-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IgI7GuGnsQCgNnjLtDv6uAVNfIHyoTsTn1TP0Tjg77kRd972SLg44UlaQoAa/t11 l5DxmcfkPXWjWEKkYT0drQ== 0000912057-00-054616.txt : 20001225 0000912057-00-054616.hdr.sgml : 20001225 ACCESSION NUMBER: 0000912057-00-054616 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20001222 EFFECTIVENESS DATE: 20001222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST CENTRAL INDEX KEY: 0000844936 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-26375 FILM NUMBER: 794897 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-05744 FILM NUMBER: 794898 BUSINESS ADDRESS: STREET 1: TWO WORLD TRADE CENTER CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123921600 MAIL ADDRESS: STREET 1: TWO WORLD TRADE CENTER STREET 2: TWO WORLD TRADE CENTER CITY: NEW YORK STATE: NY ZIP: 10048 FORMER COMPANY: FORMER CONFORMED NAME: WITTER DEAN WORLD WIDE INCOME TRUST DATE OF NAME CHANGE: 19920703 485BPOS 1 a2031791z485bpos.txt 485BPOS AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 22, 2000 FILE NOS.: 33-26375 811-5744 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/ POST-EFFECTIVE AMENDMENT NO. 14 /X/ AND/OR REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/ AMENDMENT NO. 15 /X/ ------------------- MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST (A MASSACHUSETTS BUSINESS TRUST) (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) TWO WORLD TRADE CENTER NEW YORK, NEW YORK 10048 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600 BARRY FINK, ESQ. TWO WORLD TRADE CENTER NEW YORK, NEW YORK 10048 (NAME AND ADDRESS OF AGENT FOR SERVICE) ------------------------ COPY TO: STUART M. STRAUSS, ESQ. MAYER, BROWN & PLATT 1675 BROADWAY NEW YORK, NEW YORK 10019 ---------------- APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after this Post-Effective Amendment becomes effective. IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX) ___ immediately upon filing pursuant to paragraph (b) _X_ on January 8, 2001 pursuant to paragraph (b) ___ 60 days after filing pursuant to paragraph (a) ___ on (date) pursuant to paragraph (a) of rule 485 AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROSPECTUS - JANUARY 8, 2001 Morgan Stanley Dean Witter WORLD WIDE INCOME TRUST [COVER PHOTO] A MUTUAL FUND WHOSE PRIMARY INVESTMENT OBJECTIVE IS TO PROVIDE A HIGH LEVEL OF CURRENT INCOME. AS A SECONDARY OBJECTIVE, THE FUND SEEKS APPRECIATION IN THE VALUE OF ITS ASSETS 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 Objectives................................. 1 Principal Investment Strategies....................... 1 Principal Risks....................................... 2 Past Performance...................................... 4 Fees and Expenses..................................... 5 Additional Investment Strategy Information............ 6 Additional Risk Information........................... 7 Fund Management....................................... 9 Shareholder Information Pricing Fund Shares................................... 10 How to Buy Shares..................................... 10 How to Exchange Shares................................ 12 How to Sell Shares.................................... 14 Distributions......................................... 16 Tax Consequences...................................... 16 Share Class Arrangements.............................. 17 Financial Highlights ...................................................... 25 Our Family of Funds ...................................................... Inside Back Cover THIS PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE FUND. PLEASE READ IT CAREFULLY AND KEEP IT FOR FUTURE REFERENCE.
[Sidebar] INCOME AN INVESTMENT OBJECTIVE HAVING THE PRIMARY GOAL OF SELECTING SECURITIES TO PAY OUT INCOME. [End Sidebar] THE FUND [ICON] INVESTMENT OBJECTIVES - -------------------------------------------------------------------------------- Morgan Stanley Dean Witter World Wide Income Trust seeks as a primary investment objective to provide a high level of current income. As a secondary objective, the Fund seeks appreciation in the value of its assets. On October 26, 2000, the Board of Trustees of Morgan Stanley Dean Witter World Wide Income Trust (the "Fund") approved an Agreement and Plan of Reorganization by and between the Fund and Morgan Stanley Dean Witter Diversified Income Trust ("Diversified Income"), pursuant to which substantially all of the assets of the Fund would be combined with those of Diversified Income and shareholders of the Fund would become shareholders of Diversified Income receiving shares of Diversified Income equal to the value of their holdings in the Fund (the "Reorganization"). Each shareholder of the Fund will receive the Class of shares of Diversified Income that corresponds to the Class of shares of the Fund currently held by that shareholder. The Reorganization is subject to the approval of shareholders of the Fund at a special meeting of shareholders scheduled to be held on March 27, 2001. A proxy statement formally detailing the proposal, the reasons for the Trustees' action and information concerning Diversified Income will be distributed to shareholders of the Fund. [ICON] PRINCIPAL INVESTMENT STRATEGIES - -------------------------------------------------------------------------------- The Fund will normally invest at least 65% of its assets in a portfolio of global fixed-income securities. The securities may be issued or guaranteed by the U.S. Government, its agencies or instrumentalities, or investment grade securities issued by U.S. corporations, foreign governments or foreign corporations. The securities also may be issued or guaranteed by organizations designated or supported by a government or government entity, such as the European Economic Community and the World Bank. The Fund's "Investment Manager," Morgan Stanley Dean Witter Advisors Inc., actively allocates assets of the Fund among various geographical regions, nations, currencies, corporations and governmental entities in an attempt to optimize income and, if possible, capital appreciation. In this process, the Investment Manager considers several factors, such as the yield of particular securities, the anticipated appreciation of the securities, the state of the issuers' local economies and markets, and the relationship of the U.S. dollar to the local currencies. The Fund's assets will normally be comprised of securities of issuers located in at least three countries (which may include the U.S.). Fixed-income securities include debt securities and can take the form of bonds, notes or money market instruments. The issuer of the debt security borrows money from the investor who buys the security. Most debt securities pay either fixed or adjustable rates of interest at regular intervals until they mature, at which point investors get their 1 principal back. The Fund's fixed income investments may include zero-coupon securities, which are purchased at a discount and either (i) pay no interest, or (ii) accrue interest, but make no payments until maturity. In addition to fixed-income securities, the Fund may invest in forward currency contracts, options and futures, mortgage-backed securities, convertible securities and warrants. In pursuing the Fund's investment objectives, the Investment Manager has considerable leeway in deciding which investments it buys, holds or sells on a day-to-day basis -- and which trading strategies it uses. For example, the Investment Manager in its discretion may determine to use some permitted trading strategies while not using others. [ICON] PRINCIPAL RISKS - -------------------------------------------------------------------------------- There is no assurance that the Fund will achieve its investment objectives. The Fund's share price and yield 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. FIXED-INCOME SECURITIES. All fixed-income securities are subject to two types of risk: credit risk and interest rate risk. Credit risk refers to the possibility that the issuer of a security will be unable to make interest payments and repay the principal on its debt. Interest rate risk refers to fluctuations in the value of a fixed-income security resulting from changes in the general level of interest rates. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. (Zero coupon securities are typically subject to greater price fluctuations than comparable securities that pay interest.) As merely illustrative of the relationship between fixed-income securities and interest rates, the following table shows how interest rates affect bond prices. HOW INTEREST RATES AFFECT BOND PRICES
PRICE PER $1,000 OF A BOND IF INTEREST RATES: ------------------------------------------------ INCREASE DECREASE ------------------ ------------------ BOND MATURITY COUPON 1% 2% 1% 2% -------------------------------------------------------------------------------- 1 year N/A $1,000 $1,000 $1,000 $1,000 -------------------------------------------------------------------------------- 5 years 5.875% $ 951 $ 920 $1,018 $1,054 -------------------------------------------------------------------------------- 10 years 6.00% $ 910 $ 853 $1,038 $1,110 -------------------------------------------------------------------------------- 30 years 6.125% $ 841 $ 748 $1,093 $1,264 --------------------------------------------------------------------------------
Coupons reflect yields on Treasury securities as of December 31, 1999. The table is not representative of price changes for mortgage-backed securities principally because of prepayment risk. In addition, the table is an illustration and does not represent expected yields or share price changes of any Morgan Stanley Dean Witter mutual fund. 2 The Fund is not limited as to the maturities of the securities in which it may invest. Thus, a rise in the general level of interest rates may cause the price of the Fund's portfolio securities to fall substantially. In addition, while the Fund invests in investment grade fixed-income securities, certain of these securities may have speculative characteristics. FOREIGN SECURITIES. The Fund's investments in foreign securities may involve risks in addition to the risks associated with domestic securities. One additional risk is currency risk. While the price of Fund shares is quoted in U.S. dollars, the Fund generally converts U.S. dollars to a foreign market's local currency to purchase a security in that market. If the value of that local currency falls relative to the U.S. dollar, the U.S. dollar value of the foreign security will decrease. This is true even if the foreign security's local price remains unchanged. Foreign securities (including depository receipts) also have risks related to economic and political developments abroad, including expropriations, confiscatory taxation, exchange control regulation, limitations on the use or transfer of Fund assets and any effects of foreign social, economic or political instability. Foreign companies, in general, are not subject to the regulatory requirements of U.S. companies and, as such, there may be less publicly available information about these companies. Moreover, foreign accounting, auditing and financial reporting standards generally are different from those applicable to U.S. companies. Finally, in the event of a default of any foreign debt obligations, it may be more difficult for the Fund to obtain or enforce a judgment against the issuers of the securities. Securities of foreign issuers may be less liquid than comparable securities of U.S. issuers and, as such, their price changes may be more volatile. Furthermore, foreign exchanges and broker-dealers are generally subject to less government and exchange scrutiny and regulation than their U.S. counterparts. In addition, differences in clearance and settlement procedures in foreign markets may occasion delays in settlement of the Fund's trades effected in those markets and could result in losses to the Fund due to subsequent declines in the value of the securities subject to the trades. NON-DIVERSIFIED STATUS. The Fund is a "non-diversified" mutual fund and, as such, its investments are not required to meet certain diversification requirements under federal law. Compared with "diversified" funds, the Fund may invest a greater percentage of its assets in the securities of an individual corporation or governmental entity. Thus, the Fund's assets may be concentrated in fewer securities than other funds. A decline in the value of those investments would cause the Fund's overall value to decline to a greater degree. OTHER RISKS. The performance of the Fund also will depend on whether or not 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 risks associated with investments in forward currency contracts, options and futures, mortgage-backed securities and convertible securities and warrants. For more information about these risks, see the "Additional Risk Information" section. Shares of the Fund are not bank deposits and are not guaranteed or insured by the FDIC or any other government agency. 3 [Sidebar] ANNUAL TOTAL RETURNS THIS CHART SHOWS HOW THE PERFORMANCE OF THE FUND'S CLASS B SHARES HAS VARIED FROM YEAR TO YEAR OVER THE PAST 10 CALENDAR YEARS. AVERAGE ANNUAL TOTAL RETURNS THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS WITH THOSE OF A BROAD MEASURE OF MARKET PERFORMANCE OVER TIME. THE FUND'S RETURNS INCLUDE THE MAXIMUM APPLICABLE SALES CHARGE FOR EACH CLASS AND ASSUME YOU SOLD YOUR SHARES AT THE END OF EACH PERIOD. [End Sidebar] [ICON] PAST PERFORMANCE - -------------------------------------------------------------------------------- The bar chart and table below provide some indication of the risks of investing in the Fund. The Fund's past performance does not indicate how the Fund will perform in the future. ANNUAL TOTAL RETURNS - CALENDAR YEARS EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC 1990 16.63% '91 1.08% '92 3.11% '93 9.90% '94 -4.43% '95 18.24% '96 12.25% '97 3.31% '98 9.64% '99 -9.31%
The bar chart reflects the performance of Class B shares; the performance of the other Classes will differ because the Classes have different ongoing fees. The performance information in the bar chart does not reflect the deduction of sales charges; if these amounts were reflected, returns would be less than shown. Year to date total return as of September 30, 2000 was -3.47%. During the periods shown in the bar chart, the highest return for a calendar quarter was 7.25% (quarter ended September 30, 1998) and the lowest return for a calendar quarter was -4.57% (quarter ended March 31, 1999).
AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 1999) - --------------------------------------------------------------------------------- PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS - --------------------------------------------------------------------------------- Class A(1) -12.44% -- -- - --------------------------------------------------------------------------------- Class B -13.59% 6.11% 5.70% - --------------------------------------------------------------------------------- Class C(1) -10.16% -- -- - --------------------------------------------------------------------------------- Class D(1) -8.31% -- -- - --------------------------------------------------------------------------------- Lehman Brothers Intermediate Global Treasury Index(2) -2.80% 6.55% 7.83% - ---------------------------------------------------------------------------------
1 Classes A, C and D commenced operations on July 28, 1997. 2 The Lehman Brothers Intermediate Global Treasury Index (formerly Lehman Brothers Global Intermediate Bond Index) includes local currency-denominated sovereign debt of 19 countries with maturities of 1 to 10 years. The Index does not include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. 4 [Sidebar] SHAREHOLDER FEES THESE FEES ARE PAID DIRECTLY FROM YOUR INVESTMENT. ANNUAL FUND OPERATING EXPENSES THESE EXPENSES ARE DEDUCTED FROM THE FUND'S ASSETS AND ARE BASED ON EXPENSES PAID FOR THE FISCAL YEAR ENDED OCTOBER 31, 2000. [End Sidebar] [ICON] FEES AND EXPENSES - -------------------------------------------------------------------------------- The table below briefly describes the fees and expenses that you may pay if you buy and hold shares of the Fund. The Fund offers four Classes of shares: Classes A, B, C and D. Each Class has a different combination of fees, expenses and other features. The Fund does not charge account or exchange fees. See the "Share Class Arrangements" section for further fee and expense information.
CLASS A CLASS B CLASS C CLASS D - ------------------------------------------------------------------------------------- SHAREHOLDER FEES - ------------------------------------------------------------------------------------- Maximum sales charge (load) imposed on purchases (as a percentage of offering price) 4.25%(1) None None None - ------------------------------------------------------------------------------------- Maximum deferred sales charge (load) (as a percentage based on the lesser of the offering price or net asset value at redemption) None(2) 5.00%(3) 1.00%(4) None - ------------------------------------------------------------------------------------- ANNUAL FUND OPERATING EXPENSES - ------------------------------------------------------------------------------------- Management fee 0.75% 0.75% 0.75% 0.75% - ------------------------------------------------------------------------------------- Distribution and service (12b-1) fees 0.20% 0.85% 0.85% None - ------------------------------------------------------------------------------------- Other expenses 0.46% 0.46% 0.46% 0.46% - ------------------------------------------------------------------------------------- Total annual Fund operating expenses 1.41% 2.06% 2.06% 1.21% - -------------------------------------------------------------------------------------
1 Reduced for purchases of $25,000 and over. 2 Investments that are not subject to any sales charge at the time of purchase are subject to a contingent deferred sales charge ("CDSC") of 1.00% that will be imposed if you sell your shares within one year after purchase, except for certain specific circumstances. 3 The CDSC is scaled down to 1.00% during the sixth year, reaching zero thereafter. See "Share Class Arrangements" for a complete discussion of the CDSC. 4 Only applicable if you sell your shares within one year after purchase. EXAMPLE This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund, your investment has a 5% return each year, and the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, the tables below show your costs at the end of each period based on these assumptions depending upon whether or not you sell your shares at the end of each period.
IF YOU SOLD YOUR SHARES: IF YOU HELD YOUR SHARES: ---------------------------------- ---------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS --------------------------------------------------- ---------------------------------- CLASS A $562 $852 $1,163 $2,044 $562 $852 $1,163 $2,044 --------------------------------------------------- ---------------------------------- CLASS B $709 $946 $1,308 $2,390 $209 $646 $1,108 $2,390 --------------------------------------------------- ---------------------------------- CLASS C $309 $646 $1,108 $2,390 $209 $646 $1,108 $2,390 --------------------------------------------------- ---------------------------------- CLASS D $123 $384 $ 665 $1,466 $123 $384 $ 665 $1,466 --------------------------------------------------- ----------------------------------
Long-term shareholders of Class B and C may pay more in sales charges, including distribution fees, than the economic equivalent of the maximum front-end sales charges permitted by the NASD. 5 [ICON] ADDITIONAL INVESTMENT STRATEGY INFORMATION - -------------------------------------------------------------------------------- This section provides additional information relating to the Fund's principal investment strategies. FORWARD CURRENCY CONTRACTS. The Fund's investments also may include forward currency contracts, which involve the purchase or sale of a specific amount of foreign currency at the current price with delivery at a specified future date. The Fund may use these contracts to hedge against adverse price movements in its portfolio securities and the currencies in which they are denominated. The Fund also may enter into "cross-currency" hedging transactions involving currencies other than those in which securities are held or proposed to be purchased are denominated. The Fund may engage in "anticipatory" hedging transactions in which it purchases or sells a specific amount of a foreign currency in order to lock in the current exchange rate of a currency in which a security that the Fund intends to purchase in the future is denominated. The Fund may close out the anticipatory hedge without purchasing the security. OPTIONS AND FUTURES. The Fund may invest in put and call options and futures with respect to interest rate indexes, and options on foreign currencies. Options and futures may be used to seek to protect against a decline in securities or currency prices or an increase in prices of securities or currencies that may be purchased. MORTGAGE-BACKED SECURITIES. The Fund may invest in U.S. and foreign mortgage-backed securities. One type of mortgage-backed security, in which the Fund may invest, is a mortgage pass-through security. These securities represent a participation interest in a pool of residential mortgage loans originated by U.S. or non-U.S. governmental or private lenders such as banks or mortgage loan companies. They differ from conventional debt securities, which provide for periodic payment of interest in fixed amounts and principal payments at maturity or on specified call dates. Mortgage pass-through securities provide for monthly or other quarterly payments that are a "pass-through" of the monthly interest and principal payments made by the individual borrowers on the pooled mortgage loans. The Fund may invest in mortgage pass-through securities that are issued or guaranteed by the Government National Mortgage Association, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. These securities are either direct obligations of the U.S. Government, or the issuing agency/instrumentality has the right to borrow from the U.S. Treasury to meet its obligations, although the Treasury is not legally required to extend credit to the agency/instrumentality. Private mortgage pass-through securities also can be Fund investments. They are issued by private originators of and investors in mortgage loans, including savings and loan associations, mortgage banks and foreign financial institutions. Private mortgage pass- through securities typically are not guaranteed by an entity having the credit status of a U.S. Government agency. 6 CONVERTIBLE SECURITIES AND WARRANTS. The Fund may invest in convertible securities and fixed-income securities with stock features such as warrants. DEFENSIVE INVESTING. The Fund may take temporary "defensive" positions in attempting to respond to adverse market conditions. The Fund may invest any amount of its assets in cash or money market instruments in a defensive posture when the 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. When the Fund takes a defensive position, it may not achieve its investment objectives. The percentage limitations relating to the composition of the Fund's portfolio apply at the time the Fund acquires an investment. Subsequent percentage changes that result from market fluctuations will not 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. [ICON] ADDITIONAL RISK INFORMATION - -------------------------------------------------------------------------------- This section provides additional information relating to the principal risks of investing in the Fund. FORWARD CURRENCY CONTRACTS. The Fund's participation in forward currency contracts also involves risks. If the Investment Manager employs a strategy that does not correlate well with the Fund's investments or the currencies in which the investments are denominated, currency contracts could result in a loss. The contracts also may increase the Fund's volatility and may involve a significant risk. OPTIONS AND FUTURES. If the Fund invests in options and/or 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 bond, currency or interest rate markets 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 options and futures include, for example, the possible imperfect correlation between the price of options and futures contracts and movements in the prices of the securities being hedged, and the possible absence of a liquid secondary market for any particular instrument. Certain options may be over-the-counter options, which are options negotiated with dealers; there is no secondary market for these investments. MORTGAGE-BACKED SECURITIES. Mortgage-backed securities in which the Fund may invest have different risk characteristics than traditional debt securities. Although 7 generally, the value of fixed-income securities increases during periods of falling interest rates and decreases during periods of rising interest rates, this is not always the case with mortgage-backed securities. This is due to the fact that principal on underlying mortgages may be prepaid at any time as well as other factors. Generally, prepayments will increase during a period of falling interest rates and decrease during a period of rising interest rates. The rate of prepayments also may be influenced by economic and other factors. Prepayment risk includes the possibility that, as interest rates fall, securities with stated interest rates may have the principal prepaid earlier than expected, requiring the Fund to invest the proceeds at generally lower interest rates. Investments in mortgage-backed securities are made based upon, among other things, expectations regarding the rate of prepayments on underlying mortgage pools. Rates of prepayment, faster or slower than expected by the Investment Manager, could reduce the Fund's yield, increase the volatility of the Fund and/or cause a decline in net asset value. Mortgage-backed securities, especially privately issued mortgage-backed securities, may be more volatile and less liquid than other traditional types of debt securities. The markets for foreign mortgage-backed securities may not be as well developed as U.S. markets. Those markets may be less liquid than the U.S. market and the prices for foreign mortgage-backed securities may be more volatile than U.S. mortgage-backed securities. CONVERTIBLE SECURITIES AND WARRANTS. The Fund's investments, if any, in convertible securities and fixed-income securities with stock features such as warrants, may carry risks associated with both common stock and fixed-income investments. In general, stock values fluctuate in response to activities specific to the company as well as general market, economic and political conditions. 8 [Sidebar] MORGAN STANLEY DEAN WITTER ADVISORS INC. THE INVESTMENT MANAGER IS WIDELY RECOGNIZED AS A LEADER IN THE MUTUAL FUND INDUSTRY AND TOGETHER WITH MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC., ITS WHOLLY-OWNED SUBSIDIARY, HAD APPROXIMATELY $150 BILLION IN ASSETS UNDER MANAGEMENT AS OF NOVEMBER 30, 2000. [End Sidebar] [ICON] FUND MANAGEMENT - -------------------------------------------------------------------------------- The Fund has retained the Investment Manager -- Morgan Stanley Dean Witter Advisors Inc. -- to provide administrative services, manage its business affairs and invest its assets, including the placing of orders for the purchase and sale of portfolio securities. The Investment Manager is a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co., a preeminent global financial services firm that maintains leading market positions in each of its three primary businesses: securities, asset management and credit services. Its main business office is located at Two World Trade Center, New York, NY 10048. The Fund's portfolio is managed within the Investment Manager's Taxable Income Group. W. David Armstrong and Paul F. O'Brien are the primary portfolio managers of the Fund. Mr. Armstrong is a Managing Director of the Investment Manager as well as a member of the Interest Rate Research Team of Miller Anderson & Sherrerd, LLP ("MAS"), an affiliate of the Investment Manager (since 1998), and prior thereto was a Senior Vice President of Lehman Brothers (1995-1998). Mr. O'Brien is a Managing Director of the Investment Manager as well as a member of the Interest Rate Research Team of MAS (since 1996), and prior thereto was an Economist at JP Morgan, London (1994-1996). The Fund pays the Investment Manager a monthly management fee as full compensation for the services and facilities furnished to the Fund, and for Fund expenses assumed by the Investment Manager. The fee is based on the Fund's average daily net assets. For the fiscal year ended October 31, 2000, the Fund accrued total compensation to the Investment Manager amounting to 0.75% of the Fund's average daily net assets. 9 [Sidebar] CONTACTING A FINANCIAL ADVISOR IF YOU ARE NEW TO THE MORGAN STANLEY DEAN WITTER FAMILY OF FUNDS AND WOULD LIKE TO CONTACT A FINANCIAL ADVISOR, CALL (877) 937-MSDW (TOLL-FREE) FOR THE TELEPHONE NUMBER OF THE MORGAN STANLEY DEAN WITTER OFFICE NEAREST YOU. YOU MAY ALSO ACCESS OUR OFFICE LOCATOR ON OUR INTERNET SITE AT: www.msdwadvice.com/funds [End Sidebar] SHAREHOLDER INFORMATION [ICON] PRICING FUND SHARES - -------------------------------------------------------------------------------- The price of Fund shares (excluding sales charges), called "net asset value," is based on the value of the Fund's portfolio securities. While the assets of each Class are invested in a single portfolio of securities, the net asset value of each Class will differ because the Classes have different ongoing distribution fees. The net asset value per share of the Fund is determined once daily at 4:00 p.m. Eastern time on each day that the New York Stock Exchange is open (or, on days when the New York Stock Exchange closes prior to 4:00 p.m., at such earlier time). Shares will not be priced on days that the New York Stock Exchange is closed. The value of the Fund's portfolio securities is based on the securities' market price when available. When a market price is not readily available, including circumstances under which the Investment Manager determines that a security's market price is not accurate, a portfolio security is valued at its fair value, as determined under procedures established by the Fund's Board of Trustees. In these cases, the Fund's net asset value will reflect certain portfolio securities' fair value rather than their market price. With respect to securities that are primarily listed on foreign exchanges, the value of the Fund's portfolio securities may change on days when you will not be able to purchase or sell your shares. An exception to the Fund's general policy of using market prices concerns its short-term debt portfolio securities. Debt securities with remaining maturities of sixty days or less at the time of purchase may be valued at amortized cost. However, if the cost does not reflect the securities' market value, these securities will be valued at their fair value. [ICON] HOW TO BUY SHARES - -------------------------------------------------------------------------------- You may open a new account to buy Fund shares or buy additional Fund shares for an existing account by contacting your Morgan Stanley Dean Witter Financial Advisor or other authorized financial representative. Your Financial Advisor will assist you, step- by-step, with the procedures to invest in the Fund. You may also purchase shares directly by calling the Fund's transfer agent and requesting an application. Because every investor has different immediate financial needs and long-term investment goals, the Fund offers investors four Classes of shares: Classes A, B, C and D. Class D shares are only offered to a limited group of investors. Each Class of shares offers a distinct structure of sales charges, distribution and service fees, and other features that are designed to address a variety of needs. Your 10 [Sidebar] EASYINVEST-SM- A PURCHASE PLAN THAT ALLOWS YOU TO TRANSFER MONEY AUTOMATICALLY FROM YOUR CHECKING OR SAVINGS ACCOUNT OR FROM A MONEY MARKET FUND ON A SEMI-MONTHLY, MONTHLY OR QUARTERLY BASIS. CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL ADVISOR FOR FURTHER INFORMATION ABOUT THIS SERVICE. [End Sidebar] Financial Advisor or other authorized financial representative can help you decide which Class may be most appropriate for you. When purchasing Fund shares, you must specify which Class of shares you wish to purchase. When you buy Fund shares, the shares are purchased at the next share price calculated (less any applicable front-end sales charge for Class A shares) after we receive your purchase order. Your payment is due on the third business day after you place your purchase order. We reserve the right to reject any order for the purchase of Fund shares.
MINIMUM INVESTMENT AMOUNTS - --------------------------------------------------------------------------------------------- MINIMUM INVESTMENT ------------------- INVESTMENT OPTIONS INITIAL ADDITIONAL - --------------------------------------------------------------------------------------------- Regular Accounts $1,000 $100 - --------------------------------------------------------------------------------------------- Individual Retirement Accounts: Regular IRAs $1,000 $100 Education IRAs $ 500 $100 - --------------------------------------------------------------------------------------------- EASYINVEST-SM- (Automatically from your checking or savings account or Money Market Fund) $100* $100* - ---------------------------------------------------------------------------------------------
* Provided your schedule of investments totals $1,000 in twelve months. There is no minimum investment amount if you purchase Fund shares through: (1) the Investment Manager's mutual fund asset allocation plan, (2) a program, approved by the Fund's distributor, in which you pay an asset-based fee for advisory, administrative and/or brokerage services, (3) the following programs approved by the Fund's distributor: (i) qualified state tuition plans described in Section 529 of the Internal Revenue Code and (ii) certain other investment programs that do not charge an asset-based fee, or (4) employer-sponsored employee benefit plan accounts. INVESTMENT OPTIONS FOR CERTAIN INSTITUTIONAL AND OTHER INVESTORS/CLASS D SHARES. To be eligible to purchase Class D shares, you must qualify under one of the investor categories specified in the "Share Class Arrangements" section of this PROSPECTUS. SUBSEQUENT INVESTMENTS SENT DIRECTLY TO THE FUND. In addition to buying additional Fund shares for an existing account by contacting your Morgan Stanley Dean Witter Financial Advisor, you may send a check directly to the Fund. To buy additional shares in this manner: - Write a "letter of instruction" to the Fund specifying the name(s) on the account, the account number, the social security or tax identification number, the Class of shares you wish to purchase and the investment amount (which would include any applicable front-end sales charge). The letter must be signed by the account owner(s). 11 - Make out a check for the total amount payable to: Morgan Stanley Dean Witter World Wide Income Trust. - Mail the letter and check to Morgan Stanley Dean Witter Trust FSB at P.O. Box 1040, Jersey City, NJ 07303. [ICON] HOW TO EXCHANGE SHARES - -------------------------------------------------------------------------------- PERMISSIBLE FUND EXCHANGES. You may exchange shares of any Class of the Fund for the same Class of any other continuously offered Multi-Class Fund, or for shares of a No-Load Fund, a Money Market Fund, North American Government Income Trust or Short-Term U.S. Treasury Trust, without the imposition of an exchange fee. In addition, Class A shares of the Fund may be exchanged for shares of an FSC Fund (funds subject to a front-end sales charge). See the inside back cover of this PROSPECTUS for each Morgan Stanley Dean Witter Fund's designation as a Multi-Class Fund, No-Load Fund, a Money Market Fund or FSC Fund. If a Morgan Stanley Dean Witter Fund is not listed, consult the inside back cover of that fund's prospectus for its designation. Exchanges may be made after shares of the fund acquired by purchase have been held for thirty days. There is no waiting period for exchanges of shares acquired by exchange or dividend reinvestment. The current prospectus for each fund describes its investment objectives, policies and investment minimums, and should be read before investment. Since exchanges are available only into continuously offered Morgan Stanley Dean Witter Funds, exchanges are not available into any new Morgan Stanley Dean Witter Fund during its initial offering period, or when shares of a particular Morgan Stanley Dean Witter Fund are not being offered for purchase. EXCHANGE PROCEDURES. You can process an exchange by contacting your Morgan Stanley Dean Witter Financial Advisor or other authorized financial representative. Otherwise, you must forward an exchange privilege authorization form to the Fund's transfer agent - Morgan Stanley Dean Witter Trust FSB - and then write the transfer agent or call (800) 869-NEWS to place an exchange order. You can obtain an exchange privilege authorization form by contacting your Financial Advisor or other authorized financial representative, or by calling (800) 869-NEWS. If you hold share certificates, no exchanges may be processed until we have received all applicable share certificates. An exchange to any Morgan Stanley Dean Witter Fund (except a Money Market Fund) is made on the basis of the next calculated net asset values of the funds involved after the exchange instructions are accepted. When exchanging into a Money Market Fund, the Fund's shares are sold at their next calculated net asset value and the Money Market Fund's shares are purchased at their net asset value on the following business day. The Fund may terminate or revise the exchange privilege upon required notice. The check writing privilege is not available for Money Market Fund shares you acquire in an exchange. 12 TELEPHONE EXCHANGES. For your protection when calling Morgan Stanley Dean Witter Trust FSB, we will employ reasonable procedures to confirm that exchange instructions communicated over the telephone are genuine. These procedures may include requiring various forms of personal identification such as name, mailing address, social security or other tax identification number. Telephone instructions also may be recorded. Telephone instructions will be accepted if received by the Fund's transfer agent between 9:00 a.m. and 4:00 p.m. Eastern time on any day the New York Stock Exchange is open for business. During periods of drastic economic or market changes, it is possible that the telephone exchange procedures may be difficult to implement, although this has not been the case with the Fund in the past. MARGIN ACCOUNTS. If you have pledged your Fund shares in a margin account, contact your Morgan Stanley Dean Witter Financial Advisor or other authorized financial representative regarding restrictions on the exchange of such shares. TAX CONSIDERATIONS OF EXCHANGES. If you exchange shares of the Fund for shares of another Morgan Stanley Dean Witter Fund, there are important tax considerations. For tax purposes, the exchange out of the Fund is considered a sale of Fund shares - and the exchange into the other fund is considered a purchase. As a result, you may realize a capital gain or loss. You should review the "Tax Consequences" section and consult your own tax professional about the tax consequences of an exchange. LIMITATIONS ON EXCHANGES. Certain patterns of past exchanges and/or purchase or sale transactions involving the Fund or other Morgan Stanley Dean Witter Funds may result in the Fund limiting or prohibiting, at its discretion, additional purchases and/or exchanges. Determinations in this regard may be made based on the frequency or dollar amount of the previous exchanges or purchase or sale transactions. You will be notified in advance of limitations on your exchange privileges. CDSC CALCULATIONS ON EXCHANGES. See the "Share Class Arrangements" section of this PROSPECTUS for a discussion of how applicable contingent deferred sales charges (CDSCs) are calculated for shares of one Morgan Stanley Dean Witter Fund that are exchanged for shares of another. For further information regarding exchange privileges, you should contact your Morgan Stanley Dean Witter Financial Advisor or call (800) 869-NEWS. 13 [ICON] HOW TO SELL SHARES - -------------------------------------------------------------------------------- You can sell some or all of your Fund shares at any time. If you sell Class A, Class B or Class C shares, your net sale proceeds are reduced by the amount of any applicable CDSC. Your shares will be sold at the net price calculated after we receive your order to sell shares as described below.
