<PAGE>
TCW/DW SMALL CAP GROWTH FUND Two World Trade Center, New York, New York 10048
LETTER TO THE SHAREHOLDERS
February 28, 1999
DEAR SHAREHOLDER:
We are pleased to report that in a very difficult period for small-cap stocks
TCW/DW Small Cap Growth Fund was able to achieve solid gains for the fiscal
year ended February 28, 1999. For this 12-month period the Fund's Class B
shares posted a positive return of 8.35 percent, while the Russell 2000 Small
Stock Index declined 14.14 percent and the Lipper Small-Cap Funds Index
declined 13.19 percent. For the same period the Fund's Class A, C and D shares
posted returns of 9.21 percent, 8.35 percent and 9.38 percent, respectively.
The performance of the Fund's four share classes varies because of differing
expenses.
MARKET OVERVIEW
Over the last twelve months the stock market displayed remarkable strength in
the face of a bewildering array of problems. More than one-third of the global
economy was either in recession or on the brink of rolling over. The near
collapse of a little-known hedge fund threatened some of the largest financial
institutions in the United States with billions of dollars in losses. These
events were so daunting that the impeachment of President Clinton by the House
of Representatives barely caused a ripple in the market. The reason investors
were willing to look beyond these serious problems and focus on the potential
resolution of most of them is that central banks all over the world had
generated an enormous amount of liquidity. In the fourth quarter there were
more than 65 individual moves by central banks around the globe to lower
interest rates. As long as worldwide economic growth remains sluggish, the
excess liquidity that is being generated usually finds its way into the
financial markets, regardless of the level of interest rates or price-earnings
(p/e) ratios.
February marked the 95th consecutive month of U.S. economic expansion, making
this the longest period of peacetime expansion in the country's history. In
terms of GDP growth it has lagged other expansions, but in respect to
profitability it is unsurpassed, due largely to continued
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
LETTER TO THE SHAREHOLDERS February 28, 1999, continued
corporate restructuring, globalization and technological change. What makes
this run so impressive is that inflation continues to fall in the face of
robust U.S. economic growth. Fourth-quarter real growth was revised up to 6.1
percent, and inflation decreased to an astounding 0.7 percent. The overall
strength continued in January as jobless claims hit a 10-year low, while
help-wanted ads reached a new high for this decade and existing home sales set
an all-time record. Although this surprising economic strength has ignited
interest-rate concerns, it is fortunate that the Federal Reserve seems to
recognize that solid economic growth and low inflation can coexist.
As measured by the Russell 2000 and the S&P 500, the disparity between
small-cap and large-cap performance for the fiscal year was an astonishing 32
percent, the widest spread on record by a factor of nearly two. As a result of
this underperformance, small stocks ended the year almost as attractively
valued relative to the large caps as they were at the bottom of the market in
1974. Because small stocks have historically performed significantly better
than large caps over the three, six and twelve months following a discount-rate
cut, it would not surprise us to see small caps begin to outperform.
PERFORMANCE AND PORTFOLIO STRATEGY
The Fund's outperformance of the Russell 2000 and the Lipper Small-Cap Funds
indexes can be attributed to strong performance in some of its largest
holdings, Yahoo, Citrix Systems, Gemstar, New Era of Networks, Network
Appliance, Outdoor Systems and Siebel Systems. Internet stocks posted the
largest gains, with Yahoo, E*Trade, Broadcast.com and Lycos each appreciating
more than 100 percent during the fiscal year. Among the Fund's non-Internet
stocks that also performed strongly were Gemstar, GeoTel Communications, New
Era of Networks and Sepracor. The best industry groups in terms of the overall
impact on Fund performance were consumer services, information processing,
telecommunications and leisure. Groups that penalized performance were energy,
business services, healthcare and semiconductors. The accompanying chart
compares the performance of the Fund's Class B shares with that of Russell 2000
and Lipper indexes.
The Fund is managed with a "bottom up" approach that is designed to create a
portfolio of rapidly growing companies which the portfolio managers believe
will grow at a rate faster than Wall Street expects. In addition, many
companies in the Fund's portfolio are exposed only to the strong U.S. economy
with its booming consumer markets. Additionally, its emphasis on companies with
proprietary products and above-average margins has helped the Fund avoid many
of the commodity companies having Asian-related difficulties.
