<PAGE> 1
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND Two World Trade Center
LETTER TO THE SHAREHOLDERS July 31, 1999 New York, New York 10048
DEAR SHAREHOLDER:
During the six-month period ended July 31, 1999, the U.S. equity market
experienced a change in leadership. Mega-cap market leaders, particularly in the
technology and pharmaceutical sectors, which had dominated the market's
performance in 1998, experienced lower returns. Large-cap multinationals also
faltered as concerns over inflation and global economic crisis surfaced. In
contrast to the rocky road endured by large-cap stocks, mid- and small-cap
issues had a much smoother ride. Strong performance was evident in the
technology sector and in cyclical stocks, particularly those in the drilling and
basic materials industries. This change in leadership was reflected in the
individual performance of the stocks in the S&P 500 Composite Stock Price Index
(S&P 500). Its largest 50 stocks were outperformed by the remaining 450 during
the first half of 1999, indicating a shift in sentiment toward small- and
mid-cap stocks as well as cyclicals.
Renewed concern that the Federal Reserve Board would attempt to slow domestic
economic growth by raising short-term interest rates negatively affected the
fixed-income markets during the period. These concerns proved to be justified in
June when the Fed raised rates by 25 basis points, offsetting one of the three
25-basis-point cuts that had occurred just eight months earlier.
Interest rates on intermediate-term U.S. Treasuries were highly volatile during
the period. Five-year Treasuries ranged in yield between 4.55 percent and 5.92
percent. On July 31 the five-year Treasury note was yielding 5.79 percent,
compared to 4.55 percent six months earlier.
During the first quarter of 1999, spreads on mortgage-backed securities
tightened from their historically wide levels of late 1998, but by July 1999
these spreads had widened again. Accordingly, as cash flows permitted, we
purchased current-coupon mortgages at very attractive levels, thereby enhancing
the Fund's prospects for higher total returns.
<PAGE> 2
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
LETTER TO THE SHAREHOLDERS July 31, 1999, continued
PERFORMANCE AND PORTFOLIO STRATEGY
For the six-month period ended July 31, 1999, Morgan Stanley Dean Witter
Balanced Growth Fund's Class C shares produced a total return of 2.37 percent,
compared to 2.55 percent for the Lipper Balanced Funds Index, 4.50 percent for
the Standard & Poor's 500 Composite Stock Price Index (S&P 500), and -3.24
percent for the Lehman Brothers Government/Corporate Bond Index. For the same
period the Fund's Class A, B and D shares earned 2.80 percent, 2.39 percent and
2.82 percent, respectively. The performance of the Fund's four share classes
varies because of differing expenses.
At period end, the Fund's net assets totaled more than $319 million, up from
slightly more than $308 million six months earlier. The asset mix of the Fund is
64 percent equities and 36 percent fixed-income instruments. Currently the Fund
maintains investments in 27 equity securities spread out among 23 industries.
The Fund's fixed-income assets were invested as follows: 61 percent in
mortgage-backed securities, 10 percent in U.S. Treasuries, 6 percent in U.S.
corporate obligations, 19 percent in U.S. agency obligations and the balance in
cash equivalents.
LOOKING AHEAD
While inflation seems poised to remain low, we do not believe that the economy
will weaken any time soon. As a result, we expect that the Fed may further
tighten short-term interest rates in the near future. Accordingly, adjustments
to the maturity structure and composition of the Fund will be made as conditions
warrant and attractive opportunities become available.
On May 1, 1999, Mitchell M. Merin was named President of the Morgan Stanley Dean
Witter Funds. Mr. Merin is the President and Chief Operating Officer of Asset
Management for Morgan Stanley Dean Witter & Co. and President, Chief Executive
Officer and Director of Morgan Stanley Dean Witter Advisors Inc., the Fund's
investment manager. He also serves as Chairman, Chief Executive Officer and
Director of the Fund's distributor and transfer agent.
We appreciate your ongoing support of Morgan Stanley Dean Witter Balanced Growth
Fund and look forward to continuing to serve your investment objectives.
