Document/Exhibit Description Pages Size
1: 485APOS Post-Effective Amendment 97 476K
5: EX-27.1 Financial Data Schedule 2 8K
6: EX-27.2 Financial Data Schedule 2 8K
7: EX-27.3 Financial Data Schedule 2 8K
8: EX-27.4 Financial Data Schedule 2 8K
4: EX-99.B10 Consent of Independent Accountants 1 6K
2: EX-99.B2 By-Laws 11 56K
3: EX-99.B5 Selected Dealer Agreement 6 31K
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1999
REGISTRATION NO. 333-56609
811-8809
================================================================================
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. 1 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
AMENDMENT NO. 2 [X]
---------------------
MORGAN STANLEY DEAN WITTER S&P 500 SELECT 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:
DAVID M. BUTOWSKY, ESQ.
GORDON ALTMAN BUTOWSKY
WEITZEN SHALOV & WEIN
114 WEST 47TH STREET
NEW YORK, NEW YORK 10036
---------------------
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)
----
on (date) pursuant to paragraph (b)
----
X 60 days after filing pursuant to paragraph (a)
-----
on (date) pursuant to paragraph (a) of rule 485.
----
AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS
================================================================================
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
CROSS-REFERENCE SHEET
FORM N-1A
ITEM CAPTION
---- -------
PART A PROSPECTUS
1. ......... Cover Page; Back Cover
2. ......... Investment Objective: Principal Investment Strategies,
Principal Risks, Past Performance
3. ......... Fees and Expenses
4. ......... Investment Objective: Principal Investment Strategies;
Principal Risks; Additional Investment Strategy
Information; Additional Risk Information
5. ......... Not Applicable
6. ......... Fund Management
7. ......... Pricing Fund Shares; How to Buy Shares; How
to Exchange Shares; How to Sell Shares;
Distributions; Tax Consequences
8. ......... Share Class Arrangements
9. ......... Financial Highlights
PART B STATEMENT OF ADDITIONAL INFORMATION
Information required to be included in Part B is set forth under the
appropriate caption in Part B of this Registration Statement.
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
PROSPECTUS - JUNE , 1999
Morgan Stanley Dean Witter
-------------------------------------------------------------------------------
S&P 500 SELECT FUND
A MUTUAL FUND THAT SEEKS TO PROVIDE A
TOTAL RETURN (BEFORE EXPENSES) THAT EXCEEDS THE
TOTAL RETURN OF THE STANDARD & POOR'S (REGISTERED TRADEMARK) 500
COMPOSITE STOCK PRICE INDEX
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 ................................2
Fees and Expenses ...............................3
Additional Investment Strategy Information ......4
Additional Risk Information .....................5
Fund Management .................................6
Shareholder Information Pricing Fund Shares .............................7
How to Buy Shares ...............................7
How to Exchange Shares ..........................9
How to Sell Shares .............................11
Distributions ..................................12
Tax Consequences ...............................13
Share Class Arrangements .......................13
Financial Highlights ................................................21
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.
FUND CATEGORY
-------------
[ ] Growth
[X] GROWTH AND INCOME
[ ] Income
[ ] Money Market
THE FUND
INVESTMENT OBJECTIVE
--------------------------------------------------
Morgan Stanley Dean Witter S&P 500 Select Fund is a mutual fund that seeks to
provide a total return (before expenses) that exceeds the total return of the
Standard & Poor's (Registered Trademark) 500 Composite Stock Price Index.
There is no guarantee that the Fund will achieve this objective.
PRINCIPAL INVESTMENT STRATEGIES
----------------------------------------------------------------
(sidebar)
GROWTH AND INCOME
An investment objective having the goal of selecting securities with the
potential to rise in value and pay out income.
(end sidebar)
The Fund will normally invest at least 80% of its assets in common stocks of
selected companies included in the Standard & Poor's 500 Index. The S&P 500 is
a well known stock market index that includes common stocks of 500 companies.
The companies represent a significant portion of the market value of all
publicly traded common stocks in the United States. The S&P 500 may include
some foreign companies. Unlike the S&P 500, however, the Fund is actively
managed by its "Investment Manager," Morgan Stanley Dean Witter Advisors Inc.
As such, the Fund's performance will differ from the performance of the S&P
500.
In selecting the Fund's portfolio securities, the Investment Manager first
seeks to identify those companies listed in the S&P 500 that have favorable
investment recommendations from the equity research departments of recognized
investment banking firms, including Morgan Stanley Dean Witter & Co. The
Investment Manager will consider the available analytical research reports and
investment recommendations concerning each of the companies included in the S&P
500, together with its own investment analysis, to select favorable companies.
The Investment Manager will attempt to invest in all of the industries
represented in the S&P 500; but may not do so if the companies within an
industry do not meet its investment criteria.
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.
In addition to common stocks, the Fund may invest in stock index futures on the
S&P 500, and Standard & Poor's Depository Receipts ("SPDRs").
In pursuing the Fund's investment objective, the Investment Manager has
considerable leeway in deciding which investments it buys, holds or sells on a
day-to-day basis -- and which trading or investment strategies it uses. For
example, the Investment Manager in its discretion may determine to use some
permitted trading or investment strategies while not using others.
"Standard & Poor's (Registered Trademark) ," "S&P (Registered Trademark) ,"
"S&P 500 (Registered Trademark) ," "Standard & Poor's 500," and "500" are
trademarks of the McGraw-Hill Companies, Inc. and have been licensed for use by
the Fund. The Fund is not sponsored, endorsed, sold or promoted by Standard &
Poor's, a division of the McGraw Hill Companies, Inc. and Standard & Poor's
makes no representation regarding the advisability of investing in the Fund.
1
PRINCIPAL RISKS
-------------------------------------------
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 common stock
investments. In general, stock values fluctuate in response to activities
specific to the company as well as general market, economic and political
conditions. Stock prices can fluctuate widely in response to these factors.
The performance of the Fund also will depend on whether the Investment Manager
is successful in pursuing the Fund's investment strategy. The Fund is also
subject to other risks from its permissible investments including the risks
associated with its futures, SPDRs and foreign securities investments. For more
information about these risks, see the "Additional Risk Information" section.
Shares of the Fund are not bank deposits and are not guaranteed or insured by
any bank, governmental entity, or the FDIC.
PAST PERFORMANCE
----------------------------------------------
The table below provides some indication of the risks of investing in the Fund.
The Fund's past performance does not indicate how the Fund will perform in the
future.
(sidebar)
TOTAL RETURNS
This table compares the Fund's 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)
TOTAL RETURNS (FOR THE PERIOD ENDED THE 1998 CALENDAR YEAR)
[Download Table]
LIFE OF FUND
(SINCE 9/28/98)
Class A 11.53%
Class B 12.46%
Class C 16.44%
Class D 17.78%
S&P 500 Index1 17.63%
1 The Standard & Poor's (Registered Trademark) 500 Composite Stock Price Index
is a broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The performance of the Index
does not include any expenses, fees or charges. The Index is unmanaged and
should not be considered an investment.
2
FEES AND EXPENSES
-----------------------------------------------
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 table below
briefly describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. The Fund does not charge account or exchange fees. See the
"Share Class Arrangements" section for further fee and expense information.
[Enlarge/Download Table]
CLASS A CLASS B CLASS C CLASS D
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SHAREHOLDER FEES
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Maximum sales charge (load) imposed on 5.25%(1) None None None
purchases (as a percentage of offering price)
------------------------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a
percentage based on the lesser of the offering None2 5.00%3 1.00%4 None
price or net asset value at redemption)
------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
------------------------------------------------------------------------------------------------------------
Management fee 0.60 % 0.60 % 0.60 % 0.60%
------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees 0.25 % 1.00 % 1.00 % None
------------------------------------------------------------------------------------------------------------
Other expenses 0.32 % 0.32 % 0.32 % 0.32%
------------------------------------------------------------------------------------------------------------
Total annual Fund operating expenses 1.17 % 1.92 % 1.92 % 0.92%
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 on sales made 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 to sales made within one year after purchase.
(sidebar)
SHAREHOLDER FEES
These fees are paid directly from your investment.
(end sidebar)
(sidebar)
ANNUAL FUND OPERATING EXPENSES
These expenses are deducted from the Fund's assets and are estimated based on
expenses paid for the period September 28, 1998 (commencement of operations)
through February 28, 1999.
(end sidebar)
3
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.
[Download Table]
IF YOU SOLD YOUR IF YOU HELD YOUR
SHARES: SHARES:
1 Year 3 Years 1 Year 3 Years
-----------------------------------------------------------
CLASS A $638 $878 $638 $878
-----------------------------------------------------------
CLASS B $695 $904 $195 $604
-----------------------------------------------------------
CLASS C $295 $604 $195 $604
-----------------------------------------------------------
CLASS D $ 94 $294 $ 94 $294
-----------------------------------------------------------
ADDITIONAL INVESTMENT STRATEGY INFORMATION
-------------------------------------------------------------------------------
The Fund seeks to provide a total return (before expenses) that exceeds the
total return of the Standard & Poor's (Registered Trademark) 500 Composite
Stock Price Index. There is no guarantee that the Fund will achieve this
objective.
This section provides additional information concerning the Fund's principal
strategies.
STOCK INDEX FUTURES. The Fund may invest in stock index futures with respect to
the S&P 500 Index. Stock index futures may be used to simulate investment in
the S&P 500 while retaining a cash balance for fund management purposes, to
facilitate trading, to reduce transaction costs or to seek higher investment
returns.
SPDRS. The Fund may invest in securities referred to as SPDRs (known as
"spiders") that are designed to track the S&P 500 Index. SPDRs represent an
ownership interest in the SPDR Trust, which holds a portfolio of common stocks
that closely tracks the price performance and dividend yield of the S&P 500
Index. SPDRs trade on the American Stock Exchange like shares of common stock.
The Fund may invest up to 10% of its assets in SPDRs and up to 5% of its assets
in SPDRs issued by a single unit investment trust.
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 total assets in cash or money market instruments in a defensive
posture when the Investment Manager believes it is advisable to do so. Although
taking a defensive posture is designed to protect the Fund from an anticipated
market downturn, it could have the effect of reducing the benefit from any
upswing in the market.
The percentage limitations relating to the composition of the Fund's portfolio
referenced in "Principal Investment Strategies" apply at the time the Fund
acquires an investment. Subsequent percentage changes that result from market
fluctuations or changes in total assets will not require the Fund to sell any
portfolio security. The Fund may change its principal investment strategies
without shareholder approval; however, you would be notified of any changes.
4
ADDITIONAL RISK INFORMATION
-----------------------------------------------------------
As discussed in the "Principal Risks" section, a principal risk of investing in
the Fund is associated with its common stock investments. This section provides
additional information regarding the principal risks of investing in the Fund.
FOREIGN SECURITIES. The Fund's investments in foreign securities (including
depository receipts) may involve risks in addition to the risks associated with
domestic securities. One additional risk is currency risk. In particular, the
price of securities could be adversely affected by changes in the exchange rate
between the U.S. dollar and a foreign market's local currency.
Foreign securities also have risks related to economic and political
developments abroad, including any effects of foreign social, economic or
political instability. Foreign companies, in general, are not subject to the
regulatory requirements of U.S. companies and, as such, there may be less
publicly available information about these companies. Moreover, foreign
accounting, auditing and financial reporting standards generally are different
from those applicable to U.S. companies.
FUTURES. If the Fund invests in futures, its participation in these markets
would subject the Fund's portfolio to certain risks. The Investment Manager's
predictions of movements in the direction of the stock market may be
inaccurate, and the adverse consequences to the Fund (e.g., a reduction in the
Fund's net asset value or a reduction in the amount of income available for
distribution) may leave the Fund in a worse position than if these strategies
were not used. Other risks inherent in the use of futures include, for example,
the possible imperfect correlation between the price of futures contracts and
movements in the prices of the securities, and the possible absence of a liquid
secondary market for any particular instrument.
SPDRS. SPDRs, which the Fund may hold, have many of the same risks as direct
investments in common stocks. The market value of SPDRs is expected to rise and
fall as the S&P 500 Index rises and falls.
YEAR 2000. The Fund could be adversely affected if the computer systems
necessary for the efficient operation of the Investment Manager, the Fund's
other service providers and the markets and individual and governmental issuers
in which the Fund invests do not properly process and calculate date-related
information from and after January 1, 2000. While year 2000-related computer
problems could have a negative effect on the Fund, the Investment Manager and
affiliates are working hard to avoid any problems and to obtain assurances from
their service providers that they are taking similar steps.
In addition, it is possible that the markets for securities in which the Fund
invests may be detrimentally affected by the computer failures throughout the
financial services industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and liquidity issues. In
addition, corporate and governmental data processing errors may result in
production problems for individual companies and overall economic
uncertainties. Earnings of individual issues will be affected by remediation
costs, which may be substantial and may be reported inconsistently in U.S. and
foreign financial statements. Accordingly, the Fund's investments may be
adversely affected.
5
FUND MANAGEMENT
---------------------------------------------
The Fund has retained the Investment Manager -- Morgan Stanley Dean Witter
Advisors Inc. -- to provide administrative services, manage its business affairs
and invest its assets, including the placing of orders for the purchase and sale
of portfolio securities. The Investment Manager is a wholly-owned subsidiary of
Morgan Stanley Dean Witter & Co., a preeminent global financial services firm
that maintains leading market positions in each of its three primary businesses:
securities, asset management and credit services. Its main business office is
located at Two World Trade Center, New York, New York 10048.
(sidebar)
MORGAN STANLEY DEAN WITTER ADVISORS INC.
The Investment Manager is widely recognized as a leader in the mutual fund
industry and together with Morgan Stanley Dean Witter Services Company Inc.,
its wholly-owned subsidiary, has more than $ billion in assets under
management or administration as of , 1999.
(end sidebar)
The Fund's portfolio is managed within the Investment Manager's Growth Group.
Guy G. Rutherfurd, Jr., a Senior Vice President of the Investment Manager, is
the primary portfolio manager of the Fund. Mr. Rutherfurd has been a portfolio
manager with the Investment Manager since February, 1997. During the period
from May, 1992 to February, 1997, Mr. Rutherfurd was the Executive Vice
President and Chief Investment Officer of Nomura Asset Management (U.S.A.) Inc.
Mr. Rutherfurd is assisted by Kevin Jung, Vice President of the Investment
Manager. Mr. Jung has been a portfolio manager with the Investment Manager
since September 1997, prior to which time he was a Vice President and portfolio
manager with UBS Asset Management (NY) Inc. from April 1993 through August
1997.
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 calculated by
applying the annual rate of 0.60% to the Fund's average daily net assets.
6
SHAREHOLDER INFORMATION
PRICING FUND SHARES
-------------------------------------------------
The price of Fund shares (excluding sales charges), called "net asset value,"
is based on the value of the Fund's portfolio securities. The net asset value
of each Class, however, will differ because the Classes have different ongoing
distribution fees.
The net asset value per share of the Fund is determined once daily at 4:00 p.m.
Eastern time, on each day that the New York Stock Exchange is open (or, on days
when the New York Stock Exchange closes prior to 4:00 p.m., at such earlier
time). Shares will not be priced on days that the New York Stock Exchange is
closed.
The value of the Fund's portfolio securities is based on the securities' market
price when available. When a market price is not readily available, including
circumstances under which the Investment Manager 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. In addition, if the Fund
holds securities 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.
HOW TO BUY SHARES
-----------------------------------------------
You may open a new account to buy Fund shares or buy additional Fund shares for
an existing account by contacting your Morgan Stanley Dean Witter Financial
Advisor or other authorized financial representative. Your Financial Advisor
will assist you, step-by-step, with the procedures to invest in the Fund. You
may also purchase shares directly by calling the Fund's transfer agent and
requesting an application.
(sidebar)
CONTACTING A FINANCIAL ADVISOR
If you are new to the Morgan Stanley Dean Witter Family of Funds and would like
to contact a Financial Advisor, call (800) THE-DEAN for the telephone number of
the Morgan Stanley Dean Witter office nearest you. You may also access our
office locator on our Internet site at: www.deanwitter.com/funds
(end sidebar)
Because every investor has different immediate financial needs and long-term
investment goals, the Fund offers investors four Classes of shares: Classes A,
B, C and D. Class D shares are only offered to a limited group of investors.
Each Class of shares offers a distinct structure of sales charges, distribution
and service fees, and other features that are designed to address a variety of
needs. Your Financial Advisor or other authorized financial representative can
help you decide which Class may be most appropriate for you. When purchasing
Fund shares, you must specify which Class of shares you wish to purchase.
When you buy Fund shares, the shares are purchased at the next share price
calculated, less any applicable front-end sales charge, after we receive your
investment order in proper form. We reserve the right to reject any order for
the purchase of Fund shares.
7
[Enlarge/Download Table]
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
----------------------------------------------------------------------------------------------
EasyInvestSM (Automatically from your
checking or savings account or
Money Market Fund) $ 100* $ 100*
* Provided your schedule of investments totals $1,000 in twelve months.
(sidebar)
EASYINVEST(service mark)
A purchase plan that allows you to transfer money automatically from your
checking or savings account or from a Money Market Fund on a semi-monthly,
monthly or quarterly basis. Contact your Morgan Stanley Dean Witter Financial
Advisor for further information about this service.
(end sidebar)
There is no minimum investment amount if you purchase Fund shares through: (1)
the Investment Manager's mutual fund asset allocation plan, (2) a program,
approved by the Fund's distributor, in which you pay an asset-based fee for
advisory, administrative and/or brokerage services, or (3) employer-sponsored
employee benefit plan accounts.
INVESTMENT OPTIONS FOR CERTAIN INSTITUTIONAL AND OTHER INVESTORS/CLASS D
SHARES.
To be eligible to purchase Class D shares, you must qualify under one of the
investor categories specified in the "Share Class Arrangements" section of this
Prospectus.
THREE DAY SETTLEMENT. Fund shares are sold through the Fund's distributor.
Morgan Stanley Dean Witter Distributors Inc., on a normal three business day
basis; that is, your payment for Fund shares is due on the third business day
(settlement day) after you place a purchase order.
SUBSEQUENT INVESTMENTS SENT DIRECTLY TO THE FUND. In addition to buying
additional Fund shares for an existing account by contacting your Morgan
Stanley Dean Witter Financial Advisor, you may send a check directly to the
Fund. To buy additional shares in this manner:
o Write a "letter of instruction" to the Fund specifying the name(s) on the
account, the account number, the social security or tax identification
number, the Class of shares you wish to purchase, and the investment amount
(which would include any applicable front-end sales charge). The letter must
be signed by the account owner(s).
o Make out a check for the total amount payable to: Morgan Stanley Dean Witter
S&P 500 Select Fund.
o Mail the letter and check to Morgan Stanley Dean Witter Trust FSB at P.O. Box
1040, Jersey City, NJ 07303.
8
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, Money Market Fund or Short-Term U.S. Treasury Trust,
without the imposition of an exchange fee or 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 or Money Market Fund. If a Morgan Stanley
Dean Witter Fund is not listed, consult the inside back cover of that Fund's
Prospectus for its designation. For purposes of exchanges, shares of FSC Funds
(subject to a front-end sales charge) are treated as Class A shares of a
Multi-Class Fund.
Exchanges may be made after shares of the Fund acquired by purchase have been
held for thirty days. There is no waiting period for exchanges of shares
acquired by exchange or dividend reinvestment. The current Prospectus for each
fund describes its investment objective(s), policies and investment minimums,
and should be read before investment.
EXCHANGE PROCEDURES. You can process an exchange by contacting your Morgan
Stanley Dean Witter Financial Advisor or other authorized financial
representative. Otherwise, you must forward an exchange privilege authorization
form to the Fund's transfer agent -- Morgan Stanley Dean Witter Trust FSB --
and then write the transfer agent or call (800) 869-NEWS to place an exchange
order. You can obtain an exchange privilege authorization form by contacting
your Financial Advisor or other authorized financial representative or by
calling (800) 869-NEWS. If you hold share certificates, no exchanges may be
processed until we have received all applicable share certificates.
An exchange to any Morgan Stanley Dean Witter Fund (except a Money Market Fund)
is made on the basis of the next calculated net asset values of the Funds
involved after the exchange instructions are accepted. When exchanging into a
Money Market Fund, the Fund's shares are sold at their next calculated net
asset value and the Money Market Fund's shares are purchased at their net asset
value on the following business day.
The Fund may terminate or revise the exchange privilege upon required notice.
Certain services normally available to shareholders of Money Market Funds,
including the check writing privilege, are not available for Money Market Fund
shares you acquire in an exchange.
TELEPHONE EXCHANGES. For your protection when calling Morgan Stanley Dean
Witter Trust FSB, we will employ reasonable procedures to confirm that exchange
instructions communicated over the telephone are genuine. These procedures may
include requiring various forms of personal identification such as name,
mailing address, social security or other tax identification number. Telephone
instructions also may be recorded.
Telephone instructions will be accepted if received by the Fund's transfer
agent between 9:00 a.m. and 4:00 p.m. Eastern time, on any day the New York
Stock Exchange is open for business. During periods of drastic economic or
market changes, it is possible that the telephone exchange procedures may be
difficult to implement, although this has not been the case with the Fund in
the past.
9
MARGIN ACCOUNTS. If you have pledged your Fund shares in a margin account,
contact your Morgan Stanely 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 the Fund's shares -- and the exchange into the other Fund is considered
a purchase. As a result, you may realize a capital gain or loss.
You should review the "Tax Consequences" section and consult your own tax
professional about the tax consequences of an exchange.
FREQUENT EXCHANGES. A pattern of frequent exchanges may result in the Fund
limiting or prohibiting, at its discretion, additional purchases and/or
exchanges. The Fund will notify you in advance of limiting your exchange
privileges.
CDSC CALCULATIONS ON EXCHANGES. See the "Share Class Arrangements" section of
this Prospectus for a 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.
10
HOW TO SELL SHARES
------------------------------------------------
You can sell some or all of your Fund shares at any time. If you sell Class A,
Class B or Class C shares, your net sale proceeds are reduced by the amount of
any applicable CDSC. Your shares will be sold at the next price calculated
after we receive your order to sell as described below.
[Enlarge/Download Table]
OPTIONS PROCEDURES
-------------------- -----------------------------------------------------------------------------------
Contact Your To sell your shares, simply call your Morgan Stanley Dean Witter Financial
Financial Advisor 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.
-------------------- -----------------------------------------------------------------------------------
By Letter You can also sell your shares by writing a "letter of instruction" that includes:
o your account number;
o the dollar amount or the number of shares
o you wish to sell;
o the Class of shares you wish to sell; and
o the signature of each owner as it appears on the account.