The reason the portfolio managers do not concern themselves with the macro
environment is that the Fund owns companies TCW believes are generally
benefiting from powerful trends that will not be
2
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
LETTER TO THE SHAREHOLDERS February 28, 1999, continued
derailed by a slowdown in economic growth or an increase in interest rates. The
exploitation of a proprietary advantage that results in meaningful market share
gains can lead to rapid growth regardless of the economic backdrop. So can new
product cycles, or market niches that alter the competitive landscape of a
particular industry, or a technological change that results in more efficient
ways to manage a business enterprise. Companies benefiting from the explosive
growth of the Internet, specialty retailers gaining share in rapidly growing
niches, telecommunications equipment providers riding the growth in data
communications, computer software and services being driven by new operating
systems and applications, and healthcare companies bringing out breakthrough
medical products and services are the kinds of opportunities the portfolio
managers are seeking.
LOOKING AHEAD
TCW believes that small-cap growth stocks will ultimately reflect their premium
growth potential. The fact that investors remain cautious about the prospects
for small stocks bodes well for small caps and the entire market, for cycles do
not usually end until speculation drives these stocks to unreasonably high
valuations. Three years of underperformance has created valuation levels for
many small caps that are very compelling. In terms of earnings, sales and book
value, small-cap growth stocks are as attractive relative to the S&P 500 as
they were at the market bottoms in 1990 and 1987. It is very unusual to find
both relative earnings strength and depressed relative valuations together. TCW
believes that these ingredients should eventually cause investors to move out
on the risk spectrum in order to participate in the faster growth of the small
caps.
We appreciate your ongoing support of the Fund and look forward to continuing
to serve your investment needs.
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO
- --------------------------
CHARLES A. FIUMEFREDDO
Chairman of the Board
3
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
LETTER TO THE SHAREHOLDERS February 28, 1999, continued
On February 25, 1999, the Board of Trustees for the Fund, acting on a proposal
in connection with an overall consolidation of the TCW/DW Family of Funds and
the Morgan Stanley Dean Witter Family of Funds, recommended that
o Morgan Stanley Dean Witter Advisors Inc. (MSDW Advisors), the parent company
of Morgan Stanley Dean Witter Services Company, the Fund's current manager,
serve as the Fund's new investment manager and that a new investment
management agreement between the Fund and MSDW Advisors be submitted to
shareholders for approval at a special meeting expected to be held in June
1999. Under the new investment management agreement, the advisory fee rates
that MSDW Advisors would charge would be 1.00 percent of average daily net
assets. This fee rate is identical to the total aggregate fee rate now in
effect under the current management and advisory agreements.
o A new sub-advisory agreement between MSDW Advisors and TCW Funds Management,
Inc. (TCW) be submitted to shareholders at the same special meeting. TCW is
a wholly owned subsidiary of The TCW Group, Inc., and currently serves as
the Fund's adviser. In return for the services that TCW would render under
the new sub-advisory agreement, MSDW Advisors would pay TCW monthly
compensation equal to 40 percent of the compensation it is to receive under
the new investment management agreement.
It was also voted that the Fund's name be changed from TCW/DW Small Cap Growth
Fund to Morgan Stanley Dean Witter Small Cap Growth Fund upon the effectiveness
of the aforementioned proposals.
The Trustees also nominated for election or re-election, as appropriate, the
following eight nominees to the Fund's Board of Trustees: Michael Bozic,
Charles A. Fiumefreddo, Edwin Jacob (Jake) Garn, Wayne E. Hedien, Dr. Manuel H.
Johnson, Michael E. Nugent, Philip J. Purcell and John L. Schroeder. Messrs.
Fiumefreddo, Johnson, Nugent and Schroeder currently serve as Trustees of the
Fund and, with the exception of Mr. Schroeder, were previously elected by
shareholders. Messrs. Bozic, Garn, Hedien and Purcell currently hold
directorships or trusteeships with 84 other investment companies for which MSDW
Advisors serves as investment manager or investment adviser.
A proxy statement formally detailing this proposal and the reasons for the
Trustees' action has been distributed to shareholders of the Fund, who were
shareholders on March 12, 1999.
