<PAGE>
Filed Pursuant to Rule 497(e)
Registration File No.: 33-62158
PROSPECTUS - MAY 30, 2000
MORGAN STANLEY DEAN WITTER
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LIMITED TERM MUNICIPAL TRUST
A MUTUAL FUND THAT SEEKS TO PROVIDE
A HIGH LEVEL OF CURRENT INCOME THAT IS EXEMPT FROM
FEDERAL INCOME TAX, CONSISTENT WITH THE PRESERVATION OF
CAPITAL AND PRESCRIBED STANDARDS OF QUALITY AND MATURITY
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
The Fund Investment Objective ................................1
Principal Investment Strategies .....................1
Principal Risks .....................................2
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
Financial Highlights ....................................................14
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.
<PAGE>
THE FUND
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
--------------------
Morgan Stanley Dean Witter Limited Term Municipal Trust seeks to provide a high
level of current income that is exempt from Federal income tax, consistent with
the preservation of capital and prescribed standards of quality and maturity.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
-------------------------------
(sidebar)
INCOME
An investment objective having the goal of selecting securities to pay out
income rather than rise in price.
(end sidebar)
The Fund will invest predominately in intermediate term securities that pay
interest exempt from federal income taxes. The Fund's "Investment Manager,"
Morgan Stanley Dean Witter Advisors Inc., generally invests the Fund's assets in
municipal obligations. Municipal obligations are bonds, notes or short-term
commercial paper issued by state governments, local governments and their
respective agencies. In deciding which securities to buy, hold or sell, the
Investment Manager considers market, economic and political conditions. At least
75% of the Fund's assets will be invested in municipal obligations with the
following ratings at the time of purchase:
o municipal bonds -- within the four highest grades by Moody's Investors
Service Inc. ("Moody's"), Standard & Poor's Corporation
("S&P"), or Fitch IBCA, Inc. ("Fitch");
o municipal notes -- within the two highest grades or, if not rated, have
outstanding bonds within the four highest grades by
Moody's, S&P or Fitch; and
o municipal commercial paper -- within the highest grade by Moody's, S&P or
Fitch.
The Fund also may invest up to 25% of its assets in municipal securities rated
within the fourth highest grade by Moody's, S&P or Fitch.
The municipal obligations in the Fund's portfolio will have an anticipated
average dollar-weighted maturity range of 7 to 10 years, with a maximum average
dollar-weighted maturity of 12 years. At least 80% of the Fund's assets will
have a maturity of 15 years or less.
The Fund may invest up to 10% of its assets in inverse floating rate municipal
obligations. The interest rates on these obligations generally move in the
reverse direction of market interest rates. If market interest rates fall, the
interest rate on the obligations will increase and if market interest rates
increase, the interest rate on the obligations will fall.
The Fund may invest any amount of its assets in securities that pay interest
income subject to the "alternative minimum tax," and some taxpayers may have to
pay tax on a Fund distribution of this income. The Fund therefore may not be a
suitable investment for these investors. See the "Tax Consequences" section for
more details.
Municipal obligations typically are "general obligation" or "revenue" bonds,
notes or commercial paper. General obligation securities are secured by the
issuer's faith and credit, including its taxing power for payment of principal
and interest. Revenue securities, however, are generally payable from a
specific revenue source. They are issued to fund a wide variety of public and
private projects in sectors such as public utilities, hospitals, housing,
airports and highways, and educational facilities. The Fund's municipal
obligation investments may include zero coupon securities, which are purchased
at a discount and accrue interest, but make no payments until maturity.
1
<PAGE>
In addition, the Fund may invest in private activity bonds, including
industrial development and pollution control bonds and lease obligations.
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 investment strategies it uses. For example, the
Investment Manager in its discretion may determine to use some permitted
investment strategies while not using others.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
---------------
There is no assurance that the Fund will achieve its investment objective. The
Fund's share price and yield 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.
CREDIT AND INTEREST RATE RISKS. A principal risk of investing in the Fund is
associated with its municipal investments. Municipal obligations, like other
debt securities, are subject to two types of risks: 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. In the
case of revenue bonds, notes or commercial paper, for example, the credit risk
is the possibility that the user fees from a project or other specified revenue
sources are insufficient to meet interest and/or principal payment obligations.
