<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1999
REGISTRATION NOS.: 811-2575
2-53856
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 37 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 /X/
AMENDMENT NO. 27 /X/
------------------------
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
(A MARYLAND CORPORATION)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600
BARRY FINK, ESQ.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)
------------------------------
COPY TO:
STUART M. STRAUSS, ESQ.
MAYER, BROWN & PLATT
1675 BROADWAY
NEW YORK, NEW YORK 10019
--------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after this Post-Effective Amendment becomes effective.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
___ immediately upon filing pursuant to paragraph (b)
_X_ on October 26, 1999 pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)
___ on (date) pursuant to paragraph (a) of rule 485.
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS - OCTOBER 26, 1999
Morgan Stanley Dean Witter
LIQUID ASSET FUND
[COVER PHOTO]
A MONEY MARKET FUND THAT SEEKS TO PROVIDE HIGH CURRENT
INCOME, PRESERVATION OF CAPITAL AND LIQUIDITY
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon
the adequacy of this PROSPECTUS. Any representation to the contrary is a
criminal offense.
<PAGE>
CONTENTS
<TABLE>
<S> <C> <C>
The Fund Investment Objectives................................. 1
Principal Investment Strategies....................... 1
Principal Risks....................................... 1
Past Performance...................................... 3
Fees and Expenses..................................... 4
Fund Management....................................... 5
Shareholder Information Pricing Fund Shares................................... 6
How to Buy Shares..................................... 6
How to Exchange Shares................................ 8
How to Sell Shares.................................... 10
Distributions......................................... 12
Tax Consequences...................................... 13
Financial Highlights ...................................................... 14
Our Family of Funds ...................................................... Inside Back Cover
THIS PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE FUND. PLEASE READ
IT CAREFULLY AND KEEP IT FOR FUTURE REFERENCE.
</TABLE>
<PAGE>
[Sidebar]
MONEY MARKET
A MUTUAL FUND HAVING THE GOAL TO SELECT SECURITIES TO PROVIDE CURRENT INCOME
WHILE SEEKING TO MAINTAIN A STABLE SHARE PRICE OF $1.00.
YIELD
THE FUND'S YIELD REFLECTS THE ACTUAL INCOME THE FUND PAYS TO YOU EXPRESSED AS A
PERCENTAGE OF THE FUND'S SHARE PRICE. BECAUSE THE FUND'S INCOME FROM ITS
PORTFOLIO SECURITIES WILL FLUCTUATE, THE INCOME IT IN TURN DISTRIBUTES TO YOU
AND THE FUND'S YIELD WILL VARY.
[End Sidebar]
THE FUND
[ICON] INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
Morgan Stanley Dean Witter Liquid Asset Fund Inc. is a money market
fund that seeks to provide high current income, preservation of
capital and liquidity.
[ICON] PRINCIPAL INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
The Fund invests in high quality, short-term debt obligations. In
selecting investments, the Fund's "Investment Manager," Morgan
Stanley Dean Witter Advisors Inc., seeks to maintain the Fund's share
price at $1.00. The share price remaining stable at $1.00 means that
the Fund would preserve the principal value of your investment.
The Fund's investments include the following money market securities:
<TABLE>
<S> <C>
- - Commercial paper;
- - Corporate obligations;
- - Debt obligations of U.S.-regulated banks and instruments secured by
those obligations (these investments include certificates of
deposit);
- - Certificates of deposit of savings banks and savings and loan
associations;
- - Debt obligations issued or guaranteed as to principal and interest by
the U.S. government, its agencies or its instrumentalities; and
- - Repurchase agreements, which may be viewed as a type of secured
lending by the Fund.
</TABLE>
[ICON] PRINCIPAL RISKS
- --------------------------------------------------------------------------------
CREDIT AND INTEREST RATE RISKS. Principal risks of investing in the
Fund are associated with its debt obligation investments. All debt
obligations, such as money market 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 debt
security resulting from changes in the general level of interest
rates.
The Investment Manager actively manages the Fund's assets to reduce
the risk of losing any principal investment as a result of credit or
interest rate risks. The Fund's assets
1
<PAGE>
are reviewed to maintain or improve creditworthiness. In addition,
federal regulations require money market funds to invest only in debt
obligations of high quality and short-term maturities.
There is no assurance that the Fund will achieve its investment
objective. Shares of the Fund are not bank deposits and are not
insured or guaranteed by the FDIC or any other government agency.
Although the Fund seeks to preserve the value of your investment at
$1.00 per share, if it is unable to do so, it is possible to lose
money by investing in the Fund.
YEAR 2000. The Fund could be adversely affected if the computer
systems necessary for the efficient operation of the Investment
Manager, the Fund's other service providers and the markets and
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 and
its affiliates are working hard to avoid any problems and to obtain
assurances from their service providers that they are taking similar
steps.
In addition, it is possible that the markets for securities in which
the Fund invests may be detrimentally affected by computer failures
throughout the financial services industry beginning January 1, 2000.
Improperly functioning trading systems may result in settlement
problems and liquidity issues. Corporate and governmental data
processing errors also may result in production problems for
individual companies and overall economic uncertainties. Earnings of
individual issuers will be affected by remediation costs, which may
be substantial and may be reported inconsistently in U.S. and foreign
financial statements. Accordingly, the Fund's investments may be
adversely affected.
2
<PAGE>
[Sidebar]
ANNUAL TOTAL RETURNS
THIS CHART SHOWS HOW THE PERFORMANCE OF THE FUND'S SHARES HAS VARIED FROM YEAR
TO YEAR OVER THE PAST 10 CALENDAR YEARS.
AVERAGE ANNUAL
TOTAL RETURNS
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL RETURNS WITH THOSE OF A COMPARABLE
MEASURE OF MARKET PERFORMANCE OVER TIME.
[End Sidebar]
[ICON] PAST PERFORMANCE
- --------------------------------------------------------------------------------
The bar chart and table below provide some indication of the risks of
investing in the Fund. For the Fund's most recent 7-day annualized
yield, you may call (800) 869-NEWS. The Fund's past performance does
not indicate how the Fund will perform in the future.
ANNUAL TOTAL RETURNS - CALENDAR YEARS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1989 9.12%
`90 7.98%
`91 5.74%
`92 3.37%
`93 2.65%
`94 3.76%
`95 5.61%
`96 5.09%
`97 5.21%
`98 5.17%
</TABLE>
Year-to-date total return as of September 30, 1999 was 3.44%.
During the periods shown in the bar chart, the highest return for a
calendar quarter was 2.34% (quarter ended June 30, 1989) and the
lowest return for a calendar quarter was 0.64% (quarter ended June
30, 1993).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1998)
- -------------------------------------------------------------------------------
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
<S> <C> <C> <C>
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Liquid Asset Fund 5.17% 4.97% 5.35%
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Lipper Money Market Funds Index(1) 5.10% 4.90% 5.32%
- -------------------------------------------------------------------------------
</TABLE>
1 The Lipper Money Market Funds Index is an equally-weighted performance
index of the largest qualifying funds (based on net assets) in the Lipper
Money Market 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 the
index.
3
<PAGE>
[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 AUGUST 31, 1999.
[End Sidebar]
[ICON] FEES AND EXPENSES
- --------------------------------------------------------------------------------
The table below briefly describes the fees and expenses that you may
pay if you buy and hold shares of the Fund. The Fund is a no-load
fund. The Fund does not impose any sales charges and does not impose
account or exchange fees.
<TABLE>
<S> <C>
ANNUAL FUND OPERATING EXPENSES
- -----------------------------------------------------------------------
Management Fee 0.27%
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Distribution and service (12b-1) fees 0.10%
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Other expenses 0.22%
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Total annual Fund operating expenses 0.59%
- -----------------------------------------------------------------------
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund, your
investment has a 5% return each year, and the Fund's operating
expenses remain the same. Although your actual costs may be higher or
lower, the table below shows your costs at the end of each period
based on these assumptions.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
- -----------------------------------------
$60 $189 $329 $738
- -----------------------------------------
</TABLE>
4
<PAGE>
[Sidebar]
MORGAN STANLEY DEAN WITTER ADVISORS INC.
THE INVESTMENT MANAGER IS WIDELY RECOGNIZED AS A LEADER IN THE MUTUAL FUND
INDUSTRY AND TOGETHER WITH MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC., ITS
WHOLLY-OWNED SUBSIDIARY, HAS MORE THAN $134.7 BILLION IN ASSETS UNDER MANAGEMENT
OR ADMINISTRATION AS OF SEPTEMBER 30, 1999.
[End Sidebar]
[ICON] FUND MANAGEMENT
- --------------------------------------------------------------------------------
The Fund has retained the Investment Manager -- Morgan Stanley Dean
Witter Advisors Inc. -- to provide administrative services, manage
its business affairs and invest its assets, including the placing of
orders for the purchase and sale of portfolio securities. The
Investment Manager is a wholly-owned subsidiary of Morgan Stanley
Dean Witter & Co., a preeminent global financial services firm that
maintains leading market positions in each of its three primary
businesses: securities, asset management and credit services. Its
main business office is located at Two World Trade Center, New York,
NY 10048.
The Fund pays the Investment Manager a monthly management fee as full
compensation for the services and facilities furnished to the Fund,
and for Fund expenses assumed by the Investment Manager. The fee is
based on the Fund's average daily net assets. For the fiscal year
ended August 31, 1999 the Fund accrued total compensation to the
Investment Manager amounting to 0.27% of the Fund's average daily net
assets.
5
<PAGE>
[Sidebar]
CONTACTING A FINANCIAL ADVISOR
IF YOU ARE NEW TO THE MORGAN STANLEY DEAN WITTER FAMILY OF FUNDS AND WOULD LIKE
TO CONTACT A FINANCIAL ADVISOR, CALL (800) THE-DEAN FOR THE TELEPHONE NUMBER OF
THE MORGAN STANLEY DEAN WITTER OFFICE NEAREST YOU. YOU MAY ALSO ACCESS OUR
OFFICE LOCATOR ON OUR INTERNET SITE AT:
www.msdw.com/individual/funds
[End Sidebar]
SHAREHOLDER INFORMATION
[ICON] PRICING FUND SHARES
- --------------------------------------------------------------------------------
The price of Fund shares, called "net asset value," is based on the
amortized cost of the Fund's portfolio securities. The amortized cost
valuation method involves valuing a debt obligation in reference to
its cost, rather than market forces.
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.
[ICON] HOW TO BUY SHARES
- --------------------------------------------------------------------------------
You may open a new account to buy Fund shares or buy additional Fund
shares for an existing account in several ways. When you buy Fund
shares, the shares are purchased at the next share price calculated
after we receive your purchase order accompanied by federal or other
immediately available funds. You begin earning dividends the business
day after the shares are purchased. We reserve the right to reject
any order for the purchase of Fund shares.
<TABLE>
<CAPTION>
MINIMUM INVESTMENT AMOUNTS
- ------------------------------------------------------------------------------------------
MINIMUM INVESTMENT
---------------------
INVESTMENT OPTIONS INITIAL ADDITIONAL
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------
Regular Accounts: $5,000 $100
- ------------------------------------------------------------------------------------------
Individual Retirement
Accounts: Regular IRAs $1,000 $100
Education IRAs $500 $100
- ------------------------------------------------------------------------------------------
EASYINVEST-SM- (Automatically from your checking
or savings account) not $100
available
- ------------------------------------------------------------------------------------------
</TABLE>
There is no minimum investment amount if you purchase Fund shares
through: (1) the Investment Manager's mutual fund asset allocation
plan, (2) a program, approved by the Fund's distributor, in which you
pay an asset-based fee for advisory, administrative and/ or brokerage
services, or (3) employer-sponsored employee benefit plan accounts.
6
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT
OPTIONS PROCEDURES
<S> <C>
- --------------------------------------------------------------------------------
Contact Your NEW ACCOUNTS AND SUBSEQUENT INVESTMENTS
Financial Advisor You may buy Fund shares by contacting your Morgan Stanley
Dean Witter Financial Advisor or other authorized financial
ICON representative. Your Financial Advisor will assist you,
step-by-step, with the procedures to invest in the Fund.
- --------------------------------------------------------------------------------
By Mail NEW ACCOUNTS
ICON To open a new account to buy Fund shares:
- Complete and sign the attached Application.
- Make out a check for the investment amount to: Morgan
Stanley Dean Witter Liquid Asset Fund Inc.
- Mail the Application and check to Morgan Stanley Dean
Witter Trust FSB at P.O. Box 1040, Jersey City, NJ 07303.
------------------------------------------------------------
SUBSEQUENT INVESTMENTS
To buy additional shares for an existing Fund account:
- Write a "letter of instruction" to the Fund specifying the
name(s) on the account, the account number and the social
security or tax identification number, and the additional
investment amount. The letter must be signed by the
account owner(s).
- Make out a check for the investment amount to: Morgan
Stanley Dean Witter Liquid Asset Fund Inc.
- Mail the letter and check to Morgan Stanley Dean Witter
Trust FSB at the same address as for new accounts.
- --------------------------------------------------------------------------------
By wire NEW ACCOUNTS
ICON To open a new account to buy Fund shares:
- Mail the attached Application, completed and signed, to
Morgan Stanley Dean Witter Trust FSB at P.O. Box 1040,
Jersey City, NJ 07303.
- Before sending instructions by wire, call us at (800)
869-NEWS advising us of your purchase and to confirm we have
received your Application.
- Wire the instructions specifying the name of the Fund and
your account number, along with the additional investment
amount, to The Bank of New York, for credit to the account
of "Morgan Stanley Dean Witter Trust FSB, Harborside
Financial Center, Plaza Two, Jersey City, New Jersey
07303, Account No. 8900188413."
(When you buy Fund shares, wire purchase instructions
received by Morgan Stanley Dean Witter Trust FSB prior to
12:00 noon Eastern time are normally effective that day and
wire purchase instructions received after 12:00 noon are
normally effective the next business day.)
------------------------------------------------------------
SUBSEQUENT INVESTMENTS
To buy additional shares for an existing Fund account:
- Before sending instructions by wire, call us at (800)
869-NEWS advising us of your purchase.
- Wire the instructions specifying the name of the Fund and
your account number, along with the investment amount, to
The Bank of New York, for credit to the account of Morgan
Stanley Dean Witter Trust FSB in the same manner as
opening an account.
(Also, when you buy additional Fund shares, wire purchase
instructions received by Morgan Stanley Dean Witter Trust
FSB prior to 12:00 noon Eastern time are normally effective
that day and wire purchase instructions received after 12:00
noon are normally effective the next business day.)
- --------------------------------------------------------------------------------
EASYINVEST -SM- NEW ACCOUNTS
(Automatically This program is not available to open a new Fund account or
from your a new account of another Money Market Fund.
checking or ------------------------------------------------------------
savings SUBSEQUENT INVESTMENTS
account) EASYINVEST-SM- A purchase plan that allows you to transfer
money automatically from your checking or savings account on
a semi-monthly, monthly or quarterly basis. Contact your
Morgan Stanley Dean Witter Financial Advisor for further
information about this service.
ICON
- --------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
ADDITIONAL PURCHASE INFORMATION. If you are a customer of Dean Witter
Reynolds or another authorized dealer of Fund shares, you may upon
request: (a) have the proceeds from the sale of listed securities
invested in Fund shares the day after you receive the proceeds; and
(b) pay for the purchase of certain listed securities by automatic
sale of Fund shares that you own. In addition, if you are a customer
of Dean Witter Reynolds or another authorized dealer of Fund shares,
you may have cash balances in your securities account (which do not
exceed $5,000) automatically invested in shares of the Fund on a
weekly basis.
PLAN OF DISTRIBUTION. The Fund has adopted a Plan of Distribution in
accordance with Rule 12b-1 under the Investment Company Act of 1940.
The Plan allows the Fund to pay distribution fees for the sale and
distribution of these shares. It also allows the Fund to pay for
services to shareholders. 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 and may cost you more than paying other
types of sales charges.
[ICON] HOW TO EXCHANGE SHARES
- --------------------------------------------------------------------------------
PERMISSIBLE FUND EXCHANGES. You may only exchange shares of the Fund
for shares of other continuously offered Morgan Stanley Dean Witter
Funds if the Fund shares were acquired in an exchange of shares
initially purchased in a Multi-Class Fund or an FSC Fund (subject to
a front-end sales charge). In that case, the shares may be
subsequently re-exchanged for shares of the same Class of any
Multi-Class Fund or FSC Fund or for shares of another Money Market
Fund, a No-Load Fund, North American Government Income Trust or
Short-Term U.S. Treasury Trust. Of course, if an exchange is not
permitted, you may sell shares of the Fund and buy another Fund's
shares with the proceeds.
See the inside back cover of this PROSPECTUS for each Morgan Stanley
Dean Witter Fund's designation as a Multi-Class Fund, FSC Fund,
No-Load Fund or Money Market Fund. If a Morgan Stanley Dean Witter
Fund is not listed, consult the inside back cover of that Fund's
PROSPECTUS for its designation. For purposes of exchanges, shares of
FSC Funds are treated as Class A shares of a Multi-Class Fund.
The current PROSPECTUS for each Fund describes its investment
objective(s), policies and investment minimums, and should be read
before investing. Since exchanges are available only into
continuously offered Morgan Stanley Dean Witter Funds, exchanges are
not available into any new Morgan Stanley Dean Witter Fund during its
initial offering period, or when shares of a particular Morgan
Stanley Dean Witter Fund are not being offered for purchase.
EXCHANGE PROCEDURES. You can process an exchange by contacting your
Morgan Stanley Dean Witter Financial Advisor or other authorized
financial representative. Otherwise, you must forward an exchange
privilege authorization form to the Fund's
8
<PAGE>
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.