4
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
FUND PERFORMANCE February 28, 1999
[GRAPHIC OMITTED]
FUND PERFORMANCE FEBRUARY 28, 1999
GROWTH OF $10,000 CLASS B
DATE TOTAL RUSSELL 2000 LIPPER
---- ----- ------------ ------
August 2, 1993 $10,000 $10,000 $10,000
February 28, 1994 $10,300 $11,278 $11,262
February 28, 1995 $ 9,900 $11,081 $11,282
February 28, 1996 $16,240 $14,256 $14,946
February 28, 1997 $15,730 $16,046 $15,919
February 28, 1998 $21,080 $20,853 $20,125
February 28, 1999 $22,740(3) $17,904 $17,471
-- Fund -- Russell 2000 (4) -- Lipper (5)
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
----------------------------
CLASS B SHARES*
- ----------------------------------------------------------
PERIOD ENDED 2/28/99
- --------------------
1 Year 8.35%(1) 3.35%(2)
5 Year 17.27%(1) 17.05%(2)
Since Inception (8/2/93) 15.97%(1) 15.88%(2)
CLASS C SHARES++
- -----------------------------------------------------------
PERIOD ENDED 2/28/99
- ---------------------------
1 Year 8.35%(1) 7.35%(2)
Since Inception (7/28/97) 15.73%(1) 15.73%(2)
CLASS A SHARES+
- -----------------------------------------------------------
PERIOD ENDED 2/28/99
- ---------------------------
1 Year 9.21%(1) 3.47%(2)
Since Inception (7/28/97) 16.62%(1) 12.72%(2)
CLASS D SHARES#
- --------------------------------------------
PERIOD ENDED 2/28/99
- ---------------------------
1 Year 9.38%(1)
Since Inception (7/28/97) 16.84%(1)
- ---------------
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction
of the maximum applicable sales charge. See the Fund's current prospectus
for complete details on fees and sales charges.
(3) Closing value after the deduction of a 1% CDSC, assuming a complete
redemption on February 28, 1999.
(4) The Russell 2000 Small Stock Index is a capitalization-weighted price-only
index of the 2000 smallest stocks represented in the Russell 3000 Index. 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 Small-Cap Funds Index is an equally-weighted performance index
of the largest qualifying funds (based on net assets) in the Lipper
Small-Cap 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.
5
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS February 28, 1999
NUMBER OF
SHARES VALUE
---------- ------------
COMMON STOCKS (97.0%)
Advertising (3.8%)
313,907 Outdoor Systems, Inc.* ................ $ 8,769,777
109,500 Snyder Communications, Inc.* .......... 3,750,375
------------
12,520,152
------------
Airlines (0.7%)
68,700 Atlantic Coast Airlines Holdings,
Inc.* ................................ 2,198,400
------------
Books/Magazines (0.3%)
99,100 Applied Graphics Technologies,
Inc.* ................................ 879,512
------------
Broadcasting (2.8%)
141,600 Clear Channel Communications, Inc.* ... 8,496,000
24,900 Entercom Communications Corp.*......... 781,237
------------
9,277,237
------------
Catalog/Specialty Distribution (1.5%)
167,900 Beyond.com Corp.* ..................... 4,344,412
49,600 DM Management Co.* .................... 644,800
------------
4,989,212
------------
Clothing/Shoe/Accessory Stores (0.7%)
60,400 Ann Taylor Stores Corp.* .............. 2,283,875
------------
Computer Software & Services (7.0%)
44,200 BroadVision, Inc.* .................... 1,972,425
98,040 CSG Systems International, Inc.* ...... 6,973,095
145,500 Documentum, Inc.* ..................... 3,110,062
16,200 Engineering Animation, Inc. ........... 733,050
77,100 HNC Software, Inc.* ................... 2,072,062
127,900 International Integration Inc.* ....... 2,526,025
110,800 Legato Systems, Inc.* ................. 5,456,900
------------
22,843,619
------------
Computer Software (17.0%)
101,400 Aspect Development, Inc.* ............. 3,080,025
61,900 CBT Group PLC (ADR) (Ireland)*......... 986,531
211,350 Citrix Systems, Inc.* ................. 16,300,369
60,700 Concord Communications, Inc.* ......... 3,437,137
163,800 GeoTel Communications Corp.* .......... 6,981,975
26,700 Hyperion Solutions Corp.* ............. 378,806
25,000 Macromedia, Inc.* ..................... 762,500
30,000 Mercury Interactive Corp.* ............ 1,942,500
82,000 Micromuse Inc.* ....................... 2,624,000
3,700 MicroStrategy Inc.* ................... 92,500
37,700 ModaCAD, Inc.* ........................ 622,050
157,100 New Era of Networks, Inc.* ............ 9,730,381
9,500 ONYX Software Corp.* .................. $ 172,187
194,400 Siebel Systems, Inc.* ................. 8,529,300
------------
55,640,261