<TABLE>
<S> <C>
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO /s/ MITCHELL M. MERIN
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
</TABLE>
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
FUND PERFORMANCE July 31, 1999
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A*
- ----------------------------------------------
<S> <C> <C>
PERIOD ENDED (7/31/99)
- -------------------------
Since Inception (7/28/97) 12.22(1) 9.25(2)
1 Year 12.33(1) 6.43(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C++
- ----------------------------------------------
<S> <C> <C>
PERIOD ENDED (7/31/99)
- -------------------------
Since Inception (3/28/95) 16.97(1) 16.97(2)
1 Year 11.50(1) 10.53(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS B+
- ----------------------------------------------
<S> <C> <C>
PERIOD ENDED (7/31/99)
- -------------------------
Since Inception (7/28/97) 11.34(1) 9.99(2)
1 Year 11.45(1) 6.61(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS D#
- ----------------------------------------------
<S> <C> <C>
PERIOD ENDED (7/31/99)
- -------------------------
Since Inception (7/28/97) 12.41(1)
1 Year 12.56(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
- ---------------------
<TABLE>
<S> <C>
(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.
* The maximum front-end sales charge for Class A is 5.25%.
+ The maximum CDSC for Class B is 5.0%. The CDSC declines to
0% after six years.
++ The maximum CDSC for Class C shares is 1% for shares
redeemed within one year of purchase.
# Class D shares have no sales charge.
</TABLE>
3
<PAGE> 4
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1999 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (63.5%)
Aluminum (2.4%)
126,500 Alcoa Inc. .................. $ 7,574,187
------------
Auto Parts: O.E.M. (2.3%)
410,000 Delphi Automotive Systems
Corp. ...................... 7,380,000
------------
Beverages - Non-Alcoholic (2.5%)
210,000 PepsiCo, Inc. ............... 8,216,250
------------
Computer Hardware (2.3%)
60,000 International Business
Machines Corp. ............. 7,541,250
------------
Construction/Agricultural
Equipment/Trucks (2.5%)
205,000 Deere & Co. ................. 7,841,250
------------
Department Stores (2.2%)
185,000 May Department Stores Co. ... 7,157,187
------------
Discount Chains (2.4%)
116,500 Dayton Hudson Corp. ......... 7,536,094
------------
Electric Utilities (4.7%)
188,500 GPU, Inc. ................... 7,233,687
195,000 Unicom Corp. ................ 7,653,750
------------
14,887,437
------------
Finance Companies (2.2%)
185,000 Associates First Capital
Corp. (Class A)............. 7,087,812
------------
Forest Products (2.5%)
122,000 Weyerhaeuser Co. ............ 7,891,875
------------
Integrated Oil Companies (2.5%)
90,000 Atlantic Richfield Co. ...... 8,105,625
------------
Major Banks (4.5%)
129,000 Bank One Corp. .............. 7,038,562
113,000 BankAmerica Corp. ........... 7,500,375
------------
14,538,937
------------
Major Chemicals (2.5%)
110,000 Du Pont (E.I.) de Nemours &
Co., Inc. .................. 7,926,875
------------
Major Pharmaceuticals (2.3%)
110,000 Bristol-Myers Squibb Co. .... 7,315,000
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
Major U.S. Telecommunications (2.2%)
134,500 AT&T Corp. .................. $ 6,985,594
------------
Meat/Poultry/Fish (2.3%)
287,500 ConAgra, Inc. ............... 7,349,219
------------
Metals Fabrications (2.2%)
430,000 Timken Co. (The)............. 7,095,000
------------
Military/Gov't/Technical
(2.3%)
104,500 Raytheon Co. (Class B)....... 7,347,656
------------
Motor Vehicles (4.4%)
140,000 Ford Motor Co. .............. 6,807,500
117,000 General Motors Corp. ........ 7,129,688
------------
13,937,188
------------
Multi-Sector Companies (4.8%)
72,000 General Electric Co. ........ 7,848,000
325,000 Tenneco, Inc. ............... 7,414,063
------------
15,262,063
------------
Oil/Gas Transmission (2.5%)
95,000 Enron Corp. ................. 8,092,813
------------
Package Goods/Cosmetics (2.5%)
90,000 Procter & Gamble Co. ........ 8,145,000
------------
Railroads (2.5%)
165,000 CSX Corp. ................... 7,992,188
------------
TOTAL COMMON STOCKS
(Identified Cost
$175,196,610)................ 203,206,500
------------
PRINCIPAL
AMOUNT IN
THOUSANDS
- --------
CORPORATE BONDS (2.1%)
Aerospace (0.0%)
$ 100 Lockheed Martin Corp.
