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Filed Pursuant to Rule 497(e)
Registration File No.: 811-08240
EMERGING MARKETS
OPPORTUNITIES TRUST
PROSPECTUS --JANUARY 26, 1998
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TCW/DW Emerging Markets Opportunities Trust (the "Fund") is an open-end,
non-diversified management investment company, whose investment objective is
long-term capital appreciation through investment primarily in equity
securities of companies in emerging market countries. The Fund seeks to
achieve its investment objective by investing at least 65% of its total
assets in equity securities of companies in emerging market countries. There
is no assurance that the Fund's investment objective will be achieved. See
"Investment Objective and Policies." The Fund may invest up to 35% of its
total assets in high risk debt securities which are unrated or rated below
investment grade. Investments in emerging market countries involve certain
special risk factors and therefore may not be suitable for all investors.
The Fund offers four classes of shares (each, a "Class"), each with a
different combination of sales charges, ongoing fees and other features. The
different distribution arrangements permit an investor to choose the method
of purchasing shares that the investor believes is most beneficial given the
amount of the purchase, the length of time the investor expects to hold the
shares and other relevant circumstances. Prior to the date of this prospectus
the Fund was organized as a closed-end investment company; all shares of the
Fund held prior to such date have been designated Class A shares. See "The
Fund and its Management" and "Purchase of Fund Shares--Alternative Purchase
Arrangements."
This Prospectus sets forth concisely the information you should know before
investing in the Fund. It should be read and retained for future reference.
Additional information about the Fund is contained in the Statement of
Additional Information, dated January 26, 1998 which has been filed with the
Securities and Exchange Commission, and which is available at no charge upon
request of the Fund at the address or telephone numbers listed on this page.
The Statement of Additional Information is incorporated herein by reference.
TABLE OF CONTENTS
Prospectus Summary .................................................... 2
Summary of Fund Expenses .............................................. 4
Financial Highlights .................................................. 5
The Fund and its Management ........................................... 6
Investment Objective and Policies ..................................... 7
Risk Considerations ................................................. 8
Investment Restrictions ............................................... 15
Purchase of Fund Shares ............................................... 15
Shareholder Services .................................................. 22
Repurchases and Redemptions ........................................... 24
Dividends, Distributions and Taxes .................................... 25
Performance Information ............................................... 26
Additional Information ................................................ 26
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and the shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other agency.
TCW/DW EMERGING MARKETS
OPPORTUNITIES TRUST
Two World Trade Center
New York, New York 10048
(212) 392-2550 or
(800) 869-NEWS (toll-free)
Dean Witter Distributors Inc.
Distributor
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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<CAPTION>
PROSPECTUS SUMMARY
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<S> <C>
THE The Fund is organized as a trust, commonly known as a Massachusetts business
FUND trust, and is an open-end, non-diversified management investment company investing
primarily in equity securities of companies in emerging market countries.
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SHARES Shares of beneficial interest with $0.01 par value (see page 26). The Fund offers
OFFERED four Classes of shares, each with a different combination of sales charges,
ongoing fees and other features (see pages 15-22).
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MINIMUM The minimum initial investment for each Class is $1,000 ($100 if the account
PURCHASE is opened through EasyInvest (Service Mark) ). Class D shares are only available
to persons investing $5 million ($25 million for certain qualified plans) or
more and to certain other limited categories of investors. For the purpose of
meeting the minimum $5 million (or $25 million) investment for Class D shares,
and subject to the $1,000 minimum initial investment for each Class of the Fund,
an investor's existing holdings of Class A shares and concurrent investments
in Class D shares of the Fund and other multiple class funds for which Dean
Witter Services Company Inc. serves as manager and TCW Funds Management, Inc.
serves as investment adviser will be aggregated. The minimum subsequent investment
is $100 (see page 15).
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INVESTMENT The investment objective of the Fund is long-term capital appreciation through
OBJECTIVE investment primarily in equity securities of companies in emerging market
countries.
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MANAGER Dean Witter Services Company Inc. (the "Manager"), a wholly-owned subsidiary
of Dean Witter InterCapital Inc. ("InterCapital"), is the Fund's Manager. The
Manager also serves as Manager to thirteen other investment companies which
are advised by TCW Funds Management, Inc. (the "TCW/DW Funds"). The Manager
and InterCapital serve in various investment management, advisory, management
and administrative capacities to a total of 103 investment companies and other
portfolios with assets of approximately $102.9 billion at December 31, 1997.
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CO-ADVISERS TCW Funds Management, Inc. ("TCW") and Morgan Stanley Asset Management Inc.
("MSAM"), an affiliate of InterCapital (collectively, the "Co-Advisers") are
the Fund's investment advisers. In addition to the Fund, TCW serves as investment
adviser to thirteen other TCW/DW Funds. As of December 31, 1997, TCW and its
affiliates had over $50 billion under management or committed to management
in various fiduciary or advisory capacities, primarily from institutional
investors. MSAM serves as investment adviser to one other TCW/DW Fund. MSAM
conducts a worldwide investment advisory business. As of November 30, 1997,
MSAM, together with its institutional investment management affiliates, managed
assets in various fiduciary or advisory capacities of approximately $145.2 billion
(see page 6.)
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SUB-ADVISERS TCW has appointed TCW London International, Limited and TCW Asia Limited as
sub-advisers, to assist TCW in performing its advisory functions.
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MANAGEMENT The Manager receives a monthly fee at the annual rate of 0.75% of daily net
AND ADVISORY assets. The Co-Advisers collectively receive a monthly fee at the annual rate
FEES of 0.50% of daily net assets (see page 6).
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DISTRIBUTOR AND Dean Witter Distributors Inc. (the "Distributor"). The Fund has adopted a
DISTRIBUTION distribution plan pursuant to Rule 12b-1 under the Investment Company Act (the
FEE "12b-1 Plan") with respect to the distribution fees paid by the Class A, Class
B and Class C shares of the Fund to the Distributor. The entire 12b-1 fee payable
by Class A and a portion of the 12b-1 fee payable by each of Class B and Class
C equal to 0.25% of the average daily net assets of the Class are currently
each characterized as a service fee within the meaning of the National Association
of Securities Dealers, Inc. guidelines. The remaining portion of the 12b-1 fee,
if any, is characterized as an asset-based sales charge (see pages 15 and 21).
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ALTERNATIVE Four classes of shares are offered:
PURCHASE o Class A shares are offered with a front-end sales charge, starting at 5.25%
ARRANGEMENTS and reduced for larger purchases. Investments of $1 million or more (and investments
by certain other limited categories of investors) are not subject to any sales
charge at the time of purchase but a contingent deferred sales charge ("CDSC")
of 1.0% may be imposed on redemptions within one year of purchase. The Fund
is authorized to reimburse the Distributor for specific expenses incurred in
promoting the distribution of the Fund's Class A shares and servicing shareholder
accounts pursuant to the Fund's 12b-1 Plan. Reimbursement may in no event exceed
an amount equal to payments at an annual rate of 0.25% of average daily net
assets of the Class (see pages 15, 17 and 21). All shares of the Fund held prior
to January 26, 1998 have been designated Class A shares and are not subject
to any CDSC at the time of redemption.
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2
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o Class B shares are offered without a front-end sales charge, but will in most
cases be subject to a CDSC (scaled down from 5.0% to 1.0%) if redeemed within
six years after purchase. The CDSC will be imposed on any redemption of shares
if after such redemption the aggregate current value of a Class B account with
the Fund falls below the aggregate amount of the investor's purchase payments
made during the six years preceding the redemption. A different CDSC schedule
applies to investments by certain qualified plans. Class B shares are also subject
to a 12b-1 fee assessed at the annual rate of 1.0% of the average daily net
assets of Class B. Class B shares convert to Class A shares approximately ten
years after the date of the original purchase (see pages 15, 19 and 21).
o Class C shares are offered without a front-end sales charge, but will in most
cases be subject to a CDSC of 1.0% if redeemed within one year after purchase.
The Fund is authorized to reimburse the Distributor for specific expenses incurred
in promoting the distribution of the Fund's Class C shares and servicing shareholder
accounts pursuant to the Fund's 12b-1 Plan. Reimbursement may in no event exceed
an amount equal to payments at an annual rate of 1.0% of average daily net assets
of the Class (see pages 15 and 21).
o Class D shares are offered only to investors meeting an initial investment
minimum of $5 million ($25 million for certain qualified plans) and to certain
other limited categories of investors. Class D shares are offered without a
front-end sales charge or CDSC and are not subject to any 12b-1 fee (see pages
15 and 21).
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DIVIDENDS AND Dividends from net investment income and distributions from net capital gains,
CAPITAL GAINS if any, are paid at least annually. The Fund may, however, determine to retain
DISTRIBUTIONS all or part of any net long-term capital gains in any year for reinvestment.
Dividends and capital gains distributions paid on shares of a Class are
automatically reinvested in additional shares of the same Class at net asset
value unless the shareholder elects to receive cash. Shares acquired by dividend
and distribution reinvestment will not be subject to any sales charge or CDSC
(see pages 22 and 25).
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REDEMPTION Shares are redeemable by the shareholder at net asset value less any applicable
CDSC on Class A, Class B or Class C shares. An account may be involuntarily
redeemed if the total value of the account is less than $100 or, if the account
was opened through EasyInvest (Service Mark), if after twelve months the
shareholder has invested less than $1,000 in the account (see page 24).
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RISK The net asset value of the Fund's shares will fluctuate with changes in the
CONSIDERATIONS market value of the Fund's portfolio securities. It should be recognized that
investing in emerging market country securities includes certain risks not
typically associated with investing in securities of U.S. issuers, including
(i) the risks associated with international investments generally, such as
fluctuations in foreign currency exchange rates, (ii) the risks of investing
in countries with smaller, less developed capital markets, such as limited
liquidity, price volatility, custodial settlement issues and restrictions on
foreign investment, and (iii) the risks associated with emerging country economies,
including high levels of inflation, large amounts of debt and political and
social uncertainties, such as the risk of expropriation, nationalization or
confiscation of the Fund's assets or the imposition of restrictions on foreign
investment or the repatriation of capital invested. In addition, securities
markets in emerging market countries are subject to non-uniform corporate
disclosure standards and governmental regulation which may lead to less publicly
available and less reliable information concerning issuers in emerging market
countries than is generally the case for U.S. issuers (see page 9). The Fund
may invest in securities issued by foreign investment companies, which may result
in additional costs to the Fund. The Fund is a non-diversified investment company
and, as such, is not subject to the diversification requirements of the Investment
Company Act of 1940. As a result, a relatively high percentage of the Fund's
assets may be invested in a limited number of issuers. However, the Fund intends
to continue to qualify as a regulated investment company under the federal income
tax laws and, as such, is subject to the diversification requirements of the
Internal Revenue Code (see page 12). The Fund may invest in lower rated or unrated
sovereign debt of emerging market countries or debt securities of issuers in
emerging market countries, which involves a high degree of risk (see pages 9
and 10). The Fund also may engage in options and futures transactions and swaps
and may purchase securities on a when-issued, delayed delivery or "when, as
and if issued" basis, which may involve certain additional risks (see pages
8-14).
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The above is qualified in its entirety by the detailed information appearing
elsewhere in this Prospectus and in the Statement of Additional Information.
3
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SUMMARY OF FUND EXPENSES
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The following table illustrates all expenses and fees that a shareholder
of the Fund will incur. The estimated expenses and fees set forth in the
table are based on the expenses and fees for the fiscal year ended January
31, 1997, as adjusted for changes resulting from open-ending the Fund and
implementing the distribution plan.
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<CAPTION>
CLASS A CLASS B CLASS C CLASS D
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<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) ............................................................... 5.25%(1) None None None
Sales Charge Imposed on Dividend Reinvestments ........................ None None None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or redemption proceeds) .. None(2) 5.00%(3) 1.00%(4) None
Redemption Fees........................................................ None None None None
Exchange Fee........................................................... None None None None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET
ASSETS)
Management and Advisory Fees .......................................... 1.25% 1.25% 1.25% 1.25%
12b-1 Fees (5)(6)...................................................... 0.25% 1.00% 1.00% None
Other Expenses ........................................................ 0.44% 0.44% 0.44% 0.44%
Total Fund Operating Expenses (7)...................................... 1.94% 2.69% 2.69% 1.69%
</TABLE>
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(1) Reduced for purchases of $25,000 and over (see "Purchase of Fund
Shares--Initial Sales Charge Alternative--Class A Shares"). Shares of
the Fund held prior to January 26, 1998 are not subject to a front-end
sales charge.
(2) Investments that are not subject to any sales charge at the time of
purchase are subject to a CDSC of 1.00% that will be imposed on
redemptions made within one year after purchase, except for shares of
the Fund held prior to January 26, 1998 and in certain other specific
circumstances (see "Purchase of Fund Shares--Initial Sales Charge
Alternative--Class A Shares").
(3) The CDSC is scaled down to 1.00% during the sixth year, reaching zero
thereafter.
(4) Only applicable to redemptions made within one year after purchase (see
"Purchase of Fund Shares--Level Load Alternative--Class C Shares").
(5) The 12b-1 fee is accrued daily and payable monthly. The entire 12b-1
fee payable by Class A and a portion of the 12b-1 fee payable by each
of Class B and Class C equal to 0.25% of the average daily net assets
of the Class are currently each characterized as a service fee within
the meaning of National Association of Securities Dealers, Inc.
("NASD") guidelines and are payments made for personal service and/or
maintenance of shareholder accounts. The remainder of the 12b-1 fee, if
any, is an asset-based sales charge, and is a distribution fee paid to
the Distributor to compensate it for the services provided and the
expenses borne by the Distributor and others in the distribution of the
Fund's shares (see "Purchase of Fund Shares--Plan of Distribution").