------------
Consumer/Business Services (0.7%)
95,800 Corporate Executive Board Co.* ........ 2,347,100
------------
Discount Chains (1.2%)
96,975 Dollar Tree Stores, Inc.* ............. 3,879,000
------------
Diversified Commercial Services (10.0%)
22,800 Abacus Direct Corp.* .................. 1,539,000
106,000 Administaff, Inc.* .................... 1,450,875
285,400 Dendrite International, Inc.* ......... 8,026,875
14,800 Exchange Applications, Inc.* .......... 244,200
106,050 HA-LO Industries, Inc.* ............... 1,133,409
120,100 MAXIMUS, Inc.* ........................ 3,355,294
39,700 MemberWorks Inc.* ..................... 1,379,575
48,800 Paymentech, Inc.* ..................... 933,300
40,300 Profit Recovery Group
International, Inc. (The)* ........... 1,314,787
102,150 Robert Half International, Inc.* ...... 3,677,400
274,200 Romac International, Inc.* ............ 3,290,400
208,000 Whittman-Hart, Inc.* .................. 6,487,000
------------
32,832,115
------------
Diversified Electronic Products (3.3%)
167,900 Gemstar International Group Ltd.*
(Virgin Islands) ..................... 10,724,612
------------
Diversified Financial Services (0.3%)
37,700 HealthCare Financial Partners, Inc.* .. 984,912
------------
E.D.P. Peripherals (4.6%)
177,700 Avid Technology, Inc.* ................ 5,197,725
233,000 Network Appliance, Inc.* .............. 9,786,000
------------
14,983,725
------------
E.D.P. Services (3.8%)
101,400 CIBER, Inc.* .......................... 2,547,675
114,600 META Group, Inc.* ..................... 2,535,525
138,100 National TechTeam, Inc.* .............. 889,019
67,300 Pegasus Systems, Inc.* ................ 2,532,163
86,400 SportsLine USA, Inc.* ................. 3,866,400
------------
12,370,782
------------
Electronic Components (0.6%)
63,400 DSP Communications, Inc.* ............. 951,000
87,600 SIPEX Corp.* .......................... 996,450
------------
1,947,450
------------
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS February 28, 1999, continued
NUMBER OF
SHARES VALUE
---------- ------------
Electronic Distributors (0.0%)
1,500 Intraware, Inc.* ..................... $ 28,125
------------
Electronic Production
Equipment (0.5%)
42,100 Veeco Instruments, Inc.* ............. 1,599,800
------------
Healthcare (1.1%)
150,900 Ocular Sciences, Inc.* ............... 3,678,188
------------
Insurance Brokers/Services (0.1%)
17,500 Insurance Management Solutions
Group, Inc.* ......................... 166,250
------------
Internet Services (12.8%)
58,600 Broadcast.com Inc.* .................. 4,907,750
102,100 Exodus Communications, Inc.* ......... 7,491,588
3,400 InfoSpace.com, Inc.* ................. 184,875
22,100 Lycos, Inc.* ......................... 1,935,131
1,700 pcOrder.com, Inc.* ................... 79,900
124,200 Verio Inc.* .......................... 3,446,550
46,500 VeriSign, Inc.* ...................... 4,527,938
21,100 VerticalNet, Inc.* ................... 865,100
120,500 Yahoo! Inc.* ......................... 18,496,750
------------
41,935,582
------------
Investment Bankers/Brokers/
Services (2.2%)
154,800 E*TRADE Group, Inc.* ................. 7,111,125
------------
Major Pharmaceuticals (0.6%)
70,000 Alkermes, Inc.* ...................... 1,955,625
------------
Medical Specialties (2.3%)
195,500 Diametrics Medical, Inc.* ............ 867,531
116,500 Hanger Orthopedic Group, Inc.* ....... 1,769,344
32,300 Perclose, Inc.* ...................... 1,364,675
158,100 Safeskin Corp.* ...................... 3,665,944
------------
7,667,494
------------
Movies/Entertainment (1.7%)
56,900 SFX Entertainment, Inc.* ............. 3,470,900
89,300 Westwood One, Inc.* .................. 2,176,688
------------
5,647,588
------------
Other Consumer Services (0.4%)
43,100 Steiner Leisure Ltd.* ................ 1,266,063
2,500 Ticketmaster Online-CitySearch, Inc.
(Series B)* ......................... 90,313
------------
1,356,376
------------
Other Pharmaceuticals (1.4%)
37,500 Sepracor, Inc.* ...................... 4,668,750
------------
Other Specialty Stores (4.2%)
161,200 Cost Plus, Inc.* ..................... $ 5,732,675
182,700 Guitar Center, Inc.* ................. 3,014,550
188,100 PETsMART, Inc.* ...................... 1,481,288
93,500 Restoration Hardware, Inc.* .......... 1,893,375
104,900 Whitehall Jewellers, Inc.* ........... 1,750,519
------------
13,872,407
------------
Other Telecommunications (0.9%)
71,000 MetroNet Communications Corp.
