MORGAN STANLEY DEAN WITTER FUND OF FUNDS, N-30D, 1998-12-01

MORGAN STANLEY DEAN WITTER FUND OF FUNDS
N-30D, 1998-12-01

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<PAGE>

MORGAN STANLEY DEAN WITTER FUND OF FUNDS TWO WORLD TRADE CENTER,
LETTER TO THE SHAREHOLDERS SEPTEMBER 30, 1998 NEW YORK, NEW YORK 10048

DEAR SHAREHOLDER:

This annual report to shareholders of Morgan Stanley Dean Witter Fund of Funds
(International Portfolio and Domestic Portfolio) covers the fiscal year ended
September 30, 1998.

INTERNATIONAL PORTFOLIO

The international markets have been a continual source of investor concern since
the summer of 1997. The problems began as early as July of that year with the
devaluation of the Thai baht and spread quickly throughout Asia. In what became
known as the Asian flu, no Pacific Rim market was spared and investors in the
United States began to fear a tidal wave of deflation rolling across the
Pacific, corroding corporate profits and driving global equity markets downward.
However, at least through the first half of 1998, it appeared that the European
markets would remain strong, hitting their peaks around the same time as those
of the United States. Then, over the summer of 1998, markets in both Europe and
the United States began to show symptoms of the global turmoil. Most recently,
however, markets around the world have finally seen some recovery, with those of
the United States and Asia progressing at a faster pace than the ones in Europe.

PERFORMANCE AND PORTFOLIO

From its inception on November 25, 1997, through the Fund's fiscal year-end on
September 30, 1998, the International Portfolio's Class A shares returned --
8.36 percent, Class B shares returned -- 8.87 percent, Class C shares returned
- -- 8.87 percent and Class D shares returned -- 8.26 percent. The performance of
the Fund's four share classes varies, primarily because each class has different
expenses. At the same time, the Morgan Stanley Capital International Europe,
Australia, Far East Index (MSCI EAFE Index) returned 0.25 percent and the Lipper
International Funds Index (Lipper Index) returned -- 1.70 percent. The
accompanying chart illustrates the growth of a hypothetical $10,000 investment
in the Portfolio's Class B shares from

<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS
LETTER TO THE SHAREHOLDERS SEPTEMBER 30, 1998, CONTINUED

November 25, 1997, through September 30, 1998, versus similar investments in the
issues that comprise the MSCI EAFE Index and the Lipper Index.

The International Portfolio's underperformance relative to its benchmarks can be
attributed to the contrarian view that the Portfolio's managers have taken since
its inception. This view, that the emerging markets and Japan would rebound
sharply relative to other world markets, placed an initial drag on performance.
However, in recent months, these markets have begun to recover and this
portfolio allocation has begun to pay off. We believe that, over the long term,
the Portfolio's focus on the emerging markets and Japan will continue to make
positive contributions to performance. Accordingly, as of September 30, 1998,
the Portfolio remained overweighted in Asia and underweighted in Europe.

OUTLOOK

Going forward, the Portfolio's managers expect to maintain its current
allocations, with an overweighting in Asian-exposed funds and an underweighting
in European-exposed funds. The committee believes that the Asian countries have
at last bottomed and will improve greatly over the fourth quarter of 1998 and
throughout 1999. Most of the improvement is expected to come from the weakness
of the U.S. dollar and the subsequent boost to commodity prices. Additionally,
the easing of global monetary policies will bring relief where it is most needed
- -- the battered economies of the Pacific Rim. The committee's outlook for Europe
is less positive and the Portfolio's current allocations represent that view.

DOMESTIC PORTFOLIO

Morgan Stanley Dean Witter Fund of Funds Domestic Portfolio's first fiscal
reporting period proved to be a highly volatile time for U.S. financial markets.
At the time the Portfolio began operations on November 25, 1997, domestic stock
markets were struggling to recover from the fallout produced by the first leg of
the Asian financial crisis. However, by the end of 1997 the markets had
recovered and they rallied through the first half of the summer, pushing the Dow
Jones Industrial Average to an all-time high of 9,337 in July. However, the Dow
then fell 19 percent, to a bottom of 7,539 on August 31 as renewed concerns over
international markets and subsequent trouble with some well-respected hedge
funds caused domestic markets to tumble. Then in September, while the markets
remained volatile, they began to show signs of recovery.

