<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND Two World Trade Center, New York, New
York 10048
LETTER TO THE SHAREHOLDERS March 31, 1998
DEAR SHAREHOLDER:
The U.S. stock market continued its remarkable performance during the
twelve-month period ended March 31, 1998, gaining more than 47.97 percent as
measured by the Standard & Poor's 500 Composite Stock Price Index (S&P 500).
The U.S. market, in spite of (or perhaps aided by) the difficult economic
situation in Asia, traded at new highs during the first quarter of 1998 as
generally favorable inflation numbers, low interest rates and strong
corporate profit growth drove returns higher.
PERFORMANCE AND PORTFOLIO
For the fiscal year ended March 31, 1998, Morgan Stanley Dean Witter Growth
Fund Class B posted a total return of 42.61 percent versus 47.97 percent for
the S&P 500 and 44.42 percent for the Lipper Growth Funds Index. From their
inceptions on July 28, 1997, the Fund's Class A, C and D shares had total
returns of 13.84 percent, 13.33 percent and 14.09 percent, respectively. The
performance of the Fund's four share classes varies because of differing
charges and expenses.
Morgan Stanley Asset Management Inc. (MSAM), the Fund's new sub-adviser,
assumed its responsibilities on March 2, 1998. Since then, the Fund's new
management team has added several new holdings to the portfolio, including
Clear Channel Communications, the radio, TV and billboard company; United
Technologies, a multi-industrial undergoing a corporate restructuring; and
Continental Airlines, a major beneficiary of several positive industry trends
such as increased focus on hub dominance, the emergence of "code shares" by
which frequent flyer programs are exchangeable, a focus on cost reduction and
efforts toward balance sheet improvement. At quarter-end, 98.5 percent of the
Fund's assets were invested in equities diversified among 45 issues.
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
LETTER TO THE SHAREHOLDERS, continued
Since the Fund's new management team assumed responsibility for the portfolio
on March 2, they have been changing the make-up of the Fund's holdings to
more accurately reflect their investment philosophy. As a result, capital
gains were generated and on March 31, 1998, the Fund paid a long-term capital
gain distribution of $3.173792 per share to shareholders of record on March
24, 1998.
LOOKING AHEAD
MSAM's large-cap, growth-oriented style and its focus on companies believed
to offer the potential for delivering strong earnings growth has led them to
pursue three types of stocks: 1) familiar or "classic" long-term growth
stories; 2) less-familiar or well-known companies with a strong likelihood of
delivering positive earnings surprises; and 3) stocks driven down by
unfounded fears where the fundamentals remain intact. Over the coming weeks
and months the Fund's new sub-adviser will continue to decisively, but
prudently, transition the Fund to a portfolio of equities consistent with
this investment philosophy.
We appreciate your support of Morgan Stanley Dean Witter 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
2
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
FUND PERFORMANCE March 31, 1998
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
MORGAN STANLEY DEAN WITTER GROWTH FUND
GROWTH OF $10,000 CLASS B
DATE TOTAL S&P 500 LIPPER
MAY 29, 1992 $10,000 $10,000 $10,000
MARCH 31, 1993 $11,260 $11,140 $11,158
MARCH 31, 1994 $12,100 $11,303 $11,771
MARCH 31, 1995 $12,110 $13,061 $12,807
MARCH 31, 1996 $15,100 $17,250 $16,557
MARCH 31, 1997 $16,354 $20,670 $18,549
MARCH 31, 1998 $23,222 (3) $30,584 $26,788
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.
AVERAGE ANNUAL TOTAL RETURNS*
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B SHARES**
- ---------------------------------------------------
PERIOD ENDED 3/31/98
- -------------------------
<S> <C> <C>
1 year 42.61%(1) 37.61%(2)
5 years 15.68%(1) 15.45%(2)
Since Inception (5/29/92) 15.61%(1) 15.53%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES++
- --------------------------------------------------
PERIOD ENDED 3/31/98
- -------------------------
<S> <C> <C> <C>
SINCE INCEPTION (7/28/97) 13.33%(1) 12.47%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS A SHARES+
- --------------------------------------------------
PERIOD ENDED 3/31/98
- -------------------------
<S> <C> <C> <C>
Since Inception (7/28/97) 13.84%(1) 7.86%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS D SHARES++
- ---------------------------------------------------
PERIOD ENDED 3/31/98
- -------------------------
<S> <C>
Since Inception (7/28/97) 14.09%(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 after the deduction of a 1% CDSC, assuming a complete
redemption on March 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 Funds 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.