(Class B)* .......................... 3,079,625
------------
Real Estate (0.1%)
22,900 Trammell Crow Co.* ................... 354,950
------------
Restaurants (0.1%)
49,200 Il Fornaio (America) Corp.* .......... 399,750
------------
Retail - Specialty (3.6%)
201,400 Bed Bath & Beyond, Inc.* ............. 5,916,125
164,100 Hollywood Entertainment Corp.* ....... 4,471,725
146,875 Just For Feet, Inc.* ................. 1,496,289
------------
11,884,139
------------
Savings & Loan Associations (0.8%)
60,500 Telebanc Financial Corp.* ............ 2,480,500
------------
Semiconductors (3.6%)
124,300 Maxim Integrated Products, Inc.*...... 5,127,375
70,500 Micrel, Inc.* ........................ 3,172,500
81,300 Semtech Corp.* ....................... 2,469,488
27,800 TranSwitch Corp.* .................... 962,575
------------
11,731,938
------------
Services to the Health Industry (0.6%)
46,000 Eclipsys Corp.* ...................... 1,408,750
4,200 Healthcare Recoveries, Inc.* ......... 34,650
14,400 MEDE AMERICA Corp.* .................. 246,600
26,600 QuadraMed Corp.* ..................... 408,975
------------
2,098,975
------------
Smaller Banks (0.1%)
7,875 Bank of Granite Corp. ................ 206,719
------------
Specialty Foods/Candy (1.1%)
160,200 Balance Bar Co.* ..................... 1,521,900
174,000 Neose Technologies, Inc.* ............ 1,979,250
------------
3,501,150
------------
Wholesale Distributor (0.5%)
88,700 Daisytek International Corp.* ........ 1,674,213
------------
TOTAL COMMON STOCKS
(Identified Cost $173,457,398)........ 317,801,233
------------
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS February 28, 1999, continued
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
---------- ------------
SHORT-TERM INVESTMENT (1.8%)
REPURCHASE AGREEMENT
$ 5,793 The Bank of New York 4.75%
due 03/01/99 (dated 02/26/99;
proceeds $5,795,353) (a)
(Identified Cost $5,793,060).......... $ 5,793,060
------------
TOTAL INVESTMENTS
(Identified Cost $179,250,458) (b)..... 98.8% 323,594,293
OTHER ASSETS IN EXCESS OF
LIABILITIES ........................... 1.2 4,019,341
----- -----------
NET ASSETS ............................ 100.0% $327,613,634
===== ============
- --------------------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Collateralized by $5,665,841 U.S. Treasury Note 6.50% due 05/31/01
valued at $5,908,921.
(b) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$159,263,366 and the aggregate gross unrealized depreciation is
$14,919,531, resulting in net unrealized appreciation of $144,343,835.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1999
ASSETS:
Investments in securities, at value
(identified cost $179,250,458)................................ $323,594,293
Receivable for:
Investments sold ............................................ 5,468,111
Shares of beneficial interest sold .......................... 349,352
Prepaid expenses and other assets ............................. 32,114
------------
TOTAL ASSETS ................................................ 329,443,870
------------
LIABILITIES:
Payable for:
Investments purchased ....................................... 892,981
Shares of beneficial interest repurchased ................... 362,593
Plan of distribution fee .................................... 242,089
Management fee .............................................. 169,131
Investment advisory fee ..................................... 110,696
Accrued expenses and other payables ........................... 52,746
------------
TOTAL LIABILITIES ........................................... 1,830,236
------------
NET ASSETS .................................................. $327,613,634
============
COMPOSITION OF NET ASSETS:
Paid-in-capital ............................................... $174,007,910
Net unrealized appreciation ................................... 144,343,835
Accumulated undistributed net realized gain ................... 9,261,889
------------
NET ASSETS .................................................. $327,613,634
============
CLASS A SHARES:
Net Assets .................................................... $2,450,064
Shares Outstanding (unlimited authorized, $.01 par value)...... 105,934
NET ASSET VALUE PER SHARE ................................... $23.13
======
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) ............ $24.41
======
CLASS B SHARES:
Net Assets .................................................... $322,488,560
Shares Outstanding (unlimited authorized, $.01 par value)...... 14,118,639
NET ASSET VALUE PER SHARE ................................... $22.84
======
CLASS C SHARES:
Net Assets .................................................... $2,662,180
Shares Outstanding (unlimited authorized, $.01 par value)...... 116,532
NET ASSET VALUE PER SHARE ................................... $22.85
======
CLASS D SHARES:
Net Assets .................................................... $12,830
Shares Outstanding (unlimited authorized, $.01 par value)...... 553
NET ASSET VALUE PER SHARE ................................... $23.20
======
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the year ended February 28, 1999
NET INVESTMENT LOSS:
INCOME
Interest .......................................... $ 279,958
