<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
Two World Trade Center,
New York, New York 10048
LETTER TO THE SHAREHOLDERS June 30, 1998
DEAR SHAREHOLDER:
During the first six months of 1998, Asian economic fears and uncertainties
resurfaced and contributed to extreme volatility in the U.S. financial markets.
Beneficiaries of this turmoil in the Pacific region included Treasury bonds,
electric utilities and selective telecom equities as investors sought these
vehicles for their relative safety and quality. Investors especially favored
electric utility equities for their appealing valuations, defensive
characteristics, strengthening fundamentals and minimal Asian exposure. This
positive utility backdrop provided the underpinnings for the favorable
investment performance of the Fund during the first half of 1998.
AN OVERVIEW OF THE UTILITY SECTOR
With respect to electric utilities, performance was very robust and the
fundamentals continue to prove positive as the industry progresses from a
monopoly environment to a competitive marketplace and investor concerns
regarding regulatory treatment ease further. The Fund continues to emphasize
companies characterized by low unit costs and good earnings growth
opportunities through sound diversification strategies. Within this sector, the
trend of mergers and acquisitions continued, witnessed by the American Electric
Power/Central & Southwest combination and the Texas Utilities winning bid for
The Energy Group of the United Kingdom. Providing additional upside for the
group was a suggestion of foreign utility interest in selective U.S. electric
assets.
Turning to the telecom sector, merger and acquisition fever was similarly
evident during the first six months of 1998 as investors propelled stock prices
upward in anticipation of industry consolidation. Notably, SBC Communications
announced its acquisition of Ameritech in a colossal $62 billion merger
proposal that would create a local carrier with a significant customer reach
from Ohio to California. Also, AT&T announced a ground breaking merger with the
cable company Telecommunications Inc. which should provide a powerful foray
into the
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
LETTER TO THE SHAREHOLDERS June 30, 1998, continued
local telecom market. Both proposed mergers follow the convergence path that
many telecom companies have been taking since the Telecommunication Act of 1996
was enacted. Additionally, the outlook for earnings growth within this sector
remains favorable, especially given the high-growth prospects for newer
industry applications such as data/internet. Telecom companies are capitalizing
on the strong growth of data services by incorporating Internet access into
their existing suite of telecom services.
Foreign telecom companies within the Fund also performed very strongly. This
segment of the portfolio enhances the Fund's overall investment appeal and
includes very minimal Asian exposure, with a primary emphasis on Europe as well
as Canada and Latin America. The foreign component which remains geographically
dispersed, benefited from the strong revenue growth characteristics of
broadening worldwide telecom infrastructure as well as potential consolidation
among telecom companies globally.
The natural gas sector, in contrast, lagged within the utility sectors as
natural gas prices weakened considerably due to the drop in oil prices and mild
temperatures. However, given the fact that gas prices are extremely sensitive
to weather changes, a turn toward warmer-than-normal weather during June
increased demand for natural gas resulting in a modest rebound in gas commodity
prices and stocks. The Fund continues to focus on high-quality and
well-diversified companies within all areas of the natural gas industry. This
is due to the favorable long-term outlook for natural gas, given its increasing
appeal worldwide as a clean-burning, environmentally friendly energy source.
PERFORMANCE AND PORTFOLIO
Against this backdrop, Morgan Stanley Dean Witter Utilities Fund Class B shares
provided a total return of 9.09 percent for the first six months of 1998
compared to a total return of 8.44 percent for the Lipper Utilities Funds
Average and 17.70 percent for the broad-based Standard & Poor's 500 Index. For
the same period, the Fund's Class A, C and D shares had total returns of 9.46
percent, 9.09 percent and 9.64 percent, respectively. The performance of the
Fund's four share classes varies because of differing expenses. The resumption
of Asian economic concerns enabled the Fund to close the performance gap with
the overall market during the second quarter when safe-haven investments became
increasingly appealing.
The Fund remained at its fully invested position during the first half of 1998,
reflecting the improvement in investor confidence particularly within the
electric sector, given that sector's appeal in a volatile financial
marketplace. Widespread diversification remains a key characteristic and
strength of the portfolio. To place this in perspective, on June 30, 1998, 88
percent of the Fund's net assets were allocated to utility and utility-related
equities. Within the equity component, 52 percent were allocated to electric
utilities, 36 percent to telecommunications and 12 percent to natural gas
issues. Enhancing overall Fund
2
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
LETTER TO THE SHAREHOLDERS June 30, 1998, continued
diversification are foreign securities accounting for 10 percent of net assets
that are focused on the growth area of global telecommunications. The Fund's
high-quality fixed-income portfolio accounted for 9 percent of net assets, with
3 percent of assets held in cash and cash equivalents. The fixed-income portion
of the Fund remains well diversified with a weighted average credit rating of
Baa and BBB+ as measured by Moody's Investors Service Inc. and Standard &
Poor's Corporation, respectively. At month-end, 68 percent of the fixed-income
portion of the Fund was allocated to electric utility debt instruments.
