<PAGE>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
- --------------------------------------------------------------------------------
EQUITY GROWTH PORTFOLIO
SEMI-ANNUAL REPORT
JUNE 30, 1999
<PAGE>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
EQUITY GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT OVERVIEW
THE INFORMATION CONTAINED IN THIS OVERVIEW REGARDING SPECIFIC SECURITIES IS FOR
INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION TO
PURCHASE OR SELL THE SECURITIES MENTIONED. THE PERFORMANCE RESULTS PROVIDED ARE
FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A GUARANTEE OF
THE PORTFOLIO'S FUTURE PERFORMANCE. PAST PERFORMANCE SHOWN IS NOT PREDICTIVE OF
FUTURE PERFORMANCE. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
COMPOSITION OF NET ASSETS (AT JUNE 30, 1999)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Capital Goods 19.7%
Communication Services 6.2%
Consumer Cyclicals 13.0%
Consumer Staples 13.6%
Energy 0.4%
Financial 4.3%
Healthcare 12.4%
Technology 22.4%
Utilities 0.3%
Other 7.7%
</TABLE>
PERFORMANCE COMPARED TO THE S&P 500 INDEX
- ------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURNS(2)
------------------------------------------
<S> <C> <C> <C>
AVERAGE ANNUAL
YTD ONE YEAR SINCE INCEPTION
---------- ---------- ------------------
PORTFOLIO..... 15.36% 18.95% 27.49%
INDEX......... 12.38 22.75 30.39
</TABLE>
1. The S&P 500 Index is comprised of 500 large-cap U.S. companies with market
capitalization of $1 billion or more. These 500 companies are a
representative sample of some 100 industries chosen mainly for market size,
liquidity and industry group representation.
2. Total returns for the Portfolio reflect expenses waived and reimbursed, if
applicable, by the Adviser. Without such waiver and reimbursement, total
returns would be lower.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
<S> <C> <C>
PERCENT OF
SECURITY INDUSTRY NET ASSETS
- ------------------------ ----------- -------------
Tyco International Ltd. Capital 6.7%
Goods
Microsoft Corp. Technology 4.4
General Electric Co. Capital 4.1
Goods
Cisco Systems, Inc. Technology 3.7
United Technologies
Corp. Capital 3.7
Goods
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE SECTORS
<S> <C> <C>
VALUE PERCENT OF
SECTOR (000) NET ASSETS
- ------------------- --------- -------------
Technology $ 19,166 22.4%
Capital Goods 16,839 19.7
Consumer Staples 11,657 13.6
Consumer Cyclicals 11,125 13.0
Healthcare 10,586 12.4
</TABLE>
The Equity Growth Portfolio seeks long-term capital appreciation by investing
primarily in equity securities of U.S. and to a limited extent, foreign
companies that exhibit strong or accelerating earnings growth.
For the six months ended June 30, 1999, the Portfolio had a total return of
15.36% compared to 12.38% for the S&P 500 Index (the "Index"). For the one year
ended June 30, 1999, the Portfolio had a total return of 18.95% compared to
22.75% for the Index. For the period since inception on January 2, 1997 through
June 30, 1999, the Portfolio had an average annual total return of 27.49%
compared to 30.39% for the Index.
The first half of the year was, as usual, quite eventful. As growth investors,
we were very pleased to have survived the "revenge of the value stocks" in the
early part of the second quarter. The value rally occurred when investors rushed
to purchase cyclically oriented companies in reaction to a stronger economy and
increased interest rates. At one point during the roughly six week period of the
cyclical rally, the Russell 1000 Value index had outperformed the Russell 1000
Growth index by over 1000 basis points. We were patient, stuck to our discipline
and opportunistically added to some of our highest quality growth names at
attractive prices. When growth moved back into vogue later in the second
quarter, the Portfolio benefited.
For the second quarter, the Portfolio rose 7.53%, outperforming the S&P 500
Index return of 7.05% and the Lipper Growth index return of 6.49%. The
Portfolio's non-traditional growth stock holdings such as Tyco (our largest
position), Gulfstream Aerospace (acquired by General Dynamics) and AT&T were
significant contributors to performance in the quarter.
The Portfolio's non-traditional growth stock holdings drove performance over the
six month period as well, with Tyco and United Technologies each contributing
about 180 and 175 basis points respectively and Clear Channel adding about 105
basis points to the overall return.
Tyco became our largest holding late in the first quarter when pressure due to
the AMP acquisition led us to again increase our position. With the stock up 25%
in the first six months and 32% during the second quarter, we garnered
approximately 180 basis points of performance from this holding
1
<PAGE>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
EQUITY GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT OVERVIEW (CONT.)
alone in the first half. Subsequent to the AMP acquisition, Tyco also announced
additive acquisitions of Raychem and several smaller niche companies.
During the period, Gulfstream Aerospace, which rose about 27% in the first half,
agreed to be acquired by General Dynamics. Earnings had been increasing at an
annual pace of well over 20%, yet early in the second quarter the stock was
selling at only about 12 times 2000 estimated earnings per share. After the deal
closes in the third quarter, the Portfolio will hold about a 2.0% position in
General Dynamics. We view General Dynamics as one of our non-traditional growth
holdings. The company has been increasing earnings per share at an annual rate
of about 15%. General Dynamics was a ten bagger in the early/mid 1990s when the
company was in a divestiture mode. Today the company is in the process of
proving they can also enhance shareholder value via acquisitions.
One of the sector themes which has percolated up from our stock research is what
we call "imbedded" internet exposure. We believe the internet phenomenon is real
and is permanently altering the way businesses interact with customers and how
businesses interface with other businesses. We do not believe this is debatable.
