<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
LETTER TO THE SHAREHOLDERS March 31, 1999
Two World Trade Center, New York, New York 10048
DEAR SHAREHOLDER:
During the twelve-month period ended March 31, 1999, the U.S. equity market
experienced a significant degree of turbulence. The stock market initially rose
20 percent in an environment of declining inflation and interest rates, then
fell nearly 20 percent as investors began to question whether the United States
would be drawn into recession. Subsequently, the market rebounded more than 25
percent after short-term rates were cut and the economy strengthened. In the
first quarter of 1999 the market continued to be buoyed by an unprecedented mix
of low interest rates, robust earnings and a roaring U.S. economy.
PERFORMANCE
For the twelve-month period ended March 31, 1999, Morgan Stanley Dean Witter
Growth Fund's Class B shares produced a total return of 16.32 percent, compared
to 18.47 percent for the S&P 500 Composite Stock Price Index and 17.52 percent
for the Lipper Growth Funds Index. For the same period, the Fund's Class A, C
and D shares posted total returns of 16.87 percent, 15.90 percent and 17.02
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 the Fund compared to the S&P 500 and Lipper indexes.
According to Morgan Stanley Dean Witter Investment Management Inc., the Fund's
subadvisor, the first half of the fiscal year was a difficult period for the
Fund as market volatility and the late-summer correction severely affected the
Fund's portfolio of growth stocks. However, as traditional growth stocks
rallied strongly during the fourth quarter of 1998 and into 1999, there was a
marked improvement in the Fund's performance. The Fund's technology, consumer
staples and capital goods holdings positively affected its performance during
the period, while its transportation and consumer-cyclical holdings hindered
its performance and ultimately led to the Fund's underperforming its benchmark
indexes.
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
LETTER TO THE SHAREHOLDERS March 31, 1999, continued
Cisco, Microsoft, United Technologies and America Online were the Fund's
strongest-performing stocks, while Cendant and Continental Airlines were among
its weakest.
PORTFOLIO STRATEGY
The Fund seeks long-term growth of capital by investing in growth-oriented
equity securities of medium- and large-capitalization corporations. On March
31, the portfolio was well diversified among 75 different securities. The
portfolio contains a mix of classic growth stocks such as Microsoft, General
Electric, Cisco Systems, Merck and Intel, as well as less traditional growth
names like United Technologies, Tyco International and Clear Channel
Communications. At March 31, the Fund's largest position was in Cisco Systems,
which represented 6.0 percent of the portfolio. The Fund's ten largest holdings
together accounted for 41.7 percent of its assets.
Although the focus of the Fund's investment strategy is company-oriented
fundamental research, the sub-advisor's convictions at the security level may
result in its being over- or underweighted in particular industry sectors. As a
result of its holdings in Tyco International, United Technologies and General
Electric, the Fund was overweighted in capital goods.
Tyco, one of the Fund's largest holdings, completed its acquisition of AMP
following the close of the Fund's fiscal year. This acquisition should be a
materially significant one that may provide a platform from which to make
additional acquisitions. The integration of U.S. Surgical into Tyco is ahead of
schedule. The Fund's sub-advisor believes that a combination of organic growth
and strategic actions (further acquisitions as well as selective divestitures)
should lead to significant earnings growth for the company.
United Technologies was one of the strongest contributors to Fund performance
over the past year. Its management has now demonstrated an ability to
consistently increase quarterly and annual earnings per share at 15 percent or
more. Its earnings quality is high, cash flow strong and acquisitions now a
focal point. With its acquisition of Sundstrand, the company has demonstrated
an ability to make acquisitions that are both strategically appropriate and
financially sound. Even with the stock's strong performance in 1998 and to date
in 1999, the Fund's sub-advisor continues to believe that the stock remains
attractive, selling at about 19 times year-2000 estimated earnings per share.
During the fiscal year, the Fund eliminated its Continental Airlines and
Cendant holdings. Recently, the Fund also trimmed its Loews position. While the
Loews is repurchasing stock, its CNA Insurance and Diamond Offshore holdings
have been experiencing downward earnings revisions, and negative news on the
tobacco litigation front has impaired the tobacco division.