Among the Fund's largest equity holdings on June 30, 1998, were SBC
Communications, Bell Atlantic and Sprint (telecommunications), Duke Energy, FPL
Group and New Century Energies (electric utilities) and The Williams Companies
and Enron Corporation (natural gas). Included among the Fund's major foreign
holdings are BCE Inc. and Telefonica de Espana S.A.
LOOKING AHEAD
During the second half of 1998 the Fund anticipates a modest decrease in the
electric utility component in favor of selective telecommunication
opportunities while keeping the Fund well positioned to benefit from the
current environment of low inflation and low interest rates. The Fund remains
uniquely positioned to capitalize on the expansive growth occurring across all
utility sectors and remains structured to meet its long-term objectives of
providing shareholders with current income and good long-term growth.
We appreciate your support of Morgan Stanley Dean Witter Utilities Fund and
look forward to serving your future needs and investment objectives.
Very truly yours,
/s/ Charles A. Fiumefreddo
- --------------------------
CHARLES A. FIUMEFREDDO
Chairman of the Board
3
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------ ----------------
<S> <C> <C>
COMMON STOCKS (88.3%)
Natural Gas (11.0%)
660,000 AGL Resources, Inc. ................................................. $ 13,117,500
330,000 Burlington Resources, Inc. .......................................... 14,210,625
395,000 Coastal Corp. ....................................................... 27,575,937
335,000 Consolidated Natural Gas Co. ........................................ 19,723,125
499,821 EEX Corp.* .......................................................... 4,685,822
1,020,670 El Paso Natural Gas Co. ............................................. 39,040,627
1,124,137 Enron Corp. ......................................................... 60,773,657
230,000 New Jersey Resources Corp. .......................................... 8,208,125
100,000 Royal Dutch Petroleum Co. (Netherlands) ............................. 5,481,250
275,000 Sonat, Inc. ......................................................... 10,621,875
285,000 Washington Gas Light Co. ............................................ 7,623,750
1,990,000 Williams Companies, Inc. ............................................ 67,162,500
-------------
278,224,793
-------------
Telecommunications (31.8%)
135,000 360 degrees Communications Co.* ..................................... 4,320,000
595,000 AirTouch Communications, Inc.* ...................................... 34,770,312
845,000 ALLTEL Corp. ........................................................ 39,292,500
1,185,000 Ameritech Corp. ..................................................... 53,176,875
315,000 AT&T Corp. .......................................................... 17,994,375
955,000 BCE, Inc. (Canada) .................................................. 40,766,562
1,042,000 Bell Atlantic Corp. ................................................. 47,541,250
790,000 BellSouth Corp. ..................................................... 53,028,750
120,000 British Telecommunications PLC (ADR) (United Kingdom) ............... 14,820,000
200,000 Cable & Wireless PLC (ADR) (United Kingdom) ......................... 7,375,000
767,500 Century Telephone Enterprises, Inc. ................................. 35,209,062
273,750 Cia de Telecommunicaciones de Chile S.A. (ADR) (Chile) .............. 5,560,547
565,000 Ericsson (L.M.) Telephone Co. (Class B) (ADR) (Sweden) .............. 16,173,125
152,500 France Telecom S.A. (ADR) (France) .................................. 10,608,281
600,000 Frontier Corp. ...................................................... 18,900,000
715,000 GTE Corp. ........................................................... 39,771,875
650,000 Hong Kong Telecommunications, Ltd. (ADR) (Hong Kong) ................ 12,268,750
268,810 Lucent Technologies Inc. ............................................ 22,361,632
715,000 MCI Communications Corp. ............................................ 41,514,687
355,000 MediaOne Group Inc.* ................................................ 15,597,812
145,000 Philippine Long Distance Telephone Co. (ADR) (Philippines) .......... 3,280,625
218,237 Qwest Communications International Inc.* ............................ 7,597,376
1,539,612 SBC Communications, Inc. ............................................ 61,584,480
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS June 30, 1998 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------ ----------------
<S> <C> <C>
620,000 Sprint Corp. ................................................ $ 43,710,000
465,000 Telecommunications Corp. New Zealand, Ltd. (ADR)
(New Zealand) ............................................... 15,228,750
260,000 Telefonica de Argentina S.A. (ADR) (Argentina) .............. 8,433,750
