MORGAN STANLEY DEAN WITTER UTILITIES FUND, N-30D, 2000-02-23

MORGAN STANLEY DEAN WITTER UTILITIES FUND
N-30D, 2000-02-23

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<PAGE>

MORGAN STANLEY DEAN WITTER UTILITIES FUND TWO WORLD TRADE CENTER,
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999 NEW YORK, NEW YORK 10048

DEAR SHAREHOLDER:

During the twelve-month period ended December 31, 1999, the utilities industry
continued its path toward deregulation as merger and acquisition activity
remained strong and the formation of strategic alliances enhanced the
competitive landscape.

The telecommunications sector proved to be among the stock market's most
rewarding industry groups during 1999 as increased demand for data, Internet and
wireless services, as well as strong global infrastructure sales among broadband
equipment suppliers, resulted in exceptional returns for many companies in this
sector. The power-related portion of the utilities industry continued to
restructure in making the transition from monopoly status to a more
market-driven, growth-oriented landscape. Further enhancing the overall
attractiveness of this sector was the growing trend of many power companies
expanding their businesses through selective overseas investments and by
diversifying into telecommunications and natural gas. The fundamentals of the
natural gas industry remained healthy throughout 1999, as evidenced by a tight
balance between supply and demand.

PERFORMANCE

Morgan Stanley Dean Witter Utilities Fund's Class B shares provided a total
return of 10.09 percent for the 12-month period ended December 31, 1999,
compared to 21.04 percent for the broad-based Standard & Poor's 500 Composite
Stock Price Index (S&P 500 Index). For the same period, the Fund's Class A, C
and D shares returned 10.97 percent, 10.09 percent and 11.13 percent,
respectively. (The performance of the Fund's four share classes varies because
of differing expenses. Total return figures assume the reinvestment of all
distributions and do not reflect the deduction of any applicable sales charges.)
The accompanying chart compares the performance of the Fund to that of the S&P
500 Index.

<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED

The primary reason the total return of the broad market outdistanced that of the
Fund during 1999 was the Fund's relative overweighting of the electric utilities
sector. To place this in perspective, rising interest rates and a buoyant
economic environment impeded electric-utility performance during much of the
year. Throughout 1999, however, utilities stocks provided investors with an
added degree of stability particularly during times of increased market
volatility.

PORTFOLIO STRATEGY

At fiscal year-end, the Fund's portfolio remained well diversified, both
globally and across the utilities sector. On December 31, 1999, 92 percent of
the Fund's net assets were allocated to utility and utility-related equities.
Within the Fund's equity portfolio, telecommunications represented 54 percent of
assets, power 34 percent and energy 12 percent. Adding a further degree of
diversification to the Fund's portfolio was its international holdings
(17 percent of its net assets), which focused on telecommunications
infrastructure growth. The Fund's high-quality fixed-income portfolio accounted
for 7 percent of net assets, while the remaining 1 percent was held in cash
equivalents. The fixed-income portion remains well diversified with a weighted
average credit rating of Baa and BBB+ as measured by Moody's Investors Service
and Standard & Poor's Corporation, respectively.

Among the Fund's largest equity holdings on December 31, 1999, were SBC
Communications, Alltel Corporation, Global Crossing and Vodafone AirTouch
(telecommunications), Duke Energy, New England Electric Systems and Dominion
Resources (power) and Enron Corporation and El Paso Energy (energy). Included
among the Fund's major international holdings were BCE Inc. of Canada and
Telefonica de Espana S.A. of Spain. New additions to the Fund focused on global
broadband growth stocks and included Nextel Communications, Broadwing Inc.,
Cisco Systems, Alcatel ADS, Nokia Corp., Nortel Networks and Nextlink
Communications.

2
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED

LOOKING AHEAD

As we enter the new millennium, we believe that there are compelling
opportunities for worldwide growth in the telecommunications, energy and power
industries. During the next 12 months we anticipate modestly increasing the
Fund's international component while maintaining broad diversification. We
believe that the Fund remains well positioned as it pursues its objective of
seeking both capital appreciation and current income.

We appreciate your ongoing support of Morgan Stanley Dean Witter Utilities Fund
and look forward to serving your future needs and investment objectives.