OPTIONS PROCEDURES -------------------------------------------------------------------------------- Contact your To sell your shares, simply call your Morgan Stanley Dean Financial Advisor Witter Financial Advisor or other authorized financial representative. ------------------------------------------------------------ ICON 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: ICON - your account number; - the dollar amount or the number of shares you wish to sell; - the Class of shares you wish to sell; and - the signature of each owner as it appears on the account. ------------------------------------------------------------ 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 generally obtain a signature guarantee from an eligible guarantor acceptable to Morgan Stanley Dean Witter Trust FSB. (You should contact Morgan Stanley Dean Witter Trust FSB at (800) 869-NEWS for a determination as to whether a particular institution is an eligible guarantor.) A notary public CANNOT provide a signature guarantee. Additional documentation may be required for shares held by a corporation, partnership, trustee or executor. ------------------------------------------------------------ Mail the letter to Morgan Stanley Dean Witter Trust FSB at P.O. Box 983, Jersey City, NJ 07303. If you hold share certificates, you must return the certificates, along with the letter and any required additional documentation. ------------------------------------------------------------ A check will be mailed to the name(s) and address in which the account is registered, or otherwise according to your instructions. -------------------------------------------------------------------------------- Systematic If your investment in all of the Morgan Stanley Dean Witter Withdrawal Plan Family of Funds has a total market value of at least ICON $10,000, you may elect to withdraw amounts of $25 or more, or in any whole percentage of a fund's balance (provided the amount is at least $25), on a monthly, quarterly, semi-annual or annual basis, from any fund with a balance of at least $1,000. Each time you add a fund to the plan, you must meet the plan requirements. ------------------------------------------------------------ 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. --------------------------------------------------------------------------------
14 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 under unusual circumstances. If you request to sell shares that were recently purchased by check, your sale will not be effected until it has been verified that the check has been honored. TAX CONSIDERATIONS. Normally, your sale of Fund shares is subject to federal and state income tax. You should review the "Tax Consequences" section of this PROSPECTUS and consult your own tax professional about the tax consequences of a sale. REINSTATEMENT PRIVILEGE. If you sell Fund shares and have not previously exercised the reinstatement privilege, you may, within 35 days after the date of sale, invest any portion of the proceeds in the same Class of Fund shares at their net asset value and receive a pro rata credit for any CDSC paid in connection with the sale. INVOLUNTARY SALES. The Fund reserves the right, on sixty days' notice, to sell the shares of any shareholder (other than shares held in an IRA or 403(b) Custodial Account) whose shares, due to sales by the shareholder, have a value below $100, or in the case of an account opened through EASYINVEST -SM-, if after 12 months the shareholder has invested less than $1,000 in the account. However, before the Fund sells your shares in this manner, we will notify you and allow you sixty days to make an additional investment in an amount that will increase the value of your account to at least the required amount before the sale is processed. No CDSC will be imposed on any involuntary sale. MARGIN ACCOUNTS. If you have pledged your Fund shares in a margin account, contact your Morgan Stanley Dean Witter Financial Advisor or other authorized financial representative regarding restrictions on the sale of such shares. 15 [Sidebar] TARGETED DIVIDENDS-SM- YOU MAY SELECT TO HAVE YOUR FUND DISTRIBUTIONS AUTOMATICALLY INVESTED IN OTHER CLASSES OF FUND SHARES OR CLASSES OF ANOTHER MORGAN STANLEY DEAN WITTER FUND THAT YOU OWN. CONTACT YOUR MORGAN STANLEY DEAN WITTER FINANCIAL ADVISOR FOR FURTHER INFORMATION ABOUT THIS SERVICE. [End Sidebar] [ICON] DISTRIBUTIONS - -------------------------------------------------------------------------------- The Fund passes substantially all of its earnings from income and capital gains along to its investors as "distributions." The Fund earns interest from fixed-income investments. These amounts are passed along to Fund shareholders as "income dividend distributions." The Fund realizes capital gains whenever it sells securities for a higher price than it paid for them. These amounts may be passed along as "capital gain distributions." The Fund declares income dividends separately for each Class. Distributions paid on Class A and Class D shares usually will be higher than for Class B and Class C because distribution fees that Class B and Class C pay are higher. Normally, income dividends are distributed to shareholders monthly. Capital gains, if any, are usually distributed in December. The Fund, however, may retain and reinvest any long-term capital gains. The Fund may at times make payments from sources other than income or capital gains that represent a return of a portion of your investment. Distributions are reinvested automatically in additional shares of the same Class and automatically credited to your account, unless you request in writing that all distributions be paid in cash. If you elect the cash option, the Fund will mail a check to you no later than seven business days after the distribution is declared. However, if you purchase Fund shares through a Financial Advisor within three business days prior to the record date for the distribution, the distribution will automatically be paid to you in cash, even if you did not request to receive all distributions in cash. No interest will accrue on uncashed checks. If you wish to change how your distributions are paid, your request should be received by the Fund's transfer agent, Morgan Stanley Dean Witter Trust FSB, at least five business days prior to the record date of the distributions. [ICON] TAX CONSEQUENCES - -------------------------------------------------------------------------------- As with any investment, you should consider how your Fund investment will be taxed. The tax information in this PROSPECTUS is provided as general information. You should consult your own tax professional about the tax consequences of an investment in the Fund. Unless your investment in the Fund is through a tax-deferred retirement account, such as a 401(k) plan or IRA, you need to be aware of the possible tax consequences when: - The Fund makes distributions; and - You sell Fund shares, including an exchange to another Morgan Stanley Dean Witter Fund. TAXES ON DISTRIBUTIONS. Your distributions are normally subject to federal and state income tax when they are paid, whether you take them in cash or reinvest them in Fund 16 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. If more than 50% of the Fund's assets are invested in foreign securities at the end of any fiscal year, the Fund may elect to permit shareholders to take a credit or deduction on their federal income tax return for foreign taxes paid by the Fund. Every January, you will be sent a statement (IRS Form 1099-DIV) showing the taxable distributions paid to you in the previous year. The statement provides information on your dividends and capital gains for tax purposes. TAXES ON SALES. Your sale of Fund shares normally is subject to federal and state income tax and may result in a taxable gain or loss to you. A sale also may be subject to local income tax. Your exchange of Fund shares for shares of another Morgan Stanley Dean Witter Fund is treated for tax purposes like a sale of your original shares and a purchase of your new shares. Thus, the exchange may, like a sale, result in a taxable gain or loss to you and will give you a new tax basis for your new shares. When you open your Fund account, you should provide your social security or tax identification number on your investment application. By providing this information, you will avoid being subject to a federal backup withholding tax of 31% on taxable distributions and redemption proceeds. Any withheld amount would be sent to the IRS as an advance tax payment. [ICON] SHARE CLASS ARRANGEMENTS - -------------------------------------------------------------------------------- The Fund offers several Classes of shares having different distribution arrangements designed to provide you with different purchase options according to your investment needs. Your Morgan Stanley Dean Witter Financial Advisor or other authorized financial representative can help you decide which Class may be appropriate for you. The general public is offered three Classes: Class A shares, Class B shares and Class C shares, which differ principally in terms of sales charges and ongoing expenses. A fourth Class, Class D shares, is offered only to a limited category of investors. Shares that you acquire through reinvested distributions will not be subject to any front-end sales charge or CDSC - contingent deferred sales charge. Sales personnel may receive different compensation for selling each Class of shares. The sales charges applicable to each Class provide for the distribution financing of shares of that Class. 17 [Sidebar] FRONT-END SALES CHARGE OR FSC AN INITIAL SALES CHARGE YOU PAY WHEN PURCHASING CLASS A SHARES THAT IS BASED ON A PERCENTAGE OF THE OFFERING PRICE. THE PERCENTAGE DECLINES BASED UPON THE DOLLAR VALUE OF CLASS A SHARES YOU PURCHASE. WE OFFER THREE WAYS TO REDUCE YOUR CLASS A SALES CHARGES - THE COMBINED PURCHASE PRIVILEGE, RIGHT OF ACCUMULATION AND LETTER OF INTENT. [End Sidebar] The chart below compares the sales charge and annual 12b-1 fee applicable to each Class:
MAXIMUM ANNUAL CLASS SALES CHARGE 12B-1 FEE --------------------------------------------------------------- A Maximum 4.25% initial sales charge reduced for purchase of $25,000 or more; shares sold without an initial sales charge are generally subject to a 1.0% CDSC during the first year 0.25% --------------------------------------------------------------- B Maximum 5.0% CDSC during the first year decreasing to 0% after six years 0.85% --------------------------------------------------------------- C 1.0% CDSC during the first year 0.85% --------------------------------------------------------------- D None None ---------------------------------------------------------------
CLASS A SHARES Class A shares are sold at net asset value plus an initial sales charge of up to 4.25%. The initial sales charge is reduced for purchases of $25,000 or more according to the schedule below. Investments of $1 million or more are not subject to an initial sales charge, but are generally subject to a contingent deferred sales charge, or CDSC, of 1.0% on sales made within one year after the last day of the month of purchase. The CDSC will be assessed in the same manner and with the same CDSC waivers as with Class B shares. Class A shares are also subject to a distribution (12b-1) fee of up to 0.25% of the average daily net assets of the Class. The offering price of Class A shares includes a sales charge (expressed as a percentage of the offering price) on a single transaction as shown in the following table:
FRONT-END SALES CHARGE --------------------------------------------- AMOUNT OF PERCENTAGE OF APPROXIMATE PERCENTAGE SINGLE TRANSACTION PUBLIC OFFERING PRICE OF NET AMOUNT INVESTED --------------------------------------------------------------------------------------- Less than $25,000 4.25% 4.44% --------------------------------------------------------------------------------------- $25,000 but less than $50,000 4.00% 4.17% --------------------------------------------------------------------------------------- $50,000 but less than $100,000 3.50% 3.63% --------------------------------------------------------------------------------------- $100,000 but less than $250,000 2.75% 2.83% --------------------------------------------------------------------------------------- $250,000 but less than $1 million 1.75% 1.78% --------------------------------------------------------------------------------------- $1 million and over 0.0% 0.0% ---------------------------------------------------------------------------------------
The reduced sales charge schedule is applicable to purchases of Class A shares in a single transaction by: - A single account (including an individual, trust or fiduciary account). - Family member accounts (limited to husband, wife and children under the age of 21). 18 - Pension, profit sharing or other employee benefit plans of companies and their affiliates. - Tax-exempt organizations. - Groups organized for a purpose other than to buy mutual fund shares. COMBINED PURCHASE PRIVILEGE. You also will have the benefit of reduced sales charges by combining purchases of Class A shares of the Fund in a single transaction with purchases of Class A shares of other Multi-Class Funds and shares of FSC Funds. RIGHT OF ACCUMULATION. You also may benefit from a reduction of sales charges if the cumulative net asset value of Class A shares of the Fund purchased in a single transaction, together with shares of other funds you currently own which were previously purchased at a price including a front-end sales charge (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 sales charge under the Right of Accumulation. Similar notification must be made in writing when an order is placed by mail. The reduced sales charge will not be granted if: (i) notification is not furnished at the time of the order; or (ii) a review of the records of Dean Witter Reynolds or other authorized dealer of Fund shares or the Fund's transfer agent does not confirm your represented holdings. LETTER OF INTENT. The schedule of reduced sales charges for larger purchases also will be available to you if you enter into a written "Letter of Intent." A Letter of Intent provides for the purchase of Class A shares of the Fund or other Multi-Class Funds or shares of FSC Funds within a thirteen-month period. The initial purchase under a Letter of Intent must be at least 5% of the stated investment goal. To determine the applicable sales charge reduction, you may also include: (1) the cost of shares of other Morgan Stanley Dean Witter Funds which were previously purchased at a price including a front-end sales charge during the 90-day period prior to the distributor receiving the Letter of Intent, and (2) the cost of shares of other funds you currently own acquired in exchange for shares of funds purchased during that period at a price including a front-end sales charge. You can obtain a Letter of Intent by contacting your Morgan Stanley Dean Witter Financial Advisor or other authorized financial representative, or by calling (800) 869-NEWS. If you do not achieve the stated investment goal within the thirteen-month period, you are required to pay the difference between the sales charges otherwise applicable and sales charges actually paid, which may be deducted from your investment. 19 OTHER SALES CHARGE WAIVERS. In addition to investments of $1 million or more, your purchase of Class A shares is not subject to a front-end sales charge (or a CDSC upon sale) if your account qualifies under one of the following categories: - A trust for which Morgan Stanley Dean Witter Trust FSB provides discretionary trustee services. - Persons participating in a fee-based investment program (subject to all of its terms and conditions, including termination fees, mandatory sale or transfer restrictions on termination) approved by the Fund's distributor pursuant to which they pay an asset-based fee for investment advisory, administrative and/or brokerage services. - Qualified state tuition plans described in Section 529 of the Internal Revenue Code (subject to all applicable terms and conditions) and certain other investment programs that do not charge an asset-based fee and have been approved by the Fund's distributor. - Employer-sponsored employee benefit plans, whether or not qualified under the Internal Revenue Code, for which Morgan Stanley Dean Witter Trust FSB serves as trustee or Morgan Stanley Dean Witter's Retirement Plan Services serves as recordkeeper under a written Recordkeeping Services Agreement (MSDW Eligible Plans) which have at least 200 eligible employees. - An MSDW Eligible Plan whose Class B shares have converted to Class A shares, regardless of the plan's asset size or number of eligible employees. - A client of a Morgan Stanley Dean Witter Financial Advisor who joined us from another investment firm within six months prior to the date of purchase of Fund shares, and you used the proceeds from the sale of shares of a proprietary mutual fund of that Financial Advisor's previous firm that imposed either a front-end or deferred sales charge to purchase Class A shares, provided that: (1) you sold the shares not more than 60 days prior to purchase, and (2) the sale proceeds were maintained in the interim in cash or a money market fund. - Current or retired Directors or Trustees of the Morgan Stanley Dean Witter Funds, such persons' spouses and children under the age of 21, and trust accounts for which any of such persons is a beneficiary. - Current or retired directors, officers and employees of Morgan Stanley Dean Witter & Co. and any of it subsidiaries, such persons' spouses and children under the age of 21, and trust accounts for which any of such persons is a beneficiary. 20 [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] CLASS B SHARES Class B shares are offered at net asset value with no initial sales charge but are subject to a contingent deferred sales charge, or CDSC, as set forth in the table below. For the purpose of calculating the CDSC, shares are deemed to have been purchased on the last day of the month during which they were purchased.
CDSC AS A PERCENTAGE YEAR SINCE PURCHASE PAYMENT MADE OF AMOUNT REDEEMED -------------------------------------------------------------- First 5.0% -------------------------------------------------------------- Second 4.0% -------------------------------------------------------------- Third 3.0% -------------------------------------------------------------- Fourth 2.0% -------------------------------------------------------------- Fifth 2.0% -------------------------------------------------------------- Sixth 1.0% -------------------------------------------------------------- Seventh and thereafter None --------------------------------------------------------------
Each time you place an order to sell or exchange shares, shares with no CDSC will be sold or exchanged first, then shares with the lowest CDSC will be sold or exchanged next. For any shares subject to a CDSC, the CDSC will be assessed on an amount equal to the lesser of the current market value or the cost of the shares being sold. CDSC WAIVERS. A CDSC, if otherwise applicable, will be waived in the case of: - Sales of shares held at the time you die or become disabled (within the definition in Section 72(m)(7) of the Internal Revenue Code which relates to the ability to engage in gainful employment), if the shares are: (i) registered either in your name (not a trust) or in the names of you and your spouse as joint tenants with right of survivorship; or (ii) held in a qualified corporate or self-employed retirement plan, IRA or 403(b) Custodial Account, provided in either case that the sale is requested within one year of your death or initial determination of disability. - Sales in connection with the following retirement plan "distributions:" (i) lump-sum or other distributions from a qualified corporate or self-employed retirement plan following retirement (or, in the case of a "key employee" of a "top heavy" plan, following attainment of age 59 1/2); (ii) distributions from an IRA or 403(b) Custodial Account following attainment of age 59 1/2; or (iii) a tax-free return of an excess IRA contribution (a "distribution" does not include a direct transfer of IRA, 403(b) Custodial Account or retirement plan assets to a successor custodian or trustee). - Sales of shares held for you as a participant in an MSDW Eligible Plan. - Sales of shares in connection with the Systematic Withdrawal Plan of up to 12% annually of the value of each fund from which plan sales are made. The percentage is determined on the date you establish the Systematic Withdrawal Plan and based on the next calculated share price. You may have this CDSC waiver applied in amounts up to 1% per month, 3% per quarter, 6% semi-annually or 12% annually. Shares with no 21 CDSC will be sold first, followed by those with the lowest CDSC. As such, the waiver benefit will be reduced by the amount of your shares that are not subject to a CDSC. If you suspend your participation in the plan, you may later resume plan payments without requiring a new determination of the account value for the 12% CDSC waiver. - Sales of shares if you simultaneously invest the proceeds in the Investment Manager's mutual fund asset allocation program, pursuant to which investors pay an asset-based fee. Any shares you acquire in connection with the Investment Manager's mutual fund asset allocation program are subject to all of the terms and conditions of that program, including termination fees, mandatory sale or transfer restrictions on termination. All waivers will be granted only following the Fund's distributor receiving confirmation of your entitlement. If you believe you are eligible for a CDSC waiver, please contact your Financial Advisor or call (800) 869-NEWS. DISTRIBUTION FEE. Class B shares are also subject to an annual distribution (12b-1) fee of 0.85% of the lesser of: (a) the average daily aggregate gross purchases by all shareholders of the Fund's Class B shares since the inception of the Fund (not including reinvestment of dividends or capital gains distributions), less the average daily aggregate net asset value of the Fund's Class B shares sold by all shareholders since the Fund's inception upon which a CDSC has been imposed or waived, or (b) the average daily net assets of Class B. CONVERSION FEATURE. After ten (10) years, Class B shares will convert automatically to Class A shares of the Fund with no initial sales charge. The ten year period runs from the last day of the month in which the shares were purchased, or in the case of Class B shares acquired through an exchange, from the last day of the month in which the original Class B shares were purchased; the shares will convert to Class A shares based on their relative net asset values in the month following the ten year period. At the same time, an equal proportion of Class B shares acquired through automatically reinvested distributions will convert to Class A shares on the same basis. (Class B shares held before May 1, 1997, however, will convert to Class A shares in May 2007.) In the case of Class B shares held in an MSDW Eligible Plan, the plan is treated as a single investor and all Class B shares will convert to Class A shares on the conversion date of the Class B shares of a Morgan Stanley Dean Witter Fund purchased by that plan. Currently, the Class B share conversion is not a taxable event; the conversion feature may be cancelled if it is deemed a taxable event in the future by the Internal Revenue Service. If you exchange your Class B shares for shares of a Money Market Fund, a No-Load Fund, North American Government Income Trust or Short-Term U.S. Treasury Trust, the holding period for conversion is frozen as of the last day of the month of the exchange and resumes on the last day of the month you exchange back into Class B shares. 22 EXCHANGING SHARES SUBJECT TO A CDSC. There are special considerations when you exchange Fund shares that are subject to a CDSC. When determining the length of time you held the shares and the corresponding CDSC rate, any period (starting at the end of the month) during which you held shares of a fund that does NOT charge a CDSC WILL NOT BE COUNTED. Thus, in effect the "holding period" for purposes of calculating the CDSC is frozen upon exchanging into a fund that does not charge a CDSC. For example, if you held Class B shares of the Fund for one year, exchanged to Class B of another Morgan Stanley Dean Witter Multi-Class Fund for another year, then sold your shares, a CDSC rate of 4% would be imposed on the shares based on a two year holding period -- one year for each fund. However, if you had exchanged the shares of the Fund for a Money Market Fund (which does not charge a CDSC) instead of the Multi-Class Fund, then sold your shares, a CDSC rate of 5% would be imposed on the shares based on a one year holding period. The one year in the Money Market Fund would not be counted. Nevertheless, if shares subject to a CDSC are exchanged for a fund that does 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 0.85% of the average daily net assets of that Class. The Class C shares' distribution fee may cause that Class to have higher expenses and pay lower dividends than Class A or Class D shares. Unlike Class B shares, Class C shares have no conversion feature and, accordingly, an investor that purchases Class C shares may be subject to distribution (12b-1) fees applicable to Class C shares for an indefinite period. CLASS D SHARES Class D shares are offered without any sales charge on purchases or sales and without any distribution (12b-1) fee. Class D shares are offered only to investors meeting an initial investment minimum of $5 million ($25 million for MSDW Eligible Plans) and the following investor categories: - Investors participating in the Investment Manager's mutual fund asset allocation program (subject to all of its terms and conditions, including termination fees, mandatory sale or transfer restrictions on termination) pursuant to which they pay an asset-based fee. - Persons participating in a fee-based investment program (subject to all of its terms and conditions, including termination fees, mandatory sale or transfer restrictions on termination) approved by the Fund's distributor pursuant to which they pay an 23 asset-based fee for investment advisory, administrative and/or brokerage services. With respect to Class D shares held through the Morgan Stanley Dean Witter Choice Program, at such time as those Fund shares are no longer held through the program, the shares will be automatically converted into Class A shares (which are subject to higher expenses than Class D shares) based on the then current relative net asset values of the two classes. - Certain investment programs that do not charge an asset-based fee and have been approved by the Fund's distributor. However, Class D shares are not offered for investments made through Section 529 plans (regardless of the size of the investment). - Employee benefit plans maintained by Morgan Stanley Dean Witter & Co. or any of its subsidiaries for the benefit of certain employees of Morgan Stanley Dean Witter & Co. and its subsidiaries. - Certain unit investment trusts sponsored by Dean Witter Reynolds. - Certain other open-end investment companies whose shares are distributed by the Fund's distributor. - Investors who were shareholders of the Dean Witter Retirement Series on September 11, 1998 for additional purchases for their former Dean Witter Retirement Series accounts. MEETING CLASS D ELIGIBILITY MINIMUMS. To meet the $5 million ($25 million for MSDW Eligible Plans) initial investment to qualify to purchase Class D shares you may combine: (1) purchases in a single transaction of Class D shares of the Fund and other Morgan Stanley Dean Witter Multi-Class Funds; and/or (2) previous purchases of Class A and 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. 24 FINANCIAL HIGHLIGHTS The financial highlights table is intended to help you understand the Fund's financial performance for the periods indicated. Certain information reflects financial results for a single Fund share throughout each year. The total returns in the table represent the rate an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The information for the fiscal year ended October 31, 2000 has been audited by Deloitte & Touche LLP, independent auditors, whose report, along with the Fund's financial statements, is included in the annual report, which is available upon request. The financial highlights for prior fiscal periods have been audited by other independent accountants.
FOR THE PERIOD FOR THE YEAR ENDED OCTOBER 31 JULY 28, 1997* ------------------------------ THROUGH 2000 1999 1998 OCTOBER 31, 1997 - ----------------------------------------------------------------------------------------- CLASS A SHARES++ - ----------------------------------------------------------------------------------------- SELECTED PER SHARE DATA: - ----------------------------------------------------------------------------------------- Net asset value, beginning of period $ 7.98 $ 9.11 $ 9.02 $ 8.97 - ----------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income 0.53 0.52 0.59 0.15 Net realized and unrealized gain (loss) (1.05) (1.02) 0.20 0.05 ------- ------- ------ ------ Total income (loss) from investment operations (0.52) (0.50) 0.79 0.20 - ----------------------------------------------------------------------------------------- LESS DIVIDENDS AND DISTRIBUTIONS FROM: Net investment income (0.33) (0.21) (0.70) (0.15) Paid-in-capital (0.15) (0.42) -- -- ------- ------- ------ ------ Total dividends and distributions (0.48) (0.63) (0.70) (0.15) - ----------------------------------------------------------------------------------------- Net asset value, end of period $ 6.98 $ 7.98 $ 9.11 $ 9.02 - ----------------------------------------------------------------------------------------- TOTAL RETURN+ (6.73)% (5.56)% 9.16% 2.27%(1) - ----------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - ----------------------------------------------------------------------------------------- Expenses 1.41%(3) 1.48%(3) 1.45%(3) 1.46%(2) - ----------------------------------------------------------------------------------------- Net investment income 6.49%(3) 6.14%(3) 6.63%(3) 6.69%(2) - ----------------------------------------------------------------------------------------- SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------- Net assets, end of period, in thousands $24,216 $36,253 $1,227 $682 - ----------------------------------------------------------------------------------------- Portfolio turnover rate 73% 144% 309% 345% - -----------------------------------------------------------------------------------------
* The date shares were first issued. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses. 25
FOR THE YEAR ENDED OCTOBER 31 2000 1999 1998 1997* 1996 - ------------------------------------------------------------------------------------------------------------------------- CLASS B SHARES - ------------------------------------------------------------------------------------------------------------------------- SELECTED PER SHARE DATA: - ------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 8.00 $ 9.12 $ 9.03 $ 9.33 $ 9.08 - ------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income 0.48 0.47 0.53 0.55 0.60 Net realized and unrealized gain (loss) (1.05) (1.02) 0.20 0.07 0.48 ------- ------- ------- ------- -------- Total income (loss) from investment operations (0.57) (0.55) 0.73 0.62 1.08 - ------------------------------------------------------------------------------------------------------------------------- LESS DIVIDENDS AND DISTRIBUTIONS FROM: Net investment income (0.30) (0.19) (0.64) (0.92) (0.83) Paid-in-capital (0.13) (0.38) -- -- -- ------- ------- ------- ------- -------- Total dividends and distributions (0.43) (0.57) (0.64) (0.92) (0.83) - ------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 7.00 $ 8.00 $ 9.12 $ 9.03 $ 9.33 - ------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN+ (7.32)% (6.20)% 8.61% 7.05% 12.60% - ------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - ------------------------------------------------------------------------------------------------------------------------- Expenses 2.06%(1) 2.09%(1) 2.07%(1) 2.02% 1.96% - ------------------------------------------------------------------------------------------------------------------------- Net investment income 5.84%(1) 5.53%(1) 6.01%(1) 6.07% 6.39% - ------------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------------------------------- Net assets, end of period, in thousands $43,538 $65,415 $81,611 $94,556 $114,022 - ------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 73 % 144 % 309% 345% 263% - -------------------------------------------------------------------------------------------------------------------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares of the Fund held prior to that date have been designated as Class B shares. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Reflects overall Fund ratios for investment income and non-class specific expenses. 26
FOR THE PERIOD FOR THE YEAR ENDED OCTOBER 31 JULY 28, 1997* ------------------------------- THROUGH 2000 1999 1998 OCTOBER 31, 1997 - ------------------------------------------------------------------------------------------ CLASS C SHARES++ - ------------------------------------------------------------------------------------------ SELECTED PER SHARE DATA: - ------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 7.99 $ 9.11 $ 9.02 $ 8.97 - ------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income 0.47 0.47 0.53 0.14 Net realized and unrealized gain (loss) (1.04) (1.02) 0.20 0.05 ------ ------ ------ ------ Total income (loss) from investment operations (0.57) (0.55) 0.73 0.19 - ------------------------------------------------------------------------------------------ LESS DIVIDENDS AND DISTRIBUTIONS FROM: Net investment income (0.30) (0.19) (0.64) (0.14) Paid-in-capital (0.13) (0.38) -- -- ------ ------ ------ ------ Total dividends and distributions (0.43) (0.57) (0.64) (0.14) - ------------------------------------------------------------------------------------------ Net asset value, end of period $ 6.99 $ 7.99 $ 9.11 $ 9.02 - ------------------------------------------------------------------------------------------ TOTAL RETURN+ (7.32)% (6.19)% 8.62% 2.12%(1) - ------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS: - ------------------------------------------------------------------------------------------ Expenses 2.06%(3) 2.09%(3) 2.07%(3) 2.00%(2) - ------------------------------------------------------------------------------------------ Net investment income 5.84%(3) 5.53%(3) 6.01%(3) 5.89%(2) - ------------------------------------------------------------------------------------------ SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------ Net assets, end of period, in thousands $668 $805 $234 $111 - ------------------------------------------------------------------------------------------ Portfolio turnover rate 73 % 144 % 309% 345% - ------------------------------------------------------------------------------------------
* The date shares were first issued. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses. 27
FOR THE PERIOD FOR THE YEAR ENDED OCTOBER 31 JULY 28, 1997* ------------------------------- THROUGH 2000 1999 1998 OCTOBER 31, 1997 - ------------------------------------------------------------------------------------------ CLASS D SHARES++ - ------------------------------------------------------------------------------------------ SELECTED PER SHARE DATA: - ------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 8.01 $ 9.12 $ 9.03 $8.97 - ------------------------------------------------------------------------------------------ INCOME (LOSS) FROM INVESTMENT OPERATIONS: Net investment income 0.51 0.53 0.72 0.16 Net realized and unrealized gain (loss) (1.03) (0.99) 0.09 0.05 ------ ------ ------ ----- Total income (loss) from investment operations (0.52) (0.46) 0.81 0.21 - ------------------------------------------------------------------------------------------ LESS DIVIDENDS AND DISTRIBUTIONS FROM: Net investment income (0.34) (0.22) (0.72) (0.15) Paid-in-capital (0.15) (0.43) -- -- ------ ------ ------ ----- Total dividends and distributions (0.49) (0.65) (0.72) (0.15) - ------------------------------------------------------------------------------------------ Net asset value, end of period $ 7.00 $ 8.01 $ 9.12 $9.03 - ------------------------------------------------------------------------------------------ TOTAL RETURN+ (6.52)% (5.29)% 9.41% 2.44%(1) - ------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS: - ------------------------------------------------------------------------------------------ Expenses 1.21%(3) 1.24%(3) 1.22%(3) 1.16%(2) - ------------------------------------------------------------------------------------------ Net investment income 6.69%(3) 6.38%(3) 6.86%(3) 6.83%(2) - ------------------------------------------------------------------------------------------ SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------ Net assets, end of period, in thousands $6,562 $1,523 $1,006 $39 - ------------------------------------------------------------------------------------------ Portfolio turnover rate 73 % 144 % 309% 345% - ------------------------------------------------------------------------------------------
* The date shares were first issued. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses. 28 MORGAN STANLEY DEAN WITTER FAMILY OF FUNDS The Morgan Stanley Dean Witter Family of Funds offers investors a wide range of investment choices. Come on in and meet the family! - -------------------------------------------------------------------------------- GROWTH FUNDS - --------------------------------- GROWTH FUNDS Aggressive Equity Fund All Star Growth Fund American Opportunities Fund Capital Growth Securities Developing Growth Securities Growth Fund Market Leader Trust Mid-Cap Equity Trust New Discoveries Fund Next Generation Trust Small Cap Growth Fund Special Value Fund Tax-Managed Growth Fund 21st Century Trend Fund THEME FUNDS Financial Services Trust Health Sciences Trust Information Fund Natural Resource Development Securities Technology Fund GLOBAL/INTERNATIONAL FUNDS Competitive Edge Fund - "Best Ideas" Portfolio European Growth Fund Fund of Funds - International Portfolio International Fund International SmallCap Fund Japan Fund Latin American Growth Fund Pacific Growth Fund - -------------------------------------------------------------------------------- GROWTH & INCOME FUNDS - --------------------------------- GROWTH & INCOME FUNDS Balanced Growth Fund Balanced Income Fund Convertible Securities Trust Dividend Growth Securities Equity Fund Fund of Funds - Domestic Portfolio Income Builder Fund S&P 500 Index Fund S&P 500 Select Fund Strategist Fund Total Market Index Fund Total Return Trust Value Fund Value-Added Market Series/Equity Portfolio THEME FUNDS Real Estate Fund Utilities Fund GLOBAL FUNDS Global Dividend Growth Securities Global Utilities Fund - -------------------------------------------------------------------------------- INCOME FUNDS - --------------------------------- GOVERNMENT INCOME FUNDS Federal Securities Trust Short-Term U.S. Treasury Trust U.S. Government Securities Trust DIVERSIFIED INCOME FUNDS Diversified Income Trust CORPORATE INCOME FUNDS High Yield Securities Intermediate Income Securities Short-Term Bond Fund (NL) GLOBAL INCOME FUNDS North American Government Income Trust 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 back cover of a new fund's prospectus for its designation, e.g., Multi-Class Fund or Money Market Fund. Unless otherwise noted, each listed Morgan Stanley Dean Witter Fund, except for North American Government Income Trust and Short-Term U.S. Treasury Trust, is a Multi-Class Fund. A Multi-Class Fund is a mutual fund offering multiple Classes of shares. The other types of funds are: NL - No-Load (Mutual) Fund; MM - Money Market Fund; FSC - A mutual fund sold with a front-end sales charge and a distribution (12b-1) fee. PROSPECTUS - JANUARY 8, 2001 Additional information about the Fund's investments is available in the Fund's ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS. In the Fund's ANNUAL REPORT, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. The Fund's STATEMENT OF ADDITIONAL INFORMATION also provides additional information about the Fund. THE STATEMENT OF ADDITIONAL INFORMATION is incorporated herein by reference (legally is part of this PROSPECTUS). For a free copy of any of these documents, to request other information about the Fund, or to make shareholder inquiries, please call: (800) 869-NEWS You also may obtain information about the Fund by calling your Morgan Stanley Dean Witter Financial Advisor or by visiting our Internet site at: www.msdwadvice.com/funds Information about the Fund (including the STATEMENT OF ADDITIONAL INFORMATION) can be viewed and copied at the Securities and Exchange Commission's Public Reference Room in Washington, DC. Information about the Reference Room's operations may be obtained by calling the SEC at (202) 942-8090. Reports and other information about the Fund are available on the EDGAR Database on the SEC's Internet site (www.sec.gov) and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing the Public Reference Section of the SEC, Washington, DC 20549-0102. TICKER SYMBOLS: CLASS A: WWIAX CLASS C: WWICX - -------------------- -------------------- CLASS B: WWIBX CLASS D: WWIDX - -------------------- -------------------- (THE FUND'S INVESTMENT COMPANY ACT FILE NO. IS 811-5744) Morgan Stanley Dean Witter WORLD WIDE INCOME TRUST [BACK COVER PHOTO] A MUTUAL FUND WHOSE PRIMARY INVESTMENT OBJECTIVE IS TO PROVIDE A HIGH LEVEL OF CURRENT INCOME. AS A SECONDARY OBJECTIVE, THE FUND SEEKS APPRECIATION IN THE VALUE OF ITS ASSETS STATEMENT OF ADDITIONAL INFORMATION MORGAN JANUARY 8, 2001 STANLEY DEAN WITTER WORLD WIDE INCOME TRUST - -------------------------------------------------------------------------------- This STATEMENT OF ADDITIONAL INFORMATION is not a PROSPECTUS. The PROSPECTUS dated January 8, 2001 for Morgan Stanley Dean Witter World Wide Income Trust may be obtained without charge from the Fund at its address or telephone number listed below or from Dean Witter Reynolds at any of its branch offices. Morgan Stanley Dean Witter World Wide Income Trust Two World Trade Center New York, NY 10048 (800) 869-NEWS TABLE OF CONTENTS - -------------------------------------------------------------------------------- I. Fund History............................................. 4 II. Description of the Fund and Its Investments and Risks... 4 A. Classification......................................... 4 B. Investment Strategies and Risks........................ 4 C. Fund Policies/Investment Restrictions.................. 13 III. Management of the Fund................................. 14 A. Board of Trustees...................................... 14 B. Management Information................................. 15 C. Compensation........................................... 19 IV. Control Persons and Principal Holders of Securities..... 21 V. Investment Management and Other Services................. 21 A. Investment Manager..................................... 21 B. Principal Underwriter.................................. 22 C. Services Provided by the Investment Manager............ 22 D. Dealer Reallowances.................................... 23 E. Rule 12b-1 Plan........................................ 23 F. Other Service Providers................................ 27 G. Codes of Ethics........................................ 28 VI. Brokerage Allocation and Other Practices................ 28 A. Brokerage Transactions................................. 28 B. Commissions............................................ 28 C. Brokerage Selection.................................... 29 D. Directed Brokerage..................................... 29 E. Regular Broker-Dealers................................. 29 VII. Capital Stock and Other Securities..................... 30 VIII. Purchase, Redemption and Pricing of Shares............ 30 A. Purchase/Redemption of Shares.......................... 30 B. Offering Price......................................... 31 IX. Taxation of the Fund and Shareholders................... 32 X. Underwriters............................................. 34 XI. Calculation of Performance Data......................... 34 XII. Financial Statements................................... 35
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 Chase Manhattan Bank. "DEAN WITTER REYNOLDS"--Dean Witter Reynolds Inc., a wholly-owned broker-dealer subsidiary of MSDW. "DISTRIBUTOR"--Morgan Stanley Dean Witter Distributors Inc., a wholly-owned broker-dealer subsidiary of MSDW. "FINANCIAL ADVISORS"--Morgan Stanley Dean Witter authorized financial services representatives. "FUND"--Morgan Stanley Dean Witter World Wide Income Trust, a registered open-end investment company. "INDEPENDENT TRUSTEES"--Trustees who are not "interested persons" (as defined by the Investment Company Act) of the Fund. "INVESTMENT MANAGER"--Morgan Stanley Dean Witter Advisors Inc., a wholly-owned investment advisor subsidiary of MSDW. "MORGAN STANLEY & CO."--Morgan Stanley & Co. Incorporated, a wholly-owned broker-dealer subsidiary of MSDW. "MORGAN STANLEY DEAN WITTER FUNDS"--Registered investment companies (i) for which the 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 October 14, 1988 with the name Dean Witter World Wide Income Trust. Effective June 22, 1998, the Fund's name was changed to Morgan Stanley Dean Witter World Wide Income Trust. II. DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS - -------------------------------------------------------------------------------- A. CLASSIFICATION The Fund is an open-end, non-diversified management investment company whose primary investment objective is to earn a high level of current income. As a secondary objective, the Fund will seek appreciation in the value of its assets. 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." CONVERTIBLE SECURITIES. The Fund may invest in fixed-income securities which are convertible into common stock. Convertible securities rank senior to common stocks in a corporation's capital structure and, therefore, entail less risk than the corporation's common stock. The value of a convertible security is a function of its "investment value" (its value as if it did not have a conversion privilege), and its "conversion value" (the security's worth if it were to be exchanged for the underlying security, at market value, pursuant to its conversion privilege). To the extent that a convertible security's investment value is greater than its conversion value, its price will be primarily a reflection of such investment value and its price will be likely to increase when interest rates fall and decrease when interest rates rise, as with a fixed-income security (the credit standing of the issuer and other factors may also have an effect on the convertible security's value). If the conversion value exceeds the investment value, the price of the convertible security will rise above its investment value and, in addition, will sell at some premium over its conversion value. (This premium represents the price investors are willing to pay for the privilege of purchasing a fixed-income security with a possibility of capital appreciation due to the conversion privilege.) At such times the price of the convertible security will tend to fluctuate directly with the price of the underlying equity security. Convertible securities may be purchased by the Fund at varying price levels above their investment values and/or their conversion values in keeping with the Fund's objectives. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may enter into forward foreign currency exchange contracts ("forward contracts") as a hedge against fluctuations in future foreign exchange rates. The Fund may conduct its foreign currency exchange transactions either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or through entering into forward contracts to purchase or sell foreign currencies. A forward contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded in the interbank market conducted directly between currency traders (usually large, commercial and investment banks) and their customers. Forward contracts only will be entered into with United States banks and their foreign branches, insurance companies and other dealers whose assets total $1 billion or more, or foreign banks whose assets total $1 billion or more. A forward contract generally has no deposit requirement, and no commissions are charged at any stage for trades. The Investment Manager also may from time to time utilize forward contracts to hedge a foreign security held in the portfolio or a security which pays out principal tied to an exchange rate between the U.S. dollar and a foreign currency, against a decline in value of the applicable foreign currency. They also may be used to lock in the current exchange rate of the currency in which those securities anticipated to 4 be purchased are denominated. At times, the Fund may enter into "cross-currency" hedging transactions involving currencies other than those in which securities are held or proposed to be purchased are denominated. The Fund will not enter into forward currency contracts or maintain a net exposure to these contracts where the consummation of the contracts would obligate the Fund to deliver an amount of foreign currency in excess of the value of the Fund's portfolio securities. Although the Fund values its assets daily in terms of U.S. dollars, it does not intend to convert its holdings of foreign currencies into U.S. dollars on a daily basis. It will, however, do so from time to time, and investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the spread between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at one rate, while offering a lesser rate of exchange should the Fund desire to resell that currency to the dealer. The Fund may be limited in its ability to enter into hedging transactions involving forward contracts by the Internal Revenue Code requirements relating to qualification as a regulated investment company. Forward currency contracts may limit gains on portfolio securities that could otherwise be realized had they not been utilized and could result in losses. The contracts also may increase the Fund's volatility and may involve a significant amount of risk relative to the investment of cash. OPTION AND FUTURES TRANSACTIONS. The Fund may engage in transactions in listed and OTC options. Listed options are issued or guaranteed by the exchange on which they are traded or by a clearing corporation such as the Options Clearing Corporation ("OCC"). Ownership of a listed call option gives the Fund the right to buy from the OCC (in the U.S.) or other clearing corporation or exchange, the underlying security or currency covered by the option at the stated exercise price (the price per unit of the underlying security) by filing an exercise notice prior to the expiration date of the option. The writer (seller) of the option would then have the obligation to sell to the OCC (in the U.S.) or other clearing corporation or exchange, the underlying security or currency at that exercise price prior to the expiration date of the option, regardless of its then current market price. Ownership of a listed put option would give the Fund the right to sell the underlying security or currency to the OCC (in the U.S.) or other clearing corporation or exchange, at the stated exercise price. Upon notice of exercise of the put option, the writer of the put would have the obligation to purchase the underlying security or currency from the OCC (in the U.S.) or other clearing corporation or exchange, at the exercise price. COVERED CALL WRITING. The Fund is permitted to write covered call options on portfolio securities and on the U.S. dollar and foreign currencies in which they are denominated, without limit. The Fund will receive from the purchaser, in return for a call it has written, a "premium;" i.e., the price of the option. Receipt of these premiums may better enable the Fund to earn a higher level of current income than it would earn from holding the underlying securities (or currencies) alone. Moreover, the premium received will offset a portion of the potential loss incurred by the Fund if the securities (or currencies) underlying the option decline in value. The Fund may be required, at any time during the option period, to deliver the underlying security (or currency) against payment of the exercise price on any calls it has written. This obligation is terminated upon the expiration of the option period or at such earlier time when the writer effects a closing purchase transaction. A closing purchase transaction is accomplished by purchasing an option of the same series as the option previously written. However, once the Fund has been assigned an exercise notice, the Fund will be unable to effect a closing purchase transaction. A call option is "covered" if the Fund owns the underlying security subject to the option or has an absolute and immediate right to acquire that security without additional cash consideration (or for additional consideration (in cash, Treasury bills or other liquid portfolio securities) held in a segregated account on the Fund's books) upon conversion or exchange of other securities held in its portfolio. A call 5 option is also covered if the Fund holds a call on the same security as the call written where the exercise price of the call held is (i) equal to or less than the exercise price of the call written or (ii) greater than the exercise price of the call written if the difference is maintained by the Fund in cash, Treasury bills or other liquid portfolio securities in a segregated account on the Fund's books. Options written by the Fund normally have expiration dates of from up to eighteen months from the date written. The exercise price of a call option may be below, equal to or above the current market value of the underlying security at the time the option is written. COVERED PUT WRITING. A writer of a covered put option incurs an obligation to buy the security underlying the option from the purchaser of the put, at the option's exercise price at any time during the option period, at the purchaser's election. Through the writing of a put option, the Fund would receive income from the premium paid by purchasers. The potential gain on a covered put option is limited to the premium received on the option (less the commissions paid on the transaction). During the option period, the Fund may be required, at any time, to make payment of the exercise price against delivery of the underlying security (or currency). A put option is "covered" if the Fund maintains cash, Treasury bills or other liquid portfolio securities with a value equal to the exercise price in a segregated account on the Fund's books, or holds a put on the same security as the put written where the exercise price of the put held is equal to or greater than the exercise price of the put written. The aggregate value of the obligations underlying puts may not exceed 50% of the Fund's assets. The operation of and limitations on covered put options in other respects are substantially identical to those of call options. PURCHASING CALL AND PUT OPTIONS. The Fund may purchase listed and OTC call and put options in amounts equaling up to 5% of its total assets. The purchase of a call option would enable the Fund, in return for the premium paid to lock in a purchase price for a security or currency during the term of the option. The purchase of a put option would enable the Fund, in return for a premium paid, to lock in a price at which it may sell a security or currency during the term of the option. OPTIONS ON FOREIGN CURRENCIES. The Fund may purchase and write options on foreign currencies for purposes similar to those involved with investing in forward foreign currency exchange contracts. OTC OPTIONS. OTC options are purchased from or sold (written) to dealers or financial institutions which have entered into direct agreements with the Fund. With OTC options, such variables as expiration date, exercise price and premium will be agreed upon between the Fund and the transacting dealer, without the intermediation of a third party such as the OCC. The Fund will engage in OTC option transactions only with member banks of the Federal Reserve Bank System or primary dealers in U.S. Government securities or with affiliates of such banks or dealers. RISKS OF OPTIONS TRANSACTIONS. The successful use of options depends on the ability of the Investment Manager to forecast correctly interest rates, currency exchange rates and/or market movements. If the market value of the portfolio securities (or the currencies in which they are denominated) upon which call options have been written increases, the Fund may receive a lower total return from the portion of its portfolio upon which calls have been written than it would have had such calls not been written. During the option period, the covered call writer has, in return for the premium on the option, given up the opportunity for capital appreciation above the exercise price should the market price of the underlying security (or the value of its denominated currency) increase, but has retained the risk of loss should the price of the underlying security (or the value of its denominated currency) decline. The covered put writer also retains the risk of loss should the market value of the underlying security decline below the exercise price of the option less the premium received on the sale of the option. In both cases, the writer has no control over the time when it may be required to fulfill its obligation as a writer of the option. Prior to exercise or expiration, an option position can only be terminated by entering into a closing purchase or sale transaction. Once an option writer has received an exercise notice, it cannot effect a closing purchase transaction in order to terminate its obligation under the option and must deliver or receive the underlying securities at the exercise price. 