<PAGE> 1
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND Two World Trade Center
LETTER TO THE SHAREHOLDERS July 31, 2000 New York, New York 10048
DEAR SHAREHOLDER:
The six-month period ended July 31, 2000, was a turbulent one for the U.S.
markets. As evidence grew that the economy was on the verge of overheating, the
Federal Reserve Board raised interest rates by a total of 100 basis points. The
Department of Justice moved against Microsoft, and President Clinton spoke of
potential controls on the patenting of biotechnology. This combination of events
caused concerns about a possible slowdown in the deployment of new technology,
which in turn led to a sharp correction in the NASDAQ.
The markets rebounded toward the end of the second quarter as inflation data
became more benign and the economy began to slow. The best-performing sectors
for the period were those that would benefit from a soft landing, including
financial services, real estate and utilities, as well as steady growth sectors
such as consumer staples and pharmaceuticals.
Interest rates on intermediate-term Treasuries were highly volatile during the
period, as were spreads on mortgage-backed securities. Spreads are differences
in yield between types of fixed-income securities, in this case, Treasuries and
mortgage-backed securities. Five-year Treasuries ranged in yield between 6.81
percent and 6.08 percent. On July 31, 2000, the five-year Treasury note was
yielding 6.15 percent, compared to 6.68 percent six months earlier.
During the first quarter of 2000, spreads on mortgage-backed securities widened
from where they stood in late 1999. In May and June these spreads began to
narrow, but by July they had broadened again. These movements were indicative of
reactions to the changes in the federal funds rate and anticipation of possible
future actions by the Fed. The effect was less pronounced for long-term
Treasuries, which benefited from the federal government's program of buying back
outstanding debt and its reduction in U.S. government debt issuance because of
the budget surplus. The subsequent reduction in the supply of long-term
Treasuries resulted in an inverted yield curve, on which short-term Treasury
yields are higher than those of longer-term Treasuries.
<PAGE> 2
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
LETTER TO THE SHAREHOLDERS July 31, 2000, continued
PERFORMANCE AND PORTFOLIO
For the six-month period ended July 31, 2000, Morgan Stanley Dean Witter
Balanced Growth Fund's Class C shares produced a total return of -3.48 percent,
compared to 3.20 percent for the Standard & Poor's 500 Composite Stock Price
Index (S&P 500)(1) and 5.31 percent for the Lehman Brothers Government/Credit
Index.(2) For the same period the Fund's Class A, B and D shares returned -3.15
percent, -3.49 percent and -3.03 percent, respectively. The performance of the
Fund's four share classes varies because of differing expenses. The total return
figures given assume the reinvestment of all distributions and do not reflect
the deduction of any applicable sales charges.
The Fund's underperformance relative to the S&P 500 can be attributed primarily
to its equity portion's value-oriented methodology, because value investing in
general was out of favor during the period. The fixed-income component
underperformed the Lehman index as a result of its underweighting in
longer-term U.S. Treasuries.
As of July 31, 2000, the Fund's net assets totaled more than $188 million. The
Fund's asset mix is 65 percent equities and 35 percent fixed-income instruments.
Since late last year, the Fund's equity component has shifted its emphasis
toward traditional companies that have made serious commitments to e-commerce.
Consequently, the Fund took steps to restructure its portfolio during the
period, initiating positions in Electronic Data Systems, Quaker Oats and Sears.
Over the course of the period, the Fund's cash equivalent reserves were drawn
down as cash flows warranted. This action, coupled with some minor rebalancing
of the portfolio, enabled us to increase the Fund's exposure to both U.S. agency
obligations and Treasuries while reducing its exposure to mortgage-backed
securities. As of July 31, 2000, the Fund's fixed-income assets were invested as
follows: 64 percent in mortgage-backed securities, 15 percent in U.S.
Treasuries, 18 percent in U.S. agency obligations and 3 percent in corporate
debt.