Very truly yours,

[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD

[SIGNATURE]
MITCHELL M. MERIN
PRESIDENT

3
<PAGE>

MORGAN STANLEY DEAN WITTER UTILITIES FUND
RESULTS OF SPECIAL MEETING

On August 4, 1999, a special meeting of the Fund's shareholders was held for the
purpose of voting on two separate matters, the results of which were as follows:

(1) APPROVAL OF A CHANGE IN THE FUND'S INVESTMENT OBJECTIVE FROM CURRENT INCOME
AND LONG-TERM GROWTH OF INCOME AND CAPITAL TO CAPITAL APPRECIATION AND
CURRENT INCOME:

<TABLE>
<CAPTION>
VOTE NO. OF SHARES
- ---- ----------------
<S> <C>
For............................................... 65,048,659
Against........................................... 4,029,729
Abstain........................................... 7,361,918
</TABLE>

(2) APPROVAL OF A CHANGE IN THE FUND'S INVESTMENT RESTRICTION FROM INVESTING
25 PERCENT OR MORE OF ITS ASSETS IN THE PUBLIC UTILITIES INDUSTRY TO
INVESTING 25 PERCENT OR MORE OF ITS ASSETS IN THE UTILITIES INDUSTRY:

<TABLE>
<CAPTION>
VOTE NO. OF SHARES
- ---- ----------------
<S> <C>
For............................................... 66,095,308
Against........................................... 3,029,853
Abstain........................................... 7,315,145
</TABLE>

4
<PAGE>

MORGAN STANLEY DEAN WITTER UTILITIES FUND
FUND PERFORMANCE DECEMBER 31, 1999

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
GROWTH OF $10,000 -- CLASS B SHARES
($ IN THOUSANDS)
<S> <C> <C>
Fund S&P 500(4)
December, 1989 $10,000 $10,000
December, 1990 $9,973 $9,691
December, 1991 $11,857 $12,637
December, 1992 $12,895 $13,599
December, 1993 $14,544 $14,968
December, 1994 $13,105 $15,165
December, 1995 $16,829 $20,858
December, 1996 $17,670 $25,645
December, 1997 $22,227 $34,199
December, 1998 $27,106 $43,971
December, 1999 $29842 (3) $53,222
</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 A SHARES+
-----------------------------------------------
CLASS B SHARES*
- -----------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year 10.09(1) 5.09(2) 1 Year 10.97(1) 5.14(2)
5 Years 17.89(1) 17.68(2) Since Inception (7/28/97) 21.68(1) 19.00(2)
10 Years 11.55(1) 11.55(2)
</TABLE>

<TABLE>
<CAPTION>
CLASS D SHARES++
-----------------------------------------------
CLASS C SHARES**
- -----------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year 10.09(1) 9.09(2) 1 Year 11.13(1)
Since Inception (7/28/97) 20.73(1) 20.73(2) Since Inception (7/28/97) 21.93(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 December 31, 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 Index does not include any expenses, fees or charges.
The Index is unmanaged and should not be considered an investment.
* The maximum CDSC for Class B is 5.0%. The CDSC declines to 0% after six
years.
+ The maximum front-end sales charge for Class A is 5.25%.
** The maximum CDSC for Class C shares is 1% for shares redeemed within one
year of purchase.
++ Class D shares have no sales charge.

