<PAGE> 1
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND Two World Trade Center, New
York, New York 10048
LETTER TO THE SHAREHOLDERS July 31, 1998
DEAR SHAREHOLDER:
The fiscal six months ended July 31, 1998, began with strong economic growth,
but this strength diminished somewhat during the last three months of the
period. The Federal Reserve Board expressed continuing concern throughout this
period over the possibility of a resurgence of inflation because of the
continued strength of the economy and employment growth. However, due in large
part to the turmoil in the Southeast Asian and emerging markets, the Federal
Reserve Board left rates unchanged. We believe that the deflationary trend of
those economies could be beneficial in holding inflation in check in the United
States.
Interest rates on intermediate-term Treasuries were highly volatile over the
past six months, with five-year Treasuries ranging in yield from 5.38 percent to
5.79 percent. At the end of the period, the five-year Treasury note was yielding
5.50 percent compared, to 5.38 percent six months ago.
Overall, the equity market advanced, reflecting an environment of increasing
corporate profits and low inflation.
PERFORMANCE
For the six months ended July 31, 1998, Morgan Stanley Dean Witter Balanced
Growth Fund's Class C shares produced a total return of 6.72 percent, compared
to 15.18 percent for the Standard & Poor's Composite Stock Price Index (S&P
500), 2.81 percent for the Lehman Brothers Government/Corporate Bond Index and
7.50 percent for the Lipper Balanced Funds Index. For the same period the Fund's
Class A, B and D shares had total returns of 7.10 percent, 6.65 percent and 7.13
percent, respectively. The performance of the Fund's four share classes varies
because of differing expenses. Since inception (March 28, 1995) the Fund's Class
C shares have produced a cumulative total return of 77.15 percent and an average
annual total return of 18.66 percent.
PORTFOLIO
Morgan Stanley Dean Witter Balanced Growth Fund maintains an asset mix of 64
percent equities and 36 percent fixed-income securities. During
<PAGE> 2
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
LETTER TO THE SHAREHOLDERS July 31, 1998, continued
the period under review, the Fund's net assets grew from just over $183.2
million to more than $292 million.
In March, TCW/DW Balanced Fund was merged into Morgan Stanley Dean Witter
Balanced Growth Fund. A number of the TCW/DW Fund's equity holdings were sold,
but 19 were retained. At period-end, Morgan Stanley Dean Witter Balanced Growth
Fund held 44 equity positions.
During the six-month period we initiated one new common stock position in the
equity portion of the portfolio: Procter & Gamble. Additionally, the portfolio
acquired shares of Associates First Capital through a common stock distribution
following the company's spinoff from Ford Motor Co. We subsequently built these
shares into a full portfolio position. During the period we eliminated the
portfolio's holdings in Fortune Brands, Gallaher Group PLC ADRs and Tricon
Global Restaurants.
The Fund's fixed-income sector allocation changed as a result of the addition of
corporate obligations. As cash flows permitted, we also increased our exposure
to both U.S. Treasury and U.S. agency obligations. As of July 31, 1998, the
Fund's fixed-income assets were invested 21 percent in mortgage-backed
securities, 2 percent in U.S. corporate obligations, 5 percent in U.S.
Treasuries and 8 percent in U.S. agency obligations.
LOOKING AHEAD
Following the Fund's reporting period, the stock market became increasingly
volatile, and major market indices experienced extreme swings on several trading
days in August and September. It is likely that this volatility will
characterize the market over the near term. While these ups and downs may be
unsettling, such an environment underscores the potential benefits of the asset
diversification that Morgan Stanley Dean Witter Balanced Growth Fund provides.
We appreciate your ongoing support of Morgan Stanley Dean Witter Balanced Growth
Fund and look forward to continuing to serve your investment needs and
objectives.
Very truly yours,
/S/ CHARLES A. FIUMEFREDDO
CHARLES A. FIUMEFREDDO
Chairman of the Board
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1998 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (63.8%)
Aerospace & Defense (1.9%)
101,000 Raytheon Co. (Class B)....... $ 5,586,563
------------
Aircraft & Defense (0.5%)
38,800 Boeing Co. .................. 1,505,925
------------
Air Transport (0.8%)
19,900 Delta Air Lines, Inc. ....... 2,437,750
------------
Aluminum (2.0%)
86,000 Aluminum Co. of America...... 5,960,875
------------
Auto Parts - Original Equipment (0.5%)
20,400 Magna International Inc.
