<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE TWO WORLD TRADE CENTER,
DEVELOPMENT SECURITIES INC. NEW YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS FEBRUARY 28, 1999
DEAR SHAREHOLDER:
During the twelve-month period ended February 28, 1999, commodity and energy
prices remained under pressure as the Commodity Research Bureau (CRB) Index
declined to its lowest level in more than two decades and the Goldman Sachs
Commodity Index ended the year down -32.96 percent. As a result, shares of most
basic-industry companies performed poorly.
Despite the poor overall picture, some commodities are showing signs of
improvement as supply and demand come into balance. For example, in the forest
products and paper sector, restrained capacity growth and
consolidation of assets through mergers has significantly and favorably
contained inventory levels of different grades of paper in light of a bleak
demand outlook. Within the energy sector, prices may also have seen their cycles
bottom, as announcements in advance of a March 23, 1999, OPEC meeting signaled a
further effort to reduce production to match it with daily oil demand, thus
boosting prices.
PERFORMANCE AND PORTFOLIO
For the 12-month period ended February 28, 1999, Morgan Stanley Dean Witter
Natural Resource Development Securities Class B shares produced a total return
of -26.60 percent, compared to -29.60 percent for the Lipper Natural Resources
Funds Average and 19.74 percent for the broad-based S&P 500 Index. For the same
period, the Fund's Class A, C and D shares returned -26.04 percent, -26.67
percent and -25.86 percent, respectively. Performance of the Fund's four classes
varies because of differing expenses. The accompanying chart illustrates the
Fund's performance versus the Lipper Natural Resources Funds Average and the S&P
500 Index.
While the Fund sharply underperformed the broad-market index, it did outperform
the average fund in its Lipper peer group. We attribute this outperformance to
the Fund's focus on diversification within the commodity-related sectors and its
bias toward both quality and liquidity.
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
LETTER TO THE SHAREHOLDERS FEBRUARY 28, 1999, CONTINUED
During the fiscal year, the Fund sold or reduced positions in Alcan Aluminum,
Reynolds Metals, Imperial Chemical, Solutia and Case. The Fund added to existing
positions in the paper group and initiated a position in Georgia Pacific. It
also increased its exposure to gold by adding Placer Dome. At the end of
February, 44.5 percent of the Fund's assets were allocated to the basic energy
sector (e.g., integrated oil companies, natural gas, oil and gas production, and
oil refining and marketing), 37.7 percent to the metals and basic materials
sectors (e.g., major chemicals, forest products, paper, precious metals, steel
and iron ore) and 15.7 percent to the energy development and technology sectors
(e.g., contract drilling, diversified manufacturing, oilfield services and
equipment).
LOOKING AHEAD
In the latter part of 1998, lower interest rates generally prevailed as much of
the world (excluding the United States) experienced slow economic growth and
concerted central bank policies aimed at stimulating local economies. We expect
this global easing to translate into a gradual reflation of economic activity
and hence higher commodity prices over time.
As 1999 unfolds, there is increasing evidence of a pickup in economic activity
in certain Asian economies. Recent strength in the Japanese equity market
implies that investors may believe the bottom there has been reached. We are
encouraged by the increased demand for pulp and paper products, to which stocks
have reacted positively. We expect the increase in economic activity to broaden
and to affect other commodities such as steel, aluminum, copper and gold. While
it appears that the worst may be over, any recovery could be long and slow.
Finally, we believe that, after a protracted period of underperformance, the
natural resources sector represents good relative value.
We appreciate your ongoing support of Morgan Stanley Dean Witter Natural
Resource Development Securities and look forward to continuing to serve your
investment needs.
Very truly yours,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
2
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE
DEVELOPMENT SECURITIES INC.