(6) Upon conversion of Class B shares to Class A shares, such shares will
be subject to the lower 12b-1 fee applicable to Class A shares. No
sales charge is imposed at the time of conversion of Class B shares to
Class A shares. Class C shares do not have a conversion feature and,
therefore, are subject to an ongoing 1.00% distribution fee (see
"Purchase of Fund Shares--Alternative Purchase Arrangements").
(7) There were no outstanding shares of Class B, Class C or Class D prior
to the date of this Prospectus. Accordingly, "Total Fund Operating
Expenses," as shown above with respect to those Classes, are based upon
the sum of 12b-1 Fees, Management and Advisory Fees and estimated
"Other Expenses." "Total Fund Operating Expenses" of Class A shares are
based upon the sum of 12b-1 Fees applicable to the Class A shares,
Management and Advisory Fees and estimated "Other Expenses" based on
actual expenses for the fiscal year ended January 31, 1997 as adjusted
for estimated incremental expenses in connection with open-ending the
Fund.
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<CAPTION>
EXAMPLES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment
assuming (1) a 5% annual return and (2) redemption at the end of
each time period:
Class A .......................................................... $71 $110 $152 $267
Class B .......................................................... $77 $114 $162 $302
Class C........................................................... $37 $ 84 $142 $302
Class D .......................................................... $17 $ 53 $ 92 $200
You would pay the following expenses on the same $1,000 investment
assuming no redemption at the end of the period:
Class A .......................................................... $71 $110 $152 $267
Class B .......................................................... $27 $ 84 $142 $302
Class C .......................................................... $27 $ 84 $142 $302
Class D .......................................................... $17 $ 53 $ 92 $200
</TABLE>
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES OF EACH CLASS MAY BE GREATER
OR LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. For a more complete description of these costs and expenses, see
"The Fund and its Management," "Purchase of Fund Shares--Plan of
Distribution" and "Repurchases and Redemptions."
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
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FINANCIAL HIGHLIGHTS
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The following ratios and per share data for a share of beneficial interest
outstanding throughout each of the periods through January 31, 1997 have been
audited by Price Waterhouse LLP, independent accountants. The information for
the six-month period ended July 31, 1997 is unaudited. The financial
highlights should be read in conjunction with the financial statements, notes
thereto and the unqualified report of independent accountants, which are
contained in the Statement of Additional Information.
The financial information below reflects the Fund's performance as a
closed-end investment company. Accordingly, the financial information below
may not be indicative of the Fund's performance as an open-end investment
company. Shares of the Fund existing at the time of its conversion to an
open-end investment company have been classified as Class A shares. Class B,
Class C and Class D shares were not offered prior to the date of this
prospectus; accordingly, financial information for such shares is not set
forth below.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD
FOR THE SIX JANUARY 31, MARCH 30, 1994*
MONTHS ENDED ---------------------- THROUGH
JULY 31, 1997 1997 1996 JANUARY 31, 1995
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(UNAUDITED)
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .............. $ 14.70 $ 13.07 $11.18 $ 14.02
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Net investment income.............................. 0.08 0.02 0.04 0.11
Net realized and unrealized gain (loss)............ 2.73 1.65 1.73 (2.89)
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Total from investment operations................... 2.81 1.67 1.77 (2.78)
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Offering costs charged against capital............. -- -- -- (0.02)
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Less dividends and distributions from:
Net investment income............................. (0.02) (0.05) (0.02) (0.09)
Net realized gain................................. -- -- -- (0.01)
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Total dividends and distributions.................. (0.02) (0.05) (0.02) (0.10)
-------------- ---------- ---------- ----------------
Anti-dilutive effect of acquiring treasury shares -- 0.01 0.14 0.06
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Net asset value, end of period .................... $ 17.49 $ 14.70 $13.07 $ 11.18
============== ========== ========== ================
Market value, end of period........................ $15.813 $13.125 $12.25 $ 9.875
============== ========== ========== ================
TOTAL INVESTMENT RETURN+........................... 20.62%(1) 7.59% 24.28% (33.52)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses........................................... 1.66%(2) 1.72% 1.69% 1.73%(2)
Net investment income.............................. 1.01%(2) 0.12% 0.28% 0.94%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............ $363,058 $305,308 $273,172 $254,358
Portfolio turnover rate ........................... 38%(1) 66% 66% 61%(1)
Average commission rate paid....................... $0.0008 $0.0012 -- --
</TABLE>
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* Commencement of operations.
+ Total investment return is based upon the current market value on the
last day of each period reported. Dividends and distributions are
assumed to be reinvested at the prices obtained under the Trust's
dividend reinvestment plan. Total investment return does not reflect
brokerage commissions.
(1) Not annualized.
(2) Annualized.
5
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THE FUND AND ITS MANAGEMENT
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TCW/DW Emerging Markets Opportunities Trust (the "Fund") is an open-end,
non-diversified management investment company. The Fund is a trust of the
type commonly known as a "Massachusetts business trust" and was organized
under the laws of Massachusetts on December 22, 1993 as a closed-end
non-diversified investment company. On July 22, 1997, the shareholders of the
Fund voted to, among other things, convert the Fund to an open-end investment
company. Effective as of the date of this Prospectus, the Fund converted to
an open-end investment company.
Dean Witter Services Company Inc. (the "Manager"), whose address is Two
World Trade Center, New York, New York 10048, is the Fund's Manager. The
Manager is a wholly-owned subsidiary of Dean Witter InterCapital Inc.
("InterCapital"). InterCapital is a wholly-owned subsidiary of Morgan
Stanley, Dean Witter, Discover & Co., a preeminent global financial services
firm that maintains leading market positions in each of its three primary
businesses--securities, asset management and credit services.
The Manager acts as manager to thirteen other TCW/DW Funds. The Manager
and InterCapital serve in various investment management, advisory, management
and administrative capacities to a total of 103 investment companies, 29 of
which are listed on the New York Stock Exchange, with combined assets of
approximately $98.9 billion as of December 31, 1997. InterCapital also
manages and advises portfolios of pension plans, other institutions and
individuals which aggregated approximately $4 billion at such date.
The Fund has retained the Manager to manage its business affairs,
supervise its overall day-to-day operations (other than providing investment
advice) and provide all administrative services.
TCW Funds Management, Inc. ("TCW"), whose address is 865 South Figueroa
Street, Suite 1800, Los Angeles, California 90017, and Morgan Stanley Asset
Management Inc. ("MSAM"), whose address is 1221 Avenue of the Americas, are
the Fund's investment advisers (the "Co-Advisers").
TCW was organized in 1987 as a wholly-owned subsidiary of The TCW Group,
Inc. (the "TCW Group"), whose subsidiaries, including Trust Company of the
West and TCW Asset Management Company, provide a variety of trust, investment
management and investment advisory services. Robert A. Day, who is Chairman
of the Board of Directors of the TCW Group, may be deemed to be a control
person of TCW by virtue of the aggregate ownership by Mr. Day and his family
of more than 25% of the outstanding voting stock of the TCW Group. TCW serves
as investment adviser to thirteen other TCW/DW Funds in addition to the Fund.
TCW has entered into two sub-advisory agreements with two other wholly-owned
subsidiaries of TCW Group, TCW London International, Limited ("TCW London")
and TCW Asia Limited ("TCW Asia") to assist in performing its advisory
functions. The address of TCW London is 27 Albemarle Street, London W1X 3FA
and the address of TCW Asia is One Pacific Place, 88 Queensway, Hong Kong. As
of December 31, 1997, TCW and its affiliated companies had approximately $50
billion under management or committed to management, primarily from
institutional investors.
MSAM, an affiliate of InterCapital, is a wholly-owned subsidiary of MSDWD.
MSAM, together with its institutional investment management affiliates
manages, as of November 30, 1997, assets in various fiduciary or advisory
capacities of approximately $145.2 billion primarily for U.S. corporate and
public employees benefit plans, investment companies, endowments, foundations
and wealthy individuals.
The Fund has retained the Co-Advisers to invest the Fund's assets. Prior
to the date of this Prospectus, TCW was the sole investment adviser of the
Fund. In November, 1997, TCW indicated its intention to manage only a portion
of the Fund's assets. InterCapital, with the concurrence of TCW, recommended
to the Fund's Board of Trustees that MSAM be appointed as a co-investment
adviser. Under the co-advisory arrangement, TCW and MSAM do not manage the
Fund's total assets jointly; instead, each co-adviser is responsible only for
investment of its portion of the Fund's assets. Thus, securities will be
purchased and sold by TCW and MSAM based on each co-adviser's independent
portfolio management decisions, which could result in purchases and sales,
and concomitant brokerage commissions, at times when they would not occur in
a portfolio managed by a single adviser. The Board of Trustees recommended
that new Co-Advisory Agreements with TCW and MSAM be submitted to
shareholders of the Fund for approval. The shareholders approved the new
Co-Advisory Agreements with TCW and MSAM on January 12, 1998 and those
agreements became effective as of the date of this Prospectus.
The Fund's Trustees review the various services provided by the Manager
and the Co-Advisers to ensure that the Fund's general investment policies and
programs are being properly carried out and that administrative services are
being provided to the Fund in a satisfactory manner.
As full compensation for the services and facilities furnished to the Fund
and for expenses of the Fund assumed by the Manager, the Fund pays the
Manager monthly compensation calculated daily by applying the annual rate of
0.75% to the Fund's net assets. As compensation for its investment advisory
services, the Fund pays the Co-Advisers collectively monthly compensation
calcu-
6
<PAGE>
lated daily by applying an annual rate of 0.50% to the Fund's net assets. For
the fiscal year ended January 31, 1997, the Fund accrued total compensation
to the Manager and TCW amounting to 0.75% and 0.50%, respectively, of the
Fund's average daily net assets. During that period, the Fund's expenses
amounted to 1.72% of the Fund's average daily net assets.The expenses of the
Fund include: the fee of the Investment Manager; the fee pursuant to the Plan
of Distribution (see "Purchase of Fund Shares"); taxes; transfer agent,
custodian and auditing fees; certain legal fees; and printing and other
expenses relating to the Fund's operations which are not expressly assumed by
the Investment Manager under its Investment Management Agreement with the
Fund.
INVESTMENT OBJECTIVE AND POLICIES
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The Fund's investment objective is long-term capital appreciation through
investment primarily in equity securities of companies in emerging market
countries. This objective is fundamental and may not be changed without
shareholder approval. There is no assurance that the objective will be
achieved. The Fund seeks to achieve its investment objective by investing
under normal circumstances at least 65% of its total assets in equity
securities of companies in emerging market countries.
For the purpose of this Prospectus, an "emerging market country" is any
country that is considered an emerging or developing country by the
International Bank of Reconstruction and Development (the "World Bank"), as
well as Hong Kong, Israel and Singapore. Presently, there are approximately
158 countries considered to be emerging market countries. These countries
generally include every nation in the world except the United States, Canada,
Japan, Australia, New Zealand, most nations located in Western Europe and
certain other nations located in Asia. A list of the countries not falling
within the World Bank definition of an emerging market country is set forth
in the Statement of Additional Information.
The Fund will invest primarily in equity securities of companies that: (i)
are organized under the laws of emerging market countries; (ii) regardless of
where organized, derive at least 50% of their revenues or earnings from goods
produced or sold, investments made, or services performed in emerging market
countries; (iii) maintain at least 50% of their assets in emerging market
countries; or (iv) have securities which are traded principally on a stock
exchange in an emerging market country. Under normal circumstances, the Fund
will invest in at least three emerging market countries. Substantially all of
the Fund's investments may be denominated in currencies other than the U.S.
dollar.
The equity securities in which the Fund may invest include common and
preferred stock (including convertible preferred stock), bonds, notes and
debentures convertible into common or preferred stock, stock purchase
warrants and rights, equity interests in trusts and partnerships and
American, Global or other types of Depository Receipts. These securities may
be listed on securities exchanges, traded in various over-the-counter markets
or have no organized market.
A convertible security is a bond, debenture, note, preferred stock or
other security that may be converted into or exchanged for a prescribed
amount of common stock of the same or a different issuer within a particular
period of time at a specified price or formula. Convertible securities rank
senior to common stocks in a corporation's capital structure and, therefore,
entail less risk than the corporation's common stock. The value of a
convertible security is a function of its "investment value" (its value as if
it did not have a conversion privilege), and its "conversion value" (the
security's worth if it were to be exchanged for the underlying security, at
market value, pursuant to its conversion privilege).
The Fund may invest up to 35% of its total assets in (i) non-convertible
fixed-income securities of government or corporate issuers located in
emerging market countries; (ii) equity and fixed-income securities of issuers
in developed countries; and (iii) cash and money market instruments.
The fixed-income securities (including convertible securities described
above) of government or corporate issuers located in emerging market
countries, the United States or other developed countries in which the Fund
may invest may consist of fixed-income securities that are unrated or rated
Ba or lower by Moody's Investors Service, Inc. ("Moody's") or BB or lower by
Standard & Poor's Corporation ("S&P"), including zero coupon securities.
There is no limit other than the overall 35% limitation described above on
the percentage of the Fund's total assets which may be invested in
fixed-income securities which are unrated or rated below investment grade.
Securities below investment grade are the equivalent of high yield, high risk
bonds, commonly known as "junk bonds." Fixed-income securities rated Ba or
lower by Moody's or BB or lower by S&P are considered to be speculative
investments with respect to the ability of the issuer to pay interest and
repay principal. Furthermore, since the Fund does not have any minimum
quality rating standard for such investments, the Fund may invest in
fixed-income securities rated as low as C by Moody's or as low as D by S&P.
These securities are regarded as having extremely poor prospects of ever
attaining any real investment standing, to have a current identifiable
vulnerability to default and/or to be in default or not current in the
payment of interest or principal. A description of fixed-income securities
ratings (including convertible securities) is contained in the Appendix to
the Statement of Additional Information. See "Risk Considerations"
below for a
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further discussion of the characteristics and risks associated with high
yield, lower rated fixed-income securities.
