<PAGE>
Morgan Stanley Dean Witter Growth Fund Two World Trade Center,
Letter to the Shareholders March 31, 2000 New York, New York 10048
DEAR SHAREHOLDER:
The 12-month period ended March 31, 2000 was a challenging one for equity
investors. After setting records in 1999, the U.S. equity markets pulled back
sharply this January, February and March. Led by large-capitalization growth
stocks in general and a white-hot technology sector in particular, the Standard
& Poor's 500 Composite Stock Price Index (S&P 500) rose 17.94 percent for the
period under review. With the exception of a brief period in the spring,
growth-oriented stocks outperformed value-oriented issues throughout the period
under review as investors continued to invest in the sustainability of the
growth of the largest companies. The performance of the market was narrow
throughout most of 1999, although some healthy broadening did occur late in the
year.
Increased volatility marked the U.S. equity markets in the first quarter of
2000. While the S&P 500 increased 2.29 percent for the quarter, it had been down
as much as 8 percent in late February. Growth continued to outperform value,
however, for the quarter, as the Russell 1000 Growth Index appreciated 7.13
percent versus 0.48 percent for the Russell 1000 Value Index. The market
remained extremely narrow. Technology stocks were again the dominant contributor
to the S&P 500's performance. However, technology underperformed late in the
quarter as investor attention shifted toward the beaten down, old-economy
companies, and several prominent tech names (e.g. Microsoft, Lucent, Yahoo and
America Online) were among the index's biggest detractors in the quarter.
PERFORMANCE AND PORTFOLIO STRATEGY
For the 12-month period ended March 31, 2000, Morgan Stanley Dean Witter Growth
Fund's Class B shares returned 41.82 percent, compared to 17.94 percent for the
S&P 500 Index. For the same period, the Fund's Class A, C and D shares returned
42.32 percent, 41.29 percent and 42.75 percent, respectively. The performance of
the Fund's four share classes varies because of differing expenses. Total return
figures assume the reinvestment of all distributions but do not reflect the
deduction of any
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Letter to the Shareholders March 31, 2000, continued
applicable sales charges. The accompanying chart compares the Fund's performance
to that of the S&P 500 Index.
The Fund maintained and benefited from its philosophy of opportunistic
concentration driven by bottom-up, fundamental company analysis and an emphasis
on gaining an information edge in the sectors and companies in which it invests.
As of March 31, 2000, the Fund's top 10 holdings accounted for 40 percent of
total assets. The Fund held positions in 91 stocks. The Fund's top positions at
fiscal year-end continued to reflect a mix of classic growth stocks such as
Cisco Systems, General Electric, Microsoft, Intel and Home Depot, as well as
such lesser-known growth names as Tyco International, United Technologies and
Clear Channel Communications/AMFM. While not a top-10 position now, Pfizer would
become the Fund's third largest position if it were to combine with Warner
Lambert.
According to Morgan Stanley Dean Witter Investment Management Inc., the Fund's
sub-advisor, more than 90 percent of the Fund's outperformance relative to the
S&P 500 Index was driven by its stock picking versus sector allocation. In
particular, the Fund's strong results were achieved despite its continued
relatively neutral posture toward technology versus the index. Stock picking for
the Fund in technology remains very good, because technology in general
accounted for more than 40 percent of the Fund's total relative outperformance
over the 12-month period. The absence of a large overweighted position in
technology helped its relative performance versus many other
large-capitalization growth funds toward the end of the fiscal year as many
stocks in this group experienced downside volatility. The Fund's positions in
such old-economy names as Tyco, United Technologies and Pfizer/Warner Lambert
helped sustain its strong performance during this period.
Major contributors to the Fund's performance were Cisco Systems, Intel, Tyco
International, JDS Uniphase and Home Depot. Major detractors to performance for
the period included General Dynamics, Eli Lilly, Pitney Bowes, MCI Worldcom, and
Procter & Gamble.
The performance of Tyco is especially pleasing to the sub-advisor, given the
major downward move sustained by the stock during the fourth quarter of 1999.
