<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
Two World Trade Center,
LETTER TO THE SHAREHOLDERS August 31, 1999 New York, New York 10048
DEAR SHAREHOLDER:
During the six-month period ended August 31, 1999, financial markets around the
world continued to experience volatility. After a peak in the domestic markets
in the middle of July, stock prices pulled back toward the end of the period
amid concerns that the U.S. economy was growing too fast. This concern was
manifested in the two Federal Reserve Board moves, in June and August, that
raised the federal funds rate a total of 50 basis points while inflation
remained low and the economy continued to grow.
PERFORMANCE AND PORTFOLIO STRATEGY
Morgan Stanley Dean Witter Dividend Growth Securities' Class B shares posted a
total return of 5.84 percent for the six-month period ended August 31, 1999,
versus 7.38 percent for the Lipper Growth and Income Funds Index and 7.32
percent for the Standard & Poor's 500 Composite Stock Price Index (S&P 500).
For the same period the Fund's Class A, C and D shares earned 6.07 percent,
5.67 percent and 6.21 percent, respectively. The performance of the Fund's four
share classes varies because of differing expenses. (Total return figures shown
assume the reinvestment of all distributions and do not reflect the deduction
of any applicable sales charges.)
The Fund's underperformance of the Lipper Growth and Income Funds Index over
this period was largely due to the Fund's lack of exposure to high-technology
stocks and its underweighting in the financial sector. Technology stocks
generally pay little if any dividends and therefore are not included in the
Fund, because one of the Fund's primary investment objectives is to provide
reasonable current income. (The Fund currently holds shares of IBM, however,
which does pay dividends.) While this emphasis on yield may have dampened
relative performance slightly, this same prejudice toward income provided
notable stability during the volatile markets over the past year.
Additionally, the Fund's investment process is value oriented. Just prior to
the start of the period under review, one well-known Wall Street strategist
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
LETTER TO THE SHAREHOLDERS August 31, 1999, continued
observed that S&P value stocks were underperforming S&P growth stocks by the
widest margin in 25 years. Briefly, during April of this year, this trend was
reversed as value stocks generally rose sharply. This upsurge quickly lost
steam, however, as growth stocks regained momentum and continued to outperform
value stocks with only brief interruptions through the end of the period.
On August 31 the Fund was relatively fully invested. During the period under
review the only new holdings added to the portfolio were Brunswick and Sunoco.
At the end of the six-month period, the Fund was invested in 98 common stocks
spread across 49 industries.
LOOKING AHEAD
Going forward, we believe that the outlook for the financial markets and the
economy is favorable. We expect that the continued use of our stringent
screening process that seeks out high-quality attractively valued stocks, as
well as monitoring the progress of current investments, will play a key role in
the Fund's long-term success. We also believe that investors will once again
turn to value stocks at some point in the not too distant future as they once
again recognize this sector's potential.
On May 1, 1999, Mitchell M. Merin was named President of the Morgan Stanley
Dean Witter Funds. Mr. Merin is the President and Chief Operating Officer of
Asset Management for Morgan Stanley Dean Witter & Co. and President, Chief
Executive Officer and Director of Morgan Stanley Dean Witter Advisors Inc., the
Fund's investment manager. He also serves as Chairman, Chief Executive Officer
and Director of the Fund's distributor and transfer agent.
We appreciate your ongoing support of Morgan Stanley Dean Witter Dividend
Growth Securities and look forward to continuing to serve your investment
objectives.
Very truly yours,
/s/ Charles A. Fiumefreddo /s/ Mitchell M. Merin
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
2
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FUND PERFORMANCE August 31, 1999
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A SHARES*
- -------------------------------------------------------------
PERIOD ENDED 8/31/99
- ---------------------------
<S> <C> <C>
1 year 25.47%(1) 18.89%(2)
Since Inception (7/28/97) 12.29%%(1) 9.43%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES++
- -------------------------------------------------------------
PERIOD ENDED 8/31/99
- ---------------------------
<S> <C> <C>
1 year 24.52%(1) 23.52%(2)
Since Inception (7/28/97) 11.44%(1) 11.44%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS B SHARES+
- -------------------------------------------------------------
PERIOD ENDED 8/31/99
- ---------------------
<S> <C> <C>
1 year 24.90%(1) 19.90%(2)
5 year 18.69%(1) 18.49%(2)
10 year 13.46%(1) 13.46%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS D SHARES++
- -------------------------------------------------------------
PERIOD ENDED 8/31/99
- ---------------------------
<S> <C>
1 year 25.75%(1)
Since Inception (7/28/97) 12.56%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
- ---------------
(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.
* The maximum front-end sales charge for Class A is 5.25%.