The issuers of private activity bonds, used to finance such projects as
industrial development and pollution control facilities, also may be negatively
impacted by the general credit of the user of the project. In addition, the
Fund may invest in securities with the lowest investment grade rating. These
securities may have speculative characteristics.
Interest rate risk refers to fluctuations in the value of a fixed-income
security resulting from changes in the general level of interest rates. When
the general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the
prices of most fixed-income securities go up. As a general illustration of the
relationship between fixed-income securities and interest rates, the following
table shows how interest rates affect bond prices.
HOW INTEREST RATES AFFECT BOND PRICES
--------------------------------------------------------------------------------
PRICE PER $1,000 OF A MUNICIPAL BOND IF
INTEREST RATES:
----------------------------------------------
INCREASE* DECREASE**
----------------------------------------------
YEARS TO BOND
MATURITY MATURITY COUPON 1% 2% 1% 2%
--------------------------------------------------------------------------------
1 2000 3.95% $990 $981 $1,010 $1,020
--------------------------------------------------------------------------------
5 2004 4.70% $957 $916 $1,045 $1,093
--------------------------------------------------------------------------------
10 2009 5.05% $926 $858 $1,082 $1,171
--------------------------------------------------------------------------------
20 2019 5.80% $892 $799 $1,128 $1,278
--------------------------------------------------------------------------------
30 2029 5.95% $875 $773 $1,155 $1,350
--------------------------------------------------------------------------------
Source: Municipal Market Data (a division of Thomson Financial Municipal
Group): "Aaa" yield curve as of 12/31/99. The table is not representative of
price changes for inverse floating rate municipal obligations which
typically respond to changes in interest rates to a greater extent than
comparable obligations.
* Assumes no effect from market discount calculation.
** Assumes bonds are non-callable.
2
<PAGE>
In addition, the table is an illustration and does not represent expected
yields or share price changes of any Morgan Stanley Dean Witter mutual fund.
INVERSE FLOATING RATE MUNICIPAL OBLIGATIONS. The inverse floating rate
municipal obligations in which the Fund may invest are typically created
through a division of a fixed rate municipal obligation into two separate
instruments, a short-term obligation and a long-term obligation. The interest
rate on the short-term obligation is set at periodic auctions. The interest
rate on the long-term obligation is the rate the issuer would have paid on the
fixed income obligation: (i) plus the difference between such fixed rate and
the rate on the short-term obligation, if the short-term rate is lower than the
fixed rate; or (ii) minus such difference if the interest rate on the
short-term obligation is higher than the fixed rate. Inverse floating rate
municipal obligations offer the potential for higher income than is available
from fixed rate obligations of comparable maturity and credit rating. They also
carry greater risks. In particular, the prices of inverse floating rate
municipal obligations are more volatile, i.e., they increase and decrease in
response to changes in interest rates to a greater extent than comparable fixed
rate obligations.
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 private activity bonds and lease obligations. 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.
[GRAPHIC OMITTED]
PAST PERFORMANCE
----------------
The bar chart and table below provide some indication of the risks of investing
in the Fund. The Fund's past performance does not indicate how the Fund will
perform in the future.
(sidebar)
ANNUAL TOTAL RETURNS
This chart shows how the performance of the Fund's shares has varied from year
to year over the past 6 calendar years.
(end sidebar)
ANNUAL TOTAL RETURNS -- CALENDAR YEARS
-7.95% 16.72% 3.17% 6.46% 5.10% -1.06%
------ ------ ----- ----- ----- ------
1994 '95 '96 '97 '98 '99
Year-to-date total return as of March 31, 2000 was 1.56%.
3
<PAGE>
During the periods shown in the bar chart, the highest return for a calendar
quarter was 6.78% (quarter ended March 31, 1995) and the lowest return for a
calendar quarter was -5.50% (quarter ended March 31, 1994).
(sidebar)
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Fund's average annual total returns with those of a
broad measure of market performance over time.