What could be debated, however, is the question of appropriate valuations for
the pure play internet companies. We have elected to participate in this very
exciting growth opportunity in a risk averse way, as we believe there are a
number of internet business models that will not be successful and therefore the
valuations accorded some of the high fliers will not be sustainable. Rather than
owning the "dot.com" company du jour, we have exposure to internet content,
advertising/media, telecommunication/satellite infrastructure and hardware plays
through several well established companies such as Clear Channel Communications,
Comcast, Time Warner, AT&T, MCI Worldcom, Cisco, Sun Micosystems and General
Motors Corp., Class H (Hughes Electronics). We believe that a particularly
interesting way to play the internet is through media/advertising companies that
are used to drive eyeballs to websites. In total, imbedded internet plays
accounted for about 25% of the Portfolio at quarter end. We believe this
actually understates our "imbedded" exposure, as it excludes our 4.39% stake in
Microsoft (a clear internet beneficiary) as well as the tower antennae companies
such as American Tower and Crown Castle (1.1% of the Portfolio) which should
benefit from the proliferation of wireless devices that can provide internet
connectivity. Even General Electric (a 4.06% holding) has an imbedded internet
play through its NBC subsidiary.
After increasing health care exposure in the first quarter from under 10% at
year-end to about 13% at March 31, our weighting remained fairly stable during
the second quarter. However, opportunistic investments and sales in the second
quarter have transitioned the mix of investments to those companies that we
believe have more powerful business momentum. Toward this end, we eliminated our
successful investment in Bausch & Lomb after a substantial run-up in the stock
price. We increased positions in Bristol-Myers and Warner Lambert as we believe
the investment community does not fully appreciate their earnings potential.
Proposed Medicare legislation and a strengthening economy (which makes stable
pharmaceutical earnings growth look relatively less attractive) have led to
nearly 20% relative underperformance for the drug group year-to-date. We believe
these stocks are near their relative lows and we will look to add to them
opportunistically.
Notwithstanding higher interest rates than we and the investment community had
expected earlier in the year, we believe inflation remains in check. Gross
domestic product growth, while stronger than expected, should be held to
reasonable levels by the Fed and the recovery of foreign markets, while
potentially powerful, is more likely to be U-shaped than V-shaped. This bodes
well for the continued outperformance of medium and large capitalization growth
stocks.
The Portfolio tends to be diversified by issue and we held over 70 securities at
June 30. The Portfolio remains a mix of "classic" growth stocks such as
Microsoft, General Electric, Cisco, Merck and Intel, as well as less traditional
growth names such as Tyco International, United Technologies and Clear Channel
Communications. At quarter end, our largest position was Tyco, which represented
6.7% of the Portfolio's net assets, and the ten largest holdings accounted for
38.5% the assets. We continue to believe that our philosophy of opportunistic
concentration (of which our weighting in Tyco is a good example) should lead to
above Index performance.
July 1999
2
<PAGE>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
EQUITY GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<C> <S> <C>
- -------------------------------------------------------------------------
COMMON STOCKS (92.3%)
CAPITAL GOODS (19.7%)
AEROSPACE/DEFENSE (1.9%)
(a)24,100 Gulfstream Aerospace Corp........................ $ 1,628
-------
ELECTRICAL EQUIPMENT (4.2%)
30,700 General Electric Co. ............................ 3,469
(a)7,400 Wesco International, Inc. ....................... 152
-------
3,621
-------
MANUFACTURING (DIVERSIFIED) (11.5%)
12,500 Textron, Inc. ................................... 1,029
60,100 Tyco International Ltd........................... 5,694
43,600 United Technologies Corp. ....................... 3,126
-------
9,849
-------
OFFICE EQUIPMENT & SUPPLIES (2.1%)
27,100 Pitney Bowes, Inc. .............................. 1,741
-------
TOTAL CAPITAL GOODS........................................... 16,839
-------
COMMUNICATION SERVICES (6.2%)
TELECOMMUNICATIONS (CELLULAR/WIRELESS) (0.5%)
(a)19,300 Crown Castle International Corp. ................ 402
-------
TELECOMMUNICATIONS (LONG DISTANCE) (4.3%)
23,860 AT&T Corp. ...................................... 1,332
(a)27,500 MCI WorldCom, Inc. .............................. 2,372
-------
3,704
-------
TELEPHONE (1.4%)
18,500 Bell Atlantic Corp. ............................. 1,209
-------
TOTAL COMMUNICATION SERVICES.................................. 5,315
-------
CONSUMER CYCLICALS (13.0%)
LEISURE TIME PRODUCTS (0.0%)
300 Harley-Davidson, Inc. ........................... 16
-------
RETAIL (BUILDING SUPPLIES) (2.5%)
33,000 Home Depot, Inc. ................................ 2,126
-------
RETAIL (GENERAL MERCHANDISE) (3.8%)
(a)20,400 Costco Co., Inc. ................................ 1,633
33,700 Wal-Mart Stores, Inc. ........................... 1,626
-------
3,259
-------
RETAIL (SPECIALTY) (3.2%)
(a)21,200 Abercrombie & Fitch Co. ......................... 1,018
24,975 Gap, Inc. ....................................... 1,258
10,600 Intimate Brands, Inc. ........................... 502
-------
2,778
-------
RETAIL (SPECIALTY/APPAREL) (0.7%)
(a)27,000 Office Depot, Inc. .............................. 596
-------
RETAIL (COMPUTERS & ELECTRONICS) (0.2%)
(a)2,200 Best Buy Co., Inc. .............................. 149
-------
SERVICES (ADVERTISING/MARKETING) (1.1%)
11,300 Omnicom Group, Inc. ............................. 904
-------
<CAPTION>
VALUE
SHARES (000)
<C> <S> <C>
- -------------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) (1.5%)
(a)4 Berkshire Hathaway, Inc., Class A................ $ 275