* For periods of less than one year, the fund quotes its total return on a
non-annualized basis.
** The maximum contingent deferred sales charge (CDSC) for Class B shares
is 5.00%. The CDSC declines to 0% after six years.
+ The maximum front-end sales charge for Class A shares is 5.25%.
++ The maximum contingent deferred sales charge for Class C shares is 1%
for shares redeemed within one year of purchase.
++ Class D shares have no sales charge.
3
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
RESULTS OF SPECIAL MEETING (unaudited)
* * *
On February 26, 1998, a special meeting of shareholders of the Fund was held
for the purpose of voting on three separate matters, the results of which are
as follows:
(1) APPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE FUND AND
DEAN WITTER INTERCAPITAL INC.:
<TABLE>
<CAPTION>
<S> <C>
For ....... 22,079,480
Against .. 499,941
Abstain .. 2,395,825
</TABLE>
(2) APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN DEAN WITTER INTERCAPITAL
INC. AND MORGAN STANLEY ASSET MANAGEMENT INC.:
<TABLE>
<CAPTION>
<S> <C>
For........ 21,934,517
Against .. 585,268
Abstain .. 2,455,461
</TABLE>
(3) ELECTION OF TRUSTEES:
<TABLE>
<CAPTION>
<S> <C>
Michael Bozic
For .................. 23,547,117
Withheld ............. 1,428,129
Charles A. Fiumefreddo
For .................. 23,598,435
Withheld ............. 1,376,811
Edwin J. Garn
For .................. 23,602,005
Withheld ............. 1,373,241
John R. Haire
For .................. 23,546,649
Withheld ............. 1,428,597
Wayne E. Hedien
For .................. 23,620,598
Withheld ............. 1,354,648
Dr. Manuel H. Johnson
For .................. 23,623,229
Withheld ............. 1,352,017
Michael E. Nugent
For .................. 23,590,391
Withheld ............. 1,384,855
Philip J. Purcell
For .................. 23,619,002
Withheld ............. 1,356,244
John L. Schroeder
For .................. 23,670,922
Withheld ............. 1,304,324
</TABLE>
4
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
PORTFOLIO OF INVESTMENTS March 31, 1998
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (98.5%)
Aerospace & Defense (2.7%)
14,500 Litton Industries, Inc.* ........................................ $ 836,469
211,000 Lockheed Martin Corp. ........................................... 23,737,500
--------------
24,573,969
--------------
Air Transport (12.1%)
64,300 AMR Corp.* ...................................................... 9,206,956
853,200 Continental Airlines, Inc. (Class B)* ........................... 50,178,825
251,600 Delta Air Lines, Inc. ........................................... 29,751,700
205,900 UAL Corp.* ...................................................... 19,135,831
--------------
108,273,312
--------------
Aircraft & Aerospace (9.0%)
489,400 Boeing Co. ...................................................... 25,509,975
598,600 United Technologies Corp. ....................................... 55,258,262
--------------
80,768,237
--------------
Auto Parts -Original
Equipment (1.1%)
130,300 Magna International Inc. (Class A)(Canada) ...................... 10,155,256
--------------
Automobiles (3.6%)
477,200 General Motors Corp. ............................................ 32,181,175
--------------
Banks -Money Center (3.4%)
211,400 Citicorp ........................................................ 30,018,800
--------------
Banks -Regional (1.6%)
42,500 Wells Fargo & Co. ............................................... 14,078,125
--------------
Beverages -Soft Drinks (2.2%)
458,600 PepsiCo, Inc. ................................................... 19,576,487
--------------
Broadcast Media (5.9%)
473,211 CBS Corp. ....................................................... 16,059,598
368,800 Clear Channel Communications, Inc.* ............................. 36,142,400
1,800 Pulitzer Publishing Co. ......................................... 143,775
--------------
52,345,773
--------------
Brokerage (2.8%)
304,300 Merrill Lynch & Co., Inc. ....................................... 25,256,900
--------------
Commercial & Consumer
Services (5.2%)
1,163,300 Cendant Corp.* .................................................. 46,095,762
--------------
Communications -Equipment & Software (2.8%)
51,000 3Com Corp.* ..................................................... $ 1,832,813