-----------------------------------------------------------------------------------
If you are requesting payment to anyone other than the registered owner(s) or
that payment be sent to any address other than the address of the registered
owner(s) or pre-designated bank account, you will need a signature guarantee.
You can obtain a signature guarantee from an eligible guarantor acceptable to
Morgan Stanley Dean Witter Trust FSB. (You should contact Morgan Stanley
Dean Witter Trust FSB at (800) 869-NEWS for a determination as to whether a
particular institution is an eligible guarantor.) A notary public cannot provide a
signature guarantee. Additional documentation may be required for shares held
by a corporation, partnership, trustee or executor.
-----------------------------------------------------------------------------------
Mail the letter to Morgan Stanley Dean Witter Trust FSB at P.O. Box 983, Jersey
City, New Jersey 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 Family of Funds has
Withdrawal Plan a total market value of at least $10,000, you may elect to withdraw amounts of
$25 or more, or in any whole percentage of a Fund's balance (provided the
amount is at least $25), on a monthly, quarterly, semi-annual or annual basis,
from any Fund with a balance of at least $1,000. Each time you add a Fund to the
plan, you must meet the plan requirements.
-----------------------------------------------------------------------------------
Amounts withdrawn are subject to any applicable CDSC. A CDSC may be
waived under certain circumstances. See the Class B waiver categories listed in
the "Share Class Arrangements" section of this Prospectus.
-----------------------------------------------------------------------------------
To sign up for the systematic withdrawal plan, contact your Morgan Stanley
Dean Witter Financial Advisor or call (800) 869-NEWS. You may terminate or
suspend your plan at any time. Please remember that withdrawals from the plan
are sales of shares, not Fund "distributions," and ultimately may exhaust your
account balance. The Fund may terminate or revise the plan at any time.
-----------------------------------------------------------------------------------
PAYMENT FOR SOLD SHARES. After we receive your complete instructions to sell as
described above, a check will be mailed to you within seven days, although we
will attempt to make payment within one business day. Payment may also be sent
to your brokerage account.
Payment may be postponed or the right to sell your shares suspended, however,
under unusual circumstances. If you request to sell shares that were recently
purchased by
11
check, payment of the sale proceeds may be delayed for the minimum time needed
to verify that the check has been honored (not more than fifteen days from the
time we receive the check).
TAX CONSIDERATIONS. Normally, your sale of Fund shares is subject to federal
and state income tax. You should review the "Tax Consequences" section of this
Prospectus and consult your own tax professional about the tax consequences of
a sale.
REINSTATEMENT PRIVILEGE. If you sell Fund shares and have not previously
exercised the reinstatement privilege, you may, within 35 days after the date
of sale, invest any portion of the proceeds in the same Class of Fund shares at
their net asset value and receive a pro rata credit for any CDSC paid in
connection with the sale.
INVOLUNTARY SALES. The Fund reserves the right, on sixty days' notice, to sell
the shares of any shareholder (other than shares held in an IRA or 403(b)
Custodial Account) whose shares, due to sales by the shareholder, have a value
below $100, or in the case of an account opened through EasyInvestSM, 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. Certain restrictions may apply to Fund shares pledged in
margin accounts with Dean Witter Reynolds or another authorized broker-dealer
of Fund shares. If you hold Fund shares in this manner, please contact your
Morgan Stanley Dean Witter Financial Advisor or other authorized financial
representative for more details.
DISTRIBUTIONS
----------------------------------------
The Fund passes substantially all of its earnings from income and capital gains
along to its investors as "distributions." The Fund earns income from stocks and
interest from fixed-income investments. These amounts are passed along to Fund
shareholders as "income dividend distributions." The Fund realizes capital gains
whenever it sells securities for a higher price than it paid for them. These
amounts are passed along as "capital gain distributions."
(sidebar)
TARGETED DIVIDENDS(service mark)
You may select to have your Fund distributions automatically invested in other
Classes of Fund shares or Classes of another Morgan Stanley Dean Witter Fund
that you own. Contact your Morgan Stanley Dean Witter Financial Advisor for
further information about this service.
(end sidebar)
The Fund declares income dividends separately for each Class. Distributions
paid on Class A and Class D shares will be higher than for Class B and Class C
because distribution fees that Class B and Class C pay are higher. Normally,
income dividends and capital gains are distributed at least annually in
December. The Fund, however, may retain and reinvest any long-term capital
gains. The Fund may at times make payments from sources other than income or
capital gains that represent a return of a portion of your investment.
Distributions are reinvested automatically in additional shares of the same
Class and automatically credited to your account, unless you request in writing
that all distributions be paid in cash. If you elect the cash option, the Fund
will mail a check to you no later than seven business days after the
distribution is declared. No interest will accrue on uncashed checks. If you
wish to change how your distributions are paid,
12
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.
TAX CONSEQUENCES
----------------------------------------------
As with any investment, you should consider how your Fund investment will be
taxed. The tax information in this Prospectus is provided as general
information. You should consult your own tax professional about the tax
consequences of an investment in the Fund.
Unless your investment in the Fund is through a tax-deferred retirement
account, such as a 401(k) plan or IRA, you need to be aware of the possible tax
consequences when:
o The Fund makes distributions; and
o You sell Fund shares, including an exchange to another Morgan Stanley Dean
Witter Fund.
TAXES ON DISTRIBUTIONS. Your distributions are normally subject to federal and
state income tax when they are paid, whether you take them in cash or reinvest
them in Fund shares. A distribution also may be subject to local income tax.
Any income dividend distributions and any short-term capital gain distributions
are taxable to you as ordinary income. Any long-term capital gain distributions
are taxable as long-term capital gains, no matter how long you have owned
shares in the Fund.
Every January, you will be sent a statement (IRS Form 1099-DIV) showing the
taxable distributions paid to you in the previous year. The statement provides
full information on your dividends and capital gains for tax purposes.
TAXES ON SALES. Your sale of Fund shares normally is subject to federal and
state income tax and may result in a taxable gain or loss to you. A sale also
may be subject to local income tax. Your exchange of Fund shares for shares of
another Morgan Stanley Dean Witter Fund is treated for tax purposes like a sale
of your original shares and a purchase of your new shares. Thus, the exchange
may, like a sale, result in a taxable gain or loss to you and will give you a
new tax basis for your new shares.
When you open your Fund account, you should provide your Social Security or tax
identification number on your investment application. By providing this
information, you will avoid being subject to a federal backup withholding tax
of 31% on taxable distributions and redemption proceeds. Any withheld amount
would be sent to the IRS as an advance tax payment.
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
13
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 the maximum annual 12b-1 fees
applicable to each Class:
[Enlarge/Download Table]
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. 1.0%
------------------------------------------------------------------------------------------------
C 1.0% CDSC during first year 1.0%
------------------------------------------------------------------------------------------------
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.
(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:
[Enlarge/Download Table]
FRONT-END SALES CHARGE
--------------------------------------------------
PERCENTAGE OF APPROXIMATE PERCENTAGE
AMOUNT OF SINGLE TRANSACTION PUBLIC OFFERING PRICE OF 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 0
-----------------------------------------------------------------------------------------
14
The reduced sales charge schedule is applicable to purchases of Class A shares
in a single transaction by:
o A single account (including an individual, trust or fiduciary account).
o Family member accounts (limited to husband, wife and children under the age
of 21).
o Pension, profit sharing or other employee benefit plans of companies and
their affiliates.
o Tax-exempt organizations.
o Groups organized for a purpose other than to buy mutual fund shares.
COMBINED PURCHASE PRIVILEGE. You also will have the benefit of reduced sales
charges by combining purchases of Class A shares of the Fund in a single
transaction with purchases of Class A shares of other Multi-Class Funds and
shares of FSC Funds.
RIGHT OF ACCUMULATION. You also may benefit from a reduction of sales charges,
if the cumulative net asset value of Class A shares of the Fund purchased in a
single transaction, together with shares of other Funds you currently own which
were previously purchased at a price including a front-end sales charge
(including shares acquired through reinvestment of distributions), amounts to
$25,000 or more. Also, if you have a cumulative net asset value of all your
Class A and Class D shares equal to at least $5 million (or $25 million for
certain employee benefit plans), you are eligible to purchase Class D shares of
any Fund subject to the Fund's minimum initial investment requirement.
You must notify your Morgan Stanley Dean Witter Financial Advisor or other
authorized financial representative, (or Morgan Stanley Dean Witter Trust FSB
if you purchase directly through the Fund) at the time a purchase order is
placed, that the purchase qualifies for the reduced charge under the Right of
Accumulation. Similar notification must be made in writing when an order is
placed by mail. The reduced sales charge will not be granted if: (i)
notification is not furnished at the time of the order; or (ii) a review of the
records of Dean Witter Reynolds or other authorized dealer of Fund shares or
the Fund's transfer agent does not confirm your represented holdings.
LETTER OF INTENT. The schedule of reduced sales charges for larger purchases
also will be available to you if you enter into a written "letter of intent." A
letter of intent provides for the purchase of shares within a thirteen-month
period. It is available for purchases of Class A shares of Multi-Class Funds
and/or shares of FSC Funds. 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
15
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.
OTHER FRONT-END SALES CHARGE WAIVERS. In addition to investments of $1 million
or more, your purchase of Class A shares is not subject to a front-end sales
charge (or a CDSC upon sale) if your account qualifies under one of the
following categories:
o A trust for which Morgan Stanley Dean Witter Trust FSB provides discretionary
trustee services.
o Persons participating in a fee-based investment program (subject to all of
its terms and conditions, including mandatory sale or transfer restrictions
on termination) approved by the Fund's distributor pursuant to which they
pay an asset based fee for investment advisory, administrative and/or
brokerage services.
o Employer-sponsored employee benefit plans, whether or not qualified under the
Internal Revenue Code, for which Morgan Stanley Dean Witter Trust FSB serves
as trustee or Dean Witter Reynold's Retirement Plan Services serves as
recordkeeper under a written Recordkeeping Services Agreement ("MSDW
Eligible Plans") which have at least 200 eligible employees.
o A MSDW Eligible Plan whose Class B shares have converted to Class A shares,
regardless of the plan's asset size or number of eligible employees.
o A client of a Morgan Stanley Dean Witter Financial Advisor who joined us from
another investment firm within six months prior to the date of purchase of
Fund shares, and you used the proceeds from the sale of shares of a
proprietary mutual 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 purchase, and (2) the sale proceeds were maintained in the interim in
cash or a money market fund.
o Current or retired Directors/Trustees of the Morgan Stanley Dean Witter
Funds, such persons' spouses and children under the age of 21, and trust
accounts for which any of such persons is a beneficiary.
o Current or retired directors, officers and employees of Morgan Stanley Dean
Witter & Co. and any of its subsidiaries, such persons' spouses and children
under the age of 21, and trust accounts for which any of such persons is a
beneficiary.
16
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.
[Download Table]
YEAR SINCE PURCHASE PAYMENT MADE CDSC AS A PERCENTAGE 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
--------------------------------------------------------------------------
(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)
Each time you place an order to sell or exchange shares, shares with no CDSC
will be sold or exchanged first, then shares with the lowest CDSC will be sold
or exchanged next. For any shares subject to a CDSC, the CDSC will be assessed
on an amount equal to the lesser of the current market value or the cost of the
shares being sold.
CDSC WAIVERS. A CDSC, if otherwise applicable, will be waived in the case of:
o Sales of shares held at the time you die or become disabled (within the
definition in Section 72(m)(7) of the Internal Revenue Code which relates to
the ability to engage in gainful employment), if the shares are: (i)
registered either in your name (not a trust) or in the names of you and your
spouse as joint tenants with right of survivorship; or (ii) held in a
qualified corporate or self-employed retirement plan, IRA or 403(b)
Custodial Account, provided in either case that the sale is requested within
one year of your death or initial determination of disability.
o Sales in connection with the following retirement plan "distributions": (i)
lump-sum or other distributions from a qualified corporate or self-employed
retirement plan following retirement (or, in the case of a "key employee" of
a "top heavy" plan, following attainment of age 59 1/2); (ii) distributions
from an IRA or 403(b) Custodial Account following attainment of age 59 1/2;
or (iii) a tax-free return of an excess IRA contribution (a "distribution"
does not include a direct transfer of IRA, 403(b) Custodial Account or
retirement plan assets to a successor custodian or trustee).
o Sales of shares held for you as a participant in a MSDW Eligible Plan.
o Sales of shares in connection with the Systematic Withdrawal Plan of up to
12% annually of the value of each Fund from which plan sales are made. The
percentage is determined on the date you establish the Systematic Withdrawal
Plan and based on the next calculated share price. You may have this CDSC
waiver applied in amounts up to 1% per month, 3% per quarter, 6%
semi-annually or 12% annually. Shares with no CDSC will be sold first,
followed by those with the lowest CDSC. As such, the waiver benefit will be
reduced by the amount of your shares that are not
17
subject to a CDSC. If you suspend your participation in the plan, you may
later resume plan payments without requiring a new determination of the
account value for the 12% CDSC waiver.
All waivers will be granted only following the Distributor receiving
confirmation of your entitlement. If you believe you are eligible for a CDSC
waiver, please contact your Financial Advisor or call (800) 869-NEWS.
DISTRIBUTION FEE. Class B shares are also subject to an annual distribution
(12b-1) fee of 1.0% of the average daily net assets of Class B shares.
CONVERSION FEATURE. After ten (10) years, Class B shares will convert
automatically to Class A shares of the Fund with no initial sales charge. The
ten year period runs from the last day of the month in which the shares were
purchased, or in the case of Class B shares acquired through an exchange, from
the last day of the month in which the original Class B shares were purchased;
the shares will convert to Class A shares based on their relative net asset
values in the month following the ten year period. At the same time, an equal
proportion of Class B shares acquired through automatically reinvested
distributions will convert to Class A shares on the same basis. (Class B shares
held before May 1, 1997, however, will convert to Class A shares in May 2007.)
In the case of Class B shares held in a MSDW Eligible Plan, the plan is treated
as a single investor and all Class B shares will convert to Class A shares on
the conversion date of the Class B shares of a Morgan Stanley Dean Witter Fund
purchased by that plan.
Currently, the Class B share conversion is not a taxable event; the conversion
feature may be cancelled if it is deemed a taxable event in the future by the
Internal Revenue Service.
If you exchange your Class B shares for shares of a Money Market Fund, No-Load
Fund 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
18
fund that does not charge a CDSC, you will receive a credit when you sell the
shares equal to the distribution (12b-1) fees 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 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 categories of investors:
o Investors participating in the Investment Manager's mutual fund asset
allocation program (subject to all of its terms and conditions, including
mandatory sale or transfer restrictions on termination) pursuant to which
they pay an asset-based fee.
o Persons participating in a fee-based investment program (subject to all of
its terms and conditions, including mandatory sale or transfer restrictions
on termination) approved by the Fund's distributor pursuant to which they
pay an asset based fee for investment advisory, administrative and/or
brokerage services.
o Employee benefit plans maintained by Morgan Stanley Dean Witter & Co. or any
of its subsidiaries for the benefit of certain employees of Morgan Stanley
Dean Witter & Co. and its subsidiaries.
o Certain unit investment trusts sponsored by Dean Witter Reynolds.
o Certain other open-end investment companies whose shares are distributed by
the Fund's distributor.
o 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
19
A and Class D shares of Multi-Class Funds and shares of FSC Funds you currently
own, along with shares of Morgan Stanley Dean Witter Funds you currently own
that you acquired in exchange for those shares.
NO SALES CHARGES FOR REINVESTED CASH DISTRIBUTIONS. If you receive a cash
payment representing an income dividend or capital gain and you reinvest that
amount in the applicable Class of shares by returning the check within 30 days
of the payment date, the purchased shares would not be subject to an initial
sales charge or CDSC.
PLAN OF DISTRIBUTION (RULE 12B-1 FEES) The Fund has adopted a Plan of
Distribution in accordance with Rule 12b-1 under the Investment Company Act of
1940 with respect to the distribution of Class A, Class B and Class C shares.
The Plan allows the Fund to pay distribution fees for the sale and distribution
of these shares. It also allows the Fund to pay for services to shareholders of
Class A, Class B and Class C shares. Because these fees are paid out of the
Fund's assets on an ongoing basis, over time these fees will increase the cost
of your investment in these Classes and may cost you more than paying other
types of sales charges.
20
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the period September 28, 1998 (commencement of
operations) through February 28, 1999. Certain information reflects financial
results for a single Fund share. The total returns in the table represent the
rate an investor would have earned or lost on an investment in the Fund
(assuming reinvestment of all dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, whose report,
along with the Fund's financial statements, is included in the annual report,
which is available upon request.
CLASS B SHARES
[Download Table]
----------------------------------------------------------------------------------
FOR THE PERIOD SEPTEMBER 28, 1998*
THROUGH FEBRUARY 28, 1999**
--------------------------------------------------------------------------
SELECTED PER SHARE DATA
--------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
--------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)
Net realized and unrealized gain 1.80
-------
Total income from investment operations 1.78
--------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income --++
Net realized gains (0.02)
-------
Total dividends and distributions (0.02)
--------------------------------------------------------------------------
Net asset value, end of period $ 11.76
--------------------------------------------------------------------------
TOTAL RETURN+(1) 17.96%
--------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(2)(3)(4)
--------------------------------------------------------------------------
Expenses 1.98%
--------------------------------------------------------------------------
Net investment income (0.37)%
--------------------------------------------------------------------------
SUPPLEMENTAL DATA
--------------------------------------------------------------------------
Net assets, end of period, in thousands $83,021
--------------------------------------------------------------------------
Portfolio turnover rate (1) 3%
--------------------------------------------------------------------------
* Commencement of operations.
** 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.
++ Excludes $0.002484 and $0.000859 of dividends from net investment income
for Class B and Class C, respectively.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and the net investment
income ratios would have been 1.55% and 0.06%, respectively, for Class A
shares, 2.30% and (0.69)%, respectively, for Class B shares, 2.30% and
(0.69)%, respectively, for Class C shares and 1.30% and 0.31%,
respectively, for Class D shares.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
21
[Enlarge/Download Table]
CLASS A SHARES
-------------------------------------------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 28, 1998* THROUGH
FEBRUARY 28, 1999**
-------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
-------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
-------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.02
Net realized and unrealized gain 1.81
-------
Total income from investment operations 1.83
-------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income ( 0.02)
Net realized gains ( 0.02)
-------
Total dividends and distributions ( 0.04)
-------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.79
-------------------------------------------------------------------------------------------
TOTAL RETURN+(1) 18.32%
-------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(2)(3)(4)
-------------------------------------------------------------------------------------------
Expenses 1.23%
-------------------------------------------------------------------------------------------
Net investment income 0.38%
-------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $3,269
-------------------------------------------------------------------------------------------
Portfolio turnover rate (1) 3%
-------------------------------------------------------------------------------------------
[Enlarge/Download Table]
CLASS C SHARES
-------------------------------------------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 28, 1998* THROUGH
FEBRUARY 28, 1999**
-------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
----------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
----------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) ( 0.02)
Net realized and unrealized gain 1.81
-------
Total income from investment operations 1.79
----------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income --++
Net realized gains ( 0.02)
-------
Total dividends and distributions ( 0.02)
----------------------------------------------------------------------------------------
Net asset value, end of period $ 11.77
----------------------------------------------------------------------------------------
TOTAL RETURN+(1) 17.94%
----------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(2)(3)(4)
----------------------------------------------------------------------------------------
Expenses 1.98%
----------------------------------------------------------------------------------------
Net investment income ( 0.37)%
----------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------
Net assets, end of period, in thousands $6,417
----------------------------------------------------------------------------------------
Portfolio turnover rate (1) 3%
----------------------------------------------------------------------------------------
* Commencement of operations.
** 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.
++ Excludes $0.002484 and $0.000859 of dividends from net investment income
for Class B and Class C, respectively.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and the net investment
income ratios would have been 1.55% and 0.06%, respectively, for Class A
shares, 2.30% and (0.69)%, respectively, for Class B shares, 2.30% and
(0.69)%, respectively, for Class C shares and 1.30% and 0.31%,
respectively, for Class D shares.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
22
CLASS D SHARES
[Enlarge/Download Table]
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FOR THE PERIOD SEPTEMBER 28, 1998*
THROUGH FEBRUARY 28, 1999**
-------------------------------------------------------------------------------------------
SELECTED PER SHARE DATA
-------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
-------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.02
Net realized and unrealized gain 1.81
-------
Total income from investment operations 1.83
-------------------------------------------------------------------------------------------
Less dividends and distributions from:
Net investment income ( 0.02)
Net realized gains ( 0.02)
-------
Total dividends and distributions ( 0.04)
-------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.79
-------------------------------------------------------------------------------------------
TOTAL RETURN+(1) 18.38%
-------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(2)(3)(4)
-------------------------------------------------------------------------------------------
Expenses 0.98%
-------------------------------------------------------------------------------------------
Net investment income 0.63%
-------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------
Net assets, end of period, in thousands $ 203
-------------------------------------------------------------------------------------------
Portfolio turnover rate (1) 3%
-------------------------------------------------------------------------------------------
* Commencement of operations.
** The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and the net investment
income ratios would have been 1.55% and 0.06%, respectively, for Class A
shares, 2.30% and (0.69)%, respectively, for Class B shares, 2.30% and
(0.69)%, respectively, for Class C shares and 1.30% and 0.31%,
respectively, for Class D shares.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
23
NOTES
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24
MORGAN STANLEY DEAN WITTER
FAMILY OF FUNDS
The Morgan Stanley Dean Witter Family of Funds
offers investors a wide range of investment choices.
Come on in and meet the family!