An exchange to any Morgan Stanley Dean Witter Fund (except a Money
Market Fund) is made on the basis of the next calculated net asset
values of the Funds involved after the exchange instructions are
accepted. When exchanging into a Money Market Fund, the Fund's shares
are sold at their next calculated net asset value and the Money
Market Fund's shares are purchased at their net asset value on the
following business day.
The Fund may terminate or revise the exchange privilege upon required
notice. The check writing privilege is not available for Money Market
Fund shares you acquire in an exchange.
TELEPHONE EXCHANGES. For your protection when calling Morgan Stanley
Dean Witter Trust FSB, we will employ reasonable procedures to
confirm that exchange instructions communicated over the telephone
are genuine. These procedures may include requiring various forms of
personal identification such as name, mailing address, social
security or other tax identification number. Telephone instructions
also may be recorded.
Telephone instructions will be accepted if received by the Fund's
transfer agent between 9:00 a.m. and 4:00 p.m. Eastern time on any
day the New York Stock Exchange is open for business. During periods
of drastic economic or market changes, it is possible that the
telephone exchange procedures may be difficult to implement, although
this has not been the case with the Fund in the past.
MARGIN ACCOUNTS. If you have pledged your Fund shares in a margin
account, contact your Morgan Stanley Dean Witter Financial Advisor or
other authorized financial representative regarding restrictions on
the exchange of such shares.
EXCHANGING SHARES OF ANOTHER FUND SUBJECT TO A CONTINGENT DEFERRED
SALES CHARGE ("CDSC"). There are special considerations when you
exchange shares subject to a CDSC of another Morgan Stanley Dean
Witter Fund for shares of the Fund. 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
the Fund WILL NOT BE COUNTED. Thus, in effect the "holding period"
for purposes of calculating the CDSC is frozen upon exchanging into
the Fund. Nevertheless, if shares subject to a CDSC are exchanged for
shares of the Fund, 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 the Fund up to the amount of any applicable
CDSC. See the PROSPECTUS of the Fund that charges the CDSC for more
details.
9
<PAGE>
FREQUENT EXCHANGES. A pattern of frequent exchanges may result in the
Fund limiting or prohibiting, at its discretion, additional purchases
and/or exchanges. The Fund will notify you in advance of limiting
your exchange privileges.
For further information regarding exchange privileges, you should
contact your Morgan Stanley Dean Witter Financial Advisor or call
(800) 869-NEWS.
[ICON] HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You can sell some or all of your Fund shares at any time. Your shares
will be sold at the next share price calculated after we receive your
order to sell as described below.
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
<S> <C>
- --------------------------------------------------------------------------------
Contact your To sell your shares, simply call your Morgan Stanley Dean
Financial Advisor Witter Financial Advisor or other authorized financial
ICON representative.
------------------------------------------------------------
Payment will be sent to the address to which the account is
registered or deposited in your brokerage account.
- --------------------------------------------------------------------------------
Check-writing You may order a supply of blank checks by requesting them on
Option the investment application or by contacting your Morgan
ICON Stanley Dean Witter Financial Advisor.
------------------------------------------------------------
Checks may be written in any amount not less than $500. You
must sign checks exactly as their shares are registered. If
the account is a joint account, the check may contain one
signature unless the joint owners have specified on an
investment application that all owners are required to sign
checks.
------------------------------------------------------------
Payment of check proceeds normally will be made on the next
business day after we receive your check in proper form.
Shares purchased by check (including a certified or bank
cashier's check) are not normally available to cover
redemption checks until fifteen days after Morgan Stanley
Dean Witter Trust FSB receives the check used for
investment. A check will not be honored in an amount
exceeding the value of the account at the time the check is
presented for payment.
- --------------------------------------------------------------------------------
Systematic If your investment in all of the Morgan Stanley Dean Witter
Withdrawal Plan Family of Funds has a total market value of at least
ICON $10,000, you may elect to withdraw amounts of $25 or more,
or in any whole percentage of a Fund's balance (provided the
amount is at least $25), on a monthly, quarterly,
semi-annual or annual basis, from any Fund with a balance of
at least $1,000. Each time you add a Fund to the plan, you
must meet the plan requirements.
------------------------------------------------------------
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.
------------------------------------------------------------
When you sell Fund shares through the Systematic Withdrawal
Plan, the shares may be subject to a contingent deferred
sales charge ("CDSC") if they were obtained in exchange for
shares subject to a CDSC of another Morgan Stanley Dean
Witter Fund. The CDSC, however, will be waived in an amount
up to 12% annually of the Fund's value, although Fund 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.
See the PROSPECTUS of the Fund that charges the CDSC for
more details.
- --------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
OPTIONS PROCEDURES
<S> <C>
- --------------------------------------------------------------------------------
By Letter You may also sell your shares by writing a "letter of
ICON instruction" that includes:
- your account number;
- the dollar amount or the number of shares you wish to
sell; and
- the signature of each owner as it appears on the account.
------------------------------------------------------------
If you are requesting payment to anyone other than the
registered owner(s) or that payment be sent to any address
other than the address of the registered owner(s) or
pre-designated bank account, you will need a signature
guarantee. You can obtain a signature guarantee from an
eligible guarantor acceptable to Morgan Stanley Dean Witter
Trust FSB. (You should contact Morgan Stanley Dean Witter
Trust FSB at (800)869-NEWS for a determination as to whether
a particular institution is an eligible guarantor.) A notary
public CANNOT provide a signature guarantee. Additional
documentation may be required for shares held by a
corporation, partnership, trustee or executor.
------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at
P.O. Box 983, Jersey City, NJ 07303.
------------------------------------------------------------
A check will be mailed to the name(s) and address in which
the account is registered, or otherwise according to your
instructions.
- --------------------------------------------------------------------------------
By Telephone or You may also sell your shares by calling Morgan Stanley Dean
Wire Witter Trust FSB at (800) 869-NEWS or by sending wire
ICON instructions to Morgan Stanley Dean Witter Trust FSB at
ICON Telex No. 125076. A check will be mailed to the name(s) and
address in which the account is registered or, for amounts
of $1,000 or more, you may request a wire transfer to the
bank account designated in the application.
- --------------------------------------------------------------------------------
</TABLE>
PAYMENT FOR SOLD SHARES. After we receive your complete instructions
to sell as described above, a check will be mailed to you within
seven days, although we will attempt to make payment within one
business day. Payment may also be sent to your brokerage account.
Payment may be postponed or the right to sell your shares suspended,
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).
INVOLUNTARY SALES. The Fund reserves the right, on sixty days'
notice, to sell the shares of any shareholder whose shares, due to
sales by the shareholder, have a value below $1,000. 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.
MONEY MARKET FUND AUTOMATIC SALE PROCEDURES. If you maintain a
brokerage account with Dean Witter Reynolds or another authorized
dealer of Fund shares, you may elect to have your Fund shares
automatically sold from your account to satisfy amounts you owe as a
result of purchasing securities or other transactions in your
brokerage account.
11
<PAGE>
If you elect to participate by notifying Dean Witter Reynolds or
another authorized dealer of Fund shares, your brokerage account will
be scanned each business day prior to the close of business (4:00
p.m. Eastern time). After any cash balances in the account are
applied, a sufficient number of Fund shares may be sold to satisfy
any amounts you are obligated to pay to Dean Witter Reynolds or
another authorized dealer of fund shares. Sales will be effected on
the business day before the date you are obligated to make payment,
and Dean Witter Reynolds or another authorized dealer of Fund shares
will receive the sale proceeds on the following day.
EASYINVEST -SM- -- AUTOMATIC REDEMPTION. You may invest in shares of
certain other Morgan Stanley Dean Witter Funds by subscribing to
EASYINVEST -SM-, an automatic purchase plan that provides for the
automatic investment of any amount from $100 to $5,000 in shares of
the specified fund. Under EASYINVEST -SM-, you may direct that a
sufficient number of shares of the Fund be automatically sold and the
proceeds transferred to Morgan Stanley Dean Witter Trust FSB, on a
semi-monthly, monthly or quarterly basis, for investment in shares of
the specified fund. Sales of your Fund shares will be made on the
business day preceding the investment date and Morgan Stanley Dean
Witter Trust FSB will receive the proceeds for investment on the day
following the sale date.
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
[Sidebar] the sale of such shares.
TARGETED DIVIDENDS-SM-
YOU MAY SELECT TO HAVE YOUR FUND DISTRIBUTIONS AUTOMATICALLY INVESTED IN ANOTHER
MORGAN STANLEY DEAN WITTER FUND THAT YOU OWN. CONTACT YOUR MORGAN STANLEY DEAN
WITTER FINANCIAL ADVISOR FOR FURTHER INFORMATION ABOUT THIS SERVICE.
[End Sidebar]
[ICON] DISTRIBUTIONS
- --------------------------------------------------------------------------------
The Fund passes substantially all of its earnings along to its
investors as "distributions." The Fund earns interest from
fixed-income investments. These amounts are passed along to Fund
shareholders as "income dividend distributions." The Fund may realize
capital gains whenever it sells securities for a higher price than it
paid for them. These amounts may be passed along as "capital gain
distributions;" the Investment Manager does not anticipate that there
will be significant capital gain distributions.
The Fund declares income dividends payable on each day the New York
Stock Exchange is open for business. Capital gains, if any, are
distributed periodically.
Distributions are reinvested automatically in additional shares of
the Fund (rounded to the last 1/100 of a share) and automatically
credited to your account unless you request in writing that
distributions be paid in cash. If you elect the cash option, the Fund
will reinvest the additional shares and credit your account during
the month, then redeem the credited amount no later than the last
business day of the month, and mail a check to you no later than
seven business days after the end of the month. No interest will
12
<PAGE>
accrue on uncashed checks. If you wish to change how your
distributions are paid, your request should be received by the Fund's
transfer agent, Morgan Stanley Dean Witter Trust FSB, at least five
business days prior to the record date of the distributions.
[ICON] TAX CONSEQUENCES
- --------------------------------------------------------------------------------
As with any investment, you should consider how your Fund investment
will be taxed. The tax information in this PROSPECTUS is provided as
general information. You should consult your own tax professional
about the tax consequences of an investment in the Fund.
Unless your investment in the Fund is through a tax-deferred
retirement account, such as a 401(k) plan or IRA, you need to be
aware of the possible tax consequences when the Fund makes
distributions.
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.
When you open your Fund account, you should provide your social
security or tax identification number on your investment application.
By providing this information, you will avoid being subject to a
federal backup withholding tax of 31% on taxable distributions and
sale proceeds. Any withheld amount would be sent to the IRS as an
advance tax payment.
13
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 fiscal years of the Fund. Certain
information reflects financial results for a single Fund share throughout each
year. The total returns in the table represent the rate an investor would have
earned or lost on an investment in the Fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Fund's financial statements, is
included in this prospectus.
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
- ----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------
Net investment income from operations 0.046 0.052 0.050 0.050 0.053
- ----------------------------------------------------------------------------------------------------
Less dividends from net investment income (0.046) (0.052) (0.050) (0.050) (0.053)
- ----------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------
TOTAL RETURN 4.74% 5.29% 5.13% 5.15% 5.41%
- ----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------------
Expenses 0.59% 0.61% 0.62% 0.63% 0.65%
- ----------------------------------------------------------------------------------------------------
Net investment income 4.61% 5.11% 5.01% 5.02% 5.28%
- ----------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------
Net assets, end of period, in millions $17,875 $15,321 $13,166 $11,389 $10,359
- ----------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1999
<TABLE>
<CAPTION>
ANNUALIZED
PRINCIPAL YIELD ON
AMOUNT IN DATE OF MATURITY
THOUSANDS PURCHASE DATE VALUE
- --------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER (69.4%)
BANKING (9.4%)
$ 100,000 Bank of America Corp.......... 5.02 % 10/01/99 $ 99,588,333
100,000 Bank One Corp................. 5.29 12/28/99 98,298,834
50,000 Chase Manhattan Corp.......... 5.05 10/04/99 49,772,667
220,000 Citicorp...................... 5.34 - 5.84 10/08/99 - 01/27/00 216,585,333
50,000 Mellon Financial Co........... 5.13 09/30/99 49,796,597
820,000 Morgan (J.P.) & Co. Inc....... 5.12 - 5.43 09/21/99-11/26/99 811,844,750
50,000 Wachovia Corp................. 5.55 03/01/00 48,647,639
305,000 Wells Fargo & Co.............. 5.18-5.87 09/23/99-02/07/00 299,558,097
-------------------
1,674,092,250
-------------------
COMPUTER HARDWARE (0.6%)
50,000 Hewlett-Packard Co............ 5.27 09/28/99 49,803,125
65,000 International Business
Machines Corp............... 4.89-5.85 09/13/99-01/20/00 64,170,625
-------------------
113,973,750
-------------------
DIVERSIFIED FINANCIAL SERVICES (7.1%)
180,000 Associates Corp. of North
America..................... 4.93-4.95 09/07/99-09/22/99 179,549,575
225,000 Associates First Capital
Corp........................ 5.20-5.35 10/05/99-10/25/99 223,714,746
869,000 General Electric Capital
Corp........................ 4.87-5.85 09/29/99-03/02/00 855,894,381
-------------------
1,259,158,702
-------------------
FINANCE - AUTOMOTIVE (7.5%)
480,000 DaimlerChrysler N.A. Holding
Corp........................ 5.01-5.38 09/09/99-11/18/99 477,214,408
871,000 Ford Motor Credit Co.......... 5.12-5.81 09/21/99-01/11/00 860,661,549
-------------------
1,337,875,957
-------------------
FINANCE - CONSUMER (2.8%)
465,000 New Center Asset Trust........ 4.88-5.85 09/03/99-01/28/00 462,042,935
35,000 Norwest Financial Inc......... 5.26 10/21/99 34,747,222
-------------------
496,790,157
-------------------
FINANCE - CORPORATE (4.8%)
120,000 CIT Group, Inc................ 5.39 12/15/99 118,145,000
750,000 Ciesco, L.P................... 5.09-5.32 09/02/99-11/05/99 744,575,842
-------------------
862,720,842
-------------------
INSURANCE (0.8%)
140,000 Prudential Funding Corp....... 5.15-5.33 09/16/99-10/07/99 139,543,750
-------------------
INTERNATIONAL BANKS (31.0%)
100,000 ABN-AMRO North America Finance
Inc......................... 5.01 10/18/99 99,358,972
300,000 ANZ (DE) Inc.................. 5.13-5.29 09/27/99-11/03/99 298,352,000
850,000 Abbey National North America
Corp........................ 5.10-5.42 09/14/99-12/14/99 841,649,195
150,000 Barclays U.S. Funding Corp.... 5.18 09/14/99 149,722,125
250,000 CBA (DE) Finance Inc.......... 5.25-5.42 10/05/99-11/30/99 247,248,933
630,000 Canadian Imperial Holdings,
Inc......................... 4.97-5.34 09/01/99-11/12/99 627,372,325
775,000 Deutsche Bank Financial
Inc......................... 4.89-5.37 09/08/99-12/30/99 765,550,334
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1999, CONTINUED
<TABLE>
<CAPTION>
ANNUALIZED
PRINCIPAL YIELD ON
AMOUNT IN DATE OF MATURITY
THOUSANDS PURCHASE DATE VALUE
- --------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 595,000 Dresdner U.S. Finance Inc..... 5.04 - 5.16% 09/01/99-09/20/99 $ 594,134,547
160,000 Internationale Nederlanden
(U.S.) Funding Corp......... 5.20-5.22 10/19/99-10/25/99 158,817,100
50,000 KFW International Finance
Inc......................... 5.36 11/19/99 49,419,569
195,000 Societe Generale N.A., Inc.... 5.39-5.40 11/24/99-12/03/99 192,460,439
660,000 Toronto-Dominion Holdings
(USA) Inc................... 4.98-5.43 09/07/99-12/22/99 654,014,967
880,000 UBS Finance (DE) LLC.......... 5.05-5.44 09/09/99-12/27/99 868,728,875
-------------------
5,546,829,381
-------------------
INVESTMENT BANKERS/BROKERS/SERVICES (4.7%)
850,000 Goldman Sachs Group Inc....... 5.21-5.43 10/14/99-11/24/99 843,517,836
-------------------
OFFICE EQUIPMENT & SUPPLIES (0.3%)
55,000 IBM Credit Corp............... 5.31 11/19/99 54,368,768
-------------------
RETAIL (0.4%)
75,000 Sears Roebuck Acceptance
Corp........................ 5.25-5.36 10/06/99-10/07/99 74,607,111
-------------------
TOTAL COMMERCIAL PAPER
(AMORTIZED COST $12,403,478,504)....................................... 12,403,478,504
-------------------
U.S. GOVERNMENT AGENCIES (17.9%)
100,000 Federal Farm Credit Bank...... 4.88-4.89 12/23/99-02/11/00 98,215,236
640,000 Federal Home Loan Banks....... 4.87-5.06 01/19/00-04/07/00 626,306,689
1,305,000 Federal Home Loan Mortgage
Corp........................ 4.82-5.54 09/03/99-06/30/00 1,287,463,597
1,210,000 Federal National Mortgage
Assoc....................... 4.69-5.09 09/08/99-04/03/00 1,190,561,056
-------------------
TOTAL U.S. GOVERNMENT AGENCIES
(AMORTIZED COST $3,202,546,578)........................................ 3,202,546,578
-------------------
SHORT-TERM BANK NOTES (9.2%)
650,000 Bank of America N.A........... 5.14-5.38 09/20/99-11/23/99 650,000,000
745,000 FCC National Bank............. 4.90-5.35 09/02/99-11/29/99 745,000,000
250,000 First Union National Bank..... 4.90 09/24/99-09/29/99 250,000,000
-------------------
TOTAL SHORT-TERM BANK NOTES
(AMORTIZED COST $1,645,000,000)........................................ 1,645,000,000
-------------------
CERTIFICATES OF DEPOSIT (4.5%)
365,000 Chase Manhattan Bank (USA).... 5.29-5.85 11/03/99-01/20/00 365,000,000
150,000 First Union National Bank..... 5.83 01/10/00 150,000,000
150,000 Harris Trust & Savings Bank... 5.28-5.37 11/03/99-11/18/99 150,000,000
150,000 U.S. Bank, N.A................ 5.02-5.28 10/22/99-11/05/99 150,000,000
-------------------
TOTAL CERTIFICATES OF DEPOSIT
(AMORTIZED COST $815,000,000).......................................... 815,000,000
-------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (0.1%)
$ 13,541 The Bank of New York 5.50% due 9/01/99 (dated 08/31/99; proceeds $13,542,794) (a)
(IDENTIFIED COST $13,540,725).................................................... $ 13,540,725
---------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(AMORTIZED COST $18,079,565,807) (b)................................................... 101.1 % 18,079,565,807
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS......................................... (1.1) (204,112,504)
------ ----------------
NET ASSETS............................................................................. 100.0 % $ 17,875,453,303
------ ----------------
------ ----------------
</TABLE>
- ---------------------
(a) Collateralized by $2,139,778 U.S. Treasury Bond 8.875% due 08/15/17 valued
at $2,679,384, $8,421,000 U.S. Treasury Bond 7.875% due 02/15/21 valued at
$9,780,678 and $1,338,924 U.S. Treasury Note 6.25% due 08/31/02 valued at
$1,351,477.
