.
E. REGULAR BROKER-DEALERS
During the fiscal year ended March 31, 1999, the Fund purchased common stock
issued by Bank America Corp., which issuer was among the ten brokers or the ten
dealers that executed transactions for or with the Fund in the largest dollar
amounts during the year.
At March 31, 1999, the Fund held bonds issued by Bank America Corp. and
Chase Manhattan with market values of $42,375,000 and $3,740,375, respectively.
VII. CAPITAL STOCK AND OTHER SECURITIES
- --------------------------------------------------------------------------------
The shareholders of the Fund are entitled to a full vote for each full share
of beneficial interest held. The Fund is authorized to issue an unlimited number
of shares of beneficial interest. All shares of beneficial interest of the Fund
are of $0.01 par value and are equal as to earnings, assets and voting
privileges.
The Fund's Declaration of Trust permits the Trustees to authorize the
creation of additional series of shares (the proceeds of which would be invested
in separate, independently managed portfolios) and additional Classes of shares
within any series. The Trustees have not presently authorized any such
additional series or Classes of shares other than as set forth in the
Prospectus.
The Fund is not required to hold annual meetings of shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the Investment Company Act or the Declaration of
Trust. Under certain circumstances, the Trustees may be removed by action of the
Trustees or by the shareholders. In addition, under certain circumstances, the
shareholders may call a meeting to remove Trustees and the Fund is required to
provide assistance in communicating with shareholders about such a meeting. The
voting rights of shareholders are not cumulative, so that holders of more than
50 percent of the shares voting can, if they choose, elect all Trustees being
selected, while the holders of the remaining shares would be unable to elect any
Trustees.
Under Massachusetts law, shareholders of a business trust may, under certain
limited circumstances, be held personally liable as partners for the obligations
of the Fund. However, the Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Fund, requires that notice
of such Fund obligations include such disclaimer, and provides for
indemnification out of the Fund's property for any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its obligations.
Given the above limitations on shareholder personal liability, and the nature of
the Fund's assets and operations, the possibility of the Fund being unable to
meet its obligations is remote and thus, in the opinion of Massachusetts counsel
to the Fund, the risk to Fund shareholders of personal liability is remote.
All of the Trustees have been elected by the shareholders of the Fund, most
recently at a Special Meeting of Shareholders held on May 21, 1997. The Trustees
themselves have the power to alter the number and the terms of office of the
Trustees (as provided for in the Declaration of Trust), and they may at any time
lengthen or shorten their own terms or make their terms of unlimited duration
and appoint their own successors, provided that always at least a majority of
the Trustees has been elected by the shareholders of the Fund.
30
<PAGE>
VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
- --------------------------------------------------------------------------------
A. PURCHASE OF SHARES
Information concerning how Fund shares are offered to the public (and how
they are redeemed and exchanged) is provided in the Fund's PROSPECTUS.
TRANSFER AGENT AS AGENT. With respect to the redemption or repurchase of
Fund shares, the application of proceeds to the purchase of new shares in the
Fund or any other Morgan Stanley Dean Witter Funds and the general
administration of the exchange privilege, the Transfer Agent acts as agent for
the Distributor and for the shareholder's authorized broker-dealer, if any, in
the performance of such functions. With respect to exchanges, redemptions or
repurchases, the Transfer Agent shall be liable for its own negligence and not
for the default or negligence of its correspondents or for losses in transit.
The Fund shall not be liable for any default or negligence of the Transfer
Agent, the Distributor or any authorized broker-dealer.
The Distributor and any authorized broker-dealer have appointed the Transfer
Agent to act as their agent in connection with the application of proceeds of
any redemption of Fund shares to the purchase of shares of any other Morgan
Stanley Dean Witter Fund and the general administration of the exchange
privilege. No commission or discounts will be paid to the Distributor or any
authorized broker-dealer for any transaction pursuant to the exchange privilege.
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.
Investment Management and Other Services -- E. Rule 12b-1 Plan."
The price of Fund shares, called "NET ASSET VALUE," is based on the value of
the Fund's portfolio securities. Net asset value per share of each Class is
calculated by dividing the value of the portion of the Fund's securities and
other assets attributable to that Class, less the liabilities attributable to
that Class, by the number of shares of that Class outstanding. The assets of
each Class of shares are invested in a single portfolio. The net asset value of
each Class, however, will differ because the Classes have different ongoing
fees.
In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange 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 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.
31
<PAGE>
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
Directors.
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.
Generally, trading in foreign securities, as well as corporate bonds, U.S.
Government securities and money market instruments, is substantially completed
each day at various times prior to the close of the New York Stock Exchange. The
values of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events which may affect the values of such securities and such
exchange rates may occur between the times at which they are determined and the
close of the New York Stock Exchange and will therefore not be reflected in the
computation of the Fund's net asset value. If events that may affect the value
of such securities occur during such period, then these securities may be valued
at their fair value as determined in good faith under procedures established by
and under the supervision of the Trustees.
IX. TAXATION OF THE FUND AND SHAREHOLDERS
- --------------------------------------------------------------------------------
The Fund generally will make two basic types of distributions: ordinary
dividends and long-term capital gain distributions. These two types of
distributions are reported differently on a shareholder's income tax return and
they are also subject to different rates of tax. The tax treatment of the
investment activities of the Fund will affect the amount and timing and
character of the distributions made by the Fund. Tax issues relating to the Fund
are not generally a consideration for shareholders such as tax exempt entities
and tax-advantaged retirement vehicles such as an IRA or 401(k) plan.
Shareholders are urged to consult their own tax professionals regarding specific
questions as to federal, state or local taxes.
INVESTMENT COMPANY TAXATION. The Fund intends to remain qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986. As such, the Fund will not be subject to federal income tax on its net
investment income and capital gains, if any, to the extent that it distributes
such income and capital gains to its shareholders.
The Fund generally intends to distribute sufficient income and gains so that
the Fund will not pay corporate income tax on its earnings. The Fund also
generally intends to distribute to its shareholders in each calendar year a
sufficient amount of ordinary income and capital gains to avoid the imposition
of a 4% excise tax. However, the Fund may instead determine to retain all or
part of any net long-term capital gains in any year for reinvestment. In such
event, the Fund will pay federal income tax (and possibly excise tax) on such
retained gains.
Gains or losses on sales of securities by the Fund will be long-term capital
gains or losses if the securities have a tax holding period of more than one
year. 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
32
<PAGE>
and futures transactions, various tax rules may accelerate or defer recognition
of 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.
Under certain tax rules, the Fund may be required to accrue a portion of any
discount at which certain securities are purchased as income each year even
though the Fund receives no payments in cash on the security during the year. To
the extent that the Fund invests in such securities, it would be required to pay
out such accrued discount as an income distribution in each year in order to
avoid taxation at the Fund level. Such distributions will be made from the
available cash of the Fund or by liquidation of portfolio securities if
necessary. If a distribution of cash necessitates the liquidation of portfolio
securities, the Investment Manager will select which securities to sell. The
Fund may realize a gain or loss from such sales. In the event the Fund realizes
net capital gains from such transactions, its shareholders may receive a larger
capital gain distribution, if any, than they would in the absence of such
transactions.
TAXATION OF DIVIDENDS AND DISTRIBUTIONS. Shareholders normally will have to
pay federal income taxes, and any state and/or local income taxes, on the
dividends and other distributions they receive from the Fund. Such dividends and
distributions, to the extent that they are derived from net investment income or
short-term capital gains, are taxable to the shareholder as ordinary income
regardless of whether the shareholder receives such payments in additional
shares or in cash.
Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder has
held the Fund's shares and regardless of whether the distribution is received in
additional shares or in cash. The Taxpayer Relief Act of 1997 reduced the
maximum tax on long-term capital gains applicable to individuals from 28% to
20%.
Shareholders are generally taxed on any ordinary dividend or capital gain
distributions from the Fund in the year they are actually distributed. However,
if any such dividends or distributions are declared in October, November or
December and paid in January then such amounts will be treated for tax purposes
as received by the shareholders on December 31, to shareholders of record of
such month.
Shareholders who are not citizens or residents of the United States and
certain foreign entities may be subject to withholding of United States tax on
distributions made by the Fund of investment income and short term capital
gains.
After the end of each calendar year, shareholders will be sent full
information on their dividends and capital gain distributions for tax purposes,
including the portion taxable as ordinary income, the portion taxable as
long-term capital gains and the amount of any dividends eligible for the federal
dividends received deduction for corporations.
PURCHASES AND REDEMPTIONS AND EXCHANGES OF FUND SHARES. Any dividend or
capital gains distribution received by a shareholder from any investment company
will have the effect of reducing the net asset value of the shareholder's stock
in that company by the exact amount of the dividend or capital gains
distribution. Furthermore, such dividends and capital gains distributions are
subject to federal income taxes. If the net asset value of the shares should be
reduced below a shareholder's cost as a result of the payment of dividends or
the distribution of realized long-term capital gains, such payment or
distribution would be in part a return of the shareholder's investment but
nonetheless would be taxable to the shareholder. Therefore, an investor should
consider the tax implications of purchasing Fund shares immediately prior to a
distribution record date.
In general, a sale of shares results in capital gain or loss, and for
individual shareholders, is taxable at a federal rate dependent upon the length
of time the shares were held. A redemption of a shareholder's Fund shares is
normally treated as a sale for tax purposes. Fund shares held for a period of
one year or less will, for tax purposes, generally result in short-term gains or
losses and those held for more than one year generally result in long-term gain
or loss. Any loss realized by shareholders upon a
33
<PAGE>
redemption of shares within six months of the date of their purchase will be
treated as a long-term capital loss to the extent of any distributions of net
long-term capital gains with respect to such shares during the six-month period.
Gain or loss on the sale or redemption of shares in the Fund is measured by
the difference between the amount received and the tax basis of the shares.
Shareholders should keep records of investments made (including shares acquired
through reinvestment of dividends and distributions) so they can compute the tax
basis of their shares. Under certain circumstances a shareholder may compute and
use an average cost basis in determining the gain or loss on the sale or
redemption of shares.
Exchanges of Fund shares for shares of another fund, including shares of
other Morgan Stanley Dean Witter Funds, are also subject to similar tax
treatment. Such an exchange is treated for tax purposes as a sale of the
original shares in the first fund, followed by the purchase of shares in the
second fund.
If a shareholder realizes a loss on the redemption or exchange of a fund's
shares and reinvests in that fund's shares within 30 days before or after the
redemption or exchange, the transactions may be subject to the "wash sale"
rules, resulting in a postponement of the recognition of such loss for tax
purposes.
X. UNDERWRITERS
- --------------------------------------------------------------------------------
The Fund's shares are offered to the public on a continuous basis. The
Distributor, as the principal underwriter of the shares, has certain obligations
under the Distribution Agreement concerning the distribution of the shares.
These obligations and the compensation the Distributor receives are described
above in the sections titled "Principal Underwriter" and "Rule 12b-1 Plans."