7.25% due 05/15/06.......... 98,587
------------
Beverages - Non-Alcoholic (0.1%)
150 Coca-Cola Enterprises, Inc.
6.375% due 08/01/01......... 149,914
100 Coca-Cola Enterprises, Inc.
7.875% due 02/01/02......... 103,070
------------
252,984
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1999 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------------
<C> <S> <C>
Construction/Agricultural Equipment/Trucks
(0.1%)
$ 200 Caterpillar, Inc.
9.375% due 03/15/21......... $ 237,154
------------
Discount Chains (0.1%)
200 Wal-Mart Stores, Inc.
7.50% due 05/15/04.......... 208,322
------------
Diversified Manufacturing (0.0%)
100 Minnesota Mining &
Manufacturing Co.
6.375% due 02/15/28......... 90,298
------------
Electric Utilities (0.2%)
200 Florida Power & Light Co.
7.05% due 12/01/26.......... 187,410
200 Texas Utilities Electric Co.
7.875% due 04/01/24......... 200,536
200 Union Electric Co.
6.75% due 05/01/08.......... 195,992
------------
583,938
------------
Finance Companies (0.2%)
500 Associates Corp. of North
America
6.25% due 11/01/08.......... 467,990
200 CIT Group, Inc.
6.125% due 12/15/00......... 199,690
150 Ford Motor Credit Corp.
8.20% due 02/15/02.......... 155,326
------------
823,006
------------
International Banks (0.1%)
300 Abbey National PLC
(United Kingdom)
6.69% due 10/17/05.......... 294,291
------------
Investment Bankers/Brokers/
Services (0.1%)
200 Bear Stearns Companies, Inc.
5.75% due 02/15/01.......... 197,780
100 Bear Stearns Companies, Inc.
6.75% due 12/15/07.......... 96,235
------------
294,015
------------
Life Insurance (0.0%)
100 Hartford Life, Inc.
7.65% due 06/15/27.......... 101,157
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------------
<C> <S> <C>
Major Banks 0.2%)
$ 300 Bank One Corp.
7.60% due 05/01/07.......... $ 305,931
200 Citicorp
7.125% due 03/15/04......... 201,180
230 Norwest Corp.
7.625% due 10/15/99......... 230,925
------------
738,036
------------
Major Chemicals (0.1%)
500 Monsanto Co. - 144A*
5.875% due 12/01/08......... 452,700
------------
Major U.S. Telecommunications (0.3%)
200 MCI Communication Corp.
6.95% due 08/15/06.......... 199,566
700 MCI Worldcom Inc.
6.40% due 08/15/05.......... 680,484
------------
880,050
------------
Military/Gov't/Technical (0.1%)
250 Raytheon Co.
6.45% due 08/15/02.......... 247,932
------------
Motor Vehicles (0.1%)
200 General Motors Corp.
8.10% due 06/15/24.......... 201,494
------------
Multi-Sector Companies (0.1%)
150 General Electric Capital
Corp.
8.85% due 04/01/05.......... 163,809
------------
Oil/Gas Transmission (0.1%)
250 Sonat, Inc.
6.75% due 10/01/07.......... 242,238
------------
Packaged Foods (0.0%)
150 Campbell Soup Co.
6.15% due 12/01/02.......... 149,336
------------
Railroads (0.0%)
100 Norfolk Southern Corp.
7.35% due 05/15/07.......... 100,991
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1999 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------------
<C> <S> <C>
Rental/Leasing Companies (0.1%)
$ 200 General American
Transportation Corp.