300,000 Telefonica de Espana S.A. (ADR) (Spain) ..................... 41,718,750
315,000 Telefonos de Mexico S.A. (Series L) (ADR) (Mexico) .......... 15,139,687
124,750 Telstra Corp. Ltd. (ADR) (Australia) ........................ 6,331,062
645,241 U.S. West, Inc. ............................................. 30,326,339
160,000 Vodafone Group PLC (ADR) (United Kingdom) ................... 20,170,000
377,000 WorldCom, Inc.* ............................................. 18,213,812
-------------
802,786,026
-------------
Utilities - Electric (45.5%)
100,000 AES Corp.* .................................................. 5,256,250
910,000 Allegheny Energy, Inc. ...................................... 27,413,750
830,000 Ameren Corp. ................................................ 32,992,500
625,000 American Electric Power Co. ................................. 28,359,375
795,000 Baltimore Gas & Electric Co. ................................ 24,694,688
540,000 BEC Energy .................................................. 22,410,000
260,000 Carolina Power & Light Co. .................................. 11,277,500
535,000 Central & South West Corp. .................................. 14,378,125
1,045,470 CINergy Corp. ............................................... 36,591,450
610,000 CMS Energy Corp. ............................................ 26,840,000
700,000 Consolidated Edison Co. of New York, Inc. ................... 32,243,750
865,000 Dominion Resources, Inc. .................................... 35,248,750
1,382,500 DPL, Inc. ................................................... 25,057,813
530,000 DQE, Inc. ................................................... 19,080,000
650,000 DTE Energy Co. .............................................. 26,243,750
906,862 Duke Energy Corp. ........................................... 53,731,574
1,130,000 Edison International ........................................ 33,405,625
1,055,000 Endesa S.A. (ADR) (Spain) ................................... 22,814,375
505,000 Energy East Corp. ........................................... 21,020,625
425,000 Entergy Corp. ............................................... 12,218,750
610,000 FirstEnergy Corp. ........................................... 18,757,500
590,000 Florida Progress Corp. ...................................... 24,263,750
690,000 FPL Group, Inc. ............................................. 43,470,000
920,000 GPU, Inc. ................................................... 34,787,500
1,200,000 Houston Industries, Inc. .................................... 37,050,000
670,000 Illinova Corp. .............................................. 20,100,000
660,000 Kansas City Power & Light Co. ............................... 19,140,000
431,200 MarketSpan Corp. ............................................ 12,909,050
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS June 30, 1998 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------ ----------------
<S> <C> <C>
972,500 New Century Energies, Inc. ................................ $ 44,187,969
705,000 New England Electric System ............................... 30,491,250
1,500,000 NIPSCO Industries, Inc. ................................... 42,000,000
670,000 Northern States Power Co. ................................. 19,178,750
875,000 PacifiCorp ................................................ 19,796,875
380,000 Peco Energy Co. ........................................... 11,091,250
250,000 PG & E Corp. .............................................. 7,890,625
815,000 Pinnacle West Capital Corp. ............................... 36,675,000
425,000 Potomac Electric Power Co. ................................ 10,651,563
465,000 PP&L Resources, Inc. ...................................... 10,549,688
610,000 Public Service Enterprise Group, Inc. ..................... 21,006,875
340,000 Rochester Gas & Electric Corp. ............................ 10,858,750
810,000 SCANA Corp. ............................................... 24,148,125
905,000 Sempra Energy ............................................. 25,113,750
1,260,000 Southern Co. .............................................. 34,886,250
465,000 Teco Energy, Inc. ......................................... 12,467,813
811,000 Texas Utilities Co. ....................................... 33,757,875
480,000 Utilicorp United, Inc. .................................... 18,090,000
645,000 Washington Water Power Co. ................................ 14,472,187
-------------
1,149,071,045
-------------
TOTAL COMMON STOCKS
(Identified Cost $1,228,916,350) .......................... 2,230,081,864
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE
- ----------- ----------- ----------
<S> <C> <C> <C> <C>
CORPORATE BONDS (8.7%)
Natural Gas (2.0%)
$ 5,000 ANR Pipeline Co. ..................... 9.625% 11/01/21 6,617,350
10,000 Coastal Corp. ........................ 9.625 05/15/12 12,661,500