XI. CALCULATION OF PERFORMANCE DATA
- --------------------------------------------------------------------------------
From time to time, the Fund may quote its "total return" in advertisements
and sales literature. These figures are computed separately for Class A, Class
B, Class C and Class D shares. The Fund's "average annual total return"
represents an annualization of the Fund's total return over a particular period
and is computed by finding the annual percentage rate which will result in the
ending redeemable value of a hypothetical $1,000 investment made at the
beginning of a one, five or ten year period, or for the period from the date of
commencement of operations, if shorter than any of the foregoing. The ending
redeemable value is reduced by any contingent deferred sales charge ("CDSC") at
the end of the one, five, ten year or other period. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involves a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment (which in the case of Class A shares is reduced by the Class A
initial sales charge), taking a root of the quotient (where the root is
equivalent to the number of years in the period) and subtracting 1 from the
result. The average annual total returns of Class B for the one year and five
year periods ended March 31, 1999 and for the period June 30, 1993 (commencement
of operations) through March 31, 1999 were -4.15%, 12.43% and 12.49%,
respectively. The average annual total returns of Class A for the fiscal year
ended March 31, 1999 and for the period July 28, 1997 (inception of the class)
through March 31, 1999 were -4.21% and 0.79%, respectively. The average annual
total returns of Class C for the fiscal year ended March 31, 1999 and for the
period July 28, 1997 (inception of the class) through March 31, 1999 were -0.54%
and 3.34%, respectively. The average annual total returns of Class D for the
fiscal year ended March 31, 1999 and for the period July 28, 1997 (inception of
the class) through March 31, 1999 were 1.27% and 4.31%, 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
34
<PAGE>
example, the average annual total return of the Fund may be calculated in the
manner described above, but without deduction for any applicable sales charge.
Based on this calculation, the average annual total returns of Class B for the
one year and five year periods ended March 31, 1999 and for the period June 30,
1993 (commencement of operations) through March 31, 1999, were 0.42%, 12.68% and
12.59%, respectively. The average annual total returns of Class A for the year
ended March 31, 1999 and for the period July 28, 1997 through March 31, 1999
were 1.10% and 4.09%, respectively. The average annual total returns of Class C
for the year ended March 31, 1999 and for the period July 28, 1997 through March
31, 1999 were 0.37% and 3.34%, respectively. The average annual total returns of
Class D for the year ended March 31, 1999 and for the period July 28, 1997
through March 31, 1999 were 1.27% and 4.31%, respectively.
In addition, the Fund may compute its aggregate total return for each Class
for specified periods by determining the aggregate percentage rate which will
result in the ending value of a hypothetical $1,000 investment made at the
beginning of the period. For the purpose of this calculation, it is assumed that
all dividends and distributions are reinvested. The formula for computing
aggregate total return involves a percentage obtained by dividing the ending
value (without reduction for any sales charge) by the initial $1,000 investment
and subtracting 1 from the result. Based on the foregoing calculation, the total
returns of Class B for the one year and five year periods ended March 31, 1999
and for the period June 30, 1993 (commencement of operations) through March 31,
1999, were 0.42%, 81.61% and 97.76%, respectively. The total returns of Class A
for the year ended March 31, 1999 and for the period July 28, 1997 through March
31, 1999 were 1.10% and 6.94%, respectively. The total returns of Class C for
the year ended March 31, 1999 and for the period July 28, 1997 through March 31,
1999 were 0.37% and 5.65%, respectively. The total returns of Class D for the
year ended March 31, 1999 and for the period July 28, 1997 through March 31,
1999 were 1.27% and 7.31%, respectively.
The Fund may also advertise the growth of hypothetical investments of
$10,000, $50,000 and $100,000 in each Class of shares of the Fund by adding 1 to
the Fund's aggregate total return to date (expressed as a decimal and without
taking into account the effect of any applicable CDSC) and multiplying by
$9,475, $48,000 and $97,000 in the case of Class A (investments of $10,000,
$50,000 and $100,000 adjusted for the initial sales charge) or by $10,000,
$50,000 and $100,000 in the case of each of Class B, Class C and Class D, as the
case may be. Investments of $10,000, $50,000 and $100,000 in each Class at
inception of the Class would have grown to the following amounts at March 31,
1999:
<TABLE>
<CAPTION>
INVESTMENT AT INCEPTION OF:
INCEPTION ---------------------------------
CLASS DATE: $10,000 $50,000 $100,000
- ----------------------------------- -------- ------- -------- --------
<S> <C> <C> <C> <C>
Class A............................ 7/28/97 $10,132 $ 51,331 $103,732
Class B............................ 6/30/93 19,776 98,880 197,760
Class C............................ 7/28/97 10,565 52,825 105,650
Class D............................ 7/28/97 10,731 53,655 107,310
</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
March 31, 1999 are included herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, and on the authority of
that 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 GLOBAL DIVIDEND GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS (98.6%)
AUSTRALIA (2.5%)
BUILDING MATERIALS
8,000,000 Pioneer International Ltd.......................................................... $ 15,887,880
--------------
CONTAINERS/PACKAGING
3,700,000 Amcor Ltd.......................................................................... 18,546,435
--------------
INTERNATIONAL BANKS
2,700,000 Australia & New Zealand Banking Group Ltd.......................................... 19,615,568
--------------
OIL & GAS PRODUCTION
5,700,000 Santos Ltd......................................................................... 16,491,924
--------------
PRECIOUS METALS
19,000,000 Normandy Mining Ltd................................................................ 15,189,930
--------------
TOTAL AUSTRALIA.................................................................... 85,731,737
--------------
CANADA (2.5%)
ALUMINUM
670,000 Alcan Aluminium Ltd................................................................ 17,260,942
--------------
CANADIAN OIL & GAS
1,000,000 Imperial Oil Ltd................................................................... 19,031,830
--------------
INTERNATIONAL BANKS
400,000 Toronto-Dominion Bank.............................................................. 18,328,912
--------------
MOVIES/ENTERTAINMENT
14,174 Seagram Co., Ltd................................................................... 711,990
--------------
MULTI-SECTOR COMPANIES
1,165,000 EdperBrascan Corp. (Class A)....................................................... 13,828,581
--------------
OIL/GAS TRANSMISSION
409,100 Enbridge Inc....................................................................... 18,135,501
--------------
TOTAL CANADA....................................................................... 87,297,756
--------------
FRANCE (6.7%)
AUTO PARTS: O.E.M.
1,200 Valeo S.A.......................................................................... 93,742
--------------
AUTOMOTIVE AFTERMARKET
450,000 Compagnie Generale des Etablissements Michelin (B Shares).......................... 20,146,556
--------------
BUILDING MATERIALS
193,000 Lafarge S.A........................................................................ 17,364,451
--------------
CABLE TELEVISION
10,960 Canal Plus......................................................................... 3,206,252
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CONTAINERS/PACKAGING
350,000 Compagnie Generale d'Industrie et de Participations................................ $ 17,291,181
--------------
DIVERSIFIED MANUFACTURING
135,000 Compagnie de Saint-Gobain.......................................................... 21,382,987
--------------
ELECTRICAL PRODUCTS
150,000 Alcatel Alsthom.................................................................... 17,213,062
--------------
ENGINEERING & CONSTRUCTION
280 Vivendi............................................................................ 68,757
--------------
FARMING/SEEDS/MILLING
130,000 Eridania Beghin-Say S.A............................................................ 19,218,290
--------------
HOTELS/RESORTS
11,900 Accor S.A.......................................................................... 2,949,118
--------------
INTEGRATED OIL COMPANIES
160,000 Elf Aquitaine S.A.................................................................. 21,687,920
--------------
INTERNATIONAL BANKS
220,000 Banque Nationale de Paris.......................................................... 19,106,230
20,000 Credit Commercial de France........................................................ 1,841,448
110,000 Societe Generale................................................................... 21,097,450
--------------
42,045,128
--------------
MILITARY/GOV'T/TECHNICAL
3,000 Thomson CSF........................................................................ 91,480
--------------
MULTI-LINE INSURANCE
42,400 AXA................................................................................ 5,610,241
--------------
MULTI-SECTOR COMPANIES
1,100 Compagnie Financiere de Paribas.................................................... 122,555
35,000 Societe Eurafrance S.A............................................................. 16,782,063
--------------
16,904,618
--------------
OIL REFINING/MARKETING
170,000 Total S.A. (B Shares).............................................................. 20,900,268
--------------
TELECOMMUNICATIONS
66,400 France Telecom S.A. (ADR).......................................................... 5,357,650
--------------
TOTAL FRANCE....................................................................... 231,531,701
--------------
GERMANY (5.7%)
APPAREL
11,500 Hugo Boss AG (Pref.)............................................................... 15,117,325
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
36
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
DIVERSIFIED MANUFACTURING
730,000 MAN AG............................................................................. $ 20,411,621
--------------
ELECTRICAL PRODUCTS
270,900 Siemens AG......................................................................... 18,068,285
--------------
ENGINEERING & CONSTRUCTION
750,000 Bilfinger & Berger Bau AG.......................................................... 14,061,375
--------------
INTERNATIONAL BANKS
340,000 Deutsche Bank Aktiengesellschaft................................................... 17,456,578
--------------
MAJOR CHEMICALS
500,000 BASF AG............................................................................ 18,263,625
460,000 Bayer AG........................................................................... 17,199,055
--------------
35,462,680
--------------
MOTOR VEHICLES
2,840 Bayerische Motoren Werke (BMW) AG.................................................. 1,857,481
568 Bayerische Motoren Werke (BMW) AG (New)*........................................... 361,704
200,000 DaimlerChrylser AG................................................................. 17,369,300
45,390 DaimlerChrysler AG (ADR)*.......................................................... 3,895,029
--------------
23,483,514
--------------
MULTI-SECTOR COMPANIES
390,000 RWE AG............................................................................. 17,229,225
1,000,000 Thyssen Krupp AG................................................................... 19,718,250
325,000 VEBA AG............................................................................ 17,054,131
--------------
54,001,606
--------------
TOTAL GERMANY...................................................................... 198,062,984
--------------
HONG KONG (1.8%)
MULTI-SECTOR COMPANIES
286,000 Hutchison Whampoa, Ltd............................................................. 2,251,387
--------------
REAL ESTATE
2,000,000 Cheung Kong (Holdings) Ltd......................................................... 15,227,772
3,100,000 Henderson Land Development Co., Ltd................................................ 15,081,946
--------------
30,309,718
--------------
TELECOMMUNICATIONS
8,000,000 Hong Kong Telecommunications Ltd................................................... 15,743,967
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
UTILITIES
2,998,000 CLP Holdings Ltd................................................................... $ 14,392,257
--------------
TOTAL HONG KONG.................................................................... 62,697,329
--------------
ITALY (2.3%)
INTEGRATED OIL COMPANIES
3,200,000 Ente Nazionale Idrocarburi SpA..................................................... 20,343,200
--------------
INTERNATIONAL BANKS
36,000 Banca Commerciale Italiana......................................................... 294,804
1,150,000 Istituto Bancario San Paolo di Torino SpA.......................................... 18,648,831
--------------
18,943,635
--------------
SPECIALTY FOODS/CANDY
18,000,000 Montedison SpA..................................................................... 18,619,200
--------------
TELECOMMUNICATIONS
276,000 Telecom Italia SpA (Ordinary Shares)............................................... 2,926,318
3,050,000 Telecom Italia SpA (Savings Shares)................................................ 18,075,062
--------------
21,001,380
--------------
TOTAL ITALY........................................................................ 78,907,415
--------------
JAPAN (17.3%)
AIR FREIGHT/DELIVERY SERVICES
2,480,000 Yamato Transport Co., Ltd.......................................................... 40,373,064
--------------
ALCOHOLIC BEVERAGES
3,000,000 Kirin Brewery Co., Ltd............................................................. 35,050,505
--------------
AUTO PARTS: O.E.M.