+ The maximum contingent deferred sales charge (CDSC) for Class B is 5.0%.
The CDSC declines to 0% after six years.
++ The maximum contingent deferred sales charge for Class C shares is 1% for
shares redeemed within one year of purchase.
++ Class D shares have no sales charge.
3
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS August 31, 1999 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- ---------------------
<S> <C> <C>
COMMON STOCKS (95.6%)
Aerospace (3.3%)
2,600,000 Goodrich (B.F.) Co. (The) ............. $ 96,037,500
3,900,000 Lockheed Martin Corp. ................. 144,300,000
6,200,000 United Technologies Corp. ............. 409,975,000
---------------
650,312,500
---------------
Aluminum (2.4%)
3,950,000 Alcan Aluminium Ltd. (Canada) ......... 129,856,250
5,418,000 Alcoa, Inc. ........................... 349,799,625
---------------
479,655,875
---------------
Apparel (0.5%)
2,600,000 VF Corp. .............................. 93,600,000
---------------
Auto Parts: O.E.M. (2.5%)
2,575,000 Dana Corp. ............................ 112,173,437
5,750,000 Delphi Automotive Systems Corp. 107,812,500
2,150,000 Johnson Controls, Inc. ................ 147,006,250
2,350,000 TRW Inc. .............................. 128,075,000
---------------
495,067,187
---------------
Automotive Aftermarket (0.8%)
2,650,000 Goodyear Tire & Rubber Co. ............ 148,731,250
---------------
Beverages -- Non-Alcoholic (2.1%)
3,900,000 Coca Cola Co. ......................... 233,268,750
5,072,500 PepsiCo, Inc. ......................... 173,099,062
---------------
406,367,812
---------------
Building Products (0.3%)
1,225,000 Armstrong World Industries, Inc........ 59,489,062
---------------
Construction/Agricultural
Equipment/Trucks (1.6%)
2,700,000 Caterpillar, Inc. ..................... 152,887,500
4,275,000 Deere & Co. ........................... 166,190,625
---------------
319,078,125
---------------
Consumer Electronics/
Appliances (0.8%)
2,200,000 Whirlpool Corp. ....................... 155,512,500
---------------
Containers/Packaging (0.5%)
3,500,000 Crown Cork & Seal Co., Inc. ........... 92,968,750
---------------
Department Stores (1.4%)
3,886,500 May Department Stores Co. ............. 151,816,406
3,150,000 Sears, Roebuck & Co. .................. 118,125,000
---------------
269,941,406
---------------
Discount Chains (2.5%)
8,400,000 Dayton Hudson Corp. ................... 487,200,000
---------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- ---------------
<S> <C> <C>
Diversified Electronic Products (1.2%)
2,000,000 Honeywell, Inc. ....................... $ 227,000,000
---------------
Diversified Financial Services (1.2%)
3,150,000 Providian Financial Corp. ............. 244,518,750
---------------
Diversified Manufacturing (2.1%)
1,984,000 Minnesota Mining &
Manufacturing Co. ..................... 187,488,000
2,275,000 Tyco International Ltd. (Bermuda)...... 230,485,937
---------------
417,973,937
---------------
Electric Utilities (3.4%)
2,725,000 Dominion Resources, Inc. .............. 126,031,250
2,425,000 FPL Group, Inc. ....................... 130,950,000
3,250,000 GPU, Inc. ............................. 110,906,250
4,842,500 Reliant Energy, Inc. .................. 134,076,719
4,525,500 Unicom Corp. .......................... 174,797,437
---------------
676,761,656
---------------
Electronic Data Processing (3.3%)
5,250,000 International Business Machines
Corp. ................................. 653,953,125
---------------
Engineering & Construction (0.5%)
2,400,000 Fluor Corp. ........................... 99,300,000
---------------
Finance Companies (2.7%)
4,000,000 Associates First Capital Corp.