The Fund is subject to no restrictions on the maturities of the
fixed-income securities it holds. The value of the fixed-income securities
held by the Fund generally will vary inversely to changes in prevailing
interest rates. The Fund's investments in fixed-rated debt securities with
longer terms to maturity are subject to greater volatility than the Fund's
investments in shorter-term obligations. Debt obligations acquired at a
discount are subject to greater fluctuations of market value in response to
changing interest rates than debt obligations of comparable maturities which
are not subject to such discount.
The Fund's investments in debt obligations of government issuers in
emerging market countries will consist of: (i) debt securities or obligations
issued or guaranteed by governments, governmental agencies or
instrumentalities and political subdivisions located in emerging market
countries (including participations in loans between governments and
financial institutions), (ii) debt securities or obligations issued by
government owned, controlled or sponsored entities located in emerging market
countries, and (iii) interests in issuers organized and operated for the
purpose of restructuring the investment characteristics of instruments issued
by any of the entities described above ("Sovereign Debt"). The Sovereign Debt
held by the Fund will take the form of bonds, notes, bills, debentures,
warrants, short-term paper, loan participations, loan assignments and
securities or interests issued by entities organized and operated for the
purpose of restructuring the investment characteristics of such Sovereign
Debt. This Sovereign Debt may include a particular type of debt security
known as "Brady Bonds," which were issued under the "Brady Plan" in exchange
for loans and cash in connection with debt restructurings in various emerging
market countries in 1990. Certain Sovereign Debt held by the Fund will not be
traded on any securities exchange. See "Risk Considerations."
U.S. and non-U.S. corporate fixed-income securities in which the Fund may
invest include debt securities, convertible securities and preferred stocks
of corporate issuers.
The Co-Advisers attempt to minimize the speculative risks associated with
investments in lower rated securities through credit analysis, and by
carefully monitoring current trends in interest rates, political developments
and other factors. Nonetheless, investors should carefully review the
investment objective and policies of the Fund and consider their ability to
assume the investment risks involved before making an investment.
The money market instruments in which the Fund may invest are securities
issued or guaranteed by the U.S. Government (Treasury bills, notes and bonds,
including zero coupon securities); obligations of banks subject to regulation
by the U.S. Government and having total assets of $1 billion or more;
Eurodollar certificates of deposit; obligations of savings banks and savings
and loan associations having total assets of $1 billion or more; fully
insured certificates of deposits; and commercial paper rated within the two
highest grades by Moody's or S&P or, if not rated, issued by an issuer having
an outstanding long-term debt issue rated at least Aa by Moody's or AA by
S&P.
During temporary defensive periods when, in the opinion of either of the
Co-Advisers, market conditions or economic, financial or political conditions
warrant reductions of some or all of the Fund's investments in equity
securities of emerging market countries or other securities in which the Fund
may invest in accordance with its investment objective and policies, the Fund
may adopt a temporary "defensive" posture in which any amount of its total
assets may be invested in U.S. Government securities, short-term high quality
money market instruments or cash.
Investment in Other Investment Vehicles. Under the Investment Company Act
of 1940, as amended (the "Investment Company Act"), the Fund generally may
invest up to 10% of its total assets in the aggregate in shares of other
investment companies (including, to the extent permitted by the Investment
Company Act, those which are advised by the Manager, the Co-Advisers or their
affiliates) and up to 5% of its total assets in any one investment company,
as long as that investment does not represent more than 3% of the voting
stock of the acquired investment company at the time such shares are
purchased. As stated above, investment in other investment companies or
vehicles may be the sole or most practical means by which the Fund can
participate in certain emerging country securities markets. Such investment
may involve the payment of substantial premiums above the value of such
issuers' portfolio securities, and is subject to the limitations described
above and market availability. There can be no assurance that vehicles or
funds for investing in certain emerging market countries will be available
for investment. In addition, special tax considerations may apply. The Fund
does not intend to invest in such vehicles or funds unless, in the judgment
of the Co-Advisers, the potential benefits of such investment justify the
payment of any applicable premium or sales charge. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the
same time the Fund would continue to pay its own management and advisory fees
and other expenses, as a result of which the Fund and its shareholders in
effect will be absorbing duplicate levels of advisory fees with respect to
investments in such other investment companies.
RISK CONSIDERATIONS
The net asset value of the Fund's shares will fluctuate with changes in
the market value of the Fund's securities. The market value of the Fund's
portfolio securities will increase or decrease due to a variety of economic,
market and political factors which cannot be predicted.
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Foreign Securities. Investors should carefully consider the risks of
investing in securities of foreign issuers and securities denominated in
non-U.S. currencies. Fluctuations in the relative rates of exchange between
the currencies of different nations will affect the value of the Fund's
investments. Changes in foreign currency exchange rates relative to the U.S.
dollar will affect the U.S. dollar value of the Fund's assets denominated in
that currency and thereby impact upon the Fund's total return on such assets.
See the Statement of Additional Information for a discussion of additional
risk factors.
Foreign currency exchange rates are determined by forces of supply and
demand on the foreign exchange markets. These forces are themselves affected
by the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. Moreover,
foreign currency exchange rates may be affected by the regulatory control of
the exchanges on which the currencies trade.
In addition, many of the currencies of emerging market countries have
experienced steady devaluations relative to the U.S. dollar, and major
devaluations have historically occurred in certain countries. Any
devaluations in the currencies in which the Fund's portfolio securities are
denominated may have a detrimental impact on the Fund.
Some emerging market countries also may have managed currencies which are
not free floating against the U.S. dollar. In addition, there is a risk that
certain emerging market countries may restrict the free conversion of their
currencies into other currencies. Further, certain emerging market currencies
may not be internationally traded.
Investments in foreign securities will also occasion risks relating to
political and economic developments abroad, including the possibility of
expropriations or confiscatory taxation, limitations on the use or transfer
of Fund assets and any effects of foreign social, economic or political
instability. Political and economic developments in emerging market countries
may have profound effects upon the value of the Fund's portfolio. In the
event of expropriation, nationalization or other complication, the Fund could
lose its entire investment in any one country. In addition, individual
emerging market countries may place restrictions on the ability of foreign
entities such as the Fund to invest in particular segments of the local
economies.
Companies in emerging market countries are not subject to the regulatory
requirements of U.S. companies and, as such, there may be less publicly
available information about such companies. Moreover, companies in emerging
market countries are not subject to uniform accounting, auditing and
financial reporting standards and requirements comparable to those applicable
to U.S. companies. Also, certain emerging market countries may impose
unusually high withholding taxes on dividends payable to the Fund, thereby
effectively reducing the Fund's investment income.
The securities markets of emerging market countries are substantially
smaller, less developed, less liquid and more volatile than the major
securities markets in the United States. The limited size of many emerging
market securities markets and limited trading volume in issuers compared to
volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by
traders who control large positions. Adverse publicity and investors'
perceptions, whether or not based on fundamental analysis, may decrease the
value and liquidity of portfolio securities, especially in these markets.
In addition, exchanges and broker-dealers in emerging market countries are
generally subject to less government and exchange scrutiny and regulation
than their U.S. counterparts. Brokerage commissions, dealer concessions,
custodial expenses and other transaction costs may be higher in foreign
markets than in the U.S. Thus, the Fund's operating expenses are expected to
be higher than those of investment companies investing primarily in domestic
or other more established market regions. Also, differences in clearance and
settlement procedures on foreign markets may occasion delays in settlements
of Fund trades effected in such markets. Inability to dispose of portfolio
securities due to settlement delays could result in losses to the Fund due to
subsequent declines in value of such securities and the inability of the Fund
to make intended security purchases due to settlement problems could result
in a failure of the Fund to make potentially advantageous investments. In
addition, certain adverse tax consequences of the Fund's investments in
passive foreign investment companies are discussed below under "Dividends,
Distributions and Taxes."
Most emerging market countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates have had and may continue to have very
negative effects on the economies and securities markets of certain emerging
market countries.
The Fund may not invest more than 15% of its net assets in illiquid
securities. The Fund will treat any emerging market securities that are
subject to restrictions on repatriation for more than seven days, as well as
any securities issued in connection with emerging market debt conversion
programs that are restricted as to remittance of invested capital or profits,
as illiquid securities for purposes of this limitation. The Fund will also
treat repurchase agreements with maturities in excess of seven days as being
illiquid for this purpose.
Debt Securities. Because of the special nature of the Fund's permitted
investments in lower rated convertible and debt securities, each Co-Adviser
must take account of
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certain special considerations in assessing the risks associated with such
investments. The prices of lower rated securities have been found to be less
sensitive to changes in prevailing interest rates than higher rated
investments, but are likely to be more sensitive to adverse economic changes
or individual corporate developments. During an economic downturn or
substantial period of rising interest rates, highly leveraged issuers may
experience financial stress which would adversely affect their ability to
service their principal and interest payment obligations, to meet their
projected business goals or to obtain additional financing. If the issuer of
a fixed-income security owned by the Fund defaults, the Fund may incur
additional expenses to seek recovery. In addition, periods of economic
uncertainty and change can be expected to result in an increased volatility
of market prices of lower rated securities and a corresponding volatility in
the net asset value of a share of the Fund.
Certain emerging market countries are among the largest debtors to
commercial banks and foreign governments. At times certain emerging market
countries have declared moratoria on the payment of principal and/or interest
on external debt. Trading in Sovereign Debt involves a high degree of risk,
since the governmental entity that controls the repayment of Sovereign Debt
may not be willing or able to repay the principal and/or interest of such
debt obligations when it becomes due, due to factors such as debt service
burden, political constraints, cash flow situation and other national
economic factors. As a result, emerging market governments may default on
their Sovereign Debt, which may require holders of such Sovereign Debt to
participate in debt rescheduling or additional lending to defaulting
governments. There is no bankruptcy proceeding by which defaulted Sovereign
Debt may be collected in whole or in part.
The risks of other investment techniques which may be utilized by the Fund
are described under "Interest Rate Transactions," "Forward Foreign Currency
Exchange Contracts," "Options and Futures Transactions," "Risks of Options
and Futures Transactions," "Short Sales" and "Other Investment Policies"
below.
Interest Rate Transactions. Among the hedging techniques into which the
Fund may enter are interest rate swaps and the purchase or sale of interest
rate caps and floors. The Fund expects to enter into these transactions
primarily to preserve a return or spread on a particular investment or
portion of its portfolio as a duration management technique or to protect
against any increase in the price of securities the Fund anticipates
purchasing at a later date. The Fund intends to use these transactions as a
hedge and not as a speculative investment. The Fund will not sell interest
rate caps or floors that it does not own. Interest rate swaps involve the
exchange by the Fund with another party of their respective commitments to
pay or receive interest, e.g., an exchange of floating rate payments for
fixed rate payments with respect to a notional amount of principal. The
purchase of an interest rate cap entitles the purchaser, to the extent that a
specified index exceeds a predetermined interest rate, to receive payments of
interest on a notional principal amount from the party selling such interest
rate cap. The purchase of an interest rate floor entitles the purchaser, to
the extent that a specified index falls below a predetermined interest rate,
to receive payments of interest on a notional principal amount from the party
selling such interest rate floor.
The Fund may enter into interest rate swaps, caps and floors on either an
asset-based or liability-based basis, depending on whether it is hedging its
assets or its liabilities, and will usually enter into interest rate swaps on
a net basis, i.e., the two payment streams are netted out, with the Fund
receiving or paying, as the case may be, only the net amount of the two
payment rates. The Fund will accrue the net amount of the excess, if any, of
the Fund's obligations over its entitlements with respect to each interest
rate swap on a daily basis and will segregate with a custodian an amount of
cash or liquid securities having an aggregate net asset value at least equal
to the accrued excess. The Fund will not enter into any interest rate swap,
cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in the highest
rating category of at least one nationally recognized rating organization at
the time of entering into such transactions. If there is a default by the
other party to such a transaction, the Fund will have contractual remedies
pursuant to the agreements related to the transaction. The swap market has
grown substantially in recent years with a large number of banks and
investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. Caps and floors are more recent innovations
for which standardized documentation has not yet been developed and,
accordingly, they are less liquid than swaps.
Forward Foreign Currency Exchange Contracts. To hedge against adverse
price movements in the securities held in its portfolio and the currencies in
which they are denominated (as well as in the securities it might wish to
purchase and their denominated currencies) the Fund may engage in
transactions in forward foreign currency contracts.
A forward foreign currency exchange contract, ("forward contract")
involves an obligation to purchase or sell a 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. The Fund may enter
into forward contracts as a hedge against fluctuations in future foreign
exchange rates.
Currently, only a limited market, if any, exists for hedging transactions
relating to currencies in most emerging markets or to securities of issuers
domiciled or principally engaged in business in emerging markets. This may
limit the Fund's ability to effectively hedge its investments in emerging
markets. Hedging against a decline in the value of a currency does not
eliminate fluctuations in the
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prices of portfolio securities or prevent losses if the prices of such
securities decline. Such transactions also limit the opportunity for gain if
the value of the hedged currencies should rise. In addition, it may not be
possible for the Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the devaluation level it anticipates.
If the Fund enters into forward contract transactions and the currency in
which the Fund's portfolio securities (or anticipated portfolio securities)
are denominated rises in value with respect to the currency which is being
purchased (or sold), then the Fund will have realized fewer gains than had
the Fund not entered into the forward contracts. Moreover, the precise
matching of the forward contract amounts and the value of the securities
involved will not generally be possible, since the future value of such
securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward
contract is entered into and the date it matures. The Fund is not required to
enter into such transactions with regard to its foreign currency-denominated
securities and will not do so unless deemed appropriate by the applicable
Co-Adviser.
Options and Futures Transactions. The Fund may purchase and sell (write)
call and put options on portfolio securities which are denominated in either
U.S. dollars or foreign currencies and on the U.S. dollar and foreign
currencies, which are or may in the future be listed on several U.S. and
foreign securities exchanges or are written in over-the-counter transactions
("OTC options"). OTC options are purchased from or sold (written) to dealers
or financial institutions which have entered into direct agreements with the
Fund.