4,000 Bridgestone Corp................................................................... 101,683
--------------
CONSUMER ELECTRONICS/APPLIANCES
3,400,000 Sharp Corp......................................................................... 35,774,411
400,000 Sony Corp.......................................................................... 36,868,687
--------------
72,643,098
--------------
DIVERSIFIED COMMERCIAL SERVICES
20,000 Secom Co........................................................................... 1,888,889
--------------
DIVERSIFIED ELECTRONIC PRODUCTS
675,000 Kyocera Corp....................................................................... 36,250,000
1,900,000 Matsushita Electric Industrial Co., Ltd............................................ 36,944,444
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
37
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
3,300,000 NEC Corp........................................................................... $ 39,583,333
--------------
112,777,777
--------------
ELECTRONIC COMPONENTS
450,000 TDK Corp........................................................................... 36,325,758
--------------
HOME BUILDING
3,300,000 Sekisui House Ltd.................................................................. 35,000,000
--------------
MAJOR PHARMACEUTICALS
955,000 Takeda Chemical Industries......................................................... 36,897,727
--------------
MOTOR VEHICLES
850,000 Honda Motor Co..................................................................... 38,278,620
1,300,000 Toyota Motor Corp.................................................................. 37,533,670
--------------
75,812,290
--------------
MULTI-SECTOR COMPANIES
3,500,000 Matsushita Electric Works, Ltd..................................................... 36,325,758
--------------
OTHER PHARMACEUTICALS
1,250,000 Taisho Pharmaceutical Co., Ltd..................................................... 38,930,976
--------------
OTHER TELECOMMUNICATIONS
117 Nippon Telegraph & Telephone Corp.................................................. 1,142,424
--------------
RECREATIONAL PRODUCTS/TOYS
420,000 Nintendo Co., Ltd.................................................................. 36,131,313
--------------
SEMICONDUCTORS
1,000 Rohm Co., Ltd...................................................................... 119,108
--------------
TOBACCO
3,800 Japan Tobacco, Inc................................................................. 36,784,512
--------------
TOTAL JAPAN........................................................................ 596,304,882
--------------
NETHERLANDS (3.7%)
AIRLINES
645,000 KLM Royal Dutch Air Lines NV....................................................... 18,069,675
--------------
BOOKS/MAGAZINES
61,800 VNU NV............................................................................. 2,403,881
--------------
DIVERSIFIED ELECTRONIC PRODUCTS
275,000 Koninklijke (Royal) Philips Electronics NV......................................... 22,356,778
--------------
DIVERSIFIED FINANCIAL SERVICES
2,328 ING Groep NV....................................................................... 128,055
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
FINANCIAL PUBLISHING/SERVICES
12,298 Wolters Kluwer NV.................................................................. $ 2,226,184
--------------
FOOD CHAINS
40,319 Koninklijke Ahold NV............................................................... 1,542,252
--------------
INTERNATIONAL BANKS
900,000 ABN-AMRO Holding NV................................................................ 18,716,175
--------------
LIFE INSURANCE
47,108 Aegon NV........................................................................... 4,291,662
--------------
MAJOR CHEMICALS
50,600 Akzo Nobel NV...................................................................... 1,870,087
--------------
METALS FABRICATIONS
607,000 Koninklijke Hoogovens NV........................................................... 20,079,105
--------------
OILFIELD SERVICES/EQUIPMENT
148 Fugro NV........................................................................... 3,429
--------------
SPECIALTY CHEMICALS
210,000 DSM NV............................................................................. 18,000,176
--------------
TELECOMMUNICATIONS
450,000 KPN NV............................................................................. 17,867,644
--------------
TOTAL NETHERLANDS.................................................................. 127,555,103
--------------
SPAIN (1.6%)
FOOD CHAINS
5,100 Centros Comerciales Pryca S.A...................................................... 102,267
--------------
INTERNATIONAL BANKS
275,000 Banco Popular Espanol S.A.......................................................... 17,660,225
--------------
OIL REFINING/MARKETING
360,000 Repsol S.A......................................................................... 18,502,830
--------------
TELECOMMUNICATIONS
50,071 Telefonica S.A..................................................................... 2,119,754
--------------
UTILITIES
675,000 Endesa S.A......................................................................... 17,004,566
--------------
TOTAL SPAIN........................................................................ 55,389,642
--------------
SWEDEN (3.4%)
CONSUMER ELECTRONICS/APPLIANCES
1,000,000 Electrolux AB (Series B)........................................................... 19,767,400
--------------
ENGINEERING & CONSTRUCTION
545,000 Skanska AB (B Shares).............................................................. 18,506,167
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
38
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INDUSTRIAL MACHINERY/COMPONENTS
875,000 Sandvik AB (B Shares).............................................................. $ 17,402,588
--------------
INTERNATIONAL BANKS
2,450,000 Nordbanken Holding AB.............................................................. 13,964,516
--------------
LIFE INSURANCE
293,500 Skandia Forsakrings AB............................................................. 5,445,797
--------------
MAJOR PHARMACEUTICALS
80,000 Astra AB (B Shares)................................................................ 1,809,384
--------------
MOTOR VEHICLES
648,000 Volvo AB (B Shares)................................................................ 16,934,962
--------------
PACKAGE GOODS/COSMETICS
777,900 Svenska Cellulosa AB............................................................... 16,839,296
--------------
REAL ESTATE
300,000 Drott AB (B Shares)*............................................................... 2,637,674
--------------
TELECOMMUNICATIONS EQUIPMENT
101,000 Ericsson (L.M.) Telephone Co. AB (Series "B" Free)................................. 2,449,702
--------------
TOTAL SWEDEN....................................................................... 115,757,486
--------------
SWITZERLAND (4.9%)
ACCIDENT & HEALTH INSURANCE
11,500 Schweizerische Rueckversicherungs-Gesellschaft (Registered Shares)................. 25,427,019
--------------
INTERNATIONAL BANKS
8,500 Credit Suisse Group................................................................ 1,583,851
92,000 UBS AG (Registered)................................................................ 28,881,987
--------------
30,465,838
--------------
MAJOR PHARMACEUTICALS
2,315 Novartis AG........................................................................ 3,752,576
16,000 Novartis AG - Bearer............................................................... 26,032,946
350 Roche Holdings AG.................................................................. 4,265,123
--------------
34,050,645
--------------
OTHER TELECOMMUNICATIONS
70,000 Swisscom AG (Registered Shares)*................................................... 27,315,690
--------------
PACKAGED FOODS
14,500 Nestle S.A......................................................................... 26,323,589
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TOBACCO
16,500 Compagnie Financiere Richemont AG (Series A)....................................... $ 27,403,457
--------------
TOTAL SWITZERLAND.................................................................. 170,986,238
--------------
UNITED KINGDOM (11.4%)
AEROSPACE
15,984 British Aerospace PLC.............................................................. 106,639
303,268 Rolls-Royce PLC.................................................................... 1,280,437
--------------
1,387,076
--------------
AIRLINES
3,325,000 British Airways PLC................................................................ 23,013,630
--------------
ALCOHOLIC BEVERAGES
1,600,000 Bass PLC........................................................................... 21,697,236
129,600 Diageo PLC......................................................................... 1,453,599
--------------
23,150,835
--------------
CLOTHING/SHOE/ACCESSORY STORES
2,040,000 Next PLC........................................................................... 23,308,091
--------------
ENVIRONMENTAL SERVICES
10,200,000 Cookson Group PLC.................................................................. 23,605,607
--------------
INTEGRATED OIL COMPANIES
314,073 Shell Transport & Trading Co. PLC.................................................. 2,109,291
--------------
INTERNATIONAL BANKS
117,178 Abbey National PLC................................................................. 2,405,724
59,632 HSBC Holdings PLC.................................................................. 1,920,017
1,050,000 National Westminster Bank PLC...................................................... 24,162,831
1,200,000 Royal Bank of Scotland Group PLC................................................... 26,067,624
--------------
54,556,196
--------------
LIFE INSURANCE
85,621 Prudential Corp. PLC............................................................... 1,114,174
--------------
MAJOR PHARMACEUTICALS
108,846 Glaxo Wellcome PLC................................................................. 3,636,152
--------------
MOVIES/ENTERTAINMENT
6,470,000 Rank Group PLC..................................................................... 23,589,741
--------------
MULTI-LINE INSURANCE
67,077 CGU PLC............................................................................ 1,043,113
144,192 Royal & Sun Alliance Insurance Group PLC........................................... 1,358,176
--------------
2,401,289
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
39
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MULTI-SECTOR COMPANIES
185,441 General Electric Co. PLC........................................................... $ 1,669,011
2,700,000 Hanson PLC......................................................................... 24,170,083
251,400 Tomkins PLC........................................................................ 929,776
--------------
26,768,870
--------------
NON - U.S. UTILITIES
3,000,000 National Grid Group PLC............................................................ 21,839,854
2,800,000 National Power PLC................................................................. 21,523,194
--------------
43,363,048
--------------
OTHER METALS/MINERALS
1,750,000 Rio Tinto PLC...................................................................... 24,238,974