5
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999

<TABLE>
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (92.0%)
ELECTRIC UTILITIES (31.5%)
320,000 AES Corp.*............................................................................... $ 23,920,000
940,000 Allegheny Energy, Inc.................................................................... 25,321,250
685,000 Ameren Corp.............................................................................. 22,433,750
540,000 American Electric Power Co., Inc......................................................... 17,347,500
400,000 Avista Corp.............................................................................. 6,175,000
385,000 Calpine Corp.*........................................................................... 24,640,000
310,000 Central & South West Corp................................................................ 6,200,000
794,470 Cinergy Corp............................................................................. 19,166,589
616,000 CMS Energy Corp.......................................................................... 19,211,500
705,000 Consolidated Edison, Inc................................................................. 24,322,500
830,000 Constellation Energy Group, Inc.......................................................... 24,070,000
760,000 Dominion Resources, Inc.................................................................. 29,830,000
1,380,750 DPL, Inc................................................................................. 23,904,234
589,000 DQE, Inc................................................................................. 20,394,125
565,000 DTE Energy Co............................................................................ 17,726,875
758,862 Duke Energy Corp......................................................................... 38,037,958
1,034,500 Edison International..................................................................... 27,090,969
1,000,000 Endesa S.A. (ADR) (Spain)................................................................ 20,187,500
1,000,000 Energy East Corp......................................................................... 20,812,500
320,000 Entergy Corp............................................................................. 8,240,000
520,000 FirstEnergy Corp......................................................................... 11,797,500
600,000 Florida Progress Corp.................................................................... 25,387,500
475,000 FPL Group, Inc........................................................................... 20,335,937
853,000 GPU, Inc................................................................................. 25,536,687
620,000 Illinova Corp............................................................................ 21,545,000
615,000 Kansas City Power & Light Co............................................................. 13,568,437
410,000 Montana Power Co......................................................................... 14,785,625
796,000 New Century Energies, Inc................................................................ 24,178,500
705,000 New England Electric System.............................................................. 36,483,750
1,250,000 NiSource Inc............................................................................. 22,343,750
705,000 Northern States Power Co................................................................. 13,747,500
550,000 NSTAR.................................................................................... 22,275,000
385,000 Peco Energy Co........................................................................... 13,378,750
220,000 PG & E Corp.............................................................................. 4,510,000
753,000 Pinnacle West Capital Corp............................................................... 23,013,562
440,000 Potomac Electric Power Co................................................................ 10,092,500
300,000 PP&L Resources, Inc...................................................................... 6,862,500
630,000 Public Service Enterprise Group, Inc..................................................... 21,931,875
1,245,000 Reliant Energy, Inc...................................................................... 28,479,375
300,000 RGS Energy Group Inc..................................................................... 6,168,750
820,000 SCANA Corp............................................................................... 22,037,500
307,690 Scottish Power PLC (ADR) (United Kingdom)................................................ 8,615,320
1,075,000 Southern Co.............................................................................. 25,262,500
401,000 TECO Energy, Inc......................................................................... 7,443,562
651,000 Texas Utilities Co....................................................................... 23,151,187
--------------
871,964,817
--------------
ENERGY (10.6%)
555,000 AGL Resources, Inc....................................................................... 9,435,000
740,000 Coastal Corp............................................................................. 26,223,750
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED

<TABLE>
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
175,000 Columbia Energy Group.................................................................... $ 11,068,750
310,000 Consolidated Natural Gas Co.............................................................. 20,130,625
1,075,670 El Paso Energy Corp...................................................................... 41,749,442
1,749,274 Enron Corp............................................................................... 77,624,034
150,000 Exxon Mobil Corp......................................................................... 12,084,375
450,200 KeySpan Corp............................................................................. 10,439,012
280,000 New Jersey Resources Corp................................................................ 10,937,500
739,511 Sempra Energy*........................................................................... 12,849,004
816,000 Utilicorp United, Inc.................................................................... 15,861,000
320,000 Washington Gas Light Co.................................................................. 8,800,000
1,211,000 Williams Companies, Inc.................................................................. 37,011,187
--------------
294,213,679
--------------
TELECOMMUNICATIONS (49.8%)
305,000 Alcatel (ADR) (France)................................................................... 13,725,000
804,900 ALLTEL Corp.............................................................................. 66,555,169
682,990 AT&T Corp................................................................................ 34,661,742
100,000 AT&T Corp. - Liberty Media Group (Class A)*.............................................. 5,675,000
884,000 BCE, Inc. (Canada)....................................................................... 79,725,750
857,000 Bell Atlantic Corp....................................................................... 52,759,063
1,451,000 BellSouth Corp........................................................................... 67,924,938
105,000 British Telecommunications PLC (ADR) (United Kingdom).................................... 24,990,000
300,000 Broadwing Inc............................................................................ 11,062,500
600,000 Cable & Wireless HKT Ltd. ADR (Hong Kong)................................................ 17,475,000
200,000 Cable & Wireless PLC (ADR) (United Kingdom).............................................. 10,587,500
1,076,250 CenturyTel, Inc.......................................................................... 50,987,344
150,000 Cisco Systems, Inc.*..................................................................... 16,059,375
50,000 COLT Telecom Group PLC (ADR) (United Kingdom)*........................................... 10,193,750
420,000 Ericsson (L.M.) Telefonaktiebolaqet (ADR) (Sweden)....................................... 27,562,500
152,500 France Telecom S.A. (ADR) (France)....................................................... 20,358,750
1,361,493 Global Crossing Ltd. (Bermuda)*.......................................................... 67,989,557
370,000 Global Telesystems Group, Inc.*.......................................................... 12,811,250
678,000 GTE Corp................................................................................. 47,841,375
53,100 Infonet Services Corp. (Class B)*........................................................ 1,393,875
422,620 Lucent Technologies Inc.................................................................. 31,617,259
1,063,754 MCI WorldCom, Inc.*...................................................................... 56,378,936
350,000 McLeodUSA, Inc. (Class A)*............................................................... 20,562,500
400,000 MediaOne Group, Inc.*.................................................................... 30,725,000
50,000 Nextel Communications, Inc. (Class A)*................................................... 5,153,125
130,000 NEXTLINK Communications, Inc. (Class A)*................................................. 10,790,000
165,000 Nokia Corp. (ADR) (Finland).............................................................. 31,350,000
235,000 Nortel Networks Corp. (Canada)........................................................... 23,735,000
617,802 Qwest Communications International, Inc.*................................................ 26,526,873
140,000 RCN Corp.*............................................................................... 6,781,250
2,252,972 SBC Communications, Inc.................................................................. 109,832,385
1,041,000 Sprint Corp. (FON Group)................................................................. 70,072,313
306,500 Sprint Corp. (PCS Group)*................................................................ 31,416,250
455,000 Telecommunications Corp. New Zealand, Ltd. (ADR)
(New Zealand).......................................................................... 17,517,500
812,642 Telefonica de Espana S.A. (ADR) (Spain)*................................................. 64,046,348
280,000 Telefonos de Mexico S.A. (Series L) (ADR) (Mexico)....................................... 31,500,000
499,000 Telstra Corp. Ltd. (ADR) (Australia)..................................................... 13,597,750
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED

TOTAL COMMON STOCKS
(IDENTIFIED COST $1,265,577,632)......................................................... 2,543,860,850
--------------
</TABLE>

<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE
- --------- ------ --------
<C> <S> <C> <C> <C>
CORPORATE BONDS (6.4%)
ELECTRIC UTILITIES (3.2%)
$ 1,499 AEP Generating Co....................................................... 9.81% 12/07/22 1,683,791
5,000 Arizona Public Service Co............................................... 7.25 08/01/23 4,486,400
5,000 Calenergy Inc........................................................... 8.48 09/15/28 5,190,000
6,000 Chugach Electric Co..................................................... 9.14 03/15/22 6,445,800
5,000 Cincinnati Gas & Electric Co............................................ 7.20 10/01/23 4,444,700
5,000 Consumers Energy Co..................................................... 7.375 09/15/23 4,432,100
5,645 DQU II Funding Corp..................................................... 8.70 06/01/16 5,664,927
5,000 Gulf States Utilities Co................................................ 8.94 01/01/22 4,997,900
7,000 Indiantown Cogeneration LP.............................................. 9.26 12/15/10 6,903,820
8,250 New Century Energies Inc................................................ 8.75 03/01/22 8,253,053
5,000 New York State Electric & Gas Corp...................................... 8.875 11/01/21 5,042,700
5,134 Niagara Mohawk Power Corp............................................... 8.77 01/01/18 5,363,130
5,000 Public Service Electric & Gas Co........................................ 7.00 09/01/24 4,516,900
5,000 Salton Sea Funding Corp. - 144A**....................................... 7.475 11/30/18 4,680,550
5,000 Selkirk Cogen Funding Corp.............................................. 8.98 06/26/12 5,011,750
5,000 Virginia Electric Power Co.............................................. 8.625 10/01/24 5,066,050
5,000 Wisconsin Power & Light Co.............................................. 8.60 03/15/27 5,028,250
--------------
87,211,821
--------------
ENERGY (1.5%)
5,000 ANR Pipeline Co......................................................... 9.625 11/01/21 5,637,450
10,000 Coastal Corp............................................................ 9.625 05/15/12 11,138,300
5,000 Colorado Interstate Gas Co.............................................. 10.00 06/15/05 5,513,400
3,000 Southern Union Co....................................................... 8.25 11/15/29 2,991,270
4,750 Southwest Gas Corp...................................................... 8.00 08/01/26 4,456,213
5,000 Transco Energy Co....................................................... 9.875 06/15/20 5,637,500
5,000 Williams Companies, Inc................................................. 9.375 11/15/21 5,486,450
--------------
40,860,583
--------------
TELECOMMUNICATIONS (1.7%)
5,000 Cable & Wireless Optus Ltd. (Australia)................................. 8.125 06/15/09 4,938,500
4,000 Century Telephone Enterprises, Inc...................................... 8.25 05/01/24 3,840,080
5,000 Cox Enterprises Inc. - 144A**........................................... 7.375 07/15/27 4,680,450
3,000 GTE California, Inc..................................................... 6.75 05/15/27 2,662,650
2,000 GTE Corp................................................................ 6.94 04/15/28 1,816,220
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED

<TABLE>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 5,000 Sprint Capital Corp..................................................... 6.875% 11/15/28 $ 4,448,650
5,000 Sprint Corp............................................................. 9.25 04/15/22 5,704,650
5,000 Telecomunicationes De Puerto Rico....................................... 6.80 05/15/09 4,580,200
5,000 Teleglobe Inc........................................................... 7.70 07/20/29 4,574,200
5,000 Telephone & Data Systems, Inc........................................... 10.00 01/15/21 5,241,600
5,000 Telephone & Data Systems, Inc........................................... 9.58 11/19/21 5,098,150
--------------
47,585,350
--------------

TOTAL CORPORATE BONDS
(IDENTIFIED COST $175,843,249)............................................................ 175,657,754
--------------

U.S. GOVERNMENT OBLIGATION (0.2%)
25,000 U.S.Treasury Note Strip (IDENTIFIED COST $8,254,541).................... 0.00 08/15/19 6,595,500
--------------

SHORT-TERM INVESTMENT (a) (1.3%)
U.S. GOVERNMENT AGENCY
35,400 Federal Home Loan Mortgage Corp. (AMORTIZED COST $35,397,050)........... 1.50 01/03/00 35,397,050
--------------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $1,485,072,472) (b).................................................... 99.8% 2,761,511,154

CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.......................................... 0.2 4,197,046
----- ---------------

NET ASSETS.............................................................................. 100.0% $ 2,765,708,200
----- ---------------
----- ---------------
</TABLE>

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

ADR American Depository Receipt.
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $1,296,028,092 and the
aggregate gross unrealized depreciation is $19,589,410, resulting in net
unrealized appreciation of $1,276,438,682.

SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $1,485,072,472).......................................................... $2,761,511,154
Cash........................................................................................ 51,165
Receivable for:
Dividends............................................................................... 4,830,330
Interest................................................................................ 3,500,908
Shares of beneficial interest sold...................................................... 789,630
Foreign withholding taxes reclaimed..................................................... 153,766
Prepaid expenses and other assets........................................................... 87,694
--------------
TOTAL ASSETS........................................................................... 2,770,924,647
--------------
LIABILITIES:
Payable for:
Plan of distribution fee................................................................ 2,305,109
Shares of beneficial interest repurchased............................................... 1,470,050
Investment management fee............................................................... 1,258,684
Accrued expenses and other payables......................................................... 182,604
--------------
TOTAL LIABILITIES...................................................................... 5,216,447
--------------
NET ASSETS............................................................................. $2,765,708,200
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................. $1,445,138,708
Net unrealized appreciation................................................................. 1,276,438,682
Accumulated undistributed net investment income............................................. 315,765
Accumulated undistributed net realized gain................................................. 43,815,045
--------------
NET ASSETS............................................................................. $2,765,708,200
==============
CLASS A SHARES:
Net Assets.................................................................................. $14,816,978
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 754,130
NET ASSET VALUE PER SHARE.............................................................. $19.65
==============

MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE)...................................... $20.74
==============
CLASS B SHARES:
Net Assets.................................................................................. $2,712,325,619
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 137,711,064
NET ASSET VALUE PER SHARE.............................................................. $19.70
==============
CLASS C SHARES:
Net Assets.................................................................................. $11,582,862
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 588,308
NET ASSET VALUE PER SHARE.............................................................. $19.69
==============
CLASS D SHARES:
Net Assets.................................................................................. $26,982,741
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 1,374,599
NET ASSET VALUE PER SHARE.............................................................. $19.63
==============
</TABLE>

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

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999

<TABLE>
<S> <C>
NET INVESTMENT INCOME:

INCOME
Dividends (net of $546,677 foreign withholding tax)........................................... $ 71,363,253
Interest...................................................................................... 22,316,013
------------

TOTAL INCOME............................................................................. 93,679,266
------------

EXPENSES
Plan of distribution fee (Class A shares)..................................................... 24,279
Plan of distribution fee (Class B shares)..................................................... 27,036,371
Plan of distribution fee (Class C shares)..................................................... 94,413
Investment management fee..................................................................... 14,818,972
Transfer agent fees and expenses.............................................................. 2,296,643
Shareholder reports and notices............................................................... 285,571
Custodian fees................................................................................ 135,403
Registration fees............................................................................. 97,897
Professional fees............................................................................. 96,427
Trustees' fees and expenses................................................................... 18,087
Other......................................................................................... 29,037
------------

