<PAGE>
Morgan Stanley Dean Witter Dividend Growth Two World Trade Center,
Securities Inc. New York, New York 10048
Letter to the Shareholders February 29, 2000
DEAR SHAREHOLDER:
During the 12-month period ended February 29, 2000, financial markets around the
world continued to experience volatility. After a peak in the domestic markets
in the middle of July 1999, stock prices pulled back in the fall on concerns
that the U.S. economy was growing too fast. The concern was manifested in two
Federal Reserve Board moves, in June and August, that raised the federal funds
rate a total of 50 basis points. These actions were subsequently followed by two
additional moves which raised rates by another 50 basis points by the end of
February. All of this occurred in an economic background where inflation
remained low while the economy continued to grow.
PERFORMANCE
Morgan Stanley Dean Witter Dividend Growth Securities' Class B shares posted a
total return of -12.49 percent for the 12-month period ended February 29, 2000
versus 11.73 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 returned
- -12.07 percent, -12.73 percent and -11.85 percent, respectively. The performance
of the Fund's four share classes varies because of differing expenses. The total
return figures given assume the reinvestment of all distributions but do not
reflect the deduction of any applicable sales charges. The accompanying chart
compares the Fund's performance to that of the S&P 500.
The Fund's underperformance relative to the S&P 500 was largely due to its
underexposure to high-technology stocks. Because most technology stocks
generally pay little if any dividends, they do not make up a large portion of
the Fund's portfolio. Instead, the Fund's screening process has led to an
overweighting of basic materials, capital goods and utilities, which enjoy
strong cash flows and attractive dividend yields. The Fund's emphasis on these
sectors impeded its performance during the period because these stocks
significantly underperformed growth stocks.
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Letter to the Shareholders February 29, 2000, continued
PORTFOLIO STRATEGY
Since its inception more than 18 years ago, Morgan Stanley Dean Witter Dividend
Growth Securities has utilized a unique screening process that seeks to identify
stocks of high-quality companies that have a record of paying dividends and the
potential for increasing dividends. While maintaining its commitment to this
methodology, the Fund has implemented several changes in response to the growing
role that the Internet and e-commerce play in the global economy. Since late
last year, the Fund has shifted its emphasis toward traditional companies that
have made serious commitments to e-commerce. Among the Fund's long-term holdings
that have embraced e-commerce are E.I. DuPont, General Electric, Ford Motor
Company, Avon Products and Honeywell. We believe that this added focus on
"bricks and clicks" companies, along with the Fund's more traditional technology
holdings, such as IBM and recently added Intel and Hewlett-Packard, will better
enable the Fund to participate in the new economy while maintaining a
diversified portfolio of high-quality, dividend-paying stocks.
On February 29, the Fund was relatively fully invested. During the period under
review, portfolio holdings liquidated included US West, SmithKline Beecham,
Atlantic Richfield and Tenneco. New portfolio positions were initiated in
Brunswick, Sunoco, Hewlett-Packard and Intel. At the end of the period, the Fund
was invested in 92 common stocks spread across 47 industries.
LOOKING AHEAD
Going forward, we believe that the outlook for the financial markets and the
economy is favorable. While it is clear that recent market conditions have not
favored our investment style, it seems unlikely that the market will continue to
reward only a small group of companies. We believe that, in time, the market
will once again favor reasonably priced, high-quality companies that meet our
investment criteria. Therefore, we remain convinced that our disciplined
investment approach that has served the Fund well for more than 18 years will
once again reward shareholders.