--------------
OTHER SPECIALTY STORES
128,000 Kingfisher PLC..................................................................... 1,610,984
--------------
PACKAGE GOODS/COSMETICS
7,000 Reckitt & Colman PLC............................................................... 75,636
--------------
PAPER
11,000,000 Arjo Wiggins Appleton PLC.......................................................... 24,817,100
--------------
STEEL/IRON ORE
11,600,000 British Steel PLC.................................................................. 23,880,818
--------------
TELECOMMUNICATIONS
277,921 British Telecommunications PLC..................................................... 4,527,963
--------------
TOBACCO
2,400,000 British American Tobacco PLC....................................................... 19,956,816
--------------
WATER SUPPLY
1,550,000 Hyder PLC.......................................................................... 19,532,992
1,350,000 Hyder PLC (Pref.)*................................................................. 2,670,457
1,550,000 Severn Trent PLC................................................................... 20,969,241
--------------
43,172,690
--------------
TOTAL UNITED KINGDOM............................................................... 394,284,981
--------------
UNITED STATES (34.8%)
AEROSPACE
630,000 Northrop Grumman Corp.............................................................. 37,721,250
--------------
ALUMINUM
1,000,000 Alcoa Inc.......................................................................... 41,187,500
--------------
AUTOMOTIVE AFTERMARKET
825,000 Goodyear Tire & Rubber Co.......................................................... 41,095,312
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
BEVERAGES - NON-ALCOHOLIC
77,700 PepsiCo, Inc....................................................................... $ 3,044,869
--------------
BUILDING MATERIALS/DIY CHAINS
86,000 Home Depot, Inc. (The)............................................................. 5,353,500
--------------
COMPUTER HARDWARE
86,000 Compaq Computer Corp............................................................... 2,725,125
2,300 Hewlett-Packard Co................................................................. 155,969
235,000 International Business Machines Corp............................................... 41,653,750
--------------
44,534,844
--------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS
1,030,000 Deere & Co......................................................................... 39,783,750
--------------
CONTAINERS/PACKAGING
1,430,000 Crown Cork & Seal Co., Inc......................................................... 40,844,375
--------------
DEPARTMENT STORES
900,000 Sears, Roebuck & Co................................................................ 40,668,750
--------------
DISCOUNT CHAINS
620,000 Dayton Hudson Corp................................................................. 41,307,500
--------------
DIVERSIFIED ELECTRONIC PRODUCTS
39,000 Honeywell, Inc..................................................................... 2,956,687
--------------
DIVERSIFIED FINANCIAL SERVICES
98,500 Citigroup Inc...................................................................... 6,291,687
--------------
DIVERSIFIED MANUFACTURING
550,000 Minnesota Mining & Manufacturing Co................................................ 38,912,500
44,000 Trinity Industries, Inc............................................................ 1,292,500
--------------
40,205,000
--------------
ELECTRIC UTILITIES
701,800 FPL Group, Inc..................................................................... 37,370,850
1,055,000 GPU, Inc........................................................................... 39,364,687
--------------
76,735,537
--------------
ENGINEERING & CONSTRUCTION
1,430,000 Fluor Corp......................................................................... 38,610,000
--------------
FINANCE COMPANIES
935,000 Associates First Capital Corp. (Class A)........................................... 42,075,000
47,500 Fannie Mae......................................................................... 3,289,375
--------------
45,364,375
--------------
FOOD CHAINS
685,000 Albertson's, Inc................................................................... 37,204,062
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
40
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INTEGRATED OIL COMPANIES
1,800 Atlantic Richfield Co.............................................................. $ 131,400
445,000 Chevron Corp....................................................................... 39,354,687
42,200 Exxon Corp......................................................................... 2,977,737
37,500 Mobil Corp......................................................................... 3,300,000
47,000 Texaco, Inc........................................................................ 2,667,250
--------------
48,431,074
--------------
LIFE INSURANCE
1,200,000 Conseco, Inc....................................................................... 37,050,000
--------------
MAJOR BANKS
600,000 BankAmerica Corp................................................................... 42,375,000
52,000 BankBoston Corp.................................................................... 2,252,250
46,000 Chase Manhattan Corp. (The)........................................................ 3,740,375
1,250,000 KeyCorp............................................................................ 37,890,625
--------------
86,258,250
--------------
MAJOR CHEMICALS
425,000 Dow Chemical Co.................................................................... 39,604,688
63,700 Monsanto Co........................................................................ 2,926,219
--------------
42,530,907
--------------
MAJOR PHARMACEUTICALS
71,000 American Home Products Corp........................................................ 4,632,750
650,000 Bristol-Myers Squibb Co............................................................ 41,803,125
36,200 Johnson & Johnson.................................................................. 3,391,488
66,000 Warner-Lambert Co.................................................................. 4,368,375
--------------
54,195,738
--------------
MEDIA CONGLOMERATES
82,200 Walt Disney Co..................................................................... 2,558,475
--------------
MID - SIZED BANKS
80,600 First Tennessee National Corp...................................................... 2,951,975
--------------
MILITARY/GOV'T/TECHNICAL
38,000 General Motors Corp. (Class H)*.................................................... 1,916,625
--------------
MOTOR VEHICLES
735,000 Ford Motor Co...................................................................... 41,711,250
--------------
MULTI-LINE INSURANCE
36,000 American International Group, Inc.................................................. 4,342,500
--------------
MULTI-SECTOR COMPANIES
33,000 General Electric Co................................................................ 3,650,625
1,400,000 Tenneco, Inc....................................................................... 39,112,500
--------------
42,763,125
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
NATURAL GAS
770,000 Consolidated Natural Gas Co........................................................ $ 37,489,375
--------------
OIL REFINING/MARKETING
925,000 Ashland, Inc....................................................................... 37,867,188
--------------
OILFIELD SERVICES/EQUIPMENT
1,800 Schlumberger, Ltd.................................................................. 108,338
--------------
OTHER METALS/MINERALS
811,800 Phelps Dodge Corp.................................................................. 39,981,150
--------------
OTHER SPECIALTY STORES
85,700 Pep Boys-Manny, Moe & Jack......................................................... 1,306,925
--------------
PACKAGED FOODS
35,900 General Mills, Inc................................................................. 2,712,694
--------------
PAPER
58,000 Bowater, Inc....................................................................... 2,298,250
59,200 Champion International Corp........................................................ 2,430,900
950,000 International Paper Co............................................................. 40,078,125
--------------
44,807,275
--------------
PHOTOGRAPHIC PRODUCTS
635,000 Eastman Kodak Co................................................................... 40,560,625
--------------
SAVINGS & LOAN ASSOCIATIONS
28,500 Golden West Financial Corp......................................................... 2,721,750
59,364 Washington Mutual, Inc............................................................. 2,426,504
--------------
5,148,254
--------------
SEMICONDUCTORS
36,800 Intel Corp......................................................................... 4,374,600
--------------
SPECIALTY STEELS
54,800 Nucor Corp......................................................................... 2,414,625
--------------
TOBACCO
1,050,000 Philip Morris Companies, Inc....................................................... 36,946,875
--------------
TOTAL UNITED STATES................................................................ 1,201,336,841
--------------
TOTAL COMMON AND PREFERRED STOCKS
(IDENTIFIED COST $3,036,444,289)................................................... 3,405,844,095
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
41
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (1.0%)
U.S. GOVERNMENT AGENCY
$ 35,000 Federal Home Loan Mortgage Corp. 4.82% due 04/01/99 (AMORTIZED COST $35,000,000)... $ 35,000,000
--------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $3,071,444,289) (b).................................................... 99.6 % 3,440,844,095
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.......................................... 0.4 14,094,395
------ ---------------
NET ASSETS.............................................................................. 100.0 % $ 3,454,938,490
------ ---------------
------ ---------------
</TABLE>
- ---------------------
* Non-income producing security.
ADR American Depository Receipt.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $563,547,192 and the
aggregate gross unrealized depreciation is $194,147,386, resulting in net
unrealized appreciation of $369,399,806.
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT MARCH 31, 1999:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO IN DELIVERY APPRECIATION
DELIVER EXCHANGE FOR DATE (DEPRECIATION)
- -------------------------------------------------------------------
<S> <C> <C> <C>
$ 1,503,403 CHF 2,230,299 04/01/99 $ 2,334
$ 1,590,208 EUR 1,476,516 04/01/99 738
$ 1,991,406 EUR 1,849,031 04/01/99 925
GBP 424,280 $ 687,757 04/01/99 4,031
HKD 27,635,107 $ 3,566,142 04/01/99 (138)
CAD 2,430,306 $ 1,612,464 04/05/99 855
JPY 189,461,081 $ 1,598,288 04/05/99 3,498
GBP 303,891 $ 490,313 04/08/99 593
$ 1,387,983 EUR 1,286,718 04/30/99 (1,544)
-------
Net unrealized appreciation.................. $ 11,292
-------
-------
</TABLE>
CURRENCY ABBREVIATIONS:
<TABLE>
<S> <C>
GBP British Pound.
CAD Canadian Dollar.
EUR Euro.
HKD Hong Kong Dollar.
JPY Japanese Yen.