(b) Cost is the same for federal income tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(amortized cost $18,079,565,807)......................................................... $18,079,565,807
Cash....................................................................................... 90,001
Receivable for:
Interest............................................................................... 19,692,621
Capital stock sold..................................................................... 448,036
Prepaid expenses and other assets.......................................................... 314,234
---------------
TOTAL ASSETS.......................................................................... 18,100,110,699
---------------
LIABILITIES:
Payable for:
Capital stock repurchased.............................................................. 217,882,204
Investment management fee.............................................................. 4,173,843
Plan of distribution fee............................................................... 1,567,667
Accrued expenses and other payables........................................................ 1,033,682
---------------
TOTAL LIABILITIES..................................................................... 224,657,396
---------------
NET ASSETS............................................................................ $17,875,453,303
---------------
---------------
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................ $17,874,766,713
Accumulated undistributed net investment income............................................ 686,590
---------------
NET ASSETS............................................................................ $17,875,453,303
---------------
---------------
NET ASSET VALUE PER SHARE,
17,875,437,907 SHARES OUTSTANDING (25,000,000,000 SHARES AUTHORIZED OF $.01 PAR VALUE)... $1.00
---------------
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1999
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME............................................................................... $884,749,278
------------
EXPENSES
Investment management fee..................................................................... 45,473,527
Transfer agent fees and expenses.............................................................. 34,941,528
Plan of distribution fee...................................................................... 16,590,124
Registration fees............................................................................. 1,905,249
Shareholder reports and notices............................................................... 783,498
Custodian fees................................................................................ 396,574
Professional fees............................................................................. 83,195
Directors' fees and expenses.................................................................. 18,521
Other......................................................................................... 207,036
------------
TOTAL EXPENSES........................................................................... 100,399,252
------------
NET INVESTMENT INCOME.................................................................... 784,350,026
NET REALIZED GAIN........................................................................ 64,606
------------
NET INCREASE.................................................................................. $784,414,632
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
AUGUST 31, 1999 AUGUST 31, 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income..................................................... $ 784,350,026 $ 717,140,194
Net realized gain......................................................... 64,606 22,513
--------------- ---------------
NET INCREASE......................................................... 784,414,632 717,162,707
--------------- ---------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income..................................................... (784,356,132) (717,132,845)
Net realized gain......................................................... (64,606) (22,513)
--------------- ---------------
TOTAL DIVIDENDS AND DISTRIBUTIONS.................................... (784,420,738) (717,155,358)
--------------- ---------------
Net increase from capital stock transactions.............................. 2,554,105,804 2,155,436,091
--------------- ---------------
NET INCREASE......................................................... 2,554,099,698 2,155,443,440
NET ASSETS:
Beginning of period....................................................... 15,321,353,605 13,165,910,165
--------------- ---------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $686,590 AND
$692,696, RESPECTIVELY)............................................... $17,875,453,303 $15,321,353,605
--------------- ---------------
--------------- ---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1999
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Liquid Asset Fund Inc. (the "Fund") is registered
under the Investment Company Act of 1940, as amended (the "Act"), as a
diversified, open-end management investment company. The Fund's investment
objectives are high current income, preservation of capital and liquidity. The
Fund was incorporated in Maryland on September 3, 1974 and commenced operations
on September 22, 1975.
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 -- Portfolio securities are valued at amortized
cost, which approximates market value.
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 and premiums are amortized over the life of the
respective securities. Interest income is accrued daily.
C. 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.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions as of the close of each business day.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with Morgan Stanley Dean Witter
Advisors Inc. (the "Investment Manager"), the Fund pays the Investment Manager a
management fee, accrued daily and payable monthly, by applying the following
annual rates to the net assets of the Fund determined as of the close of each
business day: 0.50% to the portion of the daily net assets not exceeding $500
million; 0.425% to the portion of the daily net assets exceeding $500 million
but not exceeding $750 million; 0.375% to the portion of the daily net assets
exceeding $750 million but not exceeding $1 billion; 0.35% to the portion of the
daily net assets exceeding $1 billion but not exceeding $1.35 billion; 0.325% to
the portion of the daily net assets exceeding $1.35 billion but not exceeding
$1.75 billion; 0.30% to the portion of the daily net assets exceeding $1.75
billion but not
21
<PAGE>
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1999, CONTINUED
exceeding $2.15 billion; 0.275% to the portion of the daily net assets exceeding
$2.15 billion but not exceeding $2.5 billion; 0.25% to the portion of the daily
net assets exceeding $2.5 billion but not exceeding $15 billion; 0.249% to the
portion of the daily net assets exceeding $15 billion but not exceeding $17.5
billion; and 0.248% to the portion of the daily net assets exceeding $17.5
billion.
Under the terms of the Agreement, the Investment Manager maintains certain of
the Fund's books and records and furnishes, at its own expense, office space,
facilities, equipment, clerical, bookkeeping and certain legal services and pays
the salaries of all personnel, including officers of the Fund who are employees
of the Investment Manager. The Investment Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION
Morgan Stanley Dean Witter Distributors Inc. (the "Distributor"), an affiliate
of the Investment Manager, is the distributor of the Fund's shares and, in
accordance with a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under
the Act, finances certain expenses in connection therewith.
Under the Plan, the Distributor bears the expense of all promotional and
distribution related activities on behalf of the Fund, except for expenses that
the Directors determine to reimburse, as described below. The following
activities and services may be provided by the Distributor, Dean Witter Reynolds
Inc. ("DWR"), its affiliates and other selected broker-dealers under the Plan:
(1) compensation to, and expenses of, sales representatives and other employees
of DWR and other selected broker-dealers including overhead and telephone
expenses; (2) sales incentives and bonuses to sales representatives and to
marketing personnel in connection with promoting sales of the Fund's shares; (3)
expenses incurred in connection with promoting sales of the Fund's shares; (4)
preparation, printing and distributing sales literature; and (5) providing
advertising and promotional activities, including direct mail solicitation and
television, radio, newspaper, magazine and other media advertisements.
The Fund is authorized to reimburse the Distributor for specific expenses the
Distributor incurs or plans to incur in promoting the distribution of the Fund's
shares. The amount of each monthly reimbursement payment may in no event exceed
an amount equal to a payment at the annual rate of 0.15% of the Fund's average
daily net assets during the month. Expenses incurred by the Distributor pursuant
to the Plan in any fiscal year will not be reimbursed by the Fund through
payments accrued in any subsequent fiscal year. For the year ended August 31,
1999, the distribution fee was accrued at the annual rate of 0.10%.
22
<PAGE>
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1999, CONTINUED
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales/maturities of portfolio securities
for the year ended August 31, 1999 aggregated $65,140,975,501 and
$63,305,600,572, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At August 31, 1999, the Fund had
transfer agent fees and expenses payable of approximately $67,000.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Directors of the Fund who will have served as independent
Directors for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended August 31, 1999 included
in Directors' fees and expenses in the Statement of Operations amounted to
$6,018. At August 31, 1999, the Fund had an accrued pension liability of $52,142
which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. CAPITAL STOCK
Transactions in capital stock, at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
AUGUST 31, 1999 AUGUST 31, 1998
----------------- -----------------
<S> <C> <C>
Shares sold...................................................... 50,418,894,458 43,113,580,761
Shares issued in reinvestment of dividends and distributions..... 782,640,290 715,431,667
Shares issued in connection with the acquisition of Dean Witter
Retirement Series -- Liquid Asset Series........................ 12,732,710 --
----------------- -----------------
51,214,267,458 43,829,012,428
Shares repurchased............................................... (48,660,161,654) (41,673,576,337)
----------------- -----------------
Net increase..................................................... 2,554,105,804 2,155,436,091
----------------- -----------------
----------------- -----------------
</TABLE>
6. ACQUISITION OF DEAN WITTER RETIREMENT SERIES -- LIQUID ASSET SERIES
As of the close of business on September 11, 1998, the Fund acquired all the net
assets of Dean Witter Retirement Series -- Liquid Asset Series ("Retirement
Liquid Asset") pursuant to a plan of reorganization approved by the shareholders
of Retirement Liquid Asset on August 19, 1998. The acquisition was accomplished
by a tax-free exchange of 12,732,710 shares of the Fund at a net asset value of
$1.00 per share for 12,732,710 shares of Retirement Liquid Asset. The net assets
of the Fund and Retirement Liquid Asset immediately before the acquisition were
$15,729,214,021 and $12,732,710, respectively. Immediately after the
acquisition, the combined net assets of the Fund amounted to $15,741,946,731.
23
<PAGE>
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Morgan Stanley Dean Witter Liquid
Asset Fund Inc. (the "Fund") at August 31, 1999, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the five years
in the period then ended, 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 August 31, 1999 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
OCTOBER 7, 1999
24
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2 3 0 --
for office use only
[LOGO]
APPLICATION
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
Send to: Morgan Stanley Dean Witter Trust FSB (the "Transfer Agent"), P.O. Box
1040, Jersey City, NJ 07303
REMOVE APPLICATION CAREFULLY
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INSTRUCTIONS For assistance in completing this application, telephone Morgan Stanley Dean Witter Trust FSB at (800) 869-NEWS
(toll-free).
TO REGISTER
SHARES 1.
(please print)
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First Name Last Name
- -As joint
tenants,
use line 1 & 2 2.
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First Name Last Name
(Joint tenants with rights of survivorship unless otherwise
specified)
------------------------
Social Security Number
- -As custodian
for a minor, 3.
use lines 1 &
3
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Minor's Name
Under the________Uniform Gifts to Minors Act ---------------------------
Minor's Social Security Number
State of Residence of Minor
- -In the name of a
corporation, 4.
trust,
partnership
or other ---------------------------------------------------------------------------------------------------------------
Name of Corporation, Trust (including trustee name(s)) or Other Organization
institutional
investors, use
line 4
If Trust, Date of Trust Instrument:____________ Tax Identification
Number__________
ADDRESS
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City State Zip Code
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TO PURCHASE
SHARES:
Minimum Initial / / CHECK (enclosed) $__________ (Make Payable to Morgan Stanley Dean Witter Liquid Asset Fund Inc.)
Investment:
$5,000 / / WIRE* On__________ MF*________
(Date) (Control number, this transaction)
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Name of Bank Branch
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Address
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Telephone Number
* For an initial investment made by wiring funds, obtain a control number by calling: (800) 869-NEWS
(toll-free).
Your bank should wire to:
Bank of New York for credit to account of Morgan Stanley Dean Witter Trust FSB
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Account Number: 8900188413
Re: Morgan Stanley Dean Witter Liquid Asset Fund Inc.
Account Of:______________________
(Investor's Account as Registered at the Transfer Agent)
Control or Account Number:______________________
(Assigned by Telephone)
OPTIONAL SERVICES
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NOTE: If you are a current shareholder of Morgan Stanley Dean Witter
Liquid Asset Fund Inc., please indicate your fund account number
here.
[ 2 ] [ 3 ] [ 0 ] -
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DIVIDENDS All dividends will be reinvested daily in additional shares, unless the following option is selected:
/ / Pay income dividends by check at the end of each month.
WRITE YOUR OWN / / Send an initial supply of checks.
CHECK FOR JOINT ACCOUNTS:
/ / CHECK THIS BOX IF ALL OWNERS ARE REQUIRED TO SIGN CHECKS.
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PAYMENT TO / / Morgan Stanley Dean Witter Trust FSB is hereby authorized to honor telephonic or other instructions, without
PREDESIGNATED signature guarantee, from any person for the redemption of any or all shares of Morgan Stanley Dean Witter
BANK ACCOUNT Liquid Asset Fund Inc. held in my (our) account provided that proceeds are transmitted only to the following
bank account. (Absent its own negligence, neither Morgan Stanley Dean Witter Liquid Asset Fund Inc. nor
Morgan Stanley Dean Witter Trust FSB (the "Transfer Agent") shall be liable for any redemption caused by
unauthorized instruction(s)):
Bank Account must be in
same name as shares are
registered ------------------------------------------------------------------------------- ------------------------------
NAME & BANK ACCOUNT NUMBER BANK'S ROUTING TRANSMIT CODE
(ASK YOUR BANK)
Minimum Amount:
$5,000 NAME OF BANK
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ADDRESS OF BANK
-------------------------------------------------------------------------------
TELEPHONE NUMBER OF BANK
SIGNATURE AUTHORIZATION
FOR ALL ACCOUNTS NOTE: RETAIN A COPY OF THIS DOCUMENT FOR YOUR RECORDS. ANY MODIFICATION OF THE INFORMATION BELOW WILL REQUIRE AN
AMENDMENT TO THIS FORM. THIS DOCUMENT IS IN FULL FORCE AND EFFECT UNTIL ANOTHER DULY EXECUTED FORM IS RECEIVED BY
THE TRANSFER AGENT.
The "Transfer Agent" is hereby authorized to act as agent for the registered owner of shares of Morgan Stanley
Dean Witter Liquid Asset Fund Inc. (the "Fund") in effecting redemptions of shares and is authorized to recognize
the signature(s) below in payment of funds resulting from such redemptions on behalf of the registered owners of
such shares. The Transfer Agent shall be liable only for its own negligence and not for 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.
I (we) certify to my (our) legal capacity, or the capacity of the investor named above, to invest in and redeem
shares of, and I (we) acknowledge receipt of a current prospectus of, Morgan Stanley Dean Witter Liquid Asset Fund
Inc. and (we) further certify my (our) authority to sign and act for and on behalf of the investor.
Under penalties of perjury, I certify (1) that the number shown on this form is my correct taxpayer identification
number and (2) that I am not subject to backup withholding either because I have not been notified that I am
subject to backup withholding as a result of a failure to report all interest or dividends, or the Internal
Revenue Service has notified me that I am no longer subject to backup withholding. (Note: You must cross out item
(2) above if you have been notified by IRS that you are currently subject to backup withholding because of
underreporting interest or dividends on your tax return.)
For Individual, Joint and Custodial Accounts for Minors, Check Applicable Box:
/ / I am a United States Citizen. / / I am not a United States Citizen.
SIGNATURE(S) (IF JOINT TENANTS, ALL MUST SIGN)
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SIGNATURE MUST BE KEPT WITHIN ABOVE AREA SIGNATURE MUST BE KEPT WITHIN ABOVE AREA
-------------------------------------------------------- --------------------------------------------------------
SIGNATURE MUST BE KEPT WITHIN ABOVE AREA SIGNATURE MUST BE KEPT WITHIN ABOVE AREA
Name(s) must be
signed
exactly the same SIGNED THIS_______________DAY OF__________, 19____.
as shown on
lines 1 to 4 on
the reverse
side of this FOR CORPORATIONS, TRUSTS, PARTNERSHIPS AND OTHER ORGANIZATIONS
application
The following named persons are currently officers/trustees/general partners/other authorized signatories of the
Registered Owner, and any * of them ("Authorized Person(s)") is/are currently authorized under the applicable
governing document to act with full power to sell, assign or transfer securities of the the Fund for the
Registered Owner and to execute and deliver any instrument necessary to effectuate the authority hereby conferred:
NAME/TITLE SIGNATURE
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In addition,
complete
Section A or B -------------------------------------------------------- --------------------------------------------------------
below.
-------------------------------------------------------- --------------------------------------------------------
SIGNATURE MUST BE KEPT WITHIN ABOVE AREA SIGNATURE MUST BE KEPT WITHIN ABOVE AREA
-------------------------------------------------------- --------------------------------------------------------
SIGNATURE MUST BE KEPT WITHIN ABOVE AREA SIGNATURE MUST BE KEPT WITHIN ABOVE AREA
-------------------------------------------------------- --------------------------------------------------------
SIGNATURE MUST BE KEPT WITHIN ABOVE AREA SIGNATURE MUST BE KEPT WITHIN ABOVE AREA
SIGNED THIS____________DAY OF____________, 19____.
The Transfer Agent may, without inquiry, act only upon the instruction of ANY PERSON(S) purporting to be (an)
Authorized Person(s) as named in the Certification Form last received by the Transfer Agent. The Transfer Agent
and the Fund shall not be liable for any claims, expenses (including legal fees) or losses resulting from the
Transfer Agent having acted upon any instruction reasonably believed genuine.
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*INSERT A NUMBER. UNLESS OTHERWISE INDICATED, THE TRANSFER AGENT MAY HONOR INSTRUCTIONS OF ANY ONE OF THE PERSONS
NAMED ABOVE.
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SECTION (A) NOTE: EITHER A SIGNATURE GUARANTEE OR CORPORATE SEAL IS REQUIRED.