2
<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS
LETTER TO THE SHAREHOLDERS SEPTEMBER 30, 1998, CONTINUED

PERFORMANCE AND PORTFOLIO

From its inception on November 25, 1997, through the Fund's fiscal year-end on
September 30, 1998, the Domestic Portfolio's Class A shares returned -- 2.33
percent, Class B shares returned -- 2.83 percent, Class C shares returned --
2.83 percent and Class D shares returned -- 2.13 percent. The performance of the
Fund's four share classes varies, because each class has different expenses. At
the same time, the Standard & Poor's 500 Stock Index (S&P 500) returned 8.53
percent, the Lipper Flexible Portfolio Funds Index (Lipper Index) returned 4.15
percent and the Lehman Brothers Government/Corporate Bond Index (Lehman Index)
returned 10.48 percent. The Portfolio underperformed relative to its benchmarks
because it was diversified across small-, medium- and large-cap issues at a time
when larger companies were outperforming smaller ones by a wide margin.

The accompanying chart illustrates the growth of a hypothetical $10,000
investment in the Portfolio's Class B shares from November 25, 1997, through
September 30, 1998, versus similar investments in the issues that comprise the
S&P 500, the Lipper Index and the Lehman Index.

Morgan Stanley Dean Witter Fund of Funds Domestic Portfolio seeks to provide
investors with diversification across investment styles, market caps and asset
classes throughout changing market environments. At its inception, the Domestic
Portfolio had access to 21 Morgan Stanley Dean Witter funds (16 equity and 5
fixed income). Since that time the Domestic Portfolio has added four new funds
to its pool of possible underlying funds. Having a large number of underlying
funds provides investors with convenience, instant diversification and
professional asset allocation. As of September 30, 1998, the allocation across
asset classes was 71 percent equities, 7 percent fixed income and the remaining
22 percent cash equivalents.

At its inception, in order to avoid large capital gains and income distributions
that could have had tax consequences for shareholders, the Domestic Portfolio
initially invested only in the S&P 500 Index Fund, which had virtually no
distributions scheduled for calendar year-end. Following that brief year-end
period, the Portfolio began to invest in a large-cross section of Morgan Stanley
Dean Witter funds to provide shareholders with diversification across asset
classes, market caps and investment styles. The Fund's investment committee
began with a fairly balanced approach on the equity portion, holding a
diversified mix of underlying funds that invest in large-, medium- and small-cap
issues. This allocation proved beneficial early in 1998 when the markets as a
whole were faring well, with particular strength in technology and commodities.
This same exposure, however, began to dampen performance in the middle of the
second quarter as certain sectors, such as oil and gold, and

3
<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS
LETTER TO THE SHAREHOLDERS SEPTEMBER 30, 1998, CONTINUED

small- and mid-cap stocks, were pummeled. By the end of the second quarter, the
Portfolio's managers began to weight the Portfolio toward the larger-cap funds.
But by the end of August, not even the large caps were being spared. Following
its bottom on August 31, the market began to recover across market caps, at
which point the Portfolio's assets were rebalanced once more to provide exposure
to funds that held large-, medium- and small-sized companies.

OUTLOOK

We do not expect our investment strategy for the Domestic Portfolio to change
drastically in the months ahead. The domestic economy continues to be buoyant,
and we believe that a number of factors will help the markets continue their
recovery. One such factor is the weakness of the U.S. dollar, which will work to
alleviate pressure on emerging nations, commodity prices and the currency
translation effect on many U.S. multinationals. Another contributing element may
be the historical market behavior during the third year of a presidential term,
in which the S&P 500 has never posted negative returns. And, of course, the
easier monetary policies being adopted by many of the world's central banks,
including the Federal Reserve Board, should help to create a favorable
environment for equities. Overall, we believe that the recent market correction
was just that -- a correction -- and that the fundamental strength of the U.S.
economy will continue to support stock prices.

We appreciate your support of Morgan Stanley Dean Witter Fund of Funds and look
forward to continuing to serve your investment needs.

Sincerely,

/s/ CHARLES A. FIUMEFREDDO
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD

4
<PAGE>

MORGAN STANLEY DEAN WITTER FUND OF FUNDS --
INTERNATIONAL
FUND PERFORMANCE SEPTEMBER 30, 1998

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
GROWTH OF $10,000--CLASS B
($ in Thousands)
Fund MSCI(4) Lipper(5)
<S> <C> <C> <C>
November 25, 1997 $10,000 $10,000 $10,000
November 30, 1997 $10,050 $10,119 $10,000
December 31, 1997 $9,941 $10,194 $10,078
January 31, 1998 $9,830 $10,647 $10,322
February 28, 1998 $10,648 $11,316 $10,977
March 31, 1998 $10,688 $11,651 $11,574
April 30, 1998 $10,446 $11,729 $11,751
May 31, 1998 $10,335 $11,658 $11,775
June 30, 1998 $10,284 $11,733 $11,672
July 31, 1998 $10,426 $11,838 $11,851
August 31, 1998 $9,356 $10,357 $10,146
September 30, 1998 $8,662(3) $10,025 $9,830
</TABLE>

PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. PERFORMANCE FOR CLASS
A, CLASS C, AND CLASS D SHARES WILL VARY FROM THE PERFORMANCE OF CLASS B
SHARES SHOWN ABOVE DUE TO DIFFERENCES IN CHARGES AND EXPENSES.