--------------------------------------------------------------------------------
GROWTH FUNDS
Aggressive Equity Fund
American Opportunities Fund
Capital Growth Securities
Developing Growth Securities
Equity Fund
Growth Fund
Market Leader Trust
Mid-Cap Growth Fund
Special Value Fund
Value Fund
THEME FUNDS
Financial Services Trust
Health Sciences Trust
Information Fund
Natural Resource Development Securities
Precious Metals and Minerals Trust
GLOBAL/INTERNATIONAL FUNDS
Competitive Edge Fund - "Best Ideas" Portfolio
European Growth Fund
Fund of Funds - International Portfolio
Global Dividend Growth Securities
International SmallCap Fund
Japan Fund
Pacific Growth Fund
--------------------------------------------------------------------------------
GROWTH & INCOME FUNDS
Balanced Growth Fund
Balanced Income Fund
Convertible Securities Trust
Dividend Growth Securities
Fund of Funds - Domestic Portfolio
Income Builder Fund
Mid-Cap Dividend Growth Securities
S&P 500 Index Fund
S&P 500 Select Fund
Strategist Fund
Value/Added Market Series/Equity Portfolio
THEME FUNDS
Global Utilities Fund
Real Estate Fund
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
World Wide Income Trust
TAX-FREE INCOME FUNDS
California Tax-Free Income Fund
Hawaii Municipal Trust(FSC)
Limited Term Municipal Trust(NL)
Multi-State Municipal Series Trust(FSC)
New York Tax-Free Income Fund
Tax-Exempt Securities Trust
--------------------------------------------------------------------------------
MONEY MARKET FUNDS
TAXABLE MONEY MARKET FUNDS
Liquid Asset Fund(MM)
U.S. Government Money Market Trust(MM)
TAX-FREE MONEY MARKET FUNDS
California Tax-Free Daily Income Trust(MM)
New York Municipal Money Market Trust(MM)
Tax-Free Daily Income Trust(MM)
There may be Funds created after this Prospectus was published. Please consult
the inside front cover of a new Fund's prospectus for its designations, e.g.,
Multi-Class Fund or Money Market Fund.
Each listed Morgan Stanley Dean Witter Fund except for Short-Term U.S. Treasury
Trust, unless otherwise noted, is a Multi-Class Fund, which 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.
MORGAN STANLEY DEAN WITTER
S&P 500 SELECT FUND
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
TICKER SYMBOLS:
Class A: SSPAX
---------------------------------------
Class B: SSPBX
---------------------------------------
Class C: SSPCX
---------------------------------------
Class D: SSPDX
---------------------------------------
You also may obtain information about the Fund by calling your Morgan Stanley
Dean Witter Financial Advisor or by visiting our Internet site at:
WWW.DEANWITTER.COM/FUNDS
Information about the Fund (including the Statement of Additional Information)
can be viewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, DC. Information about the Reference Room's
operations may be obtained by calling the SEC at (800) SEC-0330. Reports and
other information about the Fund are available on the SEC's Internet site
(www.sec.gov), and copies of this information may be obtained, upon payment of
a duplicating fee, by writing the Public Reference Section of the SEC,
Washington, DC 20549-6009.
(INVESTMENT COMPANY ACT FILE NO. 811-8809)
STATEMENT OF ADDITIONAL INFORMATION
MORGAN STANLEY DEAN WITTER
S&P 500 SELECT FUND
JUNE , 1999
--------------------------------------------------------------------------------
This Statement of Additional Information is not a Prospectus. The
Prospectus dated June , 1999 for the Morgan Stanley Dean Witter S&P 500
Select 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 S&P 500 Select Fund
Two World Trade Center
New York, New York 10048
(800) 869-NEWS
TABLE OF CONTENTS
--------------------------------------------------------------------------------
[Enlarge/Download Table]
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 ..................................... 8
III. Management of the Fund ..................................................... 9
A. Board of Trustees ......................................................... 9
B. Management Information .................................................... 9
C. Compensation .............................................................. 14
IV. Control Persons and Principal Holders of Securities .......................... 16
V. Investment Management and Other Services ..................................... 16
A. Investment Manager ........................................................ 16
B. Principal Underwriter ..................................................... 17
C. Services Provided by the Investment Manager and Fund Expenses Paid by Third
Parties .................................................................. 17
D. Dealer Reallowances ....................................................... 18
E. Rule 12b-1 Plan ........................................................... 18
F. Other Service Providers ................................................... 22
VI. Brokerage Allocation and Other Practices ..................................... 22
A. Brokerage Transactions .................................................... 22
B. Commissions ............................................................... 23
C. Brokerage Selection ....................................................... 23
D. Directed Brokerage ........................................................ 24
E. Regular Broker-Dealers .................................................... 24
VII. Capital Stock and Other Securities ........................................... 24
VIII. Purchase, Redemption and Pricing of Shares ................................... 25
A. Purchase/Redemption of Shares ............................................. 25
B. Offering Price ............................................................ 25
IX. Taxation of the Fund and Shareholders ........................................ 26
X. Underwriters ................................................................. 28
XI. Calculation of Performance Data .............................................. 28
XII. Financial Statements ......................................................... 29
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" -- The Bank of New York.
"Dean Witter Reynolds" -- Dean Witter Reynolds Inc., a wholly-owned
broker-dealer subsidiary of MSDW.
"Distributor" -- Morgan Stanley Dean Witter Distributors Inc., a
wholly-owned broker-dealer subsidiary of MSDW.
"Financial Advisors" -- Morgan Stanley Dean Witter authorized financial
services representatives.
"Fund" -- Morgan Stanley Dean Witter S&P 500 Select Fund, a registered
open-end investment company.
"Investment Manager" -- Morgan Stanley Dean Witter Advisors Inc., a
wholly-owned investment advisor subsidiary of MSDW.
"Independent Trustees" -- Trustees who are not "interested persons" (as
defined by the Investment Company Act) of the Fund.
"Morgan Stanley & Co." -- Morgan Stanley & Co. Incorporated, a
wholly-owned broker-dealer subsidiary of MSDW.
"Morgan Stanley Dean Witter Funds" -- Registered investment companies (i)
for which the Investment Manager serves as the investment advisor; and (ii)
that hold themselves out to investors as related companies for investment and
investor services.
"MSDW" -- Morgan Stanley Dean Witter & Co., a preeminent global financial
services firm.
"MSDW Services Company" -- Morgan Stanley Dean Witter Services Company
Inc., a wholly-owned fund services subsidiary of the Investment Manager.
"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 as a Massachusetts business trust, under a
Declaration of Trust, on June 8, 1998, with the name Morgan Stanley Dean Witter
S&P 500 Select Fund.
II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
--------------------------------------------------------------------------------
A. CLASSIFICATION
The Fund is an open-end, diversified management investment company whose
investment objective is to provide a total return (before expenses) that
exceeds the total return of the S&P 500 Composite Stock Price Index.
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."
STOCK INDEX FUTURES TRANSACTIONS. The Fund may invest in stock index
futures.
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.
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 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 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 or 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 or U.S.
Government securities, called "variation margin," which are reflective of price
fluctuations in the futures contract.
Limitations on Futures Contracts. The Fund may not enter into futures
contracts 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. However,
there is no overall limitation on the percentage of the Fund's net assets which
may be subject to a hedge position.
4
Risks of Transactions in Futures Contracts. 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. Also, prices of futures contracts may not move in tandem
with the changes in prevailing market movements 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 market movement trends by the Investment Manager may still not
result in a successful hedging transaction.
There is no assurance that a liquid secondary market will exist for
futures contracts 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. In addition, limitations imposed
by an exchange or board of trade on which futures contracts are traded may
compel or prevent the Fund from closing out a contract which may result in
reduced gain or increased loss to the Fund. The absence of a liquid market in
futures contracts might cause the Fund to make or take delivery of the
underlying securities at a time when it may be disadvantageous to do so.
Exchanges 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. 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.
In the event of the bankruptcy of a broker through which the Fund engages
in transactions in futures, 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.
MONEY MARKET SECURITIES. The Fund may invest in various money market
securities for cash management purposes or when assuming a temporary defensive
position, which among others may include commercial paper, bank acceptances,
bank obligations, corporate debt securities, certificates of deposit, U.S.
Government securities, 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, time
deposits 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;
5
Fully Insured Certificates of Deposit. Certificates of deposit of banks
and savings institutions, having total assets of less than $1 billion, if the
principal amount of the obligation is federally insured by the Bank Insurance
Fund or the Savings Association Insurance Fund (each of which is administered
by the FDIC), limited to $100,000 principal amount per certificate and to 10%
or less of the Fund's total assets in all such obligations and in all illiquid
assets, in the aggregate;
Commercial Paper. Commercial paper rated within the two highest grades by
Standard & Poor's Corporation ("S&P") or the two highest grade by Moody's
Investors Service, Inc. ("Moody's") or, if not rated, issued by a company
having an outstanding debt issue rated at least AA by S&P or Aa by Moody's; and
Repurchase Agreements. The Fund may invest in repurchase agreements. When
cash may be available for only a few days, it may be invested by the Fund in
repurchase agreements until such time as it may otherwise be invested or used
for payments of obligations of the Fund. These agreements, which may be viewed
as a type of secured lending by the Fund, typically involve the acquisition by
the Fund of debt securities from a selling financial institution such as a
bank, savings and loan association or broker-dealer. The agreement provides
that the Fund will sell back to the institution, and that the institution will
repurchase, the underlying security serving as collateral at a specified price
and at a fixed time in the future, usually not more than seven days from the
date of purchase. The collateral will be marked-to-market daily to determine
that the value of the collateral, as specified in the agreement, does not
decrease below the purchase price plus accrued interest. If such decrease
occurs, additional collateral will be requested and, when received, added to
the account to maintain full collateralization. The Fund will accrue interest
from the institution until the time when the repurchase is to occur. Although
this date is deemed by the Fund to be the maturity date of a repurchase
agreement, the maturities of securities subject to repurchase agreements are
not subject to any limits.
While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Fund follows procedures designed to
minimize such risks. These procedures include effecting repurchase transactions
only with large, well-capitalized and well-established financial institutions
whose financial condition will be continually monitored by the Investment
Manager subject to procedures established by the Trustees. In addition, as
described above, the value of the collateral underlying the repurchase
agreement will be at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement. In the event of a default or
bankruptcy by a selling financial institution, the Fund will seek to liquidate
such collateral. However, the exercising of the Fund's right to liquidate such
collateral could involve certain costs or delays and, to the extent that
proceeds from any sale upon a default of the obligation to repurchase were less
than the repurchase price, the Fund could suffer a loss. It is the current
policy of the Fund not to invest in repurchase agreements that do not mature
within seven days if any such investment, together with any other illiquid
assets held by the Fund, amounts to more than 15% of its total assets.
LENDING PORTFOLIO SECURITIES. The Fund may lend its portfolio securities
to brokers, dealers and other financial institutions, provided that the loans
are callable at any time by the Fund, and are at all times secured by cash or
cash equivalents, which are maintained in a segregated account pursuant to
applicable regulations and that are equal to at least 100% of the market value,
determined daily, of the loaned securities. The advantage of these loans is
that the Fund continues to receive the income on the loaned securities while at
the same time earning interest on the cash amounts deposited as collateral,
which will be invested in short-term obligations. The Fund will not lend more
than 20% 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.
6
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. From
time to time the Fund may purchase securities on a when-issued or delayed
delivery basis or may purchase or sell securities on a forward commitment
basis. When these transactions are negotiated, the price is fixed at the time
of the commitment, but delivery and payment can take place a month or more
after the date of commitment. While the Fund will only purchase securities on a
when-issued, delayed delivery or forward commitment basis with the intention of
acquiring the securities, the Fund may sell the securities before the
settlement date, if it is deemed advisable. The securities so purchased or sold
are subject to market fluctuation and no interest or dividends accrue to the
purchaser prior to the settlement date.
At the time the Fund makes the commitment to purchase or sell securities
on a when-issued, delayed delivery or forward commitment basis, it will record
the transaction and thereafter reflect the value, each day, of such security
purchased, or if a sale, the proceeds to be received, in determining its net
asset value. At the time of delivery of the securities, their value may be more
or less than the purchase or sale price. An increase in the percentage of the
Fund's assets committed to the purchase of securities on a when-issued, delayed
delivery or forward commitment basis may increase the volatility of its net
asset value. The Fund will also establish a segregated account on the Fund's
books in which it will continually maintain cash or cash equivalents or other
liquid portfolio securities equal in value to commitments to purchase
securities on a when-issued, delayed delivery or forward commitment basis.
WHEN, AS AND IF ISSUED SECURITIES. The Fund may purchase securities on a
"when, as and if issued" basis under which the issuance of the security depends
upon the occurrence of a subsequent event, such as approval of a merger,
corporate reorganization or debt restructuring. The commitment for the purchase
of any such security will not be recognized in the portfolio of the Fund until
the Investment Manager determines that issuance of the security is probable. At
that time, the Fund will record the transaction and, in determining its net
asset value, will reflect the value of the security daily. At that time, the
Fund will also establish a segregated account on the Fund's books in which it
will maintain cash or cash equivalents or other liquid portfolio securities
equal in value to recognized commitments for such securities.
The value of the Fund's commitments to purchase the securities of any one
issuer, together with the value of all securities of such issuer owned by the
Fund, may not exceed 5% of the value of the Fund's total assets at the time the
initial commitment to purchase such securities is made. An increase in the
percentage of the Fund's total 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.
YEAR 2000. The investment management services provided to the Fund by the
Investment Manager and the services provided to shareholders by the Distributor
and the Transfer Agent depend on the smooth functioning of their computer
systems. Many computer software systems in use today cannot recognize the year
2000, but revert to 1900 or some other date, due to the manner in which dates
were encoded and calculated. That failure could have a negative impact on the
handling of securities trades, pricing and account services. The Investment
Manager, the Distributor and the Transfer Agent have been actively working on
necessary changes to their own computer systems to prepare for the year 2000
and expect that their systems will be adapted before that date, but there can
be no assurance that they will be successful, or that interaction with other
non-complying computer systems will not impair their services at that time.
In addition, it is possible that the markets for securities in which the
Fund invests may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000. Improperly functioning
trading systems may result in settlement problems and liquidity
7
issues. In addition, corporate and governmental data processing errors may
result in production problems for individual companies and overall economic
uncertainties. Earnings of individual issuers will be affected by remediation
costs, which may be substantial and may be reported inconsistently in U.S. and
foreign financial statements. Accordingly, the Fund's investments may be
adversely affected.
C. FUND POLICIES/INVESTMENT RESTRICTIONS
The investment objective, policies and restrictions listed below have been
adopted by the Fund as fundamental policies. Under the Investment Company Act
of 1940 (the "Investment Company Act"), a fundamental policy may not be changed
without the vote of a majority of the outstanding voting securities of the
Fund. The Investment Company Act defines a majority as the lesser of (a) 67% or
more of the shares present at a meeting of shareholders, if the holders of 50%
of the outstanding shares of the Fund are present or represented by proxy; or
(b) more than 50% of the outstanding shares of the Fund. For purposes of the
following restrictions: (i) all percentage limitations apply immediately after
a purchase or initial investment; and (ii) any subsequent change in any
applicable percentage resulting from market fluctuations or other changes in
total or net assets does not require elimination of any security from the
portfolio.
The Fund will:
1. Seek to provide a total return (before expenses) that exceeds the total
return of the S&P 500 Composite Stock Price Index.
The Fund may not:
1. As to 75% of its total assets, invest more than 5% of the value of its
total assets in the securities of any one issuer (other than obligations
issued, or guaranteed by, the United States Government, its agencies or
instrumentalities), except that the Fund may invest all or substantially
all of its assets in another registered investment company having the
same investment objective and policies and substantially the same
investment restrictions as the Fund.
2. As to 75% of its total assets, purchase more than 10% of all
outstanding voting securities or any class of securities of any one
issuer, except that the Fund may invest all or substantially all of its
assets in another registered investment company having the same
investment objective and policies and substantially the same investment
restrictions as the Fund.
3. 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 or its
agencies or instrumentalities.
4. 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.
5. Purchase or sell commodities or commodities contracts except that the
Fund may purchase or sell index futures contracts.
6. Purchase oil, gas or other mineral leases, rights or royalty contracts
or exploration or development programs, except that the Fund may invest
in the securities of companies which operate, invest in, or sponsor such
programs.
7. 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).
8. Pledge its assets or assign or otherwise encumber them except to secure
permitted borrowings.
9. 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
8
agreement; (b) purchasing or selling futures contracts or options; (c)
borrowing money in accordance with restrictions described above; (d)
purchasing any securities on a when-issued or delayed delivery basis; or
(e) lending portfolio securities.
10. Make loans of money or securities, except: (a) by the purchase of debt
obligations in which the Fund may invest consistent with its investment
objective and policies; (b) by investment in repurchase agreements; or
(c) by lending its portfolio securities.
11. Make short sales of securities.
12. Purchase securities on margin, except for such short-term loans as are
necessary for the clearance of portfolio securities. The deposit or
payment by the Fund of initial or variation margin in connection with
futures contracts or related options is not considered the purchase of a
security on margin.
13. Invest more than 15% of its total assets in "illiquid securities"
(securities for which market quotations are not readily available),
restricted securities and repurchase agreements which have a maturity of
longer than seven days.
14. Engage in the underwriting of securities, except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in
disposing of a portfolio security.
15. Invest for the purpose of exercising control or management of any other
issuer, except that the Fund may invest all or substantially all of its
assets in another registered investment company having the same
investment objective and policies and substantially the same investment
restrictions as the Fund.
III. MANAGEMENT OF THE FUND
--------------------------------------------------------------------------------
A. BOARD OF TRUSTEES
The Board of Trustees of the Fund oversees the management of the Fund but
does not itself manage the Fund. The Trustees review various services provided
by or under the direction of the Investment Manager to ensure that the Fund's
general investment policies and programs are properly carried out. The Trustees
also conduct their review to ensure that administrative services are provided
to the Fund in a satisfactory manner.
Under state law, the duties of the Trustees are generally characterized as
a duty of loyalty and a duty of care. The duty of loyalty requires a Trustee to
exercise his or her powers in the interest of the Fund and not the Trustee's
own interest or the interest of another person or organization. A Trustee
satisfies his or her duty of care by acting in good faith with the care of an
ordinarily prudent person and in a manner the Trustee reasonably believes to be
in the best interest of the Fund and its shareholders.
B. MANAGEMENT INFORMATION
TRUSTEES AND OFFICERS. The Board of the Fund consists of eight (8)
Trustees. These same individuals also serve as directors or trustees for all of
the Morgan Stanley Dean Witter Funds. Six Trustees (75% of the total number)
have no affiliation or business connection with the Investment Manager or any
of its affiliated persons and do not own any stock or other securities issued
by the Investment Manager's parent company, MSDW. These are the
"non-interested" or "independent" Trustees. The other two Trustees (the
"management Trustees") are affiliated with the Investment Manager. All of the
Independent Trustees also serve as Independent Trustees of "Discover Brokerage
Index Series", a mutual fund for which the Investment Manager is the investment
advisor. Three of the six Independent Trustees are also Independent Trustees of
certain other mutual funds, referred to as the "TCW/DW Funds," for which MSDW
Services Company is the manager and TCW Funds Management, Inc. is the
investment advisor.
The Trustees and executive officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with the
Investment Manager, and with the 85 Morgan Stanley
9
Dean Witter Funds, the 11 TCW/DW Funds and Discover Brokerage Index Series are
shown below.
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NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
------------------------------------------- -----------------------------------------------------
Michael Bozic (58) ........................ Vice Chairman of Kmart Corporation (since
Trustee December, 1998); Director or Trustee of the Morgan
c/o Kmart Corporation Stanley Dean Witter Funds and Discover Brokerage
3100 West Big Beaver Road Index Series; formerly Chairman and Chief
Troy, Michigan Executive Officer of Levitz Furniture Corporation
(November, 1995-November, 1998) and President
and Chief Executive Officer of Hills Department
Stores (May, 1991-July, 1995); formerly variously
Chairman, Chief Executive Officer, President and
Chief Operating Officer (1987-1991) of the Sears
Merchandise Group of Sears, Roebuck and Co.;
Director of Eaglemark Financial Services, Inc. and
Weirton Steel Corporation.
Charles A. Fiumefreddo* (66) .............. Chairman, Director or Trustee and Chief Executive
Chairman of the Board, Chief Officer of the Morgan Stanley Dean Witter Funds,
Executive Officer and Trustee the TCW/DW Funds and Discover Brokerage Index
Two World Trade Center Series; formerly Chairman, Chief Executive Officer
New York, New York and Director of the Investment Manager, the
Distributor and MSDW Services Company;
Executive Vice President and Director of Dean
Witter Reynolds; Chairman and Director of the
Transfer Agent; formerly Director and/or officer of
various MSDW subsidiaries (until June, 1998).
Edwin J. Garn (66) ........................ Director or Trustee of the Morgan Stanley Dean
Trustee Witter Funds and Discover Brokerage Index Series;
c/o Huntsman Corporation formerly United States Senator (R-Utah)
500 Huntsman Way (1974-1992) and Chairman, Senate Banking
Salt Lake City, Utah Committee (1980-1986); formerly Mayor of Salt
Lake City, Utah (1971-1974); formerly Astronaut,
Space Shuttle Discovery (April 12-19, 1985); Vice
Chairman, Huntsman Corporation; Director of
Franklin Covey (time management systems), BMW
Bank of North America, Inc. (industrial loan
corporation), United Space Alliance (joint
venture between Lockheed Martin and the
Boeing Company) and Nuskin Asia Pacific
(multilevel marketing); member of the board of
various civic and charitable organizations.
Wayne E. Hedien (65) ...................... Retired; Director or Trustee of the Morgan Stanley
Trustee Dean Witter Funds and Discover Brokerage Index
c/o Gordon Altman Butowsky Series; Director of The PMI Group, Inc. (private
Weitzen Shalov & Wein mortgage insurance); Trustee and Vice Chairman
Counsel to the Independent Trustees of The Field Museum of Natural History; formerly
114 West 47th Street associated with the Allstate Companies
New York, New York (1966-1994), most recently as Chairman of The
Allstate Corporation (March, 1993-December,
1994) and Chairman and Chief Executive Officer of
its wholly-owned subsidiary, Allstate Insurance
Company (July, 1989-December, 1994); director of
various other business and charitable organizations.
10
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NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
------------------------------------------- -----------------------------------------------------
Dr. Manuel H. Johnson (50) ................ Senior Partner, Johnson Smick International, Inc.,
Trustee a consulting firm; Co-Chairman and a founder of
c/o Johnson Smick International, Inc. the Group of Seven Council (G7C), an international
1133 Connecticut Avenue, N.W. economic commission; Chairman of the Audit
Washington, D.C. Committee and Director or Trustee of the Morgan
Stanley Dean Witter Funds, the TCW/DW Funds
and Discover Brokerage Index Series; Director of
Greenwich Capital Markets, Inc. (broker-dealer)
and NVR, Inc. (home construction); Chairman and
Trustee of the Financial Accounting Foundation
(oversight organization of the Financial Accounting
Standards Board); formerly Vice Chairman of the
Board of Governors of the Federal Reserve System
(1986-1990) and Assistant Secretary of the U.S.
Treasury.
