<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH TWO WORLD TRADE CENTER,
SECURITIES NEW YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1998
DEAR SHAREHOLDER:
The past year was characterized by record levels of volatility in the U.S. and
global financial markets. Throughout the period, investors were concerned about
global currency devaluations and an economic crisis that began in Asia, then
spread to Russia and Latin America. Investors wondered if the United States
itself would be drawn into a recession. Market participants began to anticipate
an easing of monetary policy, which was soon delivered by the Federal Reserve
Board. The Federal Reserve's moves to lower rates are encouraging for U.S. and
global markets and are expected to help keep recession at bay in the United
States during the coming year.
PERFORMANCE
During the fiscal year ended October 31, 1998, Morgan Stanley Dean Witter
Capital Growth Fund's Class B shares registered a total return of -3.56 percent,
versus 21.99 percent for the Standard & Poor's 500 Index and 13.88 percent for
the Lipper Growth Funds Index, respectively. Over the same period, the Fund's
Class A, Class C and Class D shares registered total returns of -2.84 percent,
- -3.56 percent and -2.59 percent, respectively. The performance of the Fund's
four share classes varies, because each class has different expenses.
The accompanying chart illustrates the performance of a $10,000 investment in
the Fund from inception through the fiscal year ended on October 31, 1998,
versus the performance of similar hypothetical investments in the S&P 500 Index
and the Lipper Growth Funds Index.
After a respectable first half of the fiscal year (up nearly 14 percent) the
Fund underperformed noticeably during the second half, pulling down the overall
performance for the fiscal year. The Fund's diversification into mid- and small
capitalization stocks, which worked admirably in fiscal 1997, failed to produce
returns commensurate with large-capitalization stocks in fiscal 1998.
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1998, CONTINUED
Much of the underperformance during the past two quarters is attributable to the
overall performance of the stock market. It was a period when only the largest
stocks outperformed the S&P 500. While these "Nifty Fifty" names carried the S&P
500 Index higher, there was a significant decline in almost all other stocks.
During this period, mid- and small-cap stocks, which represented 41 percent of
the Fund's net assets as of November 30, 1998, suffered far worse price declines
than large caps. For much of the fiscal year, both the S&P 400 Mid Cap and S&P
600 Small Cap Indices were down on an absolute basis.
PORTFOLIO
As of October 31, 1998, the Fund's net assets were approximately $485 million.
At fiscal year end, the Fund owned 65 stocks. The portfolio was 59 percent
invested in large-cap stocks and 38 percent invested in mid-cap stocks, with the
balance invested in small-cap issues.
Although small- and mid-cap stocks had a negative impact on performance during
the fiscal year, the Fund will continue to hold stocks of various market
capitalizations. This is primarily because nearly 75 percent of the investment
ideas generated by the Fund's screening process--which seeks to identify
companies with a history of consistent revenue and earnings growth, strong
future earnings growth and attractive price valuations--have market caps under
$10 billion.
The portfolio has traditionally invested heavily in the technology, financial
services and retail sectors, a strategy that was effective in 1997 and the first
half of 1998. The Fund maintained an overweighted position in these sectors
during most of that period. However, over the summer and fall of 1998, these
sectors experienced considerable price declines.
At the end of October 1998, the Fund's 10 largest holdings were: Staples
(Specialty Stores); MCI Worldcom (Telecommunications); Elan (Biotech); Starbucks
(Restaurants); Providian Financial (Financial Services); United Technologies
(Aerospace); Watson Pharmaceuticals (Drugs); Warner-Lambert (Pharmaceutical);
Philip Morris (Tobacco); Total Renal Care Holdings (Medical/Nursing).
GOING FORWARD
We are optimistic about the Fund's prospects. We believe that many of the
mid-sized and small issues in which the Fund invests are attractive on a
valuation and fundamental basis and should exhibit better performance in fiscal
1999.
The vast majority of the names produced by the Fund's screening process have
very attractive valuations and reasonable-to-strong fundamentals, making them
suitable candidates for investment.
2
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1998, CONTINUED
Despite recent underperformance, we continue to believe that this process will
successfully identify stocks with the potential for future long-term growth. In
addition, we believe that portfolio diversification across industry sectors and
capitalization ranges is important in helping to manage risk.
We appreciate your support of Morgan Stanley Dean Witter Capital Growth Fund and
look forward to continuing to serve your investment needs and objectives.