Tyco's continued strong business fundamentals and the excitement regarding the
announced value-enhancing subsidiary-IPO of TyCom, the company's undersea
fiberoptic cable business, drove the stock's appreciation of 29 percent in the
first quarter of 2000. This increase more than offset the stock's fourth quarter
decline. The sub-advisor continues to believe in the company's ability to meet
or exceed consensus earnings expectations which, coupled with additional
value-enhancing strategic moves (such as the potential subsidiary-IPO of
M/A-Com, the leading manufacturer of gallium arsenide semiconductor substrate
used in wireless communication devices), is expected to drive additional
outperformance in future quarters.
2
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Letter to the Shareholders March 31, 2000, continued
The Fund's overweighted position in consumer staples is primarily a function of
the sub-advisor's belief in several names in the media/communications sectors
such as Clear Channel Communications/AMFM, American Tower, AT&T Liberty
Media/MediaOne and Omnicom.
The Fund's already overweighted position in health care was increased during the
first quarter of 2000. The sub-advisor believes the group's consistent earnings
growth will be increasingly valuable to investors as the overall S&P 500
earnings growth moderates from unsustainably high levels. Large positions in
Warner Lambert, American Home Products and Pfizer drove the performance of the
Fund's health-care holdings, despite the modest relative underperformance of the
S&P 500 health-care benchmark in the quarter. Warner Lambert and Pfizer
benefited from continued strong earnings fundamentals, the completion of a
formal merger agreement and excitement regarding the merged company's cost,
marketing and research synergies. The sub-advisor believes that the new Pfizer
will be the fastest-growing pharmaceutical company in the world with the largest
research budget.
The Fund's exposure to the financial services sector was increased during the
first quarter of 2000 through additions to existing positions, including Bank of
New York and American International Group, as well as through the addition of
new positions in Fannie Mae and FleetBoston. The portfolio management team
believes that each of these companies offers attractive underlying earnings
growth potential and that Federal Reserve interest-rate hikes have driven
valuations in the sector to extremely attractive levels. While additional rate
hikes may occur in 2000, given the still-constructive inflation environment the
sub-advisor believes that the Fed is closer to the end of this rate hike cycle
than the beginning. During the fiscal year, the Fund benefited by being
underweighted in financial services versus the S&P 500 benchmark, but the
sub-advisor will look to opportunistically add to positions as fundamentals
warrant.
LOOKING AHEAD
Morgan Stanley Dean Witter Investment Management remains upbeat about the
prospects for large-capitalization growth stocks going forward. Inflation
remains in check, interest rates have moderated after an early year surge, and
the Fed seems to be applying the brakes prudently to prevent the economy from
overheating.
3
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Letter to the Shareholders March 31, 2000, continued
We appreciate your ongoing support of Morgan Stanley Dean Witter Growth Fund and
look forward to continuing to serve your investment needs.
Very truly yours,
/s/ Charles A. Fiumefreddo /s/ Mitchell M. Merin
- ------------------------------------ ---------------------------------
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
4
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Fund Performance March 31, 2000
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
DATE TOTAL S&P 500
<S> <C> <C>
May 29, 1992 $10,000 $10,000
March 31, 1993 $11,260 $11,140
March 31, 1994 $12,100 $11,303
March 31, 1995 $12,110 $13,061
March 31, 1996 $15,100 $17,250
March 31, 1997 $16,354 $20,670
March 31, 1998 $23,322 $30,584
March 31, 1999 $27,130 (3) $36,231
March 31, 2000 $38,476 $42,730
-FUND -S&P 500 (4)
</TABLE>
Past performance is not predictive of future returns. Investment return and
principal value will fluctuate. When you sell fund shares, they may be worth
more or less than their original cost. 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 3/31/00
- ---------------------------
<S> <C> <C>
1 Year 41.82%(1) 36.82%(2)
5 Year 26.01%(1) 25.85%(2)
Since Inception (5/29/92) 18.76%(1) 18.76%(2)
</TABLE>
<TABLE>
<CAPTION>
Class C Shares+
- ---------------------------------------------------------------
Period Ended 3/31/00
- ---------------------------
<S> <C> <C>
1 Year 41.29%(1) 40.29%(2)
Since Inception (7/28/97) 26.01%(1) 26.01%(2)
</TABLE>
<TABLE>
<CAPTION>
Class A Shares**
- ---------------------------------------------------------------
Period Ended 3/31/00
- ---------------------------
<S> <C> <C>
1 Year 42.32%(1) 34.85%(2)
Since Inception (7/28/97) 26.96%(1) 24.42%(2)
</TABLE>
<TABLE>
<CAPTION>
Class D Shares#
- -----------------------------------------------
Period Ended 3/31/00
- ---------------------------
<S> <C>
1 Year 42.75%(1)
Since Inception (7/28/97) 27.27%(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, 2000.