(a)312 Berkshire Hathaway, Inc., Class B................ 702
(a)10,933 Nielson Media Research, Inc. .................... 320
-------
1,297
-------
TOTAL CONSUMER CYCLICALS...................................... 11,125
-------
CONSUMER STAPLES (13.6%)
BEVERAGES (ALCOHOLIC) (0.5%)
6,700 Anheuser-Busch Co., Inc. ........................ 475
-------
BEVERAGES (NON-ALCOHOLIC) (0.5%)
13,300 Coca-Cola Enterprises, Inc. ..................... 396
-------
BROADCASTING (TV, RADIO, CABLE) (7.4%)
(a)37,600 AT&T Corp.-Liberty Media Group, Class A.......... 1,382
(a)14,600 Chancellor Media Corp., Class A.................. 805
(a)37,300 Clear Channel Communications, Inc. .............. 2,571
1,300 Comcast Corp., Class A........................... 47
37,500 Comcast Corp., Class A (Special)................. 1,441
(a)600 Mediaone Group, Inc. ............................ 45
-------
6,291
-------
ENTERTAINMENT (2.4%)
27,900 Time Warner, Inc. ............................... 2,051
-------
FOODS (0.4%)
(a)12,200 Keebler Foods, Co. .............................. 370
-------
HOUSEHOLD PRODUCTS (NON-DURABLES) (1.1%)
10,700 Procter & Gamble Co. ............................ 955
-------
RESTAURANTS (0.3%)
(a)8,200 Brinker International, Inc. ..................... 223
-------
TOBACCO (1.0%)
22,300 Philip Morris Cos., Inc. ........................ 896
-------
TOTAL CONSUMER STAPLES........................................ 11,657
-------
ENERGY (0.4%)
OIL (INTERNATIONAL INTEGRATED) (0.4%)
3,900 Exxon Corp. ..................................... 301
-------
FINANCIAL (4.3%)
BANKS (MAJOR REGIONAL) (1.1%)
25,400 Bank of New York Co., Inc. ...................... 932
-------
FINANCIAL (DIVERSIFIED) (3.2%)
11,200 American Express Co. ............................ 1,457
27,700 Citigroup, Inc. ................................. 1,316
(a)100 E-Loan, Inc. .................................... 4
-------
2,777
-------
TOTAL FINANCIAL............................................... 3,709
-------
HEALTHCARE (12.4%)
HEALTHCARE (DIVERSIFIED) (5.6%)
6,300 American Home Products Corp. .................... 362
27,900 Bristol-Myers Squibb Co. ........................ 1,965
7,900 Johnson & Johnson................................ 774
24,200 Warner Lambert Co. .............................. 1,679
-------
4,780
-------
HEALTHCARE (DRUGS--GENERIC & OTHERS) (1.2%)
16,900 Amgen, Inc. ..................................... 1,029
-------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
EQUITY GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS (CONT.)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -------------------------------------------------------------------------
<C> <S> <C>
HEALTHCARE (DRUGS--MAJOR PHARMS) (5.6%)
5,500 Eli Lilly & Co. ................................. $ 394
26,100 Merck & Co., Inc. ............................... 1,931
12,900 Pfizer, Inc. .................................... 1,416
6,100 Pharmacia & Upjohn, Inc. ........................ 347
13,000 Schering-Plough Corp. ........................... 689
-------
4,777
-------
TOTAL HEALTHCARE.............................................. 10,586
-------
TECHNOLOGY (22.4%)
COMMUNICATION EQUIPMENT (3.4%)
(a)22,100 American Tower Corp., Class A.................... 530
(a)2,600 Ciena Corp. ..................................... 78
(a)3,600 L-3 Communications Holdings, Inc. ............... 174
11,100 Lucent Technologies, Inc. ....................... 749
14,700 Motorola, Inc. .................................. 1,393
-------
2,924
-------
COMPUTERS (HARDWARE) (0.4%)
(a)4,700 Sun Microsystems, Inc. .......................... 324
-------
COMPUTERS (NETWORKING) (4.3%)
(a)3,800 At Home Corp., Series A.......................... 205
(a)48,800 Cisco Systems, Inc. ............................. 3,147
(a)2,200 Juniper Networks, Inc. .......................... 328
-------
3,680
-------
COMPUTERS (PERIPHERALS) (0.4%)
(a)14,300 Quantum Corp. ................................... 345
-------
COMPUTERS (SOFTWARE & SERVICES) (7.5%)
500 Ask Jeeves, Inc. ................................ 7
(a)8,900 America Online, Inc. ............................ 983
(a)6,000 BMC Software, Inc. .............................. 324
100 Clarent Corp. ................................... 1
(a)11,100 Compuware Corp. ................................. 353
(a)41,600 Microsoft Corp. ................................. 3,752
(a)6,700 New Era of Networks, Inc. ....................... 294
(a)19,700 Novell, Inc. .................................... 522
(a)5,750 Oracle Corp. .................................... 214
-------
6,450
-------
ELECTRONICS (COMPONENT DISTRIBUTORS) (0.6%)
(a)2,900 Uniphase Corp. .................................. 482
-------
ELECTRONICS (DEFENSE) (1.7%)
(a)5,900 General Motors Corp., Class H.................... 332
(a)7,800 Litton Industries, Inc. ......................... 559
(a)31,600 Loral Space & Communications Ltd................. 569
-------
1,460
-------
ELECTRONICS (SEMICONDUCTORS) (3.1%)
36,400 Intel Corp. ..................................... 2,166
3,600 Texas Instruments, Inc. ......................... 522
-------
2,688
-------
<CAPTION>
VALUE
SHARES (000)
<C> <S> <C>
- -------------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTORS) (1.0%)
(a)11,000 Applied Materials, Inc. ......................... $ 813
-------
TOTAL TECHNOLOGY.............................................. 19,166
-------
UTILITIES (0.3%)
ELECTRIC COMPANIES (0.3%)
3,100 Montana Power Co. ............................... 218
-------
TOTAL COMMON STOCKS (COST $65,250).............................. 78,916
-------
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT
(000)
<C> <S> <C>
- ------------
SHORT-TERM INVESTMENT (2.5%)
REPURCHASE AGREEMENT (2.5%)
$2,127 Chase Securities, Inc. 4.55%, dated 6/30/99, due
7/1/99, to be repurchased at $2,127,
collateralized by U.S. Treasury Notes, 11.125%,
due 8/15/03, valued at $2,185
(COST $2,127).................................. 2,127
-------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS (94.8%) (COST $67,377)........................ 81,043
-------
OTHER ASSETS (7.2%)
Cash................................................. $ 15