2
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
LETTER TO THE SHAREHOLDERS March 31, 1999, continued
LOOKING AHEAD
Morgan Stanley Dean Witter Investment Management Inc. continues to have
confidence in the strength of large-capitalization growth stocks for the
balance of 1999. Notwithstanding higher oil prices, inflation should remain in
check. While GDP growth has been somewhat stronger than expected, concerns
about emerging markets, parts of Europe and certain cyclical components of the
U.S. economy should keep interest rates within a comfortable range.
On May 1, 1999, Mitchell M. Merin was named President of the Morgan Stanley
Dean Witter Funds. Mr. Merin is also the President and Chief Operating Officer
of Asset Management of Morgan Stanley Dean Witter & Co., and President, Chief
Executive Officer and Director of Morgan Stanley Dean Witter Advisors Inc., the
Fund's Investment Manager. He also serves as Chairman, Chief Executive Officer
and Director of the Fund's distributor and transfer agent.
We appreciate your ongoing 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. Fiemefreddo /s/ Mitchell M. Merin
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
3
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
FUND PERFORMANCE March 31, 1999
GROWTH OF $10,000 - CLASS B SHARES
($ in Thousands)
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
DATE TOTAL S&P 500 LIPPER
<S> <C> <C> <C>
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 $18,551
March 31, 1998 $23,322 $30,584 $26,792
March 31, 1999 $27,130 (3) $36,231 $31,486
-FUND -S&P 500 (4) -LIPPER (5)
</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.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B SHARES**
- ---------------------------------------------------------------
PERIOD ENDED 3/31/99
- ---------------------------
<S> <C> <C>
1 Year 16.32%(1) 11.32%(2)
5 Years 17.53%(1) 17.31%(2)
Since Inception (5/29/92) 15.72%(1) 15.72%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES++
- -------------------------------------------------------------
PERIOD ENDED 3/31/99
- ---------------------------
<S> <C> <C>
1 Year 15.90%(1) 14.90%(2)
Since Inception (7/28/97) 17.70%(1) 17.70%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS A SHARES+
- -------------------------------------------------------------
PERIOD ENDED 3/31/99
- ---------------------------
<S> <C> <C>
1 Year 16.87%(1) 10.73%(2)
Since Inception (7/28/97) 18.61%(1) 14.85%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS D SHARES#
- -------------------------------------------------------------
PERIOD ENDED 3/31/99
- ---------------------------
<S> <C>
1 Year 17.02%(1)
Since Inception (7/28/97) 18.86%(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 March 31, 1999.
(4) The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based index, the
performance of which is based on the average performance of 500 widely
held common stocks. The 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.
** 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 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.
4
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
PORTFOLIO OF INVESTMENTS March 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- ------------------
<S> <C> <C>
COMMON STOCKS (97.5%)
Advertising (0.8%)
87,100 Omnicom Group, Inc. .................. $6,962,556
------------
Aerospace (1.6%)
334,900 Gulfstream Aerospace Corp.* .......... 14,526,287
------------
Beverages -- Non-Alcoholic (0.9%)
264,400 Coca-Cola Enterprises Inc. ........... 7,998,100
------------
Books/Magazines (0.0%)
11,100 Ziff-Davis Inc.* ..................... 399,600
------------
Broadcasting (4.7%)
191,011 CBS Corp. ............................ 7,819,513
120,600 Chancellor Media Corp.* .............. 5,675,737
442,700 Clear Channel Communications,
Inc.* ................................ 29,688,569
------------
43,183,819
------------
Building Materials/DIY Chains (3.7%)
545,400 Home Depot, Inc. ..................... 33,951,150
------------
Cable Television (2.3%)
172,300 AT&T Corp. -- Liberty Media
Group (Class A)* ..................... 9,067,287
191,400 Comcast Corp. (Class A Special) ...... 12,046,237
------------
21,113,524
------------
Computer Communications (6.0%)
505,888 Cisco Systems, Inc.* ................. 55,426,354
------------
Computer Hardware (0.3%)
19,200 Sun Microsystems, Inc.* .............. 2,400,000
------------
Computers Software (5.8%)
521,600 Microsoft Corp.* ..................... 46,715,800
224,800 Novell, Inc.* ........................ 5,662,150
58,300 Oracle Corp.* ........................ 1,537,662
------------
53,915,612
------------
Consumer/Business Services (1.9%)
6,377 Berkshire Hathaway, Inc.