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 February 29, 2000
GROWTH OF $10,000 -- CLASS B
($ in thousands)
Date Total S&P 500
February 28, 1990 10,000 10,000
February 28, 1991 10,851 11,466
February 29, 1992 12,894 13,303
February 28, 1993 14,071 14,720
February 28, 1994 15,476 15,942
February 28, 1995 15,979 17,115
February 29, 1996 20,774 23,048
February 28, 1997 25,213 29,078
February 28, 1998 32,549 39,252
February 28, 1999 35,021 46,999
February 29, 2000 30,647(3) 52,512
[--- Fund --- S&P 500 (4)]
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
CLASS B SHARES*
- ----------------------------------------------------------------
PERIOD ENDED 2/29/00
- --------------------
1 Year (12.49)%(1) (16.65)%(2)
5 Year 13.91 %(1) 13.67 %(2)
10 Year 11.85 %(1) 11.85 %(2)
CLASS C SHARES+
- ----------------------------------------------------------------
PERIOD ENDED 2/29/00
- --------------------
1 Year (12.73)%(1) (13.56)%(2)
Since Inception (7/28/97) 1.38 %(1) 1.38 %(2)
CLASS A SHARES**
- ----------------------------------------------------------------
PERIOD ENDED 2/29/00
- --------------------
1 Year (12.07)%(1) (16.68)%(2)
Since Inception (7/28/97) 2.14 %(1) 0.04 %(2)
CLASS D SHARES++
- ----------------------------------------------------------------
PERIOD ENDED 2/29/00
- --------------------
1 Year (11.85)%(1)
Since Inception (7/28/97) 2.38 %(1)
- ---------------
(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 assuming a complete redemption on February 29, 2000.
(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.
* The maximum contingent deferred sales charge (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 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 February 29, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- ---------------
<S> <C> <C>
COMMON STOCKS (98.4%)
Aerospace (3.0%)
2,500,000 Goodrich (B.F.) Co. (The) ............ $ 59,843,750
3,700,000 Lockheed Martin Corp. ................ 64,518,750
5,700,000 United Technologies Corp. ............ 290,343,750
---------------
414,706,250
---------------
Aluminum (3.4%)
3,750,000 Alcan Aluminium Ltd. (Canada) ........ 123,750,000
5,050,000 Alcoa, Inc. .......................... 345,925,000
---------------
469,675,000
---------------
Apparel (0.5%)
2,500,000 VF Corp. ............................. 61,718,750
---------------
Auto Parts: O.E.M. (2.6%)
2,200,000 Dana Corp. ........................... 46,887,500
5,500,000 Delphi Automotive Systems Corp........ 91,781,250
2,050,000 Johnson Controls, Inc. ............... 109,418,750
2,250,000 TRW Inc. ............................. 108,000,000
---------------
356,087,500
---------------
Automotive Aftermarket (0.4%)
2,250,000 Goodyear Tire & Rubber Co. ........... 51,046,875
---------------
Beverages - Non-Alcoholic (2.4%)
3,650,000 Coca Cola Co. ........................ 176,796,875
4,800,000 PepsiCo, Inc. ........................ 154,800,000
---------------
331,596,875
---------------
Building Products (0.1%)
875,000 Armstrong World Industries, Inc....... 16,625,000
---------------
Construction/Agricultural
Equipment/Trucks (1.7%)
2,350,000 Caterpillar, Inc. .................... 82,396,875
4,050,000 Deere & Co. .......................... 144,787,500
---------------
227,184,375
---------------
Consumer Electronics/
Appliances (0.8%)
2,100,000 Whirlpool Corp. ...................... 114,056,250
---------------
Containers/Packaging (0.3%)
2,900,000 Crown Cork & Seal Co., Inc. .......... 40,600,000
---------------
Department Stores (1.4%)
3,700,000 May Department Stores Co. ............ 96,893,750
3,200,000 Sears, Roebuck & Co. ................. 88,200,000
---------------
185,093,750
---------------
Discount Chains (2.8%)
6,400,000 Target Corp. ......................... 377,600,000
---------------
Diversified Financial Services (1.4%)
3,000,000 Providian Financial Corp. ............ 194,437,500
---------------
Diversified Manufacturing (3.7%)
3,550,000 Honeywell International, Inc. ........ 170,843,750
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- ---------------
<S> <C> <C>
1,884,000 Minnesota Mining &
Manufacturing Co. .................. $ 166,027,500
4,300,000 Tyco International Ltd. (Bermuda) 163,131,250
---------------
500,002,500
---------------
Electric Utilities (3.3%)
669,170 Dominion Resources, Inc. ............. 24,550,174
2,300,000 FPL Group, Inc. ...................... 88,837,500
3,150,000 GPU, Inc. ............................ 78,356,250
4,600,000 Reliant Energy, Inc. ................. 94,587,500
4,300,000 Unicom Corp. ......................... 162,593,750
---------------
448,925,174
---------------
Electronic Data Processing (4.3%)
1,525,000 Hewlett-Packard Co. .................. 205,112,500
3,700,000 International Business Machines
Corp. .............................. 377,400,000
---------------
582,512,500
---------------
Engineering & Construction (0.4%)
2,050,000 Fluor Corp. .......................... 58,296,875
---------------
Finance Companies (2.9%)
3,800,000 Associates First Capital Corp.