(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.
* 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.
5
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Portfolio of Investments March 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (98.0%)
Advertising (1.5%)
77,800 DoubleClick Inc.* ..................... $7,284,025
138,300 Omnicom Group, Inc. ................... 12,922,406
----------
20,206,431
----------
Aerospace (3.7%)
806,800 United Technologies Corp. ............. 50,979,675
----------
Alcoholic Beverages (0.9%)
191,200 Anheuser-Busch Companies, Inc.......... 11,902,200
----------
Beverages - Non-Alcoholic (0.6%)
249,600 PepsiCo, Inc. ......................... 8,626,800
----------
Biotechnology (0.8%)
104,500 Amgen Inc.* ........................... 6,407,156
35,800 Luminex Corp.* ........................ 778,650
15,100 MedImmune, Inc.* ...................... 2,630,231
31,300 Tularik Inc.* ......................... 966,388
----------
10,782,425
----------
Broadcasting (3.9%)
165,000 AMFM, Inc.* ........................... 10,250,625
191,011 CBS Corp.* ............................ 10,815,998
465,300 Clear Channel Communications,
Inc.* ............................... 32,134,781
----------
53,201,404
----------
Building Materials/DIY Chains (3.3%)
692,850 Home Depot, Inc. (The) ................ 44,688,825
----------
Cable Television (4.1%)
373,200 AT&T Corp. - Liberty Media
Group (Class A)* .................... 22,112,100
274,800 Comcast Corp. (Class A Special)* ...... 11,902,275
218,600 MediaOne Group, Inc.* ................. 17,706,600
89,500 TV Guide, Inc. (Class A)* ............. 4,301,594
----------
56,022,569
----------
Cellular Telephone (0.8%)
157,900 Crown Castle International Corp.* 5,950,856
29,600 Nextel Communications, Inc.
(Class A)* .......................... 4,386,350
----------
10,337,206
----------
Clothing/Shoe/Accessory Stores (0.7%)
248,500 Intimate Brands, Inc. ................. 10,188,500
----------
Computer Communications (6.9%)
6,200 ArrowPoint Communications, Inc.* $ 734,312
1,113,952 Cisco Systems, Inc.* .................. 86,122,414
28,700 Juniper Networks, Inc.* ............... 7,558,862
----------
94,415,588
----------
Computer Software (5.6%)
532,000 Microsoft Corp.* ...................... 56,724,500
193,200 Oracle Corp.* ......................... 15,069,600
39,150 Veritas Software Corp.* ............... 5,128,650
----------
76,922,750
----------
Discount Chains (2.8%)
457,300 Costco Wholesale Corp.* ............... 24,008,250
264,400 Wal-Mart Stores, Inc. ................. 14,674,200
----------
38,682,450
----------
Diversified Electronic Products (1.2%)
141,600 JDS Uniphase Corp.* ................... 17,062,800
----------
Diversified Financial Services (2.8%)
122,800 American Express Co. .................. 18,289,525
338,150 Citigroup, Inc. ....................... 20,056,522
----------
38,346,047
----------
Diversified Manufacturing (6.0%)
1,644,400 Tyco International Ltd. (Bermuda) 82,014,450
----------
Electric Utilities (0.4%)
88,500 Montana Power Co. ..................... 5,664,000
----------
Electronic Data Processing (1.5%)
49,400 International Business Machines
Corp. ............................... 5,829,200
155,100 Sun Microsystems, Inc.* ............... 14,530,931
----------
20,360,131