The Fund is permitted to write covered call options on portfolio
securities and the U.S. dollar and foreign currencies, without limit, in
order to hedge against the decline in the value of a security or currency in
which such security is denominated and to close out long call option
positions. The Fund may write covered put options, under which the Fund
incurs an obligation to buy the security (or currency) 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. The aggregate value of
the obligation underlying the puts determined as of the date the options are
sold will not exceed 50% of the Fund's net assets.
The Fund may purchase listed and OTC call and put options in amounts
equalling up to 5% of its total assets. The Fund may purchase call options to
close out a covered call position or to protect against an increase in the
price of a security it anticipates purchasing or, in the case of call options
on a foreign currency, to hedge against an adverse exchange rate change of
the currency in which the security it anticipates purchasing is denominated
vis-a-vis the currency in which the exercise price is denominated. The Fund
may purchase put options on securities which it holds in its portfolio only
to protect itself against a decline in the value of the security. The Fund
may also purchase put options to close out written put positions in a manner
similar to call option closing purchase transactions. There are no other
limits on the Fund's ability to purchase call and put options.
The Fund may purchase and sell futures contracts that are currently
traded, or may in the future be traded, on U.S. and foreign commodity
exchanges underlying portfolio securities, U.S. Treasury bonds, notes and
bills and/or any other non-U.S. fixed-income security ("interest rate"
futures) on foreign currencies ("currency" futures) and on such indexes of
U.S. or foreign equity or fixed-income securities as may exist or come into
being ("index" futures). The Fund may purchase or sell interest rate futures
contracts for the purpose of hedging some or all of the value of its
portfolio securities (or anticipated portfolio securities) against changes in
prevailing interest rates. The Fund may purchase or sell index futures
contracts for the purpose of hedging some or all of its portfolio (or
anticipated portfolio) securities against changes in their prices (or the
currency in which they are denominated.) As stated above, currently only a
limited market exists for options and futures transactions relating to
emerging market currencies or issuers. As a futures contract purchaser, the
Fund 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. As a seller of a futures contract, the Fund incurs an
obligation to deliver the specified amount of the underlying obligation at a
specified time in return for an agreed upon price.
The Fund also may purchase and write call and put options on futures
contracts which are traded on an exchange and enter into closing transactions
with respect to such options to terminate an existing position.
New futures contracts, options and other financial products and various
combinations thereof continue to be developed. The Fund may invest in any
such futures, options or products as may be developed, to the extent
consistent with its investment objective and applicable regulatory
requirements.
Risks of Options and Futures Transactions. The Fund may close out its
position as writer of an option, or as a buyer or seller of a futures
contract, only if a liquid secondary market exists for options or futures
contracts of that series. There is no assurance that such a market will
exist, particularly in the case of OTC options, as such options may generally
only be closed out by entering into a closing purchase transaction with the
purchasing dealer. Also, exchanges may limit the amount by which the price of
many futures contracts may move on any day. If the price moves equal to the
daily limit on successive days, then it may prove impossible to liquidate a
futures position until the daily limit moves have ceased.
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While the futures contracts and options transactions to be engaged in by
the Fund for the purpose of hedging the Fund's portfolio securities are not
speculative in nature, there are risks inherent in the use of such
instruments. One such risk is that the Adviser could be incorrect in its
expectations as to the direction or extent of various interest rate or price
movements or the time span within which the movements take place. For
example, if the Fund sold futures contracts for the sale of securities in
anticipation of an increase in interest rates, and then interest rates went
down instead, causing bond prices to rise, the Fund would lose money on the
sale. Another risk which will arise in employing futures contracts to protect
against the price volatility of portfolio securities is that the prices of
securities, currencies and indexes subject to futures contracts (and thereby
the futures contract prices) may correlate imperfectly with the behavior of
the U.S. dollar cash prices of the Fund's portfolio securities and their
denominated currencies. See the Statement of Additional Information for a
further discussion of risks.
Short Sales. The Fund may make short sales of securities, consistent with
applicable legal requirements. A short sale is a transaction in which the
Fund sells a security it does not own in anticipation that the market price
of that security will decline. The Fund expects to make short sales both as a
form of hedging to offset potential declines in long positions in similar
securities and in order to maintain portfolio flexibility.
When the Fund makes a short sale, it must borrow the security sold short
and deliver it to the broker-dealer through which it made the short sale as
collateral for its obligation to deliver the security upon conclusion of the
sale. The Fund may have to pay a fee to borrow particular securities and is
often obligated to pay over any payments received on such borrowed
securities.
The Fund's obligation to replace the borrowed security will be secured by
collateral deposited with the broker-dealer, usually cash, U.S. Government
securities or other high grade liquid securities similar to those borrowed.
The Fund will also be required to deposit similar collateral with its
custodian to the extent, if any, necessary so that the value of both
collateral deposits in the aggregate is at all times equal to at least 100%
of the current market value of the security sold short. Depending on
arrangements made with the broker-dealer from which it borrowed the security
regarding payment over of any payments received by the Fund on such security,
the Fund may not receive any payments (including interest) on its collateral
deposited with such broker-dealer.
If the price of the security sold short increases between the time of the
short sale and the time the Fund replaces the borrowed security, the Fund
will incur a loss; conversely, if the price declines, the Fund will realize a
gain. Any gain will be decreased, and any loss increased, by the transaction
costs described above. Although the Fund's gain is limited to the price at
which it sold the security short, its potential loss is theoretically
unlimited.
The Fund will not make a short sale if, after giving effect to such sale,
the market value of all securities sold short exceeds 25% of the value of its
total assets or the Fund's aggregate short sales of a particular class of
securities exceeds 25% of the outstanding securities of that class. The Fund
may also make short sales "against the box" without respect to such
limitations. In this type of short sale, at the time of the sale, the Fund
owns or has the immediate and unconditional right to acquire at no additional
cost the identical security.
Year 2000. The management services provided to the Fund by the Manager,
the advisory services provided to the Fund by the Co-Advisers, and the
services provided by the Distributor and the Transfer Agent to shareholders,
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 1980, 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 Manager, each Co-Adviser, the
Distributor and the Transfer Agent have been actively working on necessary
changes to their own computer systems to deal with 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
noncomplying computer systems will not impair their services at that time.
OTHER INVESTMENT POLICIES
Non-Diversified Status. The Fund is classified as a non-diversified
investment company under the Investment Company Act, and as such is not
limited by the Investment Company Act in the proportion of its assets that it
may invest in the obligations of a single issuer. However, the Fund intends
to conduct its operations so as to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code. See "Dividends,
Distributions and Taxes." In order to qualify, among other requirements, the
Fund will limit its investments so that at the close of each quarter of the
taxable year, (i) not more than 25% of the market value of the Fund's total
assets will be invested in the securities of a single issuer, and (ii) with
respect to 50% of the market value of its total assets not more than 5% will
be invested in the securities of a single issuer and the Fund will not own
more than 10% of the outstanding voting securities of a single issuer. To the
extent that a relatively high percentage of the Fund's assets may be invested
in the obligations of a limited number of issuers, the Fund's portfolio
securities may be more susceptible to any single economic, political or
regulatory occurrence than the portfolio securities of a diversified
investment company. The limitations described in this paragraph are not
fundamental policies and may be revised to the extent applicable Federal
income tax requirements are revised.
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Repurchase Agreements. The Fund may enter into repurchase agreements,
which may be viewed as a type of secured lending by the Fund, and which
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 at a specified price and at a fixed time in the future, usually not
more than seven days from the date of purchase. While repurchase agreements
involve certain risks not associated with direct investments in debt
securities, including the risks of default or bankruptcy of the selling
financial institution, the Fund follows procedures designed to minimize those
risks. These procedures include effecting repurchase transactions only with
large, well-capitalized and well-established financial institutions and
maintaining adequate collateralization.
When-Issued and Delayed Delivery Securities and Forward Commitments. From
time to time, in the ordinary course of business, 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 such 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 the commitment.
There is no overall limit on the percentage of the Fund's assets which may be
committed to the purchase of securities on a when-issued, delayed delivery or
forward commitment basis. 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 the Fund's net asset
value.
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, leveraged buyout or debt restructuring. If
the anticipated event does not occur and the securities are not issued, the
Fund will have lost an investment opportunity. There is no overall limit on
the percentage of the Fund's assets which may be committed to the purchase of
securities on a "when, as and if issued" basis. 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.
Rights and Warrants. The Fund may acquire rights and/or warrants which are
attached to other securities in its portfolio, or which are issued as a
distribution by the issuer of a security held in its portfolio. Rights and/or
warrants are, in effect, options to purchase equity securities at a specific
price, generally valid for a specific period of time, and have no voting
rights, pay no dividends and have no rights with respect to the corporation
issuing them.
Securities Receipts. The Fund may also invest in securities of foreign
issuers in the form of American Depository Receipts (ADRs), European
Depository Receipts (EDRs), Global Depositary Receipts (GDRs) or other
similar securities convertible into securities of foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically
issued by a United States bank or trust company evidencing ownership of the
underlying securities. EDRs are European receipts evidencing a similar
arrangement. Generally, ADRs, in registered form, are designed for use in the
United States securities markets and EDRs, in bearer form, are designed for
use in European securities markets.
Loan Participations and Assignments. The Fund may invest in fixed rate and
floating rate loans ("Loans") arranged through private negotiations between
an issuer of sovereign debt obligations and one or more financial
institutions ("Lenders"). The Fund's investments in Loans are expected in
most instances to be in the form of participation in Loans ("Participations")
and assignments of all or a portion of Loans ("Assignments") from third
parties. The Fund will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the Lender selling
the Participation and only upon receipt by the Lender of the payments from
the borrower. In the event of the insolvency of the Lender selling a
Participation, the Fund may be treated as a general creditor of the Lender
and may not benefit from any set-off between the Lender and the borrower.
Certain Participations may be structured in a manner designed to avoid
purchasers of Participations being subject to the credit risk of the Lender
with respect to the Participation. Even under such a structure, in the event
of the Lender's insolvency, the Lender's servicing of the Participation may
be delayed and the assignability of the Participation may be impaired. The
Fund will acquire Participations only if the Lender interpositioned between
the Fund and the borrower is determined by the Co-Adviser to be creditworthy.
When the Fund purchases Assignments from Lenders it will acquire direct
rights against the borrower on the Loan. However, because Assignments are
arranged through private negotiations between potential assignees and
potential assignors, the rights and obligations acquired by the Fund as the
purchaser of an Assignment may differ from, and be more limited than, those
held by the assigning Lender. Because there is no liquid market for such
securities, the Fund anticipates that such securities could be sold only to a
limited number of institutional investors. The lack of a liquid secondary
market may have an adverse impact on the value of such securities and the
Fund's ability to dispose of particular Assignments or Participations when
necessary to meet the Fund's liquidity needs or in response to a specific
economic event such as a deterioration in the creditworthiness of the
borrowers. The lack of a liquid secondary market for Assignments and
13
<PAGE>
Participations also may make it more difficult for the Fund to assign a value
to these securities for purposes of valuing the Fund's portfolio and
calculating its net asset value.
Lending of Portfolio Securities. Consistent with applicable regulatory
requirements, the Fund may lend its portfolio securities to brokers, dealers
and other financial institutions, provided that such loans are callable at
any time by the Fund (subject to certain notice provisions described in the
Statement of Additional Information), and are at all times secured by cash or
money market instruments, which are maintained in a segregated account
pursuant to applicable regulations and that are equal to at least the market
value, determined daily, of the loaned securities. 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, loans of portfolio securities will only be made to
firms deemed by the Adviser to be creditworthy and when the income which can
be earned from such loans justifies the attendant risks. The Fund will not
under any circumstances lend more than 25% of the value of its total assets.
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, as amended (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 such 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 such
securities for resale and the risk of substantial delays in effecting such
registration.
Rule 144A under the Securities Act permits the Fund to sell restricted
securities to qualified institutional buyers without limitation. The Adviser,
pursuant to procedures adopted by the Trustees of the Fund, 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," such
security will not be included within the category "illiquid securities,"
which under current policy may not exceed 15% of the Fund's net assets.
However, investing in Rule 144A Securities could have the effect of
increasing the level of Fund illiquidity to the extent the Fund, at a
particular point in time, may be unable to find qualified institutional
buyers interested in purchasing such securities.
PORTFOLIO MANAGEMENT
The Fund's portfolio is actively managed by each Co-Adviser acting
independently, each with a view to achieving the Fund's investment objective.
Shaun C.K. Chan, Managing Director of TCW Asia Ltd., Terence F. Mahony,
Managing Director of TCW, and Michael P. Reilly, Managing Director of TCW,
are the primary portfolio managers of TCW for the Fund and Madhav Dhar,
Managing Director of MSAM and Morgan Stanley & Co. ("Morgan Stanley"), and
Robert L. Meyer, Managing Director of MSAM and Morgan Stanley, are primary
portfolio managers of MSAM for the Fund. Mr. Chan has been a portfolio
manager of the Fund since 1993, prior to which time he was Director of
Wardley Investment Services (Hong Kong) Ltd. Mr. Mahony has been a primary
portfolio manager of the Fund since July, 1996 and has been a portfolio
manager with TCW Asia Ltd. since April, 1996, prior to which time he was
Chief Investment Officer for Global Emerging Markets at HSBC Asset Management
(September 1993-April 1996) and prior thereto was a Director at Baring Asset
Management. Mr. Reilly has been a primary portfolio manager of the Fund since
December, 1994 and has been a portfolio manager with affiliates of the TCW
Group for over five years. Madhav Dhar has been with MSAM since 1984. He is a
member of MSAM's executive committee, head of MSAM's emerging markets group
and chief investment officer of MSAM's global emerging market equity
portfolios. Robert L. Meyer has been with MSAM since 1989. He is a co-manager
of MSAM's emerging markets group and head of MSAM's Latin American team.