(Class A) .......................... 75,525,000
3,600,000 Fannie Mae ........................... 190,800,000
4,050,000 Household International, Inc. ........ 129,346,875
---------------
395,671,875
---------------
Food Chains (0.8%)
2,650,000 Albertson's, Inc. .................... 64,925,000
2,750,000 Winn-Dixie Stores, Inc. .............. 44,343,750
---------------
109,268,750
---------------
Food Distributors (1.5%)
3,500,000 Supervalu, Inc. ...................... 60,156,250
4,250,000 SYSCO Corp. .......................... 139,453,125
---------------
199,609,375
---------------
Forest Products (1.0%)
2,600,000 Weyerhaeuser Co. ..................... 133,412,500
---------------
Integrated Oil Companies (5.9%)
4,450,000 BP Amoco PLC (ADR)
(United Kingdom) ................... 209,150,000
5,300,000 Exxon Mobil Corp. .................... 399,156,250
3,700,000 Royal Dutch Petroleum Co. (ADR)
(Netherlands) ...................... 194,250,000
---------------
802,556,250
---------------
Life Insurance (2.6%)
1,475,000 Aegon N.V. (ARS) (Netherlands) ....... 102,696,875
2,400,000 Jefferson-Pilot Corp. ................ 124,950,000
4,500,000 Lincoln National Corp. ............... 125,156,250
---------------
352,803,125
---------------
</TABLE>
See Notes to Financial Statements
4
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Portfolio of Investments February 29, 2000, continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------
<S> <C> <C>
Major Banks (4.3%)
7,500,000 Bank of America Corp. .................... $ 345,468,750
4,950,000 KeyCorp .................................. 83,840,625
1,425,000 Morgan (J.P.) & Co., Inc. ................ 158,175,000
---------------
587,484,375
---------------
Major Chemicals (4.0%)
1,525,000 Dow Chemical Co. ......................... 165,462,500
3,800,000 Du Pont (E.I.) de Nemours & Co.,
Inc. ................................... 191,900,000
2,650,000 Hercules Inc. ............................ 43,725,000
3,500,000 Monsanto Co. ............................. 135,843,750
---------------
536,931,250
---------------
Major Pharmaceuticals (8.5%)
6,350,000 Abbott Laboratories ...................... 207,962,500
6,100,000 American Home Products Corp. ............. 265,350,000
6,250,000 Bristol-Myers Squibb Co. ................. 355,078,125
9,300,000 Schering-Plough Corp. .................... 324,337,500
---------------
1,152,728,125
---------------
Major U.S. Telecommunications (2.5%)
3,500,000 Bell Atlantic Corp. ...................... 171,281,250
2,950,000 GTE Corp. ................................ 174,050,000
---------------
345,331,250
---------------
Managed Health Care (0.5%)
1,650,000 Aetna Inc. ............................... 67,856,250
---------------
Meat/Poultry/Fish (0.4%)
3,650,000 ConAgra, Inc. ............................ 59,768,750
---------------
Military/Gov't/Technical (0.4%)
3,000,000 Raytheon Co. (Class B) ................... 55,500,000
---------------
Motor Vehicles (3.6%)
2,150,000 DaimlerChrysler AG (Germany) ............. 145,662,500
3,725,000 Ford Motor Co. ........................... 155,053,125
2,550,000 General Motors Corp. ..................... 193,959,375
---------------
494,675,000
---------------
Multi-Sector Companies (2.9%)
3,000,000 General Electric Co. ..................... 396,562,500
---------------
Office Equipment/Supplies (2.6%)
4,600,000 Pitney Bowes, Inc. ....................... 227,700,000
6,000,000 Xerox Corp. .............................. 130,125,000
---------------
357,825,000