(Class A) (Canada).......... 1,392,300
------------
Automotive (4.0%)
101,000 Ford Motor Co. .............. 5,750,688
82,000 General Motors Corp. ........ 5,929,624
------------
11,680,312
------------
Bank Holding Companies (0.5%)
4,000 Wells Fargo & Co. ........... 1,423,500
------------
Banking (4.0%)
110,000 Banc One Corp. .............. 5,685,624
63,000 BankAmerica Corp. ........... 5,654,250
2,600 Citicorp..................... 442,000
------------
11,781,874
------------
Beverages - Soft Drinks
(2.0%)
154,000 PepsiCo, Inc. ............... 5,977,125
------------
Brokerage (0.8%)
24,100 Merrill Lynch & Co., Inc. ... 2,349,750
------------
Chemicals (2.0%)
93,000 Du Pont (E.I.) de Nemours &
Co., Inc. .................. 5,766,000
------------
Computer Equipment (2.0%)
45,000 International Business
Machines Corp. ............. 5,962,500
------------
Computers - Systems (1.0%)
52,700 Tandy Corp. ................. 2,994,019
------------
Conglomerates (2.0%)
162,000 Tenneco, Inc. ............... 5,872,500
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
Drugs & Healthcare (2.0%)
51,000 Bristol-Myers Squibb Co. .... $ 5,810,812
------------
Electrical Equipment (0.5%)
16,000 Honeywell, Inc. ............. 1,341,000
------------
Electric - Major (2.0%)
65,000 General Electric Co. ........ 5,805,313
------------
Electrics - Semiconductors/
Components (1.3%)
43,300 Intel Corp. ................. 3,653,438
------------
Financial (0.7%)
31,400 Fannie Mae................... 1,946,800
------------
Financial Services (2.0%)
75,746 Associates First Capital
Corp. (Class A)............. 5,884,517
------------
Foods (2.0%)
226,000 ConAgra, Inc. ............... 5,847,750
------------
Healthcare - Diversified
(1.1%)
44,100 Warner-Lambert Co. .......... 3,332,306
------------
Healthcare - Drugs (1.1%)
31,800 Lilly (Eli) & Co. ........... 2,138,550
15,100 Johnson & Johnson............ 1,166,475
------------
3,305,025
------------
Insurance - Brokers (0.6%)
29,100 Marsh & McLennan Companies,
Inc. ....................... 1,776,919
------------
Machinery - Agricultural
(1.9%)
136,000 Deere & Co. ................. 5,465,500
------------
Natural Gas (1.9%)
105,000 ENRON Corp. ................. 5,558,438
------------
Oil - Domestic (1.9%)
83,000 Atlantic Richfield Co. ...... 5,623,250
------------
Paper & Forest Products
(1.9%)
134,000 Weyerhaeuser Co. ............ 5,628,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE> 4
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1998 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
Railroads (2.5%)
138,000 CSX Corp. ................... $ 5,580,375
16,400 Burlington Northern Santa Fe
Corp. ...................... 1,688,175
------------
7,268,550
------------
Retail (1.9%)
117,000 Dayton Hudson Corp. ......... 5,594,063
------------
Retail - Department Stores (2.0%)
89,000 May Department Stores Co. ... 5,712,688
------------
Retail - Specialty (1.3%)
88,200 Home Depot, Inc. ............ 3,693,375
------------
Soap & Household Products (1.8%)
67,000 Procter & Gamble Co. ........ 5,318,125
------------
Steel (2.0%)
241,000 Timken Co. .................. 5,678,563
------------
Telecommunications (2.8%)
23,400 Lucent Technologies, Inc. ... 2,163,038
84,000 Sprint Corp. ................ 5,879,999
------------
8,043,037
------------
Tobacco (0.6%)
40,000 Philip Morris Companies,
Inc. ....................... 1,752,500
------------
Utilities - Electric (4.0%)
162,000 GPU, Inc. ................... 5,791,500
168,000 Unicom Corp. ................ 5,806,499
------------
11,597,999
------------
TOTAL COMMON STOCKS
(Identified Cost
$151,460,236)................ 186,328,961
------------
PRINCIPAL
AMOUNT IN
THOUSANDS
- --------
CORPORATE BONDS (2.2%)
Aerospace & Defense (0.1%)
$250,000 Raytheon Co.
6.45% due 08/15/02.......... 252,870
------------
Aircraft & Aerospace (0.0%)
100,000 Lockheed Martin Corp.
7.25% due 05/15/06.......... 105,383
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------------
<C> <S> <C>
Automotive (0.1%)
$150,000 Ford Motor Credit Corp.
8.20% due 02/15/02.......... $ 159,803
200,000 General Motors Co.
8.10% due 06/15/24.......... 219,598
------------
379,401
------------
Banks (0.3%)
300,000 Bank One Corp.
7.60% due 05/01/07.......... 324,821
200,000 Citicorp
7.125% due 03/15/04......... 208,456
230,000 Norwest Corp.
