<PAGE> 1
DEAN WITTER CAPITAL GROWTH SECURITIES Two World Trade Center,
LETTER TO THE SHAREHOLDERS April 30, 1998 New York, New York 10048
DEAR SHAREHOLDER:
The U.S. stock market continued its impressive run during the six-month period
ended April 30, 1998, as overall economic activity remained fairly brisk. The
expected effects of the Asian financial crisis, which have been limited so far,
are expected to play out gradually over the next year. For the most part they
are being offset by the strength of the U.S. economy, which reflects healthy
employment, increasing income and high consumer confidence.
Recently, the Federal Reserve Board expressed concern over the possibility of a
resurgence of inflationary pressure because of this continued economic strength,
but none materialized. As a result, the Fed left interest rates unchanged.
PERFORMANCE
During the six-month period ended April 30, 1998, Dean Witter Capital Growth
Securities's Class A, B, C and D shares produced total returns of 14.26 percent,
13.85 percent, 13.85 percent and 14.36 percent, respectively. Over the same
period, the Standard & Poor's 500 Composite Stock Price Index (S&P 500) and the
Lipper Growth Funds Index registered total returns of 22.47 and 18.15 percent,
respectively. The performance of the Fund's four share classes varies because of
differing expenses. On a trailing twelve-month basis the Fund's Class B shares
returned 47.01 percent versus a 41.04 percent return for the S&P 500.
The Fund underperformed its peer group and the S&P 500 during the period under
review because of its emphasis on small- and mid-cap stocks in the fourth
quarter of 1997. These stocks did not perform as strongly during the last two
months of 1997 and the opening weeks of 1998 relative to the large-cap issues
that dominated the S&P 500. Investors worried about the impact of the Asian
financial crisis on U.S. profits shunned smaller caps for the perceived safety
of large caps.
<PAGE> 2
DEAN WITTER CAPITAL GROWTH SECURITIES
LETTER TO THE SHAREHOLDERS April 30, 1998, continued
THE PORTFOLIO
Over the last four quarters the Fund has maintained its commitment to investing
across various market capitalizations of the stock market, as well as in all
major sectors of the S&P 500. As of April 30, 1998, the Fund had approximately
55 percent of its assets invested in stocks of large companies and the majority
of the remaining assets invested in mid-sized companies. In the near future we
do not anticipate a significant shift in the market capitalization structure of
the Fund.
The portfolio continues to maintain an exposure to the consumer, technology,
financial and basic industry sectors of the market and is overweighted relative
to the S&P 500 in the health care, retail and technology sectors but had more of
a neutral weighting in the energy and financial services areas. The ten largest
holdings as of April 30, 1998, were AES Corp., Providian Financial Company,
Staples, Inc., Tyco International, Ltd. NE, Elan Corp. PLC-ADR, Universal Health
Care SE, Conseco Inc., Tellabs, Inc., Southdown Inc. and EMC Corp.
LOOKING AHEAD
We continue to believe that the long-term outlook for the U.S. stock market is
favorable and that the growth-oriented stocks in which the Fund invests should
fare well going forward. Given our conviction that portfolio diversification is
important across both industry sectors and capitalization ranges, we believe
that the Fund is well positioned to take advantage of this favorable
environment.
We appreciate your ongoing support of Dean Witter Capital Growth Securities and
look forward to continuing to serve your investment needs.
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO
CHARLES A. FIUMEFREDDO
Chairman of the Board
2
<PAGE> 3
DEAN WITTER CAPITAL GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (97.9%)
Advertising (2.2%)
132,000 HA-LO Industries, Inc.*........ $ 4,430,250
210,000 Snyder Communications, Inc.*... 8,925,000
------------
13,355,250
------------
Apparel & Footwear (1.4%)
140,000 Tommy Hilfiger Corp.*.......... 8,540,000
------------
Automobiles (1.7%)
140,000 Magna International Inc.