Dividends ......................................... 49,786
-----------
TOTAL INCOME .................................... 329,744
-----------
EXPENSES
Plan of distribution fee (Class A shares) ......... 2,753
Plan of distribution fee (Class B shares) ......... 2,909,563
Plan of distribution fee (Class C shares) ......... 14,300
Investment management fee ......................... 1,913,167
Investment advisory fee ........................... 1,275,444
Transfer agent fees and expenses .................. 477,243
Registration fees ................................. 112,448
Shareholder reports and notices ................... 69,518
Professional fees ................................. 46,744
Custodian fees .................................... 37,179
Trustees' fees and expenses ....................... 32,422
Organizational expenses ........................... 15,378
Other ............................................. 26,754
-----------
TOTAL EXPENSES .................................. 6,932,913
-----------
NET INVESTMENT LOSS ............................. (6,603,169)
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain ................................. 12,853,310
Net change in unrealized appreciation ............. 18,442,746
-----------
NET GAIN ........................................ 31,296,056
-----------
NET INCREASE ...................................... $24,692,887
===========
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
FEBRUARY 28, 1999 FEBRUARY 28, 1998*
------------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss .................................. $ (6,603,169) $ (6,259,873)
Net realized gain .................................... 12,853,310 8,132,612
Net change in unrealized appreciation ................ 18,442,746 87,911,112
------------ ------------
NET INCREASE ......................................... 24,692,887 89,783,851
Net decrease from transactions in shares of beneficial
interest ........................................... (38,954,929) (16,691,187)
------------ ------------
NET INCREASE (DECREASE) ............................ (14,262,042) 73,092,664
NET ASSETS:
Beginning of period .................................. 341,875,676 268,783,012
------------ ------------
END OF PERIOD ...................................... $327,613,634 $341,875,676
============ ============
</TABLE>
- ---------------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS February 28, 1999
1. ORGANIZATION AND ACCOUNTING POLICIES
TCW/DW Small Cap Growth Fund (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a non-diversified, open-end
management investment company. The Fund's investment objective is capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
common stocks and other equity securities of lesser known, smaller
capitalization domestic and foreign companies. The Fund was organized as a
Massachusetts business trust on March 11, 1992 and commenced operations on
August 2, 1993. 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 or American or other domestic or foreign stock exchange is valued at
its latest sale price on that exchange prior to the time when assets are
valued; if there were no sales that day, the security is valued at the latest
bid price (in cases where securities are traded on more than one exchange, the
securities are valued on the exchange designated as the primary market pursuant
to procedures adopted by the Trustees); (2) all other portfolio securities for
which over-the-counter market quotations are readily available are valued at
the latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by TCW Funds Management, Inc. (the "Adviser") 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
12
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS February 28, 1999, continued
maturity and thereafter at amortized cost based on their value on the 61st day.
Short-term debt securities having a maturity date of sixty days or less at the
time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date
such items are recognized. Distribution fees are charged directly to the
respective class.
D. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends
and distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which
may differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
F. ORGANIZATIONAL EXPENSES -- Morgan Stanley Dean Witter Advisors Inc.,
formerly Dean Witter InterCapital Inc., an affiliate of Morgan Stanley Dean
Witter Services Co. Inc. (the "Manager"), paid the organizational expenses of
the Fund in the amount of $170,413 which have been reimbursed for the full
amount thereof. Such expenses were deferred and fully amortized as of August 1,
1998.
13
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS February 28, 1999, continued
2. MANAGEMENT AGREEMENT
Pursuant to a Management Agreement, the Fund pays the Manager a management fee,
accrued daily and payable monthly, by applying the annual rate of 0.60% to the
net assets of the Fund determined as of the close of each business day.
Under the terms of the Management Agreement, the 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 Manager. The Manager also bears the cost of telephone
services, heat, light, power and other utilities provided to the Fund.