Michael E. Nugent (63) .................... General Partner, Triumph Capital, L.P., a private
Trustee investment partnership; Chairman of the Insurance
c/o Triumph Capital, L.P. Committee and Director or Trustee of the Morgan
237 Park Avenue Stanley Dean Witter Funds, the TCW/DW Funds
New York, New York and Discover Brokerage Index Series; formerly
Vice President, Bankers Trust Company and BT
Capital Corporation (1984-1988); director of various
business organizations.
Philip J. Purcell* (55) ................... Chairman of the Board of Directors and Chief
Trustee Executive Officer of MSDW, Dean Witter Reynolds
1585 Broadway and Novus Credit Services Inc.; Director of the
New York, New York Distributor; Director or Trustee of the Morgan
Stanley Dean Witter Funds and Discover Brokerage
Index Series; Director and/or officer of various
MSDW subsidiaries.
John L. Schroeder (68) .................... Retired; Chairman of the Derivatives Committee
Trustee and Director or Trustee of the Morgan Stanley
c/o Gordon Altman Butowsky Dean Witter Funds, the TCW/DW Funds and
Weitzen Shalov & Wein Discover Brokerage Index Series; Director of
Counsel to the Independent Trustees Citizens Utilities Company; formerly Executive
114 West 47th Street Vice President and Chief Investment Officer of
New York, New York the Home Insurance Company (August, 1991
-September, 1995).
11
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NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
------------------------------------------- -----------------------------------------------------
Mitchell M. Merin (45) .................... President and Chief Operating Officer of Asset
President Management of MSDW (since December, 1998);
Two World Trade Center President and Director (since April, 1997) and
New York, New York Chief Executive Officer (since June, 1998) of the
Investment Manager and MSDW Services
Company; Chairman, Chief Executive Officer and
Director of the Distributor (since June, 1998);
Chairman and Chief Executive Officer (since June,
1998) and Director (since January, 1998) of the
Transfer Agent; Director of various MSDW
subsidiaries; President of the Morgan Stanley Dean
Witter Funds, the TCW/DW Funds and Discover
Brokerage Index Series (since May, 1999);
previously Chief Strategic Officer of the Investment
Manager and MSDW Services Company and
Executive Vice President of the Distributor
(April, 1997-June, 1998), Vice President of the
Morgan Stanley Dean Witter Funds, the TCW/DW
Funds and Discover Brokerage Index Series
(May, 1997-April, 1999), and Executive Vice
President of Dean Witter, Discover & Co.
Barry Fink (44) ........................... Senior Vice President (since March, 1997) and
Vice President, Secretary and General Counsel (since February,
Secretary and General Counsel 1997) and Director (since July, 1998) of the
Two World Trade Center Investment Manager and MSDW Services
New York, New York Company; Senior Vice President (since March,
1997) and Assistant Secretary and Assistant
General Counsel (since February, 1997) of the
Distributor; Assistant Secretary of Dean Witter
Reynolds (since August, 1996); Vice President,
Secretary and General Counsel of the Morgan
Stanley Dean Witter Funds and the TCW/DW
Funds (since February, 1997); Vice President,
Secretary and General Counsel of Discover
Brokerage Index Series; previously First Vice
President (June, 1993-February, 1997), Vice
President and Assistant Secretary and Assistant
General Counsel of the Investment Manager and
MSDW Services Company and Assistant Secretary
of the Morgan Stanley Dean Witter Funds and the
TCW/DW Funds.
Guy G. Rutherfurd, Jr. (59) ............... Senior Vice President of the Investment Manager
Vice President (since February, 1997); formerly Executive Vice
Two World Trade Center President and Chief Investment Officer of Nomura
New York, New York Asset Management (U.S.A.) Inc. (May,
1992-February, 1997).
Kevin Jung (32) ........................... Vice President of MSDW Advisors (since
Assistant Vice President September, 1997); formerly Vice President of UBS
Two World Trade Center Asset Management (NY) Inc. (April, 1993-
New York, New York August, 1997).
----------
* Denotes Trustees who are "interested persons" of the Fund, as defined in the
Investment Company Act.
12
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NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
------------------------------------------- ----------------------------------------------------
Thomas F. Caloia (53) ..................... First Vice President and Assistant Treasurer of the
Treasurer Investment Manager and MSDW Services
Two World Trade Center Company; Treasurer of the Morgan Stanley Dean
New York, New York Witter Funds, the TCW/DW Funds and Discover
Brokerage Index Series.
In addition, Ronald E. Robison, Executive Vice President, Chief
Administrative Officer and Director of the Investment Manager and MSDW Services
Company, Robert S. Giambrone, Senior Vice President of the Investment Manager,
MSDW Services Company, the Distributor and the Transfer Agent and Director of
the Transfer Agent, Joseph J. McAlinden, Executive Vice President and Chief
Investment Officer of the Investment Manager and Director of the Transfer
Agent, and Jayne M. Stevlingson, Senior Vice President of the Investment
Manager, and Peter Hermann, George Paoletti and Teresa McRoberts, Vice
Presidents of the Investment Manager, are Vice Presidents of the Fund and Alice
Weiss, Vice President of the Investment Manager, is an Assistant Vice President
of the Fund.
In addition, Frank Bruttomesso, Marilyn K. Cranney, Lou Anne D. McInnis,
Carsten Otto and Ruth Rossi, First Vice Presidents and Assistant General
Counsels of the Investment Manager and MSDW Services Company, and Todd Lebo,
Vice President and Assistant General Counsel of the Investment Manager and MSDW
Services Company, are Assistant Secretaries of the Fund.
INDEPENDENT TRUSTEES AND THE COMMITTEES. Law and regulation establish both
general guidelines and specific duties for the Independent Trustees. The Morgan
Stanley Dean Witter Funds seek as Independent Trustees individuals of
distinction and experience in business and finance, government service or
academia; these are people whose advice and counsel are in demand by others and
for whom there is often competition. To accept a position on the Funds' Boards,
such individuals may reject other attractive assignments because the Funds make
substantial demands on their time. All of the Independent Trustees serve as
members of the Audit Committee. In addition, three of the Trustees, including
two Independent Trustees, serve as members of the Derivatives Committee and the
Insurance Committee.
The Independent Trustees are charged with recommending to the full Board
approval of management, advisory and administration contracts, Rule 12b-1 plans
and distribution and underwriting agreements; continually reviewing Fund
performance; checking on the pricing of portfolio securities, brokerage
commissions, transfer agent costs and performance, and trading among Funds in
the same complex; and approving fidelity bond and related insurance coverage
and allocations, as well as other matters that arise from time to time. The
Independent Trustees are required to select and nominate individuals to fill
any Independent Trustee vacancy on the Board of any Fund that has a Rule 12b-1
plan of distribution. Most of the Morgan Stanley Dean Witter Funds have a Rule
12b-1 plan.
The Audit Committee is charged with recommending to the full Board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing engagement;
approving professional services provided by the independent accountants and
other accounting firms prior to the performance of the services; reviewing the
independence of the independent accountants; considering the range of audit and
non-audit fees; reviewing the adequacy of the Fund's system of internal
controls; and preparing and submitting Committee meeting minutes to the full
Board.
The Board of each Fund has a Derivatives Committee to approve parameters
for and monitor the activities of the Fund with respect to derivative
investments, if any, made by the Fund.
Finally, the Board of each Fund has formed an Insurance Committee to
review and monitor the insurance coverage maintained by the Fund.
ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT TRUSTEES FOR ALL
MORGAN STANLEY DEAN WITTER FUNDS. The Independent Trustees and the Funds'
management believe that having the
13
same Independent Trustees for each of the Morgan Stanley Dean Witter Funds
avoids the duplication of effort that would arise from having different groups
of individuals serving as Independent Trustees for each of the Funds or even of
sub-groups of Funds. They believe that having the same individuals serve as
Independent Trustees of all the Funds tends to increase their knowledge and
expertise regarding matters which affect the Fund complex generally and
enhances their ability to negotiate on behalf of each Fund with the Fund's
service providers. This arrangement also precludes the possibility of separate
groups of Independent Trustees arriving at conflicting decisions regarding
operations and management of the Funds and avoids the cost and confusion that
would likely ensue. Finally, having the same Independent Trustees serve on all
Fund Boards enhances the ability of each Fund to obtain, at modest cost to each
separate Fund, the services of Independent Trustees, of the caliber, experience
and business acumen of the individuals who serve as Independent Trustees of the
Morgan Stanley Dean Witter Funds.
TRUSTEE AND OFFICER INDEMNIFICATION. The Fund's Declaration of Trust
provides that no Trustee, officer, employee or agent of the Fund is liable to
the Fund or to a shareholder, nor is any Trustee, officer, employee or agent
liable to any third persons in connection with the affairs of the Fund, except
as such liability may arise from his/her or its own bad faith, willful
misfeasance, gross negligence or reckless disregard of his/her or its duties.
It also provides that all third persons shall look solely to the Fund property
for satisfaction of claims arising in connection with the affairs of the Fund.
With the exceptions stated, the Declaration of Trust provides that a Trustee,
officer, employee or agent is entitled to be indemnified against all liability
in connection with the affairs of the Fund.
C. COMPENSATION
The Fund pays each Independent Trustee an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Trustees, the Independent
Trustees or Committees of the Board of Trustees attended by the Trustee (the
Fund pays the Chairman of the Audit Committee an additional annual fee of $750,
and the Chairmen of the Derivatives and Insurance Committees additional annual
fees of $500). If a Board meeting and a meeting of the Independent Trustees or
a Committee meeting, or a meeting of the Independent Trustees and/or more than
one Committee meeting, take place on a single day, the Trustees are paid a
single meeting fee by the Fund. The Fund also reimburses such Trustees for
travel and other out-of-pocket expenses incurred by them in connection with
attending such meetings. Trustees and officers of the Fund who are or have been
employed by the Investment Manager or an affiliated company receive no
compensation or expense reimbursement from the Fund for their services as
Trustee.
At such time as the Fund has been in operation, and has paid fees to the
Independent Trustees, for a full fiscal year, and assuming that during such
fiscal year the Fund holds the same number of meetings of the Board, the
Independent Trustees and the Committees as were held by the other Morgan
Stanley Dean Witter Funds during the calendar year ended December 31, 1998, it
is estimated that the compensation paid to each Independent Trustee during such
fiscal year will be the amount shown in the following table:
FUND COMPENSATION (ESTIMATED)
[Download Table]
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT TRUSTEE FROM THE FUND
------------------------------- --------------
Michael Bozic ................. $1,650
Edwin J. Garn ................. 1,650
Wayne E. Hedien ............... 1,650
Dr. Manuel H. Johnson ......... 2,400
Michael E. Nugent ............. 2,150
John L. Schroeder ............. 2,150
14
The following table illustrates the compensation paid to the Fund's
Independent Trustees for the calendar year ended December 31, 1998 for services
to the 85 Morgan Stanley Dean Witter Funds and, in the case of Messrs. Johnson,
Nugent and Schroeder, the 11 TCW/DW Funds that were in operation at December
31, 1998. With respect to Messrs. Johnson, Nugent and Schroeder, the TCW/DW
Funds are included solely because of a limited exchange privilege between those
Funds and five Morgan Stanley Dean Witter Money Market Funds. No compensation
was paid to the Fund's Independent Trustees by Discover Brokerage Index Series
for the calendar year ended December 31, 1998.
CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS AND TCW/DW FUNDS
[Download Table]
FOR SERVICE TOTAL CASH
AS DIRECTOR COMPENSATION
OR TRUSTEE FOR SERVICE FOR SERVICES
AND COMMITTEE AS TRUSTEE TO 85
MEMBER OF 85 AND COMMITTEE MORGAN STANLEY
MORGAN STANLEY MEMBER OF 11 DEAN WITTER
NAME OF DEAN WITTER TCW/DW FUNDS AND 11
INDEPENDENT TRUSTEE FUNDS FUNDS TCW/DW FUNDS
--------------------------- ---------------- --------------- ---------------
Michael Bozic ............. $120,150 -- $120,150
Edwin J. Garn ............. 132,450 -- 132,450
Wayne E. Hedien ........... 132,350 -- 132,350
Dr. Manuel H. Johnson 128,400 62,331 190,731
Michael E. Nugent ......... 132,450 62,131 194,581
John L. Schroeder ......... 132,450 64,731 197,181
As of the date of this Statement of Additional Information, 55 of the
Morgan Stanley Dean Witter Funds, not including the Fund, have adopted a
retirement program under which an Independent Trustee who retires after serving
for at least five years (or such lesser period as may be determined by the
Board) as an Independent Director or Trustee of any Morgan Stanley Dean Witter
Fund that has adopted the retirement program (each such Fund referred to as an
"Adopting Fund" and each such Trustee referred to as an "Eligible Trustee") is
entitled to retirement payments upon reaching the eligible retirement age
(normally, after attaining age 72). Annual payments are based upon length of
service.
Currently, upon retirement, each Eligible Trustee is entitled to receive
from the Adopting Fund, commencing as of his or her retirement date and
continuing for the remainder of his or her life, an annual retirement benefit
(the "Regular Benefit") equal to 30.22% of his or her Eligible Compensation
plus 0.5036667% of such Eligible Compensation for each full month of service as
an Independent Director or Trustee of any Adopting Fund in excess of five years
up to a maximum of 60.44% after ten years of 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 not secured or funded by
the Adopting Funds.
The following table illustrates the retirement benefits accrued to the
Fund's Independent Trustees by the 55 Morgan Stanley Dean Witter Funds (not
including the Fund) for the calendar year ended December 31, 1998, and the
estimated retirement benefits for the Fund's Independent Trustees, to commence
upon their retirement, from the 55 Morgan Stanley Dean Witter Funds as of the
calendar year ended December 31, 1998.
----------
(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.
15
RETIREMENT BENEFITS FROM ALL MORGAN STANLEY DEAN WITTER FUNDS
[Enlarge/Download Table]
FOR ALL ADOPTING FUNDS
----------------------------------
ESTIMATED
CREDITED YEARS ESTIMATED RETIREMENT ESTIMATED
OF SERVICE AT PERCENTAGE OF BENEFITS ACCRUED ANNUAL BENEFITS UPON
NAME OF RETIREMENT ELIGIBLE AS EXPENSES BY ALL RETIREMENT FROM ALL
INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION ADOPTING FUNDS ADOPTING FUNDS(2)
------------------------------- ---------------- --------------- -------------------- ---------------------
Michael Bozic ................. 10 60.44% $22,377 $52,250
Edwin J. Garn ................. 10 60.44 35,225 52,250
Wayne E. Hedien ............... 9 51.37 41,979 44,413
Dr. Manuel H. Johnson ......... 10 60.44 14,047 52,250
Michael E. Nugent ............. 10 60.44 25,336 52,250
John L. Schroeder ............. 8 50.37 45,117 44,343
----------
(2) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in Footnote (1)
above.
IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
--------------------------------------------------------------------------------
[5% ownership list]
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
The Investment Manager to the Fund is Morgan Stanley Dean Witter Advisors
Inc., a Delaware corporation, whose address is Two World Trade Center, New
York, New York 10048. The Investment Manager is a wholly-owned subsidiary of
MSDW, a Delaware corporation. MSDW is a preeminent global financial services
firm that maintains leading market positions in each of its three primary
businesses: securities, asset management and credit services.
Pursuant to an Investment Management Agreement (the "Management
Agreement") with the Investment Manager, the Fund has retained the Investment
Manager to provide administrative services and manage the investment of the
Fund's assets, including the placing of orders for the purchase and sale of
portfolio securities. The Fund pays the Investment Manager monthly compensation
calculated daily by applying the following annual rates to the net assets of
the Fund determined as of the close of each business day: 0.60% The management
fee is allocated among the Classes pro rata based on the net assets of the Fund
attributable to each Class. For the period September 28, 1998 (commencement of
operations) through February 28, 1999 the Investment Manager accrued total
compensation under the Management Agreement in the amount of $132,990. This
amount takes into account that the Investment Manager had agreed to assume all
expenses (except for brokerage and 12b-1 fees) and to waive the compensation
provided for in its Management Agreement until such time as the Fund had $50
million of net assets or until six months from the date of commencement of the
Fund's operations, whichever occurred first. This waiver and assumption is no
longer in effect.
The Investment Manager has retained its wholly-owned subsidiary, MSDW
Services Company, to perform administrative services for the Fund.
16
B. PRINCIPAL UNDERWRITER
The Fund's principal underwriter is the Distributor (which has the same
address as the Investment Manager). In this capacity, the Fund's shares are
distributed by the Distributor. The Distributor has entered into a selected
dealer agreement with Dean Witter Reynolds, which through its own sales
organization sells shares of the Fund. In addition, the Distributor may enter
into similar agreements with other selected broker-dealers. The Distributor, a
Delaware corporation, is a wholly-owned subsidiary of MSDW.
The Distributor bears all expenses it may incur in providing services
under the Distribution Agreement. These expenses include the payment of
commissions for sales of the Fund's shares and incentive compensation to
Financial Advisors. The Distributor also pays certain expenses in connection
with the distribution of the Fund's shares, including the costs of preparing,
printing and distributing advertising or promotional materials, and the costs
of printing and distributing prospectuses and supplements thereto used in
connection with the offering and sale of the Fund's shares. The Fund bears the
costs of initial typesetting, printing and distribution of prospectuses and
supplements thereto to shareholders. The Fund also bears the costs of
registering the Fund and its shares under federal and state securities laws and
pays filing fees in accordance with state securities laws.
The Fund and the Distributor have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act. Under the
Distribution Agreement, the Distributor uses its best efforts in rendering
services to the Fund, but in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations, the Distributor is
not liable to the Fund or any of its shareholders for any error of judgment or
mistake of law or for any act or omission or for any losses sustained by the
Fund or its shareholders.
C. SERVICES PROVIDED BY THE INVESTMENT MANAGER AND FUND EXPENSES PAID BY THIRD
PARTIES
The Investment Manager manages the investment of the Fund's assets,
including the placing of orders for the purchase and sale of portfolio
securities. The Investment Manager obtains and evaluates the information and
advice relating to the economy, securities markets, and specific securities as
it considers necessary or useful to continuously manage the assets of the Fund
in a manner consistent with its investment objective.
Under the terms of the Management Agreement, in addition to managing the
Fund's investments, the Investment Manager maintains certain of the Fund's
books and records and furnishes, at its own expense, the office space,
facilities, equipment, clerical help, bookkeeping and certain legal services as
the Fund may reasonably require in the conduct of its business, including the
preparation of prospectuses, proxy statements and reports required to be filed
with federal and state securities commissions (except insofar as the
participation or assistance of independent accountants and attorneys is, in the
opinion of the Investment Manager, necessary or desirable). In addition, the
Investment Manager pays the salaries of all personnel, including officers of
the Fund, who are employees of the Investment Manager. The Investment Manager
also bears the cost of telephone service, heat, light, power and other
utilities provided to the Fund.
Expenses not expressly assumed by the Investment Manager under the
Management Agreement or by the Distributor, will be paid by the Fund. These
expenses will be allocated among the four Classes of shares pro rata based on
the net assets of the Fund attributable to each Class, except as described
below. Such expenses include, but are not limited to: expenses of the Plan of
Distribution pursuant to Rule 12b-1; charges and expenses of any registrar,
custodian, stock transfer and dividend disbursing agent; brokerage commissions;
taxes; engraving and printing share certificates; registration costs of the
Fund and its shares under federal and state securities laws; the cost and
expense of printing, including typesetting, and distributing prospectuses of
the Fund and supplements thereto to the Fund's shareholders; all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing of
proxy statements and reports to shareholders; fees and travel expenses of
Trustees or members of any advisory board or committee who are not employees of
the Investment Manager or any corporate affiliate of the Investment Manager;
all expenses incident to any dividend, withdrawal or
17
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 (not including compensation or expenses of attorneys who are
employees of the Investment Manager); fees and expenses of the Fund's
independent accountants; membership dues of industry associations; interest on
Fund borrowings; postage; insurance premiums on property or personnel
(including officers and 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
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 annual rate of 0.25% of the average daily net assets of Class A
and 1.0% of the average daily net assets of each of Class B and Class C.
The Distributor also receives the proceeds of front-end sales charges
("FSCs") and of contingent deferred sales charges ("CDSCs") imposed on certain
redemptions of shares, which are separate and apart from payments made pursuant
to the Plan. The Distributor has informed the Fund that it and/or Dean Witter
Reynolds received the proceeds of CDSCs and FSCs, for the period September 28,
1998 (commencement of operations) through February 28, 1999, in approximate
amounts as provided in the table below (the Distributor did not retain any of
these amounts).
[Download Table]
FOR THE PERIOD
SEPTEMBER 28, 1998
THROUGH
FEBRUARY 28, 1999
------------------------
Class A ......... FSCs:(1) $21,224
CDSCs: $ 0
Class B ......... CDSCs: $34,119
Class C ......... CDSCs: $ 3,891
----------
(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
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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. For the period September 28,
1998 (commencement of operations) through February 28, 1999, Class A, Class B
and Class C shares of the Fund accrued payments under the Plan amounting to
$2,495, $248,111 and $17,478, respectively, which amounts are equal to 0.25%,
1.00% and 1.00% of the average daily net assets of Class A, Class B and Class
C, respectively, for the fiscal year.
The Plan was adopted in order to permit the implementation of the Fund's
method of distribution. Under this distribution method the Fund offers four
Classes, each with a different distribution arrangement.
With respect to Class A shares, Dean Witter Reynolds compensates its
Financial Advisors by paying them, from proceeds of the FSC, commissions for
the sale of Class A shares, currently a gross sales credit of up to 5.0% of the
amount sold (except as provided in the following sentence) and an annual
residual commission, currently a residual of up to 0.25% of the current value
of the respective accounts for which they are the Financial Advisors or dealers
of record in all cases. On orders of $1 million or more (for which no sales
charge was paid) or net asset value purchases by employer-sponsored employee
benefit plans, whether or not qualified under the Internal Revenue Code, for
which the Transfer Agent serves as Trustee or Dean Witter Reynolds Retirement
Plan Services serves as recordkeeper pursuant to a written Recordkeeping
Services Agreement ("MSDW Eligible Plans"), 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.
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, the Investment
Manager compensates Dean Witter Reynolds's 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's Financial Advisors by paying them, from its own funds, an
annual residual commission, currently up to 0.10% of the current value of the
respective accounts for which they are the Financial Advisors of record (not
including accounts of participants in the Investment Manager's mutual fund
asset allocation program).