(Class B)* ........................... 14,992,327
107,500 Nielsen Media Research, Inc. ......... 2,653,906
------------
17,646,233
------------
Discount Chains (3.3%)
154,400 Costco Companies, Inc.* .............. 14,137,250
172,500 Wal-Mart Stores, Inc. ................ 15,902,344
------------
30,039,594
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- ------------------
<S> <C> <C>
Diversified Financial Services (2.8%)
94,800 American Express Co. ................. $11,139,000
151,500 Citigroup Inc. ....................... 9,677,062
72,800 Fannie Mae ........................... 5,041,400
------------
25,857,462
------------
Diversified Manufacturing (11.2%)
748,200 Tyco International Ltd. .............. 53,683,350
366,200 United Technologies Corp. ............ 49,597,212
------------
103,280,562
------------
Drugstore Chains (0.4%)
125,000 Walgreen Co. ......................... 3,531,250
------------
Electric Utilities (0.3%)
43,800 Montana Power Co. .................... 3,222,037
------------
Food Chains (0.6%)
113,800 Safeway Inc.* ........................ 5,839,362
------------
Healthcare (0.3%)
42,400 Amgen Inc.* .......................... 3,174,700
------------
Internet Services (2.3%)
128,000 America Online, Inc.* ................ 18,688,000
15,500 At Home Corp. (Series A)* ............ 2,438,344
7,750 OneMain.com, Inc.* ................... 280,937
------------
21,407,281
------------
Investment Bankers/Brokers
Services (2.4%)
245,800 Merrill Lynch & Co., Inc. ............ 21,737,938
------------
Life Insurance (0.5%)
135,150 Reinsurance Group of America,
Inc. ................................. 4,578,206
------------
Major Banks (0.9%)
239,100 Bank of New York Co., Inc. ........... 8,592,656
------------
Major Pharmaceuticals (10.8%)
41,100 American Home Products Corp. ......... 2,681,775
88,300 Bristol-Myers Squibb Co. ............. 5,678,794
196,100 Johnson & Johnson .................... 18,372,119
299,100 Lilly (Eli) & Co. .................... 25,386,113
192,400 Merck & Co., Inc. .................... 15,428,075
54,200 Pfizer, Inc. ......................... 7,520,250
38,800 Pharmacia & Upjohn, Inc. ............. 2,420,150
64,400 Schering-Plough Corp. ................ 3,562,125
285,300 Warner-Lambert Co. ................... 18,883,294
------------
99,932,695
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
PORTFOLIO OF INVESTMENTS March 31, 1999, continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- ------------------
<S> <C> <C>
Major U.S. Telecommunications (5.5%)
279,473 AT&T Corp. ........................... $22,305,439
319,600 MCI WorldCom, Inc.* .................. 28,284,600
------------
50,590,039
------------
Media Conglomerates (3.2%)
368,900 Time Warner, Inc. .................... 26,214,956
103,500 Walt Disney Co. ...................... 3,221,438
------------
29,436,394
------------
Medical Specialties (1.2%)
168,200 Bausch & Lomb, Inc. .................. 10,933,000
------------
Military/Gov't/Technical (1.4%)
161,900 General Motors Corp. (Class H)* ...... 8,165,831
360,100 Loral Space & Communications
Ltd.* ................................ 5,198,944
------------
13,364,775
------------
Motor Vehicles (0.1%)
12,400 Harley-Davidson, Inc. ................ 713,000
------------
Multi-Sector Companies (7.0%)
307,800 General Electric Co. ................. 34,050,375
197,900 Loews Corp. .......................... 14,768,288
204,100 Textron, Inc. ........................ 15,792,238
------------
64,610,901
------------
Office Equipment/Supplies (2.3%)
328,500 Pitney Bowes, Inc. ................... 20,941,875
------------
Other Consumer Services (0.0%)
6,700 Autobytel.com, Inc.* ................. 279,725
------------
Package Goods/Cosmetics (2.3%)
8,700 Clorox Co. ........................... 1,019,531
204,800 Procter & Gamble Co. ................. 20,057,600
------------
21,077,131
------------
Retail -- Specialty (3.4%)
24,000 Abercrombie & Fitch Co.