5,000 Colorado Interstate Gas Co. .......... 10.00 06/15/05 6,007,400
5,000 Northwest Pipeline Corp. ............. 10.65 11/15/18 5,307,100
4,750 Southwest Gas Corp. .................. 8.00 08/01/26 5,406,402
5,000 Transco Energy Co. ................... 9.875 06/15/20 6,788,950
5,000 Williams Companies, Inc. ............. 9.375 11/15/21 6,509,250
--------------
49,297,952
--------------
Telecommunications (1.2%)
5,000 GTE Corp. ............................ 7.90 02/01/27 5,427,000
2,000 GTE Corp. ............................ 6.94 04/15/28 2,014,560
5,000 Sprint Corp. ......................... 9.25 04/15/22 6,375,950
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS June 30, 1998 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ----------- ---------- -----------------
<S> <C> <C> <C> <C>
$ 5,000 Telephone & Data Systems, Inc. ............ 10.00% 01/15/21 $ 6,151,600
5,000 Telephone & Data Systems, Inc. ............ 9.58 11/19/21 5,422,650
5,000 U.S. West Communications Group, Inc. ...... 7.125 11/15/43 5,084,000
--------------
30,475,760
--------------
Utilities - Electric (5.5%)
1,499 AEP Generating Co. ........................ 9.81 12/07/22 1,978,604
5,000 Arizona Public Service Co. ................ 7.25 08/01/23 5,064,750
6,000 Chugach Electric Co. ...................... 9.14 03/15/22 6,760,080
5,000 Cincinnati Gas & Electric Co. ............. 7.20 10/01/23 5,098,350
5,000 Commonwealth Edison Co. ................... 8.375 02/15/23 5,439,100
5,000 Consolidated Edison Inc. .................. 7.10 02/01/28 5,105,250
2,000 Consumers Energy Co. ...................... 6.875 03/01/18 2,041,880
5,000 Consumers Energy Co. ...................... 7.375 09/15/23 5,082,100
5,783 DQU II Funding Corp. ...................... 8.70 06/01/16 6,380,384
5,000 Duke Power Co. ............................ 7.00 07/01/33 4,999,300
5,000 Gulf States Utilities Co. ................. 8.94 01/01/22 5,347,200
7,000 Indiantown Cogeneration LP ................ 9.26 12/15/10 8,022,280
3,000 Long Island Lighting Co. .................. 8.90 07/15/19 3,183,750
5,100 Long Island Lighting Co. .................. 8.20 03/15/23 5,527,431
5,250 National Rural Utilities Cooperative
Finance Corp. ............................. 9.00 09/01/21 5,807,287
5,000 New York State Electric & Gas Corp. ....... 8.875 11/01/21 5,399,050
2,000 Niagara Mohawk Power Corp. ................ 8.00 06/01/04 2,140,620
5,270 Niagara Mohawk Power Corp. ................ 8.77 01/01/18 5,602,432
5,000 Niagara Mohawk Power Corp. ................ 9.50 03/01/21 5,321,550
10,250 Public Service Company of Colorado ........ 8.75 03/01/22 11,235,128
5,000 Public Service Company of Oklahoma ........ 7.375 04/01/23 5,309,400
5,000 Public Service Electric & Gas Co. ......... 7.00 09/01/24 5,040,700
5,000 Selkirk Cogen Funding Corp. ............... 8.98 06/26/12 5,717,700
221 Systems Energy Resources, Inc. ............ 11.375 09/01/16 235,962
5,000 Texas Utilities Electric Co. .............. 7.375 10/01/25 5,084,350
5,000 Virginia Electric Power Co. ............... 8.625 10/01/24 5,612,300
5,000 Wisconsin Power & Light Co. ............... 8.60 03/15/27 5,662,550
--------------
138,199,488
--------------
TOTAL CORPORATE BONDS
(Identified Cost $195,296,157) ..................................... 217,973,200
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS June 30, 1998 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ---------- ------------ ----------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCIES (0.4%)
$ 20,000 Fannie Mae ................................ 0.00% 10/09/19 $ 5,732,800
5,000 Tennessee Valley Authority ................ 6.875 12/15/43 5,139,700
--------------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $9,889,977) ........................................ 10,872,500
--------------
SHORT-TERM INVESTMENTS (2.3%)
U.S. GOVERNMENT AGENCIES (a) (2.2%)
35,800 Federal Home Loan Mortgage Corp. .......... 5.85 07/01/98 35,800,000
20,000 Federal National Mortgage Assoc. .......... 5.47 07/10/98 19,972,650
--------------
TOTAL U.S. GOVERNMENT AGENCIES 2.2%
(Amortized Cost $55,772,650) ........................................ 55,772,650
--------------
REPURCHASE AGREEMENT (0.1%)
1,501 The Bank of New York 5.50% due 07/01/98
(dated 6/30/98; proceeds $1,501,242) (b)
(Identified Cost $1,501,013) ....................................... 1,501,013
--------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $57,273,663) ....................................... 57,273,663
--------------
TOTAL INVESTMENTS
(Identified Cost $1,491,376,147) (c) ............... 99.7% 2,516,201,227
OTHER ASSETS IN EXCESS OF LIABILITIES .............. 0.3 8,321,208
--------------
NET ASSETS ......................................... 100.0% $2,524,522,435
==============
</TABLE>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Securities were purchased on a discount basis. The interest rates
shown have been adjusted to reflect a money market equivalent
yield.
