-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EUT4t8NsR0BV82r653wI16IauJ//CWY90aONwl9fiCRgUTIHvcFMiqXg4nL2eO/8 9xa6n/A59xV9yN/P7X/f3A== 0000912057-01-008510.txt : 20010328 0000912057-01-008510.hdr.sgml : 20010328 ACCESSION NUMBER: 0000912057-01-008510 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20010327 EFFECTIVENESS DATE: 20010327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND CENTRAL INDEX KEY: 0000885410 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 136993838 STATE OF INCORPORATION: MA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-46515 FILM NUMBER: 1580739 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-06608 FILM NUMBER: 1580740 BUSINESS ADDRESS: STREET 1: TWO WORLD TRADE CENTER STREET 2: 72ND FL CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123922550 MAIL ADDRESS: STREET 1: TWO WORLD TRADE CENTER STREET 2: 72ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10048 FORMER COMPANY: FORMER CONFORMED NAME: TCW/DW LATIN AMERICAN GROWTH FUND DATE OF NAME CHANGE: 19920929 485BPOS 1 a2041641z485bpos.txt 485BPOS AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 27, 2001 REGISTRATION NOS.: 33-46515 811-6608 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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. 12 /X/ AND/OR REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / / AMENDMENT NO. 14 /X/
------------------ MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND (A MASSACHUSETTS BUSINESS TRUST) (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 March 30, 2001 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 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROSPECTUS - MARCH 30, 2001 Morgan Stanley Dean Witter LATIN AMERICAN GROWTH FUND [COVER PHOTO] A MUTUAL FUND THAT SEEKS LONG-TERM CAPITAL APPRECIATION 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. CONTENTS The Fund Investment Objective......... 1 Principal Investment Strategies................... 1 Principal Risks.............. 2 Past Performance............. 4 Fees and Expenses............ 5 Additional Investment Strategy Information......... 6 Additional Risk Information.................. 7 Fund Management.............. 9 Shareholder Information Pricing Fund Shares.......... 10 How to Buy Shares............ 10 How to Exchange Shares....... 12 How to Sell Shares........... 14 Distributions................ 15 Tax Consequences............. 16 Share Class Arrangements..... 17 Financial Highlights ............................. 25 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.
[Sidebar] CAPITAL APPRECIATION AN INVESTMENT OBJECTIVE HAVING THE GOAL OF SELECTING SECURITIES WITH THE POTENTIAL TO RISE IN PRICE RATHER THAN PAY OUT INCOME. [End Sidebar] THE FUND [ICON] INVESTMENT OBJECTIVE - -------------------------------------------------------------------------------- Morgan Stanley Dean Witter Latin American Growth Fund seeks long-term capital appreciation. [ICON] PRINCIPAL INVESTMENT STRATEGIES - -------------------------------------------------------------------------------- The Fund will normally invest at least 65% of its assets in common stocks and other equity securities (including depository receipts) of Latin American companies. In determining which securities to buy, hold or sell for the Fund, the Fund's "Sub-Advisor," TCW Investment Management Company, selects securities based on its view of their potential for capital appreciation; current dividend income will not be a factor. The Sub-Advisor primarily uses a "top-down" investment approach, which begins with an evaluation of the country in which the proposed investment is to be made. Following the country level review, the Sub-Advisor conducts a fundamental analysis of specific securities, industries and companies. The Fund's equity securities will predominately consist of the common and preferred stock of companies listed on a recognized securities exchange or traded in other regulated markets. The Fund's assets will be allocated among the countries in Latin America in accordance with the Sub-Advisor's judgment as to where favorable investment opportunities exist. However, the Sub-Advisor will normally invest in at least three Latin American countries. For the Fund's investment purposes, Latin America includes Argentina, the Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, French Guinea, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, the Netherlands Antilles, Nicaragua, Panama, Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and Venezuela. Latin American companies: (i) are organized in a Latin American country; (ii) have their securities principally trading in markets located in Latin America; OR (iii) derive at least 50% of their profits or revenues from business in Latin America. Common stock is a share ownership or equity interest in a corporation. It may or may not pay dividends, as some companies reinvest all of their profits back into their businesses, while others pay out some of their profits to shareholders as dividends. A depository receipt is generally issued by a bank or financial institution and represents an ownership interest in the common stock or other equity securities of a foreign company. The owner of a depository receipt holds rights to the underlying securities, including the right to receive dividends paid on the underlying security. The remaining 35% of the Fund's assets may be invested in Latin American convertible and debt securities (including zero coupon securities and "junk bonds") and other investment companies. The Fund may also utilize forward currency contracts. 1 In pursuing the Fund's investment objective, the Sub-Advisor has considerable leeway in deciding which investments it buys, holds or sells on a day-to-day basis -- and which trading strategies it uses. For example, the Sub-Advisor in its discretion may determine to use some permitted trading strategies while not using others. [ICON] PRINCIPAL RISKS - -------------------------------------------------------------------------------- There is no assurance that the Fund will achieve its investment objective. The Fund's share price will fluctuate with changes in the market value of the Fund's portfolio securities. When you sell Fund shares, they may be worth less than what you paid for them and, accordingly, you can lose money investing in this Fund. A principal risk of investing in the Fund is associated with its emphasis on equity investments in Latin America. In general, stock values fluctuate in response to activities specific to the company as well as general market, economic and political conditions. Stock prices can fluctuate widely in response to these factors. FOREIGN SECURITIES/LATIN AMERICA. The Fund's investments in foreign securities involve risks in addition to the risks associated with domestic securities. One additional risk is currency risk. While the price of Fund shares is quoted in U.S. dollars, the Fund generally converts U.S. dollars to a foreign market's local currency to purchase a security in that market. If the value of that local currency falls relative to the U.S. dollar, the U.S. dollar value of the foreign security will decrease. This is true even if the foreign security's local price remains unchanged. In addition, many of the currencies of Latin American countries have experienced steady devaluations relative to the U.S. dollar, and major devaluations have historically occurred in certain countries. Any devaluations in the currencies in which the Fund's portfolio securities are denominated may have a detrimental impact on the Fund. There is also a risk that certain Latin American countries may restrict the free conversion of their currencies into other currencies. Further, certain Latin American currencies may not be internationally traded. Foreign securities also have risks related to economic and political developments abroad, including expropriations, confiscatory taxation, exchange control regulation, limitations on the use or transfer of Fund assets and any effects of foreign social, economic or political instability. Economic and political developments in Latin America may have profound effects upon the value of the Fund's portfolio. In the event of expropriation, nationalization or other complication, the Fund could lose its entire investment in any one country. In addition, individual Latin American countries may place restrictions on the ability of foreign entities such as the Fund to invest in particular segments of the local economies. 2 Foreign companies, in general, are not subject to the regulatory requirements of U.S. companies and, as such, there may be less publicly available information about these companies. Moreover, foreign accounting, auditing and financial reporting standards generally are different from those applicable to U.S. companies. Finally, in the event of a default of any foreign debt obligations, it may be more difficult for the Fund to obtain or enforce a judgment against the issuers of the securities. Securities of foreign issuers may be less liquid than comparable securities of U.S. issuers and, as such, their price changes may be more volatile. The securities markets of Latin American countries are substantially smaller, less developed, less liquid and more volatile than the major securities markets in the United States. The limited size of many Latin American securities markets and limited trading volume in issuers compared to volume of trading in U.S. securities could cause prices to be erratic for reasons apart from factors that affect the quality of the securities. For example, limited market size may cause prices to be unduly influenced by traders who control large positions. Adverse publicity and investors' perceptions, whether or not based on fundamental analysis, may decrease the value and liquidity of portfolio securities, especially in these markets. Furthermore, foreign exchanges and broker-dealers are generally subject to less government and exchange scrutiny and regulation than their U.S. counterparts. In addition, differences in clearance and settlement procedures in foreign markets may occasion delays in settlements of the Fund's trades effected in those markets and could result in losses to the Fund due to subsequent declines in the value of the securities subject to the trades. The inability of the Fund to make intended security purchases due to settlement problems could result in a failure of the Fund to make potentially advantageous investments. Most Latin American countries have experienced substantial, and in some periods extremely high, rates of inflation for many years. Inflation and rapid fluctuations in inflation rates have had and may have again very negative effects on the economies and securities markets of certain Latin American countries. Depository receipts involve substantially identical risks to those associated with direct investment in foreign securities. OTHER RISKS. The performance of the Fund also will depend on whether or not the Sub-Advisor is successful in applying the Fund's investment strategies. The Fund is also subject to other risks from its permissible investments including the risks associated with its investments in Latin American convertible and debt securities (including zero coupon securities and "junk bonds"), investment companies and forward currency contracts. Shares of the Fund are not bank deposits and are not guaranteed or insured by the FDIC or any other government agency. 3 [Sidebar] ANNUAL TOTAL RETURNS THIS CHART SHOWS HOW THE PERFORMANCE OF THE FUND'S CLASS B SHARES HAS VARIED FROM YEAR TO YEAR OVER THE PAST 8 CALENDAR YEARS. AVERAGE ANNUAL TOTAL RETURNS THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS WITH THOSE OF A BROAD MEASURE OF MARKET PERFORMANCE OVER TIME. THE FUND'S RETURNS INCLUDE THE MAXIMUM APPLICABLE SALES CHARGE FOR EACH CLASS AND ASSUME YOU SOLD YOUR SHARES AT THE END OF EACH PERIOD. [End Sidebar] [ICON] PAST PERFORMANCE - -------------------------------------------------------------------------------- The bar chart and table below provide some indication of the risks of investing in the Fund. The Fund's past performance does not indicate how the Fund will perform in the future. ANNUAL TOTAL RETURNS - CALENDAR YEARS EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC 1993 46.83% '94 -23.73% '95 -20.26% '96 22.03% '97 30.56% '98 -38.99% '99 53.12% 2000 -19.42%
The bar chart reflects the performance of Class B shares; the performance of the other Classes will differ because the Classes have different ongoing fees. The performance information in the bar chart does not reflect the deduction of sales charges; if these amounts were reflected, returns would be less than shown. Year-to-date total return as of the end of the first calendar quarter was %. During the periods shown in the bar chart, the highest return for a calendar quarter was 37.16% (quarter ended December 31, 1999) and the lowest return for a calendar quarter was -29.55% (quarter ended March 31, 1995).
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 2000) - ------------------------------------------------------------------- LIFE OF FUND PAST 1 YEAR PAST 5 YEARS (SINCE 12/30/92) - --------------------------------------------------------------------------------------- Class A(1) -23.05% N/A N/A - --------------------------------------------------------------------------------------- Class B -23.45% 3.35% 0.84% - --------------------------------------------------------------------------------------- Class C(1) -20.26% N/A N/A - --------------------------------------------------------------------------------------- Class D(1) -18.70% N/A N/A - --------------------------------------------------------------------------------------- S&P/IFCI Latin American Index(2) -14.68% 6.16% 6.33%(3) - ---------------------------------------------------------------------------------------
1 Classes A, C and D commenced operations on July 28, 1997. 2 The S&P/IFCI Latin America Index is a broad, neutral and historically consistent benchmark for the Latin American markets. The Index includes selected securities from Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela reflecting restrictions on foreign investment, market capitalization, and liquidity. The Index does not include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. 3 For the period December 31, 1992 through December 31, 2000.
4 [Sidebar] SHAREHOLDER FEES THESE FEES ARE PAID DIRECTLY FROM YOUR INVESTMENT. ANNUAL FUND OPERATING EXPENSES THESE EXPENSES ARE DEDUCTED FROM THE FUND'S ASSETS AND ARE BASED ON EXPENSES PAID FOR THE FISCAL YEAR ENDED JANUARY 31, 2001. [End Sidebar] [ICON] FEES AND EXPENSES - -------------------------------------------------------------------------------- The table below briefly describes the fees and expenses that you may pay if you buy and hold shares of the Fund. The Fund offers four Classes of shares: Classes A, B, C and D. Each Class has a different combination of fees, expenses and other features. The Fund does not charge account or exchange fees. See the "Share Class Arrangements" section for further fee and expense information.
CLASS A CLASS B CLASS C CLASS D - --------------------------------------------------------------------------------------------------------- SHAREHOLDER FEES - --------------------------------------------------------------------------------------------------------- Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 5.25%(1) None None None - --------------------------------------------------------------------------------------------------------- Maximum deferred sales charge (load) (as a percentage based on the lesser of the offering price or net asset value at redemption) None(2) 5.00%(3) 1.00%(4) None - --------------------------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES - --------------------------------------------------------------------------------------------------------- Management fee 1.25% 1.25% 1.25% 1.25% - --------------------------------------------------------------------------------------------------------- Distribution and service (12b-1) fees 0.19% 1.00% 1.00% None - --------------------------------------------------------------------------------------------------------- Other expenses 0.52% 0.52% 0.52% 0.52% - --------------------------------------------------------------------------------------------------------- Total annual Fund operating expenses 1.96% 2.77% 2.77% 1.77% - ---------------------------------------------------------------------------------------------------------
1 Reduced for purchases of $25,000 and over. 2 Investments that are not subject to any sales charge at the time of purchase are subject to a contingent deferred sales charge ("CDSC") of 1.00% that will be imposed if you sell your shares within one year after purchase, except for certain specific circumstances. 3 The CDSC is scaled down to 1.00% during the sixth year, reaching zero thereafter. See "Share Class Arrangements" for a complete discussion of the CDSC. 4 Only applicable if you sell your shares within one year after purchase.
EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund, your investment has a 5% return each year, and the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, the tables below show your costs at the end of each period based on these assumptions depending upon whether or not you sell your shares at the end of each period.
IF YOU SOLD YOUR SHARES: IF YOU HELD YOUR SHARES: ----------------------------------------- ----------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS ------------------------------------------------------------------ ----------------------------------------- CLASS A $714 $1,108 $1,527 $2,690 $714 $1,108 $1,527 $2,690 ------------------------------------------------------------------ ----------------------------------------- CLASS B $780 $1,159 $1,664 $3,099 $280 $ 859 $1,464 $3,099 ------------------------------------------------------------------ ----------------------------------------- CLASS C $380 $ 859 $1,464 $3,099 $280 $ 859 $1,464 $3,099 ------------------------------------------------------------------ ----------------------------------------- CLASS D $180 $ 557 $ 959 $2,084 $180 $ 557 $ 959 $2,084 ------------------------------------------------------------------ -----------------------------------------
5 [ICON] ADDITIONAL INVESTMENT STRATEGY INFORMATION - -------------------------------------------------------------------------------- This section provides additional information relating to the Fund's principal investment strategies. CONVERTIBLE AND DEBT SECURITIES. The Fund may invest up to 35% of its assets in Latin American convertible securities, which are bonds and other securities convertible into common stock at a particular time and price, and Latin American debt securities. The Fund's fixed-income investments may include zero coupon securities, which are purchased at a discount and either (i) pay no interest or (ii) accrue interest, but make no payments until maturity. The Latin American debt securities include: (a) debt securities of companies organized in a country in Latin America or for which the principal trading market is located in Latin America, (b) "sovereign debt," which are debt securities issued or guaranteed by the government of a country in Latin America, its agencies or instrumentalities, or the central bank of such country, (c) debt securities denominated in a Latin American currency issued by companies to finance operations in Latin America, or (d) debt securities of Latin American companies. Most debt securities in which the Fund invests are not rated; when rated, the rating generally will be below investment grade. Any portion of the Fund's debt securities may be rated below investment grade. Securities rated below investment grade are commonly known as "junk bonds." These securities may include "Rule 144A" securities, which are subject to resale restrictions. The Fund, however, will not invest in debt securities that, at the time of acquisition, are in default in payment of principal or interest. INVESTMENT COMPANIES. The Fund may invest up to 10% of its net assets in securities issued by other investment companies. The Sub-Advisor may view these investments as necessary to participate in certain foreign markets where foreigners are prohibited from investing directly in the securities of individual companies. FORWARD CURRENCY CONTRACTS. The Fund's investments also may include forward currency contracts, which involve the purchase or sale of a specific amount of foreign currency at the current price with delivery at a specified future date. The Fund may use these contracts to hedge against adverse price movements in its portfolio securities and the currencies in which they are denominated. DEFENSIVE INVESTING. The Fund may take temporary "defensive" positions in attempting to respond to adverse market conditions. The Fund may invest any amount of its assets in cash or money market instruments in a defensive posture when the Sub-Advisor believes it is advisable to do so. Although taking a defensive posture is designed to protect the Fund from an anticipated market downturn, it could have the effect of reducing the benefit from any upswing in the market. When the Fund takes a defensive position, it may not achieve its investment objective. 6 The percentage limitations relating to the composition of the Fund's portfolio apply at the time the Fund acquires an investment. Subsequent percentage changes that result from market fluctuations will not generally require the Fund to sell any portfolio security. However, the Fund may be required to sell its illiquid securities holdings, if any, in response to fluctuations in the value of such holdings. The Fund may change its principal investment strategies without shareholder approval; however, you would be notified of any changes. [ICON] ADDITIONAL RISK INFORMATION - -------------------------------------------------------------------------------- This section provides additional information relating to the principal risks of investing in the Fund. CONVERTIBLE SECURITIES. The Fund's investments in convertible securities subject the Fund to the risks associated with both fixed-income securities and common stocks. To the extent that a convertible security's investment value is greater than its conversion value, its price will be likely to increase when interest rates fall and decrease when interest rates rise, as with a fixed-income security. If the conversion value exceeds the investment value, the price of the convertible security will tend to fluctuate directly with the price of the underlying equity security. HIGH RISK DEBT SECURITIES. All fixed-income securities, such as corporate and sovereign debt, are subject to two types of risk: credit risk and interest rate risk. Credit risk refers to the possibility that the issuer of a security will be unable to make interest payments and/or repay the principal on its debt. Interest rate risk refers to fluctuations in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. (Zero coupon securities are typically subject to greater price fluctuations than comparable securities that pay current interest.) The Fund's investments in "junk bonds" pose significant risks. The prices of these securities are likely to be more sensitive to adverse economic changes or individual corporate developments than higher rated securities. During an economic downturn or substantial period of rising interest rates, junk bond issuers and, in particular, highly leveraged issuers may experience financial stress that would adversely affect their ability to service their principal and interest payment obligations, to meet their projected business goals or to obtain additional financing. In the event of a default, the Fund may incur additional expenses to seek recovery. The Rule 144A securities could have the effect of increasing the level of Fund illiquidity to the extent the Fund may be unable to find qualified institutional buyers interested in purchasing the securities. In 7 addition, periods of economic uncertainty and change could result in an increased volatility of market prices of junk bond securities and a corresponding volatility in the Fund's net asset value. Investments in Latin American sovereign debt are subject to unique credit risks. Certain Latin American countries are among the largest debtors to commercial banks and foreign governments. At times, certain Latin American countries have declared a moratorium on the payment of principal and/or interest on external debt. The governmental entities that control the repayment also may not be willing or able to repay the principal and/or interest on the debt when it becomes due. Latin American governments may default on their sovereign debt, which may require holders of that debt to participate in debt rescheduling or additional lending to defaulting governments. There is no bankruptcy proceeding by which defaulted sovereign debt may be collected. These risks could have a severely negative impact on the Fund's sovereign debt holdings and cause the value of the Fund's shares to decline drastically. The Fund's Latin American debt securities are also subject to the general risks of investing in foreign securities. See the "FOREIGN SECURITIES/LATIN AMERICA" paragraphs in the "Principal Risks" section for a discussion of those risks. INVESTMENT COMPANIES. Any Fund investment in an investment company is subject to the underlying risk of that investment company's portfolio securities. For example, if the investment company held common stocks, the Fund also would be exposed to the risk of investing in common stocks. In addition to the Fund's fees and expenses, the Fund would bear its share of the investment company's fees and expenses. FORWARD CURRENCY CONTRACTS. Participation in forward currency contracts also involves risks. If the Sub-Advisor employs a strategy that does not correlate well with the Fund's investments or the currencies in which the investments are denominated, currency contracts could result in a loss. The contracts also may increase the Fund's volatility and, thus, could involve a significant risk. 8 [Sidebar] MORGAN STANLEY DEAN WITTER ADVISORS INC. THE INVESTMENT MANAGER IS WIDELY RECOGNIZED AS A LEADER IN THE MUTUAL FUND INDUSTRY AND TOGETHER WITH MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC., ITS WHOLLY-OWNED SUBSIDIARY, HAD APPROXIMATELY $145 BILLION IN ASSETS UNDER MANAGEMENT AS OF FEBRUARY 28, 2001. [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 supervise the investment of its assets. The Investment Manager has, in turn, contracted with the Sub-Advisor -- TCW Investment Management Company -- to invest the Fund's 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. The Investment Manager's main business office is located at Two World Trade Center, New York, NY 10048. The Sub-Advisor is a wholly-owned subsidiary of TCW Group, Inc., whose direct and indirect subsidiaries provide a variety of trust, investment management and investment advisory services. The Sub-Advisor's main business office is located at 865 South Figueroa Street, Suite 1800, Los Angeles, CA 90017. The Sub-Advisor, together with its affiliated companies, had approximately $80 billion under management or committed to management primarily for institutional investors. Michael P. Reilly, a Managing Director of the Sub-Advisor, is the primary portfolio manager of the Fund. Mr. Reilly has been a portfolio manager with affiliated companies of the TCW Group for over five years. The Fund pays the Investment Manager a monthly management fee as full compensation for the services and facilities furnished to the Fund, and for Fund expenses assumed by the Investment Manager. The fee is based on the Fund's average daily net assets. The Investment Manager pays the Sub-Advisor monthly compensation equal to 40% of this fee. For the fiscal year ended January 31, 2001, the Fund accrued total compensation to the Investment Manager amounting to 1.25% of the Fund's average daily net assets. 9 [Sidebar] CONTACTING A FINANCIAL ADVISOR IF YOU ARE NEW TO THE MORGAN STANLEY DEAN WITTER FAMILY OF FUNDS AND WOULD LIKE TO CONTACT A FINANCIAL ADVISOR, CALL (877) 937-MSDW (TOLL-FREE) FOR THE TELEPHONE NUMBER OF THE MORGAN STANLEY DEAN WITTER OFFICE NEAREST YOU. YOU MAY ALSO ACCESS OUR OFFICE LOCATOR ON OUR INTERNET SITE AT: www.msdwadvice.com/funds [End Sidebar] SHAREHOLDER INFORMATION [ICON] PRICING FUND SHARES - -------------------------------------------------------------------------------- The price of Fund shares (excluding sales charges), called "net asset value," is based on the value of the Fund's portfolio securities. While the assets of each Class are invested in a single portfolio of securities, the net asset value of each Class will differ because the Classes have different ongoing distribution fees. The net asset value per share of the Fund is determined once daily at 4:00 p.m. Eastern time on each day that the New York Stock Exchange is open (or, on days when the New York Stock Exchange closes prior to 4:00 p.m., at such earlier time). Shares will not be priced on days that the New York Stock Exchange is closed. The value of the Fund's portfolio securities is based on the securities' market price when available. When a market price is not readily available, including circumstances under which the Investment Manager and/or Sub-Advisor determines that a security's market price is not accurate, a portfolio security is valued at its fair value, as determined under procedures established by the Fund's Board of Trustees. In these cases, the Fund's net asset value will reflect certain portfolio securities' fair value rather than their market price. With respect to securities that are primarily listed on foreign exchanges, the value of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares. An exception to the Fund's general policy of using market prices concerns its short-term debt portfolio securities. Debt securities with remaining maturities of sixty days or less at the time of purchase are valued at amortized cost. However, if the cost does not reflect the securities' market value, these securities will be valued at their fair value. [ICON] HOW TO BUY SHARES - -------------------------------------------------------------------------------- You may open a new account to buy Fund shares or buy additional Fund shares for an existing account by contacting your Morgan Stanley Dean Witter Financial Advisor or other authorized financial representative. Your Financial Advisor will assist you, step- by-step, with the procedures to invest in the Fund. You may also purchase shares directly by calling the Fund's transfer agent and requesting an application. Because every investor has different immediate financial needs and long-term investment goals, the Fund offers investors four Classes of shares: Classes A, B, C and D. Class D shares are only offered to a limited group of investors. Each Class of shares offers a distinct structure of sales charges, distribution and service fees, and other features that are designed to address a variety of needs. Your Financial Advisor or other authorized financial representative can help you decide which Class may be most appropriate for you. When purchasing Fund shares, you must specify which Class of shares you wish to purchase. 10 [Sidebar] EASYINVEST-SM- A PURCHASE PLAN THAT ALLOWS YOU TO TRANSFER MONEY AUTOMATICALLY FROM YOUR CHECKING OR SAVINGS ACCOUNT OR FROM A MONEY MARKET FUND ON A SEMI-MONTHLY, MONTHLY OR QUARTERLY BASIS. CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL ADVISOR FOR FURTHER INFORMATION ABOUT THIS SERVICE. [End Sidebar] When you buy Fund shares, the shares are purchased at the next share price calculated (less any applicable front-end sales charge for Class A shares) after we receive your purchase order. Your payment is due on the third business day after you place your purchase order. We reserve the right to reject any order for the purchase of Fund shares.
MINIMUM INVESTMENT AMOUNTS -------------------------------------------------------------------------------- MINIMUM INVESTMENT ------------------------ INVESTMENT OPTIONS INITIAL ADDITIONAL -------------------------------------------------------------------------------- Regular Accounts: $1,000 $100 -------------------------------------------------------------------------------- Individual Retirement Accounts: Regular IRAs $1,000 $100 Education IRAs $ 500 $100 -------------------------------------------------------------------------------- EASYINVEST-SM- (Automatically from your checking or savings account or Money Market Fund) $ 100* $100* --------------------------------------------------------------------------------
* Provided your schedule of investments totals $1,000 in twelve months.
There is no minimum investment amount if you purchase Fund shares through: (1) the Investment Manager's mutual fund asset allocation plan, (2) a program, approved by the Fund's distributor, in which you pay an asset-based fee for advisory, administrative and/ or brokerage services, (3) the following programs approved by the Fund's distributor: (i) qualified state tuition plans described in Section 529 of the Internal Revenue Code and (ii) certain other investment programs that do not charge an asset-based fee, or (4) employer-sponsored employee benefit plan accounts. INVESTMENT OPTIONS FOR CERTAIN INSTITUTIONAL AND OTHER INVESTORS/CLASS D SHARES. To be eligible to purchase Class D shares, you must qualify under one of the investor categories specified in the "Share Class Arrangements" section of this PROSPECTUS. SUBSEQUENT INVESTMENTS SENT DIRECTLY TO THE FUND. In addition to buying additional Fund shares for an existing account by contacting your Morgan Stanley Dean Witter Financial Advisor, you may send a check directly to the Fund. To buy additional shares in this manner: - Write a "letter of instruction" to the Fund specifying the name(s) on the account, the account number, the social security or tax identification number, the Class of shares you wish to purchase and the investment amount (which would include any applicable front-end sales charge). The letter must be signed by the account owner(s). - Make out a check for the total amount payable to: Morgan Stanley Dean Witter Latin American Growth Fund. - Mail the letter and check to Morgan Stanley Dean Witter Trust FSB at P.O. Box 1040, Jersey City, NJ 07303. 11 [ICON] HOW TO EXCHANGE SHARES - -------------------------------------------------------------------------------- PERMISSIBLE FUND EXCHANGES. You may exchange shares of any Class of the Fund for the same Class of any other continuously offered Multi-Class Fund, or for shares of a No-Load Fund, a Money Market Fund, North American Government Income Trust or Short-Term U.S. Treasury Trust, without the imposition of an exchange fee. In addition, Class A shares of the Fund may be exchanged for shares of an FSC Fund (funds subject to a front-end sales charge). See the inside back cover of this PROSPECTUS for each Morgan Stanley Dean Witter Fund's designation as a Multi-Class Fund, No-Load Fund, Money Market Fund or FSC Fund. If a Morgan Stanley Dean Witter Fund is not listed, consult the inside back cover of that fund's current prospectus for its designation. Exchanges may be made after shares of the fund acquired by purchase have been held for thirty days. There is no waiting period for exchanges of shares acquired by exchange or dividend reinvestment. The current prospectus for each fund describes its investment objective(s), policies and investment minimums, and should be read before investment. Since exchanges are available only into continuously offered Morgan Stanley Dean Witter Funds, exchanges are not available into any new Morgan Stanley Dean Witter Fund during its initial offering period, or when shares of a particular Morgan Stanley Dean Witter Fund are not being offered for purchase. EXCHANGE PROCEDURES. You can process an exchange by contacting your Morgan Stanley Dean Witter Financial Advisor or other authorized financial representative. Otherwise, you must forward an exchange privilege authorization form to the Fund's transfer agent - Morgan Stanley Dean Witter Trust FSB - and then write the transfer agent or call (800) 869-NEWS to place an exchange order. You can obtain an exchange privilege authorization form by contacting your Financial Advisor or other authorized financial representative or by calling (800) 869-NEWS. If you hold share certificates, no exchanges may be processed until we have received all applicable share certificates. An exchange to any Morgan Stanley Dean Witter Fund (except a Money Market Fund) is made on the basis of the next calculated net asset values of the funds involved after the exchange instructions are accepted. When exchanging into a Money Market Fund, the Fund's shares are sold at their next calculated net asset value and the Money Market Fund's shares are purchased at their net asset value on the following business day. The Fund may terminate or revise the exchange privilege upon required notice. The check writing privilege is not available for Money Market Fund shares you acquire in an exchange. TELEPHONE EXCHANGES. For your protection when calling Morgan Stanley Dean Witter Trust FSB, we will employ reasonable procedures to confirm that exchange instructions communicated over the telephone are genuine. These procedures may include requiring various forms of personal identification such as name, mailing address, social security or other tax identification number. Telephone instructions also may be recorded. 12 Telephone instructions will be accepted if received by the Fund's transfer agent between 9:00 a.m. and 4:00 p.m. Eastern time on any day the New York Stock Exchange is open for business. During periods of drastic economic or market changes, it is possible that the telephone exchange procedures may be difficult to implement, although this has not been the case with the Fund in the past. MARGIN ACCOUNTS. If you have pledged your Fund shares in a margin account, contact your Morgan Stanley Dean Witter Financial Advisor or other authorized financial representative regarding restrictions on the exchange of such shares. TAX CONSIDERATIONS OF EXCHANGES. If you exchange shares of the Fund for shares of another Morgan Stanley Dean Witter Fund, there are important tax considerations. For tax purposes, the exchange out of the Fund is considered a sale of Fund shares - and the exchange into the other fund is considered a purchase. As a result, you may realize a capital gain or loss. You should review the "Tax Consequences" section and consult your own tax professional about the tax consequences of an exchange. LIMITATIONS ON EXCHANGES. Certain patterns of past exchanges and/or purchase or sale transactions involving the Fund or other Morgan Stanley Dean Witter Funds may result in the Fund limiting or prohibiting, at its discretion, additional purchases and/or exchanges. Determinations in this regard may be made based on the frequency or dollar amount of the previous exchanges or purchase or sale transactions. You will be notified in advance of limitations on your exchange privileges. CDSC CALCULATIONS ON EXCHANGES. See the "Share Class Arrangements" section of this PROSPECTUS for a further discussion of how applicable contingent deferred sales charges (CDSCs) are calculated for shares of one Morgan Stanley Dean Witter Fund that are exchanged for shares of another. For further information regarding exchange privileges, you should contact your Morgan Stanley Dean Witter Financial Advisor or call (800) 869-NEWS. 13 [ICON] HOW TO SELL SHARES - -------------------------------------------------------------------------------- You can sell some or all of your Fund shares at any time. If you sell Class A, Class B or Class C shares, your net sale proceeds are reduced by the amount of any applicable CDSC. Your shares will be sold at the next share price calculated after we receive your order to sell as described below.