(Class A)* ........................... 2,208,000
79,700 Best Buy Co., Inc.* .................. 4,144,400
223,250 Gap, Inc. (The) ...................... 15,027,516
78,600 Intimate Brands, Inc. ................ 3,782,625
25,800 Office Depot, Inc.* .................. 949,763
160,650 Staples, Inc.* ....................... 5,281,369
------------
31,393,673
------------
Semiconductors (4.8%)
130,000 Applied Materials, Inc.* ............. 8,019,375
227,700 Intel Corp. .......................... 27,067,838
41,500 Texas Instruments, Inc. .............. 4,118,875
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- ------------------
<S> <C> <C>
46,200 Uniphase Corp.* ...................... $5,301,450
------------
44,507,538
------------
Specialty Foods/Candy (0.4%)
103,000 Keebler Foods Co.* ................... 3,759,500
------------
Telecommunications Equipment (1.0%)
14,500 American Tower Corp. (Class A)* 355,250
11,500 EchoStar Communications Corp.
(Class A)* ........................... 935,813
27,600 L-3 Communications Holdings,
Inc.* ................................ 1,276,500
58,000 Lucent Technologies Inc. ............. 6,249,500
------------
8,817,063
------------
Tobacco (1.1%)
295,100 Philip Morris Companies, Inc. ........ 10,383,831
------------
Wholesale Distributor (0.0%)
2,200 Valley Media, Inc.* .................. 49,775
------------
TOTAL COMMON STOCKS
(Identified Cost $561,490,977) ....... 899,575,198
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- -----------
<S> <C> <C>
SHORT-TERM INVESTMENT (2.6%)
REPURCHASE AGREEMENT
$23,564 The Bank of New York 4.875%
due 04/01/99 (dated 03/31/99;
proceeds $23,566,866) (a)
(Identified Cost $23,563,676) .......... 23,563,676
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $585,054,653) (b) ..... 100.1 % 923,138,874
LIABILITIES IN EXCESS OF OTHER
ASSETS ................................. (0.1) (488,399)
---- -----------
NET ASSETS ............................. 100.0 % $922,650,475
======= ============
</TABLE>
- --------------------------------
* Non-income producing security.
(a) Collateralized by $23,583,461 U.S. Treasury Note 5.375% due
06/30/03 valued at $24,034,949 and $488 U.S. Treasury Note 4.75%
due 11/15/08 valued at $478.
(b) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$341,872,121 and the aggregate gross unrealized depreciation is
$3,787,900, resulting in net unrealized appreciation of
$338,084,221.