---------------------
(1) The Standard & Poor's 500 Index (S&P 500) is a broad-based index the
performance of which is based on the performance of 500 widely held common
stocks chosen for market size, liquidity and industry group representation.
The Index does not include any expenses, fees or charges. The Index is
unmanaged and should not be considered an investment.
(2) The Lehman Brothers U.S. Government/Credit Index (formerly Lehman Brothers
Government/Corporate Index) tracks the performance of government and
corporate obligations, including U.S. government agency and Treasury
securities and corporate and Yankee bonds. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
LETTER TO THE SHAREHOLDERS July 31, 2000, continued
LOOKING AHEAD
We continue to believe that the outlook for the financial markets and the
economy is favorable. As inflation seems poised to remain low, we believe that
the strength in the economy has finally begun to slow as well. As a result, it
is becoming increasingly less likely that we will see further interest-rate
tightening in the near future. Adjustments to the maturity structure and
composition of the Fund will be made as conditions warrant and attractive
opportunities become available.
We appreciate your ongoing support of Morgan Stanley Dean Witter Balanced Growth
Fund and look forward to continuing to serve your investment needs.
<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>
3
<PAGE> 4
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
FUND PERFORMANCE July 31, 2000
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A SHARES*
-----------------------------------------------
<S> <C> <C>
PERIOD ENDED 7/31/00
-------------------------
1 Year -7.06%(1) -11.94%(2)
Since Inception (7/28/97) 5.40%(1) 3.53%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS B SHARES**
-----------------------------------------------
<S> <C> <C>
PERIOD ENDED 7/31/00
-------------------------
1 Year -7.77%(1) -11.74%(2)
Since Inception (7/28/97) 4.58%(1) 4.09%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES+
----------------------------------------------
<S> <C> <C>
PERIOD ENDED 7/31/00
-------------------------
1 Year -7.74%(1) -8.54%(2)
5 Years 10.62%(1) 10.62%(2)
Since Inception (3/28/95) 11.88%(1) 11.88%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS D SHARES++
----------------------------------------------
<S> <C>
PERIOD ENDED 7/31/00
-------------------------
1 Year -6.82%(1)
Since Inception (7/28/97) 5.61%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH
LESS THAN THEIR ORIGINAL COST.
---------------------
(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 contingent deferred sales charge (CDSC) for
Class B is 5.0%. The CDSC declines to 0% after six years.
+ The maximum contingent deferred sales charge for Class C
shares is 1% for shares redeemed within one year of
purchase.
++ Class D shares have no sales charge.
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 2000 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
-------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (65.0%)
Aerospace (2.4%)
77,500 United Technologies Corp. ... $ 4,524,063
------------
Aluminum (2.4%)
147,000 Alcoa, Inc. ................. 4,446,750
------------
Auto Parts: O.E.M. (2.3%)
295,000 Delphi Automotive Systems
Corp. ...................... 4,369,688
------------
Beverages - Non-Alcoholic (2.5%)
103,500 PepsiCo, Inc. ............... 4,741,593
------------
Construction/Agricultural
Equipment/Trucks (2.2%)
109,000 Deere & Co. ................. 4,203,313
------------
Department Stores (2.2%)
139,000 Sears, Roebuck & Co. ........ 4,152,625
------------
Discount Chains (2.2%)
145,000 Target Corp. ................ 4,205,000
------------
Diversified Manufacturing (2.4%)
51,000 Minnesota Mining &
Manufacturing Co. .......... 4,593,188