Very truly yours,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
3
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH
SECURITIES
FUND PERFORMANCE OCTOBER 31, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000 - Class B
Shares
($ in Thousands)
Fund S&P 500(4) Lipper(5)
<S> <C> <C> <C>
April-1990 $10,000 $10,000 $10,000
October-1990 $9,190 $9,173 $8,985
October-1991 $13,605 $12,242 $12,709
October-1992 $14,158 $13,459 $13,701
October-1993 $13,556 $15,465 $16,302
October-1994 $13,450 $16,061 $16,636
October-1995 $16,330 $20,298 $20,624
October-1996 $19,256 $25,182 $24,128
October-1997 $25,267 $33,253 $30,975
October-1998 $24,367(3) $40,565 $35,273
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. PERFORMANCE FOR CLASS
A, CLASS C, AND CLASS D SHARES WILL VARY FROM THE PERFORMANCE OF CLASS B
SHARES SHOWN ABOVE DUE TO DIFFERENCES IN SALES CHARGES AND EXPENSES.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------------------------------------------
CLASS B SHARES* CLASS A SHARES**
- ----------------------------------------------- -----------------------------------------------
PERIOD ENDED 10/31/98 PERIOD ENDED 10/31/98
- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
1 Year -3.56%(1) -7.44%(2) 1 Year -2.84%(1) -7.94%(2)
5 Years 12.44(1) 12.19(2) Since Inception (7/28/97) 0.52(1) -3.70(2)
Since Inception (4/20/90) 10.94(1) 10.94(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES+ CLASS D SHARES#
- ----------------------------------------------- -----------------------------------------------
PERIOD ENDED 10/31/98 PERIOD ENDED 10/31/98
- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
1 Year -3.56%(1) -4.34%(2) 1 Year -2.59%(1)
Since Inception (7/28/97) -0.25(1) -0.25(2) Since Inception (7/28/97) 0.77(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 October 31, 1998.
(4) The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based index, the
performance of which is based on the average performance of 500 widely held
common stocks. The performance of the Index does not include any expenses,
fees or charges. The Index is unmanaged and should not be considered an
investment.
(5) The Lipper Growth Fund Index is an equally-weighted performance index of
the largest qualifying funds (based on net assets) in the Lipper Growth
Funds objective. The Index, which is adjusted for capital gains
distributions and income dividends, is unmanaged and should not be
considered an investment. There are currently 30 funds represented in this
index.
* The maximum contingent deferred sales charge (CDSC) for Class B is 5.0%. The
CDSC declines to 0% after six years.
** The maximum front-end sales charge for Class A is 5.25%.
+ The maximum CDSC for Class C shares is 1% for shares redeemed within one year
of purchase.
# Class D shares have no sales charge.
4
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (99.4%)
ACCIDENT & HEALTH INSURANCE (0.7%)
90,000 AFLAC Inc.............................................................................. $ 3,431,250
------------
ADVERTISING (2.8%)
375,000 Snyder Communications, Inc.*........................................................... 13,382,812
------------
AEROSPACE (3.2%)
165,000 United Technologies Corp............................................................... 15,716,250
------------
APPAREL (0.0%)
1,000 Tommy Hilfiger Corp.*.................................................................. 46,437
------------
BIOTECHNOLOGY (3.6%)
250,000 Elan Corp. PLC (ADR) (Ireland)*........................................................ 17,515,625
------------
BROADCASTING (0.0%)
5,000 Clear Channel Communications, Inc.*.................................................... 227,812
------------
BUILDING MATERIALS (1.9%)
165,000 Southdown, Inc......................................................................... 8,982,187
------------
CELLULAR TELEPHONE (0.0%)
1,500 AirTouch Communications, Inc.*......................................................... 84,000
------------
CLOTHING/SHOE/ACCESSORY CHAINS (0.0%)
1,300 Finish Line, Inc. (Class A)*........................................................... 13,650
1,500 Stage Stores, Inc.*.................................................................... 19,875
------------
33,525
------------
COMPUTER SOFTWARE (9.5%)
100,000 BMC Software, Inc.*.................................................................... 4,800,000
138,500 Citrix Systems, Inc.*.................................................................. 9,790,219