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
- ----------------------------------------------------------------------------------------------------
CLASS B SHARES** CLASS A SHARES+
- ----------------------------------------------- -----------------------------------------------
PERIOD ENDED 9/30/98 PERIOD ENDED 9/30/98
- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Since Inception Since Inception
(11/25/97) -8.87(1) -13.38(2) (11/25/97) -8.36(1) -13.17(2)
</TABLE>

<TABLE>
<CAPTION>
CLASS C SHARES++ CLASS D SHARES#
- ----------------------------------------------- -----------------------------------------------
PERIOD ENDED 9/30/98 PERIOD ENDED 9/30/98
- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Since Inception Since Inception
(11/25/97) -8.87(1) -9.77(2) (11/25/97) -8.26(1)
</TABLE>

- ------------------------
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable sales charge. See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value after the deduction of a 5% contingent deferred sales charge
(CDSC), assuming a complete redemption on September 30, 1998.
(4) The Morgan Stanley Capital International EAFE Index (MSCI) measures the
performance for a diverse range of global stock markets within Europe,
Australia, and the Far East. The Index does not include any expenses, fees,
charges or reinvestment of dividends. The Index is unmanaged and should not
be considered an investment.
(5) The Lipper International Funds Index is an equally-weighted performance
index of the largest qualifying funds (based on net assets) in the Lipper
International Funds objective. The index which is adjusted for capital
gains distributions and income dividends is unmanaged and should not be
considered an investment. There are currently 30 funds represented in this
index.
* For periods of less than one year, the Fund quotes its total return on a
non-annualized basis.
** The maximum CDSC for Class B is 5.0%. The CDSC declines to 0% after six
years.
+ The maximum front-end sales charge for Class A is 5.25%.
++ The maximum CDSC for Class C shares is 1% for shares redeemed within one year
of purchase.
# Class D shares have no sales charge.

5
<PAGE>

MORGAN STANLEY DEAN WITTER FUND OF FUNDS --
DOMESTIC
FUND PERFORMANCE SEPTEMBER 30, 1998

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
GROWTH OF $10,000--CLASS B
($ in Thousands)
Fund S&P 500(4) Lehman(5) Lipper(6)
<S> <C> <C> <C> <C>
November 25, 1997 $10,000 $10,000 $10,000 $10,000
November 30, 1997 $10,020 $10,064 $10,000 $10,000
December 31, 1997 $10,169 $10,237 $10,105 $10,138
January 31, 1998 $10,129 $10,350 $10,247 $10,198
February 28, 1998 $10,681 $11,096 $10,227 $10,693
March 31, 1998 $11,113 $11,664 $10,258 $11,053
April 30, 1998 $11,194 $11,781 $10,310 $11,123
May 31, 1998 $10,852 $11,579 $10,420 $11,012
June 30, 1998 $10,973 $12,049 $10,526 $11,224
July 31, 1998 $10,671 $11,921 $10,535 $11,107
August 31, 1998 $9,194 $10,199 $10,741 $10,017
September 30, 1998 $9,233(3) $10,853 $11,048 $10,415
</TABLE>

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
- ----------------------------------------------------------------------------------------------------
CLASS B SHARES** CLASS A SHARES+
- ----------------------------------------------- -----------------------------------------------
PERIOD ENDED 9/30/98 PERIOD ENDED 9/30/98
- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Since Inception Since Inception
(11/25/97) -2.83(1) -7.67(2) (11/25/97) -2.33(1) -7.46(2)
</TABLE>

- ------------------------

(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.

(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable sales charge. See the Fund's current prospectus for
complete details on fees and sales charges.

(3) Closing value after the deduction of a 5% contingent deferred sales charge
(CDSC), assuming a complete redemption on September 30, 1998.

(4) The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based index, the
performance of which is based on the average performance of 500 widely held
common stocks. The performance of the Index does not include any expenses,
fees or charges. The Index is unmanaged and should not be considered an
investment.

(5) The Lehman Brothers Government/Corporate Bond Index tracks the performance
of government and corporate obligations, including U.S. government agency
and U.S. treasury securities and corporate and yankee bonds with maturities
of one to ten years. The Index is unmanaged and should not be considered an
investment.