7.625% due 10/15/99......... 234,743
------------
768,020
------------
Banks - Thrift Institutions (0.1%)
200,000 Ahmanson (H.F.) & Co.
8.25% due 10/01/02.......... 214,832
------------
Beverages - Soft Drinks (0.1%)
150,000 Coca-Cola Enterprises Inc.
6.375% due 08/01/01......... 151,773
100,000 Coca-Cola Enterprises Inc.
7.875% due 02/01/02......... 105,823
------------
257,596
------------
Electric - Major (0.1%)
150,000 General Electric Capital
Corp.
8.85% due 04/01/05.......... 172,503
------------
Financial (0.4%)
300,000 Abbey National PLC (United
Kingdom)
6.69% due 10/17/05.......... 305,472
150,000 Associates Corp. North
America
6.25% due 03/15/99.......... 150,561
100,000 Associates Corp. North
America
5.25% due 03/30/00.......... 99,070
200,000 Bear Stearns Companies, Inc.
5.75% due 02/15/01.......... 198,642
100,000 Bear Stearns Companies, Inc.
6.75% due 12/15/07.......... 102,006
200,000 CIT Group, Inc.
6.125% due 12/15/00......... 200,858
------------
1,056,609
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1998 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------------
<C> <S> <C>
Finance - Leasing (0.1%)
$200,000 International Lease Finance
Corp.
6.375% due 01/18/00......... $ 201,380
------------
Food Processing (0.1%)
150,000 Campbell Soup Co.
6.15% due 12/01/02.......... 151,589
------------
Industrials (0.2%)
200,000 Caterpillar, Inc.
9.375% due 03/15/21......... 263,362
200,000 General American
Transportation Corp.
6.75% due 03/01/06.......... 203,542
100,000 Minnesota Mining &
Manufacturing Co.
6.375% due 02/15/28......... 100,112
100,000 Praxair, Inc.
6.75% due 03/01/03.......... 101,880
------------
668,896
------------
Life Insurance (0.0%)
100,000 Hartford Life, Inc.
7.65% due 06/15/27.......... 109,104
------------
Natural Gas - Distribution
(0.1%)
250,000 Sonat, Inc.
6.75% due 10/01/07.......... 254,585
------------
Retail (0.1%)
200,000 Wal-Mart Stores, Inc.
7.50% due 05/15/04.......... 215,218
------------
Technology - Consulting (0.1%)
200,000 Comdisco, Inc.
6.50% due 04/30/99.......... 200,820
------------
Telephones (0.2%)
200,000 MCI Communications Corp.
6.95% due 08/15/06.......... 206,568
500,000 U.S. West Capital Funding,
Inc.
6.25% due 07/15/05.......... 497,710
------------
704,278
------------
Transportation (0.0%)
100,000 Norfolk Southern Corp.
7.35% due 05/15/07.......... 106,986
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------------
<C> <S> <C>
Utilities (0.1%)
$200,000 Florida Power & Light Co.
7.05% due 12/01/26.......... $ 200,664
200,000 Texas Utilities Electric Co.
7.875% due 04/01/24......... 210,428
200,000 Union Electric Co.
6.75% due 05/01/08.......... 207,932
------------
619,024
------------
TOTAL CORPORATE BONDS
(Identified Cost
$6,312,042)................. 6,439,094
------------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS (12.4%)
Fannie Mae
1,000 5.75% due 04/15/03.......... 999,470
840 6.30% due 09/25/02.......... 849,240
875 6.34% due 02/04/08.......... 877,223
100 6.48% due 06/28/04.......... 103,221
1,000 6.55% due 11/21/07.......... 1,010,020
1,100 6.74% due 05/13/04.......... 1,148,774
575 7.40% due 07/01/04.......... 619,672
------------
5,607,620
------------
Federal Farm Credit Banks
3,000 5.90% due 01/10/05.......... 3,011,249
1,000 5.92% due 12/29/04.......... 1,004,820
------------
4,016,069
------------
Federal Home Loan Banks
595 0.00% due 02/25/04.......... 433,095
3,000 0.00% due 07/02/12.......... 1,029,930
500 5.53% due 01/15/03.......... 495,185
700 5.785% due 04/23/03......... 699,769
2,400 5.96% due 02/05/08.......... 2,403,503
------------
5,061,482
------------
Federal National Mortgage Assoc.
183 0.00% due 02/01/04.......... 133,713
880 6.40% due 09/27/05.......... 907,861
500 6.75% due 07/30/07.......... 510,800
------------
1,552,374
------------
Resolution Funding Corp.