6 The Fund's ability to close out its position as a writer of an option is dependent upon the existence of a liquid secondary market on option exchanges. There is no assurance that such a market will exist, particularly in the case of OTC options. In the event of the bankruptcy of a broker through which the Fund engages in transactions in options, the Fund could experience delays and/or losses in liquidating open positions purchased or sold through the broker and/or incur a loss of all or part of its margin deposits with the broker. In the case of OTC options, if the transacting dealer fails to make or take delivery of the securities underlying an option it has written, in accordance with the terms of that option, due to insolvency or otherwise, the Fund would lose the premium paid for the option as well as any anticipated benefit of the transaction. Each of the exchanges has established limitations governing the maximum number of call or put options on the same underlying security which may be written by a single investor, whether acting alone or in concert with others (regardless of whether such options are written on the same or different exchanges or are held or written on one or more accounts or through one or more brokers). An exchange may order the liquidation of positions found to be in violation of these limits and it may impose other sanctions or restrictions. These position limits may restrict the number of listed options which the Fund may write. The hours of trading for options may not conform to the hours during which the underlying securities are traded. To the extent that the option markets close before the markets for the underlying securities, significant price and rate movements can take place in the underlying markets that cannot be reflected in the option markets. The markets in foreign currency options are relatively new and the Fund's ability to establish and close out positions on such options is subject to the maintenance of a liquid secondary market. There can be no assurance that a liquid secondary market will exist for a particular option at any specific time. The value of a foreign currency option depends upon the value of the underlying currency relative to the U.S. dollar. As a result, the price of the option position may vary with changes in the value of either or both currencies and have no relationship to the investment merits of a foreign security. Because foreign currency transactions occurring in the interbank market involve substantially larger amounts than those that may be involved in the use of foreign currency options, investors may be disadvantaged by having to deal in an odd lot market (generally consisting of transactions of less than $1 million) for the underlying foreign currencies at prices that are less favorable than for round lots. There is no systematic reporting of last sale information for foreign currencies or any regulatory requirement that quotations available through dealers or other market sources be firm or revised on a timely basis. Quotation information available is generally representative of very large transactions in the interbank market and thus may not reflect relatively smaller transactions (i.e., less than $1 million) where rates may be less favorable. The interbank market in foreign currencies is a global, around-the-clock market. To the extent that the U.S. options markets are closed while the markets for the underlying currencies remain open, significant price and rate movements may take place in the underlying markets that are not reflected in the options market. FUTURES CONTRACTS. The Fund may purchase and sell interest rate, currency and index futures contracts that are traded on U.S. and foreign commodity exchanges on such underlying securities as U.S. Treasury bonds, notes, bills and GNMA Certificates and/or any foreign government fixed-income security, on various currencies and on such indexes of U.S. and foreign securities as may exist or come into existence. A futures contract purchaser incurs an obligation to take delivery of a specified amount of the obligation underlying the contract at a specified time in the future for a specified price. A seller of a futures contract incurs an obligation to deliver the specified amount of the underlying obligation at a specified time in return for an agreed upon price. The purchase of a futures contract enables the Fund, during the term of the contract, to lock in a price at which it may purchase a security or currency and 7 protect against a rise in prices pending purchase of portfolio securities. The sale of a futures contract enables the Fund to lock in a price at which it may sell a security or currency and protect against declines in the value of portfolio securities. Although most futures contracts call for actual delivery or acceptance of securities, the contracts usually are closed out before the settlement date without the making or taking of delivery. Index futures contracts provide for the delivery of an amount of cash equal to a specified dollar amount times the difference between the index value at the open or close of the last trading day of the contract and the futures contract price. A futures contract sale is closed out by effecting a futures contract purchase for the same aggregate amount of the specific type of security (currency) and the same delivery date. If the sale price exceeds the offsetting purchase price, the seller would be paid the difference and would realize a gain. If the offsetting purchase price exceeds the sale price, the seller would pay the difference and would realize a loss. Similarly, a futures contract purchase is closed out by effecting a futures contract sale for the same aggregate amount of the specific type of security (currency) and the same delivery date. If the offsetting sale price exceeds the purchase price, the purchaser would realize a gain, whereas if the purchase price exceeds the offsetting sale price, the purchaser would realize a loss. There is no assurance that the Fund will be able to enter into a closing transaction. MARGIN. If the Fund enters into a futures contract, it is initially required to deposit an "initial margin" of cash, U.S. Government securities or other liquid portfolio securities ranging from approximately 2% to 5% of the contract amount. Initial margin requirements are established by the exchanges on which futures contracts trade and may, from time to time, change. In addition, brokers may establish margin deposit requirements in excess of those required by the exchanges. Initial margin in futures transactions is different from margin in securities transactions in that initial margin does not involve the borrowing of funds by a broker's client but is, rather, a good faith deposit on the futures contract which will be returned to the Fund upon the proper termination of the futures contract. The margin deposits made are marked to market daily and the Fund may be required to make subsequent deposits of cash, U.S. Government securities or other liquid portfolio securities, called "variation margin," which are reflective of price fluctuations in the futures contract. OPTIONS ON FUTURES CONTRACTS. The Fund may purchase and write call and put options on futures contracts and enter into closing transactions with respect to such options to terminate an existing position. An option on a futures contract gives the purchaser the right (in return for the premium paid), and the writer the obligation, to assume a position in a futures contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise price at any time during the term of the option. Upon exercise of the option, the delivery of the futures position by the writer of the option to the holder of the option is accompanied by delivery of the accumulated balance in the writer's futures margin account, which represents the amount by which the market price of the futures contract at the time of exercise exceeds, in the case of a call, or is less than, in the case of a put, the exercise price of the option on the futures contract. The writer of an option on a futures contract is required to deposit initial and variation margin pursuant to requirements similar to those applicable to futures contracts. Premiums received from the writing of an option on a futures contract are included in initial margin deposits. LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS ON FUTURES. The Fund may not enter into futures contracts or purchase related options thereon if, immediately thereafter, the amount committed to margin plus the amount paid for premiums for unexpired options on futures contracts exceeds 5% of the value of the Fund's total assets, after taking into account unrealized gains and unrealized losses on such contracts it has entered into, provided, however, that in the case of an option that is in-the-money (the exercise price of the call (put) option is less (more) than the market price of the underlying security) at the time of purchase, the in-the-money amount may be excluded in calculating the 5%. However, there is no overall limitation on the percentage of the Fund's net assets which may be subject to a hedge position. 8 RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS. The prices of securities and indexes subject to futures contracts (and thereby the futures contract prices) may correlate imperfectly with the behavior of the cash prices of the Fund's portfolio securities (and the currencies in which they are denominated). Also, prices of futures contracts may not move in tandem with the changes in prevailing interest rates, market movements and/or currency exchange rates against which the Fund seeks a hedge. A correlation may also be distorted (a) temporarily, by short-term traders seeking to profit from the difference between a contract or security price objective and their cost of borrowed funds; (b) by investors in futures contracts electing to close out their contracts through offsetting transactions rather than meet margin deposit requirements; (c) by investors in futures contracts opting to make or take delivery of underlying securities rather than engage in closing transactions, thereby reducing liquidity of the futures market; and (d) temporarily, by speculators who view the deposit requirements in the futures markets as less onerous than margin requirements in the cash market. Due to the possibility of price distortion in the futures market and because of the possible imperfect correlation between movements in the prices of securities and movements in the prices of futures contracts, a correct forecast of interest rate, currency exchange rate and/or market movement trends by the 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 and related options in which the Fund may invest. In the event a liquid market does not exist, it may not be possible to close out a futures position and, in the event of adverse price movements, the Fund would continue to be required to make daily cash payments of variation margin. The absence of a liquid market in futures contracts might cause the Fund to make or take delivery of the underlying securities (currencies) at a time when it may be disadvantageous to do so. Exchanges also limit the amount by which the price of a futures contract may move on any day. If the price moves equal the daily limit on successive days, then it may prove impossible to liquidate a futures position until the daily limit moves have ceased. In the event of adverse price movements, the Fund would continue to be required to make daily cash payments of variation margin on open futures positions. In these situations, if the Fund has insufficient cash, it may have to sell portfolio securities to meet daily variation margin requirements at a time when it may be disadvantageous to do so. In addition, the Fund may be required to take or make delivery of the instruments underlying interest rate futures contracts it holds at a time when it is disadvantageous to do so. The inability to close out options and futures positions could also have an adverse impact on the Fund's ability to effectively hedge its portfolio. Futures contracts and options thereon which are purchased or sold on foreign commodities exchanges may have greater price volatility than their U.S. counterparts. Furthermore, foreign commodities exchanges may be less regulated and under less governmental scrutiny than U.S. exchanges. Brokerage commissions, clearing costs and other transaction costs may be higher on foreign exchanges. Greater margin requirements may limit the Fund's ability to enter into certain commodity transactions on foreign exchanges. Moreover, differences in clearance and delivery requirements on foreign exchanges may occasion delays in the settlement of the Fund's transactions effected on foreign exchanges. In the event of the bankruptcy of a broker through which the Fund engages in transactions in futures or options thereon, the Fund could experience delays and/or losses in liquidating open positions purchased or sold through the broker and/or incur a loss of all or part of its margin deposits with the broker. If the Fund maintains a short position in a futures contract or has sold a call option in a futures contract, it will cover this position by holding, in a segregated account maintained on the books of the Fund, cash, U.S. government securities or other liquid portfolio securities equal in value (when added to any initial or variation margin on deposit) to the market value of the securities underlying the futures contract or the exercise price of the option. Such a position may also be covered by owning the securities underlying the futures contract (in the case of a stock index futures contract a portfolio of 9 securities substantially replicating the relevant index), or by holding a call option permitting the Fund to purchase the same contract at a price no higher than the price at which the short position was established. In addition, if the Fund holds a long position in a futures contract or has sold a put option on a futures contract, it will hold cash, U.S. government securities or other liquid portfolio securities equal to the purchase price of the contract or the exercise price of the put option (less the amount of initial or variation margin on deposit) in a segregated account maintained on the books of the Fund. Alternatively, the Fund could cover its long position by purchasing a put option on the same futures contract with an exercise price as high or higher than the price of the contract held by the Fund. MONEY MARKET SECURITIES. In addition to the short term fixed-income securities in which the Fund may otherwise invest, 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 Government 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; FULLY INSURED CERTIFICATES OF DEPOSIT. Certificates of deposits 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 grades 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 10 will accrue interest from the institution until the time when the repurchase is to occur. Although this date is deemed by the Fund to be the maturity date of a repurchase agreement, the maturities of securities subject to repurchase agreements are not subject to any limits. While repurchase agreements involve certain risks not associated with direct investments in debt securities, the Fund follows procedures approved by the Trustees designed to minimize such risks. These procedures include effecting repurchase transactions only with large, well-capitalized and well-established financial institutions whose financial condition will be continually monitored by the Investment Manager. 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 10% of its total assets. REVERSE REPURCHASE AGREEMENTS. The Fund may also use reverse repurchase agreements for purposes of meeting redemptions or as part of its investment strategy. Reverse repurchase agreements involve sales by the Fund of portfolio assets concurrently with an agreement by the Fund to repurchase the same assets at a later date at a fixed price. Reverse repurchase agreements involve the risk that the market value of the securities the Fund is obligated to repurchase under the agreement may decline below the repurchase price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Fund's use of the proceeds of the agreement may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligation to repurchase the securities. Reverse repurchase agreements are speculative techniques involving leverage, and are considered borrowings by the Fund. Reverse repurchase agreements may not exceed 10% of the Fund's total assets. LENDING PORTFOLIO SECURITIES. The Fund may lend its portfolio securities to brokers, dealers and other financial institutions, provided that the loans are callable at any time by the Fund, and are at all times secured by cash or cash equivalents, which are maintained in a segregated account pursuant to applicable regulations and that are equal to at least 100% of the market value, determined daily, of the loaned securities. The advantage of these loans is that the Fund continues to receive the income on the loaned securities while at the same time earning interest on the cash amounts deposited as collateral, which will be invested in short-term obligations. The Fund will not lend its portfolio securities if such loans are not permitted by the laws or regulations of any state in which its shares are qualified for sale and will not lend more than 25% of the value of its total assets. As with any extensions of credit, there are risks of delay in recovery and, in some cases, even loss of rights in the collateral should the borrower of the securities fail financially. However, these loans of portfolio securities will only be made to firms deemed by the Fund's management to be creditworthy and when the income which can be earned from such loans justifies the attendant risks. Upon termination of the loan, the borrower is required to return the securities to the Fund. Any gain or loss in the market price during the loan period would inure to the Fund. When voting or consent rights which accompany loaned securities pass to the borrower, the Fund will follow the policy of calling the loaned securities, to be delivered within one day after notice, to permit the exercise of the rights if the matters involved would have a material effect on the Fund's investment in the loaned securities. The Fund will pay reasonable finder's, administrative and custodial fees in connection with a loan of its securities. WHEN-ISSUED AND DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS. 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 11 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, 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 assets committed to the purchase of securities on a "when, as and if issued" basis may increase the volatility of its net asset value. The Fund may also sell securities on a "when, as and if issued" basis provided that the issuance of the security will result automatically from the exchange or conversion of a security owned by the Fund at the time of sale. PRIVATE PLACEMENTS. The Fund may invest up to 10% of its total assets in securities which are subject to restrictions on resale because they have not been registered under the Securities Act of 1933 (the "Securities Act"), or which are otherwise not readily marketable. (Securities eligible for resale pursuant to Rule 144A under the Securities Act, and determined to be liquid pursuant to the procedures discussed in the following paragraph, are not subject to the foregoing restriction.) These securities are generally referred to as private placements or restricted securities. Limitations on the resale of these securities may have an adverse effect on their marketability, and may prevent the Fund from disposing of them promptly at reasonable prices. The Fund may have to bear the expense of registering the securities for resale and the risk of substantial delays in effecting the registration. Rule 144A permits the Fund to sell restricted securities to qualified institutional buyers without limitation. The Investment Manager, pursuant to procedures adopted by the Trustees, will make a determination as to the liquidity of each restricted security purchased by the Fund. If a restricted security is determined to be "liquid," the security will not be included within the category "illiquid securities," which may not exceed 10% of the Fund's total assets. However, investing in Rule 144A securities could have the effect of increasing the level of Fund illiquidity to the extent the Fund, at a particular point in time, may be unable to find qualified institutional buyers interested in purchasing such securities. WARRANTS AND SUBSCRIPTION RIGHTS. The Fund may acquire warrants and subscription rights attached to other securities. A warrant is, in effect, an option to purchase equity securities at a specific price, generally valid for a specific period of time, and has no voting rights, pays no dividends and has no rights with respect to the corporation issuing it. 12 A subscription right is a privilege granted to existing shareholders of a corporation to subscribe to shares of a new issue of common stock before it is offered to the public. A subscription right normally has a life of two to four weeks and a subscription price lower than the current market value of the common stock. C. FUND POLICIES/INVESTMENT RESTRICTIONS The investment objectives, policies and restrictions listed below have been adopted by the Fund as fundamental policies. Under the Investment Company Act of 1940, as amended (the "Investment Company Act"), a fundamental policy may not be changed without the vote of a majority of the outstanding voting securities of the Fund. The Investment Company Act defines a majority as the lesser of (a) 67% or more of the shares present at a meeting of shareholders, if the holders of 50% of the outstanding shares of the Fund are present or represented by proxy; or (b) more than 50% of the outstanding shares of the Fund. For purposes of the following restrictions: (i) all percentage limitations apply immediately after a purchase or initial investment; and (ii) any subsequent change in any applicable percentage resulting from market fluctuations or other changes in total or net assets does not require elimination of any security from the portfolio. The Fund will: 1. As a primary objective, seek to earn a high level of current income and as a secondary objective, seek appreciation in the value of its assets. The Fund may not: 1. Invest 25% or more of the value of its total assets in securities of issuers in any one industry. 2. Invest more than 5% of the value of its total assets in securities of issuers having a record, together with predecessors, of less than three years of continuous operation. This restriction shall not apply to any obligation issued or guaranteed by the United States Government, its agencies or instrumentalities. 3. Invest more than 10% of its total assets in "illiquid securities" (securities for which market quotations are not readily available) and repurchase agreements which have a maturity of longer than seven days. 4. Invest in securities of any issuer if, to the knowledge of the Fund, any officer or trustee of the Fund or of the Investment Manager owns more than 1/2 of 1% of the outstanding securities of the issuer, and the officers and trustees who own more than 1/2 of 1% own in the aggregate more than 5% of the outstanding securities of the issuer. 5. Purchase or sell real estate or interests therein, although the Fund may purchase securities of issuers which engage in real estate operations and securities secured by real estate or interests therein. 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 these programs. 7. Purchase or sell commodities or commodities contracts, except that the Fund may purchase or sell (write) interest rate, currency and stock and bond index futures contracts and related options thereon. 8. Purchase securities of other investment companies, except in connection with a merger, consolidation, reorganization or acquisition of assets. However, the Fund may invest up to 10% of the value of its total assets in the securities of foreign investment companies, but only under circumstances where purchase of the securities of foreign investment companies would secure entry to national markets which are otherwise not open to the Fund for investment or where the security is issued by a foreign bank which is deemed to be an investment company under U.S. securities laws and/or regulations. 13 The Fund anticipates that it will incur any indirect expenses incurred through investment in a foreign investment company, such as the payment of a management fee. Furthermore, it should be noted that foreign investment companies are not subject to the U.S. securities laws and may be subject to fewer or less stringent regulations than U.S. investment companies. 9. Borrow money (except insofar as the Fund may be deemed to have borrowed by entrance into a reverse repurchase agreement up to an amount not exceeding 10% of the Fund's total assets), except that the Fund may borrow from a bank for temporary or emergency purposes, in amounts not exceeding 5% of its total assets (not including the amount borrowed). 10. Pledge its assets or assign or otherwise encumber them except to secure permitted borrowings. For the purpose of this restriction, collateral arrangements with respect to the writing of options and collateral arrangements with respect to initial or variation margin for futures are not deemed to be pledges of assets. 11. 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 or reverse repurchase agreement; (b) purchasing any securities on a when-issued or delayed delivery basis; (c) purchasing or selling futures contracts, forward foreign exchange contracts or options; (d) borrowing money; or (e) lending portfolio securities. 12. Make loans of money or securities, except: (a) by the purchase of publicly distributed debt obligations; (b) by investment in repurchase or reverse repurchase agreements; or (c) by lending its portfolio securities. 13. Make short sales of securities. 14. Purchase securities on margin, except for short-term loans as are necessary for the clearance of portfolio securities. The deposit or payment by the Fund of initial or variation margin in connection with futures contracts or related options thereon is not considered the purchase of a security on margin. 15. Engage in the underwriting of securities, except insofar as the Fund may be deemed an underwriter under the Securities Act in disposing of a portfolio security. 16. Invest for the purpose of exercising control or management of any other issuer. Notwithstanding any other investment policy or restriction, the Fund may seek to achieve its investment objectives by investing all or substantially all of its assets in another investment company having substantially the same investment objective and policies as the Fund. For the fiscal years ended October 31, 1999 and 2000, the Funds portfolio turnover rates were 144% and 73%, respectively. This variation resulted from the portfolio managers' response to varying market conditions during these periods. 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. 14 B. MANAGEMENT INFORMATION TRUSTEES AND OFFICERS. The Board of the Fund consists of nine (9) Trustees. These same individuals also serve as directors or trustees for all of the Morgan Stanley Dean Witter Funds. Six Trustees (67% of the total number) have no affiliation or business connection with the Investment Manager or any of 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 three Trustees (the "management Trustees") are affiliated with the Investment Manager. 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 Morgan Stanley Dean Witter Funds (there were 93 such Funds as of the calendar year ended December 31, 1999), are shown below.
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS - --------------------------------------------- ----------------------------------------------- Michael Bozic (59) .......................... Retired; Director or Trustee of the Morgan Trustee Stanley Dean Witter Funds, formerly Vice c/o Mayer, Brown & Platt Chairman of Kmart Corporation (December Counsel to the Independent Trustees 1998-October 2000), Chairman and Chief 1675 Broadway Executive Officer of Levitz Furniture New York, New York 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 Weirton Steel Corporation. Charles A. Fiumefreddo* (67) ................ Chairman, Director or Trustee and Chief Chairman of the Board, Executive Officer of the Morgan Stanley Dean Chief Executive Officer and Trustee Witter Funds; formerly Chairman, Chief Two World Trade Center Executive Officer and Director of the New York, New York 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 (68) .......................... Director or Trustee of the Morgan Stanley Dean Trustee Witter Funds; formerly United States Senator c/o Summit Ventures LLC (R-Utah) (1974-1992) and Chairman, Senate 1 Utah Center Banking Committee (1980-1986); formerly Mayor 201 S. Main Street of Salt Lake City, Utah (1971-1974); formerly Salt Lake City, Utah Astronaut, Space Shuttle Discovery (April 12-19, 1985); Vice Chairman, Huntsman Corporation (chemical company); Director of Franklin Covey (time management systems), BMW Bank of North America, Inc. (industrial loan corporation), United Space Alliance (joint venture between Lockheed Martin and the Boeing Company) and Nuskin Asia Pacific (multilevel marketing); member of the Utah Regional Advisory Board of Pacific Corp.; member of the board of various civic and charitable organizations.
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NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS - --------------------------------------------- ----------------------------------------------- Wayne E. Hedien (66) ........................ Retired; Director or Trustee of the Morgan Trustee Stanley Dean Witter Funds; Director of The PMI c/o Mayer, Brown & Platt Group, Inc. (private mortgage insurance); Counsel to the Independent Trustees Trustee and Vice Chairman of The Field Museum 1675 Broadway of Natural History; formerly associated with New York, New York the Allstate Companies (1966-1994), most recently as Chairman of The Allstate Corporation (March 1993-December 1994) and Chairman and Chief Executive Officer of its wholly-owned subsidiary, Allstate Insurance Company (July 1989-December 1994); director of various other business and charitable organizations. James F. Higgins* (52) ...................... Chairman of the Private Client Group of MSDW Trustee (since August 2000); Director of the Transfer Two World Trade Center Agent and Dean Witter Realty Inc.; Director or New York, New York Trustee of the Morgan Stanley Dean Witter Funds (since June 2000); previously President and Chief Operating Officer of the Private Client Group of MSDW (May 1999-August 2000), President and Chief Operating Officer of Individual Securities of MSDW (February 1997-May 1999), President and Chief Operating Officer of Dean Witter Securities of MSDW (1995-February 1997), and President and Chief Operating Officer of Dean Witter Financial (1989-1995) and Director (1985-1997) of Dean Witter Reynolds. Dr. Manuel H. Johnson (51) .................. Senior Partner, Johnson Smick Trustee International, Inc., a consulting firm; c/o Johnson Smick International, Inc. Co-Chairman and a founder of the Group of Seven 1133 Connecticut Avenue, N.W. Council (G7C), an international economic Washington, D.C. commission; Chairman of the Audit Committee and Director or Trustee of the Morgan Stanley Dean Witter Funds; Director of Greenwich Capital Markets, Inc. (broker-dealer) Independence Standards Board (organization governing independence of auditors) and NVR, Inc. (home construction); Chairman and Trustee of the Financial Accounting Foundation (oversight organization of the Financial Accounting Standards Board); formerly Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury. Michael E. Nugent (64) ...................... General Partner, Triumph Capital, L.P., a Trustee private investment partnership; Chairman of the c/o Triumph Capital, L.P. Insurance Committee and Director or Trustee of 237 Park Avenue the Morgan Stanley Dean Witter Funds; formerly New York, New York Vice President, Bankers Trust Company and BT Capital Corporation; director of various business organizations.
16
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS - --------------------------------------------- ----------------------------------------------- Philip J. Purcell* (57) ..................... 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; Director of American Airlines Inc. and its parent company, AMR Corporation; Director and/or officer of various MSDW subsidiaries. John L. Schroeder (70) ...................... Retired; Chairman of the Derivatives Committee Trustee and Director or Trustee of the Morgan Stanley c/o Mayer, Brown & Platt Dean Witter Funds; Director of Citizens Counsel to the Independent Trustees Communications Company (telecommunications 1675 Broadway company); formerly Executive Vice President and New York, New York Chief Investment Officer of the Home Insurance Company (August 1991-September 1995). Mitchell M. Merin (47) ...................... 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 (since May 1999); Trustee of various Van Kampen investment companies (since December 1999); previously Chief Strategic Officer of the Investment Manager and MSDW Services Company and Executive Vice President of the Distributor (April 1997-June 1998), Vice President of the Morgan Stanley Dean Witter Funds (May 1997-April 1999), and Executive Vice President of Dean Witter, Discover & Co. Barry Fink (45) ............................. General Counsel of Asset Management of MSDW Vice President, (since May 2000); Executive Vice President Secretary and General Counsel (since December 1999) and Secretary and General Two World Trade Center Counsel (since February 1997) and Director New York, New York (since July 1998) of the Investment Manager and MSDW Services Company; Vice President, Secretary and General Counsel of the Morgan Stanley Dean Witter Funds (since February 1997); Vice President and Secretary of the Distributor; previously, Senior Vice President (March 1997-December 1999), First Vice President; Assistant Secretary and Assistant General Counsel of the Investment Manager and MSDW Services Company.
17
NAME, AGE, POSITION WITH FUND AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS - --------------------------------------------- ----------------------------------------------- W. David Armstrong (42) ..................... Managing Director of the Investment Manager and Vice President Managing Director and member of the Interest Two World Trade Center Rate Research Team of Miller Anderson & New York, New York Sherrerd, LLP ("MAS") an affiliate of the Investment Manager (since February 1998); previously Senior Vice President of Lehman Brothers (April 1995-February 1998). Vice President of various Morgan Stanley Dean Witter Funds. Paul F. O'Brien (44) ........................ Principal of the Investment Manager (since Vice President August 1996) and Principal and member of the Two World Trade Center Interest Rate Research Team of MAS (since New York, New York January 1996); previously an economist at JP Morgan, London (January 1994-January 1996). Vice President of various Morgan Stanley Dean Witter Funds. Thomas F. Caloia (54) ....................... First Vice President and Assistant Treasurer of Treasurer the Investment Manager, the Distributor and Two World Trade Center MSDW Services Company; Treasurer of the Morgan New York, New York Stanley Dean Witter Funds.
- ------------------------ * Denotes Trustees who are "interested persons" of the Fund as defined by the Investment Company Act. In addition, RONALD E. ROBISON, Executive Vice President, Chief Administrative Officer and Director of the Investment Manager and MSDW Services Company, ROBERT S. GIAMBRONE, Senior Vice President of the Investment Manager, MSDW Services Company, the Distributor and the Transfer Agent and Director of the Transfer Agent, and JOSEPH J. MCALINDEN, Executive Vice President and Chief Investment Officer of the Investment Manager and Director of the Transfer Agent, are Vice Presidents of the Fund. In addition, LOU ANNE D. MCINNIS, CARSTEN OTTO and RUTH ROSSI, Senior Vice Presidents and Assistant General Counsels of the Investment Manager and MSDW Services Company, MARILYN K. CRANNEY and TODD LEBO, First Vice Presidents and Assistant General Counsels of the Investment Manager and MSDW Services Company and NATASHA KASSIAN, Vice President and Assistant General Counsel of the Investment Manager and MSDW Services Company, are Assistant Secretaries of the Fund. INDEPENDENT DIRECTORS/TRUSTEES AND THE COMMITTEES. Law and regulation establish both general guidelines and specific duties for the independent directors/trustees. The Morgan Stanley Dean Witter Funds seek as independent directors/trustees individuals of distinction and experience in business and finance, government service or academia; these are people whose advice and counsel are in demand by others and for whom there is often competition. To accept a position on the funds' boards, such individuals may reject other attractive assignments because the funds make substantial demands on their time. All of the independent directors/trustees serve as members of the Audit Committee. In addition, three of the directors/trustees, including two independent directors/trustees serve as members of the Derivatives Committee and the Insurance Committee. The independent directors/trustees are charged with recommending to the full board approval of management, advisory and administration contracts, Rule 12b-1 plans and distribution and underwriting agreements; continually reviewing Fund performance; checking on the pricing of portfolio securities, brokerage commissions, transfer agent costs and performance, and trading among funds in the same complex; and approving fidelity bond and related insurance coverage and allocations, as well as other matters that arise from time to time. The independent directors/trustees are required to select and nominate individuals to fill any independent director/trustee vacancy on the board of any fund that has a Rule 12b-1 plan of distribution. Most of the Morgan Stanley Dean Witter Funds have a Rule 12b-1 plan. 18 The Audit Committee is charged with recommending to the full board the engagement or discharge of the Fund's independent auditors; directing investigations into matters within the scope of the independent auditors' duties, including the power to retain outside specialists; reviewing with the independent auditors the audit plan and results of the auditing engagement; approving professional services provided by the independent auditors and other accounting firms prior to the performance of the services; reviewing the independence of the independent auditors; considering the range of audit and non-audit fees; reviewing the adequacy of the Fund's system of internal controls; and preparing and submitting Committee meeting minutes to the full board. The board of each Fund has a Derivatives Committee to approve parameters for and monitor the activities of the Fund with respect to derivative investments, if any, made by the Fund. Finally, the board of each Fund has formed an Insurance Committee to review and monitor the insurance coverage maintained by the Fund. ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT DIRECTORS/TRUSTEES FOR ALL MORGAN STANLEY DEAN WITTER FUNDS. The independent directors/trustees and the funds' management believe that having the same independent directors/trustees for each of the Morgan Stanley Dean Witter Funds avoids the duplication of effort that would arise from having different groups of individuals serving as independent directors/trustees for each of the funds or even of sub-groups of funds. They believe that having the same individuals serve as independent directors/trustees of all the funds tends to increase their knowledge and expertise regarding matters which affect the fund complex generally and enhances their ability to negotiate on behalf of each fund with the fund's service providers. This arrangement also precludes the possibility of separate groups of independent directors/trustees arriving at conflicting decisions regarding operations and management of the funds and avoids the cost and confusion that would likely ensue. Finally, having the same independent directors/trustees serve on all fund boards enhances the ability of each fund to obtain, at modest cost to each separate fund, the services of independent directors/trustees, of the caliber, experience and business acumen of the individuals who serve as independent directors/trustees of the Morgan Stanley Dean Witter Funds. 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 Chairman 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. 19 The following table illustrates the compensation that the Fund paid to its Independent Trustees for the fiscal year ended October 31, 2000. FUND COMPENSATION
AGGREGATE COMPENSATION NAME OF INDEPENDENT TRUSTEE FROM THE FUND - --------------------------- -------------- Michael Bozic................................................. $1,550 Edwin J. Garn................................................. 1,550 Wayne E. Hedien............................................... 1,550 Dr. Manuel H. Johnson......................................... 2,300 Michael E. Nugent............................................. 2,050 John L. Schroeder............................................. 2,000
The following table illustrates the compensation paid to the Fund's Independent Trustees for the calendar year ended December 31, 1999 for services to the 93 Morgan Stanley Dean Witter Funds that were in operation at December 31, 1999. CASH COMPENSATION FROM MORGAN STANLEY DEAN WITTER FUNDS
TOTAL CASH COMPENSATION FOR SERVICES TO 93 MORGAN STANLEY DEAN NAME OF INDEPENDENT TRUSTEE WITTER FUNDS - --------------------------- --------------- Michael Bozic.............. $134,600 Edwin J. Garn.............. 138,700 Wayne E. Hedien............ 138,700 Dr. Manuel H. Johnson...... 208,638 Michael E. Nugent.......... 193,324 John L. Schroeder.......... 193,324
As of the date of this STATEMENT OF ADDITIONAL INFORMATION, 55 of the Morgan Stanley Dean Witter Funds, including the Fund, have adopted a retirement program under which an independent director/ trustee who retires after serving for at least five years (or such lesser period as may be determined by the Board) as an independent director/trustee of any Morgan Stanley Dean Witter Fund that has adopted the retirement program (each such Fund referred to as an "Adopting Fund" and each such trustee referred to as an "Eligible Trustee") is entitled to retirement payments upon reaching the eligible retirement age (normally, after attaining age 72). Annual payments are based upon length of service. Currently, upon retirement, each Eligible Trustee is entitled to receive from the Adopting Fund, commencing as of his or her retirement date and continuing for the remainder of his or her life, an annual retirement benefit (the "Regular Benefit") equal to 30.22% of his or her Eligible Compensation plus 0.5036667% of such Eligible Compensation for each full month of service as an independent director/ trustee of any Adopting Fund in excess of five years up to a maximum of 60.44% after ten years of service. The foregoing percentages may be changed by the Board.(1) "Eligible Compensation" is one-fifth of the total compensation earned by such Eligible Trustee for service to the Adopting Fund in the five year period prior to the date of the Eligible Trustee's retirement. Benefits under the retirement program are accrued as expenses on the books of the Adopting Funds. Such benefits are not secured or funded by the Adopting Funds. - ------------------------ (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. 20 The following table illustrates the retirement benefits accrued to the Fund's Independent Trustees by the Fund for the fiscal year ended October 31, 2000 and by the 55 Morgan Stanley Dean Witter Funds (including the Fund) for the year ended December 31, 1999, and the estimated retirement benefits for the Independent Trustees, to commence upon their retirement, from the Fund as of October 31, 2000 and from the 55 Morgan Stanley Dean Witter Funds as of December 31, 1999. RETIREMENT BENEFITS FROM THE FUND AND ALL MORGAN STANLEY DEAN WITTER FUNDS
FOR ALL ADOPTING FUNDS ------------------------------ RETIREMENT BENEFITS ESTIMATED ANNUAL ESTIMATED ACCRUED AS BENEFITS CREDITED EXPENSES UPON RETIREMENT(2) YEARS ESTIMATED ------------------- ------------------ OF SERVICE AT PERCENTAGE OF BY ALL FROM FROM ALL RETIREMENT ELIGIBLE BY THE ADOPTING THE ADOPTING NAME OF INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION FUND FUNDS FUND FUNDS - --------------------------- -------------- -------------- ------ ----------- -------- -------- Michael Bozic................ 10 60.44% $ 358 $20,933 $ 907 $50,588 Edwin J. Garn................ 10 60.44 490 31,737 909 50,675 Wayne E. Hedien.............. 9 51.37 679 39,566 771 43,000 Dr. Manuel H. Johnson........ 10 60.44 348 13,129 1,360 75,520 Michael E. Nugent............ 10 60.44 579 23,175 1,209 67,209 John L. Schroeder............ 8 50.37 1,096 41,558 960 52,994
- ------------------------ (2) Based on current levels of compensation. Amount of annual benefits also varies depending on the Trustee's elections described in Footnote 1 on page 20. IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES - -------------------------------------------------------------------------------- The following owned 5% or more of the outstanding Class A shares of the Fund as of December 7, 2000: Morgan Stanley Dean Witter Trust FSB Trustee K&S, Harborside Financial Center, Plaza 2, 7th Floor, Jersey City, NJ 07311--8.648%. The following owned 5% or more of the outstanding Class C shares of the Fund as of December 7, 2000: MSDW Trust, Custodian FBO Charles B. Pennington 403(B) Transfer & Rollover Account, 1449 Westminster Drive, Columbus, OH 43221-3445--29.063%; Janet D. Herterick, 6 Sheepmeadow Lane, Sandwich, MA 02563-2247--6.311% and Jennifer A. Katz, Trustee, Jennifer A. Katz Trust dated 7/12/00, 100 Forest Ave, Rockville, MD 20850-1817--5.130%. 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, NY 10048. The Investment Manager is a wholly-owned subsidiary of MSDW, a Delaware corporation. MSDW is a preeminent global financial services firm that maintains leading market positions in each of its three primary businesses: securities, asset management and credit services. 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: 0.75% to the portion of daily net assets not exceeding $250 million; 0.60% to the portion of daily net assets exceeding $250 million but not exceeding $500 million; 0.50% to the portion of daily net assets exceeding $500 million but not exceeding $750 billion; 0.40% to the portion of daily net 21 assets exceeding $750 million but not exceeding $1 billion; and 0.30% to the portion of daily net assets exceeding $1 billion. The management fee is allocated among the Classes pro rata based on the net assets of the Fund attributable to each Class. For the fiscal years ended October 31, 1998, 1999 and 2000, the Investment Manager accrued total compensation under the Management Agreement in the amounts of $658,757, $766,491 and $661,679, respectively. The Investment Manager has retained its wholly-owned subsidiary, MSDW Services Company, to perform administrative services for the Fund. B. PRINCIPAL UNDERWRITER The Fund's principal underwriter is the Distributor (which has the same address as the Investment Manager). In this capacity, the Fund's shares are distributed by the Distributor. The Distributor has entered into a selected dealer agreement with Dean Witter Reynolds, which through its own sales organization sells shares of the Fund. In addition, the Distributor may enter into similar agreements with other selected broker-dealers. The Distributor, a Delaware corporation, is a wholly-owned subsidiary of MSDW. The 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 costs of educational and/or business-related trips, and educational and/or promotional and business-related expenses. The Distributor also pays certain expenses in connection with the distribution of the Fund's shares, including the costs of preparing, printing and distributing advertising or promotional materials, and the costs of printing and distributing prospectuses and supplements thereto used in connection with the offering and sale of the Fund's shares. The Fund bears the costs of initial typesetting, printing and distribution of prospectuses and supplements thereto to shareholders. The Fund also bears the costs of registering the Fund and its shares under federal and state securities laws and pays filing fees in accordance with state securities laws. The Fund and the Distributor have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. Under the Distribution Agreement, the Distributor uses its best efforts in rendering services to the Fund, but in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations, the Distributor is not liable to the Fund or any of its shareholders for any error of judgment or mistake of law or for any act or omission or for any losses sustained by the Fund or its shareholders. C. SERVICES PROVIDED BY THE INVESTMENT MANAGER 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 auditors 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 22 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 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 auditors; membership dues of industry associations; interest on Fund borrowings; postage; insurance premiums on property or personnel (including officers and Trustees) of the Fund which inure to its benefit; extraordinary expenses (including, but not limited to, legal claims and liabilities and litigation costs and any indemnification relating thereto); and all other costs of the Fund's operation. The 12b-1 fees relating to a particular Class will be allocated directly to that Class. In addition, other expenses associated with a particular Class (except advisory or custodial fees) may be allocated directly to that Class, provided that such expenses are reasonably identified as specifically attributable to that Class and the direct allocation to that Class is approved by the Trustees. The Management Agreement provides that in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations thereunder, the Investment Manager is not liable to the Fund or any of its investors for any act or omission by the Investment Manager or for any losses sustained by the Fund or its investors. The Management Agreement will remain in effect from year to year, provided continuance of the Management Agreement is approved at least annually by the vote of the holders of a majority, as defined in the Investment Company Act, of the outstanding shares of the Fund, or by the Trustees; provided that in either event such continuance is approved annually by the vote of a majority of the Trustees, including a majority of the Independent Trustees. D. DEALER REALLOWANCES Upon notice to selected broker-dealers, the Distributor may reallow up to the full applicable front-end sales charge during periods specified in such notice. During periods when 90% or more of the sales charge is reallowed, such selected broker-dealers may be deemed to be underwriters as that term is defined in the Securities Act. E. RULE 12b-1 PLAN The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the Investment Company Act (the "Plan") pursuant to which each Class, other than Class D, pays the Distributor compensation accrued daily and payable monthly at the following annual rates: 0.25% and 0.85% of the average daily net assets of Class A and Class C, respectively, and, with respect to Class B, 0.85% of the lesser of: (a) the average daily aggregate gross sales of the Fund's Class B shares since the inception of the Fund (not including reinvestment of dividends or capital gains distributions), less the average daily aggregate net asset value of the Fund's Class B shares redeemed since the Fund's inception upon which a contingent deferred sales charge has been imposed or upon which such charge has been waived; or (b) the average daily net assets of Class B. The Distributor also receives the proceeds of front-end sales charges ("FSCs") and of contingent deferred sales charges ("CDSCs") imposed on certain redemptions of shares, which are separate and apart from payments made pursuant to the Plan. The Distributor has informed the Fund that it and/or 23 Dean Witter Reynolds received the proceeds of CDSCs and FSCs, for the last three fiscal years ended October 31, in approximate amounts as provided in the table below (the Distributor did not retain any of these amounts).
