MORGAN STANLEY DEAN WITTER TOTAL RETURN TRUST, 497, 1999-07-02

MORGAN STANLEY DEAN WITTER TOTAL RETURN TRUST
497, 1999-07-02

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<PAGE>
Filed Pursuant to Rule 497(c)
Registration File No.: 33-81012

PROSPECTUS - JUNE 28, 1999

MORGAN STANLEY DEAN WITTER

TOTAL RETURN TRUST

[GRAPHIC OMITTED]

A MUTUAL FUND THAT SEEKS HIGH TOTAL
RETURN FROM CAPITAL GROWTH AND INCOME

The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.

<PAGE>

CONTENTS

<TABLE>
<CAPTION>
<S> <C> <C>
The Fund Investment Objective ...................................... 1
Principal Investment Strategies ........................... 1
Principal Risks ........................................... 1
Past Performance .......................................... 2
Fees and Expenses ......................................... 3
Additional Investment Strategy Information ................ 4
Additional Risk Information ............................... 5
Fund Management ........................................... 6

Shareholder Information Pricing Fund Shares ....................................... 8
How to Buy Shares ......................................... 8
How to Exchange Shares .................................... 10
How to Sell Shares ........................................ 11
Distributions ............................................. 13
Tax Consequences .......................................... 13
Share Class Arrangements .................................. 14

Financial Highlights ........................................................... 21

Our Family of Funds ............................................ Inside Back Cover
</TABLE>

This Prospectus contains important information about the Fund.
Please read it carefully and keep it for future reference.

<PAGE>

THE FUND

[GRAPHIC OMITTED]

INVESTMENT OBJECTIVE
- --------------------
Morgan Stanley Dean Witter Total Return Trust seeks high total return from
capital growth and income.

[GRAPHIC OMITTED]

PRINCIPAL INVESTMENT STRATEGIES
- -------------------------------
The Fund will normally invest at least 65% of its total assets in common stocks
and convertible securities of domestic and foreign companies. In selecting
investments to buy, hold or sell, the Fund's "Sub-Advisor," TCW Funds
Management, Inc., typically uses a "top-down" investment process that considers
the overall economic outlook, the development of industry/sector preferences,
and, lastly, specific stock selections. Generally, at least 85% of the Fund's
total assets will be invested in companies that have a market capitalization of
at least $1 billion, and the Sub-Advisor expects them to pay dividend or
interest income. Up to 5% of the Fund's convertible securities investments may
be below investment grade.

(sidebar)
GROWTH & INCOME
An investment objective having the goal of selecting securities with the
potential to rise in price and pay out income.
(end sidebar)

Common stock is a share ownership or equity interest in a corporation. It may
or may not pay dividends, as some companies reinvest all of their profits back
into their businesses, while others pay out some of their profits to
shareholders as dividends. A convertible security is a bond, preferred stock or
other security that may be converted into a prescribed amount of common stock
at a particular time and price.

In addition, the Fund's investments may include fixed-income securities.

In pursuing the Fund's investment objective, the Sub-Advisor has considerable
leeway in deciding which investments it buys, holds or sells on a day-to-day
basis -- and which trading or investment strategies it uses. For example, the
Sub-Advisor in its discretion may determine to use some permitted trading or
investment strategies while not using others.

[GRAPHIC OMITTED]

PRINCIPAL RISKS
- ---------------
There is no assurance that the Fund will achieve its investment objective. The
Fund's share price will fluctuate with changes in the market value of the
Fund's portfolio securities. When you sell Fund shares, they may be worth less
than what you paid for them, and accordingly, you can lose money investing in
this Fund.

COMMON STOCKS. A principal risk of investing in the Fund is associated with its
common stock investments. In general, stock values fluctuate in response to
activities specific to the company as well as general market, economic and
political conditions. Stocks can fluctuate widely in response to these factors.

CONVERTIBLE SECURITIES. Any Fund investments in convertible securities subject
the Fund to the risks associated with both fixed-income securities and common
stocks. To the extent that a convertible security's investment value is greater
than its conversion value, its price will be likely to increase when interest
rates fall and decrease when interest rates rise, as with a fixed-income
security. If the conversion value exceeds the investment value, the price of
the convertible security will tend to fluctuate directly with the price of the
underlying equity security. A portion of the convertible securities

<PAGE>

in which the Fund may invest may be below investment grade. Securities below
investment grade are commonly know as "junk bonds" and have speculative
characteristics.

NON-DIVERSIFIED STATUS. The Fund is a "non-diversified" mutual fund and, as
such, its investments are not required to meet certain diversification
requirements under federal law. Compared with "diversified" funds, the Fund may
invest a greater percentage of its assets in an individual corporation or
governmental entity. Thus, the Fund's assets may be invested in fewer
securities than other funds. A decline in the value of those investments would
cause the Fund's overall value to decline to a greater degree. The Fund's
investments, however, are currently diversified and may remain diversified in
the future.

OTHER RISKS. The performance of the Fund also will depend on whether the
Sub-Advisor is successful in pursuing the Fund's investment strategy. The Fund
is also subject to other risks from its permissible investments including the
risks associated with its foreign and fixed-income investments. For more
information about these risks, see the "Additional Risk Information" section.

Shares of the Fund are not bank deposits and are not guaranteed or insured by
the FDIC or any other government agency.

[GRAPHIC OMITTED]

PAST PERFORMANCE
- ----------------
The bar chart and table below provide some indication of the risks of investing
in the Fund. The Fund's past performance does not indicate how the Fund will
perform in the future.

(sidebar)
ANNUAL TOTAL RETURNS
This chart shows how the performance of the Fund's Class B shares has varied
from year to year for the past 4 calendar years.
(end sidebar)

ANNUAL TOTAL RETURNS -- CALENDAR YEARS

1995 ........................ 27.75%
'96 ........................ 20.53%
'97 ........................ 27.44%
'98 ........................ 16.86%

The bar chart reflects the performance of Class B shares; the performance of
the other Classes will differ because the Classes have different ongoing fees.
The performance information in the bar chart does not reflect the deduction of
sales charges; if these amounts were reflected, returns would be less than
shown.

During the periods shown in the bar chart, the highest return for a calendar
quarter was 19.65% (quarter ended December 31, 1998) and the lowest return for
a calendar quarter was -11.54% (quarter ended September 30, 1998). Year-to-date
total return as of March 31, 1999 was 8.44%.

<PAGE>
(sidebar)
AVERAGE ANNUAL TOTAL RETURNS
This table compares the Fund's average annual returns with those of a broad
measure of market performance over time, as well as with an index of funds with
similar investment objectives. The Fund's returns include the maximum
applicable sales charge for each Class and assume you sold your shares at the
end of each period.
(end sidebar)

AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1998)
- ----------------------------------------------------------------------------
LIFE OF FUND
PAST 1 YEAR (SINCE 11/30/94)
- ----------------------------------------------------------------------------
Class A(1) 11.42% --
- ----------------------------------------------------------------------------
Class B 11.86% 22.24%
- ----------------------------------------------------------------------------
Class C(1) 15.67% --
- ----------------------------------------------------------------------------
Class D(1) 17.83% --
- ----------------------------------------------------------------------------
S&P 500 Index(2) 28.58% 30.24%
- ----------------------------------------------------------------------------
Lipper Growth and Income Funds Index(3) 13.58% 22.68%
- ----------------------------------------------------------------------------
(1) Classes A, C and D commenced operations on July 28, 1997.
(2) The Standard & Poor's (Registered Trademark) 500 Composite Stock Price
Index is a broad-based index, the performance of which is based on the
average performance of 500 widely held common stocks. The performance of
the Index does not include any expenses, fees or charges. The Index is
unmanaged and should not be considered an investment.
(3) The Lipper Growth and Income Funds Index is an equally-weighted performance
index of the largest qualifying funds (based on net assets) in the Lipper
Growth and Income Funds objective. The Index, which is adjusted for capital
gains distributions and income dividends, is unmanaged and should not be
considered an investment. There are currently 30 Funds represented in this
Index.

[GRAPHIC OMITTED]

FEES AND EXPENSES
- -----------------
The table below briefly describes the fees and expenses that you may pay if you
buy and hold shares of the Fund. The Fund offers four Classes of shares:
Classes A, B, C and D. Each Class has a different combination of fees, expenses
and other features. The Fund does not charge account or exchange fees. See the
"Share Class Arrangements" section for further fee and expense information.

(sidebar)
SHAREHOLDER FEES
These fees are paid directly from your investment.
(end sidebar)

(sidebar)
ANNUAL FUND OPERATING EXPENSES
These expenses are deducted from the Fund's assets and are based on expenses
paid for the fiscal year ended July 31, 1998.
(end sidebar)

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
SHAREHOLDER FEES
- ---------------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on
purchases (as a percentage of offering price) 5.25%(1) None None None
- ---------------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a
percentage based on the lesser of the offering None(2) 5.00%(3) 1.00%(4) None
price or net asset value at redemption)
- ---------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- ---------------------------------------------------------------------------------------------------
Management fee 0.75% 0.75% 0.75% 0.75%
- ---------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.25% 0.85% 1.00% None
- ---------------------------------------------------------------------------------------------------
Other expenses 0.30% 0.30% 0.30% 0.30%
- ---------------------------------------------------------------------------------------------------
Total annual Fund operating expenses 1.30% 1.90% 2.05% 1.05%
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) Reduced for purchases of $25,000 and over.
(2) Investments that are not subject to any sales charge at the time of
purchase are subject to a contingent deferred sales charge ("CDSC") of
1.00% that will be imposed if you sell your shares within one year after
purchase, except for certain specific circumstances.
(3) The CDSC is scaled down to 1.00% during the sixth year, reaching zero
thereafter. See "Share Class Arrangements" for a complete discussion of the
CDSC.
(4) Only applicable if you sell your shares within one year after purchase.
3
<PAGE>

EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund, your investment has a
5% return each year, and the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, the tables below show your
costs at the end of each period based on these assumptions depending upon
whether or not you sell your shares at the end of each period.

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IF YOU SOLD YOUR SHARES: IF YOU HELD YOUR SHARES:
1 Year 3 Years 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
CLASS A $650 $915 $1200 $2010 $ 650 $915 $1200 $2010
CLASS B $693 $987 $1226 $2222 $ 193 $597 $1026 $2222
CLASS C $308 $643 $1103 $2379 $ 208 $643 $1103 $2379
CLASS D $107 $334 $579 $1283 $ 107 $334 $579 $1283

</TABLE>

Long-term shareholders of Class B and Class C may pay more in sales charges,
including distribution fees, than the economic equivalent of the maximum
front-end sales charges permitted by the NASD.

[GRAPHIC OMITTED]

ADDITIONAL INVESTMENT STRATEGY INFORMATION
- ------------------------------------------
This section provides additional information relating to the Fund's principal
strategies.

FOREIGN SECURITIES. The Fund may invest up to 35% of its assets in equity or
investment grade fixed-income securities (including depository receipts) of
foreign companies.

FIXED-INCOME SECURITIES. The Fund also may invest up to 35% of its assets in
investment grade corporate debt securities and fixed-income securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities.

DEFENSIVE INVESTING. The Fund may take temporary "defensive" positions in
attempting to respond to adverse market conditions. The Fund may invest any
amount of its assets in cash or money market instruments in a defensive posture
when the Sub-Advisor believes it is advisable to do so. Although taking a
defensive posture is designed to protect the Fund from an anticipated market
downturn, it could have the effect of reducing the benefit from any upswing in
the market.

PORTFOLIO TURNOVER. The Fund may engage in active and frequent trading of
portfolio securities to achieve its principal investment strategies. The
portfolio turnover rate is not expected to exceed 300% annually under normal
circumstances. A high turnover rate, such as 300%, will increase Fund brokerage
costs. It also may increase the Fund's capital gains, which are passed along to
Fund shareholders as distributions. This, in turn, may increase your tax
liability as a Fund shareholder. See the sections on "Distributions" and "Tax
Consequences."

The percentage limitations relating to the composition of the Fund's portfolio
apply at the time the Fund acquires an investment and refer to the Fund's net
assets, unless otherwise noted. Subsequent percentage changes that result from
market fluctuations

<PAGE>

will not require the Fund to sell any portfolio security. The Fund may change
its principal investment strategies without shareholder approval; however, you
would be notified of any changes.

[GRAPHIC OMITTED]

ADDITIONAL RISK INFORMATION
- ---------------------------
This section provides additional information relating to the principal risks of
investing in the Fund.

FOREIGN SECURITIES. The Fund's investments in foreign securities (including
depository receipts) may involve risks in addition to the risks associated with
domestic securities. One additional risk is currency risk. While the price of
Fund shares is quoted in U.S. dollars, the Fund generally converts U.S. dollars
to a foreign market's local currency to purchase a security in that market. If
the value of that local currency falls relative to the U.S. dollar, the U.S.
dollar value of the foreign security will decrease. This is true even if the
foreign security's local price remains unchanged.

Foreign securities also have risks related to economic and political
developments abroad, including expropriations, confiscatory taxation, exchange
control regulation, limitations on the use or transfer of Fund assets and any
effects of foreign social, economic or political instability. Foreign
companies, in general, are not subject to the regulatory requirements of U.S.
companies and, as such, there may be less publicly available information about
these companies. Moreover, foreign accounting, auditing and financial reporting
standards generally are different from those applicable to U.S. companies.
Finally, in the event of a default of any foreign debt obligations, it may be
more difficult for the Fund to obtain or enforce a judgment against the issuers
of the securities.

Securities of foreign issuers may be less liquid than comparable securities of
U.S. issuers and, as such, their price changes may be more volatile.
Furthermore, foreign exchanges and broker-dealers are generally subject to less
government and exchange scrutiny and regulation than their U.S. counterparts.
In addition, differences in clearance and settlement procedures in foreign
markets may occasion delays in settlements of the Fund's trades effected in
those markets.

Many European countries have adopted or are in the process of adopting a single
European currency, referred to as the "euro." The long-term consequences of the
euro conversion for foreign exchange rates, interest rates and the value of
European securities the Fund may purchase are unclear. The consequences may
adversely affect the value and/or increase the volatility of securities held by
the Fund.

FIXED-INCOME SECURITIES. Principal risks of investing in the Fund are also
associated with its fixed-income investments. All fixed-income securities are
subject to two types of risk: credit risk and interest rate risk. Credit risk
refers to the possibility that the issuer of a security will be unable to make
interest payments and/or repay the principal on its debt.

Interest rate risk refers to fluctuations in the value of a fixed-income
security resulting from changes in the general level of interest rates. When
the general level of interest rates goes up, the prices of most fixed-income
securities go down. When the general level of interest rates goes down, the
prices of most fixed-income securities go up.

<PAGE>

YEAR 2000. The Fund could be adversely affected if the computer systems
necessary for the efficient operation of the Investment Manager, the
Sub-Advisor and the Fund's other service providers, as well as the markets and
corporate and governmental issuers in which the Fund invests do not properly
process and calculate date-related information from and after January 1, 2000.
While year 2000-related computer problems could have a negative effect on the
Fund, the Investment Manager, Sub-Advisor and their affiliates are working hard
to avoid any problems and to obtain assurances from their service providers
that they are taking similar steps.

In addition, it is possible that the markets for securities in which the Fund
invests may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and liquidity issues. In
addition, corporate and governmental data processing errors may also result in
production problems for individual companies and overall economic
uncertainties. Earnings or revenues of individual issuers will be affected by
remediation costs, which may be substantial and may be reported inconsistently
in U.S. and foreign financial statements. Accordingly, the Fund's investments
may be adversely affected.

[GRAPHIC OMITTED]

FUND MANAGEMENT
- ---------------
Effective June 28, 1999, the Fund has retained the Investment Manager - Morgan
Stanley Dean Witter Advisors Inc. - to provide administrative services, manage
its business affairs and supervise the investment of its assets. The Investment
Manager has, in turn, contracted with the Sub-Advisor - TCW Funds Management,
Inc. - to invest the Fund's assets, including the placing of orders for the
purchase and sale of portfolio securities. Prior to June 28, 1999, TCW Funds
Management, Inc. acted as the Fund's advisor and Morgan Stanley Dean Witter
Services Company Inc., a wholly-owned subsidiary of the Investment Manager,
served as the Fund's manager. The Investment Manager is a wholly-owned
subsidiary of Morgan Stanley Dean Witter & Co., a preeminent global financial
services firm that maintains leading market positions in each of its three
primary businesses: securities, asset management and credit services. Its main
business office is located at Two World Trade Center, New York, New York 10048.

(sidebar)
MORGAN STANLEY DEAN WITTER ADVISORS INC.
The Investment Manager is widely recognized as a leader in the mutual fund
industry and together with Morgan Stanley Dean Witter Services Company Inc.,
its wholly-owned subsidiary, has more than $134 billion in assets under
management or administration as of May 31, 1999.
(end sidebar)

The Sub-Advisor is a wholly-owned subsidiary of TCW Group, Inc., whose direct
and indirect subsidiaries provide a variety of trust, investment management and
investment advisory services. The Sub-Advisor's main business office is located
at 865 South Figueroa Street, Suite 1800, Los Angeles, California 90017.

James A. Tilton, a Managing Director of the Sub-Advisor and Thomas K.
McKissick, a member of the Equity Policy Committee of the TCW Group, are the
primary portfolio managers of the Fund. Mr. Tilton has been a portfolio manager
of the Fund since its inception in November 1994 and has been a portfolio
manager with affiliates of the Sub-Advisor since 1980. Mr. McKissick has been a
portfolio manager of the Fund since October 1997 and has been employed by the
TCW Group since 1985 first as an equity analyst and since 1990 as a portfolio
manager in the TCW Group's Large Cap Equity Group.

<PAGE>

The Fund pays the Investment Manager a monthly management fee as full
compensation for the services and facilities furnished to the Fund, and for
Fund expenses assumed by the Investment Manager. The fee is based on the Fund's
average daily net assets. The Investment Manager pays the Sub-Advisor monthly
compensation equal to 40% of this fee. For the fiscal year ended July 31, 1998
the Fund accrued aggregate total compensation to Morgan Stanley Dean Witter
Services Company Inc. (at that time the Fund's manager) and TCW Funds
Management, Inc. (at that time acting as the Fund's advisor, rather than
sub-advisor) of 0.75% of the Fund's average daily net assets (0.45% to Morgan
Stanley Dean Witter Services Company Inc. and 0.30% to TCW Funds Management,
Inc.).

7
<PAGE>

SHAREHOLDER INFORMATION

[GRAPHIC OMITTED]

PRICING FUND SHARES
- -------------------
The price of Fund shares (excluding sales charges), called "net asset value,"
is based on the value of the Fund's portfolio securities. The net asset value
of each Class, however, will differ because the Classes have different ongoing
distribution fees.

The net asset value per share of the Fund is determined once daily at 4:00 p.m.
Eastern time on each day that the New York Stock Exchange is open (or, on days
when the New York Stock Exchange closes prior to 4:00 p.m., at such earlier
time). Shares will not be priced on days that the New York Stock Exchange is
closed.

The value of the Fund's portfolio securities is based on the securities' market
price when available. When a market price is not readily available, including
circumstances under which the Investment Manager and/or Sub-Advisor determines
that a security's market price is not accurate, a portfolio security is valued
at its fair value, as determined under procedures established by the Fund's
Board of Trustees. In these cases, the Fund's net asset value will reflect
certain portfolio securities' fair value rather than their market price.

An exception to the Fund's general policy of using market prices concerns its
short-term debt portfolio securities. Debt securities with remaining maturities
of sixty days or less at the time of purchase are valued at amortized cost.
However, if the cost does not reflect the securities' market value, these
securities will be valued at their fair value.

[GRAPHIC OMITTED]

HOW TO BUY SHARES
- -----------------
You may open a new account to buy Fund shares or buy additional Fund shares for
an existing account by contacting your Morgan Stanley Dean Witter Financial
Advisor or other authorized financial representative. Your Financial Advisor
will assist you, step-by-step, with the procedures to invest in the Fund. You
may also purchase shares directly by calling the Fund's transfer agent and
requesting an application.

(sidebar)
CONTACTING A FINANCIAL ADVISOR
If you are new to the Morgan Stanley Dean Witter Family of Funds and would like
to contact a Financial Advisor, call (800) THE-DEAN for the telephone number of
the Morgan Stanley Dean Witter office nearest you. You may also access our
office locator on our Internet site at: www.deanwitter.com/funds
(end sidebar)

Because every investor has different immediate financial needs and long-term
investment goals, the Fund offers investors four Classes of shares: Classes A,
B, C and D. Class D shares are only offered to a limited group of investors.
Each Class of shares offers a distinct structure of sales charges, distribution
and service fees, and other features that are designed to address a variety of
needs. Your Financial Advisor or other authorized financial representative can
help you decide which Class may be most appropriate for you. When purchasing
Fund shares, you must specify which Class of shares you wish to purchase.

When you buy Fund shares, the shares are purchased at the next share price
calculated (less any applicable front-end sales charge for Class A shares)
after we receive your purchase order. Your payment is due on the third business
day after you place your purchase order. We reserve the right to reject any
order for the purchase of Fund shares.

<PAGE>

<TABLE>
<CAPTION>
MINIMUM INVESTMENT AMOUNTS
- -------------------------------------------------------------------------------------------------
MINIMUM INVESTMENT
--------------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Regular Accounts $1,000 $100
- -------------------------------------------------------------------------------------------------
Individual Retirement Accounts: Regular IRAs $1,000 $100
Education IRAs $500 $100
- -------------------------------------------------------------------------------------------------
EasyInvest(SM) (Automatically from your
checking or savings account or
Money Market Fund) $100* $100*
- -------------------------------------------------------------------------------------------------
</TABLE>

* Provided your schedule of investments totals $1,000 in twelve months.

(sidebar)
EASYINVEST(SM)
A purchase plan that allows you to transfer money automatically from your
checking or savings account or from a Money Market Fund on a semi-monthly,
monthly or quarterly basis. Contact your Morgan Stanley Dean Witter Financial
Advisor for further information about this service.
(end sidebar)

There is no minimum investment amount if you purchase Fund shares through: (1)
the Investment Manager's mutual fund asset allocation plan, (2) a program,
approved by the Fund's distributor, in which you pay an asset-based fee for
advisory, administrative and/or brokerage services, or (3) employer-sponsored
employee benefit plan accounts.

INVESTMENT OPTIONS FOR CERTAIN INSTITUTIONAL AND OTHER INVESTORS/CLASS D SHARES.
To be eligible to purchase Class D shares, you must qualify under one of the
investor categories specified in the "Share Class Arrangements" section of this
Prospectus.

SUBSEQUENT INVESTMENTS SENT DIRECTLY TO THE FUND. In addition to buying
additional Fund shares for an existing account by contacting your Morgan
Stanley Dean Witter Financial Advisor, you may send a check directly to the
Fund. To buy additional shares in this manner:

o Write a "letter of instruction" to the Fund specifying the name(s) on the
account, the account number, the social security or tax identification
number, the Class of shares you wish to purchase and the investment amount
(which would include any applicable front-end sales charge). The letter must
be signed by the account owner(s).

o Make out a check for the total amount payable to: Morgan Stanley Dean Witter
Total Return Trust.

o Mail the letter and check to Morgan Stanley Dean Witter Trust FSB at P.O. Box
1040, Jersey City, NJ 07303.

<PAGE>

[GRAPHIC OMITTED]

HOW TO EXCHANGE SHARES
- ----------------------
PERMISSIBLE FUND EXCHANGES. You may exchange shares of any Class of the Fund
for the same Class of any other continuously offered Multi-Class Fund, or for
shares of a No-Load Fund, a Money Market Fund, North American Government Income
Trust or Short-Term U.S. Treasury Trust, without the imposition of an exchange
fee. See the inside back cover of this Prospectus for each Morgan Stanley Dean
Witter Fund's designation as a Multi-Class Fund, No-Load Fund or Money Market
Fund. If a Morgan Stanley Dean Witter Fund is not listed, consult the inside
back cover of that Fund's Prospectus for its designation. For purposes of
exchanges, shares of FSC Funds (subject to a front-end sales charge) are
treated as Class A shares of a Multi-Class Fund.

Exchanges may be made after shares of the Fund acquired by purchase have been
held for thirty days. There is no waiting period for exchanges of shares
acquired by exchange or dividend reinvestment. The current Prospectus for each
Fund describes its investment objective, policies and investment minimums and
should be read before investment.

EXCHANGE PROCEDURES. You can process an exchange by contacting your Morgan
Stanley Dean Witter Financial Advisor or other authorized financial
representative. Otherwise, you must forward an exchange privilege authorization
form to the Fund's transfer agent -- Morgan Stanley Dean Witter Trust FSB --
and then write the transfer agent or call (800) 869-NEWS to place an exchange
order. You can obtain an exchange privilege authorization form by contacting
your Financial Advisor or other authorized financial representative or by
calling (800) 869-NEWS. If you hold share certificates, no exchanges may be
processed until we have received all applicable share certificates.

An exchange to any Morgan Stanley Dean Witter Fund (except a Money Market Fund)
is made on the basis of the next calculated net asset values of the Funds
involved after the exchange instructions are accepted. When exchanging into a
Money Market Fund, the Fund's shares are sold at their next calculated net
asset value and the Money Market Fund's shares are purchased at their net asset
value on the following business day.

The Fund may terminate or revise the exchange privilege upon required notice.
Certain services normally available to shareholders of Money Market Funds,
including the check writing privilege, are not available for Money Market Fund
shares you acquire in an exchange.