CORPORATIONS AND
INCORPORATED
ASSOCIATIONS ONLY. I, ____________, Secretary of the Registered Owner, do hereby certify that at a meeting on
SIGN ABOVE AND COM- ____________ at which a quorum was present throughout, the Board of Directors of the
PLETE THIS corporation/the officers of the association duly adopted a resolution, which is in full force and
SECTION effect and in accordance with the Registered Owner's charter and by-laws, which resolution did the
following: (1) empowered the above-named Authorized Person(s) to effect securities transactions
for the Registered Owner on the terms described above; (2) authorized the Secretary to certify,
from time to time, the names and titles of the officers of the Registered Owner and to notify the
Transfer Agent when changes in office occur; and (3) authorized the Secretary to certify that such
a resolution has been duly adopted and will remain in full force and effect until the Transfer
Agent receives a duly executed amendment to the Certification Form.
SIGNATURE
GUARANTEE** Witness my hand on behalf of the corporation/association this ______ day of ____________, 19____.
(or Corporate Seal)
--------------------------------------------------------------------------------------------------
Secretary**
The undersigned officer (other than the Secretary) hereby certifies that the foregoing instrument
has been signed by the Secretary of the
corporation/association.
SIGNATURE
GUARANTEE** --------------------------------------------------------------------------------------------------
(or Corporate Seal) Certifying Officer of the Corporation or Incorporated Association**
SECTION (B) ALL NOTE: A SIGNATURE GUARANTEE IS REQUIRED.
OTHER
INSTITUTIONAL --------------------------------------------------------------------------------------------------
INVESTORS Certifying
SIGNATURE Trustee(s)/General Partner(s)/Other(s)**
GUARANTEE**
--------------------------------------------------------------------------------------------------
SIGN ABOVE AND COM- Certifying
PLETE THIS SECTION Trustee(s)/General Partner(s)/Other(s)**
**SIGNATURE(S) MUST BE GUARANTEED BY AN ELIBIGLE GUARANTOR
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DEALER Above signature(s) guaranteed. Prospectus has been delivered by undersigned to above-named applicant(s).
(if any)
Completion by
dealer only ---------------------------------------------------- ----------------------------------------------------
Firm Name Office Number-Account Number at Dealer-A/E Number
---------------------------------------------------- ----------------------------------------------------
Address Account Executive's Last Name
---------------------------------------------------- ----------------------------------------------------
City, State, Zip Code Branch Office
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- -Registered Trademark- 1999 Morgan Stanley Dean Witter Distributors Inc.
<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
- ---------------------------------
Aggressive Equity Fund
American Opportunities Fund
Capital Growth Securities
Developing Growth Securities
Growth Fund
Market Leader Trust
Mid-Cap Equity Trust
Next Generation Trust
Small Cap Growth Fund
Special Value Fund
THEME FUNDS
Financial Services Trust
Health Sciences Trust
Information Fund
Natural Resource Development Securities
Precious Metals and Minerals Trust
GLOBAL/INTERNATIONAL FUNDS
Competitive Edge Fund - "Best Ideas" Portfolio
European Growth Fund
Fund of Funds - International Portfolio
International Fund
International SmallCap Fund
Japan Fund
Latin American Growth Fund
Pacific Growth Fund
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUNDS
- ---------------------------------
Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
Equity Fund
Fund of Funds - Domestic Portfolio
Income Builder Fund
Mid-Cap Dividend Growth Securities
S&P 500 Index Fund
S&P 500 Select Fund
Strategist Fund
Total Market Index Fund
Total Return Trust
Value Fund
Value-Added Market Series/Equity Portfolio
THEME FUNDS
Global Utilities Fund
Real Estate Fund
Utilities Fund
GLOBAL FUNDS
Global Dividend Growth Securities
- --------------------------------------------------------------------------------
INCOME FUNDS
- ---------------------------------
GOVERNMENT INCOME FUNDS
Federal Securities Trust
Short-Term U.S. Treasury Trust
U.S. Government Securities Trust
DIVERSIFIED INCOME FUNDS
Diversified Income Trust
CORPORATE INCOME FUNDS
High Yield Securities
Intermediate Income Securities
Short-Term Bond Fund (NL)
GLOBAL INCOME FUNDS
North American Government Income Trust
World Wide Income Trust
TAX-FREE INCOME FUNDS
California Tax-Free Income Fund
Hawaii Municipal Trust (FSC)
Limited Term Municipal Trust (NL)
Multi-State Municipal Series Trust (FSC)
New York Tax-Free Income Fund
Tax-Exempt Securities Trust
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
- ---------------------------------
TAXABLE MONEY MARKET FUNDS
Liquid Asset Fund (MM)
U.S. Government Money Market Trust (MM)
TAX-FREE MONEY MARKET FUNDS
California Tax-Free Daily Income Trust (MM)
N.Y. Municipal Money Market Trust (MM)
Tax-Free Daily Income Trust (MM)
There may be Funds created after this PROSPECTUS was published. Please consult
the inside back cover of a new Fund's PROSPECTUS for its designation, e.g.,
Multi-Class Fund or Money Market Fund.
Unless otherwise noted, each listed Morgan Stanley Dean Witter Fund, except for
North American Government Income Trust and Short-Term U.S. Treasury Trust, is a
Multi-Class Fund. A Multi-Class Fund is a mutual fund offering multiple Classes
of shares. The other types of funds are: NL - No-Load (Mutual) Fund; MM - Money
Market Fund; FSC - A mutual fund sold with a front-end sales charge and a
distribution (12b-1) fee.
<PAGE>
PROSPECTUS - OCTOBER 26, 1999
Additional information about the Fund's investments is available in the Fund's
ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS (the current annual report is
included in this PROSPECTUS). The Fund's Statement of Additional Information
also provides additional information about the Fund. The Statement of Additional
Information is incorporated herein by reference (legally is part of this
PROSPECTUS). For a free copy of any of these documents, to request other
information about the Fund, or to make shareholder inquiries, please call:
(800) 869-NEWS
You also may obtain information about the Fund by calling your Morgan Stanley
Dean Witter Financial Advisor or by visiting our Internet site at:
www.msdw.com/individual/funds
Information about the Fund (including the STATEMENT OF ADDITIONAL INFORMATION)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (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.
TICKER SYMBOL: DWLXX
Morgan Stanley Dean Witter
LIQUID ASSET FUND
[BACK COVER PHOTO]
A MONEY MARKET FUND THAT
SEEKS TO PROVIDE HIGH
CURRENT INCOME, PRESERVATION
OF CAPITAL AND LIQUIDITY
(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-2575)
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STATEMENT OF ADDITIONAL INFORMATION MORGAN STANLEY
OCTOBER 26, 1999 DEAN WITTER
LIQUID ASSET
FUND INC.
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This STATEMENT OF ADDITIONAL INFORMATION is not a PROSPECTUS. The PROSPECTUS
(dated October 26, 1999) for the Morgan Stanley Dean Witter Liquid Asset Fund
Inc. 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
Liquid Asset Fund Inc.
Two World Trade Center
New York, New York 10048
(800) 869-NEWS
<PAGE>
TABLE OF CONTENTS
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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.................. 6
III. Management of the Fund................................. 8
A. Board of Directors..................................... 8
B. Management Information................................. 8
C. Compensation........................................... 12
IV. Control Persons and Principal Holders of Securities..... 14
V. Investment Management and Other Services................. 14
A. Investment Manager..................................... 14
B. Principal Underwriter.................................. 15
C. Services Provided by the Investment Manager and Fund
Expenses Paid by Third Parties........................... 15
D. Rule 12b-1 Plan........................................ 16
E. Other Service Providers................................ 18
VI. Brokerage Allocation and Other Practices................ 18
A. Brokerage Transactions................................. 18
B. Commissions............................................ 18
C. Brokerage Selection.................................... 19
D. Directed Brokerage..................................... 20
E. Regular Broker-Dealers................................. 20
VII. Capital Stock and Other Securities..................... 20
VIII. Purchase, Redemption and Pricing of Shares............ 20
A. Purchase/Redemption of Shares.......................... 20
B. Offering Price......................................... 21
IX. Taxation of the Fund and Shareholders................... 23
X. Underwriters............................................. 24
XI. Calculation of Performance Data......................... 24
XII. Financial Statements................................... 24
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2
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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 is the Custodian of the Fund's assets.
"DEAN WITTER REYNOLDS"--Dean Witter Reynolds Inc., a wholly-owned broker-dealer
subsidiary of MSDW.
"DIRECTORS"--The Board of Directors of the Fund.
"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 Liquid Asset Fund Inc., a registered open-end
investment company.
"INVESTMENT MANAGER"--Morgan Stanley Dean Witter Advisors Inc., a wholly-owned
investment advisor subsidiary of MSDW.
"INDEPENDENT DIRECTORS"--Directors who are not "interested persons" (as defined
by the Investment Company Act) of the Fund.
"MORGAN STANLEY & CO."--Morgan Stanley & Co. Incorporated, a wholly-owned
broker-dealer subsidiary of MSDW.
"MORGAN STANLEY DEAN WITTER FUNDS"--Registered investment companies (i) for
which the Investment Manager serves as the investment advisor and (ii) that hold
themselves out to investors as related companies for investment and investor
services.
"MSDW"--Morgan Stanley Dean Witter & Co., a preeminent global financial services
firm.
"MSDW SERVICES COMPANY"--Morgan Stanley Dean Witter Services Company Inc., a
wholly-owned fund services subsidiary of the Investment Manager.
"TRANSFER AGENT"--Morgan Stanley Dean Witter Trust FSB, a wholly-owned transfer
agent subsidiary of MSDW.
3
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I. FUND HISTORY
- --------------------------------------------------------------------------------
The Fund was incorporated under Maryland law on September 3, 1974, under the
name Standard & Poor's/InterCapital Cash Management Fund, Inc. Its name was
changed to Standard & Poor's/InterCapital Liquid Asset Fund, Inc. on May 13,
1975. The Fund's name was subsequently changed to InterCapital Liquid Asset Fund
Inc. on September 1, 1977, to Dean Witter/Sears Liquid Asset Fund Inc. on March
21, 1983, and to Dean Witter Liquid Asset Fund Inc. on June 30, 1993. Effective
June 22, 1998, the Fund's name was changed to Morgan Stanley Dean Witter Liquid
Asset Fund Inc.
II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
- --------------------------------------------------------------------------------
A. CLASSIFICATION
The Fund is an open-end, diversified management investment company whose
investment objectives are high current income, preservation of capital and
liquidity.
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" and "Principal Risks."
REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements. When
cash may be available for only a few days, it may be invested by the Fund in
repurchase agreements until such time as it may otherwise be invested or used
for payments of obligations of the Fund. These agreements, which may be viewed
as a type of secured lending by the Fund, typically involve the acquisition by
the Fund of debt securities from a selling financial institution such as a bank,
savings and loan association or broker-dealer. The agreement provides that the
Fund will sell back to the institution, and that the institution will
repurchase, the underlying security serving as collateral at a specified price
and at a fixed time in the future, usually not more than seven days from the
date of purchase. The 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 continuously monitored. In addition, the value of
the collateral underlying the repurchase agreement will always be at least equal
to the resale price which consists of the acquisition price paid to the seller
of the securities plus the accrued resale premium which is defined as the amount
specified in the repurchase agreement or the daily amortization of the
difference between the acquisition price and the resale price specified in the
repurchase agreement. Such collateral will consist entirely of securities that
are direct obligations of, or that are fully guaranteed as to principal and
interest by, the United States or any agency thereof, and/or certificates of
deposit, bankers' acceptances which are eligible for acceptance by a Federal
Reserve Bank, and, if the seller is a bank, mortgage related securities (as such
term is defined in section 3(a)(41) of the Securities Exchange Act of 1934 that,
at the time the repurchase agreement is entered into, are rated in the highest
rating category by the Requisite NRSROs (as defined under Rule 2a-7 of the
Investment Company Act of 1940). Additionally, Upon an Event of Insolvency (as
defined under Rule 2a-7) with respect to the seller, the collateral must qualify
the repurchase agreement for preferential treatment under a provision of
applicable insolvency law providing an exclusion from any automatic stay of
creditors' rights against the seller. 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. The Fund's investments
in repurchase agreements may at times be substantial when, in the view of the
Fund's investment manager, liquidity or other considerations warrant.
4
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VARIABLE RATE AND FLOATING RATE OBLIGATIONS. The Fund may invest in
variable rate and floating rate obligations. The interest rate payable on a
variable rate obligation is adjusted at predesignated periodic intervals and, on
a floating rate obligation, whenever there is a change in the market rate of
interest on which the interest rate payable is based. Other features may include
the right whereby the Fund may demand prepayment of the principal amount of the
obligation prior to its stated maturity (a "demand feature") and the right of
the issuer to prepay the principal amount prior to maturity. The principal
benefit of a variable rate obligation is that the interest rate adjustment
minimizes changes in the market value of the obligation. As a result, the
purchase of variable rate and floating rate obligations should enhance the
ability of the Fund to maintain a stable net asset value per share and to sell
obligations prior to maturity at a price that is approximately the full
principal amount of the obligations. The principal benefit to the Fund of
purchasing obligations with a demand feature is that liquidity, and the ability
of the Fund to obtain repayment of the full principal amount of an obligation
prior to maturity, is enhanced. The payment of principal and interest by issuers
of certain obligations purchased by the Fund may be guaranteed by letters of
credit or other credit facilities offered by banks or other financial
institutions. Such guarantees will be considered in determining whether an
obligation meets the Fund's investment quality requirements.
REVERSE REPURCHASE AGREEMENTS. The Fund may also use reverse repurchase
agreements as part of its investment strategy. Reverse repurchase agreements
involve sales by the Fund of portfolio assets concurrently with an agreement by
the Fund to repurchase the same assets at a later date at a fixed price.
Generally, the effect of such a transaction is that the Fund can recover all or
most of the cash invested in the portfolio securities involved during the term
of the reverse repurchase agreement, while it will be able to keep the interest
income associated with those portfolio securities. Such transactions are only
advantageous if the interest cost to the Fund of the reverse repurchase
transaction is less than the cost of obtaining the cash otherwise. Opportunities
to achieve this advantage may not always be available, and the Fund intends to
use the reverse repurchase technique only when it will be to its advantage to do
so. The Fund will establish a segregated account with its custodian bank in
which it will maintain cash or cash equivalents or other portfolio securities
equal in value to its obligations in respect of reverse repurchase agreements.
Reverse repurchase agreements are considered borrowings by the Fund and for
purposes other than meeting redemptions may not exceed 5% of the Fund's total
assets.
PRIVATE PLACEMENTS. The Fund may invest in commercial paper issued in
reliance on the so-called "private placement" exemption afforded by
Section 4(2) of the Securities Act of 1933 ("Securities Act") and which may be
sold to other institutional investors pursuant to Rule 144A under the Securities
Act. Rule 144A permits the Fund to sell restricted securities to qualified
institutional buyers without limitation. The Investment Manager, pursuant to
procedures adopted by the Directors, will make a determination as to the
liquidity of each restricted security purchased by the Fund. If a restricted
security is determined to be "liquid," the security will not be included within
the category "illiquid securities," which is limited by the Fund's investment
restrictions to 10% of the Fund's total assets.
LENDING PORTFOLIO SECURITIES. The Fund may lend its portfolio securities to
brokers, dealers and other financial institutions, provided that the loans are
callable at any time by the Fund, and are at all times secured by cash or cash
equivalents, which are maintained in a segregated account pursuant to applicable
regulations and that are equal to at least 100% of the market value, determined
daily, of the loaned securities. The advantage of these loans is that the Fund
continues to receive the income on the loaned securities while at the same time
earning interest on the cash amounts deposited as collateral, which will be
invested in short-term obligations. The Fund will not lend more than 10% of the
value of its total assets.
As with any extensions of credit, there are risks of delay in recovery and,
in some cases, even loss of rights in the collateral should the borrower of the
securities fail financially. However, these loans of portfolio securities will
only be made to firms deemed by the Fund's management to be creditworthy and
when the income which can be earned from such loans justifies the attendant
risks. Upon termination of the loan, the borrower is required to return the
securities to the Fund. Any gain or loss in the market price during the loan
period would inure to the Fund.
5
<PAGE>
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.
YEAR 2000. The investment management services provided to the Fund by the
Investment Manager and the services provided to shareholders by the Distributor
and the Transfer Agent depend on the smooth functioning of their computer
systems. Many computer software systems in use today cannot recognize the year
2000, but revert to 1900 or some other date, due to the manner in which dates
were encoded and calculated. That failure could have a negative impact on the
handling of securities trades, pricing and account services. The Investment
Manager, the Distributor and the Transfer Agent have been actively working on
necessary changes to their own computer systems to prepare for the year 2000 and
expect that their systems will be adapted before that date, but there can be no
assurance that they will be successful, or that interaction with other
non-complying computer systems will not impair their services at that time.
In addition, it is possible that the markets for securities in which the
Fund invests may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and liquidity issues.
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 objectives, policies and restrictions listed below have been
adopted by the Fund as fundamental policies. Under the Investment Company Act of
1940 (the "Investment Company Act"), a fundamental policy may not be changed
without the vote of a majority of the outstanding voting securities of the Fund.
The Investment Company Act defines a majority as the lesser of (a) 67% or more
of the shares present at a meeting of shareholders, if the holders of 50% of the
outstanding shares of the Fund are present or represented by proxy; or (b) more
than 50% of the outstanding shares of the Fund. For purposes of the following
restrictions: (i) all percentage limitations apply immediately after a purchase
or initial investment; and (ii) any subsequent change in any applicable
percentage resulting from market fluctuations or other changes in total or net
assets does not require elimination of any security from the portfolio.
The Fund will:
1. Seek to provide high current income, preservation of capital and
liquidity.