337,259 Cisco Systems, Inc.* ............................................ 23,060,084
--------------
24,892,897
--------------
Computer Services (1.8%)
301,000 Computer Sciences Corp. * ....................................... 16,555,000
--------------
Computer Software (6.0%)
104,300 Computer Associates International, Inc. ......................... 6,023,325
531,800 Microsoft Corp.* ................................................ 47,562,863
--------------
53,586,188
--------------
Electrical Equipment (0.9%)
101,500 Honeywell, Inc. ................................................. 8,392,781
--------------
Electronics -Semiconductors/
Components (2.5%)
289,900 Intel Corp. ..................................................... 22,612,200
--------------
Entertainment (0.1%)
37,700 Mirage Resorts, Inc. * .......................................... 916,581
--------------
Financial (3.9%)
396,500 Fannie Mae ...................................................... 25,078,625
92,300 Golden West Financial Corp. ..................................... 8,843,494
41,000 Waddell & Reed Financial, Inc. .................................. 1,066,000
--------------
34,988,119
--------------
Foods (0.4%)
86,500 Kellogg Co. ..................................................... 3,730,313
--------------
Healthcare -Diversified (6.2%)
196,100 Johnson & Johnson ............................................... 14,376,581
154,900 United Healthcare Corp. ......................................... 10,029,775
184,700 Warner-Lambert Co. ............................................. 31,456,719
--------------
55,863,075
--------------
Healthcare -Drugs (2.7%)
399,900 Lilly (Eli) & Co. ............................................... 23,844,038
--------------
Manufacturing -Diversified (1.1%)
175,400 Tyco International Ltd. ......................................... 9,581,225
--------------
Multi-Line Insurance (2.3%)
196,600 Loews Corp. ..................................................... 20,495,550
--------------
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
PORTFOLIO OF INVESTMENTS March 31, 1998, continued
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------------------------------------------------------
Office Equipment & Supplies (0.1%)
34,800 Knoll, Inc.* .................................................... $ 1,341,975
--------------
Publishing (2.3%)
283,000 Time Warner, Inc. ............................................... 20,376,000
--------------
Restaurants (0.9%)
191,000 Cracker Barrell Old Country Store, Inc. ......................... 7,640,000
--------------
Retail -Specialty (2.2%)
290,150 Home Depot, Inc. ................................................ 19,566,991
--------------
Soap & Household Products (3.7%)
389,200 Procter & Gamble Co. ............................................ 32,838,750
--------------
Telecommunications (2.2%)
151,600 Lucent Technologies, Inc. ....................................... 19,385,850
--------------
Telephones (4.4%)
108,300 AT&T Corp. ...................................................... 7,107,188
479,100 BellSouth Corp. ................................................. 32,369,194
--------------
39,476,382
--------------
Tobacco (2.4%)
504,300 Philip Morris Companies, Inc. ................................... 21,023,006
--------------
TOTAL COMMON STOCKS
(Identified Cost $609,100,331) .................................. 880,430,717
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENT (1.8%)
REPURCHASE AGREEMENT
$16,012 The Bank of New York 5.375% due 04/01/98 (dated 03/31/98;
proceeds $16,012,026)(a)
(Identified Cost $16,009,636) ................................. $16,009,636
-------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $625,109,967)(b) . 100.3% 896,440,353
LIABILITIES IN EXCESS OF
OTHER ASSETS....................... (0.3) (2,249,190)
-------- -------------
NET ASSETS......................... 100.0% $894,191,163
======== =============
</TABLE>
- ------------
* Non-income producing security.
(a) Collateralized by $16,303,275 U.S. Treasury Note 5.50%
due 01/31/03 valued at $16,329,828.
(b) The aggregate cost for federal income tax purposes
approximates identified cost. The aggregate gross
unrealized appreciation is $273,603,558 and the aggregate
gross unrealized depreciation is $2,273,172, resulting in
net unrealized appreciation of $271,330,386.