Receivable for Portfolio Shares Sold................. 5,255
Receivable for Investments Sold...................... 848
Dividends Receivable................................. 39
Other Assets......................................... 1 6,158
-------
LIABILITIES (-2.0%)
Custodian Fees Payable............................... (7)
Investment Advisory Fees Payable..................... (8)
Administrative Fees Payable.......................... (17)
Professional Fees Payable............................ (24)
Payable for Portfolio Shares Redeemed................ (27)
Payable for Investments Purchased.................... (1,602)
Other Liabilities.................................... (38) (1,723)
------- -------
NET ASSETS (100%)............................................... $85,478
-------
-------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE
Applicable to 4,906,898 outstanding $0.001 par value shares
(authorized 500,000,000 shares)............................... $17.42
-------
-------
NET ASSETS CONSIST OF:
Paid in Capital................................................. $69,929
Undistributed Net Investment Income............................. 35
Accumulated Net Realized Gain................................... 1,848
Unrealized Appreciation on Investments.......................... 13,666
-------
NET ASSETS...................................................... $85,478
-------
-------
</TABLE>
- ----------------------------------------------------------------
(a) -- Non-income producing security
- ----------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
EQUITY GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS (CONT.)
JUNE 30, 1999
(UNAUDITED)
- ----------------------------------------------------------------
At June 30, 1999, cost and unrealized appreciation (depreciation) for U.S.
Federal income tax purposes of the investments of the Portfolio were:
<TABLE>
<CAPTION>
NET
COST APPRECIATION (DEPRECIATION) APPRECIATION
(000) (000) (000) (000)
- --------- ------------- --------------- -------------
<S> <C> <C> <C>
$ 67,377 $ 14,248 $ (582) $ 13,666
</TABLE>
- ----------------------------------------------------------------
For the six months ended June 30, 1999, purchases and sales of investment
securities for the Portfolio, other than long-term U.S. Government securities
and short-term investments, were approximately $56,984,000 and $37,512,000,
respectively. There were no purchases and sales of U.S. Government securities
for the six months ended June 30, 1999.
- ----------------------------------------------------------------
At December 31, 1998, the Portfolio had available capital loss carryforwards of
approximately $879,000 to offset future net capital gains, to the extent
provided by regulations, through December 31, 2006. To the extent that capital
loss carryforwards are used to offset future net capital gains realized during
the carryforward period as provided by U.S. Federal income tax regulations, no
capital gains tax liability will be incurred by the Portfolio for gains realized
and not distributed. To the extent that capital gains are so offset, such gains
will not be distributed to shareholders.
Net capital and net currency losses incurred after October 31 and within the
taxable year are deemed to arise on the first business day of the Portfolio's
net taxable year. For the period from November 1, 1998 to December 31, 1998, the
Portfolio incurred and elected to defer until January 1, 1999, for U.S. Federal
income tax purposes net capital losses of approximately $699,000.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
EQUITY GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999
(UNAUDITED)
(000)
<S> <C>
- --------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 192
Interest 61
--------
Total Income 253
--------
EXPENSES:
Investment Advisory Fees 187
Less: Fees Waived (108)
--------
Net Investment Advisory Fees 79
Administrative Fees 89
Shareholder Reports 55
Professional Fees 44
Custodian Fees 17
Directors' Fees and Expenses 1
Other 5
--------
Net Expenses 290
--------
Net Investment Loss (37)
--------
NET REALIZED GAIN ON:
Investments Sold 3,997
--------
CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION ON:
Investments 6,011
--------
Net Realized Gain and Change in
Unrealized
Appreciation/Depreciation 10,008
--------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 9,971
--------
--------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998
(000) (000)
<S> <C> <C>
- -----------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net Investment Income (Loss) $ (37) $ 82
Net Realized Gain (Loss) 3,997 (2,114)
Change in Unrealized
Appreciation/Depreciation 6,011 6,719
-------- --------
Net Increase in Net Assets
Resulting from Operations 9,971 4,687
-------- --------
DISTRIBUTIONS:
Net Realized Gain -- (211)
-------- --------
Total Distributions -- (211)
-------- --------
CAPITAL SHARE TRANSACTIONS (1):
Subscribed 26,549 45,859
Distributions Reinvested -- 211
Redeemed (7,257) (6,750)
-------- --------
Net Increase in Net Assets Resulting
from Capital Share Transactions 19,292 39,320
-------- --------
Total Increase in Net Assets 29,263 43,796
NET ASSETS:
Beginning of Period 56,215 12,419
-------- --------
End of Period (Including
undistributed net investment
income of $35 and $72,
respectively) $ 85,478 $ 56,215
-------- --------
-------- --------
- -----------------------------------------------------------------------------
(1) Capital Share Transactions:
Shares Subscribed 1,633 3,215
Shares Issued on Distributions
Reinvested -- 14
Shares Redeemed (449) (481)
-------- --------
Net Increase in Capital Shares
Outstanding 1,184 2,748
-------- --------
-------- --------
- -----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
EQUITY GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTHS ENDED JANUARY 2, 1997*
JUNE 30, 1999 YEAR ENDED TO DECEMBER 31,
SELECTED PER SHARE DATA AND RATIOS (UNAUDITED) DECEMBER 31, 1998 1997
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.10 $ 12.74 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.01) 0.02 0.02