6.75% due 03/01/06.......... $ 191,146
200 International Lease Finance
Corp.
6.375% due 01/18/00......... 200,474
------------
391,620
------------
Savings & Loan Associations (0.1%)
200 Washington Mutual, Inc.
8.25% due 10/01/02.......... 206,918
------------
206,918
------------
Specialty Chemicals (0.0%)
100 Praxair, Inc.
6.75% due 03/01/03.......... 99,225
------------
TOTAL CORPORATE BONDS
(Identified Cost
$7,102,867)................. 6,858,101
------------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS (10.6%)
Fannie Mae
183 0.00% due 02/01/04.......... 138,161
840 6.30% due 09/25/02.......... 834,229
875 6.34% due 02/04/08.......... 836,579
880 6.40% due 09/27/05.......... 875,477
100 6.48% due 06/28/04.......... 99,866
1,000 6.55% due 11/21/07.......... 968,370
1,100 6.74% due 05/13/04.......... 1,108,294
500 6.75% due 07/30/07.......... 489,245
575 7.40% due 07/01/04.......... 596,166
------------
5,946,387
------------
Federal Farm Credit Banks
3,000 5.90% due 01/10/05.......... 2,918,400
1,000 5.92% due 12/29/04.......... 971,600
------------
3,890,000
------------
Federal Home Loan Banks
595 0.00% due 02/25/04.......... 446,196
3,000 0.00% due 07/02/12.......... 1,086,600
1,000 5.88% due 11/25/08.......... 926,080
2,400 5.96% due 02/05/08.......... 2,267,088
------------
4,725,964
------------
Resolution Funding Corp.
(Coupon Strips)
2,500 0.00% due 04/15/04.......... 1,878,000
1,500 0.00% due 10/15/04.......... 1,092,450
2,000 0.00% due 04/15/05.......... 1,407,740
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------------
<C> <S> <C>
$ 1,300 0.00% due 01/15/06.......... $ 870,285
3,000 0.00% due 01/15/08.......... 1,756,020
------------
7,004,495
------------
Tennessee Valley Authority
298 0.00% due 04/15/04.......... 221,268
------------
U.S. Treasury Bonds
1,405 7.50% due 11/15/24+......... 1,610,931
1,730 12.00% due 08/15/13......... 2,402,607
------------
4,013,538
------------
U.S. Treasury Strips
1,500 0.00% due 11/15/04.......... 1,093,425
2,000 0.00% due 11/15/06.......... 1,285,880
1,000 0.00% due 02/15/07.......... 631,250
------------
3,010,555
------------
U.S. Treasury Notes
1,000 5.50% due 05/31/03.......... 987,430
500 5.625% due 02/15/06......... 489,350
870 5.875% due 11/15/05......... 863,318
1,500 6.125% due 08/15/07......... 1,503,435
1,000 6.25% due 02/15/07.......... 1,010,490
------------
4,854,023
------------
TOTAL U.S. GOVERNMENT &
AGENCY OBLIGATIONS
(Identified Cost
$34,313,823)................. 33,666,230
------------
U.S. GOVERNMENT AGENCY MORTGAGE
PASS-THROUGH CERTIFICATES (22.4%)
Federal Home Loan Mortgage Corp.
2,128 7.00% due 03/03/17-02/01/28. 2,111,167
1,066 7.50% due 06/01/11-08/01/11. 1,082,471
------------
3,193,638
------------
773 Federal Housing
Administration Burbank
Gardens Retirement Center
7.50% due 02/01/32.......... 762,693
------------
Federal National Mortgage Assoc.
14,133 6.00% due
10/01/00-02/01/29........... 13,441,767
5,145 6.50% due
08/01/10-06/01/13........... 5,025,614
7,949 7.00% due
03/01/12-02/01/29........... 7,826,882
9 7.10% due 05/01/27.......... 9,267
6,736 7.50% due
06/01/25-07/01/29........... 6,733,448
249 8.00% due
05/01/24-05/01/25........... 254,165
177 9.50% due 12/01/20.......... 182,222
------------
33,473,365
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1999 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------------
<C> <S> <C>
Government National Mortgage
Assoc.