TELEPHONE EXCHANGES. For your protection when calling Morgan Stanley Dean
Witter Trust FSB, we will employ reasonable procedures to confirm that exchange
instructions communicated over the telephone are genuine. These procedures may
include requiring various forms of personal identification such as name,
mailing address, social security or other tax identification number. Telephone
instructions also may be recorded.

Telephone instructions will be accepted if received by the Fund's transfer
agent between 9:00 a.m. and 4:00 p.m. Eastern time on any day the New York
Stock Exchange is open for business. During periods of drastic economic or
market changes, it is possible that the telephone exchange procedures may be
difficult to implement, although this has not been the case with the Fund in
the past.

<PAGE>

MARGIN ACCOUNTS. If you have pledged your Fund shares in a margin account,
contact your Morgan Stanley Dean Witter Financial Advisor or other authorized
financial representative regarding restrictions on the exchange of such shares.

TAX CONSIDERATIONS OF EXCHANGES. If you exchange shares of the Fund for shares
of another Morgan Stanley Dean Witter Fund there are important tax
considerations. For tax purposes, the exchange out of the Fund is considered a
sale of Fund shares -- and the exchange into the other Fund is considered a
purchase. As a result, you may realize a capital gain or loss.

You should review the "Tax Consequences" section and consult your own tax
professional about the tax consequences of an exchange.

FREQUENT EXCHANGES. A pattern of frequent exchanges may result in the Fund
limiting or prohibiting, at its discretion, additional purchases and/or
exchanges. The Fund will notify you in advance of limiting your exchange
privileges.

CDSC CALCULATIONS ON EXCHANGES. See the "Share Class Arrangements" section of
this Prospectus for a further discussion of how applicable contingent deferred
sales charges (CDSCs) are calculated for shares of one Fund that are exchanged
for shares of another.

For further information regarding exchange privileges, you should contact your
Morgan Stanley Dean Witter Financial Advisor or call (800) 869-NEWS.

[GRAPHIC OMITTED]

HOW TO SELL SHARES
- ------------------
You can sell some or all of your Fund shares at any time. If you sell Class A,
Class B or Class C shares, your net sale proceeds are reduced by the amount of
any applicable CDSC. Your shares will be sold at the next price calculated
after we receive your order to sell as described below.

<TABLE>
<CAPTION>
OPTIONS PROCEDURES
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Contact Your To sell your shares, simply call your Morgan Stanley Dean Witter Financial
Financial Advisor Advisor or other authorized financial representative.
-------------------------------------------------------------------------------------
[GRAPHIC OMITTED] Payment will be sent to the address to which the account is registered or
deposited in your brokerage account.
- ----------------------------------------------------------------------------------------------------------
By Letter You can also sell your shares by writing a "letter of instruction" that includes:
o your account number;
[GRAPHIC OMITTED] o the dollar amount or the number of shares you wish to sell;
o the Class of shares you wish to sell; and
o the signature of each owner as it appears on the account.
-------------------------------------------------------------------------------------
If you are requesting payment to anyone other than the registered owner(s) or
that payment be sent to any address other than the address of the registered
owner(s) or pre-designated bank account, you will need a signature guarantee.
You can obtain a signature guarantee from an eligible guarantor acceptable to
Morgan Stanley Dean Witter Trust FSB. (You should contact Morgan Stanley
Dean Witter Trust FSB at (800) 869-NEWS for a determination as to whether
a particular institution is an eligible guarantor.) A notary public cannot provide a
signature guarantee. Additional documentation may be required for shares held
by a corporation, partnership, trustee or executor.
-------------------------------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at P.O. Box 983, Jersey
City, NJ 07303. If you hold share certificates, you must return the certificates,
along with the letter and any required additional documentation.
-------------------------------------------------------------------------------------
A check will be mailed to the name(s) and address in which the account is
registered, or otherwise according to your instructions.
-------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
OPTIONS PROCEDURES
- ----------------------------------------------------------------------------------------------------
<S> <C>
Systematic If your investment in all of the Morgan Stanley Dean Witter Family of Funds has
Withdrawal Plan a total market value of at least $10,000, you may elect to withdraw amounts of
$25 or more, or in any whole percentage of a Fund's balance (provided the
[GRAPHIC OMITTED] amount is at least $25), on a monthly, quarterly, semi-annual or annual basis,
from any Fund with a balance of at least $1,000. Each time you add a Fund to
the plan, you must meet the plan requirements.
---------------------------------------------------------------------------------
Amounts withdrawn are subject to any applicable CDSC. A CDSC may be
waived under certain circumstances. See the Class B waiver categories listed in
the "Share Class Arrangements" section of this Prospectus.
---------------------------------------------------------------------------------
To sign up for the Systematic Withdrawal Plan, contact your Morgan Stanley
Dean Witter Financial Advisor or call (800) 869-NEWS. You may terminate or
suspend your plan at any time. Please remember that withdrawals from the
plan are sales of shares, not Fund "distributions," and ultimately may exhaust
your account balance. The Fund may terminate or revise the plan at any time.
---------------------------------------------------------------------------------
</TABLE>

PAYMENT FOR SOLD SHARES. After we receive your complete instruction to sell as
described above, a check will be mailed to you within seven days, although we
will attempt to make payment within one business day. Payment may also be sent
to your brokerage account.

Payment may be postponed or the right to sell your shares suspended, however,
under unusual circumstances. If you request to sell shares that were recently
purchased by check, payment of the sale proceeds may be delayed for the minimum
time needed to verify that the check has been honored (not more than fifteen
days from the time we receive the check).

TAX CONSIDERATIONS. Normally, your sale of Fund shares is subject to federal
and state income tax. You should review the "Tax Consequences" section of this
Prospectus and consult your own tax professional about the tax consequences of
a sale.

REINSTATEMENT PRIVILEGE. If you sell Fund shares and have not previously
exercised the reinstatement privilege, you may, within 35 days after the date
of sale, invest any portion of the proceeds in the same Class of Fund shares at
their net asset value and receive a pro rata credit for any CDSC paid in
connection with the sale.

INVOLUNTARY SALES. The Fund reserves the right, on sixty days' notice, to sell
the shares of any shareholder (other than shares held in an IRA or 403(b)
Custodial Account) whose shares, due to sales by the shareholder, have a value
below $100, or in the case of an account opened through EasyInvest(SM), if after
12 months the shareholder has invested less than $1,000 in the account.

However, before the Fund sells your shares in this manner, we will notify you
and allow you sixty days to make an additional investment in an amount that
will increase the value of your account to at least the required amount before
the sale is processed. No CDSC will be imposed on any involuntary sale.

<PAGE>

[GRAPHIC OMITTED]

DISTRIBUTIONS
- -------------
The Fund passes substantially all of its earnings from income and capital gains
along to its investors as "distributions." The Fund earns income from stocks and
interest from fixed-income investments. These amounts are passed along to Fund
shareholders as "income dividend distributions." The Fund realizes capital gains
whenever it sells securities for a higher price than it paid for them. These
amounts are passed along as "capital gain distributions."

(sidebar)
TARGETED DIVIDENDS(SM)
You may select to have your Fund distributions automatically invested in other
Classes of Fund shares or Classes of another Morgan Stanley Dean Witter Fund
that you own. Contact your Morgan Stanley Dean Witter Financial Advisor for
further information about this service.
(end sidebar)

The Fund declares income dividends separately for each Class. Distributions
paid on Class A and Class D shares will be higher than for Class B and Class C
because distribution fees that Class B and Class C pay are higher. Normally,
income dividends are distributed to shareholders annually. Capital gains, if
any, are usually distributed in December. The Fund, however, may retain and
reinvest any long-term capital gains. The Fund may at times make payments from
sources other than income or capital gains that represent a return of a portion
of your investment.

Distributions are reinvested automatically in additional shares of the same
Class and automatically credited to your account, unless you request in writing
that all distributions be paid in cash. If you elect the cash option, the Fund
will mail a check to you no later than seven business days after the
distribution is declared. No interest will accrue on uncashed checks. If you
wish to change how your distributions are paid, your request should be received
by the Fund's transfer agent, Morgan Stanley Dean Witter Trust FSB, at least
five business days prior to the record date of the distributions.

[GRAPHIC OMITTED]

TAX CONSEQUENCES
- ----------------
As with any investment, you should consider how your Fund investment will be
taxed. The tax information in this Prospectus is provided as general
information. You should consult your own tax professional about the tax
consequences of an investment in the Fund.

Unless your investment in the Fund is through a tax-deferred retirement
account, such as a 401(k) plan or IRA, you need to be aware of the possible tax
consequences when:

o The Fund makes distributions; and

o You sell Fund shares, including an exchange to another Morgan Stanley Dean
Witter Fund.

TAXES ON DISTRIBUTIONS. Your distributions are normally subject to federal and
state income tax when they are paid, whether you take them in cash or reinvest
them in Fund shares. A distribution also may be subject to local income tax.
Any income dividend distributions and any short-term capital gain distributions
are taxable to you as ordinary income. Any long-term capital gain distributions
are taxable as long-term capital gains, no matter how long you have owned
shares in the Fund.

Every January, you will be sent a statement (IRS Form 1099-DIV) showing the
taxable distributions paid to you in the previous year. The statement provides
full information on your dividends and capital gains for tax purposes.

<PAGE>

TAXES ON SALES. Your sale of Fund shares normally is subject to federal and
state income tax and may result in a taxable gain or loss to you. A sale also
may be subject to local income tax. Your exchange of Fund shares for shares of
another Morgan Stanley Dean Witter Fund is treated for tax purposes like a sale
of your original shares and a purchase of your new shares. Thus, the exchange
may, like a sale, result in a taxable gain or loss to you and will give you a
new tax basis for your new shares.

When you open your Fund account, you should provide your social security or tax
identification number on your investment application. By providing this
information, you will avoid being subject to a federal backup withholding tax
of 31% on taxable distributions and redemption proceeds. Any withheld amount
would be sent to the IRS as an advance tax payment.

[GRAPHIC OMITTED]

SHARE CLASS ARRANGEMENTS
- ------------------------
The Fund offers several Classes of shares having different distribution
arrangements designed to provide you with different purchase options according
to your investment needs. Your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative can help you decide which Class may
be appropriate for you.

The general public is offered three Classes: Class A shares, Class B shares and
Class C shares, which differ principally in terms of sales charges and ongoing
expenses. A fourth Class, Class D shares, is offered only to a limited category
of investors. Shares that you acquire through reinvested distributions will not
be subject to any front-end sales charge or CDSC -- contingent deferred sales
charge. Sales personnel may receive different compensation for selling each
Class of shares. The sales charges applicable to each Class provide for the
distribution financing of shares of that Class.

The chart below compares the sales charge and maximum annual 12b-1 fee
applicable to each Class:

<TABLE>
<CAPTION>
MAXIMUM
CLASS SALES CHARGE ANNUAL 12B-1FEE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
A Maximum 5.25% initial sales charge reduced for purchase of
$25,000 or more; shares sold without an initial sales charge are
generally subject to a 1.0% CDSC during the first year 0.25%
- ---------------------------------------------------------------------------------------------
B Maximum 5.0% CDSC during the first year decreasing to 0%
after six years 1.0%
- ---------------------------------------------------------------------------------------------
C 1.0% CDSC during the first year 1.0%
- ---------------------------------------------------------------------------------------------
D None None
- ---------------------------------------------------------------------------------------------
</TABLE>

14
<PAGE>

CLASS A SHARES
Class A shares are sold at net asset value plus an initial sales charge of up to
5.25%. The initial sales charge is reduced for purchases of $25,000 or more
according to the schedule below. Investments of $1 million or more are not
subject to an initial sales charge, but are generally subject to a contingent
deferred sales charge, or CDSC, of 1.0% on sales made within one year after the
last day of the month of purchase. The CDSC will be assessed in the same manner
and with the same CDSC waivers as with Class B shares. Class A shares are also
subject to a distribution (12b-1) fee of up to 0.25% of the average daily net
assets of the Class.

The offering price of Class A shares includes a sales charge (expressed as a
percentage of the offering price) on a single transaction as shown in the
following table:

(sidebar)
FRONT-END SALES CHARGE OR FSC
An initial sales charge you pay when purchasing Class A shares that is based on
a percentage of the offering price. The percentage declines based upon the
dollar value of Class A shares you purchase. We offer three ways to reduce your
Class A sales charges -- the Combined Purchase Privilege, Right of Accumulation
and Letter of Intent.
(end sidebar)

<TABLE>
<CAPTION>
FRONT-END SALES CHARGE
-----------------------------------------------
PERCENTAGE OF APPROXIMATE PERCENTAGE
AMOUNT OF SINGLE TRANSACTION PUBLIC OFFERING PRICE OF NET AMOUNT INVESTED
- ------------------------------------------------------------------------------------
<S> <C> <C>
Less than $25,000 5.25% 5.54%
- ------------------------------------------------------------------------------------
$25,000 but less than $50,000 4.75% 4.99%
- ------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.00% 4.17%
- ------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.00% 3.09%
- ------------------------------------------------------------------------------------
$250,000 but less than $1 million 2.00% 2.04%
- ------------------------------------------------------------------------------------
$1 million and over 0 0
- ------------------------------------------------------------------------------------
</TABLE>

The reduced sales charge schedule is applicable to purchases of Class A shares
in a single transaction by:

o A single account (including an individual, trust or fiduciary account).

o Family member accounts (limited to husband, wife and children under the age
of 21).

o Pension, profit sharing or other employee benefit plans of companies and
their affiliates.

o Tax-exempt organizations.

o Groups organized for a purpose other than to buy mutual fund shares.

COMBINED PURCHASE PRIVILEGE. You also will have the benefit of reduced sales
charges by combining purchases of Class A shares of the Fund in a single
transaction with purchases of Class A shares of other Multi-Class Funds and
shares of FSC Funds.

RIGHT OF ACCUMULATION. You also may benefit from a reduction of sales charges
if the cumulative net asset value of Class A shares of the Fund purchased in a
single transaction, together with shares of other Funds you currently own which
were previously purchased at a price including a front-end sales charge
(including shares acquired through reinvestment of distributions), amounts to
$25,000 or more. Also, if you have a cumulative net asset value of all your
Class A and Class D shares equal to at least $5 million (or $25 million for
certain employee benefit plans), you are eligible to purchase Class D shares of
any Fund subject to the Fund's minimum initial investment requirement.

<PAGE>

You must notify your Morgan Stanley Dean Witter Financial Advisor or other
authorized financial representative (or Morgan Stanley Dean Witter Trust FSB if
you purchase directly through the Fund), at the time a purchase order is
placed, that the purchase qualifies for the reduced charge under the Right of
Accumulation. Similar notification must be made in writing when an order is
placed by mail. The reduced sales charge will not be granted if: (i)
notification is not furnished at the time of the order; or (ii) a review of the
records of Dean Witter Reynolds or other authorized dealer of Fund shares or
the Fund's transfer agent does not confirm your represented holdings.

LETTER OF INTENT. The schedule of reduced sales charges for larger purchases
also will be available to you if you enter into a written "letter of intent." A
letter of intent provides for the purchase of Class A shares of the Fund or
other Multi-Class Funds or shares of FSC Funds within a thirteen month period.
The initial purchase under a letter of intent must be at least 5% of the stated
investment goal. To determine the applicable sales charge reduction, you may
also include: (1) the cost of shares of other Morgan Stanley Dean Witter
Multi-Class Funds which were previously purchased at a price including a
front-end sales charge during the 90-day period prior to the distributor
receiving the letter of intent, and (2) the cost of shares of other Funds you
currently own acquired in exchange for shares of Funds purchased during that
period at a price including a front-end sales charge. You can obtain a letter
of intent by contacting your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative, or by calling (800) 869-NEWS. If you
do not achieve the stated investment goal within the thirteen-month period, you
are required to pay the difference between the sales charges otherwise
applicable and sales charges actually paid, which may be deducted from your
investment.

OTHER SALES CHARGE WAIVERS. In addition to investments of $1 million or more,
your purchase of Class A shares is not subject to a front-end sales charge (or
a CDSC upon sale) if your account qualifies under one of the following
categories:

o A trust for which Morgan Stanley Dean Witter Trust FSB provides discretionary
trustee services.

o Persons participating in a fee-based investment program (subject to all of
its terms and conditions, including mandatory sale or transfer restrictions
on termination) approved by the Fund's distributor pursuant to which they
pay an asset-based fee for investment advisory, administrative and/or
brokerage services.

o Employer-sponsored employee benefit plans, whether or not qualified under the
Internal Revenue Code, for which Morgan Stanley Dean Witter Trust FSB serves
as trustee or Dean Witter Reynolds' Retirement Plan Services serves as
recordkeeper under a written Recordkeeping Services Agreement ("MSDW
Eligible Plans") which have at least 200 eligible employees.

o An MSDW Eligible Plan whose Class B shares have converted to Class A shares,
regardless of the plan's asset size or number of eligible employees.

o A client of a Morgan Stanley Dean Witter Financial Advisor who joined us from
another investment firm within six months prior to the date of purchase of
Fund shares, and you used the proceeds from the sale of shares of a
proprietary mutual

16
<PAGE>

fund of that Financial Advisor's previous firm that imposed either a front-end
or deferred sales charge to purchase Class A shares, provided that: (1) you
sold the shares not more than 60 days prior to the purchase of Fund shares,
and (2) the sale proceeds were maintained in the interim in cash or a money
market fund.

o Current or retired Directors/Trustees of the Morgan Stanley Dean Witter
Funds, such persons' spouses and children under the age of 21, and trust
accounts for which any of such persons is a beneficiary.

o Current or retired directors, officers and employees of Morgan Stanley Dean
Witter & Co. and any of its subsidiaries, such persons' spouses and children
under the age of 21 and trust accounts for which any of such persons is a
beneficiary.

CLASS B SHARES
Class B shares are offered at net asset value with no initial sales charge but
are subject to a contingent deferred sales charge, or CDSC, as set forth in the
table below. For the purpose of calculating the CDSC, shares are deemed to have
been purchased on the last day of the month during which they were purchased.

(sidebar)
CONTINGENT DEFERRED SALES CHARGE OR CDSC
A fee you pay when you sell shares of certain Morgan Stanley Dean Witter Funds
purchased without an initial sales charge. This fee declines the longer you hold
your shares as set forth in the table.
(end sidebar)

<TABLE>
<CAPTION>
YEAR SINCE PURCHASE PAYMENT MADE CDSC AS A PERCENTAGE OF AMOUNT REDEEMED
- ---------------------------------------------------------------------------
<S> <C>
First 5.0%
- ---------------------------------------------------------------------------
Second 4.0%
- ---------------------------------------------------------------------------
Third 3.0%
- ---------------------------------------------------------------------------
Fourth 2.0%
- ---------------------------------------------------------------------------
Fifth 2.0%
- ---------------------------------------------------------------------------
Sixth 1.0%
- ---------------------------------------------------------------------------
Seventh and thereafter None
- ---------------------------------------------------------------------------
</TABLE>

Each time you place an order to sell or exchange shares, shares with no CDSC
will be sold or exchanged first, then shares with the lowest CDSC will be sold
or exchanged next. For any shares subject to a CDSC, the CDSC will be assessed
on an amount equal to the lesser of the current market value or the cost of the
shares being sold.

CDSC WAIVERS. A CDSC, if otherwise applicable, will be waived in the case of:

o Sales of shares held at the time you die or become disabled (within the
definition in Section 72(m)(7) of the Internal Revenue Code which relates to
the ability to engage in gainful employment), if the shares are: (i)
registered either in your name (not a trust) or in the names of you and your
spouse as joint tenants with right of survivorship; or (ii) held in a
qualified corporate or self-employed retirement plan, IRA or 403(b)
Custodial Account, provided in either case that the sale is requested within
one year of your death or initial determination of disability.

o Sales in connection with the following retirement plan "distributions:" (i)
lump-sum or other distributions from a qualified corporate or self-employed
retirement plan following retirement (or, in the case of a "key employee" of
a "top heavy" plan, following attainment of age 59 1/2); (ii) distributions
from an IRA or 403(b) Custodial Account following attainment of age 59 1/2;
or (iii) a tax-free return of an excess IRA contribution (a "distribution"
does not include a direct transfer of IRA, 403(b) Custodial Account or
retirement plan assets to a successor custodian or trustee).

o Sales of shares held for you as a participant in a MSDW Eligible Plan.

<PAGE>

o Sales of shares in connection with the Systematic Withdrawal Plan of up to
12% annually of the value of each Fund from which plan sales are made. The
percentage is determined on the date you establish the Systematic Withdrawal
Plan and based on the next calculated share price. You may have this CDSC
waiver applied in amounts up to 1% per month, 3% per quarter, 6%
semi-annually or 12% annually. Shares with no CDSC will be sold first,
followed by those with the lowest CDSC. As such, the waiver benefit will be
reduced by the amount of your shares that are not subject to a CDSC. If you
suspend your participation in the plan, you may later resume plan payments
without requiring a new determination of the account value for the 12% CDSC
waiver.

All waivers will be granted only following the Fund's distributor receiving
confirmation of your entitlement. If you believe you are eligible for a CDSC
waiver, please contact your Financial Advisor or call (800) 869-NEWS.

DISTRIBUTION FEE. Class B shares are subject to an annual 12b-1 fee of 1.0% of
the lesser of: (a) the average daily aggregate gross purchases by all
shareholders of the Fund's Class B shares since the inception of the Fund (not
including reinvestments of dividends or capital gains distributions), less the
average daily aggregate net asset value of the Fund's Class B shares sold by
all shareholders since the Fund's inception upon which a CDSC has been imposed
or waived, or (b) the average daily net assets of Class B.

CONVERSION FEATURE. After ten (10) years, Class B shares will convert
automatically to Class A shares of the Fund with no initial sales charge. The
ten year period runs from the last day of the month in which the shares were
purchased, or in the case of Class B shares acquired through an exchange, from
the last day of the month in which the original Class B shares were purchased;
the shares will convert to Class A shares based on their relative net asset
values in the month following the ten year period. At the same time, an equal
proportion of Class B shares acquired through automatically reinvested
distributions will convert to Class A shares on the same basis. (Class B shares
held before May 1, 1997, however, will convert to Class A shares in May 2007.)

In the case of Class B shares held in a MSDW Eligible Plan, the plan is treated
as a single investor and all Class B shares will convert to Class A shares on
the conversion date of the Class B shares of a Morgan Stanley Dean Witter Fund
purchased by that plan.

Currently, the Class B share conversion is not a taxable event; the conversion
feature may be cancelled if it is deemed a taxable event in the future by the
Internal Revenue Service.

If you exchange your Class B shares for shares of a Money Market Fund, a
No-Load Fund, North American Government Income Trust or Short-Term U.S.
Treasury Trust, the holding period for conversion is frozen as of the last day
of the month of the exchange and resumes on the last day of the month you
exchange back into Class B shares.

EXCHANGING SHARES SUBJECT TO A CDSC. There are special considerations when you
exchange Fund shares that are subject to a CDSC. When determining the length of
time you held the shares and the corresponding CDSC rate, any period (starting
at the end of the month) during which you held shares of a fund that does not
charge a CDSC

<PAGE>

will not be counted. Thus, in effect the "holding period" for purposes of
calculating the CDSC is frozen upon exchanging into a fund that does not charge
a CDSC.

For example, if you held Class B shares of the Fund in a regular account for
one year, exchanged to Class B of another Morgan Stanley Dean Witter
Multi-Class Fund for another year, then sold your shares, a CDSC rate of 4%
would be imposed on the shares based on a two year holding period -- one year
for each Fund. However, if you had exchanged the shares of the Fund for a Money
Market Fund (which does not charge a CDSC) instead of the Multi-Class Fund,
then sold your shares, a CDSC rate of 5% would be imposed on the shares based
on a one year holding period. The one year in the Money Market Fund would not
be counted. Nevertheless, if shares subject to a CDSC are exchanged for a Fund
that does not charge a CDSC, you will receive a credit when you sell the shares
equal to the distribution (12b-1) fees, if any, you paid on those shares while
in that Fund up to the amount of any applicable CDSC.

In addition, shares that are exchanged into or from a Morgan Stanley Dean
Witter Fund subject to a higher CDSC rate will be subject to the higher rate,
even if the shares are re-exchanged into a Fund with a lower CDSC rate.

CLASS C SHARES
Class C shares are sold at net asset value with no initial sales charge but are
subject to a CDSC of 1.0% on sales made within one year after the last day of
the month of purchase. The CDSC will be assessed in the same manner and with the
same CDSC waivers as with Class B shares.

DISTRIBUTION FEE. Class C shares are subject to an annual distribution (12b-1)
fee of up to 1.0% of the average daily net assets of that Class. The Class C
shares' distribution fee may cause that Class to have higher expenses and pay
lower dividends than Class A or Class D shares. Unlike Class B shares, Class C
shares have no conversion feature and, accordingly, an investor that purchases
Class C shares may be subject to distribution (12b-1) fees applicable to Class
C shares for an indefinite period.

CLASS D SHARES
Class D shares are offered without any sales charge on purchases or sales and
without any distribution (12b-1) fee. Class D shares are offered only to
investors meeting an initial investment minimum of $5 million ($25 million for
MSDW Eligible Plans) and the following investor categories:

o Investors participating in the Investment Manager's mutual fund asset
allocation program (subject to all of its terms and conditions, including
mandatory sale or transfer restrictions on termination) pursuant to which
they pay an asset-based fee.

o Employee benefit plans maintained by Morgan Stanley Dean Witter & Co. or any
of its subsidiaries for the benefit of certain employees of Morgan Stanley
Dean Witter & Co. and its subsidiaries.

o Certain unit investment trusts sponsored by Dean Witter Reynolds.