OPTIONS PROCEDURES ------------------------------------------------------------------------------------- Contact your To sell your shares, simply call your Morgan Stanley Dean Financial Advisor Witter Financial Advisor or other authorized financial representative. ------------------------------------------------------------ Payment will be sent to the address to which the account is registered, or deposited in your brokerage account. ------------------------------------------------------------------------------------- [ICON] By Letter You can also sell your shares by writing a "letter of instruction" that includes: - your account number; - the name of the Fund; - the dollar amount or the number of shares you wish to sell; - the Class of shares you wish to sell; and - the signature of each owner as it appears on the account. [ICON] ------------------------------------------------------------ If you are requesting payment to anyone other than the registered owner(s) or that payment be sent to any address other than the address of the registered owner(s) or pre- designated bank account, you will need a signature guarantee. You can obtain a signature guarantee from an eligible guarantor acceptable to Morgan Stanley Dean Witter Trust FSB. (You should contact Morgan Stanley Dean Witter Trust FSB at (800) 869-NEWS for a determination as to whether a particular institution is an eligible guarantor.) A notary public CANNOT provide a signature guarantee. Additional documentation may be required for shares held by a corporation, partnership, trustee or executor. ------------------------------------------------------------ Mail the letter to Morgan Stanley Dean Witter Trust FSB at P.O. Box 983, Jersey City, NJ 07303. If you hold share certificates, you must return the certificates, along with the letter and any required additional documentation. ------------------------------------------------------------ A check will be mailed to the name(s) and address in which the account is registered, or otherwise according to your instructions. ------------------------------------------------------------------------------------- Systematic If your investment in all of the Morgan Stanley Dean Witter Withdrawal Plan Family of Funds has a total market value of at least $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. [ICON] ------------------------------------------------------------ Amounts withdrawn are subject to any applicable CDSC. A CDSC may be waived under certain circumstances. See the Class B waiver categories listed in the "Share Class Arrangements" section of this PROSPECTUS. ------------------------------------------------------------ To sign up for the Systematic Withdrawal Plan, contact your Morgan Stanley Dean Witter Financial Advisor or call (800) 869-NEWS. You may terminate or suspend your plan at any time. Please remember that withdrawals from the plan are sales of shares, not Fund "distributions," and ultimately may exhaust your account balance. The Fund may terminate or revise the plan at any time. -------------------------------------------------------------------------------------
PAYMENT FOR SOLD SHARES. After we receive your complete instruction to sell as described above, a check will be mailed to you within seven days, although we will attempt to make payment within one business day. Payment may also be sent to your brokerage account. 14 Payment may be postponed or the right to sell your shares suspended under unusual circumstances. If you request to sell shares that were recently purchased by check, your sale will not be effected until it has been verified that the check has been honored. TAX CONSIDERATIONS. Normally, your sale of Fund shares is subject to federal and state income tax. You should review the "Tax Consequences" section of this PROSPECTUS and consult your own tax professional about the tax consequences of a sale. REINSTATEMENT PRIVILEGE. If you sell Fund shares and have not previously exercised the reinstatement privilege, you may, within 35 days after the date of sale, invest any portion of the proceeds in the same Class of Fund shares at their net asset value and receive a pro rata credit for any CDSC paid in connection with the sale. INVOLUNTARY SALES. The Fund reserves the right, on sixty days' notice, to sell the shares of any shareholder (other than shares held in an IRA or 403(b) Custodial Account) whose shares, due to sales by the shareholder, have a value below $100, or in the case of an account opened through EASYINVEST -SM-, if after 12 months the shareholder has invested less than $1,000 in the account. However, before the Fund sells your shares in this manner, we will notify you and allow you sixty days to make an additional investment in an amount that will increase the value of your account to at least the required amount before the sale is processed. No CDSC will be imposed on any involuntary sale. MARGIN ACCOUNTS. If you have pledged your Fund shares in a margin account, contact your Morgan Stanley Dean Witter Financial Advisor or other authorized financial representative regarding restrictions on the sale of such shares. [ICON] DISTRIBUTIONS - -------------------------------------------------------------------------------- [Sidebar] TARGETED DIVIDENDS-SM- YOU MAY SELECT TO HAVE YOUR FUND DISTRIBUTIONS AUTOMATICALLY INVESTED IN OTHER CLASSES OF FUND SHARES OR CLASSES OF ANOTHER MORGAN STANLEY DEAN WITTER FUND THAT YOU OWN. CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL ADVISOR FOR FURTHER INFORMATION ABOUT THIS SERVICE. [End Sidebar] The Fund passes substantially all of its earnings from income and capital gains along to its investors as "distributions." The Fund earns income from stocks and interest from fixed-income investments. These amounts are passed along to Fund shareholders as "income dividend distributions." The Fund realizes capital gains whenever it sells securities for a higher price than it paid for them. These amounts may be passed along as "capital gain distributions." The Fund declares income dividends separately for each Class. Distributions paid on Class A and Class D shares usually will be higher than for Class B and Class C because distribution fees that Class B and Class C pay are higher. Normally, income dividends are distributed to shareholders semi-annually. Capital gains, if any, are usually distributed in June and December. The Fund, however, 15 may retain and reinvest any long-term capital gains. The Fund may at times make payments from sources other than income or capital gains that represent a return of a portion of your investment. Distributions are reinvested automatically in additional shares of the same Class and automatically credited to your account, unless you request in writing that all distributions be paid in cash. If you elect the cash option, the Fund will mail a check to you no later than seven business days after the distribution is declared. However, if you purchase Fund shares through a Financial Advisor within three business days prior to the record date for the distribution, the distribution will automatically be paid to you in cash, even if you did not request to receive all distributions in cash. No interest will accrue on uncashed checks. If you wish to change how your distributions are paid, your request should be received by the Fund's transfer agent, Morgan Stanley Dean Witter Trust FSB, at least five business days prior to the record date of the distributions. [ICON] TAX CONSEQUENCES - -------------------------------------------------------------------------------- As with any investment, you should consider how your Fund investment will be taxed. The tax information in this PROSPECTUS is provided as general information. You should consult your own tax professional about the tax consequences of an investment in the Fund. Unless your investment in the Fund is through a tax-deferred retirement account, such as a 401(k) plan or IRA, you need to be aware of the possible tax consequences when: - The Fund makes distributions; and - You sell Fund shares, including an exchange to another Morgan Stanley Dean Witter Fund. TAXES ON DISTRIBUTIONS. Your distributions are normally subject to federal and state income tax when they are paid, whether you take them in cash or reinvest them in Fund shares. A distribution also may be subject to local income tax. Any income dividend distributions and any short-term capital gain distributions are taxable to you as ordinary income. Any long-term capital gain distributions are taxable to you as long-term capital gains, no matter how long you have owned shares in the Fund. If more than 50% of the Fund's assets are invested in foreign securities at the end of any fiscal year, the Fund may elect to permit shareholders to take a credit or deduction on their federal income tax return for foreign taxes paid by 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 information on your dividends and capital gains for tax purposes. TAXES ON SALES. Your sale of Fund shares normally is subject to federal and state income tax and may result in a taxable gain or loss to you. A sale also may be subject to local income tax. Your exchange of Fund shares for shares of another Morgan Stanley 16 Dean Witter Fund is treated for tax purposes like a sale of your original shares and a purchase of your new shares. Thus, the exchange may, like a sale, result in a taxable gain or loss to you and will give you a new tax basis for your new shares. When you open your Fund account, you should provide your social security or tax identification number on your investment application. By providing this information, you will avoid being subject to a federal backup withholding tax of 31% on taxable distributions and redemption proceeds. Any withheld amount would be sent to the IRS as an advance tax payment. [ICON] SHARE CLASS ARRANGEMENTS - -------------------------------------------------------------------------------- The Fund offers several Classes of shares having different distribution arrangements designed to provide you with different purchase options according to your investment needs. Your Morgan Stanley Dean Witter Financial Advisor or other authorized financial representative can help you decide which Class may be appropriate for you. The general public is offered three Classes: Class A shares, Class B shares and Class C shares, which differ principally in terms of sales charges and ongoing expenses. A fourth Class, Class D shares, is offered only to a limited category of investors. Shares that you acquire through reinvested distributions will not be subject to any front-end sales charge or CDSC - contingent deferred sales charge. Sales personnel may receive different compensation for selling each Class of shares. The sales charges applicable to each Class provide for the distribution financing of shares of that Class. The chart below compares the sales charge and maximum annual 12b-1 fee applicable to each Class:
MAXIMUM CLASS SALES CHARGE ANNUAL 12B-1 FEE ------------------------------------------------------------------------------------------------------------- A Maximum 5.25% initial sales charge reduced for purchase of $25,000 or more; shares sold without an initial sales charge are generally subject to a 1.0% CDSC during first year 0.25% ------------------------------------------------------------------------------------------------------------- B Maximum 5.0% CDSC during the first year decreasing to 0% after six years 1.00% ------------------------------------------------------------------------------------------------------------- C 1.0% CDSC during first year 1.00% ------------------------------------------------------------------------------------------------------------- D None None -------------------------------------------------------------------------------------------------------------
CLASS A SHARES Class A shares are sold at net asset value plus an initial sales charge of up to 5.25%. The initial sales charge is reduced for purchases of $25,000 or more according to the schedule below. Investments of $1 million or more are not subject to an initial sales charge, but are generally subject to a contingent deferred sales charge, or CDSC, of 1.0% on sales made within one year after the last day of the month of purchase. The CDSC will be assessed in the same manner and with the same CDSC waivers as with Class B shares. Class A shares are also subject to a distribution (12b-1) fee of up to 0.25% of the average daily net assets of the Class. 17 [Sidebar] FRONT-END SALES CHARGE OR FSC AN INITIAL SALES CHARGE YOU PAY WHEN PURCHASING CLASS A SHARES THAT IS BASED ON A PERCENTAGE OF THE OFFERING PRICE. THE PERCENTAGE DECLINES BASED UPON THE DOLLAR VALUE OF CLASS A SHARES YOU PURCHASE. WE OFFER THREE WAYS TO REDUCE YOUR CLASS A SALES CHARGES - THE COMBINED PURCHASE PRIVILEGE, RIGHT OF ACCUMULATION AND LETTER OF INTENT. [End Sidebar] The offering price of Class A shares includes a sales charge (expressed as a percentage of the offering price) on a single transaction as shown in the following table:
FRONT-END SALES CHARGE --------------------------------------------- PERCENTAGE OF PUBLIC APPROXIMATE PERCENTAGE AMOUNT OF SINGLE TRANSACTION OFFERING PRICE OF NET AMOUNT INVESTED - ------------------------------------------------------------------------------- Less than $25,000 5.25% 5.54% - ------------------------------------------------------------------------------- $25,000 but less than $50,000 4.75% 4.99% - ------------------------------------------------------------------------------- $50,000 but less than $100,000 4.00% 4.17% - ------------------------------------------------------------------------------- $100,000 but less than $250,000 3.00% 3.09% - ------------------------------------------------------------------------------- $250,000 but less than $1 million 2.00% 2.04% - ------------------------------------------------------------------------------- $1 million and over 0.00% 0.00% - -------------------------------------------------------------------------------
The reduced sales charge schedule is applicable to purchases of Class A shares in a single transaction by: - A single account (including an individual, trust or fiduciary account). - Family member accounts (limited to husband, wife and children under the age of 21). - Pension, profit sharing or other employee benefit plans of companies and their affiliates. - Tax-exempt organizations. - Groups organized for a purpose other than to buy mutual fund shares. COMBINED PURCHASE PRIVILEGE. You also will have the benefit of reduced sales charges by combining purchases of Class A shares of the Fund in a single transaction with purchases of Class A shares of other Multi-Class Funds and shares of FSC Funds. RIGHT OF ACCUMULATION. You also may benefit from a reduction of sales charges if the cumulative net asset value of Class A shares of the Fund purchased in a single transaction, together with shares of other funds you currently own which were previously purchased at a price including a front-end sales charge (or Class A Shares purchased at $1 million or more), and shares acquired through reinvestment of distributions, amounts to $25,000 or more. Also, if you have a cumulative net asset value of all your Class A and Class D shares equal to at least $5 million (or $25 million for certain employee benefit plans), you are eligible to purchase Class D shares of any fund subject to the fund's minimum initial investment requirement. 18 You must notify your Morgan Stanley Dean Witter Financial Advisor or other authorized financial representative (or Morgan Stanley Dean Witter Trust FSB if you purchase directly through the Fund), at the time a purchase order is placed, that the purchase qualifies for the reduced sales charge under the Right of Accumulation. Similar notification must be made in writing when an order is placed by mail. The reduced sales charge will not be granted if: (i) notification is not furnished at the time of the order; or (ii) a review of the records of Dean Witter Reynolds or other authorized dealer of Fund shares or the Fund's transfer agent does not confirm your represented holdings. LETTER OF INTENT. The schedule of reduced sales charges for larger purchases also will be available to you if you enter into a written "Letter of Intent." A Letter of Intent provides for the purchase of Class A shares of the Fund or other Multi-Class Funds or shares of FSC Funds within a thirteen month period. The initial purchase under a Letter of Intent must be at least 5% of the stated investment goal. To determine the applicable sales charge reduction, you may also include: (1) the cost of shares of other Morgan Stanley Dean Witter Funds which were previously purchased at a price including a front-end sales charge during the 90-day period prior to the distributor receiving the Letter of Intent, and (2) the cost of shares of other funds you currently own acquired in exchange for shares of funds purchased during that period at a price including a front-end sales charge. You can obtain a Letter of Intent by contacting your Morgan Stanley Dean Witter Financial Advisor or other authorized financial representative, or by calling (800) 869-NEWS. If you do not achieve the stated investment goal within the thirteen month period, you are required to pay the difference between the sales charges otherwise applicable and sales charges actually paid, which may be deducted from your investment. OTHER SALES CHARGE WAIVERS. In addition to investments of $1 million or more, your purchase of Class A shares is not subject to a front-end sales charge (or a CDSC upon sale) if your account qualifies under one of the following categories: - A trust for which Morgan Stanley Dean Witter Trust FSB provides discretionary trustee services. - Persons participating in a fee-based investment program (subject to all of its terms and conditions, including termination fees, and mandatory sale or transfer restrictions on termination) approved by the Fund's distributor pursuant to which they pay an asset-based fee for investment advisory, administrative and/or brokerage services. - Qualified state tuition plans described in Section 529 of the Internal Revenue Code and donor-advised charitable gift funds (subject to all applicable terms and conditions) and certain other investment programs that do not charge an asset-based fee and have been approved by the Fund's distributor. - Employer-sponsored employee benefit plans, whether or not qualified under the Internal Revenue Code, for which (i) Morgan Stanley Dean Witter Trust FSB serves as 19 [Sidebar] CONTINGENT DEFERRED SALES CHARGE OR CDSC A FEE YOU PAY WHEN YOU SELL SHARES OF CERTAIN MORGAN STANLEY DEAN WITTER FUNDS PURCHASED WITHOUT AN INITIAL SALES CHARGE. THIS FEE DECLINES THE LONGER YOU HOLD YOUR SHARES AS SET FORTH IN THE TABLE. [End Sidebar] trustee, (ii) Morgan Stanley Dean Witter's Retirement Plan Services serves as recordkeeper under a written Recordkeeping Services Agreement or (iii) an entity independent from Morgan Stanley Dean Witter serves as recordkeeper under an alliance or similar agreement with Morgan Stanley Dean Witter's Retirement Plan Services (together, "MSDW Eligible Plans"), provided that, in the case of (i) and (ii) above, any such plan has at least 200 eligible employees. - An MSDW Eligible Plan whose Class B shares have converted to Class A shares, regardless of the plan's asset size or number of eligible employees. - A client of a Morgan Stanley Dean Witter Financial Advisor who joined us from another investment firm within six months prior to the date of purchase of Fund shares, and you used the proceeds from the sale of shares of a proprietary mutual fund of that Financial Advisor's previous firm that imposed either a front-end or deferred sales charge to purchase Class A shares, provided that: (1) you sold the shares not more than 60 days prior to the purchase of Fund shares, and (2) the sale proceeds were maintained in the interim in cash or a money market fund. - Current or retired Directors or Trustees of the Morgan Stanley Dean Witter Funds, such persons' spouses and children under the age of 21, and trust accounts for which any of such persons is a beneficiary. - Current or retired directors, officers and employees of Morgan Stanley Dean Witter & Co. and any of its subsidiaries, such persons' spouses and children under the age of 21, and trust accounts for which any of such persons is a beneficiary. CLASS B SHARES Class B shares are offered at net asset value with no initial sales charge but are subject to a contingent deferred sales charge, or CDSC, as set forth in the table below. For the purpose of calculating the CDSC, shares are deemed to have been purchased on the last day of the month during which they were purchased.
CDSC AS A PERCENTAGE YEAR SINCE PURCHASE PAYMENT MADE OF AMOUNT REDEEMED ---------------------------------------------------------------------------- First 5.0% ---------------------------------------------------------------------------- Second 4.0% ---------------------------------------------------------------------------- Third 3.0% ---------------------------------------------------------------------------- Fourth 2.0% ---------------------------------------------------------------------------- Fifth 2.0% ---------------------------------------------------------------------------- Sixth 1.0% ---------------------------------------------------------------------------- Seventh and thereafter None ----------------------------------------------------------------------------
20 Each time you place an order to sell or exchange shares, shares with no CDSC will be sold or exchanged first, then shares with the lowest CDSC will be sold or exchanged next. For any shares subject to a CDSC, the CDSC will be assessed on an amount equal to the lesser of the current market value or the cost of the shares being sold. CDSC WAIVERS. A CDSC, if otherwise applicable, will be waived in the case of: - Sales of shares held at the time you die or become disabled (within the definition in Section 72(m)(7) of the Internal Revenue Code which relates to the ability to engage in gainful employment), if the shares are: (i) registered either in your name (not a trust) or in the names of you and your spouse as joint tenants with right of survivorship; or (ii) held in a qualified corporate or self-employed retirement plan, IRA or 403(b) Custodial Account, provided in either case that the sale is requested within one year of your death or initial determination of disability. - Sales in connection with the following retirement plan "distributions": (i) lump-sum or other distributions from a qualified corporate or self-employed retirement plan following retirement (or, in the case of a "key employee" of a "top heavy" plan, following attainment of age 59 1/2); (ii) distributions from an IRA or 403(b) Custodial Account following attainment of age 59 1/2; or (iii) a tax-free return of an excess IRA contribution (a "distribution" does not include a direct transfer of IRA, 403(b) Custodial Account or retirement plan assets to a successor custodian or trustee). - Sales of shares held for you as a participant in an MSDW Eligible Plan. - Sales of shares in connection with the Systematic Withdrawal Plan of up to 12% annually of the value of each fund from which plan sales are made. The percentage is determined on the date you establish the Systematic Withdrawal Plan and based on the next calculated share price. You may have this CDSC waiver applied in amounts up to 1% per month, 3% per quarter, 6% semi-annually or 12% annually. Shares with no CDSC will be sold first, followed by those with the lowest CDSC. As such, the waiver benefit will be reduced by the amount of your shares that are not subject to a CDSC. If you suspend your participation in the plan, you may later resume plan payments without requiring a new determination of the account value for the 12% CDSC waiver. - Sales of shares if you simultaneously invest the proceeds in the Investment Manager's mutual fund asset allocation program, pursuant to which investors pay an asset-based fee. Any shares you acquire in connection with the Investment Manager's mutual fund asset allocation program are subject to all of the terms and conditions of that program, including termination fees, and mandatory sale or transfer restrictions on termination. All waivers will be granted only following the Fund's distributor receiving confirmation of your entitlement. If you believe you are eligible for a CDSC waiver, please contact your Financial Advisor or call (800) 869-NEWS. 21 DISTRIBUTION FEE. Class B shares are subject to an annual 12b-1 fee of 1.0% of the lesser of: (a) the average daily aggregate gross purchases by all shareholders of the Fund's Class B shares since the inception of the Fund (not including reinvestments of dividends or capital gain distributions), less the average daily aggregate net asset value of the Fund's Class B shares sold by all shareholders since the Fund's inception upon which a CDSC has been imposed or waived, or (b) the average daily net assets of Class B. CONVERSION FEATURE. After ten (10) years, Class B shares will convert automatically to Class A shares of the Fund with no initial sales charge. The ten year period runs from the last day of the month in which the shares were purchased, or in the case of Class B shares acquired through an exchange, from the last day of the month in which the original Class B shares were purchased; the shares will convert to Class A shares based on their relative net asset values in the month following the ten year period. At the same time, an equal proportion of Class B shares acquired through automatically reinvested distributions will convert to Class A shares on the same basis. (Class B shares held before May 1, 1997, however, will convert to Class A shares in May 2007). In the case of Class B shares held in an MSDW Eligible Plan, the plan is treated as a single investor and all Class B shares will convert to Class A shares on the conversion date of the Class B shares of a Morgan Stanley Dean Witter Fund purchased by that plan. Currently, the Class B share conversion is not a taxable event; the conversion feature may be cancelled if it is deemed a taxable event in the future by the Internal Revenue Service. If you exchange your Class B shares for shares of a Money Market Fund, a No-Load Fund, North American Government Income Trust or Short-Term U.S. Treasury Trust, the holding period for conversion is frozen as of the last day of the month of the exchange and resumes on the last day of the month you exchange back into Class B shares. EXCHANGING SHARES SUBJECT TO A CDSC. There are special considerations when you exchange Fund shares that are subject to a CDSC. When determining the length of time you held the shares and the corresponding CDSC rate, any period (starting at the end of the month) during which you held shares of a fund that does NOT charge a CDSC WILL NOT BE COUNTED. Thus, in effect the "holding period" for purposes of calculating the CDSC is frozen upon exchanging into a fund that does not charge a CDSC. For example, if you held Class B shares of the Fund for one year, exchanged to Class B of another Morgan Stanley Dean Witter Multi-Class Fund for another year, then sold your shares, a CDSC rate of 4% would be imposed on the shares based on a two year holding period - one year for each fund. However, if you had exchanged the shares of the Fund for a Money Market Fund (which does not charge a CDSC) instead of the Multi-Class Fund, then sold your shares, a CDSC rate of 5% would be imposed on the shares based on a one year holding period. The one year in the Money Market Fund would not be counted. Nevertheless, if shares subject to a CDSC are exchanged for a Fund that does 22 not charge a CDSC, you will receive a credit when you sell the shares equal to the distribution (12b-1) fees, if any, you paid on those shares while in that fund up to the amount of any applicable CDSC. In addition, shares that are exchanged into or from a Morgan Stanley Dean Witter Fund subject to a higher CDSC rate will be subject to the higher rate, even if the shares are re-exchanged into a fund with a lower CDSC rate. CLASS C SHARES Class C shares are sold at net asset value with no initial sales charge but are subject to a CDSC of 1.0% on sales made within one year after the last day of the month of purchase. The CDSC will be assessed in the same manner and with the same CDSC waivers as with Class B shares. DISTRIBUTION FEE. Class C shares are subject to an annual distribution (12b-1) fee of up to 1.0% of the average daily net assets of that Class. The Class C shares' distribution fee may cause that Class to have higher expenses and pay lower dividends than Class A or Class D shares. Unlike Class B shares, Class C shares have no conversion feature and, accordingly, an investor that purchases Class C shares may be subject to distribution (12b-1) fees applicable to Class C shares for an indefinite period. CLASS D SHARES Class D shares are offered without any sales charge on purchases or sales and without any distribution (12b-1) fee. Class D shares are offered only to investors meeting an initial investment minimum of $5 million ($25 million for MSDW Eligible Plans) and the following investor categories: - Investors participating in the Investment Manager's mutual fund asset allocation program (subject to all of its terms and conditions, including termination fees, and mandatory sale or transfer restrictions on termination) pursuant to which they pay an asset-based fee. - Persons participating in a fee-based investment program (subject to all of its terms and conditions, including termination fees, and mandatory sale or transfer restrictions on termination) approved by the Fund's distributor pursuant to which they pay an asset-based fee for investment advisory, administrative and/or brokerage services. With respect to Class D shares held through the Morgan Stanley Dean Witter Choice Program, at such time as those Fund shares are no longer held through the program, the shares will be automatically converted into Class A shares (which are subject to higher expenses than Class D shares) based on the then current relative net asset values of the two classes. - Certain investment programs that do not charge an asset-based fee and have been approved by the Fund's distributor. However, Class D shares are not offered for investments made through Section 529 plans or donor-advised charitable gift funds (regardless of the size of the investment). 23 - Employee benefit plans maintained by Morgan Stanley Dean Witter & Co. or any of its subsidiaries for the benefit of certain employees of Morgan Stanley Dean Witter & Co. and its subsidiaries. - Certain unit investment trusts sponsored by Dean Witter Reynolds. - Certain other open-end investment companies whose shares are distributed by the Fund's distributor. - Investors who were shareholders of the Dean Witter Retirement Series on September 11, 1998 for additional purchases for their former Dean Witter Retirement Series accounts. MEETING CLASS D ELIGIBILITY MINIMUMS. To meet the $5 million ($25 million for MSDW Eligible Plans) initial investment to qualify to purchase Class D shares you may combine: (1) purchases in a single transaction of Class D shares of the Fund and other Morgan Stanley Dean Witter Multi-Class Funds; and/or (2) previous purchases of Class A and D shares of Multi-Class Funds and shares of FSC Funds you currently own, along with shares of Morgan Stanley Dean Witter Funds you currently own that you acquired in exchange for those shares. NO SALES CHARGES FOR REINVESTED CASH DISTRIBUTIONS If you receive a cash payment representing an income dividend or capital gain and you reinvest that amount in the applicable Class of shares by returning the check within 30 days of the payment date, the purchased shares would not be subject to an initial sales charge or CDSC. PLAN OF DISTRIBUTION (RULE 12b-1 FEES) The Fund has adopted a Plan of Distribution in accordance with Rule 12b-1 under the Investment Company Act of 1940 with respect to the distribution of Class A, Class B and Class C shares. The Plan allows the Fund to pay distribution fees for the sale and distribution of these shares. It also allows the Fund to pay for services to shareholders of Class A, Class B and Class C shares. Because these fees are paid out of the Fund's assets on an ongoing basis, over time these fees will increase the cost of your investment in these Classes and may cost you more than paying other types of sales charges. 24 FINANCIAL HIGHLIGHTS The financial highlights table is intended to help you understand the Fund's financial performance for the periods indicated. 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). The information for the fiscal year ended January 31, 2001, has been audited by Deloitte & Touche LLP, independent auditors, whose report, along with the Fund's financial statements, is included in the annual report, which is available upon request. The financial highlights for prior fiscal periods have been audited by other independent accountants.
FOR THE PERIOD JULY 28, 1997* FOR THE YEAR ENDED JANUARY 31, THROUGH ------------------------------------------------------ JANUARY 31, 2001 2000 1999 1998 - ----------------------------------------------------------------------------------------------------------------- CLASS A SHARES++ - ----------------------------------------------------------------------------------------------------------------- SELECTED PER SHARE DATA: - ----------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $12.26 $ 7.33 $12.14 $15.22 - ----------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.00 (0.01) 0.15 (0.07) Net realized and unrealized gain (loss) (0.36) 4.94 (4.96) (3.01) ------ ------ ------ ------ Total income (loss) from investment operations (0.36) 4.93 (4.81) (3.08) - ----------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.90 $12.26 $ 7.33 $12.14 - ----------------------------------------------------------------------------------------------------------------- TOTAL RETURN+ (2.62)% 66.71% (39.62)% (20.24)%(1) - ----------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - ----------------------------------------------------------------------------------------------------------------- Expenses 1.96%(3) 2.28%(3) 2.21%(3) 2.15%(2) - ----------------------------------------------------------------------------------------------------------------- Net investment income (loss) 0.05%(3) 0.16%(3) 1.26%(3) (1.04)%(2) - ----------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------------------------------- Net assets, end of period, in thousands $936 $751 $58 $110 - ----------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 44% 59% 27% 30% - -----------------------------------------------------------------------------------------------------------------
* The date shares were first issued. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses.
25
FOR THE YEAR ENDED JANUARY 31, ------------------------------------------------------------------------------------- 2001++ 2000++ 1999++ 1998*++ 1997 - --------------------------------------------------------------------------------------------------------------------- CLASS B SHARES - --------------------------------------------------------------------------------------------------------------------- SELECTED PER SHARE DATA: - --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $11.99 $ 7.24 $12.09 $11.47 $ 9.48 - --------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.09) (0.06) 0.05 (0.09) (0.04) Net realized and unrealized gain (loss) (0.35) 4.81 (4.90) 0.71 2.03 -------- -------- -------- -------- -------- Total income (loss) from investment operations (0.44) 4.75 (4.85) 0.62 1.99 - --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.55 $11.99 $ 7.24 $12.09 $11.47 - --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN+ (3.43)% 65.19% (40.12)% 5.41% 20.99% - --------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - --------------------------------------------------------------------------------------------------------------------- Expenses 2.77%(1) 3.06%(1) 2.98%(1) 2.81% 2.78% - --------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (0.76)%(1) (0.62)%(1) 0.49%(1) (0.64)% (0.29)% - --------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA: - --------------------------------------------------------------------------------------------------------------------- Net assets, end of period, in thousands $ 99,431 $136,699 $105,678 $272,710 $270,843 - --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 44% 59% 27% 30% 29% - ---------------------------------------------------------------------------------------------------------------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares of the Fund held prior to that date have been designated Class B shares. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Reflects overall Fund ratios for investment income and non-class specific expenses.
26
FOR THE PERIOD JULY 28, 1997* FOR THE YEAR ENDED JANUARY 31, THROUGH ------------------------------------ JANUARY 31, 2001 2000 1999 1998 - -------------------------------------------------------------------------------------------------------------------- CLASS C SHARES++ - -------------------------------------------------------------------------------------------------------------------- SELECTED PER SHARE DATA: - -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $12.02 $ 7.24 $12.10 $15.22 - -------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.09) (0.06) 0.06 (0.12) Net realized and unrealized gain (loss) (0.36) 4.84 (4.92) (3.00) ------ ------ ------ ------ Total income (loss) from investment operations (0.45) 4.78 (4.86) (3.12) - -------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.57 $12.02 $ 7.24 $12.10 - -------------------------------------------------------------------------------------------------------------------- TOTAL RETURN+ (3.42)% 65.47% (40.17)% (20.50)%(1) - -------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - -------------------------------------------------------------------------------------------------------------------- Expenses 2.77%(3) 2.95%(3) 2.98%(3) 2.91%(2) - -------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (0.76)%(3) (0.51)%(3) 0.49%(3) (1.76)%(2) - -------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA: - -------------------------------------------------------------------------------------------------------------------- Net assets, end of period, in thousands $887 $776 $369 $792 - -------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 44% 59% 27% 30% - --------------------------------------------------------------------------------------------------------------------
* The date shares were first issued. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses.
27
FOR THE PERIOD FOR THE YEAR ENDED JANUARY 31, JULY 28, 1997* ------------------------------ THROUGH 2001 2000 1999 JANUARY 31, 1998 - ----------------------------------------------------------------------------------------------------------------- CLASS D SHARES++ - ----------------------------------------------------------------------------------------------------------------- SELECTED PER SHARE DATA: - ----------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $12.30 $ 7.35 $12.16 $15.22 - ----------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.00 (0.02) 0.16 (0.04) Net realized and unrealized gain (loss) (0.33) 4.97 (4.97) (3.02) ------ ------ ------ ------ Total income (loss) from investment operations (0.33) 4.95 (4.81) (3.06) - ----------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.97 $12.30 $ 7.35 $12.16 - ----------------------------------------------------------------------------------------------------------------- TOTAL RETURN+ (2.37)% 66.80% (39.56)% (20.11)%(1) - ----------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - ----------------------------------------------------------------------------------------------------------------- Expenses 1.77%(3) 2.06%(3) 1.98%(3) 1.86%(2) - ----------------------------------------------------------------------------------------------------------------- Net investment income (loss) 0.24%(3) 0.38%(3) 1.49%(3) (0.52)%(2) - ----------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------------------------------- Net assets, end of period, in thousands $9,262 $588 $5 $8 - ----------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 44% 59% 27% 30% - -----------------------------------------------------------------------------------------------------------------
* The date shares were first issued. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses.
28 MORGAN STANLEY DEAN WITTER FAMILY OF FUNDS The Morgan Stanley Dean Witter Family of Funds offers investors a wide range of investment choices. Come on in and meet the family! - -------------------------------------------------------------------------------- GROWTH FUNDS - --------------------------------- GROWTH FUNDS Aggressive Equity Fund All Star Growth Fund American Opportunities Fund Capital Growth Securities Developing Growth Securities Growth Fund Market Leader Trust Mid-Cap Equity Trust New Discoveries Fund Next Generation Trust Small Cap Growth Fund Special Value Fund Tax-Managed Growth Fund 21st Century Trend Fund THEME FUNDS Financial Services Trust Health Sciences Trust Information Fund Natural Resource Development Securities Technology Fund GLOBAL/INTERNATIONAL FUNDS Competitive Edge Fund - "Best Ideas" Portfolio European Growth Fund Fund of Funds - International Portfolio International Fund International SmallCap Fund International Value Equity Fund Japan Fund Latin American Growth Fund Pacific Growth Fund - -------------------------------------------------------------------------------- GROWTH AND INCOME FUNDS - --------------------------------- GROWTH & INCOME FUNDS Balanced Growth Fund Balanced Income Fund Convertible Securities Trust Dividend Growth Securities Equity Fund Fund of Funds - Domestic Portfolio Income Builder Fund 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 Real Estate Fund Utilities Fund GLOBAL FUNDS Global Dividend Growth Securities Global Utilities Fund - -------------------------------------------------------------------------------- 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 TAX-FREE INCOME FUNDS California Tax-Free Income Fund Hawaii Municipal Trust (FSC) Limited Term Municipal Trust (NL) Multi-State Municipal Series Trust (FSC) New York Tax-Free Income Fund Tax-Exempt Securities Trust - -------------------------------------------------------------------------------- MONEY MARKET FUNDS - --------------------------------- TAXABLE MONEY MARKET FUNDS Liquid Asset Fund (MM) U.S. Government Money Market Trust (MM) TAX-FREE MONEY MARKET FUNDS California Tax-Free Daily Income Trust (MM) New York Municipal Money Market Trust (MM) Tax-Free Daily Income Trust (MM) There may be funds created after this PROSPECTUS was published. Please consult the inside 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. PROSPECTUS - MARCH 30, 2001 Additional information about the Fund's investments is available in the Fund's ANNUAL and SEMI-ANNUAL REPORTS TO SHAREHOLDERS. In the Fund's ANNUAL REPORT, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. The Fund's Statement of Additional Information also provides additional information about the Fund. The Statement of Additional Information is incorporated herein by reference (legally is part of this PROSPECTUS). For a free copy of any of these documents, to request other information about the Fund, or to make shareholder inquiries, please call: (800) 869-NEWS You also may obtain information about the Fund by calling your Morgan Stanley Dean Witter Financial Advisor or by visiting our Internet site at: www.msdwadvice.com/funds Information about the Fund (including the STATEMENT OF ADDITIONAL INFORMATION) can be viewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, DC. Information about the Reference Room's operations may be obtained by calling the SEC at (202) 942-8090. Reports and other information about the Fund are available on the EDGAR Database on the SEC's Internet site (www.sec.gov) and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing the Public Reference Section of the SEC, Washington, DC 20549-0102. TICKER SYMBOLS: CLASS A: LATAX CLASS C: LATCX - --------------------- --------------------- CLASS B: LATBX CLASS D: LATDX - --------------------- ---------------------
(THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-6608) Morgan Stanley Dean Witter LATIN AMERICAN GROWTH FUND [BACK COVER PHOTO] A MUTUAL FUND THAT SEEKS LONG-TERM CAPITAL APPRECIATION MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND STATEMENT OF ADDITIONAL INFORMATION MARCH 30, 2001 - -------------------------------------------------------------------------------- This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus. The PROSPECTUS (dated March 30, 2001) for Morgan Stanley Dean Witter Latin American Growth Fund 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 Latin American Growth Fund Two World Trade Center New York, NY 10048 (800) 869-NEWS TABLE OF CONTENTS - -------------------------------------------------------------------------------- I. Fund History............................................. 4 II. Description of the Fund and Its Investments and Risks... 4 A. Classification......................................... 4 B. Investment Strategies and Risks........................ 4 C. Fund Policies/Investment Restrictions.................. 13 III. Management of the Fund................................. 14 A. Board of Trustees...................................... 14 B. Management Information................................. 14 C. Compensation........................................... 19 IV. Control Persons and Principal Holders of Securities..... 21 V. Management, Investment Advice and Other Services......... 21 A. The Investment Manager and Sub-Advisor................. 21 B. Principal Underwriter.................................. 22 C. Services Provided by the Investment Manager and Sub-Advisor.......................................... 22 D. Dealer Reallowances.................................... 23 E. Rule 12b-1 Plan........................................ 23 F. Other Service Providers................................ 27 G. Codes of Ethics........................................ 28 VI. Brokerage Allocation and Other Practices................ 28 A. Brokerage Transactions................................. 28 B. Commissions............................................ 28 C. Brokerage Selection.................................... 29 D. Directed Brokerage..................................... 30 E. Regular Broker-Dealers................................. 30 VII. Capital Stock and Other Securities..................... 30 VIII. Purchase, Redemption and Pricing of Shares............ 31 A. Purchase/Redemption of Shares.......................... 31 B. Offering Price......................................... 31 IX. Taxation of the Fund and Shareholders................... 32 X. Underwriters............................................. 34 XI. Calculation of Performance Data......................... 34 XII. Financial Statements................................... 36