$ 2,941 6.00% due
05/15/28-12/15/28........... $ 2,710,694
8,916 6.50% due
08/15/25-05/15/29........... 8,467,450
3,805 7.00% due
07/15/23-05/15/29........... 3,707,443
5,996 7.50% due
06/15/24-08/01/29........... 5,988,292
1,000 7.50%**..................... 998,750
1,866 8.00% due
04/15/26-08/15/26........... 1,905,301
------------
23,777,930
------------
Government National Mortgage
Assoc. II
8,559 6.50% due
04/20/28-02/20/29........... 8,093,239
2,373 7.00% due 02/20/26-06/20/29. 2,306,636
------------
10,399,875
------------
TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE PASS-THROUGH
CERTIFICATES
(Identified Cost
$73,379,711)................. 71,607,501
------------
SHORT-TERM INVESTMENT (1.4%)
REPURCHASE AGREEMENT
4,353 The Bank of New York 5.00%
due 08/02/99 (dated
07/30/99;
proceeds $4,354,858) (a)
(Identified Cost
$4,353,045)................. 4,353,045
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
- -------------------------------------------------------
<S> <C>
TOTAL INVESTMENTS
(Identified Cost $294,346,056)
(b)............................. 100.0% $319,691,377
OTHER ASSETS IN EXCESS OF LIABILITIES
0.0 96,573
------ ------------
NET ASSETS...................... 100.0% $319,787,950
====== ============
</TABLE>
- ---------------------
<TABLE>
<S> <C>
* Resale is restricted to qualified institutional
investors.
** Security was purchased on a forward commitment
basis with an approximate principal amount. The
actual principal amount and maturity date will be
determined upon settlement.
+ Securities segregated as collateral for securities
purchased on a forward commitment basis.
(a) Collateralized by $4,867,526 Government National
Mortgage Assoc. 6.50% due 06/15/28 valued at
$4,450,553.
(b) The aggregate cost for federal income tax purposes
approximates identified cost. The aggregate gross
unrealized appreciation is $29,371,059 and the
aggregate gross unrealized depreciation is
$4,025,738, resulting in net unrealized
appreciation of $25,345,321.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1999 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $294,346,056)........... $319,691,377
Receivable for:
Interest.............................. 980,257
Shares of beneficial interest sold.... 573,349
Dividends............................. 469,236
Deferred organizational expenses.......... 22,336
Prepaid expenses and other assets......... 83,315
------------
TOTAL ASSETS.......................... 321,819,870
------------
LIABILITIES:
Payable for:
Investments purchased................. 1,391,642
Plan of distribution fee.............. 273,400
Investment management fee............. 168,299
Shares of beneficial interest
repurchased.......................... 152,504
Accrued expenses and other payables....... 46,075
------------
TOTAL LIABILITIES..................... 2,031,920
------------
NET ASSETS............................ $319,787,950
============
COMPOSITION OF NET ASSETS:
Paid-in-capital........................... $269,081,885
Net unrealized appreciation............... 25,345,321
Accumulated undistributed net investment
income................................... 702,162
Accumulated undistributed net realized
gain..................................... 24,658,582
------------
NET ASSETS............................ $319,787,950
============
CLASS A SHARES:
Net Assets................................ $6,472,899
Shares Outstanding (unlimited authorized,
$.01 par value).......................... 435,366
NET ASSET VALUE PER SHARE............. $14.87
============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net
asset value)......................... $15.69
============
CLASS B SHARES:
Net Assets................................ $111,292,106
Shares Outstanding (unlimited authorized,
$.01 par value).......................... 7,493,594
NET ASSET VALUE PER SHARE............. $14.85
============
CLASS C SHARES:
Net Assets................................ $198,698,844
Shares Outstanding (unlimited authorized,
$.01 par value).......................... 13,381,640
NET ASSET VALUE PER SHARE............. $14.85
============
CLASS D SHARES:
Net Assets................................ $3,324,101
Shares Outstanding (unlimited authorized,
$.01 par value).......................... 223,650
NET ASSET VALUE PER SHARE............. $14.86
============
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended July 31, 1999
(unaudited)
NET INVESTMENT INCOME:
INCOME
Interest................................. $ 3,704,364
Dividends................................ 2,260,501
------------
TOTAL INCOME......................... 5,964,865
------------
EXPENSES
Plan of distribution fee (Class A
shares)................................. 5,283
Plan of distribution fee (Class B
shares)................................. 535,883
Plan of distribution fee (Class C
shares)................................. 1,010,865
Investment management fee................ 949,616
Transfer agent fees and expenses......... 147,866
Registration fees........................ 51,558