(Class A) (Canada).............. 10,438,750
------------
Banks (1.8%)
130,000 KeyCorp........................ 5,159,375
80,000 State Street Corp. ............ 5,720,000
------------
10,879,375
------------
Building Materials (2.6%)
230,000 Southdown, Inc. ............... 16,272,500
------------
Capital Goods (2.8%)
320,000 Tyco International Ltd. ....... 17,440,000
------------
Computer Software (4.2%)
250,000 Legato Systems, Inc.*.......... 7,843,750
195,000 Network Associates, Inc.*...... 13,357,500
90,000 Visio Corp.*................... 4,449,375
------------
25,650,625
------------
Computer Software & Services (1.1%)
190,000 Cadence Design Systems,
Inc.*......................... 6,899,375
------------
Computers - Peripheral Equipment (3.4%)
350,000 EMC Corp.*..................... 16,143,750
80,000 Lexmark International Group,
Inc. (Class A)*............... 4,630,000
------------
20,773,750
------------
Consumer Services (2.5%)
420,000 AccuStaff Inc.*................ 15,067,500
------------
Drugs (2.8%)
280,000 Elan Corp. PLC (ADR)
(Ireland)*.................... 17,395,000
------------
Electronics -
Semiconductors/Components (0.8%)
56,000 Sanmina Corp.*................. 5,019,000
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------
<S> <C> <C>
Environmental Control (4.6%)
600,000 Newpark Resources, Inc.*....... $ 14,437,500
280,000 USA Waste Services, Inc.*...... 13,737,500
------------
28,175,000
------------
Financial - Miscellaneous (6.8%)
325,000 MBNA Corp. .................... 11,009,375
300,000 Providian Financial Corp. ..... 18,056,250
250,000 SunAmerica Inc. ............... 12,484,375
------------
41,550,000
------------
Healthcare Products & Services (2.2%)
35,000 Concentra Managed Care,
Inc.*......................... 1,080,625
155,800 Express Scripts, Inc.
(Class A)..................... 12,230,300
------------
13,310,925
------------
Hospital Management (5.2%)
460,000 Quorum Health Group, Inc.*..... 14,662,500
300,000 Universal Health Services, Inc.
(Class B)*.................... 17,268,750
------------
31,931,250
------------
Insurance (2.7%)
340,000 Conseco, Inc. ................. 16,872,500
------------
Machinery - Diversified (1.4%)
150,000 Deere & Company................ 8,765,625
------------
Media Group (2.5%)
160,000 Clear Channel Communications,
Inc.*......................... 15,080,000
------------
Multi-line Insurance (2.6%)
260,000 Travelers Group, Inc. ......... 15,908,750
------------
Oil - Exploration & Production (0.5%)
60,000 EVI, Inc.*..................... 3,195,000
------------
Oil Equipment & Services (5.9%)
70,000 Camco International, Inc. ..... 4,751,250
630,000 Global Industries Ltd.*........ 14,253,750
250,000 R&B Falcon Corp.*.............. 8,015,625
300,000 Varco International, Inc.*..... 9,225,000
------------
36,245,625
------------
Oil Well Equipment & Service (1.9%)
140,000 Schlumberger Ltd. ............. 11,602,500
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE> 4
DEAN WITTER CAPITAL GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS April 30, 1998 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------
<S> <C> <C>
Pharmaceuticals (6.0%)
175,000 ICN Pharmaceuticals, Inc. ..... $ 8,618,750
310,000 Medicis Pharmaceutical Corp.