Net Realized and Unrealized Gain 2.33 2.43 3.27
------- ------- -------
Total From Investment Operations 2.32 2.45 3.29
------- ------- -------
DISTRIBUTIONS
Net Investment Income -- -- (0.02)
Net Realized Gain -- (0.09) (0.53)
------- ------- -------
Total Distributions -- (0.09) (0.55)
------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 17.42 $ 15.10 $ 12.74
------- ------- -------
------- ------- -------
TOTAL RETURN 15.36% 19.29% 33.05%
------- ------- -------
------- ------- -------
RATIOS AND SUPPLEMENTAL DATA:
Net Assets, End of Period (000's) $ 85,478 $ 56,215 $ 12,419
Ratio of Expenses to Average Net Assets 0.85%** 0.85% 0.85%**
Ratio of Net Investment Income (Loss) to
Average Net Assets (0.11)%** 0.28% 0.41%**
Portfolio Turnover Rate 59% 149% 172%
- ------------------------------------------------------------------------------------------------------------
Effect of Voluntary Expense Limitation
During the Period:
Per Share Benefit to Net Investment
Income (Loss) $ 0.04 $ 0.04 $ 0.07
Ratios Before Expense Limitation:
Expenses to Average Net Assets 1.16%** 1.31% 2.05%**
Net Investment Loss to Average Net
Assets (0.42)%** (0.18)% (0.80)%**
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations
** Annualized
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
Morgan Stanley Dean Witter Universal Funds, Inc., formerly Morgan Stanley
Universal Funds, Inc., (the "Fund") is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. As of
June 30, 1999, the Fund was comprised of twelve separate active portfolios
(individually referred to as a "Portfolio", collectively as the "Portfolios").
The accompanying financial statements relate to the Equity Growth Portfolio.
Please refer to the Investment Overview for the Portfolio's investment
objectives.
The Fund is intended to be the funding vehicle for variable annuity contracts
and variable life insurance policies to be offered by the separate accounts of
certain life insurance companies.
A. ACCOUNTING POLICIES: The following significant accounting policies are in
conformity with generally accepted accounting principles for investment
companies. Such policies are consistently followed by the Fund in the
preparation of the financial statements. Generally accepted accounting
principles may require management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual results
may differ from those estimates.
1. SECURITY VALUATION: Equity securities listed on a U.S. exchange and equity
securities traded on NASDAQ are valued at the latest quoted sales price on the
valuation date. Securities listed on a foreign exchange are valued at their
closing price. Unlisted securities and listed securities not traded on the
valuation date, for which market quotations are readily available, are valued at
the average of the mean between the current bid and asked prices obtained from
reputable brokers. Bonds and other fixed income securities may be valued
according to the broadest and most representative market. In addition, bonds and
other fixed income securities may be valued on the basis of prices provided by a
pricing service. The prices provided by a pricing service are determined without
regard to bid or last sale prices, but take into account institutional size
trading in similar groups of securities and any developments related to the
specific securities. Debt securities purchased with remaining maturities of 60
days or less are valued at amortized cost, if it approximates market value. All
other securities and assets for which market values are not readily available,
including restricted securities, are valued at fair value as determined in good
faith by the Board of Directors, although the actual calculations may be done by
others.
2. INCOME TAXES: It is each Portfolio's intention to qualify as a regulated
investment company and distribute all of its taxable and tax-exempt income.
Accordingly, no provision for Federal income taxes is required in the financial
statements.
Certain Portfolios may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on income and/or capital gains earned or
repatriated. Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation as these amounts are earned.
Taxes may also be based on transactions in foreign currency and are accrued
based on the value of investments denominated in such currency.
3. REPURCHASE AGREEMENTS: The Portfolios of the Fund may enter into repurchase
agreements under which the Portfolio lends excess cash and takes possession of
securities with an agreement that the counterparty will repurchase such
securities. In connection with transactions in repurchase agreements, a bank as
custodian for the Fund takes possession of the underlying securities which are
held as collateral, with a market value at least equal to the amount of the
repurchase transaction, including principal and accrued interest. To the extent
that any repurchase transaction exceeds one business day, the value of the
collateral is marked-to-market on a daily basis to determine the adequacy of the
collateral. In the event of default on the obligation to repurchase, the Fund
has the right to liquidate the collateral and apply the proceeds in satisfaction
of the obligation. In the event of default or bankruptcy by the counterparty to
the agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.
4. FOREIGN CURRENCY TRANSLATION AND FOREIGN INVESTMENTS: The books and records
of the Fund are maintained in U.S. dollars. Foreign currency amounts are
translated into U.S. dollars at the mean of the bid and asked prices of such
currencies against U.S. dollars last quoted by a major bank as follows:
- investments, other assets and liabilities at the prevailing rates of
exchange on the valuation date;
- investment transactions and investment income at the prevailing rates of
exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates
and market values at the close of the period, 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 fluctuations arising from changes in the market
prices of the securities held at period end. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of securities sold during the period.