250,000 Compuware Corp.*....................................................................... 13,531,250
310,000 Legato Systems, Inc.*.................................................................. 12,090,000
140,000 Network Associates, Inc.*.............................................................. 5,950,000
650 Visio Corp.*........................................................................... 17,387
------------
46,178,856
------------
COMPUTER/VIDEO CHAINS (1.4%)
100,000 Dell Computer Corp.*................................................................... 6,550,000
------------
COMPUTERS COMMUNICATIONS (6.4%)
250,000 Ascend Communications, Inc.*........................................................... 12,046,875
160,000 Cisco Systems, Inc.*................................................................... 10,090,000
150,000 Sun Microsystems, Inc.*................................................................ 8,728,125
------------
30,865,000
------------
COMPUTERS SOFTWARE & SERVICES (0.6%)
55,000 CSG Systems International, Inc.*....................................................... 2,997,500
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
DEPARTMENT STORES (0.0%)
1,400 Saks Incorporated*..................................................................... $ 31,850
------------
DISCOUNT CHAINS (0.0%)
1,500 Dollar General Corp.................................................................... 35,812
------------
DIVERSIFIED COMMERCIAL SERVICES (0.7%)
125,000 HA-LO Industries, Inc.*................................................................ 3,531,250
3,300 Modis Professional Services*........................................................... 58,162
------------
3,589,412
------------
DIVERSIFIED FINANCIAL SERVICES (3.3%)
200,000 Providian Financial Corp............................................................... 15,875,000
------------
DIVERSIFIED MANUFACTURING (2.9%)
225,000 Tyco International Ltd................................................................. 13,935,937
------------
DRUG STORE CHAIN (2.9%)
145,000 Express Scripts, Inc. (Class A)*....................................................... 14,164,687
------------
E.D.P. PERIPHERALS (2.7%)
200,000 EMC Corp.*............................................................................. 12,875,000
------------
ELECTRICAL PRODUCTS (1.7%)
195,000 American Power Conversion Corp.*....................................................... 8,263,125
------------
ELECTRONIC DATA PROCESSING (1.4%)
125,000 Gemstar International Group Ltd.*...................................................... 6,828,125
------------
ENVIRONMENTAL SERVICES (1.6%)
175,000 Waste Management, Inc.................................................................. 7,896,875
------------
FINANCE COMPANIES (4.7%)
125,000 Capital One Financial Corp............................................................. 12,718,750
450,000 MBNA Corp.............................................................................. 10,265,625
------------
22,984,375
------------
FOOD CHAINS (4.0%)
250,000 Fred Meyer, Inc.*...................................................................... 13,328,125
125,000 Safeway, Inc.*......................................................................... 5,976,563
------------
19,304,688
------------
GENERIC DRUGS (6.2%)
175,000 ALZA Corp.*............................................................................ 8,378,125
260,000 Chiron Corp.*.......................................................................... 5,833,750
1,100 ICN Pharmaceuticals, Inc............................................................... 25,713
282,400 Watson Pharmaceuticals, Inc.*.......................................................... 15,708,500
------------
29,946,088
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1998, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
HOSPITAL/NURSING MANAGEMENT (1.2%)
1,200 Quorum Health Group, Inc.*............................................................. $ 17,325
110,000 Universal Health Services, Inc. (Class B)*............................................. 5,644,375
------------
5,661,700
------------
LIFE INSURANCE (1.1%)
2,200 Conseco, Inc........................................................................... 76,313
75,000 SunAmerica Inc......................................................................... 5,287,500
------------
5,363,813
------------
MAJOR BANKS (0.0%)
50 State Street Corp...................................................................... 3,119