2000 1999 1998 ------------------- ------------------- ------------------- Class A......................... FSCs:(1) $ 462 FSCs:(1) $ 8,331 FSCs:(1) $ 232 CDSCs: $ 0 CDSCs: $ 0 CDSCs: $ 0 Class B......................... CDSCs: $40,577 CDSCs: $47,245 CDSCs: $44,911 Class C......................... CDSCs: $ 466 CDSCs: $ 570 CDSCs: $ 10
- ------------------------ (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 0.20% of the average daily net assets of Class B and 0.25% of the average daily net assets of Class C are currently each characterized as a "service fee" under the Rules of the National Association of Securities Dealers, Inc. (of which the Distributor is a member). The "service fee" is a payment made for personal service and/or the maintenance of shareholder accounts. The remaining portion of the Plan fees payable by a Class, if any, is characterized as an "asset-based sales charge" as such is defined by the Rules of the Association. Under the Plan and as required by Rule 12b-1, the Trustees receive and review promptly after the end of each calendar quarter a written report provided by the Distributor of the amounts expended under the Plan and the purpose for which such expenditures were made. Class B shares of the Fund accrued amounts payable to the Distributor under the Plan, during the fiscal year ended October 31, 2000, of $455,501. This amount is equal to 0.85% of the Fund's average daily net assets for the fiscal year and was calculated pursuant to clause (b) of the compensation formula under the Plan. For the fiscal year ended October 31, 2000, Class A and Class C shares of the Fund accrued payments under the Plan amounting to $58,120 and $6,493, respectively, which amounts are equal to 0.20% and 0.85% of the average daily net assets of Class A and Class C, respectively, for the fiscal year. The Plan was adopted in order to permit the implementation of the Fund's method of distribution. Under this distribution method the Fund offers four Classes, each with a different distribution arrangement. With respect to Class A shares, Dean Witter Reynolds compensates its Financial Advisors by paying them, from proceeds of the FSC, commissions for the sale of Class A shares, currently a gross sales credit of up to 4.0% of the amount sold (except as provided in the following sentence) and an annual residual commission, currently a residual of up to 0.20% 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 Morgan Stanley Dean Witter's 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 4.0% of the amount sold (except as provided in the following sentence) and an annual residual commission, currently a residual of up to 0.20% 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 0.85% of the current value of the respective accounts for which they are the Financial Advisors of record. 24 With respect to Class D shares other than shares held by participants in the Investment Manager's mutual fund asset allocation program and in the Morgan Stanley Dean Witter Choice Program, the Investment Manager compensates Dean Witter Reynolds' Financial Advisors by paying them, from its own funds, commissions for the sale of Class D shares, currently a gross sales credit of up to 1.0% of the amount sold. There is a chargeback of 100% of the amount paid if the Class D shares are redeemed in the first year and a chargeback of 50% of the amount paid if the Class D shares are redeemed in the second year after purchase. The Investment Manager also compensates Dean Witter Reynolds' Financial Advisors by paying them, from its own funds, an annual residual commission, currently up to 0.10% of the current value of the respective accounts for which they are the Financial Advisors of record (not including accounts of participants in the Investment Manager's mutual fund asset allocation program and the Morgan Stanley Dean Witter Choice Program). The gross sales credit is a charge which reflects commissions paid by Dean Witter Reynolds to its Financial Advisors and Dean Witter Reynolds' Fund-associated distribution-related expenses, including sales compensation, and overhead and other branch office distribution-related expenses including (a) the expenses of operating Dean Witter Reynolds' branch offices in connection with the sale of Fund shares, including lease costs, the salaries and employee benefits of operations and sales support personnel, utility costs, communications costs and the costs of stationery and supplies; (b) the costs of client sales seminars; (c) travel expenses of mutual fund sales coordinators to promote the sale of Fund shares; and (d) other expenses relating to branch promotion of Fund sales. The Investment Manager pays a retention fee to Financial Advisors at an annual rate of 0.05% of the value of shares of the Fund sold after January 1, 2000 and held for at least one year. Shares purchased through the reinvestment of dividends will be eligible for a retention fee, provided that such dividends were earned on shares otherwise eligible for a retention fee payment. Shares owned in variable annuities, closed-end fund shares and shares held in 401(k) plans where the Transfer Agent or MSDW's Retirement Plan Services is either recordkeeper or trustee are not eligible for a retention fee. For the first year only, the retention fee is paid on any shares of the Fund sold after January 1, 2000 and held by shareholders on December 31, 2000. The retention fees are paid by the Investment Manager from its own assets, which may include profits from investment management fees payable under the Management Agreement, as well as from borrowed funds. The distribution fee that the Distributor receives from the Fund under the Plan, in effect, offsets distribution expenses incurred under the Plan on behalf of the Fund and, in the case of Class B shares, opportunity costs, such as the gross sales credit and an assumed interest charge thereon ("carrying charge"). These expenses may include the cost of Fund-related educational and/or business-related trips or payment of Fund-related educational and/or promotional expenses of Financial Advisors. For example, the Distributor has implemented a compensation program available only to Financial Advisors meeting specified criteria under which certain marketing and/or promotional expenses of those Financial Advisors are paid by the Distributor out of compensation it receives under the Plan. In the Distributor's reporting of the distribution expenses to the Fund, in the case of Class B shares, such assumed interest (computed at the "broker's call rate") has been calculated on the gross credit as it is reduced by amounts received by the Distributor under the Plan and any contingent deferred sales charges received by the Distributor upon redemption of shares of the Fund. No other interest charge is included as a distribution expense in the Distributor's calculation of its distribution costs for this purpose. The broker's call rate is the interest rate charged to securities brokers on loans secured by exchange-listed securities. The Fund is authorized to reimburse expenses incurred or to be incurred in promoting the distribution of the Fund's Class A and Class C shares and in servicing shareholder accounts. Reimbursement will be made through payments at the end of each month. The amount of each monthly payment may in no event exceed an amount equal to a payment at the annual rate of 0.25%, in the case of Class A, and 0.85%, 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 25 authorized financial representatives, such amounts shall be determined at the beginning of each calendar quarter by the Trustees, including, a majority of the Independent Trustees. Expenses representing the service fee (for Class A) or a gross sales credit or a residual to Financial Advisors and other authorized financial representatives (for Class C) may be reimbursed without prior determination. In the event that the Distributor proposes that monies shall be reimbursed for other than such expenses, then in making quarterly determinations of the amounts that may be reimbursed by the Fund, the Distributor will provide and the Trustees will review a quarterly budget of projected distribution expenses to be incurred on behalf of the Fund, together with a report explaining the purposes and anticipated benefits of incurring such expenses. The Trustees will determine which particular expenses, and the portions thereof, that may be borne by the Fund, and in making such a determination shall consider the scope of the Distributor's commitment to promoting the distribution of the Fund's Class A and Class C shares. Each Class paid 100% of the amounts accrued under the Plan with respect to that Class for the fiscal year ended October 31, 2000 to the Distributor. The Distributor and Dean Witter Reynolds estimate that they have spent, pursuant to the Plan, $38,877,516 on behalf of Class B since the inception of the Fund. It is estimated that this amount was spent in approximately the following ways: (i) 9.48% ($3,686,071)--advertising and promotional expenses; (ii) 0.65% ($250,825)--printing of prospectuses for distribution to other than current shareholders; and (iii) 89.87% ($34,940,620)--other expenses, including the gross sales credit and the carrying charge, of which 16.69% ($5,832,104) represents carrying charges, 34.49% ($12,050,926) represents commission credits to Dean Witter Reynolds branch offices and other selected broker-dealers for payments of commissions to Financial Advisors and other authorized financial representatives, and 48.81% ($17,057,590) represents overhead and other branch office distribution-related expenses. The amounts accrued by Class A and a portion of the amounts accrued by Class C under the Plan during the fiscal year ended October 31, 2000 were service fees. The remainder of the amounts accrued by Class C were for expenses which relate to compensation of sales personnel and associated overhead expenses. In the case of Class B shares, at any given time, the expenses of distributing shares of the Fund may be more or less than the total of (i) the payments made by the Fund pursuant to the Plan; and (ii) the proceeds of CDSCs paid by investors upon redemption of shares. For example, if $1 million in expenses in distributing Class B shares of the Fund had been incurred and $750,000 had been received as described in (i) and (ii) above, the excess expense would amount to $250,000. The Distributor has advised the Fund that in the case of Class B shares the excess distribution expenses, including the carrying charge designed to approximate the opportunity costs incurred by Dean Witter Reynolds which arise from it having advanced monies without having received the amount of any sales charges imposed at the time of sale of the Fund's Class B shares, totaled $9,092,910 as of October 31, 2000 (the end of the Fund's fiscal year), which was equal to 20.90% 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 0.85% 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 $2,474 in the case of Class C at December 31, 1999 (end of the calendar year), which amount was equal to 0.31% 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 26 Class A on such date. No interest or other financing charges will be incurred on any Class A or Class C distribution expenses incurred by the Distributor under the Plan or on any unreimbursed expenses due to the Distributor pursuant to the Plan. No interested person of the Fund nor any Independent Trustee has any direct financial interest in the operation of the Plan except to the extent that the Distributor, the Investment Manager, Dean Witter Reynolds, MSDW Services Company or certain of their employees may be deemed to have such an interest as a result of benefits derived from the successful operation of the Plan or as a result of receiving a portion of the amounts expended thereunder by the Fund. On an annual basis, the Trustees, including a majority of the Independent Trustees, consider whether the Plan should be continued. Prior to approving the last continuation of the Plan, the Trustees requested and received from the Distributor and reviewed all the information which they deemed necessary to arrive at an informed determination. In making their determination to continue the Plan, the Trustees considered: (1) the Fund's experience under the Plan and whether such experience indicates that the Plan is operating as anticipated; (2) the benefits the Fund had obtained, was obtaining and would be likely to obtain under the Plan, including that: (a) the Plan is essential in order to give Fund investors a choice of alternatives for payment of distribution and service charges and to enable the Fund to continue to grow and avoid a pattern of net redemptions which, in turn, are essential for effective investment management; and (b) without the compensation to individual brokers and the reimbursement of distribution and account maintenance expenses of Dean Witter Reynolds' branch offices made possible by the 12b-1 fees, Dean Witter Reynolds could not establish and maintain an effective system for distribution, servicing of Fund shareholders and maintenance of shareholder accounts; and (3) what services had been provided and were continuing to be provided under the Plan to the Fund and its shareholders. Based upon their review, the Trustees, including each of the Independent Trustees, determined that continuation of the Plan would be in the best interest of the Fund and would have a reasonable likelihood of continuing to benefit the Fund and its shareholders. In the Trustees' quarterly review of the Plan, they will consider its continued appropriateness and the level of compensation provided therein. The Plan may not be amended to increase materially the amount to be spent for the services described therein without approval by the shareholders of the affected Class or Classes of the Fund, and all material amendments to the Plan must also be approved by the Trustees in the manner described above. The Plan may be terminated at any time, without payment of any penalty, by vote of a majority of the Independent Trustees or by a vote of a majority of the outstanding voting securities of the Fund (as defined in the Investment Company Act) on not more than thirty days' written notice to any other party to the Plan. So long as the Plan is in effect, the election and nomination of Independent Trustees shall be committed to the discretion of the Independent Trustees. F. OTHER SERVICE PROVIDERS (1) TRANSFER AGENT/DIVIDEND-PAYING AGENT Morgan Stanley Dean Witter Trust FSB is the Transfer Agent for the Fund's shares and the Dividend Disbursing Agent for payment of dividends and distributions on Fund shares and Agent for shareholders under various investment plans. The principal business address of the Transfer Agent is Harborside Financial Center, Plaza Two, Jersey City, NJ 07311. (2) CUSTODIAN AND INDEPENDENT AUDITORS The Chase Manhattan Bank, One Chase Plaza, New York, NY, 10005 is the Custodian of the Fund's assets. Any of the Fund's cash balances with the Custodian in excess of $100,000 are unprotected by federal deposit insurance. These balances may, at times, be substantial. Deloitte & Touche LLP, Two World Financial Center, New York, NY 10281, serves as the independent auditors of the Fund. The independent auditors are responsible for auditing the annual financial statements of the Fund. (3) AFFILIATED PERSONS The Transfer Agent is an affiliate of the Investment Manager, and of the Distributor. As Transfer Agent and Dividend Disbursing Agent, the Transfer Agent's responsibilities include maintaining shareholder 27 accounts, disbursing cash dividends and reinvesting dividends, processing account registration changes, handling purchase and redemption transactions, mailing prospectuses and reports, mailing and tabulating proxies, processing share certificate transactions, and maintaining shareholder records and lists. For these services, the Transfer Agent receives a per shareholder account fee from the Fund and is reimbursed for its out-of-pocket expenses in connection with such services. G. CODES OF ETHICS The Fund, the Investment Manager and the Distributor have each adopted a Code of Ethics pursuant to Rule 17j-1 under the Investment Company Act. The Codes of Ethics are designed to detect and prevent improper personal trading. The Codes of Ethics permit personnel subject to the Codes to invest in securities, including securities that may be purchased, sold or held by the Fund, subject to a number of restrictions and controls including prohibitions against purchases of securities in an Initial Public Offering and a preclearance requirement with respect to personal securities transactions. VI. BROKERAGE ALLOCATION AND OTHER PRACTICES - -------------------------------------------------------------------------------- A. BROKERAGE TRANSACTIONS 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. Options and 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 fiscal years ended October 31, 1998, 1999 and 2000, the Fund paid a total of $13,277, and $0 and $0, respectively, in brokerage commissions. B. COMMISSIONS Pursuant to an order of the SEC, the Fund may effect principal transactions in certain money market instruments with Dean Witter Reynolds. The Fund will limit its transactions with Dean Witter Reynolds to U.S. Government and government agency securities, bank money instruments (i.e., certificates of deposit and bankers' acceptances) and commercial paper. The transactions will be effected with Dean Witter Reynolds only when the price available from Dean Witter Reynolds is better than that available from other dealers. During the fiscal years ended October 31, 1998, 1999 and 2000, the Fund did not effect any principal transactions with Dean Witter Reynolds. Brokerage transactions in securities listed on exchanges or admitted to unlisted trading privileges may be effected through Dean Witter Reynolds, Morgan Stanley & Co. and other affiliated brokers and dealers. In order for an affiliated broker or dealer to effect any portfolio transactions on an exchange for the Fund, the commissions, fees or other remuneration received by the affiliated broker or dealer must be reasonable and fair compared to the commissions, fees or other remuneration paid to other brokers in connection with comparable transactions involving similar securities being purchased or sold on an exchange during a comparable period of time. This standard would allow the affiliated broker or dealer to receive no more than the remuneration which would be expected to be received by an unaffiliated broker in a commensurate arm's-length transaction. Furthermore, the 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. 28 During the fiscal years ended October 31, 1998, 1999 and 2000, no brokerage commissions were paid to Dean Witter Reynolds. During the fiscal years ended October 31, 1998, 1999 and 2000, the Fund paid no 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. The Fund anticipates that certain of its transactions involving foreign securities will be effected on foreign securities exchanges. Fixed commissions on such transactions are generally higher than negotiated commissions on domestic transactions. There is also generally less government supervision and regulation of foreign securities exchanges and brokers than in the United States. In seeking to implement the Fund's policies, the Investment Manager effects transactions with those brokers and dealers who the Investment Manager believes provide the most favorable prices and are capable of providing efficient executions. If the Investment Manager believes the prices and executions are obtainable from more than one broker or dealer, it may give consideration to placing portfolio transactions with those brokers and dealers who also furnish research and other services to the Fund or the Investment Manager. The services may include, but are not limited to, any one or more of the following: information as to the availability of securities for purchase or sale; statistical or factual information or opinions pertaining to investment; wire services; and appraisals or evaluations of portfolio securities. The information and services received by the Investment Manager from brokers and dealers may be of benefit to the Investment Manager in the management of accounts of some of its other clients and may not in all cases benefit the Fund directly. 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 relevant funds and/or client accounts involved and the number of shares available from the public offering. D. DIRECTED BROKERAGE During the fiscal year ended October 31, 2000, the Fund did not pay any brokerage commissions in connection with transactions because of research services provided. E. REGULAR BROKER-DEALERS During the fiscal year ended October 31, 2000, the Fund did not purchase securities issued by brokers or dealers that were among the ten brokers or the ten dealers which executed transactions for or with the Fund in the largest dollar amounts during the year. At October 31, 2000, the Fund did not own any securities issued by any of such issuers. 29 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 the actions of the Trustees. In addition, under certain circumstances, the shareholders may call a meeting to remove the Trustees, and the Fund is required to provide assistance in communicating with shareholders about such a meeting. The voting rights of shareholders are not cumulative, so that holders of more than 50 percent of the shares voting can, if they choose, elect all Trustees being selected, while the holders of the remaining shares would be unable to elect any Trustees. Under Massachusetts law, shareholders of a business trust may, under certain limited circumstances, be held personally liable as partners for the obligations of the Fund. However, the Declaration of Trust contains an express disclaimer of shareholder liability for acts or obligations of the Fund, requires that notice of such Fund obligations include such disclaimer, and provides for indemnification out of the Fund's property for any shareholder held personally liable for the obligations of the Fund. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund itself would be unable to meet its obligations. Given the above limitations on shareholder personal liability, and the nature of the Fund's assets and operations, the possibility of the Fund being unable to meet its obligations is remote and thus, in the opinion of Massachusetts counsel to the Fund, the risk to Fund shareholders of personal liability is remote. All of the Trustees, except for James F. Higgins, have been elected by the shareholders of the Fund, most recently at a Special Meeting of Shareholders held on May 21, 1997. 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. 30 The Distributor and any authorized broker-dealer have appointed the Transfer Agent to act as their agent in connection with the application of proceeds of any redemption of Fund shares to the purchase of shares of any other Morgan Stanley Dean Witter Fund and the general administration of the exchange privilege. No commission or discounts will be paid to the Distributor or any authorized broker-dealer for any transaction pursuant to the exchange privilege. TRANSFERS OF SHARES. In the event a shareholder requests a transfer of Fund shares to a new registration, the shares will be transferred without sales charge at the time of transfer. With regard to the status of shares which are either subject to the CDSC or free of such charge (and with regard to the length of time shares subject to the charge have been held), any transfer involving less than all of the shares in an account will be made on a pro rata basis (that is, by transferring shares in the same proportion that the transferred shares bear to the total shares in the account immediately prior to the transfer). The transferred shares will continue to be subject to any applicable CDSC as if they had not been so transferred. OUTSIDE BROKERAGE ACCOUNTS. If a shareholder wishes to maintain his or her fund account through a brokerage company other than Dean Witter Reynolds, he or she may do so only if the distributor has entered into a selected dealer agreement with that brokerage company. Accounts maintained through a brokerage company other than Dean Witter Reynolds may be subject to certain restrictions on subsequent purchases and exchanges. Please contact your brokerage company or the Transfer Agent for more information. 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 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. In the calculation of the Fund's net asset value: (1) an equity portfolio security listed or traded on the New York or American Stock Exchange, NASDAQ, or other exchange is valued at its latest sale price, prior to the time when assets are valued; if there were no sales that day, the security is valued at the latest bid price (in cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market pursuant to procedures adopted by the Trustees; and (2) all other portfolio securities for which over-the-counter market quotations are readily available are valued at the latest bid price. When market quotations are not readily available, including circumstances under which it is determined by the Investment Manager that sale or bid prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. For valuation purposes, quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the New York Stock Exchange. Short-term debt securities with remaining maturities of sixty days or less at the time of purchase are valued at amortized cost, unless the Trustees determine such does not reflect the securities' market value, in which case these securities will be valued at their fair value as determined by the Trustees. Certain of the Fund's portfolio securities may be valued by an outside pricing service approved by the Fund's Trustees. The pricing service may utilize a matrix system incorporating security quality, maturity and coupon as the evaluation model parameters, and/or research evaluations by its staff, including review of broker-dealer market price quotations in determining what it believes is the fair valuation of the portfolio securities valued by such pricing service. 31 Listed options on debt securities are valued at the latest sale price on the exchange on which they are listed unless no sales of such options have taken place that day, in which case they will be valued at the mean between their latest bid and asked prices. Unlisted options on debt securities and all options on equity securities are valued at the mean between their latest bid and asked prices. Futures are valued at the latest sale price on the commodities exchange on which they trade unless the Trustees determine such price does not reflect their market value, in which case they will be valued at their fair value as determined in good faith under procedures established by and under the supervision of the Trustees. Generally, trading in foreign securities, as well as corporate bonds, U.S. Government securities and money market instruments, is substantially completed each day at various times prior to the close of the New York Stock Exchange. The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the New York Stock Exchange. Occasionally, events which may affect the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the New York Stock Exchange and will therefore not be reflected in the computation of the Fund's net asset value. If events that may affect the value of such securities occur during such period, then these securities may be valued at their fair value as determined in good faith under procedures established by and under the supervision of the Trustees. IX. TAXATION OF THE FUND AND SHAREHOLDERS - -------------------------------------------------------------------------------- The Fund generally will make two basic types of distributions: ordinary dividends and long-term capital gain distributions. These two types of distributions are reported differently on a shareholder's income tax return and they are also subject to different rates of tax. The tax treatment of the investment activities of the Fund will affect the amount and timing and character of the distributions made by the Fund. Tax issues relating to the Fund are not generally a consideration for shareholders such as tax-exempt entities and tax-advantaged retirement vehicles such as an IRA or 401(k) plan. Shareholders are urged to consult their own tax professionals regarding specific questions as to federal, state or local taxes. INVESTMENT COMPANY TAXATION. The Fund intends to remain qualified as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986. As such, the Fund will not be subject to federal income tax on its net investment income and capital gains, if any, to the extent that it distributes such income and capital gains to its shareholders. The Fund generally intends to distribute sufficient income and gains so that the Fund will not pay corporate income tax on its earnings. The Fund also generally intends to distribute to its shareholders in each calendar year a sufficient amount of ordinary income and capital gains to avoid the imposition of a 4% excise tax. However, the Fund may instead determine to retain all or part of any net long-term capital gains in any year for reinvestment. In such event, the Fund will pay federal income tax (and possibly excise tax) on such retained gains. Gains or losses on sales of securities by the Fund will be long-term capital gains or losses if the securities have a tax holding period of more than one year at the time of such sale. Gains or losses on the sale of securities with a tax holding period of one year or less will be short-term capital gains or losses. Special tax rules may change the normal treatment of gains and losses recognized by the Fund when the Fund invests in forward foreign currency exchange contracts, options, futures transactions, and non-U.S. corporations classified as "passive foreign investment companies". Those special tax rules can, among other things, affect the treatment of capital gain or loss as long-term or short-term and may result in ordinary income or loss rather than capital gain or loss. The application of these special rules would therefore also affect the character of distributions made by the Fund. Under certain tax rules, the Fund may be required to accrue a portion of any discount at which certain securities are purchased as income each year even though the Fund receives no payments in cash on the security during the year. To the extent that the Fund invests in such securities, it would be required to pay out such accrued income as an income distribution in each year in order to avoid taxation at the Fund level. Such distributions will be made from the available cash of the Fund or by liquidation of portfolio securities if necessary. If a distribution of cash necessitates the liquidation of portfolio securities, the Investment Manager will select which securities to sell. The Fund may realize a 32 gain or loss from such sales. In the event the Fund realizes net capital gains from such transactions, its shareholders may receive a larger capital gain distribution, if any, than they would in the absence of such transactions. TAXATION OF DIVIDENDS AND DISTRIBUTIONS. Shareholders normally will have to pay federal income taxes, and any state and/or local income taxes, on the dividends and other distributions they receive from the Fund. Such dividends and distributions, to the extent that they are derived from net investment income or short-term capital gains, are taxable to the shareholder as ordinary income regardless of whether the shareholder receives such payments in additional shares or in cash. Distributions of net long-term capital gains, if any, are taxable to shareholders as long-term capital gains regardless of how long a shareholder has held the Fund's shares and regardless of whether the distribution is received in additional shares or in cash. Under current law, the maximum tax rate on long- term capital gains realized by non-corporate shareholders generally is 20%. A special lower tax rate of 18% on long-term capital gains is available to non-corporate shareholders to the extent the distributions of long-term capital gains are derived from securities which the Fund purchased after December 31, 2000, and held for more than five years. 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. Shareholders who are not citizens or residents of the United States and certain foreign entities may be subject to withholding of U.S. tax on distributions by the Fund of investment income and short-term capital gains. After the end of each calendar year, shareholders will be sent information on their dividends and capital gain distributions for tax purposes, including the portion taxable as ordinary income and 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 capital gains or losses and those held for more than one year generally result in long-term capital gains or losses. Under current law, the maximum tax rate on long-term capital gains realized by non-corporate shareholders is generally 20%. A special lower tax rate of 18% on long-term capital gains is available for non-corporate shareholders who purchased shares after December 31, 2000, and held such shares for more than five years. This special lower tax rate of 18% for five-year property does not apply to non-corporate shareholders holding Fund shares which were purchased on or prior to December 31, 2000, unless such shareholders make an election to treat the Fund shares as being sold and reacquired on January 1, 2001. A shareholder making such election may realize capital gains or losses. Any loss realized by shareholders upon a sale or redemption of shares within six months of the date of their purchase will be treated as a long-term capital loss to the extent of any distributions of net long-term capital gains with respect to such shares during the six-month period. Gain or loss on the sale or redemption of shares in the Fund is measured by the difference between the amount received and the tax basis of the shares. Shareholders should keep records of investments 33 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 Plan." XI. CALCULATION OF PERFORMANCE DATA - -------------------------------------------------------------------------------- From time to time, the Fund may quote its "yield" and/or "total return" in advertisements and sales literature. These figures are computed separately for Class A, Class B, Class C and Class D shares. Yield is calculated for any 30-day period as follows: the amount of interest income for each security in the Fund's portfolio is determined in accordance with regulatory requirements; the total for the entire portfolio constitutes the Fund's gross income for the period. Expenses accrued during the period are subtracted to arrive at "net investment income" of each Class. The resulting amount is divided by the product of the maximum offering price per share on the last day of the period multiplied by the average number of shares of the applicable Class outstanding during the period that were entitled to dividends. This amount is added to 1 and raised to the sixth power. 1 is then subtracted from the result and the difference is multiplied by 2 to arrive at the annualized yield. The yields for the 30-day period ended October 31, 2000, calculated pursuant to the formula described above, were 5.22%, 4.85%, 4.84% and 5.72% for Class A, Class B, Class C and Class D, respectively. These figures are computed separately for Class A, Class B, Class C and Class D shares. The Fund's "average annual total return" represents an annualization of the Fund's total return over a particular period and is computed by finding the annual percentage rate which will result in the ending redeemable value of a hypothetical $1,000 investment made at the beginning of a one, five or ten year period, or for the period from the date of commencement of operations, if shorter than any of the foregoing. The ending redeemable value is reduced by any contingent deferred sales charge ("CDSC") at the end of the one, five, ten year or other period. For the purpose of this calculation, it is assumed that all dividends and distributions are reinvested. The formula for computing the average annual total return involves a percentage obtained by dividing the ending redeemable value by the amount of the initial investment (which in the case of Class A shares is reduced by the Class A initial sales charge), taking a root of the quotient (where the root is equivalent to the number of years in the period) and subtracting 1 from the result. The average annual total returns for Class B for the one year, five year and ten year period ended October 31, 2000 were -11.69%, 2.34% and 3.56%, respectively. The average annual total returns of Class A for the fiscal year ended October 31, 2000 and for the period July 28, 1997 (inception of the Class) through October 31, 2000 were -10.69% and -1.83%, respectively. The average annual total returns of Class C for the fiscal year ended October 31, 2000 and for the period July 28, 1997 (inception of the Class) through October 31, 2000 were -8.19% and -1.11%, respectively. The average annual total returns of Class D for the fiscal year ended October 31, 2000 and for the period July 28, 1997 (inception of the Class) through October 31, 2000 were -6.52% and -0.24%, respectively. In addition, the Fund may advertise its total return for each Class over different periods of time by means of aggregate, average, year-by-year or other types of total return figures. These calculations may or may not reflect the imposition of the maximum front-end sales charge for Class A or the deduction of 34 the CDSC for each of Class B and Class C which, if reflected, would reduce the performance quoted. For example, the average annual total return of the Fund may be calculated in the manner described above, but without deduction for any applicable sales charge. Based on this calculation, the average annual total returns of Class B for the one year, five year and ten year periods ended October 31, 2000, were -7.32%, 2.62% and 3.56%, respectively. Based on this calculation, the average annual total returns of Class A for the fiscal year ended October 31, 2000 and for the period July 28, 1997 through October 31, 2000 were -6.73% and -0.51%, respectively, the average annual total returns of Class C for the fiscal year ended October 31, 2000 and for the period July 28, 1997 through October 31, 2000 were -7.32% and -1.11%, respectively, and the average annual total returns of Class D for the fiscal year ended October 31, 2000 and for the period July 28, 1997 through October 31, 2000 were -6.52% and - -0.24%, respectively. In addition, the Fund may compute its aggregate total return for each Class for specified periods by determining the aggregate percentage rate which will result in the ending value of a hypothetical $1,000 investment made at the beginning of the period. For the purpose of this calculation, it is assumed that all dividends and distributions are reinvested. The formula for computing aggregate total return involves a percentage obtained by dividing the ending value (without reduction for any sales charge) by the initial $1,000 investment and subtracting 1 from the result. Based on the foregoing calculation, the total returns for Class B for the one year, five year and ten year period ended October 31, 2000, were -7.32%, 13.81% and 41.90%, respectively. Based on the foregoing calculation, the total returns of Class A for the fiscal year ended October 31, 2000 and for the period July 28, 1997 through October 31, 2000 were - -6.73% and -1.66%, respectively, the total returns of Class C for the fiscal year ended October 31, 2000 and for the period July 28, 1997 through October 31, 2000 were -7.32% and -3.56%, respectively, and the total returns of Class D for the fiscal year ended October 31, 2000 and for the period July 28, 1997 through October 31, 2000 were -6.52% and -0.77%, respectively. The Fund may also advertise the growth of hypothetical investments of $10,000, $50,000 and $100,000 in each Class of shares of the Fund by adding 1 to the Fund's aggregate total return to date (expressed as a decimal and without taking into account the effect of any applicable CDSC) and multiplying by $9,575, $48,250 and $97,250 in the case of Class A (investments of $10,000, $50,000 and $100,000 adjusted for the initial sales charge) or by $10,000, $50,000 and $100,000 in the case of each of Class B, Class C and Class D, as the case may be. Investments of $10,000, $50,000 and $100,000 in each Class at inception of the Class would have grown or declined to the following amounts at October 31, 2000:
INVESTMENT AT INCEPTION OF: INCEPTION ------------------------------- CLASS DATE: $10,000 $50,000 $100,000 - ----- --------- -------- -------- --------- Class A............................................. 7/28/97 $ 9,416 $47,449 $ 95,636 Class B............................................. 3/30/89 16,984 84,920 169,840 Class C............................................. 7/28/97 9,644 48,220 96,440 Class D............................................. 7/28/97 9,923 49,615 99,230
The Fund from time to time may also advertise its performance relative to certain performance rankings and indexes compiled by recognized organizations. XII. FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- EXPERTS. The financial statements of the Fund for the fiscal year ended October 31, 2000 included in this STATEMENT OF ADDITIONAL INFORMATION and incorporated by reference in the PROSPECTUS have been so included and incorporated in reliance on the report of Deloitte & Touche LLP, independent auditors, given on the authority of said firm as experts in auditing and accounting. * * * * * This STATEMENT OF ADDITIONAL INFORMATION and the PROSPECTUS do not contain all of the information set forth in the REGISTRATION STATEMENT the Fund has filed with the SEC. The complete REGISTRATION STATEMENT may be obtained from the SEC. 35 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - -------------------------------------------------------------------------------------------------------------------------- GOVERNMENT & CORPORATE BONDS (89.9%) BELGIUM (5.6%) GOVERNMENT OBLIGATION EUR 4,250 Belgian Government Bond+.................................................... 8.50% 10/01/07 $ 4,211,323 ----------- CANADA (6.0%) GOVERNMENT OBLIGATION CAD 6,350 Government of Canada........................................................ 7.25 06/01/07 4,469,388 ----------- DENMARK (13.1%) FINANCE/RENTAL/LEASING (7.4%) DKK 24,306 Realkredit Denmark+......................................................... 6.00 10/01/29 2,603,887 29,357 Unikredit Realkredit+....................................................... 5.00 07/01/29 2,918,920 ----------- 5,522,807 ----------- GOVERNMENT OBLIGATIONS (5.7%) 25,000 Kingdom of Denmark.......................................................... 6.00 11/15/09 2,944,347 12,000 Kingdom of Denmark+......................................................... 9.00 11/15/00 1,370,846 ----------- 4,315,193 ----------- TOTAL DENMARK................................................................................. 9,838,000 ----------- GERMANY (0.6%) MAJOR BANKS GBP 300 Bayerische Hypo-Und Vereinsbank+............................................ 7.50 12/27/00 435,490 ----------- GREECE (14.4%) GOVERNMENT OBLIGATIONS GRD 1,000,000 Greece (Republic of)+....................................................... 8.70 04/08/05 2,778,270 1,500,000 Greece (Republic of)+....................................................... 9.70 05/27/01 3,819,651 1,650,000 Greece (Republic of)........................................................ 6.30 01/29/09 4,205,607 ----------- 10,803,528 ----------- LUXEMBOURG (2.1%) MAJOR BANKS EUR 1,850 European Investment Bank+................................................... 6.00 04/04/01 1,574,110 ----------- NORWAY (17.4%) GOVERNMENT OBLIGATIONS NOK 5,000 Norway (Kingdom of)+........................................................ 5.75 11/30/04 520,885 30,000 Norway (Kingdom of)+........................................................ 6.75 01/15/07 3,273,226 82,000 Norway (Kingdom of)+........................................................ 9.50 10/31/02 9,202,821 ----------- 12,996,932 -----------
SEE NOTES TO FINANCIAL STATEMENTS 36 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - -------------------------------------------------------------------------------------------------------------------------- UNITED KINGDOM (1.0%) MAJOR BANKS GBP 500 Union Bank of Switzerland................................................... 8.00% 01/08/07 $ 772,121 ----------- UNITED STATES (29.7%) FINANCIAL CONGLOMERATES (3.8%) 2,000 General Electric Capital Corp............................................... 6.25 09/01/09 2,880,998 ----------- GOVERNMENT AGENCIES & OBLIGATIONS (9.5%) AUD 2,400 Federal National Mortgage Assoc............................................. 6.50 07/10/02 1,246,620 $ 1,000 Federal National Mortgage Assoc............................................. 7.25 01/15/10 1,036,750 4,650 U.S. Treasury Bond*+........................................................ 13.125 05/15/01 4,811,402 ----------- 7,094,772 ----------- INTERNATIONAL BANKS (5.0%) GBP 2,500 KFW International Finance Inc............................................... 10.625 09/03/01 3,743,032 ----------- MAJOR BANKS (4.1%) 1,076 Morgan Guaranty Trust Co.................................................... 7.375 12/28/01 1,573,917 1,000 Morgan Guaranty Trust Co.+.................................................. 7.75 12/30/03 1,499,647 ----------- 3,073,564 ----------- MORTGAGE-BACKED SECURITIES (7.3%) $ 1,927 Government National Mortgage Assoc.......................................... 7.00 02/15/29- 08/15/29 1,899,864 3,533 Government National Mortgage Assoc.......................................... 8.00 12/15/29- 05/15/30 3,590,010 ----------- 5,489,874 ----------- TOTAL UNITED STATES........................................................................... 22,282,240 ----------- TOTAL GOVERNMENT & CORPORATE BONDS (COST $81,876,066)............................................................................ 67,383,132 ----------- SHORT-TERM INVESTMENTS (11.3%) UNITED STATES TIME DEPOSITS (a) (6.2%) MAJOR BANKS GRD 1,538,247 Bank of America............................................................. 7.70 11/21/00 3,843,888 EUR 984 Chase Manhattan Bank........................................................ 4.70 11/03/00 835,690 ----------- TOTAL TIME DEPOSITS (COST $5,340,835)............................................................................. 4,679,578 -----------
SEE NOTES TO FINANCIAL STATEMENTS 37 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - -------------------------------------------------------------------------------------------------------------------------- GOVERNMENT AGENCY (b) (5.1%) $ 3,800 Student Loan Marketing Assoc. (COST $3,800,000)......................................................... 6.45% 11/01/00 $ 3,800,000 ----------- TOTAL SHORT-TERM INVESTMENTS (COST $9,140,835)............................................................................. 8,479,578 -----------
TOTAL INVESTMENTS (COST $91,016,901) (C)..................................................................... 101.2% 75,862,710 LIABILITIES IN EXCESS OF OTHER ASSETS...................................................... (1.2) (878,761) ----- ------------ NET ASSETS................................................................................. 100.0% $ 74,983,949 ----- ------------ ----- ------------
- --------------------- * The market value of securities pledged to cover margin requirements for open futures contracts is $630,000. + Some or all of these securities are segregated in connection with open forward foreign currency contracts. (a) Subject to withdrawal restrictions until maturity. (b) Purchased on a discount basis. The interest rate shown has been adjusted to reflect a money market equivalent yield. (c) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $119,399 and the aggregate gross unrealized depreciation is $15,273,590, resulting in net unrealized depreciation of $15,154,191. SEE NOTES TO FINANCIAL STATEMENTS 38 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED FUTURE CONTRACTS OPEN AT OCTOBER 31, 2000:
UNDERLYING NUMBER OF DESCRIPTION, DELIVERY MONTH, FACE AMOUNT UNREALIZED CONTRACTS AND YEAR AT VALUE GAIN ------------------------------------------------------------------------------------- U.S Treasury Bond, December/2000 150 $14,976,563 $ 8,203 ============ ============
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCTOBER 31, 2000:
IN CONTRACTS EXCHANGE DELIVERY UNREALIZED TO DELIVER FOR DATE APPRECIATION - ------------------------------------------------------------------- $ 831,655 EUR 984,207 11/01/00 $ 4,035 GBP 559,315 $ 813,384 11/30/00 1,762 ------------ Net unrealized appreciation.................. $ 5,797 ============
CURRENCY ABBREVIATIONS: - ------------------------ AUD Australian Dollar. GBP British Pound. CAD Canadian Dollar. DKK Danish Krone. EUR Euro. GRD Greek Drachma. NOK Norwegian Krone.