----------
Electronic Production Equipment (1.9%)
272,000 Applied Materials, Inc.* .............. 25,636,000
----------
Finance Companies (0.6%)
147,400 Fannie Mae ............................ 8,318,887
----------
Food Chains (0.5%)
144,500 Safeway Inc.* ......................... 6,538,625
----------
Hospital/Nursing Management (0.3%)
148,300 Columbia/HCA Healthcare Corp. ......... 3,753,844
----------
Internet Services (1.4%)
36,400 Inktomi Corp.* ........................ 7,095,725
25,800 RealNetworks, Inc.* ................... 1,470,600
</TABLE>
See Notes to Financial Statements
6
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Portfolio of Investments March 31, 2000, continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------
<S> <C> <C>
23,500 VeriSign, Inc.* ...................... $ 3,510,312
43,400 Yahoo! Inc.* ......................... 7,434,962
-------------
19,511,599
-------------
Investment Bankers/Brokers/ Services (0.9%)
114,500 Merrill Lynch & Co., Inc. ............ 12,022,500
-------------
Major Banks (1.7%)
350,300 Bank of New York Co., Inc. ........... 14,559,344
251,500 FleetBoston Financial Corp. .......... 9,179,750
-------------
23,739,094
-------------
Major Pharmaceuticals (10.8%)
110,000 Abbott Laboratories .................. 3,870,625
169,200 American Home Products Corp. ......... 9,073,350
482,500 Bristol-Myers Squibb Co. ............. 27,864,375
167,900 Johnson & Johnson .................... 11,763,494
190,300 Lilly (Eli) & Co. .................... 11,988,900
216,100 Merck & Co., Inc. .................... 13,425,212
504,300 Pfizer, Inc. ......................... 18,438,469
174,000 Pharmacia & Upjohn, Inc. ............. 10,309,500
415,300 Warner-Lambert Co. ................... 40,491,750
-------------
147,225,675
-------------
Major U.S. Telecommunications (3.3%)
294,700 GTE Corp. ............................ 20,923,700
65,150 MCI WorldCom, Inc.* .................. 2,956,181
325,400 Sprint Corp. (FON Group) ............. 20,500,200
-------------
44,380,081
-------------
Media Conglomerates (2.6%)
361,100 Time Warner Inc. ..................... 36,110,000
-------------
Medical Specialties (0.2%)
30,600 PE Corporation-PE Biosystems
Group .............................. 2,952,900
-------------
Military/Gov't/Technical (1.8%)
284,800 General Dynamics Corp. ............... 14,168,800
79,100 General Motors Corp. (Class H)* ...... 9,847,950
-------------
24,016,750
-------------
Multi-Line Insurance (0.7%)
92,700 American International Group, Inc. 10,150,650
-------------
Multi-Sector Companies (5.1%)
367,300 General Electric Co. ................. 57,000,369
199,500 Textron, Inc. ........................ 12,144,563
-------------
69,144,932
-------------
Other Consumer Services (0.5%)
40,300 eBay, Inc.* .......................... 7,090,281
-------------
Other Pharmaceuticals (0.3%)
40,700 Forest Laboratories, Inc.* ........... $ 3,439,150
28,500 Intrabiotics Pharmaceuticals* ........ 427,500
-------------
3,866,650
-------------
Other Specialty Stores (0.3%)
53,900 Tiffany & Co. ........................ 4,507,388
-------------
Other Telecommunications (0.9%)
19,600 FLAG Telecom Holdings Ltd.*
(Bermuda) .......................... 444,675
128,400 IXnet, Inc.* ......................... 5,866,275
17,800 NEXTLINK Communications, Inc.