19
<PAGE>

o Certain other open-end investment companies whose shares are distributed by
the Fund's distributor.

MEETING CLASS D ELIGIBILITY MINIMUMS. To meet the $5 million ($25 million for
MSDW Eligible Plans) initial investment to qualify to purchase Class D shares
you may combine: (1) purchases in a single transaction of Class D shares of the
Fund and other Morgan Stanley Dean Witter Multi-Class Funds and/or (2) previous
purchases of Class A and Class D shares of Multi-Class Funds and shares of FSC
Funds you currently own, along with shares of Morgan Stanley Dean Witter Funds
you currently own that you acquired in exchange for those shares.

NO SALES CHARGES FOR REINVESTED CASH DISTRIBUTIONS
If you receive a cash payment representing an income dividend or capital gain
and you reinvest that amount in the applicable Class of shares by returning the
check within 30 days of the payment date, the purchased shares would not be
subject to an initial sales charge or CDSC.

PLAN OF DISTRIBUTION (RULE 12B-1 FEES)
The Fund has adopted a Plan of Distribution in accordance with Rule 12b-1 under
the Investment Company Act of 1940 with respect to the distribution of Class A,
Class B and Class C shares. The Plan allows the Fund to pay distribution fees
for the sale and distribution of these shares. It also allows the Fund to pay
for services to shareholders of Class A, Class B and Class C shares. Because
these fees are paid out of the Fund's assets on an ongoing basis, over time
these fees will increase the cost of your investment in these Classes and may
cost you more than paying other types of sales charges.

20
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance for the life of the Fund. Certain information reflects
financial results for a single Fund share throughout each year. The total
returns in the table represent the rate an investor would have earned or lost
on an investment in the Fund (assuming reinvestment of all dividends and
distributions).

With the exception of the unaudited information for the six months ended
January 31, 1999, this information has been audited by PricewaterhouseCoopers
LLP, independent accountants, whose report, along with the Fund's financial
statements, is included in the annual report, which is available upon request.

<TABLE>
<CAPTION>
CLASS B SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE YEAR ENDED JULY 31, FOR THE PERIOD
MONTHS ENDED ------------------------------------- NOVEMBER 30,
JANUARY 31, 1994*
1999++ THROUGH
(unaudited) 1998++ 1997** 1996 JULY 31, 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> C>
SELECTED PER SHARE DATA:
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $16.68 $16.59 $12.00 $11.75 $10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08) (0.08) 0.04 0.15 0.21
Net realized and unrealized gain 2.19 1.31 5.81 0.80 1.68
------------ -------- -------- --------- -----------
Total income from investment operations 2.11 1.23 5.85 0.95 1.89
- ----------------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income -- -- (0.06) (0.21) (0.14)
Net realized gain (0.89) (1.14) (1.20) (0.49) --
------------ -------- -------- --------- -----------
Total dividends and distributions (0.89) (1.14) (1.26) (0.70) (0.14)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.90 $16.68 $16.59 $12.00 $11.75
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 12.85%(1) 8.25% 51.66% 8.23% 19.04%(1)
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses 1.93%(2)(4) 1.90% 2.05% 1.98%(3) 0.94%(2)(3)
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.91)%(2)(4) (0.49)% 0.28% 1.30%(3) 3.19%(2)(3)
- ----------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $168,835 $152,380 $117,041 $48,524 $36,018
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 57%(1) 93% 198% 261% 91%(1)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Commencement of operations.
** Prior to July 28, 1997, the Fund issued one class of shares. All shares
of the Fund held prior to that date have been designated Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.

(3) If the Fund had borne all of its expenses that were reimbursed or waived
by Morgan Stanley Dean Witter Services Company Inc. and TCW Funds
Management, the above annualized expense and net investment income ratios
would have been 2.21% and 1.07%, respectively, for the year ended July
31, 1996 and 2.66% and 1.47%, respectively, for the period ended July 31,
1995.

(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.

21
<PAGE>

<TABLE>
<CAPTION>
CLASS A SHARES ++
- ---------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE JULY 28, 1997*
JANUARY 31, 1999 YEAR ENDED THROUGH
(unaudited) JULY 31, 1998 JULY 31, 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning of period $16.78 $16.59 $16.07
- --------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02) (0.01) 0.01
Net realized and unrealized gain 2.21 1.34 0.51
-------- --------- ----------
Total income from investment operations 2.19 1.33 0.52
- --------------------------------------------------------------------------------------------------------------
Less distributions from net realized gain (0.89) (1.14) --
Net asset value, end of period $18.08 $16.78 $16.59
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 13.19%(1) 8.94% 3.24%(1)
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- --------------------------------------------------------------------------------------------------------------
Expenses 1.28%(2)(3) 1.31% 1.31%(2)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.26)%(2)(3) (0.07)% 4.08%(2)
- --------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $1,959 $1,254 $10
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 57% 93% 198%
- --------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
CLASS C SHARES++
- ---------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE JULY 28, 1997*
JANUARY 31, 1999 YEAR ENDED THROUGH
(unaudited) JULY 31, 1998 JULY 31, 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SELECTED PER SHARE DATA:
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $16.66 $16.59 $16.07
- ---------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08) (0.12) 0.01
Net realized and unrealized gain 2.18 1.33 0.51
--------- --------- -----------
Total income from investment operations 2.10 1.21 0.52
- ---------------------------------------------------------------------------------------------------------------
Less distributions from net realized gain (0.89) (1.14) --
Net asset value, end of period $17.87 $16.66 $16.59
- ---------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 12.81%(1) 8.12% 3.24%(1)
- ---------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ---------------------------------------------------------------------------------------------------------------
Expenses 2.03%(2)(3) 2.06% 2.06%(2)
- ---------------------------------------------------------------------------------------------------------------
Net investment income (loss) (1.01)%(2)(3) (0.70)% 2.75%(2)
- ---------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $767 $700 $38
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 57%(1) 93% 198%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

22
<PAGE>

<TABLE>
<CAPTION>
CLASS D SHARES ++
- ---------------------------------------------------------------------------------------------------------------
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE YEAR JULY 28, 1997*
JANUARY 31, 1999 ENDED THROUGH
(unaudited) JULY 31, 1998 JULY 31, 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SELECTED PER SHARE DATA:
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $16.83 $16.59 $16.07
- ---------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income -- 0.06 0.01
Net realized and unrealized gain 2.22 1.32 0.51
--------- -------- -----------
Total income from investment operations 2.22 1.38 0.52
- ---------------------------------------------------------------------------------------------------------------
Less distributions from net realized gain (0.89) (1.14) --
Net asset value, end of period $18.16 $16.83 $16.59
- ---------------------------------------------------------------------------------------------------------------
TOTAL RETURN+ 13.34%(1) 9.20% 3.24%(1)
- ---------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
- ---------------------------------------------------------------------------------------------------------------
Expenses 1.03%(2)(3) 1.06% 1.06%(2)
- ---------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.01)%(2)(3) 0.34% 4.33%(2)
- ---------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $13 $11 $10
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 57%(1) 93% 198%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of
the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

23
<PAGE>

NOTES

------------------------------------------------------------------------

24
<PAGE>

MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS

The Morgan Stanley Dean Witter Family of Funds
offers investors a wide range of investment choices.
Come on in and meet the family!

- --------------------------------------------------------------------------------
GROWTH FUNDS

GROWTH FUNDS

Aggressive Equity Fund

American Opportunities Fund

Capital Growth Securities

Developing Growth Securities

Equity Fund

Growth Fund

Market Leader Trust

Mid-Cap Equity Trust

Small Cap Growth Fund

Special Value Fund

Value Fund

THEME FUNDS

Financial Services Trust

Health Sciences Trust

Information Fund

Natural Resource Development Securities

Precious Metals and Minerals Trust

GLOBAL/INTERNATIONAL FUNDS

Competitive Edge Fund - "Best Ideas" Portfolio

European Growth Fund

Fund of Funds - International Portfolio

International Fund

International SmallCap Fund

Japan Fund

Latin American Growth Fund

Pacific Growth Fund

- --------------------------------------------------------------------------------
GROWTH & INCOME FUNDS

Balanced Growth Fund

Balanced Income Fund

Convertible Securities Trust

Dividend Growth Securities

Fund of Funds - Domestic Portfolio

Income Builder Fund

Mid-Cap Dividend Growth Securities

S&P 500 Index Fund

S&P 500 Select Fund

Strategist Fund

Total Return Trust

Value/Added Market Series/Equity Portfolio

THEME FUNDS

Global Utilities Fund

Utilities Fund

GLOBAL FUNDS

Global Dividend Growth Securities

- --------------------------------------------------------------------------------
INCOME FUNDS

GOVERNMENT INCOME FUNDS

Federal Securities Trust

Short-Term U.S. Treasury Trust

U.S. Government Securities Trust

DIVERSIFIED INCOME FUNDS

Diversified Income Trust

CORPORATE INCOME FUNDS

High Yield Securities

Intermediate Income Securities

Short-Term Bond Fund(NL)

GLOBAL INCOME FUNDS

North American Government Income Trust

World Wide Income Trust

TAX-FREE INCOME FUNDS

California Tax-Free Income Fund

Hawaii Municipal Trust(FSC)

Limited Term Municipal Trust(NL)

Multi-State Municipal Series Trust(FSC)

New York Tax-Free Income Fund

Tax-Exempt Securities Trust

- --------------------------------------------------------------------------------
MONEY MARKET FUNDS

TAXABLE MONEY MARKET FUNDS

Liquid Asset Fund(MM)

U.S. Government Money Market Trust(MM)

TAX-FREE MONEY MARKET FUNDS

California Tax-Free Daily Income Trust(MM)

New York Municipal Money Market Trust(MM)

Tax-Free Daily Income Trust(MM)

There may be Funds created after this Prospectus was published. Please consult
the inside front cover of a new Fund's prospectus for its designations, e.g.,
Multi-Class Fund or Money Market Fund.

Unless otherwise noted, each listed Morgan Stanley Dean Witter Fund, except for
North American Government Income Trust and Short-Term U.S. Treasury Trust, is a
Multi-Class Fund. A Multi-Class Fund is a mutual fund offering multiple Classes
of shares. The other types of Funds are: NL -- No-Load (Mutual) Fund; MM --
Money Market Fund; FSC -- A mutual fund sold with a front-end sales charge and
a distribution (12b-1) fee.

<PAGE>

MORGAN STANLEY DEAN WITTER
TOTAL RETURN TRUST

Additional information about the Fund's investments is available in the Fund's
Annual and Semi-Annual Reports to Shareholders. In the Fund's Annual Report,
you will find a discussion of the market conditions and investment strategies
that significantly affected the Fund's performance during its last fiscal year.
The Fund's Statement of Additional Information also provides additional
information about the Fund. The Statement of Additional Information is
incorporated herein by reference (legally is part of this Prospectus). For a
free copy of any of these documents, to request other information about the
Fund, or to make shareholder inquiries, please call:

(800) 869-NEWS

You also may obtain information about the Fund by calling your Morgan Stanley
Dean Witter Financial Advisor or by visiting our Internet site at:

www.deanwitter.com/funds

(sidebar)
TICKER SYMBOLS:
Class A: TRFAX
- -------------------------
Class B: TRFBX
- -------------------------
Class C: TRFCX
- -------------------------
Class D: TRFDX
- -------------------------
(end sidebar)

Information about the Fund (including the Statement of Additional Information)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (800) SEC-0330. Reports and
other information about the Fund are available on the SEC's Internet site
(www.sec.gov) and copies of this information may be obtained, upon payment of a
duplicating fee, by writing the Public Reference Section of the SEC,
Washington, DC 20549-6009.

(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-8600)

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
MORGAN STANLEY
DEAN WITTER
JUNE 28, 1999
TOTAL RETURN TRUST

- --------------------------------------------------------------------------------
This Statement of Additional Information is not a Prospectus. The
Prospectus dated June 28, 1999 for Morgan Stanley Dean Witter Total Return
Trust may be obtained without charge from the Fund at its address or telephone
number listed below or from Dean Witter Reynolds at any of its branch offices.

Morgan Stanley Dean Witter Total Return Trust
Two World Trade Center
New York, New York 10048
(800) 869-NEWS

<PAGE>

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

<S> <C>
I. Fund History .................................................................... 4
II. Description of the Fund and Its Investments and Risks .......................... 4
A. Classification ............................................................... 4
B. Investment Strategies and Risks .............................................. 4
C. Fund Policies/Investment Restrictions ........................................ 7
III. Management of the Fund ........................................................ 9
A. Board of Trustees ............................................................ 9
B. Management Information ....................................................... 9
C. Compensation ................................................................. 13
IV. Control Persons and Principal Holders of Securities ............................ 15
V. Management, Investment Advice and Other Services ................................ 15
A. The Investment Manager and Sub-Advisor ....................................... 15
B. Principal Underwriter ........................................................ 16
C. Services Provided by the Investment Manager, the Sub-Advisor and Fund
Expenses Paid by Third Parties ............................................... 17
D. Dealer Reallowances .......................................................... 18
E. Rule 12b-1 Plan .............................................................. 18
F. Other Service Providers ...................................................... 22
VI. Brokerage Allocation and Other Practices ....................................... 22
A. Brokerage Transactions ....................................................... 22
B. Commissions .................................................................. 22
C. Brokerage Selection .......................................................... 23
D. Directed Brokerage ........................................................... 24
E. Regular Broker-Dealers ....................................................... 24
VII. Capital Stock and Other Securities ............................................ 24
VIII. Purchase, Redemption and Pricing of Shares ................................... 25
A. Purchase/Redemption of Shares ................................................ 25
B. Offering Price ............................................................... 26
IX. Taxation of the Fund and Shareholders .......................................... 26
X. Underwriters .................................................................... 28
XI. Calculation of Performance Data ................................................ 28
XII. Financial Statements .......................................................... 30
</TABLE>

2
<PAGE>

GLOSSARY OF SELECTED DEFINED TERMS

The terms defined in this glossary are frequently used in this Statement
of Additional Information (other terms used occasionally are defined in the
text of the document).

"Custodian " -- The Bank of New York.

"Dean Witter Reynolds " -- Dean Witter Reynolds Inc., a wholly-owned
broker-dealer subsidiary of MSDW.

"Distributor " -- Morgan Stanley Dean Witter Distributors Inc., a
wholly-owned broker-dealer subsidiary of MSDW.

"Financial Advisors " -- Morgan Stanley Dean Witter authorized financial
services representatives.

"Fund " -- Morgan Stanley Dean Witter Total Return Trust, a registered
open-end investment company.

"Investment Manager " -- Morgan Stanley Dean Witter Advisors Inc., a
wholly-owned investment advisor subsidiary of MSDW.

"Independent Trustees " -- Trustees who are not "interested persons" (as
defined by the Investment Company Act) of the Fund.

"Morgan Stanley & Co." -- Morgan Stanley & Co. Incorporated, a
wholly-owned broker-dealer subsidiary of MSDW.

"Morgan Stanley Dean Witter Funds " -- Registered investment companies (i)
for which the Investment Manager serves as the investment advisor; and (ii)
that hold themselves out to investors as related companies for investment and
investor services.

"MSDW " -- Morgan Stanley Dean Witter & Co., a preeminent global financial
services firm.

"MSDW Services Company " -- Morgan Stanley Dean Witter Services Company
Inc., a wholly-owned fund services subsidiary of the Investment Manager.

"Sub-Advisor " -- TCW Funds Management, Inc. a wholly-owned subsidiary of
TCW.

"TCW " -- The TCW Group, Inc., a preeminent investment management and
investment advisory services firm.

"Transfer Agent " -- Morgan Stanley Dean Witter Trust FSB, a wholly-owned
transfer agent subsidiary of MSDW.

"Trustees " -- The Board of Trustees of the Fund.

3
<PAGE>

I. FUND HISTORY
- --------------------------------------------------------------------------------

The Fund was organized under the laws of the Commonwealth of Massachusetts
on June 29, 1994 as a Massachusetts business trust under the name "TCW/DW Total
Return Trust." On February 25, 1999 the Fund's Trustees adopted an Amendment to
the Fund's Declaration of Trust changing the name of the Fund to Morgan Stanley
Dean Witter Total Return Trust, effective June 28, 1999.

II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
- --------------------------------------------------------------------------------

A. CLASSIFICATION

The Fund is an open-end, non-diversified management investment company
whose investment objective is to seek high total return from capital growth and
income.

B. INVESTMENT STRATEGIES AND RISKS

The following discussion of the Fund's investment strategies and risks
should be read with the sections of the Fund's Prospectus titled "Principal
Investment Strategies," "Principal Risks," "Additional Investment Strategy
Information" and "Additional Risk Information."

MONEY MARKET SECURITIES. The Fund may invest in various money market
securities for cash management purposes or when assuming a temporary defensive
position, which among others may include commercial paper, bank acceptances,
bank obligations, corporate debt securities, certificates of deposit, U.S.
Government securities and obligations of savings institutions and repurchase
agreements. Such securities are limited to:

U.S. Government Securities. Obligations issued or guaranteed as to
principal and interest by the United States or its agencies (such as the
Export-Import Bank of the United States, Federal Housing Administration and
Government National Mortgage Association) or its instrumentalities (such as the
Federal Home Loan Bank), including Treasury bills, notes and bonds;

Bank Obligations. Obligations (including certificates of deposit and
bankers' acceptances) of banks subject to regulation by the U.S. Government and
having total assets of $1 billion or more, and instruments secured by such
obligations, not including obligations of foreign branches of domestic banks
except to the extent below;

Eurodollar Certificates of Deposit. Eurodollar certificates of deposit
issued by foreign branches of domestic banks having total assets of $1 billion
or more;

Obligations of Savings Institutions. Certificates of deposit of savings
banks and savings and loan associations, having total assets of $1 billion or
more;

Fully Insured Certificates of Deposit. Certificates of deposit of banks
and savings institutions having total assets of less than $1 billion, if the
principal amount of the obligation is federally insured by the Bank Insurance
Fund or the Savings Association Insurance Fund (each of which is administered
by the FDIC), limited to $100,000 principal amount per certificate and to 10%
or less of the Fund's total assets in all such obligations and in all illiquid
assets, in the aggregate;

Commercial Paper. Commercial paper rated within the two highest grades by
Standard & Poor's Corporation ("S&P") or the two highest grade by Moody's
Investor's Service, Inc. ("Moody's") or, if not rated, issued by a company
having an outstanding debt issue rated at least AA by S&P or Aa by Moody's; and

Repurchase Agreements. The Fund may invest in repurchase agreements. When
cash may be available for only a few days, it may be invested by the Fund in
repurchase agreements until such time as it may otherwise be invested or used
for payments of obligations of the Fund. These agreements, which may be viewed
as a type of secured lending by the Fund, typically involve the acquisition, by
the Fund, of debt securities from a selling financial institution such as a
bank, savings and loan association or broker-dealer. The agreement provides
that the Fund will sell back to the institution, and that the institution will
repurchase, the underlying security serving as collateral at a specified price
and at a fixed

4
<PAGE>

time in the future, usually not more than seven days from the date of purchase.
The collateral will be marked-to-market daily to determine that the value of
the collateral, as specified in the agreement, does not decrease below the
purchase price plus accrued interest. If such decrease occurs, additional
collateral will be requested and, when received, added to the account to
maintain full collateralization. The Fund will accrue interest from the
institution until the time when the repurchase is to occur. Although this date
is deemed by the Fund to be the maturity date of a repurchase agreement, the
maturities of securities subject to repurchase agreements are not subject to
any limits.

While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Fund follows procedures designed to
minimize such risks. These procedures include effecting repurchase transactions
only with large, well-capitalized and well-established financial institutions
whose financial condition will be continually monitored by the Investment
Manager and/or Sub-Advisor subject to procedures established by the Trustees.
In addition, as described above, the value of the collateral underlying the
repurchase agreement will be at least equal to the repurchase price, including
any accrued interest earned on the repurchase agreement. In the event of a
default or bankruptcy by a selling financial institution, the Fund will seek to
liquidate such collateral. However, the exercising of the Fund's right to
liquidate such collateral could involve certain costs or delays and, to the
extent that proceeds from any sale upon a default of the obligation to
repurchase were less than the repurchase price, the Fund could suffer a loss.
It is the current policy of the Fund not to invest in repurchase agreements
that do not mature within seven days if any such investment, together with any
other illiquid assets held by the Fund, amounts to more than 15% of its net
assets.

ZERO COUPON SECURITIES. A portion of the fixed-income securities purchased
by the Fund may be zero coupon securities. Such securities are purchased at a
discount from their face amount, giving the purchaser the right to receive
their full value at maturity. The interest earned on such securities is,
implicitly, automatically compounded and paid out at maturity. While such
compounding at a constant rate eliminates the risk of receiving lower yields
upon reinvestment of interest if prevailing interest rates decline, the owner
of a zero coupon security will be unable to participate in higher yields upon
reinvestment of interest received on interest-paying securities if prevailing
interest rates rise.

A zero coupon security pays no interest to its holder during its life.
Therefore, to the extent the Fund invests in zero coupon securities, it will
not receive current cash available for distribution to shareholders. In
addition, zero coupon securities are subject to substantially greater price
fluctuations during periods of changing prevailing interest rates than are
comparable securities which pay interest on a current basis. Current federal
tax law requires that a holder (such as the Fund) of a zero coupon security
accrue a portion of the discount at which the security was purchased as income
each year even though the Fund receives no interest payments in cash on the
security during the year.

INVESTMENT IN REAL ESTATE INVESTMENT TRUSTS. The Fund may invest in real
estate investment trusts, which pool investors' funds for investments primarily
in commercial real estate properties. Investment in real estate investment
trusts may be the most practical available means for the Fund to invest in the
real estate industry (the Fund is prohibited from investing in real estate
directly). As a shareholder in a real estate investment trust, the Fund would
bear its ratable share of the real estate investment trust's expenses,
including its advisory and administration fees. At the same time the Fund would
continue to pay its own management fees, investment advisory fees and other
expenses, as a result of which the Fund and its shareholders in effect will be
absorbing duplicate levels of fees with respect to investments in real estate
investment trusts.

LENDING PORTFOLIO SECURITIES. The Fund may lend its portfolio securities
to brokers, dealers and other financial institutions, provided that the loans
are callable at any time by the Fund, and are at all times secured by cash or
cash equivalents, which are maintained in a segregated account pursuant to
applicable regulations and that are equal to at least 100% of the market value,
determined daily, of the loaned securities. The advantage of these loans is
that the Fund continues to receive the income on the loaned securities while at
the same time earning interest on the cash amounts deposited as collateral,
which will be invested in short-term obligations. The Fund will not lend more
than 25% of the value of its total assets.

5
<PAGE>

As with any extensions of credit, there are risks of delay in recovery
and, in some cases, even loss of rights in the collateral should the borrower
of the securities fail financially. However, these loans of portfolio
securities will only be made to firms deemed by the Fund's management to be
creditworthy and when the income which can be earned from such loans justifies
the attendant risks. Upon termination of the loan, the borrower is required to
return the securities to the Fund. Any gain or loss in the market price during
the loan period would inure to the Fund.

When voting or consent rights which accompany loaned securities pass to
the borrower, the Fund will follow the policy of calling the loaned securities,
to be delivered within one day after notice, to permit the exercise of the
rights if the matters involved would have a material effect on the Fund's
investment in the loaned securities. The Fund will pay reasonable finder's,
administrative and custodial fees in connection with a loan of its securities.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS. The
Fund may purchase securities on a when-issued or delayed delivery basis or may
purchase or sell securities on a forward commitment basis. When these
transactions are negotiated, the price is fixed at the time of the commitment,
but delivery and payment can take place a month or more after the date of
commitment. While the Fund will only purchase securities on a when-issued,
delayed delivery or forward commitment basis with the intention of acquiring
the securities, the Fund may sell the securities before the settlement date, if
it is deemed advisable. The securities so purchased or sold are subject to
market fluctuation and no interest or dividends accrue to the purchaser prior
to the settlement date.

At the time the Fund makes the commitment to purchase or sell securities
on a when-issued, delayed delivery or forward commitment basis, it will record
the transaction and thereafter reflect the value, each day, of such security
purchased, or if a sale, the proceeds to be received, in determining its net
asset value. At the time of delivery of the securities, their value may be more
or less than the purchase or sale price. An increase in the percentage of the
Fund's assets committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis may increase the volatility of its net
asset value. The Fund will also establish a segregated account on the Fund's
books in which it will continually maintain cash or cash equivalents or other
liquid portfolio securities equal in value to commitments to purchase
securities on a when-issued, delayed delivery or forward commitment basis.

WHEN, AS AND IF ISSUED SECURITIES. The Fund may purchase securities on a
"when, as and if issued" basis under which the issuance of the security depends
upon the occurrence of a subsequent event, such as approval of a merger,
corporate reorganization or debt restructuring. The commitment for the purchase
of any such security will not be recognized in the portfolio of the Fund until
the Investment Manager and/or Sub-Advisor determines that issuance of the
security is probable. At that time, the Fund will record the transaction and,
in determining its net asset value, will reflect the value of the security
daily. At that time, the Fund will also establish a segregated account on the
Fund's books in which it will maintain cash or cash equivalents or other liquid
portfolio securities equal in value to recognized commitments for such
securities.