(end sidebar)
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1999)
--------------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR PAST 5 YEARS (SINCE 7/12/93)
--------------------------------------------------------------------------------
Limited Term Municipal Trust -1.06% 5.92% 3.94%
--------------------------------------------------------------------------------
Lehman Brothers 10-Year Municipal
Bond Index(1) -1.25% 7.12% 5.48%(2)
--------------------------------------------------------------------------------
(1) The Lehman Brothers 10-year Municipal Bond Index measures the performance
of municipal bonds rated at least Baa+ by Moody's Investors Service, Inc.
with maturities ranging between 9 and 12 years. The performance of the
Index does not include any expenses, fees or charges. The Index is
unmanaged and should not be considered an investment.
(2) For the period July 31, 1993 to December 31, 1999.
[GRAPHIC OMITTED]
FEES AND EXPENSES
-----------------
The table below briefly describes the fees and expenses that you may pay if you
buy and hold shares of the Fund. The Fund is a no-load fund. The Fund does not
impose any sales charges and does not impose account or exchange fees.
(sidebar)
ANNUAL FUND OPERATING EXPENSES
These expenses are deducted from the Fund's assets and are based on expenses
paid for the fiscal year ended March 31, 2000.
(end sidebar)
ANNUAL FUND OPERATING EXPENSES
--------------------------------------------------------------------------------
Management fee 0.50%
--------------------------------------------------------------------------------
Distribution and service (12b-1) fees None
--------------------------------------------------------------------------------
Other expenses 0.41%
--------------------------------------------------------------------------------
Total annual Fund operating expenses 0.91%
--------------------------------------------------------------------------------
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund, your investment has a
5% return each year, and the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, the table below shows your
costs at the end of each period based on these assumptions.
Expenses Over Time
-----------------------------------------
1 Year 3 Years 5 Years 10 Years
-----------------------------------------
$93 $290 $504 $1,120
-----------------------------------------
4
<PAGE>
[GRAPHIC OMITTED]
ADDITIONAL INVESTMENT STRATEGY INFORMATION
------------------------------------------
This section provides additional information relating to the Fund's principal
investment strategies.
PRIVATE ACTIVITY BONDS. The Fund may invest more than 25% of its assets in
municipal obligations known as private activity bonds. These securities
include, for example, housing, industrial development and pollution control
revenue, electric, utility, manufacturing, and transportation facilities.
LEASE OBLIGATIONS. Included within the revenue bonds category are
participations in lease obligations or installment purchase contracts of
municipalities. Generally, state and local agencies or authorities issue lease
obligations to acquire equipment and facilities for public and private
purposes.
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 taxable money market instruments 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 Fund's ability to provide tax-exempt income and
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 such changes.
[GRAPHIC OMITTED]
ADDITIONAL RISK INFORMATION
---------------------------
This section provides additional information relating to the principal risks of
investing in the Fund.
BOND INSURANCE RISK. Many of the municipal obligations the Fund invests in will
be covered by insurance at the time of issuance or at a later date. Such
insurance covers the remaining term of the security. Insured municipal
obligations would generally be assigned a lower rating if the rating were based
primarily on the credit quality of the issuer without regard to the insurance
feature. If the claims-paying ability of the insurer were downgraded, the
ratings on the municipal obligations it insures may also be downgraded.
PRIVATE ACTIVITY BONDS. The issuers of private activity bonds in which the Fund
may invest may be negatively impacted by conditions affecting either the
general credit of the user of the private activity project or the project
itself. Conditions such as regulatory and environmental restrictions and
economic downturns may lower the need for these facilities and the ability of
users of the project to pay for the facilities. This could cause a decline in
the Fund's value. The Fund's private activity bond holdings also may pay
interest subject to the alternative minimum tax. See the "Tax Consequences"
section for more details.