CHF Swiss Franc.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
42
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
SUMMARY OF INVESTMENTS MARCH 31, 1999
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- ---------------------------------------------------------------------------------------
Accident & Health Insurance....................... $ 25,427,019 0.7%
Aerospace......................................... 39,108,326 1.1
Air Freight/Delivery Services..................... 40,373,064 1.2
Airlines.......................................... 41,083,305 1.2
Alcoholic Beverages............................... 58,201,340 1.7
Aluminum.......................................... 58,448,442 1.7
Apparel........................................... 15,117,325 0.4
Auto Parts: O.E.M................................. 195,425 0.0
Automotive Aftermarket............................ 61,241,868 1.8
Beverages - Non-Alcoholic......................... 3,044,869 0.1
Books/Magazines................................... 2,403,881 0.1
Building Materials................................ 33,252,331 1.0
Building Materials/DIY Chains..................... 5,353,500 0.2
Cable Television.................................. 3,206,252 0.1
Canadian Oil & Gas................................ 19,031,830 0.6
Clothing/Shoe/Accessory Stores.................... 23,308,091 0.7
Computer Hardware................................. 44,534,844 1.3
Construction/Agricultural Equipment/Trucks........ 39,783,750 1.2
Consumer Electronics/Appliances................... 92,410,498 2.7
Containers/Packaging.............................. 76,681,991 2.2
Department Stores................................. 40,668,750 1.2
Discount Chains................................... 41,307,500 1.2
Diversified Commercial Services................... 1,888,889 0.1
Diversified Electronic Products................... 138,091,242 4.0
Diversified Financial Services.................... 6,419,742 0.2
Diversified Manufacturing......................... 81,999,608 2.3
Electric Utilities................................ 76,735,537 2.2
Electrical Products............................... 35,281,347 1.0
Electronic Components............................. 36,325,758 1.1
Engineering & Construction........................ 71,246,299 2.1
Environmental Services............................ 23,605,607 0.7
Farming/Seeds/Milling............................. 19,218,290 0.6
Finance Companies................................. 45,364,375 1.3
Financial Publishing/Services..................... 2,226,184 0.1
Food Chains....................................... 38,848,581 1.1
Home Building..................................... 35,000,000 1.0
Hotels/Resorts.................................... 2,949,118 0.1
Industrial Machinery/Components................... 17,402,588 0.5
Integrated Oil Companies.......................... 92,571,485 2.7
International Banks............................... 251,752,771 7.2
Life Insurance.................................... 47,901,633 1.4
Major Banks....................................... 86,258,250 2.5
Major Chemicals................................... 79,863,674 2.3
Major Pharmaceuticals............................. 130,589,646 3.7
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Media Conglomerates............................... $ 2,558,475 0.1%
Metals Fabrications............................... 20,079,105 0.6
Mid-Sized Banks................................... 2,951,975 0.1
Military/Gov't/Technical.......................... 2,008,105 0.1
Motor Vehicles.................................... 157,942,016 4.5
Movies/Entertainment.............................. 24,301,731 0.7
Multi-Line Insurance.............................. 12,354,030 0.4
Multi-Sector Companies............................ 192,843,945 5.5
Natural Gas....................................... 37,489,375 1.1
Non-U.S. Utilities................................ 43,363,048 1.3
Oil & Gas Production.............................. 16,491,924 0.5
Oil Refining/Marketing............................ 77,270,286 2.2
Oil/Gas Transmission.............................. 18,135,501 0.5
Oilfield Services/Equipment....................... 111,767 0.0
Other Metals/Minerals............................. 64,220,124 1.9
Other Pharmaceuticals............................. 38,930,976 1.1
Other Specialty Stores............................ 2,917,909 0.1
Other Telecommunications.......................... 28,458,114 0.8
Package Goods/Cosmetics........................... 16,914,932 0.5
Packaged Foods.................................... 29,036,283 0.8
Paper............................................. 69,624,375 2.0
Photographic Products............................. 40,560,625 1.2
Precious Metals................................... 15,189,930 0.4
Real Estate....................................... 32,947,392 1.0
Recreational Products/Toys........................ 36,131,313 1.0
Savings & Loan Associations....................... 5,148,254 0.1
Semiconductors.................................... 4,493,708 0.1
Specialty Chemicals............................... 18,000,176 0.5
Specialty Foods/Candy............................. 18,619,200 0.5
Specialty Steels.................................. 2,414,625 0.1
Steel/Iron Ore.................................... 23,880,818 0.7
Telecommunications................................ 66,618,358 1.9
Telecommunications Equipment...................... 2,449,702 0.1
Tobacco........................................... 121,091,660 3.5
U.S. Government Agency............................ 35,000,000 1.0
Utilities......................................... 31,396,823 0.9
Water Supply...................................... 43,172,690 1.2
---------------- ---
$ 3,440,844,095 99.6%
---------------- ---
---------------- ---
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- ---------------------------------------------------------------------------------------
Common Stocks..................................... $ 3,388,056,313 98.1%
Preferred Stocks.................................. 17,787,782 0.5
Short-Term Investment............................. 35,000,000 1.0
---------------- ---
$ 3,440,844,095 99.6%
---------------- ---
---------------- ---
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
43
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $3,071,444,289).......................................................... $3,440,844,095
Cash........................................................................................ 6,015,933
Receivable for:
Investments sold........................................................................ 13,412,558
Dividends............................................................................... 12,908,774
Foreign withholding taxes reclaimed..................................................... 2,929,333
Shares of beneficial interest sold...................................................... 1,593,498
Prepaid expenses and other assets........................................................... 121,444
--------------
TOTAL ASSETS........................................................................... 3,477,825,635
--------------
LIABILITIES:
Payable for:
Investments purchased................................................................... 12,020,146
Shares of beneficial interest repurchased............................................... 5,342,472
Plan of distribution fee................................................................ 2,762,442
Investment management fee............................................................... 2,239,193
Accrued expenses and other payables......................................................... 522,892
--------------
TOTAL LIABILITIES...................................................................... 22,887,145
--------------
NET ASSETS............................................................................. $3,454,938,490
--------------
--------------
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................. $3,005,592,094
Net unrealized appreciation................................................................. 369,257,636
Accumulated undistributed net investment income............................................. 11,002,413
Accumulated undistributed net realized gain................................................. 69,086,347
--------------
NET ASSETS............................................................................. $3,454,938,490
--------------
--------------
CLASS A SHARES:
Net Assets.................................................................................. $35,673,091
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 2,702,471
NET ASSET VALUE PER SHARE.............................................................. $13.20
--------------
--------------
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET
ASSET VALUE).......................................................................... $13.93
--------------
--------------
CLASS B SHARES:
Net Assets.................................................................................. $3,342,589,020
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 253,378,824
NET ASSET VALUE PER SHARE.............................................................. $13.19
--------------
--------------
CLASS C SHARES:
Net Assets.................................................................................. $13,663,597
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 1,037,744
NET ASSET VALUE PER SHARE.............................................................. $13.17
--------------
--------------
CLASS D SHARES:
Net Assets.................................................................................. $63,012,782
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 4,769,092
NET ASSET VALUE PER SHARE.............................................................. $13.21
--------------
--------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1999
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $7,860,003 foreign withholding tax)........................................ $ 84,934,913
Interest..................................................................................... 6,711,850
-------------
TOTAL INCOME............................................................................ 91,646,763
-------------
EXPENSES
Plan of distribution fee (Class A shares).................................................... 56,340
Plan of distribution fee (Class B shares).................................................... 31,148,040
Plan of distribution fee (Class C shares).................................................... 114,981
Investment management fee.................................................................... 25,829,311
Transfer agent fees and expenses............................................................. 4,554,228
Custodian fees............................................................................... 1,960,370
Shareholder reports and notices.............................................................. 311,600
Registration fees............................................................................ 125,663
Professional fees............................................................................ 87,818
Trustees' fees and expenses.................................................................. 23,028
Organizational expenses...................................................................... 8,995
Other........................................................................................ 61,225
-------------
TOTAL EXPENSES.......................................................................... 64,281,599
-------------
NET INVESTMENT INCOME................................................................... 27,365,164
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments.............................................................................. 245,874,016
Foreign exchange transactions............................................................ (337,553)
-------------
NET GAIN................................................................................ 245,536,463
-------------
Net change in unrealized appreciation/ depreciation on:
Investments.............................................................................. (291,846,106)
Translation of forward foreign currency contracts, other assets and liabilities
denominated in foreign currencies...................................................... 108,375
-------------
NET DEPRECIATION........................................................................ (291,737,731)
-------------
NET LOSS................................................................................ (46,201,268)
-------------
NET DECREASE................................................................................. $ (18,836,104)
-------------
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
44
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, 1999 MARCH 31, 1998*
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income...................................................... $ 27,365,164 $ 28,536,934
Net realized gain.......................................................... 245,536,463 424,639,725
Net change in unrealized appreciation...................................... (291,737,731) 270,061,046
-------------- ---------------
NET INCREASE (DECREASE)............................................... (18,836,104) 723,237,705
-------------- ---------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares......................................................... (261,174) (89,450)
Class B shares......................................................... (18,635,895) (30,169,703)
Class C shares......................................................... (56,045) (44,631)
Class D shares......................................................... (571,271) (173,106)
Net realized gain
Class A shares......................................................... (1,843,310) (565,637)
Class B shares......................................................... (316,814,401) (405,262,485)
Class C shares......................................................... (1,049,978) (502,865)
Class D shares......................................................... (3,084,811) (1,032,962)
-------------- ---------------
TOTAL DIVIDENDS AND DISTRIBUTIONS..................................... (342,316,885) (437,840,839)
-------------- ---------------
Net increase (decrease) from transactions in shares of beneficial
interest................................................................. (38,312,266) 530,515,791
-------------- ---------------
NET INCREASE (DECREASE)............................................... (399,465,255) 815,912,657
NET ASSETS:
Beginning of period........................................................ 3,854,403,745 3,038,491,088
-------------- ---------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $11,002,413 AND
DIVIDENDS IN EXCESS OF NET INVESTMENT INCOME OF $2,122,966,
RESPECTIVELY).......................................................... $3,454,938,490 $ 3,854,403,745
-------------- ---------------
-------------- ---------------
</TABLE>
- ---------------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
45
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Global Dividend Growth Securities (the "Fund"),
formerly Dean Witter Global Dividend Growth Securities, is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund's investment objective is to
provide reasonable current income and long-term growth of income and capital.
The Fund seeks to achieve its objective by investing primarily in common stocks
of issuers worldwide, with a record of paying dividends and the potential for
increasing dividends. The Fund was organized as a Massachusetts business trust
on January 12, 1993 and commenced operations on June 30, 1993. On July 28, 1997,
the Fund commenced offering three additional classes of shares, with the then
current shares designated as Class B shares.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American, or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (in
cases where securities are traded on more than one exchange, the securities are
valued on the exchange designated as the primary market pursuant to procedures
adopted by the Trustees); (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by Morgan Stanley Dean Witter Advisors Inc. (the "Investment
Manager"), formerly Dean Witter InterCapital Inc., that sale and 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
46
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999, CONTINUED
supervision of the Trustees (valuation of debt securities for which market
quotations are not readily available may be based upon current market prices of
securities which are comparable in coupon, rating and maturity or an appropriate
matrix utilizing similar factors); and (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 from 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 FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward foreign
currency contracts which are valued daily at the appropriate exchange rates. The
resultant unrealized exchange gains and losses are included in the Statement of
Operations as unrealized gain/loss on
47
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999, CONTINUED
foreign exchange transactions. 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.
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 record date. The amount of dividends
and distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Dividends and distributions which
exceed net investment income and net realized capital gains for 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.
H. ORGANIZATIONAL EXPENSES -- The Investment Manager paid the organizational
expenses of approximately $180,000 which have been reimbursed for the full
amount thereof. Such expenses were deferred and fully amortized as of June 29,
1998.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined at the close of
each business day: 0.75% to the portion of daily net assets not exceeding $1
billion; 0.725% to the portion of daily net assets exceeding $1 billion but not
exceeding $1.5 billion; 0.70% to the portion of daily net assets exceeding $1.5
billion but not exceeding $2.5 billion; 0.675% to the portion of daily net
assets exceeding $2.5 billion but not exceeding $3.5 billion; and 0.65% to the
portion of daily net assets exceeding $3.5 billion. Effective May 1, 1998, the
Agreement was amended to reduce the annual fee to 0.625% of the portion of daily
net assets in excess of $4.5 billion.
48
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999, CONTINUED
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
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 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
49
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999, CONTINUED
distribution fees from the Fund pursuant to the Plan and contingent deferred
sales charges paid by investors upon redemption of Class B shares. Although
there is no legal obligation for the Fund to pay expenses incurred in excess of
payments made to the Distributor under the Plan and the proceeds of contingent
deferred sales charges paid by investors upon redemption of shares, if for any
reason the Plan is terminated, the Trustees will consider at that time the
manner in which to treat such expenses. The Distributor has advised the Fund
that such excess amounts, including carrying charges, totaled $73,697,610 at
March 31, 1999.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended March 31, 1999, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.22% and
0.95%, respectively.
The Distributor has informed the Fund that for the year ended March 31, 1999, it
received contingent deferred sales charges from certain redemptions of the
Fund's Class A, Class B and Class C shares of $337, $5,108,028 and $11,342,
respectively and received $86,379 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 March 31, 1999 aggregated
$1,655,852,492 and $2,208,885,932, respectively.
For the year ended March 31, 1999, the Fund incurred $92,945 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.
For the year ended March 31, 1999, the Fund incurred brokerage commissions of
$1,498,179 with Morgan Stanley & Co., Inc., an affiliate of the Investment
Manager and Distributor, for portfolio transactions executed on behalf of the
Fund. At March 31, 1999, included in the Fund's payable for investments
purchased were unsettled trades with Morgan Stanley & Co., Inc. for $4,102,926.