SEE NOTES TO FINANCIAL STATEMENTS 39 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 2000 ASSETS: Investments in securities, at value (cost $91,016,901)........................................ $ 75,862,710 Unrealized appreciation on open forward foreign currency contracts............................ 5,797 Cash.......................................................................................... 163,003 Receivable for: Interest.................................................................................. 1,984,337 Shares of beneficial interest sold........................................................ 62,882 Prepaid expenses and other assets............................................................. 21,814 ------------ TOTAL ASSETS............................................................................. 78,100,543 ------------ LIABILITIES: Payable for: Shares of beneficial interest repurchased................................................. 1,974,682 Investments purchased..................................................................... 835,690 Investment management fee................................................................. 50,904 Plan of distribution fee.................................................................. 39,080 Accrued expenses and other payables........................................................... 216,238 ------------ TOTAL LIABILITIES........................................................................ 3,116,594 ------------ NET ASSETS............................................................................... $ 74,983,949 ============ COMPOSITION OF NET ASSETS: Paid-in-capital............................................................................... $107,003,165 Net unrealized depreciation................................................................... (15,239,395) Dividends in excess of net investment income.................................................. (79,858) Accumulated net realized loss................................................................. (16,699,963) ------------ NET ASSETS............................................................................... $ 74,983,949 ============ CLASS A SHARES: Net Assets.................................................................................... $ 24,216,402 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 3,469,748 NET ASSET VALUE PER SHARE................................................................ $6.98 ============ MAXIMUM OFFERING PRICE PER SHARE, (NET ASSET VALUE PLUS 4.44% OF NET ASSET VALUE)........................................ $7.29 ============ CLASS B SHARES: Net Assets.................................................................................... $ 43,537,700 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 6,221,835 NET ASSET VALUE PER SHARE................................................................ $7.00 ============ CLASS C SHARES: Net Assets.................................................................................... $667,516 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 95,529 NET ASSET VALUE PER SHARE................................................................ $6.99 ============ CLASS D SHARES: Net Assets.................................................................................... $6,562,331 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 937,357 NET ASSET VALUE PER SHARE................................................................ $7.00 ============
STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 2000 NET INVESTMENT INCOME: INTEREST INCOME............................................................................... $ 6,985,965 ------------ EXPENSES Investment management fee..................................................................... 661,679 Plan of distribution fee (Class A shares)..................................................... 58,120 Plan of distribution fee (Class B shares)..................................................... 455,501 Plan of distribution fee (Class C shares)..................................................... 6,493 Transfer agent fees and expenses.............................................................. 151,017 Professional fees............................................................................. 78,528 Shareholder reports and notices............................................................... 77,732 Registration fees............................................................................. 65,601 Trustees' fees and expenses................................................................... 17,776 Custodian fees................................................................................ 12,324 Other......................................................................................... 7,984 ------------ TOTAL EXPENSES........................................................................... 1,592,755 ------------ NET INVESTMENT INCOME:................................................................... 5,393,210 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on: Investments............................................................................... (6,679,390) Futures contracts......................................................................... 852,131 Foreign exchange transactions............................................................. 2,719,576 ------------ NET LOSS................................................................................. (3,107,683) ------------ Net change in unrealized appreciation/ depreciation on: Investments............................................................................... (8,557,404) Futures contracts......................................................................... (200,534) Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies....................................................... (233,035) ------------ NET DEPRECIATION......................................................................... (8,990,973) ------------ NET LOSS................................................................................. (12,098,656) ------------ NET DECREASE.................................................................................. $ (6,705,446) ============
SEE NOTES TO FINANCIAL STATEMENTS 40 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST FINANCIAL STATEMENTS, CONTINUED STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR FOR THE YEAR ENDED ENDED OCTOBER 31, 2000 OCTOBER 31, 1999 - ------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income................................................................ $ 5,393,210 $ 5,824,612 Net realized loss.................................................................... (3,107,683) (8,285,374) Net change in unrealized depreciation................................................ (8,990,973) (3,878,832) ------------ ------------ NET DECREASE.................................................................... (6,705,446) (6,339,594) ------------ ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class A shares................................................................... (1,286,492) (583,059) Class B shares................................................................... (2,117,644) (1,711,510) Class C shares................................................................... (30,348) (14,322) Class D shares................................................................... (199,689) (49,551) Paid-in-capital Class A shares................................................................... (576,179) (1,140,000) Class B shares................................................................... (948,425) (3,346,351) Class C shares................................................................... (13,592) (28,002) Class D shares................................................................... (89,435) (96,883) ------------ ------------ TOTAL DIVIDENDS AND DISTRIBUTIONS............................................... (5,261,804) (6,969,678) ------------ ------------ Net increase (decrease) from transactions in shares of beneficial interest........... (17,044,238) 33,226,526 ------------ ------------ NET INCREASE (DECREASE)......................................................... (29,011,488) 19,917,254 NET ASSETS: Beginning of period.................................................................. 103,995,437 84,078,183 ------------ ------------ END OF PERIOD (INCLUDING DIVIDENDS IN EXCESS OF NET INVESTMENT INCOME OF $79,858, AND $186,241 RESPECTIVELY).................................................................... $ 74,983,949 $103,995,437 ============ ============
SEE NOTES TO FINANCIAL STATEMENTS 41 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000 1. ORGANIZATION AND ACCOUNTING POLICIES Morgan Stanley Dean Witter World Wide Income Trust (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified, open-end management investment company. The Fund's primary investment objective is to provide a high level of current income and, as a secondary objective, seeks appreciation in the value of its assets. The Fund was organized as a Massachusetts business trust on October 14, 1988 and commenced operations on March 30, 1989. On July 28, 1997, the Fund converted to a multiple class share structure. The Fund offers Class A shares, Class B shares, Class C shares and Class D shares. The four classes are substantially the same except that most Class A shares are subject to a sales charge imposed at the time of purchase and some Class A shares, and most Class B shares and Class C shares are subject to a contingent deferred sales charge imposed on shares redeemed within one year, six years and one year, respectively. Class D shares are not subject to a sales charge. Additionally, Class A shares, Class B shares and Class C shares incur distribution expenses. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from these estimates. The following is a summary of significant accounting policies: A. VALUATION OF INVESTMENTS -- (1) all 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; (2) futures contracts are valued at the latest sale price on the commodities exchange on which it trades unless the Trustees determine that such price does not reflect their market value, in which case they will be valued at fair value as determined by the Trustees; (3) when market quotations are not readily available, including circumstances under which it is determined by Morgan Stanley Dean Witter Advisors Inc. (the "Investment Manager") that sale or bid prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Trustees (valuation of debt securities for which market quotations are not readily available may be based upon current market prices of securities which are comparable in coupon, rating and maturity or an appropriate matrix utilizing similar factors); (4) certain portfolio securities may be valued by an outside pricing service approved by the Trustees. The pricing service may utilize a matrix system 42 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED incorporating security quality, maturity and coupon as the evaluation model parameters, and/or research and evaluations by its staff, including review of broker-dealer market price quotations, if available, in determining what it believes is the fair valuation of the securities valued by such pricing service; and (5) short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their value on the 61st day. Short-term debt securities having a maturity date of sixty days or less at the time of purchase are valued at amortized cost. B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on security transactions are determined by the identified cost method. 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. FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities, other assets and liabilities and forward foreign currency contracts ("forward contracts") are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the exchange rates prevailing on the respective dates of such transactions. The resultant exchange gains and losses are included in the Statement of Operations as realized and unrealized gain/loss on foreign exchange transactions. Pursuant to U.S. Federal income tax regulations, certain foreign 43 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED exchange gains/losses included in realized and unrealized gain/loss are included in or are a reduction of ordinary income for federal income tax purposes. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of the securities. F. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward contracts which are valued daily at the appropriate exchange rates. The resultant unrealized exchange gains and losses are included in the Statement of Operations as unrealized foreign currency gain or loss. The Fund records realized gains or losses on delivery of the currency or at the time the forward contract is extinguished (compensated) by entering into a closing transaction prior to delivery. G. 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. H. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and distributions to its shareholders on the record date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income and net realized capital gains for tax purposes are reported as distributions of paid-in-capital. 2. INVESTMENT MANAGEMENT AGREEMENT Pursuant to an Investment Management Agreement, the Fund pays a management fee, accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund determined as of the close of each business day: 0.75% to the portion of daily net assets not exceeding $250 million; 0.60% to the portion of daily net assets exceeding $250 million but not exceeding $500 million; 0.50% to the portion of daily net assets exceeding $500 million but not exceeding $750 million; 0.40% to the portion of daily net assets exceeding $750 million but not exceeding $1 billion; and 0.30% to the portion of daily net assets exceeding $1 billion. 44 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED 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 -- 0.85% of the lesser of: (a) the average daily aggregate gross sales of the Class B shares since inception of the Fund (not including reinvestment of dividend or capital gain distributions) less the average daily aggregate net asset value of the Class B shares redeemed since the Fund's inception upon which a contingent deferred sales charge has been imposed or waived; or (b) the average daily net assets of Class B; and (iii) Class C -- up to 0.85% of the average daily net assets of Class C. In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by the Distributor but not yet recovered may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares. Although there is no legal obligation for the Fund to pay expenses incurred in excess of payments made to the Distributor under the Plan and the proceeds of contingent deferred sales charges paid by investors upon redemption of shares, if for any reason the Plan is terminated, the Trustees will consider at that time the manner in which to treat such expenses. The Distributor has advised the Fund that such excess amounts totaled $9,092,910 at October 31, 2000. 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 0.85% of the average daily net assets of Class A or Class C, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses representing a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other selected broker-dealer representatives may be reimbursed in the subsequent calendar year. For the year ended October 31, 2000, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.20% and 0.85%, respectively. The Distributor has informed the Fund that for the year ended October 31, 2000, it received contingent deferred sales charges from certain redemptions of the Fund's Class B shares and Class C 45 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED shares of $40,577 and $466, respectively, and received $462 in front-end sales charges from sales of the Fund's Class A shares. The respective shareholders pay such charges which are not an expense of the Fund. 4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the year ended October 31, 2000 aggregated $54,349,950, and $54,571,083, respectively. Included in the aforementioned are purchases and sales of U.S. Government securities of $12,564,677 and $13,161,448, respectively. Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and Distributor, is the Fund's transfer agent. At October 31, 2000, the Fund had transfer agent fees and expenses payable of approximately $200. The Fund has an unfunded noncontributory defined benefit pension plan covering all independent Trustees of the Fund who will have served as independent Trustees for at least five years at the time of retirement. Benefits under this plan are based on years of service and compensation during the last five years of service. Aggregate pension costs for the year ended October 31, 2000 included in Trustees' fees and expenses in the Statement of Operations amounted to $6,632. At October 31, 2000, the Fund had an accrued pension liability of $78,096 which is included in accrued expenses in the Statement of Assets and Liabilities. 5. FEDERAL INCOME TAX STATUS At October 31, 2000, the Fund had a net capital loss carryover of approximately $16,692,000, which may be used to offset future capital gains to the extent provided by regulations, which will be available through October 31 of the following years:
AMOUNTS IN THOUSANDS - ------------------------------------------------------------- 2001 2002 2004 2005 2007 2008 - ------ -------- -------- -------- -------- -------- $4,853 $5,322 $214 $471 $4,300 $1,532 ====== ====== ==== ==== ====== ======
Due to the Fund's acquisition of Morgan Stanley Dean Witter Global Short-Term Income Fund, utilization of this carryover is subject to limitations imposed by the Internal Revenue Code and Treasury Regulations, significantly reducing the total carryover available. 46 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED As of October 31, 2000, the Fund had permanent book/tax differences primarily attributable to foreign currency losses and an expired capital loss carryover. To reflect reclassifications arising from these differences, dividends in excess of net investment income was charged $1,652,654, paid-in-capital was credited $659,023 and accumulated net realized loss was credited $993,631. 6. SHARES OF BENEFICIAL INTEREST Transactions in shares of beneficial interest were as follows:
FOR THE YEAR FOR THE YEAR ENDED ENDED OCTOBER 31, 2000 OCTOBER 31, 1999 --------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT ----------- -------------- ----------- ------------ CLASS A SHARES Sold............................................................. 4,088,315 $ 30,496,900 1,815,359 $ 14,907,629 Reinvestment of dividends........................................ 139,433 1,039,705 126,396 1,038,579 Acquisition of Morgan Stanley Dean Witter Global Short-Term Income Fund..................................................... -- -- 4,683,780 40,215,931 Redeemed......................................................... (5,299,850) (39,523,297) (2,218,440) (18,155,151) ----------- ------------- ---------- ------------ Net increase (decrease) - Class A................................ (1,072,102) (7,986,692) 4,407,095 38,006,988 ----------- ------------- ---------- ------------ CLASS B SHARES Sold............................................................. 5,767,090 43,845,960 8,073,133 69,770,271 Reinvestment of dividends........................................ 249,379 1,863,870 356,189 3,038,854 Redeemed......................................................... (7,971,906) (60,348,308) (9,201,928) (79,010,074) ----------- ------------- ---------- ------------ Net decrease - Class B........................................... (1,955,437) (14,638,478) (772,606) (6,200,949) ----------- ------------- ---------- ------------ CLASS C SHARES Sold............................................................. 29,593 221,714 98,810 856,107 Reinvestment of dividends........................................ 5,115 38,063 4,130 34,529 Redeemed......................................................... (39,889) (298,005) (27,927) (229,069) ----------- ------------- ---------- ------------ Net increase (decrease) - Class C................................ (5,181) (38,228) 75,013 661,567 ----------- ------------- ---------- ------------ CLASS D SHARES Sold............................................................. 2,349,533 17,644,185 2,794,192 22,574,638 Reinvestment of dividends........................................ 22,216 163,189 13,041 106,851 Redeemed......................................................... (1,624,579) (12,188,214) (2,727,393) (21,922,569) ----------- ------------- ---------- ------------ Net increase - Class D........................................... 747,170 5,619,160 79,840 758,920 ----------- ------------- ---------- ------------ Net increase (decrease) in Fund.................................. (2,285,550) $ (17,044,238) 3,789,342 $ 33,226,526 =========== ============= ========== ============
7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS The Fund may enter into forward contracts to facilitate settlement of foreign currency denominated portfolio transactions or to manage its foreign currency exposure or to sell, for a fixed amount of U.S. dollars or other currency, the amount of foreign currency approximating the value of some or all of its holdings denominated in such foreign currency or an amount of foreign currency other than the 47 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED currency in which the securities to be hedged are denominated approximating the value of some or all of its holdings to be hedged. Additionally, when the Investment Manager anticipates purchasing securities at some time in the future, the Fund may enter into a forward contract to purchase an amount of currency equal to some or all the value of the anticipated purchase for a fixed amount of U.S. dollars or other currency. To hedge against adverse interest rate, foreign currency and market risks, the Fund may enter into written options on interest rate futures and interest rate futures contracts ("derivative investments"). Forward contracts and derivative instruments 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 foreign exchange rates underlying the forward contracts. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts. At October 31, 2000, there were outstanding forward contracts and futures contracts. 8. ACQUISITION OF MORGAN STANLEY DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC. As of the close of business on March 12, 1999, the Fund acquired all the net assets of Morgan Stanley Dean Witter Global Short-Term Income Fund Inc. ("Global Short-Term") pursuant to a plan of reorganization approved by the shareholders of Global Short-Term on February 24, 1999. The acquisition was accomplished by a tax-free exchange of 4,683,780 Class A shares of the Fund at a net asset value of $8.59 per share for 4,700,195 shares of Global Short-Term. The net assets of the Fund and Global Short-Term immediately before the acquisition were $80,419,774 and $40,215,931, respectively, including unrealized depreciation of $893,307 for Global Short-Term. Immediately after the acquisition, the combined net assets of the Fund amounted to $120,635,705. 9. FUND MERGER On October 26, 2000, the Trustees of the Fund and Morgan Stanley Dean Witter Diversified Income Trust ("Diversified") approved a plan of reorganization ("the Plan") whereby the Fund would be merged into Diversified. The Plan is subject to the consent of the Fund's shareholders. If approved, the assets of the Fund would be combined with the assets of Diversified and shareholders of the Fund would become shareholders of Diversified, receiving shares of the corresponding class of Diversified equal to the value of their holdings in the Fund. 48 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST FINANCIAL HIGHLIGHTS Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE PERIOD FOR THE YEAR ENDED OCTOBER 31 JULY 28, 1997* -------------------------------- THROUGH 2000 1999 1998 OCTOBER 31, 1997 - ------------------------------------------------------------------------------------------------------------------ CLASS A SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period........................ $ 7.98 $ 9.11 $ 9.02 $ 8.97 ------- ------- ------- ------- Income (loss) from investment operations: Net investment income.................................... 0.53 0.52 0.59 0.15 Net realized and unrealized gain (loss).................. (1.05) (1.02) 0.20 0.05 ------- ------- ------- ------- Total income (loss) from investment operations.............. (0.52) (0.50) 0.79 0.20 ------- ------- ------- ------- Less dividends and distributions from: Net investment income.................................... (0.33) (0.21) (0.70) (0.15) Paid-in-capital.......................................... (0.15) (0.42) -- -- ------- ------- ------- ------- Total dividends and distributions........................... (0.48) (0.63) (0.70) (0.15) ------- ------- ------- ------- Net asset value, end of period.............................. $ 6.98 $ 7.98 $ 9.11 $ 9.02 ======= ======= ======= ======= TOTAL RETURN+............................................... (6.73)% (5.56)% 9.16% 2.27%(1) RATIOS TO AVERAGE NET ASSETS: Expenses.................................................... 1.41 %(3) 1.48 %(3) 1.45%(3) 1.46%(2) Net investment income....................................... 6.49 %(3) 6.14 %(3) 6.63%(3) 6.69%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands..................... $24,216 $36,253 $1,227 $682 Portfolio turnover rate..................................... 73 % 144 % 309% 345%
- --------------------- * The date shares were first issued. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses. SEE NOTES TO FINANCIAL STATEMENTS 49 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST FINANCIAL HIGHLIGHTS, CONTINUED
FOR THE YEAR ENDED OCTOBER 31 ------------------------------------------------------ 2000++ 1999++ 1998++ 1997*++ 1996 - ------------------------------------------------------------------------------------------------------------------- CLASS B SHARES SELECTED PER SHARE DATA: Net asset value, beginning of period........................ $ 8.00 $ 9.12 $ 9.03 $ 9.33 $ 9.08 --------- ------- ------- --------- --------- Income (loss) from investment operations: Net investment income.................................... 0.48 0.47 0.53 0.55 0.60 Net realized and unrealized gain (loss).................. (1.05) (1.02) 0.20 0.07 0.48 --------- ------- ------- --------- --------- Total income (loss) from investment operations.............. (0.57) (0.55) 0.73 0.62 1.08 --------- ------- ------- --------- --------- Less dividends and distributions from: Net investment income.................................... (0.30) (0.19) (0.64) (0.92) (0.83) Paid-in-capital.......................................... (0.13) (0.38) -- -- -- --------- ------- ------- --------- --------- Total dividends and distributions........................... (0.43) (0.57) (0.64) (0.92) (0.83) --------- ------- ------- --------- --------- Net asset value, end of period.............................. $ 7.00 $ 8.00 $ 9.12 $ 9.03 $ 9.33 ========= ======= ======= ========= ========= TOTAL RETURN+............................................... (7.32)% (6.20)% 8.61% 7.05% 12.60% RATIOS TO AVERAGE NET ASSETS: Expenses.................................................... 2.06 %(1) 2.09 %(1) 2.07%(1) 2.02% 1.96% Net investment income....................................... 5.84 %(1) 5.53 %(1) 6.01%(1) 6.07% 6.39% SUPPLEMENTAL DATA: Net assets, end of period, in thousands..................... $43,538 $65,415 $81,611 $94,556 $114,022 Portfolio turnover rate..................................... 73 % 144 % 309% 345% 263%
- --------------------- * Prior to July 28, 1997, the Fund issued one class of shares. All shares of the Fund held prior to that date have been designated as Class B shares. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Reflects overall Fund ratios for investment income and non-class specific expenses. SEE NOTES TO FINANCIAL STATEMENTS 50 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST FINANCIAL HIGHLIGHTS, CONTINUED
FOR THE PERIOD FOR THE YEAR ENDED OCTOBER 31 JULY 28, 1997* ------------------------------- THROUGH 2000 1999 1998 OCTOBER 31, 1997 - -------------------------------------------------------------------------------------------------------------- CLASS C SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period........................ $ 7.99 $ 9.11 $ 9.02 $ 8.97 ------- ------- ------- --------- Income (loss) from investment operations: Net investment income.................................... 0.47 0.47 0.53 0.14 Net realized and unrealized gain (loss).................. (1.04) (1.02) 0.20 0.05 ------- ------- ------- --------- Total income (loss) from investment operations.............. (0.57) (0.55) 0.73 0.19 ------- ------- ------- --------- Less dividends and distributions from: Net investment income.................................... (0.30) (0.19) (0.64) (0.14) Paid-in-capital.......................................... (0.13) (0.38) -- -- ------- ------- ------- --------- Total dividends and distributions........................... (0.43) (0.57) (0.64) (0.14) ------- ------- ------- --------- Net asset value, end of period.............................. $ 6.99 $ 7.99 $ 9.11 $ 9.02 ======= ======= ======= ========= TOTAL RETURN+............................................... (7.32)% (6.19)% 8.62% 2.12%(1) RATIOS TO AVERAGE NET ASSETS: Expenses.................................................... 2.06 %(3) 2.09 %(3) 2.07%(3) 2.00%(2) Net investment income....................................... 5.84 %(3) 5.53 %(3) 6.01%(3) 5.89%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands..................... $668 $805 $234 $111 Portfolio turnover rate..................................... 73 % 144 % 309% 345%
- --------------------- * The date shares were first issued. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses. SEE NOTES TO FINANCIAL STATEMENTS 51 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST FINANCIAL HIGHLIGHTS, CONTINUED
FOR THE PERIOD FOR THE YEAR ENDED OCTOBER 31 JULY 28, 1997* -------------------------------- THROUGH 2000 1999 1998 OCTOBER 31, 1997 - ------------------------------------------------------------------------------------------------------------------ CLASS D SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period........................ $ 8.01 $ 9.12 $ 9.03 $ 8.97 ------- ------- ------- ------- Income (loss) from investment operations: Net investment income.................................... 0.51 0.53 0.72 0.16 Net realized and unrealized gain (loss).................. (1.03) (0.99) 0.09 0.05 ------- ------- ------- ------- Total income (loss) from investment operations.............. (0.52) (0.46) 0.81 0.21 ------- ------- ------- ------- Less dividends and distributions from: Net investment income.................................... (0.34) (0.22) (0.72) (0.15) Paid-in-capital.......................................... (0.15) (0.43) -- -- ------- ------- ------- ------- Total dividends and distributions........................... (0.49) (0.65) (0.72) (0.15) ------- ------- ------- ------- Net asset value, end of period.............................. $ 7.00 $ 8.01 $ 9.12 $ 9.03 ======= ======= ======= ======= TOTAL RETURN+............................................... (6.52)% (5.29)% 9.41% 2.44%(1) RATIOS TO AVERAGE NET ASSETS: Expenses.................................................... 1.21 %(3) 1.24 %(3) 1.22%(3) 1.16%(2) Net investment income....................................... 6.69 %(3) 6.38 %(3) 6.86%(3) 6.83%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands..................... $6,562 $1,523 $1,006 $39 Portfolio turnover rate..................................... 73 % 144 % 309% 345%
- --------------------- * The date shares were first issued. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses. SEE NOTES TO FINANCIAL STATEMENTS 52 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST: We have audited the accompanying statement of assets and liabilities of Morgan Stanley Dean Witter World Wide Income Trust (the "Fund"), including the portfolio of investments, as of October 31, 2000, and the related statements of operations and changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The statement of changes in net assets for the year ended October 31, 1999 and the financial highlights for each of the respective stated periods ended October 31, 1999 were audited by other independent accountants whose report, dated December 13, 1999, expressed an unqualified opinion on that statement and financial highlights. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Morgan Stanley Dean Witter World Wide Income Trust as of October 31, 2000, the results of its operations, the changes in its net assets, and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP NEW YORK, NEW YORK DECEMBER 5, 2000 2000 FEDERAL TAX NOTICE (UNAUDITED) Of the Fund's ordinary income dividends paid during the fiscal year ended October 31, 2000, 17.93% was attributable to qualifying Federal obligations. Please consult your tax advisor to determine if any portion of the dividends you received is exempt from state income tax. 53 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST CHANGE IN INDEPENDENT ACCOUNTANTS On July 1, 2000 PricewaterhouseCoopers LLP resigned as independent accountants of the Fund. The reports of PricewaterhouseCoopers LLP on the financial statements of the Fund for the past two fiscal years contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle. In connection with its audits for the two most recent fiscal years and through July 1, 2000, there have been no disagreements with PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of PricewaterhouseCoopers LLP would have caused them to make reference thereto in their report on the financial statements for such years. The Fund, with the approval of its Board of Directors and its Audit Committee, engaged Deloitte & Touche LLP as its new independent auditors as of July 1, 2000. 54 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST REPORT OF INDEPENDENT ACCOUNTANTS TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST In our opinion, the statement of changes in net assets and the financial highlights of Morgan Stanley Dean Witter World Wide Income Trust (the "Fund") (not presented separately herein) present fairly, in all material respects, the changes in its net assets for the year ended October 31, 1999 and the financial highlights for each of the years in the period ended October 31, 1999, in conformity with generally accepted accounting principles. This financial statement and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. We have not audited the financial statements or financial highlights of the Fund for any period subsequent to October 31, 1999. PricewaterhouseCoopers LLP 1177 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10036 DECEMBER 13, 1999 55 MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST PART C OTHER INFORMATION ITEM 23. EXHIBITS 1 (a). Declaration of Trust of the Registrant, dated October 13, 1988, is incorporated by reference to Exhibit 1 of Post-Effective Amendment No. 8 to the Registration Statement on Form N-1A, filed on January 25, 1996. 1 (b). Amendment, dated June 22, 1998, to the Declaration of Trust of the Registrant is incorporated by reference to Exhibit 1 of Post- Effective Amendment No. 12 to the Registration Statement on Form N-1A, filed on December 24, 1998. 1 (c). Instrument Establishing and Designating Additional Classes of Shares, dated July 28, 1997, is incorporated by reference to Exhibit 1 of Post-Effective Amendment No. 10 to the Registration Statement on Form N-1A, filed on July 17, 1997. 2. Amended and Restated By-Laws of the Registrant, dated May 1, 1999, are incorporated by reference to Exhibit 2 of Post-Effective Amendment No. 13 to the Registration Statement on Form N-1A, filed on January 28, 2000. 3. Not applicable. 4. Amended Investment Management Agreement between the Registrant and Morgan Stanley Dean Witter Advisors Inc., dated April 30, 1998, is incorporated by reference to Exhibit 6 of the Registration Statement on Form N-14, filed on November 3, 1998. 5 (a). Amended Distribution Agreement between the Registrant and Morgan Stanley Dean Witter Distributors Inc., dated June 22, 1998, is incorporated by reference to Exhibit 7(a) of the Initial Registration Statement on Form N-14, filed on November 3, 1998. 5 (b). Selected Dealer Agreement between Morgan Stanley Dean Witter Distributors Inc. and Dean Witter Reynolds Inc., dated January 4, 1993, is incorporated by reference to Exhibit 6 of Post-Effective Amendment No. 8 to the Registration Statement on Form N-1A, filed on January 25, 1996. 5 (c). Omnibus Selected Dealer Agreement between Morgan Stanley Dean Witter Distributors Inc. and National Financial Services Corporation, dated October 17, 1998, is incorporated by reference to Exhibit 6 of Post-Effective Amendment No. 12 to the Registration Statement on Form N-1A, filed on December 24, 1998. 6. Amended and Restated Retirement Plan for Non-Interested Trustees or Directors, dated May 8, 1997, is incorporated by reference to Exhibit 6 of Post-Effective Amendment No. 13 to the Registration Statement on Form N-1A, filed on January 28, 2000. 7 (a). Custodian Agreement between The Chase Manhattan Bank and the Registrant, dated September 20, 1991, is incorporated by reference to Exhibit 8 of Post-Effective Amendment No. 8 to the Registration Statement on Form N-1A, filed on January 25, 1996. 8 (a). Amended and Restated Transfer Agency and Service Agreement between the Registrant and Morgan Stanley Dean Witter Trust FSB, dated September 1, 2000, filed herein. 8 (b). Amended Services Agreement between Morgan Stanley Dean Witter Advisors Inc. and Morgan Stanley Dean Witter Services Company Inc., dated June 22, 1998, is incorporated by reference to Exhibit 13 of the Initial Registration Statement on Form N-14, filed on November 3, 1998. 9 (a). Opinion of Sheldon Curtis, Esq., dated February 3, 1989, is incorporated by reference to Exhibit 9(a) of Post-Effective Amendment No. 13 to the Registration Statement on Form N-1A, filed on January 28, 2000. 9 (b). Opinion of Gaston & Snow, Massachusetts Counsel, dated February 3, 1989, is incorporated by reference to Exhibit 9(b) of Post- Effective Amendment No. 13 to the Registration Statement on Form N-1A, filed on January 28, 2000. 10(a). Consent of Independent Auditors, filed herein. 10(b). Consent of PricewaterhouseCoopers LLP, filed herein. 11. Not applicable. 12. Not applicable. 13. Amended and Restated Plan of Distribution pursuant to Rule 12b-1 between the Registrant and Morgan Stanley Dean Witter Distributors Inc., dated July 28, 1997, is incorporated by reference to Exhibit 15 of Post-Effective Amendment No. 10 to the Registration Statement on Form N-1A, filed on July 17, 1997. 15. Amended Multiple Class Plan pursuant to Rule 18f-3, dated December 1, 2000, filed herein. 16(a). Code of Ethics of Morgan Stanley Dean Witter Advisors Inc., Morgan Stanley Dean Witter Services Company Inc. and Morgan Stanley Dean Witter Distributors Inc., filed herein. 16(b). Code of Ethics of the Morgan Stanley Dean Witter Funds, filed herein. Other. Powers of Attorney of Trustees are incorporated by reference to Exhibit (Other) of Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A, filed on February 6, 1989, Post-Effective Amendment No. 7 to the Registration Statement on Form N-1A, filed on December 23, 1994 and Post-Effective Amendment No. 11 to the Registration Statement on Form N-1A, filed on February 6, 1998. Power of Attorney for James F. Higgins, filed herein. Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND. None Item 25. INDEMNIFICATION. Pursuant to Section 5.3 of the Registrant's Declaration of Trust and under Section 4.8 of the Registrant's By-Laws, the indemnification of the Registrant's trustees, officers, employees and agents is permitted if it is determined that they acted under the belief that their actions were in or not opposed to the best interest of the Registrant, and, with respect to any criminal proceeding, they had reasonable cause to believe their conduct was not unlawful. In addition, indemnification is permitted only if it is determined that the actions in question did not render them liable by reason of willful misfeasance, bad faith or gross negligence in the performance of their duties or by reason of reckless disregard of their obligations and duties to the Registrant. Trustees, officers, employees and agents will be indemnified for the expense of litigation if it is determined that they are entitled to indemnification against any liability established in such litigation. The Registrant may also advance money for these expenses provided that they give their undertakings to repay the Registrant unless their conduct is later determined to permit indemnification. Pursuant to Section 5.2 of the Registrant's Declaration of Trust and paragraph 8 of the Registrant's Investment Management Agreement, neither the Investment Manager nor any trustee, officer, employee or agent of the Registrant shall be liable for any action or failure to act, except in the case of bad faith, willful misfeasance, gross negligence or reckless disregard of duties to the Registrant. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer, or controlling person of the Registrant in connection with the successful defense of any action, suit or proceeding) is asserted against the Registrant by such trustee, officer or controlling person in connection with the shares being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act, and will be governed by the final adjudication of such issue. The Registrant hereby undertakes that it will apply the indemnification provision of its by-laws in a manner consistent with Release 11330 of the Securities and Exchange Commission under the Investment Company Act of 1940, so long as the interpretation of Sections 17(h) and 17(i) of such Act remains in effect. Registrant, in conjunction with the Investment Manager, Registrant's Trustees, and other registered investment management companies managed by the Investment Manager, maintains insurance on behalf of any person who is or was a Trustee, officer, employee, or agent of Registrant, or who is or was serving at the request of Registrant as a trustee, director, officer, employee or agent of another trust or corporation, against any liability asserted against him and incurred by him or arising out of his position. However, in no event will Registrant maintain insurance to indemnify any such person for any act for which Registrant itself is not permitted to indemnify him. Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR See "The Fund and Its Management" in the Prospectus regarding the business of the investment advisor. The following information is given regarding officers of Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"). MSDW Advisors is a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co. The term "Morgan Stanley Dean Witter Funds" refers to the following registered investment companies: CLOSED-END INVESTMENT COMPANIES (1) Morgan Stanley Dean Witter California Insured Municipal Income Trust (2) Morgan Stanley Dean Witter California Quality Municipal Securities (3) Morgan Stanley Dean Witter Government Income Trust (4) Morgan Stanley Dean Witter High Income Advantage Trust (5) Morgan Stanley Dean Witter High Income Advantage Trust II (6) Morgan Stanley Dean Witter High Income Advantage Trust III (7) Morgan Stanley Dean Witter Income Securities Inc. (8) Morgan Stanley Dean Witter Insured California Municipal Securities (9) Morgan Stanley Dean Witter Insured Municipal Bond Trust (10) Morgan Stanley Dean Witter Insured Municipal Income Trust (11) Morgan Stanley Dean Witter Insured Municipal Securities (12) Morgan Stanley Dean Witter Insured Municipal Trust (13) Morgan Stanley Dean Witter Municipal Income Opportunities Trust (14) Morgan Stanley Dean Witter Municipal Income Opportunities Trust II (15) Morgan Stanley Dean Witter Municipal Income Opportunities Trust III (16) Morgan Stanley Dean Witter Municipal Income Trust (17) Morgan Stanley Dean Witter Municipal Income Trust II (18) Morgan Stanley Dean Witter Municipal Income Trust III (19) Morgan Stanley Dean Witter Municipal Premium Income Trust (20) Morgan Stanley Dean Witter New York Quality Municipal Securities (21) Morgan Stanley Dean Witter Prime Income Trust (22) Morgan Stanley Dean Witter Quality Municipal Income Trust (23) Morgan Stanley Dean Witter Quality Municipal Investment Trust (24) Morgan Stanley Dean Witter Quality Municipal Securities OPEN-END INVESTMENT COMPANIES (1) Active Assets California Tax-Free Trust (2) Active Assets Government Securities Trust (3) Active Assets Institutional Money Trust (4) Active Assets Money Trust (5) Active Assets Premier Money Trust (6) Active Assets Tax-Free Trust (7) Morgan Stanley Dean Witter 21st Century Trend Fund (8) Morgan Stanley Dean Witter Aggressive Equity Fund (9) Morgan Stanley Dean Witter All Star Growth Fund (10) Morgan Stanley Dean Witter American Opportunities Fund (11) Morgan Stanley Dean Witter Balanced Growth Fund (12) Morgan Stanley Dean Witter Balanced Income Fund (13) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust (14) Morgan Stanley Dean Witter California Tax-Free Income Fund (15) Morgan Stanley Dean Witter Capital Growth Securities (16) Morgan Stanley Dean Witter Competitive Edge Fund, "Best Ideas Portfolio" (17) Morgan Stanley Dean Witter Convertible Securities Trust (18) Morgan Stanley Dean Witter Developing Growth Securities Trust (19) Morgan Stanley Dean Witter Diversified Income Trust (20) Morgan Stanley Dean Witter Dividend Growth Securities Inc. (21) Morgan Stanley Dean Witter Equity Fund (22) Morgan Stanley Dean Witter European Growth Fund Inc. (23) Morgan Stanley Dean Witter Federal Securities Trust (24) Morgan Stanley Dean Witter Financial Services Trust (25) Morgan Stanley Dean Witter Fund of Funds (26) Morgan Stanley Dean Witter Global Dividend Growth Securities (27) Morgan Stanley Dean Witter Global Utilities Fund (28) Morgan Stanley Dean Witter Growth Fund (29) Morgan Stanley Dean Witter Hawaii Municipal Trust (30) Morgan Stanley Dean Witter Health Sciences Trust (31) Morgan Stanley Dean Witter High Yield Securities Inc. (32) Morgan Stanley Dean Witter Income Builder Fund (33) Morgan Stanley Dean Witter Information Fund (34) Morgan Stanley Dean Witter Intermediate Income Securities (35) Morgan Stanley Dean Witter International Fund (36) Morgan Stanley Dean Witter International SmallCap Fund (37) Morgan Stanley Dean Witter Japan Fund (38) Morgan Stanley Dean Witter Latin American Growth Fund (39) Morgan Stanley Dean Witter Limited Term Municipal Trust (40) Morgan Stanley Dean Witter Liquid Asset Fund Inc. (41) Morgan Stanley Dean Witter Market Leader Trust (42) Morgan Stanley Dean Witter Mid-Cap Equity Trust (43) Morgan Stanley Dean Witter Multi-State Municipal Series Trust (44) Morgan Stanley Dean Witter Natural Resource Development Securities Inc. (45) Morgan Stanley Dean Witter New Discoveries Fund (46) Morgan Stanley Dean Witter New York Municipal Money Market Trust (47) Morgan Stanley Dean Witter New York Tax-Free Income Fund (48) Morgan Stanley Dean Witter Next Generation Trust (49) Morgan Stanley Dean Witter North American Government Income Trust (50) Morgan Stanley Dean Witter Pacific Growth Fund Inc. (51) Morgan Stanley Dean Witter Real Estate Fund (52) Morgan Stanley Dean Witter S&P 500 Index Fund (53) Morgan Stanley Dean Witter S&P 500 Select Fund (54) Morgan Stanley Dean Witter Select Dimensions Investment Series (55) Morgan Stanley Dean Witter Select Municipal Reinvestment Fund (56) Morgan Stanley Dean Witter Short-Term Bond Fund (57) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust (58) Morgan Stanley Dean Witter Small Cap Growth Fund (59) Morgan Stanley Dean Witter Special Value Fund (60) Morgan Stanley Dean Witter Strategist Fund (61) Morgan Stanley Dean Witter Tax-Exempt Securities Trust (62) Morgan Stanley Dean Witter Tax-Free Daily Income Trust (63) Morgan Stanley Dean Witter Tax-Managed Growth Fund (64) Morgan Stanley Dean Witter Technology Fund (65) Morgan Stanley Dean Witter Total Market Index Fund (66) Morgan Stanley Dean Witter Total Return Trust (67) Morgan Stanley Dean Witter U.S. Government Money Market Trust (68) Morgan Stanley Dean Witter U.S. Government Securities Trust (69) Morgan Stanley Dean Witter Utilities Fund (70) Morgan Stanley Dean Witter Value-Added Market Series (71) Morgan Stanley Dean Witter Value Fund (72) Morgan Stanley Dean Witter Variable Investment Series (73) Morgan Stanley Dean Witter World Wide Income Trust