An increase in the percentage of the Fund's assets committed to the
purchase of securities on a "when, as and if issued" basis may increase the
volatility of its net asset value. The Fund may also sell securities on a
"when, as and if issued" basis provided that the issuance of the security will
result automatically from the exchange or conversion of a security owned by the
Fund at the time of sale.

PRIVATE PLACEMENTS AND RESTRICTED SECURITIES. The Fund may invest up to
15% of its net assets in securities which are subject to restrictions on resale
because they have not been registered under the Securities Act of 1933 (the
"Securities Act"), or which are otherwise not readily marketable. (Securities
eligible for resale pursuant to Rule 144A under the Securities Act, and
determined to be liquid pursuant to the procedures discussed in the following
paragraph, are not subject to the foregoing restriction.) These securities are
generally referred to as "private placements" or "restricted securities."
Limitations on the resale of these securities may have an adverse effect on
their marketability, and may prevent the Fund from disposing of them promptly
at reasonable prices. The Fund may have to bear the expense of registering the
securities for resale and the risk of substantial delays in effecting the
registration.

6
<PAGE>

Rule 144A permits the Fund to sell restricted securities to qualified
institutional buyers without limitation. The Investment Manager and/or
Sub-Advisor, pursuant to procedures adopted by the Trustees, will make a
determination as to the liquidity of each restricted security purchased by the
Fund. If a restricted security is determined to be "liquid," the security will
not be included within the category "illiquid securities," which may not exceed
15% of the Fund's net assets. However, investing in Rule 144A securities could
have the effect of increasing the level of Fund illiquidity to the extent the
Fund, at a particular point in time, may be unable to find qualified
institutional buyers interested in purchasing such securities.

WARRANTS AND SUBSCRIPTION RIGHTS. The Fund may acquire warrants and
subscription rights attached to other securities. The Fund may invest up to 5%
of the value of its net assets in warrants, including not more than 2% in
warrants not listed on either the New York or American Stock Exchange. A
warrant is, in effect, an option to purchase equity securities at a specific
price, generally valid for a specific period of time, and has no voting rights,
pays no dividends and has no rights with respect to the corporation issuing it.

A subscription right is a privilege granted to existing shareholders of a
corporation to subscribe to shares of a new issue of common stock before it is
offered to the public. A subscription right normally has a life of two to four
weeks and a subscription price lower than the current market value of the
common stock. A subscription right is freely transferable. The Fund may invest
up to 5% of the value of its net assets in rights.

YEAR 2000. The investment management services provided to the Fund by the
Investment Manager and the Sub-Advisor and the services provided to
shareholders by the Distributor and the Transfer Agent depend on the smooth
functioning of their computer systems. Many computer software systems in use
today cannot recognize the year 2000, but revert to 1900 or some other date,
due to the manner in which dates were encoded and calculated. That failure
could have a negative impact on the handling of securities trades, pricing and
account services. The Investment Manager, the Sub-Advisor, the Distributor and
the Transfer Agent have been actively working on necessary changes to their own
computer systems to prepare for the year 2000 and expect that their systems
will be adapted before that date, but there can be no assurance that they will
be successful, or that interaction with other non-complying computer systems
will not impair their services at that time.

In addition, it is possible that the markets for securities in which the
Fund invests may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and liquidity issues. In
addition, corporate and governmental data processing errors may result in
production problems for individual companies and overall economic
uncertainties. Earnings of individual issuers will be affected by remediation
costs, which may be substantial and may be reported inconsistently in U.S. and
foreign financial statements. Accordingly, the Fund's investments may be
adversely affected.

C. FUND POLICIES/INVESTMENT RESTRICTIONS

The investment objective, policies and restrictions listed below have been
adopted by the Fund as fundamental policies. Under the Investment Company Act
of 1940 (the "Investment Company Act"), a fundamental policy may not be changed
without the vote of a majority of the outstanding voting securities of the
Fund. The Investment Company Act defines a majority as the lesser of (a) 67% or
more of the shares present at a meeting of shareholders, if the holders of 50%
of the outstanding shares of the Fund are present or represented by proxy; or
(b) more than 50% of the outstanding shares of the Fund. For purposes of the
following restrictions: (i) all percentage limitations apply immediately after
a purchase or initial investment; and (ii) any subsequent change in any
applicable percentage resulting from market fluctuations or other changes in
total or net assets does not require elimination of any security from the
portfolio.

The Fund will:

1. Seek high total return from capital growth and income.

7
<PAGE>

The Fund may not:

1. Invest 25% or more of the value of its total assets in securities of
issuers in any one industry. This restriction does not apply to
obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities.

2. Invest more than 5% of the value of its total assets in securities of
issuers having a record, together with predecessors, of less than three
years of continuous operation. This restriction shall not apply to
obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities.

3. Purchase or sell real estate or interests therein (including limited
partnership interests), although the Fund may purchase securities of
issuers which engage in real estate operations and securities secured by
real estate or interests therein.

4. Purchase oil, gas or other mineral leases, rights or royalty contracts
or exploration or development programs, except that the Fund may invest
in the securities of companies which operate, invest in, or sponsor such
programs.

5. Purchase securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets.

6. Borrow money, except that the Fund may borrow from a bank for temporary
or emergency purposes in amounts not exceeding 5% (taken at the lower of
cost or current value) of its total assets (not including the amount
borrowed).

7. Pledge its assets or assign or otherwise encumber them except to secure
permitted borrowings. For the purpose of this restriction, collateral
arrangements with respect to initial or variation margin for futures are
not deemed to be pledges of assets.

8. Issue senior securities as defined in the Act except insofar as the
Fund may be deemed to have issued a senior security by reason of (a)
entering into any repurchase agreement; (b) purchasing any securities on
a when-issued or delayed delivery basis; (c) purchasing or selling any
financial futures contracts; (d) borrowing money; or (e) lending
portfolio securities.

9. Make loans of money or securities, except: (a) by the purchase of
portfolio securities in which the Fund may invest consistent with its
investment objective and policies; (b) by investment in repurchase
agreements; or (c) by lending its portfolio securities.

10. Purchase or sell commodities or commodities contracts except that the
Fund may purchase or sell financial or stock index futures contracts or
options thereon.

11. Make short sales of securities.

12. Purchase securities on margin, except for such short-term loans as are
necessary for the clearance of portfolio securities. The deposit or
payment by the Fund of initial or variation margin in connection with
futures contracts is not considered the purchase of a security on
margin.

13. Engage in the underwriting of securities, except insofar as the Fund
may be deemed an underwriter under the Securities Act in disposing of a
portfolio security.

14. Invest for the purpose of exercising control or management of any
other issuer.

As a non-fundamental policy, the Fund may not, as to 75% of its total
assets, purchase more than 10% of the voting securities of any issuer.

8
<PAGE>

III. MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------

A. BOARD OF TRUSTEES

The Board of Trustees of the Fund oversees the management of the Fund but
does not itself manage the Fund. The Trustees review various services provided
by or under the direction of the Investment Manager to ensure that the Fund's
general investment policies and programs are properly carried out. The Trustees
also conduct their review to ensure that administrative services are provided
to the Fund in a satisfactory manner.

Under state law, the duties of the Trustees are generally characterized as
a duty of loyalty and a duty of care. The duty of loyalty requires a Trustee to
exercise his or her powers in the interest of the Fund and not the Trustee's
own interest or the interest of another person or organization. A Trustee
satisfies his or her duty of care by acting in good faith with the care of an
ordinarily prudent person and in a manner the Trustee reasonably believes to be
in the best interest of the Fund and its shareholders.

B. MANAGEMENT INFORMATION

TRUSTEES AND OFFICERS. The Board of the Fund consists of eight (8)
Trustees. These same individuals also serve as trustees for all of the Morgan
Stanley Dean Witter Funds. Six Trustees (75% of the total number) have no
affiliation or business connection with the Investment Manager or any of its
affiliated persons and do not own any stock or other securities issued by the
Investment Manager's parent company, MSDW or the Sub-Advisor's parent company,
TCW. These are the "disinterested" or "independent" Trustees. The other two
Trustees (the "Management Trustees") are affiliated with the Investment
Manager. All of the Trustees also serve as Trustees of "Discover Brokerage
Index Series," a mutual fund for which the Investment Manager is the investment
advisor.

The Trustees and executive officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with the
Investment Manager or the Sub-Advisor, and with the 90 Morgan Stanley Dean
Witter Funds and Discover Brokerage Index Series are shown below.

9
<PAGE>

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
Edwin J. Garn (66) ........................ Director or Trustee of the Morgan Stanley Dean
Trustee Witter Funds and Discover Brokerage Index Series;
c/o Huntsman Corporation formerly United States Senator (R-Utah)
500 Huntsman Way (1974-1992) and Chairman, Senate Banking
Salt Lake City, Utah Committee (1980-1986); formerly Mayor of Salt
Lake City, Utah (1971-1974); formerly Astronaut,
Space Shuttle Discovery (April 12-19, 1985); Vice
Chairman, Huntsman Corporation (chemical
company); Director of Franklin Covey (time
management systems), BMW Bank of North
America, Inc. (industrial loan corporation), United
Space Alliance (joint venture between Lockheed
Martin and the Boeing Company) and Nuskin Asia
Pacific (multilevel marketing); member of the board
of various civic and charitable organizations.
Wayne E. Hedien (65) ...................... Retired; Director or Trustee of the Morgan Stanley
Trustee Dean Witter Funds and Discover Brokerage Index
c/o Gordon Altman Butowsky Series; Director of The PMI Group, Inc. (private
Weitzen Shalov & Wein mortgage insurance); Trustee and Vice Chairman
Counsel to the Independent Trustees of The Field Museum of Natural History; formerly
114 West 47th Street associated with the Allstate Companies
New York, New York (1966-1994), most recently as Chairman of The
Allstate Corporation (March, 1993-December,
1994) and Chairman and Chief Executive Officer of
its wholly-owned subsidiary, Allstate Insurance
Company (July, 1989-December, 1994); director
of various other business and charitable
organizations.
Dr. Manuel H. Johnson (50) ................ Senior Partner, Johnson Smick International, Inc.,
Trustee a consulting firm; Co-Chairman and a founder of
c/o Johnson Smick International, Inc. the Group of Seven Council (G7C), an international
1133 Connecticut Avenue, N.W. economic commission; Chairman of the Audit
Washington, D.C. Committee and Director or Trustee of the Morgan
Stanley Dean Witter Funds and Discover Brokerage
Index Series; Director of Greenwich Capital
Markets, Inc. (broker-dealer) and NVR, Inc. (home
construction); Chairman and Trustee of the
Financial Accounting Foundation (oversight
organization of the Financial Accounting Standards
Board); formerly Vice Chairman of the Board of
Governors of the Federal Reserve System
(1986-1990) and Assistant Secretary of the U.S.
Treasury.
Michael E. Nugent (63) .................... General Partner, Triumph Capital, L.P., a private
Trustee investment partnership; Chairman of the Insurance
c/o Triumph Capital, L.P. Committee and Director or Trustee of the Morgan
237 Park Avenue Stanley Dean Witter Funds and Discover Brokerage
New York, New York Index Series; formerly Vice President, Bankers
Trust Company and BT Capital Corporation
(1984-1988); director of various business
organizations.
</TABLE>

10
<PAGE>

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ------------------------------------------------------
<S> <C>
Philip J. Purcell* (55) ................... Chairman of the Board of Directors and Chief
Trustee Executive Officer of MSDW, Dean Witter Reynolds
1585 Broadway and Novus Credit Services Inc.; Director of the
New York, New York Distributor; Director or Trustee of the Morgan
Stanley Dean Witter Funds and Discover Brokerage
Index Series; Director and/or officer of various
MSDW subsidiaries.
John L. Schroeder (68) .................... Retired; Chairman of the Deriatives Committee
Trustee and Director or Trustee of the Morgan Stanley
c/o Gordon Altman Butowsky Dean Witter Funds and Discover Brokerage Index
Weitzen Shalov & Wein Series; Director of Citizens Utilities Company
Counsel to the Independent Trustees (telecommunications, gas, electric and water
114 West 47th Street utilities company); formerly Executive Vice
New York, New York President and Chief Investment Officer of Home
Insurance Company (August, 1991-September,
1995).
Mitchell M. Merin (45) .................... President and Chief Operating Officer of Asset
President Management of MSDW (since December, 1998);
Two World Trade Center President and Director (since April, 1997) and
New York, New York Chief Executive Officer (since June, 1998) of the
Investment Manager and MSDW Services
Company; Chairman, Chief Executive Officer and
Director of the Distributor (since June, 1998);
Chairman and Chief Executive Officer (since June,
1998) and Director (since January, 1998) of the
Transfer Agent; Director of various MSDW
subsidiaries; President of the Morgan Stanley Dean
Witter Funds and Discover Brokerage Index Series
(since May, 1999); previously Chief Strategic Officer
of the Investment Manager and MSDW Services
Company and Executive Vice President of the
Distributor (April, 1997-June, 1998), Vice President
of the Morgan Stanley Dean Witter Funds and
Discover Brokerage Index Series (May, 1997-April,
1999), and Executive Vice President of Dean
Witter, Discover & Co.
Barry Fink (44) ........................... Senior Vice President (since March, 1997) and
Vice President, Secretary and General Counsel (since February,
Secretary and General Counsel 1997) and Director (since July, 1998) of the
Two World Trade Center Investment Manager and MSDW Services
New York, New York Company; Senior Vice President (since March,
1997) and Assistant Secretary and Assistant
General Counsel (since February, 1997) of the
Distributor; Assistant Secretary of Dean Witter
Reynolds (since August, 1996); Vice President,
Secretary and General Counsel of the Morgan
Stanley Dean Witter Funds (since February, 1997);
Vice President, Secretary and General Counsel of
Discover Brokerage Index Series; previously First
Vice President (June, 1993-February, 1997), Vice
President and Assistant Secretary and Assistant
General Counsel of the Investment Manager and
MSDW Services Company and Assistant Secretary
of the Morgan Stanley Dean Witter Funds.
</TABLE>

11
<PAGE>

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ----------------------------------------------------
<S> <C>
James A. Tilton (58) ...................... Managing Director of the Sub-Advisor; Managing
Vice President Director, Equities of Trust Company of the West
865 South Figueroa Street and TCW Asset Management Company; Chairman
Los Angeles, California of the Board of Verdugo Hills Hospital and
Chairman of the Board of Councilors of the
University of Southern California School of Public
Administration; director of various other business
organizations.
Thomas K. McKissick (37) .................. Managing Director of the Sub-Advisor; Managing
Vice President Director, Equities of Trust Company of the West
865 South Figueroa Street and TCW Asset Management Company.
Los Angeles, California
Thomas F. Caloia (53) ..................... First Vice President and Assistant Treasurer of the
Treasurer Investment Manager, the Distributor and MSDW
Two World Trade Center Services Company; Treasurer of the Morgan
New York, New York Stanley Dean Witter Funds and Discover Brokerage
Index Series.
</TABLE>

- ----------
* Denotes Trustees who are "interested persons" of the Fund as defined by the
Investment Company Act.

In addition, Ronald E. Robison, Executive Vice President, Chief
Administrative Officer and Director of the Investment Manager and MSDW Services
Company, Robert S. Giambrone, Senior Vice President of the Investment Manager,
MSDW Services Company, the Distributor and the Transfer Agent and Director of
the Transfer Agent, and Joseph J. McAlinden, Executive Vice President and Chief
Investment Officer of the Investment Manager and Director of the Transfer
Agent, are Vice Presidents of the Fund.

In addition, Frank Bruttomesso, Marilyn K. Cranney, Lou Anne D. McInnis,
Carsten Otto and Ruth Rossi, First Vice Presidents and Assistant General
Counsels of the Investment Manager and MSDW Services Company, and Todd Lebo,
Vice President and Assistant General Counsel of the Investment Manager and MSDW
Services Company, are Assistant Secretaries of the Fund.

INDEPENDENT TRUSTEES AND THE COMMITTEES. Law and regulation establish both
general guidelines and specific duties for the Independent Trustees. The Morgan
Stanley Dean Witter Funds seek as Independent Trustees individuals of
distinction and experience in business and finance, government service or
academia; these are people whose advice and counsel are in demand by others and
for whom there is often competition. To accept a position on the Funds' Boards,
such individuals may reject other attractive assignments because the Funds make
substantial demands on their time. All of the Independent Trustees serve as
members of the Audit Committee. In addition, three of the Trustees, including
two Independent Trustees, serve as members of the Derivatives Committee and the
Insurance Committee.

The Independent Trustees are charged with recommending to the full Board
approval of management, advisory and administration contracts, Rule 12b-1 plans
and distribution and underwriting agreements; continually reviewing Fund
performance; checking on the pricing of portfolio securities, brokerage
commissions, transfer agent costs and performance, and trading among Funds in
the same complex; and approving fidelity bond and related insurance coverage
and allocations, as well as other matters that arise from time to time. The
Independent Trustees are required to select and nominate individuals to fill
any Independent Trustee vacancy on the Board of any Fund that has a Rule 12b-1
plan of distribution. Most of the Morgan Stanley Dean Witter Funds have a Rule
12b-1 plan.

The Audit Committee is charged with recommending to the full Board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing engagement;
approving professional services provided by the independent accountants and
other accounting firms prior to the performance

12
<PAGE>

of the services; reviewing the independence of the independent accountants;
considering the range of audit and non-audit fees; reviewing the adequacy of
the Fund's system of internal controls; and preparing and submitting Committee
meeting minutes to the full Board.

The Board of each Fund has a Derivatives Committee to approve parameters
for and monitor the activities of the Fund with respect to derivative
investments, if any, made by the Fund.

Finally, the Board of each Fund has formed an Insurance Committee to
review and monitor the insurance coverage maintained by the Fund.

ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT TRUSTEES FOR ALL
MORGAN STANLEY DEAN WITTER FUNDS. The Independent Trustees and the Funds'
management believe that having the same Independent Trustees for each of the
Morgan Stanley Dean Witter Funds avoids the duplication of effort that would
arise from having different groups of individuals serving as Independent
Trustees for each of the Funds or even of sub-groups of Funds. They believe
that having the same individuals serve as Independent Trustees of all the Funds
tends to increase their knowledge and expertise regarding matters which affect
the Fund complex generally and enhances their ability to negotiate on behalf of
each Fund with the Fund's service providers. This arrangement also precludes
the possibility of separate groups of Independent Trustees arriving at
conflicting decisions regarding operations and management of the Funds and
avoids the cost and confusion that would likely ensue. Finally, having the same
Independent Trustees serve on all Fund Boards enhances the ability of each Fund
to obtain, at modest cost to each separate Fund, the services of Independent
Trustees, of the caliber, experience and business acumen of the individuals who
serve as Independent Trustees of the Morgan Stanley Dean Witter Funds.

TRUSTEE AND OFFICER INDEMNIFICATION. The Fund's Declaration of Trust
provides that no Trustee, officer, employee or agent of the Fund is liable to
the Fund or to a shareholder, nor is any Trustee, officer, employee or agent
liable to any third persons in connection with the affairs of the Fund, except
as such liability may arise from his/her or its own bad faith, willful
misfeasance, gross negligence or reckless disregard of his/her or its duties.
It also provides that all third persons shall look solely to the Fund property
for satisfaction of claims arising in connection with the affairs of the Fund.
With the exceptions stated, the Declaration of Trust provides that a Trustee,
officer, employee or agent is entitled to be indemnified against all liability
in connection with the affairs of the Fund.

C. COMPENSATION

The Fund pays each Independent Trustee an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Trustees, the Independent
Trustees or Committees of the Board of Trustees attended by the Trustee (the
Fund pays the Chairman of the Audit Committee an additional annual fee of $750,
and the Chairmen of the Derivatives and Insurance Committees additional annual
fees of $500). If a Board meeting and a meeting of the Independent Trustees or
a Committee meeting, or a meeting of the Independent Trustees and/or more than
one Committee meeting, take place on a single day, the Trustees are paid a
single meeting fee by the Fund. The Fund also reimburses such Trustees for
travel and other out-of-pocket expenses incurred by them in connection with
attending such meetings. Trustees and officers of the Fund who are or have been
employed by the Investment Manager or an affiliated company receive no
compensation or expense reimbursement from the Fund for their services as
Trustee. Dr. Johnson serves as Chairman of the Audit Committee.

At their June 8, 1999 meeting, shareholders elected or re-elected, as
appropriate, the following eight individuals to the Fund's Board of Trustees to
serve for indefinite terms: Michael Bozic, Charles A. Fiumefreddo, Edwin Jacob
(Jake) Garn, Wayne E. Hedien, Dr. Manuel H. Johnson, Michael E. Nugent, Philip
J. Purcell and John L. Schroeder. Messrs. Fiumefreddo, Johnson, Nugent and
Schroeder previously served as Trustees of the Fund and were previously elected
by shareholders. Messrs. Bozic, Garn, Hedien and Purcell previously held
directorships or trusteeships with the other Morgan Stanley Dean Witter Funds
and were elected to replace Messrs. Argue, DeMartini, Larkin and Stern who
resigned as Trustees. Messrs. Bozic, Garn, Hedien and Purcell commenced service
at the time the new Investment Management Agreement took effect on June 28,
1999. Prior to the effectiveness of the

13
<PAGE>

election of Messrs. Bozic, Garn, Hedien and Purcell and the resignation of
Messrs. Argue, DeMartini, Larkin and Stern, the Fund paid each Independent
Trustee an annual fee of $2,225 plus a per meeting fee of $200 for meetings of
the Board of Trustees or committees of the Board attended by the Trustee. The
fee paid by the Fund to the Chairman of the Audit Committee and the Chairman of
the Independent Trustees remained unchanged.

The following table illustrates the compensation that the Fund paid to
those of its Independent Trustees who were Trustees of the Fund on July 31,
1998, for the fiscal year ended on that date.

FUND COMPENSATION

AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
- ------------------------------- --------------
Dr. Manuel H. Johnson .................................... $5,313
Michael E. Nugent ........................................ 5,313
John L. Schroeder ........................................ 5,513

At such time as the Fund has paid fees to the Independent Trustees for a
full fiscal year at the lower current compensation rates set forth above, and
assuming that during such fiscal year the Fund holds the same number of
meetings of the Board, the Independent Trustees and the Committees as were held
by the other Morgan Stanley Dean Witter Funds during the calendar year ended
December 31, 1998, it is estimated that the compensation paid to each current
Independent Trustee during such fiscal year will be $1,650 and an additional
$750 to Dr. Johnson who serves as Chairman of the Audit Committee.

The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1998 for services
to the 90 Morgan Stanley Dean Witter Funds that were in operation at December
31, 1998. No compensation was paid to the Fund's Independent Trustees by
Discover Brokerage Index Series for the calendar year ended December 31, 1998.

CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS

TOTAL CASH
COMPENSATION
FOR SERVICES TO
90 MORGAN
NAME OF STANLEY DEAN
INDEPENDENT TRUSTEE WITTER FUNDS
- ------------------------------- ----------------
Michael Bozic ............................................ $120,150
Edwin J. Garn ............................................ 132,450
Wayne E. Hedien .......................................... 132,350
Dr. Manuel H. Johnson .................................... 155,681
Michael E. Nugent ........................................ 159,731
John L. Schroeder ........................................ 160,731

As of the date of this Statement of Additional Information, 55 of the
Morgan Stanley Dean Witter Funds, not including the Fund, have adopted a
retirement program under which an Independent Trustee who retires after serving
for at least five years (or such lesser period as may be determined by the
Board) as an Independent Director or Trustee of any Morgan Stanley Dean Witter
Fund that has adopted the retirement program (each such Fund referred to as an
"Adopting Fund" and each such Trustee referred to as an "Eligible Trustee") is
entitled to retirement payments upon reaching the eligible retirement age
(normally, after attaining age 72). Annual payments are based upon length of
service.

Currently, upon retirement, each Eligible Trustee is entitled to receive
from the Adopting Fund, commencing as of his or her retirement date and
continuing for the remainder of his or her life, an annual retirement benefit
(the "Regular Benefit") equal to 30.22% of his or her Eligible Compensation
plus 0.5036667% of such Eligible Compensation for each full month of service as
an Independent Director or Trustee of any Adopting Fund in excess of five years
up to a maximum of 60.44% after ten years of

14
<PAGE>

service. The foregoing percentages may be changed by the Board(1). "Eligible
Compensation" is one-fifth of the total compensation earned by such Eligible
Trustee for service to the Adopting Fund in the five year period prior to the
date of the Eligible Trustee's retirement. Benefits under the retirement
program are accrued as expenses by the Adopting Funds. Such benefits are not
secured or funded by the Adopting Funds.

The following table illustrates the retirement benefits accrued to the
Fund's Independent Trustees by the 55 Morgan Stanley Dean Witter Funds (not
including the Fund) for the year ended December 31, 1998, and the estimated
retirement benefits for the Independent Trustees, to commence upon their
retirement, from the 55 Morgan Stanley Dean Witter Funds as of December 31,
1998.