FUND PERFORMANCE FEBRUARY 28, 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000--Class B
Shares
Lipper
($ in Thousands) Fund S&P 500(4) (5)
<S> <C> <C> <C>
February-1989 $10,000 $10,000 $10,000
February-1990 $12,111 $11,884 $12,250
February-1991 $12,458 $13,627 $12,070
February-1992 $12,220 $15,810 $11,652
February-1993 $13,847 $17,494 $12,693
February-1994 $15,531 $18,947 $15,159
February-1995 $15,334 $20,341 $14,242
February-1996 $19,064 $27,391 $17,867
February-1997 $23,045 $34,557 $21,981
February-1998 $26,946 $46,648 $22,476
February-1999 $19,780(3) $55,856 $15,823
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. PERFORMANCE FOR CLASS
A, CLASS C, AND CLASS D SHARES WILL VARY FROM THE PERFORMANCE OF CLASS B
SHARES SHOWN ABOVE DUE TO DIFFERENCES IN SALES CHARGES AND EXPENSES.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------------------------------------------------------
CLASS B SHARES* CLASS A SHARES+
- -------------------------------------------------- ----------------------------------------------------------
PERIOD ENDED 2/28/99 PERIOD ENDED 2/28/99
- ------------------------- --------------------------
<S> <C> <C> <C> <C> <C>
1 Year -26.60%(1) -30.23%(2) 1 Year -26.04%(1) -29.93%(2)
5 Year 4.96(1) 4.67(2) Since Inception (7/28/97) -17.42(1) -20.18(2)
10 Year 7.06(1) 7.06(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES++ CLASS D SHARES++
- -------------------------------------------------- ----------------------------------------------------------
PERIOD ENDED 2/28/99 PERIOD ENDED 2/28/99
- ------------------------- --------------------------
<S> <C> <C> <C> <C> <C>
1 Year -26.67%(1) -27.39%(2) 1 Year -25.86%(1)
Since Inception (7/28/97) -18.08(1) -18.08(2) Since Inception (7/28/97) -17.22(1)
</TABLE>
- ------------------------
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable sales charge. See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value assuming a complete redemption on February 28, 1999.
(4) The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based index, the
performance of which is based on the average performance of 500 widely held
common stocks. The performance of the Index does not include any expenses,
fees or charges. The Index is unmanaged and should not be considered an
investment.
(5) The Lipper Natural Resources Funds Average tracks the performance of all
funds which invest more than 65% of their equity commitment in natural
resource stocks, as reported by Lipper Analytical Services, Inc.
* 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 NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (97.9%)
BASIC ENERGY (44.5%)
CANADIAN OIL & GAS (0.5%)
175,000 Gulf Canada Resources, Ltd. (Canada)*.............................................. $ 404,687
174,831 Ranger Oil Ltd..................................................................... 491,712
------------
896,399
------------
INTEGRATED OIL COMPANIES (26.3%)
50,000 Atlantic Richfield Co.............................................................. 2,731,250
60,000 BP Amoco PLC (ADR) (United Kingdom)................................................ 5,100,000
25,000 Chevron Corp....................................................................... 1,921,875
45,000 Ente Nazionale Idrocarburi SpA (ADR) (Italy)....................................... 2,655,000
115,000 Exxon Corp......................................................................... 7,654,687
25,000 Kerr-McGee Corp.................................................................... 714,063
95,000 Mobil Corp......................................................................... 7,902,812
35,000 PennzEnergy Co..................................................................... 328,125
117,000 Royal Dutch Petroleum Co. (ADR) (Netherlands)...................................... 5,133,375
95,000 Texaco, Inc........................................................................ 4,423,437
70,000 Unocal Corp........................................................................ 1,973,125
95,000 YPF Sociedad Anonima (ADR) (Argentina)............................................. 2,755,000
------------
43,292,749
------------
NATURAL GAS (0.8%)
60,000 KN Energy, Inc..................................................................... 1,256,250
------------
OIL & GAS PRODUCTION (6.4%)
50,000 Anardarko Petroleum Corp........................................................... 1,375,000
80,000 Apache Corp........................................................................ 1,595,000
70,000 Burlington Resources, Inc.......................................................... 2,266,250
55,000 Cabot Oil & Gas Corp. (Class A).................................................... 601,562
25,000 Devon Energy Corp.................................................................. 585,937
10,000 Noble Affiliates, Inc.............................................................. 226,250
22,500 Nuevo Energy Co.*.................................................................. 157,500
80,000 Occidental Petroleum Corp.......................................................... 1,205,000
25,000 Snyder Oil Corp.................................................................... 260,937
55,000 St. Mary Land & Exploration Co..................................................... 825,000
71,500 Swift Energy Co.*.................................................................. 429,000
55,000 Union Pacific Resources Group, Inc................................................. 491,563
80,000 Vintage Petroleum, Inc............................................................. 355,000
100,000 Wiser Oil Co....................................................................... 168,750
------------
10,542,749
------------
OIL REFINING/MARKETING (3.8%)
35,000 Pennzoil-Quaker State Co........................................................... 435,313
40,000 Petro-Canada (Canada).............................................................. 429,908
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
<C> <S> <C>
25,000 Sunoco, Inc........................................................................ $ 760,938
35,000 Tosco Corp......................................................................... 724,063