2 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"--Chase Manhattan Bank. "DEAN WITTER REYNOLDS"--Dean Witter Reynolds Inc., a wholly-owned broker-dealer subsidiary of MSDW. "DISTRIBUTOR"--Morgan Stanley Dean Witter Distributors Inc., a wholly-owned broker-dealer subsidiary of MSDW. "FINANCIAL ADVISORS"--Morgan Stanley Dean Witter authorized financial services representatives. "FUND"--Morgan Stanley Dean Witter Latin American Growth Fund, a registered open-end investment company. "INDEPENDENT TRUSTEES"--Trustees who are not "interested persons" (as defined by the Investment Company Act) of the Fund. "INVESTMENT MANAGER"--Morgan Stanley Dean Witter Advisors Inc., a wholly-owned investment advisor subsidiary of MSDW. "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 MSDW Advisors 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 ADVISORS"--Morgan Stanley Dean Witter Advisors, Inc., a wholly-owned investment advisor subsidiary of MSDW. "SUB-ADVISOR"--TCW Investment Management Company, a wholly-owned subsidiary of TCW. "TCW"--The TCW Group, Inc., a preeminent investment management and investment advisory services firm. "TRANSFER AGENT"--Morgan Stanley Dean Witter Trust FSB, a wholly-owned transfer agent subsidiary of MSDW. "TRUSTEES"--The Board of Trustees of the Fund. 3 I. FUND HISTORY - -------------------------------------------------------------------------------- The Fund was organized under the laws of the Commonwealth of Massachusetts on February 25, 1992 as a Massachusetts business trust under the name TCW/DW Latin American Growth Fund. On February 25, 1999 the Fund's Trustees adopted an Amendment to the Fund's Declaration of Trust changing the name of the Fund to Morgan Stanley Dean Witter Latin American Growth Fund, effective June 28, 1999. II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS - -------------------------------------------------------------------------------- A. CLASSIFICATION The Fund is an open-end, non-diversified management investment company whose investment objective is long-term capital appreciation. As a "non-diversified" mutual fund, the Fund's investments are not required to meet certain diversification requirements under federal securities law. Compared with "diversified" funds, the Fund may invest a greater percentage of its assets in the securities of an individual corporation or governmental entity. Thus, the Fund's assets may be concentrated in fewer securities than other funds. A decline in the value of those investments would cause the Fund's overall value to decline to a greater degree. The Fund's investments, however, are currently diversified and may remain diversified in the future. B. INVESTMENT STRATEGIES AND RISKS The following discussion of the Fund's investment strategies and risks should be read with the sections of the Fund's PROSPECTUS titled "Principal Investment Strategies," "Principal Risks," "Additional Investment Strategy Information" and "Additional Risk Information." DEBT-TO-EQUITY CONVERSIONS. The Fund may participate with respect to up to 5% of its total assets in debt-to-equity conversions. Debt-to-equity conversion programs are sponsored in varying degrees by certain Latin American countries and permit investors to use external debt of a country to make equity investments in local companies. Many conversion programs relate primarily to investments in transportation, communication, utilities and similar infrastructure related areas. The terms of the programs vary from country to country, but include significant restrictions on the application of the proceeds received in the conversion and on the repatriation of investment profits and capital. In inviting conversion applications by holders of eligible debt, a government will usually specify a minimum discount from par value that it will accept for conversion. There can be no assurance that debt-to-equity conversion programs will continue or be successful or that the Fund will be able to convert all or any of its Latin American debt portfolio into equity investments. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may enter into forward foreign currency exchange contracts ("FORWARD CONTRACTS") as a hedge against fluctuations in future foreign exchange rates. The Fund may conduct its foreign currency exchange transactions either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or through entering into forward contracts to purchase or sell foreign currencies. A forward contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded in the interbank market conducted directly between currency traders (usually large, commercial and investment banks) and their customers. Forward contracts only will be entered into with United States banks and their foreign branches, insurance companies and other dealers or foreign banks whose assets total $1 billion or more. A forward contract generally has no deposit requirement, and no commissions are charged at any stage for trades. The Fund may enter into forward contracts under various circumstances. The typical use of a forward contract is to "lock in" the price of a security in U.S. dollars or some other foreign currency which the Fund is holding in its portfolio. By entering into a forward contract for the purchase or sale, for a fixed amount of dollars or other currency, of the amount of foreign currency involved in the underlying security 4 transactions, the Fund may be able to protect itself against a possible loss resulting from an adverse change in the relationship between the U.S. dollar or other currency which is being used for the security purchase and the foreign currency in which the security is denominated during the period between the date on which the security is purchased or sold and the date on which payment is made or received. The Sub-Advisor also may from time to time utilize forward contracts for other purposes. For example, they may be used to hedge a foreign security held in the portfolio or a security which pays out principal tied to an exchange rate between the U.S. dollar and a foreign currency, against a decline in value of the applicable foreign currency. They also may be used to lock in the current exchange rate of the currency in which those securities anticipated to be purchased are denominated. At times, the Fund may enter into "cross-currency" hedging transactions involving currencies other than those in which securities are held or proposed to be purchased are denominated. The Fund will not enter into forward currency contracts or maintain a net exposure to these contracts where the consummation of the contracts would obligate the Fund to deliver an amount of foreign currency in excess of the value of the Fund's portfolio securities. When required by law, the Fund will cause its custodian bank to place cash, U.S. Government securities or other appropriate liquid portfolio securities in a segregated account of the Fund in an amount equal to the value of the Fund's total assets committed to the consummation of forward contracts entered into under the circumstances set forth above. If the value of the securities placed in the segregated account declines, additional cash or securities will be placed in the account on a daily basis so that the value of the account will equal the amount of the Fund's commitments with respect to such contracts. Although the Fund values its assets daily in terms of U.S. dollars, it does not intend to convert its holdings of foreign currencies into U.S. dollars on a daily basis. It will, however, do so from time to time, and investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the spread between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at one rate, while offering a lesser rate of exchange should the Fund desire to resell that currency to the dealer. The Fund may be limited in its ability to enter into hedging transactions involving forward contracts by the Internal Revenue Code requirements relating to qualification as a regulated investment company. Forward currency contracts may limit gains on portfolio securities that could otherwise be realized had they not been utilized and could result in losses. The contracts also may increase the Fund's volatility and may involve a significant amount of risk relative to the investment of cash. OPTIONS AND FUTURES TRANSACTIONS. The Fund may engage in transactions in listed and OTC options. Listed options are issued or guaranteed by the exchange on which they are traded or by a clearing corporation such as the Options Clearing Corporation ("OCC"). Ownership of a listed call option gives the Fund the right to buy from the OCC (in the U.S.) or other clearing corporation or exchange, the underlying security or currency covered by the option at the stated exercise price (the price per unit of the underlying security) by filing an exercise notice prior to the expiration date of the option. The writer (seller) of the option would then have the obligation to sell to the OCC (in the U.S.) or other clearing corporation or exchange, the underlying security or currency at that exercise price prior to the expiration date of the option, regardless of its then current market price. Ownership of a listed put option would give the Fund the right to sell the underlying security or currency to the OCC (in the U.S.) or other clearing corporation or exchange, at the stated exercise price. Upon notice of exercise of the put option, the writer of the put would have the obligation to purchase the underlying security or currency from the OCC (in the U.S.) or other clearing corporation or exchange, at the exercise price. COVERED CALL WRITING. The Fund is permitted to write covered call options on portfolio securities and on the currencies in which they are denominated, without limit. 5 The Fund will receive from the purchaser, in return for a call it has written, a "premium;" i.e., the price of the option. Receipt of these premiums may better enable the Fund to earn a higher level of current income than it would earn from holding the underlying securities (or currencies) alone. Moreover, the premium received will offset a portion of the potential loss incurred by the Fund if the securities (or currencies) underlying the option decline in value. The Fund may be required, at any time during the option period, to deliver the underlying security (or currency) against payment of the exercise price on any calls it has written. This obligation is terminated upon the expiration of the option period or at such earlier time when the writer effects a closing purchase transaction. A closing purchase transaction is accomplished by purchasing an option of the same series as the option previously written. However, once the Fund has been assigned an exercise notice, the Fund will be unable to effect a closing purchase transaction. A call option is "covered" if the Fund owns the underlying security subject to the option or has an absolute and immediate right to acquire that security without additional cash consideration (or for additional consideration (in cash, Treasury bills or other liquid portfolio securities) held in a segregated account on the Fund's books) upon conversion or exchange of other securities held in its portfolio. A call option is also covered if the Fund holds a call on the same security as the call written where the exercise price of the call held is (i) equal to or less than the exercise price of the call written or (ii) greater than the exercise price of the call written if the difference is maintained by the Fund in cash, Treasury bills or other liquid portfolio securities in a segregated account on the Fund's books. Options written by the Fund normally have expiration dates of from up to eighteen months from the date written. The exercise price of a call option may be below, equal to or above the current market value of the underlying security at the time the option is written. COVERED PUT WRITING. A writer of a covered put option incurs an obligation to buy the security underlying the option from the purchaser of the put, at the option's exercise price at any time during the option period, at the purchaser's election. Through the writing of a put option, the Fund would receive income from the premium paid by purchasers. The potential gain on a covered put option is limited to the premium received on the option (less the commissions paid on the transaction). During the option period, the Fund may be required, at any time, to make payment of the exercise price against delivery of the underlying security (or currency). A put option is "covered" if the Fund maintains cash, Treasury bills or other liquid portfolio securities with a value equal to the exercise price in a segregated account on the Fund's books, or holds a put on the same security as the put written where the exercise price of the put held is equal to or greater than the exercise price of the put written. The operation of and limitations on covered put options in other respects are substantially identical to those of call options. PURCHASING CALL AND PUT OPTIONS. The Fund may purchase listed and OTC call and put options in amounts equaling up to 5% of its total assets. The purchase of a call option would enable the Fund, in return for the premium paid to lock in a purchase price for a security or currency during the term of the option. The purchase of a put option would enable the Fund, in return for a premium paid, to lock in a price at which it may sell a security or currency during the term of the option. OTC OPTIONS. OTC options are purchased from or sold (written) to dealers or financial institutions which have entered into direct agreements with the Fund. With OTC options, such variables as expiration date, exercise price and premium will be agreed upon between the Fund and the transacting dealer, without the intermediation of a third party such as the OCC. The Fund will engage in OTC option transactions only with member banks of the Federal Reserve Bank System or primary dealers in U.S. Government securities or with affiliates of such banks or dealers. The Fund will engage in OTC option transactions only with member banks of the Federal Reserve System or primary dealers in U.S. Government securities or with affiliates of such banks or dealers which have capital of at least $50 million or whose obligations are guaranteed by an entity having capital of at least $50 million. RISKS OF OPTIONS TRANSACTIONS. The successful use of options depends on the ability of the Sub-Advisor to forecast correctly interest rates, currency exchange rates and/or market movements. If the 6 market value of the portfolio securities (or the currencies in which they are denominated) upon which call options have been written increases, the Fund may receive a lower total return from the portion of its portfolio upon which calls have been written than it would have had such calls not been written. During the option period, the covered call writer has, in return for the premium on the option, given up the opportunity for capital appreciation above the exercise price should the market price of the underlying security (or the value of its denominated currency) increase, but has retained the risk of loss should the price of the underlying security (or the value of its denominated currency) decline. The covered put writer also retains the risk of loss should the market value of the underlying security decline below the exercise price of the option less the premium received on the sale of the option. In both cases, the writer has no control over the time when it may be required to fulfill its obligation as a writer of the option. Prior to exercise or expiration, an option position can only be terminated by entering into a closing purchase or sale transaction. Once an option writer has received an exercise notice, it cannot effect a closing purchase transaction in order to terminate its obligation under the option and must deliver or receive the underlying securities at the exercise price. The Fund's ability to close out its position as a writer of an option is dependent upon the existence of a liquid secondary market on option exchanges. There is no assurance that such a market will exist, particularly in the case of OTC options. In the event of the bankruptcy of a broker through which the Fund engages in transactions in options, the Fund could experience delays and/or losses in liquidating open positions purchased or sold through the broker and/or incur a loss of all or part of its margin deposits with the broker. In the case of OTC options, if the transacting dealer fails to make or take delivery of the securities underlying an option it has written, in accordance with the terms of that option, due to insolvency or otherwise, the Fund would lose the premium paid for the option as well as any anticipated benefit of the transaction. Each of the exchanges has established limitations governing the maximum number of call or put options on the same underlying security which may be written by a single investor, whether acting alone or in concert with others (regardless of whether such options are written on the same or different exchanges or are held or written on one or more accounts or through one or more brokers). An exchange may order the liquidation of positions found to be in violation of these limits and it may impose other sanctions or restrictions. These position limits may restrict the number of listed options which the Fund may write. The hours of trading for options may not conform to the hours during which the underlying securities are traded. To the extent that the option markets close before the markets for the underlying securities, significant price and rate movements can take place in the underlying markets that cannot be reflected in the option markets. There can be no assurance that a liquid secondary market will exist for a particular option at any specific time. FUTURES CONTRACTS. The Fund may purchase and sell interest rate, currency and index futures contracts that are traded on U.S. and foreign commodity exchanges on such underlying securities as U.S. Treasury bonds, notes, bills and GNMA Certificates and/or any foreign government fixed-income security, on various currencies and on such indexes of U.S. securities as may exist or come into existence. A futures contract purchaser incurs an obligation to take delivery of a specified amount of the obligation underlying the contract at a specified time in the future for a specified price. A seller of a futures contract incurs an obligation to deliver the specified amount of the underlying obligation at a specified time in return for an agreed upon price. The purchase of a futures contract enables the Fund, during the term of the contract, to lock in a price at which it may purchase a security or currency and protect against a rise in prices pending purchase of portfolio securities. The sale of a futures contract enables the Fund to lock in a price at which it may sell a security or currency and protect against declines in the value of portfolio securities. 7 The Fund will purchase or sell index futures contracts for the purpose of hedging some or all of its portfolio securities against changes in their prices. If the Sub-Advisor anticipates that the prices of securities held by the Fund may fall, the Fund may sell an index futures contract. Conversely, if the Fund wishes to hedge against anticipated price rises in those securities which the Fund intends to purchase, the Fund may purchase an index futures contract. In addition, futures contracts will be bought or sold in order to close out a short or long position maintained by the Fund in a corresponding futures contract. Although most futures contracts call for actual delivery or acceptance of securities, the contracts usually are closed out before the settlement date without the making or taking of delivery. Index futures contracts provide for the delivery of an amount of cash equal to a specified dollar amount times the difference between the index value at the open or close of the last trading day of the contract and the futures contract price. A futures contract sale is closed out by effecting a futures contract purchase for the same aggregate amount of the specific type of security (currency) and the same delivery date. If the sale price exceeds the offsetting purchase price, the seller would be paid the difference and would realize a gain. If the offsetting purchase price exceeds the sale price, the seller would pay the difference and would realize a loss. Similarly, a futures contract purchase is closed out by effecting a futures contract sale for the same aggregate amount of the specific type of security (currency) and the same delivery date. If the offsetting sale price exceeds the purchase price, the purchaser would realize a gain, whereas if the purchase price exceeds the offsetting sale price, the purchaser would realize a loss. There is no assurance that the Fund will be able to enter into a closing transaction. MARGIN. If the Fund enters into a futures contract, it is initially required to deposit an "initial margin" of cash, U.S. Government securities or other liquid portfolio securities ranging from approximately 2% to 5% of the contract amount. Initial margin requirements are established by the exchanges on which futures contracts trade and may, from time to time, change. In addition, brokers may establish margin deposit requirements in excess of those required by the exchanges. Initial margin in futures transactions is different from margin in securities transactions in that initial margin does not involve the borrowing of funds by a broker's client but is, rather, a good faith deposit on the futures contract which will be returned to the Fund upon the proper termination of the futures contract. The margin deposits made are marked to market daily and the Fund may be required to make subsequent deposits of cash, U.S. Government securities or other liquid portfolio securities, called "variation margin," which are reflective of price fluctuations in the futures contract. OPTIONS ON FUTURES CONTRACTS. The Fund may purchase and write call and put options on futures contracts and enter into closing transactions with respect to such options to terminate an existing position. An option on a futures contract gives the purchaser the right (in return for the premium paid), and the writer the obligation, to assume a position in a futures contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise price at any time during the term of the option. Upon exercise of the option, the delivery of the futures position by the writer of the option to the holder of the option is accompanied by delivery of the accumulated balance in the writer's futures margin account, which represents the amount by which the market price of the futures contract at the time of exercise exceeds, in the case of a call, or is less than, in the case of a put, the exercise price of the option on the futures contract. The writer of an option on a futures contract is required to deposit initial and variation margin pursuant to requirements similar to those applicable to futures contracts. Premiums received from the writing of an option on a futures contract are included in initial margin deposits. LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS ON FUTURES. The Fund may not enter into futures contracts or purchase related options thereon if, immediately thereafter, the amount committed to margin plus the amount paid for premiums for unexpired options on futures contracts exceeds 5% of the value of the Fund's total assets, after taking into account unrealized gains and unrealized losses on such contracts it has entered into, provided, however, that in the case of an option that is in-the-money (the 8 exercise price of the call (put) option is less (more) than the market price of the underlying security) at the time of purchase, the in-the-money amount may be excluded in calculating the 5%. However, there is no overall limitation on the percentage of the Fund's net assets which may be subject to a hedge position. RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS. The prices of securities and indexes subject to futures contracts (and thereby the futures contract prices) may correlate imperfectly with the behavior of the cash prices of the Fund's portfolio securities (and the currencies in which they are denominated). Also, prices of futures contracts may not move in tandem with the changes in prevailing interest rates, market movements and/or currency exchange rates against which the Fund seeks a hedge. A correlation may also be distorted (a) temporarily, by short-term traders seeking to profit from the difference between a contract or security price objective and their cost of borrowed funds; (b) by investors in futures contracts electing to close out their contracts through offsetting transactions rather than meet margin deposit requirements; (c) by investors in futures contracts opting to make or take delivery of underlying securities rather than engage in closing transactions, thereby reducing liquidity of the futures market; and (d) temporarily, by speculators who view the deposit requirements in the futures markets as less onerous than margin requirements in the cash market. Due to the possibility of price distortion in the futures market and because of the possible imperfect correlation between movements in the prices of securities and movements in the prices of futures contracts, a correct forecast of interest rate, currency exchange rate and/or market movement trends by the Adviser may still not result in a successful hedging transaction. There is no assurance that a liquid secondary market will exist for futures contracts and related options in which the Fund may invest. In the event a liquid market does not exist, it may not be possible to close out a futures position and, in the event of adverse price movements, the Fund would continue to be required to make daily cash payments of variation margin. The absence of a liquid market in futures contracts might cause the Fund to make or take delivery of the underlying securities (currencies) at a time when it may be disadvantageous to do so. Exchanges also limit the amount by which the price of a futures contract may move on any day. If the price moves equal the daily limit on successive days, then it may prove impossible to liquidate a futures position until the daily limit moves have ceased. In the event of adverse price movements, the Fund would continue to be required to make daily cash payments of variation margin on open futures positions. In these situations, if the Fund has insufficient cash, it may have to sell portfolio securities to meet daily variation margin requirements at a time when it may be disadvantageous to do so. In addition, the Fund may be required to take or make delivery of the instruments underlying interest rate futures contracts it holds at a time when it is disadvantageous to do so. The inability to close out options and futures positions could also have an adverse impact on the Fund's ability to effectively hedge its portfolio. Futures contracts and options thereon which are purchased or sold on foreign commodities exchanges may have greater price volatility than their U.S. counterparts. Furthermore, foreign commodities exchanges may be less regulated and under less governmental scrutiny than U.S. exchanges. Brokerage commissions, clearing costs and other transaction costs may be higher on foreign exchanges. Greater margin requirements may limit the Fund's ability to enter into certain commodity transactions on foreign exchanges. Moreover, differences in clearance and delivery requirements on foreign exchanges may occasion delays in the settlement of the Fund's transactions effected on foreign exchanges. In the event of the bankruptcy of a broker through which the Fund engages in transactions in futures or options thereon, the Fund could experience delays and/or losses in liquidating open positions purchased or sold through the broker and/or incur a loss of all or part of its margin deposits with the broker. If the Fund maintains a short position in a futures contract or has sold a call option in a futures contract, it will cover this position by holding, in a segregated account maintained on the books of the Fund, cash, U.S. government securities or other liquid portfolio securities equal in value (when added to 9 any initial or variation margin on deposit) to the market value of the securities underlying the futures contract or the exercise price of the option. Such a position may also be covered by owning the securities underlying the futures contract (in the case of a stock index futures contract a portfolio of securities substantially replicating the relevant index), or by holding a call option permitting the Fund to purchase the same contract at a price no higher than the price at which the short position was established. In addition, if the Fund holds a long position in a futures contract or has sold a put option on a futures contract, it will hold cash, U.S. government securities or other liquid portfolio securities equal to the purchase price of the contract or the exercise price of the put option (less the amount of initial or variation margin on deposit) in a segregated account maintained on the books of the Fund. Alternatively, the Fund could cover its long position by purchasing a put option on the same futures contract with an exercise price as high or higher than the price of the contract held by the Fund. MONEY MARKET SECURITIES. The Fund may invest in various U.S. money market securities for cash management purposes or when assuming a temporary defensive position, which among others may include commercial paper, bank acceptances, bank obligations, corporate debt securities, certificates of deposit, U.S. Government securities and obligations of savings institutions and repurchase agreements. Such securities are limited to: U.S. GOVERNMENT SECURITIES. Obligations issued or guaranteed as to principal and interest by the United States or its agencies (such as the Export-Import Bank of the United States, Federal Housing Administration and Government National Mortgage Association) or its instrumentalities (such as the Federal Home Loan Bank), including Treasury bills, notes and bonds; BANK OBLIGATIONS. Obligations (including certificates of deposit and bankers' acceptances) of banks subject to regulation by the U.S. Government and having total assets of $1 billion or more, and instruments secured by such obligations, not including obligations of foreign branches of domestic banks except to the extent below; EURODOLLAR CERTIFICATES OF DEPOSIT. Eurodollar certificates of deposit issued by foreign branches of domestic banks having total assets of $1 billion or more; OBLIGATIONS OF SAVINGS INSTITUTIONS. Certificates of deposit of savings banks and savings and loan associations, having total assets of $1 billion or more; FULLY INSURED CERTIFICATES OF DEPOSIT. Certificates of deposit of banks and savings institutions having total assets of less than $1 billion, if the principal amount of the obligation is federally insured by the Bank Insurance Fund or the Savings Association Insurance Fund (each of which is administered by the FDIC), limited to $100,000 principal amount per certificate and to 15% or less of the Fund's total assets in all such obligations and in all illiquid assets, in the aggregate; COMMERCIAL PAPER. Commercial paper rated within the two highest grades by Standard & Poor's Corporation ("S&P") or by Moody's Investor's Service, Inc. ("Moody's") or, if not rated, issued by a company having an outstanding debt issue rated at least AAA by S&P or Aaa by Moody's; and REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements. When cash may be available for only a few days, it may be invested by the Fund in repurchase agreements until such time as it may otherwise be invested or used for payments of obligations of the Fund. These agreements, which may be viewed as a type of secured lending by the Fund, typically involve the acquisition by the Fund of debt securities from a selling financial institution such as a bank, savings and loan association or broker-dealer. The agreement provides that the Fund will sell back to the institution, and that the institution will repurchase, the underlying security serving as collateral at a specified price and at a fixed time in the future, usually not more than seven days from the date of purchase. The collateral will be marked-to-market daily to determine that the value of the collateral, as specified in the agreement, does not decrease below the purchase price plus accrued interest. If such decrease occurs, additional collateral will be requested and, when received, added to the account to maintain full collateralization. The Fund 10 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 approved by the Trustees designed to minimize such risks. These procedures include effecting repurchase transactions only with large, well-capitalized and well-established financial institutions whose financial condition will be continually monitored by the Sub-Advisor. In addition, as described above, the value of the collateral underlying the repurchase agreement will be at least equal to the repurchase price, including any accrued interest earned on the repurchase agreement. In the event of a default or bankruptcy by a selling financial institution, the Fund will seek to liquidate such collateral. However, the exercising of the Fund's right to liquidate such collateral could involve certain costs or delays and, to the extent that proceeds from any sale upon a default of the obligation to repurchase were less than the repurchase price, the Fund could suffer a loss. It is the current policy of the Fund not to invest in repurchase agreements that do not mature within seven days if any such investment, together with any other illiquid assets held by the Fund, amounts to more than 15% of its net assets. LENDING PORTFOLIO SECURITIES. The Fund may lend its portfolio securities to brokers, dealers and other financial institutions, provided that the loans are callable at any time by the Fund, and are at all times secured by cash or cash equivalents, which are maintained in a segregated account pursuant to applicable regulations and that are equal to at least 100% of the market value, determined daily, of the loaned securities. The advantage of these loans is that the Fund continues to receive the income on the loaned securities while at the same time earning interest on the cash amounts deposited as collateral, which will be invested in short-term obligations. The Fund will not lend more than 25% of the value of its total assets. As with any extensions of credit, there are risks of delay in recovery and, in some cases, even loss of rights in the collateral should the borrower of the securities fail financially. However, these loans of portfolio securities will only be made to firms deemed by the Fund's management to be creditworthy and when the income which can be earned from such loans justifies the attendant risks. Upon termination of the loan, the borrower is required to return the securities to the Fund. Any gain or loss in the market price during the loan period would inure to the Fund. When voting or consent rights which accompany loaned securities pass to the borrower, the Fund will follow the policy of calling the loaned securities, to be delivered within one day after notice, to permit the exercise of the rights if the matters involved would have a material effect on the Fund's investment in the loaned securities. The Fund will pay reasonable finder's, administrative and custodial fees in connection with a loan of its securities. WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS. The Fund may purchase securities on a when-issued or delayed delivery basis or may purchase or sell securities on a forward commitment basis. When these transactions are negotiated, the price is fixed at the time of the commitment, but delivery and payment can take place a month or more after the date of commitment. While the Fund will only purchase securities on a when-issued, delayed delivery or forward commitment basis with the intention of acquiring the securities, the Fund may sell the securities before the settlement date, if it is deemed advisable. The securities so purchased or sold are subject to market fluctuation and no interest or dividends accrue to the purchaser prior to the settlement date. At the time the Fund makes the commitment to purchase or sell securities on a when-issued, delayed delivery or forward commitment basis, it will record the transaction and thereafter reflect the value, each day, of such security purchased, or if a sale, the proceeds to be received, in determining its net asset value. At the time of delivery of the securities, their value may be more or less than the purchase or sale price. An increase in the percentage of the Fund's assets committed to the purchase of securities on a when-issued, delayed delivery or forward commitment basis may increase the volatility of its net 11 asset value. The Fund will also establish a segregated account on the Fund's books in which it will continually maintain cash or cash equivalents or other liquid portfolio securities equal in value to commitments to purchase securities on a when-issued, delayed delivery or forward commitment basis. WHEN, AS AND IF ISSUED SECURITIES. The Fund may purchase securities on a "when, as and if issued" basis under which the issuance of the security depends upon the occurrence of a subsequent event, such as approval of a merger, corporate reorganization or debt restructuring. The commitment for the purchase of any such security will not be recognized in the portfolio of the Fund until the Sub-Advisor determines that issuance of the security is probable. At that time, the Fund will record the transaction and, in determining its net asset value, will reflect the value of the security daily. At that time, the Fund will also establish a segregated account on the Fund's books in which it will maintain cash, cash equivalents or other liquid portfolio securities equal in value to recognized commitments for such securities. An increase in the percentage of the Fund's assets committed to the purchase of securities on a "when, as and if issued" basis may increase the volatility of its net asset value. The Fund may also sell securities on a "when, as and if issued" basis provided that the issuance of the security will result automatically from the exchange or conversion of a security owned by the Fund at the time of sale. PRIVATE PLACEMENTS AND RESTRICTED SECURITIES. The Fund may invest up to 15% of its net assets in securities which are subject to restrictions on resale because they have not been registered under the Securities Act of 1933 (the "Securities Act"), or which are otherwise not readily marketable. (Securities eligible for resale pursuant to Rule 144A under the Securities Act, and determined to be liquid pursuant to the procedures discussed in the following paragraph, are not subject to the foregoing restriction.) These securities are generally referred to as private placements or restricted securities. Limitations on the resale of these securities may have an adverse effect on their marketability, and may prevent the Fund from disposing of them promptly at reasonable prices. The Fund may have to bear the expense of registering the securities for resale and the risk of substantial delays in effecting the registration. Rule 144A permits the Fund to sell restricted securities to qualified institutional buyers without limitation. The Sub-Advisor, pursuant to procedures adopted by the Trustees, will make a determination as to the liquidity of each restricted security purchased by the Fund. If a restricted security is determined to be "liquid," the security will not be included within the category "illiquid securities," which may not exceed 15% of the Fund's net assets. However, investing in Rule 144A securities could have the effect of increasing the level of Fund illiquidity to the extent the Fund, at a particular point in time, may be unable to find qualified institutional buyers interested in purchasing such securities. WARRANTS AND SUBSCRIPTION RIGHTS. The Fund may invest up to 5% of the value of its net assets in warrants, including not more than 2% in warrants not listed on either the New York or American Stock Exchange. A warrant is, in effect, an option to purchase equity securities at a specific price, generally valid for a specific period of time, and has no voting rights, pays no dividends and has no rights with respect to the corporation issuing it. The Fund may acquire warrants and subscription rights attached to other securities without reference to the percentage limitations. A subscription right is a privilege granted to existing shareholders of a corporation to subscribe to shares of a new issue of common stock before it is offered to the public. A subscription right normally has a life of two to four weeks and a subscription price lower than the current market value of the common stock. The Fund may invest up to 5% of the value of its net assets in rights. 12 C. FUND POLICIES/INVESTMENT RESTRICTIONS The investment objective, policies and restrictions listed below have been adopted by the Fund as fundamental policies. Under the Investment Company Act of 1940, as amended (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 long-term capital appreciation. The Fund may not: 1. Invest 25% or more of the value of its total assets in securities of issuers in any one industry. This restriction does not apply to obligations issued or guaranteed by the United States Government, its agencies or instrumentalities or to cash equivalents. 2. Invest more than 5% of the value of its total assets in securities of issuers having a record, together with predecessors, of less than 3 years of continuous operation. This restriction does not apply to any obligation of the United States Government, its agencies or instrumentalities. 3. Purchase or sell real estate or interests therein (including limited partnership interests), although the Fund may purchase securities of issuers which engage in real estate operations and securities secured by real estate or interests therein. 4. Purchase oil, gas or other mineral leases, rights or royalty contracts, or exploration or development programs, except that the Fund may invest in the securities of companies which operate, invest in, or sponsor these programs. 5. Purchase or sell commodities or commodities contracts except that the Fund may purchase or sell futures contracts or options on futures. 6. Borrow money, except that the Fund may borrow from a bank for temporary or emergency purposes, in amounts not exceeding 5% (taken at the lower of cost or current value) of its total assets (not including the amount borrowed). 7. Pledge its assets or assign or otherwise encumber them except to secure permitted borrowings. For the purpose of this restriction, collateral arrangements with respect to initial or variation margin for futures are not deemed to be pledges of assets. 8. Issue senior securities as defined in the Investment Company Act, except insofar as the Fund may be deemed to have issued a senior security by reason of: (a) entering into any repurchase agreement; (b) purchasing any securities on a when-issued or delayed delivery basis; (c) purchasing or selling any financial futures contracts or options thereon; (d) borrowing money; or (e) lending portfolio securities. 9. Make loans of money or securities, except: (a) by the purchase of publicly distributed debt obligations; (b) by investment in repurchase agreements; or (c) by lending its portfolio securities. 10. Make short sales of securities. 11. Purchase securities on margin, except for short-term loans as are necessary for the clearance of portfolio securities. The deposit or payment by the Fund of initial or variation margin in connection with futures contracts or related options thereon is not considered the purchase of a security on margin. 13 12. Engage in the underwriting of securities, except insofar as the Fund may be deemed an underwriter under the Securities Act in disposing of a portfolio security. (The Fund may invest in restricted securities subject to the non-fundamental limitations contained in the Prospectus.) 13. Invest for the purpose of exercising control or management of any other issuer. As a non-fundamental policy, as to 75% of its total assets, the Fund may not purchase more than 10% of all outstanding voting securities or any class of securities of any one issuer. III. MANAGEMENT OF THE FUND - -------------------------------------------------------------------------------- A. BOARD OF TRUSTEES The Board of Trustees of the Fund oversees the management of the Fund but does not itself manage the Fund. The Trustees review various services provided by or under the direction of the Investment Manager to ensure that the Fund's general investment policies and programs are properly carried out. The Trustees also conduct their review to ensure that administrative services are provided to the Fund in a satisfactory manner. Under state law, the duties of the Trustees are generally characterized as a duty of loyalty and a duty of care. The duty of loyalty requires a Trustee to exercise his or her powers in the interest of the Fund and not the Trustee's own interest or the interest of another person or organization. A Trustee satisfies his or her duty of care by acting in good faith with the care of an ordinarily prudent person and in a manner the Trustee reasonably believes to be in the best interest of the Fund and its shareholders. B. MANAGEMENT INFORMATION TRUSTEES AND OFFICERS. The Board of the Fund consists of nine (9) Trustees. These same individuals also serve as directors or trustees for all of the Morgan Stanley Dean Witter Funds. Six Trustees (67% of the total number) have no affiliation or business connection with the Investment Manager or any of their affiliated persons and do not own any stock or other securities issued by the Investment Manager's parent company, MSDW, or the Sub-Advisor's parent company, TCW. These are the "disinterested" or "independent" Trustees. The other three Trustees (the "Management Trustees") are affiliated with the Investment Manager or Sub-Advisor. The Trustees and executive officers of the Fund, their principal business occupations during the last five years and their affiliations, if any, with the Manager or the Adviser, and with the Morgan Stanley Dean Witter Funds (there were 97 such Funds as of the calendar year ended December 31, 2000), are shown below.
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS - ----------------------------------------- ----------------------------------------------------- Michael Bozic (60) ..................... Retired; Director or Trustee of the Morgan Stanley Trustee Dean Witter Funds; formerly Vice Chairman of Kmart c/o Mayer, Brown & Platt Corporation (since December 1998-October 2000); Counsel to the Independent Trustees Chairman and Chief Executive Officer of Levitz 1675 Broadway Furniture Corporation (November 1995-November 1998) New York, New York and President and Chief Executive Officer of Hills Department Stores (May 1991-July 1995); formerly variously Chairman, Chief Executive Officer, Presi- dent and Chief Operating Officer (1987-1991) of the Sears Merchandise Group of Sears, Roebuck and Co.; Director of Weirton Steel Corporation.
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NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS - ----------------------------------------- ----------------------------------------------------- Charles A. Fiumefreddo* (67) ........... Chairman, Director or Trustee and Chief Executive Chairman of the Board, Officer of the Morgan Stanley Dean Witter Funds; Chief Executive Officer and Trustee formerly Chairman, Chief Executive Officer and Two World Trade Center Director of the Investment Manager, the Distributor New York, New York 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 (68) ..................... Director or Trustee of the Morgan Stanley Dean Witter Trustee Funds; formerly United States Senator c/o Summit Ventures LLC (R-Utah)(1974-1992) and Chairman, Senate Banking 1 Utah Center Committee (1980-1986); formerly Mayor of Salt Lake 201 S. Main Street City, Utah (1971-1974); formerly Astronaut, Space Salt Lake City, Utah 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 Lock- heed Martin and the Boeing Company) and Nuskin Asia Pacific (multilevel marketing); member of the Utah Regional Advisory Board of Pacific Corp.; member of the board of various civic and charitable organizations. Wayne E. Hedien (67) ................... Retired; Director or Trustee of the Morgan Stanley Trustee Dean Witter Funds; Director of The PMI Group, Inc. c/o Mayer, Brown & Platt (private mortgage insurance); Trustee and Vice Counsel to the Independent Trustees Chairman of The Field Museum of Natural History; 1675 Broadway formerly associated with the Allstate Companies New York, New York (1966-1994), most recently as Chairman of The Allstate Corporation (March 1993-December 1994) and Chairman and Chief Executive Officer of its wholly-owned subsidiary, Allstate Insurance Company (July 1989-December 1994); director of various other business and charitable organizations. James F. Higgins* (53) ................. Chairman of the Private Client Group of MSDW (since Trustee August 2000); Director of the Transfer Agent and Dean Two World Trade Center Witter Realty Inc.; Director or Trustee of the Morgan New York New York Stanley Dean Witter Funds (since June 2000); previously President and Chief Operating Officer of the Private Client Group of MSDW (May 1999-August 2000), President and Chief Operating Officer of Individual Securities of MSDW (February 1997-May 1999), President and Chief Operating Officer of Dean Witter Securities of MSDW (1995-February 1997), and President and Chief Operating Officer of Dean Witter Financial (1989-1995) and Director (1985-1997) of Dean Witter Reynolds.
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NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS - ----------------------------------------- ----------------------------------------------------- Dr. Manuel H. Johnson (52) ............. Senior Partner, Johnson Smick International, Inc., a Trustee consulting firm; Co-Chairman and a founder of the c/o Johnson Smick International, Inc. Group of Seven Council (G7C), an international 1133 Connecticut Avenue, N.W. economic commission; Chairman of the Audit Committee Washington, D.C. and Director or Trustee of the Morgan Stanley Dean Witter Funds; Director of Greenwich Capital Markets, Inc. (broker-dealer), Independence Standards Board (private sector organization governing independence of auditors) 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 and Assistant Secretary of the U.S. Treasury. Michael E. Nugent (64) ................. General Partner, Triumph Capital, L.P., a private Trustee investment partnership; Chairman of the Insurance c/o Triumph Capital, L.P. Committee and Director or Trustee of the Morgan 237 Park Avenue New York, Stanley Dean Witter Funds; formerly Vice President, New York Bankers Trust Company and BT Capital Corporation; Director of various business organizations. Philip J. Purcell* (57) ................ Chairman of the Board of Directors and Chief Trustee Executive Officer of MSDW, Dean Witter Reynolds and 1585 Broadway Novus Credit Services Inc.; Director of the New York, New York Distributor; Director or Trustee of the Morgan Stanley Dean Witter Funds; Director of American Airlines, Inc. and its parent company, AMR Corporation; Director and/or officer of various MSDW subsidiaries. John L. Schroeder (70) ................. Retired; Chairman of the Derivatives Committee and Trustee Director or Trustee of the Morgan Stanley Dean Witter c/o Mayer, Brown & Platt Funds; Director of Citizens Communications Company Counsel to the Independent Trustees (telecommunications company); formerly Executive Vice 1675 Broadway President and Chief Investment Officer of the Home New York, New York Insurance Company (August 1991-September 1995).
16
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS - ----------------------------------------- ----------------------------------------------------- Mitchell M. Merin (47) ................. President and Chief Operating Officer of Morgan President Stanley Dean Witter Asset Management (since Two World Trade Center December 1998); President and Director (since New York, New York April 1997) and 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 (since May 1999); Trustee of various Van Kampen investment companies (since December 1999); previously Chief Strategic Officer of the Investment Manager and MSDW Services Company and Executive Vice President of the Distributor (April 1997-June 1998), Vice President of the Morgan Stanley Dean Witter Funds (May 1997-April 1999), and Executive Vice President of Dean Witter, Discover & Co. Barry Fink (46) ........................ General Counsel (since May 2000) and Managing Vice President, Director (since December 2000) of Morgan Stanley Dean Secretary and General Counsel Witter Asset Management; Managing Director (since Two World Trade Center December 2000) and Secretary and General Counsel New York, New York (since February 1997) and Director (since July 1998) of the Investment Manager and MSDW Services Company; Vice President, Secretary and General Counsel of the Morgan Stanley Dean Witter Funds (since February 1997); Vice President and Secretary of the Distributor; previously, Senior Vice President (March 1997-December 1999), First Vice President, Assis- tant Secretary and Assistant General Counsel of the Investment Manager and MSDW Services Company. Michael P. Reilly (37) ................. Managing Director of the Sub-Advisor, Trust Company Vice President of the West and TCW Asset Management Company. 865 South Figueroa Street Los Angeles, California Thomas F. Caloia (55) .................. First Vice President and Assistant Treasurer of the Treasurer Investment Manager, the Distributer and MSDW Services Two World Trade Center Company; Treasurer of the Morgan Stanley Dean Witter New York, New York Funds.