(Class A) ............................. 137,250,000
3,800,400 Fannie Mae ............................ 236,099,850
4,250,000 Household International, Inc. ......... 160,437,500
---------------
533,787,350
---------------
Food Chains (1.2%)
3,000,000 Albertson's, Inc. ..................... 143,812,500
2,900,000 Winn-Dixie Stores, Inc. ............... 98,600,000
---------------
242,412,500
---------------
Food Distributors (1.2%)
3,650,000 Supervalu, Inc. ....................... 82,125,000
4,500,000 SYSCO Corp. ........................... 146,812,500
---------------
228,937,500
---------------
Forest Products (0.8%)
2,763,000 Weyerhaeuser Co. ...................... 155,418,750
---------------
Home Furnishings (0.4%)
2,150,000 Newell Rubbermaid, Inc. ............... 88,150,000
---------------
Integrated Oil Companies (6.7%)
2,000,000 Atlantic Richfield Co. ................ 175,875,000
2,350,000 BP Amoco PLC (ADR) (United
Kingdom) .............................. 263,493,750
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS August 31, 1999 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------- ---------------
<S> <C> <C>
3,389,000 Exxon Corp. ............................. $ 267,307,375
1,950,000 Kerr-McGee Corp. ........................ 109,200,000
2,600,000 Mobil Corp. ............................. 266,175,000
3,900,000 Royal Dutch Petroleum Co. (ADR)
(Netherlands) ........................... 241,312,500
---------------
1,323,363,625
---------------
Life Insurance (2.7%)
1,575,000 Aegon N.V. (ARS) (Netherlands) .......... 136,729,687
2,550,000 Jefferson-Pilot Corp. ................... 170,212,500
4,750,000 Lincoln National Corp. .................. 222,656,250
---------------
529,598,437
---------------
Major Banks (4.2%)
8,100,000 Bank of America Corp. ................... 490,050,000
5,200,000 KeyCorp. ................................ 150,800,000
1,500,000 Morgan (J.P.) & Co., Inc. ............... 193,781,250
---------------
834,631,250
---------------
Major Chemicals (3.5%)
1,625,000 Dow Chemical Co. ........................ 184,640,625
4,047,000 Du Pont (E.I.) de Nemours & Co.,
Inc. .................................... 256,478,625
3,050,000 Hercules, Inc. .......................... 99,315,625
3,830,000 Monsanto Co. ............................ 157,269,375
---------------
697,704,250
---------------
Major Pharmaceuticals (9.7%)
6,664,000 Abbott Laboratories ..................... 289,051,000
6,500,000 American Home Products Corp. ............ 269,750,000
6,600,000 Bristol-Myers Squibb Co. ................ 464,475,000
10,100,000 Schering-Plough Corp. ................... 530,881,250
5,600,000 Smithkline Beecham PLC (ADR)
(United Kingdom) ........................ 357,000,000
---------------
1,911,157,250
---------------
Major U.S. Telecommunications (3.2%)
3,660,000 Bell Atlantic Corp. ..................... 224,175,000
3,100,000 GTE Corp. ............................... 212,737,500
3,550,000 U.S. West, Inc. ......................... 185,487,500
---------------
622,400,000
---------------
Managed Health Care (0.7%)
1,875,000 Aetna Inc. .............................. 145,781,250
---------------
Meat/Poultry/Fish (0.5%)
4,150,000 ConAgra, Inc. ........................... 101,675,000
---------------
Military/Gov't/Technical (1.1%)
3,099,000 Raytheon Co. (Class B) .................. 211,119,375
---------------
Motor Vehicles (2.8%)
2,272,657 DaimlerChrysler AG (Germany) ............ 170,875,398
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------- ---------------
<S> <C> <C>
3,925,000 Ford Motor Co. .......................... $ 204,590,625
2,700,000 General Motors Corp. .................... 178,537,500
---------------
554,003,523
---------------
Multi-Sector Companies (2.6%)
3,830,000 General Electric Co. .................... 430,156,875
3,550,000 Tenneco, Inc. ........................... 71,443,750
---------------
501,600,625
---------------
Natural Gas (0.8%)
2,300,000 Consolidated Natural Gas Co. ............ 146,481,250
---------------
Office Equipment/Supplies (3.0%)
4,850,000 Pitney Bowes, Inc. ...................... 286,150,000
6,300,000 Xerox Corp. ............................. 300,825,000
---------------
586,975,000
---------------
Oil & Gas Production (0.7%)
3,450,000 Burlington Resources, Inc. .............. 144,253,125
---------------
Oil Refining/Marketing (1.3%)
2,725,000 Sunoco, Inc. ............................ 88,732,813
5,150,000 USX-Marathon Group ...................... 160,293,750
---------------
249,026,563
---------------
Oil/Gas Transmission (2.5%)
3,150,000 El Paso Energy Corp. .................... 115,171,875
6,500,000 Enron Corp. ............................. 272,187,500
2,875,000 Sonat, Inc. ............................. 103,859,375
---------------
491,218,750
---------------
Other Metals/Minerals (0.5%)
1,875,000 Phelps Dodge Corp. ...................... 104,882,813
---------------
Package Goods/Cosmetics (5.9%)
6,000,000 Avon Products, Inc. ..................... 263,250,000
5,900,000 Gillette Co. ............................ 275,087,500
2,425,000 International Flavors &
Fragrances, Inc. ........................ 98,818,750
2,750,000 Kimberly-Clark Corp. .................... 156,578,124
3,650,000 Procter & Gamble Co. .................... 362,262,500
---------------
1,155,996,874
---------------
Packaged Foods (1.0%)
3,049,000 Quaker Oats Company (The) ............... 203,711,313
---------------
Paints/Coatings (0.7%)
2,125,000 PPG Industries, Inc. .................... 127,632,813
---------------
Paper (1.2%)
2,750,000 International Paper Co. ................. 129,421,875
3,100,000 Mead Corp. .............................. 115,668,750
---------------
245,090,625
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS August 31, 1999 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- ---------------
<S> <C> <C>
Photographic Products (0.9%)
2,300,000 Eastman Kodak Co. ........................ $ 168,906,250
---------------
Railroads (1.3%)
4,800,000 Burlington Northern Santa Fe
Corp. .................................... 139,200,000