In determining which securities to purchase for the Fund or hold in the
Fund's portfolio, the Co-Advisers will rely on information from various
sources, including research, analysis and appraisals of brokers and dealers,
including Dean Witter Reynolds Inc. ("DWR"), Morgan Stanley & Co.
Incorporated and other broker-dealer affiliates of the Manager and others
regarding economic developments and interest rate trends, and the
Co-Advisers' own analysis of factors they deem relevant.
Orders for transactions in portfolio securities and commodities are placed
for the Fund with a number of brokers and dealers, including DWR, Morgan
Stanley & Co. Incorporated and other broker-dealer affiliates of the Manager.
The Fund may incur brokerage commissions on transactions conducted through
DWR, Morgan Stanley & Co. Incorporated and other brokers and dealers that are
affiliates of the Manager. The Fund intends to buy and hold securities for
capital appreciation. Although the Fund does not intend to engage in
substantial short-term trading as a means of achieving its investment
objective, the Fund may sell portfolio securities without regard to the
length of time that they have been held, in order to take advantage of new
investment opportunities or yield differentials, or because the Fund desires
to preserve gains or limit losses due to changing economic conditions,
interest rate trends, or the financial condition of the issuer. It is not
anticipated that the Fund's portfolio turnover rate will exceed 100% in any
one year. Short term gains and losses may result from such portfolio
transactions. See "Divi-
14
<PAGE>
dends, Distributions and Taxes" for a discussion of the tax implications of
the Fund's transactions.
The expenses of the Fund relating to its portfolio management are likely
to be greater than those incurred by other investment companies investing
only in securities issued by domestic issuers, as custodial costs, brokerage
commissions and other transaction charges related to investing on foreign
markets are generally higher than in the United States.
Except as specifically noted, all investment policies and practices
discussed above are not fundamental policies of the Fund and thus may be
changed without shareholder approval.
INVESTMENT RESTRICTIONS
- -----------------------------------------------------------------------------
The investment restriction listed below is among the restrictions which
have been adopted by the Fund as fundamental policies. Under the Investment
Company Act of 1940, as amended (the "Act"), a fundamental policy may not be
changed without the vote of a majority of the outstanding voting securities
of the Fund, as defined in the Act. For purposes of the following limitation:
(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 may not invest 25% or more of the value of its total assets in
securities of issuers in any one industry. Obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities shall not be
considered investments in the securities of issuers in a single industry.
Additional restrictions which have been adopted by the Fund as fundamental
policies are contained in the Statement of Additional Information.
PURCHASE OF FUND SHARES
- -----------------------------------------------------------------------------
GENERAL
The Fund offers each class of its shares for sale to the public on a
continuous basis. Pursuant to a Distribution Agreement between the Fund and
Dean Witter Distributors Inc. (the "Distributor"), an affiliate of the
Manager, shares of the Fund are distributed by the Distributor and offered by
DWR and other dealers (which may include TCW Brokerage Services, an affiliate
of TCW) who have entered into selected dealer agreements with the Distributor
("Selected Broker-Dealers"). The principal executive office of the
Distributor is located at Two World Trade Center, New York, New York 10048.
The Fund offers four classes of shares (each, a "Class"). Class A shares
are sold to investors with an initial sales charge that declines to zero for
larger purchases; however, Class A shares sold without an initial sales
charge are subject to a contingent deferred sales charge ("CDSC") of 1.0% if
redeemed within one year of purchase, except for certain specific
circumstances. Class B shares are sold without an initial sales charge but
are subject to a CDSC (scaled down from 5.0% to 1.0%) payable upon most
redemptions within six years after purchase. (Class B shares purchased by
certain qualified plans are subject to a CDSC scaled down from 2.0% to 1.0%
if redeemed within three years after purchase.) Class C shares are sold
without an initial sales charge but are subject to a CDSC of 1.0% on most
redemptions made within one year after purchase. Class D shares are sold
without an initial sales charge or CDSC and are available only to investors
meeting an initial investment minimum of $5 million ($25 million for certain
qualified plans), and to certain other limited categories of investors. At
the discretion of the Board of Trustees of the Fund, Class A shares may be
sold to categories of investors in addition to those set forth in this
prospectus at net asset value without a front-end sales charge, and Class D
shares may be sold to certain other categories of investors, in each case as
may be described in the then current prospectus of the Fund. See "Alternative
Purchase Arrangements--Selecting a Particular Class" for a discussion of
factors to consider in selecting which Class of shares to purchase.
The minimum initial purchase is $1,000 for each Class of shares, although
Class D shares are only available to persons investing $5 million ($25
million for certain qualified plans) or more and to certain other limited
categories of investors. For the purpose of meeting the minimum $5 million
(or $25 million) initial investment for Class D shares, and subject to the
$1,000 minimum initial investment for each Class of the Fund, an investor's
existing holdings of Class A shares and concurrent investments in Class D
shares of the Fund and other TCW/DW Funds which are multiple class funds
("TCW/DW Multi-Class Funds") will be aggregated. Subsequent purchases of $100
or more may be made by sending a check, payable to TCW/DW Emerging Markets
Opportunities Trust, directly to Dean Witter Trust FSB (the "Transfer Agent"
or "DWT") at P.O. Box 1040, Jersey City, NJ 07303 or by contacting an account
executive of DWR or other Selected Broker-Dealer. When purchasing shares of
the Fund, investors must specify whether the purchase is for Class A, Class
B, Class C or Class D shares. If no Class is specified,
15
<PAGE>
the Transfer Agent will not process the transaction until the proper Class is
identified. The minimum initial purchase in the case of investments through
EasyInvest (Service Mark), an automatic purchase plan (see "Shareholder
Services"), is $100, provided that the schedule of automatic investments will
result in investments totalling $1,000 within the first twelve months. The
minimum initial purchase in the case of an "Education IRA" is $500, if the
Distributor has reason to believe that additional investments will increase
the investment in the account to $1,000 within three years. In the case of
investments pursuant to (i) Systematic Payroll Deduction Plans (including
Individual Retirement Plans), (ii) the InterCapital mutual fund asset
allocation program and (iii) fee based programs approved by the Distributor,
pursuant to which participants pay an asset based fee for services in the
nature of investment advisory or administrative services, the Fund, in its
discretion, may accept investments without regard to any minimum amounts
which would otherwise be required, provided, in the case of Systematic
Payroll Deduction Plans, that the Distributor has reason to believe that
additional investments will increase the investment in all accounts under
such Plans to at least $1,000. Certificates for shares purchased will not be
issued unless requested by the shareholder in writing to the Transfer Agent.
Shares of the Fund are sold through the Distributor on a normal three
business day settlement basis; that is, payment is due on the third business
day (settlement date) after the order is placed with the Distributor. Since
DWR and other Selected Broker-Dealers forward investors' funds on settlement
date, they will benefit from the temporary use of the funds if payment is
made prior thereto. As noted above, orders placed directly with the Transfer
Agent must be accompanied by payment. Investors will be entitled to receive
income dividends and capital gains distributions if their order is received
by the close of business on the day prior to the record date for such
dividends and distributions. Sales personnel of a Selected Broker-Dealer are
compensated for selling shares of the Fund by the Distributor or any of its
affiliates and/or the Selected Broker-Dealer. In addition, some sales
personnel of the Selected Broker-Dealer will receive various types of
non-cash compensation as special sales incentives, including trips,
educational and/or business seminars and merchandise. The Fund and the
Distributor reserve the right to reject any purchase orders.
ALTERNATIVE PURCHASE ARRANGEMENTS
The Fund offers several Classes of shares to investors designed to provide
them with the flexibility of selecting an investment best suited to their
needs. The general public is offered three Classes of shares: Class A shares,
Class B shares and Class C shares, which differ principally in terms of sales
charges and rate of expenses to which they are subject. A fourth Class of
shares, Class D shares, is offered only to limited categories of investors
(see "No Load Alternative--Class D Shares" below).
Each Class A, Class B, Class C or Class D share of the Fund represents an
identical interest in the investment portfolio of the Fund except that Class
A, Class B and Class C shares bear the expenses of the ongoing shareholder
service fees, Class B and Class C shares bear the expenses of the ongoing
distribution fees and Class A, Class B and Class C shares which are redeemed
subject to a CDSC bear the expense of the additional incremental distribution
costs resulting from the CDSC applicable to shares of those Classes. The
ongoing distribution fees that are imposed on Class A, Class B and Class C
shares will be imposed directly against those Classes and not against all
assets of the Fund and, accordingly, such charges against one Class will not
affect the net asset value of any other Class or have any impact on investors
choosing another sales charge option. See "Plan of Distribution" and
"Redemptions and Repurchases."
Set forth below is a summary of the differences between the Classes and
the factors an investor should consider when selecting a particular Class.
This summary is qualified in its entirety by detailed discussion of each
Class that follows this summary.
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 certain
purchases. Investments of $1 million or more (and investments by certain
other limited categories of investors) are not subject to any sales charges
at the time of purchase but are subject to a CDSC of 1.0% on redemptions made
within one year after purchase, except for certain specific circumstances.
Class A shares are also subject to a 12b-1 fee of up to 0.25% of the average
daily net assets of the Class. See "Initial Sales Charge Alternative--Class A
Shares."
Class B Shares. Class B shares are offered at net asset value with no
initial sales charge but are subject to a CDSC (scaled down from 5.0% to
1.0%) if redeemed within six years of purchase. (Class B shares purchased by
certain qualified plans are subject to a CDSC scaled down from 2.0% to 1.0%
if redeemed within three years after purchase.) This CDSC may be waived for
certain redemptions. Class B shares are also subject to an annual 12b-1 fee
of 1.0% of the average daily net assets of Class B. The Class B shares'
distribution fee will cause that Class to have higher expenses and pay lower
dividends than Class A or Class D shares.
After approximately ten (10) years, Class B shares will convert
automatically to Class A shares of the Fund, based on the relative net asset
values of the shares of the two Classes on the conversion date. In addition,
a certain portion of Class B shares that have been acquired through the
reinvestment of dividends and distributions will be converted at that time.
See "Contingent Deferred Sales Charge Alternative--Class B Shares."
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 redemptions made within one
year after
16
<PAGE>
purchase. This CDSC may be waived for certain redemptions. They are subject
to an annual 12b-1 fee of up to 1.0% of the average daily net assets of the
Class C shares. 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.
See "Level Load Alternative--Class C Shares."
Class D Shares. Class D shares are available only to limited categories of
investors (see "No Load Alternative--Class D Shares" below). Class D shares
are sold at net asset value with no initial sales charge or CDSC. They are
not subject to any 12b-1 fees. See "No Load Alternative--Class D Shares."
Selecting a Particular Class. In deciding which Class of Fund shares to
purchase, investors should consider the following factors, as well as any
other relevant facts and circumstances:
The decision as to which Class of shares is more beneficial to an investor
depends on the amount and intended length of his or her investment. Investors
who prefer an initial sales charge alternative may elect to purchase Class A
shares. Investors qualifying for significantly reduced or, in the case of
purchases of $1 million or more, no initial sales charges may find Class A
shares particularly attractive because similar sales charge reductions are
not available with respect to Class B or Class C shares. Moreover, Class A
shares are subject to lower ongoing expenses than are Class B or Class C
shares over the term of the investment. As an alternative, Class B and Class
C shares are sold without any initial sales charge so the entire purchase
price is immediately invested in the Fund. Any investment return on these
additional investment amounts may partially or wholly offset the higher
annual expenses of these Classes. Because the Fund's future return cannot be
predicted, however, there can be no assurance that this would be the case.
Finally, investors should consider the effect of the CDSC period and any
conversion rights of the Classes in the context of their own investment time
frame. For example, although Class C shares are subject to a significantly
lower CDSC upon redemptions, they do not, unlike Class B shares, convert into
Class A shares after approximately ten years, and, therefore, are subject to
an ongoing 12b-1 fee of 1.0% (rather than the 0.25% fee applicable to Class A
shares) for an indefinite period of time. Thus, Class B shares may be more
attractive than Class C shares to investors with longer term investment
outlooks. Other investors, however, may elect to purchase Class C shares if,
for example, they determine that they do not wish to be subject to a
front-end sales charge and they are uncertain as to the length of time they
intend to hold their shares.
For the purpose of meeting the $5 million (or $25 million) minimum
investment amount for Class D shares, holdings of Class A shares in all
TCW/DW Multi-Class Funds, and holdings of shares of "Exchange Funds" (see
"Shareholder Services--Exchange Privilege") for which Class A shares have
been exchanged, will be included together with the current investment amount.
Sales personnel may receive different compensation for selling each Class
of shares. Investors should understand that the purpose of a CDSC is the same
as that of the initial sales charge in that the sales charges applicable to
each Class provide for the financing of the distribution of shares of that
Class.
Set forth below is a chart comparing the sales charge, 12b-1 fees and
conversion options applicable to each Class of shares:
<TABLE>
<CAPTION>
CONVERSION
CLASS SALES CHARGE 12B-1 FEE FEATURE
- --------- ---------------------------- ------------- -----------------------
<S> <C> <C> <C>
A Maximum 5.25% initial 0.25% No
sales charge reduced
for purchases of $25,000
and over; shares sold
without an initial sales
charge generally subject
to a 1.0% CDSC during
first year.
- --------- ---------------------------- ------------- -----------------------
B Maximum 5.0% 1.0% B shares convert to
CDSC during the first A shares
year decreasing automatically
to 0 after six years after approximately
ten years
- --------- ---------------------------- ------------- -----------------------
C 1.0% CDSC during 1.0% No
first year
- --------- ---------------------------- ------------- -----------------------
D None None No
- --------- ---------------------------- ------------- -----------------------
</TABLE>
See "Purchase of Fund Shares" and "The Fund and its Management" for a
complete description of the sales charges and service and distribution fees
for each Class of shares and "Determination of Net Asset Value," "Dividends,
Distributions and Taxes" and "Shareholder Services--Exchange Privilege" for
other differences between the Classes of shares.