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $585,054,653) .................................. $923,138,874
Receivable for:
Investments sold ............................................... 10,698,624
Dividends ...................................................... 639,510
Shares of beneficial interest sold ............................. 552,045
Prepaid expenses and other assets ................................. 100,781
-------------
TOTAL ASSETS ................................................... 935,129,834
-------------
LIABILITIES:
Payable for:
Investments purchased .......................................... 9,629,665
Shares of beneficial interest repurchased ...................... 1,622,621
Investment management fee ...................................... 652,033
Plan of distribution fee ....................................... 505,543
Accrued expenses and other payables ............................... 69,497
-------------
TOTAL LIABILITIES .............................................. 12,479,359
-------------
NET ASSETS ..................................................... $922,650,475
=============
COMPOSITION OF NET ASSETS:
Paid-in-capital ................................................... $536,181,165
Net unrealized appreciation ....................................... 338,084,221
Accumulated undistributed net realized gain ....................... 48,385,089
-------------
NET ASSETS ..................................................... $922,650,475
=============
CLASS A SHARES:
Net Assets ........................................................ $4,986,965
Shares Outstanding (unlimited authorized, $.01 par value) ......... 287,667
NET ASSET VALUE PER SHARE ...................................... $17.34
======
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) ............... $18.30
======
CLASS B SHARES:
Net Assets ........................................................ $913,059,814
Shares Outstanding (unlimited authorized, $.01 par value) ......... 53,087,158
NET ASSET VALUE PER SHARE ...................................... $17.20
======
CLASS C SHARES:
Net Assets ........................................................ $3,040,635
Shares Outstanding (unlimited authorized, $.01 par value) ......... 177,942
NET ASSET VALUE PER SHARE ...................................... $17.09
======
CLASS D SHARES:
Net Assets ........................................................ $1,563,061
Shares Outstanding (unlimited authorized, $.01 par value) ......... 89,760
NET ASSET VALUE PER SHARE ...................................... $17.41
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the year ended March 31, 1999
<TABLE>
<S> <C>
NET INVESTMENT LOSS:
INCOME
Dividends ......................................... $ 6,793,206
Interest .......................................... 787,142
------------
TOTAL INCOME ................................... 7,580,348
------------
EXPENSES
Investment management fee ......................... 6,701,295
Plan of distribution fee (Class A shares) ......... 5,426
Plan of distribution fee (Class B shares) ......... 5,542,233
Plan of distribution fee (Class C shares) ......... 17,578
Transfer agent fees and expenses .................. 840,143
Shareholder reports and notices ................... 158,979
Professional fees ................................. 90,312
Registration fees ................................. 68,921
Custodian fees .................................... 53,688
Trustees' fees and expenses ....................... 4,991
Other ............................................. 18,544
------------
TOTAL EXPENSES ................................. 13,502,110
------------
NET INVESTMENT LOSS ............................ (5,921,762)
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain ................................. 65,327,474
Net change in unrealized appreciation ............. 66,753,835
------------
NET GAIN ....................................... 132,081,309
------------
NET INCREASE ...................................... $126,159,547
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<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, 1999 MARCH 31, 1998*
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss .................................. $ (5,921,762) $ (5,271,022)
Net realized gain .................................... 65,327,474 237,138,133
Net change in unrealized appreciation ................ 66,753,835 58,221,456
------------ ------------
NET INCREASE ....................................... 126,159,547 290,088,567
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
NET REALIZED GAIN:
Class A shares ....................................... (57,063) (85,555)
Class B shares ....................................... (17,822,626) (285,764,089)
Class C shares ....................................... (45,433) (72,388)
Class D shares ....................................... (527) (4,322,077)
------------ ------------
TOTAL DISTRIBUTIONS ................................ (17,925,649) (290,244,109)
------------ ------------
Net increase (decrease) from transactions in shares of
beneficial interest ................................ (79,774,586) 166,818,675
------------ ------------
NET INCREASE ....................................... 28,459,312 166,663,133
NET ASSETS:
Beginning of period .................................. 894,191,163 727,528,030
------------ ------------
END OF PERIOD ...................................... $922,650,475 $894,191,163
============ ============
</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 GROWTH FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1999
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Growth Fund (the "Fund") 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 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;
(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 Investment Management Inc. (the "Sub-Advisor") an affiliate of Morgan
Stanley Dean Witter Advisors Inc. (the "Investment Manager"), formerly Dean
Witter InterCapital Inc., that sale or bid prices are not reflective of a
security's market value, portfolio securities are valued at their fair value as
determined in good faith under procedures established by and under the general
supervision of the Trustees (valuation 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 until sixty days prior to maturity and
thereafter
10
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1999, continued
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.
2. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
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 as of the close
of each business day: 0.80% of the portion of daily net assets not exceeding
$750 million; 0.75% of the portion of daily net assets exceeding $750 million
but not exceeding $1.5 billion; and 0.70% of the portion of daily net assets in
excess of $1.5 billion.
11
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1999, continued
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.