(Class A)*.................... 13,213,750
110,000 Shire Pharmaceuticals Group PLC
(ADR)*........................ 2,461,250
10,000 Warner-Lambert Co. ............ 1,891,875
250,000 Watson Pharmaceuticals,
Inc.*......................... 10,750,000
------------
36,935,625
------------
Pollution Control (1.1%)
200,000 US Filter Corp.*............... 6,525,000
------------
Restaurants (2.4%)
310,000 Starbucks Corp.*............... 14,899,375
------------
Retail - Department Stores (4.1%)
350,000 Proffitt's, Inc.*.............. 13,912,500
225,000 Stage Stores, Inc.*............ 11,573,437
------------
25,485,937
------------
Retail - Drug Stores (0.9%)
175,000 Rite Aid Corp. ................ 5,621,875
------------
Retail - Food Chains (4.6%)
350,000 Kroger Co.*.................... 14,656,250
350,000 Safeway Inc.*.................. 13,387,500
------------
28,043,750
------------
Retail - General Merchandise (2.5%)
150,000 Consolidated Stores Corp.*..... 6,000,000
250,000 Dollar General Corp. .......... 9,468,750
------------
15,468,750
------------
Retail - Specialty (2.3%)
250,000 Finish Line, Inc. (Class A)*... 6,109,375
220,000 General Nutrition Companies,
Inc.*......................... 7,878,750
------------
13,988,125
------------
Retail Stores (2.9%)
715,000 Staples, Inc.*................. 17,651,563
------------
Telecommunications - Wireless (1.7%)
200,000 Airtouch Communications,
Inc.*......................... 10,625,000
------------
Telecommunications Equipment (2.7%)
235,000 Tellabs, Inc.*................. 16,640,938
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------
<S> <C> <C>
Utilities (3.1%)
350,000 AES Corp.*..................... $ 19,315,625
------------
TOTAL COMMON STOCKS
(Identified Cost
$449,948,062).................. 601,569,863
------------
PRINCIPAL
AMOUNT IN
THOUSANDS
-------
<S> <C> <C>
SHORT-TERM INVESTMENTS (2.4%)
U.S. GOVERNMENT AGENCY (a) (2.3%)
$14,000 Federal Home Loan Mortgage
Corp. 5.45% due 05/01/98
(Amortized Cost
$14,000,000).................. 14,000,000
------------
REPURCHASE AGREEMENT (0.1%)
583 The Bank of New York 5.50% due
05/01/98 (dated 04/30/98;
proceeds $583,080)(b)
(Identified Cost $582,991).... 582,991
------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $14,582,991).. 14,582,991
------------
TOTAL INVESTMENTS
(Identified Cost $464,531,053) (c).. 100.3% 616,152,854
LIABILITIES IN EXCESS OF
OTHER ASSETS....................... (0.3) (1,700,195)
----- ------------
NET ASSETS......................... 100.0% $614,452,659
====== ============
</TABLE>
- ---------------------
<TABLE>
<S> <C>
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 $483,294 U.S. Treasury Bond
10.75% due 02/15/03 valued at $594,650.
(c) The aggregate cost for federal income tax
purposes approximates identified cost. The
aggregate gross unrealized appreciation is
$153,131,774 and the aggregate gross unrealized
depreciation is $1,509,973, resulting in net
unrealized appreciation of $151,621,801.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE> 5
DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1998 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $464,531,053)............................. $616,152,854
Receivable for:
Investments sold........................................ 10,229,209
Shares of beneficial interest sold...................... 477,445
Dividends............................................... 73,500
Prepaid expenses and other assets........................... 107,282
------------
TOTAL ASSETS............................................ 627,040,290
------------
LIABILITIES:
Payable for:
Investments purchased................................... 11,387,698
Plan of distribution fee................................ 465,077
Investment management fee............................... 317,337
Shares of beneficial interest repurchased............... 314,092
Accrued expenses............................................ 103,427
------------
TOTAL LIABILITIES....................................... 12,587,631
------------
NET ASSETS.............................................. $614,452,659
============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................. $416,522,575
Net unrealized appreciation................................. 151,621,801
Accumulated net investment loss............................. (3,837,005)
Accumulated undistributed net realized gain................. 50,145,288
------------
NET ASSETS.............................................. $614,452,659
============
CLASS A SHARES:
Net Assets.................................................. $3,281,566
Shares Outstanding (unlimited authorized, $.01 par value)... 189,704
NET ASSET VALUE PER SHARE............................... $17.30
======
MAXIMUM OFFERING PRICE PER SHARE
(net asset value plus 5.54% of net asset value)........ $18.26
======
CLASS B SHARES:
Net Assets.................................................. $566,825,735
Shares Outstanding (unlimited authorized, $.01 par value)... 32,981,963
NET ASSET VALUE PER SHARE............................... $17.19
======
CLASS C SHARES:
Net Assets.................................................. $999,945
Shares Outstanding (unlimited authorized, $.01 par value)... 58,180
NET ASSET VALUE PER SHARE............................... $17.19
======
CLASS D SHARES:
Net Assets.................................................. $43,345,413
Shares Outstanding (unlimited authorized, $.01 par value)... 2,500,726
NET ASSET VALUE PER SHARE............................... $17.33
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE> 6
DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1998 (unaudited)
NET INVESTMENT INCOME:
INCOME
Dividends (net of $8,701 foreign withholding tax)........... $ 790,003