INITIAL SALES CHARGE ALTERNATIVE--
CLASS A SHARES
Class A shares are sold at net asset value plus an initial sales charge.
In some cases, reduced sales charges may be available, as described below.
Investments of $1 million or more (and investments by certain other limited
categories of investors) are not subject to any sales charges at the time of
purchase but are subject to a CDSC of 1.0% on redemptions made within one
year after purchase (calculated from the last day of the month in which the
shares were purchased), except for certain specific circumstances. The CDSC
will be assessed on an amount equal to the lesser of the current market value
or the cost of the shares being redeemed. The CDSC will not be imposed (i) in
the circumstances set forth below in the section "Contingent Deferred Sales
Charge Alternative--Class B Shares--CDSC Waivers," except that the references
to six years in the first paragraph of that section shall mean one year in
the case of Class A shares, and (ii) in the circumstances
18
<PAGE>
identified in the section "Additional Net Asset Value Purchase Options"
below. Class A shares are also subject to an annual 12b-1 fee of up to 0.25%
of the average daily net assets of the Class.
The offering price of Class A shares will be the net asset value per share
next determined following receipt of an order (see "Determination of Net
Asset Value" below), plus a sales charge (expressed as a percentage of the
offering price) on a single transaction as shown in the following table:
<TABLE>
<CAPTION>
SALES CHARGE
--------------------------------
PERCENTAGE OF APPROXIMATE
AMOUNT OF SINGLE PUBLIC OFFERING PERCENTAGE OF
TRANSACTION PRICE 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>
Upon notice to all Selected Broker-Dealers, the Distributor may reallow up
to the full applicable sales charge as shown in the above schedule 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 of 1933.
The above schedule of sales charges is applicable to purchases in a single
transaction by, among others: (a) an individual; (b) an individual, his or
her spouse and their children under the age of 21 purchasing shares for his,
her or their own accounts; (c) a trustee or other fiduciary purchasing shares
for a single trust estate or a single fiduciary account; (d) a pension,
profit-sharing or other employee benefit plan qualified or non-qualified
under Section 401 of the Internal Revenue Code; (e) tax-exempt organizations
enumerated in Section 501(c)(3) or (13) of the Internal Revenue Code; (f)
employee benefit plans qualified under Section 401 of the Internal Revenue
Code of a single employer or of employers who are "affiliated persons" of
each other within the meaning of Section 2(a)(3)(c) of the Act; and for
investments in Individual Retirement Accounts of employees of a single
employer through Systematic Payroll Deduction plans; or (g) any other
organized group of persons, whether incorporated or not, provided the
organization has been in existence for at least six months and has some
purpose other than the purchase of redeemable securities of a registered
investment company at a discount.
Combined Purchase Privilege. Investors may have the benefit of reduced
sales charges in accordance with the above schedule by combining purchases of
Class A shares of the Fund in single transactions with the purchase of Class
A shares of other TCW/DW Multi-Class Funds. The sales charge payable on the
purchase of the Class A shares of the Fund and the Class A shares of the
other TCW/DW Multi-Class Funds will be at their respective rates applicable
to the total amount of the combined concurrent purchases of such shares.
Right of Accumulation. The above persons and entities may benefit from a
reduction of the sales charges in accordance with the above schedule if the
cumulative net asset value of Class A shares purchased in a single
transaction, together with shares of the Fund and other TCW/DW Multi-Class
Funds previously purchased at a price including a front-end sales charge
(including shares of the Fund, other TCW/DW Multi-Class Funds or "Exchange
Funds" (see "Shareholder Services--Exchange Privilege") acquired in exchange
for those shares, and including in each case shares acquired through
reinvestment of dividends and distributions), which are held at the time of
such transaction, amounts to $25,000 or more. If such investor has a
cumulative net asset value of Class A and Class D shares that together with
the current investment amount, is equal to at least $5 million ($25 million
for certain qualified plans), such investor is eligible to purchase Class D
shares subject to the $1,000 minimum initial investment requirement of that
Class of the Fund. See "No Load Alternative--Class D Shares" below.
The Distributor must be notified by DWR or a Selected Broker-Dealer or the
shareholder 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 by the dealer or shareholder when such
an order is placed by mail. The reduced sales charge will not be granted if:
(a) such notification is not furnished at the time of the order; or (b) a
review of the records of the Selected Broker-Dealer or the Transfer Agent
fails to confirm the investor's represented holdings.
Letter of Intent. The foregoing schedule of reduced sales charges will
also be available to investors who enter into a written Letter of Intent
providing for the purchase, within a thirteen-month period, of Class A shares
of the Fund from DWR or other Selected Broker-Dealers. The cost of Class A
shares of the Fund or Class A shares of other TCW/DW Multi-Class Funds which
were previously purchased at a price including a front-end sales charge
during the 90-day period prior to the date of receipt by the Distributor of
the Letter of Intent, or of Class A shares of the Fund or other TCW/DW
Multi-Class Funds or shares of "Exchange Funds" (see "Shareholder
Services--Exchange Privilege") acquired in exchange for Class A shares of
such funds purchased during such period at a price including a front-end
sales charge, which are still owned by the shareholder, may also be included
in determining the applicable reduction.
Additional Net Asset Value Purchase Options. In addition to investments of
$1 million or more, Class A shares also may be purchased at net asset value
by the following:
(1) trusts for which DWT (an affiliate of the Investment Manager) provides
discretionary trustee services;
18
<PAGE>
(2) persons participating in a fee-based program approved by the
Distributor, pursuant to which such persons pay an asset based fee for
services in the nature of investment advisory or administrative services
(such investments are subject to all of the terms and conditions of such
programs, which may include termination fees, mandatory redemption upon
termination and such other circumstances as specified in the programs'
agreements, and restrictions on transferability of Fund shares);
(3) employer-sponsored 401(k) and other plans qualified under Section
401(a) of the Internal Revenue Code ("Qualified Retirement Plans") with at
least 200 eligible employees and for which DWT serves as Trustee or DWR's
Retirement Plan Services serves as recordkeeper pursuant to a written
Recordkeeping Services Agreement;
(4) Qualified Retirement Plans for which DWT serves as Trustee or DWR's
Retirement Plan serves as recordkeeper pursuant to a written Recordkeeping
Services Agreement whose Class B shares have converted to Class A shares,
regardless of the plan's asset size or number of eligible employees;
(5) investors who are clients of a Dean Witter account executive who
joined Dean Witter from another investment firm within six months prior to
the date of purchase of Fund shares by such investors, if the shares are
being purchased with the proceeds from a redemption of shares of an open-end
proprietary mutual fund of the account executive's previous firm which
imposed either a front-end or deferred sales charge, provided such purchase
was made within sixty days after the redemption and the proceeds of the
redemption had been maintained in the interim in cash or a money market fund;
and
(6) other categories of investors, at the discretion of the Board, as
disclosed in the then current prospectus of the Fund.
No CDSC will be imposed on redemptions of shares purchased pursuant to
paragraphs (1), (2) or (5), above.
Prior to the date of this Prospectus the Fund was organized as a
closed-end investment company; all shares of the Fund held prior to such date
have been designated Class A shares and are not subject to any CDSC upon
redemption.
For further information concerning purchases of the Fund's shares, contact
DWR or another Selected Broker-Dealer or consult the Statement of Additional
Information.
CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE--CLASS B SHARES
Class B shares are sold at net asset value next determined without an
initial sales charge so that the full amount of an investor's purchase
payment may be immediately invested in the Fund. A CDSC, however, will be
imposed on most Class B shares redeemed within six years after purchase. The
CDSC will be imposed on any redemption of shares if after such redemption the
aggregate current value of a Class B account with the Fund falls below the
aggregate amount of the investor's purchase payments for Class B shares made
during the six years (or, in the case of shares held by certain Qualified
Retirement Plans, three years) preceding the redemption. In addition, Class B
shares are subject to an annual 12b-1 fee of 1.0% of the average daily net
assets of Class B.
Except as noted below, Class B shares of the Fund which are held for six
years or more after purchase (calculated from the last day of the month in
which the shares were purchased) will not be subject to any CDSC upon
redemption. Shares redeemed earlier than six years after purchase may,
however, be subject to a CDSC which will be a percentage of the dollar amount
of shares redeemed and will be assessed on an amount equal to the lesser of
the current market value or the cost of the shares being redeemed. The size
of this percentage will depend upon how long the shares have been held, as
set forth in the following table:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE CDSC AS A PERCENTAGE
PAYMENT MADE OF AMOUNT REDEEMED
- -------------------------- ------------------------
<S> <C>
First...................... 5.0%
Second..................... 4.0%
Third...................... 3.0%
Fourth..................... 2.0%
Fifth...................... 2.0%
Sixth...................... 1.0%
Seventh and thereafter .... None
</TABLE>
In the case of Class B shares of the Fund purchased on or after July 28,
1997 by Qualified Retirement Plans for which DWT serves as Trustee or DWR's
Retirement Plan Services serves as recordkeeper pursuant to a written
Recordkeeping Services Agreement, shares held for three years or more after
purchase (calculated as described in the paragraph above) will not be subject
to any CDSC upon redemption. However, shares redeemed earlier than three
years after purchase may be subject to a CDSC (calculated as described in the
paragraph above), the percentage of which will depend on how long the shares
have been held, as set forth in the following table:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE CDSC AS A PERCENTAGE
PAYMENT MADE OF AMOUNT REDEEMED
- -------------------------- ------------------------
<S> <C>
First ..................... 2.0%
Second .................... 2.0%
Third ..................... 1.0%
Fourth and thereafter .... None
</TABLE>
CDSC Waivers. A CDSC will not be imposed on: (i) any amount which
represents an increase in value of shares purchased within the six years (or,
in the case of shares held by certain Qualified Retirement Plans, three
years) preceding the redemption; (ii) the current net asset value
19
<PAGE>
of shares purchased more than six years (or, in the case of shares held by
certain Qualified Retirement Plans, three years) prior to the redemption; and
(iii) the current net asset value of shares purchased through reinvestment of
dividends or distributions. Moreover, in determining whether a CDSC is
applicable it will be assumed that amounts described in (i), (ii) and (iii)
above (in that order) are redeemed first.
In addition, the CDSC, if otherwise applicable, will be waived in the case
of:
(1) redemptions of shares held at the time a shareholder dies or becomes
disabled, only if the shares are: (A) registered either in the name of an
individual shareholder (not a trust), or in the names of such shareholder and
his or her spouse as joint tenants with right of survivorship; or (B) held
in a qualified corporate or self-employed retirement plan, Individual
Retirement Account ("IRA") or Custodial Account under Section 403(b)(7) of
the Internal Revenue Code ("403(b) Custodial Account"), provided in either
case that the redemption is requested within one year of the death or initial
determination of disability;
(2) redemptions in connection with the following retirement plan
distributions: (A) 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); (B) distributions from an IRA or 403(b) Custodial Account following
attainment of age 59 1/2; or (C) a tax-free return of an excess contribution
to an IRA; and
(3) all redemptions of shares held for the benefit of a participant in a
Qualified Retirement Plan which offers investment companies managed by the
Manager or its parent, Dean Witter InterCapital Inc., as self-directed
investment alternatives and for which DWT serves as Trustee or DWR's
Retirement Plan Services serves as recordkeeper pursuant to a written
Recordkeeping Services Agreement ("Eligible Plan"), provided that either: (A)
the plan continues to be an Eligible Plan after the redemption; or (B) the
redemption is in connection with the complete termination of the plan
involving the distribution of all plan assets to participants.
With reference to (1) above, for the purpose of determining disability,
the Distributor utilizes the definition of disability contained in Section
72(m)(7) of the Internal Revenue Code, which relates to the inability to
engage in gainful employment. With reference to (2) above, the term
"distribution" does not encompass a direct transfer of IRA, 403(b) Custodial
Account or retirement plan assets to a successor custodian or trustee. All
waivers will be granted only following receipt by the Distributor of
confirmation of the shareholder's entitlement.
Conversion to Class A Shares. Class B shares will convert automatically to
Class A shares, based on the relative net asset values of the shares of the
two Classes on the conversion date, which will be approximately ten (10)
years after the date of the original purchase. The ten year period is
calculated from the last day of the month in which the shares were purchased
or, in the case of Class B shares acquired through an exchange or a series of
exchanges, from the last day of the month in which the original Class B
shares were purchased; provided that shares acquired in exchange for shares
of another fund originally purchased before May 1, 1997 will convert to Class
A shares in May, 2007. The conversion of shares purchased on or after May 1,
1997 will take place in the month following the tenth anniversary of the
purchase. There will also be converted at that time such proportion of Class
B shares acquired through automatic reinvestment of dividends and
distributions owned by the shareholder as the total number of his or her
Class B shares converting at the time bears to the total number of
outstanding Class B shares purchased and owned by the shareholder. In the
case of Class B shares held by a Qualified Retirement Plan for which DWT
serves as Trustee or DWR's Retirement Plan Services serves as recordkeeper
pursuant to a written Recordkeeping Agreement, 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 first shares of a TCW/DW Multi-Class Fund purchased by
that plan. In the case of Class B shares previously exchanged for shares of
an "Exchange Fund" (see "Shareholder Services--Exchange Privilege"), the
period of time the shares were held in the Exchange Fund (calculated from the
last day of the month in which the Exchange Fund shares were acquired) is
excluded from the holding period for conversion. If those shares are
subsequently re-exchanged for Class B shares of a TCW/DW Multi-Class Fund,
the holding period resumes on the last day of the month in which Class B
shares are reacquired.
If a shareholder has received share certificates for Class B shares, such
certificates must be delivered to the Transfer Agent at least one week prior
to the date for conversion. Class B shares evidenced by share certificates
that are not received by the Transfer Agent at least one week prior to any
conversion date will be converted into Class A shares on the next scheduled
conversion date after such certificates are received.