TOTAL EXPENSES........................................................................... 44,933,100
------------

NET INVESTMENT INCOME.................................................................... 48,746,166
------------

NET REALIZED AND UNREALIZED GAIN:
Net realized gain............................................................................. 179,742,637
Net change in unrealized appreciation......................................................... 34,094,678
------------

NET GAIN................................................................................. 213,837,315
------------

NET INCREASE.................................................................................. $262,583,481
============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>

INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment income................................................. $ 48,746,166 $ 56,595,530
Net realized gain..................................................... 179,742,637 132,906,441
Net change in unrealized appreciation................................. 34,094,678 323,997,946
-------------- --------------

NET INCREASE..................................................... 262,583,481 513,499,917
-------------- --------------

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares.................................................... (325,894) (195,162)
Class B shares.................................................... (48,736,862) (56,213,582)
Class C shares.................................................... (178,804) (82,276)
Class D shares.................................................... (773,272) (680,717)

Net realized gain:
Class A shares.................................................... (743,247) (481,447)
Class B shares.................................................... (145,019,769) (139,042,766)
Class C shares.................................................... (597,665) (285,747)
Class D shares.................................................... (1,443,288) (1,268,629)
-------------- --------------

TOTAL DIVIDENDS AND DISTRIBUTIONS................................ (197,818,801) (198,250,326)
-------------- --------------

Net increase (decrease) from transactions in shares of beneficial
interest............................................................ (92,465,156) 25,796,333
-------------- --------------

NET INCREASE (DECREASE).......................................... (27,700,476) 341,045,924

NET ASSETS:
Beginning of period................................................... 2,793,408,676 2,452,362,752
-------------- --------------

END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $315,765 AND
$1,584,446, RESPECTIVELY)......................................... $2,765,708,200 $2,793,408,676
============== ==============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999

1. ORGANIZATION AND ACCOUNTING POLICIES

Morgan Stanley Dean Witter Utilities Fund (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. On August 4, 1999, the Fund's
shareholders approved a change in the Fund's investment objective from current
income and long-term growth of income and capital to capital appreciation and
current income. The new objective was effective August 5, 1999. The Fund seeks
to achieve its objective by investing primarily in equity and fixed income
securities of companies engaged in the utilities industry. Prior to receiving
shareholder approval, the Fund was limited to 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 converted to
a multiple class share structure.

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

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

The following is a summary of significant accounting policies:

A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, 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") that sale or bid prices are not reflective of a security's market
value, portfolio securities are valued at their fair value as determined

13
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED

in good faith under procedures established by and under the general supervision
of the Trustees (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); (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

14
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED

federal tax-basis treatment; temporary differences do not require
reclassification. Dividends and distributions which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they exceed
net investment income and net realized capital gains for tax purposes, they are
reported as distributions of paid-in-capital.

2. INVESTMENT MANAGEMENT AGREEMENT

Pursuant to an Investment Management Agreement with the Investment Manager, the
Fund pays 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

15
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED

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, 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 $39,858,543 at December 31, 1999.

In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that 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 December 31, 1999, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.20% and
1.0%, respectively.

16
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED

The Distributor has informed the Fund that for the year ended December 31, 1999,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class A, Class B and Class C shares of $258, $1,562,015 and $10,264,
respectively and received $69,063 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 December 31, 1999 aggregated
$364,173,880 and $519,124,798, respectively. Included in the aforementioned are
purchases and sales of U.S. Government securities of $7,829,500 and $9,470,745,
respectively.

For the year ended December 31, 1999, the Fund incurred $41,796 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.

For the year ended December 31, 1999, the Fund incurred brokerage commissions of
$7,500 with Morgan Stanley & Co., Inc., an affiliate of the Investment Manager
and Distributor, for portfolio transactions executed on behalf of the Fund.

The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent 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 year ended December 31, 1999
included in Trustees' fees and expenses in the Statement of Operations amounted
to $6,101. At December 31, 1999, the Fund had an accrued pension liability of
$53,908 which is included in accrued expenses in the Statement of Assets and
Liabilities.

5. FEDERAL INCOME TAX STATUS

As of December 31, 1999, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales.