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $625,109,967) ............. $896,440,353
Receivable for:
Shares of beneficial interest sold ....... 1,097,242
Dividends ................................. 323,537
Interest .................................. 2,390
Prepaid expenses ............................ 232,566
--------------
TOTAL ASSETS .............................. 898,096,088
--------------
LIABILITIES:
Payable for:
Distributions to shareholders ............. 1,567,496
Shares of beneficial interest repurchased 1,165,390
Management fee ............................ 582,460
Plan of distribution fee .................. 482,281
Investment management fee ................. 24,287
Investment advisory fee ................... 16,191
Accrued expenses and other payables ........ 66,820
--------------
TOTAL LIABILITIES ......................... 3,904,925
--------------
NET ASSETS ................................ $894,191,163
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital ............................. $621,877,513
Net unrealized appreciation ................. 271,330,386
Accumulated undistributed net realized gain 983,264
--------------
NET ASSETS ................................ $894,191,163
==============
CLASS A SHARES:
Net Assets .................................. $646,859
Shares Outstanding (unlimited authorized,
$.01 par value) ............................ 42,627
NET ASSET VALUE PER SHARE ................. $15.17
==============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset
value) ................................... $16.01
==============
CLASS B SHARES:
Net Assets .................................. $893,110,581
Shares Outstanding (unlimited authorized,
$.01 par value) ............................ 59,062,079
NET ASSET VALUE PER SHARE ................. $15.12
======
CLASS C SHARES:
Net Assets .................................. $422,288
Shares Outstanding (unlimited authorized,
$.01 par value) ............................ 28,011
NET ASSET VALUE PER SHARE ................. $15.08
==============
CLASS D SHARES:
Net Assets .................................. $11,435
Shares Outstanding (unlimited authorized,
$.01 par value) ............................ 752
NET ASSET VALUE PER SHARE ................. $15.21
==============
</TABLE>
STATEMENT OF OPERATIONS
For the year ended March 31, 1998*
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $31,286 foreign withholding
tax) ........................................ $ 7,663,193
Interest ..................................... 628,537
-------------
TOTAL INCOME ............................... 8,291,730
-------------
EXPENSES
Plan of distribution fee (Class A shares) ... 128
Plan of distribution fee (Class B shares) ... 5,417,766
Plan of distribution fee (Class C shares) ... 1,284
Management fee ............................... 3,826,969
Investment advisory fee ...................... 2,551,313
Transfer agent fees and expenses ............. 777,289
Investment management fee .................... 582,460
Shareholder reports and notices .............. 126,576
Professional fees ............................ 70,337
Registration fees ............................ 56,900
Custodian fees ............................... 49,282
Trustees' fees and expenses .................. 42,967
Organizational expenses ...................... 6,681
Other ........................................ 52,800
-------------
TOTAL EXPENSES ............................. 13,562,752
-------------
NET INVESTMENT LOSS ........................ (5,271,022)
-------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain ............................ 237,138,133
Net change in unrealized appreciation ....... 58,221,456
-------------
NET GAIN ................................... 295,359,589
-------------
NET INCREASE ................................. $290,088,567
=============
</TABLE>
- ------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, 1998* MARCH 31, 1997
- ------------------------------------------------------ --------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss ................................... $ (5,271,022) $ (5,793,842)
Net realized gain ..................................... 237,138,133 90,999,031
Net change in unrealized appreciation ................. 58,221,456 (22,753,082)
--------------- --------------
NET INCREASE ........................................ 290,088,567 62,452,107
--------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAIN:
Class A shares......................................... (85,555) --
Class B shares ........................................ (285,764,089) (61,217,104)
Class C shares ........................................ (72,388) --
Class D shares ........................................ (4,322,077) --
--------------- --------------
TOTAL DISTRIBUTIONS ................................. (290,244,109) (61,217,104)
--------------- --------------
Net increase (decrease) from transactions in shares of
beneficial interest .................................. 166,818,675 (40,876,663)
--------------- --------------
NET INCREASE (DECREASE) ............................. 166,663,133 (39,641,660)
NET ASSETS:
Beginning of period ................................... 727,528,030 767,169,690
--------------- --------------
END OF PERIOD ....................................... $ 894,191,163 $727,528,030
=============== ==============
</TABLE>
- ------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1998
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Growth Fund (the "Fund"), formerly TCW/DW Core
Equity Trust, is registered under the Investment Company Act of 1940, as
amended, as a non-diversified, open-end management investment company. The
Fund's investment objective is long-term growth of capital. The Fund seeks to
achieve its objective by investing primarily in common stocks and securities
convertible into common stocks issued by domestic and foreign companies. The
Fund was organized as a Massachusetts business trust on January 31, 1992 and
commenced operations on May 29, 1992. On July 28, 1997, the Fund commenced
offering three additional classes of shares, with the then current shares
designated as Class B 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; (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 Asset Management Inc. (the "Sub-Adviser"), an affiliate of
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 (valuation
of debt securities for which market quotations are not readily available may
be based upon current market prices of securities which are comparable in
coupon, rating and maturity or an appropriate matrix utilizing similar
factors); and (4) short-term debt securities having a maturity date of more
than sixty days at time of purchase are valued on a mark-to-market basis
9
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1998, continued
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity
date of sixty days or less at the time of purchase are valued at amortized
cost.