Effectiveness of the conversion feature is subject to the continuing
availability of a ruling of the Internal Revenue Service or an opinion of
counsel that (i) the conversion of shares does not constitute a taxable event
under the Internal Revenue Code, (ii) Class A shares received on conversion
will have a basis equal to the shareholder's basis in the converted Class B
shares immediately prior to the conversion, and (iii) Class A shares received
on conversion will have a holding period that includes the holding period of
the converted Class B shares. The conversion feature may be suspended if the
ruling or opinion is no longer available. In such event, Class B shares would
continue to be subject to Class B 12b-1 fees.
20
<PAGE>
LEVEL LOAD ALTERNATIVE--CLASS C SHARES
Class C shares are sold at net asset value next determined without an
initial sales charge but are subject to a CDSC of 1.0% on most redemptions
made within one year after purchase (calculated from the last day of the
month in which the shares were purchased). The CDSC will be assessed on an
amount equal to the lesser of the current market value or the cost of the
shares being redeemed. The CDSC will not be imposed in the circumstances set
forth above in the section "Contingent Deferred Sales Charge
Alternative--Class B Shares--CDSC Waivers," except that the references to six
years in the first paragraph of that section shall mean one year in the case
of Class C shares. Class C shares are subject to an annual 12b-1 fee of up to
1.0% of the average daily net assets of the Class. Unlike Class B shares,
Class C shares have no conversion feature and, accordingly, an investor that
purchases Class C shares will be subject to 12b-1 fees applicable to Class C
shares for an indefinite period subject to annual approval by the Fund's
Board of Trustees and regulatory limitations.
NO LOAD ALTERNATIVE--CLASS D SHARES
Class D shares are offered without any sales charge on purchase or
redemption and without any 12b-1 fee. Class D shares are offered only to
investors meeting an initial investment minimum of $5 million ($25 million
for Qualified Retirement Plans for which DWT serves as Trustee or DWR's
Retirement Plan Services serves as recordkeeper pursuant to a written
Recordkeeping Services Agreement) and the following categories of investors:
(i) investors participating in the InterCapital mutual fund asset allocation
program pursuant to which such persons pay an asset based fee; (ii) persons
participating in a fee-based program approved by the Distributor, pursuant to
which such persons pay an asset based fee for services in the nature of
investment advisory or administrative services (subject to all of the terms
and conditions of such programs referred to in (i) and (ii) above, which may
include termination fees, mandatory redemption upon termination and such
other circumstances as specified in the programs agreements, and restrictions
on transferability of Fund shares); (iii) certain Unit Investment Trusts
sponsored by DWR; (iv) certain other open-end investment companies whose
shares are distributed by the Distributor; and (v) other categories of
investors, at the discretion of the Board, as disclosed in the then current
prospectus of the Fund. Investors who require a $5 million (or $25 million)
minimum initial investment to qualify to purchase Class D shares may satisfy
that requirement by investing that amount in a single transaction in Class D
shares of the Fund and other TCW/DW Multi-Class Funds, subject to the $1,000
minimum initial investment required for that Class of the Fund. In addition,
for the purpose of meeting the $5 million (or $25 million) minimum investment
amount, holdings of Class A shares in all TCW/DW Multi-Class Funds, and
holdings of shares of "Exchange Funds" (see "Shareholder Services--Exchange
Privilege") for which Class A shares have been exchanged, will be included
together with the current investment amount. If a shareholder redeems Class A
shares and purchases Class D shares, such redemption may be a taxable event.
PLAN OF DISTRIBUTION
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under
the Act with respect to the distribution of Class A, Class B and Class C
shares of the Fund. In the case of Class A and Class C shares, the Plan
provides that the Fund will reimburse the Distributor and others for the
expenses of certain activities and services incurred by them specifically on
behalf of those shares. Reimbursements for these expenses will be made in
monthly payments by the Fund to the Distributor, which will in no event
exceed amounts equal to payments at the annual rates of 0.25% and 1.0% of the
average daily net assets of Class A and Class C, respectively. In the case of
Class B shares, the Plan provides that the Fund will pay the Distributor a
fee, which is accrued daily and paid monthly, at the annual rate of 1.0% of
the average daily net assets of Class B. The fee is treated by the Fund as an
expense in the year it is accrued. In the case of Class A shares, the entire
amount of the fee currently represents a service fee within the meaning of
the NASD guidelines. In the case of Class B and Class C shares, a portion of
the fee payable pursuant to the Plan, equal to 0.25% of the average daily net
assets of each of these Classes, is currently characterized as a service fee.
A service fee is a payment made for personal service and/or the maintenance
of shareholder accounts.
Additional amounts paid under the Plan in the case of Class B and Class C
shares are paid to the Distributor for services provided and the expenses
borne by the Distributor and others in the distribution of the shares of
those Classes, including the payment of commissions for sales of the shares
of those Classes and incentive compensation to and expenses of DWR's account
executives and others who engage in or support distribution of shares or who
service shareholder accounts, including overhead and telephone expenses;
printing and distribution of prospectuses and reports used in connection with
the offering of the Fund's shares to other than current shareholders; and
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 DWR 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, at any given time, the expenses in
distributing Class B shares of the Fund may be in excess of the total of (i)
the payments made by the Fund pursuant to the Plan, and (ii) the proceeds of
CDSCs paid by investors upon the redemption of Class B shares. For example,
if $1 million in expenses in distributing Class B shares of the Fund had been
incurred and $750,000 had
21
<PAGE>
been received as described in (i) and (ii) above, the excess expense would
amount to $250,000. Because there is no requirement under the Plan that the
Distributor be reimbursed for all distribution expenses or any requirement
that the Plan be continued from year to year, such 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 account executives at the
time of sale may be reimbursed in the subsequent calendar year. No interest
or other financing charges will be incurred on any Class A or Class C
distribution expenses incurred by the Distributor under the Plan or on any
unreimbursed expenses due to the Distributor pursuant to the Plan.
DETERMINATION OF NET ASSET VALUE
The net asset value per share is determined once daily at 4:00 p.m., New
York time (or, on days when the New York Stock Exchange closes prior to 4:00
p.m., at such earlier time), on each day that the New York Stock Exchange is
open by taking the net assets of the Fund, dividing by the number of shares
outstanding and adjusting to the nearest cent. The assets belonging to the
Class A, Class B, Class C and Class D shares will be invested together in a
single portfolio. The net asset value of each Class, however, will be
determined separately by subtracting each Class's accrued expenses and
liabilities. The net asset value per share will not be determined on Good
Friday and on such other federal and non-federal holidays as are observed by
the New York Stock Exchange.
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
domestic or foreign exchange is valued at its latest sale price on that
exchange prior to the time 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 Adviser 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 supervision of the Board of 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).
Short-term debt securities with remaining maturities of sixty days or less
at the time of purchase are valued at amortized cost, unless the Trustees
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Trustees.
Certain of the Fund's portfolio securities may be valued by an outside
pricing service approved by the Fund's Trustees. The pricing service may
utilize a matrix system incorporating security quality, maturity and coupon
as the evaluation model parameters, and/or research evaluations by its staff,
including review of broker-dealer market price quotations, in determining
what it believes is the fair valuation of the portfolio securities valued by
such pricing service.
SHAREHOLDER SERVICES
- -----------------------------------------------------------------------------
Automatic Investment of Dividends and Distributions. All income dividends
and capital gains distributions are automatically paid in full and fractional
shares of the applicable Class of the Fund (or, if specified by the
shareholder, in shares of any other open-end TCW/DW Fund), unless the
shareholder requests that they be paid in cash. Shares so acquired are
acquired at net asset value and are not subject to the imposition of a
front-end sales charge or a CDSC (see "Repurchases and Redemptions").
Investment of Dividends and Distributions Received in Cash. Any
shareholder who receives a cash payment representing a dividend or capital
gains distribution may invest such dividend or distribution in shares of the
applicable Class at the net asset value per share next determined after
receipt by the Transfer Agent, by returning the check or the proceeds to the
Transfer Agent within thirty days after the payment date. Shares so acquired
are acquired at net asset value and are not subject to the imposition of a
front-end sales charge or a CDSC (see "Repurchases and Redemptions").
EasyInvest (Service Mark). Shareholders may subscribe to EasyInvest, an
automatic purchase plan which provides for any amount from $100 to $5,000 to
be transferred automatically from a checking or savings account or following
redemption of shares of a Dean Witter money marketfund, on a semi-monthly,
monthly or quarterly basis, to
22
<PAGE>
the Transfer Agent for investment in shares of the Fund (see "Purchase of
Fund Shares" and "Repurchases and Redemptions -- Involuntary Redemption").
Systematic Withdrawal Plan. A systematic withdrawal plan (the "Withdrawal
Plan") is available for shareholders who own or purchase shares of the Fund
having a minimum value of $10,000 based upon the then current net asset
value. The Withdrawal Plan provides for monthly or quarterly (March, June,
September and December) checks in any dollar amount, not less than $25, or in
any whole percentage of the account balance, on an annualized basis. Any
applicable CDSC will be imposed on shares redeemed under the Withdrawal Plan
(see "Purchase of Fund Shares"). Therefore, any shareholder participating in
the Withdrawal Plan will have sufficient shares redeemed from his or her
account so that the proceeds (net of any applicable CDSC) to the shareholder
will be the designated monthly or quarterly amount. Withdrawal plan payments
should not be considered as dividends, yields or income. If periodic
withdrawal plan payments continuously exceed net investment income and net
capital gains, the shareholder's original investment will be correspondingly
reduced and ultimately exhausted. Each withdrawal constitutes a redemption of
shares and any gain or loss realized must be recognized for federal income
tax purposes.
Shareholders should contact their DWR or other Selected Broker-Dealer
account executive or the Transfer Agent for further information about any of
the above services.
Tax Sheltered Retirement Plans. Retirement plans are available for use by
corporations, the self-employed, Individual Retirement Accounts and Custodial
Accounts under Section 403(b)(7) of the Internal Revenue Code. Adoption of
such plans should be on advice of legal counsel or tax adviser.
For further information regarding plan administration, custodial fees and
other details, investors should contact their account executive or the
Transfer Agent. With respect to shares held through broker-dealers that have
not entered into selected dealer agreements with the Distributor, shares must
be registered directly with the Fund by contacting the Transfer Agent, or by
contacting an account executive of DWR or other Selected Broker-Dealer in
order to receive the shareholder services described in this section.
EXCHANGE PRIVILEGE
Shares of each Class may be exchanged for shares of the same Class of any
other TCW/DW Multi-Class Fund without the imposition of any exchange fee.
Shares may also be exchanged for shares of TCW/DW North American Government
Income Trust and for shares of five money market funds for which InterCapital
serves as investment manager: Dean Witter Liquid Asset Fund Inc., Dean Witter
U.S. Government Money Market Trust, Dean Witter Tax-Free Daily Income Trust,
Dean Witter California Tax-Free Daily Income Trust and Dean Witter New York
Municipal Money Market Trust (the foregoing six funds are hereinafter
collectively referred to as "Exchange Funds"). Exchanges may be made after
the shares of the Fund acquired by purchase (not by exchange or dividend
reinvestment) have been held for thirty days. There is no waiting period for
exchanges of shares acquired by exchange or dividend reinvestment.
An exchange to another TCW/DW Multi-Class Fund or any Exchange Fund that
is not a money market fund is on the basis of the next calculated net asset
value per share of each fund after the exchange order is received. When
exchanging into a money market fund from the Fund, shares of the Fund are
redeemed out of the Fund at their next calculated net asset value and the
proceeds of the redemption are used to purchase shares of the money market
fund at their net asset value determined the following business day.
Subsequent exchanges between any of the money market funds and any of the
TCW/DW Multi-Class Funds or any Exchange Fund that is not a money market fund
can be effected on the same basis.
No CDSC is imposed at the time of any exchange of shares, although any
applicable CDSC will be imposed upon ultimate redemption. During the period
of time the shareholder remains in an Exchange Fund (calculated from the last
day of the month in which the Exchange Fund shares were acquired), the
holding period (for the purpose of determining the rate of the CDSC) is
frozen. If those shares are subsequently re-exchanged for shares of a TCW/DW
Multi-Class Fund, the holding period previously frozen when the first
exchange was made resumes on the last day of the month in which shares of a
TCW/DW Multi-Class Fund are reacquired. Thus, the CDSC is based upon the time
(calculated as described above) the shareholder was invested in shares of a
TCW/DW Multi-Class Fund (see "Purchase of Fund Shares"). In the case of
shares exchanged into an Exchange Fund, upon a redemption of shares which
results in a CDSC being imposed, a credit (not to exceed the amount of the
CDSC) will be given in an amount equal to the Exchange Fund 12b-1
distribution fees which are attributable to those shares. (Exchange Fund
12b-1 distribution fees are described in the prospectuses for those funds.)
Additional Information Regarding Exchanges. Purchases and exchanges should
be made for investment purposes only. A pattern of frequent exchanges may be
deemed by the Manager to be abusive and contrary to the best interests of the
Fund's other shareholders and, at the Manager's discretion, may be limited by
the Fund's refusal to accept additional purchases and/or exchanges from the
investor. Although the Fund does not have any specific definition of what
constitutes a pattern of frequent exchanges, and will consider all relevant
factors in determining whether a particular situation is abusive and contrary
to the best interests of the Fund and its other shareholders, investors
should be aware that the Fund,
23
<PAGE>
each of the other TCW/DW Funds and each of the money market funds may in
their discretion limit or otherwise restrict the number of times this
Exchange Privilege may be exercised by any investor. Any such restriction
will be made by the Fund on a prospective basis only, upon notice to the
shareholder not later than ten days following such shareholder's most recent
exchange. Also, the Exchange Privilege may be terminated or revised at any
time by the Fund and/or any of such TCW/DW Funds or money market funds for
which shares of the Fund have been exchanged, upon such notice as may be
required by applicable regulatory agencies. Shareholders maintaining margin
accounts with DWR or another Selected Broker-Dealer are referred to their
account executive regarding restrictions on exchange of shares of the Fund
pledged in the margin account.