(Class A)* ......................... 2,200,525
79,000 Pinnacle Holdings Inc.* .............. 4,266,000
-------------
12,777,475
-------------
Package Goods/Cosmetics (0.6%)
136,100 Procter & Gamble Co. ................. 7,655,625
-------------
Precision Instruments (0.1%)
12,300 Waters Corp.* ........................ 1,171,575
-------------
Restaurants (0.2%)
100,600 Brinker International, Inc.* ......... 2,986,563
-------------
<PAGE>
Semiconductors (8.7%)
23,300 Broadcom Corp. (Class A)* ............ 5,658,988
61,800 Infineon Techologies AG (ADR)*
(Germany) .......................... 3,549,638
411,000 Intel Corp. .......................... 54,174,938
109,900 Intersil Holding Corp.* .............. 5,680,456
239,600 Maxim Integrated Products, Inc.* 17,026,575
25,600 PMC-Sierra, Inc.* .................... 5,212,800
173,400 Texas Instruments, Inc. .............. 27,744,000
-------------
119,047,395
-------------
Specialty Foods/Candy (0.4%)
182,600 Keebler Foods Co.* ................... 5,238,338
-------------
Telecommunications Equipment (6.7%)
262,600 American Tower Corp. (Class A)* 12,965,875
44,600 CIENA Corp.* ......................... 5,622,388
38,200 Corning Inc. ......................... 7,410,800
159,800 Lucent Technologies Inc. ............. 9,707,850
194,000 Motorola, Inc. ....................... 27,620,750
177,500 Nortel Networks Corp. (Canada) ....... 22,365,000
34,000 QUALCOMM Inc.* ....................... 5,072,375
-------------
90,765,038
-------------
TOTAL COMMON STOCKS
(Identified Cost $788,831,375)........ 1,339,012,116
-------------
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Portfolio of Investments March 31, 2000, continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (1.6%)
U.S. GOVERNMENT AGENCY (a) (1.6%)
$ 21,900 Federal Home Loan Mortgage
Corp. 6.05% due 04/03/00
(Amortized Cost $21,892,639)... $ 21,892,639
-------------
REPURCHASE AGREEMENT (0.0%)
326 The Bank of New York 6.063%
due 04/03/00 (dated 03/31/00;
proceeds $326,223) (b)
(Identified Cost $326,058)..... 326,058
-------------
TOTAL SHORT-TERM INVESTMENTS,
(Identified Cost $22,218,697)...... 22,218,697
-------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $811,050,072) (c)..... 99.6% 1,361,230,813
OTHER ASSETS IN EXCESS OF
LIABILITIES ........................... 0.4 5,112,555
----- -------------
NET ASSETS ............................ 100.0% $1,366,343,368
===== ==============
</TABLE>
- --------------------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Purchased on a discount basis. The interest rate shown has been adjusted to
reflect a money market equivalent yield.
(b) Collateralized by $329,423 U.S. Treasury Note 5.875% due 11/30/01 valued at
$332,579.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unealized appreciation is $565,810,134 and the
aggregate gross unrealized depreciation is $15,629,393, resulting in net
unrealized appreciation of $550,180,741.
See Notes to Financial Statements
8
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2000
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value
(identified cost $811,050,072).................. $1,361,230,813
Receivable for :
Shares of beneficial interest sold ........... 6,713,970
Investments sold ............................. 5,485,647
Dividends .................................... 543,477
Prepaid expenses and other assets ................. 64,682
--------------
TOTAL ASSETS .................................. 1,374,038,589
--------------
LIABILITIES:
Payable for:
Investments purchased ........................ 5,584,625
Investment management fee .................... 863,590
Plan of distribution fee ..................... 620,698
Shares of beneficial interest repurchased..... 535,464
Accrued expenses and other payables ............... 90,844
--------------
TOTAL LIABILITIES ............................. 7,695,221
--------------
NET ASSETS .................................... $1,366,343,368
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital ................................... $ 693,626,379
Net unrealized appreciation ....................... 550,180,741
Accumulated undistributed net realized gain ....... 122,536,248
--------------
NET ASSETS .................................... $1,366,343,368
==============
CLASS A SHARES:
Net Assets ........................................ $14,947,044
Shares Outstanding (unlimited authorized, $.01
par value) ..................................... 669,784
NET ASSET VALUE PER SHARE ..................... $22.32
======
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset
value) ....................................... $23.56
======
CLASS B SHARES:
Net Assets ........................................ $1,326,846,075
Shares Outstanding (unlimited authorized, $.01
par value) ..................................... 60,207,487
NET ASSET VALUE PER SHARE ..................... $22.04
======
CLASS C SHARES:
Net Assets ........................................ $11,848,353
Shares Outstanding (unlimited authorized, $.01
par value) ..................................... 543,529
NET ASSET VALUE PER SHARE ..................... $21.80
======
CLASS D SHARES:
Net Assets ........................................ $12,701,896
Shares Outstanding (unlimited authorized, $.01
par value) ..................................... 564,876
NET ASSET VALUE PER SHARE ..................... $22.49
======
</TABLE>
STATEMENT OF OPERATIONS
For the year ended March 31, 2000
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT LOSS:
INCOME
Dividends (net of $1,366 foreign withholding
tax) ........................................... $ 5,973,509
Interest .......................................... 832,651
------------
TOTAL INCOME .................................. 6,806,160
------------
EXPENSES ..........................................