------------
E.D.P. Services (2.3%)
102,000 Electronic Data Systems
Corp........................ 4,386,000
------------
Electric Utilities (4.6%)
155,000 GPU, Inc. ................... 4,107,500
110,000 Unicom Corp. ................ 4,516,874
------------
8,624,374
------------
Electronic Data Processing (2.4%)
40,000 International Business
Machines Corp. ............. 4,497,500
------------
Finance Companies (2.5%)
180,000 Associates First Capital
Corp. (Class A)............. 4,713,750
------------
Forest Products (2.4%)
98,000 Weyerhaeuser Co. ............ 4,477,375
------------
Major Banks (4.4%)
91,000 Bank of America Corp. ....... 4,311,124
225,000 KeyCorp. .................... 3,951,563
------------
8,262,687
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
-------------------------------------------------------
<S> <C> <C>
Major Chemicals (2.4%)
100,000 Du Pont (E.I.) de Nemours &
Co., Inc. .................. $ 4,531,250
------------
Major Pharmaceuticals (2.2%)
85,000 Bristol-Myers Squibb Co. .... 4,218,125
------------
Major U.S. Telecommunications (2.2%)
135,000 AT&T Corp. .................. 4,176,563
------------
Motor Vehicles (4.6%)
97,000 Ford Motor Co. .............. 4,516,562
72,500 General Motors Corp. ........ 4,127,968
------------
8,644,530
------------
Multi-Sector Companies (2.3%)
85,500 General Electric Co. ........ 4,397,906
------------
Oil/Gas Transmission (2.3%)
59,500 Enron Corp. ................. 4,380,688
------------
Other Metals/Minerals (2.5%)
113,000 Phelps Dodge Corp. .......... 4,597,688
------------
Package Goods/Cosmetics (2.3%)
76,500 Procter & Gamble Co. ........ 4,350,938
------------
Packaged Foods (2.2%)
61,500 Quaker Oats Company (The).... 4,135,875
------------
Railroads (2.4%)
180,000 CSX Corp. ................... 4,466,250
------------
Semiconductors (2.4%)
67,000 Intel Corp. ................. 4,472,250
------------
TOTAL COMMON STOCKS
(Cost $119,763,366).......... 122,569,969
------------
<CAPTION>
PRINCIPAL
AMOUNT IN
---------
<C> <S> <C>
CORPORATE BONDS (0.9%)
Construction/Agricultural
Equipment/Trucks (0.1%)
$ 200 Caterpillar, Inc
9.38% due 03/15/21.......... 227,066
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
-------------------------------------------------------
<C> <S> <C>
Diversified Financial Services (0.2%)
$ 300 Abbey National PLC (United
Kingdom)
6.69% due 10/17/05.......... $ 290,091
------------
Diversified Manufacturing (0.0%)
100 Minnesota Mining &
Manufacturing Co.
6.38% due 02/15/28.......... 88,650
------------
Electric Utilities (0.1%)
200 Florida Power & Light Co.
7.05% due 12/01/26.......... 170,386
------------
Finance Companies (0.3%)
500 Associates Corp. of North
America
6.25% due 11/01/08.......... 450,355
150 Ford Motor Credit Corp.
8.20% due 02/15/02.......... 151,560
------------
601,915
------------
Motor Vehicles (0.1%)
200 General Motors Corp.
8.10% due 06/15/24.......... 192,032
------------
Multi - Sector Companies
(0.1%)
150 General Electric Capital
Corp.
8.85% due 04/01/05.......... 159,588
------------
TOTAL CORPORATE BONDS
(Cost $1,888,355 )........... 1,729,728
------------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS (11.1%)
Federal Home Loan Banks
595 0.00% due 02/25/04.......... 465,873
3,000 0.00% due 07/02/12.......... 1,118,640
1,000 5.88% due 11/25/08.......... 908,380
2,400 5.96% due 02/05/08.......... 2,221,776
------------
4,714,669
------------
Federal National Mortgage Assoc.
183 0.00% due 02/01/04.......... 143,869
875 6.34% due 02/04/08.......... 819,901
100 6.48% due 06/28/04.......... 98,231
1,000 6.55% due 11/21/07.......... 956,260
500 6.75% due 07/30/07.......... 479,510
------------
2,497,771
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
-------------------------------------------------------
<C> <S> <C>
Resolution Funding Corp.