The gross sales credit is a charge which reflects commissions paid by Dean
Witter Reynolds to its Financial Advisors and Dean Witter Reynolds's
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's branch offices in
connection with the sale of Fund shares, including lease costs, the salaries
and employee benefits of operations and sales support
19
personnel, utility costs, communications costs and the costs of stationery and
supplies; (b) the costs of client sales seminars; (c) travel expenses of mutual
fund sales coordinators to promote the sale of Fund shares; and (d) other
expenses relating to branch promotion of Fund sales.
The distribution fee that the Distributor receives from the Fund under the
Plan, in effect, offsets distribution expenses incurred under the Plan on
behalf of the Fund and, in the case of Class B shares, opportunity costs, such
as the gross sales credit and an assumed interest charge thereon ("carrying
charge"). In the Distributor's reporting of the distribution expenses to the
Fund, in the case of Class B shares, such assumed interest (computed at the
"broker's call rate") has been calculated on the gross credit as it is reduced
by amounts received by the Distributor under the Plan and any contingent
deferred sales charges received by the Distributor upon redemption of shares of
the Fund. No other interest charge is included as a distribution expense in the
Distributor's calculation of its distribution costs for this purpose. The
broker's call rate is the interest rate charged to securities brokers on loans
secured by exchange-listed securities.
The Fund is authorized to reimburse expenses incurred or to be incurred in
promoting the distribution of the Fund's Class A and Class C shares and in
servicing shareholder accounts. Reimbursement will be made through payments at
the end of each month. The amount of each monthly payment may in no event
exceed an amount equal to a payment at the annual rate of 0.25%, in the case of
Class A, and 1.0%, in the case of Class C, of the average net assets of the
respective Class during the month. No interest or other financing charges, if
any, incurred on any distribution expenses on behalf of Class A and Class C
will be reimbursable under the Plan. With respect to Class A, in the case of
all expenses other than expenses representing the service fee, and, with
respect to Class C, in the case of all expenses other than expenses
representing a gross sales credit or a residual to Financial Advisors and other
authorized financial representatives, such amounts shall be determined at the
beginning of each calendar quarter by the Trustees, including, a majority of
the Independent Trustees. Expenses representing the service fee (for Class A)
or a gross sales credit or a residual to Financial Advisors and other
authorized financial representatives (for Class C) may be reimbursed without
prior determination. In the event that the Distributor proposes that monies
shall be reimbursed for other than such expenses, then in making quarterly
determinations of the amounts that may be reimbursed by the Fund, the
Distributor will provide and the Trustees will review a quarterly budget of
projected distribution expenses to be incurred on behalf of the Fund, together
with a report explaining the purposes and anticipated benefits of incurring
such expenses. The Trustees will determine which particular expenses, and the
portions thereof, that may be borne by the Fund, and in making such a
determination shall consider the scope of the Distributor's commitment to
promoting the distribution of the Fund's Class A and Class C shares.
Each Class paid 100% of the amounts accrued under the Plan with respect to
that Class for the period September 28, 1998 (commencement of operations)
through February 28, 1999 to the Distributor. The Distributor and Dean Witter
Reynolds estimate that they have spent, pursuant to the Plan, $3,222,346 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) 4.98%
($160,473)--advertising and promotional expenses; (ii) 3.46%
($111,624)--printing of prospectuses for distribution to other than current
shareholders; and (iii) 91.56% ($2,950,249)--other expenses, including the
gross sales credit and the carrying charge, of which 1.55% ($45,851) represents
carrying charges, 40.76% ($1,202,421) 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 57.69% ($1,701,977) represents overhead and other branch
office distribution-related expenses. The amounts accrued by Class A and Class
C for distribution during the period September 28, 1998 (commencement of
operations) through February 28, 1999 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
20
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
$2,944,607 as of February 28, 1999 (end of the fiscal period), which was equal
to 3.55% of the net assets of Class B on such date. Because there is no
requirement under the Plan that the Distributor be reimbursed for all
distribution expenses with respect to Class B shares or any requirement that
the Plan be continued from year to year, this excess amount does not constitute
a liability of the Fund. Although there is no legal obligation for the Fund to
pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of CDSCs paid by investors upon redemption of shares, if
for any reason the Plan is terminated, the Trustees will consider at that time
the manner in which to treat such expenses. Any cumulative expenses incurred,
but not yet recovered through distribution fees or CDSCs, may or may not be
recovered through future distribution fees or CDSCs.
In the case of Class A and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales commission credited to Morgan Stanley Dean Witter Financial
Advisors and other authorized financial representatives at the time of sale may
be reimbursed in the subsequent calendar year. The Distributor has advised the
Fund that unreimbursed expenses representing a gross sales commission credited
to Morgan Stanley Dean Witter Financial Advisors and other authorized financial
representatives at the time of sale totaled $28,733 in the case of Class C at
December 31, 1998 (the end of the calendar year), which amount was equal to
0.66% 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's 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.
21
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, New Jersey 07311.
(2) CUSTODIAN AND INDEPENDENT ACCOUNTANTS
The Bank of New York, 90 Washington Street, New York, New York 10286, is
the Custodian of the Fund's assets. Any of the Fund's cash balances with the
Custodian in excess of $100,000 are unprotected by federal deposit insurance.
These balances may, at times, be substantial.
PricewaterhouseCoopers LLP, serves as the independent accountants of the
Fund. The independent accountants are responsible for auditing the annual
financial statements of the Fund.
(3) AFFILIATED PERSONS
The Transfer Agent is an affiliate of the Investment Manager, and of the
Distributor. As Transfer Agent and Dividend Disbursing Agent, the Transfer
Agent's responsibilities include maintaining shareholder accounts, disbursing
cash dividends and reinvesting dividends, processing account registration
changes, handling purchase and redemption transactions, mailing prospectuses
and reports, mailing and tabulating proxies, processing share certificate
transactions, and maintaining shareholder records and lists. For these
services, the Transfer Agent receives a per shareholder account fee from the
Fund and is reimbursed for its out-of-pocket expenses in connection with such
services.
VI. BROKERAGE ALLOCATION AND OTHER PRACTICES
--------------------------------------------------------------------------------
A. BROKERAGE TRANSACTIONS
Subject to the general supervision of the Trustees, the Investment Manager
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. Futures transactions will usually be effected through a broker and
a commission will be charged. 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 period September 28, 1998 (commencement of operations) through
February 28, 1999, the Fund paid a total of $44,371 in brokerage commissions.
22
B. COMMISSIONS
Pursuant to an order of the SEC, the Fund may effect principal
transactions in certain money market instruments with Dean Witter Reynolds. The
Fund will limit its transactions with Dean Witter Reynolds to U.S. Government
and government agency securities, bank money instruments (i.e., certificates of
deposit and bankers' acceptances) and commercial paper. The transactions will
be effected with Dean Witter Reynolds only when the price available from Dean
Witter Reynolds is better than that available from other dealers.
During the period September 28, 1998 (commencement of operations) through
February 28, 1999, the Fund did not effect any principal transactions with Dean
Witter Reynolds.
Consistent with the policy described above, 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 period September 28, 1998 (commencement of operations) through
February 28, 1999, the Fund did not pay any brokerage commissions to Dean
Witter Reynolds.
During the period September 28, 1998 (commencement of operations) through
February 28, 1999, the Fund did not pay any brokerage commissions to Morgan
Stanley & Co.
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 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 relies
upon its experience and knowledge regarding commissions generally charged by
various brokers and on its judgment in evaluating the brokerage and research
services received from the broker effecting the transaction. These
determinations are necessarily subjective and imprecise, as in most cases an
exact dollar value for those services is not ascertainable.
In seeking to implement the Fund's policies, the Investment Manager
effects transactions with those brokers and dealers who the Investment Manager
believes provide the most favorable prices and are capable of providing
efficient executions. If the Investment Manager believes the prices and
executions are obtainable from more than one broker or dealer, it may give
consideration to placing portfolio transactions with those brokers and dealers
who also furnish research and other services to the Fund or the Investment
Manager. The services may include, but are not limited to, any one or more of
the following: information as to the availability of securities for purchase or
sale; statistical or factual
23
information or opinions pertaining to investment; wire services; and appraisals
or evaluations of portfolio securities. The information and services received
by the Investment Manager from brokers and dealers may be of benefit to the
Investment Manager in the management of accounts of some of its other clients
and may not in all cases benefit the Fund directly.
The Investment Manager currently serves as investment manager to a number
of clients, including other investment companies, and may in the future act as
investment manager or advisor to others. It is the practice of the Investment
Manager to cause purchase and sale transactions to be allocated among the Fund
and others whose assets it manages in such manner as it deems equitable. In
making such allocations among the Fund and other client accounts, various
factors may be considered, including the respective investment objectives, the
relative size of portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments
generally held and the opinions of the persons responsible for managing the
portfolios of the Fund and other client accounts. In the case of certain
initial and secondary public offerings, the Investment Manager utilizes a pro
rata allocation process based on the size of the Morgan Stanley Dean Witter
Funds involved and the number of shares available from the public offering.
D. DIRECTED BROKERAGE
During the period September 28, 1998 (commencement of operations) through
February 28, 1999, the Fund paid $2,185 in brokerage commissions in connection
with transactions in the aggregate amount of $4,767,770 to brokers because of
research services provided.
E. REGULAR BROKER-DEALERS
During the period September 28, 1998 (commencement of operations) through
February 28, 1999, the Fund purchased securities issued by Merrill Lynch & Co.,
which issuer was among the ten brokers or the ten dealers that executed
transactions for or with the Fund in the largest dollar amounts during the
year. At February 28, 1999, the Fund held securities issued by Merrill Lynch &
Co. with a market value of $206,457.
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 or by the shareholders.
Under Massachusetts law, shareholders of a business trust may, under
certain limited circumstances, be held personally liable as partners for the
obligations of the Fund. However, the Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Fund,
requires
24
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 Funds 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 transactions 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 a 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.
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.
Investment Management 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.
25
In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
stock exchange is valued at its latest sale price on that exchange, prior to
the time when assets are valued; if there were no sales that day, the security
is valued at the latest bid price (in cases where a security is traded on more
than one exchange, the security is valued on the exchange designated as the
primary market pursuant to procedures adopted by the Trustees); and (2) all
other portfolio securities for which over-the-counter market quotations are
readily available are valued at the latest bid price. When market quotations
are not readily available, including circumstances under which it is determined
by the Investment Manager 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.
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.
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. Gains or losses on the sale of securities with a tax holding
period of one year or less will be short-term gains or losses.
Gains or losses on the Fund's transactions in listed futures generally are
treated as 60% long-term and 40% short-term. When the Fund engages in futures
transactions, various tax rules may accelerate or defer recognition of certain
gains and losses, change the character of certain gains or losses, or alter the
holding period of other investments held by the Fund. The application of these
rules would therefore also affect the amount, timing and 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
26
cash on the security during the year. To the extent that the Fund invests in
such securities, it would be required to pay out such accrued discount as an
income distribution in each year in order to avoid taxation at the Fund level.
Such distributions will be made from the available cash of the Fund or by
liquidation of portfolio securities if necessary. If a distribution of cash
necessitates the liquidation of portfolio securities, the Investment Manager
will select which securities to sell. The Fund may realize a gain or loss from
such sales. In the event the Fund realizes net capital gains from such
transactions, its shareholders may receive a larger capital gain distribution,
if any, than they would in the absence of such transactions.
TAXATION OF DIVIDENDS AND DISTRIBUTIONS. Shareholders normally will have
to pay federal income taxes, and any state and/or local income taxes, on the
dividends and other distributions they receive from the Fund. Such dividends
and distributions, to the extent that they are derived from net investment
income or short-term capital gains, are taxable to the shareholder as ordinary
income regardless of whether the shareholder receives such payments in
additional shares or in cash.
Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder
has held the Fund's shares and regardless of whether the distribution is
received in additional shares or in cash. The Taxpayer Relief Act of 1997
reduced the maximum tax on long-term capital gains applicable to individuals
from 28% to 20%.
Shareholders are generally taxed on any ordinary dividend or capital gain
distributions from the Fund in the year they are actually distributed. However,
if any such dividends or distributions are declared in October, November or
December and paid in January then such amounts will be treated for tax purposes
as received by the shareholders on December 31, to shareholders of record of
such month.
Subject to certain exceptions, a corporate shareholder may be eligible for
a 70% dividends received deduction to the extent that the Fund earns and
distributes qualifying dividends from its investments. Distributions of net
capital gains by the Fund will not be eligible for the dividends received
deduction.
Shareholders who are not citizens or residents of the United States and
certain foreign entities may be subject to withholding of United States tax on
distributions made by the Fund of investment income and short term capital
gains.
After the end of each calendar year, shareholders will be sent full
information on their dividends and capital gain distributions for tax purposes,
including the portion taxable as ordinary income, the portion taxable as
long-term capital gains and the amount of any dividends eligible for the
federal dividends received deduction for corporations.
PURCHASES AND REDEMPTIONS AND EXCHANGES OF FUND SHARES. Any dividend or
capital gains distribution received by a shareholder from any investment
company will have the effect of reducing the net asset value of the
shareholder's stock in that company by the exact amount of the dividend or
capital gains distribution. Furthermore, such dividends and capital gains
distributions are subject to federal income taxes. If the net asset value of
the shares should be reduced below a shareholder's cost as a result of the
payment of dividends or the distribution of realized long-term capital gains,
such payment or distribution would be in part a return of the shareholder's
investment but nonetheless would be taxable to the shareholder. Therefore, an
investor should consider the tax implications of purchasing Fund shares
immediately prior to a distribution record date.
In general, a sale of shares results in capital gain or loss, and for
individual shareholders, is taxable at a federal rate dependent upon the length
of time the shares were held. A redemption of a shareholder's Fund shares is
normally treated as a sale for tax purposes. Fund shares held for a period of
one year or less will, for tax purposes, generally result in short-term gains
or losses and those held for more than one year generally result in long-term
gain or loss. Any loss realized by shareholders upon a redemption of shares
within six months of the date of their purchase will be treated as a long-term
capital loss to the extent of any distributions of net long-term capital gains
with respect to such shares during the six-month period.
Gain or loss on the sale or redemption of shares in the Fund is measured
by the difference between the amount received and the tax basis of the shares.
Shareholders should keep records of investments
27
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.
If a shareholder realizes a loss on the redemption or exchange of a fund's
shares and reinvests in that fund's shares within 30 days before or after the
redemption or exchange, the transactions may be subject to the "wash sale"
rules, resulting in a postponement of the recognition of such loss for tax
purposes.
X. UNDERWRITERS
--------------------------------------------------------------------------------
The Fund's shares are offered to the public on a continuous basis. The
Distributor, as the principal underwriter of the shares, has certain
obligations under the Distribution Agreement concerning the distribution of the
shares. These obligations and the compensation the Distributor receives are
described above in the sections titled "Principal Underwriter" and "Rule 12b-1
Plans."
XI. CALCULATION OF PERFORMANCE DATA
--------------------------------------------------------------------------------
From time to time, the Fund may quote its "total return" in advertisements
and sales literature. These figures are computed separately for Class A, Class
B, Class C and Class D shares. The Fund's "average annual total return"
represents an annualization of the Fund's total return over a particular period
and is computed by finding the annual percentage rate which will result in the
ending redeemable value of a hypothetical $1,000 investment made at the
beginning of a one, five or ten year period, or for the period from the date of
commencement of operations, if shorter than any of the foregoing. The ending
redeemable value is reduced by any contingent deferred sales charge ("CDSC") at
the end of the one, five, ten year or other period. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involved 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 (which the root is
equivalent to the number of years in the period) and subtracting 1 from the
result.
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.
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 as assumed
that all dividends and distribution are reinvested. The formula for computing
aggregate total return involves a percentage obtained by dividing the ending
value (without reduction for any sale charge) by the initial $1,000 investment
and subtracting 1 from the result. Based on the foregoing calculations, the
total returns of Class A for the period September 28, 1998 (commencement of
operations) through February 28, 1999 was 18.32%. The total return of Class B
for the period September 28, 1998 through February 28, 1999 was 17.96%. The
total return of Class C for the period September 28, 1998 through February 28,
1999 was 17.94%. The total return of Class D for the period September 28, 1998
through February 28, 1999 was 18.38%.
The Fund may also advertise the growth of hypothetical investment 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
28
(expressed as a decimal and without taking into account the effect of any
applicable CDSC) and multiplying by $9,475, $48,000 and $97,000 in the case of
Class A (investments of $10,000, $50,000 and $100,000 adjusted for the initial
sales charge) or by $10,000, $50,000 and $100,000 in the case of each of Class
B, Class C and Class D, as the case may be. Investments of $10,000, $50,000 and
$100,000 in each Class at inception of the Class would have grown to the
following amounts at February 28, 1999:
[Download Table]
INVESTMENT AT INCEPTION OF:
INCEPTION -----------------------------------
CLASS DATE: $10,000 $50,000 $100,000
----------------- ---------- --------- --------- -----------
Class A ......... 9/28/98 $11,211 $56,794 $114,770
Class B ......... 9/28/98 11,796 58,980 117,960
Class C ......... 9/28/98 11,794 58,970 117,940
Class D ......... 9/28/98 11,838 59,190 118,380
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 period September 28,
1998 (commencement of operations) through February 28, 1999 included in this
Statement of Additional Information and incorporated by reference in the
Prospectus have been so included and incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
* * * * *
This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Fund has
filed with the SEC. The complete Registration Statement may be obtained from
the SEC.
29
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 28, 1999
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
COMMON STOCKS (91.4%)
Accident & Health Insurance (0.4%)
774 Jefferson-Pilot Corp. ............... $ 52,487
705 Lincoln National Corp. .............. 66,755
1,752 Marsh & McLennan Companies,
Inc. ................................ 124,063
1,393 Provident Companies, Inc. ........... 45,621
1,429 Torchmark Corp. ..................... 47,514
1,361 UNUM Corp. .......................... 60,905
-----------
397,345
-----------
Advertising (0.1%)
1,358 Omnicom Group, Inc. ................. 89,967
-----------
Aerospace (0.5%)
2,650 Boeing Co. .......................... 94,241
562 Goodrich (B.F.) Co. (The) .......... 19,178
1,202 Northrop Grumman Corp. .............. 74,900
2,494 United Technologies Corp. ........... 308,944
-----------
497,263
-----------
Aerospace & Defense (0.2%)
5,191 Lockheed Martin Corp. ............... 195,636
-----------
Airlines (0.3%)
1,213 AMR Corp. * ......................... 67,246
1,109 Delta Air Lines, Inc. ............... 67,441
2,240 Southwest Airlines Co. .............. 67,480
771 US Airways Group Inc. * ............. 36,526
-----------
238,693
-----------
Alcoholic Beverages (0.3%)
3,257 Anheuser-Busch Companies, Inc. ...... 249,771
460 Brown-Forman Corp. (Class B) ....... 30,331
339 Coors (Adolph) Co. (Class B) ....... 20,192
-----------
300,294
-----------
Aluminum (0.2%)
1,520 Alcan Aluminium Ltd. (Canada) ....... 36,955
3,212 Alcoa Inc. .......................... 130,086
427 Reynolds Metals Co. ................ 18,254
-----------
185,295
-----------
Apparel (0.1%)
480 Fruit of the Loom, Inc. (Class A)*. 6,090
433 Liz Claiborne, Inc. ................. 14,587
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
320 Russell Corp. ....................... $ 6,240
800 VF Corp. ............................ 38,500
-----------
65,417
-----------
Auto Parts: O.E.M. (0.1%)
1,832 Dana Corp. ......................... 69,158
566 Eaton Corp. ........................ 39,266
-----------
108,424
-----------
Automotive Aftermarket (0.1%)
646 Cooper Tire & Rubber Co. ........... 12,758
1,465 Genuine Parts Co. .................. 43,858
1,269 Goodyear Tire & Rubber Co. .......... 58,691
-----------
115,307
-----------
Bank Holding Companies (0.1%)
1,084 Comerica, Inc. ..................... 71,815
-----------
Banking (0.1%)
1,230 SouthTrust Corp. ................... 49,277
-----------
Banks - Commercial (0.1%)
3,248 KeyCorp ............................. 104,748
-----------
Beverages - Non-Alcoholic (2.1%)
19,492 Coca Cola Co. ** .................... 1,246,270
3,734 Coca-Cola Enterprises Inc. .......... 115,754
14,315 PepsiCo, Inc. ....................... 538,602
-----------
1,900,626
-----------
Biotechnology (0.5%)
2,326 Amgen Inc. * ........................ 290,459
2,961 Guidant Corp. ....................... 168,777
-----------
459,236
-----------
Books/Magazines (0.1%)
573 Harcourt General, Inc. .............. 26,251
504 Meredith Corp. ...................... 17,010
-----------
43,261
-----------
Broadcasting (0.4%)
6,877 CBS Corp. * ......................... 253,589
2,557 Clear Channel Communications,
Inc. * .............................. 153,420
-----------
407,009
-----------
SEE NOTES TO FINANCIAL STATEMENTS
30
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 28, 1999, continued
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
Building Materials (0.2%)
3,381 Lowe's Companies, Inc. ................ $ 200,536
415 Owens Corning ......................... 13,202
-----------
213,738
-----------
Building Materials/DIY Chains (0.9%)
14,672 Home Depot, Inc. (The) ............... 875,735
-----------
Building Products (0.1%)
302 Armstrong World Industries, Inc. ...... 14,855
3,094 Masco Corp. ........................... 81,217
1,000 Rubbermaid, Inc. ...................... 33,062
-----------
129,134
-----------
Cable Television (1.0%)
3,604 Comcast Corp. (Class A Special) ...... 255,659
5,806 MediaOne Group Inc. * ................. 316,427
5,090 Tele-Communications, Inc.
(Class A)* ............................ 319,716
-----------
891,802
-----------
Casino/Gambling (0.1%)
1,201 Harrah's Entertainment, Inc. * ........ 20,042
1,200 Mirage Resorts, Inc. * ................ 23,400
-----------
43,442
-----------
Cellular Telephone (0.2%)
2,801 Nextel Communications, Inc.