Interest.................................................... 318,606
-----------
TOTAL INCOME............................................ 1,108,609
-----------
EXPENSES
Plan of distribution fee (Class A shares)................... 2,521
Plan of distribution fee (Class B shares)................... 2,580,456
Plan of distribution fee (Class C shares)................... 3,586
Investment management fee................................... 1,780,605
Transfer agent fees and expenses............................ 386,112
Registration fees........................................... 47,193
Shareholder reports and notices............................. 31,579
Professional fees........................................... 29,231
Custodian fees.............................................. 24,188
Trustees' fees and expenses................................. 8,992
Other....................................................... 3,213
-----------
TOTAL EXPENSES.......................................... 4,897,676
-----------
NET INVESTMENT LOSS..................................... (3,789,067)
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 51,481,028
Net change in unrealized appreciation....................... 27,527,872
-----------
NET GAIN................................................ 79,008,900
-----------
NET INCREASE................................................ $75,219,833
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 7
DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
APRIL 30,1998 OCTOBER 31, 1997*
- ---------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss................................. $ (3,789,067) $ (6,458,646)
Net realized gain................................... 51,481,028 108,316,922
Net change in unrealized appreciation............... 27,527,872 37,095,380
------------ ------------
NET INCREASE.................................... 75,219,833 138,953,656
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED
GAIN:
Class A shares...................................... (325,709) --
Class B shares...................................... (95,121,214) (81,010,400)
Class C shares...................................... (135,038) --
Class D shares...................................... (6,701,777) --
------------ ------------
TOTAL DISTRIBUTIONS............................. (102,283,738) (81,010,400)
------------ ------------
Net increase (decrease) from transactions in shares
of beneficial interest............................. 80,304,755 (3,302,638)
------------ ------------
NET INCREASE.................................... 53,240,850 54,640,618
NET ASSETS:
Beginning of period................................. 561,211,809 506,571,191
------------ ------------
END OF PERIOD
(Including accumulated net investment losses of
$3,837,005 and $47,938, respectively)........... $614,452,659 $561,211,809
============ ============
</TABLE>
- ---------------------
* Class A, Class B and Class C shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 8
DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1998 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter Capital Growth Securities (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund's investment objective is
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, 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 Dean Witter InterCapital Inc. (the "Investment Manager") that sale
or bid prices are not reflective of a security's market value, portfolio
securities are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the 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.
8
<PAGE> 9
DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1998 (unaudited) continued
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the 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.
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
9
<PAGE> 10
DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1998 (unaudited) continued
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 Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The Plan
provides that the Fund will pay the Distributor a fee which is accrued daily and
paid monthly at the following annual rates: (i) Class A -- up to 0.25% of the
average daily net assets of Class A; (ii) Class B -- 1.0% of the lesser of: (a)
the average daily aggregate gross sales of the Class B shares since the
inception of the Fund (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net asset value of the Class B
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or waived; or (b) the average daily net assets of
Class B; and (iii) Class C -- up to 1.0% of the average daily net assets of
Class C. In the case of Class A shares, amounts paid under the Plan are paid to
the Distributor for services provided. In the case of Class B and Class C
shares, amounts paid under the Plan are paid to the Distributor for services
provided and the expenses borne by it and others in the distribution of the
shares of these Classes, including the payment of commissions for sales of these
Classes and incentive compensation to, and expenses of, the account executives
of Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and
Distributor, and others who engage in or support distribution of the shares or
who service shareholder accounts, including overhead and telephone expenses;
printing and distribution of prospectuses and reports used in connection with
the offering of these shares to other than current shareholders; and
preparation, printing and distribution of sales literature and advertising
materials. In addition, the Distributor may utilize fees paid pursuant to the
Plan, in the case of Class B shares, to compensate DWR 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 $20,581,208 at April 30, 1998.