5
<PAGE>
LEASE OBLIGATIONS. Lease obligations may have risks not normally associated
with general obligation or other revenue bonds. Leases and installment purchase
or conditional sale contracts (which may provide for title to the leased asset
to pass eventually to the issuer) have developed as a means for governmental
issuers to acquire property and equipment without the necessity of complying
with the constitutional and statutory requirements generally applicable for the
issuance of debt. Certain lease obligations contain "non-appropriation" clauses
that provide that the governmental issuer has no obligation to make future
payments under the lease or contract unless money is appropriated for that
purpose by the appropriate legislative body on an annual or other periodic
basis. Consequently, continued lease payments on those lease obligations
containing "non-appropriation" clauses are dependent on future legislative
actions. If these legislative actions do not occur, the holders of the lease
obligation, such as the Fund, may experience difficulty in exercising their
rights, including disposition of the property.
[GRAPHIC OMITTED]
FUND MANAGEMENT
---------------
(sidebar)
MORGAN STANLEY DEAN WITTER ADVISORS INC.
The Investment Manager is widely recognized as a leader in the mutual fund
industry and together with Morgan Stanley Dean Witter Services Company Inc.,
its wholly-owned subsidiary, had approximately $150 billion in assets under
management as of April 30, 2000.
(end sidebar)
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, NY 10048.
The Fund's portfolio is managed within the Investment Manager's Tax-Exempt
Group. Katherine H. Stromberg is the Fund's portfolio manager. Ms. Stromberg
has been a portfolio manager at 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, 2000, the Fund
accrued total compensation to the Investment Manager amounting to 0.50% of the
Fund's average daily net assets.
6
<PAGE>
SHAREHOLDER INFORMATION
[GRAPHIC OMITTED]
PRICING FUND SHARES
-------------------
The price of Fund shares, called "net asset value," is based on the value of
the Fund's portfolio securities.
The net asset value per share of the Fund is determined once daily at 4:00 p.m.
Eastern time on each day that the New York Stock Exchange is open (or, on days
when the New York Stock Exchange closes prior to 4:00 p.m., at such earlier
time). Shares will not be priced on days that the New York Stock Exchange is
closed.
The value of the Fund's portfolio securities (except for short-term taxable
debt securities and certain other investments) are valued by an outside
independent pricing service. The service uses a computerized grid matrix of
tax-exempt securities and its evaluations in determining what it believes is
the fair value of the portfolio securities. The Fund's Board of Trustees
believes that timely and reliable market quotations are generally not readily
available to the Fund to value tax-exempt securities and the valuations that
the pricing service supplies are more likely to approximate the fair value of
the securities.
Short-term debt portfolio securities with remaining maturities of sixty days or
less at the time of purchase are valued at amortized cost. However, if the cost
does not reflect the securities' market value, these securities will be valued
at their fair value.
[GRAPHIC OMITTED]
HOW TO BUY SHARES
-----------------
(sidebar)
CONTACTING A FINANCIAL ADVISOR
If you are new to the Morgan Stanley Dean Witter Family of Funds and would like
to contact a Financial Advisor, call (877) 937-MSDW (toll-free) for the
telephone number of the Morgan Stanley Dean Witter office nearest you. You may
also access our office locator on our Internet site at:
www.msdw.com/individual/funds
(end sidebar)
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.
When you buy Fund shares, the shares are purchased at the next share price
calculated after we receive your purchase order. Your payment is due on the
third business day after you place your purchase order. We reserve the right to
reject any order for the purchase of Fund shares.
7
<PAGE>
MINIMUM INVESTMENT AMOUNTS
--------------------------------------------------------------------------
MINIMUM INVESTMENT
--------------------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
--------------------------------------------------------------------------
Regular Accounts: $1,000 $100
--------------------------------------------------------------------------
EasyInvest(SM)
(Automatically from your
checking or savings account
or Money Market Fund) $100* $100*
--------------------------------------------------------------------------
* Provided your schedule of investments totals $1,000 in twelve months.
(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)
There is no minimum investment amount if you purchase Fund shares through:
(1) the Investment Manager's mutual fund asset allocation plan, (2) a program,
approved by the Fund's distributor, in which you pay an asset-based fee for
advisory, administrative and/or brokerage services, or (3) employer-sponsored
employee benefit plan accounts.