Shareholder reports and notices.......... 32,286
Professional fees........................ 31,431
Custodian fees........................... 21,301
Organizational expenses.................. 16,844
Trustees' fees and expenses.............. 6,299
Other.................................... 3,462
------------
TOTAL EXPENSES....................... 2,812,694
------------
NET INVESTMENT INCOME................ 3,152,171
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain........................ 25,362,560
Net change in unrealized appreciation.... (21,123,895)
------------
NET GAIN............................. 4,238,665
------------
NET INCREASE............................. $ 7,390,836
============
</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 FOR THE YEAR
MONTHS ENDED ENDED
JULY 31, 1999 JANUARY 31, 1999
- ----------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income.................................. $ 3,152,171 $ 5,261,263
Net realized gain...................................... 25,362,560 34,473,593
Net change in unrealized appreciation.................. (21,123,895) (2,381,940)
------------ ------------
NET INCREASE....................................... 7,390,836 37,352,916
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares..................................... (74,801) (47,853)
Class B shares..................................... (1,011,012) (1,598,472)
Class C shares..................................... (1,863,509) (3,567,970)
Class D shares..................................... (26,857) (476)
Net realized gain
Class A shares..................................... (161,659) (293,543)
Class B shares..................................... (2,595,518) (9,940,337)
Class C shares..................................... (4,729,164) (20,539,850)
Class D shares..................................... (44,906) (1,892)
------------ ------------
TOTAL DIVIDENDS AND DISTRIBUTIONS.................. (10,507,426) (35,990,393)
------------ ------------
Net increase from transactions in shares of beneficial
interest.............................................. 14,583,894 123,790,091
------------ ------------
NET INCREASE....................................... 11,467,304 125,152,614
NET ASSETS:
Beginning of period.................................... 308,320,646 183,168,032
------------ ------------
END OF PERIOD
(Including undistributed net investment income of
$702,162 and $526,170, respectively)............... $319,787,950 $308,320,646
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1999 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Balanced Growth Fund (the "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
converted to a multiple class share structure.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (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"), 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
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1999 (unaudited) continued
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.
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.
11
<PAGE> 12
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1999 (unaudited) continued
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. Effective May 1, 1999, the Agreement was amended to reduce
the annual rate to 0.575% of the portion of daily net assets in excess of $500
million.
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.
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 (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;
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1999 (unaudited) continued
(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 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 $1,785,115 at July 31, 1999.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the six months ended July 31, 1999, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.21% and
1.0%, respectively.
The Distributor has informed the Fund that for the six months ended July 31,
1999, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $74,244 and $14,732,
respectively and received $23,479 in front-end sales charges from sales of the
Fund's Class A shares. The respective shareholders pay such charges which are
not an expense of the Fund.
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1999 (unaudited) continued
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended July 31, 1999 aggregated
$75,419,327 and $69,772,622, respectively. Included in the aforementioned are
purchases and sales of U.S. Government securities in the amount of $20,594,993
and $8,112,080, respectively.
For the six months ended July 31, 1999, the Fund incurred brokerage commissions
of $19,730 with Morgan Stanley & Co., Inc., an affiliate of the Investment
Manager and Distributor, for portfolio transactions executed on behalf of the
Fund.
For the six months ended July 31, 1999, the Fund incurred brokerage commissions
of $24,038, with DWR for portfolio transactions executed on behalf of the Fund.