75,000 Total S.A. (ADR) (France).......................................................... 3,871,875
------------
6,222,097
------------
OIL/GAS TRANSMISSION (6.7%)
70,000 El Paso Energy Corp................................................................ 2,550,625
45,000 Enron Corp......................................................................... 2,925,000
40,000 Enron Oil & Gas Co................................................................. 660,000
135,000 Williams Companies, Inc............................................................ 4,995,000
------------
11,130,625
------------
TOTAL BASIC ENERGY................................................................. 73,340,869
------------
ENERGY DEVELOPMENT &
TECHNOLOGY (15.7%)
CONTRACT DRILLING (2.9%)
35,000 Diamond Offshore Drilling, Inc..................................................... 724,062
75,000 ENSCO International, Inc........................................................... 665,625
30,000 Global Marine, Inc.*............................................................... 232,500
40,000 Marine Drilling Company, Inc.*..................................................... 255,000
65,000 Nabors Industries, Inc.*........................................................... 747,500
25,000 Noble Drilling Corp.*.............................................................. 309,375
20,000 Patterson Energy, Inc.*............................................................ 55,625
25,000 Precision Drilling Corp. (Class A) (Canada)*....................................... 229,687
88,500 R & B Falcon Corp.*................................................................ 486,750
25,000 Santa Fe International Corp........................................................ 334,375
40,000 Transocean Offshore Inc............................................................ 825,000
------------
4,865,499
------------
DIVERSIFIED MANUFACTURING (2.8%)
95,000 Allegheny Teledyne Inc............................................................. 1,959,375
65,000 AlliedSignal, Inc.................................................................. 2,689,375
------------
4,648,750
------------
OILFIELD SERVICES/EQUIPMENT (10.0%)
50,000 Baker Hughes, Inc.................................................................. 900,000
25,000 BJ Services Co.*................................................................... 351,563
60,000 Cooper Cameron Corp.*.............................................................. 1,387,500
110,000 Global Industries Ltd.*............................................................ 556,875
125,000 Halliburton Co..................................................................... 3,531,250
5,000 National-Oilwell, Inc.*............................................................ 44,375
20,000 Offshore Logistics, Inc.*.......................................................... 173,750
30,000 Petroleum Geo - Services ASA (ADR) (Norway)*....................................... 343,125
83,200 Schlumberger, Ltd.................................................................. 4,040,400
30,000 Smith International, Inc.*......................................................... 729,375
32,500 Stolt Comex Seaway, S.A. (ADR) (United Kingdom)*................................... 190,938
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
<C> <S> <C>
70,000 Stolt Comex Seaway, S.A. (United Kingdom)*......................................... $ 457,188
30,000 Trico Marine Service, Inc.*........................................................ 129,375
55,000 UTI Energy Corp.*.................................................................. 319,688
90,000 Varco International, Inc.*......................................................... 697,500
65,000 Veritas DGC Inc.*.................................................................. 613,438
116,500 Weatherford International, Inc.*................................................... 1,980,500
------------
16,446,840
------------
TOTAL ENERGY DEVELOPMENT & TECHNOLOGY.............................................. 25,961,089
------------
METALS AND BASIC MATERIALS (37.7%)
ALUMINUM (2.2%)
90,000 Alcoa Inc.......................................................................... 3,645,000
------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS (0.9%)
45,000 Deere & Co......................................................................... 1,470,937
------------
CONTAINERS/PACKAGING (2.6%)
78,000 Owens-Illinois, Inc.*.............................................................. 1,867,125
40,000 Temple-Inland, Inc................................................................. 2,397,500
------------
4,264,625
------------
ENVIRONMENTAL SERVICES (0.2%)
15,500 Casella Waste Systems Inc., (Class A)*............................................. 315,812
------------
FOREST PRODUCTS (1.1%)
25,000 Georgia-Pacific Group.............................................................. 1,831,250
------------
INDUSTRIAL MACHINERY/COMPONENTS (1.0%)
34,200 Ingersoll-Rand Co.................................................................. 1,624,500
------------
MAJOR CHEMICALS (6.9%)
35,000 Dow Chemical Co.................................................................... 3,443,125
75,000 Du Pont (E.I.) de Nemours & Co., Inc............................................... 3,848,437
90,000 Monsanto Co........................................................................ 4,100,625
------------
11,392,187
------------
METALS FABRICATIONS (0.6%)
40,000 Reliance Steel & Aluminum Co....................................................... 1,022,500
------------
PAINTS/COATINGS (0.9%)
30,000 PPG Industries, Inc................................................................ 1,561,875
------------
PAPER (8.6%)
50,000 Boise Cascade Corp................................................................. 1,553,125
50,000 Bowater, Inc....................................................................... 2,106,250
50,000 Champion International Corp........................................................ 1,850,000
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
<C> <S> <C>
100,000 Mead Corp.......................................................................... $ 3,043,750