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; Executive Vice President and Director of Dean Witter Reynolds Inc. ("DWR"); Director of various MSDW subsidiaries; Trustee of various Van Kampen investment companies. Barry Fink General Counsel of Asset Management of MSDW; Executive Executive Vice President, Vice President, Secretary, General Counsel and Director Secretary, General Counsel of MSDW Services; Vice President and Secretary of MSDW and Director Distributors; Vice President, Secretary and General Counsel of the Morgan Stanley Dean Witter Funds. Joseph J. McAlinden Vice President of the Morgan Stanley Dean Witter Funds; Executive Vice President Director of MSDW Trust. and Chief Investment Officer Ronald E. Robison Executive Vice President, Chief Administrative Officer Executive Vice President, and Director of MSDW Services; Vice President of the Chief Administrative Morgan Stanley Dean Witter Funds. Officer and Director Edward C. Oelsner, III Executive Vice President Joseph R. Arcieri Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. Peter M. Avelar Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. and Director of the High Yield Group 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 - ----------------------- ------------------------------------------------ Mark Bavoso Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. Douglas Brown Senior Vice President Rosalie Clough Senior Vice President and Director of Marketing Richard G. DeSalvo Senior Vice President and Director of Investment Management Services Richard Felegy Senior Vice President Sheila A. Finnerty Vice President of Morgan Stanley Dean Witter Prime Senior Vice President Income Trust. Edward F. Gaylor Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. Director of the Research Group Robert S. Giambrone Senior Vice President of MSDW Services, MSDW Senior Distributors and MSDW Trust and Director of MSDW Trust; Vice President of the Morgan Stanley Dean Witter Funds. Rajesh K. Gupta Management and Vice President of various Morgan Stanley Senior Vice President Dean Witter Funds. Director of the Taxable Fixed Income Group and Chief Administrative Officer - Investments Kenton J. Hinchliffe Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. Kevin Hurley Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. Jenny Beth Jones Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. Michelle Kaufman Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. 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 B. Kemp, III President of MSDW Distributors. Senior Vice President Anita H. Kolleeny Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. and Director of Sector Rotation Lou Anne D. McInnis Senior Vice President and Assistant Secretary of MSDW Senior Vice President and Services; Assistant Secretary of MSDW Distributors and Assistant Secretary the Morgan Stanley Dean Witter Funds. Carsten Otto Senior Vice President and Assistant Secretary of MSDW Senior Vice President Services; Assistant Secretary of MSDW Distributors and and Assistant Secretary the Morgan Stanley Dean Witter Funds. Jonathan R. Page Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. and Director of the Money. Market Group Ira N. Ross Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. Ruth Rossi Senior Vice President and Assistant Secretary of MSDW Senior Vice President and Services; Assistant Secretary of MSDW Distributors and Assistant Secretary the Morgan Stanley Dean Witter Funds. Guy G. Rutherfurd, Jr. Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. and Director of the Growth Group Rochelle G. Siegel Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. James Solloway Jr. Senior Vice President Katherine H. Stromberg Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. Paul D. Vance Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. and Director of the Growth and Income Group 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 - ----------------------- ------------------------------------------------ Elizabeth A. Vetell Senior Vice President and Director of Shareholder Communication James P. Wallin Senior Vice President James F. Willison Vice President of various Morgan Stanley Dean Witter Senior Vice President Funds. and Director of the Tax-Exempt Fixed Income Group Raymond A. Basile First Vice President Thomas F. Caloia First Vice President and Assistant Treasurer of MSDW First Vice President Services; Assistant Treasurer of MSDW Distributors; and Assistant Treasurer and Chief Financial and Accounting Officer of Treasurer the Morgan Stanley Dean Witter Funds. Thomas Chronert First Vice President Richard Colville First Vice President and Controller of MSDW Services; First Vice President Assistant Treasurer of MSDW Distributors; First Vice and Controller President and Treasurer of MSDW Trust. Marilyn K. Cranney Assistant Secretary of DWR; First Vice President and First Vice President Assistant Secretary of MSDW Services; Assistant Secretary and Assistant Secretary of MSDW Distributors and the Morgan Stanley Dean Witter Funds. Salvatore DeSteno First Vice President of MSDW Services. First Vice President David Johnson First Vice President Stanley Kapica First Vice President Douglas J. Ketterer First Vice President Todd Lebo First Vice President and Assistant Secretary of MSDW First Vice President and Services; Assistant Secretary of MSDW Distributors and Assistant Secretary the Morgan Stanley Dean 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 - ----------------------- ------------------------------------------------ Carl F. Sadler First Vice President Robert Abreu Vice President Dale Albright Vice President Joan G. Allman Vice President Andrew Arbenz Vice President of Morgan Stanley Dean Witter Global Vice President Utilities Fund. Sean Aurigemma Vice President Armon Bar-Tur Vice President of various Morgan Stanley Dean Witter Vice President Funds. Thomas A. Bergeron Vice President Philip Bernstein Vice President Dale Boettcher Vice President Michelina Calandrella Vice President Ronald Caldwell Vice President Joseph Cardwell Vice President Christie Carr-Waldron Vice President Liam Carroll Vice President Philip Casparius 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 - ----------------------- ------------------------------------------------ Annette Celenza Vice President Aaron Clark Vice President of Morgan Stanley Dean Witter Market Vice President Leader Trust William Connerly Vice President Virginia Connors Vice President Michael J. Davey Vice President David Dineen Vice President of various Morgan Stanley Dean Witter Vice President Funds. Michele Eng Vice President June Ewers Vice President Jeffrey D. Geffen Vice President of Morgan Stanley Dean Witter U.S. Vice President Government Securities Trust Sandra Gelpieryn Vice President Charmaine George Vice President Michael Geringer Vice President Gail Gerrity Burke Vice President Peter Gewirtz Vice President Mina Gitsevich Vice President Ellen Gold 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 - ---------------------- ------------------------------------------------ Amy Golub Vice President Stephen Greenhut Vice President Joan Hamilton Vice President Trey Hancock Vice President Matthew T. Haynes Vice President of various Morgan Stanley Dean Witter Vice President Funds. Peter Hermann Jr. Vice President of various Morgan Stanley Dean Witter Vice President Funds. David T. Hoffman Vice President Thomas G. Hudson II Vice President Linda Jones Vice President Norman Jones Vice President Kevin Jung Vice President of various Morgan Stanley Dean Witter Vice President Funds. Carol Espejo-Kane Vice President Nancy Karole Kennedy Vice President Natasha Kassian Vice President and Assistant Secretary of MSDW Services; Vice President and Assistant Secretary of MSDW Distributors and Assistant Secretary the Morgan Stanley Dean Witter Funds. Paula LaCosta Vice President of various Morgan Stanley Dean Witter Vice President Funds. Kimberly LaHart 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 - ----------------------- ------------------------------------------------ Thomas Lawlor Vice President Lester Lay Vice President Phuong Le Vice President Gerard J. Lian Vice President of various Morgan Stanley Dean Witter Vice President Funds. Cameron J. Livingstone Vice President Nancy Login Cole Vice President Sharon Loguercio Vice President Stephanie Lovinger Vice President Steven MacNamara Vice President Catherine Maniscalco Vice President of various Morgan Stanley Dean Witter Vice President Funds. Peter R. McDowell Vice President Albert McGarity Vice President Teresa McRoberts Vice President of various Morgan Stanley Dean Witter Vice President Funds. Mark Mitchell Vice President Thomas Moore Vice President Julie Morrone Vice President of various Morgan Stanley Dean Witter Vice President 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 - ----------------------- ------------------------------------------------ Mary Beth Mueller Vice President David Myers Vice President of Morgan Stanley Dean Witter Natural Vice President Resource Development Securities Inc. James Nash Vice President Daniel Niland Vice President Richard Norris Vice President Hilary A. O'Neill Vice President Steven Orlov Vice President Mori Paulsen Vice President Mary Anne Picciotto Vice President Anne Pickrell Vice President Christine Reisch Vice President Reginald Rigaud Vice President Frances Roman Vice President Dawn Rorke Vice President John Roscoe Vice President of various Morgan Stanley Dean Witter Vice President Funds. Hugh Rose 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 - ---------------------- ------------------------------------------------ Robert Rossetti Vice President of Morgan Stanley Dean Witter Competitive Vice President Edge Fund. Sally Sancimino Vice President of various Morgan Stanley Dean Witter Vice President Funds. Deborah Santaniello Vice President Patrice Saunders Vice President Donna Savoca Vice President Howard A. Schloss Vice President of Morgan Stanley Dean Witter Federal Vice President Securities Trust. Alison M. Sharkey Vice President Peter J. Seeley Vice President of various Morgan Stanley Dean Witter Vice President Funds. George Silfen Vice President Ronald B. Silvestri Vice President of various Morgan Stanley Dean Witter Vice President Funds. Herbert Simon Vice President Martha Slezak Vice President Frank Smith Vice President Otha Smith Vice President Stuart Smith Vice President Robert Stearns 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 - ---------------------- ------------------------------------------------ Naomi Stein Vice President William Stevens Vice President Michael Strayhorn Vice President Marybeth Swisher Vice President Michael Thayer Vice President Bradford Thomas Vice President Barbara Toich Vice President Robert Vanden Assem Vice President Frank Vindigni Vice President David Walsh Vice President Alice Weiss Vice President of various Morgan Stanley Dean Witter Vice President Funds. John Wong Vice President
The principal address of MSDW Advisors, MSDW Services, MSDW Distributors, DWR, and the Morgan Stanley Dean Witter Funds is Two World Trade Center, New York, New York 10048. The principal address of MSDW is 1585 Broadway, New York, New York 10036. The principal address of MSDW Trust is 2 Harborside Financial Center, Jersey City, New Jersey 07311. Item 27. PRINCIPAL UNDERWRITERS (a) Morgan Stanley Dean Witter Distributors Inc. ("MSDW Distributors"), a Delaware corporation, is the principal underwriter of the Registrant. MSDW Distributors is also the principal underwriter of the following investment companies: (1) Active Assets California Tax-Free Trust (2) Active Assets Government Securities Trust (3) Active Assets Institutional Money Trust (4) Active Assets Money Trust (5) Active Assets Premier Money Trust (6) Active Assets Tax-Free Trust (7) Morgan Stanley Dean Witter 21st Century Trend Fund (8) Morgan Stanley Dean Witter Aggressive Equity Fund (9) Morgan Stanley Dean Witter All Star Growth Fund (10) Morgan Stanley Dean Witter American Opportunities Fund (11) Morgan Stanley Dean Witter Balanced Growth Fund (12) Morgan Stanley Dean Witter Balanced Income Fund (13) Morgan Stanley Dean Witter California Tax-Free Daily Income Trust (14) Morgan Stanley Dean Witter California Tax-Free Income Fund (15) Morgan Stanley Dean Witter Capital Growth Securities (16) Morgan Stanley Dean Witter Competitive Edge Fund, "BEST IDEAS PORTFOLIO" (17) Morgan Stanley Dean Witter Convertible Securities Trust (18) Morgan Stanley Dean Witter Developing Growth Securities Trust (19) Morgan Stanley Dean Witter Diversified Income Trust (20) Morgan Stanley Dean Witter Dividend Growth Securities Inc. (21) Morgan Stanley Dean Witter Equity Fund (22) Morgan Stanley Dean Witter European Growth Fund Inc. (23) Morgan Stanley Dean Witter Federal Securities Trust (24) Morgan Stanley Dean Witter Financial Services Trust (25) Morgan Stanley Dean Witter Fund of Funds (26) Morgan Stanley Dean Witter Global Dividend Growth Securities (27) Morgan Stanley Dean Witter Global Utilities Fund (28) Morgan Stanley Dean Witter Growth Fund (29) Morgan Stanley Dean Witter Hawaii Municipal Trust (30) Morgan Stanley Dean Witter Health Sciences Trust (31) Morgan Stanley Dean Witter High Yield Securities Inc. (32) Morgan Stanley Dean Witter Income Builder Fund (33) Morgan Stanley Dean Witter Information Fund (34) Morgan Stanley Dean Witter Intermediate Income Securities (35) Morgan Stanley Dean Witter International Fund (36) Morgan Stanley Dean Witter International SmallCap Fund (37) Morgan Stanley Dean Witter Japan Fund (38) Morgan Stanley Dean Witter Latin American Growth Fund (39) Morgan Stanley Dean Witter Limited Term Municipal Trust (40) Morgan Stanley Dean Witter Liquid Asset Fund Inc. (41) Morgan Stanley Dean Witter Market Leader Trust (42) Morgan Stanley Dean Witter Mid-Cap Equity Trust (43) Morgan Stanley Dean Witter Multi-State Municipal Series Trust (44) Morgan Stanley Dean Witter Natural Resource Development Securities Inc. (45) Morgan Stanley Dean Witter New Discoveries Fund (46) Morgan Stanley Dean Witter New York Municipal Money Market Trust (47) Morgan Stanley Dean Witter New York Tax-Free Income Fund (48) Morgan Stanley Dean Witter Next Generation Trust (49) Morgan Stanley Dean Witter North American Government Income Trust (50) Morgan Stanley Dean Witter Pacific Growth Fund Inc. (51) Morgan Stanley Dean Witter Prime Income Trust (52) Morgan Stanley Dean Witter Real Estate Fund (53) Morgan Stanley Dean Witter S&P 500 Index Fund (54) Morgan Stanley Dean Witter S&P 500 Select Fund (55) Morgan Stanley Dean Witter Short-Term Bond Fund (56) Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust (57) Morgan Stanley Dean Witter Small Cap Growth Fund (58) Morgan Stanley Dean Witter Special Value Fund (59) Morgan Stanley Dean Witter Strategist Fund (60) Morgan Stanley Dean Witter Tax-Exempt Securities Trust (61) Morgan Stanley Dean Witter Tax-Free Daily Income Trust (62) Morgan Stanley Dean Witter Tax-Managed Growth Fund (63) Morgan Stanley Dean Witter Technology Fund (64) Morgan Stanley Dean Witter Total Market Index Fund (65) Morgan Stanley Dean Witter Total Return Trust (66) Morgan Stanley Dean Witter U.S. Government Money Market Trust (67) Morgan Stanley Dean Witter U.S. Government Securities Trust (68) Morgan Stanley Dean Witter Utilities Fund (69) Morgan Stanley Dean Witter Value-Added Market Series (70) Morgan Stanley Dean Witter Value Fund (71) Morgan Stanley Dean Witter Variable Investment Series (72) Morgan Stanley Dean Witter World Wide Income Trust (b) The following information is given regarding directors and officers of MSDW Distributors not listed in Item 26 above. The principal address of MSDW Distributors is Two World Trade Center, New York, New York 10048. Other than Messrs. Higgins and Purcell, who are Trustees of the Registrant, none of the following persons has any position or office with the Registrant. NAME POSITIONS AND OFFICE WITH MSDW DISTRIBUTORS James F. Higgins Director Philip J. Purcell Director John Schaeffer Director Charles Vadala Senior Vice President and Financial Principal. Item 28. LOCATION OF ACCOUNTS AND RECORDS All accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are maintained by the Investment Manager at its offices, except records relating to holders of shares issued by the Registrant, which are maintained by the Registrant's Transfer Agent, at its place of business as shown in the prospectus. Item 29. MANAGEMENT SERVICES Registrant is not a party to any such management-related service contract. Item 30. UNDERTAKINGS Registrant hereby undertakes to furnish each person to whom a prospectus is delivered with a copy of the Registrant's latest annual report to shareholders, upon request and without charge. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York and State of New York on the 22 day of December, 2000. MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST 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. 14 has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURES TITLE DATE (1) Principal Executive Officer Chairman, Chief Executive Officer and Trustee By: /s/Charles A. Fiumefreddo 12/22/00 ------------------------------ Charles A. Fiumefreddo (2) Principal Financial Officer Treasurer and Principal Accounting Officer By: /s/Thomas F. Caloia 12/22/00 ------------------------------ Thomas F. Caloia (3) Majority of the Trustees Charles A. Fiumefreddo (Chairman) Philip J. Purcell James F. Higgins By: /s/Barry Fink 12/22/00 ------------------------------ 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 12/22/00 ------------------------------ David M. Butowsky Attorney-in-Fact
MORGAN STANLEY DEAN WITTER WORLD WIDE INCOME TRUST. EXHIBIT INDEX 8(a). Transfer Agency and Services Agreement between the Registrant and Morgan Stanley Dean Witter Trust FSB, dated September 1, 2000. 10(a). Consent of Independent Auditors. 10(b). Consent of PricewaterhouseCoopers LLP. 15. Multiple Class Plan pursuant to Rule 18f-3, dated December 1, 2000. 16(a). Code of Ethics of Morgan Stanley Dean Witter Advisors Inc., Morgan Stanley Dean Witter Services Company Inc. and Morgan Stanley Dean Witter Distributors Inc. 16(b). Code of Ethics of the Morgan Stanley Dean Witter Funds. Other. Power of Attorney for James F. Higgins. EX-99.8(A) 2 a2031791zex-99_8a.txt EXHIBIT 99.8(A) AMENDED AND RESTATED TRANSFER AGENCY AND SERVICE AGREEMENT WITH MORGAN STANLEY DEAN WITTER TRUST FSB 00NYC9802 [OPEN-END FUNDS] TABLE OF CONTENTS
PAGE -------- Article 1 Terms of Appointment........................................ 1 Article 2 Fees and Expenses........................................... 3 Article 3 Representations and Warranties of MSDW TRUST................ 3 Article 4 Representations and Warranties of the Fund.................. 4 Article 5 Duty of Care and Indemnification............................ 4 Article 6 Documents and Covenants of the Fund and MSDW TRUST.......... 5 Article 7 Duration and Termination of Agreement....................... 7 Article 8 Assignment.................................................. 7 Article 9 Affiliations................................................ 7 Article 10 Amendment................................................... 7 Article 11 Applicable Law.............................................. 8 Article 12 Miscellaneous............................................... 8 Article 13 Merger of Agreement......................................... 9 Article 14 Personal Liability.......................................... 9
i AMENDED AND RESTATED TRANSFER AGENCY AND SERVICE AGREEMENT AGREEMENT made as of August 1, 1997, and amended on June 22, 1998 and September 1, 2000, by and between each of the Funds listed on the signature pages hereof, each of such Funds acting severally on its own behalf and not jointly with any of such other Funds (each such Fund hereinafter referred to as the "Fund"), each such Fund having its principal office and place of business at Two World Trade Center, New York, New York, 10048, and MORGAN STANLEY DEAN WITTER TRUST FSB ("MSDW TRUST"), a federally chartered savings bank, having its principal office and place of business at Harborside Financial Center, Plaza Two, Jersey City, New Jersey 07311. WHEREAS, the Fund desires to appoint MSDW TRUST as its transfer agent, dividend disbursing agent and shareholder servicing agent and MSDW TRUST desires to accept such appointment; NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows: ARTICLE 1 TERMS OF APPOINTMENT; DUTIES OF MSDW TRUST 1.1 Subject to the terms and conditions set forth in this Agreement, the Fund hereby employs and appoints MSDW TRUST to act as, and MSDW TRUST agrees to act as, the transfer agent for each series and class of shares of the Fund, whether now or hereafter authorized or issued ("Shares"), dividend disbursing agent and shareholder servicing agent in connection with any accumulation, open-account or similar plans provided to the holders of such Shares ("Shareholders") and set out in the currently effective prospectus and statement of additional information ("prospectus") of the Fund, including without limitation any periodic investment plan or periodic withdrawal program. 1.2 MSDW TRUST agrees that it will perform the following services: (a) In accordance with procedures established from time to time by agreement between the Fund and MSDW TRUST, MSDW TRUST shall: (i) Receive for acceptance, orders for the purchase of Shares, and promptly deliver payment and appropriate documentation therefor to the custodian of the assets of the Fund (the "Custodian"); (ii) Pursuant to purchase orders, issue the appropriate number of Shares and issue certificates therefor or hold such Shares in book form in the appropriate Shareholder account; (iii) Receive for acceptance redemption requests and redemption directions and deliver the appropriate documentation therefor to the Custodian; (iv) At the appropriate time as and when it receives monies paid to it by the Custodian with respect to any redemption, pay over or cause to be paid over in the appropriate manner such monies as instructed by the redeeming Shareholders; (v) Effect transfers of Shares by the registered owners thereof upon receipt of appropriate instructions; (vi) Prepare and transmit payments for dividends and distributions declared by the Fund; (vii) Calculate any sales charges payable by a Shareholder on purchases and/or redemptions of Shares of the Fund as such charges may be reflected in the prospectus; 1 (viii) Maintain records of account for and advise the Fund and its Shareholders as to the foregoing; and (ix) Record the issuance of Shares of the Fund and maintain pursuant to Rule 17Ad-10(e) under the Securities Exchange Act of 1934 ("1934 Act") a record of the total number of Shares of the Fund which are authorized, based upon data provided to it by the Fund, and issued and outstanding. MSDW TRUST shall also provide to the Fund on a regular basis the total number of Shares that are authorized, issued and outstanding and shall notify the Fund in case any proposed issue of Shares by the Fund would result in an overissue. In case any issue of Shares would result in an overissue, MSDW TRUST shall refuse to issue such Shares and shall not countersign and issue any certificates requested for such Shares. When recording the issuance of Shares, MSDW TRUST shall have no obligation to take cognizance of any Blue Sky laws relating to the issue of sale of such Shares, which functions shall be the sole responsibility of the Fund. (b) In addition to and not in lieu of the services set forth in the above paragraph (a), MSDW TRUST shall: (i) perform all of the customary services of a transfer agent, dividend disbursing agent and, as relevant, shareholder servicing agent in connection with dividend reinvestment, accumulation, open-account or similar plans (including without limitation any periodic investment plan or periodic withdrawal program), including but not limited to, maintaining all Shareholder accounts, preparing Shareholder meeting lists, mailing proxies, receiving and tabulating proxies, mailing shareholder reports and prospectuses to current Shareholders, withholding taxes on U.S. resident and non-resident alien accounts, preparing and filing appropriate forms required with respect to dividends and distributions by federal tax authorities for all Shareholders, preparing and mailing confirmation forms and statements of account to Shareholders for all purchases and redemptions of Shares and other confirmable transactions in Shareholder accounts, preparing and mailing activity statements for Shareholders and providing Shareholder account information; (ii) open any and all bank accounts which may be necessary or appropriate in order to provide the foregoing services; and (iii) provide a system that will enable the Fund to monitor the total number of Shares sold in each State or other jurisdiction. (c) In addition, the Fund shall: (i) identify to MSDW TRUST in writing those transactions and assets to be treated as exempt from Blue Sky reporting for each State; and (ii) verify the inclusion on the system prior to activation of each State in which Fund shares may be sold and thereafter monitor the daily purchases and sales for shareholders in each State. The responsibility of MSDW TRUST for the Fund's status under the securities laws of any State or other jurisdiction is limited to the inclusion on the system of each State as to which the Fund has informed MSDW TRUST that shares may be sold in compliance with state securities laws and the reporting of purchases and sales in each such State to the Fund as provided above and as agreed from time to time by the Fund and MSDW TRUST. (d) MSDW TRUST shall provide such additional services and functions not specifically described herein as may be mutually agreed between MSDW TRUST and the Fund. Procedures applicable to such services may be established from time to time by agreement between the Fund and MSDW TRUST. 2 ARTICLE 2 FEES AND EXPENSES 2.1 For performance by MSDW TRUST pursuant to this Agreement, each Fund agrees to pay MSDW TRUST an annual maintenance fee for each Shareholder account and certain transactional fees, if applicable, as set out in the respective fee schedule attached hereto as Schedule A. Such fee shall be increased or decreased on August 1st of each year by an amount equal to the change in the Consumer Price Index-Financial Services (All Urban Consumers), as published by the Bureau of Labor Statistics of the United States Department of Labor (or another comparable measure of employee wages and salaries and employer costs for employee benefits as mutually agreed to by the Fund and MSDW Trust) for the twelve-month period ending on March 31st of that year and shall be reflected in a revised Schedule A dated as of August 1 of each year. Such fees and out-of-pocket expenses and advances identified under Section 2.2 below may be changed from time to time subject to mutual written agreement between the Fund and MSDW TRUST. 2.2 In addition to the fees paid under Section 2.1 above, the Fund agrees to reimburse MSDW TRUST for out of pocket expenses in connection with the services rendered by MSDW TRUST hereunder. In addition, any other expenses incurred by MSDW TRUST at the request or with the consent of the Fund will be reimbursed by the Fund. 2.3 The Fund agrees to pay all fees and reimbursable expenses within a reasonable period of time following the mailing of the respective billing notice. Postage for mailing of dividends, proxies, Fund reports and other mailings to all Shareholder accounts shall be advanced to MSDW TRUST by the Fund upon request prior to the mailing date of such materials. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF MSDW TRUST MSDW TRUST represents and warrants to the Fund that: 3.1 It is a federally chartered savings bank whose principal office is in New Jersey. 3.2 It is and will remain registered with the U.S. Securities and Exchange Commission ("SEC") as a Transfer Agent pursuant to the requirements of Section 17A of the 1934 Act. 3.3 It is empowered under applicable laws and by its charter and By-Laws to enter into and perform this Agreement. 3.4 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement. 3.5 It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement. 3 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE FUND The Fund represents and warrants to MSDW TRUST that: 4.1 It is a corporation duly organized and existing and in good standing under the laws of Delaware or Maryland or a trust duly organized and existing and in good standing under the laws of Massachusetts, as the case may be. 4.2 It is empowered under applicable laws and by its Articles of Incorporation or Declaration of Trust, as the case may be, and under its By-Laws to enter into and perform this Agreement. 4.3 All corporate proceedings necessary to authorize it to enter into and perform this Agreement have been taken. 4.4 It is an investment company registered with the SEC under the Investment Company Act of 1940, as amended (the "1940 Act"). 4.5 A registration statement under the Securities Act of 1933 (the "1933 Act") is currently effective and will remain effective, and appropriate state securities law filings have been made and will continue to be made, with respect to all Shares of the Fund being offered for sale. ARTICLE 5 DUTY OF CARE AND INDEMNIFICATION 5.1 MSDW TRUST shall not be responsible for, and the Fund shall indemnify and hold MSDW TRUST harmless from and against, any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to: (a) All actions of MSDW TRUST or its agents or subcontractors required to be taken pursuant to this Agreement, provided that such actions are taken in good faith and without negligence or willful misconduct. (b) The Fund's refusal or failure to comply with the terms of this Agreement, or which arise out of the Fund's lack of good faith, negligence or willful misconduct or which arise out of breach of any representation or warranty of the Fund hereunder. (c) The reliance on or use by MSDW TRUST or its agents or subcontractors of information, records and documents which (i) are received by MSDW TRUST or its agents or subcontractors and furnished to it by or on behalf of the Fund, and (ii) have been prepared and/or maintained by the Fund or any other person or firm on behalf of the Fund. (d) The reliance on, or the carrying out by MSDW TRUST or its agents or subcontractors of, any instructions or requests of the Fund. (e) The offer or sale of Shares in violation of any requirement under the federal securities laws or regulations or the securities or Blue Sky laws of any State or other jurisdiction that notice of offering of such Shares in such State or other jurisdiction or in violation of any stop order or other determination or ruling by any federal agency or any State or other jurisdiction with respect to the offer or sale of such Shares in such State or other jurisdiction. 5.2 MSDW TRUST shall indemnify and hold the Fund harmless from or against any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to any 4 action or failure or omission to act by MSDW TRUST as a result of the lack of good faith, negligence or willful misconduct of MSDW TRUST, its officers, employees or agents. 5.3 At any time, MSDW TRUST may apply to any officer of the Fund for instructions, and may consult with legal counsel to the Fund, with respect to any matter arising in connection with the services to be performed by MSDW TRUST under this Agreement, and MSDW TRUST and its agents or subcontractors shall not be liable and shall be indemnified by the Fund for any action taken or omitted by it in reliance upon such instructions or upon the opinion of such counsel. MSDW TRUST, its agents and subcontractors shall be protected and indemnified in acting upon any paper or document furnished by or on behalf of the Fund, reasonably believed to be genuine and to have been signed by the proper person or persons, or upon any instruction, information, data, records or documents provided to MSDW TRUST or its agents or subcontractors by machine readable input, telex, CRT data entry or other similar means authorized by the Fund, and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Fund. MSDW TRUST, its agents and subcontractors shall also be protected and indemnified in recognizing stock certificates which are reasonably believed to bear the proper manual or facsimile signature of the officers of the Fund, and the proper countersignature of any former transfer agent or registrar, or of a co-transfer agent or co-registrar. 5.4 In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes. 5.5 Neither party to this Agreement shall be liable to the other party for consequential damages under any provision of this Agreement or for any act or failure to act hereunder. 5.6 In order that the indemnification provisions contained in this Article 5 shall apply, upon the assertion of a claim for which either party may be required to indemnify the other, the party seeking indemnification shall promptly notify the other party of such assertion, and shall keep the other party advised with respect to all developments concerning such claim. The party who may be required to indemnify shall have the option to participate with the party seeking indemnification in the defense of such claim. The party seeking indemnification shall in no case confess any claim or make any compromise in any case in which the other party may be required to indemnify it except with the other party's prior written consent. ARTICLE 6 DOCUMENTS AND COVENANTS OF THE FUND AND MSDW TRUST 6.1 The Fund shall promptly furnish to MSDW TRUST the following, unless previously furnished to Dean Witter Trust Company, the prior transfer agent of the Fund: (a) If a corporation: (i) A certified copy of the resolution of the Board of Directors of the Fund authorizing the appointment of MSDW TRUST and the execution and delivery of this Agreement; (ii) A certified copy of the Articles of Incorporation and By-Laws of the Fund and all amendments thereto; (iii) Certified copies of each vote of the Board of Directors designating persons authorized to give instructions on behalf of the Fund and signature cards bearing the signature of any officer of the Fund or any other person authorized to sign written instructions on behalf of the Fund; 5 (iv) A specimen of the certificate for Shares of the Fund in the form approved by the Board of Directors, with a certificate of the Secretary of the Fund as to such approval; (b) If a business trust: (i) A certified copy of the resolution of the Board of Trustees of the Fund authorizing the appointment of MSDW TRUST and the execution and delivery of this Agreement; (ii) A certified copy of the Declaration of Trust and By-Laws of the Fund and all amendments thereto; (iii) Certified copies of each vote of the Board of Trustees designating persons authorized to give instructions on behalf of the Fund and signature cards bearing the signature of any officer of the Fund or any other person authorized to sign written instructions on behalf of the Fund; (iv) A specimen of the certificate for Shares of the Fund in the form approved by the Board of Trustees, with a certificate of the Secretary of the Fund as to such approval; (c) The current registration statements and any amendments and supplements thereto filed with the SEC pursuant to the requirements of the 1933 Act or the 1940 Act; (d) All account application forms or other documents relating to Shareholder accounts and/or relating to any plan, program or service offered or to be offered by the Fund; and (e) Such other certificates, documents or opinions as MSDW TRUST deems to be appropriate or necessary for the proper performance of its duties. 6.2 MSDW TRUST hereby agrees to establish and maintain facilities and procedures reasonably acceptable to the Fund for safekeeping of Share certificates, check forms and facsimile signature imprinting devices, if any; and for the preparation or use, and for keeping account of, such certificates, forms and devices. 6.3 MSDW TRUST shall prepare and keep records relating to the services to be performed hereunder, in the form and manner as it may deem advisable and as required by applicable laws and regulations. To the extent required by Section 31 of the 1940 Act, and the rules and regulations thereunder, MSDW TRUST agrees that all such records prepared or maintained by MSDW TRUST relating to the services performed by MSDW TRUST hereunder are the property of the Fund and will be preserved, maintained and made available in accordance with such Section 31 of the 1940 Act, and the rules and regulations thereunder, and will be surrendered promptly to the Fund on and in accordance with its request. 6.4 MSDW TRUST and the Fund agree that all books, records, information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential and shall not be voluntarily disclosed to any other person except as may be required by law or with the prior consent of MSDW TRUST and the Fund. 6.5 In case of any request or demands for the inspection of the Shareholder records of the Fund, MSDW TRUST will endeavor to notify the Fund and to secure instructions from an authorized officer of the Fund as to such inspection. MSDW TRUST reserves the right, however, to exhibit the Shareholder records to any person whenever it is advised by its counsel that it may be held liable for the failure to exhibit the Shareholder records to such person. 6 ARTICLE 7 DURATION AND TERMINATION OF AGREEMENT 7.1 This Agreement shall remain in full force and effect until August 1, 2001 and from year-to-year thereafter unless terminated by either party as provided in Section 7.2 hereof. 