SUBSEQUENT INVESTMENTS SENT DIRECTLY TO THE FUND. In addition to buying
additional Fund shares for an existing account by contacting your Morgan
Stanley Dean Witter Financial Advisor, you may send a check directly to the
Fund. To buy additional shares in this manner:
o Write a "letter of instruction" to the Fund specifying the name(s) on the
account, the account number, the social security or tax identification
number, and the investment amount. The letter must be signed by the account
owner(s).
o Make out a check for the total amount payable to: Morgan Stanley Dean
Witter Limited Term Municipal Trust.
o Mail the letter and check to Morgan Stanley Dean Witter Trust FSB at P.O.
Box 1040, Jersey City, NJ 07303.
PLAN OF DISTRIBUTION The Fund has adopted a Plan of Distribution in accordance
with Rule 12b-1 under the Investment Company Act of 1940. The Plan allows the
Fund's distributor to pay distribution fees for the sale and distribution of
Fund shares.
[GRAPHIC OMITTED]
HOW TO EXCHANGE SHARES
----------------------
PERMISSIBLE FUND EXCHANGES. You may only exchange shares of the Fund for
shares of other continuously offered Morgan Stanley Dean Witter Funds if the
Fund shares were acquired in an exchange of shares initially purchased in a
Multi-Class Fund or an FSC Fund (subject to a front-end sales charge). In that
case, the shares may be subsequently re-exchanged for shares of the same Class
of any Multi-Class Fund or FSC Fund or for shares of another No-Load Fund, a
Money Market Fund, North American Government Income Trust or Short-Term U.S.
Treasury Trust. Of course, if an exchange is not permitted, you may sell shares
of the Fund and buy another Fund's shares with the proceeds.
See the inside back cover of this Prospectus for each Morgan Stanley Dean
Witter Fund's designation as a Multi-Class Fund, FSC Fund, No-Load Fund or
Money Market
8
<PAGE>
Fund. If a Morgan Stanley Dean Witter Fund is not listed, consult the inside
back cover of that fund's prospectus for its designation. For purposes of
exchanges, shares of FSC Funds are treated as Class A shares of a Multi-Class
Fund.
Exchanges may be made after shares of the fund acquired by purchase have been
held for thirty days. There is no waiting period for exchanges of shares
acquired by exchange or dividend reinvestment. The current prospectus for each
fund describes its investment objective(s), policies and investment minimums,
and should be read before investment. Since exchanges are available only into
continuously offered Morgan Stanley Dean Witter Funds, exchanges are not
available into any new Morgan Stanley Dean Witter Fund during its initial
offering period, or when shares of a particular Morgan Stanley Dean Witter Fund
are not being offered for purchase.
EXCHANGE PROCEDURES. You can process an exchange by contacting your Morgan
Stanley Dean Witter Financial Advisor or other authorized financial
representative. Otherwise, you must forward an exchange privilege authorization
form to the Fund's transfer agent -- Morgan Stanley Dean Witter Trust FSB --
and then write the transfer agent or call (800) 869-NEWS to place an exchange
order. You can obtain an exchange privilege authorization form by contacting
your Financial Advisor or other authorized financial representative, or by
calling (800) 869-NEWS. If you hold share certificates, no exchanges may be
processed until we have received all applicable share certificates.
An exchange to any 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 sale of such shares.
9
<PAGE>
TAX CONSIDERATIONS OF EXCHANGES. If you exchange shares of the Fund for shares
of another Morgan Stanley Dean Witter Fund there are important tax
considerations. For tax purposes, the exchange out of the Fund is considered a
sale of Fund shares -- and the exchange into the other fund is considered a
purchase. As a result, you may realize a capital gain or loss.
You should review the "Tax Consequences" section and consult your own tax
professional about the tax consequences of an exchange.
LIMITATIONS ON EXCHANGES. Certain patterns of past exchanges and/or purchase or
sale transactions involving the Fund or other Morgan Stanley Dean Witter Funds
may result in the Fund limiting or prohibiting, at its discretion, additional
purchases and/or exchanges. Determinations in this regard may be made based on
the frequency or dollar amount of the previous exchanges or purchase or sale
transactions. You will be notified in advance of limitations on your exchange
privileges.
For further information regarding exchange privileges, you should contact your
Morgan Stanley Dean Witter Financial Advisor or call (800) 869-NEWS.