The Fund may not:
1. Borrow money, except from banks for temporary or emergency purposes
or to meet redemption requests which might otherwise require the untimely
disposition of securities, and not for investment or leveraging, provided
that borrowing in the aggregate may not exceed 10% of the value of the
Fund's total assets (including the amount borrowed) at the time of such
borrowing; or mortgage, pledge or hypothecate any assets except in
connection with any such borrowing and in amounts not in excess of 10% of
the value of the Fund's total assets at the time of such borrowing.
2. Purchase securities of any issuer, except for securities issued by
U.S. government agencies or instrumentalities, having a record, together
with predecessors, of less than three years' continuous operation, if,
immediately after such purchase, more than 5% of the Fund's total assets
taken at market value would be invested in such securities.
3. With respect to 75% of its total assets, purchase any securities,
other than obligations of the U.S. government, or its agencies or
instrumentalities, if, immediately after such purchase, more
6
<PAGE>
than 5% of the value of the Fund's total assets would be invested in
securities of any one issuer. (However, as a non-fundamental policy, the
Fund will not invest more than 10% of its total assets in the securities of
any one issuer.
4. Purchase any securities, other than obligations of the U.S.
government, or its agencies or instrumentalities, if, immediately after such
purchase, more than 10% of the outstanding securities of one issuer would be
owned by the Fund (for this purpose all indebtedness of an issuer shall be
deemed a single class of security).
5. Purchase any securities, other than obligations of banks or of the
U.S. government, or its agencies or instrumentalities, if, immediately after
such purchase, more than 25% of the value of the Fund's total assets would
be invested in the securities of issuers in the same industry; however,
there is no limitation as to investments in bank obligations or in
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities.
6. Invest more than 10% of its total assets in illiquid securities,
including repurchase agreements which have a maturity of longer than seven
days. For purposes of this restriction, securities eligible for sale
pursuant to Rule 144A under the Securities Act are not considered illiquid
if they are determined to be liquid under procedures adopted by the Fund's
Board of Directors.
7. Purchase any common stocks or other equity securities.
8. Make loans to others, except through the purchase of the permitted
debt obligations and repurchase agreements; and loans of portfolio
securities in excess of 10% of the value of the Fund's total assets, made in
accordance with guidelines established by the Fund's Board of Directors,
including maintaining collateral from the borrower equal at all times to the
current market value of the securities loaned.
9. Purchase or sell real estate; however, the Fund may purchase
marketable securities issued by companies which invest in real estate or
interests therein.
10. Purchase securities on margin or sell short.
11. Purchase or sell commodities or commodity futures contracts, or
oil, gas or mineral exploration or development programs.
12. Underwrite securities of other issuers.
13. Purchase warrants, or write, purchase or sell puts, calls,
straddles, spreads, or combinations thereof.
14. Participate on a joint or joint and several basis in any securities
trading account.
15. Purchase the securities of any other investment company.
16. Purchase securities of any issuer for the purpose of exercising
control or management.
17. Purchase or retain the securities of any issuer if any officer or
director of the Fund is an officer or director of such issuer and owns
beneficially more than 1/2 of 1% of the securities of such issuer and all of
the officers and directors of the Fund and its Investment Manager together
own more than 5% of the securities of such issuer.
Notwithstanding any other investment policy or restriction, the Fund may
seek to achieve its investment objectives by investing all or substantially all
of its assets in another investment company having substantially the same
investment objectives and policies as the Fund.
7
<PAGE>
III. MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
A. BOARD OF DIRECTORS
The Board of Directors of the Fund oversees the management of the Fund but
does not itself manage the Fund. The Directors 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 Directors
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 Directors are generally characterized as
a duty of loyalty and a duty of care. The duty of loyalty requires a Director to
exercise his or her powers in the interest of the Fund and not the Director's
own interest or the interest of another person or organization. A Director
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 Director reasonably believes to be
in the best interest of the Fund and its shareholders.
B. MANAGEMENT INFORMATION
DIRECTORS AND OFFICERS. The Board of the Fund consists of eight (8)
Directors. These same individuals also serve as directors or trustees for all of
the Morgan Stanley Dean Witter Funds. Six Directors (75% of the total number)
have no affiliation or business connection with the Investment Manager or any of
its affiliated persons and do not own any stock or other securities issued by
the Investment Manager's parent company, MSDW. These are the "non-interested" or
"independent" Directors. The other two Directors (the "management Directors")
are affiliated with the Investment Manager. All of the Directors also serve as
Directors of "Discover Brokerage Index Series," a mutual fund for which the
Investment Manager is the investment advisor.
The Directors and executive officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with the
Investment Manager, and with the 92 Morgan Stanley Dean Witter Funds and
Discover Brokerage Index Series, are shown below.
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- --------------------------------------------- -----------------------------------------------
<S> <C>
Michael Bozic (58) .......................... Vice Chairman of Kmart Corporation (since
Director December, 1998); Director or Trustee of the
c/o Kmart Corporation Morgan Stanley Dean Witter Funds and Discover
3100 West Big Beaver Road Brokerage Index Series; formerly Chairman and
Troy, Michigan Chief Executive Officer of Levitz Furniture
Corporation (November, 1995-November, 1998) and
President and Chief Executive Officer of Hills
Department Stores (May, 1991-July, 1995);
formerly variously Chairman, Chief Executive
Officer, President and Chief Operating Officer
(1987-1991) of the Sears Merchandise Group of
Sears, Roebuck and Co.; Director of Eaglemark
Financial Services, Inc. and Weirton Steel
Corporation.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- --------------------------------------------- -----------------------------------------------
<S> <C>
Charles A. Fiumefreddo* (66) ................ Chairman, Director or Trustee and Chief
Chairman of the Board, Executive Officer of the Morgan Stanley Dean
Chief Executive Officer and Director Witter Funds and Discover Brokerage Index
Two World Trade Center Series; formerly Chairman, Chief Executive
New York, New York Officer and Director of the Investment Manager,
the Distributor and MSDW Services Company;
Executive Vice President and Director of Dean
Witter Reynolds; Chairman and Director of the
Transfer Agent; formerly Director and/or
officer of various MSDW subsidiaries (until
June 1998).
Edwin J. Garn (67) .......................... Director or Trustee of the Morgan Stanley Dean
Director Witter Funds and Discover Brokerage Index
c/o Huntsman Corporation Series; 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
Director Stanley Dean Witter Funds and Discover
c/o Mayer, Brown & Platt Brokerage Index Series; Director of The PMI
Counsel to the Independent Directors Group, Inc. (private mortgage insurance);
1675 Broadway Trustee and Vice Chairman of The Field Museum
New York, New York of Natural History; formerly associated with
the Allstate Companies (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,
Director Inc., a consulting firm; Co-Chairman and a
c/o Johnson Smick International, Inc. founder of the Group of Seven Council (G7C), an
1133 Connecticut Avenue, N.W. international economic commission; Chairman of
Washington, D.C. the Audit 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.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- --------------------------------------------- -----------------------------------------------
<S> <C>
Michael E. Nugent (63) ...................... General Partner, Triumph Capital, L.P., a
Director private investment partnership; Chairman of the
c/o Triumph Capital, L.P. Insurance Committee and Director or Trustee of
237 Park Avenue the Morgan Stanley Dean Witter Funds and
New York, New York Discover Brokerage Index Series; formerly Vice
President, Bankers Trust Company and BT Capital
Corporation (1984-1988); director of various
business organizations.
Philip J. Purcell* (55) ..................... Chairman of the Board of Directors and Chief
Director 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 (69) ...................... Retired; Chairman of the Derivatives Committee
Director and Director or Trustee of the Morgan Stanley
c/o Mayer, Brown & Platt Dean Witter Funds and Discover Brokerage Index
Counsel to the Independent Directors Series; Director of Citizens Utilities Company
1675 Broadway (telecommunications, gas, electric and water
New York, New York utilities company); formerly Executive Vice
President and Chief Investment Officer of the
Home Insurance Company (August 1991-September
1995).
Mitchell M. Merin (45) ...................... President and Chief Operating Officer of Asset
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 Stra-
tegic 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.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- --------------------------------------------- -----------------------------------------------
<S> <C>
Barry Fink (44) ............................. Senior Vice President (since March 1997) and
Vice President, Secretary and General Counsel Secretary and General Counsel (since February
Two World Trade Center 1997) and Director (since July 1998) of the
New York, New York Investment Manager and MSDW Services 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.
Jonathan R. Page (53) ....................... Senior Vice President of the Investment
Senior Vice President Manager; Vice President of various Morgan
Two World Trade Center Stanley Dean Witter Funds.
New York, New York
Thomas F. Caloia (53) ....................... First Vice President and Assistant Treasurer of
Treasurer the Investment Manager, the Distributor and
Two World Trade Center MSDW Services Company; Treasurer of the Morgan
New York, New York Stanley Dean Witter Funds and Discover
Brokerage Index Series.
</TABLE>
- ------------------------
*Denotes Directors 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, JOSEPH J. MCALINDEN, Executive Vice President and Chief
Investment Officer of the Investment Manager and Director of the Transfer Agent,
and PETER M. AVELAR and JAMES F. WILLISON, Senior Vice Presidents of the
Investment Manager, are Vice Presidents of the Fund.
In addition, 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, TODD LEBO, Vice President and Assistant
General Counsel of the Investment Manager and MSDW Services Company, and NATASHA
KASSIAN, a Staff Attorney with the Investment Manager, are Assistant Secretaries
of the Fund.
INDEPENDENT DIRECTORS/TRUSTEES AND THE COMMITTEES. Law and regulation
establish both general guidelines and specific duties for the independent
directors/trustees. The Morgan Stanley Dean Witter Funds seek as independent
directors/trustees individuals of distinction and experience in business and
finance, government service or academia; these are people whose advice and
counsel are in demand by others and for whom there is often competition. To
accept a position on the Funds' Boards, such individuals may reject other
attractive assignments because the Funds make substantial demands on their time.
All of the independent directors/trustees serve as members of the Audit
Committee. In addition, three of the directors/trustees, including two
independent directors/trustees, serve as members of the Derivatives Committee
and the Insurance Committee.
11
<PAGE>
The independent directors/trustees are charged with recommending to the full
Board approval of management, advisory and administration contracts, Rule 12b-1
plans and distribution and underwriting agreements; continually reviewing Fund
performance; checking on the pricing of portfolio securities, brokerage
commissions, transfer agent costs and performance, and trading among Funds in
the same complex; and approving fidelity bond and related insurance coverage and
allocations, as well as other matters that arise from time to time. The
independent directors/trustees are required to select and nominate individuals
to fill any independent director/trustee vacancy on the Board of any Fund that
has a Rule 12b-1 plan of distribution. Most of the Morgan Stanley Dean Witter
Funds have a Rule 12b-1 plan.
The Audit Committee is charged with recommending to the full Board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing engagement;
approving professional services provided by the independent accountants and
other accounting firms prior to the performance of the services; reviewing the
independence of the independent accountants; considering the range of audit and
non-audit fees; reviewing the adequacy of the Fund's system of internal
controls; and preparing and submitting Committee meeting minutes to the full
Board.
The Board of each Fund has a Derivatives Committee to approve parameters for
and monitor the activities of the Fund with respect to derivative investments,
if any, made by the Fund.
Finally, the Board of each Fund has formed an Insurance Committee to review
and monitor the insurance coverage maintained by the Fund.
ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT DIRECTORS/TRUSTEES FOR
ALL MORGAN STANLEY DEAN WITTER FUNDS. The independent directors/trustees and
the Funds' management believe that having the same independent
directors/trustees for each of the Morgan Stanley Dean Witter Funds avoids the
duplication of effort that would arise from having different groups of
individuals serving as independent directors/trustees for each of the Funds or
even of sub-groups of Funds. They believe that having the same individuals serve
as independent directors/trustees of all the Funds tends to increase their
knowledge and expertise regarding matters which affect the Fund complex
generally and enhances their ability to negotiate on behalf of each Fund with
the Fund's service providers. This arrangement also precludes the possibility of
separate groups of independent directors/trustees arriving at conflicting
decisions regarding operations and management of the Funds and avoids the cost
and confusion that would likely ensue. Finally, having the same independent
directors/trustees serve on all Fund Boards enhances the ability of each Fund to
obtain, at modest cost to each separate Fund, the services of independent
directors/trustees, of the caliber, experience and business acumen of the
individuals who serve as independent directors/trustees of the Morgan Stanley
Dean Witter Funds.
DIRECTOR AND OFFICER INDEMNIFICATION. The Fund's By-Laws provides that no
Director, officer, employee or agent of the Fund is liable to the Fund or to a
shareholder, nor is any Director, 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 By-Laws provides that a Director, 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 Director an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Directors, the Independent
Directors or Committees of the Board of Directors attended by the Director (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 Directors or
a Committee meeting, or a meeting of the Independent Directors and/or more than
one Committee meeting, take place on a single day, the Directors are paid a
single meeting fee by the Fund. The Fund also reimburses such Directors for
travel and other out-of-pocket expenses incurred by them in connection with
attending such meetings.
12
<PAGE>
Directors and officers of the Fund who are or have been employed by the
Investment Manager or an affiliated company receive no compensation or expense
reimbursement from the Fund for their services as Trustee.
The following table illustrates the compensation that the Fund paid to its
Independent Director for the fiscal year ended August 31, 1999.
FUND COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT DIRECTOR FROM THE FUND
- ---------------------------- -------------
<S> <C>
Michael Bozic............................................... $1,450
Edwin J. Garn............................................... 1,600
Wayne E. Hedien............................................. 1,650
Dr. Manuel H. Johnson....................................... 1,913
Michael E. Nugent........................................... 1,808
John L. Schroeder........................................... 1,808
</TABLE>
The following table illustrates the compensation paid to the Fund's
Independent Directors 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 Directors by
Discover Brokerage Index Series for the calendar year ended December 31, 1998.
CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS
<TABLE>
<CAPTION>
TOTAL CASH
COMPENSATION
FOR SERVICES TO
90 MORGAN
STANLEY
NAME OF DEAN WITTER
INDEPENDENT DIRECTOR FUNDS
- -------------------- ---------------
<S> <C>
Michael Bozic............................................... $120,150
Edwin J. Garn............................................... 132,450
Wayne E. Hedien............................................. 132,350
Dr. Manuel H. Johnson....................................... 155,681
Michael E. Nugent........................................... 159,731
John L. Schroeder........................................... 160,731
</TABLE>
As of the date of this STATEMENT OF ADDITIONAL INFORMATION, 55 of the Morgan
Stanley Dean Witter Funds, including the Fund, have adopted a retirement program
under which an independent director/ trustee who retires after serving for at
least five years (or such lesser period as may be determined by the Board) as an
independent director/trustee of any Morgan Stanley Dean Witter Fund that has
adopted the retirement program (each such Fund referred to as an "Adopting Fund"
and each such director/trustee referred to as an "Eligible Director") 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 Director is entitled to receive
from the Adopting Fund, commencing as of his or her retirement date and
continuing for the remainder of his or her life, an annual retirement benefit
(the "Regular Benefit") equal to 30.22% of his or her Eligible Compensation plus
0.5036667% of such Eligible Compensation for each full month of service as an
independent director/ trustee of any Adopting Fund in excess of five years up to
a maximum of 60.44% after ten years of service. The foregoing percentages may be
changed by the Board.(1) "Eligible Compensation" is one-fifth of the total
compensation earned by such Eligible Director for service to the Adopting Fund
in the five
- ------------------------
(1) An Eligible Director may elect alternative payments of his or her
retirement benefits based upon the combined life expectancy of the Eligible
Director and his or her spouse on the date of such Eligible Director's
retirement. In addition, the Eligible Director 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 Director and spouse, will be the actuarial equivalent
of the Regular Benefit.
13
<PAGE>
year period prior to the date of the Eligible Director's retirement. Benefits
under the retirement program are accrued as expenses on the books of the
Adopting Funds. Such benefits are not secured or funded by the Adopting Funds.
The following table illustrates the retirement benefits accrued to the
Fund's Independent Directors by the Fund for the fiscal year ended August 31,
1999 and by the 55 Morgan Stanley Dean Witter Funds (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 Fund as of
August 31, 1999 and from the 55 Morgan Stanley Dean Witter Funds as of December
31, 1998.
RETIREMENT BENEFITS FROM THE FUND AND ALL MORGAN STANLEY DEAN WITTER FUNDS
<TABLE>
<CAPTION>
FOR ALL ADOPTING FUNDS ESTIMATED ANNUAL
----------------------------- BENEFITS
ESTIMATED RETIREMENT BENEFITS UPON
CREDITED ACCRUED AS EXPENSES RETIREMENT(2)
YEARS ESTIMATED --------------------- -------------------
OF SERVICE AT PERCENTAGE OF BY ALL FROM FROM ALL
RETIREMENT ELIGIBLE BY THE ADOPTING THE ADOPTING
NAME OF INDEPENDENT DIRECTOR (MAXIMUM 10) COMPENSATION FUND FUNDS FUND FUNDS
- ---------------------------- ------------- ------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Michael Bozic................ 10 60.44% $384 $22,377 $937 $52,250
Edwin J. Garn................ 10 60.44 571 35,225 937 52,250
Wayne E. Hedien.............. 9 51.37 721 41,979 796 44,413
Dr. Manuel H. Johnson........ 10 60.44 233 14,047 937 52,250
Michael E. Nugent............ 10 60.44 404 25,336 937 52,250
John L. Schroeder............ 8 50.37 781 45,117 796 44,343
</TABLE>
- ------------------------
(2) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Director's elections described in Footnote (1) on
page 13 of this STATEMENT OF ADDITIONAL INFORMATION.
IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------
As of August 31, 1999, no shareholder was known to own beneficially or of
record as much as 5% of the outstanding shares of the Fund. The percentage
ownership of shares of the Fund changes from time to time depending on purchases
and redemptions by shareholders and the total number of shares outstanding.
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 Directors as a group was less than 1% of the Fund's shares of beneficial
interest outstanding.