17
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED

6. SHARES OF BENEFICIAL INTEREST

Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold............................................................. 415,079 $ 8,077,971 471,524 $ 8,460,496
Reinvestment of dividends and distributions...................... 49,792 955,657 33,328 613,355
Redeemed......................................................... (249,521) (4,882,705) (176,648) (3,093,414)
----------- ------------- ----------- -------------
Net increase - Class A........................................... 215,350 4,150,923 328,204 5,980,437
----------- ------------- ----------- -------------

CLASS B SHARES
Sold............................................................. 11,295,521 219,772,333 19,178,545 349,176,866
Reinvestment of dividends and distributions...................... 8,368,147 161,065,061 8,756,868 161,419,594
Redeemed......................................................... (24,796,406) (483,837,209) (27,729,620) (500,666,327)
----------- ------------- ----------- -------------
Net increase (decrease) - Class B................................ (5,132,738) (102,999,815) 205,793 9,930,133
----------- ------------- ----------- -------------

CLASS C SHARES
Sold............................................................. 372,109 7,252,767 315,427 5,761,324
Reinvestment of dividends and distributions...................... 36,252 696,927 17,427 321,582
Redeemed......................................................... (159,132) (3,112,493) (76,154) (1,373,522)
----------- ------------- ----------- -------------
Net increase - Class C........................................... 249,229 4,837,201 256,700 4,709,384
----------- ------------- ----------- -------------

CLASS D SHARES
Sold............................................................. 654,645 12,555,868 442,423 8,058,763
Reinvestment of dividends and distributions...................... 113,475 2,176,148 103,737 1,906,622
Acquisition of Dean Witter Retirement Series - Utilities
Series.......................................................... -- -- 244,186 4,310,004
Redeemed......................................................... (691,022) (13,185,481) (499,814) (9,099,010)
----------- ------------- ----------- -------------
Net increase - Class D........................................... 77,098 1,546,535 290,532 5,176,379
----------- ------------- ----------- -------------
Net increase (decrease) in Fund.................................. (4,591,061) $ (92,465,156) 1,081,229 $ 25,796,333
=========== ============= =========== =============
</TABLE>

7. ACQUISITION OF DEAN WITTER RETIREMENT SERIES - UTILITIES SERIES

As of the close of business on September 11, 1998, the Fund acquired all the net
assets of Dean Witter Retirement Series - Utilities Series ("Retirement
Utilities") pursuant to a plan of reorganization approved by the shareholders of
Retirement Utilities on August 19, 1998. The acquisition was accomplished by a
tax-free exchange of 244,186 Class D shares of the Fund at a net asset value of
$17.65 per share for 411,249 shares of Retirement Utilities. The net assets of
the Fund and Retirement Utilities immediately before the acquisition were
$2,422,836,927 and $4,310,004, respectively, including unrealized appreciation
of $694,594 for Retirement Utilities. Immediately after the acquisition, the
combined net assets of the Fund amounted to $2,427,146,931.

18
<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 PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A SHARES++

SELECTED PER SHARE DATA:

Net asset value, beginning of period.................................. $ 19.22 $ 17.01 $15.89
------- ------- ------

Income from investment operations:
Net investment income.............................................. 0.50 0.54 0.27
Net realized and unrealized gain................................... 1.53 3.24 2.52
------- ------- ------

Total income from investment operations............................... 2.03 3.78 2.79
------- ------- ------

Less dividends and distributions from:
Net investment income.............................................. (0.51) (0.55) (0.35)
Net realized gain.................................................. (1.09) (1.02) (1.32)
------- ------- ------

Total dividends and distributions..................................... (1.60) (1.57) (1.67)
------- ------- ------

Net asset value, end of period........................................ $ 19.65 $ 19.22 $17.01
======= ======= ======

TOTAL RETURN+......................................................... 10.97% 22.86% 18.06%(2)

RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.85%(1) 0.90%(1) 0.92%(3)

Net investment income................................................. 2.55%(1) 2.98%(1) 4.05%(3)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $14,817 $10,357 $3,581

Portfolio turnover rate............................................... 14% 6% 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) Reflects overall Fund ratios for investment income and non-class specific
expenses.
(2) Not annualized.
(3) Annualized.

SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
FINANCIAL HIGHLIGHTS, CONTINUED

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1999++ 1998++ 1997*++ 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES++

SELECTED PER SHARE DATA:

Net asset value, beginning of period.................... $ 19.26 $ 17.04 $ 15.22 $ 15.15 $ 12.30
---------- ------- ------- ------- -------

Income from investment operations:
Net investment income................................ 0.35 0.40 0.50 0.56 0.58
Net realized and unrealized gain..................... 1.54 3.25 3.28 0.16 2.85
---------- ------- ------- ------- -------

Total income from investment operations................. 1.89 3.65 3.78 0.72 3.43
---------- ------- ------- ------- -------

Less dividends and distributions from:
Net investment income................................ (0.36) (0.41) (0.51) (0.58) (0.58)
Net realized gain.................................... (1.09) (1.02) (1.45) (0.07) --
---------- ------- ------- ------- -------