(b) Collateralized by $78,081 U.S. Treasury Bond 8.75% due 08/15/20
valued at $109,530 and $1,392,915 U.S. Treasury Note 5.625% due
02/28/01 valued at $1,421,502.
(c) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$1,029,764,457 and the aggregate gross unrealized depreciation is
$4,939,377, resulting in net unrealized appreciation of
$1,024,825,080.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998 (unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $1,491,376,147)................ $2,516,201,227
Receivable for:
Dividends .................................... 5,543,395
Interest ..................................... 4,389,638
Investments sold ............................. 3,344,738
Shares of beneficial interest sold ........... 1,915,669
Foreign withholding taxes reclaimed .......... 232,308
Prepaid expenses and other assets ................. 64,787
--------------
TOTAL ASSETS ................................. 2,531,691,762
--------------
LIABILITIES:
Payable for:
Plan of distribution fee ..................... 2,180,513
Shares of beneficial interest repurchased..... 1,452,343
Distributions to shareholders ................ 1,420,981
Investment management fee .................... 1,198,908
Investments purchased ........................ 658,750
Accrued expenses and other payables ............... 257,832
--------------
TOTAL LIABILITIES ............................ 7,169,327
--------------
NET ASSETS ................................... $2,524,522,435
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital ................................... $1,417,743,726
Net unrealized appreciation ....................... 1,024,825,080
Accumulated undistributed net investment
income ......................................... 458,848
Accumulated undistributed net realized gain ....... 81,494,781
--------------
NET ASSETS ................................... $2,524,522,435
==============
CLASS A SHARES:
Net Assets ........................................ $5,584,973
Shares Outstanding (unlimited authorized, $.01
par value) ..................................... 306,988
NET ASSET VALUE PER SHARE .................... $18.19
==============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset
value) .................................... $19.20
==============
CLASS B SHARES:
Net Assets ........................................ $2,497,491,753
Shares Outstanding (unlimited authorized, $.01
par value) ..................................... 137,015,862
NET ASSET VALUE PER SHARE .................... $18.23
==============
CLASS C SHARES:
Net Assets ........................................ $2,951,899
Shares Outstanding (unlimited authorized, $.01
par value) ..................................... 161,877
NET ASSET VALUE PER SHARE .................... $18.24
==============
CLASS D SHARES:
Net Assets ........................................ $18,493,810
Shares Outstanding (unlimited authorized, $.01
par value) ..................................... 1,017,532
NET ASSET VALUE PER SHARE .................... $18.18
==============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1998 (unaudited)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $454,157 foreign
withholding tax) ............................... $ 39,494,004
Interest .......................................... 9,718,038
------------
TOTAL INCOME ................................. 49,212,042
------------
EXPENSES ..........................................