40,000 Union Camp Corp.................................................................... 2,675,000
80,000 Willamette Industries, Inc......................................................... 2,915,000
------------
14,143,125
------------
PRECIOUS METALS (6.1%)
160,000 Barrick Gold Corp. (Canada)........................................................ 2,830,000
100,000 Getchell Gold Corp.*............................................................... 2,593,750
100,000 Newmont Mining Corp................................................................ 1,725,000
100,000 Placer Dome Inc. (Canada).......................................................... 1,093,750
82,950 Stillwater Mining Co.*............................................................. 1,902,666
------------
10,145,166
------------
SPECIALTY CHEMICALS (2.0%)
60,000 Avery Dennison Corp................................................................ 3,221,250
------------
SPECIALTY STEELS (0.8%)
30,000 Nucor Corp......................................................................... 1,336,875
------------
STEEL/IRON ORE (3.8%)
80,000 AK Steel Holding Corp.............................................................. 1,745,000
95,000 British Steel PLC (ADR) (United Kingdom)........................................... 1,870,313
45,000 Lone Star Technologies, Inc.*...................................................... 582,188
80,000 USX-U.S. Steel Group............................................................... 2,025,000
------------
6,222,501
------------
TOTAL METALS & BASIC MATERIALS..................................................... 62,197,603
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $178,309,725) (a)........................................................ 97.9 % 161,499,561
OTHER ASSETS IN EXCESS OF LIABILITIES..................................................... 2.1 3,450,760
------ -------------
NET ASSETS................................................................................ 100.0 % $ 164,950,321
------ -------------
------ -------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $22,003,093 and the
aggregate gross unrealized depreciation is $38,813,257, resulting in net
unrealized depreciation of $16,810,164.
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $178,309,725).............................................................. $161,499,561
Receivable for:
Investments sold.......................................................................... 3,676,977
Dividends................................................................................. 416,280
Capital stock sold........................................................................ 195,092
Foreign withholding taxes reclaimed....................................................... 34,594
Prepaid expenses and other assets............................................................. 98,252
------------
TOTAL ASSETS............................................................................. 165,920,756
------------
LIABILITIES:
Payable for:
Capital stock repurchased................................................................. 196,014
Plan of distribution fee.................................................................. 127,550
Investment management fee................................................................. 88,601
Payable to bank............................................................................... 447,129
Accrued expenses and other payables........................................................... 111,141
------------
TOTAL LIABILITIES........................................................................ 970,435
------------
NET ASSETS............................................................................... $164,950,321
------------
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................... $193,467,539
Net unrealized depreciation................................................................... (16,810,164)
Accumulated net investment loss............................................................... (52,409)
Accumulated net realized loss................................................................. (11,654,645)
------------
NET ASSETS............................................................................... $164,950,321
------------
------------
CLASS A SHARES:
Net Assets.................................................................................... $691,035
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................... 68,091
NET ASSET VALUE PER SHARE................................................................ $10.15
------------
------------
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE)......................................... $10.71
------------
------------
CLASS B SHARES:
Net Assets.................................................................................... $147,527,336
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................... 14,708,614
NET ASSET VALUE PER SHARE................................................................ $10.03
------------
------------
CLASS C SHARES:
Net Assets.................................................................................... $1,277,627
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................... 127,480
NET ASSET VALUE PER SHARE................................................................ $10.02
------------
------------
CLASS D SHARES:
Net Assets.................................................................................... $15,454,323
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................... 1,516,381
NET ASSET VALUE PER SHARE................................................................ $10.19
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 28, 1999
<TABLE>
<S> <C>
NET INVESTMENT LOSS:
INCOME
Dividends (net of $93,493 foreign withholding tax)............................................ $ 3,683,514
Interest...................................................................................... 188,322
------------
TOTAL INCOME............................................................................. 3,871,836
------------
EXPENSES
Plan of distribution fee (Class A shares)..................................................... 1,320