7.2 This Agreement may be terminated by the Fund on 60 days written notice, and by MSDW TRUST on 90 days written notice, to the other party without payment of any penalty. 7.3 Should the Fund exercise its right to terminate, all out-of-pocket expenses associated with the movement of records and other materials will be borne by the Fund. Additionally, MSDW TRUST reserves the right to charge for any other reasonable fees and expenses associated with such termination. ARTICLE 8 ASSIGNMENT 8.1 Except as provided in Section 8.3 below, neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the written consent of the other party. 8.2 This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns. 8.3 MSDW TRUST may, in its sole discretion and without further consent by the Fund, subcontract, in whole or in part, for the performance of its obligations and duties hereunder with any person or entity including but not limited to companies which are affiliated with MSDW TRUST; provided, however, that such person or entity has and maintains the qualifications, if any, required to perform such obligations and duties, and that MSDW TRUST shall be as fully responsible to the Fund for the acts and omissions of any agent or subcontractor as it is for its own acts or omissions under this Agreement. ARTICLE 9 AFFILIATIONS 9.1 MSDW TRUST may now or hereafter, without the consent of or notice to the Fund, function as transfer agent and/or shareholder servicing agent for any other investment company registered with the SEC under the 1940 Act and for any other issuer, including without limitation any investment company whose adviser, administrator, sponsor or principal underwriter is or may become affiliated with Morgan Stanley Dean Witter & Co. or any of its direct or indirect subsidiaries or affiliates. 9.2 It is understood and agreed that the Directors or Trustees (as the case may be), officers, employees, agents and shareholders of the Fund, and the directors, officers, employees, agents and shareholders of the Fund's investment adviser and/or distributor, are or may be interested in MSDW TRUST as directors, officers, employees, agents and shareholders or otherwise, and that the directors, officers, employees, agents and shareholders of MSDW TRUST may be interested in the Fund as Directors or Trustees (as the case may be), officers, employees, agents and shareholders or otherwise, or in the investment adviser and/or distributor as directors, officers, employees, agents, shareholders or otherwise. ARTICLE 10 AMENDMENT 10.1 This Agreement may be amended or modified by a written agreement executed by both parties and authorized or approved by a resolution of the Board of Directors or the Board of Trustees (as the case may be) of the Fund. 7 ARTICLE 11 APPLICABLE LAW 11.1 This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of New York. ARTICLE 12 MISCELLANEOUS 12.1 In the event that one or more additional investment companies managed or administered by Morgan Stanley Dean Witter Advisors Inc. or any of its affiliates ("Additional Funds") desires to retain MSDW TRUST to act as transfer agent, dividend disbursing agent and/or shareholder servicing agent, and MSDW TRUST desires to render such services, such services shall be provided pursuant to a letter agreement, substantially in the form of Exhibit A hereto, between MSDW TRUST and each Additional Fund. 12.2 In the event of an alleged loss or destruction of any Share certificate, no new certificate shall be issued in lieu thereof, unless there shall first be furnished to MSDW TRUST an affidavit of loss or non-receipt by the holder of Shares with respect to which a certificate has been lost or destroyed, supported by an appropriate bond satisfactory to MSDW TRUST and the Fund issued by a surety company satisfactory to MSDW TRUST, except that MSDW TRUST may accept an affidavit of loss and indemnity agreement executed by the registered holder (or legal representative) without surety in such form as MSDW TRUST deems appropriate indemnifying MSDW TRUST and the Fund for the issuance of a replacement certificate, in cases where the alleged loss is in the amount of $1,000 or less. 12.3 In the event that any check or other order for payment of money on the account of any Shareholder or new investor is returned unpaid for any reason, MSDW TRUST will (a) give prompt notification to the Fund's distributor ("Distributor") (or to the Fund if the Fund acts as its own distributor) of such non-payment; and (b) take such other action, including imposition of a reasonable processing or handling fee, as MSDW TRUST may, in its sole discretion, deem appropriate or as the Fund and, if applicable, the Distributor may instruct MSDW TRUST. 12.4 Any notice or other instrument authorized or required by this Agreement to be given in writing to the Fund or to MSDW TRUST shall be sufficiently given if addressed to that party and received by it at its office set forth below or at such other place as it may from time to time designate in writing. To the Fund: [Name of Fund] Two World Trade Center New York, New York 10048 Attention: General Counsel To MSDW TRUST: Morgan Stanley Dean Witter Trust FSB Harborside Financial Center Plaza Two Jersey City, New Jersey 07311 Attention: President 8 ARTICLE 13 MERGER OF AGREEMENT 13.1 This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written. ARTICLE 14 PERSONAL LIABILITY 14.1 In the case of a Fund organized as a Massachusetts business trust, a copy of the Declaration of Trust of the Fund is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Board of Trustees of the Fund as Trustees and not individually and that the obligations of this instrument are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Fund; provided, however, that the Declaration of Trust of the Fund provides that the assets of a particular Series of the Fund shall under no circumstances be charged with liabilities attributable to any other Series of the Fund and that all persons extending credit to, or contracting with or having any claim against, a particular Series of the Fund shall look only to the assets of that particular Series for payment of such credit, contract or claim. IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written. MORGAN STANLEY DEAN WITTER FUNDS TAXABLE MONEY MARKET FUNDS 1. Active Assets Government Securities Trust 2. Active Assets Institutional Money Trust 3. Active Assets Money Trust 4. Active Assets Premier Money Trust 5. Morgan Stanley Dean Witter Liquid Asset Fund Inc. 6. Morgan Stanley Dean Witter U.S. Government Money Market Trust TAX-EXEMPT MONEY MARKET FUNDS 7. Active Assets California Tax-Free Trust 8. Active Assets Tax-Free Trust 9. Morgan Stanley Dean Witter California Tax-Free Daily Income Trust 10. Morgan Stanley Dean Witter New York Municipal Money Market Trust 11. Morgan Stanley Dean Witter Tax-Free Daily Income Trust EQUITY FUNDS 12. Morgan Stanley Dean Witter Aggressive Equity Fund 13. Morgan Stanley Dean Witter American Opportunities Fund 14. Morgan Stanley Dean Witter Capital Growth Securities 15. Morgan Stanley Dean Witter Competitive Edge Fund 16. Morgan Stanley Dean Witter Developing Growth Securities Trust 17. Morgan Stanley Dean Witter Dividend Growth Securities Inc. 18. Morgan Stanley Dean Witter Equity Fund 19. Morgan Stanley Dean Witter European Growth Fund Inc. 9 20. Morgan Stanley Dean Witter Financial Services Trust 21. Morgan Stanley Dean Witter Fund of Funds 22. Morgan Stanley Dean Witter Global Dividend Growth Securities 23. Morgan Stanley Dean Witter Global Utilities Fund 24. Morgan Stanley Dean Witter Growth Fund 25. Morgan Stanley Dean Witter Health Sciences Trust 26. Morgan Stanley Dean Witter Income Builder Fund 27. Morgan Stanley Dean Witter Information Fund 28. Morgan Stanley Dean Witter International Fund 29. Morgan Stanley Dean Witter International SmallCap Fund 30. Morgan Stanley Dean Witter Japan Fund 31. Morgan Stanley Dean Witter Latin American Growth Fund 32. Morgan Stanley Dean Witter Market Leader Trust 33. Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities 34. Morgan Stanley Dean Witter Mid-Cap Equity Trust 35. Morgan Stanley Dean Witter Natural Resource Development Securities Inc. 36. Morgan Stanley Dean Witter New Discoveries Fund 37. Morgan Stanley Dean Witter Next Generation Trust 38. Morgan Stanley Dean Witter Pacific Growth Fund Inc. 39. Morgan Stanley Dean Witter Real Estate Fund 40. Morgan Stanley Dean Witter Small Cap Growth Fund 41. Morgan Stanley Dean Witter S&P 500 Index Fund 42. Morgan Stanley Dean Witter S&P 500 Select Fund 43. Morgan Stanley Dean Witter Special Value Fund 44. Morgan Stanley Dean Witter Tax-Managed Growth Fund 45. Morgan Stanley Dean Witter Technology Fund 46. Morgan Stanley Dean Witter Total Market Index Fund 47. Morgan Stanley Dean Witter Total Return Trust 48. Morgan Stanley Dean Witter 21st Century Trend Fund 49. Morgan Stanley Dean Witter Utilities Fund 50. Morgan Stanley Dean Witter Value-Added Market Series 51. Morgan Stanley Dean Witter Value Fund BALANCED FUNDS 52. Morgan Stanley Dean Witter Balanced Growth Fund 53. Morgan Stanley Dean Witter Balanced Income Fund ASSET ALLOCATION FUND 54. Morgan Stanley Dean Witter Strategist Fund TAXABLE FIXED-INCOME FUNDS 55. Morgan Stanley Dean Witter Convertible Securities Trust 56. Morgan Stanley Dean Witter Diversified Income Trust 57. Morgan Stanley Dean Witter Federal Securities Trust 58. Morgan Stanley Dean Witter High Yield Securities Inc 59. Morgan Stanley Dean Witter Intermediate Income Securities 60. Morgan Stanley Dean Witter North American Government Income Trust 61. Morgan Stanley Dean Witter Short-Term Bond Fund 10 62. Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust 63. Morgan Stanley Dean Witter U.S. Government Securities Trust 64. Morgan Stanley Dean Witter World Wide Income Trust TAX-EXEMPT FIXED-INCOME FUNDS 65. Morgan Stanley Dean Witter California Tax-Free Income Fund 66. Morgan Stanley Dean Witter Hawaii Municipal Trust 67. Morgan Stanley Dean Witter Limited Term Municipal Trust 68. Morgan Stanley Dean Witter Multi-State Municipal Series Trust 69. Morgan Stanley Dean Witter New York Tax-Free Income Fund 70. Morgan Stanley Dean Witter Select Municipal Reinvestment Fund 71. Morgan Stanley Dean Witter Tax-Exempt Securities Trust SPECIAL PURPOSE FUNDS 72. Morgan Stanley Dean Witter Select Dimensions Investment Series 73. Morgan Stanley Dean Witter Variable Investment Series By: /s/ Barry Fink -------------------------------------------- Barry Fink Vice President and General Counsel ATTEST: /s/ Todd Lebo - ------------------------------------ Assistant Secretary MORGAN STANLEY DEAN WITTER TRUST FSB By: /s/ Jonathan Thomas -------------------------------------------- Jonathan Thomas President ATTEST: /s/ Geoffrey Flynn - ------------------------------------ Executive Vice President
11 EXHIBIT A Morgan Stanley Dean Witter Trust FSB Harborside Financial Center Plaza Two Jersey City, NJ 07311 Gentlemen: The undersigned, (inset name of investment company) a (Massachusetts business trust/Maryland corporation) (the "Fund"), desires to employ and appoint Morgan Stanley Dean Witter Trust FSB ("MSDW TRUST") to act as transfer agent for each series and class of shares of the Fund, whether now or hereafter authorized or issued ("Shares"), dividend disbursing agent and shareholder servicing agent, registrar and agent in connection with any accumulation, open-account or similar plan provided to the holders of Shares, including without limitation any periodic investment plan or periodic withdrawal plan. The Fund hereby agrees that, in consideration for the payment by the Fund to MSDW TRUST of fees as set out in the fee schedule attached hereto as Schedule A, MSDW TRUST shall provide such services to the Fund pursuant to the terms and conditions set forth in the Transfer Agency and Service Agreement annexed hereto, as if the Fund was a signatory thereto. Please indicate MSDW TRUST's acceptance of employment and appointment by the Fund in the capacities set forth above by so indicating in the space provided below. Very truly yours, (name of fund) By: _______________________________ Barry Fink Vice President and General Counsel ACCEPTED AND AGREED TO: MORGAN STANLEY DEAN WITTER TRUST FSB By: _________________________________________ Its: _________________________________________ Date: _______________________________________ 12 SCHEDULE A MORGAN STANLEY DEAN WITTER TRUST FSB SHAREHOLDER ACCOUNT MAINTENANCE FEES
RATES PER NEW TRANSFER AGENCY AGREEMENT AS OF SEPTEMBER 1, 2000 -------------------------------- Money Market $15.70 US Government Securities Trust 9.95 US Government Securities Trust--Over 50,000 5.20 AAA Funds 11.75 Fixed Income Funds 13.80 Equity Funds 13.25 Closed End Funds 10.20 Prime Income Trust 10.45 Insurance Products: Select Dimensions $500 per annum per account Variable Investment $500 per annum per account
A fee equal to 1/12 of the fee set forth above, for providing Forms 1099 for accounts closed during the year, payable following the end of the calendar year (this does not apply to Select Dimensions and Variable Investment). Out-of-pocket expenses in accordance with Section 2.2 of the Agreement. Fees for additional services not set forth in this Agreement shall be as negotiated between the parties. 13 EX-10.A 3 a2031791zex-10_a.txt EXHIBIT 10(A) CONSENT OF INDEPENDENT AUDITORS We consent to the use in this Post-Effective Amendment No. 14 to Registration Statement No.33-26375 of Morgan Stanley Dean Witter World Wide Income Trust on Form N-1A of our report dated December 5, 2000, appearing in the Statement of Additional Information and incorporated by reference in the Prospectus, and to the references to us under the captions "Financial Highlights" in the Prospectus and "Custodian and Independent Auditors" and "Experts" in the Statement of Additional Information, both of which are part of such Registration Statement. Deloitte & Touche LLP New York, New York December 22, 2000 EX-99.10(B) 4 a2031791zex-99_10b.txt EXHIBIT 99.10(B) REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Board of Trustees of Morgan Stanley Dean Witter World Wide Income Trust In our opinion, the statement of changes in net assets and the financial highlights of Morgan Stanley Dean Witter World Wide Income Trust (the "Fund") (not presented separately herein) present fairly, in all material respects, the changes in its net assets for the year ended October 31, 1999 and the financial highlights for each of the years in the period ended October 31, 1999, in conformity with generally accepted accounting principles. This financial statement and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. We have not audited the financial statements or financial highlights of the Fund for any period subsequent to October 31, 1999. PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, New York 10036 December 13, 1999 EX-99.15 5 a2031791zex-99_15.txt EXHIBIT 99.15 MORGAN STANLEY DEAN WITTER FUNDS MULTIPLE CLASS PLAN PURSUANT TO RULE 18f-3 INTRODUCTION This plan (the "Plan") is adopted pursuant to Rule 18f-3(d) of the Investment Company Act of 1940, as amended (the "1940 Act"), effective as of July 28, 1997, and amended as of June 22, 1998, August 15, 2000 and December 1, 2000. The Plan relates to shares of the open-end investment companies to which Morgan Stanley Dean Witter Advisors Inc. acts as investment manager, that are listed on Schedule A, as may be amended from time to time (each, a "Fund" and collectively, the "Funds"). The Funds are distributed pursuant to a system (the "Multiple Class System") in which each class of shares (each, a "Class" and collectively, the "Classes") of a Fund represents a pro rata interest in the same portfolio of investments of the Fund and differs only to the extent outlined below. I. DISTRIBUTION ARRANGEMENTS One or more Classes of shares of the Funds are offered for purchase by investors with the sales load structures described below. In addition, pursuant to Rule 12b-1 under the 1940 Act, the Funds have each adopted a Plan of Distribution (the "12b-1 Plan") under which shares of certain Classes are subject to the service and/or distribution fees ("12b-1 fees") described below. 1. CLASS A SHARES Class A shares are offered with a front-end sales load ("FESL"). The schedule of sales charges applicable to a Fund and the circumstances under which the sales charges are subject to reduction are set forth in each Fund's current prospectus. As stated in each Fund's current prospectus, Class A shares may be purchased at net asset value (without a FESL): (i) in the case of certain large purchases of such shares; and (ii) by certain limited categories of investors, in each case, under the circumstances and conditions set forth in each Fund's current prospectus. Class A shares purchased at net asset value may be subject to a contingent deferred sales charge ("CDSC") on redemptions made within one year of purchase. Further information relating to the CDSC, including the manner in which it is calculated, is set forth in paragraph 6 below. Class A shares are also subject to payments under each Fund's 12b-1 Plan to reimburse Morgan Stanley Dean Witter Distributors Inc. ("MSDW Distributors"), Dean Witter Reynolds Inc. ("DWR"), its affiliates and other broker-dealers for distribution expenses incurred by them specifically on behalf of the Class, assessed at an annual rate of up to 0.25% of average daily net assets. The entire amount of the 12b-1 fee represents a service fee within the meaning of National Association of Securities Dealers, Inc. ("NASD") guidelines. 2. CLASS B SHARES Class B shares are offered without a FESL, but will in most cases be subject to a six-year declining CDSC which is calculated in the manner set forth in paragraph 6 below. The schedule of CDSC charges applicable to each Fund is set forth in each Fund's current prospectus. With the exception of certain of the Funds which have a different formula described below (Morgan Stanley Dean Witter American Opportunities Fund, Morgan Stanley Dean Witter Natural Resource Development Securities Inc., Morgan Stanley Dean Witter Strategist Fund and Morgan Stanley Dean Witter Dividend Growth Securities 1 Inc.)(1), Class B shares are also subject to a fee under each Fund's respective 12b-1 Plan, assessed at the annual rate of up to 1.0% of either: (a) the lesser of (i) the average daily aggregate gross sales of the Fund's Class B shares since the inception of the Fund (not including reinvestment of dividends or capital gains distributions), less the average daily aggregate net asset value of the Fund's Class B shares redeemed since the Fund's inception upon which a CDSC has been imposed or waived, or (ii) the average daily net assets of Class B; or (b) the average daily net assets of Class B. A portion of the 12b-1 fee equal to up to 0.25% of the Fund's average daily net assets is characterized as a service fee within the meaning of the NASD guidelines and the remaining portion of the 12b-1 fee, if any, is characterized as an asset-based sales charge. Also, Class B shares have a conversion feature ("Conversion Feature") under which such shares convert to Class A shares after a certain holding period. Details of the Conversion Feature are set forth in Section IV below. 3. CLASS C SHARES Class C shares are offered without imposition of a FESL, but will in most cases be subject to a CDSC of 1.0% on redemptions made within one year after purchase. Further information relating to the CDSC is set forth in paragraph 6 below. In addition, Class C shares, under each Fund's 12b-1 Plan, are subject to 12b-1 payments to reimburse MSDW Distributors, DWR, its affiliates and other broker-dealers for distribution expenses incurred by them specifically on behalf of the Class, assessed at the annual rate of up to 1.0% of the average daily net assets of the Class. A portion of the 12b-1 fee equal to up to 0.25% of the Fund's average daily net assets is characterized as a service fee within the meaning of NASD guidelines. Unlike Class B shares, Class C shares do not have the Conversion Feature. 4. CLASS D SHARES Class D shares are offered without imposition of a FESL, CDSC or a 12b-1 fee for purchases of Fund shares by (i) investors meeting an initial minimum investment requirement and (ii) certain other limited categories of investors, in each case, as may be approved by the Boards of Directors/Trustees of the Funds and as disclosed in each Fund's current prospectus. Class D shares may not be offered for purchases of Fund shares made through certain investment programs approved by MSDW Distributors. 5. ADDITIONAL CLASSES OF SHARES The Boards of Directors/Trustees of the Funds have the authority to create additional Classes, or change existing Classes, from time to time, in accordance with Rule 18f-3 under the 1940 Act. 6. CALCULATION OF THE CDSC Any applicable CDSC is calculated based upon the lesser of net asset value of the shares at the time of purchase or at the time of redemption. The CDSC does not apply to amounts representing an increase in - ------------ (1)The payments under the 12b-1 Plan for each of Morgan Stanley Dean Witter American Opportunities Fund, Morgan Stanley Dean Witter Natural Resource Development Securities Inc. and Morgan Stanley Dean Witter Dividend Growth Securities Inc. are assessed at the annual rate of 1.0% of the lesser of: (a) the average daily aggregate gross sales of the Fund's Class B shares since the inception of the Fund's Plan (not including reinvestment of dividends or capital gains distributions), less the average daily aggregate net asset value of the Fund's Class B shares redeemed since the Plan's inception upon which a CDSC has been imposed or waived, or (b) the average daily net assets of Class B attributable to shares issued, net of related shares redeemed, since inception of the Plan. The payments under the 12b-1 Plan for the Morgan Stanley Dean Witter Strategist Fund are assessed at the annual rate of: (i) 1% of the lesser of (a) the average daily aggregate gross sales of the Fund's Class B shares since the effectiveness of the first amendment of the Plan on November 8, 1989 (not including reinvestment of dividends or capital gains distributions), less the average daily aggregate net asset value of the Fund's Class B shares redeemed since the effectiveness of the first amended Plan, upon which a CDSC has been imposed or waived, or (b) the average daily net assets of Class B attributable to shares issued, net of related shares redeemed, since the effectiveness of the first amended Plan; plus (ii) 0.25% of the average daily net assets of Class B attributable to shares issued, net of related shares redeemed, prior to effectiveness of the first amended Plan. 2 share value due to capital appreciation and shares acquired through the reinvestment of dividends or capital gains distributions. The CDSC schedule applicable to a Fund and the circumstances in which the CDSC is subject to waiver are set forth in each Fund's prospectus. II. EXPENSE ALLOCATIONS Expenses incurred by a Fund are allocated among the various Classes of shares pro rata based on the net assets of the Fund attributable to each Class, except that 12b-1 fees relating to a particular Class are allocated directly to that Class. In addition, other expenses associated with a particular Class (except advisory or custodial fees), may be allocated directly to that Class, provided that such expenses are reasonably identified as specifically attributable to that Class and the direct allocation to that Class is approved by the Fund's Board of Directors/Trustees. III. CLASS DESIGNATION All shares of the Funds held prior to July 28, 1997 (other than the shares held by certain employee benefit plans established by DWR, shares of Funds offered with a FESL, and shares of Morgan Stanley Dean Witter Balanced Growth Fund and Morgan Stanley Dean Witter Balanced Income Fund) have been designated Class B shares. Shares held prior to July 28, 1997 by such employee benefit plans have been designated Class D shares. Shares held prior to July 28, 1997 of Funds offered with a FESL have been designated Class D shares. In addition, shares of Morgan Stanley Dean Witter American Opportunities Fund purchased prior to April 30, 1984, shares of Morgan Stanley Dean Witter Strategist Fund purchased prior to November 8, 1989 and shares of Morgan Stanley Dean Witter Natural Resource Development Securities Inc. and Morgan Stanley Dean Witter Dividend Growth Securities Inc. purchased prior to July 2, 1984 (with respect to such shares of each Fund, including such proportion of shares acquired through reinvestment of dividends and capital gains distributions as the total number of shares acquired prior to each of the preceding dates in this sentence bears to the total number of shares purchased and owned by the shareholder of that Fund) have been designated Class D shares. Shares of Morgan Stanley Dean Witter Balanced Growth Fund and Morgan Stanley Dean Witter Balanced Income Fund held prior to July 28, 1997 have been designated Class C shares except that shares of Morgan Stanley Dean Witter Balanced Growth Fund and Morgan Stanley Dean Witter Balanced Income Fund held prior to July 28, 1997 that were acquired in exchange for shares of an investment company offered with a CDSC have been designated Class B shares and those that were acquired in exchange for shares of an investment company offered with a FESL have been designated Class A shares. IV. CONVERSION FEATURES 1. CLASS B TO CLASS A Class B shares held before May 1, 1997 will convert to Class A shares in May, 2007, except that Class B shares which were purchased before July 28, 1997 by trusts for which Morgan Stanley Dean Witter Trust FSB ("MSDW Trust") provides discretionary trustee services converted to Class A shares on August 29, 1997 (the CDSC was not applicable to such shares upon the conversion). In all other instances, Class B shares of each Fund will automatically convert to Class A shares, based on the relative net asset values of the shares of the two Classes on the conversion date, which will be approximately ten (10) years after the date of the original purchase. Conversions will be effected once a month. The 10 year period will be calculated from the last day of the month in which the shares were purchased or, in the case of Class B shares acquired through an exchange or a series of exchanges, from the last day of the month in which the original Class B shares were purchased, provided that shares originally purchased before May 1, 1997 will convert to Class A shares in May, 2007. Except as set forth below, the conversion of shares purchased on or after May 1, 1997 will take place in the month following the tenth anniversary of the purchase. There will also be converted at that time such proportion of Class B shares acquired through automatic reinvestment of dividends owned by the shareholder as the total number of his or her Class B shares converting at the time bears to the total number of outstanding Class B shares purchased and owned by the shareholder. In the case of Class B shares held by employer-sponsored employee benefit plans (whether or not qualified under the Internal Revenue Code) for which MSDW Trust serves as Trustee or Morgan Stanley Dean Witter & Co.'s Retirement Plan Services serves as recordkeeper pursuant to a written Recordkeeping Services Agreement, all Class B shares will 3 convert to Class A shares on the conversion date of the first shares of a Fund purchased by that plan. In the case of Class B shares previously exchanged for shares of Morgan Stanley Dean Witter North American Government Income Trust, Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust, a "Money Market Fund" or a 'No-Load Fund' (as such terms are defined in the prospectus of each Fund), the period of time the shares were held in any of such Funds (calculated from the last day of the month in which the shares of any of such Funds were acquired) is excluded from the holding period for conversion. If those shares are subsequently re-exchanged for Class B shares of a Fund, the holding period resumes on the last day of the month in which Class B shares are reacquired. Effectiveness of the Conversion Feature is subject to the continuing availability of a ruling of the Internal Revenue Service or an opinion of counsel to the effect that (i) the conversion of shares does not constitute a taxable event under the Code; (ii) Class A shares received on conversion will have a basis equal to the shareholder's basis in the converted Class B shares immediately prior to the conversion; and (iii) Class A shares received on conversion will have a holding period that includes the holding period of the converted Class B shares. The Conversion Feature may be suspended if the Ruling or opinion is no longer available. In such event, Class B shares would continue to be subject to Class B fees under the applicable Fund's 12b-1 Plan. 2. CHOICE PROGRAM CONVERSIONS Effective on or about December 1, 2000, all Class D shares held through the Morgan Stanley Dean Witter Choice Program (the "Choice Program") will automatically be converted to Class A shares in the same Fund at such time as those Fund shares are no longer held through the Choice Program (unless the affected shareholder is otherwise eligible to purchase Class D shares). On December 8, 2000, any Class A shares held through the Choice Program will automatically be converted to Class D shares in the same Fund. Both conversions will be effected based on then current relative net asset values of the shares of the two classes on the conversion date. Effectiveness of these conversions is subject to the continuing availability of an opinion of counsel to the effect that the conversion of shares does not constitute a taxable event under the Internal Revenue Code. V. EXCHANGE PRIVILEGES Shares of each Class may be exchanged for shares of the same Class of the other Funds and for shares of certain other investment companies without the imposition of an exchange fee as described in the prospectuses and statements of additional information of the Funds. The exchange privilege of each Fund may be terminated or revised at any time by the Fund upon such notice as may be required by applicable regulatory agencies as described in each Fund's prospectus. VI. VOTING Each Class shall have exclusive voting rights on any matter that relates solely to its 12b-1 Plan, except that Class B shareholders will have the right to vote on any proposed material increase in Class A's expenses, including payments under the Class A 12b-1 Plan, if such proposal is submitted separately to Class A shareholders. If the amount of expenses, including payments under the Class A 12b-1 Plan, is increased materially without the approval of Class B shareholders, the Fund will establish a new Class A for Class B shareholders whose shares automatically convert on the same terms as applied to Class A before the increase. In addition, each Class shall have separate voting rights on any matter submitted to shareholders in which the interests of one Class differ from the interests of any other Class. 4 MORGAN STANLEY DEAN WITTER FUNDS MULTIPLE CLASS PLAN PURSUANT TO RULE 18f-3 SCHEDULE A AT DECEMBER 1, 2000 1) Morgan Stanley Dean Witter 21st Century Trend Fund 2) Morgan Stanley Dean Witter All Star Growth Fund 3) Morgan Stanley Dean Witter Aggressive Equity Fund 4) Morgan Stanley Dean Witter American Opportunities Fund 5) Morgan Stanley Dean Witter Balanced Growth Fund 6) Morgan Stanley Dean Witter Balanced Income Fund 7) Morgan Stanley Dean Witter California Tax-Free Income Fund 8) Morgan Stanley Dean Witter Capital Growth Securities Morgan Stanley Dean Witter Competitive Edge Fund, "BEST 9) IDEAS" PORTFOLIO 10) Morgan Stanley Dean Witter Convertible Securities Trust Morgan Stanley Dean Witter Developing Growth Securities 11) Trust 12) Morgan Stanley Dean Witter Diversified Income Trust 13) Morgan Stanley Dean Witter Dividend Growth Securities Inc. 14) Morgan Stanley Dean Witter Equity Fund 15) Morgan Stanley Dean Witter European Growth Fund Inc. 16) Morgan Stanley Dean Witter Federal Securities Trust 17) Morgan Stanley Dean Witter Financial Services Trust 18) Morgan Stanley Dean Witter Fund of Funds 19) Morgan Stanley Dean Witter Global Dividend Growth Securities 20) Morgan Stanley Dean Witter Global Utilities Fund 21) Morgan Stanley Dean Witter Growth Fund 22) Morgan Stanley Dean Witter Health Sciences Trust 23) Morgan Stanley Dean Witter High Yield Securities Inc. 24) Morgan Stanley Dean Witter Income Builder Fund 25) Morgan Stanley Dean Witter Information Fund 26) Morgan Stanley Dean Witter Intermediate Income Securities 27) Morgan Stanley Dean Witter International Fund 28) Morgan Stanley Dean Witter International SmallCap Fund 29) Morgan Stanley Dean Witter Japan Fund 30) Morgan Stanley Dean Witter Latin American Growth Fund 31) Morgan Stanley Dean Witter Market Leader Trust 32) Morgan Stanley Dean Witter Mid-Cap Equity Trust Morgan Stanley Dean Witter Natural Resource Development 33) Securities Inc. 34) Morgan Stanley Dean Witter New Discoveries Fund 35) Morgan Stanley Dean Witter New York Tax-Free Income Fund 36) Morgan Stanley Dean Witter Next Generation Trust 37) Morgan Stanley Dean Witter Pacific Growth Fund Inc. 38) Morgan Stanley Dean Witter Real Estate Fund 39) Morgan Stanley Dean Witter Small Cap Growth Fund 40) Morgan Stanley Dean Witter Special Value Fund 41) Morgan Stanley Dean Witter S&P 500 Index Fund 42) Morgan Stanley Dean Witter S&P 500 Select Fund 43) Morgan Stanley Dean Witter Strategist Fund 44) Morgan Stanley Dean Witter Tax-Exempt Securities Trust 45) Morgan Stanley Dean Witter Tax-Managed Growth Fund 46) Morgan Stanley Dean Witter Technology Fund 47) Morgan Stanley Dean Witter Total Market Index Fund 48) Morgan Stanley Dean Witter Total Return Trust 49) Morgan Stanley Dean Witter U.S. Government Securities Trust 50) Morgan Stanley Dean Witter Utilities Fund 51) Morgan Stanley Dean Witter Value-Added Market Series 52) Morgan Stanley Dean Witter Value Fund 53) Morgan Stanley Dean Witter World Wide Income Trust
5 EX-99.16(A) 6 a2031791zex-99_16a.txt EXHIBIT 99.16(A) CODE OF ETHICS - ------------------------ (Print Name) MORGAN STANLEY DEAN WITTER ADVISORS INC. MORGAN STANLEY DEAN WITTER SERVICES COMPANY INC. MORGAN STANLEY DEAN WITTER DISTRIBUTORS INC. Effective September 1, 1994 (as amended through November 1, 2000) I. INTRODUCTION Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"), a subsidiary of Morgan Stanley Dean Witter & Co., is an investment adviser or manager of a group of investment companies, referred to herein as the "Morgan Stanley Dean Witter Funds." MSDW Advisors also serves as investment adviser to other clients, including corporate pension funds, other institutions and individuals ("MSDW Advisors Managed Accounts"). This Code of Ethics is adopted by MSDW Advisors in keeping with the general principles and objectives set forth in Sections II and III below, and to enforce the highest legal and ethical standards in light of its fiduciary obligations to the Morgan Stanley Dean Witter Fund shareholders and to MSDW Advisors' other clients. It has also been adopted by Morgan Stanley Dean Witter Services Company Inc. ("Services"), a wholly owned subsidiary of MSDW Advisors, and by Morgan Stanley Dean Witter Distributors Inc. ("Distributors"), a wholly-owned subsidiary of Morgan Stanley Dean Witter & Co.), to apply to their Directors, officers and employees. Employees, officers and Directors of MSDW Advisors, Services and Distributors are also referred to the Morgan Stanley Dean Witter Policy Statement on Insider Trading (attached), which is incorporated in this Code. II. GENERAL PRINCIPLES A. SHAREHOLDER AND CLIENT INTERESTS COME FIRST Every officer, director or employee of MSDW Advisors, Services and Distributors owes a fiduciary duty to the shareholders of the Morgan Stanley Dean Witter Funds and to all other clients of MSDW Advisors. This means that in every decision relating to investments, employees and affiliates must recognize the needs and interests of the Morgan Stanley Dean Witter Fund shareholders and other MSDW Advisors clients, and be certain that at all times the interests of the shareholders and other clients are placed ahead of any personal interest. B. AVOID ACTUAL AND POTENTIAL CONFLICTS OF INTEREST The restrictions and requirements of this Code of Ethics are designed to prevent behavior which conflicts, potentially conflicts or raises the appearance of actual or potential conflict with the interests of the shareholders of the Morgan Stanley Dean Witter Funds and MSDW Advisors Managed Account clients. It is of the utmost importance that the personal securities transactions of employees and affiliates be conducted in a manner consistent with both the letter and spirit of this Code of Ethics, including these principles. Only then can an individual, and MSDW Advisors, Services and Distributors as a whole, be certain to avoid any actual or potential conflict of interest or any abuse of an individual's position of trust and responsibility. 00NYC3531 C. AVOID UNDUE PERSONAL BENEFIT MSDW Advisors, Services and Distributors employees and affiliates should ensure that they do not acquire undue personal benefit or advantage as a result of the performance of their normal duties as they relate to the Morgan Stanley Dean Witter Funds and other MSDW Advisors clients. Consistent with the first principle that the interests of the Morgan Stanley Dean Witter Fund shareholders and other MSDW Advisors clients must always come first is the fundamental standard that undue personal advantage deriving from the management by MSDW Advisors of other people's money is to be avoided. III. OBJECTIVE The Securities and Exchange Commission's code of ethics rule contained in the Investment Company Act of 1940 makes it unlawful for certain persons associated with investment advisers or principal underwriters of investment companies to engage in conduct which is deceitful, fraudulent, or manipulative, or which involves false or misleading statements, in connection with the purchase or sale of a security held or proposed to be acquired by an investment company. In addition, Section 204A of the Investment Advisers Act of 1940 requires investment advisers to establish, maintain and enforce written policies and procedures designed to prevent misuse of material non-public information. The objective of this Code is to maintain the behavior of certain individuals associated with MSDW Advisors, Services and Distributors (herein called "Access Persons") within the general principles set forth above, as well as to prevent such persons from engaging in conduct proscribed by the code of ethics rule and Section 204A of the Investment Advisers Act. The Compliance Officer or Compliance Coordinator in MSDW Advisors Risk Management Department will identify all Access Persons and notify them of their reporting obligations at the time they become an Access Person. Access Persons include all directors, officers and employees of MSDW Advisors, Services or Distributors except those directors and officers of Distributors who meet the following three criteria: (i) they do not devote substantially all working time to the activities of MSDW Advisors, Services or Distributors; (ii) they do not, in connection with their regular functions and duties, participate in, obtain information with respect to, or make recommendations as to, the purchase and sale of securities; and (iii) they do not have access to information regarding the day-to-day investment activities of MSDW Advisors, Services or Distributors (those Directors and officers must, however, file quarterly transaction reports pursuant to Section V., sub-section D., below). An Officer or employee of MSDW Advisors, Distributors or Services on leave is not considered an Access Person hereunder, provided that during the period such person is on leave, subparagraphs (ii) and (iii) in the preceding sentence are applicable. IV. GROUNDS FOR DISQUALIFICATION FROM EMPLOYMENT Pursuant to the terms of Section 9 of the Investment Company Act of 1940, no director, officer or employee of MSDW Advisors, Services or Distributors may become, or continue to remain, an officer, director or employee, without an exemptive order issued by the Securities and Exchange Commission, if such director, officer or employee is, or becomes: A. within the past ten years convicted of any felony or misdemeanor involving the purchase or sale of any security or arising out of the officer's or employee's conduct as an affiliated person, salesman or employee of any investment company, bank, insurance company or entity or person required to be registered under the Commodity Exchange Act; or B. permanently or temporarily enjoined by any court from acting as an affiliated person, salesman or employee of any investment company, bank, insurance company or entity or person required to be registered under the Commodity Exchange Act, or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any security. 2 It is your obligation to immediately report any conviction or injunction to the General Counsel of MSDW Advisors. V. PERSONAL TRANSACTIONS IN SECURITIES A. PROHIBITED CONDUCT No Access Person shall buy or sell any security for his own account or for an account in which he has, or as a result of the transaction acquires, any direct or indirect beneficial ownership (referred to herein as a "personal transaction") unless: 1. advance clearance of the transaction has been obtained; and 2. the transaction is reported in writing to MSDW Advisors in accordance with the requirements of sub-section D below. B. RESTRICTIONS AND LIMITATIONS ON PERSONAL SECURITIES TRANSACTIONS The following restrictions and limitations govern investments and personal securities transactions by Access Persons. Unless otherwise indicated, all restrictions and limitations are applicable to all Access Persons: 1. Securities purchased may not be sold until at least 30 days from the purchase trade date and may not be sold at a profit until at least 60 days from the purchase trade date. In addition, securities sold may not be repurchased until at least 30 days from the sale trade date. In addition, securities sold may not be purchased at a lower price until at least 60 days from the sale trade date. Any violation will result in disgorgement of all profits from the transactions. 2. No short sales are permitted. 3. No transactions in options or futures are permitted, except that listed options may be purchased and covered call options written. No options may be purchased or written if the expiration date is less than 60 days from the date of purchase. No option position may be closed at a profit less than 60 days from the date established. 4. No Access Person may acquire any security in an Initial Public Offering (IPO). 5a. Private placements of any kind may only be acquired with special permission of the Code of Ethics Review Committee, and, if approved, will be subject to continuous monitoring for possible future conflict. Any Access Person wishing to request approval for private placements must complete an MSDW Advisors Private Placement Approval Request Form and submit the form to MSDW Advisors' Risk Management Department. A copy of MSDW Advisors Private Placement Approval Request Form, which may be revised at any time, is attached as Exhibit A. Where the Code of Ethics Review Committee approves any acquisition of private placements, its decision and reasons for supporting the decision will be documented in a written report, which is to be kept for five years in MSDW Advisors' Risk Management Department after the end of the fiscal year in which the approval was granted. 5b. Any Access Person who has a personal position in an issuer through a private placement must affirmatively disclose that interest if such Access Person is involved in consideration of any subsequent investment decision regarding any security of that issuer or an affiliate by any Morgan Stanley Dean Witter Fund or MSDW Advisors Managed Account. In such event, the final investment decision shall be independently reviewed by MSDW Advisor's Chief Investment Officer. Written records of any such circumstance shall be maintained and sent to the MSDW Advisors' Risk Management Department. 6. Access Persons with MSDW Online accounts are permitted to trade ONLY between the hours of 9:30 a.m. and 4:00 p.m. (New York time). Trading after hours is prohibited. 3 THE FOLLOWING RESTRICTIONS, 7a, 7b AND 7c, APPLY ONLY TO (i) PORTFOLIO MANAGERS (AND ALL PERSONS REPORTING TO PORTFOLIO MANAGERS) AND (ii) PERSONNEL IN THE MSDW ADVISORS TRADING DEPARTMENT. 7a. No purchase or sale transactions may be made in any security by any portfolio manager (or person reporting to a portfolio manager) for a period of seven (7) days before or after that security is bought or sold by any Morgan Stanley Dean Witter Fund (other than Morgan Stanley Dean Witter Value-Added Market Series, Morgan Stanley Dean Witter Select Dimensions Investment Series--Value-Added Portfolio, Morgan Stanley Dean Witter Index Funds, or Portfolios) or MSDW Advisors Managed Account for which such portfolio manager (or the portfolio manager to whom such person reports) serves in that capacity. 7b. No purchase or sale transactions may be made in any security traded through the MSDW Advisors trading department by any person employed in the MSDW Advisors trading department for a period of seven (7) days before or after that security is bought or sold by any Morgan Stanley Dean Witter Fund (other than Morgan Stanley Dean Witter Value-Added Market Series, Morgan Stanley Dean Witter Select Dimensions Investment Series--Value-Added Portfolio, Morgan Stanley Dean Witter Index Funds, or Portfolios) or MSDW Advisors Managed Account. 7c. Any transactions by persons described in (a) and (b) above within such enumerated period will be required to be reversed, if applicable, and any profits or, at the discretion of the Code of Ethics Review Committee, any differential between the sale price of the individual security transaction and the subsequent purchase or sale price by a relevant MSDW Fund during the enumerated period, will be subject to disgorgement. IMPORTANT: Regardless of the limited applicability of Restriction 8, MSDW Advisors' Risk Management Department monitors all transactions by ALL Access Persons in order to ascertain any pattern of conduct which may evidence conflicts or potential conflicts with the principles and objectives of this Code, including a pattern of frontrunning. On a quarterly basis, MSDW Advisors' Risk Management Department (i) will provide the MSDW Funds Boards of Directors with a written report that describes issues that arose during the previous quarter under this Code and if applicable, each MSDW Funds' Sub- Adviser's Code, including but not limited to, information about material violations and sanctions imposed in response to the material violations, and (ii) on an annual basis, will certify that MSDW Advisors has adopted procedures reasonably necessary to prevent Access Persons from violating this Code. C. ADVANCE CLEARANCE REQUIREMENT 1. PROCEDURES (a) FROM WHOM OBTAINED Subject to the limitations and restrictions of B above, advance clearance of a personal transaction in a security must be obtained from any two of the following officers of MSDW Advisors: (1) CEO/President (2) Chief Investment Officer (3) Chief Administrative Officer (4) General Counsel (5) any other person so designated by the CEO or President, provided, however, that no more than ten persons, at any time, may be Clearing Officers. 4 These officers are referred to in this Code as "Clearing Officers." Prior to obtaining the two signatures from the Clearing Officers, the form must be approved by the MSDW Advisors Department responsible for the type of security for which permission is being sought, as follows: 1. Equity Trading --Equity Trading Department 2. Fixed-Income Corporate --Manager,Corporate Fixed-Income Bonds 3. Municipal Bonds --Manager, Municipal Fixed-Income 4. Non-Investment Grade --Manager, High Yield Fixed-Income ("Junk") Bonds 5. Collateralized Mortgage --Manager, Government Fixed-Income Obligations (CMOs) and other non-exempt Mortgage and Asset-Backed Securities 6. Convertible Securities --Manager, Convertible Securities