Investment management fee ......................... 8,216,124
Plan of distribution fee (Class A shares) ......... 22,414
Plan of distribution fee (Class B shares) ......... 6,107,610
Plan of distribution fee (Class C shares) ......... 55,973
Transfer agent fees and expenses .................. 709,497
Registration fees ................................. 118,413
Shareholder reports and notices ................... 90,086
Professional fees ................................. 82,777
Custodian fees .................................... 59,578
Trustees' fees and expenses ....................... 13,903
Other ............................................. 10,073
------------
TOTAL EXPENSES ................................ 15,486,448
------------
NET INVESTMENT LOSS ........................... (8,680,288)
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain ................................. 182,640,866
Net change in unrealized appreciation ............. 212,096,520
------------
NET GAIN ...................................... 394,737,386
------------
NET INCREASE ...................................... $386,057,098
============
</TABLE>
See Notes to Financial Statements
9
<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, 2000 MARCH 31, 1999
------------------ ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss .................................. $ (8,680,288) $ (5,921,762)
Net realized gain .................................... 182,640,866 65,327,474
Net change in unrealized appreciation ................ 212,096,520 66,753,835
-------------- ------------
NET INCREASE ...................................... 386,057,098 126,159,547
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAIN:
Class A shares ....................................... (835,214) (57,063)
Class B shares ....................................... (98,247,672) (17,822,626)
Class C shares ....................................... (481,656) (45,433)
Class D shares ....................................... (244,877) (527)
-------------- ------------
TOTAL DISTRIBUTIONS ............................... (99,809,419) (17,925,649)
-------------- ------------
Net increase (decrease) from transactions in shares of
beneficial interest ................................ 157,445,214 (79,774,586)
-------------- ------------
NET INCREASE ...................................... 443,692,893 28,459,312
NET ASSETS:
Beginning of period .................................. 922,650,475 894,191,163
-------------- ------------
END OF PERIOD ..................................... $1,366,343,368 $922,650,475
============== ============
</TABLE>
See Notes to Financial Statements
10
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Notes to Financial Statements March 31, 2000
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 converted to a multiple class share structure.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS - (1) an equity security listed or traded on the New
York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price;
(2) all other portfolio securities for which over-the-counter market quotations
are readily available are valued at the latest available bid price prior to the
time of valuation; (3) when market quotations are not readily available,
including circumstances under which it is determined by Morgan Stanley Dean
Witter Advisors Inc. (the "Investment Manager") and/or Morgan Stanley Dean
Witter Investment Management Inc. (the "Sub-Advisor"), an affiliate of 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 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.
11
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Notes to Financial Statements March 31, 2000, continued
B. ACCOUNTING FOR INVESTMENTS - Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily.
C. MULTIPLE CLASS ALLOCATIONS - Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. FEDERAL INCOME TAX STATUS - It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - The Fund records dividends and
distributions to its shareholders on the 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% 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.
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.