2,725,000 CSX Corp. ................................ 119,048,438
---------------
258,248,438
---------------
Recreational Products/Toys (0.4%)
2,775,000 Brunswick Corp. .......................... 70,935,938
---------------
Rental/Leasing Companies (0.3%)
2,275,000 Ryder System, Inc. ....................... 50,192,188
---------------
Tobacco (0.7%)
4,100,000 UST, Inc. ................................ 129,918,750
---------------
TOTAL COMMON STOCKS
(Identified Cost $8,617,437,878).......... 18,792,643,310
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- --------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (3.1%)
$ 100,000 U.S. Treasury Note
5.50% due 02/29/00 ...................... 100,095,000
500,000 U.S. Treasury Note
5.625% due 04/30/00 ..................... 500,625,000
---------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Identified Cost $599,855,469) .......... 600,720,000
---------------
SHORT-TERM INVESTMENTS (1.1%)
U.S. GOVERNMENT AGENCY (a) (1.1%)
221,000 Federal Home Loan Mortgage
Corp. 5.42% due 09/01/99
(Amortized Cost $221,000,000) 221,000,000
---------------
REPURCHASE AGREEMENT (0.0%)
233 The Bank of New York 5.50%
due 09/01/99 (dated 08/31/99;
proceeds $232,665) (b)
(Identified Cost $232,630)............... 232,630
---------------
TOTAL SHORT-TERM
INVESTMENTS
(Identified Cost $221,232,630)........... 221,232,630
---------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
---------------
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $9,438,525,977) (c)..... 99.8% $19,614,595,940
OTHER ASSETS IN EXCESS OF
LIABILITIES ............................. 0.2 45,027,101
----- ---------------
NET ASSETS .............................. 100.0% $19,659,623,041
===== ===============
</TABLE>
- --------------------------------
ADR American Depository Receipt.
ARS American Registered Share.
(a) Security was purchased on a discount basis. The interest rate
shown has been adjusted to reflect a money market equivalent
yield.
(b) Collateralized by $1,208,097 U.S. Treasury Strip due 08/15/25
valued at $237,282.
(c) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$10,523,761,481 and the aggregate gross unrealized depreciation
is $347,691,518, resulting in net unrealized appreciation of
$10,176,069,963.
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999 (unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $9,438,525,977)....................................... $19,614,595,940
Receivable for:
Dividends ............................................................ 50,841,741
Capital stock sold ................................................... 17,447,304
Interest ............................................................. 9,492,048
Prepaid expenses and other assets ....................................... 468,669
----------------
TOTAL ASSETS ......................................................... 19,692,845,702
----------------
LIABILITIES:
Payable for:
Capital stock repurchased ............................................ 15,015,293
Plan of distribution fee ............................................. 11,768,889
Investment management fee ............................................ 6,038,070
Accrued expenses and other payables ..................................... 400,409
----------------
TOTAL LIABILITIES .................................................... 33,222,661
----------------
NET ASSETS ........................................................... $19,659,623,041
================
COMPOSITION OF NET ASSETS:
Paid-in-capital ......................................................... $ 9,296,571,825
Net unrealized appreciation ............................................. 10,176,069,963
Accumulated undistributed net investment income ......................... 75,588,059
Accumulated undistributed net realized gain ............................. 111,393,194
----------------
NET ASSETS ........................................................... $19,659,623,041
================
CLASS A SHARES:
Net Assets .............................................................. $270,858,389
Shares Outstanding (500,000,000 shares authorized, $.01 par value)....... 4,324,542
NET ASSET VALUE PER SHARE ............................................ $62.63
================
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) .................... $66.10
================
CLASS B SHARES:
Net Assets .............................................................. $18,706,131,211
Shares Outstanding (500,000,000 shares authorized, $.01 par value)....... 298,736,590
NET ASSET VALUE PER SHARE ............................................ $62.62
================
CLASS C SHARES:
Net Assets .............................................................. $188,115,822
Shares Outstanding (500,000,000 shares authorized, $.01 par value)....... 3,013,189
NET ASSET VALUE PER SHARE ............................................ $62.43
================
CLASS D SHARES:
Net Assets .............................................................. $494,517,619
Shares Outstanding (500,000,000 shares authorized, $.01 par value)....... 7,887,593
NET ASSET VALUE PER SHARE ............................................ $62.70
================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the six months ended August 31, 1999 (unaudited)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $2,114,244 foreign withholding tax)......... $ 196,909,489
Interest ..................................................... 30,674,555
--------------
TOTAL INCOME .............................................. 227,584,044
--------------
EXPENSES
Plan of distribution fee (Class A shares) .................... 322,737
Plan of distribution fee (Class B shares) .................... 65,243,237
Plan of distribution fee (Class C shares) .................... 884,706
Investment management fee .................................... 34,991,661
Transfer agent fees and expenses ............................. 6,788,493
Custodian fees ............................................... 386,086
Shareholder reports and notices .............................. 345,456