- ------------ *Denotes Trustees who are "interested persons" of the Fund as defined by the Investment Company Act. RONALD E. ROBISON, Executive Vice President, Chief Administrative Officer and Director of the Investment Manager and MSDW Services Company and Chief Executive Officer and Director of the Transfer Agent, ROBERT S. GIAMBRONE, Senior Vice President of the Investment Manager, MSDW Services Company, the Distributor and the Transfer Agent and Director of the Transfer Agent, and JOSEPH J. MCALINDEN, Managing Director and Chief Investment Officer of the Investment Manager and Director of the Transfer Agent, are Vice Presidents of the Fund. 17 In addition, LOU ANNE D. MCINNIS, CARSTEN OTTO and RUTH ROSSI, Senior Vice Presidents and Assistant General Counsels of the Investment Manager and MSDW Services Company, MARILYN K. CRANNEY and TODD LEBO, First Vice Presidents and Assistant General Counsels of the Investment Manager and MSDW Services Company, and NATASHA KASSIAN and GEORGE SILFEN, Vice Presidents and Assistant General Counsels of the Investment Manager and MSDW Services Company, are Assistant Secretaries of the Fund. INDEPENDENT DIRECTORS/TRUSTEES AND THE COMMITTEES. Law and regulation establish both general guidelines and specific duties for the independent directors/trustees. The Morgan Stanley Dean Witter Funds seek as independent directors/trustees individuals of distinction and experience in business and finance, government service or academia; these are people whose advice and counsel are in demand by others and for whom there is often competition. To accept a position on the funds' boards, such individuals may reject other attractive assignments because the funds make substantial demands on their time. All of the independent directors/trustees serve as members of the Audit Committee. In addition, three of the directors/trustees, including two independent directors/trustees, serve as members of the Derivatives Committee and the Insurance Committee. The independent directors/trustees are charged with recommending to the full board approval of management, advisory and administration contracts, Rule 12b-1 plans and distribution and underwriting agreements; continually reviewing Fund performance; checking on the pricing of portfolio securities, brokerage commissions, transfer agent costs and performance, and trading among funds in the same complex; and approving fidelity bond and related insurance coverage and allocations, as well as other matters that arise from time to time. The independent directors/trustees are required to select and nominate individuals to fill any independent 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 auditors; directing investigations into matters within the scope of the independent auditors' duties, including the power to retain outside specialists; reviewing with the independent auditors the audit plan and results of the auditing engagement; approving professional services provided by the independent auditors and other accounting firms prior to the performance of the services; reviewing the independence of the independent auditors; 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. 18 TRUSTEE AND OFFICER INDEMNIFICATION. The Fund's Declaration of Trust provides that no Trustee, officer, employee or agent of the Fund is liable to the Fund or to a shareholder, nor is any Trustee, officer, employee or agent liable to any third persons in connection with the affairs of the Fund, except as such liability may arise from his/her or its own bad faith, willful misfeasance, gross negligence or reckless disregard of his/her or its duties. It also provides that all third persons shall look solely to the Fund property for satisfaction of claims arising in connection with the affairs of the Fund. With the exceptions stated, the Declaration of Trust provides that a Trustee, officer, employee or agent is entitled to be indemnified against all liability in connection with the affairs of the Fund. C. COMPENSATION The Fund pays each Independent Trustee an annual fee of $800 plus a per meeting fee of $50 for meetings of the Board of Trustees, the Independent Trustees or Committees of the Board of Trustees attended by the Trustee (the Fund pays the Chairman of the Audit Committee an additional annual fee of $750 and the Chairmen of the Derivatives and Insurance Committees additional annual fees of $500). If a Board meeting and a meeting of the Independent Trustees or a Committee meeting, or a meeting of the Independent Trustees and/or more than one Committee meeting, take place on a single day, the Trustees are paid a single meeting fee by the Fund. The Fund also reimburses such Trustees for travel and other out-of-pocket expenses incurred by them in connection with attending such meetings. Trustees and officers of the Fund who are or have been employed by the Investment Manager or an affiliated company receive no compensation or expense reimbursement from the Fund for their services as Trustee. The following table illustrates the compensation that the Fund paid to its current Independent Trustees for the fiscal year ended January 31, 2001. FUND COMPENSATION
AGGREGATE COMPENSATION NAME OF INDEPENDENT TRUSTEE FROM THE FUND - --------------------------- ------------- Michael Bozic............................................... $1,550 Edwin J. Garn............................................... 1,600 Wayne E. Hedien............................................. 1,600 Dr. Manuel H. Johnson....................................... 2,350 Michael E. Nugent........................................... 2,100 John L. Schroeder........................................... 2,050
19 The following table illustrates the compensation paid to the Fund's Independent Trustees for the calendar year ended December 31, 2000 for services to the 97 Morgan Stanley Dean Witter Funds that were in operation at December 31, 2000. CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS
TOTAL CASH COMPENSATION FOR SERVICES TO 97 MORGAN NAME OF INDEPENDENT TRUSTEE STANLEY DEAN WITTER FUNDS - --------------------------- ------------------------- Michael Bozic............................................... $146,917 Edwin J. Garn............................................... 151,717 Wayne E. Hedien............................................. 151,567 Dr. Manuel H. Johnson....................................... 223,655 Michael E. Nugent........................................... 199,759 John L. Schroeder........................................... 194,809
As of the date of this STATEMENT OF ADDITIONAL INFORMATION, 53 of the Morgan Stanley Dean Witter Funds, not 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 trustee referred to as an "Eligible Trustee") is entitled to retirement payments upon reaching the eligible retirement age (normally, after attaining age 72). Annual payments are based upon length of service. Currently, upon retirement, each Eligible Trustee is entitled to receive from the Adopting Fund, commencing as of his or her retirement date and continuing for the remainder of his or her life, an annual retirement benefit (the "Regular Benefit") equal to 30.22% of his or her Eligible Compensation plus 0.5036667% of such Eligible Compensation for each full month of service as an independent director/ trustee of any Adopting Fund in excess of five years up to a maximum of 60.44% after ten years of service. The foregoing percentages may be changed by the Board(1). "Eligible Compensation" is one-fifth of the total compensation earned by such Eligible Trustee for service to the Adopting Fund in the five year period prior to the date of the Eligible Trustee's retirement. Benefits under the retirement program are accrued as expenses on the books of the Adopting Funds. Such benefits are not secured or funded by the Adopting Funds. The following table illustrates the retirement benefits accrued to the Fund's Independent Trustees by the 53 Morgan Stanley Dean Witter Funds (not including the Fund) for the year ended December 31, 2000, and the estimated retirement benefits for the Independent Trustees, to commence upon their retirement, from the 53 Morgan Stanley Dean Witter Funds as of December 31, 2000. RETIREMENT BENEFITS FROM ALL MORGAN STANLEY DEAN WITTER FUNDS
FOR ALL ADOPTING FUNDS ------------------------------ ESTIMATED CREDITED YEARS ESTIMATED RETIREMENT BENEFITS ESTIMATED ANNUAL OF SERVICE AT PERCENTAGE OF ACCRUED AS EXPENSES BENEFITS UPON RETIREMENT NAME OF RETIREMENT ELIGIBLE BY ALL FROM ALL INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION ADOPTING FUNDS ADOPTING FUNDS(2) - ------------------- -------------- ------------- ------------------- ------------------------ Michael Bozic.......... 10 60.44% $ 20,001 $ 52,885 Edwin J. Garn.......... 10 60.44 29,348 52,817 Wayne E. Hedien........ 9 51.37 37,886 44,952 Dr. Manuel H. Johnson............... 10 60.44 21,187 77,817 Michael E. Nugent...... 10 60.44 36,202 69,506 John L. Schroeder...... 8 50.37 65,337 53,677
- ------------------------ (1) An Eligible Trustee may elect alternative payments of his or her retirement benefits based upon the combined life expectancy of the Eligible Trustee and his or her spouse on the date of such Eligible Trustee's retirement. In addition, the Eligible Trustee may elect that the surviving spouse's periodic payment of benefits will be equal to a lower percentage of the periodic amount when both spouses were alive. The amount estimated to be payable under this method, through the remainder of the later of the lives of the Eligible Trustee and spouse, will be the actuarial equivalent of the Regular Benefit. (2) Based on current levels of compensation. Amount of annual benefits also varies depending on the Trustee's elections described in Footnote (1) above. 20 IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES - -------------------------------------------------------------------------------- The following owned 5% or more of the outstanding Class A shares of the Fund as of March 8, 2001: Physicians Postgraduate Press Employees P/S/P DTD 12/28/82, FBO Irving R Shelton, P.O. Box 752870, Memphis, TN 38175-2870--13.325%; and Fundacion Dituc, Vicuna Mackenna 4860, EDF Raul Deves Piso 4 Macul, Santiago, Chile--9.920%. The following owned 5% or more of the outstanding Class D shares of the Fund on March 8, 2001: Hare & Co., c/o The Bank of New York, P.O. Box 11203, New York, NY 10286-1203--99.241%. As of the date of this STATEMENT OF ADDITIONAL INFORMATION, the aggregate number of shares of beneficial interest of the Fund owned by the Fund's officers and Trustees as a group was less than 1% of the Fund's shares of beneficial interest outstanding. V. INVESTMENT MANAGEMENT AND OTHER SERVICES - -------------------------------------------------------------------------------- A. INVESTMENT MANAGER AND SUB-ADVISOR The Investment Manager to the Fund is Morgan Stanley Dean Witter Advisors Inc., a Delaware corporation, whose address is Two World Trade Center, New York, NY 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. The Sub-Advisor is TCW Investment Management Company, a wholly-owned subsidiary of TCW, whose direct and indirect subsidiaries provide a variety of trust, investment management and investment advisory services. The Sub-Advisor is headquartered at 865 South Figueroa Street, Suite 1800, Los Angeles, CA 90017. Robert A. Day, who is Chairman of the Board of Directors of TCW, may be deemed to be a control person of the Sub-Advisor by virtue of the aggregate ownership by Mr. Day and his family of more than 25% of the outstanding voting stock of TCW. The Sub-Advisor was retained to provide sub-advisory services to the Fund effective June 28, 1999. Pursuant to an Investment Management Agreement (the "Management Agreement") with the Investment Manager, the Fund has retained the Investment Manager to provide administrative services, manage its business affairs and supervise the investment of the Fund's assets. The Fund pays the Investment Manager monthly compensation calculated daily by applying the following annual rates to the net assets of the Fund determined as of the close of each business day: 1.25% of the portion of daily net assets not exceeding $500 million; and 1.20% of the portion of daily net assets exceeding $500 million. The management fee is allocated among the Classes pro rata based on the net assets of the Fund attributable to each Class. The Investment Manager has retained its wholly-owned subsidiary, MSDW Services Company, to perform administrative services for the Fund. Under a Sub-Advisory Agreement (the "Sub-Advisory Agreement") between the Sub-Advisor and the Investment Manager, the Sub-Advisor provides the Fund with investment advice and portfolio management relating to the Fund's investments in securities, subject to the overall supervision of the Investment Manager. The Investment Manager pays the Sub-Advisor monthly compensation equal to 40% of the Investment Manager's fee. Prior to June 28, 1999, the Fund was managed by MSDW Services Company, pursuant to a management agreement between the Fund and MSDW Services Company and was advised by TCW Investment Management Company pursuant to an advisory agreement between the Fund and TCW Investment Management Company. For the fiscal year ended January 31, 1999 and for the period February 1, 1999 through June 25, 1999, MSDW Services Company accrued total compensation under the old management agreement in the amounts of $1,476,124 and $374,012, respectively. For the same periods, TCW Investment Management Company accrued total compensation in its capacity of adviser to the Fund in the amounts of $984,082 and $249,342, respectively. 21 For the fiscal period June 28, 1999 through January 31, 2000 and for the fiscal year ended January 31, 2001, the Investment Manager accrued total compensation under the Investment Management Agreement in the amounts of $956,902 and $1,552,969, respectively, of which $382,761 and $621,188, respectively, was paid to TCW Investment Management Company under the Sub-Advisory Agreement. B. PRINCIPAL UNDERWRITER The Fund's principal underwriter is the Distributor (which has the same address as the Investment Manager). In this capacity, the Fund's shares are distributed by the Distributor. The Distributor has entered into a selected dealer agreement with Dean Witter Reynolds, which through its own sales organization sells shares of the Fund. In addition, the Distributor may enter into similar agreements with other selected broker-dealers. The Distributor, a Delaware corporation, is a wholly-owned subsidiary of MSDW. The Distributor bears all expenses it may incur in providing services under the Distribution Agreement. These expenses include the payment of commissions for sales of the Fund's shares and incentive compensation to Financial Advisors, the cost of educational and/or business-related trips, and educational and/or promotional and business-related expenses. The Distributor also pays certain expenses in connection with the distribution of the Fund's shares, including the costs of preparing, printing and distributing advertising or promotional materials, and the costs of printing and distributing prospectuses and supplements thereto used in connection with the offering and sale of the Fund's shares. The Fund bears the costs of initial typesetting, printing and distribution of prospectuses and supplements thereto to shareholders. The Fund also bears the costs of registering the Fund and its shares under federal and state securities laws and pays filing fees in accordance with state securities laws. The Fund and the Distributor have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. Under the Distribution Agreement, the Distributor uses its best efforts in rendering services to the Fund, but in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations, the Distributor is not liable to the Fund or any of its shareholders for any error of judgment or mistake of law or for any act or omission or for any losses sustained by the Fund or its shareholders. C. SERVICES PROVIDED BY THE INVESTMENT MANAGER AND SUB-ADVISOR The Investment Manager supervises the investment of the Fund's assets. The Investment Manager obtains and evaluates the information and advice relating to the economy, securities markets, and specific securities as it considers necessary or useful to continuously oversee the management of the assets of the Fund in a manner consistent with its investment objective. Under the terms of the Management Agreement, the Investment Manager 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 auditors and attorneys is, in the opinion of the Investment Manager, necessary or desirable). The Investment Manager also bears the cost of telephone service, heat, light, power and other utilities provided to the Fund. Pursuant to the Sub-Advisory Agreement, the Sub-Advisor has been retained, subject to the overall supervision of the Investment Manager, to continuously furnish investment advice concerning individual security selections, asset allocations and overall economic trends. Expenses not expressly assumed by the Investment Manager or the Sub-Advisor under the Management Agreement and the Sub-Advisory Agreement or by the Distributor, will be paid by the Fund. These expenses will be allocated among the four Classes of shares pro rata based on the net assets of the Fund attributable to each Class, except as described below. Such expenses include, but are not limited to: expenses of the Plan of Distribution pursuant to Rule 12b-1; charges and expenses of any 22 registrar, custodian, stock transfer and dividend disbursing agent; brokerage commissions; taxes; engraving and printing share certificates; registration costs of the Fund and its shares under federal and state securities laws; the cost and expense of printing, including typesetting, and distributing prospectuses of the Fund and supplements thereto to the Fund's shareholders; all expenses of shareholders' and Trustees' meetings and of preparing, printing and mailing of proxy statements and reports to shareholders; fees and travel expenses of Trustees or members of any advisory board or committee who are not employees of the Investment Manager or the Sub-Advisor or any corporate affiliate of either; all expenses incident to any dividend, withdrawal or redemption options; charges and expenses of any outside service used for pricing of the Fund's shares; fees and expenses of legal counsel, including counsel to the Trustees who are not interested persons of the Fund or of the Investment Manager or the Sub-Advisor (not including compensation or expenses of attorneys who are employees of the Investment Manager or the Sub-Advisor); fees and expenses of the Fund's independent auditors; membership dues of industry associations; interest on Fund borrowings; postage; insurance premiums on property or personnel (including officers and Trustees) of the Fund which inure to its benefit; extraordinary expenses (including, but not limited to, legal claims and liabilities and litigation costs and any indemnification relating thereto); and all other costs of the Fund's operation. The 12b-1 fees relating to a particular Class will be allocated directly to that Class. In addition, other expenses associated with a particular Class (except advisory or custodial fees) may be allocated directly to that Class, provided that such expenses are reasonably identified as specifically attributable to that Class and the direct allocation to that Class is approved by the Trustees. The Management Agreement provides that in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations thereunder, the Investment Manager is not liable to the Fund or any of its investors for any act or omission by the Investment Manager or for any losses sustained by the Fund or its investors. The Management Agreement will remain in effect from year to year, provided continuance of the Management Agreement is approved at least annually by the vote of the holders of a majority, as defined in the Investment Company Act, of the outstanding shares of the Fund, or by the Trustees; provided that in either event such continuance is approved annually by the vote of a majority of the Independent Trustees. D. DEALER REALLOWANCES Upon notice to selected broker-dealers, the Distributor may reallow up to the full applicable front-end sales charge during periods specified in such notice. During periods when 90% or more of the sales charge is reallowed, such selected broker-dealers may be deemed to be underwriters as that term is defined in the Securities Act. E. RULE 12b-1 PLAN The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the Investment Company Act (the "Plan") pursuant to which each Class, other than Class D, pays the Distributor compensation accrued daily and payable monthly at the following annual rates: 0.25% and 1.0% of the average daily net assets of Class A and Class C, respectively, and, with respect to Class B, 1.0% of the lesser of: (a) the average daily aggregate gross sales of the Fund's Class B shares since the inception of the Fund (not including reinvestment of dividends or capital gains distributions), less the average daily aggregate net asset value of the Fund's Class B shares redeemed since the Fund's inception upon which a contingent deferred sales charge has been imposed or upon which such charge has been waived, or (b) the average daily net assets of Class B. The Distributor also receives the proceeds of front-end sales charges ("FSCs") and of contingent deferred sales charges ("CDSCs") imposed on certain redemptions of shares, which are separate and apart from payments made pursuant to the Plan. The Distributor has informed the Fund that it and/or 23 Dean Witter Reynolds received the proceeds of CDSCs and FSCs, for the last three fiscal years ended January 31, in approximate amounts as provided in the table below (the Distributor did not retain any of these amounts).
2001 2000 1999 ----------------- ----------------- ------------------- Class A...................... FSCs:(1) $ 6,890 FSCs:(1) $ 3,307 FSCs:(1) $ 1,799 CDSCs: $ 0 CDSCs: $ 0 CDSCs: $ 2 Class B...................... CDSCs: $148,014 CDSCs: $310,386 CDSCs: $ 916,003 Class C...................... CDSCs: $ 23,373 CDSCs: $ 1,443 CDSCs: $ 2,365
- ------------------------ (1) FSCs apply to Class A only. The Distributor has informed the Fund that the entire fee payable by Class A and a portion of the fees payable by each of Class B and Class C each year pursuant to the Plan equal to 0.25% of such Class' average daily net assets are currently each characterized as a "service fee" under the Rules of the National Association of Securities Dealers, Inc. (of which the Distributor is a member). The "service fee" is a payment made for personal service and/or the maintenance of shareholder accounts. The remaining portion of the Plan fees payable by a Class, if any, is characterized as an "asset-based sales charge" as such is defined by the Rules of the Association. Under the Plan and as required by Rule 12b-1, the Trustees receive and review promptly after the end of each calendar quarter a written report provided by the Distributor of the amounts expended under the Plan and the purpose for which such expenditures were made. Class B shares of the Fund accrued amounts payable to the Distributor under the Plan, during the fiscal year ended January 31, 2001, of $1,167,074. This amount is equal to 1.00% of the average daily net assets of Class B for the fiscal year and was calculated pursuant to clause (b) of the compensation formula under the Plan. For the fiscal year ended January 31, 2001, Class A and Class C shares of the Fund accrued payments under the Plan amounting to $1,906 and $9,579, respectively, which amounts are equal to 0.19% and 1.00% of the average daily net assets of Class A and Class C, respectively, for the fiscal year. The Plan was adopted in order to permit the implementation of the Fund's method of distribution. Under this distribution method the Fund offers four Classes, each with a different distribution arrangement. With respect to Class A shares, Dean Witter Reynolds compensates its Financial Advisors by paying them, from proceeds of the FSC, commissions for the sale of Class A shares, currently a gross sales credit of up to 5.0% of the amount sold (except as provided in the following sentence) and an annual residual commission, currently a residual of up to 0.25% of the current value of the respective accounts for which they are the Financial Advisors or dealers of record in all cases. On orders of $1 million or more (for which no sales charge was paid) or net asset value purchases by employer-sponsored employee benefit plans, whether or not qualified under the Internal Revenue Code, for which (i) the Transfer Agent serves as Trustee, (ii) or MSDW's Retirement Plan Services serves as recordkeeper pursuant to a written Recordkeeping Services Agreement or (iii) an entity independent from MSDW serves as recordkeeper under an alliance or similar agreement with MSDW's Retirement Plan Services ("MSDW Eligible Plans"), the Investment Manager compensates Financial Advisors by paying them, from its own funds, a gross sales credit of 1.0% of the amount sold. With respect to Class B shares, Dean Witter Reynolds compensates its Financial Advisors by paying them, from its own funds, commissions for the sale of Class B shares, currently a gross sales credit of up to 5.0% of the amount sold (except as provided in the following sentence) and an annual residual commission, currently a residual of up to 0.25% of the current value (not including reinvested dividends or distributions) of the amount sold in all cases. In the case of Class B shares purchased by MSDW Eligible Plans, Dean Witter Reynolds compensates its Financial Advisors by paying them, from its own funds, a gross sales credit of 3.0% of the amount sold. 24 With respect to Class C shares, Dean Witter Reynolds compensates its Financial Advisors by paying them, from its own funds, commissions for the sale of Class C shares, currently a gross sales credit of up to 1.0% of the amount sold and an annual residual commission, currently up to 1.0% of the current value of the respective accounts for which they are the Financial Advisors of record. With respect to Class D shares other than shares held by participants in the Investment Manager's mutual fund asset allocation program and in the Morgan Stanley Dean Witter Choice Program, the Investment Manager compensates Dean Witter Reynolds' Financial Advisors by paying them, from its own funds, commissions for the sale of Class D shares, currently a gross sales credit of up to 1.0% of the amount sold. There is a chargeback of 100% of the amount paid if the Class D shares are redeemed in the first year and a chargeback of 50% of the amount paid if the Class D shares are redeemed in the second year after purchase. The Investment Manager also compensates Dean Witter Reynolds' Financial Advisors by paying them, from its own funds, an annual residual commission, currently up to 0.10% of the current value of the respective accounts for which they are the Financial Advisors of record (not including accounts of participants in the Investment Manager's mutual fund asset allocation program and the Morgan Stanley Dean Witter Choice program). The gross sales credit is a charge which reflects commissions paid by Dean Witter Reynolds to its Financial Advisors and Dean Witter Reynolds' Fund-associated distribution-related expenses, including sales compensation, and overhead and other branch office distribution-related expenses including (a) the expenses of operating Dean Witter Reynolds' branch offices in connection with the sale of Fund shares, including lease costs, the salaries and employee benefits of operations and sales support personnel, utility costs, communications costs and the costs of stationery and supplies, (b) the costs of client sales seminars, (c) travel expenses of mutual fund sales coordinators to promote the sale of Fund shares and (d) other expenses relating to branch promotion of Fund sales. The Investment Manager pays a retention fee to Financial Advisors at an annual rate of 0.05% of the value of shares of the Fund held for at least one year. Shares purchased through the reinvestment of dividends will be eligible for a retention fee, provided that such dividends were earned on shares otherwise eligible for a retention fee payment. Shares owned in variable annuities, closed-end fund shares and shares held in 401(k) plans where the Transfer Agent or MSDW's Retirement Plan Services is either recordkeeper or trustee are not eligible for a retention fee. The retention fees are paid by the Investment Manager from its own assets, which may include profits from investment management fees payable under the Management Agreement, as well as from borrowed funds. The distribution fee that the Distributor receives from the Fund under the Plan, in effect, offsets distribution expenses incurred under the Plan on behalf of the Fund and, in the case of Class B shares, opportunity costs, such as the gross sales credit and an assumed interest charge thereon ("carrying charge"). These expenses may include the cost of Fund-related educational and/or business-related trips or payment of Fund-related educational and/or promotional expenses of Financial Advisors. For example, the Distributor has implemented a compensation program available only to Financial Advisors meeting specified criteria under which certain marketing and/or promotional expenses of those Financial Advisors are paid by the Distributor out of compensation it receives under the Plan. In the Distributor's reporting of the distribution expenses to the Fund, in the case of Class B shares, such assumed interest (computed at the "broker's call rate") has been calculated on the gross credit as it is reduced by amounts received by the Distributor under the Plan and any contingent deferred sales charges received by the Distributor upon redemption of shares of the Fund. No other interest charge is included as a distribution expense in the Distributor's calculation of its distribution costs for this purpose. The broker's call rate is the interest rate charged to securities brokers on loans secured by exchange-listed securities. The Fund is authorized to reimburse expenses incurred or to be incurred in promoting the distribution of the Fund's Class A and Class C shares and in servicing shareholder accounts. Reimbursement will be made through payments at the end of each month. The amount of each monthly payment may in no event exceed an amount equal to a payment at the annual rate of 0.25%, in the case of Class A, and 25 1.0%, in the case of Class C, of the average net assets of the respective Class during the month. No interest or other financing charges, if any, incurred on any distribution expenses on behalf of Class A and Class C will be reimbursable under the Plan. With respect to Class A, in the case of all expenses other than expenses representing the service fee, and, with respect to Class C, in the case of all expenses other than expenses representing a gross sales credit or a residual to Financial Advisors and other authorized financial representatives, such amounts shall be determined at the beginning of each calendar quarter by the Trustees, including, a majority of the Independent Trustees. Expenses representing the service fee (for Class A) or a gross sales credit or a residual to Financial Advisors and other authorized financial representatives (for Class C) may be reimbursed without prior determination. In the event that the Distributor proposes that monies shall be reimbursed for other than such expenses, then in making quarterly determinations of the amounts that may be reimbursed by the Fund, the Distributor will provide and the Trustees will review a quarterly budget of projected distribution expenses to be incurred on behalf of the Fund, together with a report explaining the purposes and anticipated benefits of incurring such expenses. The Trustees will determine which particular expenses, and the portions thereof, that may be borne by the Fund, and in making such a determination shall consider the scope of the Distributor's commitment to promoting the distribution of the Fund's Class A and Class C shares. Each Class paid 100% of the amounts accrued under the Plan with respect to that Class for the fiscal year ended January 31, 2001 to the Distributor. The Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to the Plan, $45,697,176 on behalf of Class B since the inception of the Plan. It is estimated that this amount was spent in approximately the following ways: (i) 9.85% ($4,500,340)--advertising and promotional expenses; (ii) 0.61% ($280,362)--printing and mailing of prospectuses for distribution to other than current shareholders; and (iii) 89.54% ($40,916,474)--other expenses, including the gross sales credit and the carrying charge, of which 16.88% ($6,905,154) represents carrying charges, 34.41% ($14,080,686) represents commission credits to Dean Witter Reynolds branch offices and other selected broker-dealers for payments of commissions to Financial Advisors and other authorized financial representatives, and 48.71% ($19,930,634) represents overhead and other branch office distribution-related expenses. The amounts accrued by Class A and a portion of the amounts accrued by Class C under the Plan during the fiscal year ended January 31, 2001 were service fees. The remainder of the amounts accrued by Class C were for expenses which relate to compensation of sales personnel and associated overhead expenses. In the case of Class B shares, at any given time, the expenses of distributing shares of the Fund may be more or less than the total of (i) the payments made by the Fund pursuant to the Plan; and (ii) the proceeds of CDSCs paid by investors upon redemption of shares. For example, if $1 million in expenses in distributing Class B shares of the Fund had been incurred and $750,000 had been received as described in (i) and (ii) above, the excess expense would amount to $250,000. The Distributor has advised the Fund that in the case of Class B shares the excess distribution expenses, including the carrying charge designed to approximate the opportunity costs incurred by Dean Witter Reynolds which arise from it having advanced monies without having received the amount of any sales charges imposed at the time of sale of the Fund's Class B shares, totaled $21,295,307 as of January 31, 2001 (the end of the Fund's fiscal year), which was equal to 21.42% of the net assets of Class B on such date. Because there is no requirement under the Plan that the Distributor be reimbursed for all distribution expenses with respect to Class B shares or any requirement that the Plan be continued from year to year, this excess amount does not constitute a liability of the Fund. Although there is no legal obligation for the Fund to pay expenses incurred in excess of payments made to the Distributor under the Plan and the proceeds of CDSCs paid by investors upon redemption of shares, if for any reason the Plan is terminated, the Trustees will consider at that time the manner in which to treat such expenses. Any cumulative expenses incurred, but not yet recovered through distribution fees or CDSCs, may or may not be recovered through future distribution fees or CDSCs. In the case of Class A and Class C shares, expenses incurred pursuant to the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net assets of Class A or Class C, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses represent- 26 ing a gross sales commission credited to Morgan Stanley Dean Witter Financial Advisors and other authorized financial representatives at the time of sale may be reimbursed in the subsequent calendar year. The Distributor has advised the Fund that unreimbursed expenses representing a gross sales commission credited to Morgan Stanley Dean Witter Financial Advisors and other authorized financial representatives at the time of sale totaled $684 in the case of Class C at December 31, 2000 (end of the calendar year), which amount was equal to 0.10% of the net assets of Class C on such date, and that there were no such expenses that may be reimbursed in the subsequent year in the case of Class A on such date. No interest or other financing charges will be incurred on any Class A or Class C distribution expenses incurred by the Distributor under the Plan or on any unreimbursed expenses due to the Distributor pursuant to the Plan. No interested person of the Fund nor any Independent Trustee has any direct financial interest in the operation of the Plan except to the extent that the Distributor, the Investment Manager, Dean Witter Reynolds, MSDW Services Company or certain of their employees may be deemed to have such an interest as a result of benefits derived from the successful operation of the Plan or as a result of receiving a portion of the amounts expended thereunder by the Fund. On an annual basis, the Trustees, including a majority of the Independent Trustees, consider whether the Plan should be continued. Prior to approving the last continuation of the Plan, the Trustees requested and received from the Distributor and reviewed all the information which they deemed necessary to arrive at an informed determination. In making their determination to continue the Plan, the Trustees considered: (1) the Fund's experience under the Plan and whether such experience indicates that the Plan is operating as anticipated; (2) the benefits the Fund had obtained, was obtaining and would be likely to obtain under the Plan, including that: (a) the Plan is essential in order to give Fund investors a choice of alternatives for payment of distribution and service charges and to enable the Fund to continue to grow and avoid a pattern of net redemptions which, in turn, are essential for effective investment management; and (b) without the compensation to individual brokers and the reimbursement of distribution and account maintenance expenses of Dean Witter Reynolds' branch offices made possible by the 12b-1 fees, Dean Witter Reynolds could not establish and maintain an effective system for distribution, servicing of Fund shareholders and maintenance of shareholder accounts; and (3) what services had been provided and were continuing to be provided under the Plan to the Fund and its shareholders. Based upon their review, the Trustees, including each of the Independent Trustees, determined that continuation of the Plan would be in the best interest of the Fund and would have a reasonable likelihood of continuing to benefit the Fund and its shareholders. In the Trustees' quarterly review of the Plan, they will consider its continued appropriateness and the level of compensation provided therein. The Plan may not be amended to increase materially the amount to be spent for the services described therein without approval by the shareholders of the affected Class or Classes of the Fund, and all material amendments to the Plan must also be approved by the Trustees in the manner described above. The Plan may be terminated at any time, without payment of any penalty, by vote of a majority of the Independent Trustees or by a vote of a majority of the outstanding voting securities of the Fund (as defined in the Investment Company Act) on not more than thirty days' written notice to any other party to the Plan. So long as the Plan is in effect, the election and nomination of Independent Trustees shall be committed to the discretion of the Independent Trustees. F. OTHER SERVICE PROVIDERS (1) TRANSFER AGENT/DIVIDEND-PAYING AGENT Morgan Stanley Dean Witter Trust FSB is the Transfer Agent for the Fund's shares and the Dividend Disbursing Agent for payment of dividends and distributions on Fund shares and Agent for shareholders under various investment plans. The principal business address of the Transfer Agent is Harborside Financial Center, Plaza Two, Jersey City, NJ 07311. 27 (2) CUSTODIAN AND INDEPENDENT AUDITORS Chase Manhattan Bank, Chase Plaza, New York, NY 10005, is the Custodian of the Fund's assets. Any of the Fund's cash balances with the Custodian in excess of $100,000 are unprotected by federal deposit insurance. These balances may, at times, be substantial. Deliotte & Touche LLP, Two World Financial Center, New York, NY 10281, serves as the independent auditors of the Fund. The independent auditors 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. G. CODES OF ETHICS The Fund, the Investment Manager, the Sub-Advisor and the Distributor have each adopted a Code of Ethics pursuant to Rule 17j-1 under the Investment Company Act. The Codes of Ethics are designed to detect and prevent improper personal trading. The Codes of Ethics permit personnel subject to the Codes to invest in securities, including securities that may be purchased, sold or held by the Fund, subject to a number of restrictions and controls including prohibitions against purchases of securities in an Initial Public Offering and a preclearance requirement with respect to personal securities transactions. VI. BROKERAGE ALLOCATION AND OTHER PRACTICES - -------------------------------------------------------------------------------- A. BROKERAGE TRANSACTIONS Pursuant to an order of the SEC, the Fund may effect principal transactions in certain money market instruments with Dean Witter Reynolds. The Fund will limit its transactions with Dean Witter Reynolds to U.S. Government and government agency securities, bank money instruments (i.e., certificates of deposit and bankers' acceptances) and commercial paper. The transactions will be effected with Dean Witter Reynolds only when the price available from Dean Witter Reynolds is better than that available from other dealers. During the fiscal years ended January 31, 1998, 1999, and 2000, the Fund did not effect any principal transactions with Dean Witter Reynolds. Subject to the general supervision of the Trustees, the Investment Manager and/or Sub-Advisor is responsible for decisions to buy and sell securities for the Fund, the selection of brokers and dealers to effect the transactions, and the negotiation of brokerage commissions, if any. Purchases and sales of securities on a stock exchange are effected through brokers who charge a commission for their services. In the over-the-counter market, securities are generally traded on a "net" basis with dealers acting as principal for their own accounts without a stated commission, although the price of the security usually includes a profit to the dealer. The Fund also expects that securities will be purchased at times in underwritten offerings where the price includes a fixed amount of compensation, generally referred to as the underwriter's concession or discount. On occasion, the Fund may also purchase certain money market instruments directly from an issuer, in which case no commissions or discounts are paid. For the fiscal years ended January 31, 1999, 2000, and 2001, the Fund paid a total of $591,538, $350,544 and $309,496, respectively, in brokerage commissions. 28 B. COMMISSIONS Brokerage transactions in securities listed on exchanges or admitted to unlisted trading privileges may be effected through Dean Witter Reynolds, Morgan Stanley & Co. and other affiliated brokers and dealers. In order for an affiliated broker or dealer to effect any portfolio transactions on an exchange for the Fund, the commissions, fees or other remuneration received by the affiliated broker or dealer must be reasonable and fair compared to the commissions, fees or other remuneration paid to other brokers in connection with comparable transactions involving similar securities being purchased or sold on an exchange during a comparable period of time. This standard would allow the affiliated broker or dealer to receive no more than the remuneration which would be expected to be received by an unaffiliated broker in a commensurate arm's-length transaction. Furthermore, the Trustees, including the Independent Trustees, have adopted procedures which are reasonably designed to provide that any commissions, fees or other remuneration paid to an affiliated broker or dealer are consistent with the foregoing standard. The Fund does not reduce the management fee it pays to the Investment Manager by any amount of the brokerage commissions it may pay to an affiliated broker or dealer. During the fiscal years ended January 31, 1999, 2000, and 2001, the Fund did not pay any brokerage fees to Dean Witter Reynolds. During the fiscal years ended January 31, 1999, 2000, and 2001, the Fund paid a total of $13,262, $5,159 and $24,112, respectively, in brokerage commissions to Morgan Stanley & Co. Inc. During the fiscal year ended January 31, 2001, the brokerage commissions paid to Morgan Stanley & Co. represented approximately 7.79% of the total brokerage commissions paid by the Fund for this period and were paid on account of transactions having an aggregate dollar value equal to approximately 5.88% of the aggregate dollar value of all portfolio transactions of the Fund during the year for which commissions were paid. C. BROKERAGE SELECTION The policy of the Fund regarding purchases and sales of securities for its portfolio is that primary consideration will be given to obtaining the most favorable prices and efficient executions of transactions. Consistent with this policy, when securities transactions are effected on a stock exchange, the Fund's policy is to pay commissions which are considered fair and reasonable without necessarily determining that the lowest possible commissions are paid in all circumstances. The Fund believes that a requirement always to seek the lowest possible commission cost could impede effective portfolio management and preclude the Fund and the Investment Manager and/or Sub-Advisor from obtaining a high quality of brokerage and research services. In seeking to determine the reasonableness of brokerage commissions paid in any transaction, the Investment Manager and/or Sub-Advisor relies upon its experience and knowledge regarding commissions generally charged by various brokers and on its judgment in evaluating the brokerage and research services received from the broker effecting the transaction. These determinations are necessarily subjective and imprecise, as in most cases an exact dollar value for those services is not ascertainable. The Fund anticipates that certain of its transactions involving foreign securities will be effected on foreign securities exchanges. Fixed commissions on such transactions are generally higher than negotiated commissions on domestic transactions. There is also generally less government supervision and regulation of foreign securities exchanges and brokers than in the United States. In seeking to implement the Fund's policies, the Investment Manager and Sub-Advisor effect transactions with those brokers and dealers who the Investment Manager and/or Sub-Advisor believes provide the most favorable prices and are capable of providing efficient executions. If the Investment Manager and/or Sub-Advisor believes the prices and executions are obtainable from more than one broker or dealer, it may give consideration to placing portfolio transactions with those brokers and dealers who also furnish research and other services to the Fund, the Investment Manager and Sub-Advisor or any of their affiliates. The services may include, but are not limited to, any one or more of the following: reports on industries and companies, economic analyses and review of business conditions, portfolio strategy, analytic computer software, account performance services, computer terminals and various trading and/or quotation equipment. They also include advice from broker-dealers as to the value of securities, availability of securities, availability of buyers, and availability of sellers. In addition, 29 they include recommendations as to purchase and sale of individual securities and timing of such transactions. The information and services received by the Investment Manager and/or Sub-Advisor from brokers and dealers may be of benefit to them and any of their asset management affiliates in the management of accounts of some of their other clients and may not in all cases benefit the Fund directly. The Investment Manager, the Sub-Advisor and certain of their affiliates currently serve 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 and Sub-Advisor and their affiliates to cause purchase and sale transactions (including transactions in certain initial and secondary public offerings) to be allocated among clients whose assets they manage (including the Fund) in such manner as they deem equitable. In making such allocations among the Fund and other client accounts, various factors may be considered, including the respective investment objectives, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment, the size of investment commitments generally held and the opinions of the persons responsible for managing the portfolios of the Fund and other client accounts. The Investment Manager, the Sub-Advisor and their affiliates may operate one or more order placement facilities and each facility will implement order allocation in accordance with the procedures described above. From time to time, each facility may transact in a security at the same time as other facilities are trading in that security. D. DIRECTED BROKERAGE During the fiscal year ended January 31, 2001, the Fund paid $307,582 in brokerage commissions in connection with transactions in the aggregate amount of $120,552,993 to brokers because of research services provided. E. REGULAR BROKER-DEALERS During the fiscal year ended January 31, 2001, the Fund did not purchase securities issued by brokers or dealers that 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 January 31, 2001, the Fund did not own any securities issued by any of such issuers. VII. CAPITAL STOCK AND OTHER SECURITIES - -------------------------------------------------------------------------------- The shareholders of the Fund are entitled to a full vote for each full share of beneficial interest held. The Fund is authorized to issue an unlimited number of shares of beneficial interest. All shares of beneficial interest of the Fund are of $0.01 par value and are equal as to earnings, assets and voting privileges except that each Class will have exclusive voting privileges with respect to matters relating to distribution expenses borne solely by such Class or any other matter in which the interests of one Class differ from the interests of any other Class. In addition, Class B shareholders will have the right to vote on any proposed material increase in Class A's expenses, if such proposal is submitted separately to Class A shareholders. Also, Class A, Class B and Class C bear expenses related to the distribution of their respective shares. The Fund's Declaration of Trust permits the Trustees to authorize the creation of additional series of shares (the proceeds of which would be invested in separate, independently managed portfolios) and additional Classes of shares within any series. The Trustees have not presently authorized any such additional series or Classes of shares other than as set forth in the PROSPECTUS. The Fund is not required to hold annual meetings of shareholders and in ordinary circumstances the Fund does not intend to hold such meetings. The Trustees may call special meetings of shareholders for action by shareholder vote as may be required by the Investment Company Act or the Declaration of Trust. Under certain circumstances, the Trustees may be removed by action of the Trustees. In addition, under certain circumstances, the shareholders may call a meeting to remove the Trustees and the Fund is required to provide assistance in communicating with shareholders about such a meeting. The voting 30 rights of shareholders are not cumulative, so that holders of more than 50 percent of the shares voting can, if they choose, elect all Trustees being selected, while the holders of the remaining shares would be unable to elect any Trustees. Under Massachusetts law, shareholders of a business trust may, under certain limited circumstances, be held personally liable as partners for the obligations of the Fund. However, the Declaration of Trust contains an express disclaimer of shareholder liability for acts or obligations of the Fund, requires that notice of such Fund obligations include such disclaimer, and provides for indemnification out of the Fund's property for any shareholder held personally liable for the obligations of the Fund. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund itself would be unable to meet its obligations. Given the above limitations on shareholder personal liability, and the nature of the Fund's assets and operations, the possibility of the Fund being unable to meet its obligations is remote and thus, in the opinion of Massachusetts counsel to the Fund, the risk to Fund shareholders of personal liability is remote. The Trustees themselves have the power to alter the number and the terms of office of the Trustees (as provided for in the Declaration of Trust), and they may at any time lengthen or shorten their own terms or make their terms of unlimited duration and appoint their own successors, provided that always at least a majority of the Trustees has been elected by the shareholders of the Fund. VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES - -------------------------------------------------------------------------------- A. PURCHASE/REDEMPTION OF SHARES Information concerning how Fund shares are offered to the public (and how they are redeemed and exchanged) is provided in the Fund's PROSPECTUS. TRANSFER AGENT AS AGENT. With respect to the redemption or repurchase of Fund shares, the application of proceeds to the purchase of new shares in the Fund or any other Morgan Stanley Dean Witter Fund and the general administration of the exchange privilege, the Transfer Agent acts as agent for the Distributor and for the shareholder's authorized broker-dealer, if any, in the performance of such functions. With respect to exchanges, redemptions or repurchases, the Transfer Agent shall be liable for its own negligence and not for the default or negligence of its correspondents or for losses in transit. The Fund shall not be liable for any default or negligence of the Transfer Agent, the Distributor or any authorized broker-dealer. The Distributor and any authorized broker-dealer have appointed the Transfer Agent to act as their agent in connection with the application of proceeds of any redemption of Fund shares to the purchase of shares of any other Morgan Stanley Dean Witter Fund and the general administration of the exchange privilege. No commission or discounts will be paid to the Distributor or any authorized broker-dealer for any transaction pursuant to the exchange privilege. TRANSFERS OF SHARES. In the event a shareholder requests a transfer of Fund shares to a new registration, the shares will be transferred without sales charge at the time of transfer. With regard to the status of shares which are either subject to the CDSC or free of such charge (and with regard to the length of time shares subject to the charge have been held), any transfer involving less than all of the shares in an account will be made on a pro rata basis (that is, by transferring shares in the same proportion that the transferred shares bear to the total shares in the account immediately prior to the transfer). The transferred shares will continue to be subject to any applicable CDSC as if they had not been so transferred. OUTSIDE BROKERAGE ACCOUNTS. If a shareholder wishes to maintain his or her fund account through a brokerage company other than Dean Witter Reynolds, he or she may do so only if the Distributor has entered into a selected dealer agreement with that brokerage company. Accounts maintained through a brokerage company other than Dean Witter Reynolds may be subject to certain restrictions on subsequent purchases and exchanges. Please contact your brokerage company or the Transfer Agent for more information. 31 B. OFFERING PRICE The Fund's Class B, Class C and Class D shares are offered at net asset value per share and the Class A shares are offered at net asset value per share plus any applicable FSC which is distributed among the Fund's distributor, Dean Witter Reynolds and other authorized dealers as described in Section "V. Management, Investment Advice and Other Services--E. Rule 12b-1 Plan." The price of Fund shares, called "net asset value," is based on the value of the Fund's portfolio securities. Net asset value per share of each Class is calculated by dividing the value of the portion of the Fund's securities and other assets attributable to that Class, less the liabilities attributable to that Class, by the number of shares of that Class outstanding. The assets of each Class of shares are invested in a single portfolio. The net asset value of each Class, however, will differ because the Classes have different ongoing fees. In the calculation of the Fund's net asset value: (1) an equity portfolio security listed or traded on the New York or American Stock Exchange, NASDAQ or other exchange is valued at its latest sale price prior to the time when assets are valued; if there were no sales that day, the security is valued at the latest bid price (in cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market pursuant to procedures adopted by the Trustees), and (2) all other portfolio securities for which over-the-counter market quotations are readily available are valued at the latest bid price. When market quotations are not readily available, including circumstances under which it is determined by the Investment Manager or Sub-Advisor that sale or bid prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. For valuation purposes, quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the New York Stock Exchange. Short-term debt securities with remaining maturities of sixty days or less at the time of purchase are valued at amortized cost, unless the Trustees determine such does not reflect the securities' market value, in which case these securities will be valued at their fair value as determined by the Trustees. Certain of the Fund's portfolio securities may be valued by an outside pricing service approved by the Fund's Trustees. The pricing service may utilize a matrix system incorporating security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker-dealer market price quotations in determining what it believes is the fair valuation of the portfolio securities valued by such pricing service. Listed options on debt securities are valued at the latest sale price on the exchange on which they are listed unless no sales of such options have taken place that day, in which case they will be valued at the mean between their latest bid and asked prices. Unlisted options on debt securities and all options on equity securities are valued at the mean between their latest bid and asked prices. Futures are valued at the latest sale price on the commodities exchange on which they trade unless the Trustees determine such price does not reflect their market value, in which case they will be valued at their fair value as determined in good faith under procedures established by and under the supervision of the Trustees. Generally, trading in foreign securities, as well as corporate bonds, U.S. Government securities and money market instruments, is substantially completed each day at various times prior to the close of the New York Stock Exchange. The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the New York Stock Exchange. Occasionally, events which may affect the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the New York Stock Exchange and will therefore not be reflected in the computation of the Fund's net asset value. If events that may affect the value of such securities occur during such period, then these securities may be valued at their fair value as determined in good faith under procedures established by and under the supervision of the Trustees. 32 IX. TAXATION OF THE FUND AND SHAREHOLDERS - -------------------------------------------------------------------------------- The Fund generally will make two basic types of distributions: ordinary dividends and long-term capital gain distributions. These two types of distributions are reported differently on a shareholder's income tax return and they are also subject to different rates of tax. The tax treatment of the investment activities of the Fund will affect the amount and timing and character of the distributions made by the Fund. Tax issues relating to the Fund are not generally a consideration for shareholders such as tax-exempt entities and tax-advantaged retirement vehicles such as an IRA or 401(k) plan. Shareholders are urged to consult their own tax professionals regarding specific questions as to federal, state or local taxes. INVESTMENT COMPANY TAXATION. The Fund intends to remain qualified as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986. As such, the Fund will not be subject to federal income tax on its net investment income and capital gains, if any, to the extent that it distributes such income and capital gains to its shareholders. The Fund generally intends to distribute sufficient income and gains so that the Fund will not pay corporate income tax on its earnings. The Fund also generally intends to distribute to its shareholders in each calendar year a sufficient amount of ordinary income and capital gains to avoid the imposition of a 4% excise tax. However, the Fund may instead determine to retain all or part of any net long-term capital gains in any year for reinvestment. In such event, the Fund will pay federal income tax (and possibly excise tax) on such retained gains. Gains or losses on sales of securities by the Fund will be long-term capital gains or losses if the securities have a tax holding period of more than one year at the time of such sale. Gains or losses on the sale of securities with a tax holding period of one year or less will be short-term capital gains or losses. Special tax rules may change the normal treatment of gains and losses recognized by the Fund when the Fund invests in forward foreign currency exchange contracts, options, futures transactions, or non-U.S. corporations classified as "passive foreign investment companies." Those special tax rules can, among other things, affect the treatment of a capital gain or loss as long-term or short-term and may result in an ordinary income or loss rather than a capital gain or loss. The application of these special rules would therefore also affect the character of distributions made by the Fund. Under certain tax rules, the Fund may be required to accrue a portion of any discount at which certain securities are purchased as income each year even though the Fund receives no payments in cash on the security during the year. To the extent that the Fund invests in such securities, it would be required to pay out such income as an income distribution in each year in order to avoid taxation at the Fund level. Such distributions will be made from the available cash of the Fund or by liquidation of portfolio securities if necessary. If a distribution of cash necessitates the liquidation of portfolio securities, the Investment Manager and/or Sub-Advisor will select which securities to sell. The Fund may realize a gain or loss from such sales. In the event the Fund realizes net capital gains from such transactions, its shareholders may receive a larger capital gain distribution, if any, than they would in the absence of such transactions. TAXATION OF DIVIDENDS AND DISTRIBUTIONS. Shareholders normally will have to pay federal income taxes, and any state and/or local income taxes, on the dividends and other distributions they receive from the Fund. Such dividends and distributions, to the extent that they are derived from net investment income or short-term capital gains, are taxable to the shareholder as ordinary income regardless of whether the shareholder receives such payments in additional shares or in cash. Distributions of net long-term capital gains, if any, are taxable to shareholders as long-term capital gains regardless of how long a shareholder has held the Fund's shares and regardless of whether the distribution is received in additional shares or in cash. Under current law, the maximum tax rate on long- term capital gains realized by non-corporate shareholders generally is 20%. A special lower tax rate of 18% on long-term capital gains is available to non-corporate shareholders to the extent the distributions of long-term capital gains are derived from securities which the Fund purchased after December 31, 2000, and held for more than five years. 33 Shareholders are generally taxed on any ordinary dividend or capital gain distributions from the Fund in the year they are actually distributed. However, if any such dividends or distributions are declared in October, November or December and paid in January then such amounts will be treated for tax purposes as received by the shareholders on December 31, to shareholders of record of such month. Subject to certain exceptions, a corporate shareholder may be eligible for a 70% dividends received deduction to the extent that the Fund earns and distributes qualifying dividends from its investments. Distributions of net capital gains by the Fund will not be eligible for the dividends received deduction. Shareholders who are not citizens or residents of the United States and certain foreign entities may be subject to withholding of United States tax on distributions made by the Fund of investment income and short-term capital gains. After the end of each calendar year, shareholders will be sent information on their dividends and capital gain distributions for tax purposes, including the portion taxable as ordinary income, the portion taxable as long-term capital gains, and the amount of any dividends eligible for the federal dividends received deduction for corporations. PURCHASES AND REDEMPTIONS AND EXCHANGES OF FUND SHARES. Any dividend or capital gains distribution received by a shareholder from any investment company will have the effect of reducing the net asset value of the shareholder's stock in that company by the exact amount of the dividend or capital gains distribution. Furthermore, such dividends and capital gains distributions are subject to federal income taxes. If the net asset value of the shares should be reduced below a shareholder's cost as a result of the payment of dividends or the distribution of realized long-term capital gains, such payment or distribution would be in part a return of the shareholder's investment but nonetheless would be taxable to the shareholder. Therefore, an investor should consider the tax implications of purchasing Fund shares immediately prior to a distribution record date. In general, a sale of shares results in capital gain or loss, and for individual shareholders, is taxable at a federal rate dependent upon the length of time the shares were held. A redemption of a shareholder's Fund shares is normally treated as a sale for tax purposes. Fund shares held for a period of one year or less at the time of such sale or redemption will, for tax purposes, generally result in short-term capital gains or losses and those held for more than one year generally result in long-term capital gains or losses. Under current law, the maximum tax rate on long-term capital gains realized by non-corporate shareholders generally is 20%. A special lower tax rate of 18% on long-term capital gains is available for non-corporate shareholders who purchased shares after December 31, 2000, and held such shares for more than five years. This special lower tax rate of 18% for five-year property does not apply to non-corporate shareholders holding Fund shares which were purchased on or prior to December 31, 2000, unless such shareholders make an election to treat the Fund shares as being sold and reacquired on January 1, 2001. A shareholder making such election may realize capital gains or losses. Any loss realized by shareholders upon a sale or redemption of shares within six months of the date of their purchase will be treated as a long-term capital loss to the extent of any distributions of net long-term capital gains with respect to such shares during the six-month period. Gain or loss on the sale or redemption of shares in the Fund is measured by the difference between the amount received and the tax basis of the shares. Shareholders should keep records of investments made (including shares acquired through reinvestment of dividends and distributions) so they can compute the tax basis of their shares. Under certain circumstances a shareholder may compute and use an average cost basis in determining the gain or loss on the sale or redemption of shares. Exchanges of Fund shares for shares of another fund, including shares of other Morgan Stanley Dean Witter Funds, are also subject to similar tax treatment. Such an exchange is treated for tax purposes as a sale of the original shares in the first fund, followed by the purchase of shares in the second fund. 34 If a shareholder realizes a loss on the redemption or exchange of a fund's shares and reinvests in that fund's shares within 30 days before or after the redemption or exchange, the transactions may be subject to the "wash sale" rules, resulting in a postponement of the recognition of such loss for tax purposes. X. UNDERWRITERS - -------------------------------------------------------------------------------- The Fund's shares are offered to the public on a continuous basis. The Distributor, as the principal underwriter of the shares, has certain obligations under the Distribution Agreement concerning the distribution of the shares. These obligations and the compensation the Distributor receives are described above in the sections titled "Principal Underwriter" and "Rule 12b-1 Plan". XI. CALCULATION OF PERFORMANCE DATA - -------------------------------------------------------------------------------- From time to time, the Fund may quote its "total return" in advertisements and sales literature. These figures are computed separately for Class A, Class B, Class C and Class D shares. The Fund's "average annual total return" represents an annualization of the Fund's total return over a particular period and is computed by finding the annual percentage rate which will result in the ending redeemable value of a hypothetical $1,000 investment made at the beginning of a one, five or ten year period, or for the period from the date of commencement of operations, if shorter than any of the foregoing. The ending redeemable value is reduced by any contingent deferred sales charge ("CDSC") at the end of the one, five, ten year or other period. For the purpose of this calculation, it is assumed that all dividends and distributions are reinvested. The formula for computing the average annual total return involves a percentage obtained by dividing the ending redeemable value by the amount of the initial investment (which in the case of Class A shares is reduced by the Class A initial sales charge), taking a root of the quotient (where the root is equivalent to the number of years in the period) and subtracting 1 from the result. Based on this calculation the average annual total returns for Class B for the one year, five year and the life of the Fund (which commenced on December 30, 1992) periods ended January 31, 2001 were -8.26%, 3.69%, 2.28%, respectively. The average annual total returns of Class A for the fiscal year ended January 31, 2001 and for the period July 28, 1997 (inception of the Class) through January 31, 2001 were -7.73% and -8.19%, respectively. The average annual total returns of Class C for the fiscal year ended January 31, 2001 and for the period July 28, 1997 (inception of the Class) through January 31, 2001 were -4.39% and -7.51%, respectively. The average annual total returns of Class D for the fiscal year ended January 31, 2001 and for the period July 28, 1997 (inception of the Class) through January 31, 2001 were -2.37% and -6.61%, respectively. In addition, the Fund may advertise its total return for each Class over different periods of time by means of aggregate, average, year-by-year or other types of total return figures. These calculations may or may not reflect the imposition of the maximum front-end sales charge for Class A or the deduction of the CDSC for each of Class B and Class C which, if reflected, would reduce the performance quoted. For example, the average annual total return of the Fund may be calculated in the manner described above, but without deduction for any applicable sales charge. Based on this calculation, the average annual total returns of Class B for the one year, five year and the life of the Fund (which commenced on December 30, 1992) periods ended January 31, 2001 were -3.43%, 4.03%, and 2.28%, respectively. The average annual total returns of Class A for the fiscal year ended January 31, 2001 and for the period July 28, 1997 through January 31, 2001 were -2.62% and -6.77%, respectively. The average annual total returns of Class C for the fiscal year ended January 31, 2001 and for the period July 28, 1997 through January 31, 2001 were -3.42% and -7.51%, respectively. The average annual total returns of Class D for the fiscal year ended January 31, 2001 and for the period July 28, 1997 through January 31, 2001 were -2.37% and - -6.61%, respectively. In addition, the Fund may compute its aggregate total return for each Class for specified periods by determining the aggregate percentage rate which will result in the ending value of a hypothetical $1,000 investment made at the beginning of the period. For the purpose of this calculation, it is assumed that all dividends and distributions are reinvested. The formula for computing aggregate total return involves a percentage obtained by dividing the ending value (without reduction for any sales charge) by the initial 35 $1,000 investment and subtracting 1 from the result. Based on their foregoing calculation, the total returns for Class B for the one year, five year and the life of the Fund (which commenced on December 30, 1992) periods ended January 31, 2001 were -3.43%, 21.84% and 19.97%, respectively. The total returns of Class A for the fiscal year ended January 31, 2001 and for the period July 28, 1997 through January 31, 2001 were -2.62% and -21.81%, respectively. The total returns of Class C for the fiscal year ended January 31, 2001 and for the period July 28, 1997 through January 31, 2001 were -3.42% and -23.98%, respectively. The total returns of Class D for the fiscal year ended January 31, 2001 and for the period July 28, 1997 through January 31, 2001 were - -2.37% and -21.35%, respectively. The Fund may also advertise the growth of hypothetical investments of $10,000, $50,000 and $100,000 in each Class of shares of the Fund by adding 1 to the Fund's aggregate total return to date (expressed as a decimal and without taking into account the effect of any applicable CDSC) and multiplying by $9,475, $48,000 and $97,000 in the case of Class A (investments of $10,000, $50,000 and $100,000 adjusted for the initial sales charge) or by $10,000, $50,000 and $100,000 in the case of each of Class B, Class C and Class D, as the case may be. Investments of $10,000, $50,000 and $100,000 in each Class at inception of the Class would have grown or declined to the following amounts at January 31, 2001:
INVESTMENT AT INCEPTION OF: INCEPTION ------------------------------- CLASS DATE: $10,000 $50,000 $100,000 - ----- --------- -------- -------- --------- Class A............................................. 07/28/97 $ 7,409 $37,531 $ 75,844 Class B............................................. 12/30/92 11,997 59,985 119,970 Class C............................................. 07/28/97 7,602 38,010 76,020 Class D............................................. 07/28/97 7,865 39,325 78,650
The Fund from time to time may also advertise its performance relative to certain performance rankings and indexes compiled by recognized organizations. XII. FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- EXPERTS. The financial statements of the Fund for the fiscal year ended January 31, 2001 included in this STATEMENT OF ADDITIONAL INFORMATION and incorporated by reference in the PROSPECTUS have been so included and incorporated in reliance on the report of Deloitte & Touche LLP, independent auditors, 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. 36 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND PORTFOLIO OF INVESTMENTS JANUARY 31, 2001
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- COMMON AND PREFERRED STOCKS (94.2%) ARGENTINA (5.7%) BEVERAGES: ALCOHOLIC 62,780 Quilmes Industrial (Quinsa) S.A. (ADR) (Pref.)....................................... $ 709,414 ------------ MAJOR TELECOMMUNICATIONS 57,120 Telecom Argentina Stet - France Telecom S.A. (Class B) (ADR)......................... 1,272,633 ------------ OIL & GAS PRODUCTION 89,915 Perez Companc S.A. (Class B) (ADR)................................................... 1,637,352 ------------ REGIONAL BANKS 12,725 Banco Frances S.A. (ADR)............................................................. 394,984 51,057 Grupo Financiero Galicia S.A. (Class B) (ADR)*....................................... 1,056,242 ------------ 1,451,226 ------------ STEEL 523,600 Siderca S.A.I.C...................................................................... 1,193,999 ------------ TOTAL ARGENTINA...................................................................... 6,264,624 ------------ BRAZIL (44.9%) BEVERAGES: ALCOHOLIC 150,435 Companhia de Bebidas das Americas (ADR).............................................. 4,317,485 ------------ ELECTRIC UTILITIES 69,908 Companhia Energetica de Minas Gerais S.A. (ADR) (Pref.).............................. 1,256,163 113,320 Companhia Paranaense de Energia - Copel (ADR) (Pref.)................................ 1,133,200 ------------ 2,389,363 ------------ FOOD RETAIL 54,320 Companhia Brasileira de Distribuicao Grupo Pao de Acucar (ADR) (Pref.)............... 1,939,224 ------------ INTEGRATED OIL 214,830 Petroleo Brasileiro S.A. (Pref.)..................................................... 5,969,921 ------------ MAJOR TELECOMMUNICATIONS 60,810 Telecomunicacoes Brasileiras S.A. (ADR) (Pref.)...................................... 4,772,977 ------------ OIL & GAS PRODUCTION 141,640 Petroleo Brasileiro S.A. (ADR)*...................................................... 4,005,579 ------------ OTHER METALS/MINERALS 154,418 Companhia Vale do Rio Doce (Class A) (Pref.)......................................... 4,133,735 15,230 Companhia Vale do Rio Doce S.A. (Class A) (ADR) (Pref.).............................. 410,905 266,358 Companhia Vale do Rio Doce S.A. (Debentures)*........................................ -- ------------ 4,544,640 ------------ REGIONAL BANKS 544,889,904 Banco Bradesco S.A. (Pref.).......................................................... 3,768,914
SEE NOTES TO FINANCIAL STATEMENTS 37 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND PORTFOLIO OF INVESTMENTS JANUARY 31, 2001, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 59,220,560 Banco Itau S.A. (Pref.).............................................................. $ 5,600,728 74,195 Uniao de Bancos Brasileiros S.A. (GDR) (Pref.) (Units)++............................. 2,255,528 ------------ 11,625,170 ------------ SPECIALTY TELECOMMUNICATIONS 37,590,000 Brasil Telecom Participacoes S.A..................................................... 417,455 32,085 Brasil Telecom Participacoes S.A. (ADR) (Pref.)...................................... 2,040,606 57,418 Embratel Participacoes S.A. (ADR) (Pref.)............................................ 958,306 13,152,000 Tele Norte Leste Participacoes S.A................................................... 266,775 151,363 Tele Norte Leste Participacoes S.A. (ADR) (Pref.).................................... 3,746,234 ------------ 7,429,376 ------------ STEEL 24,402,000 Companhia Siderurgica Nacional S.A................................................... 915,694 125,900 Usinas Siderurgicas de Minas Gerais S.A. (Class A) (Pref.)........................... 759,741 ------------ 1,675,435 ------------ WIRELESS COMMUNICATIONS 35,330 Telesp Celular Participacoes S.A. (ADR) (Pref.)...................................... 952,144 ------------ TOTAL BRAZIL......................................................................... 49,621,314 ------------ CHILE (3.7%) BEVERAGES: ALCOHOLIC 29,350 Compania Cervecerias Unidas S.A. (ADR)............................................... 767,503 14,550 Vina Concha Y Toro S.A. (ADR)........................................................ 611,100 ------------ 1,378,603 ------------ BEVERAGES: NON-ALCOHOLIC 57,520 Embotelladora Andina S.A. (Series A) (ADR)........................................... 926,072 ------------ FOOD RETAIL 21,140 Distribucion Y Servicio D&S S.A. (ADR)............................................... 357,266 ------------ MAJOR TELECOMMUNICATIONS 91,448 Cia de Telecommunicaciones de Chile S.A. (Series A) (ADR)*........................... 1,452,194 ------------ TOTAL CHILE.......................................................................... 4,114,135 ------------ MEXICO (39.1%) BEVERAGES: ALCOHOLIC 1,307,830 Grupo Modelo S.A. de C.V. (Series C)................................................. 3,612,566 ------------ BEVERAGES: NON-ALCOHOLIC 36,880 Fomento Economico Mexicano, S.A. de C.V. (ADR)....................................... 1,176,472 ------------ BROADCASTING 103,165 Grupo Televisa S.A. (GDR) (Units)++*................................................. 5,519,327 ------------
SEE NOTES TO FINANCIAL STATEMENTS 38 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND PORTFOLIO OF INVESTMENTS JANUARY 31, 2001, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- CONSTRUCTION MATERIALS 53,094 Cemex S.A. de C.V. (ADR)............................................................. $ 1,134,088 ------------ FOOD: SPECIALTY/CANDY 626,178 Grupo Bimbo S.A. de C.V. (Series A).................................................. 848,638 ------------ HOUSEHOLD/PERSONAL CARE 524,100 Kimberly-Clark de Mexico S.A. de C.V. (A Shares)..................................... 1,388,599 ------------ MAJOR TELECOMMUNICATIONS 313,353 Telefonos de Mexico S.A. de C.V. (Series L) (ADR).................................... 17,005,667 ------------ OTHER METALS/MINERALS 298,400 Nueva Grupo Mexico S.A............................................................... 966,265 ------------ REGIONAL BANKS 2,296,890 Grupo Financiero Banamex Accival, SA de C.V. (O Shares)*............................. 4,443,601 ------------ SPECIALTY STORES 3,268,118 Wal-Mart de Mexico S.A. de C.V. (Series C)*.......................................... 7,100,194 ------------ TOTAL MEXICO......................................................................... 43,195,417 ------------ VENEZUELA (0.8%) MAJOR TELECOMMUNICATIONS 38,345 Compania Anomina Nacional Telefonos de Venezuela (CANTV) (Class D) (ADR)............. 943,287 ------------
TOTAL INVESTMENTS (COST $80,245,445)(A)..................................................................... 94.2% 104,138,777 OTHER ASSETS IN EXCESS OF LIABILITIES..................................................... 5.8 6,377,236 ----- ------------- NET ASSETS................................................................................ 100.0% $ 110,516,013 ----- ------------- ----- -------------
- --------------------- ADR American Depository Receipt. GDR Global Depository Receipt. * Non-income producing security. ++ Consists of one or more class of securities traded together as a unit; stocks with attached warrants. (a) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $28,978,153 and the aggregate gross unrealized depreciation is $5,084,821, resulting in net unrealized appreciation of $23,893,332. SEE NOTES TO FINANCIAL STATEMENTS 39 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND SUMMARY OF INVESTMENTS JANUARY 31, 2001
PERCENT OF INDUSTRY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Beverages: Alcoholic.............................................................. $ 10,018,068 9.1% Beverages: Non-Alcoholic.......................................................... 2,102,544 1.9 Broadcasting...................................................................... 5,519,327 5.0 Construction Materials............................................................ 1,134,088 1.0 Electric Utilities................................................................ 2,389,363 2.2 Food Retail....................................................................... 2,296,490 2.1 Food: Specialty/Candy............................................................. 848,638 0.8 Household/Personal Care........................................................... 1,388,599 1.2 Integrated Oil.................................................................... 5,969,921 5.4 Major Telecommunications.......................................................... 25,446,758 23.0 Oil & Gas Production.............................................................. 5,642,931 5.1 Other Metals/Minerals............................................................. 5,510,905 5.0 Regional Banks.................................................................... 17,519,997 15.8 Specialty Stores.................................................................. 7,100,194 6.4 Specialty Telecommunications...................................................... 7,429,376 6.7 Steel............................................................................. 2,869,434 2.6 Wireless Communications........................................................... 952,144 0.9 ------------ ----- $104,138,777 94.2% ------------ ----- ------------ -----
PERCENT OF TYPE OF INVESTMENT VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Common Stocks..................................................................... $ 63,731,037 57.7% Preferred Stocks.................................................................. 40,407,740 36.5 ------------ ----- $104,138,777 94.2% ------------ ----- ------------ -----
SEE NOTES TO FINANCIAL STATEMENTS 40 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES JANUARY 31, 2001 ASSETS: Investments in securities, at value (cost $80,245,445)........................................ $104,138,777 Cash.......................................................................................... 5,544,911 Receivable for: Dividends................................................................................. 589,954 Investments sold.......................................................................... 460,849 Shares of beneficial interest sold........................................................ 101,183 Interest.................................................................................. 15,907 Prepaid expenses and other assets............................................................. 44,894 ------------ TOTAL ASSETS............................................................................. 110,896,475 ------------ LIABILITIES: Payable for: Investment management fee................................................................. 117,784 Plan of distribution fee.................................................................. 86,225 Shares of beneficial interest repurchased................................................. 79,769 Accrued expenses and other payables........................................................... 96,684 ------------ TOTAL LIABILITIES........................................................................ 380,462 ------------ NET ASSETS............................................................................... $110,516,013 ============ COMPOSITION OF NET ASSETS: Paid-in-capital............................................................................... $176,503,804 Net unrealized appreciation................................................................... 23,890,523 Accumulated net investment loss............................................................... (68,882) Accumulated net realized loss................................................................. (89,809,432) ------------ NET ASSETS............................................................................... $110,516,013 ============ CLASS A SHARES: Net Assets.................................................................................... $936,482 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 78,689 NET ASSET VALUE PER SHARE................................................................ $11.90 ============ MAXIMUM OFFERING PRICE PER SHARE, (NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE).......................................... $12.56 ============ CLASS B SHARES: Net Assets.................................................................................... $ 99,430,636 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 8,605,478 NET ASSET VALUE PER SHARE................................................................ $11.55 ============ CLASS C SHARES: Net Assets.................................................................................... $887,199 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 76,652 NET ASSET VALUE PER SHARE................................................................ $11.57 ============ CLASS D SHARES: Net Assets.................................................................................... $9,261,696 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 773,961 NET ASSET VALUE PER SHARE................................................................ $11.97 ============
STATEMENT OF OPERATIONS FOR THE YEAR ENDED JANUARY 31, 2001 NET INVESTMENT LOSS: INCOME Dividends (net of $330,626 foreign withholding tax)........................................... $ 2,347,227 Interest...................................................................................... 153,219 ------------ TOTAL INCOME............................................................................. 2,500,446 ------------ EXPENSES Investment management fee..................................................................... 1,552,969 Plan of distribution fee (Class A shares)..................................................... 1,906 Plan of distribution fee (Class B shares)..................................................... 1,167,074 Plan of distribution fee (Class C shares)..................................................... 9,579 Transfer agent fees and expenses.............................................................. 320,468 Custodian fees................................................................................ 73,772 Shareholder reports and notices............................................................... 71,862 Professional fees............................................................................. 60,313 Registration fees............................................................................. 54,849 Foreign exchange provisional tax.............................................................. 48,656 Trustees' fees and expenses................................................................... 12,708 Other......................................................................................... 8,753 ------------ TOTAL EXPENSES........................................................................... 3,382,909 ------------ NET INVESTMENT LOSS...................................................................... (882,463) ------------ NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain/loss on: Investments............................................................................... 11,785,590 Foreign exchange transactions............................................................. (107,302) ------------ NET GAIN................................................................................. 11,678,288 ------------ Net change in unrealized appreciation/ depreciation on: Investments............................................................................... (16,955,911) Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies....................................................... (8,505) ------------ NET DEPRECIATION......................................................................... (16,964,416) ------------ NET LOSS................................................................................. (5,286,128) ------------ NET DECREASE.................................................................................. $ (6,168,591) ============
SEE NOTES TO FINANCIAL STATEMENTS 41 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL STATEMENTS, CONTINUED STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR FOR THE YEAR ENDED ENDED JANUARY 31, 2001 JANUARY 31, 2000 - ------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment loss..................................................... $ (882,463) $ (789,755) Net realized gain....................................................... 11,678,288 10,213,576 Net change in unrealized appreciation................................... (16,964,416) 51,729,529 ------------ ------------ NET INCREASE (DECREASE)............................................ (6,168,591) 61,153,350 ------------ ------------ Net decrease from transactions in shares of beneficial interest......... (22,128,668) (28,450,098) ------------ ------------ NET INCREASE (DECREASE)............................................ (28,297,259) 32,703,252 NET ASSETS: Beginning of period..................................................... 138,813,272 106,110,020 ------------ ------------ END OF PERIOD (INCLUDING ACCUMULATED NET INVESTMENT LOSSES OF $68,882 AND $303,731, RESPECTIVELY)............................................. $110,516,013 $138,813,272 ============ ============