---------------
Oil & Gas Production (1.3%)
3,225,000 Burlington Resources, Inc. ............... 89,090,625
1,900,000 Kerr-McGee Corp. ......................... 85,025,000
---------------
174,115,625
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------
<S> <C> <C>
Oil Refining/Marketing (1.2%)
2,500,000 Sunoco, Inc. ............................. $ 61,718,750
4,900,000 USX-Marathon Group ....................... 105,962,500
---------------
167,681,250
---------------
Oil/Gas Transmission (4.5%)
5,600,000 El Paso Energy Corp. ..................... 207,550,000
5,900,000 Enron Corp. .............................. 407,100,000
---------------
614,650,000
---------------
Other Metals/Minerals (0.6%)
1,750,000 Phelps Dodge Corp. ....................... 82,468,750
---------------
Package Goods/Cosmetics (6.3%)
5,750,000 Avon Products, Inc. ...................... 155,609,375
5,600,000 Gillette Co. ............................. 197,400,000
2,325,000 International Flavors &
Fragrances, Inc. ....................... 69,750,000
2,625,000 Kimberly-Clark Corp. ..................... 135,679,687
3,400,000 Procter & Gamble Co. ..................... 299,200,000
---------------
857,639,062
---------------
Packaged Foods (1.2%)
2,900,000 Quaker Oats Company (The) ................ 156,418,750
---------------
Paints/Coatings (0.7%)
2,000,000 PPG Industries, Inc. ..................... 98,750,000
---------------
Paper (1.4%)
2,600,000 International Paper Co. .................. 95,712,500
2,950,000 Mead Corp. ............................... 88,315,625
---------------
184,028,125
---------------
Photographic Products (0.9%)
2,150,000 Eastman Kodak Co. ........................ 123,221,875
---------------
Railroads (1.1%)
4,550,000 Burlington Northern Santa Fe
Corp. .................................... 89,578,125
2,600,000 CSX Corp. ................................ 57,687,500
---------------
147,265,625
---------------
Recreational Products/Toys (0.3%)
2,475,000 Brunswick Corp. .......................... 43,776,563
---------------
Rental/Leasing Companies (0.3%)
2,100,000 Ryder System, Inc. ....................... 39,112,500
---------------
Semiconductors (1.2%)
1,425,000 Intel Corp. .............................. 161,025,000
---------------
Tobacco (0.5%)
3,800,000 UST, Inc. ................................ 73,387,500
---------------
TOTAL COMMON STOCKS
(Identified Cost $7,386,824,228).......... 13,401,690,174
---------------
</TABLE>
See Notes to Financial Statements
5
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Portfolio of Investments February 29, 2000, continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------- ----------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (1.4%)
U.S. GOVERNMENT AGENCY (a) (1.4%)
$ 200,600 Federal Home Loan Mortgage
Corp. 5.72% due 03/01/00
(Amortized Cost $200,600,000) 200,600,000
---------------
REPURCHASE AGREEMENT (0.0%)
274 The Bank of New York 5.69%
due 03/01/00 (dated 02/29/00;
proceeds $273,618) (b)
(Identified Cost $273,575)............ 273,575
---------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $200,873,575).......... 200,873,575
---------------
TOTAL INVESTMENTS
(Identified Cost $7,587,697,803) (c)..... 99.8% 13,602,563,749
OTHER ASSETS IN EXCESS OF
LIABILITIES ............................. 0.2 22,130,559
----- ---------------
NET ASSETS .............................. 100.0% $13,624,694,308
===== ===============
</TABLE>
- --------------------------------
ADR American Depository Receipt.