(Coupon Strips)
2,500 0.00% due 04/15/04.......... 1,815,375
2,000 0.00% due 04/15/05.......... 1,371,300
1,300 0.00% due 01/15/06.......... 851,214
3,000 0.00% due 01/15/08.......... 1,738,710
------------
5,776,599
------------
Tennessee Valley Authority
298 0.00% due 04/15/04.......... 215,198
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1998 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------------
<C> <S> <C>
U.S. Treasury Bond
$ 800 5.75% due 10/31/02.......... $ 805,552
1,405 7.50% due 11/15/24.......... 1,723,851
1,730 12.00% due 08/15/13......... 2,549,846
------------
5,079,249
------------
U.S. Treasury Note
2,160 5.00% due 02/15/99.......... 2,155,550
500 5.75% due 11/30/02.......... 503,475
870 5.875% due 11/15/05......... 885,208
430 6.25% due 01/31/02.......... 439,503
200 6.25% due 02/15/03.......... 205,508
1,000 6.25% due 02/15/07.......... 1,044,220
740 6.625% due 06/30/01......... 761,564
------------
5,995,028
------------
U.S. Treasury Coupon Strips
1,500 0.00% due 11/15/04.......... 1,060,650
------------
U.S. Treasury Strips
2,000 0.00% due 11/15/06.......... 1,261,160
1,000 0.00% due 02/15/07.......... 620,650
------------
1,881,810
------------
TOTAL U.S. GOVERNMENT &
AGENCY OBLIGATIONS
(Identified Cost
$35,370,608)................. 36,246,079
------------
ASSET-BACKED SECURITY (0.3%)
Federal Housing
Administration Burbank
Gardens Retirement Center
778 7.50% due 02/01/32
(Identified Cost
$755,902)................... 810,079
------------
U.S. GOVERNMENT AGENCY MORTGAGE
PASS-THROUGH CERTIFICATES (20.7%)
Federal Home Loan Mortgage Corp.
2,956 7.00% due
03/01/17-08/01/25........... 3,002,903
1,617 7.50% due
06/01/11-08/01/11........... 1,662,976
------------
4,665,879
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------------
<C> <S> <C>
Federal National Mortgage Assoc.
$ 7,910 6.00% due
10/01/00-05/01/13........... $ 7,768,531
6,377 6.50% due
08/01/10-06/01/13........... 6,412,411
10,879 7.00% due
03/01/12-08/01/27........... 11,056,275
7,666 7.50% due
06/01/25-09/01/27........... 7,869,523
74 7.713% due 05/01/27......... 74,974
456 8.00% due
05/01/24-05/01/25........... 472,538
234 9.50% due 12/01/20.......... 240,141
------------
33,894,393
------------
Government National Mortgage Assoc.
990 6.00% due
05/15/28-06/15/28........... 965,869
4,994 6.50% due
04/20/28-05/20/28........... 4,960,921
4,278 7.00% due
02/20/26-08/15/26........... 4,335,971
8,405 7.50% due
06/15/24-06/15/27........... 8,648,965
2,991 8.00% due
04/15/26-08/15/26........... 3,102,734
------------
22,014,460
------------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE
PASS-THROUGH
CERTIFICATES
(Identified Cost
$59,431,265).............. 60,574,732
------------
TOTAL INVESTMENTS
(Identified Cost $253,330,053) (a)..99.4% 290,398,945
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES.............. 0.6 1,731,282
--- ------------
NET ASSETS....................... 100.0% $292,130,227
===== ============
</TABLE>
- ---------------------
(a) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $43,462,285 and the
aggregate gross unrealized depreciation is $6,393,393, resulting in net
unrealized appreciation of $37,068,892.