50
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999, CONTINUED
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended March 31, 1999 included
in Trustees' fees and expenses in the Statement of Operations amounted to
$10,766. At March 31, 1999, the Fund had an accrued pension liability of $57,480
which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. FEDERAL INCOME TAX STATUS
As of March 31, 1999, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales and income from the
mark-to-market of passive foreign investment companies ("PFICs") and permanent
book/tax differences primarily attributable to foreign currency losses and tax
adjustments on PFICs sold by the Fund. To reflect reclassifications arising from
the permanent differences, accumulated undistributed net realized gain was
charged $5,304,758, paid-in capital was charged $83,170 and accumulated
undistributed net investment income was credited $5,387,928.
6. 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 March 31, 1999, there were outstanding forward contracts used to facilitate
settlement of foreign currency denominated portfolio transactions.
51
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999, CONTINUED
7. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, 1999 MARCH 31, 1998*
------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ---------------- ------------ --------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold............................................................. 2,445,885 $ 31,514,500 885,238 $ 12,442,665
Reinvestment of dividends and distributions...................... 151,674 1,988,984 47,429 606,606
Shares issued in connection with the acquisition of Dean Witter
World Wide Investment Trust..................................... 60,400 813,198 -- --
Redeemed......................................................... (858,155) (11,314,041) (30,000) (424,056)
------------ ---------------- ------------ --------------
Net increase - Class A........................................... 1,799,804 23,002,641 902,667 12,625,215
------------ ---------------- ------------ --------------
CLASS B SHARES
Sold............................................................. 21,502,359 286,062,777 54,063,092 772,136,946
Reinvestment of dividends and distributions...................... 23,576,064 312,457,447 30,559,475 405,815,115
Shares issued in connection with the acquisition of Dean Witter
World Wide Investment Trust..................................... 21,617,480 291,123,802 -- --
Redeemed......................................................... (77,262,606) (1,000,267,017) (49,060,405) (689,166,941)
------------ ---------------- ------------ --------------
Net increase (decrease) - Class B................................ (10,566,703) (110,622,991) 35,562,162 488,785,120
------------ ---------------- ------------ --------------
CLASS C SHARES
Sold............................................................. 580,330 7,763,468 697,103 9,960,568
Reinvestment of dividends and distributions...................... 78,973 1,043,840 40,593 516,939
Shares issued in connection with the acquisition of Dean Witter
World Wide Investment Trust..................................... 5,717 76,885 -- --
Redeemed......................................................... (300,803) (3,913,266) (64,169) (887,746)
------------ ---------------- ------------ --------------
Net increase - Class C........................................... 364,217 4,970,927 673,527 9,589,761
------------ ---------------- ------------ --------------
CLASS D SHARES
Sold............................................................. 1,733,498 22,835,792 1,378,903 19,481,908
Reinvestment of dividends and distributions...................... 275,791 3,602,567 93,459 1,196,710
Shares issued in connection with the acquisition of Dean Witter
World Wide Investment Trust..................................... 2,083,617 28,062,611 -- --
Shares issued in connection with the acquisition of Dean Witter
Retirement Series -- Global Equity Series....................... 1,324,733 15,658,117 -- --
Redeemed......................................................... (2,035,926) (25,821,930) (84,983) (1,162,923)
------------ ---------------- ------------ --------------
Net increase - Class D........................................... 3,381,713 44,337,157 1,387,379 19,515,695
------------ ---------------- ------------ --------------
Net increase (decrease) in Fund.................................. (5,020,969) $ (38,312,266) 38,525,735 $ 530,515,791
------------ ---------------- ------------ --------------
------------ ---------------- ------------ --------------
</TABLE>
- ---------------------
* For Class A, C and D, for the period July 28, 1997 (issue date) through
March 31, 1998.
52
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999, CONTINUED
8. ACQUISITION OF DEAN WITTER WORLD WIDE INVESTMENT TRUST AND DEAN WITTER
RETIREMENT SERIES -- GLOBAL EQUITY SERIES
As of the close of business on June 5, 1998, the Fund acquired all the net
assets of Dean Witter World Wide Investment Trust ("World Wide") pursuant to a
plan of reorganization approved by the shareholders of World Wide on May 21,
1998. The acquisition was accomplished by a tax-free exchange of 60,400 Class A
shares of the Fund at a net asset value of $13.46 per share for 45,643 Class A
shares of World Wide; 21,617,480 Class B shares of the Fund at a net asset value
of $13.47 per share for 16,154,443 Class B shares of World Wide; 5,717 Class C
shares of the Fund at a net asset value $13.45 per share for 4,847 Class C
shares of World Wide; and 2,083,617 Class D shares of the Fund at a net asset
value of $13.47 per share for 1,553,200 Class D shares of World Wide. The net
assets of the Fund and World Wide immediately before the acquisition were
$3,752,602,041 and $320,076,496, respectively, including unrealized appreciation
of $62,462,147 for World Wide. Immediately after the acquisition, the combined
net assets of the Fund amounted to $4,072,678,537.
As of the close of business on September 11, 1998, the Fund acquired all the net
assets of Dean Witter Retirement Series -- Global Equity Series ("Retirement
Global Equity") pursuant to a plan of reorganization approved by shareholders of
Retirement Global Equity on August 19, 1998. The acquisition was accomplished by
a tax-free exchange of 1,324,733 Class D shares of the Fund at a net asset value
of $11.82 per share for 1,295,148 shares of Retirement Global Equity. The net
assets of the Fund and Retirement Global Equity immediately before the
acquisition were $3,344,782,577 and $15,658,117, respectively, including
unrealized appreciation of $1,416,232 for Retirement Global Equity. Immediately
after the acquisition, the combined net assets of the Fund amounted to
$3,360,440,694.
53
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31
---------------------------------------------------
1999++ 1998*++ 1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.............. $ 14.44 $ 13.30 $ 12.86 $ 11.41 $ 10.81
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income.......................... 0.10 0.11 0.12 0.13 0.14
Net realized and unrealized gain (loss)........ (0.06) 2.79 1.44 1.96 0.88
------- ------- ------- ------- -------
Total income from investment operations........... 0.04 2.90 1.56 2.09 1.02
------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income.......................... (0.07) (0.12) (0.13) (0.15) (0.14)
Net realized gain.............................. (1.22) (1.64) (0.99) (0.49) (0.28)
------- ------- ------- ------- -------
Total dividends and distributions................. (1.29) (1.76) (1.12) (0.64) (0.42)
------- ------- ------- ------- -------
Net asset value, end of period.................... $ 13.19 $ 14.44 $ 13.30 $ 12.86 $ 11.41
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL RETURN+..................................... 0.42% 23.41% 12.58% 18.77% 9.60%
RATIOS TO AVERAGE NET ASSETS:
Expenses.......................................... 1.78%(1) 1.71% 1.75% 1.85% 1.97%
Net investment income............................. 0.74%(1) 0.80% 0.93% 1.05% 1.22%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions............ $ 3,343 $ 3,812 $ 3,038 $ 2,434 $ 1,854
Portfolio turnover rate........................... 47% 51% 40% 40% 32%
</TABLE>
- ---------------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
54
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 28, 1997*
ENDED THROUGH
MARCH 31, 1999 MARCH 31, 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 14.43 $ 14.91
------ ------
Income (loss) from investment operations:
Net investment income.............................................. 0.17 0.09
Net realized and unrealized gain (loss)............................ (0.04) 0.62
------ ------
Total income from investment operations............................... 0.13 0.71
------ ------
Less dividends and distributions from:
Net investment income.............................................. (0.14) (0.16)
Net realized gain.................................................. (1.22) (1.03)
------ ------
Total dividends and distributions..................................... (1.36) (1.19)
------ ------
Net asset value, end of period........................................ $ 13.20 $ 14.43
------ ------
------ ------
TOTAL RETURN+......................................................... 1.10% 5.77%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.12%(3) 1.17%(2)
Net investment income................................................. 1.39%(3) 1.02%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $35,673 $13,027
Portfolio turnover rate............................................... 47% 51%(1)
</TABLE>
<TABLE>
<S> <C> <C>
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 14.42 $ 14.91
------ ------
Income (loss) from investment operations:
Net investment income.............................................. 0.08 0.02
Net realized and unrealized gain (loss)............................ (0.05) 0.62
------ ------
Total income from investment operations............................... 0.03 0.64
------ ------
Less dividends and distributions from:
Net investment income.............................................. (0.06) (0.10)
Net realized gain.................................................. (1.22) (1.03)
------ ------
Total dividends and distributions..................................... (1.28) (1.13)
------ ------
Net asset value, end of period........................................ $ 13.17 $ 14.42
------ ------
------ ------
TOTAL RETURN+......................................................... 0.37% 5.26%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.85%(3) 1.92%(2)
Net investment income................................................. 0.66%(3) 0.24%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $13,664 $9,711
Portfolio turnover rate............................................... 47% 51%(1)
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
55
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 28, 1997*
ENDED THROUGH
MARCH 31, 1999 MARCH 31, 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 14.44 $ 14.91
------ ------
Income (loss) from investments operations:
Net investment income.............................................. 0.20 0.11
Net realized and unrealized gain (loss)............................ (0.05) 0.62
------ ------
Total income from investment operations............................... 0.15 0.73
------ ------
Less dividends and distributions from:
Net investment income.............................................. (0.16) (0.17)
Net realized gain.................................................. (1.22) (1.03)
------ ------
Total dividends and distributions..................................... (1.38) (1.20)
------ ------
Net asset value, end of period........................................ $ 13.21 $ 14.44
------ ------
------ ------
TOTAL RETURN+......................................................... 1.27% 5.97%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.90%(3) 0.92%(2)
Net investment income................................................. 1.61%(3) 1.21%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $63,013 $20,032
Portfolio turnover rate............................................... 47% 51%(1)
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
56
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND
GROWTH SECURITIES
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
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 Global
Dividend Growth Securities (the "Fund"), formerly Dean Witter Global Dividend
Growth Securities, at March 31, 1999, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at March
31, 1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
MAY 14, 1999
1999 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended March 31, 1999, the Fund paid to its
shareholders $1.07 per share from long-term capital gains. For
such period, 37.18% of the income paid qualified for the dividends
received deduction available to corporations.
In addition, the Fund has elected, pursuant to section 853 of the
Internal Revenue Code, to pass through foreign taxes of $0.03 per
share to its shareholders, of which 100% would be allowable as a
credit. The Fund generated net foreign source income of $0.09 per
share with respect to this election.
57
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
PART C OTHER INFORMATION
ITEM 23. EXHIBITS
1 (a). Declaration of Trust of the Registrant, dated January 8, 1993,
is incorporated by reference to Exhibit 1 of Post-Effective
Amendment No. 4 to the Registration Statement on Form N-1A,
filed on May 24, 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 16, 1997.