12
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Notes to Financial Statements March 31, 2000, continued
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 and
Sub-Advisor. 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 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 totaled
$19,008,654 at March 31, 2000.
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, 2000, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.24% and
1.0%, respectively.
The Distributor has informed the Fund that for the year ended March 31, 2000, it
received contingent deferred sales charges from certain redemptions of the
Fund's Class A shares, Class B shares and Class C shares of $829, $426,021 and
$5,650, respectively and received $54,993 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.
13
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Notes to Financial Statements March 31, 2000, continued
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, 2000 aggregated
$879,886,988 and $835,181,975, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager,
Distributor, and Sub-Advisor, is the Fund's transfer agent. At March 31, 2000,
the Fund had transfer agent fees and expenses payable of approximately $1,600.
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, 2000 MARCH 31, 1999
--------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold .................................. 529,435 $ 9,785,216 331,535 $ 5,195,083
Reinvestment of distributions ......... 44,982 806,215 3,781 56,150
Redeemed .............................. (192,300) (3,391,567) (90,276) (1,415,690)
-------- -------------- ------- --------------
Net increase - Class A ................ 382,117 7,199,864 245,040 3,835,543
-------- -------------- ------- --------------
CLASS B SHARES
Sold .................................. 11,699,278 224,799,498 5,248,657 79,679,953
Reinvestment of distributions ......... 5,194,537 91,185,616 1,123,085 16,565,513
Redeemed .............................. (9,773,486) (182,289,872) (12,346,663) (183,588,963)
---------- -------------- ----------- --------------
Net increase (decrease) - Class B ..... 7,120,329 133,695,242 (5,974,921) (87,343,497)
---------- -------------- ----------- --------------
CLASS C SHARES
Sold .................................. 442,621 8,420,352 173,035 2,597,416
Reinvestment of distributions ......... 26,376 467,128 2,985 43,796
Redeemed .............................. (103,410) (1,923,844) (26,089) (376,564)
---------- -------------- ----------- --------------
Net increase - Class C ................ 365,587 6,963,636 149,931 2,264,648
---------- -------------- ----------- --------------
CLASS D SHARES
Sold .................................. 763,875 14,957,910 88,973 1,468,193
Reinvestment of distributions ......... 9,673 186,024 35 527
Redeemed .............................. (298,432) (5,557,462) - -
---------- -------------- ----------- --------------
Net increase - Class D ................ 475,116 9,586,472 89,008 1,468,720
---------- -------------- ----------- --------------
Net increase (decrease) in Fund ....... 8,343,149 $ 157,445,214 (5,490,942) $ (79,774,586)
========== ============== =========== ==============
</TABLE>
6. FEDERAL INCOME TAX STATUS
As of March 31, 2000, the Fund had temporary book/tax differences attributable
to capital loss deferrals on wash sales and permanent book/tax differences
attributable to net operating loss. To reflect reclassifications arising from
the permanent differences, accumulated undistributed net realized gain was
charged and net investment loss was credited $8,680,288.