Registration fees ............................................ 249,756
Professional fees ............................................ 30,464
Directors' fees and expenses ................................. 9,457
Other ........................................................ 109,689
--------------
TOTAL EXPENSES ............................................ 109,361,742
--------------
NET INVESTMENT INCOME ..................................... 118,222,302
--------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain ............................................ 111,479,619
Net change in unrealized appreciation ........................ 884,629,813
--------------
NET GAIN .................................................. 996,109,432
--------------
NET INCREASE ................................................. $1,114,331,734
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
AUGUST 31, 1999 FEBRUARY 28, 1999
------------------- ------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income .................................... $ 118,222,302 $ 239,360,286
Net realized gain ........................................ 111,479,619 606,047,528
Net change in unrealized appreciation .................... 884,629,813 480,919,311
--------------- ---------------
NET INCREASE .......................................... 1,114,331,734 1,326,327,125
--------------- ---------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares ........................................ (1,857,153) (2,629,429)
Class B shares ........................................ (92,397,428) (221,780,945)
Class C shares ........................................ (595,958) (1,069,758)
Class D shares ........................................ (4,210,826) (8,313,813)
Net realized gain
Class A shares ........................................ (3,326,793) (5,076,567)
Class B shares ........................................ (237,710,650) (523,178,010)
Class C shares ........................................ (2,234,456) (3,300,551)
Class D shares ........................................ (6,468,686) (13,056,873)
--------------- ---------------
TOTAL DIVIDENDS AND DISTRIBUTIONS ..................... (348,801,950) (778,405,946)
--------------- ---------------
Net increase (decrease) from capital stock transactions .. (27,622,803) 883,514,920
--------------- ---------------
NET INCREASE .......................................... 737,906,981 1,431,436,099
NET ASSETS:
Beginning of period ...................................... 18,921,716,060 17,490,279,961
--------------- ---------------
END OF PERIOD
(Including undistributed net investment income of
$75,588,059 and $56,427,122, respectively)............. $19,659,623,041 $18,921,716,060
=============== ===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS August 31, 1999 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Dividend Growth Securities Inc. (the "Fund") is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
a diversified, open-end management investment company. The Fund's investment
objective is to provide reasonable current income and long-term growth of
income and capital. The Fund seeks to achieve its objective by investing
primarily in common stock of companies with a record of paying dividends and
the potential for increasing dividends. The Fund was incorporated in Maryland
on December 22, 1980 and commenced operations on March 30, 1981. On July 28,
1997, the Fund converted to a multiple class share structure.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year,
six years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York or American or other domestic or foreign stock exchange is valued at
its latest sale price on that exchange prior to the time when assets are
valued; if there were no sales that day, the security is valued at the latest
bid price; (2) all other portfolio securities for which over-the-counter market
quotations are readily available are valued at the latest available bid price
prior to the time of valuation; (3) when market quotations are not readily
available, including circumstances under which it is determined by Morgan
Stanley Dean Witter Advisors Inc. (the "Investment Manager") that sale or bid
prices are not reflective of a security's market value, portfolio securities
are valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Directors (valuation of
debt securities for which market quotations are not readily available may be
based upon current market prices of securities which are comparable in coupon,
rating and maturity or an appropriate matrix utilizing similar factors); and
(4) short-term debt securities having a maturity date of more than sixty days
at time of purchase are valued
10
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS August 31, 1999 (unaudited) continued
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.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with the Investment Manager, the
Fund pays a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined at the close of
each business day: 0.625% to the portion of daily net assets not exceeding $250
million; 0.50% to the portion of daily net assets exceeding $250 million but
not exceeding $1 billion; 0.475% to the portion of daily net assets exceeding
$1 billion but not exceeding
11
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS August 31, 1999 (unaudited) continued
$2 billion; 0.45% to the portion of daily net assets exceeding $2 billion but
not exceeding $3 billion; 0.425% to the portion of daily net assets exceeding
$3 billion but not exceeding $4 billion; 0.40% to the portion of daily net
assets exceeding $4 billion but not exceeding $5 billion; 0.375% to the portion
of daily net assets exceeding $5 billion but not exceeding $6 billion; 0.35% to
the portion of daily net assets exceeding $6 billion but not exceeding $8
billion; 0.325% to the portion of daily net assets exceeding $8 billion but not
exceeding $10 billion; 0.30% to the portion of daily net assets exceeding $10
billion but not exceeding $15 billion; and 0.275% to the portion of daily net
assets exceeding $15 billion.