Plan of distribution fee (Class A shares) ......... 4,284
Plan of distribution fee (Class B shares) ......... 12,225,774
Plan of distribution fee (Class C shares) ......... 10,932
Investment management fee ......................... 6,727,028
Transfer agent fees and expenses .................. 1,172,791
Shareholder reports and notices ................... 85,507
Registration fees ................................. 78,561
Custodian fees .................................... 46,896
Professional fees ................................. 38,845
Trustees' fees and expenses ....................... 12,583
Other ............................................. 15,366
------------
TOTAL EXPENSES ............................... 20,418,567
------------
NET INVESTMENT INCOME ........................ 28,793,475
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain ................................. 80,901,279
Net change in unrealized appreciation ............. 107,173,616
------------
NET GAIN ..................................... 188,074,895
------------
NET INCREASE ...................................... $216,868,370
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JUNE 30, 1998 DECEMBER 31, 1997*
----------------- -------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................ $ 28,793,475 $ 75,091,782
Net realized gain .................................... 80,901,279 199,367,128
Net change in unrealized appreciation ................ 107,173,616 261,162,998
-------------- --------------
NET INCREASE ...................................... 216,868,370 535,621,908
-------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares .................................... (67,889) (150,922)
Class B shares .................................... (30,069,910) (73,193,086)
Class C shares .................................... (32,240) (6,635)
Class D shares .................................... (325,241) (344,827)
Net realized gain
Class A shares .................................... (39,555) (252,328)
Class B shares .................................... (19,044,212) (194,864,905)
Class C shares .................................... (22,282) (57,955)
Class D shares .................................... (157,522) (1,198,655)
-------------- --------------
TOTAL DIVIDENDS AND DISTRIBUTIONS ................. (49,758,851) (270,069,313)
-------------- --------------
Net decrease from transactions in shares of beneficial
interest ........................................... (94,949,836) (490,134,824)
-------------- --------------
NET INCREASE (DECREASE) ........................... 72,159,683 (224,582,229)
NET ASSETS:
Beginning of period .................................. 2,452,362,752 2,676,944,981
-------------- --------------
END OF PERIOD
(Including undistributed net investment income of
$458,848 and $2,160,653, respectively)............. $2,524,522,435 $2,452,362,752
============== ==============
</TABLE>
- ---------------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Utilities Fund (the "Fund"), formerly Dean Witter
Utilities 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 current income and long-term
growth of income and capital. The Fund seeks to achieve its objective by
investing primarily in equity and fixed income securities of companies engaged
in the public utilities industry. The Fund was organized as a Massachusetts
business trust on December 8, 1987 and commenced operations on April 29, 1988.
On July 28, 1997, the Fund commenced offering three additional classes of
shares, with the then current shares, other than shares held by certain
employee benefit plans established by Dean Witter Reynolds Inc. and its
affiliate, SPS Transaction Services, Inc., designated as Class B shares. Shares
held by those employee benefit plans prior to July 28, 1997 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, 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 the
procedures adopted by the Trustees); (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 value as determined in good faith under procedures established by
and under the general supervision of the Trustees (valuation
11
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited) continued
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); (4)
certain of the Fund's portfolio securities may be valued by an outside pricing
service approved by the Trustees. The pricing service may utilize a matrix
system incorporating security quality, maturity and coupon as the evaluation
model parameters, and/or research and evaluations by its staff, including
review of broker-dealer market price quotations, if available, in determining
what it believes is the fair valuation of the portfolio securities valued by
such pricing service; and (5) 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.
Discounts are amortized over the life of the respective securities. Dividend
income and other distributions are recorded on the ex-dividend date. 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 record 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
12
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited) continued
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 the Investment Manager a management fee, accrued daily and payable
monthly, by applying the annual rate of 0.65% to the portion of daily net
assets not exceeding $500 million; 0.55% to the portion of daily net assets
exceeding $500 million but not exceeding $1 billion; 0.525% to the portion of
daily net assets exceeding $1 billion but not exceeding $1.5 billion; 0.50% to
the portion of daily net assets exceeding $1.5 billion but not exceeding $2.5
billion; 0.475% to the portion of daily net assets exceeding $2.5 billion but
not exceeding $3.5 billion; 0.45% to the portion of daily net assets exceeding
$3.5 billion but not exceeding $5 billion; and 0.425% to the portion of daily
net assets exceeding $5 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 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
services provided and the expenses borne by it and others in the distribution
of the shares
13
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited) continued
of these Classes, including the payment of commissions for sales of these
Classes and incentive compensation to, and expenses of, the 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; printing and distribution of prospectuses and reports used
in connection with the offering of these shares to other than current
shareholders; and preparation, printing and distribution of sales literature
and advertising materials. In addition, the Distributor may utilize fees paid
pursuant to the Plan, in the case of Class B shares, to compensate Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and Distributor,
and other selected broker-dealers for their opportunity costs in advancing such
amounts, which compensation would be in the form of a carrying charge on any
unreimbursed expenses.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund
pursuant to the Plan and contingent deferred sales charges paid by investors
upon redemption of Class B shares. Although there is no legal obligation for
the Fund to pay expenses incurred in excess of payments made to the Distributor
under the Plan and the proceeds of contingent deferred sales charges paid by
investors upon redemption of shares, if for any reason the Plan is terminated,
the Trustees will consider at that time the manner in which to treat such
expenses. The Distributor has advised the Fund that such excess amounts,
including carrying charges, totaled $57,852,583 at June 30, 1998.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the six months ended June 30, 1998, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.25% and
1.0%, respectively.