------------
MAJOR PHARMACEUTICALS (3.2%)
200,000 Warner-Lambert Co...................................................................... 15,675,000
------------
MAJOR U.S. TELECOMMUNICATIONS (3.7%)
325,000 MCI Worldcom Inc.*..................................................................... 17,956,250
------------
MEDICAL/NURSING SERVICES (3.2%)
625,000 Total Renal Care Holdings, Inc.*....................................................... 15,312,500
------------
MID-SIZED BANKS (2.2%)
140,000 Star Banc Corp......................................................................... 10,587,500
------------
MULTI-LINE INSURANCE (1.2%)
125,000 American Bankers Insurance Group....................................................... 5,585,938
------------
OFFICE EQUIPMENT/SUPPLIES (1.4%)
100,000 Lexmark International Group, Inc. (Class A)*........................................... 6,993,750
------------
OIL/GAS TRANSMISSION (2.3%)
140,000 Cooper Cameron Corp.*.................................................................. 4,865,000
175,000 Transocean Offshore Inc................................................................ 6,464,063
------------
11,329,063
------------
OILFIELD SERVICES/EQUIPMENT (2.1%)
250,000 R & B Falcon Corp.*.................................................................... 3,390,625
125,000 Schlumberger, Ltd...................................................................... 6,562,500
------------
9,953,125
------------
OTHER PHARMACEUTICALS (2.2%)
210,000 Medicis Pharmaceutical Corp. (Class A)*................................................ 10,526,250
------------
OTHER SPECIALTY STORES (4.0%)
600,000 Staples, Inc.*......................................................................... 19,537,500
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
POLLUTION CONTROL EQUIPMENT (0.0%)
1,300 U.S. Filter Corp.*..................................................................... $ 27,544
------------
RESTAURANTS (5.0%)
125,000 Outback Steakhouse, Inc.*.............................................................. 4,328,125
100,000 Papa John's International, Inc.*....................................................... 3,787,500
375,000 Starbucks Corp.*....................................................................... 16,265,625
------------
24,381,250
------------
SAVINGS & LOAN ASSOCIATIONS (0.4%)
75,000 Charter One Financial, Inc............................................................. 2,048,438
------------
TELECOMMUNICATION EQUIPMENT (0.0%)
1,350 Tellabs, Inc.*......................................................................... 74,166
------------
TOBACCO (3.2%)
300,000 Philip Morris Companies, Inc........................................................... 15,337,500
------------
UNREGULATED POWER GENERATION (0.8%)
100,000 AES Corp.*............................................................................. 4,093,750
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $409,374,484)......................................................... 482,190,384
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ---------
<C> <S> <C>
SHORT-TERM INVESTMENTS (1.5%)
U.S. GOVERNMENT AGENCY (a) (1.4%)
$ 6,500 Federal Home Loan Mortgage Corp. 5.42% due 11/02/98 (AMORTIZED COST $6,499,022)........ 6,499,022
------------
REPURCHASE AGREEMENT (0.1%)
539 The Bank of New York 5.125% due 11/02/98 (dated 10/30/98; proceeds $539,479) (b)
(IDENTIFIED COST $539,249)........................................................... 539,249
------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $7,038,271)........................................................... 7,038,271
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1998, CONTINUED
<TABLE>
<CAPTION>
TOTAL INVESTMENTS
(IDENTIFIED COST $416,412,755) (C).................................................... 100.9 % 489,228,655
<C> <S> <C>
LIABILITIES IN EXCESS OF OTHER ASSETS..................................................... (0.9) (4,233,887)
------ -------------
NET ASSETS................................................................................ 100.0 % $ 484,994,768
------ -------------
------ -------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) Collateralized by $470,063 U.S. Treasury Note 7.25% due 05/15/04 valued at
$550,034.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $80,150,164 and the
aggregate gross unrealized depreciation is $7,334,264, resulting in net
unrealized appreciation of $72,815,900.