(6) The Lipper Flexible Portfolio Funds Index is an equally-weighted
performance index of the largest qualifying funds (based on net assets) in
the Lipper Flexible Portfolio Funds objective. The Index which is adjusted
for capital gains distributions and income dividends, is unmanaged and
should not be considered an investment. There are currently 30 funds
represented in this index.

* For periods of less than one year, the Fund quotes its total return on a
non-annualized basis.
** The maximum CDSC for Class B is 5.0%. The CDSC declines to 0% after six
years.
+ The maximum front-end sales charge for Class A is 5.25%.
++ The maximum CDSC for Class C shares is 1% for shares redeemed within one year
of purchase.
# Class D shares have no sales charge.

6
<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS - INTERNATIONAL
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998

TOTAL COMMON STOCKS
(IDENTIFIED COST $3,714,266)............................................................. 3,350,714
----------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ---------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (13.9%)
U.S. GOVERNMENT AGENCY
$ 550 Federal Home Loan Mortgage Corp. 5.38% due 10/01/98 (AMORTIZED COST $550,000)............ 550,000
----------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $4,264,266) (b)............................................................ 98.7 % 3,900,714

CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.............................................. 1.3 52,884
------ -----------

NET ASSETS.................................................................................. 100.0 % $ 3,953,598
------ -----------
------ -----------
</TABLE>

- ---------------------

SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS - DOMESTIC
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (80.2%)
87,474 Morgan Stanley Dean Witter American Value Fund.......................................... $ 2,797,404
194,491 Morgan Stanley Dean Witter Capital Growth Securities.................................... 2,804,559
226,195 Morgan Stanley Dean Witter Competitive Edge Fund
"Best Ideas" Portfolio................................................................ 1,997,301
134,631 Morgan Stanley Dean Witter Convertible Securities Trust................................. 1,674,804
47,832 Morgan Stanley Dean Witter Developing Growth Securities................................. 977,683
58,097 Morgan Stanley Dean Witter Dividend Growth Securities Inc............................... 3,202,908
79,941 Morgan Stanley Dean Witter Health Sciences Trust........................................ 1,217,502
88,375 Morgan Stanley Dean Witter Information Fund............................................. 1,118,824
87,333 Morgan Stanley Dean Witter Market Leader Trust.......................................... 887,303
123,822 Morgan Stanley Dean Witter Mid-Cap Dividend Growth Securities........................... 947,240
19,017 Morgan Stanley Dean Witter Mid-Cap Growth Fund.......................................... 274,419
75,392 Morgan Stanley Dean Witter Natural Resource Development Securities Inc.................. 825,538
142 Morgan Stanley Dean Witter Short-Term Bond Fund......................................... 1,368
53,241 Morgan Stanley Dean Witter Special Value Fund........................................... 557,438
81,368 Morgan Stanley Dean Witter Value-Added Market Series/Equity Portfolio................... 2,710,368
-----------

TOTAL COMMON STOCKS
(IDENTIFIED COST $24,016,031)........................................................... 21,994,659
-----------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ---------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (8.8%)
U.S. GOVERNMENT AGENCY
$ 2,400 Federal Home Loan Mortgage Corp. 5.38% due 10/01/98 (AMORTIZED COST $2,400,000)......... 2,400,000
-----------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $26,416,031) (b).......................................................... 89.0 % 24,394,659

CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................. 11.0 3,016,560
------ ------------

NET ASSETS................................................................................. 100.0 % $ 27,411,219
------ ------------
------ ------------
</TABLE>

- ---------------------

(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $32,433 and the
aggregate gross unrealized depreciation is $2,053,805, resulting in net
unrealized depreciation of $2,021,372.

SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
INTERNATIONAL DOMESTIC
- -----------------------------------------------------------------------
<S> <C> <C>