Prior to obtaining the Clearing Officers' signatures the form also must be reviewed and initialed by the MSDW Advisors' Risk Management Department. A copy of MSDW Advisors Securities Transaction Approval Form, which may be revised at any time, is attached as Exhibit B. The Clearing Officers will not sign unless the approvals of the relevant investment department and MSDW Advisors' Risk Management Department are indicated on the form. MSDW Advisors' Risk Management Department has implemented procedures reasonably designed to monitor purchases and sales effected pursuant to the aforementioned pre-clearance procedures. (b) TIME OF CLEARANCE All approved securities transactions, whether executed through AN MSDW BROKERAGE ACCOUNT OR AN MSDW ONLINE ACCOUNT, must take place, prior to 4:00 p.m. EST, on the same day that the complete advance clearance is obtained. If the transaction is not completed on the date of clearance, a new clearance must be obtained, including one for any uncompleted portion. Post-approval is NOT PERMITTED under the Code of Ethics. If it is determined that a trade was completed before approval, it will be considered a violation of the Code of Ethics. (c) PERMITTED BROKERAGE ACCOUNTS ALL SECURITIES TRANSACTIONS MUST BE THROUGH AN MSDW BROKERAGE ACCOUNT OR AN MSDW ONLINE ACCOUNT; NO OTHER BROKERAGE ACCOUNTS ARE PERMITTED UNLESS SPECIAL PERMISSION IS OBTAINED. If you maintain accounts outside of MSDW, you must immediately transfer your accounts to a MSDW branch. Failure to do so will be considered a significant violation of the Code of Ethics. In the event permission is granted to maintain an outside brokerage account, it is the responsibility of the employee to arrange for duplicate confirmations of all securities transactions and monthly brokerage statements to be sent to the MSDW Advisors' Risk Management Department. Prior to opening an MSDW ONLINE ACCOUNT, Access Persons must obtain approval from MSDW Advisors' Risk Management Department. NO employee may open an MSDW Online account unless a completed and signed copy of their MSDW Online account application and MSDW Employee Account Request Form is submitted to MSDW Advisors' Risk Management Department for approval. NO employee may apply for an 5 MSDW ONLINE ACCOUNT ONLINE. A copy of the MSDW Employee Account Request Form, which may be revised at any time, is attached as Exhibit C. (d) FORM Clearance must be obtained by completing and signing the Securities Transaction Approval Form provided for that purpose by MSDW Advisors and obtaining the signature of the correct Department indicated in sub-section C.1 (a) and any two of the Clearing Officers. The form must also indicate the name of the individual's Financial Advisor and the Branch Office Number, whether the account is an MSDW Online Account, as well as other required information. If you have more than one account under your control, indicate on the approval sheet for which account the trade is intended. ADDITIONALLY, PLEASE ADVISE YOUR FINANCIAL ADVISOR OR MSDW ONLINE TO SEND DUPLICATE COPIES OF YOUR CONFIRMATION SLIPS AND BROKER STATEMENTS TO THE MSDW Advisors' Risk Management Department FOR EACH ACCOUNT UNDER YOUR CONTROL. (e) FILING After all required signatures are obtained, the Securities Transaction Approval Form must be filed with the Risk Management Department of MSDW Advisors by noon of the day following execution of the trade for filing in the respective individual's Code of Ethics file. A copy is retained by the employee for his or her records. (If a preclearance request is denied, a copy of the form will be maintained with MSDW Advisors' Risk Management Department.) 2. FACTORS CONSIDERED IN CLEARANCE OF PERSONAL TRANSACTIONS In addition to the limitations and restrictions set forth under B above, the Clearing Officers, in keeping with the general principles and objectives of this Code of Ethics, may refuse to grant clearance of a personal transaction in their sole discretion without being required to specify any reason for the refusal. Generally, the Clearing Officers will consider the following factors in determining whether or not to clear a proposed transaction: (a) Whether the amount or the nature of the transaction or person making it is likely to affect the price or market of the security. (b) Whether the individual making the proposed purchase or sale is likely to benefit from purchases or sales being made or considered on behalf of any Morgan Stanley Dean Witter Fund or client. (c) Whether the transaction is non-volitional on the part of the individual. 3. EXEMPT SECURITIES (a) The securities listed below are exempt from the restrictions of sub-sections (B) (1) and (7), the advance clearance requirement of sub-section C AND the quarterly and annual reporting requirements of sub-section D. Therefore, it is not necessary to obtain advance clearance for personal transactions in any of the following securities nor is it necessary to report such securities in the quarterly transaction reports or annual securities holdings list: (i) U.S. Government Securities; (ii) Bank Certificates of Deposit; (iii) Bankers' Acceptances; 6 (iv) Commercial Paper; (v) Purchases which are part of an automatic dividend reinvestment plan (All employees with dividend reinvestment plans must submit a memorandum to the compliance officer in MSDW Advisors' Risk Management Department stating the name and the amount invested in the automatic dividend reinvestment plan. Any sales must be pre-approved); and (vi) Open-end investment companies (mutual funds) (Closed-end funds must be pre-approved). (b) Unit Investment Trusts are exempt from the restrictions of sub-sections B (1) and (7) and the advance clearance requirement of sub-section C, but are subject to the quarterly and annual reporting requirements of sub-section D: (c) Morgan Stanley Dean Witter & Co. stock (including exercise of stock option grants), due to the fact that it may not be purchased by any actively managed Morgan Stanley Dean Witter Fund (other than index-type funds) or for any MSDW Advisors Managed Account, is exempt from the restrictions of sub-section B (7) and the advance clearance requirement of sub-section C. However, MSDW stock held in an approved brokerage account remains subject to the quarterly and annual reporting requirements of sub- section D as well as the 60 day short swing profit restriction in Section B (1) (except in connection with the sale of MSDW stock acquired through the exercise of employee stock options). The restrictions imposed by Morgan Stanley Dean Witter & Co. on Senior Management and other persons in connection with transactions in Morgan Stanley Dean Witter & Co. stock are not affected by the exemption of Morgan Stanley Dean Witter & Co. stock from the advance clearance requirements of this Code, and continue in effect to the extent applicable. 4. ACCOUNTS COVERED Advance clearance must be obtained for any personal transaction in a security by an Access Person if such Access Person has, or as a result of the transaction acquires, any direct or indirect beneficial ownership in the security. The term "beneficial ownership" is defined by rules of the SEC which will be applicable in all cases. Generally, under the SEC rules, a person is regarded as having beneficial ownership of securities held in the name of: (a) a husband, wife or a minor child; OR (b) a relative sharing the same house; OR (c) anyone else if the Access Person: (i) obtains benefits substantially equivalent to ownership of the securities; or (ii) can obtain ownership of the securities immediately or at some future time. 5. EXEMPTION FROM CLEARANCE REQUIREMENT Clearance is not required for any account over which the Access Person has no influence or control. In case of doubt the Access Person may state on the Securities Transaction Approval Form that he or she disclaims any beneficial ownership in the securities involved. 7 D. REPORT OF TRANSACTIONS 1. TRANSACTIONS AND ACCOUNTS COVERED (a) All securities transactions, except for transactions involving exempt securities listed in Section V., sub-section C.3.(a) and Section V., sub-section D.1.(c) of this Code, must be reported in the next quarterly transaction report after the transaction is effected. The quarterly report shall contain the following information: (i) The date of the transaction, the title, interest rate and maturity date (if applicable), number of shares and principal amount of each security involved; (ii) The nature of the transaction (i.e., purchase, sale, or any other type of acquisition or disposition); (i) The price at which the purchase or sale was effected; (ii) The name of the broker, dealer, or bank with or through which the purchase or sale was effected; and (iii) The date the report was submitted to MSDW Advisors' Risk Management Department by such person. In addition, any new brokerage account(s) opened during the quarter as well as the date(s) the account(s) was opened must be reported. The report must contain the following information: (i) The name of the broker, dealer, or bank with whom the account was established; (ii) The date the account was established; and (iii) The date the report was submitted to MSDW Advisors' Risk Management Department. (b) Directors and officers who, pursuant to Section III, are exempt from preclearance ARE subject to the quarterly reporting requirements. (c) An Access Person need not make a quarterly transaction report if (i) they maintain an MSDW brokerage account or MSDW Online Account AND (ii) the report would duplicate information contained in the broker trade confirms or account statements received by MSDW Advisors' Risk Management Department and (iii) no new brokerage accounts were opened during the quarter by such person, including any account established with MSDW Online or an MSDW broker. 2. TIME OF REPORTING (a) INITIAL HOLDINGS REPORT Each Access Person must, at the time of becoming an Access Person, provide an initial holdings report to the Compliance Officer or Compliance Coordinator disclosing (i) all securities beneficially owned by the Access Person listing the title of the security, number of shares held, and principal amount of the security (any privately-placed securities held must be reported) (ii) the name of the broker dealer or financial institution where the Access Person maintains a personal account and (iii) the date the report is submitted by the Access Person. New employees will be required to provide a listing of all non-exempt securities holdings as of the date of commencement of employment as well as a listing of all outside brokerage accounts. This report must be provided no later than 10 days after a person becomes an Access Person. 8 (b) QUARTERLY TRANSACTION REPORTS Each Access Person must submit a quarterly report of all securities transactions, except for transactions involving exempt securities listed in Section V., sub-section C.3.(a) and transactions in accounts defined in Section V., sub-section D.1(c) of this Code, within 10 calendar days after the end of each calendar quarter. Any new brokerage Accounts(s) opened during the quarter as well as the date(s) the account(s) was opened must be reported within 10 calendar days after the end of each calendar quarter. (c) ANNUAL HOLDINGS REPORTS The January Annual Listing of Securities Holdings Report requires all Access Persons (including those who may have been exempt from having to file quarterly reports pursuant to D.1.(c), above) to provide an annual listing of holdings of (i) all securities beneficially owned listing the title of the security, number of shares held, and principal amount of the security as of December 31 of the preceding year, except securities exempt from pre-clearance AND reporting under Section V., sub-section C. 3(a), (ii) the name of any broker dealer or financial institution where the account(s) are maintained, as of December 31 of the preceding year (a current listing will also be required upon the effectiveness of this Code) and (iii) the date the Report is submitted by the Access Person. The information must be current as of a date not more than 30 days before the report is submitted. 3. FORM OF REPORTING The initial holdings report, quarterly transaction report and the annual listing of holdings report must be on the appropriate forms provided by MSDW Advisors. Not submitting a quarterly transaction report to MSDW Advisors' Risk Management Department will constitute a representation by an Access Person, that such person has (i) only executed reportable transactions in an exempt account as defined in Section V., sub-section D.1(c) above, or (ii) only traded securities exempt from the reporting requirements defined in Section V., sub- section C.3(a) above. In addition, not submitting a quarterly transaction report will constitute a representation that during the quarter such person has not opened any new brokerage accounts of mutual fund accounts with brokerage facilities during the quarter. Copies of MSDW Advisors' initial holdings report, quarterly transaction report and the annual listing of holdings report, which may be revised at any time, are attached as Exhibits D, E, and F, respectively. 4. RESPONSIBILITY TO REPORT The responsibility for taking the initiative to report is imposed on each individual required to make a report. Any effort by MSDW Advisors to facilitate the reporting process does not change or alter that responsibility. 5. WHERE TO FILE REPORT All reports must be filed with the Risk Management Department of MSDW Advisors. 6. RESPONSIBILITY TO REVIEW MSDW Advisors' Risk Management Department's Compliance Officer or Compliance Coordinator will review all initial holdings reports, quarterly transaction reports, and annual listing of holdings reports filed by Access Persons as well as broker confirmations and account statements. 9 VI. REVIEW COMMITTEE A Code of Ethics Review Committee, consisting of the CEO/ President, Chief Investment Officer and the General Counsel of MSDW Advisors, will review and consider any proper request of an Access Person for relief or exemption from any restriction, limitation or procedure contained herein, which restriction, limitation or procedure is claimed to cause a hardship for such Access Person. The committee shall meet on an ad hoc basis, as deemed necessary upon written request by an Access Person, stating the basis for his or her request for relief. The committee's decision is solely within its complete discretion. VII. SERVICE AS DIRECTOR No Access Person may serve on the board of any company without prior approval of the Code of Ethics Review Committee. If such approval is granted, it will be subject to the implementation of Chinese Wall procedures to isolate investment personnel serving as directors from making investment decisions for Morgan Stanley Dean Witter Funds or MSDW Advisors Managed Accounts concerning the company in question. VIII. GIFTS No Access Person shall accept, directly or indirectly, anything of value, including gifts and gratuities, in excess of $100 per year from any person or entity that does business with any Morgan Stanley Dean Witter Fund or MSDW Advisors Managed Account, not including occasional meals or tickets to theater or sporting events or other similar entertainment. IX. SANCTIONS Upon discovering a violation of this Code, MSDW Advisors may impose such sanctions as it deems appropriate, including, but not limited to, a reprimand (orally or in writing), demotion, and suspension or termination of employment. The CEO of MSDW Advisors, in his sole discretion, is authorized to determine the choice of sanctions to be imposed in specific cases, including termination of employment of any employee. X. EFFECTIVE DATE All employees, officers and Directors of MSDW Advisors, Services and Distributors (whether or not Access Persons) are required to sign a copy of this Code indicating their agreement to abide by the terms of this Code. In addition, all employees, officers and Directors of MSDW Advisors, Services and Distributors will be required to certify annually that (i) they have read and understand the terms of this Code of Ethics and recognize the responsibilities and obligations incurred by their being subject to this Code, and (ii) they are in compliance with the requirements of this Code of Ethics, including but not limited to the reporting of all brokerage accounts, the preclearance for Access Persons and all non-exempt personal securities transactions in accordance with this Code. XI. EMPLOYEE CERTIFICATION I have read and understand the terms of the above Code of Ethics. I recognize the responsibilities and obligations, including but not limited to my quarterly transaction, annual listing of holdings, and initial holdings reporting obligations, incurred by me as a result of my being subject to this Code of Ethics. I hereby agree to abide by the above Code of Ethics. - -------------------------------------- ------------------------ (Signature) (Date) - -------------------------------------- (Print name) 10 EX-99.16(B) 7 a2031791zex-99_16b.txt EXHIBIT 99.16(B) MORGAN STANLEY DEAN WITTER FUNDS CODE OF ETHICS I. INTRODUCTION This Code of Ethics is adopted by the investment companies listed on Schedule A attached hereto, which list may be amended from time to time (each a "Fund" and collectively the "Morgan Stanley Dean Witter Funds" or the "Funds"), in compliance with Rule 17j-1 promulgated by the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940, as amended. This Code covers all persons who are "Access Persons," as that term is defined in Rule 17j-1. To the extent that any such individuals are "Access Persons" under the Code of Ethics of the Funds' Investment Advisor, Investment Manager, or Sub-Advisor, as applicable (any such entity herein referred to as "Investment Advisor"), whose Codes have also been established pursuant to Rule 17j-1, compliance by such individuals with the provisions of the Code of the applicable Investment Advisor shall constitute compliance with this Code. II. PERSONAL TRANSACTIONS A. REPORTS OF TRANSACTIONS - INDEPENDENT DIRECTORS/TRUSTEES An Independent Director/Trustee of a Morgan Stanley Dean Witter Fund shall report quarterly to the Fund any personal transaction in a security if he or she knows or should know at the time of entering into the transaction that: (a) the Fund has engaged in a transaction in the same security within the last 15 days, or is engaging in such transaction or is going to engage in a transaction in the same security in the next 15 days, or (b) the Fund or its Investment Advisor has within the last 15 days considered a transaction in the same security or is considering a transaction in the security or within the next 15 days is going to consider a transaction in the security. B. REPORTS OF TRANSACTIONS, BROKERAGE ACCOUNTS AND HOLDINGS - ACCESS PERSONS WHO ARE NOT INDEPENDENT DIRECTORS/ TRUSTEES An Access Person who is not an Independent Director/Trustee of a Morgan Stanley Dean Witter Fund shall report all non-exempt securities transactions and new brokerage accounts on a quarterly basis. An Access Person who is not an Independent Director/Trustee of a Morgan Stanley Dean Witter Fund shall provide an annual listing of holdings of (i) all securities beneficially owned as of December 31 of the preceding year, except securities exempt from pre-clearance and reporting under Section D., (2) hereof listing the title of the security, number of shares held, and principal amount of the security, (ii) the name of any broker dealer or financial institution where the account(s) are maintained, as of December 31 of the preceding year (a current listing will also be required upon the effectiveness of this Code) and (iii) the date the Report is submitted by the Access Person. The information must be current as of a date not more than 30 days before the report is submitted. New Access Persons, who are not Independent Directors/Trustees of a Morgan Stanley Dean Witter Fund, will be required to provide a listing of all non-exempt securities holdings, with the information set forth above, as of the date of commencement of employment as well as a listing of all outside brokerage accounts no later than ten days after that person becomes an Access Person. C. REPORTS OF TRANSACTIONS, BROKERAGE ACCOUNTS AND HOLDINGS - GENERAL Any quarterly report required under A or B above must be made within ten days after the end of the calendar quarter in which the personal transaction occurred. The report may be made on the form provided by the Investment Advisor or may consist of a broker statement that provides at least the same information. In the event that MSDW Advisors already maintains a record of the required information, an Access Person may satisfy this requirement by (i) confirming in writing (which may include e-mail) the accuracy and completeness of the record and disclose the beneficial ownership of 00NYC3532 securities (if any) not listed on the account statement and (ii) recording the date of the confirmation. Copies of the Investment Advisor's forms, which may be revised at any time, are attached. The Funds' Compliance Officer will identify and advise all Access Persons, including the Independent Directors/Trustees, subject to the reporting requirement under A or B above, of their reporting requirement. Each report required under A or B above will be submitted for review by the Compliance Officer or Compliance Coordinator in the Risk Management Department of the Investment Advisor. D. DEFINITIONS AND EXEMPTIONS (1) DEFINITIONS For purposes of this Code the term "personal transaction" means the purchase or sale, or other acquisition or disposition, of a security for the account of the individual making the transaction or for an account in which he or she has, or as a result of the transaction acquires, any direct or indirect beneficial ownership in a security. The term "beneficial ownership" is defined by rules of the SEC. Generally, under SEC rules a person is regarded as having beneficial ownership of securities held in the name of: (a) a husband, wife, or minor child; (b) a relative sharing the same house; (c) anyone else if the access person - (i) obtains benefits substantially equivalent to ownership of the securities; or (ii) can obtain ownership of the securities immediately or at some future time. The term "Access Person" is defined by rules of the SEC as (i) any director, officer, or general partner of a fund or of a fund's investment adviser, or any employee of a fund or of a fund's investment adviser who, in connection with his or her regular functions or duties, participates in the selection of a fund's portfolio securities or who has access to information regarding a fund's future purchases or sales of portfolio securities; or (ii) any director, officer, or general partner of a principal underwriter who in the ordinary course of business, makes, participates in or obtains information regarding, the purchase or sale of securities for the fund for which the principal underwriter acts, or whose functions or duties in the ordinary course of business relate to the making of any recommendation to the fund regarding the purchase or sale of securities. (2) EXEMPTIONS No report is required for a personal transaction in any of the following securities: (i) Securities issued by the U.S. Government; (ii) Bank certificates of deposit; (iii) Bankers' acceptances; (iv) Commercial paper; (v) Open-end mutual fund shares. Also, no report is required with respect to any account over which the access person has no influence or control. III. CODE VIOLATIONS Any officer of a Morgan Stanley Dean Witter Fund who discovers a violation or apparent violation of this Code by an access person shall bring the matter to the attention of the Chief Executive Officer or General Counsel of the Fund who shall then report the matter to the Board of Directors or the Board of Trustees, as the case may be, of the fund. The Board shall determine whether a violation has occurred and, if it so finds, may impose such sanctions, if any, as it considers appropriate. IV. ADMINISTRATION OF CODE OF ETHICS On a quarterly basis, the Board of Directors or the Board of Trustees of each of the Funds shall be provided with a written report by each of the Funds and the Investment Advisors, that describes any new issues arising under the Code of Ethics, including information on material violations of the Code of Ethics or procedures and sanctions imposed, and certifies that each Fund and the Investment Advisors have adopted procedures reasonably necessary to prevent Access Persons from violating the Code of Ethics. Rev. March 1, 2000 MORGAN STANLEY DEAN WITTER FUNDS AT NOVEMBER 16, 2000 MONEY MARKET FUNDS 1. Active Assets California Tax-Free Trust 2. Active Assets Government Securities Trust 3. Active Assets Institutional Money Trust 4. Active Assets Money Trust 5. Active Assets Premier Money Trust 6. Active Assets Tax-Free Trust 7. Morgan Stanley Dean Witter California Tax-Free Daily Income Trust 8. Morgan Stanley Dean Witter Liquid Asset Fund Inc. 9. Morgan Stanley Dean Witter New York Municipal Money Market Trust 10. Morgan Stanley Dean Witter Tax-Free Daily Income Trust 11. Morgan Stanley Dean Witter U.S. Government Money Market Trust EQUITY FUNDS 12. Morgan Stanley Dean Witter Aggressive Equity Fund 13. Morgan Stanley Dean Witter All Star Growth Fund 14. Morgan Stanley Dean Witter American Opportunities Fund 15. Morgan Stanley Dean Witter Capital Growth Securities 16. Morgan Stanley Dean Witter Competitive Edge Fund 17. Morgan Stanley Dean Witter Developing Growth Securities Trust 18. Morgan Stanley Dean Witter Dividend Growth Securities Inc. 19. Morgan Stanley Dean Witter Equity Fund 20. Morgan Stanley Dean Witter European Growth Fund Inc. 21. Morgan Stanley Dean Witter Financial Services Trust 22. Morgan Stanley Dean Witter Fund of Funds 23. Morgan Stanley Dean Witter Global Dividend Growth Securities 24. Morgan Stanley Dean Witter Global Utilities Fund 25. Morgan Stanley Dean Witter Growth Fund 26. Morgan Stanley Dean Witter Health Sciences Trust 27. Morgan Stanley Dean Witter Income Builder Fund 28. Morgan Stanley Dean Witter Information Fund 29. Morgan Stanley Dean Witter International Fund 30. Morgan Stanley Dean Witter International SmallCap Fund 31. Morgan Stanley Dean Witter Japan Fund 32. Morgan Stanley Dean Witter Latin American Growth Fund 33. Morgan Stanley Dean Witter Market Leader Trust 34. Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities 35. Morgan Stanley Dean Witter Mid-Cap Equity Trust 36. Morgan Stanley Dean Witter Natural Resource Development Securities Inc. 37. Morgan Stanley Dean Witter New Discoveries Fund 38. Morgan Stanley Dean Witter Next Generation Trust 39. Morgan Stanley Dean Witter Pacific Growth Fund Inc. 40. Morgan Stanley Dean Witter Real Estate Fund 41. Morgan Stanley Dean Witter Small Cap Growth Fund 42. Morgan Stanley Dean Witter S&P 500 Index Fund 43. Morgan Stanley Dean Witter S&P 500 Select Fund 44. Morgan Stanley Dean Witter Special Value Fund 45. Morgan Stanley Dean Witter Tax-Managed Growth Fund 46. Morgan Stanley Dean Witter Technology Fund 47. Morgan Stanley Dean Witter Total Market Index Fund 48. Morgan Stanley Dean Witter Total Return Trust 49. Morgan Stanley Dean Witter 21st Century Trend Fund 50. Morgan Stanley Dean Witter Utilities Fund 51. Morgan Stanley Dean Witter Value-Added Market Series 52. Morgan Stanley Dean Witter Value Fund BALANCED FUNDS 53. Morgan Stanley Dean Witter Balanced Growth Fund 54. Morgan Stanley Dean Witter Balanced Income Fund ASSET ALLOCATION FUND 55. Morgan Stanley Dean Witter Strategist Fund FIXED-INCOME FUNDS 56. Morgan Stanley Dean Witter California Tax-Free Income Fund 57. Morgan Stanley Dean Witter Convertible Securities Trust 58. Morgan Stanley Dean Witter Diversified Income Trust 59. Morgan Stanley Dean Witter Federal Securities Trust 60. Morgan Stanley Dean Witter Hawaii Municipal Trust 61. Morgan Stanley Dean Witter High Yield Securities Inc 62. Morgan Stanley Dean Witter Intermediate Income Securities 63. Morgan Stanley Dean Witter Limited Term Municipal Trust 64. Morgan Stanley Dean Witter Multi-State Municipal Series Trust 65. Morgan Stanley Dean Witter New York Tax-Free Income Fund 66. Morgan Stanley Dean Witter North American Government Income Trust 67. Morgan Stanley Dean Witter Select Municipal Reinvestment Fund 68. Morgan Stanley Dean Witter Short-Term Bond Fund 69. Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust 70. Morgan Stanley Dean Witter Tax-Exempt Securities Trust 71. Morgan Stanley Dean Witter U.S. Government Securities Trust 72. Morgan Stanley Dean Witter World Wide Income Trust SPECIAL PURPOSE FUNDS 73. Morgan Stanley Dean Witter Select Dimensions Investment Series 74. Morgan Stanley Dean Witter Variable Investment Series CLOSED-END FUNDS 75. Morgan Stanley Dean Witter California Insured Municipal Income Trust 76. Morgan Stanley Dean Witter California Quality Municipal Securities 77. Morgan Stanley Dean Witter Government Income Trust 78. Morgan Stanley Dean Witter High Income Advantage Trust 79. Morgan Stanley Dean Witter High Income Advantage Trust II 80. Morgan Stanley Dean Witter High Income Advantage Trust III 81. Morgan Stanley Dean Witter Income Securities Inc. 82. Morgan Stanley Dean Witter Insured California Municipal Securities 83. Morgan Stanley Dean Witter Insured Municipal Bond Trust 84. Morgan Stanley Dean Witter Insured Municipal Income Trust 85. Morgan Stanley Dean Witter Insured Municipal Securities 86. Morgan Stanley Dean Witter Insured Municipal Trust 87. Morgan Stanley Dean Witter Municipal Income Opportunities Trust 88. Morgan Stanley Dean Witter Municipal Income Opportunities Trust II 89. Morgan Stanley Dean Witter Municipal Income Opportunities Trust III 90. Morgan Stanley Dean Witter Municipal Income Trust 91. Morgan Stanley Dean Witter Municipal Income Trust II 92. Morgan Stanley Dean Witter Municipal Income Trust III 93. Morgan Stanley Dean Witter Municipal Premium Income Trust 94. Morgan Stanley Dean Witter New York Quality Municipal Securities 95. Morgan Stanley Dean Witter Prime Income Trust 96. Morgan Stanley Dean Witter Quality Municipal Income Trust 97. Morgan Stanley Dean Witter Quality Municipal Investment Trust 98. Morgan Stanley Dean Witter Quality Municipal Securities TCW/DW TERM TRUSTS AT NOVEMBER 16, 2000 1. TCW/DW Term Trust 2000 2. TCW/DW Term Trust 2002 3. TCW/DW Term Trust 2003 EX-99.OTHER 8 a2031791zex-99_other.txt EXHIBIT 99.OTHER POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that JAMES F. HIGGINS, whose signature appears below, constitutes and appoints Barry Fink and Marilyn Cranney, or either of them, his true and lawful attorneys-in-fact and agents, with full power of substitution among himself and each of the persons appointed herein, for him and in his name, place and stead, in any and all capacities, to sign any amendments to any registration statement of ANY OF THE MORGAN STANLEY DEAN WITTER FUNDS AND THE TCW/DW TERM TRUSTS SET FORTH IN THE LIST ANNEXED HERETO, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, may lawfully do or cause to be done by virtue hereof. Dated: June 12, 2000 /s/ JAMES F. HIGGINS James F. Higgins 00NYC6669 MORGAN STANLEY DEAN WITTER FUNDS AT JUNE 12, 2000 OPEN-END FUNDS TAXABLE MONEY MARKET FUNDS 1. Active Assets Government Securities Trust ("AA GOVERNMENT") 2. Active Assets Institutional Money Trust ("AA INSTITUTIONAL") 3. Active Assets Money Trust ("AA MONEY") 4. Active Assets Premier Money Trust ("AA PREMIER") 5. Morgan Stanley Dean Witter Liquid Asset Fund Inc. ("LIQUID ASSET") 6. Morgan Stanley Dean Witter U.S. Government Money Market Trust ("GOVERNMENT MONEY") TAX-EXEMPT MONEY MARKET FUNDS 7. Active Assets California Tax-Free Trust ("AA CALIFORNIA") 8. Active Assets Tax-Free Trust ("AA TAX-FREE") 9. Morgan Stanley Dean Witter California Tax-Free Daily Income Trust ("CALIFORNIA TAX-FREE DAILY") 10. Morgan Stanley Dean Witter New York Municipal Money Market Trust ("NEW YORK MONEY") 11. Morgan Stanley Dean Witter Tax-Free Daily Income Trust ("TAX-FREE DAILY") EQUITY FUNDS 12. Morgan Stanley Dean Witter Aggressive Equity Fund ("AGGRESSIVE EQUITY") 13. Morgan Stanley Dean Witter American Opportunities Fund ("AMERICAN OPPORTUNITIES") 14. Morgan Stanley Dean Witter Capital Growth Securities ("CAPITAL GROWTH") 15. Morgan Stanley Dean Witter Competitive Edge Fund ("COMPETITIVE EDGE") 16. Morgan Stanley Dean Witter Developing Growth Securities Trust ("DEVELOPING GROWTH") 17. Morgan Stanley Dean Witter Dividend Growth Securities Inc. ("DIVIDEND GROWTH") 18. Morgan Stanley Dean Witter Equity Fund ("EQUITY FUND") 19. Morgan Stanley Dean Witter European Growth Fund Inc. ("EUROPEAN GROWTH") 20. Morgan Stanley Dean Witter Financial Services Trust ("FINANCIAL SERVICES") 21. Morgan Stanley Dean Witter Fund of Funds ("FUND OF FUNDS") 22. Morgan Stanley Dean Witter Global Dividend Growth Securities ("GLOBAL DIVIDEND GROWTH") 23. Morgan Stanley Dean Witter Global Utilities Fund ("GLOBAL UTILITIES") 24. Morgan Stanley Dean Witter Growth Fund ("GROWTH FUND") 25. Morgan Stanley Dean Witter Health Sciences Trust ("HEALTH SCIENCES") 26. Morgan Stanley Dean Witter Income Builder Fund ("INCOME BUILDER") 27. Morgan Stanley Dean Witter Information Fund ("INFORMATION FUND") 28. Morgan Stanley Dean Witter International Fund ("INTERNATIONAL FUND") 29. Morgan Stanley Dean Witter International SmallCap Fund ("INTERNATIONAL SMALLCAP") 30. Morgan Stanley Dean Witter Japan Fund ("JAPAN FUND") 31. Morgan Stanley Dean Witter Latin American Growth Fund ("LATIN AMERICAN") 32. Morgan Stanley Dean Witter Market Leader Trust ("MARKET LEADER") 33. Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities ("MID-CAP DIVIDEND GROWTH") 34. Morgan Stanley Dean Witter Mid-Cap Equity Trust ("MID-CAP EQUITY") 35. Morgan Stanley Dean Witter Natural Resource Development Securities Inc. ("NATURAL RESOURCE") 36. Morgan Stanley Dean Witter Next Generation Trust ("NEXT GENERATION") 37. Morgan Stanley Dean Witter New Discoveries Fund ("NEW DISCOVERIES") 38. Morgan Stanley Dean Witter Pacific Growth Fund Inc. ("PACIFIC GROWTH") 39. Morgan Stanley Dean Witter Real Estate Fund ("REAL ESTATE") 40. Morgan Stanley Dean Witter Small Cap Growth Fund ("SMALL CAP GROWTH") 41. Morgan Stanley Dean Witter S&P 500 Index Fund ("S&P500 INDEX") 42. Morgan Stanley Dean Witter S&P 500 Select Fund ("S&P 500 SELECT") 43. Morgan Stanley Dean Witter Special Value Fund ("SPECIAL VALUE") 44. Morgan Stanley Dean Witter Tax-Managed Growth Fund ("TAX-MANAGED GROWTH") 45. Morgan Stanley Dean Witter Total Market Index Fund ("TOTAL MARKET INDEX") 46. Morgan Stanley Dean Witter Total Return Trust ("TOTAL RETURN") 47. Morgan Stanley Dean Witter 21st Century Trend Fund ("21ST CENTURY TREND") 48. Morgan Stanley Dean Witter Utilities Fund ("UTILITIES FUND") 49. Morgan Stanley Dean Witter Value-Added Market Series ("VALUE-ADDED") 50. Morgan Stanley Dean Witter Value Fund ("VALUE FUND") BALANCED FUNDS 51. Morgan Stanley Dean Witter Balanced Growth Fund ("BALANCED GROWTH") 52. Morgan Stanley Dean Witter Balanced Income Fund ("BALANCED INCOME") ASSET ALLOCATION FUND 53. Morgan Stanley Dean Witter Strategist Fund ("STRATEGIST FUND") TAXABLE FIXED-INCOME FUNDS 54. Morgan Stanley Dean Witter Convertible Securities Trust ("CONVERTIBLE SECURITIES") 55. Morgan Stanley Dean Witter Diversified Income Trust ("DIVERSIFIED INCOME") 56. Morgan Stanley Dean Witter Federal Securities Trust ("FEDERAL SECURITIES") 57. Morgan Stanley Dean Witter High Yield Securities Inc ("HIGH YIELD") 58. Morgan Stanley Dean Witter Intermediate Income Securities ("INTERMEDIATE INCOME") 59. Morgan Stanley Dean Witter North American Government Income Trust ("NORTH AMERICAN GOVERNMENT") 60. Morgan Stanley Dean Witter Select Municipal Reinvestment Fund ("MUNICIPAL REINVESTMENT") 61. Morgan Stanley Dean Witter Short-Term Bond Fund ("SHORT-TERM BOND") 62. Morgan Stanley Dean Witter Short-Term U.S. Treasury Trust ("SHORT-TERM TREASURY") 63. Morgan Stanley Dean Witter U.S. Government Securities Trust ("GOVERNMENT SECURITIES") 64. Morgan Stanley Dean Witter World Wide Income Trust ("WORLD WIDE INCOME") TAX-EXEMPT FIXED-INCOME FUNDS 65. Morgan Stanley Dean Witter California Tax-Free Income Fund ("CALIFORNIA TAX-FREE") 66. Morgan Stanley Dean Witter Hawaii Municipal Trust ("HAWAII MUNICIPAL") 67. Morgan Stanley Dean Witter Limited Term Municipal Trust ("LIMITED TERM MUNICIPAL") 68. Morgan Stanley Dean Witter Multi-State Municipal Series Trust ("MULTI-STATE SERIES") 69. Morgan Stanley Dean Witter New York Tax-Free Income Fund ("NEW YORK TAX-FREE") 70. Morgan Stanley Dean Witter Tax-Exempt Securities Trust ("TAX-EXEMPT SECURITIES") SPECIAL PURPOSE FUNDS 71. Morgan Stanley Dean Witter Select Dimensions Investment Series ("SELECT DIMENSIONS") 72. Morgan Stanley Dean Witter Variable Investment Series ("VARIABLE INVESTMENT") CLOSED-END FUNDS TAXABLE FIXED-INCOME CLOSED-END FUNDS 73. Morgan Stanley Dean Witter Government Income Trust ("GOVERNMENT INCOME") 74. Morgan Stanley Dean Witter High Income Advantage Trust ("HIGH INCOME") 75. Morgan Stanley Dean Witter High Income Advantage Trust II ("HIGH INCOME II") 76. Morgan Stanley Dean Witter Income Securities Inc. ("INCOME SECURITIES") 77. Morgan Stanley Dean Witter Prime Income Trust ("PRIME INCOME") TAX-EXEMPT FIXED-INCOME CLOSED-END FUNDS 78. Morgan Stanley Dean Witter California Insured Municipal Income Trust ("CALIFORNIA INSURED MUNICIPAL") 79. Morgan Stanley Dean Witter Insured Municipal Bond Trust ("INSURED MUNICIPAL BOND") 80. Morgan Stanley Dean Witter Insured Municipal Income Trust ("INSURED MUNICIPAL INCOME") 81. Morgan Stanley Dean Witter Insured Municipal Trust ("INSURED MUNICIPAL TRUST") 82. Morgan Stanley Dean Witter Municipal Income Opportunities Trust ("MUNICIPAL OPPORTUNITIES") 83. Morgan Stanley Dean Witter Municipal Income Opportunities Trust III ("MUNICIPAL OPPORTUNITIES III") 84. Morgan Stanley Dean Witter Municipal Income Trust ("MUNICIPAL INCOME") 85. Morgan Stanley Dean Witter Municipal Premium Income Trust ("MUNICIPAL PREMIUM") 86. Morgan Stanley Dean Witter Quality Municipal Income Trust ("QUALITY MUNICIPAL INCOME") 87. Morgan Stanley Dean Witter Quality Municipal Investment Trust ("QUALITY MUNICIPAL INVESTMENT") TCW/DW TERM TRUSTS AT JUNE 12, 2000 1. TCW/DW Term Trust 2000 ("TERM TRUST 2000") 2. TCW/DW Term Trust 2002 ("TERM TRUST 2002") 3. TCW/DW Term Trust 2003 ("TERM TRUST 2003") -----END PRIVACY-ENHANCED MESSAGE-----