ARS American Registered Shares.
(a) Purchased on a discount basis. The interest rate shown has been adjusted to
reflect a money market equivalent yield.
(b) Collateralized by $223,013 U.S. Treasury Bond 8.75% due 05/15/17 valued at
$279,047.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $6,850,386,885 and the
aggregate gross unrealized depreciation is $835,520,939, resulting in net
unrealized appreciation of $6,014,865,946.
See Notes to Financial Statements
6
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2000
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value
(identified cost $7,587,697,803) ............. $13,602,563,749
Receivable for:
Dividends .................................. 38,741,485
Investments sold ........................... 33,373,440
Capital stock sold ......................... 11,613,618
Prepaid expenses and other assets ............... 180,281
---------------
TOTAL ASSETS ................................ 13,686,472,573
---------------
LIABILITIES:
Payable for:
Capital stock repurchased .................. 46,945,550
Plan of distribution fee ................... 10,012,750
Investment management fee .................. 4,281,273
Accrued expenses and other payables ............. 538,692
---------------
TOTAL LIABILITIES ........................... 61,778,265
---------------
NET ASSETS .................................. $13,624,694,308
===============
COMPOSITION OF NET ASSETS:
Paid-in-capital ................................. $6,956,883,381
Net unrealized appreciation ..................... 6,014,865,946
Accumulated undistributed net investment
income ....................................... 42,247,912
Accumulated undistributed net realized gain ..... 610,697,069
---------------
NET ASSETS .................................. $13,624,694,308
===============
CLASS A SHARES:
Net Assets ...................................... $214,668,626
Shares Outstanding (500,000,000 shares
authorized, $.01 par value) .................. 4,283,629
NET ASSET VALUE PER SHARE ................... $50.11
======
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset
value) .................................... $52.89
======
CLASS B SHARES:
Net Assets ...................................... $12,869,283,376
Shares Outstanding (500,000,000 shares
authorized, $.01 par value) .................. 256,890,789
NET ASSET VALUE PER SHARE ................... $50.10
======
CLASS C SHARES:
Net Assets ...................................... $135,496,432
Shares Outstanding (500,000,000 shares
authorized, $.01 par value) .................. 2,712,262
NET ASSET VALUE PER SHARE ................... $49.96
======
CLASS D SHARES:
Net Assets ...................................... $405,245,874
Shares Outstanding (500,000,000 shares
authorized, $.01 par value) .................. 8,079,117
NET ASSET VALUE PER SHARE ................... $50.16
======
</TABLE>
STATEMENT OF OPERATIONS
For the year ended February 29, 2000
<TABLE>
<CAPTION>
NET INVESTMENT INCOME:
<S> <C>
INCOME
Dividends (net of $3,146,349 foreign
withholding tax) ............................... $ 365,483,198
Interest .......................................... 49,062,880
---------------
TOTAL INCOME .................................. 414,546,078
---------------
EXPENSES
Plan of distribution fee (Class A shares) ......... 621,888
Plan of distribution fee (Class B shares) ......... 129,811,870
Plan of distribution fee (Class C shares) ......... 1,749,257
Investment management fee ......................... 65,806,041
Transfer agent fees and expenses .................. 13,565,567
Custodian fees .................................... 756,134
Shareholder reports and notices ................... 703,478
Registration fees ................................. 343,477
Professional fees ................................. 76,212
Directors' fees and expenses ...................... 18,346
Other ............................................. 221,962
---------------
TOTAL EXPENSES ................................ 213,674,232
---------------
NET INVESTMENT INCOME ......................... 200,871,846
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain ................................. 1,061,810,935
Net change in unrealized appreciation ............. (3,276,574,204)
---------------
NET LOSS ...................................... (2,214,763,269)
---------------
NET DECREASE ...................................... $(2,013,891,423)
===============
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Financial Statements, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