SEE NOTES TO FINANCIAL STATEMENTS 42 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2001 1. ORGANIZATION AND ACCOUNTING POLICIES Morgan Stanley Dean Witter Latin American Growth Fund (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified, open-end management investment company. The Fund's investment objective is long-term capital appreciation. The Fund seeks to achieve its objective by investing primarily in equity securities of Latin American issuers. The Fund was organized as a Massachusetts business trust on February 25, 1992 and commenced operations on December 30, 1992. On July 28, 1997, the Fund converted to a multiple class share structure. The Fund offers Class A shares, Class B shares, Class C shares and Class D shares. The four classes are substantially the same except that most Class A shares are subject to a sales charge imposed at the time of purchase and some Class A shares, and most Class B shares and Class C shares are subject to a contingent deferred sales charge imposed on shares redeemed within one year, six years and one year, respectively. Class D shares are not subject to a sales charge. Additionally, Class A shares, Class B shares and Class C shares incur distribution expenses. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of significant accounting policies: A. VALUATION OF INVESTMENTS -- (1) an equity portfolio security listed or traded on the New York or American Stock Exchange, NASDAQ, or other exchange is valued at its latest sale price, prior to the time when assets are valued; if there were no sales that day, the security is valued at the latest bid price (in cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market pursuant to procedures adopted by the Trustees); (2) all other portfolio securities for which over-the-counter market quotations are readily available are valued at the latest available bid price; (3) when market quotations are not readily available, including circumstances under which it is determined by Morgan Stanley Dean Witter Advisors Inc. (the "Investment Manager") or TCW Investment Management Company (the "Sub-Advisor") that sale or bid prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Trustees (valuation of debt securities for which market quotations are not readily available may be based upon current market prices of securities which are comparable in coupon, rating and 43 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2001, CONTINUED maturity or an appropriate matrix utilizing similar factors); and (4) short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their value on the 61st day. Short-term debt securities having a maturity date of sixty days or less at the time of purchase are valued at amortized cost. B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on security transactions are determined by the identified cost method. Dividend income and other distributions are recorded on the ex-dividend date except for certain dividends on foreign securities which are recorded as soon as the Fund is informed after the ex-dividend date. Discounts are accreted over the life of the respective securities. Interest income is accrued daily. C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than distribution fees), and realized and unrealized gains and losses are allocated to each class of shares based upon the relative net asset value on the date such items are recognized. Distribution fees are charged directly to the respective class. D. FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities, other assets and liabilities and forward foreign currency contracts ("forward contracts") are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the exchange rates prevailing on the respective dates of such transactions. The resultant exchange gains and losses are included in the Statement of Operations as realized and unrealized gain/loss on foreign exchange transactions. Pursuant to U.S. Federal income tax regulations, certain foreign exchange gains/losses included in realized and unrealized gain/loss are included in or are a reduction of ordinary income for federal income tax purposes. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of the securities. E. FORWARD CURRENCY CONTRACTS -- The Fund may enter into forward contracts which are valued daily at the appropriate exchange rates. The resultant unrealized exchange gains and losses are included in the Statement of Operations as unrealized foreign currency gain or loss. The Fund records realized gains or losses on delivery of the currency or at the time the forward contract is extinguished (compensated) by entering into a closing transaction prior to delivery. 44 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2001, CONTINUED F. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and distributions to its shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income and net realized capital gains for tax purposes are reported as distributions of paid-in-capital. 2. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS Pursuant to an Investment Management Agreement, the Fund pays the Investment Manager a management fee, accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund determined as of the close of each business day: 1.25% to the portion of daily net assets not exceeding $500 million and 1.20% to the portion of the daily net assets exceeding $500 million. Under a Sub-Advisory Agreement between the Investment Manager and the Sub-Advisor, the Sub-Advisor provides the Fund with investment advice and portfolio management relating to the Fund's investments in securities, subject to the overall supervision of the Investment Manager. As compensation for its services provided pursuant to the Sub-Advisory Agreement, the Investment Manager pays the Sub-Advisor compensation equal to 40% of its monthly compensation. 3. PLAN OF DISTRIBUTION Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The Plan provides that the Fund will pay the Distributor a fee which is accrued daily and paid monthly at the following annual rates: (i) Class A -- up to 0.25% of the average daily net assets of Class A; (ii) Class B -- 1.0% of the lesser of: (a) the average daily aggregate gross sales of the Class B shares since the inception of the Fund (not 45 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2001, CONTINUED including reinvestment of dividend or capital gain distributions) less the average daily aggregate net asset value of the Class B shares redeemed since the Fund's inception upon which a contingent deferred sales charge has been imposed or waived; or (b) the average daily net assets of Class B; and (iii) Class C -- up to 1.0% of the average daily net assets of Class C. In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by the Distributor but not yet recovered may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares. Although there is no legal obligation for the Fund to pay expenses incurred in excess of payments made to the Distributor under the Plan and the proceeds of contingent deferred sales charges paid by investors upon redemption of shares, if for any reason the Plan is terminated, the Trustees will consider at that time the manner in which to treat such expenses. The Distributor has advised the Fund that such excess amounts totaled $21,295,307 at January 31, 2001. In the case of Class A shares and Class C shares, expenses incurred pursuant to the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net assets of Class A or Class C, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses representing a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other selected broker-dealer representatives may be reimbursed in the subsequent calendar year. For the year ended January 31, 2001, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.19% and 1.0%, respectively. The Distributor has informed the Fund that for the year ended January 31, 2001, it received contingent deferred sales charges from certain redemptions of the Fund's Class B shares and Class C shares of $148,014 and $23,373, respectively and received $6,890 in front-end sales charges from sales of the Fund's Class A shares. The respective shareholders pay such charges which are not an expense of the Fund. 4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the year ended January 31, 2001 aggregated $53,051,554 and $77,839,981, respectively. 46 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2001, CONTINUED For the year ended January 31, 2001, the Fund incurred brokerage commissions of $24,112 with Morgan Stanley & Co., Inc., an affiliate of the Investment Manager and Distributor, for the portfolio transactions executed on behalf of the Fund. Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and Distributor, is the Fund's transfer agent. At January 31, 2001, the Fund had transfer agent fees and expenses payable of approximately $2,100. 5. SHARES OF BENEFICIAL INTEREST Transactions in shares of beneficial interest were as follows:
FOR THE YEAR FOR THE YEAR ENDED ENDED JANUARY 31, 2001 JANUARY 31, 2000 --------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT ----------- -------------- ----------- ------------ CLASS A SHARES Sold............................................................. 541,846 $ 6,412,961 903,814 $ 9,285,862 Redeemed......................................................... (524,401) (6,097,164) (850,499) (8,815,570) ---------- ------------- ---------- ------------ Net increase - Class A........................................... 17,445 315,797 53,315 470,292 ---------- ------------- ---------- ------------ CLASS B SHARES Sold............................................................. 1,370,159 17,649,840 1,854,204 19,260,542 Redeemed......................................................... (4,161,466) (49,590,950) (5,056,135) (48,993,518) ---------- ------------- ---------- ------------ Net decrease - Class B........................................... (2,791,307) (31,941,110) (3,201,931) (29,732,976) ---------- ------------- ---------- ------------ CLASS C SHARES Sold............................................................. 62,537 796,624 59,774 653,992 Redeemed......................................................... (50,442) (583,241) (46,151) (464,154) ---------- ------------- ---------- ------------ Net increase - Class C........................................... 12,095 213,383 13,623 189,838 ---------- ------------- ---------- ------------ CLASS D SHARES Sold............................................................. 947,876 11,879,492 119,896 1,532,077 Redeemed......................................................... (221,713) (2,596,230) (72,756) (909,329) ---------- ------------- ---------- ------------ Net increase - Class D........................................... 726,163 9,283,262 47,140 622,748 ---------- ------------- ---------- ------------ Net decrease in Fund............................................. (2,035,604) $ (22,128,668) (3,087,853) $(28,450,098) ========== ============= ========== ============
6. FEDERAL INCOME TAX STATUS During the year ended January 31, 2001, the Fund utilized approximately $12,318,000 of its net capital loss carryover. At January 31, 2001, the Fund had a net capital loss carryover of approximately $87,018,000, which may be used to offset future capital gains to the extent provided by regulations, which is available through January 31 of the following years:
AMOUNT IN THOUSANDS - ---------------------------------------- 2004 2005 2007 2008 - ------- -------- -------- -------- $61,221 $19,839 $3,058 $2,900 ======= ======= ====== ======
47 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2001, CONTINUED Capital and foreign currency losses incurred after October 31 ("post-October" losses) within the taxable year are deemed to arise on the first business day of the Fund's next taxable year. The Fund incurred and will elect to defer net capital and foreign currency losses of approximately $1,078,000 and $69,000, respectively during fiscal 2001. As of January 31, 2001, the Fund had temporary book/tax differences attributable to post-October losses and capital loss deferrals on wash sales and permanent book/tax differences attributable to a net operating loss, foreign currency losses and tax adjustments on passive foreign investment companies sold by the Fund. To reflect reclassification arising from the permanent differences, paid- in-capital was charged $952,138, accumulated net realized loss was charged $165,174 and accumulated net investment loss was credited $1,117,312. 7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS The Fund may enter into forward contracts to facilitate settlement of foreign currency denominated portfolio transactions or to manage foreign currency exposure associated with foreign currency denominated securities. Forward contracts involve elements of market risk in excess of the amounts reflected in the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in foreign exchange rates underlying the forward contracts. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts. At January 31, 2001, there were no outstanding forward contracts. At January 31, 2001, the Fund's cash balance consisted principally of interest bearing deposits with Chase Manhattan Bank N.A., the Fund's custodian. At January 31, 2001, investment in securities of issuers in Brazil and Mexico represented 44.9% and 39.1% of net assets, respectively. These investments, as well as other non-U.S. investments which involve risks and considerations not present with respect to U.S. securities may be affected by economic or political developments in these regions. 48 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL HIGHLIGHTS Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE PERIOD FOR THE YEAR ENDED JANUARY 31, JULY 28, 1997* ---------------------------------- THROUGH 2001 2000 1999 JANUARY 31, 1998 - ---------------------------------------------------------------------------------------------------------------------- CLASS A SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period........................ $12.26 $ 7.33 $12.14 $15.22 ------ ------ ------ ------ Income (loss) from investment operations: Net investment income (loss)............................. 0.00 (0.01) 0.15 (0.07) Net realized and unrealized gain (loss).................. (0.36) 4.94 (4.96) (3.01) ------ ------ ------ ------ Total income (loss) from investment operations.............. (0.36) 4.93 (4.81) (3.08) ------ ------ ------ ------ Net asset value, end of period.............................. $11.90 $12.26 $ 7.33 $12.14 ====== ====== ====== ====== TOTAL RETURN+............................................... (2.62)% 66.71% (39.62)% (20.24)%(1) RATIOS TO AVERAGE NET ASSETS: Expenses.................................................... 1.96 %(3) 2.28%(3) 2.21 %(3) 2.15 %(2) Net investment income (loss)................................ 0.05 %(3) 0.16%(3) 1.26 %(3) (1.04)%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands..................... $936 $751 $58 $110 Portfolio turnover rate..................................... 44 % 59% 27 % 30 %
- --------------------- * The date shares were first issued. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses. SEE NOTES TO FINANCIAL STATEMENTS 49 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL HIGHLIGHTS, CONTINUED
FOR THE YEAR ENDED JANUARY 31, --------------------------------------------------------------------- 2001++ 2000++ 1999++ 1998*++ 1997 - --------------------------------------------------------------------------------------------------------------------- CLASS B SHARES SELECTED PER SHARE DATA: Net asset value, beginning of period.......... $11.99 $ 7.24 $12.09 $11.47 $ 9.48 ------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income (loss)............... (0.09) (0.06) 0.05 (0.09) (0.04) Net realized and unrealized gain (loss).... (0.35) 4.81 (4.90) 0.71 2.03 ------- -------- -------- -------- -------- Total income (loss) from investment operations................................... (0.44) 4.75 (4.85) 0.62 1.99 ------- -------- -------- -------- -------- Net asset value, end of period................ $11.55 $11.99 $ 7.24 $12.09 $11.47 ======= ======== ======== ======== ======== TOTAL RETURN+................................. (3.43)% 65.19 % (40.12)% 5.41 % 20.99 % RATIOS TO AVERAGE NET ASSETS: Expenses...................................... 2.77 %(1) 3.06 %(1) 2.98 %(1) 2.81 % 2.78 % Net investment income (loss).................. (0.76)%(1) (0.62)%(1) 0.49 %(1) (0.64)% (0.29)% SUPPLEMENTAL DATA: Net assets, end of period, in thousands....... $99,431 $136,699 $105,678 $272,710 $270,843 Portfolio turnover rate....................... 44 % 59 % 27 % 30 % 29 %
- --------------------- * Prior to July 28, 1997, the Fund issued one class of shares. All shares of the Fund held prior to that date have been designated Class B shares. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Reflects overall Fund ratios for investment income and non-class specific expenses. SEE NOTES TO FINANCIAL STATEMENTS 50 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL HIGHLIGHTS, CONTINUED
FOR THE PERIOD FOR THE YEAR ENDED JANUARY 31, JULY 28, 1997* ---------------------------------- THROUGH 2001 2000 1999 JANUARY 31, 1998 - ------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period.................................. $12.02 $ 7.24 $12.10 $15.22 ------ ------ ------ ------ Income (loss) from investment operations: Net investment income (loss)....................................... (0.09) (0.06) 0.06 (0.12) Net realized and unrealized gain (loss)............................ (0.36) 4.84 (4.92) (3.00) ------ ------ ------ ------ Total income (loss) from investment operations........................ (0.45) 4.78 (4.86) (3.12) ------ ------ ------ ------ Net asset value, end of period........................................ $11.57 $12.02 $ 7.24 $12.10 ====== ====== ====== ====== TOTAL RETURN+......................................................... (3.42)% 65.47 % (40.17)% (20.50)%(1) RATIOS TO AVERAGE NET ASSETS: Expenses.............................................................. 2.77 %(3) 2.95 %(3) 2.98 %(3) 2.91 %(2) Net investment income (loss).......................................... (0.76)%(3) (0.51)%(3) 0.49 %(3) (1.76)%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands............................... $887 $776 $369 $792 Portfolio turnover rate............................................... 44 % 59 % 27 % 30 %
- --------------------- * The date shares were first issued. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses. SEE NOTES TO FINANCIAL STATEMENTS 51 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL HIGHLIGHTS, CONTINUED
FOR THE PERIOD FOR THE YEAR ENDED JANUARY 31, JULY 28, 1997* ---------------------------------- THROUGH 2001 2000 1999 JANUARY 31, 1998 - ------------------------------------------------------------------------------------------------------------------------------- CLASS D SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period.................................. $12.30 $ 7.35 $12.16 $15.22 ------ ------ ------ ------ Income (loss) from investment operations: Net investment income (loss)....................................... 0.00 (0.02) 0.16 (0.04) Net realized and unrealized gain (loss)............................ (0.33) 4.97 (4.97) (3.02) ------ ------ ------ ------ Total income (loss) from investment operations........................ (0.33) 4.95 (4.81) (3.06) ------ ------ ------ ------ Net asset value, end of period........................................ $11.97 $12.30 $ 7.35 $12.16 ====== ====== ====== ====== TOTAL RETURN+......................................................... (2.37)% 66.80% (39.56)% (20.11)%(1) RATIOS TO AVERAGE NET ASSETS: Expenses.............................................................. 1.77 %(3) 2.06%(3) 1.98 %(3) 1.86 %(2) Net investment income (loss).......................................... 0.24 %(3) 0.38%(3) 1.49 %(3) (0.52)%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands............................... $9,262 $588 $5 $8 Portfolio turnover rate............................................... 44 % 59% 27 % 30 %
- --------------------- * The date shares were first issued. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses. SEE NOTES TO FINANCIAL STATEMENTS 52 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND We have audited the accompanying statement of assets and liabilities of Morgan Stanley Dean Witter Latin American Growth Fund (the "Fund"), including the portfolio of investments, as of January 31, 2001, and the related statements of operations and changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The statement of changes in net assets for the year ended January 31, 2000 and the financial highlights for each of the respective stated periods ended January 31, 2000 were audited by other independent accountants whose report, dated March 14, 2000, expressed an unqualified opinion on that statement and financial highlights. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of January 31, 2001, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Morgan Stanley Dean Witter Latin American Growth Fund as of January 31, 2001, the results of its operations, the changes in its net assets, and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP NEW YORK, NEW YORK MARCH 13, 2001 53 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND CHANGE IN INDEPENDENT ACCOUNTANTS On July 1, 2000 PricewaterhouseCoopers LLP resigned as independent accountants of the Fund. The reports of PricewaterhouseCoopers LLP on the financial statements of the Fund for the past two fiscal years contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. In connection with its audits for the two most recent fiscal years and through July 1, 2000, there have been no disagreements with PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of PricewaterhouseCoopers LLP would have caused them to make reference thereto in their report on the financial statements for such years. The Fund, with the approval of its Board of Trustees and its Audit Committee, engaged Deloitte & Touche LLP as its new independent accountants as of July 1, 2000. 54 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND REPORT OF INDEPENDENT ACCOUNTANTS TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND In our opinion, the statement of changes in net assets and the financial highlights of Morgan Stanley Dean Witter Latin American Growth Fund (the "Fund") (not presented separately herein) present fairly, in all material respects, the changes in its net assets for the year ended January 31, 2000 and the financial highlights for each of the years in the period ended January 31, 2000, in conformity with accounting principles generally accepted in the United States. This financial statement 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 auditing standards generally accepted in the United States, 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 provide a reasonable basis for the opinion expressed above. We have not audited the financial statements or financial highlights of the Fund for any period subsequent to January 31, 2000. PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, New York 10036 March 14, 2000 55 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND PART C OTHER INFORMATION ITEM 23. EXHIBITS - -------- ----------------------------------------------------------------- 1 (a). Declaration of Trust of the Registrant, dated February 25, 1992, is incorporated by reference to Exhibit 1 of Post-Effective Amendment No. 4 to the Registration Statement on Form N-1A, filed on March 27, 1996. 1 (b). Instrument Establishing and Designating Additional Classes, dated July 28, 1997, is incorporated by reference to Exhibit 1 of Post-Effective Amendment No. 6 to the Registration Statement on Form N-1A, filed on July 22, 1997. 1 (c). Amendment to the Declaration of Trust of the Registrant, dated June 25, 1999, is incorporated by reference to Exhibit 1(c) of Post-Effective Amendment No. 10 to the Registration Statement on Form N-1A, filed on June 25, 1999. 2. Amended and Restated By-Laws of the Registrant, dated May 1, 1999, is incorporated by reference to Exhibit 2 of Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A, filed on May 28, 1999. 3. Not Applicable. 4 (a). Investment Management Agreement between the Registrant and Morgan Stanley Dean Witter Advisors Inc., dated June 28, 1999, is incorporated by reference to Exhibit 4(a) of Post-Effective Amendment No. 10 to the Registration Statement on Form N-1A, filed on June 25, 1999. 4 (b). Sub-Advisory Agreement between Morgan Stanley Dean Witter Advisors Inc. and TCW Investment Management Company, dated June 28, 1999, is incorporated by reference to Exhibit 4(b) of Post-Effective Amendment No. 10 to the Registration Statement on Form N-1A, filed on June 25, 1999. 5 (a). Amended Distribution Agreement, dated June 22, 1998, is incorporated by reference to Exhibit 5(a) of Post-Effective Amendment No. 10 to the Registration Statement on Form N-1A, filed on June 25, 1999. 5 (b). Multi-Class Distribution Agreement is incorporated by reference to Exhibit 6(b) of Post-Effective Amendment No. 4 to the Registration Statement on Form N-1A, filed on July 22, 1997. 5 (c). Selected Dealers 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. 4 to the Registration Statement on Form N-1A, filed on March 27, 1996. 6. Not Applicable. 1 7. Custody Agreement between The Chase Manhattan Bank and the Registrant is incorporated by reference to Exhibit 8(a) of Post-Effective Amendment No. 4 to the Registration Statement on Form N-1A, filed on March 27, 1996. 8 (a). Amended and Restated Transfer Agency and Service Agreement between the Registrant and Morgan Stanley Dean Witter Trust FSB, dated September 1, 2000, filed herein. 8 (b). Amended Services Agreement, dated June 22, 1998, is incorporated by reference to Exhibit 8(b) of Post-Effective Amendment No. 10 to the Registration Statement on Form N-1A, filed on June 25, 1999. 9 (a). Opinion of Sheldon Curtis, Esq., dated September 14, 1992, is incorporated by reference to Exhibit 9(a) of Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A, filed on May 28, 1999. 9 (b). Opinion of Lane, Altman & Owens LLP, Massachusetts Counsel, dated September 10, 1992, is incorporated by reference to Exhibit 9(b) to Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A, filed on May 28, 1999. 10 (a). Consent of Independent Auditors, filed herein. 10 (b). Consent of PricewaterhouseCoopers LLP, filed herein. 11. Not Applicable. 12. Not Applicable. 13. Amended and Restated Plan of Distribution pursuant to Rule 12b-1, dated June 28, 1999, is incorporated by reference to Exhibit 13 of Post-Effective Amendment No. 10 to the Registration Statement on Form N-1A, filed on June 25, 1999. 14. Amended and Restated Multi-Class Plan pursuant to Rule 18f-3, dated March 12, 2001, filed herein. 15. Not Applicable. 16 (a). Code of Ethics of Morgan Stanley Dean Witter Advisors Inc., and Morgan Stanley Dean Witter Distributors Inc., as well as other MSDW affiliated entities, filed herein. 16 (b). Code of Ethics of the Morgan Stanley Dean Witter Funds, filed herein. 16 (c). Code of Ethics of The TCW Group Inc., is incorporated by reference to Exhibit 16(c) of post-Effective Amendment No. 11 to the Registration Statement on Form N-1A, filed on March 31, 2000. Other Powers of Attorney are incorporated by reference to Exhibit (Other) of Post-Effective Amendment No. 4 to the Registration Statement on Form N-1A, filed on March 27, 1996, and to Exhibit (Other) of Post-Effective Amendment No. 10 to 2 the Registration Statement on Form N-1A, filed on June 25, 1999. The Power of Attorney for James F. Higgins, filed herein. Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND. ------------------------------------------------------------ None Item 25. INDEMNIFICATION. ---------------- Pursuant to Section 5.3 of the Registrant's Declaration of Trust and under Section 4.8 of the Registrant's By-Laws, the indemnification of the Registrant's trustees, officers, employees and agents is permitted if it is determined that they acted under the belief that their actions were in or not opposed to the best interest of the Registrant, and, with respect to any criminal proceeding, they had reasonable cause to believe their conduct was not unlawful. In addition, indemnification is permitted only if it is determined that the actions in question did not render them liable by reason of willful misfeasance, bad faith or gross negligence in the performance of their duties or by reason of reckless disregard of their obligations and duties to the Registrant. Trustees, officers, employees and agents will be indemnified for the expense of litigation if it is determined that they are entitled to indemnification against any liability established in such litigation. The Registrant may also advance money for these expenses provided that they give their undertakings to repay the Registrant unless their conduct is later determined to permit indemnification. Pursuant to Section 5.2 of the Registrant's Declaration of Trust and paragraph 8 of the Registrant's Investment Management Agreement, neither the Investment Manager nor any trustee, officer, employee or agent of the Registrant shall be liable for any action or failure to act, except in the case of bad faith, willful misfeasance, gross negligence or reckless disregard of duties to the Registrant. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer, or controlling person of the Registrant in connection with the successful defense of any action, suit or proceeding) is asserted against the Registrant by such trustee, officer or controlling person in connection with the shares being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act, and will be governed by the final adjudication of such issue. The Registrant hereby undertakes that it will apply the indemnification provision of its by-laws in a manner consistent with Release 11330 of the Securities and Exchange Commission under the Investment Company Act of 1940, so long as the interpretation of Sections 17(h) and 17(i) of such Act remains in effect. Registrant, in conjunction with the Investment Manager, Registrant's Trustees, and other registered investment management companies managed by the Investment Manager, maintains insurance on behalf of any person who is or was a Trustee, officer, employee, or agent of Registrant, or who is or was serving at the request of Registrant as a trustee, director, officer, employee or agent of another trust or corporation, against any liability asserted against him and incurred by him or arising out of his position. However, in no event will Registrant maintain insurance to indemnify any such person for any act for which Registrant itself is not permitted to indemnify him. Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR ---------------------------------------------------- 3 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 principal address of MSDW Advisors, Morgan Stanley Dean Witter Services Company Inc. ("MSDW Services"), Morgan Stanley Dean Witter Distributors Inc. ("MSDW Distributors"), Dean Witter Reynolds Inc. ("DWR") and the Morgan Stanley Dean Witter Funds is Two World Trade Center, New York, New York 10048. The principal address of Morgan Stanley Dean Witter Investment Management Inc. ("MSDWIM") and Morgan Stanley Dean Witter Investment Group Inc. ("MSDWIG") is 1221 Avenue of the Americas, New York, New York 10020. The principal address of Morgan Stanley Dean Witter Investment Management Ltd. and Morgan Stanley & Co. International Limited is 25 Cabot Square, London, England. The principal address of Morgan Stanley Dean Witter Trust FSB ("MSDW Trust") is 2 Harborside Financial Center, Jersey City, New Jersey 07311.The principal address of Miller Anderson & Sherrerd, LLP ("MAS"), MAS Funds and MAS Distribution Inc. is One Tower Bridge, West Conshohocken, PA 19428. The principal address of Van Kampen Investment Asset Management Inc. is 1 Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181.
OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION OR EMPLOYMENT, NAME AND POSITION WITH MSDW ADVISORS INCLUDING NAME, PRINCIPAL ADDRESS AND NATURE OF CONNECTION - ------------------------------------ --------------------------------------------------------------- Mitchell M. Merin President and Chief Operating Officer of Morgan Stanley President, Chief Executive Officer Dean Witter Asset Management; Chairman, Chief Executive and and Director Director Officer of MSDW Distributors and MSDW Trust; President, Chief Executive Officer and Director of MSDW Services; President of the Morgan Stanley Dean Witter Funds; Executive Vice President and Director of DWR; Director of MSDWIM; Member of the Executive Committee of MAS; Director of various MSDW subsidiaries; Trustee of various Van Kampen investment companies. Barry Fink Managing Director and General Counsel of Morgan Stanley Dean Managing Director, Witter Asset Management; Managing Director, Secretary, General Secretary, General Counsel Counsel and Director of MSDW Services; Vice President and and Director Secretary of MSDW Distributors; Vice President, Secretary and General Counsel of the Morgan Stanley Dean Witter Funds. Joseph J. McAlinden Chief Investment Officer and Managing Director of MSDWIM; Managing Director and Chief Investment Officer of MAS; Director of MSDW Trust. Chief Investment Officer Barton M. Biggs Chairman, Managing Director and Director of MSDWIM; Managing Managing Director Director of MAS. Thomas L. Bennett Managing Director and Director of MSDWIM; Director of MSDW Managing Director Universal Funds, Inc.; Managing Director of MAS; Executive Committee member of MAS; Chairman of the MAS Funds; Director of MAS Distribution Inc. Ronald E. Robison Executive Vice President, Chief Administrative Officer and Executive Vice President, and Director of MSDW Services. Chief Administrative Officer and Director Arden C. Armstrong Managing Director of MSDWIM and MAS. Managing Director
4
OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION OR EMPLOYMENT, NAME AND POSITION WITH MSDW ADVISORS INCLUDING NAME, PRINCIPAL ADDRESS AND NATURE OF CONNECTION - ------------------------------------ --------------------------------------------------------------- W. David Armstrong Managing Director of MSDWIM and MAS. Managing Director Dominic P. Caldecott Managing Director of MSDWIM, MAS and Morgan Stanley Dean Witter Managing Director Investment Management Ltd.; Vice President and Investment Manager of Morgan Stanley & Co. International Limited. Jesse L. Carroll, Jr. Managing Director of MSDWIG, MSDWIM and MAS. Managing Director Stephen F. Esser Managing Director of MSDWIM and MAS. Managing Director Philip W. Friedman Managing Director of MSDWIM and MAS. Managing Director Rajesh K. Gupta Managing Director and Chief Investment Officer- Investments of Managing Director and MSDWIM; Chief Administrative Officer-Investments of MAS. Chief Administrative Officer- Investments William Lock Managing Director of MSDWIM and MAS. Managing Director Margaret P. Naylor Managing Director of MSDWIM and MAS. Managing Director Narayan Ramachandran Managing Director of MSDWIM and MAS. Managing Director Scott F. Richard Managing Director of MSDWIM and MAS. Managing Director Gary G. Schlarbaum Managing Director of MSDWIM and MAS; Executive Committee Managing Director Member of MAS. Ann D. Thivierage Managing Director of MSDWIM and MAS. Managing Director Paul D. Vance Managing Director of MSDWIM and MAS. Managing Director Peter J. Wright Managing Director of MSDWIM and MAS. Managing Director Robert E. Angevine Principal of MSDWIM and MAS. Principal Benjamin J. Gord Principal of MSDWIM and MAS. Principal
5
OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION OR EMPLOYMENT, NAME AND POSITION WITH MSDW ADVISORS INCLUDING NAME, PRINCIPAL ADDRESS AND NATURE OF CONNECTION - ------------------------------------ --------------------------------------------------------------- Gordon W. Loery Principal of MSDWIM and MAS. Principal Deanna L. Loughnane Principal of MSDWIM and MAS. Principal Angelo Manioudakis Principal of MSDWIM and MAS. Principal Paul F. O'Brien Principal of MSDWIM and MAS. Principal Robert S. Giambrone Senior Vice President of MSDW Services, MSDW Distributors and Senior Vice President MSDW Trust; Director of MSDW Trust. John B. Kemp, III President of MSDW Distributors. Senior Vice President
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 Institutional Money Trust (4) Active Assets Money Trust (5) Active Assets Premier Money Trust (6) Active Assets Tax-Free Trust (7) Morgan Stanley Dean Witter 21st Century Trend Fund (8) Morgan Stanley Dean Witter Aggressive Equity Fund (9) Morgan Stanley Dean Witter All Star Growth Fund (10) Morgan Stanley Dean Witter American Opportunities Fund (11) Morgan Stanley Dean Witter Balanced Growth Fund (12) Morgan Stanley Dean Witter Balanced Income Fund (13) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust (14) Morgan Stanley Dean Witter California Tax-Free Income Fund (15) Morgan Stanley Dean Witter Capital Growth Securities (16) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS PORTFOLIO" (17) Morgan Stanley Dean Witter Convertible Securities Trust (18) Morgan Stanley Dean Witter Developing Growth Securities Trust (19) Morgan Stanley Dean Witter Diversified Income Trust (20) Morgan Stanley Dean Witter Dividend Growth Securities Inc. (21) Morgan Stanley Dean Witter Equity Fund (22) Morgan Stanley Dean Witter European Growth Fund Inc. (23) Morgan Stanley Dean Witter Federal Securities Trust (24) Morgan Stanley Dean Witter Financial Services Trust (25) Morgan Stanley Dean Witter Fund of Funds (26) Morgan Stanley Dean Witter Global Dividend Growth Securities (27) Morgan Stanley Dean Witter Global Utilities Fund (28) Morgan Stanley Dean Witter Growth Fund 6 (29) Morgan Stanley Dean Witter Hawaii Municipal Trust (30) Morgan Stanley Dean Witter Health Sciences Trust (31) Morgan Stanley Dean Witter High Yield Securities Inc. (32) Morgan Stanley Dean Witter Income Builder Fund (33) Morgan Stanley Dean Witter Information Fund (34) Morgan Stanley Dean Witter Intermediate Income Securities (35) Morgan Stanley Dean Witter International Fund (36) Morgan Stanley Dean Witter International SmallCap Fund (37) Morgan Stanley Dean Witter International Value Equity Fund (38) Morgan Stanley Dean Witter Japan Fund (39) Morgan Stanley Dean Witter Latin American Growth Fund (40) Morgan Stanley Dean Witter Limited Term Municipal Trust (41) Morgan Stanley Dean Witter Liquid Asset Fund Inc. (42) Morgan Stanley Dean Witter Market Leader Trust (43) Morgan Stanley Dean Witter Mid-Cap Equity Trust (44) Morgan Stanley Dean Witter Multi-State Municipal Series Trust (45) Morgan Stanley Dean Witter Natural Resource Development Securities Inc. (46) Morgan Stanley Dean Witter New Discoveries Fund (47) Morgan Stanley Dean Witter New York Municipal Money Market Trust (48) Morgan Stanley Dean Witter New York Tax-Free Income Fund (49) Morgan Stanley Dean Witter Next Generation Trust (50) Morgan Stanley Dean Witter North American Government Income Trust (51) Morgan Stanley Dean Witter Pacific Growth Fund Inc. (52) Morgan Stanley Dean Witter Prime Income Trust (53) Morgan Stanley Dean Witter Real Estate Fund (54) Morgan Stanley Dean Witter S&P 500 Index Fund (55) Morgan Stanley Dean Witter S&P 500 Select Fund (56) Morgan Stanley Dean Witter Short-Term Bond Fund (57) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust (58) Morgan Stanley Dean Witter Small Cap Growth Fund (59) Morgan Stanley Dean Witter Special Value Fund (60) Morgan Stanley Dean Witter Strategist Fund (61) Morgan Stanley Dean Witter Tax-Exempt Securities Trust (62) Morgan Stanley Dean Witter Tax-Free Daily Income Trust (63) Morgan Stanley Dean Witter Tax-Managed Growth Fund (64) Morgan Stanley Dean Witter Technology Fund (65) Morgan Stanley Dean Witter Total Market Index Fund (66) Morgan Stanley Dean Witter Total Return Trust (67) Morgan Stanley Dean Witter U.S. Government Money Market Trust (68) Morgan Stanley Dean Witter U.S. Government Securities Trust (69) Morgan Stanley Dean Witter Utilities Fund (70) Morgan Stanley Dean Witter Value-Added Market Series (71) Morgan Stanley Dean Witter Value Fund (72) Morgan Stanley Dean Witter Variable Investment Series (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 Messrs. Higgins and Purcell, who are Trustees of the Registrant, none of the following persons has any position or office with the Registrant. 7
NAME POSITIONS AND OFFICE WITH MSDW DISTRIBUTORS - ---- -------------------------------------------- James F. Higgins Director 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. 8 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 27th day of March, 2001. MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND 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. 12 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 Trustee By: /s/ Charles A. Fiumefreddo 03/27/01 -------------------------- Charles A. Fiumefreddo (2) Principal Financial Officer Treasurer and Principal Accounting Officer By: /s/ Thomas F. Caloia 03/27/01 -------------------------- Thomas F. Caloia (3) Majority of the Trustees Charles A. Fiumefreddo (Chairman) Philip J. Purcell James F. Higgins By: /s/ Barry Fink 03/27/01 -------------------------- 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 03/27/01 -------------------------- David M. Butowsky Attorney-in-Fact
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND EXHIBIT INDEX 8(a). Amended and Restated Transfer Agency Agreement between the Registrant and Morgan Stanley Dean Witter Trust FSB, dated September 1, 2000. 10(a). Consent of Independent Auditors. 10(b). Consent of PricewatehouseCoopers LLP. 15. Amended and Restated Multiple Class Plan pursuant to Rule 18f-3, dated March 12, 2001. 16(a). Code of Ethics of Morgan Stanley Dean Witter Advisors Inc., and Morgan Stanley Dean Witter Distributors Inc., as well as other MSDW affiliated entities. 16(b). Code of Ethics of the Morgan Stanley Dean Witter Funds. Other Power of Attorney for James F. Higgins. EX-99.8(A) 2 a2041641zex-99_8a.txt EXHIBIT 99.8(A) AMENDED AND RESTATED TRANSFER AGENCY AND SERVICE AGREEMENT WITH MORGAN STANLEY DEAN WITTER TRUST FSB [OPEN-END FUNDS] TABLE OF CONTENTS
PAGE -------- Article 1 Terms of Appointment........................................ 1 Article 2 Fees and Expenses........................................... 3 Article 3 Representations and Warranties of MSDW TRUST................ 3 Article 4 Representations and Warranties of the Fund.................. 4 Article 5 Duty of Care and Indemnification............................ 4 Article 6 Documents and Covenants of the Fund and MSDW TRUST.......... 5 Article 7 Duration and Termination of Agreement....................... 7 Article 8 Assignment.................................................. 7 Article 9 Affiliations................................................ 7 Article 10 Amendment................................................... 7 Article 11 Applicable Law.............................................. 8 Article 12 Miscellaneous............................................... 8 Article 13 Merger of Agreement......................................... 9 Article 14 Personal Liability.......................................... 9
i AMENDED AND RESTATED TRANSFER AGENCY AND SERVICE AGREEMENT AGREEMENT made as of August 1, 1997, and amended on June 22, 1998 and September 1, 2000, by and between each of the Funds listed on the signature pages hereof, each of such Funds acting severally on its own behalf and not jointly with any of such other Funds (each such Fund hereinafter referred to as the "Fund"), each such Fund having its principal office and place of business at Two World Trade Center, New York, New York, 10048, and MORGAN STANLEY DEAN WITTER TRUST FSB ("MSDW TRUST"), a federally chartered savings bank, having its principal office and place of business at Harborside Financial Center, Plaza Two, Jersey City, New Jersey 07311. WHEREAS, the Fund desires to appoint MSDW TRUST as its transfer agent, dividend disbursing agent and shareholder servicing agent and MSDW TRUST desires to accept such appointment; NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows: ARTICLE 1 TERMS OF APPOINTMENT; DUTIES OF MSDW TRUST 1.1 Subject to the terms and conditions set forth in this Agreement, the Fund hereby employs and appoints MSDW TRUST to act as, and MSDW TRUST agrees to act as, the transfer agent for each series and class of shares of the Fund, whether now or hereafter authorized or issued ("Shares"), dividend disbursing agent and shareholder servicing agent in connection with any accumulation, open-account or similar plans provided to the holders of such Shares ("Shareholders") and set out in the currently effective prospectus and statement of additional information ("prospectus") of the Fund, including without limitation any periodic investment plan or periodic withdrawal program. 1.2 MSDW TRUST agrees that it will perform the following services: (a) In accordance with procedures established from time to time by agreement between the Fund and MSDW TRUST, MSDW TRUST shall: (i) Receive for acceptance, orders for the purchase of Shares, and promptly deliver payment and appropriate documentation therefor to the custodian of the assets of the Fund (the "Custodian"); (ii) Pursuant to purchase orders, issue the appropriate number of Shares and issue certificates therefor or hold such Shares in book form in the appropriate Shareholder account; (iii) Receive for acceptance redemption requests and redemption directions and deliver the appropriate documentation therefor to the Custodian; (iv) At the appropriate time as and when it receives monies paid to it by the Custodian with respect to any redemption, pay over or cause to be paid over in the appropriate manner such monies as instructed by the redeeming Shareholders; (v) Effect transfers of Shares by the registered owners thereof upon receipt of appropriate instructions; (vi) Prepare and transmit payments for dividends and distributions declared by the Fund; (vii) Calculate any sales charges payable by a Shareholder on purchases and/or redemptions of Shares of the Fund as such charges may be reflected in the prospectus; 1 (viii) Maintain records of account for and advise the Fund and its Shareholders as to the foregoing; and (ix) Record the issuance of Shares of the Fund and maintain pursuant to Rule 17Ad-10(e) under the Securities Exchange Act of 1934 ("1934 Act") a record of the total number of Shares of the Fund which are authorized, based upon data provided to it by the Fund, and issued and outstanding. MSDW TRUST shall also provide to the Fund on a regular basis the total number of Shares that are authorized, issued and outstanding and shall notify the Fund in case any proposed issue of Shares by the Fund would result in an overissue. In case any issue of Shares would result in an overissue, MSDW TRUST shall refuse to issue such Shares and shall not countersign and issue any certificates requested for such Shares. When recording the issuance of Shares, MSDW TRUST shall have no obligation to take cognizance of any Blue Sky laws relating to the issue of sale of such Shares, which functions shall be the sole responsibility of the Fund. (b) In addition to and not in lieu of the services set forth in the above paragraph (a), MSDW TRUST shall: (i) perform all of the customary services of a transfer agent, dividend disbursing agent and, as relevant, shareholder servicing agent in connection with dividend reinvestment, accumulation, open-account or similar plans (including without limitation any periodic investment plan or periodic withdrawal program), including but not limited to, maintaining all Shareholder accounts, preparing Shareholder meeting lists, mailing proxies, receiving and tabulating proxies, mailing shareholder reports and prospectuses to current Shareholders, withholding taxes on U.S. resident and non-resident alien accounts, preparing and filing appropriate forms required with respect to dividends and distributions by federal tax authorities for all Shareholders, preparing and mailing confirmation forms and statements of account to Shareholders for all purchases and redemptions of Shares and other confirmable transactions in Shareholder accounts, preparing and mailing activity statements for Shareholders and providing Shareholder account information; (ii) open any and all bank accounts which may be necessary or appropriate in order to provide the foregoing services; and (iii) provide a system that will enable the Fund to monitor the total number of Shares sold in each State or other jurisdiction. (c) In addition, the Fund shall: (i) identify to MSDW TRUST in writing those transactions and assets to be treated as exempt from Blue Sky reporting for each State; and (ii) verify the inclusion on the system prior to activation of each State in which Fund shares may be sold and thereafter monitor the daily purchases and sales for shareholders in each State. The responsibility of MSDW TRUST for the Fund's status under the securities laws of any State or other jurisdiction is limited to the inclusion on the system of each State as to which the Fund has informed MSDW TRUST that shares may be sold in compliance with state securities laws and the reporting of purchases and sales in each such State to the Fund as provided above and as agreed from time to time by the Fund and MSDW TRUST. (d) MSDW TRUST shall provide such additional services and functions not specifically described herein as may be mutually agreed between MSDW TRUST and the Fund. Procedures applicable to such services may be established from time to time by agreement between the Fund and MSDW TRUST. 2 ARTICLE 2 FEES AND EXPENSES 2.1 For performance by MSDW TRUST pursuant to this Agreement, each Fund agrees to pay MSDW TRUST an annual maintenance fee for each Shareholder account and certain transactional fees, if applicable, as set out in the respective fee schedule attached hereto as Schedule A. Such fee shall be increased or decreased on August 1st of each year by an amount equal to the change in the Consumer Price Index-Financial Services (All Urban Consumers), as published by the Bureau of Labor Statistics of the United States Department of Labor (or another comparable measure of employee wages and salaries and employer costs for employee benefits as mutually agreed to by the Fund and MSDW Trust) for the twelve-month period ending on March 31st of that year and shall be reflected in a revised Schedule A dated as of August 1 of each year. Such fees and out-of-pocket expenses and advances identified under Section 2.2 below may be changed from time to time subject to mutual written agreement between the Fund and MSDW TRUST. 2.2 In addition to the fees paid under Section 2.1 above, the Fund agrees to reimburse MSDW TRUST for out of pocket expenses in connection with the services rendered by MSDW TRUST hereunder. In addition, any other expenses incurred by MSDW TRUST at the request or with the consent of the Fund will be reimbursed by the Fund. 2.3 The Fund agrees to pay all fees and reimbursable expenses within a reasonable period of time following the mailing of the respective billing notice. Postage for mailing of dividends, proxies, Fund reports and other mailings to all Shareholder accounts shall be advanced to MSDW TRUST by the Fund upon request prior to the mailing date of such materials. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF MSDW TRUST MSDW TRUST represents and warrants to the Fund that: 3.1 It is a federally chartered savings bank whose principal office is in New Jersey. 3.2 It is and will remain registered with the U.S. Securities and Exchange Commission ("SEC") as a Transfer Agent pursuant to the requirements of Section 17A of the 1934 Act. 3.3 It is empowered under applicable laws and by its charter and By-Laws to enter into and perform this Agreement. 3.4 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement. 3.5 It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement. 3 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE FUND The Fund represents and warrants to MSDW TRUST that: 4.1 It is a corporation duly organized and existing and in good standing under the laws of Delaware or Maryland or a trust duly organized and existing and in good standing under the laws of Massachusetts, as the case may be. 4.2 It is empowered under applicable laws and by its Articles of Incorporation or Declaration of Trust, as the case may be, and under its By-Laws to enter into and perform this Agreement. 4.3 All corporate proceedings necessary to authorize it to enter into and perform this Agreement have been taken. 4.4 It is an investment company registered with the SEC under the Investment Company Act of 1940, as amended (the "1940 Act"). 4.5 A registration statement under the Securities Act of 1933 (the "1933 Act") is currently effective and will remain effective, and appropriate state securities law filings have been made and will continue to be made, with respect to all Shares of the Fund being offered for sale. ARTICLE 5 DUTY OF CARE AND INDEMNIFICATION 5.1 MSDW TRUST shall not be responsible for, and the Fund shall indemnify and hold MSDW TRUST harmless from and against, any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to: (a) All actions of MSDW TRUST or its agents or subcontractors required to be taken pursuant to this Agreement, provided that such actions are taken in good faith and without negligence or willful misconduct. (b) The Fund's refusal or failure to comply with the terms of this Agreement, or which arise out of the Fund's lack of good faith, negligence or willful misconduct or which arise out of breach of any representation or warranty of the Fund hereunder. (c) The reliance on or use by MSDW TRUST or its agents or subcontractors of information, records and documents which (i) are received by MSDW TRUST or its agents or subcontractors and furnished to it by or on behalf of the Fund, and (ii) have been prepared and/or maintained by the Fund or any other person or firm on behalf of the Fund. (d) The reliance on, or the carrying out by MSDW TRUST or its agents or subcontractors of, any instructions or requests of the Fund. (e) The offer or sale of Shares in violation of any requirement under the federal securities laws or regulations or the securities or Blue Sky laws of any State or other jurisdiction that notice of offering of such Shares in such State or other jurisdiction or in violation of any stop order or other determination or ruling by any federal agency or any State or other jurisdiction with respect to the offer or sale of such Shares in such State or other jurisdiction. 5.2 MSDW TRUST shall indemnify and hold the Fund harmless from or against any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to any 4 action or failure or omission to act by MSDW TRUST as a result of the lack of good faith, negligence or willful misconduct of MSDW TRUST, its officers, employees or agents. 5.3 At any time, MSDW TRUST may apply to any officer of the Fund for instructions, and may consult with legal counsel to the Fund, with respect to any matter arising in connection with the services to be performed by MSDW TRUST under this Agreement, and MSDW TRUST and its agents or subcontractors shall not be liable and shall be indemnified by the Fund for any action taken or omitted by it in reliance upon such instructions or upon the opinion of such counsel. MSDW TRUST, its agents and subcontractors shall be protected and indemnified in acting upon any paper or document furnished by or on behalf of the Fund, reasonably believed to be genuine and to have been signed by the proper person or persons, or upon any instruction, information, data, records or documents provided to MSDW TRUST or its agents or subcontractors by machine readable input, telex, CRT data entry or other similar means authorized by the Fund, and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Fund. MSDW TRUST, its agents and subcontractors shall also be protected and indemnified in recognizing stock certificates which are reasonably believed to bear the proper manual or facsimile signature of the officers of the Fund, and the proper countersignature of any former transfer agent or registrar, or of a co-transfer agent or co-registrar. 5.4 In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes. 5.5 Neither party to this Agreement shall be liable to the other party for consequential damages under any provision of this Agreement or for any act or failure to act hereunder. 5.6 In order that the indemnification provisions contained in this Article 5 shall apply, upon the assertion of a claim for which either party may be required to indemnify the other, the party seeking indemnification shall promptly notify the other party of such assertion, and shall keep the other party advised with respect to all developments concerning such claim. The party who may be required to indemnify shall have the option to participate with the party seeking indemnification in the defense of such claim. The party seeking indemnification shall in no case confess any claim or make any compromise in any case in which the other party may be required to indemnify it except with the other party's prior written consent. ARTICLE 6 DOCUMENTS AND COVENANTS OF THE FUND AND MSDW TRUST 6.1 The Fund shall promptly furnish to MSDW TRUST the following, unless previously furnished to Dean Witter Trust Company, the prior transfer agent of the Fund: (a) If a corporation: (i) A certified copy of the resolution of the Board of Directors of the Fund authorizing the appointment of MSDW TRUST and the execution and delivery of this Agreement; (ii) A certified copy of the Articles of Incorporation and By-Laws of the Fund and all amendments thereto; (iii) Certified copies of each vote of the Board of Directors designating persons authorized to give instructions on behalf of the Fund and signature cards bearing the signature of any officer of the Fund or any other person authorized to sign written instructions on behalf of the Fund; 5 (iv) A specimen of the certificate for Shares of the Fund in the form approved by the Board of Directors, with a certificate of the Secretary of the Fund as to such approval; (b) If a business trust: (i) A certified copy of the resolution of the Board of Trustees of the Fund authorizing the appointment of MSDW TRUST and the execution and delivery of this Agreement; (ii) A certified copy of the Declaration of Trust and By-Laws of the Fund and all amendments thereto; (iii) Certified copies of each vote of the Board of Trustees designating persons authorized to give instructions on behalf of the Fund and signature cards bearing the signature of any officer of the Fund or any other person authorized to sign written instructions on behalf of the Fund; (iv) A specimen of the certificate for Shares of the Fund in the form approved by the Board of Trustees, with a certificate of the Secretary of the Fund as to such approval; (c) The current registration statements and any amendments and supplements thereto filed with the SEC pursuant to the requirements of the 1933 Act or the 1940 Act; (d) All account application forms or other documents relating to Shareholder accounts and/or relating to any plan, program or service offered or to be offered by the Fund; and (e) Such other certificates, documents or opinions as MSDW TRUST deems to be appropriate or necessary for the proper performance of its duties. 6.2 MSDW TRUST hereby agrees to establish and maintain facilities and procedures reasonably acceptable to the Fund for safekeeping of Share certificates, check forms and facsimile signature imprinting devices, if any; and for the preparation or use, and for keeping account of, such certificates, forms and devices. 6.3 MSDW TRUST shall prepare and keep records relating to the services to be performed hereunder, in the form and manner as it may deem advisable and as required by applicable laws and regulations. To the extent required by Section 31 of the 1940 Act, and the rules and regulations thereunder, MSDW TRUST agrees that all such records prepared or maintained by MSDW TRUST relating to the services performed by MSDW TRUST hereunder are the property of the Fund and will be preserved, maintained and made available in accordance with such Section 31 of the 1940 Act, and the rules and regulations thereunder, and will be surrendered promptly to the Fund on and in accordance with its request. 6.4 MSDW TRUST and the Fund agree that all books, records, information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential and shall not be voluntarily disclosed to any other person except as may be required by law or with the prior consent of MSDW TRUST and the Fund. 6.5 In case of any request or demands for the inspection of the Shareholder records of the Fund, MSDW TRUST will endeavor to notify the Fund and to secure instructions from an authorized officer of the Fund as to such inspection. MSDW TRUST reserves the right, however, to exhibit the Shareholder records to any person whenever it is advised by its counsel that it may be held liable for the failure to exhibit the Shareholder records to such person. 6 ARTICLE 7 DURATION AND TERMINATION OF AGREEMENT 7.1 This Agreement shall remain in full force and effect until August 1, 2001 and from year-to-year thereafter unless terminated by either party as provided in Section 7.2 hereof. 7.2 This Agreement may be terminated by the Fund on 60 days written notice, and by MSDW TRUST on 90 days written notice, to the other party without payment of any penalty. 7.3 Should the Fund exercise its right to terminate, all out-of-pocket expenses associated with the movement of records and other materials will be borne by the Fund. Additionally, MSDW TRUST reserves the right to charge for any other reasonable fees and expenses associated with such termination. ARTICLE 8 ASSIGNMENT 8.1 Except as provided in Section 8.3 below, neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the written consent of the other party. 8.2 This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns. 8.3 MSDW TRUST may, in its sole discretion and without further consent by the Fund, subcontract, in whole or in part, for the performance of its obligations and duties hereunder with any person or entity including but not limited to companies which are affiliated with MSDW TRUST; provided, however, that such person or entity has and maintains the qualifications, if any, required to perform such obligations and duties, and that MSDW TRUST shall be as fully responsible to the Fund for the acts and omissions of any agent or subcontractor as it is for its own acts or omissions under this Agreement. ARTICLE 9 AFFILIATIONS 9.1 MSDW TRUST may now or hereafter, without the consent of or notice to the Fund, function as transfer agent and/or shareholder servicing agent for any other investment company registered with the SEC under the 1940 Act and for any other issuer, including without limitation any investment company whose adviser, administrator, sponsor or principal underwriter is or may become affiliated with Morgan Stanley Dean Witter & Co. or any of its direct or indirect subsidiaries or affiliates. 9.2 It is understood and agreed that the Directors or Trustees (as the case may be), officers, employees, agents and shareholders of the Fund, and the directors, officers, employees, agents and shareholders of the Fund's investment adviser and/or distributor, are or may be interested in MSDW TRUST as directors, officers, employees, agents and shareholders or otherwise, and that the directors, officers, employees, agents and shareholders of MSDW TRUST may be interested in the Fund as Directors or Trustees (as the case may be), officers, employees, agents and shareholders or otherwise, or in the investment adviser and/or distributor as directors, officers, employees, agents, shareholders or otherwise. ARTICLE 10 AMENDMENT 10.1 This Agreement may be amended or modified by a written agreement executed by both parties and authorized or approved by a resolution of the Board of Directors or the Board of Trustees (as the case may be) of the Fund. 7 ARTICLE 11 APPLICABLE LAW 11.1 This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of New York. ARTICLE 12 MISCELLANEOUS 12.1 In the event that one or more additional investment companies managed or administered by Morgan Stanley Dean Witter Advisors Inc. or any of its affiliates ("Additional Funds") desires to retain MSDW TRUST to act as transfer agent, dividend disbursing agent and/or shareholder servicing agent, and MSDW TRUST desires to render such services, such services shall be provided pursuant to a letter agreement, substantially in the form of Exhibit A hereto, between MSDW TRUST and each Additional Fund. 12.2 In the event of an alleged loss or destruction of any Share certificate, no new certificate shall be issued in lieu thereof, unless there shall first be furnished to MSDW TRUST an affidavit of loss or non-receipt by the holder of Shares with respect to which a certificate has been lost or destroyed, supported by an appropriate bond satisfactory to MSDW TRUST and the Fund issued by a surety company satisfactory to MSDW TRUST, except that MSDW TRUST may accept an affidavit of loss and indemnity agreement executed by the registered holder (or legal representative) without surety in such form as MSDW TRUST deems appropriate indemnifying MSDW TRUST and the Fund for the issuance of a replacement certificate, in cases where the alleged loss is in the amount of $1,000 or less. 12.3 In the event that any check or other order for payment of money on the account of any Shareholder or new investor is returned unpaid for any reason, MSDW TRUST will (a) give prompt notification to the Fund's distributor ("Distributor") (or to the Fund if the Fund acts as its own distributor) of such non-payment; and (b) take such other action, including imposition of a reasonable processing or handling fee, as MSDW TRUST may, in its sole discretion, deem appropriate or as the Fund and, if applicable, the Distributor may instruct MSDW TRUST. 12.4 Any notice or other instrument authorized or required by this Agreement to be given in writing to the Fund or to MSDW TRUST shall be sufficiently given if addressed to that party and received by it at its office set forth below or at such other place as it may from time to time designate in writing. To the Fund: [Name of Fund] Two World Trade Center New York, New York 10048 Attention: General Counsel To MSDW TRUST: Morgan Stanley Dean Witter Trust FSB Harborside Financial Center Plaza Two Jersey City, New Jersey 07311 Attention: President 8 ARTICLE 13 MERGER OF AGREEMENT 13.1 This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written. ARTICLE 14 PERSONAL LIABILITY 14.1 In the case of a Fund organized as a Massachusetts business trust, a copy of the Declaration of Trust of the Fund is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Board of Trustees of the Fund as Trustees and not individually and that the obligations of this instrument are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Fund; provided, however, that the Declaration of Trust of the Fund provides that the assets of a particular Series of the Fund shall under no circumstances be charged with liabilities attributable to any other Series of the Fund and that all persons extending credit to, or contracting with or having any claim against, a particular Series of the Fund shall look only to the assets of that particular Series for payment of such credit, contract or claim. IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written. MORGAN STANLEY DEAN WITTER FUNDS TAXABLE MONEY MARKET FUNDS 1. Active Assets Government Securities Trust 2. Active Assets Institutional Money Trust 3. Active Assets Money Trust 4. Active Assets Premier Money Trust 5. Morgan Stanley Dean Witter Liquid Asset Fund Inc. 6. Morgan Stanley Dean Witter U.S. Government Money Market Trust TAX-EXEMPT MONEY MARKET FUNDS 7. Active Assets California Tax-Free Trust 8. Active Assets Tax-Free Trust 9. Morgan Stanley Dean Witter California Tax-Free Daily Income Trust 10. Morgan Stanley Dean Witter New York Municipal Money Market Trust 11. Morgan Stanley Dean Witter Tax-Free Daily Income Trust EQUITY FUNDS 12. Morgan Stanley Dean Witter Aggressive Equity Fund 13. Morgan Stanley Dean Witter American Opportunities Fund 14. Morgan Stanley Dean Witter Capital Growth Securities 15. Morgan Stanley Dean Witter Competitive Edge Fund 16. Morgan Stanley Dean Witter Developing Growth Securities Trust 17. Morgan Stanley Dean Witter Dividend Growth Securities Inc. 18. Morgan Stanley Dean Witter Equity Fund 19. Morgan Stanley Dean Witter European Growth Fund Inc. 9 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 Health Sciences Trust 26. Morgan Stanley Dean Witter Income Builder Fund 27. Morgan Stanley Dean Witter Information Fund 28. Morgan Stanley Dean Witter International Fund 29. Morgan Stanley Dean Witter International SmallCap Fund 30. Morgan Stanley Dean Witter Japan Fund 31. Morgan Stanley Dean Witter Latin American Growth Fund 32. Morgan Stanley Dean Witter Market Leader Trust 33. Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities 34. Morgan Stanley Dean Witter Mid-Cap Equity Trust 35. Morgan Stanley Dean Witter Natural Resource Development Securities Inc. 36. Morgan Stanley Dean Witter New Discoveries Fund 37. Morgan Stanley Dean Witter Next Generation Trust 38. Morgan Stanley Dean Witter Pacific Growth Fund Inc. 39. Morgan Stanley Dean Witter Real Estate Fund 40. Morgan Stanley Dean Witter Small Cap Growth Fund 41. Morgan Stanley Dean Witter S&P 500 Index Fund 42. Morgan Stanley Dean Witter S&P 500 Select Fund 43. Morgan Stanley Dean Witter Special Value Fund 44. Morgan Stanley Dean Witter Tax-Managed Growth Fund 45. Morgan Stanley Dean Witter Technology Fund 46. Morgan Stanley Dean Witter Total Market Index Fund 47. Morgan Stanley Dean Witter Total Return Trust 48. Morgan Stanley Dean Witter 21st Century Trend Fund 49. Morgan Stanley Dean Witter Utilities Fund 50. Morgan Stanley Dean Witter Value-Added Market Series 51. Morgan Stanley Dean Witter Value Fund BALANCED FUNDS 52. Morgan Stanley Dean Witter Balanced Growth Fund 53. Morgan Stanley Dean Witter Balanced Income Fund ASSET ALLOCATION FUND 54. Morgan Stanley Dean Witter Strategist Fund TAXABLE FIXED-INCOME FUNDS 55. Morgan Stanley Dean Witter Convertible Securities Trust 56. Morgan Stanley Dean Witter Diversified Income Trust 57. Morgan Stanley Dean Witter Federal Securities Trust 58. Morgan Stanley Dean Witter High Yield Securities Inc 59. Morgan Stanley Dean Witter Intermediate Income Securities 60. Morgan Stanley Dean Witter North American Government Income Trust 61. Morgan Stanley Dean Witter Short-Term Bond Fund 10 62. Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust 63. Morgan Stanley Dean Witter U.S. Government Securities Trust 64. Morgan Stanley Dean Witter World Wide Income Trust TAX-EXEMPT FIXED-INCOME FUNDS 65. Morgan Stanley Dean Witter California Tax-Free Income Fund 66. Morgan Stanley Dean Witter Hawaii Municipal Trust 67. Morgan Stanley Dean Witter Limited Term Municipal Trust 68. Morgan Stanley Dean Witter Multi-State Municipal Series Trust 69. Morgan Stanley Dean Witter New York Tax-Free Income Fund 70. Morgan Stanley Dean Witter Select Municipal Reinvestment Fund 71. Morgan Stanley Dean Witter Tax-Exempt Securities Trust SPECIAL PURPOSE FUNDS 72. Morgan Stanley Dean Witter Select Dimensions Investment Series 73. Morgan Stanley Dean Witter Variable Investment Series By: /s/ Barry Fink -------------------------------------------- Barry Fink Vice President and General Counsel ATTEST: /s/ Todd Lebo - ------------------------------------ Assistant Secretary MORGAN STANLEY DEAN WITTER TRUST FSB By: /s/ Jonathan Thomas -------------------------------------------- Jonathan Thomas President ATTEST: /s/ Geoffrey Flynn - ------------------------------------ Executive Vice President
11 EXHIBIT A Morgan Stanley Dean Witter Trust FSB Harborside Financial Center Plaza Two Jersey City, NJ 07311 Gentlemen: The undersigned, (inset name of investment company) a (Massachusetts business trust/Maryland corporation) (the "Fund"), desires to employ and appoint Morgan Stanley Dean Witter Trust FSB ("MSDW TRUST") to act as transfer agent for each series and class of shares of the Fund, whether now or hereafter authorized or issued ("Shares"), dividend disbursing agent and shareholder servicing agent, registrar and agent in connection with any accumulation, open-account or similar plan provided to the holders of Shares, including without limitation any periodic investment plan or periodic withdrawal plan. The Fund hereby agrees that, in consideration for the payment by the Fund to MSDW TRUST of fees as set out in the fee schedule attached hereto as Schedule A, MSDW TRUST shall provide such services to the Fund pursuant to the terms and conditions set forth in the Transfer Agency and Service Agreement annexed hereto, as if the Fund was a signatory thereto. Please indicate MSDW TRUST's acceptance of employment and appointment by the Fund in the capacities set forth above by so indicating in the space provided below. Very truly yours, (name of fund) By: _______________________________ Barry Fink Vice President and General Counsel ACCEPTED AND AGREED TO: MORGAN STANLEY DEAN WITTER TRUST FSB By: _________________________________________ Its: _________________________________________ Date: _______________________________________ 12 SCHEDULE A MORGAN STANLEY DEAN WITTER TRUST FSB SHAREHOLDER ACCOUNT MAINTENANCE FEES
RATES PER NEW TRANSFER AGENCY AGREEMENT AS OF SEPTEMBER 1, 2000 -------------------------------- Money Market $15.70 US Government Securities Trust 9.95 US Government Securities Trust--Over 50,000 5.20 AAA Funds 11.75 Fixed Income Funds 13.80 Equity Funds 13.25 Closed End Funds 10.20 Prime Income Trust 10.45 Insurance Products: Select Dimensions $500 per annum per account Variable Investment $500 per annum per account
A fee equal to 1/12 of the fee set forth above, for providing Forms 1099 for accounts closed during the year, payable following the end of the calendar year (this does not apply to Select Dimensions and Variable Investment). Out-of-pocket expenses in accordance with Section 2.2 of the Agreement. Fees for additional services not set forth in this Agreement shall be as negotiated between the parties. 13 EX-99.10(A) 3 a2041641zex-99_10a.txt EXHIBIT 99.10(A) Exhibit 10(a) CONSENT OF INDEPENDENT AUDITORS We consent to the use in this Post-Effective Amendment No. 12 to Registration Statement No. 33-46515 of Morgan Stanley Dean Witter Latin American Growth Fund on Form N-1A of our report dated March 13, 2001, appearing in the Statement of Additional Information and incorporated by reference in the Prospectus, and to the references to us under the captions "Financial Highlights" in the Prospectus and "Custodian and Independent Auditors" and "Experts" in the Statement of Additional Information, both of which are part of such Registration Statement. Deloitte & Touche LLP New York, New York March 27, 2001 EX-99.10(B) 4 a2041641zex-99_10b.txt EXHIBIT 99.10(B) Exhibit 10(b) CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in this Registration Statement on Form N-1A of our report dated March 27, 2000, relating to the financial statement and financial highlights of Morgan Stanley Dean Witter Latin American Growth Fund referred to in such report, which appears in such Registration Statement. PricewaterhouseCoopers LLP New York, New York March 27, 2001 EX-99.15 5 a2041641zex-99_15.txt EXHIBIT 99.15 MORGAN STANLEY DEAN WITTER FUNDS MULTIPLE CLASS PLAN PURSUANT TO RULE 18f-3 INTRODUCTION This plan (the "Plan") is adopted pursuant to Rule 18f-3(d) of the Investment Company Act of 1940, as amended (the "1940 Act"), effective as of July 28, 1997, and amended as of June 22, 1998, August 15, 2000, December 1, 2000 and March 12, 2001. The Plan relates to shares of the open-end investment companies to which Morgan Stanley Dean Witter Advisors Inc. acts as investment manager, that are listed on Schedule A, as may be amended from time to time (each, a "Fund" and collectively, the "Funds"). The Funds are distributed pursuant to a system (the "Multiple Class System") in which each class of shares (each, a "Class" and collectively, the "Classes") of a Fund represents a pro rata interest in the same portfolio of investments of the Fund and differs only to the extent outlined below. I. DISTRIBUTION ARRANGEMENTS One or more Classes of shares of the Funds are offered for purchase by investors with the sales load structures described below. In addition, pursuant to Rule 12b-1 under the 1940 Act, the Funds have each adopted a Plan of Distribution (the "12b-1 Plan") under which shares of certain Classes are subject to the service and/or distribution fees ("12b-1 fees") described below. 1. CLASS A SHARES Class A shares are offered with a front-end sales load ("FESL"). The schedule of sales charges applicable to a Fund and the circumstances under which the sales charges are subject to reduction are set forth in each Fund's current prospectus. As stated in each Fund's current prospectus, Class A shares may be purchased at net asset value (without a FESL): (i) in the case of certain large purchases of such shares; and (ii) by certain limited categories of investors, in each case, under the circumstances and conditions set forth in each Fund's current prospectus. Class A shares purchased at net asset value may be subject to a contingent deferred sales charge ("CDSC") on redemptions made within one year of purchase. Further information relating to the CDSC, including the manner in which it is calculated, is set forth in paragraph 6 below. Class A shares are also subject to payments under each Fund's 12b-1 Plan to reimburse Morgan Stanley Dean Witter Distributors Inc. ("MSDW Distributors"), Dean Witter Reynolds Inc. ("DWR"), its affiliates and other broker-dealers for distribution expenses incurred by them specifically on behalf of the Class, assessed at an annual rate of up to 0.25% of average daily net assets. The entire amount of the 12b-1 fee represents a service fee within the meaning of National Association of Securities Dealers, Inc. ("NASD") guidelines. 2. CLASS B SHARES Class B shares are offered without a FESL, but will in most cases be subject to a six-year declining CDSC which is calculated in the manner set forth in paragraph 6 below. The schedule of CDSC charges applicable to each Fund is set forth in each Fund's current prospectus. With the exception of certain of the Funds which have a different formula described below (Morgan Stanley Dean Witter American Opportunities Fund, Morgan Stanley Dean Witter Natural Resource Development Securities Inc., Morgan Stanley Dean Witter Strategist Fund and Morgan Stanley Dean Witter Dividend Growth Securities 1 Inc.)(1), Class B shares are also subject to a fee under each Fund's respective 12b-1 Plan, assessed at the annual rate of up to 1.0% of either: (a) the lesser of (i) the average daily aggregate gross sales of the Fund's Class B shares since the inception of the Fund (not including reinvestment of dividends or capital gains distributions), less the average daily aggregate net asset value of the Fund's Class B shares redeemed since the Fund's inception upon which a CDSC has been imposed or waived, or (ii) the average daily net assets of Class B; or (b) the average daily net assets of Class B. A portion of the 12b-1 fee equal to up to 0.25% of the Fund's average daily net assets is characterized as a service fee within the meaning of the NASD guidelines and the remaining portion of the 12b-1 fee, if any, is characterized as an asset-based sales charge. Also, Class B shares have a conversion feature ("Conversion Feature") under which such shares convert to Class A shares after a certain holding period. Details of the Conversion Feature are set forth in Section IV below. 3. CLASS C SHARES Class C shares are offered without imposition of a FESL, but will in most cases be subject to a CDSC of 1.0% on redemptions made within one year after purchase. Further information relating to the CDSC is set forth in paragraph 6 below. In addition, Class C shares, under each Fund's 12b-1 Plan, are subject to 12b-1 payments to reimburse MSDW Distributors, DWR, its affiliates and other broker-dealers for distribution expenses incurred by them specifically on behalf of the Class, assessed at the annual rate of up to 1.0% of the average daily net assets of the Class. A portion of the 12b-1 fee equal to up to 0.25% of the Fund's average daily net assets is characterized as a service fee within the meaning of NASD guidelines. Unlike Class B shares, Class C shares do not have the Conversion Feature. 4. CLASS D SHARES Class D shares are offered without imposition of a FESL, CDSC or a 12b-1 fee for purchases of Fund shares by (i) investors meeting an initial minimum investment requirement and (ii) certain other limited categories of investors, in each case, as may be approved by the Boards of Directors/Trustees of the Funds and as disclosed in each Fund's current prospectus. Class D shares may not be offered for purchases of Fund shares made through certain investment programs approved by MSDW Distributors. 5. ADDITIONAL CLASSES OF SHARES The Boards of Directors/Trustees of the Funds have the authority to create additional Classes, or change existing Classes, from time to time, in accordance with Rule 18f-3 under the 1940 Act. 6. CALCULATION OF THE CDSC Any applicable CDSC is calculated based upon the lesser of net asset value of the shares at the time of purchase or at the time of redemption. The CDSC does not apply to amounts representing an increase in - ------------ (1)The payments under the 12b-1 Plan for each of Morgan Stanley Dean Witter American Opportunities Fund, Morgan Stanley Dean Witter Natural Resource Development Securities Inc. and Morgan Stanley Dean Witter Dividend Growth Securities Inc. are assessed at the annual rate of 1.0% of the lesser of: (a) the average daily aggregate gross sales of the Fund's Class B shares since the inception of the Fund's Plan (not including reinvestment of dividends or capital gains distributions), less the average daily aggregate net asset value of the Fund's Class B shares redeemed since the Plan's inception upon which a CDSC has been imposed or waived, or (b) the average daily net assets of Class B attributable to shares issued, net of related shares redeemed, since inception of the Plan. The payments under the 12b-1 Plan for the Morgan Stanley Dean Witter Strategist Fund are assessed at the annual rate of: (i) 1% of the lesser of (a) the average daily aggregate gross sales of the Fund's Class B shares since the effectiveness of the first amendment of the Plan on November 8, 1989 (not including reinvestment of dividends or capital gains distributions), less the average daily aggregate net asset value of the Fund's Class B shares redeemed since the effectiveness of the first amended Plan, upon which a CDSC has been imposed or waived, or (b) the average daily net assets of Class B attributable to shares issued, net of related shares redeemed, since the effectiveness of the first amended Plan; plus (ii) 0.25% of the average daily net assets of Class B attributable to shares issued, net of related shares redeemed, prior to effectiveness of the first amended Plan. 2 share value due to capital appreciation and shares acquired through the reinvestment of dividends or capital gains distributions. The CDSC schedule applicable to a Fund and the circumstances in which the CDSC is subject to waiver are set forth in each Fund's prospectus. II. EXPENSE ALLOCATIONS Expenses incurred by a Fund are allocated among the various Classes of shares pro rata based on the net assets of the Fund attributable to each Class, except that 12b-1 fees relating to a particular Class are allocated directly to that Class. In addition, other expenses associated with a particular Class (except advisory or custodial fees), may be allocated directly to that Class, provided that such expenses are reasonably identified as specifically attributable to that Class and the direct allocation to that Class is approved by the Fund's Board of Directors/Trustees. III. CLASS DESIGNATION All shares of the Funds held prior to July 28, 1997 (other than the shares held by certain employee benefit plans established by DWR, shares of Funds offered with a FESL, and shares of Morgan Stanley Dean Witter Balanced Growth Fund and Morgan Stanley Dean Witter Balanced Income Fund) have been designated Class B shares. Shares held prior to July 28, 1997 by such employee benefit plans have been designated Class D shares. Shares held prior to July 28, 1997 of Funds offered with a FESL have been designated Class D shares. In addition, shares of Morgan Stanley Dean Witter American Opportunities Fund purchased prior to April 30, 1984, shares of Morgan Stanley Dean Witter Strategist Fund purchased prior to November 8, 1989 and shares of Morgan Stanley Dean Witter Natural Resource Development Securities Inc. and Morgan Stanley Dean Witter Dividend Growth Securities Inc. purchased prior to July 2, 1984 (with respect to such shares of each Fund, including such proportion of shares acquired through reinvestment of dividends and capital gains distributions as the total number of shares acquired prior to each of the preceding dates in this sentence bears to the total number of shares purchased and owned by the shareholder of that Fund) have been designated Class D shares. Shares of Morgan Stanley Dean Witter Balanced Growth Fund and Morgan Stanley Dean Witter Balanced Income Fund held prior to July 28, 1997 have been designated Class C shares except that shares of Morgan Stanley Dean Witter Balanced Growth Fund and Morgan Stanley Dean Witter Balanced Income Fund held prior to July 28, 1997 that were acquired in exchange for shares of an investment company offered with a CDSC have been designated Class B shares and those that were acquired in exchange for shares of an investment company offered with a FESL have been designated Class A shares. IV. CONVERSION FEATURES 1. CLASS B TO CLASS A Class B shares held before May 1, 1997 will convert to Class A shares in May, 2007, except that Class B shares which were purchased before July 28, 1997 by trusts for which Morgan Stanley Dean Witter Trust FSB ("MSDW Trust") provides discretionary trustee services converted to Class A shares on August 29, 1997 (the CDSC was not applicable to such shares upon the conversion). In all other instances, Class B shares of each Fund will automatically convert to Class A shares, based on the relative net asset values of the shares of the two Classes on the conversion date, which will be approximately ten (10) years after the date of the original purchase. Conversions will be effected once a month. The 10 year period will be calculated from the last day of the month in which the shares were purchased or, in the case of Class B shares acquired through an exchange or a series of exchanges, from the last day of the month in which the original Class B shares were purchased, provided that shares originally purchased before May 1, 1997 will convert to Class A shares in May, 2007. Except as set forth below, the conversion of shares purchased on or after May 1, 1997 will take place in the month following the tenth anniversary of the purchase. There will also be converted at that time such proportion of Class B shares acquired through automatic reinvestment of dividends owned by the shareholder as the total number of his or her Class B shares converting at the time bears to the total number of outstanding Class B shares purchased and owned by the shareholder. In the case of Class B shares held by an "MSDW Eligible Plan" (as such term is defined in the prospectus of each Fund), all Class B shares will convert to Class A shares on the conversion date of the first shares of a Fund purchased by that plan. In the case of Class B shares previously exchanged for shares of Morgan Stanley Dean Witter North American 3 Government Income Trust, Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust, a "Money Market Fund" or a 'No-Load Fund' (as such terms are defined in the prospectus of each Fund), the period of time the shares were held in any of such Funds (calculated from the last day of the month in which the shares of any of such Funds were acquired) is excluded from the holding period for conversion. If those shares are subsequently re-exchanged for Class B shares of a Fund, the holding period resumes on the last day of the month in which Class B shares are reacquired. Effectiveness of the Conversion Feature is subject to the continuing availability of a ruling of the Internal Revenue Service or an opinion of counsel to the effect that (i) the conversion of shares does not constitute a taxable event under the Internal Revenue Code; (ii) Class A shares received on conversion will have a basis equal to the shareholder's basis in the converted Class B shares immediately prior to the conversion; and (iii) Class A shares received on conversion will have a holding period that includes the holding period of the converted Class B shares. The Conversion Feature may be suspended if the Ruling or opinion is no longer available. In such event, Class B shares would continue to be subject to Class B fees under the applicable Fund's 12b-1 Plan. 2. CHOICE PROGRAM CONVERSIONS On December 8, 2000, all Class A shares held through the Morgan Stanley Dean Witter Choice Program (the "Choice Program") were automatically converted to Class D shares in the same Fund. All Class D shares held through the Choice Program will automatically be converted to Class A shares in the same Fund at such time as those Fund shares are no longer held through the Choice Program (unless the affected shareholder is otherwise eligible to purchase Class D shares). All conversions will be effected based on then current relative net asset values of the shares of the two Classes on the conversion date. Effectiveness of these conversions is subject to the continuing availability of an opinion of counsel to the effect that the conversion of shares does not constitute a taxable event under the Internal Revenue Code. V. EXCHANGE PRIVILEGES Shares of each Class may be exchanged for shares of the same Class of the other Funds and for shares of certain other investment companies without the imposition of an exchange fee as described in the prospectuses and statements of additional information of the Funds. The exchange privilege of each Fund may be terminated or revised at any time by the Fund upon such notice as may be required by applicable regulatory agencies as described in each Fund's prospectus. VI. VOTING Each Class shall have exclusive voting rights on any matter that relates solely to its 12b-1 Plan, except that Class B shareholders will have the right to vote on any proposed material increase in Class A's expenses, including payments under the Class A 12b-1 Plan, if such proposal is submitted separately to Class A shareholders. If the amount of expenses, including payments under the Class A 12b-1 Plan, is increased materially without the approval of Class B shareholders, the Fund will establish a new Class A for Class B shareholders whose shares automatically convert on the same terms as applied to Class A before the increase. In addition, each Class shall have separate voting rights on any matter submitted to shareholders in which the interests of one Class differ from the interests of any other Class. 4 MORGAN STANLEY DEAN WITTER FUNDS MULTIPLE CLASS PLAN PURSUANT TO RULE 18f-3 SCHEDULE A AT MARCH 12, 2001 1) Morgan Stanley Dean Witter 21st Century Trend Fund 2) Morgan Stanley Dean Witter All Star Growth Fund 3) Morgan Stanley Dean Witter Aggressive Equity Fund 4) Morgan Stanley Dean Witter American Opportunities Fund 5) Morgan Stanley Dean Witter Balanced Growth Fund 6) Morgan Stanley Dean Witter Balanced Income Fund 7) Morgan Stanley Dean Witter California Tax-Free Income Fund 8) Morgan Stanley Dean Witter Capital Growth Securities Morgan Stanley Dean Witter Competitive Edge Fund, "BEST 9) IDEAS" PORTFOLIO 10) Morgan Stanley Dean Witter Convertible Securities Trust Morgan Stanley Dean Witter Developing Growth Securities 11) Trust 12) Morgan Stanley Dean Witter Diversified Income Trust 13) Morgan Stanley Dean Witter Dividend Growth Securities Inc. 14) Morgan Stanley Dean Witter Equity Fund 15) Morgan Stanley Dean Witter European Growth Fund Inc. 16) Morgan Stanley Dean Witter Federal Securities Trust 17) Morgan Stanley Dean Witter Financial Services Trust 18) Morgan Stanley Dean Witter Fund of Funds 19) Morgan Stanley Dean Witter Global Dividend Growth Securities 20) Morgan Stanley Dean Witter Global Utilities Fund 21) Morgan Stanley Dean Witter Growth Fund 22) Morgan Stanley Dean Witter Health Sciences Trust 23) Morgan Stanley Dean Witter High Yield Securities Inc. 24) Morgan Stanley Dean Witter Income Builder Fund 25) Morgan Stanley Dean Witter Information Fund 26) Morgan Stanley Dean Witter Intermediate Income Securities 27) Morgan Stanley Dean Witter International Fund 28) Morgan Stanley Dean Witter International SmallCap Fund 29) Morgan Stanley Dean Witter International Value Equity Fund 30) Morgan Stanley Dean Witter Japan Fund 31) Morgan Stanley Dean Witter Latin American Growth Fund 32) Morgan Stanley Dean Witter Market Leader Trust 33) Morgan Stanley Dean Witter Mid-Cap Equity Trust Morgan Stanley Dean Witter Natural Resource Development 34) Securities Inc. 35) Morgan Stanley Dean Witter New Discoveries Fund 36) Morgan Stanley Dean Witter New York Tax-Free Income Fund 37) Morgan Stanley Dean Witter Next Generation Trust 38) Morgan Stanley Dean Witter Pacific Growth Fund Inc. 39) Morgan Stanley Dean Witter Real Estate Fund 40) Morgan Stanley Dean Witter Small Cap Growth Fund 41) Morgan Stanley Dean Witter Special Value Fund 42) Morgan Stanley Dean Witter S&P 500 Index Fund 43) Morgan Stanley Dean Witter S&P 500 Select Fund 44) Morgan Stanley Dean Witter Strategist Fund 45) Morgan Stanley Dean Witter Tax-Exempt Securities Trust 46) Morgan Stanley Dean Witter Tax-Managed Growth Fund 47) Morgan Stanley Dean Witter Technology Fund 48) Morgan Stanley Dean Witter Total Market Index Fund 49) Morgan Stanley Dean Witter Total Return Trust 50) Morgan Stanley Dean Witter U.S. Government Securities Trust 51) Morgan Stanley Dean Witter Utilities Fund 52) Morgan Stanley Dean Witter Value-Added Market Series 53) Morgan Stanley Dean Witter Value Fund 54) Morgan Stanley Dean Witter World Wide Income Trust