V. INVESTMENT MANAGEMENT AND OTHER SERVICES
- --------------------------------------------------------------------------------
A. INVESTMENT MANAGER
The Investment Manager to the Fund is Morgan Stanley Dean Witter Advisors
Inc., a Delaware corporation, whose address is Two World Trade Center, New York,
New York 10048. The Investment Manager is a wholly-owned subsidiary of MSDW, a
Delaware corporation. MSDW is a preeminent global financial services firm that
maintains leading market positions in each of its three primary businesses:
securities, asset management and credit services.
Pursuant to an Investment Management Agreement (the "Management Agreement")
with the Investment Manager, the Fund has retained the Investment Manager to
provide administrative services and manage the investment of the Fund's assets,
including the placing of orders for the purchase and sale of portfolio
securities. The Fund pays the Investment Manager monthly compensation calculated
daily by applying the following annual rates to the net assets of the Fund,
determined as of the close of business on every business day: 0.50% of the
portion of the daily net assets not exceeding $500 million; 0.425% of the
portion of the daily net assets exceeding $500 million but not exceeding $750
million; 0.375% of the portion of the daily net assets exceeding $750 million
but not exceeding $1 billion; 0.35%
14
<PAGE>
of the portion of the daily net assets exceeding $1 billion but not exceeding
$1.35 billion; 0.325% of the portion of the daily net assets exceeding $1.35
billion but not exceeding $1.75 billion; 0.30% of the portion of the daily net
assets exceeding $1.75 billion but not exceeding $2.15 billion; 0.275% of the
portion of the daily net assets exceeding $2.15 billion but not exceeding $2.5
billion; 0.25% of the portion of the daily net assets exceeding $2.5 billion but
not exceeding $15 billion; 0.249% of the portion of daily net assets exceeding
$15 billion but not exceeding $17.5 billion; and 0.248% of the portion of the
daily net assets exceeding $17.5 billion.
For the fiscal years ended August 31, 1997, 1998 and 1999, the Investment
Manager accrued total compensation under the Management Agreement in the amounts
of $33,616,072, $38,009,366 and $45,473,527, respectively.
The Investment Manager has retained its wholly-owned subsidiary, MSDW
Services Company, to perform administrative services for the Fund.
B. PRINCIPAL UNDERWRITER
The Fund's principal underwriter is the Distributor (which has the same
address as the Investment Manager). In this capacity, the Fund's shares are
distributed by the Distributor. The Distributor has entered into a selected
dealer agreement with Dean Witter Reynolds, which through its own sales
organization sells shares of the Fund. In addition, the Distributor may enter
into similar agreements with other selected broker-dealers. The Distributor, a
Delaware corporation, is a wholly-owned subsidiary of MSDW.
The Fund and the Distributor have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act. Under the
Distribution Agreement, the Distributor uses its best efforts in rendering
services to the Fund, but in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations, the Distributor is
not liable to the Fund or any of its shareholders for any error of judgment or
mistake of law or for any act or omission or for any losses sustained by the
Fund or its shareholders.
C. SERVICES PROVIDED BY THE INVESTMENT MANAGER AND FUND EXPENSES PAID BY THIRD
PARTIES
The Investment Manager manages the investment of the Fund's assets,
including the placing of orders for the purchase and sale of portfolio
securities. 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 manage the assets of the Fund
in a manner consistent with its investment objective.
Under the terms of the Management Agreement, in addition to managing the
Fund's investments, the Investment Manager maintains certain of the Fund's books
and records and furnishes, at its own expense, 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.
Expenses not expressly assumed by the Investment Manager under the
Management Agreement or by the Distributor, will be paid by the Fund. These
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 Directors'
meetings and of preparing, printing and mailing of proxy statements and reports
to shareholders; fees and travel expenses of Directors or members of any
advisory board or committee who are not employees of the
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Investment Manager or any corporate affiliate of the Investment Manager; all
expenses incident to any dividend, withdrawal or redemption options; charges and
expenses of any outside service used for pricing of the Fund's shares; fees and
expenses of legal counsel, including counsel to the Directors who are not
interested persons of the Fund or of the Investment Manager (not including
compensation or expenses of attorneys who are employees of the Investment
Manager); fees and expenses of the Fund's independent accountants; membership
dues of industry associations; interest on Fund borrowings; postage; insurance
premiums on property or personnel (including officers and Directors) 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 Management Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations thereunder, the Investment Manager is not liable to the Fund or any
of its investors for any act or omission by the Investment Manager or for any
losses sustained by the Fund or its investors.
The Management Agreement will remain in effect from year to year, provided
continuance of the Management Agreement is approved at least annually by the
vote of the holders of a majority, as defined in the Investment Company Act, of
the outstanding shares of the Fund, or by the Directors; provided that in either
event such continuance is approved annually by the vote of a majority of the
Directors.
D. RULE 12b-1 PLAN
In accordance with a Plan of Distribution pursuant to Rule 12b-1 under the
Investment Company Act between the Fund and the Distributor, the Distributor
provides certain services in connection with the promotion of sales of Fund
shares (the "Plan").
The Plan provides that the Distributor bears the expense of all promotional
and distribution related activities on behalf of the Fund, except for expenses
that the Directors determine to reimburse, as described below. The following
activities and services may be provided by the Distributor under the Plan: (1)
compensation to and expenses of Dean Witter Reynolds' and other selected
Broker-Dealers' Financial Advisors and other employees, including overhead and
telephone expenses; (2) sales incentives and bonuses to sales representatives
and to marketing personnel in connection with promoting sales of the Fund's
shares; (3) expenses incurred in connection with promoting sales of the Fund's
shares; (4) preparing and distributing sales literature; and (5) providing
advertising and promotional activities, including direct mail solicitation and
television, radio, newspaper, magazine and other media advertisements.
Dean Witter Reynolds Financial Advisors are paid an annual residual
commission, currently a residual of up to 0.10% of the current value of the
respective accounts for which they are the Financial Advisors of record. The
residual is a charge which reflects residual commissions paid by Dean Witter
Reynolds to its Financial Advisors and Dean Witter Reynolds' expenses associated
with the servicing of shareholders' accounts, including the expenses of
operating Dean Witter Reynolds' branch offices in connection with the servicing
of shareholders' accounts, which expenses include lease costs, the salaries and
employee benefits of operations and sales support personnel, utility costs,
communications costs and the costs of stationery and supplies and other expenses
relating to branch office serving of shareholder accounts.
The Fund is authorized to reimburse specific expenses incurred or to be
incurred in promoting the distribution of the Fund's shares. Reimbursement is
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 0.15 of 1% of the Fund's average daily net assets during the month. No
interest or other financing charges will be incurred for which reimbursement
payments under the Plan will be made. In addition, no interest charges, if any,
incurred on any distribution expense incurred by the Distributor or other
selected dealers pursuant to the Plan, will be reimbursable under the Plan. In
the case of all expenses other than expenses representing a residual to
Financial Advisors, such amounts shall be determined at the beginning of each
calendar quarter by the Directors, including a majority of the Independent 12b-1
Directors. Expenses representing a residual to Financial Advisors may be
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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 expended by the Fund,
the Investment Manager provides and the Directors review a quarterly budget of
projected incremental 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 Directors 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 shares.
The Fund reimbursed $16,590,124 to the Distributor pursuant to the Plan
which amounted to 0.10 of 1% of the Fund's average daily net assets for the
fiscal year ended August 31, 1999. Based upon the total amounts spent by the
Distributor during the period, it is estimated that the amount paid by the Fund
to the Distributor for distribution was spent in approximately the following
ways: (i) advertising -- $-0-; (ii) printing and mailing PROSPECTUSES to other
than current shareholders -- $-0-; (iii) compensation to underwriters -- $-0-;
(iv) compensation to dealers --$-0-; (v) compensation to sales personnel --
$-0-; and (vi) other, which includes payments to Dean Witter Reynolds for
expenses substantially all of which relate to compensation of sales personnel
and associated overhead expenses -- $16,590,124. No payments under the Plan were
made for interest, carrying or other financing charges.
Under the Plan, 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.
Under the Plan, the Distributor provides the Fund, for review by the
Directors, and the Directors review, promptly after the end of each calendar
quarter, a written report regarding the incremental distribution expenses
incurred on behalf of the Fund during such calendar quarter, which report
includes (1) an itemization of the types of expenses and the purposes therefore;
(2) the amounts of such expenses; and (3) a description of the benefits derived
by the Fund. In the Directors' quarterly review of the Plan they consider its
continued appropriateness and the level of compensation provided therein.
No interested person of the Fund nor any Independent Director has any direct
financial interest in the operation of the Plan except to the extent that the
Distributor, the Investment Manager, Dean Witter Reynolds, MSDW Services Company
or certain of their employees may be deemed to have such an interest as a result
of benefits derived from the successful operation of the Plan or as a result of
receiving a portion of the amounts expended thereunder by the Fund.
On an annual basis, the Directors, including a majority of the Independent
Directors, consider whether the Plan should be continued. Prior to approving the
most recent continuation of the Plan, the Directors 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 Directors 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
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 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 Directors, including each of the Independent Directors, 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 Directors' quarterly review of the Plan, they will consider
its continued appropriateness and the level of compensation provided therein.
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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
Fund, and all material amendments to the Plan must also be approved by the
Directors 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
Directors or by a vote of a majority of the outstanding voting securities of the
Fund (as defined in the Investment Company Act) on not more than thirty days'
written notice to any other party to the Plan. So long as the Plan is in effect,
the election and nomination of Independent Directors shall be committed to the
discretion of the Independent Directors.
E. 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, 100 Church Street, New York, New York 10286 is the
Custodian for 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, New York
10036 serves as the independent accountants of the Fund. The independent
accountants are responsible for auditing the annual financial statements of the
Fund.
(3) AFFILIATED PERSONS
The Transfer Agent is an affiliate of the Investment Manager, and of the
Distributor. As Transfer Agent and Dividend Disbursing Agent, the Transfer
Agent's responsibilities include maintaining shareholder accounts, disbursing
cash dividends and reinvesting dividends, processing account registration
changes, handling purchase and redemption transactions, mailing prospectuses and
reports, mailing and tabulating proxies, processing share certificate
transactions, and maintaining shareholder records and lists. For these services,
the Transfer Agent receives a per shareholder account fee from the Fund and is
reimbursed for its out-of-pocket expenses in connection with such services.
VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
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A. BROKERAGE TRANSACTIONS
Subject to the general supervision of the Directors, the Investment Manager
is responsible for decisions to buy and sell securities for the Fund, the
selection of brokers and dealers to effect the transactions, and the negotiation
of brokerage commissions, if any. Purchases and sales of portfolio securities
are normally transacted through dealers, issuers or underwriters. Such
transactions are generally made on a net basis and do not involve payment of
brokerage commissions. The cost of securities purchased from an underwriter
usually includes a commission paid by the issuer to the underwriters;
transactions with dealers normally reflect the spread between bid and asked
prices.
During the fiscal years ended August 31, 1997, 1998 and 1999, the Fund paid
no brokerage commissions or concessions.
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. 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.
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During the fiscal years ended August 31, 1997, 1998 and 1999, the Fund did
not effect any principal transactions with Dean Witter Reynolds.
Brokerage transactions in securities listed on exchanges or admitted to
unlisted trading privileges may be effected through Dean Witter Reynolds, Morgan
Stanley & Co. and other affiliated brokers and dealers. In order for an
affiliated broker or dealer to effect any portfolio transactions on an exchange
for the Fund, the commissions, fees or other remuneration received by the
affiliated broker or dealer must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
an exchange during a comparable period of time. This standard would allow the
affiliated broker or dealer to receive no more than the remuneration which would
be expected to be received by an unaffiliated broker in a commensurate
arm's-length transaction. Furthermore, the Directors, including the Independent
Directors, 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 August 31, 1997, 1998 and 1999, the Fund paid
no brokerage commissions to an affiliated broker or dealer.
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.
In seeking to implement the Fund's policies, the Investment Manager effects
transactions with those brokers and dealers who the Investment Manager believes
provide the most favorable prices and are capable of providing efficient
executions. If the Investment Manager believes the prices and executions are
obtainable from more than one broker or dealer, it may give consideration to
placing portfolio transactions with those brokers and dealers who also furnish
research and other services to the Fund or the Investment Manager. The services
may include, but are not limited to, any one or more of the following:
information as to the availability of securities for purchase or sale;
statistical or factual information or opinions pertaining to investment; wire
services; and appraisals or evaluations of portfolio securities.
The information and services received by the Investment Manager from brokers
and dealers may be of benefit to the Investment Manager in the management of
accounts of some of its other clients and may not in all cases benefit the Fund
directly. While the receipt of such information and services is useful in
varying degrees and would generally reduce the amount of research or services
otherwise performed by the Investment Manager and thereby reduce its expenses,
it is of indeterminable value and the Fund does not reduce the management fee it
pays to the Investment Manager by any amount that may be attributable to the
value of such services.
Subject to the principle of obtaining best price and execution, the
Investment Manager may consider a broker-dealer's sales of shares of the Fund as
a factor in selecting from among those broker-dealers qualified to provide
comparable prices and execution on the Fund's portfolio transactions. The Fund
does not, however, require a broker-dealer to sell shares of the Fund in order
for it to be considered to execute portfolio transactions, and will not enter
into any arrangement whereby a specific amount or percentage of the Fund's
transactions will be directed to a broker which sells shares of the Fund to
customers. The Directors review, periodically, the allocation of brokerage
orders to monitor the operation of these policies.
The Investment Manager currently serves as investment manager to a number of
clients, including other investment companies, and may in the future act as
investment manager or advisor to others. It is the practice of the Investment
Manager to cause purchase and sale transactions to be allocated among the Fund
and others whose assets it manages in such manner as it deems equitable. In
making such
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allocations among the Fund and other client accounts, various factors may be
considered, including the respective investment objectives, the relative size of
portfolio holdings of the same or comparable securities, the availability of
cash for investment, the size of investment commitments generally held and the
opinions of the persons responsible for managing the portfolios of the Fund and
other client accounts. In the case of certain initial and secondary public
offerings, the Investment Manager utilizes a pro rata allocation process based
on the size of the Morgan Stanley Dean Witter Funds involved and the number of
shares available from the public offering.
D. DIRECTED BROKERAGE
During the fiscal year ended August 31, 1999, the Fund did not pay any
brokerage commissions to brokers because of research services provided.
E. REGULAR BROKER-DEALERS
During the fiscal year ended August 31, 1999, the Fund purchased commercial
paper issued by Goldman Sachs Group Inc., Merrill Lynch, Pierce Fenner & Smith
Inc., Morgan (J.P.) & Co., Deutsche Bank Financial Inc., Bank of America Corp.,
Bank One Corp. and CS First Boston, and bank notes issued by Goldman Sachs Group
Inc., Bank of America N.A., Bank One Corp. and CS First Boston, which issuers
were among the ten brokers or the ten dealers which executed transactions for or
with the Fund in the largest dollar amounts during the year. At August 31, 1999,
the Fund held commercial paper issued by Goldman Sachs Group Inc., Morgan
(J.P.) & Co., Deutsche Bank Financial Inc., Bank of America Corp. and Bank One
Corp. with values of $843,517,836, $811,844,750, $765,550,334, $99,588,333 and
$98,298,834, respectively, and held bank notes issued by Bank of America N.A.
with a value of $650,000,000.
VII. CAPITAL STOCK AND OTHER SECURITIES
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The Fund has an authorized capital of 25 billion shares of common stock with
a par value of $.01 per share. All shares are of the same class and are freely
transferable. Each outstanding share is entitled to one vote on all matters
submitted to a vote of shareholders and to a pro rata share of the Fund's net
assets in liquidation and of dividends declared. The Fund may also issue
fractional shares.
Under certain circumstances the Directors may be removed by action of the
Directors. In addition, under certain circumstances the shareholders may call a
meeting to remove Directors 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 Directors being selected, while the
holders of the remaining shares would be unable to elect any Directors.
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
Directors may call special meetings of shareholders for action by shareholder
vote as may be required by the Investment Company Act or the Fund's By-Laws.
Under certain circumstances, the Directors may be removed by the actions of the
Directors. In addition, under certain circumstances, the shareholders may call a
meeting to remove the Directors 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 Directors being selected, while the
holders of the remaining shares would be unable to elect any Directors.
VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES
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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 Funds and the general
administration of the exchange privilege, the Transfer Agent acts as agent
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for the Distributor and for the shareholder's authorized broker-dealer, if any,
in the performance of such functions. With respect to exchanges, redemptions or
repurchases, the Transfer Agent shall be liable for its own negligence and not
for the default or negligence of its correspondents or for losses in transit.
The Fund shall not be liable for any default or negligence of the Transfer
Agent, the Distributor or any authorized broker-dealer.
The Distributor and any authorized broker-dealer have appointed the Transfer
Agent to act as their agent in connection with the application of proceeds of
any redemption of Fund shares to the purchase of shares of any other Morgan
Stanley Dean Witter Fund and the general administration of the exchange
privilege. No commission or discounts will be paid to the Distributor or any
authorized broker-dealer for any transaction pursuant to the exchange privilege.
REDEMPTIONS. A check drawn by a shareholder against his or her account in
the Fund constitutes a request for redemption of a number of shares sufficient
to provide proceeds equal to the amount of the check. Payment of the proceeds
will normally be made on the next business day after receipt by the Transfer
Agent of the check in proper form. If a check is presented for payment to the
Transfer Agent by a shareholder or payee in person, the Transfer Agent will make
payment by means of a check drawn on the Fund's account or, in the case of a
shareholder payee, to the shareholder's predesignated bank account, but will not
make payment in cash.
B. OFFERING PRICE
The price of Fund shares, called "net asset value," is based on the value of
the Fund's portfolio securities.