(Coupon Strips)
$ 1,500 0.00% due 10/15/04.......... $ 1,143,075
500 0.00% due 04/15/05.......... 370,380
1,300 0.00% due 01/15/06.......... 916,604
3,000 0.00% due 01/15/08.......... 1,869,960
------------
4,300,019
------------
Tennessee Valley Authority
298 0.00% due 04/15/04.......... 232,008
------------
U.S. Treasury Bonds
1,405 7.50% due 11/15/24.......... 1,657,043
1,730 12.00% due 08/15/13......... 2,334,826
------------
3,991,869
------------
U.S. Treasury Notes
800 6.125% due 08/15/07......... 797,472
1,000 6.625% due 05/15/07......... 1,024,180
------------
1,821,652
------------
U.S. Treasury Strips
3,000 0.00% due 08/15/06.......... 2,079,780
2,000 0.00% due 11/15/06.......... 1,369,900
------------
3,449,680
------------
TOTAL U.S. GOVERNMENT &
AGENCY OBLIGATIONS
(Cost $21,588,570)........... 21,007,668
------------
U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES (21.9%)
Federal Home Loan Mortgage Corp.
322 7.00% due 02/01/28.......... 311,848
871 7.50% due
06/01/11-08/01/11........... 868,349
------------
1,180,197
------------
Federal National Mortgage Assoc.
4,532 6.00% due
11/01/28-02/01/29........... 4,157,698
3,135 6.00% due
11/01/04-04/01/06........... 2,991,281
1,825 6.00% due
01/01/11-05/01/13........... 1,727,023
989 6.50% due 09/01/29.......... 933,756
998 6.50% due
08/01/10-06/01/13........... 963,417
2,255 7.00% due 02/01/29.......... 2,177,020
1,570 7.00% due
03/01/12-06/01/12........... 1,540,411
4,816 7.50% due
06/01/25-07/01/29........... 4,745,213
208 8.00% due
05/01/24-05/01/25........... 208,257
9 8.475% due 05/01/27......... 9,263
150 9.50% due 12/01/20.......... 155,459
------------
19,608,798
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
-------------------------------------------------------
<C> <S> <C>
Government National Mortgage Assoc.
$ 2,771 6.00% due
05/15/28-12/15/28........... $ 2,552,450
2,448 6.50% due
08/15/25-05/15/29........... 2,321,088
2,329 7.00% due
09/15/23-05/15/29........... 2,260,752
2,344 7.50% due
09/15/25-07/15/29........... 2,321,440
1,502 8.00% due
04/15/26-08/15/26........... 1,513,408
------------
10,969,138
------------
Government National Mortgage Assoc. II
7,877 6.50% due
04/20/28-02/20/29........... 7,431,455
2,150 7.00% due
02/20/26-06/20/29........... 2,074,753
------------
9,506,208
------------
TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES
(Cost $42,830,508)........... 41,264,341
------------
SHORT-TERM INVESTMENT (0.2%)
REPURCHASE AGREEMENT
357 The Bank of New York 6.50%
due 08/01/00 (dated
07/31/00; proceeds $357,305)
(a) (Cost $357,240)......... 357,240
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
-------------------------------------------------------
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $186,428,039)(b)......... 99.1% $186,928,946
OTHER ASSETS IN EXCESS
OF LIABILITIES................... 0.9 1,760,976
---- ------------
NET ASSETS..................... 100.0% $188,689,922
===== ============
</TABLE>
---------------------
(a) Collateralized by $359,250 U.S. Treasury Note 5.875% due 02/15/04 valued at
$364,386.
(b) The aggregate cost for federal income tax purposes approximates the
aggregated cost for book purposes. The aggregate gross unrealized
appreciation is $17,160,418 and the aggregate gross unrealized depreciation
is $16,659,511, resulting in net unrealized appreciation of $500,907.