1 (c). Amendment, dated June 22, 1998, to the Declaration of Trust, is
incorporated by reference to Exhibit 1 of Post-Effective
Amendment No. 7 to the Registration Statement on Form N-1A,
filed on June 23, 1998.
2. Amended and Restated By-Laws of the Registrant, dated
May 1, 1999, is incorporated by reference to Exhibit 2 of
Post-Effective Amendment No. 8 to the Registration Statement on
Form N-1A, filed on May 28, 1999.
3. Not Applicable.
4. Amended Investment Management Agreement between the Registrant
and Morgan Stanley Dean Witter Advisors, Inc., dated May 1,
1998, is incorporated by reference to Exhibit 5 of
Post-Effective Amendment No. 7 to the Registration Statement on
Form N-1A, filed on June 23, 1998.
5 (a). Amended Distribution Agreement, dated June 22, 1998, is
incorporated by reference to Exhibit 6 of Post-Effective
Amendment No. 7 to the Registration Statement on Form N-1A,
filed on June 23, 1998.
5 (b). Omnibus Selected Dealer Agreement between Morgan Stanley Dean
Witter Distributors Inc. and National Financial Services
Corporation is incorporated by reference to Exhibit 5 of
Post-Effective No. 8 to the Registration Statement on Form N-1A,
filed on May 28, 1999.
6. Amended and Restated Retirement Plan for Non-Interested
Directors or Trustees, dated May 8, 1997, is incorporated by
reference to Exhibit 6 of Post-Effective Amendment No. 8 to the
Registration Statement on Form N-1A, filed on May 28, 1999.
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 May 24, 1996.
8 (a). Amended and Restated Transfer Agency and Service Agreement is
incorporated by reference to Exhibit 8 of Post-Effective
Amendment No. 7 to the Registration Statement on Form N-1A,
filed on June 23, 1998.
<PAGE>
8 (b). Amended Services Agreement, dated June 22, 1998, is
incorporated by reference to Exhibit 9 of Post-Effective
Amendment No. 7 to the Registration Statement on Form N-1A,
filed on June 23, 1998.
9 (a). Opinion of Sheldon Curtis, Esq., dated April 30, 1993, is
incorporated by reference to Exhibit 9(a) of Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A,
filed on May 28, 1999.
9 (b). Opinion of Lane Altman & Owens LLP, Massachusetts Counsel, dated
April 29, 1993, is incorporated by reference to Exhibit 9(b) of
Post-Effective Amendment No. 8 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 July 28, 1997, is incorporated by reference to
Exhibit 15 of Post-Effective Amendment No. 6 to the Registration
Statement on Form N-1A, filed on July 16, 1997.
14. Amended Multi-Class Plan pursuant to Rule 18f-3, dated
June 22, 1998, is incorporated by reference to Exhibit 18 of
Post-Effective Amendment No. 7 to the Registration Statement on
Form N-1A, filed on June 23, 1998.
Other Power of Attorney of Trustees is incorporated by reference to
Exhibit (Other) of Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A, filed on June 23, 1998 and
Post-Effective Amendment No. 2 to the Registration Statement on
Form N-1A, filed on May 25, 1994.
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.
2
<PAGE>
Pursuant to Section 5.2 of the Registrant's Declaration of Trust and
paragraph 8 of the Registrant's Investment Management Agreement, neither the
Investment Manager nor any trustee, officer, employee or agent of the Registrant
shall be liable for any action or failure to act, except in the case of bad
faith, willful misfeasance, gross negligence or reckless disregard of duties to
the Registrant.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of the Registrant in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such trustee,
officer or controlling person in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act, and will be governed by the final adjudication of such
issue.
The Registrant hereby undertakes that it will apply the
indemnification provision of its by-laws in a manner consistent with Release
11330 of the Securities and Exchange Commission under the Investment Company Act
of 1940, so long as the interpretation of Sections 17(h) and 17(i) of such Act
remains in effect.
Registrant, in conjunction with the Investment Manager, Registrant's
Trustees, and other registered investment management companies managed by the
Investment Manager, maintains insurance on behalf of any person who is or was a
Trustee, officer, employee, or agent of Registrant, or who is or was serving at
the request of Registrant as a trustee, director, officer, employee or agent of
another trust or corporation, against any liability asserted against him and
incurred by him or arising out of his position. However, in no event will
Registrant maintain insurance to indemnify any such person for any act for which
Registrant itself is not permitted to indemnify him.
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
See "The Fund and Its Management" in the Prospectus regarding the
business of the investment advisor. The following information is given regarding
officers of Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"). MSDW
Advisors is a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co.
The term "Morgan Stanley Dean Witter Funds" refers to the following
registered investment companies:
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
3
<PAGE>
(7) Morgan Stanley Dean Witter Income Securities Inc.
(8) Morgan Stanley Dean Witter Insured California Municipal Securities
(9) Morgan Stanley Dean Witter Insured Municipal Bond Trust
(10) Morgan Stanley Dean Witter Insured Municipal Income Trust
(11) Morgan Stanley Dean Witter Insured Municipal Securities
(12) Morgan Stanley Dean Witter Insured Municipal Trust
(13) Morgan Stanley Dean Witter Municipal Income Opportunities Trust
(14) Morgan Stanley Dean Witter Municipal Income Opportunities Trust II
(15) Morgan Stanley Dean Witter Municipal Income Opportunities Trust III
(16) Morgan Stanley Dean Witter Municipal Income Trust
(17) Morgan Stanley Dean Witter Municipal Income Trust II
(18) Morgan Stanley Dean Witter Municipal Income Trust III
(19) Morgan Stanley Dean Witter Municipal Premium Income Trust
(20) Morgan Stanley Dean Witter New York Quality Municipal Securities
(21) Morgan Stanley Dean Witter Prime Income Trust
(22) Morgan Stanley Dean Witter Quality Municipal Income Trust
(23) Morgan Stanley Dean Witter Quality Municipal Investment Trust
(24) Morgan Stanley Dean Witter Quality Municipal Securities
OPEN-END INVESTMENT COMPANIES
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Money Trust
(4) Active Assets Tax-Free Trust
(5) Morgan Stanley Dean Witter Aggressive Equity Fund
(6) Morgan Stanley Dean Witter American Opportunities Fund
(7) Morgan Stanley Dean Witter Balanced Growth Fund
(8) Morgan Stanley Dean Witter Balanced Income Fund
(9) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(10) Morgan Stanley Dean Witter California Tax-Free Income Fund
(11) Morgan Stanley Dean Witter Capital Growth Securities
(12) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS PORTFOLIO"
(13) Morgan Stanley Dean Witter Convertible Securities Trust
(14) Morgan Stanley Dean Witter Developing Growth Securities Trust
(15) Morgan Stanley Dean Witter Diversified Income Trust
(16) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(17) Morgan Stanley Dean Witter Equity Fund
(18) Morgan Stanley Dean Witter European Growth Fund Inc.
(19) Morgan Stanley Dean Witter Federal Securities Trust
(20) Morgan Stanley Dean Witter Financial Services Trust
(21) Morgan Stanley Dean Witter Fund of Funds
(22) Morgan Stanley Dean Witter Global Dividend Growth Securities
(23) Morgan Stanley Dean Witter Global Utilities Fund
(24) Morgan Stanley Dean Witter Growth Fund
(25) Morgan Stanley Dean Witter Hawaii Municipal Trust
(26) Morgan Stanley Dean Witter Health Sciences Trust
(27) Morgan Stanley Dean Witter High Yield Securities Inc.
(28) Morgan Stanley Dean Witter Income Builder Fund
(29) Morgan Stanley Dean Witter Information Fund
(30) Morgan Stanley Dean Witter Intermediate Income Securities
(31) Morgan Stanley Dean Witter International Fund
4
<PAGE>
(32) Morgan Stanley Dean Witter International SmallCap Fund
(33) Morgan Stanley Dean Witter Japan Fund
(34) Morgan Stanley Dean Witter Latin American Growth Fund
(35) Morgan Stanley Dean Witter Limited Term Municipal Trust
(36) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(37) Morgan Stanley Dean Witter Market Leader Trust
(38) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(39) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(40) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(41) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(42) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(43) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(44) Morgan Stanley Dean Witter North American Government Income Trust
(45) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(46) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
(47) Morgan Stanley Dean Witter Real Estate Fund
(48) Morgan Stanley Dean Witter S&P 500 Index Fund
(49) Morgan Stanley Dean Witter S&P 500 Select Fund
(50) Morgan Stanley Dean Witter Select Dimensions Investment Series
(51) Morgan Stanley Dean Witter Select Municipal Reinvestment Fund
(52) Morgan Stanley Dean Witter Short-Term Bond Fund
(53) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(54) Morgan Stanley Dean Witter Small Cap Growth Fund
(55) Morgan Stanley Dean Witter Special Value Fund
(56) Morgan Stanley Dean Witter Strategist Fund
(57) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(58) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(59) Morgan Stanley Dean Witter Total Return Trust
(60) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(61) Morgan Stanley Dean Witter U.S. Government Securities Trust
(62) Morgan Stanley Dean Witter Utilities Fund
(63) Morgan Stanley Dean Witter Value-Added Market Series
(64) Morgan Stanley Dean Witter Value Fund
(65) Morgan Stanley Dean Witter Variable Investment Series
(66) Morgan Stanley Dean Witter World Wide Income Trust
5
<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 and Discover Brokerage Index Series; Executive
Vice President and Director of Dean Witter Reynolds Inc.
("DWR"); Director of various MSDW subsidiaries.
Joseph J. McAlinden Vice President of the Morgan Stanley Dean Witter Funds
Executive Vice President and Discover Brokerage Index Series; Director of MSDW Trust.
and Chief Investment
Officer
Ronald E. Robison President MSDW Trust; Executive Vice President, Chief
Executive Vice President, Administrative Officer and Director of MSDW Services;
Chief Administrative Vice President of the Morgan Stanley Dean Witter Funds
Officer and Director and Discover Brokerage Index Series.
Edward C. Oelsner, III
Executive Vice President
Barry Fink Assistant Secretary of DWR; Senior Vice President,
Senior Vice President, Secretary, General Counsel and Director of MSDW Secretary,
Secretary and General Services; Senior Vice President, Assistant Secretary and
Counsel, Director Assistant General Counsel of MSDW Distributors; Vice
President, Secretary and General Counsel of the Morgan
Stanley Dean Witter Funds and Discover Brokerage Index Series.
Peter M. Avelar Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the High
Yield Group
Mark Bavoso Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Douglas Brown
Senior Vice President
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- -------------------- -------------------------------------------------
<S> <C>
Rosalie Clough
Senior Vice President
and Director of Marketing
Richard Felegy
Senior Vice President
Edward F. Gaylor Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Robert S. Giambrone Senior Vice President of MSDW Services, MSDW
Senior Vice President Distributors and MSDW Trust and Director of MSDW Trust;
Vice President of the Morgan Stanley Dean Witter Funds
and Discover Brokerage Index Series.
Rajesh K. Gupta Vice President of various Morgan Stanley Dean Witter
Senior Vice President, Funds.