The current prospectus for each fund describes its investment objective(s)
and policies, and shareholders should obtain a copy and examine it carefully
before investing. Exchanges are subject to the minimum investment requirement
of each Class of shares and any other conditions imposed by each fund. In the
case of a shareholder holding a share certificate or certificates, no
exchanges may be made until all applicable share certificates have been
received by the Transfer Agent and deposited in the shareholder's account. An
exchange will be treated for federal income tax purposes the same as a
repurchase or redemption of shares, on which the shareholder may realize a
capital gain or loss. However, the ability to deduct capital losses on an
exchange may be limited in situations where there is an exchange of shares
within ninety days after the shares are purchased. The Exchange Privilege is
only available in states where an exchange may legally be made.
If DWR or another Selected Broker-Dealer is the current dealer of record
and its account numbers are part of the account information, shareholders may
initiate an exchange of shares of the Fund for shares of any of the funds for
which the Exchange Privilege is available pursuant to this Exchange Privilege
by contacting their account executive (no Exchange Privilege Authorization
Form is required). Other shareholders (and those shareholders who are clients
of DWR or another Selected Broker-Dealer but who wish to make exchanges
directly by writing or telephoning the Transfer Agent) must complete and
forward to the Transfer Agent an Exchange Privilege Authorization Form,
copies of which may be obtained from the Transfer Agent, to initiate an
exchange. If the Authorization Form is used, exchanges may be made in writing
or by contacting the Transfer Agent at (800) 869-NEWS (toll-free).
The Fund will employ reasonable procedures to confirm that exchange
instructions communicated over the telephone are genuine. Such procedures may
include requiring various forms of personal identification such as name,
mailing address, social security or other tax identification number and DWR
or other Selected Broker-Dealer account number (if any). Telephone
instructions may also be recorded. If such procedures are not employed, the
Fund may be liable for any losses due to unauthorized or fraudulent
instructions.
Telephone exchange instructions will be accepted if received by the
Transfer Agent between 9:00 a.m. and 4:00 p.m., New York time, on any day the
New York Stock Exchange is open. Any shareholder wishing to make an exchange
who has previously filed an Exchange Privilege Authorization Form and who is
unable to reach the Fund by telephone should contact his or her DWR or other
Selected Broker-Dealer account executive, if appropriate, or make a written
exchange request. Shareholders are advised that 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 in the past with other funds managed by the Manager.
Shareholders should contact their DWR or other Selected Broker-Dealer
account executive or the Trans fer Agent for further information about the
Exchange Privilege.
REPURCHASES AND REDEMPTIONS
- -----------------------------------------------------------------------------
Repurchases. DWR and other Selected Broker-Dealers are authorized to
repurchase shares represented by a share certificate which is delivered to
any of their offices. Shares held in a shareholder's account without a share
certificate may also be repurchased by DWR and other Selected Broker-Dealers
upon the telephonic request of the shareholder. The repurchase price is the
net asset value next computed (see "Purchase of Fund Shares") after such
purchase order is received by DWR or other Selected Broker-Dealer reduced by
any applicable CDSC.
The CDSC, if any, will be the only fee imposed by the Fund or the
Distributor. The offer by DWR and other Selected Broker-Dealers to repurchase
shares may be suspended without notice by them at any time. In that event,
shareholders may redeem their shares through the Fund's Transfer Agent as set
forth below under "Redemptions."
Redemptions. Shares of each Class of the Fund can be redeemed for cash at
any time at the net asset value per share next determined less the amount of
any applicable CDSC in the case of Class A, Class B or Class C shares (see
"Purchase of Fund Shares"). If shares are held in a shareholder's account
without a share certificate, a written request for redemption to the Fund's
Transfer Agent at P.O. Box 983, Jersey City, NJ 07303 is required. If
certificates are held by the shareholder, the shares may be redeemed by
surrendering the certificates with a written request for redemption, along
with any additional information required by the Transfer Agent.
24
<PAGE>
Payment for Shares Redeemed or Repurchased. Payment for shares presented
for repurchase or redemption will be made by check within seven days after
receipt by the Transfer Agent of the certificate and/or written request in
good order. Such payment may be postponed or the right of redemption
suspended under unusual circumstances, e.g., when normal trading is not
taking place on the New York Stock Exchange. If the shares to be redeemed
have recently been purchased by check, payment of the redemption proceeds may
be delayed for the minimum time needed to verify that the check used for
investment has been honored (not more than fifteen days from the time of
receipt of the check by the Transfer Agent). Shareholders maintaining margin
accounts with DWR or another Selected Broker-Dealer are referred to their
account executives regarding restrictions on redemption of shares of the Fund
pledged in the margin account.
Reinstatement Privilege. A shareholder who has had his or her shares
redeemed or repurchased and has not previously exercised this reinstatement
privilege may, within 35 days after the date of the redemption or repurchase,
reinstate any portion or all of the proceeds of such redemption or repurchase
in shares of the Fund in the same Class from which such shares were redeemed
or repurchased, at their net asset value next determined after a
reinstatement request, together with the proceeds, is received by the
Transfer Agent and receive a pro rata credit for any CDSC paid in connection
with such redemption or repurchase.
Involuntary Redemption. The Fund reserves the right, on 60 days' notice,
to redeem, at their net asset value, the shares of any shareholder (other
than shares held in an Individual Retirement Account or custodial account
under Section 403(b)(7) of the Internal Revenue Code) whose shares due to
redemptions by the shareholder have a value of less than $100, or such lesser
amount as may be fixed by the Board of Trustees or, in the case of an account
opened through EasyInvest (Service Mark), if after twelve months the
shareholder has invested less than $1,000 in the account. However, before the
Fund redeems such shares and sends the proceeds to the shareholder, it will
notify the shareholder that the value of the shares is less than the
applicable amount and allow the shareholder 60 days to make an additional
investment in an amount which will increase the value of his or her account
to at least the applicable amount before the redemption is processed. No CDSC
will be imposed on any involuntary redemption.
DIVIDENDS, DISTRIBUTIONS AND TAXES
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Dividends and Distributions. The Fund declares dividends separately for
each Class of shares and intends to distribute substantially all of its net
investment income and net realized short-term and long-term capital gains, if
any, at least once each year. The Fund may, however, determine to retain all
or part of any net long-term capital gains in any year for reinvestment.
All dividends and any capital gains distributions will be paid in
additional shares of the same Class and automatically credited to the
shareholder's account without issuance of a share certificate unless the
shareholder requests in writing that all dividends and/or distributions be
paid in cash. Shares acquired by dividend and distribution reinvestments will
not be subject to any front-end sales charge or CDSC. Class B shares acquired
through dividend and distribution reinvestments will become eligible for
conversion to Class A shares on a pro rata basis. Distributions paid on Class
A and Class D shares will be higher than for Class B and Class C shares
because distribution fees paid by Class B and Class C shares are higher. (See
"Shareholder Services--Automatic Investment of Dividends and Distributions.")
Taxes. Because the Fund intends to distribute all of its net investment
income and net capital gains (to the extent not offset by capital loss
carryovers) to shareholders and remain qualified as a regulated investment
company under Subchapter M of the Internal Revenue Code, it is not expected
that the Fund will be required to pay any federal income tax. Shareholders
who are required to pay taxes on their income will normally have to pay
federal income taxes, and any applicable state and/or local income taxes, on
any dividends and distributions they receive from the Fund. Such dividends
and distributions, to the extent they are derived from net investment income
and net short-term capital gains, are taxable to the shareholder as ordinary
dividend income regardless of whether the shareholder receives such payments
in additional shares or in cash. Any dividends declared in the last quarter
of any calendar year which are paid in the following year prior to February 1
will be deemed, for tax purposes, to have been received by the shareholder in
the prior year.
Long-term and short-term capital gains may be generated by the sale of
portfolio securities by the Fund. 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 Fund may at times make payments from sources other than income or net
capital gains. Payments from such sources would, in effect, represent a
return of a portion of each shareholder's investment. All, or a portion, of
such payments would not be taxable to shareholders.
After the end of the calendar year, shareholders will be sent full
information on their dividends and capital gains distributions for tax
purposes, including information as to the portion characterized as ordinary
income, the portion taxable as long-term capital gains and the amount of
dividends eligible for the Federal dividends received
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deduction available to corporations. Shareholders will also be notified of
their proportionate share of long-term capital gains distributions that are
eligible for a reduced rate of tax under the Taxpayer Relief Act of 1997.
To avoid being subject to a 31% federal backup withholding tax on taxable
dividends, capital gains distributions and the proceeds of redemptions and
repurchases, shareholders' taxpayer identification numbers must be furnished
and certified as to their accuracy. Shareholders who are not citizens or
residents of, or entities organized in, the United States may be subject to
withholding taxes of up to 30% on certain payments received from the Fund.
Shareholders should consult their tax advisers as to the applicability of
the foregoing to their current situation.
PERFORMANCE INFORMATION
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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 total return of the Fund is based on
historical earnings and is not intended to indicate future performance. The
"average annual total return" of the Fund refers to a figure reflecting the
average annualized percentage increase (or decrease) in the value of an
initial investment in a Class of the Fund of $1,000 over periods of one, five
and ten years, or the life of the Fund, if less than any of the foregoing.
Average annual total return reflects all income earned by the Fund, any
appreciation or depreciation of the Fund's assets, all expenses incurred by
the applicable Class and all sales charges which will be incurred by
shareholders, for the stated periods. It also assumes reinvestment of all
dividends and distributions paid by the Fund.
In addition to the foregoing, 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. Such calculations may or
may not reflect the deduction of any sales charge which, if reflected, would
reduce the performance quoted. 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. The Fund from time to time may also advertise its
performance relative to certain performance rankings and indexes compiled by
independent organizations, such as mutual fund performance rankings of Lipper
Analytical Services, Inc.
Prior to the date of this Prospectus, the Fund operated as a closed-end
investment company. The historical performance of the Class A shares of the
Fund has been restated to reflect the front-end sales charge of such Class A
shares in effect as of the date of this Prospectus. Class A shares are also
subject to a 0.25% 12b-1 fee which is not reflected in the restated
historical performance. Including the 12b-1 fee would have the effect of
lowering the Fund's performance.
ADDITIONAL INFORMATION
- -----------------------------------------------------------------------------
Voting Rights. All shares of beneficial interest of the Fund are of $0.01
par value and are equal as to earnings, assets and voting privileges except
that each Class will have exclusive voting privileges with respect to matters
relating to distribution expenses borne solely by such Class or any other
matter in which the interests of one Class differ from the interests of any
other Class. In addition, Class B shareholders will have the right to vote on
any proposed material increase in Class A 's expenses, if such proposal is
submitted separately to Class A shareholders. Also, as discussed herein,
Class A, Class B and Class C bear the expenses related to the distribution of
their respective shares.
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 Act or the Declaration of Trust. Under certain
circumstances the Trustees may be removed by action of the Trustees or by the
shareholders.
Under Massachusetts law, shareholders of a business trust may, under
certain 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 Fund obligations include such disclaimer, and provides
for indemnification and reimbursement of expenses out of the property of the
Fund 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.
Code of Ethics. Each Co-Adviser is subject to a Code of Ethics with
respect to investment transactions in which the Co-Adviser's officers,
directors and certain other persons have a beneficial interest to avoid any
actual or potential conflict or abuse of their fiduciary position. The Code
of Ethics of TCW, as it pertains to the TCW/DW Funds, contains several
restrictions and procedures
26
<PAGE>
designed to eliminate conflicts of interest including: (a) preclearance of
personal investment transactions to ensure that personal transactions by
employees are not being conducted at the same time as TCW's clients; (b)
quarterly reporting of personal securities transactions; (c) a prohibition
against personally acquiring securities in an initial public offering,
entering into uncovered short sales and writing uncovered options; (d) a
seven day "black-out period" prior or subsequent to a TCW/DW Fund transaction
during which portfolio managers are prohibited from making certain
transactions in securities which are being purchased or sold by a TCW/DW
Fund; (e) a prohibition, with respect to certain investment personnel, from
profiting in the purchase and sale, or sale and purchase, of the same (or
equivalent) securities within 60 calendar days; and (f) a prohibition against
acquiring any security which is subject to firm wide or, if applicable, a
department restriction of the Adviser. The Code of Ethics of TCW provides
that exemptive relief may be given from certain of its requirements, upon
application. Each Co-Adviser's Code of Ethics complies with regulatory
requirements and, insofar as it relates to persons associated with registered
investment companies, the 1994 Report of the Advisory Group on Personal
Investing of the Investment Company Institute.
Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone numbers or address set forth on the front cover
of this Prospectus.
27
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TCW/DW EMERGING
MARKETS OPPORTUNITIES TRUST
Two World Trade Center
New York, New York 10048
BOARD OF TRUSTEES
John C. Argue
Richard M. DeMartini
Charles A. Fiumefreddo
John R. Haire
Dr. Manuel H. Johnson
Thomas E. Larkin, Jr.
Michael E. Nugent
John L. Schroeder
Marc I. Stern
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Thomas E. Larkin, Jr.
President
Barry Fink
Vice President, Secretary and
General Counsel
Shaun C.K. Chan
Vice President
Terence F. Mahony
Vice President
Michael P. Reily
Vice President
Thomas F. Caloia
Treasurer
CUSTODIAN
The Chase Manhattan Bank
One Chase Plaza
New York, New York 10005
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Dean Witter Trust FSB
Harborside Financial Center
Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
MANAGER
Dean Witter Services Company Inc.
CO-ADVISERS
TCW Funds Management, Inc.
Morgan Stanley Asset Management Inc.