Accordingly, realized and unrealized foreign currency gains (losses) are
included in the reported net realized and unrealized gains (losses) on
investment transactions and balances. However, pursuant to U.S. Federal income
tax regulations, gains and losses from certain
8
<PAGE>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONT.)
JUNE 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
foreign currency transactions and the foreign currency portion of gains and
losses realized on sales and maturities of foreign denominated debt securities
are treated as ordinary income for U.S. Federal income tax purposes.
Net realized gains (losses) on foreign currency transactions represent net
foreign exchange gains (losses) from foreign currency exchange contracts,
disposition of foreign currencies, currency gains or losses realized between the
trade and settlement dates on securities transactions, and the difference
between the amount of investment income and foreign withholding taxes recorded
on the Fund's books and the U.S. dollar equivalent amounts actually received or
paid. Net unrealized currency gains (losses) from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected as
a component of unrealized appreciation (depreciation) on the Statement of Net
Assets. The change in net unrealized currency gains (losses) for the period is
reflected on the Statement of Operations.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. dollar denominated
transactions as a result of, among other factors, the possibility of lower
levels of governmental supervision and regulation of foreign securities markets
and the possibility of political or economic instability.
Prior governmental approval for foreign investments may be required under
certain circumstances in some countries, and the extent of foreign investments
in domestic companies may be subject to limitation in other countries. Foreign
ownership limitations also may be imposed by the charters of individual
companies to prevent, among other concerns, violation of foreign investment
limitations. As a result, an additional class of shares (identified as "Foreign"
in the Statement of Net Assets) may be created and offered for investment. The
"local" and "foreign" shares' market values may differ. In the absence of
trading of the foreign shares in such markets, the Fund values the foreign
shares at the closing exchange price of the local shares. Such securities are
identified as fair valued in the Statement of Net Assets.
The investment techniques of the Fund described in the following notes (5-11)
are applicable to certain, but not all, of the Portfolios of the Fund.
5. FOREIGN CURRENCY EXCHANGE CONTRACTS: Certain Portfolios may enter into
foreign currency exchange contracts generally to attempt to protect securities
and related receivables and payables against changes in future foreign currency
exchange rates. A foreign currency exchange contract is an agreement between two
parties to buy or sell currency at a set price on a future date. The market
value of the contract will fluctuate with changes in currency exchange rates.
The contract is marked-to-market daily and the change in market value is
recorded by the Portfolio as unrealized gain or loss. The Portfolio records
realized gains or losses when the contract is closed 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. Risk may arise upon entering into these contracts from the
potential inability of counterparties to meet the terms of their contracts and
is generally limited to the amount of the unrealized gain on the contracts, if
any, at the date of default. Risks may also arise from unanticipated movements
in the value of a foreign currency relative to the U.S. dollar.
6. FORWARD COMMITMENTS AND WHEN-ISSUED/DELAYED DELIVERY SECURITIES: Certain
Portfolios may make forward commitments to purchase or sell securities. Payment
and delivery for securities which have been purchased or sold on a forward
commitment basis can take place up to 120 days after the date of the
transaction. Additionally, a Portfolio may purchase securities on a when-issued
or delayed delivery basis. Securities purchased on a when-issued or delayed
delivery basis are purchased for delivery beyond the normal settlement date at a
stated price and yield, and no income accrues to the Portfolio on such
securities prior to delivery. When the Portfolio enters into a purchase
transaction on a when-issued or delayed delivery basis, it establishes either a
segregated account in which it maintains liquid assets in an amount at least
equal in value to the Portfolio's commitments to purchase such securities or
designates such assets as segregated on the records of the Portfolio. Purchasing
securities on a forward commitment or when-issued or delayed-delivery basis may
involve a risk that the market price at the time of delivery may be lower than
the agreed upon purchase price, in which case there could be an unrealized loss
at the time of delivery.
7. LOAN AGREEMENTS: Certain Portfolios may invest in fixed and floating rate
loans ("Loans") arranged through private negotiations between an issuer of
sovereign debt obligations and one or more financial institutions ("Lenders")
deemed to be creditworthy by the investment adviser. A Portfolio's investments
in Loans may be in the form of participations in Loans ("Participations") or
assignments of all or a portion of Loans ("Assignments") from third parties. A
Portfolio's investment in Participations typically results in the Portfolio
having a contractual relationship with only the Lender and not with the
borrower. The Portfolio has the right to receive payments of principal, interest
and any fees to which it is entitled only upon receipt by the Lender of the
payments from the borrower. A Portfolio generally has no right to enforce
compliance by the borrower with the terms of the loan agreement. As a result,
the Portfolio may be subject to the credit risk of both the borrower and the
Lender that is selling the Participation. When a Portfolio purchases Assignments
from Lenders, it typically acquires direct rights
9
<PAGE>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONT.)
JUNE 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
against the borrower on the Loan. Because Assignments are arranged through
private negotiations between potential assignees and potential assignors, the
rights and obligations acquired by the Portfolio as the purchaser of an
Assignment may differ from, and be more limited than, those held by the
assigning Lender.
8. SHORT SALES: Certain Portfolios may sell securities short. A short sale is a
transaction in which the Portfolio sells securities it may or may not own, but
has borrowed, in anticipation of a decline in the market price of the
securities. The Portfolio is obligated to replace the borrowed securities at the
market price at the time of replacement. The Portfolio may have to pay a premium
to borrow the securities as well as pay any dividends or interest payable on the
securities until they are replaced. The Portfolio's obligation to replace the
securities borrowed in connection with a short sale will generally be secured by
collateral deposited with the broker that consists of cash, U.S. government
securities or other liquid, high grade debt obligations. In addition, the
Portfolio will either designate on the custodian records in its regular custody
account or place in a segregated account with its Custodian an amount of cash,
U.S. government securities or other liquid high grade debt obligations equal to
the difference, if any, between (1) the market value of the securities sold and
(2) any cash, U.S. government securities or other liquid high grade debt
obligations deposited as collateral with the broker in connection with the short
sale. Short sales by the Portfolio involve certain risks and special
considerations. Possible losses from short sales differ from losses that could
be incurred from a purchase of a security, because losses from short sales may
be unlimited, whereas losses from purchases cannot exceed the total amount
invested.