10
<PAGE> 11
DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1998 (unaudited) continued
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 account executives may be reimbursed in the subsequent
calendar year. For the six months ended April 30, 1998, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.25% and
1.0%, respectively. The Distributor has informed the Fund that for the six
months ended April 30, 1998, it received contingent deferred sales charges from
certain redemptions of the Fund's Class B shares and Class C shares of $130,391
and $259, respectively and received $5,803 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 six months ended April 30, 1998 aggregated
$488,541,807 and $512,878,845, respectively.
For the six months ended April 30, 1998 the fund incurred $78,675 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the fund.
For the six months ended April 30, 1998, the Fund incurred brokerage commissions
of $93,540 with Morgan Stanley & Co., Inc., an affiliate of the Investment
Manager, for portfolio transactions executed on behalf of the Fund.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the six months ended April 30, 1998
included in Trustees fees and expenses in the Statement of Operations amounted
to $2,010. At April 30, 1998, the Fund had an accrued pension liability of
$48,490 which is included in accrued expenses in the Statement of Assets and
Liabilities.
11
<PAGE> 12
DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1998 (unaudited) continued
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
APRIL 30, 1998 OCTOBER 31, 1997*+
------------------------- ---------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold........................................................ 143,084 $ 2,385,785 119,616 $ 2,203,507
Reinvestment of distributions............................... 22,937 324,792 -- --
Redeemed.................................................... (66,135) (1,119,920) (29,798) (567,173)
---------- ------------ ----------- -------------
Net increase - Class A...................................... 99,886 1,590,657 89,818 1,636,334
---------- ------------ ----------- -------------
CLASS B SHARES
Sold........................................................ 2,450,790 40,879,014 6,428,644 107,706,868
Reinvestment of distributions............................... 6,416,435 90,535,898 5,359,165 77,011,200
Redeemed.................................................... (3,804,766) (60,790,617) (11,716,042) (189,751,824)
---------- ------------ ----------- -------------
Net increase (decrease) - Class B........................... 5,062,459 70,624,295 71,767 (5,033,756)
---------- ------------ ----------- -------------
CLASS C SHARES
Sold........................................................ 36,529 633,732 23,055 439,171
Reinvestment of distributions............................... 5,932 83,701 -- --
Redeemed.................................................... (5,100) (79,774) (2,236) (40,010)
---------- ------------ ----------- -------------
Net increase - Class C...................................... 37,361 637,659 20,819 399,161
---------- ------------ ----------- -------------
CLASS D SHARES
Sold........................................................ 369,953 5,731,672 133,845 2,512,173
Reinvestment of distributions............................... 472,467 6,699,585 -- --
Redeemed.................................................... (307,116) (4,979,113) (149,862) (2,816,550)
---------- ------------ ----------- -------------
Net increase (decrease) - Class D........................... 535,304 7,452,144 (16,017) (304,377)
---------- ------------ ----------- -------------
Net increase (decrease) in Fund............................. 5,735,010 $ 80,304,755 166,387 $ (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.
6. FEDERAL INCOME TAX STATUS
As of October 31, 1997, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales.