RETIREMENT BENEFITS FROM ALL MORGAN STANLEY DEAN WITTER FUNDS

<TABLE>
<CAPTION>
FOR ALL ADOPTING FUNDS
---------------------------------
ESTIMATED
CREDITED
YEARS ESTIMATED RETIREMENT BENEFITS ESTIMATED ANNUAL
OF SERVICE AT PERCENTAGE OF ACCRUED AS EXPENSES BENEFITS UPON RETIREMENT
NAME OF RETIREMENT ELIGIBLE BY ALL FROM ALL
INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION ADOPTING FUNDS ADOPTING FUNDS(2)
- --------------------------- --------------- --------------- --------------------- -------------------------
<S> <C> <C> <C> <C>
Michael Bozic ............. 10 60.44% $22,377 $52,250
Edwin J. Garn ............. 10 60.44 35,225 52,250
Wayne E. Hedien ........... 9 51.37 41,979 44,413
Dr. Manuel H. Johnson...... 10 60.44 14,047 52,250
Michael E. Nugent ......... 10 60.44 25,336 52,250
John L. Schroeder ......... 8 50.37 45,117 44,343
</TABLE>

- ----------
(1) An Eligible Trustee may elect alternative payments of his or her
retirement benefits based upon the combined life expectancy of the
Eligible Trustee and his or her spouse on the date of such Eligible
Trustee's retirement. In addition, the Eligible Trustee may elect that
the surviving spouse's periodic payment of benefits will be equal to a
lower percentage of the periodic amount when both spouses were alive. The
amount estimated to be payable under this method, through the remainder
of the later of the lives of the Eligible Trustee and spouse, will be the
actuarial equivalent of the Regular Benefit.

(2) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in Footnote (1)
above.

IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------

The following persons owned 5% or more of the outstanding Class A Shares
of the Fund as of June 9, 1999: James P. Rogers, 172 Torrey Pines Terrace, Del
Mar, CA 92014-3335 -- 49.267%. The following persons owned 5% or more of the
outstanding Class C Shares of the Fund as of June 9, 1999: Jeffrey Stratton and
Carol S. Stratton, JTTEN, 12152 Southwick Circle, Knoxville, TN 37922-1500 --
10.665%, Omar Legant & Jean Legant, revocable trust dated 2/22/90, 1000 Los
Arboles NW, Albuquerque, NM 87107-1142 -- 5.203%. The following persons owned
5% or more of the outstanding Class D Shares of the Fund on June 9, 1999:
Morgan Stanley Dean Witter Advisors Inc., Attn: Maurice Bendrihem, 2 World
Trade Center, 70th Fl., New York, NY 10048-0203 -- 99.803%.

As of the date of this Statement of Additional Information, the aggregate
number of shares of beneficial interest of the Fund owned by the Fund's
officers and Trustees as a group was less than 1% of the Fund's shares of
beneficial interest outstanding.

V. MANAGEMENT, INVESTMENT ADVICE AND OTHER SERVICES
- --------------------------------------------------------------------------------

A. INVESTMENT MANAGER AND SUB-ADVISOR

The Investment Manager to the Fund is Morgan Stanley Dean Witter Advisors
Inc., a Delaware corporation, whose address is Two World Trade Center, New
York, New York 10048. The Investment Manager is a wholly-owned subsidiary of
MSDW, a Delaware corporation. MSDW is a preeminent global financial services
firm that maintains leading market positions in each of its three primary
businesses: securities, asset management and credit services.

15
<PAGE>

The Sub-Advisor is TCW Funds Management, Inc., a wholly-owned subsidiary
of TCW, whose direct and indirect subsidiaries provide a variety of trust,
investment management and investment advisory services. The Sub-Advisor is
headquartered at 865 South Figueroa Street, Suite 1800, Los Angeles, California
90017. Robert A. Day, who is Chairman of the Board of Directors of TCW, may be
deemed to be a control person of the Sub-Advisor by virtue of the aggregate
ownership by Mr. Day and his family of more than 25% of the outstanding voting
stock of TCW. The Sub-Advisor was retained to provide sub-advisory services to
the Fund effective June 28, 1999.

Pursuant to an Investment Management Agreement (the "Management Agreement")
with the Investment Manager, the Fund has retained the Investment Manager to
provide administrative services, manage its business affairs and supervise the
investment of the Fund's assets. The Fund pays the Investment Manager monthly
compensation calculated daily at the annual rate of 0.75% of the Fund's average
daily net assets. The management fee is allocated among the Classes pro rata
based on the net assets of the Fund attributable to each Class. The Investment
Manager has retained its wholly-owned subsidiary, MSDW Services Company, to
perform administrative services for the Fund.

Under a Sub-Advisory Agreement (the "Sub-Advisory Agreement ") between the
Sub-Advisor and the Investment Manager, the Sub-Advisor provides the Fund with
investment advice and portfolio management relating to the Fund's investments
in securities, subject to the overall supervision of the Investment Manager.
The Investment Manager pays the Sub-Advisor monthly compensation equal to 40%
of the Investment Manager's fee.

Prior to June 28, 1999, the Fund was managed by MSDW Services Company,
pursuant to a management agreement between the Fund and MSDW Services Company
and was advised by TCW Funds Management, Inc. pursuant to an advisory agreement
between the Fund and TCW Funds Management, Inc. As part of an overall
consolidation of the TCW/DW Family of Funds and the Morgan Stanley Dean Witter
Family of Funds, the Fund's Board of Trustees recommended on February 25, 1999
and shareholders of the Fund approved on June 8, 1999 the Investment Management
Agreement between the Fund and the Investment Manager. The Board also
recommended and shareholders also approved the Sub-Advisory Agreement between
the Investment Manager and TCW Funds Management, Inc. The fee rate under the
Management Agreement with the Investment Manager is identical to the total
aggregate fee rate in effect under the previous management and advisory
agreements. For the fiscal years ended July 31, 1996, 1997 and 1998 MSDW
Services Company accrued total compensation under the old management agreement
in the amounts of $204,371, $320,431 and $641,236, respectively. For the same
periods, TCW Funds Management, Inc. accrued total compensation in its capacity
of adviser to the Fund in the amounts of $136,247, $213,621 and $427,491,
respectively.

B. PRINCIPAL UNDERWRITER

The Fund's principal underwriter is the Distributor (which has the same
address as the Investment Manager). In this capacity, the Fund's shares are
distributed by the Distributor. The Distributor has entered into a Selected
Dealer Agreement with Dean Witter Reynolds, which through its own sales
organization sells shares of the Fund. In addition, the Distributor may enter
into similar agreements with other selected broker-dealers. The Distributor, a
Delaware corporation, is a wholly-owned subsidiary of MSDW.

The Distributor bears all expenses it may incur in providing services
under the Distribution Agreement. These expenses include the payment of
commissions for sales of the Fund's shares and incentive compensation to
Financial Advisors. The Distributor also pays certain expenses in connection
with the distribution of the Fund's shares, including the costs of preparing,
printing and distributing advertising or promotional materials, and the costs
of printing and distributing prospectuses and supplements thereto used in
connection with the offering and sale of the Fund's shares. The Fund bears the
costs of initial typesetting, printing and distribution of prospectuses and
supplements thereto to shareholders. The Fund also bears the costs of
registering the Fund and its shares under federal and state securities laws and
pays filing fees in accordance with state securities laws.

16
<PAGE>

The Fund and the Distributor have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act. Under the
Distribution Agreement, the Distributor uses its best efforts in rendering
services to the Fund, but in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations, the Distributor is
not liable to the Fund or any of its shareholders for any error of judgment or
mistake of law or for any act or omission or for any losses sustained by the
Fund or its shareholders.

C. SERVICES PROVIDED BY THE INVESTMENT MANAGER, THE SUB-ADVISOR AND FUND
EXPENSES PAID BY THIRD PARTIES

The Investment Manager supervises the investment of the Fund's assets. The
Investment Manager obtains and evaluates the information and advice relating to
the economy, securities markets, and specific securities as it considers
necessary or useful to continuously oversee the management of the assets of the
Fund in a manner consistent with its investment objective.

Under the terms of the Management Agreement, the Investment Manager also
maintains certain of the Fund's books and records and furnishes, at its own
expense, the office space, facilities, equipment, clerical help, bookkeeping
and certain legal services as the Fund may reasonably require in the conduct of
its business, including the preparation of prospectuses, proxy statements and
reports required to be filed with federal and state securities commissions
(except insofar as the participation or assistance of independent accountants
and attorneys is, in the opinion of the Investment Manager, necessary or
desirable). In addition, the Investment Manager pays the salaries of all
personnel, including officers of the Fund, who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone service, heat,
light, power and other utilities provided to the Fund.

Pursuant to the Sub-Advisory Agreement, the Sub-Advisor has been retained,
subject to the overall supervision of the Investment Manager, to continuously
furnish investment advice concerning individual security selections, asset
allocations and overall economic trends.

Expenses not expressly assumed by the Investment Manager or the
Sub-Advisor under the Management Agreement and the Sub-Advisory Agreement or by
the Distributor, will be paid by the Fund. These expenses will be allocated
among the four Classes of shares pro rata based on the net assets of the Fund
attributable to each Class, except as described below. Such expenses include,
but are not limited to: expenses of the Plan of Distribution pursuant to Rule
12b-1; charges and expenses of any registrar, custodian, stock transfer and
dividend disbursing agent; brokerage commissions; taxes; engraving and printing
share certificates; registration costs of the Fund and its shares under federal
and state securities laws; the cost and expense of printing, including
typesetting, and distributing prospectuses of the Fund and supplements thereto
to the Fund's shareholders; all expenses of shareholders' and Trustees'
meetings and of preparing, printing and mailing of proxy statements and reports
to shareholders; fees and travel expenses of Trustees or members of any
advisory board or committee who are not employees of the Investment Manager or
any corporate affiliate of the Investment Manager or the Sub-Advisor; all
expenses incident to any dividend, withdrawal or redemption options; charges
and expenses of any outside service used for pricing of the Fund's shares; fees
and expenses of legal counsel, including counsel to the Trustees who are not
interested persons of the Fund or of the Investment Manager or the Sub-Advisor
(not including compensation or expenses of attorneys who are employees of the
Investment Manager or the Sub-Advisor); fees and expenses of the Fund's
independent accountants; membership dues of industry associations; interest on
Fund borrowings; postage; insurance premiums on property or personnel
(including officers and Trustees) of the Fund which inure to its benefit;
extraordinary expenses (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification relating thereto); and
all other costs of the Fund's operation. The 12b-1 fees relating to a
particular Class will be allocated directly to that Class. In addition, other
expenses associated with a particular Class (except advisory or custodial fees)
may be allocated directly to that Class, provided that such expenses are
reasonably identified as specifically attributable to that Class and the direct
allocation to that Class is approved by the Trustees.

The Management Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the Investment Manager is not liable to the Fund or any
of its investors for any act or omission by the Investment Manager or for any
losses sustained by the Fund or its investors.

17
<PAGE>

The Management Agreement will remain in effect from year to year, provided
continuance of the Management Agreement is approved at least annually by the
vote of the holders of a majority, as defined in the Investment Company Act, of
the outstanding shares of the Fund, or by the Trustees; provided that in either
event such continuance is approved annually by the vote of a majority of the
Trustees who are not parties to the Management Agreement or the Sub-Advisory
Agreement or are "independent Trustees," which votes must be cast in person at
a meeting called for the purpose of voting on such approval.

D. DEALER REALLOWANCES

Upon notice to selected broker-dealers, the Distributor may reallow up to
the full applicable front-end sales charge during periods specified in such
notice. During periods when 90% or more of the sales charge is reallowed, such
selected broker-dealers may be deemed to be underwriters as that term is
defined in the Securities Act.

E. RULE 12B-1 PLAN

The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under
the Investment Company Act (the "Plan") pursuant to which each Class, other
than Class D, pays the Distributor compensation accrued daily and payable
monthly at the following annual rates: 0.25% and 1.0% of the average daily net
assets of Class A and Class C, respectively, and, with respect to Class B, 1.0%
of the lesser of: (a) the average daily aggregate gross sales of the Fund's
Class B shares since the inception of the Fund (not including reinvestment of
dividends or capital gains distributions), less the average daily aggregate net
asset value of the Fund's Class B shares redeemed since the Fund's inception
upon which a contingent deferred sales charge has been imposed or upon which
such charge has been waived; or (b) the average daily net assets of Class B
shares.

The Distributor also receives the proceeds of front-end sales charges
("FSCs") and of contingent deferred sales charges ("CDSCs") imposed on certain
redemptions of shares, which are separate and apart from payments made pursuant
to the Plan. The Distributor has informed the Fund that it and/or Dean Witter
Reynolds received the proceeds of CDSCs and FSCs, for the last three fiscal
years ended July 31, in approximate amounts as provided in the table below (the
Distributor did not retain any of these amounts).

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Class A .......... FSCs:(1) $ 14,513 FSCs:(1) $ 0 FSCs: N/A(2)
CDSCs: $ 0 CDSCs: $ 0 CDSCs: N/A(2)
Class B .......... CDSCs: $316,290 CDSCs: $180,978 CDSCs: $ 214,582(3)
Class C .......... CDSCs: $ 494 CDSCs: $ 0 CDSCs: N/A(2)
</TABLE>

- ----------
(1) FSCs apply to Class A only.

(2) This Class commenced operations on July 28, 1997.

(3) For the period February 27, 1996 (commencement of operations) through
November 30, 1996.

The Distributor has informed the Fund that the entire fee payable by Class
A and a portion of the fees payable by each of Class B and Class C each year
pursuant to the Plan equal to 0.25% of such Class' average daily net assets are
currently each characterized as a "service fee" under the Rules of the National
Association of Securities Dealers, Inc. (of which the Distributor is a member).
The "service fee" is a payment made for personal service and/or the maintenance
of shareholder accounts. The remaining portion of the Plan fees payable by a
Class, if any, is characterized as an "asset-based sales charge" as such is
defined by the Rules of the Association.

Under the Plan and as required by Rule 12b-1, the Trustees receive and
review promptly after the end of each calendar quarter a written report
provided by the Distributor of the amounts expended under the Plan and the
purpose for which such expenditures were made. Class B shares of the Fund
accrued amounts payable to the Distributor under the Plan, during the fiscal
year ended July 31, 1998, of

18
<PAGE>

$1,196,377. This amount is equal to 0.85% of the average daily net assets of
Class B for the fiscal year and was calculated pursuant to clause (a) of the
compensation formula under the Plan. For the fiscal year ended July 31, 1998,
Class A and Class C shares of the Fund accrued payments under the Plan
amounting to $1,129 and $4,605, respectively, which amounts are equal to 0.25%
and 1.00% of the average daily net assets of Class A and Class C, respectively,
for the fiscal year.

The Plan was adopted in order to permit the implementation of the Fund's
method of distribution. Under this distribution method the Fund offers four
Classes, each with a different distribution arrangement.

With respect to Class A shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from proceeds of the FSC, commissions for
the sale of Class A shares, currently a gross sales credit of up to 5.0% of the
amount sold (except as provided in the following sentence) and an annual
residual commission, currently a residual of up to 0.25% of the current value
of the respective accounts for which they are the Financial Advisors or dealers
of record in all cases. On orders of $1 million or more (for which no sales
charge was paid) or net asset value purchases by employer-sponsored employee
benefit plans, whether or not qualified under the Internal Revenue Code, for
which the Transfer Agent serves as Trustee or Dean Witter Reynolds Retirement
Plan Services serves as recordkeeper pursuant to a written Recordkeeping
Services Agreement ("MSDW Eligible Plans"), MSDW Advisors compensates Financial
Advisors by paying them, from its own funds, a gross sales credit of 1.0% of
the amount sold.

With respect to Class B shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the sale
of Class B shares, currently a gross sales credit of up to 5.0% of the amount
sold (except as provided in the following sentence) and an annual residual
commission, currently a residual of up to 0.25% of the current value (not
including reinvested dividends or distributions) of the amount sold in all
cases. In the case of Class B shares purchased on or after July 28, 1997 by
MSDW Eligible Plans, Dean Witter Reynolds compensates its Financial Advisors by
paying them, from its own funds, a gross sales credit of 3.0% of the amount
sold.

With respect to Class C shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from its own funds, commissions for the sale
of Class C shares, currently a gross sales credit of up to 1.0% of the amount
sold and an annual residual commission, currently up to 1.0% of the current
value of the respective accounts for which they are the Financial Advisors of
record.

With respect to Class D shares other than shares held by participants in
MSDW Advisor's mutual fund asset allocation program, MSDW Advisors compensates
Dean Witter Reynolds' Financial Advisors by paying them, from its own funds,
commissions for the sale of Class D shares, currently a gross sales credit of
up to 1.0% of the amount sold. There is a chargeback of 100% of the amount paid
if the Class D shares are redeemed in the first year and a chargeback of 50% of
the amount paid if the Class D shares are redeemed in the second year after
purchase. The Manager also compensates Dean Witter Reynolds' Financial Advisors
by paying them, from its own funds, an annual residual commission, currently up
to 0.10% of the current value of the respective accounts for which they are the
Financial Advisors of record (not including accounts of participants in the
Investment Manager's mutual fund asset allocation program).

The gross sales credit is a charge which reflects commissions paid by Dean
Witter Reynolds to its Financial Advisors and Dean Witter Reynolds'
Fund-associated distribution-related expenses, including sales compensation,
and overhead and other branch office distribution-related expenses including
(a) the expenses of operating Dean Witter Reynolds' branch offices in
connection with the sale of Fund shares, including lease costs, the salaries
and employee benefits of operations and sales support personnel, utility costs,
communications costs and the costs of stationery and supplies; (b) the costs of
client sales seminars; (c) travel expenses of mutual fund sales coordinators to
promote the sale of Fund shares; and (d) other expenses relating to branch
promotion of Fund sales.

The distribution fee that the Distributor receives from the Fund under the
Plan, in effect, offsets distribution expenses incurred under the Plan on
behalf of the Fund and, in the case of Class B shares,

19
<PAGE>

opportunity costs, such as the gross sales credit and an assumed interest
charge thereon ("carrying charge"). In the Distributor's reporting of the
distribution expenses to the Fund, in the case of Class B shares, such assumed
interest (computed at the "broker's call rate") has been calculated on the
gross credit as it is reduced by amounts received by the Distributor under the
Plan and any contingent deferred sales charges received by the Distributor upon
redemption of shares of the Fund. No other interest charge is included as a
distribution expense in the Distributor's calculation of its distribution costs
for this purpose. The broker's call rate is the interest rate charged to
securities brokers on loans secured by exchange-listed securities.

The Fund is authorized to reimburse expenses incurred or to be incurred in
promoting the distribution of the Fund's Class A and Class C shares and in
servicing shareholder accounts. Reimbursement will be made through payments at
the end of each month. The amount of each monthly payment may in no event
exceed an amount equal to a payment at the annual rate of 0.25%, in the case of
Class A, and 1.0%, in the case of Class C, of the average net assets of the
respective Class during the month. No interest or other financing charges, if
any, incurred on any distribution expenses on behalf of Class A and Class C
will be reimbursable under the Plan. With respect to Class A, in the case of
all expenses other than expenses representing the service fee, and, with
respect to Class C, in the case of all expenses other than expenses
representing a gross sales credit or a residual to Financial Advisors and other
authorized financial representatives, such amounts shall be determined at the
beginning of each calendar quarter by the Trustees, including, a majority of
the Independent Trustees. Expenses representing the service fee (for Class A)
or a gross sales credit or a residual to Financial Advisors and other
authorized financial representatives (for Class C) may be reimbursed without
prior determination. In the event that the Distributor proposes that monies
shall be reimbursed for other than such expenses, then in making quarterly
determinations of the amounts that may be reimbursed by the Fund, the
Distributor will provide and the Trustees will review a quarterly budget of
projected distribution expenses to be incurred on behalf of the Fund, together
with a report explaining the purposes and anticipated benefits of incurring
such expenses. The Trustees will determine which particular expenses, and the
portions thereof, that may be borne by the Fund, and in making such a
determination shall consider the scope of the Distributor's commitment to
promoting the distribution of the Fund's Class A and Class C shares.

Each Class paid 100% of the amounts accrued under the Plan with respect to
that Class for the fiscal year ended July 31, 1998 to the Distributor. The
Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to
the Plan, $7,957,442 on behalf of Class B since the inception of the Plan. It
is estimated that this amount was spent in approximately the following ways:
(i) 20.25% ($1,611,450)--advertising and promotional expenses; (ii) 2.10%
($167,008)--printing and mailing of prospectuses for distribution to other than
current shareholders; and (iii) 77.65% ($6,178,984)--other expenses, including
the gross sales credit and the carrying charge, of which 5.84% ($361,145)
represents carrying charges, 38.51% ($2,379,496) represents commission credits
to Dean Witter Reynolds branch offices and other selected broker-dealers for
payments of commissions to Financial Advisors and other authorized financial
representatives, and 55.65% ($3,438,343) represents overhead and other branch
office distribution-related expenses. The amounts accrued by Class A and a
portion of the amounts accrued by Class C under the Plan were service fees
during the fiscal year ended July 31, 1998. The remainder of the amounts
accrued by Class C were for expenses which relate to compensation of sales
personnel and associated overhead expenses.

In the case of Class B shares, at any given time, the expenses of
distributing shares of the Fund may be more or less than the total of (i) the
payments made by the Fund pursuant to the Plan; and (ii) the proceeds of CDSCs
paid by investors upon redemption of shares. For example, if $1 million in
expenses in distributing Class B shares of the Fund had been incurred and
$750,000 had been received as described in (i) and (ii) above, the excess
expense would amount to $250,000. The Distributor has advised the Fund that in
the case of Class B shares the excess distribution expenses, including the
carrying charge designed to approximate the opportunity costs incurred by Dean
Witter Reynolds which arise from it having advanced monies without having
received the amount of any sales charges imposed at the time of sale of the
Fund's Class B shares, totaled $4,799,182 as of July 31, 1998 (the end of the

20
<PAGE>

Fund's fiscal year), which was equal to 3.15% of the net assets of Class B on
such date. Because there is no requirement under the Plan that the Distributor
be reimbursed for all distribution expenses with respect to Class B shares or
any requirement that the Plan be continued from year to year, this excess
amount does not constitute a liability of the Fund. Although there is no legal
obligation for the Fund to pay expenses incurred in excess of payments made to
the Distributor under the Plan and the proceeds of CDSCs paid by investors upon
redemption of shares, if for any reason the Plan is terminated, the Trustees
will consider at that time the manner in which to treat such expenses. Any
cumulative expenses incurred, but not yet recovered through distribution fees
or CDSCs, may or may not be recovered through future distribution fees or
CDSCs.

In the case of Class A and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales commission credited to Morgan Stanley Dean Witter Financial
Advisors and other authorized financial representatives at the time of sale may
be reimbursed in the subsequent calendar year. The Distributor has advised the
Fund that unreimbursed expenses representing a gross sales commission credited
to Morgan Stanley Dean Witter Financial Advisors and other authorized financial
representatives at the time of sale totaled $0.0 in the case of Class C at
December 31, 1998 (end of the calendar year), which amount was equal to 0% of
the net assets of Class C on such date, and that there were no such expenses
that may be reimbursed in the subsequent year in the case of Class A on such
date. No interest or other financing charges will be incurred on any Class A or
Class C distribution expenses incurred by the Distributor under the Plan or on
any unreimbursed expenses due to the Distributor pursuant to the Plan.

No interested person of the Fund nor any Independent Trustee has any
direct financial interest in the operation of the Plan except to the extent
that the Distributor, the Manager, Dean Witter Reynolds, MSDW Advisors or
certain of their employees may be deemed to have such an interest as a result
of benefits derived from the successful operation of the Plan or as a result of
receiving a portion of the amounts expended thereunder by the Fund.

On an annual basis, the Trustees, including a majority of the Independent
Trustees, consider whether the Plan should be continued. Prior to approving the
last continuation of the Plan, the Trustees requested and received from the
Distributor and reviewed all the information which they deemed necessary to
arrive at an informed determination. In making their determination to continue
the Plan, the Trustees considered: (1) the Fund's experience under the Plan and
whether such experience indicates that the Plan is operating as anticipated;
(2) the benefits the Fund had obtained, was obtaining and would be likely to
obtain under the Plan, including that: (a) the Plan is essential in order to
give Fund investors a choice of alternatives for payment of distribution and
service charges and to enable the Fund to continue to grow and avoid a pattern
of net redemptions which, in turn, are essential for effective investment
management; and (b) without the compensation to individual brokers and the
reimbursement of distribution and account maintenance expenses of Dean Witter
Reynolds' branch offices made possible by the 12b-1 fees, Dean Witter Reynolds
could not establish and maintain an effective system for distribution,
servicing of Fund shareholders and maintenance of shareholder accounts; and (3)
what services had been provided and were continuing to be provided under the
Plan to the Fund and its shareholders. Based upon their review, the Trustees,
including each of the Independent Trustees, determined that continuation of the
Plan would be in the best interest of the Fund and would have a reasonable
likelihood of continuing to benefit the Fund and its shareholders. In the
Trustees' quarterly review of the Plan, they will consider its continued
appropriateness and the level of compensation provided therein.

The Plan may not be amended to increase materially the amount to be spent
for the services described therein without approval by the shareholders of the
affected Class or Classes of the Fund, and all material amendments to the Plan
must also be approved by the Trustees in the manner described above. The Plan
may be terminated at any time, without payment of any penalty, by vote of a
majority of the Independent Trustees or by a vote of a majority of the
outstanding voting securities of the Fund

21
<PAGE>

(as defined in the Investment Company Act) on not more than thirty days'
written notice to any other party to the Plan. So long as the Plan is in
effect, the election and nomination of Independent Trustees shall be committed
to the discretion of the Independent Trustees.

F. OTHER SERVICE PROVIDERS

(1) TRANSFER AGENT/DIVIDEND-PAYING AGENT

Morgan Stanley Dean Witter Trust FSB is the Transfer Agent for the Fund's
shares and the Dividend Disbursing Agent for payment of dividends and
distributions on Fund shares and Agent for shareholders under various
investment plans. The principal business address of the Transfer Agent is
Harborside Financial Center, Plaza Two, Jersey City, New Jersey 07311.