The Distributor has informed the Fund that for the six months ended June 30,
1998, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $889,926 and $701, respectively
and received $13,865 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.
14
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited) continued
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the six months ended June 30, 1998
aggregated $39,194,983 and $194,777,133, respectively. Included in the
aforementioned are purchases and sales of U.S. Government securities of
$5,496,570 and $2,040,000, respectively.
For the six months ended June 30, 1998, the Fund incurred $47,750 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.
For the six months ended June 30, 1998, the Fund incurred brokerage commissions
of $2,750 with Morgan Stanley & Co., Inc., an affiliate of the Investment
Manager, 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. At June 30, 1998, the Fund had
transfer agent fees and expenses payable of approximately $79,000.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the six months ended June 30, 1998
included in Trustees' fees and expenses in the Statement of Operations amounted
to $3,056. At June 30, 1998, the Fund had an accrued pension liability of
$49,927 which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. FEDERAL INCOME TAX STATUS
As of December 31, 1997, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales.
15
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited) continued
6. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JUNE 30, 1998 DECEMBER 31, 1997+*
---------------------------------- ----------------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ................................................ 237,288 $ 4,247,725 772,410 $ 12,186,174
Reinvestment of dividends and distributions ......... 2,871 52,473 16,570 271,414
Redeemed ............................................ (143,747) (2,503,668) (578,404) (9,675,382)
-------- -------------- -------- --------------
Net increase - Class A .............................. 96,412 1,796,530 210,576 2,782,206
-------- -------------- -------- --------------
CLASS B SHARES
Sold ................................................ 7,354,981 130,594,370 11,966,780 194,020,522
Reinvestment of dividends and distributions ......... 2,172,893 39,765,157 13,633,251 220,842,234
Redeemed ............................................ (15,150,021) (268,744,789) (57,908,671) (910,948,280)
----------- -------------- ----------- --------------
Net decrease - Class B .............................. (5,622,147) (98,385,262) (32,308,640) (496,085,524)
----------- -------------- ----------- --------------
CLASS C SHARES
Sold ................................................ 97,900 1,733,546 79,155 1,330,983
Reinvestment of dividends and distributions ......... 2,217 40,515 3,294 54,114
Redeemed ............................................ (20,619) (359,730) (70) (1,121)
----------- -------------- ----------- --------------
Net increase - Class C .............................. 79,498 1,414,331 82,379 1,383,976
----------- -------------- ----------- --------------
CLASS D SHARES
Sold ................................................ 237,454 4,262,902 128,367 2,102,719
Reinvestment of dividends and distributions ......... 24,365 444,766 94,075 1,539,246
Redeemed ............................................ (251,256) (4,483,103) (113,508) (1,857,447)
----------- -------------- ----------- --------------
Net increase - Class D .............................. 10,563 224,565 108,934 1,784,518
----------- -------------- ----------- --------------
Net decrease in Fund ................................ (5,435,674) $ (94,949,836) (31,906,751) $ (490,134,824)
=========== ============== =========== ==============
</TABLE>
- ---------------
+ On July 28, 1997, 898,035 shares representing $14,269,769 were
transferred to Class D.
* For Class A, C and D shares, for the period July 28, 1997 (issue date)
through December 31, 1997.