At July 31, 1999, the Fund's payable for investments purchased included
unsettled trades with DWR of $386,263.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent.
5. FEDERAL INCOME TAX STATUS
As of January 31, 1999, the Fund had temporary book/tax attributable to capital
loss deferrals on wash sales.
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 6, 1998. The acquisition
was accomplished by a tax-free exchange of 4,134 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 $291,138,900.
14
<PAGE> 15
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1999 (unaudited) continued
7. 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, 1999 JANUARY 31, 1999
------------------------- -------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold........................................................ 245,939 $ 3,785,842 214,798 $ 3,288,029
Reinvestment of dividends and distributions................. 11,871 177,718 20,830 297,931
Acquisition of TCW/DW Balanced Fund......................... -- -- 4,134 64,616
Redeemed.................................................... (66,901) (1,022,945) (18,692) (283,157)
---------- ------------ ---------- ------------
Net increase - Class A...................................... 190,909 2,940,615 221,070 3,367,419
---------- ------------ ---------- ------------
CLASS B SHARES
Sold........................................................ 1,529,017 23,226,680 2,522,284 38,625,606
Reinvestment of dividends and distributions................. 194,598 2,911,719 556,089 8,004,525
Acquisition of TCW/DW Balanced Fund......................... -- -- 714,438 11,141,706
Redeemed.................................................... (876,663) (13,350,868) (2,048,564) (31,309,102)
---------- ------------ ---------- ------------
Net increase - Class B...................................... 846,952 12,787,531 1,744,247 26,462,735
---------- ------------ ---------- ------------
CLASS C SHARES
Sold........................................................ 719,080 10,953,976 1,731,430 26,748,214
Reinvestment of dividends and distributions................. 413,078 6,179,777 1,566,246 22,586,918
Acquisition of TCW/DW Balanced Fund......................... -- -- 5,421,407 84,548,537
Redeemed.................................................... (1,302,110) (19,807,955) (2,732,100) (41,716,243)
---------- ------------ ---------- ------------
Net increase (decrease) - Class B........................... (169,952) (2,674,202) 5,986,983 92,167,426
---------- ------------ ---------- ------------
CLASS D SHARES
Sold........................................................ 185,649 2,850,894 122,652 1,796,907
Reinvestment of dividends and distributions................. 4,799 71,763 164 2,368
Redeemed.................................................... (90,271) (1,392,707) (457) (6,764)
---------- ------------ ---------- ------------
Net increase - Class D...................................... 100,177 1,529,950 122,359 1,792,511
---------- ------------ ---------- ------------
Net increase in Fund........................................ 968,086 $ 14,583,894 8,074,659 $123,790,091
========== ============ ========== ============
</TABLE>
15
<PAGE> 16
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 JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
JULY 31, 1999 JANUARY 31, 1999 JANUARY 31, 1998
- --------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $15.01 $14.68 $14.69
------ ------ ------
Income from investment operations:
Net investment income...................................... 0.20 0.36 0.21
Net realized and unrealized gain........................... 1.29 2.01 0.50
------ ------ ------
Total income from investment operations..................... 1.49 2.37 0.71
------ ------ ------
Less dividends and distributions from:
Net investment income...................................... (0.20) (0.39) (0.21)
Net realized gain.......................................... (1.43) (1.65) (0.51)
------ ------ ------
Total dividends and distributions........................... (1.63) (2.04) (0.72)
------ ------ ------
Net asset value, end of period.............................. $14.87 $15.01 $14.68
====== ====== ======
TOTAL RETURN+............................................... 2.80%(1) 17.02% 4.77%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.01%(2)(3) 1.06%(3) 1.12%(2)
Net investment income....................................... 2.76%(2)(3) 2.62%(3) 2.84%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $6,473 $3,670 $343
Portfolio turnover rate..................................... 22%(1) 49% 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.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE> 17
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
JULY 31, 1999 JANUARY 31, 1999 JANUARY 31, 1998
- --------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
CLASS B SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $14.99 $14.67 $14.69
------ ------ ------