The Fund utilizes the amortized cost method in valuing its portfolio
securities for purposes of determining the net asset value of its shares. The
Fund utilizes the amortized cost method in valuing its portfolio securities even
though the portfolio securities may increase or decrease in market value,
generally in connection with changes in interest rates. The amortized cost
method of valuation involves valuing a security at its cost at the time of
purchase adjusted by a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Fund would receive if it sold the investment.
During such periods, the yield to investors in the Fund may differ somewhat from
that obtained in a similar company which uses market-to-market values for all of
its portfolio securities. For example, if the use of amortized cost resulted in
a lower (higher) aggregate portfolio value on a particular day, a prospective
investor in the Fund would be able to obtain a somewhat higher (lower) yield
than would result from investment in such a similar company and existing
investors would receive less (more) investment income. The purpose of this
method of calculation is to facilitate the maintenance of a constant net asset
value per share of $1.00.
The use of the amortized cost method to value the portfolio securities of
the Fund and the maintenance of the per share net asset value of $1.00 is
permitted pursuant to Rule 2a-7 of the Act (the "Rule") and is conditioned on
its compliance with various conditions contained in the Rule including: (a) the
Directors are obligated, as a particular responsibility within the overall duty
of care owed to the Fund's shareholders, to establish procedures reasonably
designed, taking into account current market conditions and the Fund's
investment objectives, to stabilize the net asset value per share as computed
for the purpose of distribution and redemption at $1.00 per share; (b) the
procedures include (i) calculation, at such intervals as the Directors determine
are appropriate and as are reasonable in light of current market conditions, of
the deviation, if any, between net asset value per share using amortized cost to
value portfolio securities and net asset value per share based upon available
market quotations with respect to such portfolio securities; (ii) periodic
review by the Directors of the amount of deviation as well as methods used to
calculate it; and (iii) maintenance of written records of the procedures, and
the Directors' considerations made pursuant to them and any actions taken upon
such consideration; (c) the Directors should consider what steps should be
taken, if any, in the event of a difference of more than 1/2 of 1% between the
two methods of valuation; and (d) the Directors should take such action as they
deem appropriate (such as shortening the average portfolio maturity, realizing
gains or losses, withholding dividends or, as provided by the By-Laws, reducing
the number of outstanding shares of the Fund) to
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<PAGE>
eliminate or reduce to the extent reasonably practicable material dilution or
other unfair results to investors or existing shareholders which might arise
from differences between the two method of valuation.
Generally, for purposes of the procedures adopted under the Rule, the
maturity of a portfolio security is deemed to be the period remaining
(calculated from the trade date or such other date on which the Fund's interest
in the instrument is subject to market action) until the date on which in
accordance with the terms of the security the principal amount must
unconditionally be paid, or in the case of a security called for redemption, the
date on which the redemption payment must be made.
A variable rate security that is subject to a demand feature is deemed to
have a maturity equal to the period remaining until the principal amount can be
recovered through demand. A floating rate security that is subject to a demand
feature is deemed to have a maturity equal to the period remaining until the
principal amount can be recovered through demand.
An "NRSRO" is a nationally recognized statistical rating organization. The
term "Requisite NRSROs" means (i) any two NRSROs that have issued a rating with
respect to a security or class of debt obligations of an issuer, or (ii) if only
one NRSRO has issued a rating with respect to such security or issuer at the
time a fund purchases or rolls over the security, that NRSRO.
An Eligible Security is generally defined in the Rule to mean (i) a rated
security with a remaining maturity of 397 calendar days or less that has
received a rating from the Requisite NRSROs in one of the two highest short-term
rating categories (within which there may be sub-categories or gradations
indicating relative standing); or (ii) An Unrated Security that is of comparable
quality to a security meeting the requirements of (1) above, as determined by
Directors; (iii) In addition, in the case of a security that is subject to a
Demand Feature or Guarantee: (A) The Guarantee has received a rating from an
NRSRO or the Guarantee is issued by a guarantor that has received a rating from
an NRSRO with respect to a class of debt obligations (or any debt obligation
within that class) that is comparable in priority and security to the Guarantee,
unless: (1) the Guarantee is issued by a person that directly or indirectly,
controls, is controlled by or is under a common control with the issuer of the
security subject to the Guarantee (other than a sponsor or a Special Purpose
Entity with respect to an Asset Backed Security: (2) the security subject to the
Guarantee is a repurchase agreement that is Collateralized Fully; or (3) the
Guarantee itself is a Government Security and (B) the issuer of the Demand
Feature, or another institution, has undertaken promptly to notify the holder of
the security in the event the Demand Feature or Guarantee is substituted with
another Demand Feature or Guarantee (if such substitution is permissible under
the terms of the Demand Feature or Guarantee). The Fund will limit its
investments to securities that meet the requirements for Eligible Securities.
As permitted by the Rule, the Directors have delegated to the Fund's
Investment Manager the authority to determine which securities present minimal
credit risks and which unrated securities are comparable in quality to rated
securities.
Also, as required by the Rule, the Fund will limit its investments in
securities, other than Government securities, so that, at the time of purchase:
(a) except as further limited in (b) below with regard to certain securities, no
more than 5% of its total assets will be invested in the securities of any one
issuer; and (b) with respect to Eligible Securities that have received a rating
in less than the highest category by any one of the NRSROs whose ratings are
used to qualify the security as an Eligible Security, or that have been
determined to be of comparable quality: (i) no more than 5% in the aggregate of
the Fund's total assets in all such securities, and (ii) no more than the
greater of 1% of total assets, or $1 million, in the securities on any one
issuer.
The Rule further requires that the Fund limit its investments to U.S.
dollar-denominated instruments which the Directors determine present minimal
credit risks and which are Eligible Securities. The Rule also requires the Fund
to maintain a dollar-weighted average portfolio maturity (not more than 90 days)
appropriate to its objective of maintaining a stable net asset value of $1.00
per share and precludes the purchase of any instrument with a remaining maturity
of more than 397 days. Should the disposition of a
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portfolio security result in a dollar-weighted average portfolio maturity of
more than 90 days, the Fund will invest its available cash in such a manner as
to reduce such maturity to 90 days or less a soon as is reasonably practicable.
If the Directors determine that it is no longer in the best interests of the
Fund and its shareholders to maintain a stable price of $1 per share or if the
Directors believe that maintaining such price no longer reflects a market-based
net asset value per share, the Directors have the right to change from an
amortized cost basis of valuation to valuation based on market quotations. The
Fund will notify shareholders of the Fund of any such change.
IX. TAXATION OF THE FUND AND SHAREHOLDERS
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The Fund intends to distribute all of its daily net investment income (and
net short-term capital gains, if any) to shareholders of record as of the close
of business the preceding business day. Net income, for dividend purposes,
includes accrued interest and amortization of acquisition, original issue and
market discount, plus or minus any short-term gains or losses realized on sales
of portfolio securities, less the amortization of market premium and the
estimated expenses of the Fund. Net income will be calculated immediately prior
to the determination of net asset value per share of the Fund.
The Directors of the Fund may revise the dividend policy, or postpone the
payment of dividends, if the Fund should have or anticipate any large unexpected
expense, loss or fluctuation in net assets which, in the opinion of the
Directors, might have a significant adverse effect on shareholders. On occasion,
in order to maintain a constant $1.00 per share net asset value, the Directors
may direct that the number of outstanding shares be reduced in each
shareholder's account. Such reduction may result in taxable income to a
shareholder in excess of the net increase (i.e., dividends, less such
reductions), if any, in the shareholder's account for a period of time.
Furthermore, such reduction may be realized as a capital loss when the shares
are liquidated.
It has been and remains the Fund's policy and practice that, if checks for
dividends or distributions paid in cash remain uncashed, no interest will accrue
on amounts represented by such uncashed checks.
TAXES. The Fund has qualified and intends to remain qualified as a
regulated investment company under Subchapter M of the Internal Revenue Code. If
so qualified, the Fund will not be subject to federal income taxes, provided
that it distributes all of its taxable net investment income and all of its net
realized gains.
Shareholders will be subject to federal income tax on dividends paid from
interest income derived from taxable securities and on distributions of realized
net short-term capital gains and long-term capital gains. Interest and realized
net short-term capital gains distributions are taxable to the shareholder as
ordinary dividend income regardless of whether the shareholder receives such
distributions in additional shares or in cash. Since the Fund's income is
expected to be derived entirely from interest rather than dividends, none of
such distributions will be eligible for the federal dividends received deduction
available to corporations. Realized net long-term capital gains distributions,
which are taxable as long-term capital gains, are not eligible for the dividends
received deduction.
The Fund may be subject to tax or taxes in certain states where it does
business. Furthermore, in those states which have income tax laws, the tax
treatment of the Fund and of shareholders with respect to distributions by the
Fund may differ from federal tax treatment.
Shareholders are urged to consult their own tax advisors regarding specific
questions as to federal, state or local taxes.
23
<PAGE>
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
- --------------------------------------------------------------------------------
The Fund's current yield for the seven days ending August 31, 1999 was
4.75%. The effective annual yield on August 31, 1999, was 4.86% assuming daily
compounding.
The Fund's annualized current yield, as may be quoted from time to time in
advertisements and other communications to shareholders and potential investors,
is computed by determining, for a stated seven-day period, the net change,
exclusive of capital changes and including the value of additional shares
purchased with dividends and any dividends declared therefrom (which reflect
deductions of all expenses of the Fund such as management fees), in the value of
a hypothetical pre-existing account having a balance of one share at the
beginning of the period, and dividing the difference by the value of the account
at the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7).
The Fund's annualized effective yield, as may be quoted from time to time in
advertisements and other communications to shareholders and potential investors,
is computed by determining (for the same stated seven-day period as for the
current yield), the net change, exclusive of capital changes and including the
value of additional shares purchased with dividends and any dividends declared
therefrom (which reflect deductions of all expenses of the Fund such as
management fees), in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, and dividing the difference
by the value of the account at the beginning of the base period to obtain the
base period return, and then compounding the base period return by adding 1,
raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the
result.
The yields quoted in any advertisement or other communication should not be
considered a representation of the yields of the Fund in the future since the
yield is not fixed. Actual yields will depend not only on the type, quality and
maturities of the investments held by the Fund and changes in interest rates on
such investments, but also on changes in the Fund's expenses during the period.
Yield information may be useful in reviewing the performance of the Fund and
for providing a basis for comparison with other investment alternatives.
However, unlike bank deposits or other investments which typically pay a fixed
yield for a stated period of time, the Fund's yield fluctuates.
The Fund may also advertise the growth of hypothetical investments of
$10,000, $50,000 and $100,000 in shares of the Fund by adding the sum of all
distributions on 10,000, 50,000 or 100,000 shares of the Fund since inception to
$10,000, $50,000 and $100,000, as the case may be. Investments of $10,000,
$50,000 and $100,000 in the Fund at inception would have grown to $55,262,
$276,310 and $552,620, respectively, at August 31, 1999.
XII. FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
EXPERTS. The financial statements of the Fund for the fiscal year ended
August 31, 1999 included in the PROSPECTUS and incorporated by reference in this
STATEMENT OF ADDITIONAL INFORMATION 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.
24
<PAGE>
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
PART C OTHER INFORMATION
Item 23. Exhibits
- -------- -----------------------------------------------------------------
1 (a). Articles of Incorporation of the Registrant dated August 30, 1974
and all amendments thereto, comprised of amended Articles of
Incorporation dated May 12, 1975 and amendments to Articles of
Incorporation dated August 30, 1977, December 20, 1978, May 4,
1979, December 19, 1978, September 17, 1981, March 18, 1983,
December 16, 1985 and June 29, 1993, are incorporated by
reference to Exhibit 1 of Post-Effective Amendment No. 30 to the
Registration Statement on Form N-1A, filed on October 8, 1993.
1 (b). Articles of Amendment dated June 22, 1998 are incorporated by
reference to Exhibit 1 of Post-Effective Amendment No. 35 to the
Registration Statement on Form N-1A, filed on October 20, 1998.
2. Amended and Restated By-Laws of the Registrant, dated May 1, 1999,
are incorporated by reference to Exhibit 2 of Post-Effective
Amendment No. 36 to the Registration Statement on Form N-1A,
filed on August 24, 1999.
3. Not Applicable.
4. Amended Investment Management Agreement between the Registrant and
Morgan Stanley Dean Witter Advisors Inc., dated April 30, 1998, is
incorporated by reference to Exhibit 5 of Post-Effective Amendment
No. 35 to the Registration Statement on Form N-1A, filed on
October 20, 1998.
5 (a). Amended Distribution Agreement dated May 31, 1997 is incorporated
by reference to Exhibit 6 of Post-Effective Amendment No. 34 to the
Registration Statement on Form N-1A, filed on October 23, 1997.
5 (b). Selected Dealer Agreement between Morgan Stanley Dean Witter
Distributors Inc. and Dean Witter Reynolds Inc. is incorporated
by reference to Exhibit 6(b) of Post-Effective Amendment No. 30
to the Registration Statement on Form N-1A, filed on
October 7, 1993.
6. Not Applicable.
7 (a). Custody Agreement between The Bank of New York and the Registrant
is incorporated by reference to Exhibit 8 of Post-Effective
Amendment No. 32 to the Registration Statement on Form N-1A,
filed on October 17, 1995.
7 (b). Amendment to Custody Agreement, dated April 17, 1996, between the
Bank of New York and the Registrant is incorporated by reference
to Exhibit 8 of Post-Effective Amendment No. 33 to the
Registration Statement on Form N-1A, filed on October 16, 1996.
8 (a). Amended and Restated Transfer Agency and Service Agreement, dated
June 22, 1998, is incorporated by reference to Exhibit 8 of
Post-Effective Amendment No. 35 to the Registration Statement on
Form N-1A, filed on October 20, 1998.
<PAGE>
8 (b). Amended Services Agreement, dated June 22, 1998, is incorporated
by reference to Exhibit 9 of Post-Effective Amendment No. 35 to
the Registration Statement on Form N-1A, filed on October 20, 1998.
9. Opinion of Piper & Marbury, L.L.P. is incorporated by reference to
Exhibit 9 of Post-Effective Amendment No. 36 to the Registration
Statement on Form N-1A, filed on August 24, 1999.
10. Consent of Independent Accountants, filed herein.
11. Not Applicable.
12. Not Applicable.
13. Amended and Restated Plan of Distribution pursuant to Rule 12b-1,
dated July 23, 1997, is incorporated by reference to Exhibit 15
of Post-Effective Amendment No. 34 to the Registration Statement
on Form N-1A, filed on October 23, 1997.
14. Not Applicable.
Other Powers of Attorney of Trustees are incorporated by reference to
Exhibit (Other) of Post-Effective Amendment No. 30 to the
Registration Statement on Form N-1A, filed on October 8, 1993 and
of Post-Effective Amendment No. 31 to the Registration Statement
on Form N-1A, filed on October 17, 1994 and of Post-Effective
Amendment No. 34 to the Registration Statement on Form N-1A,
filed on October 23, 1997.
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.
None
Item 25. INDEMNIFICATION.
Reference is made to Section 3.15 of the Registrant's By-Laws and Section
2-418 of the Maryland General Corporation Law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ( the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities ( other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in connection with the successful defense of any action, suit or proceeding) is
asserted against the Registrant by such director, officer or controlling person
in connection with the shares being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act, and will
be governed by the final adjudication of such issue.
<PAGE>
The Registrant hereby undertakes that it will apply the indemnification
provision of its by-laws in a manner consistent with release 11330 of the
Securities and Exchange Commission under the Investment Company Act of 1940, so
long as the interpretation of Sections 17 (h) and 17 (l) of such Act remains in
effect.
Registrant, in conjunction with the Investment Manager, Registrant's
Directors, and other registered investment management companies managed by the
Investment Manager, maintains insurance on behalf of any person who is or was a
Director, officer, employee, or agent of registrant, or who is or was serving at
the request of registrant as a trustee, director, officer, employee or agent of
another trust or corporation, against any liability asserted against him and
incurred by him or arising out of his position. However, in no event will
registrant maintain insurance to indemnify any such person for any act for which
Registrant itself is not permitted to indemnify him.
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
See "The Fund and Its Management" in the Prospectus regarding the business
of the investment advisor. The following information is given regarding officers
of Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"). MSDW Advisors is
a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co.
The term "Morgan Stanley Dean Witter Funds" refers to the following
registered investment companies:
CLOSED-END INVESTMENT COMPANIES
(1) Morgan Stanley Dean Witter California Insured Municipal Income Trust
(2) Morgan Stanley Dean Witter California Quality Municipal Securities
(3) Morgan Stanley Dean Witter Government Income Trust
(4) Morgan Stanley Dean Witter High Income Advantage Trust
(5) Morgan Stanley Dean Witter High Income Advantage Trust II
(6) Morgan Stanley Dean Witter High Income Advantage Trust III
(7) Morgan Stanley Dean Witter Income Securities Inc.