(2) CUSTODIAN AND INDEPENDENT ACCOUNTANTS

The Bank of New York, 90 Washington Street, New York, New York 10286, is
the Custodian of the Fund's assets. Any of the Fund's cash balances with the
Custodian in excess of $100,000 are unprotected by federal deposit insurance.
These balances may, at times, be substantial.

PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, NY
10036, serves as the independent accountants of the Fund. The independent
accountants are responsible for auditing the annual financial statements of the
Fund.

(3) AFFILIATED PERSONS

The Transfer Agent is an affiliate of the Investment Manager, and of the
Distributor. As Transfer Agent and Dividend Disbursing Agent, the Transfer
Agent's responsibilities include maintaining shareholder accounts, disbursing
cash dividends and reinvesting dividends, processing account registration
changes, handling purchase and redemption transactions, mailing prospectuses
and reports, mailing and tabulating proxies, processing share certificate
transactions, and maintaining shareholder records and lists. For these
services, the Transfer Agent receives a per shareholder account fee from the
Fund and is reimbursed for its out-of-pocket expenses in connection with such
services.

VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
- --------------------------------------------------------------------------------

A. BROKERAGE TRANSACTIONS

Subject to the general supervision of the Trustees, the Investment Manager
and/or Sub-Advisor are responsible for decisions to buy and sell securities for
the Fund, the selection of brokers and dealers to effect the transactions, and
the negotiation of brokerage commissions, if any. Purchases and sales of
securities on a stock exchange are effected through brokers who charge a
commission for their services. In the over-the-counter market, securities are
generally traded on a "net" basis with dealers acting as principal for their
own accounts without a stated commission, although the price of the security
usually includes a profit to the dealer. The Fund also expects that securities
will be purchased at times in underwritten offerings where the price includes a
fixed amount of compensation, generally referred to as the underwriter's
concession or discount. On occasion, the Fund may also purchase certain money
market instruments directly from an issuer, in which case no commissions or
discounts are paid.

During the fiscal years ended July 31, 1996, 1997 and 1998, the Fund paid
a total of $208,471, $354,603 and $337,545, respectively, in brokerage
commissions.

B. COMMISSIONS

Pursuant to an order of the SEC, the Fund may effect principal
transactions in certain money market instruments with Dean Witter Reynolds. The
Fund will limit its transactions with Dean Witter Reynolds to U.S. Government
and government agency securities, bank money instruments (i.e., certificates of
deposit and bankers' acceptances) and commercial paper. The transactions will
be effected with Dean Witter Reynolds only when the price available from Dean
Witter Reynolds is better than that available from other dealers.

During the fiscal years ended July 31, 1996, 1997 and 1998, the Fund did
not effect any principal transactions with Dean Witter Reynolds.

22
<PAGE>

Brokerage transactions in securities listed on exchanges or admitted to
unlisted trading privileges may be effected through Dean Witter Reynolds,
Morgan Stanley & Co. and other affiliated brokers and dealers. In order for an
affiliated broker or dealer to effect any portfolio transactions on an exchange
for the Fund, the commissions, fees or other remuneration received by the
affiliated broker or dealer must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers in connection
with comparable transactions involving similar securities being purchased or
sold on an exchange during a comparable period of time. This standard would
allow the affiliated broker or dealer to receive no more than the remuneration
which would be expected to be received by an unaffiliated broker in a
commensurate arm's-length transaction. Furthermore, the Trustees, including the
Independent Trustees, have adopted procedures which are reasonably designed to
provide that any commissions, fees or other remuneration paid to an affiliated
broker or dealer are consistent with the foregoing standard. The Fund does not
reduce the management fee it pays to the Investment Manager by any amount of
the brokerage commissions it may pay to an affiliated broker or dealer.

During the fiscal years ended July 31, 1996 and 1997, the Fund paid
$36,391 and $43,448, respectively, in brokerage commissions to Dean Witter
Reynolds. During the fiscal year ended 1998 there were no brokerage fees paid
to Dean Witter Reynolds. During the period June 1 through July 31, 1997 and
during the fiscal year ended July 31, 1998, the Fund paid a total of $1,850 and
$8,215, respectively, in brokerage commissions to Morgan Stanley & Co., which
broker-dealer became an affiliate of the Investment Manager on May 31, 1997
upon consummation of the merger of Dean Witter, Discover & Co. with Morgan
Stanley Group Inc. During the fiscal year ended July 31, 1998, the brokerage
commissions paid to Morgan Stanley & Co. represented approximately 2.43% of the
total brokerage commissions paid by the Fund for this period and were paid on
account of transactions having an aggregate dollar value equal to approximately
2.14% of the aggregate dollar value of all portfolio transactions of the Fund
during the year for which commissions were paid.

C. BROKERAGE SELECTION

The policy of the Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions. Consistent with this
policy, when securities transactions are effected on a stock exchange, the
Fund's policy is to pay commissions which are considered fair and reasonable
without necessarily determining that the lowest possible commissions are paid
in all circumstances. The Fund believes that a requirement always to seek the
lowest possible commission cost could impede effective portfolio management and
preclude the Fund and the Investment Manager and/or Sub-Advisor from obtaining
a high quality of brokerage and research services. In seeking to determine the
reasonableness of brokerage commissions paid in any transaction, the Investment
Manager and/or Sub-Advisor relies upon its experience and knowledge regarding
commissions generally charged by various brokers and on its judgment in
evaluating the brokerage and research services received from the broker
effecting the transaction. These determinations are necessarily subjective and
imprecise, as in most cases an exact dollar value for those services is not
ascertainable.

In seeking to implement the Fund's policies, the Investment Manager and
the Sub-Advisor effect transactions with those brokers and dealers who the
Investment Manager and/or Sub-Advisor believes provide the most favorable
prices and are capable of providing efficient executions. If the Investment
Manager and/or Sub-Advisor believes the prices and executions are obtainable
from more than one broker or dealer, it may give consideration to placing
portfolio transactions with those brokers and dealers who also furnish research
and other services to the Fund or the Investment Manager and the Sub-Advisor.
The services may include, but are not limited to, any one or more of the
following: information as to the availability of securities for purchase or
sale; statistical or factual information or opinions pertaining to investment;
wire services; and appraisals or evaluations of portfolio securities. The
information and services received by the Investment Manager and/or Sub-Advisor
from brokers and dealers may be of benefit to the Investment Manager and/or
Sub-Advisor in the management of accounts of some of their other clients and
may not in all cases benefit the Fund directly.

23
<PAGE>

The Investment Manager and the Sub-Advisor currently serve as investment
advisors to a number of clients, including other investment companies, and may
in the future act as investment manager or advisor to others. It is the
practice of the Investment Manager and the Sub-Advisor to cause purchase and
sale transactions to be allocated among the Fund and others whose assets they
manage in such manner as they deem equitable. In making such allocations among
the Fund and other client accounts, various factors may be considered,
including the respective investment objectives, the relative size of portfolio
holdings of the same or comparable securities, the availability of cash for
investment, the size of investment commitments generally held and the opinions
of the persons responsible for managing the portfolios of the Fund and other
client accounts. In the case of certain initial and secondary public offerings,
the Investment Manager and the Sub-Advisor utilize a pro rata allocation
process based on the size of the funds involved and the number of shares
available from the public offering.

D. DIRECTED BROKERAGE

During the fiscal year ended July 31, 1998, the Fund paid $140,400 in
brokerage commissions in connection with transactions in the aggregate amount
of $90,546,016 to brokers because of research services provided.

E. REGULAR BROKER-DEALERS

During the fiscal year ended July 31, 1998, the Fund purchased common
stock issued by J.P. Morgan & Co., Inc. and held common stock issued by J.P.
Morgan & Co., Inc. and Merrill Lynch & Co., Inc. which issuers were among the
ten brokers or dealers which executed transactions for or with the Fund in the
largest dollar amounts during the year. At July 31, 1998, the Fund held common
stock issued by J.P. Morgan & Co., Inc. and Merrill Lynch & Co. Inc. with
market values of $1,600,200 and $2,515,500, respectively.

VII. CAPITAL STOCK AND OTHER SECURITIES
- --------------------------------------------------------------------------------

The shareholders of the Fund are entitled to a full vote for each full
share of beneficial interest held. The Fund is authorized to issue an unlimited
number of shares of beneficial interest. All shares of beneficial interest of
the Fund are of $0.01 par value and are equal as to earnings, assets and voting
privileges except that each Class will have exclusive voting privileges with
respect to matters relating to distribution expenses borne solely by such Class
or any other matter in which the interests of one Class differ from the
interests of any other Class. In addition, Class B shareholders will have the
right to vote on any proposed material increase in Class A's expenses, if such
proposal is submitted separately to Class A shareholders. Also, Class A, Class
B and Class C bear expenses related to the distribution of their respective
shares.

The Fund's Declaration of Trust permits the Trustees to authorize the
creation of additional series of shares (the proceeds of which would be
invested in separate, independently managed portfolios) and additional Classes
of shares within any series. The Trustees have not presently authorized any
such additional series or Classes of shares other than as set forth in the
Prospectus.

The Fund is not required to hold annual meetings of shareholders and in
ordinary circumstances the Fund does not intend to hold such meetings. The
Trustees may call special meetings of shareholders for action by shareholder
vote as may be required by the Investment Company Act or the Declaration of
Trust. Under certain circumstances the Trustees may be removed by action of the
Trustees. In addition, under certain circumstances the shareholders may call a
meeting to remove Trustees and the Fund is required to provide assistance in
communicating with shareholders about such a meeting. The voting rights of
shareholders are not cumulative, so that holders of more than 50 percent of the
shares voting can, if they choose, elect all Trustees being selected, while the
holders of the remaining shares would be unable to elect any Trustees.

Under Massachusetts law, shareholders of a business trust may, under
certain limited circumstances, be held personally liable as partners for the
obligations of the Fund. However, the Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Fund,
requires

24
<PAGE>

that notice of such Fund obligations include such disclaimer, and provides for
indemnification out of the Fund's property for any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its obligations.
Given the above limitations on shareholder personal liability, and the nature
of the Fund's assets and operations, the possibility of the Fund being unable
to meet its obligations is remote and thus, in the opinion of Massachusetts
counsel to the Fund, the risk to Fund shareholders of personal liability is
remote.

All of the Trustees have been elected by the shareholders of the Fund,
most recently at a Special Meeting of Shareholders held on June 8, 1999. The
Trustees themselves have the power to alter the number and the terms of office
of the Trustees (as provided for in the Declaration of Trust), and they may at
any time lengthen or shorten their own terms or make their terms of unlimited
duration and appoint their own successors, provided that always at least a
majority of the Trustees has been elected by the shareholders of the Fund.

VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
- --------------------------------------------------------------------------------

A. PURCHASE/REDEMPTION OF SHARES

Information concerning how Fund shares are offered to the public (and how
they are redeemed and exchanged) is provided in the Fund's Prospectus.

TRANSFER AGENT AS AGENT. With respect to the redemption or repurchase of
Fund shares, the application of proceeds to the purchase of new shares in the
Fund or any other Morgan Stanley Dean Witter Fund and the general
administration of the exchange privilege, the Transfer Agent acts as agent for
the Distributor and for the shareholder's authorized broker-dealer, if any, in
the performance of such functions. With respect to exchanges, redemptions or
repurchases, the Transfer Agent shall be liable for its own negligence and not
for the default or negligence of its correspondents or for losses in transit.
The Fund shall not be liable for any default or negligence of the Transfer
Agent, the Distributor or any authorized broker-dealer.

The Distributor and any authorized broker-dealer have appointed the
Transfer Agent to act as their agent in connection with the application of
proceeds of any redemption of Fund shares to the purchase of shares of any
other continuously offered Morgan Stanley Dean Witter Fund and the general
administration of the exchange privilege. No commission or discounts will be
paid to the Distributor or any authorized broker-dealer for any transaction
pursuant to the exchange privilege.

TRANSFERS OF SHARES. In the event a shareholder requests a transfer of
Fund shares to a new registration, the shares will be transferred without sales
charge at the time of transfer. With regard to the status of shares which are
either subject to the CDSC or free of such charge (and with regard to the
length of time shares subject to the charge have been held), any transfer
involving less than all of the shares in an account will be made on a pro rata
basis (that is, by transferring shares in the same proportion that the
transferred shares bear to the total shares in the account immediately prior to
the transfer). The transferred shares will continue to be subject to any
applicable CDSC as if they had not been so transferred.

EXCHANGING SHARES OF CLASSES WITH A CDSC

When exchanging shares of a Class of the Fund that imposes a CDSC, shares
that are not subject to a CDSC because they were (i) purchased more than one
year ago (for Class A and Class C) or six years ago (for Class B) or (ii)
acquired through reinvestment of dividends or distributions (all such shares
referred to as "Free Shares") will be exchanged first. After exchanging such
Free Shares the shares subject to a CDSC that were held the longest will be
exchanged next. Shares purchased during the same month are deemed to be held
for the same length of time. (For shares held for the same length of time but
subject to different CDSC rates, the shares with the lower CDSC rate will be
exchanged first.) When exchanging shares subject to a CDSC, you should know
that the CDSC rate will be calculated on such exchanged shares based on the
lesser of: (a) the purchase price of those shares; or (b) their current net
asset value at the time of the exchange. Accordingly, any appreciation in value
on such exchanged

25
<PAGE>

shares is not subject to a CDSC. When exchanging a portion of shares deemed to
be held for the same length of time, shares representing any appreciation in
value (and therefore, such shares will not be subject to any CDSC) will be
exchanged first.

B. OFFERING PRICE

The Fund's Class B, Class C and Class D shares are offered at net asset
value per share and the Class A shares are offered at net asset value per share
plus any applicable FSC which is distributed among the Fund's Distributor, Dean
Witter Reynolds and other authorized dealers as described in Section "V.
Management, Investment Advice and Other Services--F. Rule 12b-1 Plan."

The price of Fund shares, called "net asset value," is based on the value
of the Fund's portfolio securities. Net asset value per share of each Class is
calculated by dividing the value of the portion of the Fund's securities and
other assets attributable to that Class, less the liabilities attributable to
that Class, by the number of shares of that Class outstanding. The assets of
each Class of shares are invested in a single portfolio. The net asset value of
each Class, however, will differ because the Classes have different ongoing
fees.

In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
stock exchange is valued at its latest sale price on that exchange, prior to
the time when assets are valued; if there were no sales that day, the security
is valued at the latest bid price (in cases where a security is traded on more
than one exchange, the security is valued on the exchange designated as the
primary market pursuant to procedures adopted by the Trustees); and (2) all
other portfolio securities for which over-the-counter market quotations are
readily available are valued at the latest bid price. When market quotations
are not readily available, including circumstances under which it is determined
by the Investment Manager or the Sub-Advisor that sale or bid prices are not
reflective of a security's market value, portfolio securities are valued at
their fair value as determined in good faith under procedures established by
and under the general supervision of the Fund's Trustees. For valuation
purposes, quotations of foreign portfolio securities, other assets and
liabilities and forward contracts stated in foreign currency are translated
into U.S. dollar equivalents at the prevailing market rates prior to the close
of the New York Stock Exchange.

Short-term debt securities with remaining maturities of sixty days or less
at the time of purchase are valued at amortized cost, unless the Trustees
determine such does not reflect the securities' market value, in which case
these securities will be valued at their fair value as determined by the
Trustees.

Certain of the Fund's portfolio securities may be valued by an outside
pricing service approved by the Fund's Trustees. The pricing service may
utilize a matrix system incorporating security quality, maturity and coupon as
the evaluation model parameters, and/or research evaluations by its staff,
including review of broker-dealer market price quotations in determining what
it believes is the fair valuation of the portfolio securities valued by such
pricing service.

Generally, trading in foreign securities, as well as corporate bonds, U.S.
Government securities and money market instruments, is substantially completed
each day at various times prior to the close of the New York Stock Exchange.
The values of such securities used in computing the net asset value of the
Fund's shares are determined as of such times. Foreign currency exchange rates
are also generally determined prior to the close of the New York Stock
Exchange. Occasionally, events which may affect the values of such securities
and such exchange rates may occur between the times at which they are
determined and the close of the New York Stock Exchange and will therefore not
be reflected in the computation of the Fund's net asset value. If events that
may affect the value of such securities occur during such period, then these
securities may be valued at their fair value as determined in good faith under
procedures established by and under the supervision of the Trustees.

IX. TAXATION OF THE FUND AND SHAREHOLDERS
- --------------------------------------------------------------------------------

The Fund generally will make two basic types of distributions: ordinary
dividends and long-term capital gain distributions. These two types of
distributions are reported differently on a shareholder's

26
<PAGE>

income tax return and they are also subject to different rates of tax. The tax
treatment of the investment activities of the Fund will affect the amount and
timing and character of the distributions made by the Fund. Tax issues relating
to the Fund are not generally a consideration for shareholders such as tax
exempt entities and tax-advantaged retirement vehicles such as an IRA or 401(k)
plan. Shareholders are urged to consult their own tax professionals regarding
specific questions as to federal, state or local taxes.

INVESTMENT COMPANY TAXATION. The Fund intends to remain qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986. As such, the Fund will not be subject to federal income tax on its net
investment income and capital gains, if any, to the extent that it distributes
such income and capital gains to its shareholders.

The Fund generally intends to distribute sufficient income and gains so
that the Fund will not pay corporate income tax on its earnings. The Fund also
generally intends to distribute to its shareholders in each calendar year a
sufficient amount of ordinary income and capital gains to avoid the imposition
of a 4% excise tax. However, the Fund may instead determine to retain all or
part of any net long-term capital gains in any year for reinvestment. In such
event, the Fund will pay federal income tax (and possibly excise tax) on such
retained gains.

Gains or losses on sales of securities by the Fund will be long-term
capital gains or losses if the securities have a tax holding period of more
than one year. Gains or losses on the sale of securities with a tax holding
period of one year or less will be short-term gains or losses.

Under certain tax rules, the Fund may be required to accrue a portion of
any discount at which certain securities are purchased as income each year even
though the Fund receives no payments in cash on the security during the year.
To the extent that the Fund invests in such securities, it would be required to
pay out such accrued discount as an income distribution in each year in order
to avoid taxation at the Fund level. Such distributions will be made from the
available cash of the Fund or by liquidation of portfolio securities if
necessary. If a distribution of cash necessitates the liquidation of portfolio
securities, the Investment Manager and/or Sub-Advisor will select which
securities to sell. The Fund may realize a gain or loss from such sales. In the
event the Fund realizes net capital gains from such transactions, its
shareholders may receive a larger capital gain distribution, if any, than they
would in the absence of such transactions.

TAXATION OF DIVIDENDS AND DISTRIBUTIONS. Shareholders normally will have
to pay federal income taxes, and any state and/or local income taxes, on the
dividends and other distributions they receive from the Fund. Such dividends
and distributions, to the extent that they are derived from net investment
income or short-term capital gains, are taxable to the shareholder as ordinary
income regardless of whether the shareholder receives such payments in
additional shares or in cash.

Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder
has held the Fund's shares and regardless of whether the distribution is
received in additional shares or in cash. The Taxpayer Relief Act of 1997
reduced the maximum tax on long-term capital gains applicable to individuals
from 28% to 20%.

Shareholders are generally taxed on any ordinary dividend or capital gain
distributions from the Fund in the year they are actually distributed. However,
if any such dividends or distributions are declared in October, November or
December and paid in January then such amounts will be treated for tax purposes
as received by the shareholders on December 31, to shareholders of record of
such month.

Subject to certain exceptions, a corporate shareholder may be eligible for
a 70% dividends received deduction to the extent that the Fund earns and
distributes qualifying dividends from its investments. Distributions of net
capital gains by the Fund will not be eligible for the dividends received
deduction.

Shareholders who are not citizens or residents of the United States and
certain foreign entities may be subject to withholding of United States tax on
distributions made by the Fund of investment income and short term capital
gains.

27
<PAGE>

After the end of each calendar year, shareholders will be sent full
information on their dividends and capital gain distributions for tax purposes,
including the portion taxable as ordinary income, the portion taxable as
long-term capital gains and the amount of any dividends eligible for the
federal dividends received deduction for corporations.

PURCHASES AND REDEMPTIONS AND EXCHANGES OF FUND SHARES. Any dividend or
capital gains distribution received by a shareholder from any investment
company will have the effect of reducing the net asset value of the
shareholder's stock in that company by the exact amount of the dividend or
capital gains distribution. Furthermore, such dividends and capital gains
distributions are subject to federal income taxes. If the net asset value of
the shares should be reduced below a shareholder's cost as a result of the
payment of dividends or the distribution of realized long-term capital gains,
such payment or distribution would be in part a return of the shareholder's
investment but nonetheless would be taxable to the shareholder. Therefore, an
investor should consider the tax implications of purchasing Fund shares
immediately prior to a distribution record date.

In general, a sale of shares results in capital gain or loss, and for
individual shareholders, is taxable at a federal rate dependent upon the length
of time the shares were held. A redemption of a shareholder's Fund shares is
normally treated as a sale for tax purposes. Fund shares held for a period of
one year or less will, for tax purposes, generally result in short-term gains
or losses and those held for more than one year generally result in long-term
gain or loss. Any loss realized by shareholders upon a redemption of shares
within six months of the date of their purchase will be treated as a long-term
capital loss to the extent of any distributions of net long-term capital gains
with respect to such shares during the six-month period.

Gain or loss on the sale or redemption of shares in the Fund is measured
by the difference between the amount received and the tax basis of the shares.
Shareholders should keep records of investments made (including shares acquired
through reinvestment of dividends and distributions) so they can compute the
tax basis of their shares. Under certain circumstances a shareholder may
compute and use an average cost basis in determining the gain or loss on the
sale or redemption of shares.

Exchanges of Fund shares for shares of any other continuously offered
Morgan Stanley Dean Witter Fund are also subject to similar tax treatment. Such
an exchange is treated for tax purposes as a sale of the original shares in the
first fund, followed by the purchase of shares in the second fund.

If a shareholder realizes a loss on the redemption or exchange of a fund's
shares and reinvests in that fund's shares within 30 days before or after the
redemption or exchange, the transactions may be subject to the "wash sale"
rules, resulting in a postponement of the recognition of such loss for tax
purposes.

X. UNDERWRITERS
- --------------------------------------------------------------------------------

The Fund's shares are offered to the public on a continuous basis. The
Distributor, as the principal underwriter of the shares, has certain
obligations under the Distribution Agreement concerning the distribution of the
shares. These obligations and the compensation the Distributor receives are
described above in the sections titled "Principal Underwriter" and "Rule 12b-1
Plans".

XI. CALCULATION OF PERFORMANCE DATA
- --------------------------------------------------------------------------------

From time to time, the Fund may quote its "total return" in advertisements
and sales literature. These figures are computed separately for Class A, Class
B, Class C and Class D shares. The Fund's "average annual total return"
represents an annualization of the Fund's total return over a particular period
and is computed by finding the annual percentage rate which will result in the
ending redeemable value of a hypothetical $1,000 investment made at the
beginning of a one, five or ten year period, or for the period from the date of
commencement of operations, if shorter than any of the foregoing. The ending
redeemable value is reduced by any contingent deferred sales charge ("CDSC") at
the end of the one, five, ten year or other period. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involves a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment

28
<PAGE>

(which in the case of Class A shares is reduced by the Class A initial sales
charge), taking a root of the quotient (where the root is equivalent to the
number of years in the period) and subtracting 1 from the result. Based on this
calculation, the average annual total returns for Class B for the one year
period ended July 31, 1998 and from November 30, 1994, the date of inception,
through July 31, 1998 were 3.25% and 22.35%, respectively. The average annual
total returns of Class A for the fiscal year ended July 31, 1998 and for the
period July 28, 1997 (inception of the Class) through July 31, 1998 were 3.22%
and 6.51%, respectively. The average annual total returns of Class C for the
fiscal year ended July 31, 1998 and for the period July 28, 1997 (inception of
the Class) through July 31, 1998 were 7.12% and 11.52%, respectively. The
average annual total returns of Class D for the fiscal year ended July 31, 1998
and for the period July 28, 1997 (inception of the Class) through November 30,
1998 were 9.20% and 12.63%, respectively.

In addition, the Fund may advertise its total return for each Class over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. These calculations may or may not reflect the
imposition of the maximum front-end sales charge for Class A or the deduction
of the CDSC for each of Class B and Class C which, if reflected, would reduce
the performance quoted. For example, the average annual total return of the
Fund may be calculated in the manner described above, but without deduction for
any applicable sales charge. Based on this calculation, the average annual
total returns of Class B for the one year period ended July 31, 1998 and from
the date of inception through July 31, 1998 were 8.25% and 22.67%,
respectively. The average annual total returns of Class A for the fiscal year
ended July 31, 1998 and for the period July 28, 1997 through July 31, 1998 were
8.94% and 12.37%, respectively. The average annual total returns of Class C for
the fiscal year ended July 31, 1998 and for the period July 28, 1997 through
July 31, 1998 were 8.12% and 11.52%, respectively. The average annual total
returns of Class D for the fiscal year ended July 31, 1998 and for the period
July 28, 1997 through July 31, 1998 were 9.20% and 12.63%, respectively.