[GRAPHIC OMITTED]
HOW TO SELL SHARES
------------------
You can sell some or all of your Fund shares at any time. Your shares will be
sold at the next price calculated after we receive your order to sell as
described below.
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
-------------------------------------------------------------------------------------------------------
<S> <C>
Contact Your To sell your shares, simply call your Morgan Stanley Dean Witter Financial
Financial Advisor Advisor or other authorized financial representative.
----------------------------------------------------------------------------------
[GRAPHIC OMITTED] Payment will be sent to the address to which the account is registered or
deposited in your brokerage account.
-------------------------------------------------------------------------------------------------------
By Letter You can also sell your shares by writing a "letter of instruction" that includes:
o your account number;
[GRAPHIC OMITTED] o the dollar amount or the number of shares you wish to sell; and
o the signature of each owner as it appears on the account.
----------------------------------------------------------------------------------
If you are requesting payment to anyone other than the registered owner(s) or
that payment be sent to any address other than the address of the registered
owner(s) or pre-designated bank account, you will need a signature guarantee.
You can generally obtain a signature guarantee from an eligible guarantor
acceptable to Morgan Stanley Dean Witter Trust FSB. (You should contact
Morgan Stanley Dean Witter Trust FSB at (800) 869-NEWS for determination
as to whether a particular institution is an eligible guarantor.) A notary public
cannot provide a signature guarantee. Additional documentation may be required
for shares held by a corporation, partnership, trustee or executor.
----------------------------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at P.O. Box 983,
Jersey City, NJ 07303. If you hold share certificates, you must return the
certificates, along with the letter and any required additional documentation.
----------------------------------------------------------------------------------
A check will be mailed to the name(s) and address in which the account is
registered, or otherwise according to your instructions.
-------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
-------------------------------------------------------------------------------------------------------
<S> <C>
Systematic If your investment in all of the Morgan Stanley Dean Witter Family of Funds has
Withdrawal Plan a total market value of at least $10,000, you may elect to withdraw amounts of
$25 or more, or in any whole percentage of a fund's balance (provided the
[GRAPHIC OMITTED] 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.
----------------------------------------------------------------------------------
To sign up for the Systematic Withdrawal Plan, contact your Morgan Stanley
Dean Witter Financial Advisor or call (800) 869-NEWS. You may terminate or
suspend your plan at any time. Please remember that withdrawals from the plan
are sales of shares, not Fund "distributions," and ultimately may exhaust your
account balance. The Fund may terminate or revise the plan at any time.
-------------------------------------------------------------------------------------------------------
</TABLE>
PAYMENT FOR SOLD SHARES. After we receive your complete instructions to sell as
described above, a check will be mailed to you within seven days, although we
will attempt to make payment within one business day. Payment may also be sent
to your brokerage account.
Payment may be postponed or the right to sell your shares suspended under
unusual circumstances. If you request to sell shares that were recently
purchased by check, your sale will not be effected until it has been verified
that the check has been honored.
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.
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.
[GRAPHIC OMITTED]
DISTRIBUTIONS
-------------
(sidebar)
TARGETED DIVIDENDS(SM)
You may select to have your Fund distributions automatically invested in
another Morgan Stanley Dean Witter Fund that you own. Contact your Morgan
Stanley Dean Witter Financial Advisor for further information about this
service.
(end sidebar)
The Fund passes substantially all of its earnings from income and capital gains
along to its investors as "distributions." The Fund earns interest from
fixed-income investments. These amounts are passed along to Fund shareholders as
"income dividend distributions." The Fund realizes capital gains whenever it
sells securities for a higher price than it paid for them. These amounts may be
passed along as "capital gain distributions."
Normally, income dividends are declared on each day the New York Stock Exchange
is open for business and are distributed to shareholders monthly. Capital
gains, if any, are usually distributed in June and December. The Fund, however,
may retain and reinvest any long-term capital gains. The Fund may at times make
payments from sources other than income or capital gains that represent a
return of a portion of your investment.