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1998 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $253,330,053)............................. $290,398,945
Cash........................................................ 116,870
Receivable for:
Interest................................................ 927,711
Shares of beneficial interest sold...................... 664,571
Investments sold........................................ 450,053
Dividends............................................... 381,289
Deferred organizational expenses............................ 56,304
Prepaid expenses and other assets........................... 109,219
------------
TOTAL ASSETS............................................ 293,104,962
------------
LIABILITIES:
Payable for:
Investments purchased................................... 348,013
Plan of distribution fee................................ 254,607
Investment management fee............................... 153,538
Shares of beneficial interest repurchased............... 146,291
Accrued expenses and other payables......................... 72,286
------------
TOTAL LIABILITIES....................................... 974,735
------------
NET ASSETS.............................................. $292,130,227
============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................. $233,276,663
Net unrealized appreciation................................. 37,068,892
Accumulated undistributed net investment income............. 411,816
Accumulated undistributed net realized gain................. 21,372,856
------------
NET ASSETS.............................................. $292,130,227
============
CLASS A SHARES:
Net Assets.................................................. $2,049,721
Shares Outstanding (unlimited authorized, $.01 par value)... 133,478
NET ASSET VALUE PER SHARE............................... $15.36
============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value)........ $16.21
============
CLASS B SHARES:
Net Assets.................................................. $91,386,682
Shares Outstanding (unlimited authorized, $.01 par value)... 5,958,522
NET ASSET VALUE PER SHARE............................... $15.34
============
CLASS C SHARES:
Net Assets.................................................. $198,676,295
Shares Outstanding (unlimited authorized, $.01 par value)... 12,958,865
NET ASSET VALUE PER SHARE............................... $15.33
============
CLASS D SHARES:
Net Assets.................................................. $17,529
Shares Outstanding (unlimited authorized, $.01 par value)... 1,142
NET ASSET VALUE PER SHARE............................... $15.35
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended July 31, 1998 (unaudited)
NET INVESTMENT INCOME:
INCOME
Interest.................................................... $ 3,211,311
Dividends (net of $1,384 foreign withholding tax)........... 1,742,415
-----------
TOTAL INCOME............................................ 4,953,726
-----------
EXPENSES
Plan of distribution fee (Class A shares)................... 1,311
Plan of distribution fee (Class B shares)................... 434,342
Plan of distribution fee (Class C shares)................... 890,592
Investment management fee................................... 807,029
Transfer agent fees and expenses............................ 101,839
Registration fees........................................... 84,061
Professional fees........................................... 25,579
Shareholder reports and notices............................. 21,642
Organizational expenses..................................... 16,845
Custodian fees.............................................. 15,402
Trustees' fees and expenses................................. 7,041
Other....................................................... 2,383
-----------
TOTAL EXPENSES.......................................... 2,408,066
-----------
NET INVESTMENT INCOME................................... 2,545,660
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 21,624,880
Net change in unrealized appreciation....................... 11,469,032
-----------
NET GAIN................................................ 33,093,912
-----------
NET INCREASE................................................ $35,639,572
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JULY 31, ENDED
1998 JANUARY 31, 1998*
- ---------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................ $ 2,545,660 $ 3,418,094
Net realized gain.................................... 21,624,880 9,339,981
Net change in unrealized appreciation................ 11,469,032 15,015,576
------------ ------------
NET INCREASE..................................... 35,639,572 27,773,651
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares................................... (11,747) (5,489)
Class B shares................................... (757,564) (718,055)
Class C shares................................... (1,809,212) (2,548,813)
Class D shares................................... (227) (235)
Net realized gain
Class A shares................................... (15,219) (10,635)
Class B shares................................... (1,050,951) (2,320,188)
Class C shares................................... (2,311,734) (4,770,925)
Class D shares................................... (201) (540)
------------ ------------
TOTAL DIVIDENDS AND DISTRIBUTIONS................ (5,956,855) (10,374,880)
------------ ------------
Net increase from transactions in shares of
beneficial interest................................. 79,279,478 46,353,274
------------ ------------
NET INCREASE..................................... 108,962,195 63,752,045
NET ASSETS:
Beginning of period.................................. 183,168,032 119,415,987
------------ ------------
END OF PERIOD
(Including undistributed net investment income of
$411,816 and $448,903, respectively)............. $292,130,227 $183,168,032
============ ============
</TABLE>
- ---------------------
* Class A, Class B and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1998 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Balanced Growth Fund (the "Fund"), formerly Dean
Witter Balanced Growth Fund, is registered under the Investment Company Act of
1940, as amended (the "Act"), as a diversified, open-end management investment
company. The Fund's investment objective is capital growth with reasonable
current income. The Fund seeks to achieve its objective by investing in common
stock of companies which have a record of paying dividends and have the
potential for increasing dividends, securities convertible into common stock and
in investment grade fixed income securities. The Fund was organized as a
Massachusetts business trust on November 23, 1994 and commenced operations on
March 28, 1995. On July 28, 1997, the Fund commenced offering three additional
classes of shares, with the then current shares, other than shares which were
acquired in exchange for shares of Funds for which Morgan Stanley Dean Witter
Advisors Inc. serves as Investment Manager ("Morgan Stanley Dean Witter Funds")
offered with either a front-end sales charge or a contingent deferred sales
charge ("CDSC") and shares acquired through reinvestment of dividends and
distributions thereon, designated as Class C shares. Shares held prior to July
28, 1997 which were acquired in exchange for shares of a Morgan Stanley Dean
Witter Fund sold with a front-end sales charge, including shares acquired
through reinvestment of dividends and distributions thereon, have been
designated Class A shares and shares held prior to July 28, 1997 which were
acquired in exchange for shares of a Morgan Stanley Dean Witter Fund sold with a
CDSC, including shares acquired through reinvestment of dividends and
distributions thereon, have been designated Class B shares.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase, some Class
A shares, and most Class B shares and Class C shares are subject to a contingent
deferred sales charge imposed on shares redeemed within one year, six years and
one year, respectively. Class D shares are not subject to a sales charge.
Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1998 (unaudited) continued
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (in
cases where securities are traded on more than one exchange, the securities are
valued on the exchange designated as the primary market pursuant to procedures
adopted by the Trustees); (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by Morgan Stanley Dean Witter Advisors Inc. (the "Investment
Manager"), formerly Dean Witter InterCapital, Inc., that sale or bid prices are
not reflective of a security's market value, portfolio securities are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision of the Trustees (valuation of debt securities for
which market quotations are not readily available may be based upon current
market prices of securities which are comparable in coupon, rating and maturity
or an appropriate matrix utilizing similar factors); (4) certain portfolio
securities may be valued by an outside pricing service approved by the Trustees.
The pricing service may utilize a matrix system incorporating security quality,
maturity and coupon as the evaluation model parameters, and/or research and
evaluations by its staff, including review of broker-dealer market price
quotations, if available, in determining what it believes is the fair valuation
of the securities valued by such pricing service; and (5) 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.
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.
Discounts are accreted over the life of the respective securities. Dividend
income and other distributions are recorded on the ex-dividend date. 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.
11
<PAGE> 12
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1998 (unaudited) continued
D. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
F. ORGANIZATIONAL EXPENSES -- The Investment Manager paid the organizational
expenses of the Fund in the amount of approximately $171,000, of which
approximately $141,000 have been reimbursed. Such expenses have been deferred
and are being amortized on the straight-line method over a period not to exceed
five years from the commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
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 Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1998 (unaudited) 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. 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
average daily net assets of Class B; and (iii) Class C -- up to 1.0% of the
average daily net assets of Class C. In the case of Class A shares, amounts paid
under the Plan are paid to the Distributor for services provided. In the case of
Class B and Class C shares, amounts paid under the Plan are paid to the
Distributor for services provided and the expenses borne by it and others in the
distribution of the shares of these Classes, including the payment of
commissions for sales of these Classes and incentive compensation to, and
expenses of, 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; printing and distribution of
prospectuses and reports used in connection with the offering of these shares to
other than current shareholders; and preparation, printing and distribution of
sales literature and advertising materials. In addition, the Distributor may
utilize fees paid pursuant to the Plan, in the case of Class B shares, to
compensate Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Investment
Manager and Distributor, and other selected broker-dealers for their opportunity
costs in advancing such amounts, which compensation would be in the form of a
carrying charge on any unreimbursed expenses.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts, including
carrying charges, totaled $631,687 at July 31, 1998.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1998 (unaudited) continued
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 six months ended July 31,
1998, the distribution fee was accrued for Class A shares and Class C shares at
the annual rate of 0.25% and 0.98%, respectively.
The Distributor has informed the Fund that for the six months ended July 31,
1998, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $30,629 and $16,557,
respectively and received $22,358 in front-end sales charges from sales of the
Fund's Class A shares. The respective shareholders pay such charges which are
not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended July 31, 1998 aggregated
$148,203,745 and $72,690,104, respectively. Included in the aforementioned are
purchases and sales of U.S. Government securities in the amount of $45,595,153
and $3,483,195, respectively.
For the six months ended July 31, 1998, the Fund incurred brokerage commissions
of $10,117 with Morgan Stanley & Co., Inc., an affiliate of the Investment
Manager, for portfolio transactions executed on behalf of the Fund.
For the six months ended July 31, 1998, the Fund incurred brokerage commissions
of $30,190, with DWR for portfolio transactions executed on behalf of the Fund.
At July 31, 1998, the Fund's payable for investments purchased and receivable
for investments sold included unsettled trades with DWR of $142,450 and
$199,981, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent.