ASSETS:
Investments in securities, at value
(identified cost $4,264,266 and
$26,416,031, respectively)............ $ 3,900,714 $ 24,394,659
Cash.................................... 51,780 2,299,185
Receivable for:
Investments sold.................... -- 3,481,605
Shares of beneficial interest
sold.............................. 3,999 48,237
Receivable from affiliate............... 24,408 33,862
Prepaid expenses and other assets....... 15,690 15,204
Deferred organizational expenses........ 20,757 20,757
------------ ------------
TOTAL ASSETS....................... 4,017,348 30,293,509
------------ ------------
LIABILITIES:
Payable for:
Investments purchased............... -- 2,788,481
Shares of beneficial interest
repurchased....................... -- 2,449
Plan of distribution fee............ 2,894 21,539
Organizational expenses................. 20,775 20,922
Accrued expenses and other payables..... 40,081 48,899
------------ ------------
TOTAL LIABILITIES.................. 63,750 2,882,290
------------ ------------
NET ASSETS......................... $ 3,953,598 $ 27,411,219
------------ ------------
------------ ------------
COMPOSITION OF NET ASSETS:
Paid-in-capital......................... $ 4,395,562 $ 28,613,323
Net unrealized depreciation............. (363,552) (2,021,372)
Undistributed net investment income..... -- 255,368
Undistributed net realized gain
(loss)................................ (78,412) 563,900
------------ ------------
NET ASSETS......................... $ 3,953,598 $ 27,411,219
------------ ------------
------------ ------------
CLASS A SHARES:
Net Assets.............................. $595,651 $1,358,728
Shares Outstanding (UNLIMITED
AUTHORIZED, $.01 PAR VALUE)........... 65,604 139,781
NET ASSET VALUE PER SHARE.......... $9.08 $9.72
----- -----
----- -----
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF
NET ASSET VALUE)........................ $9.58 $10.26
----- ------
----- ------
CLASS B SHARES:
Net Assets.............................. $3,241,122 $24,337,990
Shares Outstanding (UNLIMITED
AUTHORIZED, $.01 PAR VALUE)........... 359,031 2,517,533
NET ASSET VALUE PER SHARE.......... $9.03 $9.67
----- -----
----- -----
CLASS C SHARES:
Net Assets.............................. $105,343 $1,702,258
Shares Outstanding (UNLIMITED
AUTHORIZED, $.01 PAR VALUE)........... 11,670 176,082
NET ASSET VALUE PER SHARE.......... $9.03 $9.67
----- -----
----- -----
CLASS D SHARES:
Net Assets.............................. $11,482 $12,243
Shares Outstanding (UNLIMITED
AUTHORIZED, $.01 PAR VALUE)........... 1,263 1,257
NET ASSET VALUE PER SHARE.......... $9.09 $9.74
----- -----
----- -----
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF OPERATIONS
FOR THE PERIOD NOVEMBER 25, 1997* THROUGH SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
INTERNATIONAL DOMESTIC
- ------------------------------------------------------------------------
<S> <C> <C>

NET INVESTMENT INCOME:

INCOME
Dividends............................... $ 14,488 $ 496,466
Interest................................ 22,949 65,705
------------ -------------

TOTAL INCOME....................... 37,437 562,171
------------ -------------

EXPENSES
Plan of distribution fee (Class A
shares)............................... 877 3,390
Plan of distribution fee (Class B
shares)............................... 25,269 203,895
Plan of distribution fee (Class C
shares)............................... 835 14,042
Registration fees....................... 105,129 112,276
Professional fees....................... 41,217 40,868
Shareholder reports and notices......... 14,965 14,933
Transfer agent fees and expenses........ 4,452 21,901
Custodian fees.......................... 3,824 12,294
Organizational expenses................. 4,243 4,243
Other................................... 2,027 2,035
------------ -------------

TOTAL EXPENSES..................... 202,838 429,877

Less: amounts waived/reimbursed......... (177,560) (226,074)
------------ -------------

NET EXPENSES....................... 25,278 203,803
------------ -------------

NET INVESTMENT INCOME.............. 12,159 358,368
------------ -------------

NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on
investments........................... (78,412) 453,719
Capital gain distributions received..... -- 110,181
------------ -------------

NET REALIZED GAIN (LOSS)........... (78,412) 563,900

Net unrealized depreciation............. (363,552) (2,021,372)
------------ -------------

NET LOSS........................... (441,964) (1,457,472)
------------ -------------

NET DECREASE............................ $ (429,805) $ (1,099,104)
------------ -------------
------------ -------------
</TABLE>

- ---------------------

* Commencement of operations.

SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE PERIOD
NOVEMBER 25, 1997*
THROUGH
SEPTEMBER 30, 1998
------------------------------
INTERNATIONAL DOMESTIC
- -------------------------------------------------------------------------
<S> <C> <C>

INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment income................... $ 12,159 $ 358,368
Net realized gain (loss)................ (78,412) 563,900
Net unrealized depreciation............. (363,552) (2,021,372)
------------- -------------

NET DECREASE....................... (429,805) (1,099,104)
------------- -------------

DIVIDENDS TO SHAREHOLDERS FROM NET
INVESTMENT INCOME:
Class A shares.......................... (444) (7,838)
Class B shares.......................... (18,372) (89,059)
Class C shares.......................... (670) (6,042)
Class D shares.......................... (114) (61)
------------- -------------

TOTAL DIVIDENDS.................... (19,600) (103,000)
------------- -------------
Net increase from transactions in shares
of beneficial interest................ 4,353,003 28,563,323
------------- -------------

NET INCREASE....................... 3,903,598 27,361,219

NET ASSETS:
Beginning of period..................... 50,000 50,000
------------- -------------

END OF PERIOD
(INCLUDING UNDISTRIBUTED NET
INVESTMENT INCOME OF $0 AND
$255,368, RESPECTIVELY)............. $ 3,953,598 $ 27,411,219
------------- -------------
------------- -------------
</TABLE>

- ---------------------

* Commencement of operations.

SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998

1. ORGANIZATION AND ACCOUNTING POLICIES

Morgan Stanley Dean Witter Fund of Funds (the "Fund"), formerly Dean Witter Fund
of Funds, is registered under the Investment Company Act of 1940, as amended
(the "Act"), as a non-diversified, open-end management investment company. The
Fund will invest in Class D shares of other open-end management investment
companies that are either members of the Morgan Stanley Dean Witter Family of
Funds or managed by an investment advisor that is an affiliate of Morgan Stanley
Dean Witter Advisors Inc. (the "Investment Manager"), formerly Dean Witter
InterCapital Inc., (individually, an "Underlying Fund" and collectively, the
"Underlying Funds").

The Fund, which consists of two separate portfolios ("Portfolios"),
International and Domestic, was organized as a Massachusetts business trust on
July 3, 1997 and had no operations other than those relating to organizational
matters and the issuance of 10,000 shares of beneficial interest for $100,000 to
the Investment Manager to effect the Fund's initial capitalization. Each
Portfolio issued 5,000 shares (1,250 per class) of beneficial interest for
$50,000 ($12,500 per class). The Fund commenced operations on November 25, 1997.

The investment objectives of each Portfolio are as follows:

PORTFOLIO INVESTMENT OBJECTIVE
<S> <C>
International Seeks long-term capital appreciation by
investing in a selection of Underlying Funds
which invest their assets primarily in the
international equity markets.
Domestic Seeks to maximize total investment return
through capital growth and income by
investing in a selection of Underlying Funds
which invest their assets primarily in the
U.S. equity and fixed-income markets.
</TABLE>

Each Portfolio offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.

12
<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998, CONTINUED

The following is a summary of significant accounting policies:

A. VALUATION OF INVESTMENTS -- (1) Investments are valued at the net asset value
per share of each Underlying Fund determined as of the close of the New York
Stock Exchange on valuation date; and (2) short-term debt securities having a
maturity date of more than sixty days at time of purchase are valued on a
mark-to-market basis until sixty days prior to maturity and thereafter at
amortized cost based on their value on the 61st day. Short-term debt securities
having a maturity date of sixty days or less at the time of purchase are valued
at amortized cost.

B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
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. 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.

E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.

13
<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998, CONTINUED

F. ORGANIZATIONAL AND PREPAID EXPENSES -- The Investment Manager incurred the
organizational expenses of the Fund in the amount of approximately $50,000
($25,000 per Portfolio) which will be reimbursed for the full amount thereof,
exclusive of amounts waived of $8,486 ($4,243 per Portfolio). Such expenses have
been deferred and are being amortized on the straight-line method over a period
not to exceed five years from the commencement of operations. The Investment
Manager incurred additional expenses on behalf of the Fund consisting primarily
of registration fees in the amount of approximately $200,000 ($100,000 per
Portfolio) which were to be reimbursed for the full amount thereof. Such
expenses were deferred and fully amortized as of September 30, 1998. The
Investment Manager waived all such reimbursements.

2. INVESTMENT MANAGEMENT AGREEMENT

Pursuant to an Investment Management Agreement, the Fund pays no investment
management fee. However, the Fund, through its investments in the Underlying
Funds, will pay its pro rata share of the management or advisory or sub-advisory
fees to the Investment Manager and/or Sub-Advisors or Advisor of the Underlying
Funds.

Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.

The Investment Manager has agreed to assume all operating expenses (except for
plan of distribution fees) until such time as the respective Portfolio has $50
million in net assets or November 30, 1999, whichever occurs first. For the
period November 25, 1997 (commencement of operations) through December 31, 1997,
the Investment Manager also assumed the plan of distribution fees of the Fund.
At September 30, 1998, included in the Statement of Assets and Liabilities of
each Portfolio is a receivable from an affiliate which represents expense
reimbursements due to the Fund.