11
<PAGE>
Distributions are reinvested automatically in additional shares of the Fund and
automatically credited to your account, unless you request in writing that all
distributions be paid in cash. If you elect the cash option, processing of your
dividend checks begins immediately following the monthly payment date, and the
Fund will mail a monthly dividend check to you normally during the first seven
days of the following month. No interest will accrue on uncashed checks. If you
wish to change how your distributions are paid, your request should be received
by the Fund's transfer agent, Morgan Stanley Dean Witter Trust FSB, at least
five business days prior to the record date of the distributions.
[GRAPHIC OMITTED]
TAX CONSEQUENCES
----------------
As with any investment, you should consider how your Fund investment will be
taxed. The tax information in this Prospectus is provided as general
information. You should consult your own tax professional about the tax
consequences of an investment in the Fund.
You need to be aware of the possible tax consequences when:
o The Fund makes distributions; and
o You sell Fund shares, including an exchange to another Morgan Stanley Dean
Witter Fund.
TAXES ON DISTRIBUTIONS. Your income dividend distributions are normally exempt
from federal income taxes -- to the extent they are derived from municipal
obligations. Income derived from other portfolio securities may be subject to
federal, state and/or local income taxes.
Income derived from some municipal securities is subject to the federal
"alternative minimum tax." Certain tax-exempt securities whose proceeds are
used to finance private, for-profit organizations are subject to this special
tax system that ensures that individuals pay at least some federal taxes.
Although interest on these securities is generally exempt from federal income
tax, some taxpayers who have many tax deductions or exemptions nevertheless may
have to pay tax on the income.
If you borrow money to purchase shares of the Fund, the interest on the
borrowed money is generally not deductible for personal income tax purposes.
If the Fund makes any capital gain distributions, those distributions will
normally be subject to federal and state income tax when they are paid, whether
you take them in cash or reinvest them in Fund shares. Any short-term capital
gain distributions are taxable to you as ordinary income. Any long-term capital
gain distributions are taxable to you as long-term capital gains, no matter how
long you have owned shares in the Fund.
The Fund may derive gains in part from municipal obligations the Fund purchased
below their principal or face values. All, or a portion, of these gains may be
taxable to you as ordinary income rather than capital gains.
Every January, you will be sent a statement (IRS Form 1099-DIV) showing the
distributions paid to you in the previous year. The statement provides
information on your dividends and capital gains for tax purposes.
12
<PAGE>
TAXES ON SALES. Your sale of Fund shares normally is subject to federal and
state income tax and may result in a taxable gain or loss to you. A sale also
may be subject to local income tax. Your exchange of Fund shares for shares of
another Morgan Stanley Dean Witter Fund is treated for tax purposes like a sale
of your original shares and a purchase of your new shares. Thus, the exchange
may, like a sale, result in a taxable gain or loss to you and will give you a
new tax basis for your new shares.
When you open your Fund account, you should provide your social security or tax
identification number on your investment application. By providing this
information, you will avoid being subject to a federal backup withholding tax
of 31% on taxable distributions and sale proceeds. Any withheld amount would be
sent to the IRS as an advance tax payment.
13
<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, independent
accountants, whose report, along with the Fund's financial statements, is
included in the annual report, which is available upon request.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31, 2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA:
-------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.34 $10.26 $ 9.91 $ 9.95 $ 9.56
-------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.38 0.39 0.40 0.40 0.41
Net realized and unrealized gain (loss) (0.38) 0.08 0.35 (0.04) 0.39
------ ------ ------ ------ ------
Total income from investment operations -- 0.47 0.75 0.36 0.80
-------------------------------------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.38) (0.39) (0.40) (0.40) (0.41)
-------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.96 $10.34 $10.26 $ 9.91 $ 9.95
-------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 0.08% 4.68% 7.70% 3.65% 8.42%
-------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
-------------------------------------------------------------------------------------------------------------------------------
Expenses 0.91% 0.86%(1) 0.83% 0.88%(1) 0.87%(1)
-------------------------------------------------------------------------------------------------------------------------------
Net investment income 3.81% 3.75% 3.92% 3.99% 4.09%
-------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
-------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $44,237 $58,648 $57,500 $61,098 $72,766
-------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 3% 29% -- -- --
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Does not reflect the effect of expense offset of 0.01%.