14
<PAGE> 15
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1998 (unaudited) continued
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JULY 31, 1998 JANUARY 31, 1998*+
------------------------- -------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold........................................................ 107,937 $ 1,695,315 46,655 $ 683,770
Reinvestment of dividends and distributions................. 1,331 20,777 786 11,607
Shares issued in connection with the acquisition of TCW/DW
Balanced Fund.............................................. 4,134 64,616 -- --
Redeemed.................................................... (3,311) (51,925) (36,416) (550,341)
---------- ------------ ---------- ------------
Net increase - Class A...................................... 110,091 1,728,783 11,025 145,036
---------- ------------ ---------- ------------
CLASS B SHARES
Sold........................................................ 1,224,231 18,721,958 1,248,350 18,499,860
Reinvestment of dividends and distributions................. 77,302 1,207,497 128,246 1,890,315
Shares issued in connection with the acquisition of TCW/DW
Balanced Fund.............................................. 714,438 11,141,706 -- --
Redeemed.................................................... (959,844) (15,007,990) (804,817) (11,954,345)
---------- ------------ ---------- ------------
Net increase - Class B...................................... 1,056,127 16,063,171 571,779 8,435,830
---------- ------------ ---------- ------------
CLASS C SHARES
Sold........................................................ 1,034,234 16,830,899 4,677,752 64,189,834
Reinvestment of dividends and distributions................. 245,673 3,837,449 469,682 6,767,943
Shares issued in connection with the acquisition of TCW/DW
Balanced Fund.............................................. 5,421,407 84,548,537 -- --
Redeemed.................................................... (1,307,058) (43,729,806) (2,419,792) (33,201,717)
---------- ------------ ---------- ------------
Net increase - Class C...................................... 5,394,256 61,487,079 2,727,642 37,756,060
---------- ------------ ---------- ------------
CLASS D SHARES
Sold........................................................ 1 17 1,061 15,573
Reinvestment of dividends and distributions................. 27 428 53 775
---------- ------------ ---------- ------------
Net increase - Class D...................................... 28 445 1,114 16,348
---------- ------------ ---------- ------------
Net increase in Fund........................................ 6,560,502 $ 79,279,478 3,311,560 $ 46,353,274
========== ============ ========== ============
</TABLE>
- ---------------------
+ On July 28, 1997, 12,362 shares representing $181,608 were transferred to
Class A and 4,330,616 shares representing $63,616,743 were transferred to
Class B.
* For Class A, B and D shares, for the period July 28, 1997 (issue date) through
January 31, 1998.
6. ACQUISITION OF TCW/DW BALANCED FUND
As of the close of business on March 13, 1998, the Fund acquired all the net
assets of TCW/DW Balanced Fund ("Balanced") pursuant to a plan of reorganization
approved by the shareholders of Balanced on February 26, 1998. The acquisition
was accomplished by a tax-free exchange of 4,134
15
<PAGE> 16
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1998 (unaudited) continued
Class A shares of the Fund at a net asset value of $15.63 per share for 4,970
Class A shares of Balanced; 714,438 Class B shares of the Fund at a net asset
value of $15.60 per share for 857,985 Class B shares of Balanced; and 5,421,407
Class C shares of the Fund at a net asset value of $15.60 per share for
6,505,688 Class C shares of Balanced. The net assets of the Fund and Balanced
immediately before the acquisition were $195,384,041 and $95,754,859,
respectively, including unrealized appreciation of $23,251,296 for Balanced.
Immediately after the acquisition, the combined net assets of the Fund amounted
to $218,635,337.
16
<PAGE> 17
MORGAN STANLEY DEAN WITTER BALANCED 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 SIX FOR THE YEAR FOR THE YEAR MARCH 28, 1995*
MONTHS ENDED ENDED ENDED THROUGH
JULY 31, 1998++ JANUARY 31, 1998***++ JANUARY 31, 1997 JANUARY 31, 1996
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.............. $14.66 $13.01 $11.92 $10.00
------ ------ ------ ------
Net investment income............................. 0.09 0.32 0.25 0.31
Net realized and unrealized gain.................. 0.90 2.23 1.33 1.88
------ ------ ------ ------
Total from investment operations.................. 0.99 2.55 1.58 2.19
------ ------ ------ ------
Less dividends and distributions from:
Net investment income............................ (0.14) (0.30) (0.27) (0.27)**
Net realized gain................................ (0.18) (0.60) (0.22) --
------ ------ ------ ------
Total dividends and distributions................. (0.32) (0.90) (0.49) (0.27)
------ ------ ------ ------
Net asset value, end of period.................... $15.33 $14.66 $13.01 $11.92
====== ====== ====== ======
TOTAL INVESTMENT RETURN+.......................... 6.72%(1) 19.82% 13.44% 22.13%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.......................................... 1.79%(2) 1.87% 1.92%(3) --(2)(3)
Net investment income............................. 1.89%(2) 2.18% 2.31%(3) 4.25%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands........... $198,676 $110,909 $119,416 $47,596
Portfolio turnover rate........................... 28%(1) 28% 16% 2%(1)
</TABLE>
- ---------------------
<TABLE>
<C> <S>
* Commencement of operations.