16
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR ENDED DECEMBER 31,
MONTHS ENDED -----------------------------------------------------------
JUNE 30, 1998++ 1997*++ 1996 1995 1994 1993
---------------- ----------- ----------- ----------- ----------- -----------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ........ $17.04 $15.22 $15.15 $12.30 $14.34 $13.37
--------- ------- ------- ------- ------- -------
Net investment income ....................... 0.20 0.50 0.56 0.58 0.63 0.61
Net realized and unrealized gain (loss) ..... 1.35 3.28 0.16 2.85 (2.04) 1.09
--------- ------- ------- ------- ------- -------
Total from investment operations ............ 1.55 3.78 0.72 3.43 (1.41) 1.70
--------- ------- ------- ------- ------- -------
Less dividends and distributions from:
Net investment income ...................... (0.22) (0.51) (0.58) (0.58) (0.61) (0.61)
Net realized gain .......................... (0.14) (1.45) (0.07) -- (0.02) (0.12)
--------- ------- ------- ------- ------- -------
Total dividends and distributions ........... (0.36) (1.96) (0.65) (0.58) (0.63) (0.73)
--------- ------- ------- ------- ------- -------
Net asset value, end of period .............. $18.23 $17.04 $15.22 $15.15 $12.30 $14.34
========= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN+ .................... 9.09%(1) 25.79% 4.99% 28.42% (9.90)% 12.79%
RATIOS TO AVERAGE NET ASSETS:
Expenses .................................... 1.66%(2) 1.67% 1.64% 1.65% 1.64 % 1.46%
Net investment income ....................... 2.32%(2) 3.15% 3.63% 4.19% 4.67 % 4.32%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions ...... $2,497 $2,430 $2,677 $3,321 $2,827 $3,881
Portfolio turnover rate ..................... 2%(1) 6% 7% 9% 11 % 16%
</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 held by certain
employee benefit plans established by Dean Witter Reynolds Inc. and its
affiliate, SPS Transaction Services, Inc., have been designated Class B
shares. Shares held by those employee benefit plans prior to July 28,
1997 have been designated Class D shares.
++ 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.
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JULY 28, 1997*
MONTHS ENDED THROUGH
JUNE 30, 1998++ DECEMBER 31, 1997++
----------------- --------------------
(unaudited)
<S> <C> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ............ $17.01 $15.89
-------- --------
Net investment income ........................... 0.27 0.27
Net realized and unrealized gain ................ 1.34 2.52
-------- --------
Total from investment operations ................ 1.61 2.79
-------- --------
Less dividends and distributions from:
Net investment income .......................... (0.29) (0.35)
Net realized gain .............................. (0.14) (1.32)
-------- --------
Total dividends and distributions ............... (0.43) (1.67)
-------- --------
Net asset value, end of period .................. $18.19 $17.01
======== ========
TOTAL INVESTMENT RETURN+ ........................ 9.46%(1) 18.06%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 0.90%(2) 0.92%(2)
Net investment income ........................... 3.12%(2) 4.05%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $5,585 $3,581
Portfolio turnover rate ......................... 2%(1) 6%
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ............ $17.06 $15.89
----------- -----------
Net investment income ........................... 0.21 0.22
Net realized and unrealized gain ................ 1.34 2.51
----------- -----------
Total from investment operations ................ 1.55 2.73
----------- -----------
Less dividends and distributions from:
Net investment income .......................... (0.23) (0.24)
Net realized gain .............................. (0.14) (1.32)
----------- -----------
Total dividends and distributions ............... (0.37) (1.56)
----------- -----------
Net asset value, end of period .................. $18.24 $17.06
=========== ===========
TOTAL INVESTMENT RETURN+ ........................ 9.09%(1) 17.67%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 1.66%(2) 1.69%(2)
Net investment income ........................... 2.35%(2) 3.14%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $ 2,952 $ 1,405
Portfolio turnover rate ......................... 2%(1) 6%
</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.
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JULY 28, 1997*
MONTHS ENDED THROUGH
JUNE 30, 1998++ DECEMBER 31, 1997++
------------------- --------------------
(unaudited)
<S> <C> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ............ $16.99 $15.89
----------- --------
Net investment income ........................... 0.29 0.22
Net realized and unrealized gain ................ 1.35 2.58
----------- --------
Total from investment operations ................ 1.64 2.80
----------- --------
Less dividends and distributions from:
Net investment income .......................... (0.31) (0.38)
Net realized gain .............................. (0.14) (1.32)
----------- --------
Total dividends and distributions ............... (0.45) (1.70)
----------- --------
Net asset value, end of period .................. $18.18 $16.99
=========== ========
TOTAL INVESTMENT RETURN+ ........................ 9.64%(1) 18.13%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 0.66%(2) 0.67%(2)
Net investment income ........................... 3.34%(2) 4.21%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $18,494 $17,106
Portfolio turnover rate ......................... 2%(1) 6%
</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.
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
TRUSTEES
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
Edward F. Gaylor
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 Stanely Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records
of the Fund without examination by the independent accountants and
accordingly they do not express an opinion thereon.
This report is submitted for the general information of shareholders
of the Fund. For more detailed information about the Fund, its officers
and trustees, fees, expenses and other pertinent information, please see
the prospectus of the Fund.
This report is not authorized for distribution to prospective investors
in the Fund unless preceded or accompanied by an effective prospectus.
MORGAN STANLEY
DEAN WITTER
UTILITIES FUND
SEMIANNUAL REPORT
JUNE 30, 1998