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, 2000 (unaudited)
ASSETS:
Investments in securities, at value
(cost $186,428,039)...................... $186,928,946
Receivable for:
Investments sold...................... 1,516,933
Interest.............................. 555,906
Dividends............................. 333,205
Shares of beneficial interest sold.... 45,792
Prepaid expenses.......................... 48,774
------------
TOTAL ASSETS.......................... 189,429,556
------------
LIABILITIES:
Payable for:
Shares of beneficial interest
repurchased.......................... 402,179
Plan of distribution fee.............. 157,897
Investment management fee............. 98,464
Accrued expenses and other payables....... 81,094
------------
TOTAL LIABILITIES..................... 739,634
------------
NET ASSETS............................ $188,689,922
============
COMPOSITION OF NET ASSETS:
Paid-in-capital........................... $195,840,040
Net unrealized appreciation............... 500,907
Accumulated undistributed net investment
income................................... 1,069,027
Accumulated net realized loss............. (8,720,052)
------------
NET ASSETS............................ $188,689,922
============
CLASS A SHARES:
Net Assets................................ $5,885,081
Shares Outstanding (unlimited authorized,
$.01 par value).......................... 498,412
NET ASSET VALUE PER SHARE............. $11.81
============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net
asset value)......................... $12.46
============
CLASS B SHARES:
$58,883,591
Net Assets................................
Shares Outstanding (unlimited authorized, 4,989,391
$.01 par value)..........................
NET ASSET VALUE PER SHARE............. $11.80
============
CLASS C SHARES:
$121,000,368
Net Assets................................
Shares Outstanding (unlimited authorized, 10,256,865
$.01 par value)..........................
NET ASSET VALUE PER SHARE............. $11.80
============
CLASS D SHARES:
$2,920,882
Net Assets................................
Shares Outstanding (unlimited authorized, 247,539
$.01 par value)..........................
NET ASSET VALUE PER SHARE............. $11.80
============
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended July 31, 2000 (unaudited)
NET INVESTMENT INCOME:
INCOME
Interest................................. $ 2,629,699
Dividends................................ 1,767,780
------------
TOTAL INCOME......................... 4,397,479
------------
EXPENSES
Plan of distribution fee (Class A
shares)................................. 7,432
Plan of distribution fee (Class B
shares)................................. 352,279
Plan of distribution fee (Class C
shares)................................. 685,341
Investment management fee................ 649,174
Transfer agent fees and expenses......... 130,079
Registration fees........................ 48,347
Professional fees........................ 36,717
Shareholder reports and notices.......... 30,461
Custodian fees........................... 21,576
Trustees' fees and expenses.............. 6,341
Organizational expenses.................. 5,307
Other.................................... 4,310
------------
TOTAL EXPENSES....................... 1,977,364
------------
NET INVESTMENT INCOME................ 2,420,115
------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss........................ (7,466,504)
Net change in unrealized appreciation.... (3,596,655)
------------
NET LOSS............................. (11,063,159)
------------
NET DECREASE............................. $ (8,643,044)
============
</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
2000 JANUARY 31, 2000
---------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................. $ 2,420,115 $ 6,406,107
Net realized gain (loss).............................. (7,466,504) 29,579,104
Net change in unrealized appreciation................. (3,596,655) (42,371,654)
------------ ------------
NET DECREASE...................................... (8,643,044) (6,386,443)
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares.................................... (89,104) (169,618)
Class B shares.................................... (751,133) (2,006,722)
Class C shares.................................... (1,491,275) (3,663,089)
Class D shares.................................... (47,795) (75,592)
Net realized gain
Class A shares.................................... (318,133) (584,845)
Class B shares.................................... (3,524,302) (9,188,841)
Class C shares.................................... (6,864,295) (16,779,533)
Class D shares.................................... (159,508) (263,468)
------------ ------------
TOTAL DIVIDENDS AND DISTRIBUTIONS................. (13,245,545) (32,731,708)
------------ ------------
Net decrease from transactions in shares of beneficial
interest............................................. (50,424,051) (8,199,933)
------------ ------------
NET DECREASE...................................... (72,312,640) (47,318,084)
NET ASSETS:
Beginning of period................................... 261,002,562 308,320,646
------------ ------------
END OF PERIOD
(Including undistributed net investment income of
$1,069,027 and $1,028,219, respectively).......... $188,689,922 $261,002,562
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 2000 (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 portfolio security listed or traded
on the New York or American Stock Exchange, NASDAQ, or other exchange is valued
at its latest sale price, 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; (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 prices of securities which are
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 2000 (unaudited) continued
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, 2000 (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 were fully amortized as of March 27, 2000.
2. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined as of the close
of each business day: 0.60% to the portion of daily net assets not exceeding
$500 million and 0.575% to the portion of daily net assets in excess of $500
million.
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 B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts totaled $1,926,248
at July 31, 2000.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the six
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 2000 (unaudited) continued
months ended July 31, 2000, the distribution fee was accrued for Class A shares
and Class C shares at the annual rate of 0.25% and 1.0%, respectively.
The Distributor has informed the Fund that for the six months ended July 31,
2000, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $77,471 and $8,791, respectively
and received $6,843 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/prepayments of portfolio
securities, excluding
short-term investments, for the six months ended July 31, 2000 aggregated
$38,075,053, and $102,105,885, respectively. Included in the aforementioned are
purchases and sales/prepayments of U.S. Government securities in the amount of
$7,405,531 and $35,622,591, respectively.
For the six months ended July 31, 2000, the Fund incurred brokerage commissions
of $9,125 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, 2000, the Fund incurred brokerage commissions
of $33,585, with Dean Witter Reynolds Inc. ("DWR"), an affiliate of the
Investment Manager and Distributor, for portfolio transactions executed on
behalf of the Fund. At July 31, 2000, included in the receivable for investments
sold were $877,931 for unsettled trades with DWR.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At July 31, 2000, the Fund had
transfer agent fees and expenses payable of approximately $14,000.
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 2000 (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, 2000 JANUARY 31, 2000
------------------------- ------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold........................................................ 93,006 $ 1,181,084 457,031 $ 6,829,861
Reinvestment of dividends and distributions................. 33,008 386,980 48,583 659,711
Redeemed.................................................... (108,887) (1,380,051) (268,786) (3,857,460)
---------- ------------ ---------- -----------
Net increase -- Class A..................................... 17,127 188,013 236,828 3,632,112
---------- ------------ ---------- -----------
CLASS B SHARES
Sold........................................................ 1,001,986 12,746,875 2,180,069 32,477,102
Reinvestment of dividends and distributions................. 301,492 3,528,666 671,424 9,166,773
Redeemed.................................................... (3,000,531) (37,754,434) (2,811,691) (40,151,388)
---------- ------------ ---------- -----------
Net increase (decrease) -- Class B.......................... (1,697,053) (21,478,893) 39,802 1,492,487
---------- ------------ ---------- -----------
CLASS C SHARES
Sold........................................................ 145,831 1,858,675 1,064,467 15,862,750
Reinvestment of dividends and distributions................. 669,329 7,835,985 1,405,960 19,192,025
Redeemed.................................................... (3,083,060) (38,865,667) (3,497,254) (50,162,074)
---------- ------------ ---------- -----------
Net decrease -- Class C..................................... (2,267,900) (29,171,007) (1,026,827) (15,107,299)
---------- ------------ ---------- -----------
CLASS D SHARES
Sold........................................................ 34,406 437,475 313,344 4,728,000
Reinvestment of dividends and distributions................. 17,684 207,303 25,143 338,834
Redeemed.................................................... (47,925) (606,942) (218,586) (3,284,067)
---------- ------------ ---------- -----------
Net increase -- Class D..................................... 4,165 37,836 119,901 1,782,767
---------- ------------ ---------- -----------
Net decrease in Fund........................................ (3,943,661) $(50,424,051) (630,296) $(8,199,933)
========== ============ ========== ===========
</TABLE>
6. FEDERAL INCOME TAX STATUS
As of January 31, 2000, the Fund had temporary book/tax differences attributable
to capital loss deferrals on wash sales.