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.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan"), pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund will pay the Distributor a fee which is
accrued daily and paid monthly at the following annual rates: (i) Class A - up
to 0.25% of the average daily net assets of Class A; (ii) Class B - 1.0% of the
lesser of: (a) the average daily aggregate gross sales of the Class B shares
since the inception of the Plan on July 2, 1984 (not including reinvestment of
dividend or capital gain distributions) less the average daily aggregate net
asset value of the Class B shares redeemed since the Plan's inception upon
which a contingent deferred sales charge has been imposed or waived; or (b) the
average daily net assets of Class B attributable to shares issued, net of
related shares redeemed, since the Plan's inception; 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
12
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS August 31, 1999 (unaudited) continued
pursuant to the Plan, in the case of Class B shares, to compensate Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and Distributor,
and other selected broker-dealers for their opportunity costs in advancing such
amounts, which compensation would be in the form of a carrying charge on any
unreimbursed expenses.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund
pursuant to the Plan and contingent deferred sales charges paid by investors
upon redemption of Class B shares. Although there is no legal obligation for
the Fund to pay expenses incurred in excess of payments made to the Distributor
under the Plan and the proceeds of contingent deferred sales charges paid by
investors upon redemption of shares, if for any reason the Plan is terminated,
the Trustees will consider at that time the manner in which to treat such
expenses. The Distributor has advised the Fund that such excess amounts,
including carrying charges, totaled $256,744,074 at August 31, 1999.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that the 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 six months ended August 31, 1999, the
distribution fee was accrued for Class A shares and Class C shares at the
annual rate of 0.24% and 1.0%, respectively.
The Distributor has informed the Fund that for the six months ended August 31,
1999, it received contingent deferred sales charges from certain redemptions of
the Fund's Class A shares, Class B shares and Class C shares of $12,070,
$9,123,061 and $71,659, respectively and received $527,795 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 six months ended August 31, 1999
aggregated $444,907,224 and $137,641,238, respectively.
For the six months ended August 31, 1999, the Fund incurred $65,498 in
brokerage commissions with DWR for portfolio transactions executed on behalf of
the Fund.
13
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS August 31, 1999 (unaudited) continued
For the six months ended August 31, 1999, the Fund incurred brokerage
commissions of $76,060 with Morgan Stanley & Co., Inc., an affiliate of the
Investment Manager and Distributor, for portfolio transactions executed on
behalf of the Fund.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Directors of the Fund who will have served as independent
Directors for at least five years at the time of retirement. Benefits under
this plan are based on years of service and compensation during the last five
years of service. Aggregate pension costs for the six months ended August 31,
1999 included in Directors' fees and expenses in the Statement of Operations
amounted to $3,041. At August 31, 1999, the Fund had an accrued pension
liability of $53,158 which is included in accrued expenses in the Statement of
Assets and Liabilities.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager
and Distributor, is the Fund's transfer agent.
5. FUND ACQUISITIONS
As of the close business on September 11, 1998, the Fund acquired all the net
assets of Dean Witter Retirement Series -- Dividend Growth Series ("Retirement
Dividend Growth") pursuant to a plan of reorganization approved by shareholders
of Retirement Dividend Growth on August 19, 1998. The acquisition was
accomplished by a tax-free exchange of 1,765,858 Class D shares of the Fund at
a net asset value of $54.47 per share for 6,721,613 shares of Retirement
Dividend Growth. The net assets of the Fund and Retirement Dividend Growth
immediately before the acquisition were $16,582,111,142 and $96,172,282,
respectively, including unrealized appreciation of $8,813,294 for Retirement
Dividend Growth. Immediately after the acquisition, the combined net assets of
the Fund amounted to $16,678,283,424.