Under a Sub-Advisory Agreement between the Sub-Advisor and the Investment
Manager, the Sub-Advisor provides the Fund with investment advice and portfolio
management relating to the Fund's investments in securities, subject to the
overall supervision of the Investment Manager. As compensation for its services
provided pursuant to the Sub-Advisory Agreement, the Investment Manager pays
the Sub-Advisor compensation equal to 40% of its monthly compensation.
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 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
12
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1999, continued
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 $17,647,975 at March 31, 1999.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended March 31, 1999, 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 March 31, 1999,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class B shares and Class C shares of $654,998 and $1,212, respectively
and received $44,487 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 March 31, 1999 aggregated
$938,242,024 and $1,051,178,852, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager
and Distributor, is the Fund's transfer agent. At March 31, 1999, the Fund had
transfer agent fees and expenses payable of approximately $4,000.
13
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1999, continued
5. 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, 1999 MARCH 31, 1998*
---------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ....................................... 331,535 $ 5,195,083 37,956 $ 633,209
Reinvestment of distributions .............. 3,781 56,150 5,054 77,016
Redeemed ................................... (90,276) (1,415,690) (383) (6,771)
------- -------------- ------ --------------
Net increase -- Class A .................... 245,040 3,835,543 42,627 703,454
------- -------------- ------ --------------
CLASS B SHARES
Sold ....................................... 5,248,657 79,679,953 4,545,691 77,314,601
Reinvestment of distributions .............. 1,123,085 16,565,513 16,919,027 264,591,495
Redeemed ................................... (12,346,663) (183,588,963) (10,620,556) (180,817,478)
----------- -------------- ----------- --------------
Net increase (decrease) -- Class B ......... (5,974,921) (87,343,497) 10,844,162 161,088,618
----------- -------------- ----------- --------------
CLASS C SHARES
Sold ....................................... 173,035 2,597,416 32,145 541,605
Reinvestment of distributions .............. 2,985 43,796 4,683 71,691
Redeemed ................................... (26,089) (376,564) (8,817) (152,695)
----------- -------------- ----------- --------------
Net increase -- Class C .................... 149,931 2,264,648 28,011 460,601
----------- -------------- ----------- --------------
CLASS D SHARES
Sold ....................................... 88,973 1,468,193 1,361,485 25,004,121
Reinvestment of distributions .............. 35 527 182 2,817
Redeemed ................................... -- -- (1,360,915) (20,440,936)
----------- -------------- ----------- --------------
Net increase -- Class D .................... 89,008 1,468,720 752 4,566,002
----------- -------------- ----------- --------------
Net increase (decrease) in Fund ............ (5,490,942) $ (79,774,586) 10,915,552 $166,818,675
=========== ============== =========== ==============
</TABLE>
- ---------------
* For Class A, C and D shares, for the period July 28, 1997 (issue date)
through March 31, 1998.
6. FEDERAL INCOME TAX STATUS
As of March 31, 1999, 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, paid-in-capital was charged and net investment loss
was credited $5,921,762.
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,
--------------------------------------------------------------------------
1999 ++ 1998 * ++ 1997 1996 1995
------------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA :
Net asset value, beginning of period .......... $15.12 $15.09 $15.09 $12.11 $12.10
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment loss .......................... (0.11) (0.11) (0.12) (0.11) (0.06)
Net realized and unrealized gain ............. 2.52 6.07 1.39 3.09 0.07
------ ----- ----- ------ ------
Total income from investment operations ....... 2.41 5.96 1.27 2.98 0.01
------ ------ ----- ------ ------
Less distributions from net realized gain...... (0.33) (5.93) (1.27) -- --
------ ------ ------ ------ ------
Net asset value, end of period ................ $17.20 $15.12 $15.09 $15.09 $12.11
====== ====== ====== ====== ======
TOTAL RETURN+ ................................. 16.32 % 42.61 % 8.31 % 24.69 % 0.08 %
RATIOS TO AVERAGE NET ASSETS :
Expenses ...................................... 1.60 %(1) 1.64 % 1.73 % 1.82 % 1.96 %