FEBRUARY 29, 2000 FEBRUARY 28, 1999
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ........................................... $ 200,871,846 $ 239,360,286
Net realized gain ............................................... 1,061,810,935 606,047,528
Net change in unrealized appreciation ........................... (3,276,574,204) 480,919,311
--------------- ---------------
NET INCREASE (DECREASE) ...................................... (2,013,891,423) 1,326,327,125
--------------- ---------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares ............................................... (4,193,005) (2,629,429)
Class B shares ............................................... (200,448,728) (221,780,945)
Class C shares ............................................... (1,483,355) (1,069,758)
Class D shares ............................................... (8,926,874) (8,313,813)
Net realized gain
Class A shares ............................................... (10,045,473) (5,076,567)
Class B shares ............................................... (665,653,684) (523,178,010)
Class C shares ............................................... (6,747,862) (3,300,551)
Class D shares ............................................... (18,321,098) (13,056,873)
--------------- ---------------
TOTAL DIVIDENDS AND DISTRIBUTIONS ............................ (915,820,079) (778,405,946)
--------------- ---------------
Net increase (decrease) from capital stock transactions ......... (2,367,310,250) 883,514,920
--------------- ---------------
NET INCREASE (DECREASE) ...................................... (5,297,021,752) 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
$42,247,912 and $56,427,122, respectively) ................... $13,624,694,308 $18,921,716,060
=============== ===============
</TABLE>
See Notes to Financial Statements
8
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Notes to Financial Statements February 29, 2000
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 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.
9
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Notes to Financial Statements February 29, 2000, continued
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 $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
10
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Notes to Financial Statements February 29, 2000, continued
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 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.
11
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Notes to Financial Statements February 29, 2000, continued
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 $225,009,245 at February 29, 2000.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 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 year ended February 29, 2000, 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 year ended February 29, 2000,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class A shares, Class B shares and Class C shares of $27,072, $21,790,773
and $150,182, respectively and received $831,926 in front-end sales charges from
sales of the Fund's Class A shares. The respective shareholders pay such charges
which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended February 29, 2000 aggregated
$785,219,639 and $3,258,643,331, respectively. Included in the aforementioned
are sales of U.S. Government securities of $600,078,125.
For the year ended February 29, 2000, the Fund incurred $258,623 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.
For the year ended February 29, 2000, the Fund incurred brokerage commissions
of $175,945 with Morgan Stanley & Co., Inc., an affiliate of the Investment
Manager and Distributor, for portfolio transactions executed on behalf of the
Fund. At February 29, 2000, the Fund's receivable for investments sold included
unsettled trades with Morgan Stanley & Co., Inc. of $5,887,543.
12
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Notes to Financial Statements February 29, 2000, continued
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 year ended February 29, 2000
included in Directors' fees and expenses in the Statement of Operations amounted
to $6,120. At February 29, 2000, the Fund had an accrued pension liability of
$53,673 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. At February 29, 2000, the Fund had
transfer agent fees and expenses payable of approximately $50,000.
5. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
FEBRUARY 29, 2000 FEBRUARY 28, 1999
----------------------------------- ------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- ------------------- ---------------- -------------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ................................................... 1,994,969 $ 122,849,690 2,876,877 $ 170,240,232
Reinvestment of dividends and distributions ............ 220,693 13,036,456 115,901 6,832,652
Redeemed ............................................... (1,709,414) (101,555,287) (670,884) (39,915,516)
---------- ---------------- --------- ----------------
Net increase - Class A ................................. 506,248 34,330,859 2,321,894 137,157,368
---------- ---------------- --------- ----------------
CLASS B SHARES
Sold ................................................... 25,790,072 1,605,655,514 41,065,402 2,454,734,237
Reinvestment of dividends and distributions ............ 13,531,215 802,060,686 11,692,435 692,257,292
Redeemed ............................................... (82,531,778) (4,828,912,064) (43,749,714) (2,596,707,850)
----------- ---------------- ----------- ----------------
Net increase (decrease) - Class B ...................... (43,210,491) (2,421,195,864) 9,008,123 550,283,679
----------- ---------------- ----------- ----------------
CLASS C SHARES
Sold ................................................... 1,554,622 96,103,008 1,945,008 116,417,760
Reinvestment of dividends and distributions ............ 135,281 7,959,717 71,052 4,189,216
Redeemed ............................................... (1,383,770) (81,095,212) (481,183) (28,373,226)
----------- ---------------- ----------- ----------------
Net increase - Class C ................................. 306,133 22,967,513 1,534,877 92,233,750
----------- ---------------- ----------- ----------------
CLASS D SHARES
Sold ................................................... 2,262,533 134,440,506 1,439,703 86,416,098
Reinvestment of dividends and distributions ............ 446,610 26,500,428 351,263 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 ............................................... (2,745,191) (164,353,692) (1,689,580) (99,505,561)
----------- ---------------- ----------- ----------------
Net increase (decrease) - Class D ...................... (36,048) (3,412,758) 1,867,244 103,840,123
----------- ---------------- ----------- ----------------
Net increase (decrease) in Fund ........................ (42,434,158) $ (2,367,310,250) 14,732,138 $ 883,514,920
=========== ================ =========== ================
</TABLE>
13
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Notes to Financial Statements February 29, 2000, continued
6. FEDERAL INCOME TAX STATUS
As of February 29, 2000, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales.
7. FUND ACQUISITION
As of the close of 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.
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 YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
FEBRUARY 29, 2000 FEBRUARY 28, 1999 FEBRUARY 28, 1998
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $60.22 $58.39 $53.43
------ ------ ------
Income (loss) from investment operations:
Net investment income ................................. 0.94 1.05 0.66
Net realized and unrealized gain (loss) ............... (7.75) 3.58 5.22
------ ------ ------
Total income (loss) from investment operations ......... (6.81) 4.63 5.88
------ ------ ------
Less dividends and distributions from:
Net investment income ................................. (0.99) (1.02) (0.67)
Net realized gain ..................................... (2.31) (1.78) (0.25)
------ ------ ------
Total dividends and distributions ...................... (3.30) (2.80) (0.92)
------ ------ ------
Net asset value, end of period ......................... $50.11 $60.22 $58.39
====== ====== ======
TOTAL RETURN + ......................................... (12.07)% 8.10% 11.15%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 0.67 %(3) 0.64%(3) 0.70%(2)
Net investment income .................................. 1.52 %(3) 1.76%(3) 2.09%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $214,669 $227,457 $84,987
Portfolio turnover rate ................................ 4 % 13% 4%
</TABLE>
- -------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
See Notes to Financial Statements
15
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Financial Highlights, continued
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 28,
-----------------------------------------------------------------------------
2000**++ 1999++ 1998*++ 1997 1996**
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............... $60.18 $58.36 $46.60 $39.65 $31.16
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income ............................. 0.64 0.77 0.84 0.81 0.75
Net realized and unrealized gain (loss) ........... (7.73) 3.58 12.50 7.55 8.50
------ ------ ------ ------ ------
Total income (loss) from investment operations ..... (7.09) 4.35 13.34 8.36 9.25
------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income ............................. (0.68) (0.75) (0.83) (0.88) (0.67)
Net realized gain ................................. (2.31) (1.78) (0.75) (0.53) (0.09)
------ ------ ------ ------ ------
Total dividends and distributions .................. (2.99) (2.53) (1.58) (1.41) (0.76)
------ ------ ------ ------ ------
Net asset value, end of period ..................... $50.10 $60.18 $58.36 $46.60 $39.65
====== ====== ====== ====== ======
TOTAL RETURN + ..................................... (12.49)% 7.59% 29.10% 21.37% 30.01%
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................... 1.15 %(1) 1.11%(1) 1.14% 1.22% 1.31%
Net investment income .............................. 1.04 %(1) 1.29%(1) 1.61% 1.95% 2.14%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ............ $12,869,283 $18,060,848 $16,989,453 $12,906,779 $9,782,106
Portfolio turnover rate ........................... 4 % 13% 4% 4% 10%
</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 during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Reflects overall Fund ratios for investment income and non-class specific
expenses.