Director of the Taxable
Fixed Income Group and
Chief Administrative Officer -
Investments
Kenton J. Hinchliffe Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds and Discover Brokerage Index Series.
Kevin Hurley Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Jenny Beth Jones Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Michelle Kaufman Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
John B. Kemp, III President of MSDW Distributors.
Senior Vice President
Anita H. Kolleeny Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of Sector
Rotation
Jonathan R. Page Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Money
Market Group
</TABLE>
7
<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>
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
Paul D. Vance Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Growth
and Income Group
Elizabeth A. Vetell
Senior Vice President
and Director of Shareholder
Communication
James F. Willison Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the
Tax-Exempt Fixed
Income Group
Frank Bruttomesso First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
Thomas F. Caloia First Vice President and Assistant Treasurer of
First Vice President MSDW Services; Assistant Treasurer of MSDW
and Assistant Distributors; Treasurer and Chief Financial and Accounting
Treasurer Officer of the Morgan Stanley Dean Witter Funds and
Discover Brokerage Index Series.
Thomas Chronert
First Vice President
</TABLE>
8
<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>
Marilyn K. Cranney Assistant Secretary of DWR; First Vice President and
First Vice President Assistant Secretary of MSDW Services; Assistant
and Assistant Secretary Secretary of MSDW Distributors, the Morgan Stanley Dean
Witter Funds and Discover Brokerage Index Series.
Salvatore DeSteno First Vice President of MSDW Services.
First Vice President
Peter W. Gurman
First Vice President
Michael Interrante First Vice President and Controller of MSDW Services;
First Vice President Assistant Treasurer of MSDW Distributors; First Vice
and Controller President and Treasurer of MSDW Trust.
David Johnson
First Vice President
Stanley Kapica
First Vice President
Lou Anne D. McInnis First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
Carsten Otto First Vice President and Assistant Secretary of MSDW
First Vice President Services; Assistant Secretary of MSDW Distributors, the
and Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
Ruth Rossi First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
James P. Wallin
First Vice President
Robert Abreu
Vice President
Dale Albright
Vice President
Joan G. Allman
Vice President
</TABLE>
9
<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>
Andrew Arbenz
Vice President
Joseph Arcieri Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Armon Bar-Tur Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Raymond Basile
Vice President
Nancy Belza
Vice President
Maurice Bendrihem
Vice President and
Assistant Controller
Dale Boettcher
Vice President
Ronald Caldwell
Vice President
Joseph Cardwell
Vice President
Liam Carroll
Vice President
Philip Casparius
Vice President
Aaron Clark
Vice President
William Connerly
Vice President
David Dineen
Vice President
Sheila Finnerty Vice President of Morgan Stanley Dean Witter Prime
Vice President Income Trust
</TABLE>
10
<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>
Jeffrey D. Geffen
Vice President
Sandra Gelpieryn
Vice President
Charmaine George
Vice President
Michael Geringer
Vice President
Gail Gerrity
Vice President
Ellen Gold
Vice President
Stephen Greenhut
Vice President
Trey Hancock
Vice President
Matthew Haynes Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Peter Hermann Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
David T. Hoffman
Vice President
Kevin Jung Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Carol Espejo-Kane
Vice President
Nancy Karole-Kennedy
Vice President
Doug Ketterer
Vice President
Paula LaCosta Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
</TABLE>
11
<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>
Kimberly LaHart
Vice President
Thomas Lawlor
Vice President
Todd Lebo Vice President and Assistant Secretary of MSDW
Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
Gerard J. Lian Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Nancy Login
Vice President
Sharon Loguercio
Vice President
Steven MacNamara
Vice President
Catherine Maniscalco Vice President of Morgan Stanley Dean Witter Natural
Vice President Resource Development Securities Inc.
Albert McGarity
Vice President
Teresa McRoberts Vice President of Morgan Stanley Dean Witter S&P 500
Vice President Select Fund.
Mark Mitchell
Vice President
Julie Morrone
Vice President
Mary Beth Mueller
Vice President
David Myers Vice President of Morgan Stanley Dean Witter Natural
Vice President Resource Development Securities Inc.
James Nash
Vice President
</TABLE>
12
<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>
Richard Norris
Vice President
Anne Pickrell Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Dawn Rorke
Vice President
John Roscoe Vice President of Morgan Stanley Dean Witter
Vice President Real Estate Fund
Hugh Rose
Vice President
Robert Rossetti Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Carl F. Sadler
Vice President
Deborah Santaniello
Vice President
Patrice Saunders
Vice President
Howard A. Schloss Vice President of Morgan Stanley Dean Witter Federal
Vice President Securities Trust.
Peter J. Seeley Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Robert Stearns
Vice President
Naomi Stein
Vice President
Michael Strayhorn
Vice President
Kathleen H. Stromberg Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Marybeth Swisher
Vice President
</TABLE>
13
<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>
Michael Thayer
Vice President
Robert Vanden Assem
Vice President
David Walsh
Vice President
Alice Weiss Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
John Wong
Vice President
</TABLE>
The principal address of MSDW Advisors, MSDW Services, MSDW
Distributors, DWR, the Morgan Stanley Dean Witter Funds and Discover Brokerage
Index Series is Two World Trade Center, New York, New York 10048. The principal
address of MSDW is 1585 Broadway, New York, New York 10036. The principal
address of MSDW Trust is 2 Harborside Financial Center, Jersey City, New Jersey
07311.
Item 27. PRINCIPAL UNDERWRITERS
(a) Morgan Stanley Dean Witter Distributors Inc. ("MSDW Distributors"), a
Delaware corporation, is the principal underwriter of the Registrant. MSDW
Distributors is also the principal underwriter of the following investment
companies:
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Money Trust
(4) Active Assets Tax-Free Trust
(5) Morgan Stanley Dean Witter Aggressive Equity Fund
(6) Morgan Stanley Dean Witter American Opportunities Fund
(7) Morgan Stanley Dean Witter Balanced Growth Fund
(8) Morgan Stanley Dean Witter Balanced Income Fund
(9) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(10) Morgan Stanley Dean Witter California Tax-Free Income Fund
(11) Morgan Stanley Dean Witter Capital Growth Securities
(12) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS PORTFOLIO"
(13) Morgan Stanley Dean Witter Convertible Securities Trust
(14) Morgan Stanley Dean Witter Developing Growth Securities Trust
(15) Morgan Stanley Dean Witter Diversified Income Trust
(16) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(17) Morgan Stanley Dean Witter Equity Fund
(18) Morgan Stanley Dean Witter European Growth Fund Inc.
(19) Morgan Stanley Dean Witter Federal Securities Trust
(20) Morgan Stanley Dean Witter Financial Services Trust
14
<PAGE>
(21) Morgan Stanley Dean Witter Fund of Funds
(22) Morgan Stanley Dean Witter Global Dividend Growth Securities
(23) Morgan Stanley Dean Witter Global Utilities Fund
(24) Morgan Stanley Dean Witter Growth Fund
(25) Morgan Stanley Dean Witter Hawaii Municipal Trust
(26) Morgan Stanley Dean Witter Health Sciences Trust
(27) Morgan Stanley Dean Witter High Yield Securities Inc.
(28) Morgan Stanley Dean Witter Income Builder Fund
(29) Morgan Stanley Dean Witter Information Fund
(30) Morgan Stanley Dean Witter Intermediate Income Securities
(31) Morgan Stanley Dean Witter International Fund
(32) Morgan Stanley Dean Witter International SmallCap Fund
(33) Morgan Stanley Dean Witter Japan Fund
(34) Morgan Stanley Dean Witter Latin American Growth Fund
(35) Morgan Stanley Dean Witter Limited Term Municipal Trust
(36) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(37) Morgan Stanley Dean Witter Market Leader Trust
(38) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(39) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(40) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(41) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(42) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(43) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(44) Morgan Stanley Dean Witter North American Government Income Trust
(45) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(46) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
(47) Morgan Stanley Dean Witter Prime Income Trust
(48) Morgan Stanley Dean Witter Real Estate Fund
(49) Morgan Stanley Dean Witter S&P 500 Index Fund
(50) Morgan Stanley Dean Witter S&P 500 Select Fund
(51) Morgan Stanley Dean Witter Short-Term Bond Fund
(52) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(53) Morgan Stanley Dean Witter Small Cap Growth Fund
(54) Morgan Stanley Dean Witter Special Value Fund
(55) Morgan Stanley Dean Witter Strategist Fund
(56) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(57) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(58) Morgan Stanley Dean Witter Total Return Trust
(59) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(60) Morgan Stanley Dean Witter U.S. Government Securities Trust
(61) Morgan Stanley Dean Witter Utilities Fund
(62) Morgan Stanley Dean Witter Value-Added Market Series
(63) Morgan Stanley Dean Witter Value Fund
(64) Morgan Stanley Dean Witter Variable Investment Series
(65) Morgan Stanley Dean Witter World Wide Income Trust
(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.
15
<PAGE>
NAME POSITIONS AND OFFICE WITH MSDW DISTRIBUTORS
Michael T. Gregg Vice President and Assistant Secretary.
James F. Higgins Director
Fredrick K. Kubler Senior Vice President, Assistant Secretary and Chief
Compliance Officer.
Philip J. Purcell Director
John Schaeffer Director
Charles Vadala Senior Vice President and Financial Principal.
Item 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained by the Investment Manager at its offices, except records relating to
holders of shares issued by the Registrant, which are maintained by the
Registrant's Transfer Agent, at its place of business as shown in the
prospectus.
Item 29. MANAGEMENT SERVICES
Registrant is not a party to any such management-related service contract.
Item 30. UNDERTAKINGS
Registrant hereby undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.
16
<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 28th day of July, 1999.
MORGAN STANLEY DEAN WITTER
GLOBAL DIVIDEND GROWTH SECURITIES
By: /s/ Barry Fink
----------------------------
Barry Fink
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 9 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 07/28/99
------------------------------
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By: /s/ Thomas F. Caloia 07/28/99
------------------------------
Thomas F. Caloia
(3) Majority of the Trustees
Charles A. Fiumefreddo (Chairman)
Philip J. Purcell
By: /s/ Barry Fink 07/28/99
------------------------------
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 07/28/99
------------------------------
David M. Butowsky
Attorney-in-Fact
</TABLE>
<PAGE>
MORGAN STANLEY DEAN WITTER GLOBAL DIVIDEND GROWTH SECURITIES
EXHIBIT INDEX
10. Consent of Independent Accountants.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 9 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated May
14, 1999, relating to the financial statements and financial highlights of
Morgan Stanley Dean Witter Global Dividend Growth Securities, formerly Dean
Witter Global Dividend Growth Securities, which appears in such Statement of
Additional Information, and to the incorporation by reference of our report
into the Prospectus which constitutes part of this Registration Statement. We
also consent to the references to us under the headings "Custodian and
Independent Accountants" and "Experts" in such Statement of Additional
Information and to the reference to us under the heading "Financial
Highlights" in such Prospectus.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
July 27, 1999