14
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS August 31, 1999 (unaudited) continued
6. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
AUGUST 31, 1999 FEBRUARY 28, 1999
------------------------------------ ------------------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------------- ------------------- ---------------- -------------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ................................................ 1,115,206 $ 72,097,030 2,876,877 $ 170,240,232
Reinvestment of dividends and distributions ......... 73,243 4,686,724 115,901 6,832,652
Redeemed ............................................ (641,288) (41,590,325) (670,884) (39,915,516)
--------- ---------------- --------- ----------------
Net increase - Class A .............................. 547,161 35,193,429 2,321,894 137,157,368
--------- ---------------- --------- ----------------
CLASS B SHARES
Sold ................................................ 16,426,936 1,062,356,911 41,065,402 2,454,734,237
Reinvestment of dividends and distributions ......... 4,777,281 306,198,258 11,692,435 692,257,292
Redeemed ............................................ (22,568,907) (1,455,930,878) (43,749,714) (2,596,707,850)
----------- ---------------- ----------- ----------------
Net increase (decrease) - Class B ................... (1,364,690) (87,375,709) 9,008,123 550,283,679
----------- ---------------- ----------- ----------------
CLASS C SHARES
Sold ................................................ 953,472 61,465,966 1,945,008 116,417,760
Reinvestment of dividends and distributions ......... 42,563 2,726,559 71,052 4,189,216
Redeemed ............................................ (388,974) (25,104,716) (481,183) (28,373,226)
----------- ---------------- ----------- ----------------
Net increase - Class C .............................. 607,061 39,087,809 1,534,877 92,233,750
----------- ---------------- ----------- ----------------
CLASS D SHARES
Sold ................................................ 704,635 45,886,636 1,439,703 86,416,098
Reinvestment of dividends and distributions ......... 162,296 10,370,576 351,263 20,757,304
Shares issued in connection with the
acquisition of Dean Witter Retirement
Series - Dividend Growth Series .................... -- -- 1,765,858 96,172,282
Redeemed ............................................ (1,094,503) (70,785,544) (1,689,580) (99,505,561)
----------- ---------------- ----------- ----------------
Net increase (decrease) - Class D ................... (227,572) (14,528,332) 1,867,244 103,840,123
----------- ---------------- ----------- ----------------
Net increase (decrease) in Fund ..................... (438,040) $ (27,622,803) 14,732,138 $ 883,514,920
=========== ================ =========== ================
</TABLE>
15
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of capital stock outstanding
throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
AUGUST 31, 1999 FEBRUARY 28, 1999 FEBRUARY 28, 1998
---------------------- ------------------- ------------------
(unaudited)
<S> <C> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $60.22 $58.39 $53.43
---------- -------- --------
Income from investment operations:
Net investment income .......................... 0.51 1.05 0.66
Net realized and unrealized gain ............... 3.16 3.58 5.22
---------- -------- --------
Total income from investment operations ......... 3.67 4.63 5.88
---------- -------- --------
Less dividends and distributions from:
Net investment income .......................... (0.46) (1.02) (0.67)
Net realized gain .............................. (0.80) (1.78) (0.25)
---------- -------- --------
Total dividends and distributions ............... (1.26) (2.80) (0.92)
---------- -------- --------
Net asset value, end of period .................. $62.63 $60.22 $58.39
========== ======== ========
TOTAL RETURN+ ................................... 6.07%(1) 8.10% 11.15%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 0.66%(2)(3) 0.64%(3) 0.70%(2)
Net investment income ........................... 1.57%(2)(3) 1.76%(3) 2.09%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions .......... $271 $227 $85
Portfolio turnover rate ......................... 1%(1) 13% 4%
</TABLE>
- -------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
AUGUST 31, 1999++
----------------------
(unaudited)
<S> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ........ $60.18
-----------
Income from investment operations:
Net investment income ...................... 0.37
Net realized and unrealized gain ........... 3.18
-----------
Total income from investment operations ..... 3.55
-----------
Less dividends and distributions from:
Net investment income ...................... (0.31)
Net realized gain .......................... (0.80)
-----------
Total dividends and distributions ........... (1.11)
-----------
Net asset value, end of period .............. $62.62
===========
TOTAL RETURN+ ............................... 5.84%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .................................... 1.09%(2)(3)
Net investment income ....................... 1.14%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions ...... $18,706
Portfolio turnover rate ..................... 1%(1)
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 28,
----------------------------------------------------------------
1999++ 1998*++ 1997 1996** 1995
---------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ........ $58.36 $46.60 $39.65 $31.16 $30.86
--------- ------- ------- ------- -------