Plan of distribution fee (Class B shares)..................................................... 2,124,861
Plan of distribution fee (Class C shares)..................................................... 12,497
Investment management fee..................................................................... 1,408,351
Transfer agent fees and expenses.............................................................. 342,988
Registration fees............................................................................. 93,922
Shareholder reports and notices............................................................... 87,009
Professional fees............................................................................. 69,946
Custodian fees................................................................................ 22,782
Directors' fees and expenses.................................................................. 17,187
Other......................................................................................... 9,972
------------
TOTAL EXPENSES........................................................................... 4,190,835
------------
NET INVESTMENT LOSS...................................................................... (318,999)
------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss............................................................................. (10,954,030)
Net change in unrealized appreciation......................................................... (56,429,019)
------------
NET LOSS................................................................................. (67,383,049)
------------
NET DECREASE.................................................................................. $(67,702,048)
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
FEBRUARY 28, FEBRUARY 28,
1999 1998*
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss......................................... $ (318,999) $ (351,725)
Net realized gain (loss).................................... (10,954,030) 13,069,671
Net change in unrealized appreciation....................... (56,429,019) 28,945,843
-------------- --------------
NET INCREASE (DECREASE)................................ (67,702,048) 41,663,789
-------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class B shares.......................................... -- (105,075)
Net realized gain
Class A shares.......................................... (5,526) (9,967)
Class B shares.......................................... (2,604,507) (32,041,346)
Class C shares.......................................... (14,135) (36,377)
Class D shares.......................................... (114,256) (416,177)
-------------- --------------
TOTAL DIVIDENDS AND DISTRIBUTIONS...................... (2,738,424) (32,608,942)
-------------- --------------
Net increase (decrease) from capital stock transactions..... (52,899,959) 31,247,222
-------------- --------------
NET INCREASE (DECREASE)................................ (123,340,431) 40,302,069
NET ASSETS:
Beginning of period......................................... 288,290,752 247,988,683
-------------- --------------
END OF PERIOD
(INCLUDING NET INVESTMENT LOSSES OF $52,409 AND $49,179,
RESPECTIVELY)........................................... $ 164,950,321 $ 288,290,752
-------------- --------------
-------------- --------------
</TABLE>
- ---------------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1999
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Natural Resource Development Securities Inc. (the
"Fund"), formerly Dean Witter Natural Resource Development Securities Inc., 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 capital growth. The Fund invests primarily in common stock of
companies in the natural resources and related areas. The Fund was incorporated
in Maryland on December 22, 1980 and commenced operations on March 30, 1981. On
July 28, 1997, the Fund commenced offering three additional classes of shares,
with the then current shares, 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")), designated as Class B shares. The Old Shares have been designated
Class D shares.
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, 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 (in
cases where securities are traded on more than one exchange, the securities are
valued on the exchange designated as the primary market pursuant to procedures
adopted by the Directors); (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"), formerly Dean Witter InterCapital Inc., that sale or bid prices are
not reflective of a security's market value, portfolio securities are valued at
their fair
9
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1999, CONTINUED
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.
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.
10
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1999, CONTINUED
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 and 0.50% to the portion of daily net assets exceeding $250 million.
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 Fund (not including reinvestment of dividend or
capital gain distributions) less the average daily aggregate net asset value of
the Class B shares redeemed since the Fund's inception upon which a contingent
deferred sales charge has been imposed or waived; or (b) the average daily net
assets of Class B; and (iii) Class C -- up to 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,
11
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1999, CONTINUED
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 $5,822,597 at February 28, 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 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 28, 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 year ended February 28, 1999,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class B shares and Class C shares of $404,686 and $1,864, respectively
and received $10,626 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 28, 1999 aggregated
$57,916,923 and $107,740,740, respectively.
For the year ended February 28, 1999, the Fund incurred brokerage commissions of
$57,167 with DWR for portfolio transactions executed on behalf of the Fund.