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $416,412,755).............................................................. $489,228,655
Receivable for:
Investments sold.......................................................................... 10,204,885
Shares of beneficial interest sold........................................................ 562,019
Dividends................................................................................. 6,875
Prepaid expenses and other assets............................................................. 61,770
------------
TOTAL ASSETS............................................................................. 500,064,204
------------
LIABILITIES:
Payable for:
Investments purchased..................................................................... 13,260,037
Shares of beneficial interest repurchased................................................. 1,091,230
Plan of distribution fee.................................................................. 345,584
Investment management fee................................................................. 245,436
Accrued expenses and other payables........................................................... 127,149
------------
TOTAL LIABILITIES........................................................................ 15,069,436
------------
NET ASSETS............................................................................... $484,994,768
------------
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................... $373,362,761
Net unrealized appreciation................................................................... 72,815,900
Accumulated net investment loss............................................................... (50,304)
Accumulated undistributed net realized gain................................................... 38,866,411
------------
NET ASSETS............................................................................... $484,994,768
------------
------------
CLASS A SHARES:
Net Assets.................................................................................... $3,403,226
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 231,815
NET ASSET VALUE PER SHARE................................................................ $14.68
------------
------------
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET
ASSET VALUE)............................................................................ $15.49
------------
------------
CLASS B SHARES:
Net Assets.................................................................................... $441,787,339
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 30,405,379
NET ASSET VALUE PER SHARE................................................................ $14.53
------------
------------
CLASS C SHARES:
Net Assets.................................................................................... $963,918
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 66,335
NET ASSET VALUE PER SHARE................................................................ $14.53
------------
------------
CLASS D SHARES:
Net Assets.................................................................................... $38,840,285
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 2,637,052
NET ASSET VALUE PER SHARE................................................................ $14.73
------------
------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1998
<TABLE>
<S> <C>
NET INVESTMENT LOSS:
INCOME
Dividends (net of $9,728 foreign withholding tax)............................................. $ 1,208,728
Interest...................................................................................... 979,233
------------
TOTAL INCOME............................................................................. 2,187,961
------------
EXPENSES
Plan of distribution fee (Class A shares)..................................................... 6,632
Plan of distribution fee (Class B shares)..................................................... 5,067,171
Plan of distribution fee (Class C shares)..................................................... 8,548
Investment management fee..................................................................... 3,513,517
Transfer agent fees and expenses.............................................................. 772,973
Registration fees............................................................................. 102,380
Shareholder reports and notices............................................................... 79,763
Custodian fees................................................................................ 57,016
Professional fees............................................................................. 51,037
Trustees' fees and expenses................................................................... 21,183
Other......................................................................................... 9,254
------------
TOTAL EXPENSES........................................................................... 9,689,474
------------
NET INVESTMENT LOSS...................................................................... (7,501,513)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain............................................................................. 41,554,280
Net change in unrealized appreciation......................................................... (51,278,029)
------------
NET LOSS................................................................................. (9,723,749)
------------
NET DECREASE.................................................................................. $(17,225,262)
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997*
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss................................................ $ (7,501,513) $ (6,458,646)
Net realized gain.................................................. 41,554,280 108,316,922
Net change in unrealized appreciation.............................. (51,278,029) 37,095,380
---------------- -----------------
NET INCREASE (DECREASE)....................................... (17,225,262) 138,953,656
---------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAIN:
Class A shares..................................................... (332,952) --
Class B shares..................................................... (96,278,872) (81,010,400)
Class C shares..................................................... (137,250) --
Class D shares..................................................... (6,786,251) --
---------------- -----------------
TOTAL DISTRIBUTIONS........................................... (103,535,325) (81,010,400)
---------------- -----------------
Net increase (decrease) from transactions in shares of beneficial
interest......................................................... 44,543,546 (3,302,638)
---------------- -----------------
NET INCREASE (DECREASE)....................................... (76,217,041) 54,640,618
NET ASSETS:
Beginning of period................................................ 561,211,809 506,571,191
---------------- -----------------
END OF PERIOD
(INCLUDING ACCUMULATED NET INVESTMENT LOSSES OF $50,304 AND
$47,938, RESPECTIVELY)......................................... $ 484,994,768 $ 561,211,809
---------------- -----------------
---------------- -----------------
</TABLE>
- ---------------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1998
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Capital Growth Securities (the "Fund"), formerly Dean
Witter Capital Growth Securities, 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 long-term capital growth.
The Fund was organized as a Massachusetts business trust on December 8, 1989 and
commenced operations on April 2, 1990. 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 and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (in
cases where securities are traded on more than one exchange, the securities are
valued on the exchange designated as the primary market pursuant to procedures
adopted by the 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
10
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1998, CONTINUED
of the Trustees; and (4) short-term debt securities having a maturity date of
more than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the 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 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.
11
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1998, CONTINUED
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined at the close of
each business day: 0.65% 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; 0.50% to the portion of daily net assets exceeding $1
billion but not exceeding $1.5 billion; and 0.475% to the portion of daily net
assets exceeding $1.5 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 (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
12
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1998, CONTINUED
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 $19,222,752 at October 31, 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 year ended October 31, 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 year ended October 31, 1998,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class B shares and Class C shares of $278,936 and $620, respectively and
received $6,978 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 October 31, 1998 aggregated
$1,219,884,100 and $1,277,540,630, respectively.
13
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1998, CONTINUED
For the year ended October 31, 1998 the Fund incurred $91,353 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.
At October 31, 1998, the Fund's payable for investments purchased and receivable
for investments sold included unsettled trades with DWR of $354,536 and
$490,034, respectively.