Income from investment operations:
Net investment income ...................... 0.77 0.84 0.81 0.75 0.72
Net realized and unrealized gain ........... 3.58 12.50 7.55 8.50 0.24
--------- ------- ------- ------- -------
Total income from investment operations ..... 4.35 13.34 8.36 9.25 0.96
--------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income ...................... (0.75) (0.83) (0.88) (0.67) (0.66)
Net realized gain .......................... (1.78) (0.75) (0.53) (0.09) --
--------- ------- ------- -------- --------
Total dividends and distributions ........... (2.53) (1.58) (1.41) (0.76) (0.66)
--------- ------- ------- -------- --------
Net asset value, end of period .............. $60.18 $58.36 $46.60 $39.65 $31.16
========= ======= ======= ======== ========
TOTAL RETURN+ ............................... 7.59% 29.10% 21.37% 30.01% 3.25%
RATIOS TO AVERAGE NET ASSETS:
Expenses .................................... 1.11%(3) 1.14% 1.22% 1.31% 1.42%
Net investment income ....................... 1.29%(3) 1.61% 1.95% 2.14% 2.42%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions ...... $18,061 $16,989 $12,907 $9,782 $7,101
Portfolio turnover rate ..................... 13% 4% 4% 10% 6%
</TABLE>
- --------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares
of the Fund held prior to that date, other than shares which were
purchased prior to July 2, 1984 (and with respect to such shares, certain
shares acquired through reinvestment of dividends and capital gains
distributions (collectively the "Old Shares")) and shares held by certain
employee benefit plans established by Dean Witter Reynolds Inc. have been
designated Class B shares. The Old Shares and shares held by those
employee benefit plans prior to July 28, 1997 have been designated Class
D shares.
** Year ended February 29.
++ The per share amounts were computed using an average number of shares
outstanding.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
AUGUST 31, 1999 FEBRUARY 28, 1999 FEBRUARY 28, 1998
---------------------- ------------------- ------------------
(unaudited)
<S> <C> <C> <C>
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $60.02 $58.28 $53.43
---------- -------- --------
Income from investment operations:
Net investment income .......................... 0.27 0.59 0.43
Net realized and unrealized gain ............... 3.16 3.56 5.21
---------- -------- --------
Total income from investment operations ......... 3.43 4.15 5.64
---------- -------- --------
Less dividends and distributions from:
Net investment income .......................... (0.22) (0.63) (0.54)
Net realized gain .............................. (0.80) (1.78) (0.25)
---------- -------- --------
Total dividends and distributions ............... (1.02) (2.41) (0.79)
---------- -------- --------
Net asset value, end of period .................. $62.43 $60.02 $58.28
========== ======== ========
TOTAL RETURN+ ................................... 5.67%(1) 7.26% 10.68%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 1.42%(2)(3) 1.43%(3) 1.45%(2)
Net investment income ........................... 0.81%(2)(3) 0.97%(3) 1.37%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions .......... $188 $144 $51
Portfolio turnover rate ......................... 1%(1) 13% 4%
</TABLE>
- --------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
AUGUST 31, 1999 FEBRUARY 28, 1999 FEBRUARY 28, 1998
---------------------- ------------------- ------------------
(unaudited)
<S> <C> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA :
Net asset value, beginning of period ............ $60.26 $58.43 $53.43
---------- -------- --------
Income from investment operations:
Net investment income .......................... 0.59 1.17 0.76
Net realized and unrealized gain ............... 3.17 3.59 5.20
---------- -------- --------
Total income from investment operations ......... 3.76 4.76 5.96
---------- -------- --------
Less dividends and distributions from:
Net investment income .......................... (0.52) (1.15) (0.71)
Net realized gain .............................. (0.80) (1.78) (0.25)
---------- -------- --------
Total dividends and distributions ............... (1.32) (2.93) (0.96)
---------- -------- --------
Net asset value, end of period .................. $62.70 $60.26 $58.43
========== ======== ========
TOTAL RETURN+ ................................... 6.21%(1) 8.33% 11.31%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 0.42%(2)(3) 0.43%(3) 0.45%(2)
Net investment income ........................... 1.81%(2)(3) 1.97%(3) 2.39%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions .......... $495 $489 $365
Portfolio turnover rate ......................... 1%(1) 13% 4%
</TABLE>
- --------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding.
+ Calculated based on the net asset value as of the last business day of
the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
BOARD OF DIRECTORS
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin
President
Barry Fink
Vice President, Secretary and General Counsel
Paul D. Vance
Vice President
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
The financial statements included herein have been taken from the records
of the Fund without examination by the independent accountants and
accordingly they do not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and directors,
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. Read the
prospectus carefully before investing.
MORGAN STANLEY
DEAN WITTER
DIVIDEND GROWTH
SECURITIES
SEMIANNUAL REPORT
AUGUST 31, 1999