(Class A)* ............................ 84,205
4,284 Sprint Corp. (PCS Group)* ............ 137,088
-----------
221,293
-----------
Clothing/Shoe/Accessory Stores (0.3%)
3,286 Kmart Corp. * ......................... 57,505
1,444 Kohl's Corp. * ........................ 99,636
1,209 Nordstrom, Inc. ....................... 48,662
3,086 TJX Companies, Inc. ................... 88,144
-----------
293,947
-----------
Computer Communications (1.9%)
3,522 3Com Corp. * .......................... 110,723
2,017 Ascend Communications, Inc. * ......... 155,183
15,533 Cisco Systems, Inc. * ................. 1,519,322
-----------
1,785,228
-----------
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
Computer Hardware (4.6%)
906 Apple Computer, Inc. * ................ $ 31,483
16,710 Compaq Computer Corp. ................. 589,027
3,613 Computer Associates
International, Inc. ................... 151,746
336 Data General Corp. * .................. 4,641
9,563 Dell Computer Corp. * ................. 765,638
4,931 EMC Corp. * ........................... 504,811
1,069 Gateway 2000, Inc. * .................. 77,703
7,504 Hewlett-Packard Co. ................... 498,547
9,407 International Business Machines
Corp. ................................. 1,599,190
-----------
4,222,786
-----------
Computer/Video Chains (0.0%)
660 Tandy Corp. ........................... 36,712
-----------
Computer Software (4.7%)
443 Adobe Systems, Inc. ................... 17,831
405 Autodesk, Inc. ........................ 16,225
2,133 BMC Software, Inc. * .................. 87,186
1,688 Compuware Corp. * ..................... 94,422
24,720 Microsoft Corp. * ** .................. 3,709,545
2,416 Novell, Inc. * ........................ 46,810
6,532 Oracle Corp. * ........................ 364,567
1,827 Parametric Technology Corp. * ......... 28,090
-----------
4,364,676
-----------
Construction/Agricultural
Equipment/Trucks (0.3%)
2,676 Caterpillar, Inc. ..................... 121,925
1,733 Deere & Co. ........................... 56,647
1,465 Navistar International Corp. * ........ 62,995
-----------
241,567
-----------
Consumer Electronics/Appliances (0.1%)
875 Maytag Corp. .......................... 49,055
498 Whirlpool Corp. ....................... 21,663
-----------
70,718
-----------
Consumer Sundries (0.2%)
474 American Greetings Corp.
(Class A) ............................. 11,228
233 Jostens, Inc. ......................... 5,461
3,694 Kimberly-Clark Corp. .................. 174,541
-----------
191,230
-----------
SEE NOTES TO FINANCIAL STATEMENTS
31
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 28, 1999, continued
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
Containers/Packaging (0.2%)
207 Ball Corp. ............................... $ 8,668
342 Bemis Company, Inc. ...................... 11,649
813 Crown Cork & Seal Co. , Inc. ............. 22,561
1,514 Owens-Illinois, Inc. * ................... 36,241
795 Sealed Air Corp. * ....................... 40,346
373 Temple-Inland, Inc. ...................... 22,357
---------
141,822
---------
Contract Drilling (0.0%)
333 Helmerich & Payne, Inc. .................. 5,432
552 Rowan Companies, Inc. * .................. 4,761
---------
10,193
---------
Department Stores (0.3%)
868 Dillard's, Inc. (Class A) ............... 21,591
1,663 Federated Department Stores,
Inc. * ................................... 63,298
1,898 May Department Stores Co. ................ 112,456
2,553 Sears, Roebuck & Co. ..................... 103,716
---------
301,061
---------
Discount Chains (2.4%)
827 Consolidated Stores Corp. * .............. 20,830
2,068 Costco Companies, Inc. * ................. 166,086
4,295 Dayton Hudson Corp. ...................... 268,706
1,227 Dollar General Corp. ..................... 36,733
19,705 Wal-Mart Stores, Inc. ** ................. 1,702,019
---------
2,194,374
---------
Diversified Commercial Services (0.1%)
1,093 Paychex, Inc. ............................ 46,316
---------
Diversified Electronic Products (0.2%)
1,229 Honeywell, Inc. .......................... 85,953
1,798 Rockwell International Corp. ............. 79,899
---------
165,852
---------
Diversified Financial Services (2.0%)
4,419 American Express Co. ..................... 479,461
19,468 Citigroup Inc. ........................... 1,143,745
879 Lehman Brothers Holdings, Inc. ........... 46,587
1,363 Providian Financial Corp. ................ 139,196
833 Transamerica Corp. ....................... 60,445
---------
1,869,434
---------
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
Diversified Manufacturing (1.2%)
1,853 Allegheny Teledyne Inc. .................. $ 38,218
6,189 AlliedSignal, Inc. ....................... 256,070
829 Cooper Industries, Inc. .................. 36,269
1,482 Danaher Corp. ............................ 71,506
2,337 Dover Corp. .............................. 79,458
231 FMC Corp. * .............................. 11,824
433 Minnesota Mining &
Manufacturing Co. ........................ 32,069
1,739 Thermo Electron Corp. * .................. 24,020
7,118 Tyco International Ltd. .................. 529,846
---------
1,079,280
---------
Drugstore Chains (0.6%)
3,869 CVS Corp. ................................ 205,057
2,560 Rite Aid Corp. ........................... 105,920
6,808 Walgreen Co. ............................. 217,856
---------
528,833
---------
E.D.P. Peripherals (0.1%)
2,363 Seagate Technology, Inc. * ............... 68,379
---------
E.D.P. Services (0.6%)
4,025 Automatic Data Processing, Inc. .......... 159,994
700 Ceridian Corp. * ......................... 50,137
1,061 Computer Sciences Corp. * ................ 70,689
3,286 Electronic Data Systems Corp. ............ 152,799
2,953 First Data Corp. ......................... 112,952
---------
546,571
---------
Electric Utilities (1.6%)
1,765 AES Corp. (The)* ........................ 65,636
1,111 Baltimore Gas & Electric Co. ............. 28,469
1,124 Carolina Power & Light Co. ............... 44,819
1,585 Central & South West Corp. ............... 39,328
1,186 Cinergy Corp. ............................ 34,616
1,735 Consolidated Edison, Inc. ................ 81,111
1,454 Dominion Resources, Inc. ................. 56,161
2,700 Duke Power Co. ........................... 153,562
2,630 Edison International ..................... 67,065
1,842 Entergy Corp. ............................ 52,036
1,776 FirstEnergy Corp. ........................ 51,948
1,362 FPL Group, Inc. .......................... 70,058
990 GPU, Inc. ................................ 39,476
850 New Century Energies, Inc. ............... 34,478
1,567 Niagara Mohawk Power Corp. * ............. 22,917
1,138 Northern States Power Co. ................ 29,375
SEE NOTES TO FINANCIAL STATEMENTS
32
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 28, 1999, continued
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
2,215 PacifiCorp ................................ $ 39,732
1,671 PECO Energy Co. ........................... 59,216
2,856 PG & E Corp. .............................. 89,964
1,700 Public Service Enterprise Group,
Inc. ...................................... 64,600
2,125 Reliant Energy, Inc. ...................... 56,977
5,198 Southern Co. .............................. 130,275
2,980 Texas Utilities Co. ....................... 126,464
2,092 Unicom Corp. .............................. 74,397
---------
1,512,680
---------
Electrical Products (0.3%)
4,147 Emerson Electric Co. ...................... 238,193
771 Raychem Corp. ............................. 17,588
593 Thomas & Betts Corp. ...................... 24,721
---------
280,502
---------
Electronic Components (0.2%)
1,460 AMP, Inc. ................................. 77,654
694 Andrew Corp. * ............................ 10,497
949 LSI Logic Corp. * ......................... 24,615
1,574 Solectron Corp. * ......................... 70,338
---------
183,104
---------
Electronic Data Processing (0.5%)
3,738 Sun Microsystems, Inc. * .................. 363,754
2,504 Unisys Corp. * ............................ 74,650
---------
438,404
---------
Electronic Production Equipment (0.2%)
3,306 Applied Materials, Inc. * ................. 183,896
783 KLA-Tencor Corp. * ........................ 40,373
---------
224,269
---------
Engineering & Construction (0.0%)
509 Fluor Corp. ............................... 17,910
380 Foster Wheeler Corp. ...................... 4,750
---------
22,660
---------
Environmental Services (0.3%)
1,160 Browning-Ferris Industries, Inc. .......... 36,540
5,609 Waste Management, Inc. .................... 274,140
---------
310,680
---------
Farming/Seeds/Milling (0.1%)
5,437 Archer-Daniels-Midland Co. ................ 82,235
1,613 Pioneer Hi-Bred International,
Inc. ...................................... 37,805
---------
120,040
---------
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
Finance Companies (2.2%)
7,761 Associates First Capital Corp.
(Class A) ................................. $ 315,291
644 Capital One Financial Corp. ............... 82,190
1,096 Countrywide Credit Industries,
Inc. ...................................... 41,511
11,069 Fannie Mae ................................ 774,830
7,248 Freddie Mac ............................... 426,726
4,701 Household International, Inc. ............. 190,978
6,873 MBNA Corp. ................................ 166,670
1,714 SLM Holding Corp. ......................... 73,488
---------
2,071,684
---------
Financial Publishing/Services (0.2%)
1,113 Dun & Bradstreet Corp. .................... 38,120
1,436 Equifax, Inc. ............................. 54,209
653 McGraw-Hill, Inc. ......................... 71,463
---------
163,792
---------
Fluid Controls (0.0%)
824 Parker-Hannifin Corp. ..................... 30,591
---------
Food Chains (0.8%)
2,535 Albertson's, Inc. ......................... 144,495
1,983 American Stores Co. ....................... 66,926
1,110 Fred Meyer, Inc. * ........................ 71,317
274 Great Atlantic & Pacific Tea Co. ,
Inc. ...................................... 8,648
2,639 Kroger Co. * .............................. 170,710
5,007 Safeway Inc. * ............................ 289,154
---------
751,250
---------
Food Distributors (0.1%)
1,070 Supervalu, Inc. ........................... 25,747
2,227 SYSCO Corp. ............................... 62,913
---------
88,660
---------
Forest Products (0.1%)
594 Georgia-Pacific Group ..................... 43,510
742 Louisiana-Pacific Corp. ................... 13,634
1,355 Weyerhaeuser Co. .......................... 75,541
---------
132,685
---------
Gold (0.1%)
2,623 Barrick Gold Corp. (Canada) .............. 46,394
---------
Health Care Diversified (0.0%)
1,113 Humana, Inc. * ............................ 19,477
---------
SEE NOTES TO FINANCIAL STATEMENTS
33
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 28, 1999, continued
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
Health Care Drugs (0.8%)
8,310 Lilly (Eli) & Co. ................... $ 786,853
-----------
Home Building (0.1%)
620 Centex Corp. ........................ 22,824
339 Fleetwood Enterprises, Inc. ......... 10,996
320 Kaufman & Broad Home Corp. .......... 7,200
287 Pulte Corp. ......................... 6,906
-----------
47,926
-----------
Home Furnishings (0.1%)
1,773 Newell Co. .......................... 75,352
497 Tupperware Corp. .................... 8,697
-----------
84,049
-----------
Hospital/Nursing Management (0.2%)
6,310 Columbia/HCA Healthcare Corp. *...... 112,791
1,078 HCR Manor Care, Inc. ................ 24,120
3,033 Tenet Healthcare Corp. * ............ 59,712
-----------
196,623
-----------
Hotels/Resorts (0.4%)
5,317 Carnival Corp. ...................... 236,606
1,740 Hilton Hotels Corp. ................. 27,514
2,358 Marriott International, Inc. ........ 84,888
-----------
349,008
-----------
Industrial Machinery/Components (0.0%)
371 Milacron Inc. ....................... 6,608
-----------
Industrial Specialties (0.1%)
1,643 Ecolab, Inc. ........................ 65,515
293 Millipore Corp. ..................... 8,167
1,207 Pall Corp. .......................... 25,573
-----------
99,255
-----------
Insurance Brokers/Services (0.1%)
1,133 AON Corp. ........................... 66,776
-----------
Integrated Oil Companies (3.6%)
667 Amerada Hess Corp. .................. 30,265
2,380 Atlantic Richfield Co. .............. 130,007
4,552 Chevron Corp. ....................... 349,935
20,927 Exxon Corp. ** ...................... 1,392,953
5,556 Mobil Corp. ......................... 462,190
1,891 Phillips Petroleum Co. .............. 73,158
16,248 Royal Dutch Petroleum Co. (ADR)
(Netherlands) ....................... 712,881
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
3,766 Texaco, Inc. ........................ $ 175,354
1,787 Unocal Corp. ........................ 50,371
-----------
3,377,114
-----------
Internet Services (0.8%)
8,796 America Online, Inc. * .............. 782,294
-----------
Investment Bankers/Brokers/
Services (0.5%)
900 Bear Stearns Companies, Inc. ........ 38,512
2,690 Merrill Lynch & Co. , Inc. .......... 206,457
3,039 Schwab (Charles) Corp. .............. 226,595
-----------
471,564
-----------
Investment Managers (0.1%)
1,688 Franklin Resources, Inc. ............ 53,700
-----------
Life Insurance (0.2%)
1,755 American General Corp. .............. 128,554
3,067 Conseco, Inc. ....................... 91,818
-----------
220,372
-----------
Machinery - Diversified (0.1%)
938 Johnson Controls, Inc. .............. 57,687
-----------
Major Banks (5.9%)
6,989 Bank of New York Co. , Inc. ......... 244,178
11,765 Bank One Corp. ...................... 632,369
18,103 BankAmerica Corp. ................... 1,182,352
2,051 BankBoston Corp. .................... 82,937
657 Bankers Trust New York Corp. ........ 57,159
8,927 Chase Manhattan Corp. (The) ........ 710,812
10,509 First Union Corp. ................... 560,261
1,633 Firstar Corp. ....................... 136,764
5,598 Fleet Financial Group, Inc. ......... 240,364
2,622 Mellon Bank Corp. ................... 177,313
2,300 National City Corp. ................. 160,713
2,091 PNC Bank Corp. ...................... 108,863
1,119 State Street Corp. .................. 85,813
1,210 Summit Bancorp. ..................... 46,736
2,210 SunTrust Banks, Inc. ................ 150,142
7,162 U.S. Bancorp ........................ 231,422
1,410 Wachovia Corp. ...................... 119,938
16,247 Wells Fargo & Co. ................... 597,077
-----------
5,525,213
-----------
Major Chemicals (1.0%)
10,298 Du Pont (E.I.) de Nemours & Co. ,
Inc. ................................ 528,416
SEE NOTES TO FINANCIAL STATEMENTS
34
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 28, 1999, continued
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
694 Eastman Chemical Co. ................... $ 32,748
1,287 Hercules, Inc. ......................... 35,634
5,546 Monsanto Co. ........................... 252,690
1,459 Rohm & Haas Co. ........................ 45,594
-----------
895,082
-----------
Major Pharmaceuticals (7.3%)
13,994 Abbott Laboratories .................... 649,846
9,459 American Home Products Corp. ........... 562,811
7,624 Bristol-Myers Squibb Co. ............... 960,148
20,642 Merck & Co. , Inc. ** .................. 1,687,484
12,274 Pfizer, Inc. ** ........................ 1,619,401
3,387 Pharmacia & Upjohn, Inc. ............... 184,592
10,746 Schering-Plough Corp. .................. 601,104
8,014 Warner-Lambert Co. ..................... 553,467
-----------
6,818,853
-----------
Major U.S. Telecommunications (7.8%)
5,496 AirTouch Communications, Inc. *......... 500,480
1,827 ALLTEL Corp. ........................... 109,392
7,825 Ameritech Corp. ........................ 511,559
13,987 AT&T Corp. ............................. 1,148,682
14,969 Bell Atlantic Corp. .................... 859,782
14,498 BellSouth Corp. ........................ 670,533
9,270 GTE Corp. .............................. 601,391
855 ITT Industries, Inc. ................... 33,398
17,890 MCI WorldCom, Inc. * ................... 1,475,925
14,694 SBC Communications, Inc. ............... 776,945
4,150 Sprint Corp. (FON Group) .............. 356,122
3,353 U.S. West, Inc. ........................ 178,757
-----------
7,222,966
-----------
Managed Health Care (0.1%)
954 Aetna Inc. ............................. 70,656
1,239 United Healthcare Corp. ................ 61,098
-----------
131,754
-----------
Manufacturer Consumer &
Industrial Products (0.1%)
1,787 Ingersoll-Rand Co. ..................... 84,883
326 National Service Industries, Inc. ...... 10,473
-----------
95,356
-----------
Manufacturing - Diversified
Industries (0.0%)
1,240 UST, Inc. .............................. 36,658
-----------
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
Media Conglomerates (1.7%)
11,755 Time Warner, Inc. ...................... $ 758,198
3,382 Viacom, Inc. (Class B)* ............... 298,884
14,436 Walt Disney Co. ........................ 507,967
-----------
1,565,049
-----------
Medical Equipment & Supplies (0.4%)
5,455 Medtronic, Inc. ........................ 385,259
-----------
Medical Specialties (0.3%)
580 ALZA Corp. (Class A)* ................. 30,414
2,361 Becton, Dickinson & Co. ................ 79,094
746 Biomet, Inc. ........................... 27,369
2,620 Boston Scientific Corp. * .............. 69,430
499 Mallinckrodt Group, Inc. ............... 15,438
560 St. Jude Medical, Inc. * ............... 14,070
-----------
235,815
-----------
Medical/Dental Distributors (0.3%)
2,529 Cardinal Health, Inc. .................. 182,562
1,898 McKesson HBOC, Inc. .................... 129,064
-----------
311,626
-----------
Medical/Nursing Services (0.1%)
4,132 HEALTHSOUTH Corp. * .................... 48,035
-----------
Mid -- Sized Banks (0.4%)
1,856 Fifth Third Bancorp .................... 122,612
1,092 Mercantile Bancorporation, Inc. ........ 49,823
772 Northern Trust Corp. ................... 68,998
2,188 Regions Financial Corp. ................ 82,734
993 Union Planters Corp. ................... 44,871
-----------
369,038
-----------
Military/Gov't/Technical (0.3%)
429 EG & G, Inc. ........................... 11,369
1,637 General Dynamics Corp. ................. 98,936
3,289 Raytheon Co. (Class B) ................ 175,756
-----------
286,061
-----------
Motor Vehicles (0.9%)
8,675 Ford Motor Co. ......................... 514,536
4,374 General Motors Corp. ................... 361,128
-----------
875,664
-----------
SEE NOTES TO FINANCIAL STATEMENTS
35
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 28, 1999, continued
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
Movies/Entertainment (0.1%)
487 King World Productions Inc. * .......... $ 12,875
2,627 Seagram Co. Ltd. (Canada) ............. 121,827
-----------
134,702
-----------
Multi-Line Insurance (2.2%)
8,442 Allstate Corp. ......................... 316,575
11,961 American International Group, Inc.. 1,362,806
2,283 CIGNA Corp. ............................ 179,216
2,231 Hartford Financial Services
Group, Inc. ............................ 120,613
778 Loews Corp. ............................ 60,830
975 SAFECO Corp. ........................... 39,183
-----------
2,079,223
-----------
Multi-Sector Companies (3.7%)
756 Crane Co. .............................. 20,743
1,862 Fortune Brands, Inc. ................... 56,093
32,072 General Electric Co. ** ................ 3,217,223
407 McDermott International, Inc. .......... 8,115
1,353 Tenneco, Inc. .......................... 40,505
1,282 Textron, Inc. .......................... 99,996
-----------
3,442,675
-----------
Natural Gas (0.1%)
697 Consolidated Natural Gas Co. ........... 38,291
154 Eastern Enterprises .................... 5,919
349 Nicor Inc. ............................. 13,327
232 ONEOK, Inc. ............................ 6,250
214 Peoples Energy Corp. ................... 7,263
-----------
71,050
-----------
Newspapers (0.3%)
2,079 Gannett Co. , Inc. ..................... 132,017
575 Knight-Ridder, Inc. .................... 28,858
1,824 New York Times Co. (The)
(Class A) .............................. 56,544
610 Times Mirror Co. (Class A) ............ 34,046
877 Tribune Co. ............................ 58,156
-----------
309,621
-----------
Office Equipment/Supplies (0.7%)
1,084 Avery Dennison Corp. ................... 58,197
918 IKON Office Solutions, Inc. ............ 12,967
2,763 Pitney Bowes, Inc. ..................... 174,587
6,458 Xerox Corp. ............................ 356,401
-----------
602,152
-----------
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
Oil & Gas Production (0.2%)
824 Anardarko Petroleum Corp. .............. $ 22,660
653 Apache Corp. ........................... 13,019
1,726 Burlington Resources, Inc. ............. 55,879
763 Oryx Energy Co. * ...................... 7,916
2,023 Union Pacific Corp. .................... 94,828
1,673 Union Pacific Resources Group,
Inc. ................................... 14,952
-----------
209,254
-----------
Oil Refining/Marketing (0.1%)
517 Ashland, Inc. .......................... 23,007
903 Sunoco, Inc. ........................... 27,485
3,234 USX-Marathon Group ..................... 66,903
-----------
117,395
-----------
Oil Related (0.0%)
337 Kerr-McGee Corp. ....................... 9,626
-----------
Oil Well -- Machinery (0.1%)
3,890 Halliburton Co. ........................ 109,893
-----------
Oil/Gas Transmission (0.6%)
2,204 Coastal Corp. .......................... 70,528
884 Columbia Energy Group .................. 44,642
3,370 Enron Corp. ............................ 219,050
799 Sonat, Inc. ............................ 20,225
4,295 Williams Companies, Inc. ............... 158,915
-----------
513,360
-----------
Oilfield Services/Equipment (0.3%)
2,181 Baker Hughes, Inc. ..................... 39,258
4,745 Schlumberger, Ltd. ..................... 230,429
-----------
269,687
-----------
Other Consumer Services (0.2%)
988 Block (H.&R.), Inc. .................... 44,831
5,686 Cendant Corp. * ........................ 94,174
2,580 Service Corp. International ........... 39,668
-----------
178,673
-----------
Other Metals/Minerals (0.1%)
267 ASARCO, Inc. ........................... 3,771
900 Cyprus Amax Minerals Co. ............... 10,125
953 Engelhard Corp. ........................ 16,975
1,643 Inco Ltd. (Canada) ..................... 20,743
387 Phelps Dodge Corp. ..................... 18,770
-----------
70,384
-----------
SEE NOTES TO FINANCIAL STATEMENTS
36
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 28, 1999, continued
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
Other Pharmaceuticals (1.2%)
440 Allergan, Inc. ........................ $ 35,860
12,596 Johnson & Johnson ..................... 1,075,384
-----------
1,111,244
-----------
Other Specialty Stores (0.3%)
1,335 Interpublic Group of Companies,
Inc. .................................. 99,875
468 Pep Boys-Manny, Moe & Jack ............ 8,541
5,161 Staples, Inc. * ....................... 151,282
-----------
259,698
-----------
Package Goods/Cosmetics (1.8%)
406 Alberto-Culver Co. (Class B) ......... 9,744
2,566 Avon Products, Inc. ................... 106,810
780 Clorox Co. ............................ 92,284
1,953 Colgate-Palmolive Co. ................. 165,761
7,435 Gillette Co. .......................... 398,702
10,098 Procter & Gamble Co. .................. 903,771
-----------
1,677,072
-----------
Packaged Foods (1.3%)
2,469 Bestfoods ............................. 115,889
1,321 General Mills, Inc. ................... 106,588
3,125 Heinz (H.J.) Co. ...................... 170,117
1,234 Hershey Foods Corp. ................... 76,817
1,174 Quaker Oats Company (The) ............. 64,130
3,327 Ralston-Ralston Purina Group .......... 89,621
7,883 Sara Lee Corp. ........................ 214,319
5,565 Unilever N.V. (Netherlands) ........... 403,115
-----------
1,240,596
-----------
Paints/Coatings (0.1%)
1,208 PPG Industries, Inc. .................. 62,892
1,148 Sherwin-Williams Co. .................. 27,624
-----------
90,516
-----------
Paper (0.3%)
381 Boise Cascade Corp. ................... 11,835
653 Champion International Corp. .......... 24,161
2,117 Fort James Corp. ...................... 63,245
2,091 International Paper Co. ............... 87,822
702 Mead Corp. ............................ 21,367
460 Union Camp Corp. ...................... 30,763
688 Westvaco Corp. ........................ 15,394
757 Willamette Industries, Inc. ........... 27,583
-----------
282,170
-----------
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
Photographic Products (0.2%)
3,083 Eastman Kodak Co. ..................... $ 204,056
-----------
Precious Metals (0.1%)
1,970 Freeport-McMoran Copper &
Gold, Inc. (Class B) ................. 18,592
1,714 Homestake Mining Co. .................. 15,747
1,174 Newmont Mining Corp. .................. 20,252
1,758 Placer Dome Inc. (Canada) ............ 19,228
-----------
73,819