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 PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
MARCH 31, 2000 MARCH 31, 1999 MARCH 31, 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A SHARES#
SELECTED PER SHARE DATA:
Net asset value, beginning of period .............. $17.34 $15.17 $17.58
------ ------ ------
Income (loss) from investment operations:
Net investment loss .............................. (0.09) (0.05) (0.04)
Net realized and unrealized gain ................. 6.89 2.55 2.28
------ ------ ------
Total income from investment operations ........... 6.80 2.50 2.24
------ ------ ------
Less distributions from net realized gain ......... (1.82) (0.33) (4.65)
------ ------ ------
Net asset value, end of period .................... $22.32 $17.34 $15.17
====== ====== ======
TOTAL RETURN+ .................................... 42.32 % 16.87 % 13.84 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .......................................... 1.13 %(3) 1.19 %(3) 1.33 %(2)
Net investment loss ............................... (0.48)%(3) (0.29)%(3) (0.34)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ........... $14,947 $4,987 $647
Portfolio turnover rate ........................... 81 % 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
15
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Financial Highlights, continued
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
------------------------------------------------------------------------------
2000# 1999# 1998*# 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ........... $17.20 $15.12 $15.09 $15.09 $12.11
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment loss ........................... (0.15) (0.11) (0.11) (0.12) (0.11)
Net realized and unrealized gain .............. 6.81 2.52 6.07 1.39 3.09
------ ------ ------ ------ ------
Total income from investment operations ........ 6.66 2.41 5.96 1.27 2.98
------ ------ ------ ------ ------
Less distributions from net realized gain ...... (1.82) (0.33) (5.93) (1.27) -
------ ------ ------ ------ ------
Net asset value, end of period ................. $22.04 $17.20 $15.12 $15.09 $15.09
====== ====== ====== ====== ======
TOTAL RETURN+ .................................. 41.82 % 16.32 % 42.61 % 8.31 % 24.69 %
RATIOS TO AVERAGE NET ASSETS:
Expenses ....................................... 1.48 %(1) 1.60 %(1) 1.64 % 1.73 % 1.82 %
Net investment loss ............................ (0.83)%(1) (0.70)%(1) (0.64)% (0.75)% (0.72)%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ........ $1,326,846 $913,060 $893,111 $727,528 $767,170
Portfolio turnover rate ........................ 81 % 113 % 77 % 45 % 48 %
</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
16
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Financial Highlights, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
MARCH 31, 2000 MARCH 31, 1999 MARCH 31, 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS C SHARES#
SELECTED PER SHARE DATA:
Net asset value, beginning of period .............. $17.09 $15.08 $17.58
------ ------ ------
Income (loss) from investment operations:
Net investment loss .............................. (0.23) (0.16) (0.11)
Net realized and unrealized gain ................. 6.76 2.50 2.26
------ ------ ------
Total income from investment operations ........... 6.53 2.34 2.15
------ ------ ------
Less distributions from net realized gain ......... (1.82) (0.33) (4.65)
------ ------ ------
Net asset value, end of period .................... $21.80 $17.09 $15.08
====== ====== ======
TOTAL RETURN+ ..................................... 41.29 % 15.90 % 13.33 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .......................................... 1.89 %(3) 1.94 %(3) 2.02 %(2)
Net investment loss ............................... (1.24)%(3) (1.04)%(3) (1.00)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ........... $11,848 $3,041 $422
Portfolio turnover rate ........................... 81 % 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
17
<PAGE>
Morgan Stanley Dean Witter Growth Fund
Financial Highlights, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
MARCH 31, 2000 MARCH 31, 1999 MARCH 31, 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS D SHARES#
SELECTED PER SHARE DATA:
Net asset value, beginning of period .............. $17.41 $15.21 $17.58
------ ------ ------
Income (loss) from investment operations:
Net investment loss .............................. (0.04) (0.01) (0.08)
Net realized and unrealized gain ................. 6.94 2.54 2.36
------ ------ ------
Total income from investment operations ........... 6.90 2.53 2.28
------ ------ ------
Less distributions from net realized gain ......... (1.82) (0.33) (4.65)
------ ------ ------
Net asset value, end of period .................... $22.49 $17.41 $15.21
====== ====== ======
TOTAL RETURN+ ..................................... 42.75 % 17.02 % 14.09 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .......................................... 0.89 %(3) 0.94 %(3) 1.43 %(2)
Net investment loss ............................... (0.24)%(3) (0.04)%(3) (0.78)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ........... $12,702 $1,563 $11
Portfolio turnover rate ........................... 81 % 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
18
<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, 2000, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
indicated, in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at March 31, 2000 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 11, 2000
2000 FEDERAL TAX NOTICE (unaudited)
During the year ended March 31, 2000, the Fund paid to shareholders
$1.57 per share from long-term capital gains.
19
<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.
1221 Avenue of the Americas
New York, NY 10020
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of the
Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus. Read the
prospectus carefully before investing.
Morgan Stanley Dean Witter Distributors Inc., member NASD.
MORGAN STANLEY DEAN WITTER GROWTH FUND
[GRAPHIC OMMITTED]
ANNUAL REPORT
March 31, 2000