9. FUTURES: Certain Portfolios may purchase and sell futures contracts. Futures
contracts provide for the sale by one party and purchase by another party of a
specified amount of a specified security, index, instrument or basket of
instruments. Futures contracts (secured by cash or government securities
deposited with brokers or custodians as "initial margin") are valued based upon
their quoted daily settlement prices; changes in initial settlement value
(represented by cash paid to or received from brokers as "variation margin") are
accounted for as unrealized appreciation (depreciation). When futures contracts
are closed, the difference between the opening value at the date of purchase and
the value at closing is recorded as realized gains or losses in the Statement of
Operations.
Certain Portfolios may use futures contracts in order to manage exposure to the
stock and bond markets, to hedge against unfavorable changes in the value of
securities or to remain fully invested and to reduce transaction costs. Futures
contracts involve market risk in excess of the amounts recognized in the
Statement of Net Assets. Risks arise from the possible movements in security
values underlying these instruments. The change in value of futures contracts
primarily corresponds with the value of their underlying instruments, which may
not correlate with the change in value of the hedged investments. In addition,
there is the risk that a Portfolio may not be able to enter into a closing
transaction because of an illiquid secondary market.
10. SWAP AGREEMENTS: The Portfolios may enter into swap agreements to exchange
one return or cash flow for another return or cash flow in order to hedge
against unfavorable changes in the value of securities or to remain fully
invested and to reduce transaction costs. The following summarizes swaps which
may be entered into by the Portfolios.
INTEREST RATE SWAPS: Interest rate swaps involve the exchange of commitments to
pay and receive interest based on a notional principal amount. Net periodic
interest payments to be received or paid are accrued daily and are recorded in
the Statement of Operations as an adjustment to interest income. Interest rate
swaps are marked-to-market daily based upon quotations from market makers and
the change, if any, is recorded as unrealized appreciation or depreciation in
the Statement of Operations.
TOTAL RETURN SWAPS: Total return swaps involve commitments to pay interest in
exchange for a market-linked return based on a notional amount. To the extent
the total return of the security, instrument or basket of instruments underlying
the transaction exceeds or falls short of the offsetting interest obligation,
the Portfolio will receive a payment from or make a payment to the counterparty,
respectively. Total return swaps are marked-to-market daily based upon
quotations from market makers and the change, if any, is recorded as
appreciation or depreciation in the Statement of Operations. Periodic payments
received or made at the end of each measurement period are recorded as realized
gains or losses in the Statement of Operations.
Realized gains or losses on maturity or termination of interest rate and total
return swaps are presented in the Statement of Operations.
Because there is no organized market for these swap agreements, the value of
open swaps reported in the Statement of Net Assets may differ from that which
would be realized in the event the Portfolio terminated its position in the
agreement. Risks may arise upon entering into these agreements from the
potential inability of the counterparties to meet the terms of the agreements
and are generally limited to the amount of net interest payments to be received
and/or favorable movements in the value of the underlying security, instrument
or basket of instruments, if any, at the date of default.
10
<PAGE>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONT.)
JUNE 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
11. PURCHASED AND WRITTEN OPTIONS: Certain Portfolios may write covered call and
put options on portfolio securities and other financial instruments. Premiums
are received and are recorded as liabilities. The liabilities are subsequently
adjusted to reflect the current value of the options written. Premiums received
from writing options which expire are treated as realized gains. Premiums
received from writing options which are exercised or are closed are added to or
offset against the proceeds or amount paid on the transaction to determine the
net realized gain or loss. By writing a covered call option, a Portfolio, in
exchange for the premium, foregoes the opportunity for capital appreciation
above the exercise price should the market price of the underlying security
increase. By writing a covered put option, a Portfolio, in exchange for the
premium, accepts the risk of a decline in the market value of the underlying
security below the exercise price.
Certain Portfolios may purchase call and put options on their portfolio
securities or other financial instruments. A Portfolio may purchase call options
to protect against an increase in the price of the security or financial
instrument it anticipates purchasing. Each Portfolio may purchase put options on
securities which it holds or other financial instruments to protect against a
decline in the value of the security or financial instrument or to close out
covered written put positions. Risks may arise from an imperfect correlation
between the change in market value of the securities held by the Portfolio and
the prices of options relating to the securities purchased or sold by the
Portfolio and from the possible lack of a liquid secondary market for an option.
The maximum exposure to loss for any purchased option is limited to the premium
initially paid for the option.
12. OTHER: Security transactions are accounted for on the date the securities
are purchased or sold. Realized gains and losses on the sale of investment
securities are determined on the specific identified cost basis. Dividend income
is recorded on the ex-dividend date (except for certain foreign dividends that
may be recorded as soon as the Fund is informed of such dividends) net of
applicable withholding taxes where recovery of such taxes is not reasonably
assured. Interest income is recognized on the accrual basis except where
collection is in doubt. Discounts and premiums on securities purchased (other
than mortgage-backed securities) are amortized according to the effective yield
method over their respective lives. Most expenses of the Fund can be directly
attributed to a particular Portfolio. Expenses which cannot be directly
attributed are apportioned among the Portfolios based upon relative net assets.