-----------
Precision Instruments (0.1%)
498 Perkin-Elmer Corp. .................... 47,186
313 Tektronix, Inc. ....................... 6,104
-----------
53,290
-----------
Printing/Forms (0.1%)
532 Deluxe Corp. .......................... 18,022
907 Donnelley (R.R.) & Sons Co. ........... 31,065
-----------
49,087
-----------
Property - Casualty Insurers (0.2%)
1,175 Chubb Corp. ........................... 70,206
502 Progressive Corp. ..................... 64,507
1,701 St. Paul Companies, Inc. .............. 55,070
-----------
189,783
-----------
Railroads (0.2%)
3,832 Burlington Northern Santa Fe
Corp. ................................. 126,935
3,105 Norfolk Southern Corp. ................ 87,134
-----------
214,069
-----------
Recreational Products/Toys (0.1%)
640 Brunswick Corp. ....................... 13,640
1,282 Hasbro, Inc. .......................... 47,434
2,515 Mattel, Inc. .......................... 66,333
-----------
127,407
-----------
Rental/Leasing Companies (0.0%)
480 Ryder System, Inc. .................... 12,960
-----------
Restaurants (0.6%)
927 Darden Restaurants, Inc. .............. 20,394
4,536 McDonald's Corp. ...................... 385,560
1,491 Tricon Global Restaurants, Inc. *...... 92,442
814 Wendy's International, Inc. ........... 19,485
-----------
517,881
-----------
SEE NOTES TO FINANCIAL STATEMENTS
37
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 28, 1999, continued
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
Retail - Specialty (0.4%)
1,525 AutoZone, Inc. * ........................ $ 53,375
976 Circuit City Stores, Inc. ............... 52,948
3,860 Gap, Inc. (The) ........................ 249,694
----------
356,017
----------
Retail - Specialty Apparel (0.1%)
1,520 Limited (The), Inc. ..................... 53,960
----------
Savings & Loan Associations (0.3%)
380 Golden West Financial Corp. ............. 35,696
5,789 Washington Mutual, Inc. ................. 231,560
----------
267,256
----------
Semiconductors (2.6%)
16,363 Intel Corp. ** .......................... 1,962,537
1,668 Micron Technology, Inc. * ............... 96,119
1,117 National Semiconductor Corp. * .......... 11,729
3,416 Texas Instruments, Inc. ................. 304,665
----------
2,375,050
----------
Services to the Health Industry (0.3%)
360 Bard (C.R.), Inc. ....................... 20,295
1,949 Baxter International, Inc. .............. 137,161
2,133 IMS Health Inc. ......................... 75,722
208 Shared Medical Systems Corp. ............ 10,608
----------
243,786
----------
Shoe Manufacturing (0.1%)
1,907 Nike, Inc. (Class B) ................... 102,263
657 Reebok International Ltd. (United
Kingdom)* ............................... 10,594
----------
112,857
----------
Smaller Banks (0.1%)
2,090 BB&T Corp. .............................. 79,159
----------
Specialty Chemicals (0.2%)
2,030 Air Products & Chemicals, Inc. .......... 65,214
752 Great Lakes Chemical Corp. .............. 29,281
1,545 Praxair, Inc. ........................... 53,978
1,287 Sigma-Aldrich Corp. ..................... 33,945
----------
182,418
----------
Specialty Foods/Candy (0.1%)
4,221 ConAgra, Inc. ........................... 127,158
----------
Specialty Insurers (0.1%)
714 MBIA, Inc. .............................. 43,956
[Download Table]
NUMBER OF
SHARES VALUE
----------------- -----------------
1,118 MGIC Investment Corp. ................... $ 38,082
----------
82,038
----------
Specialty Steels (0.0%)
590 Nucor Corp. ............................. 26,292
----------
Steel/Iron Ore (0.0%)
867 Bethlehem Steel Corp. * ................. 7,640
587 USX-U.S. Steel Group .................... 14,858
613 Worthington Industries, Inc. ............ 7,777
----------
30,275
----------
Telecommunications (0.0%)
1,147 Frontier Corp. .......................... 41,220
----------
Telecommunications Equipment (2.1%)
1,873 Corning, Inc. ........................... 100,206
1,646 General Instrument Corp. * .............. 48,146
10,292 Lucent Technologies Inc. ................ 1,045,281
4,050 Motorola, Inc. .......................... 284,513
4,498 Northern Telecom Ltd. (Canada) .......... 261,165
546 Scientific-Atlanta, Inc. ................ 17,711
1,912 Tellabs, Inc. * ......................... 152,841
----------
1,909,863
----------
Tobacco (1.1%)
23,589 Philip Morris Companies, Inc. ........... 922,920
2,168 RJR Nabisco Holdings Corp. .............. 59,214
----------
982,134
----------
Tools/Hardware (0.2%)
1,136 Black & Decker Corp. .................... 55,380
212 Briggs & Stratton Corp. ................. 10,348
2,027 Illinois Tool Works Inc. ................ 139,356
640 Snap-On, Inc. ........................... 18,080
----------
223,164
----------
Vision Care & Instruments (0.0%)
373 Bausch & Lomb, Inc. ..................... 22,497
----------
Waste Management (0.0%)
3,161 Laidlaw, Inc. (Canada) ................. 24,300
----------
Wholesale Distributor (0.0%)
633 Grainger (W.W.), Inc. ................... 28,169
----------
TOTAL COMMON STOCKS
(Identified Cost $76,350,651)............ 84,951,822
----------
SEE NOTES TO FINANCIAL STATEMENTS
38
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PORTFOLIO OF INVESTMENTS February 28, 1999, continued
[Download Table]
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
------------- ----------
SHORT-TERM INVESTMENT (a) (8.0%)
U.S. GOVERNMENT AGENCY
$ 7,400 Federal Home Loan Mortgage
Corp. 4.70% due 03/01/99
(Amortized Cost $7,400,000).......... 7,400,000
---------
[Download Table]
TOTAL INVESTMENTS
(Identified Cost $83,750,651) (b) ..... 99.4% 92,351,822
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES 0.6 558,124
----- ----------
NET ASSETS ............................ 100.0% $92,909,946
===== ===========
-------------------------------
ADR American Depository Receipt.
* Non-income producing security.
** Some or all of these securities are segregated in connection with open
futures contracts.
(a) Security was purchased on a discount basis. The interest rate
shown has been adjusted to reflect a money market equivalent
yield.
(b) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unealized appreciation is
$10,532,814 and the aggregate gross unrealized depreciation is
$1,931,643, resulting in net unrealized appreciation of
$8,601,171.
FUTURES CONTRACTS OPEN AT FEBRUARY 28, 1999:
[Download Table]
UNDERLYING
DESCRIPTION FACE
NUMBER OF DELIVERY MONTH, AMOUNT UNREALIZED
CONTRACTS AND YEAR AT VALUE LOSS
----------- ----------------- ------------- --------------
25 S&P 500 Index/ $7,721,875 $ (116,525)
March 1999
SEE NOTES TO FINANCIAL STATEMENTS
39
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1999
[Download Table]
ASSETS :
Investments in securities, at value
(identified cost $83,750,651)................................... $92,351,822
Cash ............................................................. 47,958
Receivable for:
Shares of beneficial interest sold ............................. 793,336
Dividends ...................................................... 100,579
Deferred offering costs .......................................... 77,621
Prepaid expenses and other assets ................................ 21,221
Receivable from affiliate ........................................ 36,064
------------
TOTAL ASSETS ................................................... 93,428,601
------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased ...................... 195,168
Plan of distribution fee ....................................... 71,896
Investments purchased .......................................... 48,739
Investment management fee ...................................... 44,434
Variation margin on futures contracts .......................... 38,009
Accrued expenses and other payables .............................. 86,409
Offering costs ................................................... 34,000
------------
TOTAL LIABILITIES .............................................. 518,655
------------
NET ASSETS ..................................................... $92,909,946
============
COMPOSITION OF NET ASSETS:
Paid-in-capital .................................................. $83,895,619
Net unrealized appreciation ...................................... 8,484,646
Undistributed net realized gain .................................. 529,681
------------
NET ASSETS ..................................................... $92,909,946
============
CLASS A SHARES:
Net Assets ....................................................... $ 3,269,158
Shares Outstanding (unlimited authorized, $.01 par value)......... 277,358
NET ASSET VALUE PER SHARE ...................................... $ 11.79
============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) ............... $ 12.44
============
CLASS B SHARES:
Net Assets ....................................................... $83,020,581
Shares Outstanding (unlimited authorized, $.01 par value)......... 7,057,210
NET ASSET VALUE PER SHARE ...................................... $ 11.76
============
CLASS C SHARES:
Net Assets ....................................................... $ 6,417,422
Shares Outstanding (unlimited authorized, $.01 par value)......... 545,412
NET ASSET VALUE PER SHARE ...................................... $ 11.77
============
CLASS D SHARES:
Net Assets ....................................................... $ 202,785
Shares Outstanding (unlimited authorized, $.01 par value)......... 17,196
NET ASSET VALUE PER SHARE ...................................... $ 11.79
============
SEE NOTES TO FINANCIAL STATEMENTS
40
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the period September 28, 1998* through February 28, 1999
[Download Table]
NET INVESTMENT LOSS:
INCOME
Dividends ......................................... $ 330,836
Interest .......................................... 113,793
----------
TOTAL INCOME .................................... 444,629
----------
EXPENSES
Plan of distribution fee (Class A shares) ......... 2,495
Plan of distribution fee (Class B shares) ......... 248,111
Plan of distribution fee (Class C shares) ......... 17,478
Investment management fee ......................... 165,675
Offering costs .................................... 65,099
Professional fees ................................. 49,000
Transfer agent fees and expenses .................. 30,899
Registration fees ................................. 23,337
Shareholder reports and notices ................... 9,010
Custodian fees .................................... 6,661
S&P license fees .................................. 4,968
Trustees' fees and expenses ....................... 3,053
Other ............................................. 439
----------
TOTAL EXPENSES .................................. 626,225
Less: amounts waived/reimbursed ................... (88,703)
----------
NET EXPENSES .................................... 537,522
----------
NET INVESTMENT LOSS ............................. (92,893)
----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on:
Investments ...................................... 11,797
Futures contracts ................................ 673,662
----------
NET GAIN ........................................ 685,459
----------
Net unrealized appreciation/depreciation on:
Investments ...................................... 8,601,171
Futures contracts ................................ (116,525)
----------
NET APPRECIATION ................................ 8,484,646
----------
NET GAIN ........................................ 9,170,105
----------
NET INCREASE ...................................... $9,077,212
==========
---------------------
* Commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS
41
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
[Enlarge/Download Table]
FOR THE PERIOD
SEPTEMBER 28, 1998*
THROUGH
FEBRUARY 28, 1999
--------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss ............................................ $ (92,893)
Net realized gain .............................................. 685,459
Net unrealized appreciation .................................... 8,484,646
-----------
NET INCREASE ................................................. 9,077,212
-----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares ............................................... (3,651)
Class B shares ............................................... (13,797)
Class C shares ............................................... (301)
Class D shares ............................................... (252)
Net realized gain
Class A shares ............................................... (4,603)
Class B shares ............................................... (128,154)
Class C shares ............................................... (8,097)
Class D shares ............................................... (235)
-----------
TOTAL DIVIDENDS AND DISTRIBUTIONS ........................... (159,090)
-----------
Net increase from transactions in shares of beneficial interest 83,891,824
-----------
NET INCREASE ................................................. 92,809,946
NET ASSETS:
Beginning of period ............................................ 100,000
-----------
END OF PERIOD ................................................ $92,909,946
===========
---------------------
* Commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS
42
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
NOTES TO FINANCIAL STATEMENTS February 28, 1999
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter S&P 500 Select Fund (the "Fund") is registered under
the Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund's investment objective is to
provide a total return (before expenses) that exceeds the total return of the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index"). The
Fund seeks to achieve its objective by investing, under normal circumstances,
at least 80% of the value of its net assets in common stocks of selected
companies included in the S&P 500 Index. The Fund was organized as a
Massachusetts business trust on June 8, 1998 and had no operations other than
those relating to organizational matters and the issuance of 2,500 shares of
beneficial interest by each class for $25,000 of each class to Morgan Stanley
Dean Witter Advisors Inc. (the "Investment Manager") to effect the Fund's
initial capitalization. The Fund commenced operations on September 28, 1998.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year,
six years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price
(in cases where 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 prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by the Investment Manager 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; and (4) short-term debt securities having
a maturity date of more than sixty days at time of
43
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
NOTES TO FINANCIAL STATEMENTS February 28, 1999, continued
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.
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. FUTURES CONTRACTS -- A futures contract is an agreement between two parties
to buy and sell financial instruments at a set price on a future date. Upon
entering into such a contract, the Fund is required to pledge to the broker
cash, U.S. Government securities or other liquid portfolio securities equal to
the minimum initial margin requirements of the applicable futures exchange.
Pursuant to the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in the value of the contract,
which is known as variation margin. Such receipts or payments are recorded by
the Fund as unrealized gains or losses. Upon closing of the contract, the Fund
realizes a gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
E. 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.
F. 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 financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized
44
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
NOTES TO FINANCIAL STATEMENTS February 28, 1999, continued
capital gains. To the extent they exceed net investment income and net realized
capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
G. OFFERING COSTS -- The Investment Manager incurred offering costs on behalf
of the Fund in the amount of approximately $143,000 which will be reimbursed
for the full amount thereof. Such expenses were deferred and are being
amortized by the Fund on the straight-line method over a period of
approximately one year or less from the commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
annual rate of 0.60% to the net assets of the Fund determined as of the close
of each business day.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services,
heat, light, power and other utilities provided to the Fund.
The Investment Manager agreed to assume all operating expenses (except for plan
of distribution fees) and waive the compensation provided for in the Agreement
until such time as the Fund had $50 million of net assets or until March 28,
1999, whichever occurred first. The Fund attained $50 million of net assets on
November 13, 1998. At February 28, 1999, included in the Statement of Assets
and Liabilities, is a receivable from an affiliate which represents expense
reimbursements due to the Fund.
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 average daily net assets of Class B; and (iii) Class C -- up to 1.0% of the
average daily net assets of Class C. In the case of Class A shares, amounts
paid under the Plan are paid to the Distributor for services provided. In the
case of Class B and Class C shares, amounts paid under the Plan are paid to the
Distributor for (1) services provided and the expenses borne by it and
45
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
NOTES TO FINANCIAL STATEMENTS February 28, 1999, continued
others in the distribution of the shares of these Classes, including the
payment of commissions for sales of these Classes and incentive compensation
to, and expenses of, the Morgan Stanley Dean Witter Financial Advisors and
others who engage in or support distribution of the shares or who service
shareholder accounts, including overhead and telephone expenses; (2) printing
and distribution of prospectuses and reports used in connection with the
offering of these shares to other than current shareholders; and (3)
preparation, printing and distribution of sales literature and advertising
materials. In addition, the Distributor may utilize fees paid pursuant to the
Plan, in the case of Class B shares, to compensate Dean Witter Reynolds Inc.
("DWR"), an affiliate of the Investment Manager and Distributor, and other
selected broker-dealers for their opportunity costs in advancing such amounts,
which compensation would be in the form of a carrying charge on any
unreimbursed expenses.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund
pursuant to the Plan and contingent deferred sales charges paid by investors
upon redemption of Class B shares. Although there is no legal obligation for
the Fund to pay expenses incurred in excess of payments made to the Distributor
under the Plan and the proceeds of contingent deferred sales charges paid by
investors upon redemption of shares, if for any reason the Plan is terminated,
the Trustees will consider at that time the manner in which to treat such
expenses. The Distributor has advised the Fund that such excess amounts,
including carrying charges, totaled $2,944,607 at February 28, 1999.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the period ended February 28, 1999, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.25% and
1.0%, respectively.
The Distributor has informed the Fund that for the period ended February 28,
1999, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $34,119 and $3,891,
respectively and received $21,224 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.
46
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
NOTES TO FINANCIAL STATEMENTS February 28, 1999, continued
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the period ended February 28, 1999
aggregated $78,352,276 and $2,013,422, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager
and Distributor, is the Fund's transfer agent.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
[Enlarge/Download Table]
FOR THE PERIOD
SEPTEMBER 28, 1998*
THROUGH
FEBRUARY 28, 1999
-------------------------------
SHARES AMOUNT
------------- ---------------
CLASS A
Sold ................................................ 287,669 $ 3,063,240
Reinvestment of dividends and distributions ......... 696 8,153
Redeemed ............................................ (13,507) (148,699)
------- ------------
Net increase -- Class A ............................. 274,858 2,922,694
------- ------------
CLASS B
Sold ................................................ 7,352,876 78,346,802
Reinvestment of dividends and distributions ......... 11,216 131,227
Redeemed ............................................ (309,382) (3,536,821)
--------- ------------
Net increase -- Class B ............................. 7,054,710 74,941,208
--------- ------------
CLASS C
Sold ................................................ 590,107 6,366,780
Reinvestment of dividends and distributions ......... 691 8,077
Redeemed ............................................ (47,886) (514,807)
--------- ------------
Net increase -- Class C ............................. 542,912 5,860,050
--------- ------------
CLASS D
Sold ................................................ 14,665 167,520
Reinvestment of dividends and distributions ......... 42 488
Redeemed ............................................ (11) (136)
--------- ------------
Net increase -- Class D ............................. 14,696 167,872
--------- ------------
Net increase in Fund ................................ 7,887,176 $ 83,891,824
========= ============
---------------
* Commencement of operations.
47
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
NOTES TO FINANCIAL STATEMENTS February 28, 1999, continued
6. FEDERAL INCOME TAX STATUS
As of February 28, 1999, the Fund had temporary book/tax differences primarily
attributable to the mark-to-market of futures contracts and permanent book/tax
differences primarily attributable to nondeductible expenses. To reflect
reclassifications arising from the permanent differences, paid-in-capital was
charged $96,205, undistributed net realized gain was charged $14,689 and net
investment income was credited $110,894.
7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
The Fund may purchase and sell stock index futures ("futures contracts") for
the following reasons: to simulate full investment in the S&P 500 Index while
retaining a cash balance for fund management purposes; to facilitate trading;
to reduce transaction costs; or to seek higher investment returns when a
futures contract is priced more attractively than stocks comprising the S&P 500
Index.
These futures contracts involve elements of market risk in excess of the amount
reflected in the Statement of Assets and Liabilities. The Fund bears the risk
of an unfavorable change in the value of the underlying securities.
At February 28, 1999, the Fund had outstanding futures contracts.
48
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout the period:
[Enlarge/Download Table]
FOR THE PERIOD SEPTEMBER 28, 1998*
THROUGH FEBRUARY 28, 1999**
---------------------------------------------------------
CLASS A CLASS B CLASS C CLASS D
SHARES SHARES SHARES SHARES
----------- ------------- ------------- -----------
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $ 10.00 $ 10.00 $ 10.00 $ 10.00
------- ------- ------- -------
Income from investment operations:
Net investment income (loss) ................... 0.02 (0.02) ( 0.02) 0.02
Net realized and unrealized gain ............... 1.81 1.80 1.81 1.81
------- ------- ------- -------
Total income from investment operations ......... 1.83 1.78 1.79 1.83
------- ------- ------- -------
Less dividends and distributions from:
Net investment income .......................... ( 0.02) --++ --++ (0.02)
Net realized gains ............................. ( 0.02) (0.02) (0.02) 0.02)
-------- ------- ------- --------
Total dividends and distributions ............... ( 0.04) (0.02) (0.02) (0.04)
-------- ------- ------- --------
Net asset value, end of period .................. $ 11.79 $ 11.76 $ 11.77 $ 11.79
======== ======= ======= ========
TOTAL RETURN+(1) ................................ 18.32% 17.96% 17.94% 18.38%
RATIOS TO AVERAGE NET ASSETS(2)(3)(4):
Expenses ........................................ 1.23% 1.98% 1.98% 0.98%
Net investment income ........................... 0.38% (0.37)% (0.37)% 0.63%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $ 3,269 $83,021 $6,417 $ 203
Portfolio turnover rate (1) ..................... 3% 3% 3% 3%
-------------
* Commencement of operations.