Income from investment operations:
Net investment income...................................... 0.09 0.21 0.16
Net realized and unrealized gain........................... 1.34 2.03 0.49
------ ------ ------
Total income from investment operations..................... 1.43 2.24 0.65
------ ------ ------
Less dividends and distributions from:
Net investment income...................................... (0.14) (0.27) (0.16)
Net realized gain.......................................... (1.43) (1.65) (0.51)
------ ------ ------
Total dividends and distributions........................... (1.57) (1.92) (0.67)
------ ------ ------
Net asset value, end of period.............................. $14.85 $14.99 $14.67
====== ====== ======
TOTAL RETURN+............................................... 2.39%(1) 16.09% 4.38%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.80%(2)(3) 1.81%(3) 1.86%(2)
Net investment income....................................... 1.97%(2)(3) 1.87%(3) 2.14%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $111,292 $99,666 $71,900
Portfolio turnover rate..................................... 22%(1) 49% 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.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
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 FOR THE YEAR ENDED JANUARY 31 MARCH 28, 1995*
MONTHS ENDED ------------------------------- THROUGH
JULY 31, 1999++ 1999++ 1998***++ 1997 JANUARY 31, 1996
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C>
CLASS C SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.............. $14.99 $14.66 $13.01 $11.92 $10.00
------ ------ ------ ------ ------
Income from investment operations:
Net investment income............................ 0.10 0.22 0.32 0.25 0.31
Net realized and unrealized gain................. 1.33 2.04 2.23 1.33 1.88
------ ------ ------ ------ ------
Total income from investment operations........... 1.43 2.26 2.55 1.58 2.19
------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income............................ (0.14) (0.28) (0.30) (0.27) (0.27)**
Net realized gain................................ (1.43) (1.65) (0.60) (0.22) --
------ ------ ------ ------ ------
Total dividends and distributions................. (1.57) (1.93) (0.90) (0.49) (0.27)
------ ------ ------ ------ ------
Net asset value, end of period.................... $14.85 $14.99 $14.66 $13.01 $11.92
====== ====== ====== ====== ======
TOTAL RETURN+..................................... 2.37%(1) 16.23% 19.82% 13.44% 22.13%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.......................................... 1.80%(2)(4) 1.80%(4) 1.87% 1.92%(3) --(2)(3)
Net investment income............................. 1.97%(2)(4) 1.88%(4) 2.18% 2.31%(3) 4.25%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands........... $198,699 $203,132 $110,909 $119,416 $47,596
Portfolio turnover rate........................... 22%(1) 49% 28% 16% 2%(1)
</TABLE>
- ---------------
* 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.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.
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 FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
JULY 31, 1999 JANUARY 31, 1999 JANUARY 31, 1998
- --------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $15.01 $14.68 $14.69
------ ------ ------
Income from investment operations:
Net investment income...................................... 0.22 0.37 0.24
Net realized and unrealized gain........................... 1.28 2.03 0.48
------ ------ ------
Total income from investment operations..................... 1.50 2.40 0.72
------ ------ ------
Less dividends and distributions from:
Net investment income...................................... (0.22) (0.42) (0.22)
Net realized gain.......................................... (1.43) (1.65) (0.51)
------ ------ ------
Total dividends and distributions........................... (1.65) (2.07) (0.73)
------ ------ ------
Net asset value, end of period.............................. $14.86 $15.01 $14.68
====== ====== ======
TOTAL RETURN+............................................... 2.82%(1) 17.28% 4.88%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 0.80%(2)(3) 0.81%(3) 0.86%(2)
Net investment income....................................... 2.97%(2)(3) 2.87%(3) 3.08%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $3,324 $1,853 $16
Portfolio turnover rate..................................... 22%(1) 49% 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.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE> 20
TRUSTEES
- ----------------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
- ----------------------------------
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin
President
Barry Fink
Vice President, Secretary and General Counsel
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. Read the
prospectus carefully before investing.
MORGAN STANLEY
DEAN WITTER
BALANCED
GROWTH FUND
Semiannual Report
July 31, 1999