In addition, the Fund may compute its aggregate total return for each
Class for specified periods by determining the aggregate percentage rate which
will result in the ending value of a hypothetical $1,000 investment made at the
beginning of the period. For the purpose of this calculation, it is assumed
that all dividends and distributions are reinvested. The formula for computing
aggregate total return involves a percentage obtained by dividing the ending
value (without reduction for any sales charge) by the initial $1,000 investment
and subtracting 1 from the result. Based on this calculation, the total returns
for Class B for the one year period ended July 31, 1998 and the date of
inception through July 31, 1998 were 8.25% and 11.51%, respectively. The total
returns of Class A for the fiscal year ended July 31, 1998 and for the period
July 28, 1997 through July 31, 1998 were 8.94% and 12.47%, respectively. The
total returns of Class C for the fiscal year ended July 31, 1998 and for the
period July 28, 1997 through July 31, 1998 were 8.12% and 11.62%, respectively.
The total returns of Class D for the fiscal year ended July 31, 1998 and for
the period July 28, 1997 through July 31, 1998 were 9.20% and 12.73%,
respectively.

The Fund may also advertise the growth of hypothetical investments of
$10,000, $50,000 and $100,000 in each Class of shares of the Fund by adding 1
to the Fund's aggregate total return to date (expressed as a decimal and
without taking into account the effect of any applicable CDSC) and multiplying
by $9,475, $48,000 and $97,000 in the case of Class A (investments of $10,000,
$50,000 and $100,000 adjusted for the initial sales charge) or by $10,000,
$50,000 and $100,000 in the case of each of Class B, Class C and Class D, as
the case may be. Investments of $10,000, $50,000 and $100,000 in each Class at
inception of the Class would have grown to the following amounts at July 31,
1998:

INVESTMENT AT INCEPTION OF:
INCEPTION ------------------------------------
CLASS DATE $10,000 $50,000 $100,000
- ----------------- ---------- --------- ---------- -----------
Class A ......... 7/28/97 $10,656 $53,986 $109,096
Class B ......... 11/30/94 21,151 105,755 211,510
Class C ......... 7/28/97 11,162 55,810 111,620
Class D ......... 7/28/97 11,273 56,365 112,730

The Fund from time to time may also advertise its performance relative to
certain performance rankings and indexes compiled by recognized organizations.

29
<PAGE>

XII. FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

EXPERTS. The financial statements of the Fund for the fiscal year ended
July 31, 1998 included in this Statement of Additional Information and
incorporated by reference in the Prospectus have been so included and
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

* * * * *

This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Fund has
filed with the SEC. The complete Registration Statement may be obtained from
the SEC.

30
<PAGE>

TCW/DW TOTAL RETURN TRUST
PORTFOLIO OF INVESTMENTS January 31, 1999 (unaudited)

NUMBER OF
SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS (99.8%)
Aerospace (7.4%)
143,900 Boeing Co. ................................ $ 4,973,544
387,700 Hexcel Corp.* ............................. 3,586,225
71,600 Lockheed Martin Corp. ..................... 2,523,900
26,700 Northrop Grumman Corp. .................... 1,521,900
3,200 Sundstrand Corp. .......................... 142,400
------------
12,747,969
------------
Air Freight/Delivery Services (1.4%)
28,900 FDX Corp.* ................................ 2,360,769
------------
Beverages -- Non-Alcoholic (1.0%)
2,000 Coca Cola Co. ............................. 130,875
41,750 PepsiCo, Inc. ............................. 1,630,859
------------
1,761,734
------------
Books/Magazines (1.0%)
27,400 Time Warner, Inc. ......................... 1,712,500
------------
Building Products (2.1%)
95,100 Fort James Corp. .......................... 3,411,712
1,700 Procter & Gamble Co. ...................... 154,487
------------
3,566,199
------------
Casino/Gambling (2.3%)
272,900 Mirage Resorts, Inc.* ..................... 3,905,881
------------
Cellular Telephone (2.1%)
39,900 AT&T Corp. ................................ 3,620,925
------------
Computer Communications (3.6%)
55,575 Cisco Systems, Inc.* ...................... 6,207,033
------------
Computer Hardware (3.3%)
56,600 Dell Computer Corp.* ...................... 5,660,000
------------
Computer Software (4.2%)
41,500 Microsoft Corp.* .......................... 7,259,906
------------
Department Stores (2.6%)
51,700 Wal-Mart Stores, Inc. ..................... 4,446,200
------------
Diversified Commercial
Services (1.0%)
75,400 Sodexho Marriott Services, Inc.* .......... 1,677,650
------------
Diversified Financial Services (1.6%)
38,000 Citigroup Inc. ............................ 2,130,375
6,500 Morgan (J.P.) & Co., Inc. ................. 685,750
------------
2,816,125

NUMBER OF
SHARES VALUE
- -------------------------------------------------------------------------
Electrical Products (2.9%)
1,000 Honeywell, Inc. ........................... $ 65,187
567,700 Wyman-Gordon Co.* ......................... 4,860,931
------------
4,926,118
------------
Electronics (9.3%)
36,200 General Electric Co. ...................... 3,796,475
87,500 Motorola, Inc. ............................ 6,321,875
10,200 Raytheon Co. (Class B) .................... 570,562
53,800 Texas Instruments, Inc. ................... 5,319,475
------------
16,008,387
------------
Energy (2.1%)
218,100 Baker Hughes, Inc. ........................ 3,680,437
------------
Finance Companies (1.7%)
13,500 Fannie Mae ................................ 983,812
32,000 Freddie Mac ............................... 1,984,000
------------
2,967,812
------------
Financial Services (0.5%)
8,000 American Express Co. ...................... 823,000
------------
Insurance (2.6%)
23,750 American International Group,
Inc. ...................................... 2,444,766
35,700 Hartford Life, Inc. (Class A) ............. 2,012,588
------------
4,457,354
------------
Integrated Oil Companies (7.4%)
29,600 Chevron Corp. ............................. 2,212,600
72,100 Exxon Corp. ............................... 5,078,544
69,600 Royal Dutch Petroleum Co. (ADR)
(Netherlands) ............................. 2,788,350
55,000 Texaco, Inc. .............................. 2,605,625
------------
12,685,119
------------
Investment Bankers/Brokers/
Services (3.5%)
25,100 Marsh & McLennan Companies,
Inc. ...................................... 1,578,163
57,800 Merrill Lynch & Co., Inc. ................. 4,392,800
------------
5,970,963
------------
Major Banks (2.3%)
10,410 BankAmerica Corp. ......................... 696,169
95,000 Wells Fargo & Co. ......................... 3,319,063
------------
4,015,232
------------

SEE NOTES TO FINANCIAL STATEMENTS
31
<PAGE>

TCW/DW TOTAL RETURN TRUST
PORTFOLIO OF INVESTMENTS January 31, 1999 (unaudited) continued

NUMBER OF
SHARES VALUE
- -------------------------------------------------------------------------
Major Pharmaceuticals (7.7%)
8,700 Johnson & Johnson ......................... $ 739,500
54,800 Lilly (Eli) & Co. ......................... 5,134,075
18,000 Merck & Co., Inc. ......................... 2,641,500
59,800 Schering-Plough Corp. ..................... 3,259,100
18,800 Warner-Lambert Co. ........................ 1,357,125
------------
13,131,300
------------
Major U.S. Telecommunications (1.9%)
24,200 GTE Corp. ................................. 1,633,500
29,400 SBC Communications, Inc. .................. 1,587,600
------------
3,221,100
------------
Movies/Entertainment (0.7%)
38,200 Walt Disney Co. ........................... 1,260,600
------------
Oil & Gas Production (1.0%)
135,000 Nabors Industries, Inc.* .................. 1,687,500
------------
Oilfield Services/Equipment (1.7%)
99,700 Halliburton Co. ........................... 2,959,844
------------
Real Estate Investment Trust (2.1%)
300,600 Indymac Mortgage Holdings, Inc............. 3,625,988
------------
Restaurants (5.5%)
56,400 McDonald's Corp. .......................... 4,445,025
102,710 Tricon Global Restaurants, Inc.* .......... 4,885,144
------------
9,330,169
------------
Retail (0.2%)
6,720 Fred Meyer, Inc.* ......................... 420,000
------------
Semiconductors (7.9%)
122,200 Applied Materials, Inc.* .................. 7,713,875
40,900 Intel Corp. ............................... 5,759,231
------------
13,473,106
------------
Supermarkets (2.8%)
79,800 Albertson's, Inc. ......................... 4,867,800
------------
Wholesale Distributor (2.4%)
147,400 Supervalu, Inc. ........................... 4,044,288
------------
TOTAL COMMON STOCKS
(Identified Cost $136,544,805)............. 171,299,008
------------

PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------------------------------
SHORT-TERM INVESTMENT (0.3%)
REPURCHASE AGREEMENT
$ 482 The Bank of New York 4.6875%
due 02/01/99 (dated 01/29/99;
proceeds $482,284) (a)
(Identified Cost $482,096).................. $ 482,096
-------------
TOTAL INVESTMENTS
(Identified Cost $137,026,901) (b)......... 100.1% 171,781,104
LIABILITIES IN EXCESS OF OTHER
ASSETS .................................... (0.1) (207,391)
----- -----------
NET ASSETS ................................ 100.0% $171,573,713

- --------------------------------
* Non-income producing security.
(a) Collateralized by $484,833 U.S. Treasury Note 4.75% due 11/15/08
valued at $491,737.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $45,473,855 and the
aggregate gross unrealized depreciation is $10,719,652, resulting in net
unrealized appreciation of $34,754,203.

SEE NOTES TO FINANCIAL STATEMENTS
32
<PAGE>

TCW/DW TOTAL RETURN TRUST
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
January 31, 1999 (unaudited)

ASSETS:
Investments in securities, at value
(identified cost $137,026,901)................................. $171,781,104
Receivable for:
Investment sold .............................................. 2,442,656
Shares of beneficial interest sold ........................... 352,729
Dividends .................................................... 108,992
Deferred organizational expenses ................................ 25,221
Prepaid expenses and other assets ............................... 70,386
------------
TOTAL ASSETS ................................................. 174,781,088
------------
LIABILITIES:
Payable for:
Investments purchased ........................................ 2,787,730
Shares of beneficial interest repurchased .................... 155,017
Plan of distribution fee ..................................... 118,171
Management fee ............................................... 64,525
Investment advisory fee ...................................... 43,016
Accrued expenses and other payables ............................. 38,916
------------
TOTAL LIABILITIES ............................................ 3,207,375
------------
NET ASSETS ................................................... $171,573,713
============
COMPOSITION OF NET ASSETS:
Paid-in-capital ................................................. $126,771,841
Net unrealized appreciation ..................................... 34,754,203
Accumulated net investment loss ................................. (689,415)
Accumulated undistributed net realized gain ..................... 10,737,084
------------
NET ASSETS ................................................... $171,573,713
============
CLASS A SHARES:
Net Assets ...................................................... $ 1,959,070
Shares Outstanding (unlimited authorized, $.01 par value)........ 108,362
NET ASSET VALUE PER SHARE .................................... $ 18.08
============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) ............ $ 19.08
============
CLASS B SHARES:
Net Assets ...................................................... $168,835,300
Shares Outstanding (unlimited authorized, $.01 par value)........ 9,432,806
NET ASSET VALUE PER SHARE .................................... $ 17.90
============
CLASS C SHARES:
Net Assets ...................................................... $ 766,542
Shares Outstanding (unlimited authorized, $.01 par value)........ 42,902
NET ASSET VALUE PER SHARE .................................... $ 17.87
============
CLASS D SHARES:
Net Assets ...................................................... $ 12,801
Shares Outstanding (unlimited authorized, $.01 par value)........ 705
NET ASSET VALUE PER SHARE .................................... $ 18.16
============

SEE NOTES TO FINANCIAL STATEMENTS
33
<PAGE>

TCW/DW TOTAL RETURN TRUST
FINANCIAL STATEMENTS, continued

STATEMENT OF OPERATIONS
For the six months ended January 31, 1999 (unaudited)

NET INVESTMENT LOSS:
INCOME
Dividends (net of $3,451 foreign withholding tax)......... $ 734,829
Interest ................................................. 45,961
------------
TOTAL INCOME .......................................... 780,790
------------
EXPENSES
Plan of distribution fee (Class A shares) ................ 1,791
Plan of distribution fee (Class B shares) ................ 681,784
Plan of distribution fee (Class C shares) ................ 3,459
Management fee ........................................... 344,492
Investment advisory fee .................................. 229,662
Transfer agent fees and expenses ......................... 80,065
Registration fees ........................................ 35,261
Professional fees ........................................ 25,620
Shareholder reports and notices .......................... 24,990
Trustees' fees and expenses .............................. 17,379
Organizational expenses .................................. 15,282
Custodian fees ........................................... 8,276
Other .................................................... 5,227
------------
TOTAL EXPENSES ........................................ 1,473,288
------------
NET INVESTMENT LOSS ................................... (692,498)
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain ........................................ 11,099,338
Net change in unrealized appreciation .................... 8,861,395
------------
NET GAIN .............................................. 19,960,733
------------
NET INCREASE ............................................. $ 19,268,235
============

SEE NOTES TO FINANCIAL STATEMENTS
34
<PAGE>

TCW/DW TOTAL RETURN TRUST
FINANCIAL STATEMENTS, continued

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JANUARY 31, 1999 JULY 31, 1998
------------------ ----------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss .................................... $ (692,498) $ (717,671)
Net realized gain ...................................... 11,099,338 10,549,425
Net change in unrealized appreciation .................. 8,861,395 1,702,988
------------ ------------
NET INCREASE ........................................ 19,268,235 11,534,742
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAIN:
Class A shares ......................................... (78,538) (7,061)
Class B shares ......................................... (8,017,342) (9,224,024)
Class C shares ......................................... (36,827) (24,164)
Class D shares ......................................... (597) (712)
------------ ------------
TOTAL DISTRIBUTIONS ................................. (8,133,304) (9,255,961)
------------ ------------
Net increase from transactions in shares of beneficial
interest ............................................. 6,114,827 34,945,345
------------ ------------
NET INCREASE ........................................ 17,249,758 37,224,126
NET ASSETS:
Beginning of period .................................... 154,323,955 117,099,829
------------ ------------
END OF PERIOD
(Including an accumulated net investment loss of
$689,415 and undistributed net investment income of
$3,083, respectively) ............................... $171,573,713 $154,323,955
============ ============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
35
<PAGE>

TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1999 (unaudited)

1. ORGANIZATION AND ACCOUNTING POLICIES

TCW/DW Total Return Trust (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a non-diversified, open-end
management investment company. The Fund's investment objective is high total
return from capital growth and income. The Fund seeks to achieve its objective
by investing primarily in equity and equity-related securities issued by
domestic and foreign companies. The Fund was organized as a Massachusetts
business trust on June 29, 1994 and commenced operations on November 30, 1994.
On July 28, 1997, the Fund converted to a multiple class share structure.

The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year,
six years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates.

The following is a summary of significant accounting policies:

A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price
(in cases where securities are traded on more than one exchange, the securities
are valued on the exchange designated as the primary market pursuant to
procedures adopted by the Trustees); (2) all other portfolio securities for
which over-the-counter market quotations are readily available are valued at
the latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by TCW Funds Management, Inc. (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 Trustees; and (4)
short-term debt securities having a maturity date of more than sixty days at
time of purchase are valued on a mark-to-market basis until sixty days prior to
maturity and thereafter at amortized cost based on their value on the 61st day.
Short-term debt securities having a maturity date of sixty days or less at the
time of purchase are valued at amortized cost.

36
<PAGE>

TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1999 (unaudited) continued

B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Discounts are accreted over the life of the respective securities. Dividend
income and other distributions are recorded on the ex-dividend date. Interest
income is accrued daily.

C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are charged to
each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are allocated directly to the
respective class.

D. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.

E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends
and distributions to its shareholders on the record date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which
may differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.

F. ORGANIZATIONAL EXPENSES -- Morgan Stanley Dean Witter Advisors Inc., an
affiliate of Morgan Stanley Dean Witter Services Company Inc. (the "Manager"),
paid the organizational expenses of the Fund in the amount of approximately
$127,000 of which approximately $122,000 has been reimbursed. Such expenses
have been deferred and are being amortized on the straight-line method over a
period not to exceed five years from the commencement of operations.

2. MANAGEMENT AGREEMENT

Pursuant to a Management Agreement, the Fund pays the Manager a management fee,
accrued daily and payable monthly, by applying the annual rate of 0.45% to the
net assets of the Fund determined as of the close of each business day.

37
<PAGE>

TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1999 (unaudited) continued

Under the terms of the Management Agreement, the Manager maintains certain of
the Fund's books and records and furnishes, at its own expense, office space,
facilities, equipment, clerical, bookkeeping and certain legal services and
pays the salaries of all personnel, including officers of the Fund who are
employees of the Manager. The Manager also bears the cost of telephone
services, heat, light, power and other utilities provided to the Fund.

3. INVESTMENT ADVISORY AGREEMENT

Pursuant to an Investment Advisory Agreement with the Adviser, the Fund pays an
advisory fee, accrued daily and payable monthly, by applying the annual rate of
0.30% to the net assets of the Fund determined as of the close of each business
day.

Under the terms of the Investment Advisory Agreement, the Fund has retained the
Adviser to invest the Fund's assets, including placing orders for the purchase
and sale of portfolio securities. The Adviser obtains and evaluates such
information and advice relating to the economy, securities markets, and
specific securities as it considers necessary or useful to continuously manage
the assets of the Fund in a manner consistent with its investment objective. In
addition, the Adviser pays the salaries of all personnel, including officers of
the Fund, who are employees of the Adviser.

4. PLAN OF DISTRIBUTION

Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Manager. The Fund has adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The
Plan provides that the Fund will pay the Distributor a fee which is accrued
daily and paid monthly at the following annual rates: (i) Class A -- up to
0.25% of the average daily net assets of Class A; (ii) Class B -- 1.0% of the
lesser of: (a) the average daily aggregate gross sales of the Class B shares
since the inception of the Fund (not including reinvestment of dividend or
capital gain distributions) less the average daily aggregate net asset value of
the Class B shares redeemed since the Fund's inception upon which a contingent
deferred sales charge has been imposed or waived; or (b) the average daily net
assets of Class B; and (iii) Class C -- up to 1.0% of the average daily net
assets of Class C. In the case of Class A shares, amounts paid under the Plan
are paid to the Distributor for services provided. In the case of Class B and
Class C shares, amounts paid under the Plan are paid to the Distributor for (1)
services provided and the expenses borne by it and others in the distribution
of the shares of these Classes, including the payment of commissions for sales
of these Classes and incentive compensation to, and expenses of, Morgan Stanley
Dean Witter Financial Advisors and others who engage in or support distribution
of the shares or who service shareholder accounts, including overhead and

38
<PAGE>

TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1999 (unaudited) continued

telephone expenses; (2) printing and distribution of prospectuses and reports
used in connection with the offering of these shares to other than current
shareholders; and (3) preparation, printing and distribution of sales
literature and advertising materials. In addition, the Distributor may utilize
fees paid pursuant to the Plan, in the case of Class B shares, to compensate
Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and
Distributor, and other selected broker-dealers for their opportunity costs in
advancing such amounts, which compensation would be in the form of a carrying
charge on any unreimbursed expenses.

In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund
pursuant to the Plan and contingent deferred sales charges paid by investors
upon redemption of Class B shares. Although there is no legal obligation for
the Fund to pay expenses incurred in excess of payments made to the Distributor
under the Plan and the proceeds of contingent deferred sales charges paid by
investors upon redemption of shares, if for any reason the Plan is terminated,
the Trustees will consider at that time the manner in which to treat such
expenses. The Distributor has advised the Fund that such excess amounts,
including carrying charges, totaled $4,841,950 at January 31, 1999.

In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the six months ended January 31, 1999, the distribution fee
was accrued for Class A shares and Class C shares at the annual rate of 0.25%
and 1.0%, respectively.

The Distributor has informed the Fund that for the six months ended January 31,
1999, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $174,028 and $603, respectively
and received $1,345 in front-end sales charges from sales of the Fund's Class A
shares. The respective shareholders pay such charges which are not an expense
of the Fund.

5. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES

The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the six months ended January 31, 1999
aggregated $86,631,099 and $88,409,387, respectively.

39
<PAGE>

TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1999 (unaudited) continued

For the six months ended January 31, 1999, the Fund incurred brokerage
commissions of $11,547 with Morgan Stanley & Co., Inc., an affiliate of the
Manager and Distributor, for portfolio transactions executed on behalf of the
Fund.

Morgan Stanley Dean Witter Trust FSB, an affiliate of the Manager and
Distributor, is the Fund's transfer agent. At January 31, 1999, the Fund had
transfer agent fees and expenses payable of approximately $1,000.

6. SHARES OF BENEFICIAL INTEREST

Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JANUARY 31, 1999 JULY 31, 1998
---------------------------------- ----------------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold .................................. 33,753 $ 576,818 77,071 $ 1,323,814
Reinvestment of distributions ......... 4,229 73,535 473 7,061
Redeemed .............................. (4,356) (74,913) (3,432) (58,689)
------ ------------- ------ -------------
Net increase -- Class A ............... 33,626 575,440 74,112 1,272,186
------ ------------- ------ -------------
CLASS B SHARES
Sold .................................. 1,100,376 18,053,362 3,642,674 60,041,237
Reinvestment of distributions ......... 423,058 7,289,285 553,040 8,234,768
Redeemed .............................. (1,225,022) (19,817,409) (2,117,176) (35,250,499)
---------- ------------- ---------- -------------
Net increase -- Class B ............... 298,412 5,525,238 2,078,538 33,025,506
---------- ------------- ---------- -------------
CLASS C SHARES
Sold .................................. 5,041 80,791 42,555 699,553
Reinvestment of distributions ......... 2,093 36,001 1,578 23,504
Redeemed .............................. (6,243) (103,240) (4,433) (76,116)
---------- ------------- ---------- -------------
Net increase -- Class C ............... 891 13,552 39,700 646,941
---------- ------------- ---------- -------------
CLASS D SHARES
Reinvestment of distributions ......... 34 597 47 712
---------- ------------- ---------- -------------
Net increase in Fund .................. 332,963 $ 6,114,827 2,192,397 $ 34,945,345
========== ============= ========== =============
</TABLE>

7. FEDERAL INCOME TAX STATUS

At July 31, 1998, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales.

40
<PAGE>

TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1999 (unaudited) continued

8. SUBSEQUENT EVENT

On February 25, 1999, the Board of Trustees of the Fund recommended that the
Fund engage Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"), an
affiliate of the Manager, to serve as the Funds' new investment manager and
that a new investment management agreement between the Fund and MSDW Advisors
be submitted to shareholders for approval. Under the new agreement, MSDW
Advisors would be responsible for all the services presently provided by both
the Manager and the Adviser. The compensation paid to MSDW Advisors would be
equal to the total compensation presently paid to both the Manager and the
Adviser.

Additionally, on February 25, 1999, the Board of Trustees recommended that a
new sub-advisory agreement between MSDW Advisors and the present Adviser be
submitted to shareholders for approval. Under the new sub-advisory agreement,
MSDW Advisors would pay the new sub-adviser monthly compensation equal to 40%
of the compensation it receives under the new investment management agreement.

41
<PAGE>

TCW/DW TOTAL RETURN TRUST
FINANCIAL HIGHLIGHTS

Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:

FOR THE YEAR ENDED JULY 31, FOR THE PERIOD
FOR THE SIX ----------------------------------------- NOVEMBER 30, 1994*
MONTHS ENDED THROUGH
JANUARY 31, 1999++ 1998++ 1997** 1996 JULY 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
(unaudited) <C>
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ........ $ 16.68 $ 16.59 $ 12.00 $ 11.75 $ 10.00
-------- --------- -------- --------- ---------
Income from investment operations:
Net investment income (loss) ............... (0.08) (0.08) 0.04 0.15 0.21
Net realized and unrealized gain ........... 2.19 1.31 5.81 0.80 1.68
-------- --------- -------- --------- ---------
Total income from investment operations ..... 2.11 1.23 5.85 0.95 1.89
-------- --------- -------- --------- ---------
Less dividends and distributions from:
Net investment income ...................... -- -- (0.06) (0.21) (0.14)
Net realized gain .......................... (0.89) (1.14) (1.20) (0.49) --
-------- --------- -------- --------- ---------
Total dividends and distributions ........... (0.89) (1.14) (1.26) (0.70) (0.14)
-------- --------- -------- --------- ---------
Net asset value, end of period .............. $ 17.90 $ 16.68 $ 16.59 $ 12.00 $ 11.75
======== ========= ======== ========= =========
TOTAL RETURN+ ............................... 12.85%(1) 8.25% 51.66% 8.23% 19.04%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .................................... 1.93%(2)(4) 1.90% 2.05% 1.98%(3) 0.94%(2)(3)
Net investment income (loss) ................ (0.91)%(2)(4) (0.49)% 0.28% 1.30%(3) 3.19%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ..... $168,835 $152,380 $117,041 $48,524 $36,018
Portfolio turnover rate ..................... 57%(1) 93% 198% 261% 91%(1)

</TABLE>

- -------------
* Commencement of operations.
** Prior to July 28, 1997, the Fund issued one class of shares. All shares
of the Fund held prior to that date have been designated Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived
by the Manager and Adviser, the above annualized expense and net
investment income ratios would have been 2.21% and 1.07%, respectively,
for the year ended July 31, 1996 and 2.66% and 1.47%, respectively, for
the period ended July 31, 1995.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.