(8) Morgan Stanley Dean Witter Insured California Municipal Securities
(9) Morgan Stanley Dean Witter Insured Municipal Bond Trust
(10) Morgan Stanley Dean Witter Insured Municipal Income Trust
(11) Morgan Stanley Dean Witter Insured Municipal Securities
(12) Morgan Stanley Dean Witter Insured Municipal Trust
(13) Morgan Stanley Dean Witter Municipal Income Opportunities Trust
(14) Morgan Stanley Dean Witter Municipal Income Opportunities Trust II
(15) Morgan Stanley Dean Witter Municipal Income Opportunities Trust III
(16) Morgan Stanley Dean Witter Municipal Income Trust
(17) Morgan Stanley Dean Witter Municipal Income Trust II
(18) Morgan Stanley Dean Witter Municipal Income Trust III
(19) Morgan Stanley Dean Witter Municipal Premium Income Trust
(20) Morgan Stanley Dean Witter New York Quality Municipal Securities
(21) Morgan Stanley Dean Witter Prime Income Trust
(22) Morgan Stanley Dean Witter Quality Municipal Income Trust
(23) Morgan Stanley Dean Witter Quality Municipal Investment Trust
(24) Morgan Stanley Dean Witter Quality Municipal Securities
<PAGE>
OPEN-END INVESTMENT COMPANIES
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Money Trust
(4) Active Assets Tax-Free Trust
(5) Morgan Stanley Dean Witter Aggressive Equity Fund
(6) Morgan Stanley Dean Witter American Opportunities Fund
(7) Morgan Stanley Dean Witter Balanced Growth Fund
(8) Morgan Stanley Dean Witter Balanced Income Fund
(9) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(10) Morgan Stanley Dean Witter California Tax-Free Income Fund
(11) Morgan Stanley Dean Witter Capital Growth Securities
(12) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS PORTFOLIO"
(13) Morgan Stanley Dean Witter Convertible Securities Trust
(14) Morgan Stanley Dean Witter Developing Growth Securities Trust
(15) Morgan Stanley Dean Witter Diversified Income Trust
(16) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(17) Morgan Stanley Dean Witter Equity Fund
(18) Morgan Stanley Dean Witter European Growth Fund Inc.
(19) Morgan Stanley Dean Witter Federal Securities Trust
(20) Morgan Stanley Dean Witter Financial Services Trust
(21) Morgan Stanley Dean Witter Fund of Funds
(22) Morgan Stanley Dean Witter Global Dividend Growth Securities
(23) Morgan Stanley Dean Witter Global Utilities Fund
(24) Morgan Stanley Dean Witter Growth Fund
(25) Morgan Stanley Dean Witter Hawaii Municipal Trust
(26) Morgan Stanley Dean Witter Health Sciences Trust
(27) Morgan Stanley Dean Witter High Yield Securities Inc.
(28) Morgan Stanley Dean Witter Income Builder Fund
(29) Morgan Stanley Dean Witter Information Fund
(30) Morgan Stanley Dean Witter Intermediate Income Securities
(31) Morgan Stanley Dean Witter International Fund
(32) Morgan Stanley Dean Witter International SmallCap Fund
(33) Morgan Stanley Dean Witter Japan Fund
(34) Morgan Stanley Dean Witter Latin American Growth Fund
(35) Morgan Stanley Dean Witter Limited Term Municipal Trust
(36) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(37) Morgan Stanley Dean Witter Market Leader Trust
(38) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(39) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(40) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(41) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(42) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(43) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(44) Morgan Stanley Dean Witter Next Generation Trust
(45) Morgan Stanley Dean Witter North American Government Income Trust
(46) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(47) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
(48) Morgan Stanley Dean Witter Real Estate Fund
(49) Morgan Stanley Dean Witter S&P 500 Index Fund
(50) Morgan Stanley Dean Witter S&P 500 Select Fund
<PAGE>
(51) Morgan Stanley Dean Witter Select Dimensions Investment Series
(52) Morgan Stanley Dean Witter Select Municipal Reinvestment Fund
(53) Morgan Stanley Dean Witter Short-Term Bond Fund
(54) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(55) Morgan Stanley Dean Witter Small Cap Growth Fund
(56) Morgan Stanley Dean Witter Special Value Fund
(57) Morgan Stanley Dean Witter Strategist Fund
(58) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(59) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(60) Morgan Stanley Dean Witter Total Market Index Fund
(61) Morgan Stanley Dean Witter Total Return Trust
(62) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(63) Morgan Stanley Dean Witter U.S. Government Securities Trust
(64) Morgan Stanley Dean Witter Utilities Fund
(65) Morgan Stanley Dean Witter Value-Added Market Series
(66) Morgan Stanley Dean Witter Value Fund
(67) Morgan Stanley Dean Witter Variable Investment Series
(68) Morgan Stanley Dean Witter World Wide Income Trust
<TABLE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Mitchell M. Merin President and Chief Operating Officer of Asset
President, Chief Management of Morgan Stanley Dean Witter & Co.
Executive Officer and ("MSDW); Chairman, Chief Executive Officer and Director
Director of Morgan Stanley Dean Witter Distributors Inc. ("MSDW
Distributors") and Morgan Stanley Dean Witter Trust FSB
("MSDW Trust"); President, Chief Executive Officer and
Director of Morgan Stanley Dean Witter Services Company
Inc. ("MSDW Services"); President of the Morgan Stanley
Dean Witter Funds and Discover Brokerage Index Series;
Executive Vice President and Director of Dean Witter
Reynolds Inc. ("DWR"); Director of various MSDW
subsidiaries.
Joseph J. McAlinden Vice President of the Morgan Stanley Dean Witter Funds
Executive Vice President and Discover Brokerage Index Series; Director of MSDW
and Chief Investment Trust.
Officer
Ronald E. Robison President MSDW Trust; Executive Vice President, Chief
Executive Vice President, Administrative Officer and Director of MSDW Services;
Chief Administrative Vice President of the Morgan Stanley Dean Witter Funds
Officer and Director and Discover Brokerage Index Series.
Edward C. Oelsner, III
Executive Vice President
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Barry Fink Assistant Secretary of DWR; Senior Vice President,
Senior Vice President, Secretary, General Counsel and Director of MSDW
Secretary, General Services; Senior Vice President, Assistant Secretary and
Counsel and Director Assistant General Counsel of MSDW Distributors; Vice
President, Secretary and General Counsel of the Morgan
Stanley Dean Witter Funds and Discover Brokerage Index
Series.
Peter M. Avelar Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the High
Yield Group
Mark Bavoso Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Douglas Brown
Senior Vice President
Rosalie Clough
Senior Vice President
and Director of Marketing
Richard Felegy
Senior Vice President
Edward F. Gaylor Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Robert S. Giambrone Senior Vice President of MSDW Services, MSDW
Senior Vice President Distributors and MSDW Trust and Director of MSDW Trust;
Vice President of the Morgan Stanley Dean Witter Funds
and Discover Brokerage Index Series.
Rajesh K. Gupta Vice President of various Morgan Stanley Dean Witter
Senior Vice President, Funds.
Director of the Taxable
Fixed Income Group and
Chief Administrative Officer -
Investments
Kenton J. Hinchliffe Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds and Discover Brokerage Index Series.
Kevin Hurley Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Jenny Beth Jones Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Michelle Kaufman Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
John B. Kemp, III President of MSDW Distributors.
Senior Vice President
Anita H. Kolleeny Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of Sector
Rotation
Jonathan R. Page Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Money
Market Group
Ira N. Ross Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
Guy G. Rutherfurd, Jr. Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Growth
Group
Rochelle G. Siegel Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
James Solloway
Senior Vice President
Paul D. Vance Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the Growth
and Income Group
Elizabeth A. Vetell
Senior Vice President
and Director of Shareholder
Communication
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
James F. Willison Vice President of various Morgan Stanley Dean Witter
Senior Vice President Funds.
and Director of the
Tax-Exempt Fixed
Income Group
Thomas F. Caloia First Vice President and Assistant Treasurer of
First Vice President MSDW Services; Assistant Treasurer of MSDW
and Assistant Distributors; Treasurer and Chief Financial and Accounting
Treasurer Officer of the Morgan Stanley Dean Witter Funds and
Discover Brokerage Index Series.
Thomas Chronert
First Vice President
Marilyn K. Cranney Assistant Secretary of DWR; First Vice President and
First Vice President Assistant Secretary of MSDW Services; Assistant
and Assistant Secretary Secretary of MSDW Distributors, the Morgan Stanley Dean
Witter Funds and Discover Brokerage Index Series.
Salvatore DeSteno First Vice President of MSDW Services.
First Vice President
Peter W. Gurman
First Vice President
Michael Interrante First Vice President and Controller of MSDW Services;
First Vice President Assistant Treasurer of MSDW Distributors; First Vice
and Controller President and Treasurer of MSDW Trust.
David Johnson
First Vice President
Stanley Kapica
First Vice President
Lou Anne D. McInnis First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
Carsten Otto First Vice President and Assistant Secretary of MSDW
First Vice President Services; Assistant Secretary of MSDW Distributors, the
and Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Ruth Rossi First Vice President and Assistant Secretary of MSDW
First Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
James P. Wallin
First Vice President
Robert Abreu
Vice President
Dale Albright
Vice President
Joan G. Allman
Vice President
Andrew Arbenz
Vice President
Joseph Arcieri Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Armon Bar-Tur Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Raymond Basile
Vice President
Nancy Belza
Vice President
Maurice Bendrihem
Vice President and
Assistant Controller
Dale Boettcher
Vice President
Ronald Caldwell
Vice President
Joseph Cardwell
Vice President
Liam Carroll
Vice President
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Philip Casparius
Vice President
Aaron Clark
Vice President
William Connerly
Vice President
David Dineen
Vice President
Sheila Finnerty Vice President of Morgan Stanley Dean Witter Prime
Vice President Income Trust
Jeffrey D. Geffen
Vice President
Sandra Gelpieryn
Vice President
Charmaine George
Vice President
Michael Geringer
Vice President
Gail Gerrity
Vice President
Ellen Gold
Vice President
Stephen Greenhut
Vice President
Trey Hancock
Vice President
Matthew Haynes Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Peter Hermann Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
David T. Hoffman
Vice President
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Kevin Jung Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Carol Espejo-Kane
Vice President
Nancy Karole-Kennedy
Vice President
Doug Ketterer
Vice President
Paula LaCosta Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Kimberly LaHart
Vice President
Thomas Lawlor
Vice President
Todd Lebo Vice President and Assistant Secretary of MSDW
Vice President and Services; Assistant Secretary of MSDW Distributors, the
Assistant Secretary Morgan Stanley Dean Witter Funds and Discover
Brokerage Index Series.
Gerard J. Lian Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Nancy Login
Vice President
Sharon Loguercio
Vice President
Steven MacNamara
Vice President
Catherine Maniscalco Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Albert McGarity
Vice President
Teresa McRoberts Vice President of Morgan Stanley Dean Witter S&P 500
Vice President Select Fund.
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Mark Mitchell
Vice President
Julie Morrone Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Mary Beth Mueller
Vice President
David Myers Vice President of Morgan Stanley Dean Witter Natural
Vice President Resource Development Securities Inc.
James Nash
Vice President
Richard Norris
Vice President
Anne Pickrell
Vice President
Dawn Rorke
Vice President
John Roscoe Vice President of Morgan Stanley Dean Witter
Vice President Real Estate Fund
Hugh Rose
Vice President
Robert Rossetti Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Carl F. Sadler
Vice President
Deborah Santaniello
Vice President
Patrice Saunders
Vice President
Howard A. Schloss Vice President of Morgan Stanley Dean Witter Federal
Vice President Securities Trust.
Peter J. Seeley Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
<PAGE>
<CAPTION>
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
- ---------------------- ------------------------------------------------
<S> <C>
Robert Stearns
Vice President
Naomi Stein
Vice President
Michael Strayhorn
Vice President
Kathleen H. Stromberg Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
Marybeth Swisher
Vice President
Michael Thayer
Vice President
Robert Vanden Assem
Vice President
David Walsh
Vice President
Alice Weiss Vice President of various Morgan Stanley Dean Witter
Vice President Funds.
John Wong
Vice President
</TABLE>
The principal address of MSDW Advisors, MSDW Services, MSDW Distributors,
DWR, the Morgan Stanley Dean Witter Funds and Discover Brokerage Index Series is
Two World Trade Center, New York, New York 10048. The principal address of MSDW
is 1585 Broadway, New York, New York 10036. The principal address of MSDW Trust
is 2 Harborside Financial Center, Jersey City, New Jersey 07311.
Item 27. PRINCIPAL UNDERWRITERS
(a) Morgan Stanley Dean Witter Distributors Inc. ("MSDW Distributors"), a
Delaware corporation, is the principal underwriter of the Registrant. MSDW
Distributors is also the principal underwriter of the following investment
companies:
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Money Trust
(4) Active Assets Tax-Free Trust
(5) Morgan Stanley Dean Witter Aggressive Equity Fund
<PAGE>
(6) Morgan Stanley Dean Witter American Opportunities Fund
(7) Morgan Stanley Dean Witter Balanced Growth Fund
(8) Morgan Stanley Dean Witter Balanced Income Fund
(9) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(10) Morgan Stanley Dean Witter California Tax-Free Income Fund
(11) Morgan Stanley Dean Witter Capital Growth Securities
(12) Morgan Stanley Dean Witter Competitive Edge Fund, "Best Ideas Portfolio"
(13) Morgan Stanley Dean Witter Convertible Securities Trust
(14) Morgan Stanley Dean Witter Developing Growth Securities Trust
(15) Morgan Stanley Dean Witter Diversified Income Trust
(16) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(17) Morgan Stanley Dean Witter Equity Fund
(18) Morgan Stanley Dean Witter European Growth Fund Inc.
(19) Morgan Stanley Dean Witter Federal Securities Trust
(20) Morgan Stanley Dean Witter Financial Services Trust
(21) Morgan Stanley Dean Witter Fund of Funds
(22) Morgan Stanley Dean Witter Global Dividend Growth Securities
(23) Morgan Stanley Dean Witter Global Utilities Fund
(24) Morgan Stanley Dean Witter Growth Fund
(25) Morgan Stanley Dean Witter Hawaii Municipal Trust
(26) Morgan Stanley Dean Witter Health Sciences Trust
(27) Morgan Stanley Dean Witter High Yield Securities Inc.
(28) Morgan Stanley Dean Witter Income Builder Fund
(29) Morgan Stanley Dean Witter Information Fund
(30) Morgan Stanley Dean Witter Intermediate Income Securities
(31) Morgan Stanley Dean Witter International Fund
(32) Morgan Stanley Dean Witter International SmallCap Fund
(33) Morgan Stanley Dean Witter Japan Fund
(34) Morgan Stanley Dean Witter Latin American Growth Fund
(35) Morgan Stanley Dean Witter Limited Term Municipal Trust
(36) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(37) Morgan Stanley Dean Witter Market Leader Trust
(38) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(39) Morgan Stanley Dean Witter Mid-Cap Equity Trust
(40) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(41) Morgan Stanley Dean Witter Natural Resource Development Securities Inc.
(42) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(43) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(44) Morgan Stanley Dean Witter Next Generation Trust
(45) Morgan Stanley Dean Witter North American Government Income Trust
(46) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(47) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
(48) Morgan Stanley Dean Witter Prime Income Trust
(49) Morgan Stanley Dean Witter Real Estate Fund
(50) Morgan Stanley Dean Witter S&P 500 Index Fund
(51) Morgan Stanley Dean Witter S&P 500 Select Fund
(52) Morgan Stanley Dean Witter Short-Term Bond Fund
(53) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(54) Morgan Stanley Dean Witter Small Cap Growth Fund
(55) Morgan Stanley Dean Witter Special Value Fund
(56) Morgan Stanley Dean Witter Strategist Fund
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(57) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(58) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(59) Morgan Stanley Dean Witter Total Market Index Fund
(60) Morgan Stanley Dean Witter Total Return Trust
(61) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(62) Morgan Stanley Dean Witter U.S. Government Securities Trust
(63) Morgan Stanley Dean Witter Utilities Fund
(64) Morgan Stanley Dean Witter Value-Added Market Series
(65) Morgan Stanley Dean Witter Value Fund
(66) Morgan Stanley Dean Witter Variable Investment Series
(67) Morgan Stanley Dean Witter World Wide Income Trust
(b) The following information is given regarding directors and officers of
MSDW Distributors not listed in Item 26 above. The principal address of MSDW
Distributors is Two World Trade Center, New York, New York 10048. Other than Mr.
Purcell, who is a Director of the Registrant, none of the following persons has
any position or office with the Registrant.
Name Positions and Office with MSDW Distributors
- ---- -------------------------------------------
Michael T. Gregg Vice President and Assistant Secretary.
James F. Higgins Director
Fredrick K. Kubler Senior Vice President, Assistant Secretary and Chief
Compliance Officer.
Philip J. Purcell Director
John Schaeffer Director
Charles Vadala Senior Vice President and Financial Principal.
Item 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained by the Investment Manager at its offices, except records relating to
holders of shares issued by the Registrant, which are maintained by the
Registrant's Transfer Agent, at its place of business as shown in the
prospectus.
Item 29. MANAGEMENT SERVICES
Registrant is not a party to any such management-related service contract.
Item 30. UNDERTAKINGS
Registrant hereby undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York on the 25th day of October, 1999.
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
By: /s/Barry Fink
-------------------------
Barry Fink
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 37 has been signed below by the following persons
in the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
(1) Principal Executive Officer Chairman, Chief Executive
Officer and Director
By: /s/ Charles A. Fiumefreddo 10/25/99
---------------------------
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By: /s/ Thomas F. Caloia 10/25/99
---------------------------
Thomas F. Caloia
(3) Majority of the Directors
Charles A. Fiumefreddo (Chairman)
Philip J. Purcell
By: /s/ Barry Fink 10/25/99
---------------------------
Barry Fink
Attorney-in-Fact
Michael Bozic Manuel H. Johnson
Edwin J. Garn Michael E. Nugent
Wayne E. Hedien John L. Schroeder
By: /s/ David M. Butowsky 10/25/99
---------------------------
David M. Butowsky
Attorney-in-Fact
<PAGE>
MORGAN STANLEY DEAN WITTER LIQUID ASSET FUND INC.
EXHIBIT INDEX
10. Consent of Independent Accountants.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 37 to the registration statement on Form N-1A (the
"Registration Statement") of our report dated October 7, 1999, relating to the
financial statements and financial highlights of Morgan Stanley Dean Witter
Liquid Asset Fund Inc., which appears in such Prospectus, and to the
incorporation by reference of our report into the Statement of Additional
Information which constitutes part of this Registration Statement. We also
consent to the references to us under the headings "Custodian and Independent
Accountants" and "Experts" in such Statement of Additional Information and to
the reference to us under the heading "Financial Highlights" in such Prospectus.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
October 22, 1999