Distributions from the Portfolios are recorded on the ex-distribution date.
The amount and character of income and capital gain distributions to be paid by
Portfolios of the Fund are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing book and tax treatments for the
character and timing of the recognition of gains or losses on securities and
foreign currency exchange contracts, the timing of the deductibility of certain
foreign taxes and dividends received from real estate investment trusts.
Permanent book and tax basis differences relating to shareholder distributions
may result in reclassifications among undistributed net investment income
(loss), accumulated net realized gain (loss) and paid in capital.
Permanent book and tax differences, if any, are not included in ending
undistributed (distributions in excess of) net investment income/accumulated net
investment loss for the purpose of calculating net investment income (loss) per
share in the Financial Highlights.
Settlement and registration of foreign securities transactions may be subject to
significant risks not normally associated with investments in the United States.
In certain markets, including Russia, ownership of shares is defined according
to entries in the issuer's share register. In Russia, there currently exists no
central registration system and the share registrars may not be subject to
effective state supervision. It is possible that a Portfolio holding these
securities could lose its share registration through fraud, negligence or even
mere oversight. In addition, shares being delivered for sales and cash being
paid for purchases may be delivered before the exchange is complete. This may
subject the Portfolio to further risk of loss in the event of a failure to
complete the transaction by the counterparty.
B. ADVISER: Morgan Stanley Dean Witter Investment Management Inc. ("MSDW
Investment Management"), a wholly-owned subsidiary of Morgan Stanley Dean Witter
& Co., provides the Portfolio with investment advisory services for a fee, paid
quarterly, at the annual rate based on average daily net assets as follows:
<TABLE>
<CAPTION>
FROM MORE
FIRST $500 MILLION THAN
PORTFOLIO $500 MILLION TO $1 BILLION $1 BILLION
- ------------- --------------- --------------- -------------
<S> <C> <C> <C>
Equity Growth 0.55% 0.50% 0.45%
</TABLE>
MSDW Investment Management has agreed to reduce fees payable to it and to
reimburse the Portfolio, if necessary, to the extent that the annual operating
expenses, as defined, expressed as a percentage of average daily net assets,
exceed the maximum ratio of 0.85%.
C. ADMINISTRATOR: MSDW Investment Management (the "Administrator") also provides
the Portfolio with administrative services pursuant to an administrative
agreement for a monthly fee which on an annual basis equals 0.25% of the average
daily net assets of the Portfolio, plus reimbursement of out-of-pocket expenses.
Under an
11
<PAGE>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONT.)
JUNE 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
agreement between the Administrator and Chase Global Funds Services Company
("CGFSC"), a corporate affiliate of The Chase Manhattan Bank ("Chase"), CGFSC
provides certain administrative services to the Fund. For such services, the
Administrator pays CGFSC a portion of the fee the Administrator receives from
the Fund. Certain employees of CGFSC are officers of the Fund. In addition, the
Fund incurs local administration fees in connection with doing business in
certain emerging market countries.
D. CUSTODIAN: The Chase Manhattan Bank serves as custodian for the Fund in
accordance with a custodian agreement.
E. OTHER: At June 30, 1999, the net assets of certain Portfolios were
substantially comprised of foreign denominated securities and currency. Changes
in currency exchange rates will affect the U.S. dollar value of and investment
income from such securities.
From time to time, a Portfolio may have shareholders that hold a significant
portion of the Portfolio's outstanding shares. Investment activities of these
shareholders could have a material impact on those Portfolios.
12
<PAGE>
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
- --------------------------------------------------------------------------------
DIRECTORS
Barton M. Biggs
CHAIRMAN OF THE BOARD
Chairman and Director, Morgan Stanley Dean Witter Investment
Management Inc. and Morgan Stanley Dean Witter
Investment Management Limited;
Managing Director, Morgan Stanley & Co. Incorporated
Michael F. Klein
DIRECTOR AND PRESIDENT
Principal, Morgan Stanley Dean Witter Investment Management
Inc. and Morgan Stanley & Co. Incorporated
John D. Barrett II
Chairman and Director,
Barrett Associates, Inc.
Gerard E. Jones
Partner, Richards & O'Neil LLP
Andrew McNally IV
River Road Partners
Samuel T. Reeves
Chairman of the Board and Chief Executive Officer,
Pinnacle L.L.C.
Fergus Reid
Chairman and Chief Executive Officer,
LumeLite Plastics Corporation
Frederick O. Robertshaw
Of Counsel, Copple, Chamberlin & Boehm, P.C.
INVESTMENT ADVISERS AND ADMINISTRATORS
Morgan Stanley Dean Witter Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020
Miller Anderson & Sherrerd, LLP
One Tower Bridge
West Conshohocken, PA 19428-2899
DISTRIBUTOR
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, NY 10020
CUSTODIAN
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, NY 11245
OFFICERS
Stefanie V. Chang
VICE PRESIDENT
James A. Gallo
VICE PRESIDENT
Harold J. Schaaff, Jr.
VICE PRESIDENT
Joseph P. Stadler
VICE PRESIDENT
Richard J. Shoch
VICE PRESIDENT
Mary E. Mullin
SECRETARY
Karl O. Hartmann
ASSISTANT SECRETARY
Belinda A. Brady
ASSISTANT TREASURER
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
- --------------------------------------------------------------------------------
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION ONLY WHEN PRECEDED OR ACCOMPANIED BY
THE PROSPECTUS OF THE MORGAN STANLEY UNIVERSAL FUNDS, INC. WHICH DESCRIBES IN
DETAIL EACH INVESTMENT PORTFOLIO'S INVESTMENT POLICIES, FEES AND EXPENSES.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
13