Total dividends and distributions....................... (1.45) (1.43) (1.96) (0.65) (0.58)
---------- ------- ------- ------- -------

Net asset value, end of period.......................... $ 19.70 $ 19.26 $ 17.04 $ 15.22 $ 15.15
========== ======= ======= ======= =======

TOTAL RETURN+........................................... 10.09% 21.95% 25.79% 4.99% 28.42%

RATIOS TO AVERAGE NET ASSETS:
Expenses................................................ 1.65%(1) 1.65%(1) 1.67% 1.64% 1.65%

Net investment income................................... 1.75%(1) 2.23%(1) 3.15% 3.63% 4.19%

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands................. $2,712,326 $2,751,600 $2,430,270 $2,676,945 $3,321,001

Portfolio turnover rate................................. 14% 6% 6% 7% 9%
</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., 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) Reflects overall Fund ratios for investment income and non-class specific
expenses.

SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
FINANCIAL HIGHLIGHTS, CONTINUED

SELECTED PER SHARE DATA:

Net asset value, beginning of period.................................. $ 19.26 $17.06 $15.89
------- ------ ------

Income from investment operations:
Net investment income.............................................. 0.34 0.40 0.22
Net realized and unrealized gain................................... 1.54 3.25 2.51
------- ------ ------

Total income from investment operations............................... 1.88 3.65 2.73
------- ------ ------

Less dividends and distributions from:
Net investment income.............................................. (0.36) (0.43) (0.24)
Net realized gain.................................................. (1.09) (1.02) (1.32)
------- ------ ------

Total dividends and distributions..................................... (1.45) (1.45) (1.56)
------- ------ ------

Net asset value, end of period........................................ $ 19.69 $19.26 $17.06
======= ====== ======

TOTAL RETURN+......................................................... 10.09% 21.92% 17.67%(2)

RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.65%(1) 1.65%(1) 1.69%(3)

Net investment income................................................. 1.75%(1) 2.23%(1) 3.14%(3)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $11,583 $6,532 $1,405

Portfolio turnover rate............................................... 14% 6% 6%
</TABLE>

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

SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
MORGAN STANLEY DEAN WITTER UTILITIES FUND
FINANCIAL HIGHLIGHTS, CONTINUED

SELECTED PER SHARE DATA:

Net asset value, beginning of period.................................. $ 19.21 $ 16.99 $ 15.89
------- ------- -------

Income from investment operations:
Net investment income.............................................. 0.54 0.58 0.22
Net realized and unrealized gain................................... 1.52 3.25 2.58
------- ------- -------

Total income from investment operations............................... 2.06 3.83 2.80
------- ------- -------

Less dividends and distributions from:
Net investment income.............................................. (0.55) (0.59) (0.38)
Net realized gain.................................................. (1.09) (1.02) (1.32)
------- ------- -------

Total dividends and distributions..................................... (1.64) (1.61) (1.70)
------- ------- -------

Net asset value, end of period........................................ $ 19.63 $ 19.21 $ 16.99
======= ======= =======

TOTAL RETURN+......................................................... 11.13% 23.21% 18.13%(2)

RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.65%(1) 0.65%(1) 0.67%(3)

Net investment income................................................. 2.75%(1) 3.23%(1) 4.21%(3)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $26,983 $24,920 $17,106

Portfolio turnover rate............................................... 14% 6% 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) Reflects overall Fund ratios for investment income and non-class specific
expenses.
(2) Not annualized.
(3) Annualized.

SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE>

MORGAN STANLEY DEAN WITTER UTILITIES FUND
REPORT OF INDEPENDENT ACCOUNTANTS

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

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
Utilities Fund (the "Fund") at December 31, 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 accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.

PricewaterhouseCoopers LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
FEBRUARY 8, 2000

1999 FEDERAL TAX NOTICE (UNAUDITED)

For the year ended December 31, 1999, the Fund paid to
shareholders $1.09 per share from long-term capital gains. For
such period, 100% of the income paid qualified for the dividends
received deduction available to corporations.

23
<PAGE>

TRUSTEES

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

OFFICERS

Charles A. Fiumefreddo
Chairman and Chief Executive Officer

Mitchell M. Merin
President

Barry Fink
Vice President, Secretary and General Counsel

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

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

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

MORGAN STANLEY
DEAN WITTER
UTILITIES FUND

[PHOTO]

ANNUAL REPORT
DECEMBER 31, 1999