5 EX-99.16(A) 6 a2041641zex-99_16a.txt EXHIBIT 99.16(A) MORGAN STANLEY DEAN WITTER ASSET MANAGEMENT CODE OF ETHICS - --------------------------- (Print Name) MORGAN STANLEY DEAN WITTER ADVISORS INC. MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC. MORGAN STANLEY DEAN WITTER INVESTMENT GROUP INC. MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT LIMITED MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT COMPANY MORGAN STANLEY ASSET & INVESTMENT TRUST MANAGEMENT CO., LIMITED MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT PRIVATE LIMITED MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC. MILLER ANDERSON & SHERRERD, LLP MORGAN STANLEY & CO. INCORPORATED MAS FUND DISTRIBUTION, INC. MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC. Effective January 29, 2001 I. INTRODUCTION Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"), Morgan Stanley Dean Witter Investment Management Inc. ("MSDWIM"), Morgan Stanley Dean Witter Investment Group Inc. ("MSDWIG"), Morgan Stanley Dean Witter Investment Management Limited ("MSDWIM-Ltd"), Morgan Stanley Dean Witter Investment Management Company ("MSDWIM-Singapore"), Morgan Stanley Asset & Investment Trust Management Co., Limited ("MSAITM-Tokyo"), Morgan Stanley Dean Witter Investment Management Private Limited ("MSDWIM-Mumbai") and Miller Anderson & Sherrerd, LLP ("MAS") (each, an "MSDW Affiliated Adviser" and collectively, the "MSDW Affiliated Advisers") are subsidiaries of Morgan Stanley Dean Witter & Co. ("MSDW"). Each MSDW Affiliated Adviser, except for MSDWIG, is an investment adviser or manager of certain registered investment companies (each a "Fund", and collectively, the "Funds"). The MSDW Affiliated Advisers also serve as investment advisers to other clients, including institutional clients and individuals (each, a "Managed Account" and collectively, the "Managed Accounts"). This Code of Ethics (the "Code") is adopted by each MSDW Affiliated Adviser in keeping with the general principles and objectives set forth in Sections II. and III. below, and to enforce the highest legal and ethical standards in light of their fiduciary obligations to the shareholders of the Funds and the Managed Accounts. It has also been adopted by: (i) Morgan Stanley Dean Witter Services Company Inc. ("Services"), a wholly owned subsidiary of MSDW Advisors; and (ii) Morgan Stanley Dean Witter Distributors Inc., and Morgan Stanley & Co. Incorporated, each 1 a wholly-owned subsidiary of MSDW, and MAS Fund Distribution, Inc., a wholly-owned subsidiary of MAS (each, a "Distributor" and collectively, the "Distributors"), to apply to their directors, officers and employees who are Access Persons or Covered Employees (as those terms are defined in Section IV. below). The directors, officers and employees of each MSDW Affiliated Adviser, Services and the Distributors are also referred to the "Morgan Stanley Dean Witter Code of Conduct - Securities and Asset Management Businesses" (the "Code of Conduct"), the requirements of which all Employees are subject to. II. GENERAL PRINCIPLES A. SHAREHOLDER AND CLIENT INTERESTS COME FIRST Every Employee (as defined in Section IV. below) of an MSDW Affiliated Adviser, Services and the Distributors owes a fiduciary duty to the shareholders of the Funds and to the Managed Accounts. This means that in every decision relating to investments, every Employee must recognize the needs and interests of the Fund shareholders and the Managed Accounts, and be certain that at all times the interests of the shareholders and other clients are placed ahead of any personal interest. B. AVOID ACTUAL AND POTENTIAL CONFLICTS OF INTEREST The restrictions and requirements of this Code are designed to prevent behavior which actually or potentially conflicts, or raises the appearance of actual or potential conflict, with the interests of the Fund shareholders or the Managed Accounts. It is of the utmost importance that the Personal Securities Transactions (as defined in Section VI., sub-section A., below) of Employees of each MSDW Affiliated Adviser, Services and the Distributors be conducted in a manner consistent with both the letter and spirit of this Code, including these principles, to ensure the avoidance of any such conflict of interest, or abuse of an individual's position of trust and responsibility. C. AVOID UNDUE PERSONAL BENEFIT Employees of each MSDW Affiliated Adviser, Services and the Distributors must ensure that they do not acquire undue personal benefit or advantage as a result of the performance of their duties as they relate to the Funds or the Managed Accounts. III. OBJECTIVE Rule 17j-1 under the Investment Company Act of 1940, as amended (the "1940 Act"), makes it unlawful for certain persons associated with investment advisers or principal underwriters of investment companies to engage in conduct which is deceitful, 2 fraudulent, or manipulative, or which involves false or misleading statements, in connection with the purchase or sale of a security held or proposed to be acquired by a registered investment company. In addition, Section 204A of the Investment Advisers Act of 1940, as amended (the "Advisers Act"), requires investment advisers to establish, maintain and enforce written policies and procedures designed to prevent misuse of material non-public information. The objective of this Code is to maintain the behavior of Employees within the general principles set forth above, as well as to prevent such persons from engaging in conduct proscribed by Rule 17j-1 under the 1940 Act and Section 204A of the Advisers Act. The designated Compliance Group for each MSDW Affiliated Adviser (each, a "Local Compliance Group") will identify all Access Persons and Covered Employees and notify them of their pre-clearance and reporting obligations at the time they become an Access Person or a Covered Employee. IV. ACCESS PERSONS AND COVERED EMPLOYEES "Access Persons" include all directors, officers and employees of an MSDW Affiliated Adviser, Services or the Distributors, and such other persons that may be so deemed by the Local Compliance Group from time to time, except those individuals who meet the following criteria: (i) directors and officers of the Distributors that do not devote substantially all of their working time to the activities of an MSDW Affiliated Adviser or Services; (ii) directors and officers of the Distributors that do not, in connection with their regular functions and duties, participate in, obtain information with respect to, or make recommendations as to, the purchase and sale of securities on behalf of a Fund or Managed Account; and (iii) directors and officers of Distributors that do not have access to information regarding the day-to-day investment activities of an MSDW Affiliated Adviser; such persons are, however, subject to the Code of Conduct. In addition, any Employee of MSDWIM, MSDWIG, MSDWIM-Ltd., MSDWIM-Singapore, MSAITM-Tokyo, MSDWIM-Mumbai or MAS who is not an officer and does not in connection with their regular functions and duties, participate in, obtain information with respect to, or make recommendations as to, the purchase and sale of securities on behalf of a Fund or Managed Account (a "Covered Employee") shall be exempt from the requirements contained in Section VI., sub-section D.2.(a) (Initial Listing of Securities Holdings and Brokerage Accounts Report), but shall otherwise remain subject to all other provisions contained herein pertaining to Access Persons. Access Persons and Covered Employees of each MSDW Affiliated Adviser, Services or the Distributors on leave of absence will not be subject to the pre-clearance and reporting provisions of the Code, provided that during the leave period the Access Person or Covered Employee does not engage in activities of the nature described in (ii) and (iii) above. Access Persons and Covered Employees will be referred to collectively as "Employees" throughout this Code to the extent they are subject to the same requirements or restrictions. V. GROUNDS FOR DISQUALIFICATION FROM EMPLOYMENT Pursuant to the terms of Section 9 of the 1940 Act, no director, officer or employee of an MSDW Affiliated Adviser, Services or the Distributors may become, or continue to 3 remain, an officer, director or employee without an exemptive order issued by the Securities and Exchange Commission if such director, officer or employee: A. within the past ten years has been convicted of any felony or misdemeanor (i) involving the purchase or sale of any security; or (ii) arising out of their conduct as an affiliated person, salesman or employee of any investment company, bank, insurance company or entity or person required to be registered under the Commodity Exchange Act; or B. is or becomes permanently or temporarily enjoined by any court from: (i) acting as an affiliated person, salesman or employee of any investment company, bank, insurance company or entity or person required to be registered under the Commodity Exchange Act; or (ii) engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any security. It is your obligation to immediately report any conviction or injunction falling within the foregoing provisions to the Chief Legal Officer of MSDW Asset Management. VI. PERSONAL SECURITIES TRANSACTIONS A. PROHIBITED CONDUCT No Employee shall buy or sell any "Covered Security" (defined as all securities with the exception of those described in sub-section C.3.) for his/her own account or for an account in which the individual has, or as a result of the transaction acquires, any direct or indirect "beneficial ownership" (as defined in sub-section C. 4.) (referred to herein as a "Personal Securities Transaction") unless: 1. pre-clearance of the transaction has been obtained; and 2. the transaction is reported in writing to the Local Compliance Group in accordance with the requirements of sub-section D. below. B. RESTRICTIONS AND LIMITATIONS ON PERSONAL SECURITIES TRANSACTIONS Except where otherwise indicated, the following restrictions and limitations govern investments and personal securities transactions by Employees: 1. Securities purchased may not be sold until at least 30 calendar days from the purchase trade date and may not be sold at a profit until at least 60 calendar days from the purchase trade date. Securities sold may not be repurchased until at least 30 calendar days from the sale trade date. In addition, securities sold may not be purchased at a lower price until at least 60 calendar days from the sale trade date. Any violation may result in 4 disgorgement of all profits from the transactions as well as other possible sanctions. 2. No short sales are permitted. 3. No transactions in options or futures are permitted, except that listed options may be purchased, and covered calls written. No option may be purchased or written if the expiration date is less than 60 calendar days from the date of purchase. No option position may be closed at a profit less than 60 calendar days from the date it is established. 4. No Employee may acquire any security in an initial public offering (IPO) or any other public underwriting. 5a. Private placements of any kind may only be acquired with special permission from the Code of Ethics Review Committee (described in Section VII. below) and, if approved, will be subject to continuous monitoring by the Local Compliance Group for possible future conflict. Any Employee wishing to request approval for private placements must complete a Private Placement Approval Request Form and submit the form to the Local Compliance Group. A copy of the Private Placement Approval Request Form, which may be revised from time to time, is attached as EXHIBIT A. Where the Code of Ethics Review Committee approves any acquisition of a private placement, its decision and reasons for supporting the decision will be documented in a written report, which is to be kept for five years by the Local Compliance Group after the end of the fiscal year in which the approval was granted. 5b. Any Employee who has a personal position in an issuer through a private placement must affirmatively disclose that interest if such person is involved in consideration of any subsequent investment decision by a Fund or Managed Account regarding any security of that issuer or its affiliate. In such event, the President or Chief Investment Officer of MSDW Asset Management shall independently determine the final investment decision. Written records of any such circumstance shall be sent to the Local Compliance Group and maintained for a period of five years after the end of the fiscal year in which the approval was granted. 6. U.S. Employees are permitted to trade only between the hours of 9:30 a.m. and 4:00 p.m. (Eastern Standard Time). Employees outside the U.S. may execute trades (i) only during the time markets in the jurisdiction in which they are located are open if the trade is being executed in that market, or another market that has overlapping trading hours or (ii) in markets which open after the close of the market in which the Employee is located, by the next close of trading in that other market. 5 Restriction 7a. applies only to MSDW Affiliated Advisers' portfolio managers and research analysts (and all persons reporting to portfolio managers and research analysts). Restriction 7b. applies only to personnel in the trading department of each MSDW Affiliated Adviser. 7a. No purchase or sale transaction may be made in any security or related security by any portfolio manager or research analyst (or person reporting to a portfolio manager or research analyst) for a period of seven (7) calendar days before or after that security is bought or sold by any Fund (other than Morgan Stanley Dean Witter Value-Added Market Series, Morgan Stanley Dean Witter Select Dimensions Investment Series - Value-Added Market Portfolio, and Morgan Stanley Dean Witter index funds, or Portfolios) or any Managed Account for which such portfolio manager or research analyst (or person reporting to a portfolio manager or research analyst) serves in that capacity. 7b. No purchase or sale transaction may be made in any security or related security traded through the appropriate MSDW Affiliated Adviser's trading desk(s) (as determined by the Local Compliance Group) by any person on that trading desk on the same day that any Fund (other than Morgan Stanley Dean Witter Value-Added Market Series, Morgan Stanley Dean Witter Select Dimensions Investment Series-Value-Added Market Portfolio, and Morgan Stanley Dean Witter index funds, or Portfolios) or any Managed Account has a pending purchase or sale order in that same security or related security. 7c. Any transaction by persons described in sub-sections 7a. and 7b. above within such enumerated period may be required to be reversed, if applicable, and any profits or, at the discretion of the Code of Ethics Review Committee, any differential between the sale price of the individual security transaction and the subsequent purchase or sale price by a relevant Fund or Managed Account during the enumerated period, will be subject to disgorgement; other sanctions may also be applied. 8. No Employee of an MSDW Affiliated Adviser shall purchase or sell any Covered Security which to their knowledge at the time of such purchase or sale: (i) IS BEING CONSIDERED for purchase or sale by a Fund or a Managed Account; or (ii) IS BEING purchased or sold by a Fund or a Managed Account. IMPORTANT: Regardless of the limited applicability of Restrictions 7.a., and 7.b., each MSDW Affiliated Adviser's Compliance Group monitors all transactions by its Employees in all locations in order to ascertain any pattern of conduct that may evidence actual or potential conflicts with the principles and objectives of this Code, including a pattern of frontrunning. Each MSDW Affiliated Adviser's Compliance Group: (i) on a quarterly basis, will provide the Boards of 6 Directors/Trustees of the Funds it manages with a written report that describes any issues that arose during the previous quarter under this Code and, if applicable, any Funds' Sub-Adviser's Code of Ethics, including but not limited to, information about material violations and sanctions imposed in response to the material violations; and (ii) on an annual basis, will certify that the MSDW Affiliated Adviser has adopted procedures reasonably necessary to prevent its Employees from violating this Code. Also, as stated elsewhere in this Code, any violation of the foregoing restrictions may result in disgorgement of all profits from the transactions as well as other possible sanctions. C. PRE-CLEARANCE REQUIREMENT 1. PROCEDURES (a) FROM WHOM OBTAINED Subject to the limitations and restrictions set forth in sub-section B. above, all Employees are required to obtain pre-clearance of a Personal Securities Transaction by: (i) confirming that no open orders exist in the same or related security with the appropriate trading desk(s) (as determined by the Local Compliance Group); and (ii) having the transaction approved by the Local Compliance Group. Portfolio managers and research analysts (or persons reporting to portfolio managers or research analysts) seeking approval for a Personal Securities Transaction must obtain an additional approval signature from a designated Senior Portfolio Manager. Trading desk personnel at any MSDW Affiliated Adviser seeking approval for a Personal Securities Transaction must obtain an additional approval signature from their immediate supervisor. A copy of the Personal Securities Transaction Approval Form, which may be revised from time to time, is attached as EXHIBIT B. Each Local Compliance Group has implemented procedures reasonably designed to monitor purchases and sales effected pursuant to the aforementioned pre-clearance procedures. (b) TIME OF PRE-CLEARANCE All approved securities transactions, whether executed through an MSDW brokerage account (as defined below) or an MSDW Online account, must take place: (i) for U.S. employees, prior to 4:00 p.m. (Eastern Standard Time) on the same day that the complete pre-clearance is obtained and (ii) for Employees located outside the 7 U.S., as described in Section VI., sub-section B.6. If the transaction is not completed on such date, a new pre-clearance must be obtained, including one for any uncompleted portion of a transaction. Post-approval is not permitted under the Code. Any trade that is determined to have been completed before approval will be considered a violation of this Code. (c) PERMITTED BROKERAGE ACCOUNTS ALL SECURITIES TRANSACTIONS MUST BE MADE THROUGH A MORGAN STANLEY DEAN WITTER BROKERAGE ACCOUNT(1) (AN "MSDW BROKERAGE ACCOUNT") OR AN MSDW ONLINE ACCOUNT. NO OTHER BROKERAGE ACCOUNTS ARE PERMITTED UNLESS SPECIAL PERMISSION IS OBTAINED FROM THE LOCAL COMPLIANCE GROUP. If you maintain accounts outside of MSDW, you must transfer your accounts to an MSDW brokerage account or an MSDW Online account as soon as practical (generally thirty days or less). Failure to do so will be considered a significant violation of the Code. In the event permission to maintain an outside brokerage account is granted by the Local Compliance Group, it is the responsibility of the Employee to arrange for duplicate confirmations of all securities transactions and monthly brokerage statements to be sent to the Local Compliance Group. Prior to opening an MSDW brokerage account or an MSDW Online account, Employees must obtain approval from their Local Compliance Group. No Employee may open a brokerage account unless a completed and signed copy of an MSDW Employee Account Request Form is submitted to the Local Compliance Group for approval. No Employee may open an MSDW Online account unless a completed and signed copy of an MSDW Employee Account Request Form is submitted to the Local Compliance Group for approval. In addition, no Employee may apply electronically for an MSDW Online Account. A copy of the MSDW Employee Account Request Form, which may be revised from time to time, is attached as EXHIBIT C. (d) PERSONAL SECURITIES TRANSACTION APPROVAL FORM Pre-clearance must be obtained by completing and signing the Personal Securities Transaction Approval Form provided for that purpose and obtaining the proper pre-clearance signatures, as indicated in sub-section C.1.(a). The form must also indicate, as applicable, the name of the individual's Financial Advisor, the - ---------- (1) MSDW brokerage account shall mean an account with an affiliated MSDW broker in the Employee's local jurisdiction. 8 Branch Office Number, or whether the account is an MSDW Online Account, as well as other required information. If you have more than one account under your control, you must indicate on the approval sheet for which account the trade is intended. Additionally, unless your Local Compliance Group has informed you that it will obtain information directly from the MSDW affiliate(s) where you maintain your account or MSDW Online containing substantially the same information as trade confirms and account statements, please advise the MSDW affiliate(s) where you maintain your account or MSDW Online to have duplicate copies of your trade confirms and account statements sent to the Local Compliance Group for each account an Employee has, or as a result of the transaction acquires, any direct or indirect beneficial ownership. (as defined in sub-section C.4.) (e) FILING After all required signatures are obtained, the Personal Securities Transaction Approval Form must be filed with the Local Compliance Group by noon of the day following execution of the trade for filing in the respective individual's Code of Ethics file. The Employee should retain a copy for his/her records. (The Local Compliance Group will also retain a copy of the form if a pre-clearance request is denied.) 2. FACTORS CONSIDERED IN PRE-CLEARANCE OF PERSONAL SECURITIES TRANSACTIONS In addition to the requirements set forth under sub-section C.1.(a) above, the Local Compliance Group and/or, if applicable, designated Senior Portfolio Manager/immediate trading room supervisor (as appropriate), in keeping with the general principles and objectives of this Code, may refuse to grant pre-clearance of a Personal Securities Transaction in their sole discretion without being required to specify any reason for the refusal. Generally, the following factors, among others, will be considered in determining whether or not to clear a proposed transaction: (a) Whether the amount or the nature of the transaction, or the person making it, is likely to affect the price or market of security that is held by a Fund or a Managed Account. (b) Whether the individual making the proposed purchase or sale is likely to benefit from purchases or sales being made or considered on behalf of any Fund or Managed Account. (c) Whether the transaction is non-volitional on the part of the individual. 9 3. EXEMPT SECURITIES (a) The securities listed below are exempt from: (i) the restrictions of Section VI., sub-sections B.1., B.7. and B.8.; (ii) the pre-clearance requirements of sub-section C.; and (iii) the initial, quarterly and annual reporting requirements of sub-section D. Accordingly, it is not necessary to obtain pre-clearance for Personal Securities Transactions in any of the following securities, nor is it necessary to report such securities in the quarterly transaction reports or the initial and annual securities holdings list: (i) U.S. Government Securities (2) (ii) Bank Certificates of Deposit; (iii) Bankers' Acceptances; (iv) Commercial Paper; (v) High Quality Short-Term Debt Instruments (including repurchase agreements); (vi) U.S. Government Agency Securities(2); and (vii) Open-end investment companies (mutual funds.) (Closed-end funds must be pre-approved.) (b) Transactions in redeemable Unit Investment Trusts and purchases under an issuer's direct stock purchase plan or automatic dividend reinvestment plan are exempt from the restrictions contained in sub-sections B.1., B.7. and B.8 and the pre-clearance requirement of sub-section C., but are subject to the initial, quarterly and annual reporting requirements of sub-section D. (All Employees wishing to utilize these types of plans must submit a memorandum to the Local Compliance Group stating the name and the amount to be invested in the plan. Any sale transactions from an automatic dividend reinvestment plan must be pre-approved.) (c) Due to the fact that Morgan Stanley Dean Witter & Co. stock ("MWD") may not be purchased by any actively managed Fund (other than index-type funds) or any Managed Account, transactions in such stock (including exercise of stock option grants) are exempt from the restrictions of sub-section B.7. However, MWD stock holdings and transactions in MWD stock(3) remain subject to the quarterly and annual reporting requirements of sub-section D. as well as the 30-day holding period restriction and the 60-day short swing profit restriction in Section B.1. (except in connection with the sale of MWD stock acquired through the exercise of employee stock - ---------- (2) For foreign offices, the equivalent shares in fixed income securities issued by the government of their respective jurisdiction; however, such securities are subject to the initial and annual reporting requirements of sub-section D. (3) In connection with the sale of MWD stock, periodic purchases through employer sponsored equity purchase plans shall not be looked to in calculating the 30-day holding period restriction or the 60-day short swing profit restriction, provided that stock in an amount greater than or equal to the amount being sold was held prior to the beginning of the applicable 30-day/60-day period. 10 options) and the pre-clearance requirements of sub-section C. The restrictions imposed by MSDW on Senior Management and other persons in connection with transactions in MWD stock are not affected by the exemption of MWD stock from the pre-clearance requirements of this Code, and continue in effect to the extent applicable. 4. ACCOUNTS COVERED An Employee must obtain pre-clearance for any Personal Securities Transaction if such Employee has, or as a result of the transaction acquires, any direct or indirect beneficial ownership in the security. The term "beneficial ownership" shall be interpreted with reference to the definition contained in the provisions of Section 16 of the Securities Exchange Act of 1934. Generally, a person is regarded as having beneficial ownership of securities held in the name of: (a) the individual; or (b) a husband, wife or a minor child; or (c) a relative sharing the same house; or (d) other person if the Employee: (i) obtains benefits substantially equivalent to ownership of the securities; (ii) can obtain ownership of the securities immediately or at some future time; or (iii) can have investment discretion or otherwise can exercise control. The final determination of beneficial ownership is a question to be determined in light of the facts of each particular case and the above is not an exclusive list of examples. If there are any questions as to beneficial ownership, please contact your Local Compliance Group. 5. EXEMPTION FROM PRE-CLEARANCE REQUIREMENT Pre-clearance is not required for any account where the Employee does not have direct or indirect beneficial ownership. In case of doubt as to whether an account is covered by this Code, Employees must consult with their Local Compliance Group. 11 D. REPORT OF TRANSACTIONS 1. TRANSACTIONS AND ACCOUNTS COVERED (a) All Personal Securities Transactions in Covered Securities must be reported in the next quarterly transaction report after the transaction is effected. The quarterly report shall contain the following information: (i) The date of the transaction, the title, interest rate and maturity date (if applicable), number of shares and principal amount of each security involved; (ii) The nature of the transaction (i.e., purchase, sale, or any other type of acquisition or disposition); (iii) The price at which the purchase or sale was effected; (iv) The name of the broker, dealer, or bank with, or through which, the purchase or sale was effected; and (v) The date the report was submitted to the Local Compliance Group by such person. In addition, any new brokerage account(s) opened during the quarter without approval from the Local Compliance Group as well as the date(s) the account(s) was (were) opened must be reported. The report must contain the following information: (i) The name of the broker, dealer, or bank with whom the account was established; (ii) The date the account was established; and (iii) The date the report was submitted to the Local Compliance Group. (b) An Employee need not make a quarterly transaction report if he/she: (i) maintains only an MSDW brokerage account or an MSDW Online Account AND the report would duplicate information contained in the broker trade confirms, system generated reports or account statements received by the Local Compliance Group; and (ii) has not opened any new brokerage accounts or mutual fund accounts with brokerage facilities without obtaining approval from their Local Compliance Group during the quarter. 12 2. TIME OF REPORTING (a) INITIAL LISTING OF SECURITIES HOLDINGS AND BROKERAGE ACCOUNTS REPORT Each Access Person must, at the time of becoming an Access Person, provide an Initial Listing of Securities Holdings and Brokerage Accounts Report to their Local Compliance Group disclosing: (i) all Covered Securities, including private placement securities, beneficially owned by the Access Person listing the title of the security, number of shares held, and principal amount of the security; (ii) the name of the broker dealer or financial institution where the Access Person maintains a personal account; and (iii) the date the report is submitted by the Access Person. New Access Persons will be required to provide a listing of all holdings in Covered Securities as of the date of commencement of employment as well as a listing of all outside brokerage accounts and mutual fund accounts with brokerage facilities. This report must be provided no later than 10 calendar days after a person becomes an Access Person. (b) QUARTERLY SECURITIES TRANSACTIONS AND NEW BROKERAGE ACCOUNT(S) REPORTS Quarterly Securities Transactions and New Brokerage Account(s) Reports must be submitted by Employees within 10 calendar days after the end of each calendar quarter. Any new brokerage account(s) opened during the quarter without their Local Compliance Group's prior approval, as well as the date(s) the account(s) was (were) opened, must be reported within 10 calendar days after the end of each calendar quarter. (c) ANNUAL LISTING OF SECURITIES HOLDINGS REPORTS AND CERTIFICATION OF COMPLIANCE The Annual Listing of Securities Holdings Report and Certification of Compliance requires all Employees to provide an annual listing of holdings of: (i) all Covered Securities beneficially owned, listing the title of the security, number of shares held, and principal amount of the security as of December 31 of the preceding year, (ii) the name of any broker dealer or financial institution where the account(s) in which Covered Securities were maintained, as of December 31 of the preceding year (a current listing will also be required upon the effectiveness of this Code); and (iii) the date the report is submitted. The information must be current as of a date not more than 30 calendar days before the report is submitted. In the case of Employees maintaining MSDW brokerage accounts or MSDW Online Accounts for which broker trade confirms, system 13 generated reports or account statements are already received on a quarterly basis by the Local Compliance Group, an annual certification (Annual Certification of Compliance) that the holdings information already provided to the Local Compliance Group accurately reflects all such holdings will satisfy the aforementioned requirement. 3. FORM OF REPORTING The Initial Listing of Securities Holdings and Brokerage Accounts Report, Quarterly Securities Transactions and New Brokerage Account(s) Reports, and the Annual Listing of Securities Holdings Report and Certification of Compliance must be completed on the appropriate forms provided by each Local Compliance Group. By not submitting a quarterly transaction report form, an Employee will be deemed to have represented, that such person has: (i) only executed reportable transactions in an account as defined in Section VI., sub-section D.1. (b) above; or (ii) only traded securities exempt from the reporting requirements defined in Section VI., sub-section C.3.(a) above. Copies of the Initial Holdings Report, Quarterly Securities Transactions and New Brokerage Account(s) Reports, and the Annual Listing of Securities Holdings Report, which may be revised from time to time, are attached as EXHIBITS D, E, AND F, respectively. 4. RESPONSIBILITY TO REPORT The responsibility for reporting is imposed on each individual required to make a report. Any effort by an MSDW Affiliated Adviser, Services and/or the Distributors to facilitate the reporting process does not change or alter that individual's responsibility. 5. LEAVE OF ABSENCE Employees of each MSDW Affiliated Adviser, Services or the Distributors on leave of absence may not be subject to the pre-clearance and reporting provisions of the Code, provided they meet the requirements for such exception specified in Section IV. above. 6. WHERE TO FILE REPORT All reports must be filed by Employees with their Local Compliance Group. 7. RESPONSIBILITY TO REVIEW Each Local Compliance Group will review all Initial Listing of Securities Holdings and Brokerage Accounts Reports, Quarterly Securities Transactions and New Brokerage Account(s) Reports, and Annual Listing 14 of Securities Holdings Reports and Certification of Compliance, filed by Employees, as well as broker confirmations, system generated reports, and account statements. VII. REVIEW COMMITTEE A Code of Ethics Review Committee, consisting of the President/ Chief Operating Officer, Chief Investment Officer, Chief Legal Officer, Chief Operations Officer, Chief Strategic Officer, Chief Sales and Marketing Officer, and the Chief Administrative Officer - Investments of MSDW Asset Management will review and consider any proper request of an Employee for relief or exemption from any restriction, limitation or procedure contained herein consistent with the principles and objectives outlined in Sections II. and III. of this Code. The Committee shall meet on an ad hoc basis, as it deems necessary upon written request by an Employee stating the basis for the requested relief. The Committee's decision is within its sole discretion. VIII. SERVICE AS A DIRECTOR No Employee may serve on the board of any company without prior approval of the Code of Ethics Review Committee. If such approval is granted, it will be subject to the implementation of information barrier procedures to isolate any such person from making investment decisions for Funds or Managed Accounts concerning the company in question. IX. GIFTS No Employee shall accept directly or indirectly anything of value, including gifts and gratuities, in excess of $100 per year from any person or entity that does business with any Fund or Managed Account, not including occasional meals or tickets to theater or sporting events or other similar entertainment.(4) X. SANCTIONS Upon discovering a violation of this Code, any of MSDW Affiliated Advisers, Services or the Distributors may impose such sanctions as they deem appropriate, including a reprimand (orally or in writing), demotion, suspension or termination of employment and/or other possible sanctions. The President/Chief Operating Officer of MSDW Asset Management, in his sole discretion, is authorized to determine the choice of sanctions to be imposed in specific cases, including termination of employment. - ---------- (4) For MSAITM-Tokyo, the receipt of gifts shall not be in excess of Y 20,000 per year. 15 XI. EMPLOYEE CERTIFICATION All Employees of each MSDW Affiliated Adviser, Services and the Distributors are required to sign a copy of this Code indicating their understanding of, and their agreement to abide by the terms of this Code. In addition, all Employees of each MSDW Affiliated Adviser, Services and the Distributors will be required to certify annually that: (i) they have read and understand the terms of this Code and recognize the responsibilities and obligations incurred by their being subject to this Code; and (ii) they are in compliance with the requirements of this Code, including but not limited to the reporting of all brokerage accounts, and the pre-clearance of all non-exempt Personal Securities Transactions in accordance with this Code. 16 I have read and understand the terms of the above Code. I recognize the responsibilities and obligations, including but not limited to my quarterly transaction, annual listing of holdings, and initial holdings reporting obligations (as applicable), incurred by me as a result of my being subject to this Code. I hereby agree to abide by the above Code. - -------------------------------- ---------------------------------- (Signature) (Date) - -------------------------------- (Print name) MORGAN STANLEY DEAN WITTER ASSET MANAGEMENT CODE OF ETHICS Dated: January 29, 2001 17 EX-99.16(B) 7 a2041641zex-99_16b.txt EXHIBIT 99.16(B) MSDW ASSET MANAGEMENT CODE OF ETHICS FOR REGISTERED INVESTMENT COMPANIES I. INTRODUCTION This Code of Ethics (the "Code") applies to the registered investment companies (each, a "Fund" and collectively, the "Funds") advised or managed by any affiliate of Morgan Stanley Dean Witter & Co. (MSDW), except for any investment company (i) for which Van Kampen Asset Management, Inc. acts as Investment Adviser or Investment Manager or (ii) that is sub-advised, but not advised by, an advisory affiliate of MSDW, in compliance with Rule 17j-1 promulgated by the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940, as amended (the "1940 Act"). This Code covers all persons who are "Access Persons" of the Funds, as that term is defined in Rule 17j-1. To the extent that any such individuals are subject to compliance with the Code of Ethics of the Funds' Investment Adviser(s) or Investment Manager(s) (any such entity may be referred to as an "Investment Adviser"), and/or Sub-Adviser(s), as applicable, whose Codes have also been established pursuant to Rule 17j-1, compliance by such individuals with the provisions of the Code of the applicable Investment Adviser shall constitute compliance with this Code. The Code will only be effective for a Fund upon its adoption by that Fund's Board of Directors or Trustees pursuant to Rule 17j-1. II. PERSONAL TRANSACTIONS A. REPORTS OF TRANSACTIONS - INDEPENDENT DIRECTORS/TRUSTEES A director or trustee of a Fund who is not an "interested person" of the Fund within the meaning of section 2(a)(19) of the1940 Act ("an Independent Director/Trustee") shall report quarterly to the Fund any personal transaction in a security if he or she knows or in the course of his/her duties as a Director/Trustee of the Fund, should have known that: the Fund has purchased or sold the same security, or the Fund's Investment Adviser considered purchasing or selling the same security, during the 15 day period immediately before or after the Director/Trustee's transaction in the same security. B. REPORTS OF TRANSACTIONS, BROKERAGE ACCOUNTS AND HOLDINGS - ACCESS PERSONS WHO ARE NOT INDEPENDENT DIRECTORS/TRUSTEES An Access Person who is not an Independent Director/Trustee of a Fund shall report all non-exempt securities transactions and new brokerage accounts on a quarterly basis. An Access Person who is not an Independent Director/Trustee of a Fund shall provide annually: (i) a listing of holdings of all securities beneficially owned as of December 31 of the preceding year, except securities exempt from reporting under Section II(D)(2) hereof, listing the title of the security, number of shares held, and principal amount of the security, (ii) the name of any broker dealer or financial institution where an account was maintained, as of December 31 of the preceding year (a current listing will also be required upon the effectiveness of this Code) and (iii) the date the Report is submitted by the Access Person. The information must be current as of a date not more than 30 days before the report is submitted. New Access Persons who are not Independent Directors/Trustees of a Fund will be required to provide a listing of all non-exempt securities holdings, with the information set forth above, as of the date of commencement of employment as well as a listing of all outside brokerage accounts no later than ten days after that person becomes an Access Person. C. REPORTS OF TRANSACTIONS, BROKERAGE ACCOUNTS AND HOLDINGS - GENERAL Any quarterly report required under Section II(A) or B above must be made within ten days after the end of the calendar quarter in which the personal transaction occurred. The report may be made on the form provided by the applicable Fund's Investment Adviser or may consist of a broker statement that provides at least the same information. In the event that the Investment Adviser already maintains a record of the required information, an Access Person may satisfy this requirement by (i) confirming in writing (which may include e-mail) the accuracy and completeness of the record and disclosing the beneficial ownership of securities (if any) not listed on the account statement and (ii) recording the date of the confirmation. Copies of the Investment Advisers' forms, which may be revised at any time, are attached. The Compliance Group of a Fund's Investment Adviser will identify and advise all Access Persons of the Fund, including the Independent Directors/Trustees, subject to the reporting requirement under A or B above, of their reporting requirement. Each report required under Section II(A) or B above will be submitted for review by the applicable Compliance Group of the Investment Adviser. D. DEFINITIONS AND EXEMPTIONS (1) DEFINITIONS For purposes of this Code the term "personal transaction" means the purchase or sale, or other acquisition or disposition, of a security for the account of the individual making the transaction or for an account in which he or she has, or as a result of the transaction acquires, any direct or indirect beneficial ownership in a security. The term "beneficial ownership" shall be interpreted with reference to the definition contained in the provisions of Section 16 of the Securities Exchange Act of 1934, as amended. Generally, under Section 16, a person is regarded as having beneficial ownership of securities held in the name of: (a) the individual; or (b) a husband, wife or a minor child; or (c) a relative sharing the same household; or (d) other person if the Access Person: (i) obtains benefits substantially equivalent to ownership of the securities; or (ii) can obtain ownership of the securities immediately or at some future time. The term "Access Person" is defined by Rule 17j-1 under the 1940 Act as (i) any director, officer, or general partner of a fund or of a fund's investment adviser, or any employee of a fund or of a fund's investment adviser (or of any company in a Control relationship to the Fund or investment adviser) who, in connection with his or her regular functions or duties, participates in the selection of a fund's portfolio securities or who has access to information regarding a fund's future purchases or sales of portfolio securities; or (ii) any director, officer, or general partner of a principal underwriter who in the ordinary course of business, makes, participates in or obtains information regarding, the purchase or sale of securities for the fund for which the principal underwriter acts, or whose functions or duties in the ordinary course of business relate to the making of any recommendation to the fund regarding the purchase or sale of securities. (2) EXEMPTIONS No report is required for a personal transaction in any of the following securities: (i) U.S. Government Securities; (ii) Bank Certificates of Deposit; (iii) Bankers' Acceptances; (iv) Commercial Paper; (v) U.S. Government Agency Securities; (vi) High Quality Short-Term Instruments (including repurchase agreements); and (vi) Open-end registered investment companies (mutual funds). Also, no report is required with respect to (i) any account over which the access person has no influence or control. III. CODE VIOLATIONS Any officer of a Fund who discovers a violation or apparent violation of this Code by an Access Person shall bring the matter to the attention of the Chief Executive Officer or General Counsel of the Fund who shall then report the matter to the Board of Directors or the Board of Trustees, as the case may be, of the Fund. The Board shall determine whether a violation has occurred and, if it so finds, may impose such sanctions, if any, as it considers appropriate. IV. ADMINISTRATION OF CODE OF ETHICS No less frequently than annually the Board of Directors or the Board of Trustees of each of the Funds shall be provided with a written report by each of the Funds and the applicable Investment Advisers (and, if applicable, the Sub-Adviser(s)), that describes any new issues arising under the Code, including information on material violations of the Code of Ethics or procedures and sanctions imposed, and certifies that each Fund and the Investment Advisers (and, if applicable, the Sub-Adviser(s)) have adopted procedures reasonably necessary to prevent Access Persons from violating the Code of Ethics. EX-99.OTHER 8 a2041641zex-99_other.txt EXHIBIT 99.OTHER POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that JAMES F. HIGGINS, whose signature appears below, constitutes and appoints Barry Fink and Marilyn Cranney, or either of them, his true and lawful attorneys-in-fact and agents, with full power of substitution among himself and each of the persons appointed herein, for him and in his name, place and stead, in any and all capacities, to sign any amendments to any registration statement of ANY OF THE MORGAN STANLEY DEAN WITTER FUNDS AND THE TCW/DW TERM TRUSTS SET FORTH IN THE LIST ANNEXED HERETO, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, may lawfully do or cause to be done by virtue hereof. Dated: June 12, 2000 /s/ JAMES F. HIGGINS James F. Higgins MORGAN STANLEY DEAN WITTER FUNDS AT JUNE 12, 2000 OPEN-END FUNDS TAXABLE MONEY MARKET FUNDS 1. Active Assets Government Securities Trust ("AA GOVERNMENT") 2. Active Assets Institutional Money Trust ("AA INSTITUTIONAL") 3. Active Assets Money Trust ("AA MONEY") 4. Active Assets Premier Money Trust ("AA PREMIER") 5. Morgan Stanley Dean Witter Liquid Asset Fund Inc. ("LIQUID ASSET") 6. Morgan Stanley Dean Witter U.S. Government Money Market Trust ("GOVERNMENT MONEY") TAX-EXEMPT MONEY MARKET FUNDS 7. Active Assets California Tax-Free Trust ("AA CALIFORNIA") 8. Active Assets Tax-Free Trust ("AA TAX-FREE") 9. Morgan Stanley Dean Witter California Tax-Free Daily Income Trust ("CALIFORNIA TAX-FREE DAILY") 10. Morgan Stanley Dean Witter New York Municipal Money Market Trust ("NEW YORK MONEY") 11. Morgan Stanley Dean Witter Tax-Free Daily Income Trust ("TAX-FREE DAILY") EQUITY FUNDS 12. Morgan Stanley Dean Witter Aggressive Equity Fund ("AGGRESSIVE EQUITY") 13. Morgan Stanley Dean Witter American Opportunities Fund ("AMERICAN OPPORTUNITIES") 14. Morgan Stanley Dean Witter Capital Growth Securities ("CAPITAL GROWTH") 15. Morgan Stanley Dean Witter Competitive Edge Fund ("COMPETITIVE EDGE") 16. Morgan Stanley Dean Witter Developing Growth Securities Trust ("DEVELOPING GROWTH") 17. Morgan Stanley Dean Witter Dividend Growth Securities Inc. ("DIVIDEND GROWTH") 18. Morgan Stanley Dean Witter Equity Fund ("EQUITY FUND") 19. Morgan Stanley Dean Witter European Growth Fund Inc. ("EUROPEAN GROWTH") 20. Morgan Stanley Dean Witter Financial Services Trust ("FINANCIAL SERVICES") 21. Morgan Stanley Dean Witter Fund of Funds ("FUND OF FUNDS") 22. Morgan Stanley Dean Witter Global Dividend Growth Securities ("GLOBAL DIVIDEND GROWTH") 23. Morgan Stanley Dean Witter Global Utilities Fund ("GLOBAL UTILITIES") 24. Morgan Stanley Dean Witter Growth Fund ("GROWTH FUND") 25. Morgan Stanley Dean Witter Health Sciences Trust ("HEALTH SCIENCES") 26. Morgan Stanley Dean Witter Income Builder Fund ("INCOME BUILDER") 27. Morgan Stanley Dean Witter Information Fund ("INFORMATION FUND") 28. Morgan Stanley Dean Witter International Fund ("INTERNATIONAL FUND") 29. Morgan Stanley Dean Witter International SmallCap Fund ("INTERNATIONAL SMALLCAP") 30. Morgan Stanley Dean Witter Japan Fund ("JAPAN FUND") 31. Morgan Stanley Dean Witter Latin American Growth Fund ("LATIN AMERICAN") 32. Morgan Stanley Dean Witter Market Leader Trust ("MARKET LEADER") 33. Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities ("MID-CAP DIVIDEND GROWTH") 34. Morgan Stanley Dean Witter Mid-Cap Equity Trust ("MID-CAP EQUITY") 35. Morgan Stanley Dean Witter Natural Resource Development Securities Inc. ("NATURAL RESOURCE") 36. Morgan Stanley Dean Witter Next Generation Trust ("NEXT GENERATION") 37. Morgan Stanley Dean Witter New Discoveries Fund ("NEW DISCOVERIES") 38. Morgan Stanley Dean Witter Pacific Growth Fund Inc. ("PACIFIC GROWTH") 39. Morgan Stanley Dean Witter Real Estate Fund ("REAL ESTATE") 40. Morgan Stanley Dean Witter Small Cap Growth Fund ("SMALL CAP GROWTH") 41. Morgan Stanley Dean Witter S&P 500 Index Fund ("S&P500 INDEX") 42. Morgan Stanley Dean Witter S&P 500 Select Fund ("S&P 500 SELECT") 43. Morgan Stanley Dean Witter Special Value Fund ("SPECIAL VALUE") 44. Morgan Stanley Dean Witter Tax-Managed Growth Fund ("TAX-MANAGED GROWTH") 45. Morgan Stanley Dean Witter Total Market Index Fund ("TOTAL MARKET INDEX") 46. Morgan Stanley Dean Witter Total Return Trust ("TOTAL RETURN") 47. Morgan Stanley Dean Witter 21st Century Trend Fund ("21ST CENTURY TREND") 48. Morgan Stanley Dean Witter Utilities Fund ("UTILITIES FUND") 49. Morgan Stanley Dean Witter Value-Added Market Series ("VALUE-ADDED") 50. Morgan Stanley Dean Witter Value Fund ("VALUE FUND") BALANCED FUNDS 51. Morgan Stanley Dean Witter Balanced Growth Fund ("BALANCED GROWTH") 52. Morgan Stanley Dean Witter Balanced Income Fund ("BALANCED INCOME") ASSET ALLOCATION FUND 53. Morgan Stanley Dean Witter Strategist Fund ("STRATEGIST FUND") TAXABLE FIXED-INCOME FUNDS 54. Morgan Stanley Dean Witter Convertible Securities Trust ("CONVERTIBLE SECURITIES") 55. Morgan Stanley Dean Witter Diversified Income Trust ("DIVERSIFIED INCOME") 56. Morgan Stanley Dean Witter Federal Securities Trust ("FEDERAL SECURITIES") 57. Morgan Stanley Dean Witter High Yield Securities Inc ("HIGH YIELD") 58. Morgan Stanley Dean Witter Intermediate Income Securities ("INTERMEDIATE INCOME") 59. Morgan Stanley Dean Witter North American Government Income Trust ("NORTH AMERICAN GOVERNMENT") 60. Morgan Stanley Dean Witter Select Municipal Reinvestment Fund ("MUNICIPAL REINVESTMENT") 61. Morgan Stanley Dean Witter Short-Term Bond Fund ("SHORT-TERM BOND") 62. Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust ("SHORT-TERM TREASURY") 63. Morgan Stanley Dean Witter U.S. Government Securities Trust ("GOVERNMENT SECURITIES") 64. Morgan Stanley Dean Witter World Wide Income Trust ("WORLD WIDE INCOME") TAX-EXEMPT FIXED-INCOME FUNDS 65. Morgan Stanley Dean Witter California Tax-Free Income Fund ("CALIFORNIA TAX-FREE") 66. Morgan Stanley Dean Witter Hawaii Municipal Trust ("HAWAII MUNICIPAL") 67. Morgan Stanley Dean Witter Limited Term Municipal Trust ("LIMITED TERM MUNICIPAL") 68. Morgan Stanley Dean Witter Multi-State Municipal Series Trust ("MULTI-STATE SERIES") 69. Morgan Stanley Dean Witter New York Tax-Free Income Fund ("NEW YORK TAX-FREE") 70. Morgan Stanley Dean Witter Tax-Exempt Securities Trust ("TAX-EXEMPT SECURITIES") SPECIAL PURPOSE FUNDS 71. Morgan Stanley Dean Witter Select Dimensions Investment Series ("SELECT DIMENSIONS") 72. Morgan Stanley Dean Witter Variable Investment Series ("VARIABLE INVESTMENT") CLOSED-END FUNDS TAXABLE FIXED-INCOME CLOSED-END FUNDS 73. Morgan Stanley Dean Witter Government Income Trust ("GOVERNMENT INCOME") 74. Morgan Stanley Dean Witter High Income Advantage Trust ("HIGH INCOME") 75. Morgan Stanley Dean Witter High Income Advantage Trust II ("HIGH INCOME II") 76. Morgan Stanley Dean Witter Income Securities Inc. ("INCOME SECURITIES") 77. Morgan Stanley Dean Witter Prime Income Trust ("PRIME INCOME") TAX-EXEMPT FIXED-INCOME CLOSED-END FUNDS 78. Morgan Stanley Dean Witter California Insured Municipal Income Trust ("CALIFORNIA INSURED MUNICIPAL") 79. Morgan Stanley Dean Witter Insured Municipal Bond Trust ("INSURED MUNICIPAL BOND") 80. Morgan Stanley Dean Witter Insured Municipal Income Trust ("INSURED MUNICIPAL INCOME") 81. Morgan Stanley Dean Witter Insured Municipal Trust ("INSURED MUNICIPAL TRUST") 82. Morgan Stanley Dean Witter Municipal Income Opportunities Trust ("MUNICIPAL OPPORTUNITIES") 83. Morgan Stanley Dean Witter Municipal Income Opportunities Trust III ("MUNICIPAL OPPORTUNITIES III") 84. Morgan Stanley Dean Witter Municipal Income Trust ("MUNICIPAL INCOME") 85. Morgan Stanley Dean Witter Municipal Premium Income Trust ("MUNICIPAL PREMIUM") 86. Morgan Stanley Dean Witter Quality Municipal Income Trust ("QUALITY MUNICIPAL INCOME") 87. Morgan Stanley Dean Witter Quality Municipal Investment Trust ("QUALITY MUNICIPAL INVESTMENT") TCW/DW TERM TRUSTS AT JUNE 12, 2000 1. TCW/DW Term Trust 2000 ("TERM TRUST 2000") 2. TCW/DW Term Trust 2002 ("TERM TRUST 2002") 3. TCW/DW Term Trust 2003 ("TERM TRUST 2003") -----END PRIVACY-ENHANCED MESSAGE-----