** 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.
++ Excludes $0.002484 and $0.000859 of dividends from net investment income
for Class B and Class C, respectively.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived
by the Investment Manager, the annualized expense and the net investment
income ratios would have been 1.55% and 0.06%, respectively, for Class A
shares, 2.30% and (0.69)%, respectively, for Class B shares, 2.30% and
(0.69)%, respectively, for Class C shares and 1.30% and 0.31%,
respectively, for Class D shares.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
49
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Morgan Stanley Dean Witter S&P 500
Select Fund (the "Fund") at February 28, 1999, and the results of its
operations, the changes in its net assets and the financial highlights for the
period September 28, 1998 (commencement of operations) through February 28,
1999, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit, which included confirmation of
securities at February 28, 1999 by correspondence with the custodian and
brokers, provides a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
April 14, 1999
1999 FEDERAL TAX NOTICE (unaudited)
For the period ended February 28, 1999, the Fund paid to shareholders
$0.01 per share from long-term capital gains. For such period, 97.46% of
the income paid qualified for the dividends received deduction available
to corporations.
50
MORGAN STANLEY DEAN WITTER S&P 500 SELECT FUND
PART C OTHER INFORMATION
Item 23. Exhibits
2. Amended and Restated By-Laws of Registrant dated May 1, 1999.
5. Form of Selected Dealer Agreement.
10. Consent of Independent Accountants.
14. Financial Data Schedules.
All other exhibits were previously filed via EDGAR and are hereby
incorporated by reference.
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
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 the Morgan Stanley Dean Witter Funds is Two World Trade Center, New
York, New York 10048.
The term "Morgan Stanley Dean Witter Funds" refers to the following
registered investment companies:
Closed-End Investment Companies
-------------------------------
(1) Morgan Stanley Dean Witter California Insured Municipal Income Trust
(2) Morgan Stanley Dean Witter California Quality Municipal Securities
(3) Morgan Stanley Dean Witter Government Income Trust
(4) Morgan Stanley Dean Witter High Income Advantage Trust
(5) Morgan Stanley Dean Witter High Income Advantage Trust II
(6) Morgan Stanley Dean Witter High Income Advantage Trust III
(7) Morgan Stanley Dean Witter Income Securities Inc.
(8) Morgan Stanley Dean Witter Insured California Municipal Securities
(9) Morgan Stanley Dean Witter Insured Municipal Bond Trust
(10) Morgan Stanley Dean Witter Insured Municipal Income Trust
(11) Morgan Stanley Dean Witter Insured Municipal Securities
(12) Morgan Stanley Dean Witter Insured Municipal Trust
(13) Morgan Stanley Dean Witter Municipal Income Opportunities Trust
(14) Morgan Stanley Dean Witter Municipal Income Opportunities Trust II
(15) Morgan Stanley Dean Witter Municipal Income Opportunities Trust III
(16) Morgan Stanley Dean Witter Municipal Income Trust
(17) Morgan Stanley Dean Witter Municipal Income Trust II
(18) Morgan Stanley Dean Witter Municipal Income Trust III
(19) Morgan Stanley Dean Witter Municipal Premium Income Trust
(20) Morgan Stanley Dean Witter New York Quality Municipal Securities
(21) Morgan Stanley Dean Witter Prime Income Trust
(22) Morgan Stanley Dean Witter Quality Municipal Income Trust
(23) Morgan Stanley Dean Witter Quality Municipal Investment Trust
(24) Morgan Stanley Dean Witter Quality Municipal Securities
Open-end Investment Companies
-----------------------------
(1) Active Assets California Tax-Free Trust
(2) Active Assets Government Securities Trust
(3) Active Assets Money Trust
(4) Active Assets Tax-Free Trust
(5) Morgan Stanley Dean Witter Aggressive Equity Fund
(6) Morgan Stanley Dean Witter American Opportunities Fund
(7) Morgan Stanley Dean Witter Balanced Growth Fund
(8) Morgan Stanley Dean Witter Balanced Income Fund
(9) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(10) Morgan Stanley Dean Witter California Tax-Free Income Fund
(11) Morgan Stanley Dean Witter Capital Growth Securities
(12) Morgan Stanley Dean Witter Competitive Edge Fund, "Best Ideas
Portfolio"
(13) Morgan Stanley Dean Witter Convertible Securities Trust
(14) Morgan Stanley Dean Witter Developing Growth Securities Trust
(15) Morgan Stanley Dean Witter Diversified Income Trust
(16) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(17) Morgan Stanley Dean Witter Equity Fund
(18) Morgan Stanley Dean Witter European Growth Fund Inc.
(19) Morgan Stanley Dean Witter Federal Securities Trust
(20) Morgan Stanley Dean Witter Financial Services Trust
(21) Morgan Stanley Dean Witter Fund of Funds
(22) Morgan Stanley Dean Witter Global Dividend Growth Securities
(23) Morgan Stanley Dean Witter Global Utilities Fund
(24) Morgan Stanley Dean Witter Growth Fund
(25) Morgan Stanley Dean Witter Hawaii Municipal Trust
(26) Morgan Stanley Dean Witter Health Sciences Trust
(27) Morgan Stanley Dean Witter High Yield Securities Inc.
(28) Morgan Stanley Dean Witter Income Builder Fund
(29) Morgan Stanley Dean Witter Information Fund
(30) Morgan Stanley Dean Witter Intermediate Income Securities
(31) Morgan Stanley Dean Witter International SmallCap Fund
(32) Morgan Stanley Dean Witter Japan Fund
(33) Morgan Stanley Dean Witter Limited Term Municipal Trust
(34) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(35) Morgan Stanley Dean Witter Market Leader Trust
(36) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(37) Morgan Stanley Dean Witter Mid-Cap Growth Fund
(38) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(39) Morgan Stanley Dean Witter Natural Resource Development
Securities Inc.
(40) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(41) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(42) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(43) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
(44) Morgan Stanley Dean Witter Real Estate Fund
(45) Morgan Stanley Dean Witter S&P 500 Index Fund
(46) Morgan Stanley Dean Witter S&P 500 Select Fund
(47) Morgan Stanley Dean Witter Select Dimensions Investment Series
(48) Morgan Stanley Dean Witter Select Municipal Reinvestment Fund
(49) Morgan Stanley Dean Witter Short-Term Bond Fund
(50) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(51) Morgan Stanley Dean Witter Special Value Fund
(52) Morgan Stanley Dean Witter Strategist Fund
(53) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(54) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(55) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(56) Morgan Stanley Dean Witter U.S. Government Securities Trust
(57) Morgan Stanley Dean Witter Utilities Fund
(58) Morgan Stanley Dean Witter Value-Added Market Series
(59) Morgan Stanley Dean Witter Value Fund
(60) Morgan Stanley Dean Witter Variable Investment Series
(61) Morgan Stanley Dean Witter World Wide Income Trust
The term "TCW/DW Funds" refers to the following registered investment companies:
Open-End Investment Companies
-----------------------------
(1) TCW/DW Emerging Markets Opportunities Trust
(2) TCW/DW Global Telecom Trust
(3) TCW/DW Income and Growth Fund
(4) TCW/DW Latin American Growth Fund
(5) TCW/DW Mid-Cap Equity Trust
(6) TCW/DW North American Government Income Trust
(7) TCW/DW Small Cap Growth Fund
(8) TCW/DW Total Return Trust
Closed-End Investment Companies
-------------------------------
(1) TCW/DW Term Trust 2000
(2) TCW/DW Term Trust 2002
(3) TCW/DW Term Trust 2003
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
-------------------- ------------------------------------------------
Mitchell M. Merin President and Chief Operating Officer of Asset
President, Chief Management of Morgan Stanley Dean Witter & Co.
Executive Officer and ("MSDW); Chairman, Chief Executive Officer and
Director Director of Morgan Stanley Dean Witter
Distributors Inc. ("MSDW Distributors") and
Morgan Stanley Dean Witter Trust FSB ("MSDW
Trust"); President, Chief Executive Officer and
Director of Morgan Stanley Dean Witter Services
Company Inc. ("MSDW Services"); President of the
Morgan Stanley Dean Witter Funds, TCW/DW Funds
and Discover Brokerage Index Series; Executive
Vice President and Director of Dean Witter
Reynolds Inc. ("DWR"); Director of various MSDW
subsidiaries.
Joseph J. McAlinden Vice President of the Morgan Stanley Dean Witter
Executive Vice President Funds and Discover Brokerage Index Series;
and Chief Investment Director of MSDW Trust.
Officer
Ronald E. Robison Executive Vice President, Chief Administrative
Executive Vice President, Officer and Director of MSDW Services; Vice
Chief Administrative President of the Morgan Stanley Dean Witter
Officer and Director Funds, TCW/DW Funds and Discover Brokerage Index
Series.
Edward C. Oelsner, III
Executive Vice President
John Van Heuvelen President of MSDW Trust.
Executive Vice President
Barry Fink Assistant Secretary of DWR; Senior Vice
Senior Vice President, President, Secretary, General Counsel and
Secretary, General Director of MSDW Services; Senior Vice
Counsel and Director President, Assistant Secretary and Assistant
General Counsel of MSDW Distributors; Vice
President, Secretary and General Counsel of the
Morgan Stanley Dean Witter Funds, TCW/DW Funds
and Discover Brokerage Index Series.
Peter M. Avelar Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
Mark Bavoso Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
Douglas Brown
Senior Vice President
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
-------------------- ------------------------------------------------
Rosalie Clough
Senior Vice President
and Director of Marketing
Richard Felegy
Senior Vice President
Edward F. Gaylor Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
Robert S. Giambrone Senior Vice President of MSDW Services, MSDW
Senior Vice President Distributors and MSDW Trust and Director of MSDW
Trust; Vice President of the Morgan Stanley Dean
Witter Funds, TCW/DW Funds and Discover
Brokerage Index Series.
Rajesh K. Gupta Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
Kenton J. Hinchliffe Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds and Discover Brokerage Index
Series.
Kevin Hurley Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
Margaret Iannuzzi
Senior Vice President
Jenny Beth Jones Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
Michelle Kaufman Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
John B. Kemp, III President of MSDW Distributors.
Senior Vice President
Anita H. Kolleeny Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
Jonathan R. Page Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
Ira N. Ross Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
Guy G. Rutherfurd, Jr. Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
-------------------- ------------------------------------------------
Rochelle G. Siegel Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
James Solloway
Senior Vice President
Jayne M. Stevlingson Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
Paul D. Vance Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
Elizabeth A. Vetell
Senior Vice President
and Director of Shareholder
Communication
James F. Willison Vice President of various Morgan Stanley Dean
Senior Vice President Witter Funds.
Frank Bruttomesso First Vice President and Assistant Secretary of
First Vice President and MSDW Services; Assistant Secretary of MSDW
Assistant Secretary Distributors, the Morgan Stanley Dean Witter
Funds, TCW/DW Funds and Discover Brokerage
Index Series.
Toby Burroughs
First Vice President
Thomas F. Caloia First Vice President and Assistant Treasurer of
First Vice President MSDW Services; Assistant Treasurer of MSDW
and Assistant Distributors; Treasurer and Chief Financial and
Treasurer Accounting Officer of the Morgan Stanley Dean
Witter Funds, TCW/DW Funds and Discover
Brokerage Index Series..
Thomas Chronert
First Vice President
Marilyn K. Cranney Assistant Secretary of DWR; First Vice President
First Vice President and Assistant Secretary of MSDW Services;
and Assistant Secretary Assistant Secretary of MSDW Distributors, the
Morgan Stanley Dean Witter Funds, TCW/DW Funds
and Discover Brokerage Index Series.
Salvatore DeSteno First Vice President of MSDW Services.
First Vice President
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
-------------------- ------------------------------------------------
Peter W. Gurman
First Vice President
Michael Interrante First Vice President and Controller of MSDW
First Vice President Services; Assistant Treasurer of MSDW
and Controller Distributors; First Vice President and Treasurer
of MSDW Trust.
David Johnson
First Vice President
Stanley Kapica
First Vice President
Lou Anne D. McInnis First Vice President and Assistant Secretary of
First Vice President and MSDW Services; Assistant Secretary of MSDW
Assistant Secretary Distributors, the Morgan Stanley Dean Witter
Funds, TCW/DW Funds and Discover Brokerage Index
Series.
Carsten Otto First Vice President and Assistant Secretary of
First Vice President MSDW Services; Assistant Secretary of MSDW
and Assistant Secretary Distributors, the Morgan Stanley Dean Witter
Funds, TCW/DW Funds and Discover Brokerage Index
Series.
Ruth Rossi First Vice President and Assistant Secretary of
First Vice President and MSDW Services; Assistant Secretary of MSDW
Assistant Secretary Distributors the Morgan Stanley Dean Witter
Funds, TCW/DW Funds and Discover Brokerage Index
Series.
James P. Wallin
First Vice President
Dale Albright
Vice President
Joan G. Allman
Vice President
Andrew Arbenz
Vice President
Joseph Arcieri Vice President of various Morgan Stanley Dean
Vice President Witter Funds.
Armon Bar-Tur
Vice President
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
-------------------- ------------------------------------------------
Raymond Basile
Vice President
Nancy Belza
Vice President
Maurice Bendrihem
Vice President and
Assistant Controller
Dale Boettcher
Vice President
Ronald Caldwell
Vice President
Joseph Cardwell
Vice President
Liam Carroll
Vice President
Philip Casparius
Vice President
Aaron Clark
Vice President
William Connerly
Vice President
David Dineen
Vice President
Sheila Finnerty
Vice President
Jeffrey D. Geffen
Vice President
Sandra Gelpieryn
Vice President
Michael Geringer
Vice President
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
-------------------- ------------------------------------------------
Gail Gerrity
Vice President
Ellen Gold
Vice President
Stephen Greenhut
Vice President
Matthew Haynes Vice President of various Morgan Stanley Dean
Vice President Witter Funds.
Peter Hermann Vice President of various Morgan Stanley Dean
Vice President Witter Funds.
David T. Hoffman
Vice President
Christopher Jones
Vice President
Kevin Jung Vice President of various Morgan Stanley Dean
Vice President Witter Funds.
Carol Espejo-Kane
Vice President
Nancy Kennedy
Vice President
Doug Ketterer
Vice President
Paula LaCosta Vice President of various Morgan Stanley Dean
Vice President Witter Funds.
Kimberly LaHart
Vice President
Thomas Lawlor
Vice President
Todd Lebo Vice President and Assistant Secretary of MSDW
Vice President and Services; Assistant Secretary of MSDW
Assistant Secretary Distributors, the Morgan Stanley Dean Witter
Funds, TCW/DW Funds and Discover Brokerage Index
Series.
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
-------------------- ------------------------------------------------
Gerard J. Lian Vice President of various Morgan Stanley Dean
Vice President Witter Funds.
Nancy Login
Vice President
Sharon Loguercio
Vice President
Steven MacNamara
Vice President
Catherine Maniscalco Vice President of Morgan Stanley Dean Witter
Vice President Natural Resource Development Securities Inc.
Albert McGarity
Vice President
Teresa McRoberts Vice President of Morgan Stanley Dean Witter S&P
Vice President 500 Select Fund.
Mark Mitchell
Vice President
Julie Morrone
Vice President
Mary Beth Mueller
Vice President
David Myers Vice President of Morgan Stanley Dean Witter
Vice President Natural Resource Development Securities Inc.
James Nash
Vice President
Richard Norris
Vice President
George Paoletti Vice President of various Morgan Stanley Dean
Vice President Witter Funds.
Anne Pickrell Vice President of various Morgan Stanley Dean
Vice President Witter Funds.
Dawn Rorke
Vice President
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
-------------------- ------------------------------------------------
John Roscoe Vice President of Morgan Stanley Dean Witter
Vice President Real Estate Fund
Hugh Rose
Vice President
Robert Rossetti Vice President of various Morgan Stanley Dean
Vice President Witter Funds.
Carl F. Sadler
Vice President
Deborah Santaniello
Vice President
Patrice Saunders
Vice President
Howard A. Schloss Vice President of Morgan Stanley Dean Witter
Vice President Federal Securities Trust.
Peter J. Seeley Vice President of various Morgan Stanley Dean
Vice President Witter Funds.
Robert Stearns
Vice President
Naomi Stein
Vice President
Michael Strayhorn
Vice President
Kathleen H. Stromberg Vice President of various Morgan Stanley Dean
Vice President Witter Funds.
Marybeth Swisher
Vice President
Stuart Taylor
Vice President
Michael Thayer
Vice President
Robert Vanden Assem
Vice President
NAME AND POSITION WITH OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
MORGAN STANLEY DEAN OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
WITTER ADVISORS INC. AND NATURE OF CONNECTION
-------------------- ------------------------------------------------
Alice Weiss Vice President of various Morgan Stanley Dean
Vice President Witter Funds.
John Wong
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 Money Trust
(4) Active Assets Tax-Free Trust
(5) Morgan Stanley Dean Witter Aggressive Equity Fund
(6) Morgan Stanley Dean Witter American Opportunities Fund
(7) Morgan Stanley Dean Witter Balanced Growth Fund
(8) Morgan Stanley Dean Witter Balanced Income Fund
(9) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust
(10) Morgan Stanley Dean Witter California Tax-Free Income Fund
(11) Morgan Stanley Dean Witter Capital Growth Securities
(12) Morgan Stanley Dean Witter Competitive Edge Fund, "Best Ideas
Portfolio"
(13) Morgan Stanley Dean Witter Convertible Securities Trust
(14) Morgan Stanley Dean Witter Developing Growth Securities Trust
(15) Morgan Stanley Dean Witter Diversified Income Trust
(16) Morgan Stanley Dean Witter Dividend Growth Securities Inc.
(17) Morgan Stanley Dean Witter Equity Fund
(18) Morgan Stanley Dean Witter European Growth Fund Inc.
(19) Morgan Stanley Dean Witter Federal Securities Trust
(20) Morgan Stanley Dean Witter Financial Services Trust
(21) Morgan Stanley Dean Witter Fund of Funds
(22) Morgan Stanley Dean Witter Global Dividend Growth Securities
(23) Morgan Stanley Dean Witter Global Utilities Fund
(24) Morgan Stanley Dean Witter Growth Fund
(25) Morgan Stanley Dean Witter Hawaii Municipal Trust
(26) Morgan Stanley Dean Witter Health Sciences Trust
(27) Morgan Stanley Dean Witter High Yield Securities Inc.
(28) Morgan Stanley Dean Witter Income Builder Fund
(29) Morgan Stanley Dean Witter Information Fund
(30) Morgan Stanley Dean Witter Intermediate Income Securities
(31) Morgan Stanley Dean Witter International SmallCap Fund
(32) Morgan Stanley Dean Witter Japan Fund
(33) Morgan Stanley Dean Witter Limited Term Municipal Trust
(34) Morgan Stanley Dean Witter Liquid Asset Fund Inc.
(35) Morgan Stanley Dean Witter Market Leader Trust
(36) Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities
(37) Morgan Stanley Dean Witter Mid-Cap Growth Fund
(38) Morgan Stanley Dean Witter Multi-State Municipal Series Trust
(39) Morgan Stanley Dean Witter Natural Resource Development
Securities Inc.
(40) Morgan Stanley Dean Witter New York Municipal Money Market Trust
(41) Morgan Stanley Dean Witter New York Tax-Free Income Fund
(42) Morgan Stanley Dean Witter Pacific Growth Fund Inc.
(43) Morgan Stanley Dean Witter Precious Metals and Minerals Trust
(44) Morgan Stanley Dean Witter Prime Income Trust
(45) Morgan Stanley Dean Witter Real Estate Fund
(46) Morgan Stanley Dean Witter S&P 500 Index Fund
(47) Morgan Stanley Dean Witter S&P 500 Select Fund
(48) Morgan Stanley Dean Witter Short-Term Bond Fund
(49) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust
(50) Morgan Stanley Dean Witter Special Value Fund
(51) Morgan Stanley Dean Witter Strategist Fund
(52) Morgan Stanley Dean Witter Tax-Exempt Securities Trust
(53) Morgan Stanley Dean Witter Tax-Free Daily Income Trust
(54) Morgan Stanley Dean Witter U.S. Government Money Market Trust
(55) Morgan Stanley Dean Witter U.S. Government Securities Trust
(56) Morgan Stanley Dean Witter Utilities Fund
(57) Morgan Stanley Dean Witter Value-Added Market Series
(58) Morgan Stanley Dean Witter Value Fund
(59) Morgan Stanley Dean Witter Variable Investment Series
(60) Morgan Stanley Dean Witter World Wide Income Trust
(1) TCW/DW Emerging Markets Opportunities Trust
(2) TCW/DW Global Telecom Trust
(3) TCW/DW Income and Growth
(4) TCW/DW Latin American Growth Fund
(5) TCW/DW Mid-Cap Equity Trust
(6) TCW/DW North American Government Income Trust
(7) TCW/DW Small Cap Growth Fund
(8) TCW/DW Total Return Trust
(b) The following information is given regarding directors and officers of MSDW
Distributors not listed in Item 26 above. The principal address of MSDW
Distributors is Two World Trade Center, New York, New York 10048. Other than Mr.
Purcell, who is a Trustee of the Registrant, none of the following persons has
any position or office with the Registrant.
Name Positions and Office with MSDW Distributors
---- -------------------------------------------
Christine A. Edwards Executive Vice President, Secretary, Director and
Chief Legal Officer.
Michael T. Gregg Vice President and Assistant Secretary.
James F. Higgins Director
Fredrick K. Kubler Senior Vice President, Assistant Secretary and
Chief Compliance Officer.
Name Positions and Office with MSDW Distributors
---- -------------------------------------------
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
None.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it 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 30th day of April, 1999.
MORGAN STANLEY DEAN WITTER S&P 500 SELECT 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. 1 has been signed below by the following persons in
the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
(1) Principal Executive Officer President, Chief
Executive Officer,
Trustee and Chairman
By /s/ Charles A. Fiumefreddo 04/30/99
-------------------------------
Charles A. Fiumefreddo
(2) Principal Financial Officer Treasurer and Principal
Accounting Officer
By /s/ Thomas F. Caloia 04/30/99
-------------------------------
Thomas F. Caloia
(3) Majority of the Trustees
Charles A. Fiumefreddo (Chairman)
Philip J. Purcell
By /s/ Barry Fink 04/30/99
-------------------------------
Barry Fink
Attorney-in-Fact
Michael Bozic Manuel H. Johnson
Edwin J. Garn Michael E. Nugent
Wayne E. Hedien John L. Schroeder
By /s/ David M. Butowsky 04/30/99
-------------------------------
David M. Butowsky
Attorney-in-Fact
EXHIBIT INDEX
-------------
2. -- Amended and Restated By-Laws of Registrant dated May 1, 1999.
5. -- Form of Selected Dealer Agreement.
10. -- Consent of Independent Accountants.
14. -- Financial Data Schedules.
Dates Referenced Herein and Documents Incorporated by Reference
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