** Includes a capital gain distribution of $0.004.
*** Prior to July 28, 1997, the fund issued one class of shares.
All shares of the Fund held prior to that date, other than
shares which were acquired in exchange for shares of Funds
for which Morgan Stanley Dean Witter Advisors Inc. serves as
Investment Manager ("Morgan Stanley Dean Witter Funds")
offered with either a front-end sales charge or a contingent
deferred sales charge ("CDSC") and shares acquired through
reinvestment of dividends and distributions thereon, have
been designated Class C shares. Shares held prior to July
28, 1997 which were acquired in exchange for shares of a
Morgan Stanley Dean Witter Fund sold with a front-end sales
charge, including shares acquired through reinvestment of
dividends and distributions thereon, have been designated
Class A shares and shares held prior to July 28, 1997 which
were acquired in exchange for shares of a Morgan Stanley
Dean Witter Fund sold with a CDSC, including shares acquired
through reinvestment of dividends and distributions thereon,
have been designated Class B shares.
++ The per share amounts were computed using an average number
of shares outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated
based on the net asset value as of the last business day of
the period.
(1) Not annualized.
(2) Annualized.
(3) If the Investment Manager had not reimbursed expenses and
waived the management fee, the annualized expense and net
investment income ratios would have been 1.95% and 2.28%,
respectively, for the year ended January 31, 1997, and 2.42%
and 1.83%, respectively, for the period ended January 31,
1996.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE> 18
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JULY 28, 1997*
MONTHS ENDED THROUGH
JULY 31, 1998++ JANUARY 31, 1998++
- --------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................ $14.68 $14.69
------ ------
Net investment income....................................... 0.15 0.21
Net realized and unrealized gain............................ 0.90 0.50
------ ------
Total from investment operations............................ 1.05 0.71
------ ------
Less dividends and distributions from:
Net investment income...................................... (0.19) (0.21)
Net realized gain.......................................... (0.18) (0.51)
------ ------
Total dividends and distributions........................... (0.37) (0.72)
------ ------
Net asset value, end of period.............................. $15.36 $14.68
====== ======
TOTAL INVESTMENT RETURN+.................................... 7.10%(1) 4.77%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.05%(2) 1.12%(2)
Net investment income....................................... 2.65%(2) 2.84%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $2,050 $343
Portfolio turnover rate..................................... 28%(1) 28%
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................ $14.67 $14.69
------ ------
Net investment income....................................... 0.08 0.16
Net realized and unrealized gain............................ 0.90 0.49
------ ------
Total from investment operations............................ 0.98 0.65
------ ------
Less dividends and distributions from:
Net investment income...................................... (0.13) (0.16)
Net realized gain.......................................... (0.18) (0.51)
------ ------
Total dividends and distributions........................... (0.31) (0.67)
------ ------
Net asset value, end of period.............................. $15.34 $14.67
====== ======
TOTAL INVESTMENT RETURN+.................................... 6.65%(1) 4.38%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.80%(2) 1.86%(2)
Net investment income....................................... 1.90%(2) 2.14%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $91,387 $71,900
Portfolio turnover rate..................................... 28%(1) 28%
</TABLE>
- ---------------------
* The date the shares were first issued. Shareholders who held shares of the
Fund prior to July 28, 1997 (the date the Fund converted to a multiple class
share structure) should refer to the Financial Highlights of Class C to
obtain the historical per share data and ratio information of their shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE> 19
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JULY 28, 1997*
MONTHS ENDED THROUGH
JULY 31, 1998++ JANUARY 31, 1998++
- ---------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................ $14.68 $14.69
------ ------
Net investment income....................................... 0.12 0.24
Net realized and unrealized gain............................ 0.93 0.48
------ ------
Total from investment operations............................ 1.05 0.72
------ ------
Less dividends and distributions from:
Net investment income...................................... (0.20) (0.22)
Net realized gain.......................................... (0.18) (0.51)
------ ------
Total dividends and distributions........................... (0.38) (0.73)
------ ------
Net asset value, end of period.............................. $15.35 $14.68
====== ======
TOTAL INVESTMENT RETURN+.................................... 7.13%(1) 4.88%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 0.80%(2) 0.86%(2)
Net investment income....................................... 2.91%(2) 3.08%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $18 $16
Portfolio turnover rate..................................... 28% (1) 28%
</TABLE>
- ---------------------
* The date the shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE> 20
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Paul D. Vance
Vice President
Rajesh K. Gupta
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
INVESTMENT MANAGER
Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records of
the Fund without examination by the independent accountants and accordingly
they do not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and
trustees, fees, expenses and other pertinent information, please see the
prospectus of the Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus.
MORGAN STANLEY
DEAN WITTER
BALANCED
GROWTH FUND
[GRAPHIC]
SEMIANNUAL REPORT
JULY 31, 1998