14
<PAGE>
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15
<PAGE>
NOTES
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16
<PAGE>
MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS
The Morgan Stanley Dean Witter Family of Funds offers investors a wide range of
investment choices. Come on in and meet the family!
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GROWTH FUNDS Aggressive Equity Fund Health Sciences Trust
American Opportunities Fund Information Fund
Capital Growth Securities Natural Resource Development Securities
Developing Growth Securities GLOBAL/INTERNATIONAL FUNDS
Growth Fund Competitive Edge Fund - "Best Ideas" Portfolio
Market Leader Trust European Growth Fund
Mid-Cap Equity Trust Fund of Funds - International Portfolio
Next Generation Trust International Fund
Small Cap Growth Fund International SmallCap Fund
Special Value Fund Japan Fund
Tax-Managed Growth Fund Latin American Growth Fund
21st Century Trend Fund Pacific Growth Fund
THEME FUNDS
Financial Services Trust
----------------------------------------------------------------------------------------------------------------------------------
GROWTH & INCOME FUNDS Balanced Growth Fund Total Market Index Fund
Balanced Income Fund Total Return Trust
Convertible Securities Trust Value Fund
Dividend Growth Securities Value-Added Market Series/Equity Portfolio
Equity Fund THEME FUNDS
Fund of Funds - Domestic Portfolio Real Estate Fund
Income Builder Fund Utilities Fund
Mid-Cap Dividend Growth Securities GLOBAL FUNDS
S&P 500 Index Fund Global Dividend Growth Securities
S&P 500 Select Fund Global Utilities Fund
Strategist Fund
----------------------------------------------------------------------------------------------------------------------------------
INCOME FUNDS GOVERNMENT INCOME FUNDS GLOBAL INCOME FUNDS
Federal Securities Trust North American Government Income Trust
Short-Term U.S. Treasury Trust World Wide Income Trust
U.S. Government Securities Trust TAX-FREE INCOME FUNDS
DIVERSIFIED INCOME FUNDS California Tax-Free Income Fund
Diversified Income Trust Hawaii Municipal Trust(FSC)
CORPORATE INCOME FUNDS Limited Term Municipal Trust(NL)
High Yield Securities Multi-State Municipal Series Trust(FSC)
Intermediate Income Securities New York Tax-Free Income Fund
Short-Term Bond Fund(NL) Tax-Exempt Securities Trust
----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS TAXABLE MONEY MARKET FUNDS TAX-FREE MONEY MARKET FUNDS
Liquid Asset Fund(MM) California Tax-Free Daily Income Trust(MM)
U.S. Government Money Market Trust(MM) New York Municipal Money Market Trust(MM)
Tax-Free Daily Income Trust(MM)
</TABLE>
There may be funds created after this Prospectus was published. Please consult
the inside back cover of a new fund's prospectus for its 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
LIMITED TERM MUNICIPAL TRUST
Additional information about the Fund's investments is available in the Fund's
Annual and Semi-Annual Reports to Shareholders. In the Fund's Annual Report,
you will find a discussion of the market conditions and investment strategies
that significantly affected the Fund's performance during its last fiscal year.
The Fund's Statement of Additional Information also provides additional
information about the Fund. The Statement of Additional Information is
incorporated herein by reference (legally is part of this Prospectus). For a
free copy of any of these documents, to request other information about the
Fund, or to make shareholder inquiries, please call:
(800) 869-NEWS
You also may obtain information about the Fund by calling your Morgan Stanley
Dean Witter Financial Advisor or by visiting our Internet site at:
WWW.MSDW.COM/INDIVIDUAL/FUNDS
Information about the Fund (including the Statement of Additional Information)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (202) 942-8090. Reports and
other information about the Fund are available on the EDGAR Database on the
SEC's Internet site at (www.sec.gov), and copies of this information may be
obtained, after paying a duplicating fee, by electronic request at the
following E-mail address: [email protected], or by writing the Public
Reference Section of the SEC, Washington, DC 20549-0102.
TICKER SYMBOL:
DWLTX
------------------
(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-7700)