12
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1999, CONTINUED
For the year ended February 28, 1999, the Fund incurred $28,737 in brokerage
commissions with Morgan Stanley & Co., Inc., an affiliate of the Investment
Manager and Distributor, for portfolio transactions executed on behalf of the
Fund.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent.
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. Aggregated pension costs for the year ended February 28, 1999
included in Director's fees and expenses in the Statement of Operations amounted
to $6,389. At February 28, 1999, the Fund had an accrued pension liability of
$52,405 which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. FEDERAL INCOME TAX STATUS
At February 28, 1999, the Fund had a net capital loss carryover of approximately
$6,384,000 which will be available through February 28, 2007 to offset future
capital gains to the extent provided by regulations.
Capital losses incurred after October 31 ("post-October losses") within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
approximately $5,226,000 during fiscal 1999.
As of February 28, 1999, the Fund had temporary book/tax differences primarily
attributable to post-October losses and capital loss deferrals on wash sales and
permanent book/tax differences primarily attributable to a net operating loss.
To reflect reclassifications arising from the permanent differences,
paid-in-capital was charged $368,840, accumulated net realized loss was credited
$53,071 and net investment loss was credited $315,769.
13
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1999, CONTINUED
6. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
FEBRUARY 28, 1999 FEBRUARY 28, 1998*+
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold............................................................. 87,666 $ 1,046,452 27,229 $ 407,922
Reinvestment of distributions.................................... 383 5,103 673 8,808
Redeemed......................................................... (42,239) (490,436) (5,621) (78,162)
----------- -------------- ----------- ------------
Net increase - Class A........................................... 45,810 561,119 22,281 338,568
----------- -------------- ----------- ------------
CLASS B SHARES
Sold............................................................. 10,150,338 129,276,569 17,476,686 251,041,315
Reinvestment of dividends and distributions...................... 184,797 2,441,170 2,235,739 29,908,674
Redeemed......................................................... (15,417,509) (191,663,575) (17,865,123) (255,937,003)
----------- -------------- ----------- ------------
Net increase (decrease) - Class B................................ (5,082,374) (59,945,836) 1,847,302 25,012,986
----------- -------------- ----------- ------------
CLASS C SHARES
Sold............................................................. 448,875 5,948,277 214,875 2,958,438
Reinvestment of distributions.................................... 1,001 13,228 2,477 32,320
Redeemed......................................................... (430,175) (5,757,346) (109,573) (1,457,551)
----------- -------------- ----------- ------------
Net increase - Class C........................................... 19,701 204,159 107,779 1,533,207
----------- -------------- ----------- ------------
CLASS D SHARES
Sold............................................................. 1,402,605 15,983,255 292,553 4,265,324
Reinvestment of distributions.................................... 8,305 110,702 30,695 402,418
Redeemed......................................................... (842,093) (9,813,358) (21,545) (305,281)
----------- -------------- ----------- ------------
Net increase - Class D........................................... 568,817 6,280,599 301,703 4,362,461
----------- -------------- ----------- ------------
Net increase (decrease) in Fund.................................. (4,448,046) $ (52,899,959) 2,279,065 $ 31,247,222
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
- ---------------------
* For Class A, C and D shares, for the period July 28, 1997 (issue date)
through February 28, 1998.
+ On July 28, 1997, 645,861 shares representing $9,326,226 were transferred
to Class D.