B. ACCOUNTING FOR INVESTMENTS-- Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). Realized gains
and losses on security transactions are determined by the identified cost
method. Dividend income and other distributions are recorded on the
ex-dividend date. Discounts are accreted over the life of the respective
securities. Interest income is accrued daily.
C. MULTIPLE CLASS ALLOCATIONS-- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are
allocated to each class of shares based upon the relative net asset value on
the date such items are recognized. Distribution fees are charged directly to
the respective class.
D. FEDERAL INCOME TAX STATUS-- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS-- The Fund records dividends
and distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends
and distributions which exceed net investment income and net realized capital
gains for financial reporting purposes but not for tax purposes are reported
as dividends in excess of net investment income or distributions in excess of
net realized capital gains. To the extent they exceed net investment income
and net realized capital gains for tax purposes, they are reported as
distributions of paid-in-capital.
F. ORGANIZATIONAL EXPENSES-- The Investment Manager paid the organizational
expenses of approximately $202,000 which have been reimbursed for the full
amount thereof, exclusive of $2,000
which has been absorbed by the Investment Manager. Such expenses were fully
amortized as of
May 31, 1997.
10
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1998, continued
2. INVESTMENT MANAGEMENT / MANAGEMENT AGREEMENT
Pursuant to a Management Agreement in effect through March 1, 1998, the Fund
paid Dean Witter Services Company Inc. (the "Former Manager"), an affiliate
of the Investment Manager, a management fee, accrued daily and payable
monthly, by applying the following annual rates to the Fund's daily net
assets determined at the close of each business day: 0.51% to the portion of
daily net assets not exceeding $750 million; 0.48% to the portion of daily
net assets exceeding $750 million but not exceeding $1.5 billion; and 0.45%
to the portion of daily net assets exceeding $1.5 billion.
Under the terms of the Management Agreement, the Former Manager maintained
certain of the Fund's books and records and furnished, at its own expense,
office space, facilities, equipment, clerical, bookkeeping and certain legal
services and paid the salaries of all personnel, including officers of the
Fund who were employees of the Former Manager. The Former Manager also bore
the cost of telephone services, heat, light, power and other utilities
provided to the Fund.
Effective March 2, 1998, pursuant to an Investment Management Agreement, the
Investment Manager took on all the responsibilities of the Former Manager and
TCW Funds Management, Inc. (the "Former Adviser"), and receives a management
fee, accrued daily and payable monthly, by applying the following annual
rates to the Fund's daily net assets determined at the close of each business
day: 0.80% to the portion of daily net assets not exceeding $750 million;
0.75% to the portion of daily net assets exceeding $750 million but not
exceeding $1.5 billion; and 0.70% to the portion of daily net assets
exceeding $1.5 billion.
3. INVESTMENT ADVISORY / SUB-ADVISORY AGREEMENT
Pursuant to an Investment Advisory Agreement in effect through March 1, 1998,
the Fund paid the Former Adviser an advisory fee, accrued daily and payable
monthly, by applying the following annual rates to the Fund's daily net
assets determined at the close of each business day: 0.34% to the portion of
daily net assets not exceeding $750 million; 0.32% to the portion of daily
net assets exceeding $750 million but not exceeding $1.5 billion; and 0.30%
to the portion of daily net assets exceeding
$1.5 billion.
Under the terms of the Investment Advisory Agreement, the Fund retained the
Former Adviser to invest the Fund's assets, including placing orders for the
purchase and sale of portfolio securities. The Former Adviser obtained and
evaluated such information and gave advice relating to the economy,
securities markets, and specific securities as it considered necessary or
useful to continuously manage the assets of the Fund in a manner consistent
with its investment objective. In addition, the Former Adviser paid the
salaries of all personnel, including officers of the Fund, who were employees
of the Former Adviser.