Net investment loss ........................... (0.70)%(1) (0.64)% (0.75)% (0.72)% (0.48)%
SUPPLEMENTAL DATA :
Net assets, end of period, in thousands ....... $913,060 $893,111 $727,528 $767,170 $697,350
Portfolio turnover rate ....................... 113 % 77 % 45 % 48 % 38 %
</TABLE>
- -------------
* 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) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 28, 1997*
ENDED THROUGH
MARCH 31, 1999 MARCH 31, 1998
------------------ ------------------
<S> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA :
Net asset value, beginning of period .............. $15.17 $17.58
------ ------
Income (loss) from investment operations:
Net investment loss .............................. (0.05) (0.04)
Net realized and unrealized gain ................. 2.55 2.28
------ ------
Total income from investment operations ........... 2.50 2.24
------ ------
Less distributions from net realized gain......... (0.33) (4.65)
------ ------
Net asset value, end of period .................... $17.34 $15.17
====== ======
TOTAL RETURN+ ..................................... 16.87 % 13.84 %(1)
RATIOS TO AVERAGE NET ASSETS :
Expenses .......................................... 1.19 %(3) 1.33 %(2)
Net investment loss ............................... (0.29)%(3) (0.34)%(2)
SUPPLEMENTAL DATA :
Net assets, end of period, in thousands ........... $4,987 $647
Portfolio turnover rate ........................... 113 % 77 %
CLASS C SHARES++
SELECTED PER SHARE DATA :
Net asset value, beginning of period .............. $15.08 $17.58
------ ------
Income (loss) from investment operations:
Net investment loss .............................. (0.16) (0.11)
Net realized and unrealized gain ................. 2.50 2.26
------ ------
Total income from investment operations ........... 2.34 2.15
------ ------
Less distributions from net realized gain......... (0.33) (4.65)
------ ------
Net asset value, end of period .................... $17.09 $15.08
====== ======
TOTAL RETURN+ ..................................... 15.90 % 13.33 %(1)
RATIOS TO AVERAGE NET ASSETS :
Expenses .......................................... 1.94 %(3) 2.02 %(2)
Net investment loss ............................... (1.04)%(3) (1.00)%(2)
SUPPLEMENTAL DATA :
Net assets, end of period, in thousands ........... $3,041 $422
Portfolio turnover rate ........................... 113 % 77 %
</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
16
<PAGE>
MORGAN STANLEY DEAN WITTER GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 28, 1997*
ENDED THROUGH
MARCH 31, 1999 MARCH 31, 1998
------------------ ------------------
<S> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA :
Net asset value, beginning of period .............. $15.21 $17.58
------ ------
Income (loss) from investment operations:
Net investment loss .............................. (0.01) (0.08)
Net realized and unrealized gain ................. 2.54 2.36
------ ------
Total income from investment operations ........... 2.53 2.28
------ ------
Less distributions from net realized gain......... (0.33) (4.65)
------ ------
Net asset value, end of period .................... $17.41 $15.21
====== ======
TOTAL RETURN+ ..................................... 17.02 % 14.09 %(1)
RATIOS TO AVERAGE NET ASSETS :
Expenses .......................................... 0.94 %(3) 1.43 %(2)
Net investment loss ............................... (0.04)%(3) (0.78)%(2)
SUPPLEMENTAL DATA :
Net assets, end of period, in thousands ........... $1,563 $11
Portfolio turnover rate ........................... 113 % 77 %
</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.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
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") at March 31, 1999, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
indicated, in conformity with 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, 1999 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
May 10, 1999
1999 FEDERAL TAX NOTICE (unaudited)
During the year ended March 31, 1999, the Fund paid to shareholders $0.29
per share from long-term capital gains.
18
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin
President
Barry Fink
Vice President, Secretary and General Counsel
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
SUB-ADVISOR
Morgan Stanley Dean Witter Investment Management Inc.
This report is submitted for the general information of shareholders
of the Fund. For more detailed information about the Fund, its officers
and trustees, fees, expenses and other pertinent information, please see
the prospectus of the Fund.
This report is not authorized for distribution to prospective investors
in the Fund unless preceded or accompanied by an effective prospectus.
MORGAN STANLEY
DEAN WITTER
GROWTH FUND
[GRAPHIC]
ANNUAL REPORT
March 31, 1999