14
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of capital stock outstanding
throughout each period:
<TABLE>
<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....................... $ 13.81 $ 13.34 $ 12.70 $ 10.77 $ 11.82
------ ------ ------ ------ ------
Income (loss) from investment
operations:
Net investment income
(loss)..................... (0.04) (0.02) -- 0.06 0.09
Net realized and unrealized
gain (loss)................ (3.60) 2.18 2.66 2.53 (0.24)
------ ------ ------ ------ ------
Total income (loss) from
investment operations........ (3.64) 2.16 2.66 2.59 (0.15)
------ ------ ------ ------ ------
Less dividends and
distributions from:
Net investment income...... -- (0.01) (0.02) (0.04) (0.12)
Net realized gain.......... (0.14) (1.68) (2.00) (0.62) (0.78)
------ ------ ------ ------ ------
Total dividends and
distributions................ (0.14) (1.69) (2.02) (0.66) (0.90)
------ ------ ------ ------ ------
Net asset value, end of
period....................... $ 10.03 $ 13.81 $ 13.34 $ 12.70 $ 10.77
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL RETURN+................. (26.60)% 16.93% 20.88% 24.32% (1.26)%
RATIOS TO AVERAGE NET ASSETS:
Expenses...................... 1.90%(1) 1.80% 1.84% 1.90% 1.90%
Net investment income
(loss)....................... (0.20)%(1) (0.15)% 0.05% 0.52% 0.77%
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.................... $147,527 $273,333 $247,989 $152,661 $132,812
Portfolio turnover rate....... 26% 67% 156% 49% 59%
</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")), have been designated Class B shares. The
Old Shares 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
15
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 28, 1997*
ENDED THROUGH
FEBRUARY 28, FEBRUARY 28,
1999 1998++
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS A SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 13.87 $ 14.44
------ ------
Income (loss) from investment operations:
Net investment income.............................................. 0.03 0.04
Net realized and unrealized loss................................... (3.61) (0.10)
------ ------
Total loss from investment operations................................. (3.58) (0.06)
------ ------
Less distributions from net realized gain............................. (0.14) (0.51)
------ ------
Net asset value, end of period........................................ $ 10.15 $ 13.87
------ ------
------ ------
TOTAL RETURN+......................................................... (26.04)% (0.22)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.14%(3) 1.11%(2)
Net investment income................................................. 0.56%(3) 0.45%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $691 $309
Portfolio turnover rate............................................... 26% 67%(1)
CLASS C SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 13.81 $ 14.44
------ ------
Loss from investment operations:
Net investment loss................................................ (0.02) (0.02)
Net realized and unrealized loss................................... (3.63) (0.10)
------ ------
Total loss from investment operations................................. (3.65) (0.12)
------ ------
Less distributions from net realized gain............................. (0.14) (0.51)
------ ------
Net asset value, end of period........................................ $ 10.02 $ 13.81
------ ------
------ ------
TOTAL RETURN+......................................................... (26.67)% (0.64)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.90%(3) 1.87%(2)
Net investment loss................................................... (0.20)%(3) (0.23)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $1,278 $1,488
Portfolio turnover rate............................................... 26% 67%(1)
</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
16
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 28, 1997*
ENDED THROUGH
FEBRUARY 28, FEBRUARY 28,
1999 1998++
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS D SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 13.89 $ 14.44
------ ------
Income (loss) from investment operations:
Net investment income.............................................. 0.05 0.07
Net realized and unrealized loss................................... (3.61) (0.11)
------ ------
Total loss from investment operations................................. (3.56) (0.04)
------ ------
Less distributions from net realized gain............................. (0.14) (0.51)
------ ------
Net asset value, end of period........................................ $ 10.19 $ 13.89
------ ------
------ ------
TOTAL RETURN+......................................................... (25.86)% (0.08)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.90%(3) 0.84%(2)
Net investment income................................................. 0.80%(3) 0.82%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $15,454 $13,161
Portfolio turnover rate............................................... 26% 67%(1)
</TABLE>
- ---------------------
* The date shares were first issued. Shareholders who held shares of the Fund
prior to July 28, 1997 (the date the Fund converted to a multiple class
share structure) should refer to the Financial Highlights of Class B to
obtain the historical per share data and ratio information of their shares.
++ 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
17
<PAGE>
MORGAN STANLEY DEAN WITTER NATURAL RESOURCE
DEVELOPMENT SECURITIES INC.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF MORGAN STANLEY DEAN WITTER NATURAL RESOURCE DEVELOPMENT 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 Natural
Resource Development Securities Inc. (the "Fund"), formerly Dean Witter Natural
Resource Development Securities Inc., at February 28, 1999, 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 generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at February 28, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
APRIL 13, 1999
1999 FEDERAL TAX NOTICE (UNAUDITED)
During the fiscal year ended February 28, 1999, 47.63% of the
income dividends qualified for the dividends received deduction
available to corporations.
18
<PAGE>
BOARD OF DIRECTORS
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
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
Barry Fink
Vice President, Secretary and General Counsel
David F. Myers
Vice President
Catherine Maniscalco
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.
MORGAN STANLEY
DEAN WITTER
NATURAL RESOURCE
DEVELOPMENT
SECURITIES
[PHOTO]
ANNUAL REPORT
FEBRUARY 28, 1999