11
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1998, continued
Effective March 2, 1998, the Sub-Adviser took on all the responsibilities of
the Former Adviser. As compensation for its services under a Sub-Advisory
Agreement between the Sub-Adviser and the Investment Manager, the Investment
Manager pays the Sub-Adviser 40% of its monthly compensation.
4. 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
12
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1998, continued
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 $18,878,312 at March 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 account executives may be reimbursed in
the subsequent calendar year. For the period ended March 31, 1998, the
distribution fee was accrued for Class A shares and Class C shares at the
annual rate of 0.23% and 1.0%, respectively.
The Distributor has informed the Fund that for the period ended March 31,
1998, it received contingent deferred sales charges from certain redemptions
of the Fund's Class B shares and Class C shares of $1,270,906 and $318,
respectively and received $4,630 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.
5. 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 March 31, 1998
aggregated $611,012,119 and $751,615,090, respectively.
For the year ended March 31, 1998, the Fund incurred $3,195 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the
Fund.
For the period May 31, 1997 through March 31, 1998, the Fund incurred
brokerage commissions of $4,350 with Morgan Stanley & Co. Inc., an affiliate
of the Investment Manager since May 31, 1997, for portfolio transactions
executed on behalf of the Fund.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager,
is the Fund's transfer agent.
13
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1998, continued
6. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, 1998 MARCH 31, 1997
------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
CLASS A SHARES*
Sold 37,956 $ 633,209 -- --
Reinvestment of distributions 5,054 77,016 -- --
Redeemed (383 ) (6,771) -- --
-------------- --------------- ------------- ---------------
Net increase -Class A 42,627 703,454 -- --
-------------- --------------- ------------- ---------------
CLASS B SHARES
Sold 4,545,691 77,314,601 3,329,142 $ 52,606,423
Reinvestment of distributions 16,919,027 264,591,495 3,693,581 57,173,675
Redeemed (10,620,556) (180,817,478) (9,631,148) (150,656,761)
-------------- --------------- ------------- ---------------
Net increase (decrease) -Class B 10,844,162 161,088,618 (2,608,425) (40,876,663)
-------------- --------------- ------------- ---------------
CLASS C SHARES*
Sold 32,145 541,605 -- --
Reinvestment of distributions 4,683 71,691 -- --
Redeemed (8,817) (152,695) -- --
-------------- --------------- ------------- ---------------
Net increase -Class C 28,011 460,601 -- --
-------------- --------------- ------------- ---------------
CLASS D SHARES*
Sold 1,361,485 25,004,121 -- --
Reinvestment of distributions 182 2,817 -- --
Redeemed (1,360,915) (20,440,936) -- --
-------------- --------------- ------------- ---------------
Net increase -Class D 752 4,566,002 -- --
-------------- --------------- ------------- ---------------
Net increase (decrease) in Fund 10,915,552 $ 166,818,675 (2,608,425) $ (40,876,663)
============== =============== ============= ===============
</TABLE>
- ------------
* For the period July 28, 1997 (issue date) through March 31, 1998.
7. FEDERAL INCOME TAX STATUS
As of March 31, 1998, the Fund had temporary book/tax differences
attributable to capital loss deferrals on wash sales and permanent book/tax
differences attributable to a net operating loss. To reflect
reclassifications arising from the permanent differences, accumulated
undistributed net realized gain was charged and net investment loss was
credited $5,271,022.