See Notes to Financial Statements
16
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Financial Highlights, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
FEBRUARY 29, 2000 FEBRUARY 28, 1999 FEBRUARY 28, 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $60.02 $58.28 $53.43
------ ------ ------
Income (loss) from investment operations:
Net investment income ................................. 0.47 0.59 0.43
Net realized and unrealized gain (loss) ............... (7.70) 3.56 5.21
------ ------ ------
Total income (loss) from investment operations ......... (7.23) 4.15 5.64
------ ------ ------
Less dividends and distributions from:
Net investment income ................................. (0.52) (0.63) (0.54)
Net realized gain ..................................... (2.31) (1.78) (0.25)
------ ------ ------
Total dividends and distributions ...................... (2.83) (2.41) (0.79)
------ ------ ------
Net asset value, end of period ......................... $49.96 $60.02 $58.28
====== ====== ======
TOTAL RETURN + ......................................... (12.73)% 7.26% 10.68%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 1.43 %(3) 1.43%(3) 1.45%(2)
Net investment income .................................. 0.76 %(3) 0.97%(3) 1.37%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $135,496 $144,425 $50,773
Portfolio turnover rate ................................ 4 % 13% 4%
</TABLE>
- --------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
See Notes to Financial Statements
17
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Financial Highlights, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
FEBRUARY 29, 2000 FEBRUARY 28, 1999 FEBRUARY 28, 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $60.26 $58.43 $53.43
------ ------ ------
Income (loss) from investment operations:
Net investment income ................................. 1.09 1.17 0.76
Net realized and unrealized gain (loss) ............... (7.76) 3.59 5.20
------ ------ ------
Total income (loss) from investment operations ......... (6.67) 4.76 5.96
------ ------ ------
Less dividends and distributions from:
Net investment income ................................. (1.12) (1.15) (0.71)
Net realized gain ..................................... (2.31) (1.78) (0.25)
------ ------ ------
Total dividends and distributions ...................... (3.43) (2.93) (0.96)
------ ------ ------
Net asset value, end of period ......................... $50.16 $60.26 $58.43
====== ====== ======
TOTAL RETURN + ......................................... (11.85)% 8.33% 11.31%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 0.43 %(3) 0.43%(3) 0.45%(2)
Net investment income .................................. 1.76 %(3) 1.97%(3) 2.39%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $405,246 $488,987 $365,068
Portfolio turnover rate ................................ 4 % 13% 4%
</TABLE>
- --------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
See Notes to Financial Statements
18
<PAGE>
Morgan Stanley Dean Witter Dividend Growth Securities Inc.
Report of Independent Accountants
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
MORGAN STANLEY DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Morgan Stanley Dean Witter Dividend
Growth Securities Inc. (the "Fund") at February 29, 2000, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the periods indicated, in conformity with accounting principles generally
accepted in the United States. 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 auditing standards
generally accepted in the United States, 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 February
29, 2000 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
April 14, 2000
2000 FEDERAL TAX NOTICE (unaudited)
During the year ended February 29, 2000, the Fund paid to its shareholders
$2.31 per share from long-term capital gains. For such period, 100% of the
income paid qualified for the dividends received deduction available to
corporations.
19
<PAGE>
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
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
[GRAPHIC OMITTED]
ANNUAL REPORT
FEBRUARY 29, 2000