3. PLAN OF DISTRIBUTION

Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund will pay the Distributor a fee which is
accrued daily and paid monthly at the following annual rates: (i) Class A --

14
<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998, CONTINUED

up to 0.25% of the average daily net assets of Class A; (ii) Class B -- 1.0% of
the average daily net assets of Class B; and (iii) Class C -- up to 1.0% of the
average daily net assets of Class C. In the case of Class A shares, amounts paid
under the Plan are paid to the Distributor for services provided. In the case of
Class B and Class C shares, amounts paid under the Plan are paid to the
Distributor for (1) services provided and the expenses borne by it and others in
the distribution of the shares of these Classes, including the payment of
commissions for sales of these Classes and incentive compensation to, and
expenses of, Morgan Stanley Dean Witter Financial Advisors and others who engage
in or support distribution of the shares or who service shareholder accounts,
including overhead and telephone expenses; (2) printing and distribution of
prospectuses and reports used in connection with the offering of these shares to
other than current shareholders; and (3) preparation, printing and distribution
of sales literature and advertising materials. In addition, the Distributor may
utilize fees paid pursuant to the Plan, in the case of Class B shares, to
compensate Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Investment
Manager and Distributor, and other selected broker-dealers for their opportunity
costs in advancing such amounts, which compensation would be in the form of a
carrying charge on any unreimbursed expenses.

In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised International and Domestic that such excess amounts,
including carrying charges, totaled $659,369 and $1,709,171, respectively at
September 30, 1998.

In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the period ended September 30, 1998, the distribution fee was
accrued for International and Domestic Class A shares and Class C shares at the
annual rate of 0.25% and 0.92%, and 0.22% and 0.92%, respectively.

15
<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998, CONTINUED

The Distributor has informed International and Domestic that for the period
ended September 30, 1998, it received contingent deferred sales charges from
certain redemptions of the Fund's shares as follows: Class B shares -- $3,623
and $32,706, respectively; and Class C shares -- $79 and $1,153, respectively;
and received $5,645 and $19,992, respectively, 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 period ended September 30, 1998 aggregated
$7,801,534 and $4,008,856, respectively, for International and $79,506,625 and
$55,944,313, respectively, for Domestic.

Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Funds transfer agent. At September 30, 1998, Domestic's
receivable for investments sold and payable for investments purchased
represented unsettled trades with the transfer agent of $3,481,605 and
$2,788,481, respectively.

16
<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998, CONTINUED

5. SHARES OF BENEFICIAL INTEREST

Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
FOR THE PERIOD NOVEMBER 25, 1997*
THROUGH SEPTEMBER 30, 1998
---------------------------------------------------------
INTERNATIONAL DOMESTIC
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
CLASS A
Sold............................................................. 67,277 $ 699,140 195,957 $ 1,986,330
Reinvestment of dividends........................................ 45 444 724 7,325
Redeemed......................................................... (2,968) (29,427) (58,150) (627,694)
----------- -------------- ----------- ------------
Net increase - Class A........................................... 64,354 670,157 138,531 1,365,961
----------- -------------- ----------- ------------
CLASS B
Sold............................................................. 397,997 3,985,486 2,941,410 29,850,040
Reinvestment of dividends........................................ 1,770 17,435 7,843 79,375
Redeemed......................................................... (41,986) (424,650) (432,970) (4,524,346)
----------- -------------- ----------- ------------
Net increase - Class B........................................... 357,781 3,578,271 2,516,283 25,405,069
----------- -------------- ----------- ------------
CLASS C
Sold............................................................. 11,806 118,681 208,500 2,140,619
Reinvestment of dividends........................................ 68 670 564 5,713
Redeemed......................................................... (1,454) (14,900) (34,232) (354,110)
----------- -------------- ----------- ------------
Net increase - Class C........................................... 10,420 104,451 174,832 1,792,222
----------- -------------- ----------- ------------
CLASS D
Sold............................................................. 1 10 1 10
Reinvestment of dividends........................................ 12 114 6 61
----------- -------------- ----------- ------------
Net increase - Class D........................................... 13 124 7 71
----------- -------------- ----------- ------------
Net increase in Fund............................................. 432,568 $ 4,353,003 2,829,653 $ 28,563,323
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>

- ---------------------

* Commencement of operations.

6. FEDERAL INCOME TAX STATUS

Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Portfolio's
next taxable year. The International Portfolio incurred and will elect to defer
net capital losses of approximately $4,000 during fiscal 1998.

As of September 30, 1998, the International Portfolio had temporary book/tax
differences attributable to post-October losses and capital loss deferrals on
wash sales and permanent book/tax differences relating to an excise tax
distribution. To reflect reclassifications arising from the permanent
differences, paid-in-capital was charged and undistributed net investment income
was credited $7,441.