14
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31, FOR THE PERIOD
MAY 29, 1992*
------------------------------------------------------------------- THROUGH
1998**++ 1997 1996 1995 1994 MARCH 31, 1993
- ------------------------------------------ ------------ ------------ ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ...... $15.09 $15.09 $12.11 $12.10 $11.26 $10.00
------------ ------------ ------------ ------------ ------------ --------------
Net investment loss ....................... (0.11) (0.12) (0.11) (0.06) (0.06) (0.01)
Net realized and unrealized gain .......... 6.07 1.39 3.09 0.07 0.90 1.27
------------ ------------ ------------ ------------ ------------ --------------
Total from investment operations .......... 5.96 1.27 2.98 0.01 0.84 1.26
------------ ------------ ------------ ------------ ------------ --------------
Less distributions from net realized gain (5.93) (1.27) -- -- -- --
------------ ------------ ------------ ------------ ------------ --------------
Net asset value, end of period ............ $15.12 $15.09 $15.09 $12.11 $12.10 $11.26
============ ============ ============ ============ ============ ==============
TOTAL INVESTMENT RETURN+................... 42.61 % 8.31 % 24.69 % 0.08 % 7.46 % 12.60 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................... 1.64 % 1.73 % 1.82 % 1.96 % 1.93 % 2.07 %(2)
Net investment loss ....................... (0.64)% (0.75)% (0.72)% (0.48)% (0.59)% (0.14)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .. $893,111 $727,528 $767,170 $697,350 $707,069 $486,829
Portfolio turnover rate ................... 77 % 45 % 48 % 38 % 35 % 26 %(1)
Average commission rate paid .............. $0.0596 $0.0590 $0.0595 -- -- --
</TABLE>
- ------------
* Commencement of operations.
** Prior to July 28, 1997, the Fund issued one class of shares. All shares
of the Fund held prior to that date have been designated Class B
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
15
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
MARCH 31,
1998++
- ------------------------------------------ ---------------
<S> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ..... $ 17.58
---------------
Net investment loss ....................... (0.04)
Net realized and unrealized gain .......... 2.28
---------------
Total from investment operations .......... 2.24
---------------
Less distributions from net realized gain (4.65)
---------------
Net asset value, end of period ............ $ 15.17
===============
TOTAL INVESTMENT RETURN+ .................. 13.84 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .................................. 1.33 %(2)
Net investment loss ....................... (0.34)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .. $ 647
Portfolio turnover rate ................... 77 %
Average commission rate paid .............. $0.0596
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ..... $ 17.58
---------------
Net investment loss ....................... (0.11)
Net realized and unrealized gain .......... 2.26
---------------
Total from investment operations .......... 2.15
---------------
Less distributions from net realized gain (4.65)
---------------
Net asset value, end of period ............ $ 15.08
===============
TOTAL INVESTMENT RETURN+ .................. 13.33 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .................................. 2.02 %(2)
Net investment loss ....................... (1.00)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .. $ 422
Portfolio turnover rate ................... 77 %
Average commission rate paid .............. $0.0596
</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
16
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
MARCH 31,
1998++
- ------------------------------------------ ---------------
<S> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ..... $ 17.58
---------------
Net investment loss ....................... (0.08)
Net realized and unrealized gain .......... 2.36
---------------
Total from investment operations .......... 2.28
---------------
Less distributions from net realized gain (4.65)
---------------
Net asset value, end of period............. $ 15.21
===============
TOTAL INVESTMENT RETURN+ .................. 14.09 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................... 1.43 %(2)
Net investment loss ....................... (0.78)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .. $ 11
Portfolio turnover rate ................... 77 %
Average commission rate paid .............. $0.0596
</TABLE>
- ------------
* The date shares were first issued.
++ 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
17
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER GROWTH FUND
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Morgan Stanley
Dean Witter Growth Fund (the "Fund"), formerly TCW/DW Core Equity Trust, at
March 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 March
31, 1998 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
May 8, 1998
18
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
FEDERAL TAX NOTICE (unaudited)
1998 FEDERAL TAX NOTICE
For the year ended March 31, 1998, the Fund paid to shareholders the
following per share amounts from long-term capital gains. These distributions
are taxable as 28% rate gains or 20% rate gains, as indicated below:
<TABLE>
<CAPTION>
PER SHARE
-----------------------------------------
CLASS A CLASS B CLASS C CLASS D
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Portion of long-term capital gains taxable as:
28% rate gain ................................ $0.36 $1.64 $0.36 $0.36
20% rate gain ................................ 4.21 4.21 4.21 4.21
--------- --------- --------- ---------
Total long-term capital gains ................. $4.57 $5.85 $4.57 $4.57
========= ========= ========= =========
</TABLE>
19
<PAGE>
TRUSTEES
Micheal Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Micheal 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
Tomas 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
SUB-ADVISER
Morgan Stanley Asset Managment Inc.
This report is submitted for the general infornation of shareholders of the
Fund. For more detailed information about the Fund, its officer 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 acommpanied by an effective prospectus.
ANNUAL REPORT
MARCH 31, 1998