3. INVESTMENT ADVISORY AGREEMENT
Pursuant to an Investment Advisory Agreement, the Fund pays an advisory fee,
accrued daily and payable monthly, by applying the annual rate of 0.40% to the
net assets of the Fund determined as of the close of each business day.
Under the terms of the Investment Advisory Agreement, the Fund has retained the
Adviser to invest the Fund's assets, including placing orders for the purchase
and sale of portfolio securities. The Adviser obtains and evaluates such
information and advice relating to the economy, securities markets, and
specific securities as it considers necessary or useful to continuously manage
the assets of the Fund in a manner consistent with its investment objective. In
addition, the Adviser pays the salaries of all personnel, including officers of
the Fund who are employees of the Adviser.
4. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the 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
14
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS February 28, 1999, continued
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 the 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 $12,935,646 at February 28, 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, and
other selected broker-dealer representatives may be reimbursed in the
subsequent calendar year. For the year ended February 28, 1999, the
distribution fee was accrued for Class A shares and Class C shares at the
annual rate of 0.24% and 1.00%, respectively.
The Distributor has informed the Fund that for the year ended February 28, 1999
it received contingent deferred sales charges from certain redemptions of the
Fund's Class B shares and Class C shares of $1,029,288 and $2,813, respectively
and received $17,451 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.
15
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS February 28, 1999, continued
5. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the year ended February 28, 1999
aggregated $159,725,807 and $220,940,036, respectively.
For the year ended February 28, 1999, the Fund incurred brokerage commissions
of $16,025 with Morgan Stanley & Co., Inc., an affiliate of the Manager and
Distributor, for portfolio transactions executed on behalf of the Fund. At
February 28, 1999, the Fund's receivable for investments sold included
unsettled trades with Morgan Stanley & Co., Inc. of $392,508.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Manager and
Distributor, is the Fund's transfer agent.
6. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
FEBRUARY 28, 1999 FEBRUARY 28, 1998*
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ............................ 116,536 $ 2,511,381 13,711 $ 261,176
Redeemed ........................ (23,647) (450,535) (666) (13,032)
------- ------------- ------ -------------
Net increase -- Class A ......... 92,889 2,060,846 13,045 248,144
------- ------------- ------ -------------
CLASS B SHARES
Sold ............................ 4,486,194 90,833,133 5,153,345 91,806,062
Redeemed ........................ (6,527,001) (133,486,471) (6,080,943) (109,578,810)
---------- ------------- ---------- -------------
Net decrease -- Class B ......... (2,040,807) (42,653,338) (927,598) (17,772,748)
---------- ------------- ---------- -------------
CLASS C SHARES
Sold ............................ 108,755 2,343,245 49,455 935,270
Redeemed ........................ (35,976) (705,682) (5,702) (111,875)
---------- ------------- ---------- -------------
Net increase -- Class C ......... 72,779 1,637,563 43,753 823,395
---------- ------------- ---------- -------------
CLASS D SHARES
Sold ............................ -- -- 553 10,022
---------- ------------- ---------- -------------
Net decrease in Fund ............ (1,875,139) $ (38,954,929) (870,247) $ (16,691,187)
========== ============= ========== =============
</TABLE>
- ---------------
* For Class A, C and D shares, for the period July 28, 1997 (issue date)
through February 28, 1998.
7. FEDERAL INCOME TAX STATUS
During the year ended February 28, 1999, the Fund utilized its net capital loss
carryover of approximately $3,370,000.
16
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS February 28, 1999, continued
As of February 28, 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 $6,603,169.
8. OTHER
On February 25, 1999, the Board of Trustees of the Fund recommended that the
Fund engage Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"), an
affiliate of the Manager, to serve as the Funds' new investment manager and
that a new investment management agreement between the Fund and MSDW Advisors
be submitted to shareholders for approval. Under the new agreement, MSDW
Advisors would be responsible for all the services presently provided by both
the Manager and the Adviser. The compensation paid to MSDW Advisors would be
equal to the total compensation presently paid to both the Manager and the
Adviser.
Additionally, on February 25, 1999, the Board of Trustees recommended that a
new sub-advisory agreement between MSDW Advisors and the present Adviser be
submitted to shareholders for approval. Under the new sub-advisory agreement,
MSDW Advisors would pay the new sub-adviser monthly compensation equal to 40%
of the compensation it receives under the new investment management agreement.