SEE NOTES TO FINANCIAL STATEMENTS
42
<PAGE>

TCW/DW TOTAL RETURN TRUST
FINANCIAL HIGHLIGHTS, continued

Total income from investment operations ........... 2.19 1.33 0.52
------- ------- --------

Less distributions from net realized gain ......... (0.89) (1.14) --
------- ------- --------

Net asset value, end of period .................... $ 18.08 $ 16.78 $ 16.59
======= ======= ========
TOTAL RETURN+ ..................................... 13.19%(1) 8.94% 3.24%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .......................................... 1.28%(2)(3) 1.31% 1.31%(2)
Net investment income (loss) ...................... (0.26)%(2)(3) (0.07)% 4.08%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ........... $1,959 $1,254 $ 10
Portfolio turnover rate ........................... 57% 93% 198%
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period .............. $ 16.66 $ 16.59 $ 16.07
------- ------- --------
Income from investment operations:
Net investment income (loss) ..................... (0.08) (0.12) 0.01
Net realized and unrealized gain ................. 2.18 1.33 0.51
------- ------- --------
Total income from investment operations ........... 2.10 1.21 0.52
------- ------- --------
Less distributions from net realized gain ......... (0.89) (1.14) --
------- ------- --------
Net asset value, end of period .................... $ 17.87 $ 16.66 $ 16.59
======= ======= ========
TOTAL RETURN+ ..................................... 12.81%(1) 8.12% 3.24%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .......................................... 2.03%(2)(3) 2.06% 2.06%(2)
Net investment income (loss) ...................... (1.01)%(2)(3) (0.70)% 2.75%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ........... $ 767 $ 700 $ 38
Portfolio turnover rate ........................... 57%(1) 93% 198%

</TABLE>

- -------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

SEE NOTES TO FINANCIAL STATEMENTS
43
<PAGE>

TCW/DW TOTAL RETURN TRUST
FINANCIAL HIGHLIGHTS, continued

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
JANUARY 31, 1999 JULY 31, 1998 JULY 31, 1997
------------------------ --------------- ---------------
(unaudited)
<S> <C> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period .............. $ 16.83 $ 16.59 $ 16.07
------- ------- --------
Income from investment operations:
Net investment income ............................ -- 0.06 0.01
Net realized and unrealized gain ................. 2.22 1.32 0.51
------- ------- --------
Total income from investment operations ........... 2.22 1.38 0.52
------- ------- --------
Less distributions from net realized gain ......... (0.89) (1.14) --
------- -------- --------
Net asset value, end of period .................... $ 18.16 $ 16.83 $ 16.59
======= ======== ========
TOTAL RETURN+ ..................................... 13.34%(1) 9.20% 3.24%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .......................................... 1.03%(2)(3) 1.06% 1.06%(2)
Net investment income (loss) ...................... (0.01)%(2)(3) 0.34% 4.33%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ........... $13 $11 $10
Portfolio turnover rate ........................... 57%(1) 93% 198%
</TABLE>

- -------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of
the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

SEE NOTES TO FINANCIAL STATEMENTS
44
<PAGE>

TCW/DW TOTAL RETURN TRUST
PORTFOLIO OF INVESTMENTS July 31, 1998

NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS (99.2%)
Aircraft & Aerospace (6.4%)
97,000 Boeing Co. ............................. $ 3,764,812
87,600 Coltec Industries, Inc.* ............... 1,494,675
161,400 Hexcel Corp.* .......................... 2,259,600
44,700 Sundstrand Corp. ....................... 2,338,369
------------
9,857,456
------------
Banking (5.2%)
17,400 BankAmerica Corp. ...................... 1,561,650
15,200 Citicorp ............................... 2,584,000
11,100 Wells Fargo & Co. ...................... 3,950,212
------------
8,095,862
------------
Banks -- Money Center (1.0%)
12,700 Morgan (J.P.) & Co., Inc. .............. 1,600,200
------------
Beverages -- Soft Drinks (2.3%)
24,700 Coca Cola Co. .......................... 1,992,981
41,750 PepsiCo, Inc. .......................... 1,620,422
------------
3,613,403
------------
Brokerage (6.0%)
30,900 Marsh & McLennan Companies,
Inc. ................................... 1,886,831
25,800 Merrill Lynch & Co., Inc. .............. 2,515,500
128,100 Schwab (CHARLES) Corp. ................. 4,803,750
------------
9,206,081
------------
Building Materials (1.4%)
101,500 Calmat Co. ............................. 2,112,469
------------
Chemicals -- Specialty (2.0%)
121,100 General Chemical Group Inc. ............ 3,103,187
------------
Communications -- Equipment &
Software (3.0%)
49,050 Cisco Systems, Inc.* ................... 4,696,537
------------
Computer Software (2.2%)
31,000 Microsoft Corp.* ....................... 3,408,062
------------
Drugs (14.4%)
63,700 Amgen Inc.* ............................ 4,673,987
21,200 Johnson & Johnson ...................... 1,637,700
60,400 Lilly (Eli) & Co. ...................... 4,061,900
18,000 Merck & Co., Inc. ...................... 2,219,625
28,200 Pfizer, Inc. ........................... 3,102,000
29,900 Schering-Plough Corp. .................. 2,892,825
47,100 Warner-Lambert Co. ..................... 3,558,994
------------
22,147,031
------------

NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------
Electrical Equipment (4.5%)
34,200 Honeywell, Inc. ........................ $ 2,866,387
249,200 Wyman-Gordon Co.* ...................... 4,111,800
------------
6,978,187
------------
Electronics -- Defense (2.3%)
35,900 Hewlett-Packard Co. .................... 1,992,450
27,800 Raytheon Co. (Class B) ................. 1,537,687
------------
3,530,137
------------
Electronics -- Semiconductors/
Components (11.8%)
39,000 General Electric Co. ................... 3,483,188
64,800 Intel Corp. ............................ 5,467,500
88,000 Motorola, Inc. ......................... 4,598,000
78,900 Texas Instruments, Inc. ................ 4,679,756
------------
18,228,444
------------
Financial (1.5%)
13,500 Fannie Mae ............................. 837,000
32,000 Freddie Mac ............................ 1,512,000
------------
2,349,000
------------
Household Products (2.6%)
61,100 Fort James Corp. ....................... 2,062,125
23,700 Procter & Gamble Co. ................... 1,881,188
------------
3,943,313
------------
Insurance (3.9%)
18,300 American International Group, Inc. 2,759,869
55,100 Hartford Life, Inc. (Class A) .......... 3,188,913
------------
5,948,782
------------
Lodging -- Hotels (3.0%)
183,300 Hilton Hotels Corp. .................... 4,616,869
------------
Oil & Gas Products (1.3%)
122,800 Enron Oil & Gas Co. .................... 1,949,450
------------
Oil -- Exploration & Production (1.3%)
113,400 Mitchell Energy & Development
Corp. (Class A) ........................ 2,076,638
------------
Oil -- Foreign (3.2%)
13,600 Chevron Corp. .......................... 1,123,700
54,600 Exxon Corp. ............................ 3,828,825
------------
4,952,525
------------
Oil Drilling & Services (1.9%)
217,900 ENSCO International, Inc. .............. 2,955,269
------------

SEE NOTES TO FINANCIAL STATEMENTS
45
<PAGE>

TCW/DW TOTAL RETURN TRUST
PORTFOLIO OF INVESTMENTS July 31, 1998, continued

NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------
Oil Integrated -- International (1.1%)
32,400 Royal Dutch Petroleum Co.
(Netherlands) ....................... $ 1,652,400
------------
Oil Well Equipment & Service (0.4%)
15,100 Halliburton Co. ..................... 548,319
------------
Paper & Forest Products (0.0%)
600 Weyerhaeuser Co. .................... 25,200
------------
Publishing -- Newspaper (0.5%)
11,500 Tribune Co. ......................... 773,375
------------
Real Estate Investment Trust (2.5%)
185,600 IndyMac Mortgage Holdings, Inc....... 3,909,200
------------
Restaurants (3.2%)
34,700 McDonald's Corp. .................... 2,318,394
74,810 TRICON Global Restaurants, Inc.* 2,646,404
------------
4,964,798
------------
Retail -- Department Stores (2.4%)
59,800 Wal-Mart Stores, Inc. ............... 3,774,875
------------
Retail -- General Merchandise (2.1%)
72,920 Fred Meyer, Inc.* ................... 3,213,038
------------
Semiconductor Equipment (3.3%)
150,000 Applied Materials, Inc.* ............ 5,015,625
------------
Wholesale Distributor (2.5%)
78,100 Supervalu, Inc. ..................... 3,870,831
------------
TOTAL COMMON STOCKS
(Identified Cost $127,223,755)....... $153,116,563
------------
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------------------
SHORT-TERM INVESTMENT (0.6%)
REPURCHASE AGREEMENT
$ 893 The Bank of New York 5.50%
due 08/03/98 (dated 07/31/98;
proceeds $893,378) (a)
(Identified Cost $892,969) .......... $ 892,969
------------
TOTAL INVESTMENTS
(Identified Cost $128,116,724) (b)..... 99.8% 154,009,532

OTHER ASSETS IN EXCESS OF
LIABILITIES ........................... 0.2 314,423
----- -----------
NET ASSETS ............................ 100.0% $154,323,955
===== ============
- --------------------------------
* Non-income producing security.
(a) Collateralized by $569,213 U.S. Treasury Bond 11.125% due 08/15/03 valued
at $734,593 and $169,286 U.S. Treasury Note 7.75% due 11/30/99 valued
at $176,234.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $34,611,294 and the
aggregate gross unrealized depreciation is $8,718,486, resulting in net
unrealized appreciation of $25,892,808.

SEE NOTES TO FINANCIAL STATEMENTS
46
<PAGE>

TCW/DW TOTAL RETURN TRUST
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
July 31, 1998

ASSETS:
Investments in securities, at value
(identified cost $128,116,724)............................... $ 154,009,532
Receivable for:
Investments sold ............................................ 1,436,571
Shares of beneficial interest sold .......................... 689,137
Dividends ................................................... 150,839
Deferred organizational expenses .............................. 40,503
Prepaid expenses and other assets ............................. 43,369
--------------
TOTAL ASSETS ................................................ 156,369,951
--------------
LIABILITIES:
Payable for:
Investments purchased ....................................... 923,013
Shares of beneficial interest repurchased ................... 831,121
Plan of distribution fee .................................... 115,170
Management fee .............................................. 62,069
Investment advisory fee ..................................... 41,380
Accrued expenses and other payables ........................... 73,243
--------------
TOTAL LIABILITIES ........................................... 2,045,996
--------------
NET ASSETS .................................................. $ 154,323,955
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital ............................................... $ 120,657,014
Net unrealized appreciation ................................... 25,892,808
Accumulated undistributed net investment income ............... 3,083
Accumulated undistributed net realized gain ................... 7,771,050
--------------
NET ASSETS .................................................. $ 154,323,955
==============
CLASS A SHARES:
Net Assets .................................................... $ 1,254,354
Shares Outstanding (unlimited authorized, $.01 par value)...... 74,736
NET ASSET VALUE PER SHARE ................................... $ 16.78
==============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) ............ $ 17.71
==============
CLASS B SHARES:
Net Assets .................................................... $ 152,358,435
Shares Outstanding (unlimited authorized, $.01 par value) ..... 9,134,394
NET ASSET VALUE PER SHARE ................................... $ 16.68
==============
CLASS C SHARES:
Net Assets .................................................... $ 699,874
Shares Outstanding (unlimited authorized, $.01 par value) ..... 42,011
NET ASSET VALUE PER SHARE ................................... $ 16.66
==============
CLASS D SHARES:
Net Assets .................................................... $ 11,292
Shares Outstanding (unlimited authorized, $.01 par value) ..... 671
NET ASSET VALUE PER SHARE ................................... $ 16.83
==============

SEE NOTES TO FINANCIAL STATEMENTS
47
<PAGE>

TCW/DW TOTAL RETURN TRUST
FINANCIAL STATEMENTS, continued

STATEMENT OF OPERATIONS
For the year ended July 31, 1998

NET INVESTMENT INCOME :

INCOME
Dividends (net of $4,357 foreign withholding tax) ......... $ 1,707,676
Interest .................................................. 276,135
-----------
TOTAL INCOME ............................................ 1,983,811
-----------
EXPENSES
Plan of distribution fee (Class A shares) ................. 1,129
Plan of distribution fee (Class B shares) ................. 1,196,377
Plan of distribution fee (Class C shares) ................. 4,605
Management fee ............................................ 641,236
Investment advisory fee ................................... 427,491
Transfer agent fees and expenses .......................... 138,552
Registration fees ......................................... 90,383
Shareholder reports and notices ........................... 50,834
Professional fees ......................................... 49,780
Trustees' fees and expenses ............................... 38,711
Organizational expenses ................................... 30,313
Custodian fees ............................................ 19,137
Other ..................................................... 12,934
-----------
TOTAL EXPENSES .......................................... 2,701,482
-----------
NET INVESTMENT LOSS ..................................... (717,671)
-----------
NET REALIZED AND UNREALIZED GAIN :
Net realized gain ......................................... 10,549,425
Net change in unrealized appreciation ..................... 1,702,988
-----------
NET GAIN ................................................ 12,252,413
-----------
NET INCREASE .............................................. $11,534,742
===========

SEE NOTES TO FINANCIAL STATEMENTS
48
<PAGE>

TCW/DW TOTAL RETURN TRUST
FINANCIAL STATEMENTS, continued

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
JULY 31, 1998 JULY 31, 1997*
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
OPERATIONS :
Net investment income (loss) ......................... $ (717,671) $ 202,878
Net realized gain .................................... 10,549,425 7,872,093
Net change in unrealized appreciation ................ 1,702,988 23,391,695
------------ ------------
NET INCREASE ....................................... 11,534,742 31,466,666
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM :
Net investment income
Class B shares ...................................... -- (243,888)
Net realized gain
Class A shares ...................................... (7,061) --
Class B shares ...................................... (9,224,024) (5,079,906)
Class C shares ...................................... (24,164) --
Class D shares ...................................... (712) --
------------ ------------
TOTAL DIVIDENDS AND DISTRIBUTIONS .................. (9,255,961) (5,323,794)
------------ ------------
Net increase from transactions in shares of beneficial
interest ........................................... 34,945,345 42,432,561
------------ ------------
NET INCREASE ....................................... 37,224,126 68,575,433
NET ASSETS :
Beginning of period .................................. 117,099,829 48,524,396
------------ ------------
END OF PERIOD
(Including undistributed net investment income of
$3,083 and $5,972, respectively) .................. $154,323,955 $117,099,829
============ ============
</TABLE>

- ---------------------
* Class A, Class C and Class D shares were issued July 28, 1997.

SEE NOTES TO FINANCIAL STATEMENTS
49
<PAGE>

TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS July 31, 1998

1. ORGANIZATION AND ACCOUNTING POLICIES

The following is a summary of significant accounting policies:

50
<PAGE>

TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS July 31, 1998, continued

F. ORGANIZATIONAL EXPENSES -- Morgan Stanley Dean Witter Advisors Inc.,
formerly Dean Witter InterCapital Inc., an affiliate of Morgan Stanley Dean
Witter Services Company Inc. (the "Manager"), paid the organizational expenses
of the Fund in the amount of approximately $127,000 of which approximately
$122,000 has been reimbursed. Such expenses have been deferred and are being
amortized on the straight-line method over a period not to exceed five years
from the commencement of operations.

2. MANAGEMENT AGREEMENT

51
<PAGE>

TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS July 31, 1998, continued

3. INVESTMENT ADVISORY AGREEMENT

4. PLAN OF DISTRIBUTION

Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Manager. The Fund has adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The Plan
provides that the Fund will pay the Distributor a fee which is accrued daily and
paid monthly at the following annual rates: (i) Class A -- up to 0.25% of the
average daily net assets of Class A; (ii) Class B -- 1.0% of the lesser of: (a)
the average daily aggregate gross sales of the Class B shares since the
inception of the Fund (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net asset value of the Class B
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or waived; or (b) the average daily net assets of
Class B; and (iii) Class C -- up to 1.0% of the average daily net assets of
Class C. In the case of Class A shares, amounts paid under the Plan are paid to
the Distributor for services provided. In the case of Class B and Class C
shares, amounts paid under the Plan are paid to the Distributor for services
provided and the expenses borne by it and others in the distribution of the
shares of these Classes, including the payment of commissions for sales of these
Classes and incentive compensation to, and expenses of, Morgan Stanley Dean
Witter Financial Advisors and others who engage in or support distribution of
the shares or who service shareholder accounts, including overhead and

52
<PAGE>

TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS July 31, 1998, continued

telephone expenses; printing and distribution of prospectuses and reports used
in connection with the offering of these 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 Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and Distributor,
and other selected broker-dealers for their opportunity costs in advancing such
amounts, which compensation would be in the form of a carrying charge on any
unreimbursed expenses.

In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts, including
carrying charges, totaled $4,799,182 at July 31, 1998.

In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended July 31, 1998, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.25% and
1.0%, respectively.

The Distributor has informed the Fund that for the year ended July 31, 1998, it
received contingent deferred sales charges from certain redemptions of the
Fund's Class B shares and Class C shares of $316,290 and $494, respectively and
received $14,513 in front-end sales charges from sales of the Fund's Class A
shares. The respective shareholders pay such charges which are not an expense
of the Fund.

5. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES

The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the year ended July 31, 1998 aggregated
$154,729,887 and $130,352,065, respectively. Included in the aforementioned are
purchases and sales of U.S. Government securities of $13,289,711 and
$13,535,242, respectively.

53
<PAGE>

TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS July 31, 1998, continued

For the year ended July 31, 1998, the Fund incurred brokerage commissions of
$8,215 with Morgan Stanley & Co., Inc., an affiliate of the Manager, for
portfolio transactions executed on behalf of the Fund.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Manager and
Distributor, is the Fund's transfer agent. At July 31, 1998, the Fund had
transfer agent fees and expenses payable of approximately $1,000.

6. SHARES OF BENEFICIAL INTEREST

Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
JULY 31, 1998 JULY 31, 1997*
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ................................................ 77,071 $ 1,323,814 624 $ 10,020
Reinvestment of distributions ....................... 473 7,061 -- --
Redeemed ............................................ (3,432) (58,689) -- --
------ ------------- --- -------------
Net increase -- Class A ............................. 74,112 1,272,186 624 10,020
------ ------------- --- -------------
CLASS B SHARES
Sold ................................................ 3,642,674 60,041,237 3,902,145 54,982,768
Reinvestment of dividends and distributions ......... 553,040 8,234,768 356,843 4,658,943
Redeemed ............................................ (2,117,176) (35,250,499) (1,245,479) (17,266,663)
---------- ------------- ---------- -------------
Net increase -- Class B ............................. 2,078,538 33,025,506 3,013,509 42,375,048
---------- ------------- ---------- -------------
CLASS C SHARES
Sold ................................................ 42,555 699,553 2,311 37,473
Reinvestment of distributions ....................... 1,578 23,504 -- --
Redeemed ............................................ (4,433) (76,116) -- --
---------- ------------- ---------- -------------
Net increase -- Class C ............................. 39,700 646,941 2,311 37,473
---------- ------------- ---------- -------------
CLASS D SHARES
Sold ................................................ -- -- 624 10,020
Reinvestment of distributions ....................... 47 712 -- --
---------- ------------- ---------- -------------
Net increase -- Class D ............................. 47 712 624 10,020
---------- ------------- ---------- -------------
Net increase in Fund ................................ 2,192,397 $ 34,945,345 3,017,068 $ 42,432,561
========== ============= ========== =============
</TABLE>

- ---------------
* For Class A, C and D shares, for the period July 28, 1997 (issue date)
through July 31, 1997.

7. FEDERAL INCOME TAX STATUS

At July 31, 1998, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales and permanent book/tax
differences primarily attributable to a net operating loss. To reflect
reclassifications arising from the permanent differences, accumulated
undistributed net realized gain was charged and accumulated undistributed net
investment income was credited $714,782.

54
<PAGE>

TCW/DW TOTAL RETURN TRUST
FINANCIAL HIGHLIGHTS

Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED JULY 31, NOVEMBER 30, 1994*
--------------------------------------------------- THROUGH
1998++ 1997** 1996 JULY 31, 1995
--------------- -------------- ---------------- ----------------------
<S> <C> <C> <C> <C>
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE :
Net asset value, beginning of period ............ $ 16.59 $ 12.00 $ 11.75 $ 10.00
---------- --------- ---------- -----------
Net investment income (loss) .................... (0.08) 0.04 0.15 0.21
Net realized and unrealized gain ................ 1.31 5.81 0.80 1.68
---------- --------- ---------- -----------
Total from investment operations ................ 1.23 5.85 0.95 1.89
---------- --------- ---------- -----------
Less dividends and distributions from:
Net investment income .......................... -- (0.06) (0.21) (0.14)
Net realized gain .............................. (1.14) (1.20) (0.49) --
---------- ---------- ---------- -----------
Total dividends and distributions ............... (1.14) (1.26) (0.70) (0.14)
---------- ---------- ---------- -----------
Net asset value, end of period .................. $ 16.68 $ 16.59 $ 12.00 $ 11.75
========== ========== ========== ===========
TOTAL INVESTMENT RETURN + ....................... 8.25% 51.66% 8.23% 19.04%(1)
RATIOS TO AVERAGE NET ASSETS
Expenses ........................................ 1.90% 2.05% 1.98%(3) 0.94%(2)(3)
Net investment income (loss) .................... (0.50)% 0.28% 1.30%(3) 3.19%(2)(3)
SUPPLEMENTAL DATA :
Net assets, end of period, in thousands ......... $152,358 $117,041 $48,524 $36,018
Portfolio turnover rate ......................... 93% 198% 261% 91%(1)
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
55
<PAGE>

TCW/DW TOTAL RETURN TRUST
FINANCIAL HIGHLIGHTS, continued

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 28, 1997*
ENDED THROUGH
JULY 31, 1998++ JULY 31, 1997
----------------- ---------------
<S> <C> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE :
Net asset value, beginning of period .............. $ 16.59 $ 16.07
------- --------
Net investment income (loss) ...................... (0.01) 0.01
Net realized and unrealized gain .................. 1.34 0.51
------- --------
Total from investment operations .................. 1.33 0.52
------- --------
Less distributions from net realized gain ......... (1.14) --
------- --------
Net asset value, end of period .................... $ 16.78 $ 16.59
======= ========
TOTAL INVESTMENT RETURN+ .......................... 8.94% 3.24%(1)
RATIOS TO AVERAGE NET ASSETS
Expenses .......................................... 1.31% 1.31%(2)
Net investment income (loss) ...................... (0.07)% 4.08%(2)
SUPPLEMENTAL DATA :
Net assets, end of period, in thousands ........... $1,254 $ 10
Portfolio turnover rate ........................... 93% 198%
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE :
Net asset value, beginning of period .............. $ 16.59 $ 16.07
-------- -----------
Net investment income (loss) ...................... (0.12) 0.01
Net realized and unrealized gain .................. 1.33 0.51
-------- -----------
Total from investment operations .................. 1.21 0.52
-------- -----------
Less distributions from net realized gain ......... (1.14) --
-------- -----------
Net asset value, end of period .................... $ 16.66 $ 16.59
======== ===========
TOTAL INVESTMENT RETURN + ......................... 8.12% 3.24%(1)
RATIOS TO AVERAGE NET ASSETS
Expenses .......................................... 2.06% 2.06%(2)
Net investment income (loss) ...................... (0.70)% 2.75%(2)
SUPPLEMENTAL DATA :
Net assets, end of period, in thousands ........... $ 700 $ 38
Portfolio turnover rate ........................... 93% 198%
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
56
<PAGE>

TCW/DW TOTAL RETURN TRUST
FINANCIAL HIGHLIGHTS, continued

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 28, 1997*
ENDED THROUGH
JULY 31, 1998++ JULY 31, 1997
----------------- ---------------
<S> <C> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE :
Net asset value, beginning of period .............. $ 16.59 $ 16.07
------- --------
Net investment income ............................. 0.06 0.01
Net realized and unrealized gain .................. 1.32 0.51
------- --------
Total from investment operations .................. 1.38 0.52
------- --------
Less distributions from net realized gain ......... (1.14) --
-------- --------
Net asset value, end of period .................... $ 16.83 $ 16.59
======== ========
TOTAL INVESTMENT RETURN + ......................... 9.20% 3.24%(1)
RATIOS TO AVERAGE NET ASSETS
Expenses .......................................... 1.06% 1.06%(2)
Net investment income ............................. 0.34% 4.33%(2)
SUPPLEMENTAL DATA :
Net assets, end of period, in thousands ........... $ 11 $ 10
Portfolio turnover rate ........................... 93% 198%
</TABLE>

(2) Annualized.

SEE NOTES TO FINANCIAL STATEMENTS
57
<PAGE>

TCW/DW TOTAL RETURN TRUST
REPORT OF INDEPENDENT ACCOUNTANTS

TO THE SHAREHOLDERS AND TRUSTEES
OF TCW/DW TOTAL RETURN TRUST

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of TCW/DW Total Return Trust (the
"Fund") at July 31, 1998, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at July 31, 1998 by correspondence with the custodian and brokers,
provide a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
September 11, 1998

- --------------------------------------------------------------------------------
1998 FEDERAL TAX NOTICE (unaudited)

For the year ended July 31, 1998, the Fund paid to its shareholders $0.32
per share from long-term capital gains. Of this $0.32 distribution, $0.29
is taxable as 28% rate gain and $.03 is taxable as 20% rate gain. For
such period, 24.72% of the income paid qualified for the dividends
received deduction available to corporations.
- --------------------------------------------------------------------------------