For the year ended October 31, 1998, the Fund incurred brokerage commissions of
$205,878 with Morgan Stanley & Co., Inc., an affiliate of the Investment Manager
and Distributor, for portfolio transactions executed on behalf of the Fund.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent 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 October 31, 1998 included
in Trustees fees and expenses in the Statement of Operations amounted to $5,282.
At October 31, 1998, the Fund had an accrued pension liability of $50,304 which
is included in accrued expenses in the Statement of Assets and Liabilities.
5. FEDERAL INCOME TAX STATUS
As of October 31, 1998, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales and permanent book/tax
differences primarily attributable to a net operating loss. To reflect
reclassifications arising from the permanent differences, paid-in-capital was
charged $7,500,508, accumulated undistributed net realized gain was credited
$1,361 and accumulated net investment loss was credited $7,499,147.
6. ACQUISITION OF DEAN WITTER RETIREMENT SERIES -- CAPITAL GROWTH SERIES
As of the close of business on September 11, 1998, the Fund acquired all the net
assets of Dean Witter Retirement Series -- Capital Growth Series ("Retirement
Capital Growth") pursuant to a plan of reorganization (the "Plan") approved by
the shareholders of Retirement Capital Growth on August 19, 1998. The
acquisition was accomplished by a tax-free exchange of 218,480 Class D shares of
the Fund at a net asset value of $13.96 per share for 271,835 shares of
Retirement Capital Growth. The net assets of the Fund and Retirement Capital
Growth immediately before the
14
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1998, CONTINUED
acquisition were $469,210,059 and $3,049,132, respectively, including unrealized
depreciation of $87,914 for Retirement Capital Growth. Immediately after the
acquisition, the combined net assets of the Fund amounted to $472,259,191.
7. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997*+
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold............................................................. 223,439 $ 3,613,973 119,616 $ 2,203,507
Reinvestment of distributions.................................... 23,370 332,008 -- --
Redeemed......................................................... (104,811) (1,707,265) (29,798) (567,173)
----------- -------------- ----------- ------------
Net increase - Class A........................................... 141,998 2,238,716 89,818 1,636,334
----------- -------------- ----------- ------------
CLASS B SHARES
Sold............................................................. 3,644,613 59,399,825 6,428,644 107,706,868
Reinvestment of distributions.................................... 6,483,260 91,640,518 5,359,165 77,011,200
Redeemed......................................................... (7,641,998) (118,765,145) (11,716,042) (189,751,824)
----------- -------------- ----------- ------------
Net increase (decrease) - Class B................................ 2,485,875 32,275,198 71,767 (5,033,756)
----------- -------------- ----------- ------------
CLASS C SHARES
Sold............................................................. 63,753 1,053,888 23,055 439,171
Reinvestment of distributions.................................... 6,035 85,400 -- --
Redeemed......................................................... (24,271) (372,811) (2,236) (40,010)
----------- -------------- ----------- ------------
Net increase - Class C........................................... 45,517 766,477 20,819 399,161
----------- -------------- ----------- ------------
CLASS D SHARES
Sold............................................................. 774,509 11,951,069 133,845 2,512,173
Reinvestment of distributions.................................... 477,524 6,784,035 -- --
Acquisition of Dean Witter Retirement Series -- Capital Growth
Series.......................................................... 218,480 3,049,132 -- --
Redeemed......................................................... (798,883) (12,521,081) (149,862) (2,816,550)
----------- -------------- ----------- ------------
Net increase (decrease) - Class D................................ 671,630 9,263,155 (16,017) (304,377)
----------- -------------- ----------- ------------
Net increase in Fund............................................. 3,345,020 $ 44,543,546 166,387 $ (3,302,638)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
- ---------------------
* For Class A, C and D, for the period July 28, 1997 (issue date) through
October 31, 1997.
+ On July 28, 1997, 1,981,439 shares representing $35,864,043 were
transferred to Class D.