17
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each year:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 28,
----------------------------------
1999++ 1998**++
--------------- --------------
<S> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $21.08 $15.73
------ ------
Income (loss) from investment operations:
Net investment loss ................................... (0.43) (0.37)
Net realized and unrealized gain (loss) ............... 2.19 5.72
------ ------
Total income (loss) from investment operations ......... 1.76 5.35
------ ------
Net asset value, end of period ......................... $22.84 $21.08
====== ======
TOTAL RETURN+ .......................................... 8.35 % 34.01 %
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 2.18 %(1) 2.25 %
Net investment loss .................................... (2.08)%(1) (2.05)%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $322,489 $340,665
Portfolio turnover rate ................................ 51 % 61 %
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 28,
-------------------------------------------
1997 1996* 1995
-------------- -------------- -------------
<S> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $16.24 $ 9.90 $10.30
------ ------ ------
Income (loss) from investment operations:
Net investment loss ................................... (0.26) (0.19) (0.18)
Net realized and unrealized gain (loss) ............... (0.25) 6.53 (0.22)
------ ------ ------
Total income (loss) from investment operations ......... (0.51) 6.34 (0.40)
------ ------ ------
Net asset value, end of period ......................... $15.73 $16.24 $ 9.90
====== ====== ======
TOTAL RETURN+ .......................................... (3.14)% 64.04 % (3.88)%
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 2.15 % 2.32 % 2.57 %
Net investment loss .................................... (1.70)% (1.75)% (2.04)%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $268,783 $153,366 $69,984
Portfolio turnover rate ................................ 42 % 52 % 116 %
</TABLE>
- -------------
* Year ended February 29.
** 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
18
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 28, 1997*
ENDED THROUGH
FEBRUARY 28, 1999 FEBRUARY 28, 1998
------------------- ------------------
<S> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $21.18 $18.12
------ ------
Income from investment operations:
Net investment loss ............................ (0.29) (0.15)
Net realized and unrealized gain ............... 2.24 3.21
------ ------
Total income from investment operations ......... 1.95 3.06
------ ------
Net asset value, end of period .................. $23.13 $21.18
====== ======
TOTAL RETURN+ ................................... 9.21 % 16.89 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 1.50 %(3) 1.52 %(2)
Net investment loss ............................. (1.40)%(3) (1.32)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $2,450 $276
Portfolio turnover rate ......................... 51 % 61 %(1)
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $21.08 $18.12
------ ------
Income from investment operations:
Net investment loss ............................ (0.45) (0.24)
Net realized and unrealized gain ............... 2.22 3.20
------ ------
Total income from investment operations ......... 1.77 2.96
------ ------
Net asset value, end of period .................. $22.85 $21.08
====== ======
TOTAL RETURN+ ................................... 8.35 % 16.39 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 2.26 %(3) 2.29 %(2)
Net investment loss ............................. (2.16)%(3) (2.10)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $2,662 $923
Portfolio turnover rate ......................... 51 % 61 %(1)
</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
19
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR JULY 28, 1997*
ENDED THROUGH
FEBRUARY 28, 1999 FEBRUARY 28, 1998
------------------- ------------------
<S> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $21.21 $18.12
------ ------
Income from investment operations:
Net investment loss ............................ (0.24) (0.12)
Net realized and unrealized gain ............... 2.23 3.21
------ ------
Total income from investment operations ......... 1.99 3.09
------ ------
Net asset value, end of period .................. $23.20 $21.21
====== ======
TOTAL RETURN+ ................................... 9.38 % 17.05 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 1.26 %(3) 1.27 %(2)
Net investment loss ............................. (1.16)%(3) (1.10)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $13 $12
Portfolio turnover rate ......................... 51 % 61 %(1)
</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
20
<PAGE>
TCW/DW SMALL CAP GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF TCW/DW SMALL CAP 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 TCW/DW Small Cap Growth Fund (the
"Fund") at February 28, 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 February 28, 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
April 13, 1999
21
<PAGE>
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<PAGE>
(This page has been left blank intentionally.)
<PAGE>
TRUSTEES
John C. Argue
Richard M. DeMartini
Charles A. Fiumefreddo
John R. Haire
Dr. Manuel H. Johnson
Thomas E. Larkin, Jr.
Michael E. Nugent
John L. Schroeder
Marc I. Stern
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Thomas E. Larkin, Jr.
President
Barry Fink
Vice President, Secretary and
General Counsel
Christopher J. Ainley
Vice President
Charles Larsen
Vice President
Douglas S. Foreman
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
MANAGER
Morgan Stanley Dean Witter Services Company Inc.
ADVISER
TCW Funds 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.
TCW/DW
SMALL CAP
GROWTH FUND
[GRAPHIC]
ANNUAL REPORT
FEBRUARY 28, 1999