17
<PAGE>
MORGAN STANLEY DEAN WITTER FUND OF FUNDS
FINANCIAL HIGHLIGHTS

Selected ratios and per share data for a share of beneficial interest
outstanding throughout the period:

<TABLE>
<CAPTION>
FOR THE PERIOD NOVEMBER 25, 1997* THROUGH SEPTEMBER 30, 1998**
--------------------------------------------------------------------------------------------------
INTERNATIONAL DOMESTIC
---------------------------------------------- ----------------------------------------------
CLASS A CLASS B CLASS C CLASS D CLASS A CLASS B CLASS C CLASS D
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- ------------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:

Net asset value, beginning
of period................. $10.00 $10.00 $10.00 $10.00 $10.00 $ 10.00 $10.00 $10.00
------- ------- ------- ------- ------- ------- ------- -------

Net investment income...... 0.05 0.03 0.04 0.14 0.21 0.14 0.13 0.22

Net realized and unrealized
loss...................... (0.88) (0.91) (0.92) (0.96) (0.44) (0.42) (0.41) (0.43)
------- ------- ------- ------- ------- ------- ------- -------

Total from investment
operations................ (0.83) (0.88) (0.88) (0.82) (0.23) (0.28) (0.28) (0.21)
------- ------- ------- ------- ------- ------- ------- -------

Less dividends from net
investment income......... (0.09) (0.09) (0.09) (0.09) (0.05) (0.05) (0.05) (0.05)
------- ------- ------- ------- ------- ------- ------- -------

Net asset value, end of
period.................... $ 9.08 $ 9.03 $ 9.03 $ 9.09 $ 9.72 $ 9.67 $ 9.67 $ 9.74
------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- -------

TOTAL INVESTMENT
RETURN(1)+................. (8.36)% (8.87)% (8.87)% (8.26)% (2.33)% (2.83)% (2.83)% (2.13)%

RATIOS TO AVERAGE
NET ASSETS(2)(6):

Expenses(5)................ 0.25%(3) 0.94%(3) 0.92%(3) 0.00%(3) 0.22%(4) 0.92%(4) 0.92%(4) 0.00%(4)

Net investment income...... 1.01%(3) 0.32%(3) 0.34%(3) 1.26%(3) 2.21%(4) 1.51%(4) 1.51%(4) 2.43%(4)

SUPPLEMENTAL DATA:

Net assets, end of period,
in thousands.............. $596 $3,241 $105 $11 $1,359 $24,338 $1,702 $12

Portfolio turnover
rate(1)................... 135% 135% 135% 135% 227% 227% 227% 227%
</TABLE>

- ---------------------

* Commencement of operations.
** The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or waived by
the Investment Manager, the annualized expense and net investment loss
ratios would have been 6.16% and (4.90)%, respectively, for Class A shares,
6.91% and (5.65)%, respectively, for Class B shares, 6.91% and (5.65)%,
respectively, for Class C shares and 5.91% and (4.65)%, respectively, for
Class D shares.
(4) If the Fund had borne all of its expenses that were reimbursed or waived by
the Investment Manager, the annualized expense and net investment income
ratios would have been 1.15% and 1.28%, respectively, for Class A shares,
1.90% and 0.53%, respectively, for Class B shares, 1.90% and 0.53%,
respectively, for Class C shares and 0.90% and 1.53%, respectively, for
Class D shares.
(5) Does not include any expenses incurred as a result of investment in the
Underlying Funds.
(6) Reflects overall Fund ratios for investment income and non-class specific
expenses.

SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>

MORGAN STANLEY DEAN WITTER FUND OF FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS

TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER FUND OF FUNDS

In our opinion, the accompanying statement of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the International Portfolio and the
Domestic Portfolio (constituting Morgan Stanley Dean Witter Fund of Funds,
formerly Dean Witter Fund of Funds, hereafter referred to as the "Fund") at
September 30, 1998, and the results of its operations, the changes in its net
assets and the financial highlights for the period November 25, 1997
(commencement of operations) through September 30, 1998, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 1998 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.

PricewaterhouseCoopers LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
NOVEMBER 5, 1998

1998 FEDERAL TAX NOTICE (UNAUDITED)

During the fiscal year ended September 30, 1998, 11.98% of the
income dividends paid by Morgan Stanley Dean Witter Fund of Funds
-- Domestic Portfolio qualified for the dividends received
deduction available to corporations.

19
<PAGE>

TRUSTEES

Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Manuel N. Johnson
Michael E. Nugent
Philip J. Purcell
John L Schroeder

OFFICERS

Charles A. Fiumefreddo
Chairman and Chief Executive Officer

Barry Fink
Vice President, Secretary and General Counsel

Thomas F. Caloia
Treasurer

TRANSFER AGENT

Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036

INVESTMENT MANAGER

Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048

This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of
the Fund.

This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus.

MORGAN STANLEY
DEAN WITTER
FUND OF FUNDS

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ANNUAL REPORT
SEPTEMBER 30, 1998