12
<PAGE> 13
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 SIX FOR THE YEAR ENDED OCTOBER 31
MONTHS ENDED ----------------------------------------------------
APRIL 30, 1998++ 1997*++ 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................. $18.71 $16.98 $14.40 $11.86 $13.35 $14.09
------ ------ ------ ------ ------ ------
Net investment loss.................................. (0.12) (0.21) (0.11) (0.06) (0.07) (0.08)
Net realized and unrealized gain (loss).............. 1.97 4.68 2.69 2.60 -- (0.50)
------ ------ ------ ------ ------ ------
Total from investment operations..................... 1.85 4.47 2.58 2.54 (0.07) (0.58)
------ ------ ------ ------ ------ ------
Less distributions from net realized gain............ (3.37) (2.74) -- -- (1.42) (0.16)
------ ------ ------ ------ ------ ------
Net asset value, end of period....................... $17.19 $18.71 $16.98 $14.40 $11.86 $13.35
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN+............................. 13.85 %(1) 31.21 % 17.92 % 21.42 % (0.79)% (4.25)%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................. 1.83 %(2) 1.84% 1.84 % 1.89 % 1.87 % 1.81 %
Net investment loss.................................. (1.43)%(2) (1.26)% (0.64)% (0.43)% (0.15)% (0.38)%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.............. $566,826 $522,276 $506,571 $483,870 $456,977 $683,165
Portfolio turnover rate.............................. 87 %(1) 123 % 72 % 33 % 13 % 25 %
Average commission rate paid......................... $0.0569 $0.0582 $0.0571 -- -- --
</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) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE> 14
DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JULY 28, 1997*
MONTHS ENDED THROUGH
APRIL 30, 1998++ OCTOBER 31, 1997++
- ---------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................ $18.75 $18.10
------ ------
Net investment loss......................................... (0.06) (0.04)
Net realized and unrealized gain............................ 1.98 0.69
------ ------
Total from investment operations............................ 1.92 0.65
------ ------
Less distributions from net realized gain................... (3.37) --
------ ------
Net asset value, end of period.............................. $17.30 $18.75
====== ======
TOTAL INVESTMENT RETURN+.................................... 14.26 %(1) 3.59 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.08 %(2) 1.12 %(2)
Net investment loss......................................... (0.69)%(2) (0.82)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $3,282 $1,684
Portfolio turnover rate..................................... 87 % 123 %(1)
Average commission rate paid................................ $0.0569 $0.0582
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................ $18.71 $18.10
------ ------
Net investment loss......................................... (0.11) (0.07)
Net realized and unrealized gain............................ 1.96 0.68
------ ------
Total from investment operations............................ 1.85 0.61
------ ------
Less distributions from net realized gain................... (3.37) --
------ ------
Net asset value, end of period.............................. $17.19 $18.71
====== ======
TOTAL INVESTMENT RETURN+.................................... 13.85 %(1) 3.37 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.84 %(2) 1.85 %(2)
Net investment loss......................................... (1.44)%(2) (1.54)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $1,000 $389
Portfolio turnover rate..................................... 87 %(1) 123 %(1)
Average commission rate paid................................ $0.0569 $0.0582
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE> 15
DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JULY 28, 1997*
MONTHS ENDED THROUGH
APRIL 30, 1998++ OCTOBER 31, 1997++
- ---------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................ $18.76 $18.10
------ ------
Net investment loss......................................... (0.04) (0.02)
Net realized and unrealized gain............................ 1.98 0.68
------ ------
Total from investment operations............................ 1.94 0.66
------ ------
Less distributions from net realized gain:.................. (3.37) --
------ ------
Net asset value, end of period.............................. $17.33 $18.76
====== ======
TOTAL INVESTMENT RETURN+.................................... 14.36 %(1) 3.65 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 0.83 %(2) 0.82 %(2)
Net investment loss......................................... (0.43)%(2) (0.50)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $43,345 $36,863
Portfolio turnover rate..................................... 87 %(1) 123 %(1)
Average commission rate paid................................ $0.0569 $0.0582
</TABLE>
- ---------------------
* The date shares were first issued. Shareholders who held shares of the Fund
prior to July 28, 1997 (the date the Fund converted to a multiple class
share structure) should refer to the Financial Highlights of Class B to
obtain the historical per share data and ratio information of their shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE> 16
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
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
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records of
the Fund without examination by the independent accountants and accordingly
they do not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of
the Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
CAPTIAL GROWTH
SECURITIES
[PHOTO]
Semiannual Report
April 30, 1998