15
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31
--------------------------------------------------------------------------
1998++ 1997*++ 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.... $ 18.71 $ 16.98 $ 14.40 $ 11.86 $ 13.35
------ ---------- ---------- ---------- -----------
Income (loss) from investment
operations:
Net investment loss.................. (0.23) (0.21) (0.11) (0.06) (0.07)
Net realized and unrealized gain
(loss)............................... (0.54) 4.68 2.69 2.60 --
------ ---------- ---------- ---------- -----------
Total income (loss) from investment
operations............................. (0.77) 4.47 2.58 2.54 (0.07)
------ ---------- ---------- ---------- -----------
Less distributions from net realized
gain................................... (3.41) (2.74) -- -- (1.42)
------ ---------- ---------- ---------- -----------
Net asset value, end of period.......... $ 14.53 $ 18.71 $ 16.98 $ 14.40 $ 11.86
------ ---------- ---------- ---------- -----------
------ ---------- ---------- ---------- -----------
TOTAL RETURN+........................... (3.56)% 31.21% 17.92% 21.42% (0.79)%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ %1.84(1) 1.84% 1.84% 1.89% 1.87%
Net investment loss..................... (1.44)%(1) (1.26)% (0.64)% (0.43)% (0.15)%
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.............................. $441,787 $522,276 $506,571 $483,870 $456,977
Portfolio turnover rate................. % 230 123% 72% 33% 13%
</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 as 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
16
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 28, 1997*
ENDED THROUGH
OCTOBER 31, 1998 OCTOBER 31, 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 18.75 $ 18.10
------ ------
Income (loss) from investment operations:
Net investment loss...................................... (0.11) (0.04)
Net realized and unrealized gain (loss).................. (0.55) 0.69
------ ------
Total income (loss) from investment operations.............. (0.66) 0.65
------ ------
Less distributions from net realized gain................... (3.41) --
------ ------
Net asset value, end of period.............................. $ 14.68 $ 18.75
------ ------
------ ------
TOTAL RETURN+............................................... (2.84)% 3.59%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.09%(3) 1.12%(2)
Net investment loss......................................... (0.69)%(3) (0.82)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $3,403 $1,684
Portfolio turnover rate..................................... 230% 123%
</TABLE>
<TABLE>
<S> <C> <C>
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 18.71 $ 18.10
------ ------
Income (loss) from investment operations:
Net investment loss................................................ (0.23) (0.07)
Net realized and unrealized gain (loss)............................ (0.54) 0.68
------ ------
Total income (loss) from investment operations........................ (0.77) 0.61
------ ------
Less distributions from net realized gain............................. (3.41) --
------ ------
Net asset value, end of period........................................ $ 14.53 $ 18.71
------ ------
------ ------
TOTAL RETURN+......................................................... (3.56)% 3.37%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.84%(3) 1.85%(2)
Net investment loss................................................... (1.44)%(3) (1.54)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $964 $389
Portfolio turnover rate............................................... 230% 123%
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 28, 1997*
ENDED THROUGH
OCTOBER 31, 1998 OCTOBER 31, 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 18.76 $ 18.10
------ ------
Income (loss) from investment operations:
Net investment loss................................................ (0.07) (0.02)
Net realized and unrealized gain (loss)............................ (0.55) 0.68
------ ------
Total income (loss) from investment operations........................ (0.62) 0.66
------ ------
Less distributions from net realized gain............................. (3.41) --
------ ------
Net asset value, end of period........................................ $ 14.73 $ 18.76
------ ------
------ ------
TOTAL RETURN+......................................................... (2.59)% 3.65%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.84%(3) 0.82%(2)
Net investment loss................................................... (0.44)%(3) (0.50)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $38,840 $36,863
Portfolio turnover rate............................................... 230% 123%
</TABLE>
- ---------------------
* The date shares were first issued. Shareholders who held shares of the Fund
prior to July 28, 1997 (the date the Fund converted to a multiple class
share structure) should refer to the Financial Highlights of Class B to
obtain the historical per share data and ratio information of their shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
MORGAN STANLEY DEAN WITTER CAPITAL GROWTH
SECURITIES
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER CAPITAL GROWTH SECURITIES
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 Capital
Growth Securities (the "Fund"), formerly Dean Witter Capital Growth Securities,
at October 31, 1998, 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 presented, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
DECEMBER 7, 1998
1998 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended October 31, 1998, the Fund paid to
shareholders $3.14 per share from long-term capital gains.
19
<PAGE>
TRUSTEES Morgan Stanley Dean Witter
Capital Growth
Michael Bozic Securities
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 [PHOTO]
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Peter Hermann
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 ANNUAL REPORT
OCTOBER 31, 1998
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.