14
<PAGE> 15
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 JULY 28, 1997*
MONTHS ENDED ENDED ENDED THROUGH
JULY 31, 2000 JANUARY 31, 2000 JANUARY 31, 1999 JANUARY 31, 1998
-----------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period................. $13.11 $15.01 $14.68 $14.69
------ ------ ------ ------
Income (loss) from investment operations:
Net investment income............................... 0.18 0.41 0.36 0.21
Net realized and unrealized gain (loss)............. (0.61) (0.59) 2.01 0.50
------ ------ ------ ------
Total income (loss) from investment operations....... (0.43) (0.18) 2.37 0.71
------ ------ ------ ------
Less dividends and distributions from:
Net investment income............................... (0.19) (0.40) (0.39) (0.21)
Net realized gain................................... (0.68) (1.32) (1.65) (0.51)
------ ------ ------ ------
Total dividends and distributions.................... (0.87) (1.72) (2.04) (0.72)
------ ------ ------ ------
Net asset value, end of period....................... $11.81 $13.11 $15.01 $14.68
====== ====== ====== ======
TOTAL RETURN+........................................ (3.15)%(1) (1.35)% 17.02% 4.77%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................. 1.11 %(2)(3) 1.04 %(3) 1.06%(3) 1.12%(2)
Net investment income................................ 2.94 %(2)(3) 2.81 %(3) 2.62%(3) 2.84%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.............. $5,885 $6,308 $3,670 $343
Portfolio turnover rate.............................. 18 %(1) 48 % 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
15
<PAGE> 16
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED ENDED THROUGH
JULY 31, 2000 JANUARY 31, 2000 JANUARY 31, 1999 JANUARY 31, 1998
---------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
CLASS B SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period...... $13.09 $14.99 $14.67 $14.69
------ ------ ------ ------
Income (loss) from investment operations:
Net investment income.................... 0.14 0.30 0.21 0.16
Net realized and unrealized gain
(loss)................................. (0.61) (0.60) 2.03 0.49
------ ------ ------ ------
Total income (loss) from investment
operations............................... (0.47) (0.30) 2.24 0.65
------ ------ ------ ------
Less dividends and distributions from:
Net investment income.................... (0.14) (0.28) (0.27) (0.16)
Net realized gain........................ (0.68) (1.32) (1.65) (0.51)
------ ------ ------ ------
Total dividends and distributions......... (0.82) (1.60) (1.92) (0.67)
------ ------ ------ ------
Net asset value, end of period............ $11.80 $13.09 $14.99 $14.67
====== ====== ====== ======
TOTAL RETURN+............................. (3.49)%(1) (2.15)% 16.09% 4.38 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................. 1.86 %(2)(3) 1.80 %(3) 1.81%(3) 1.86 %(2)
Net investment income..................... 2.19 %(2)(3) 2.05 %(3) 1.87%(3) 2.14 %(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands... $58,884 $87,554 $99,666 $71,900
Portfolio turnover rate................... 18 %(1) 48 % 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 ENDED JANUARY 31 MARCH 28, 1995*
MONTHS ENDED ---------------------------------------------------- THROUGH
JULY 31, 2000++ 2000++ 1999++ 1998***++ 1997 JANUARY 31, 1996
---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of
period...................... $13.09 $ 14.99 $14.66 $13.01 $11.92 $10.00
------ -------- ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income....... 0.14 0.30 0.22 0.32 0.25 0.31
Net realized and unrealized
gain (loss)............... (0.61) (0.60) 2.04 2.23 1.33 1.88
------ -------- ------ ------ ------ ------
Total income (loss) from
investment operations....... (0.47) (0.30) 2.26 2.55 1.58 2.19
------ -------- ------ ------ ------ ------
Less dividends and
distributions from:
Net investment income....... (0.14) (0.28) (0.28) (0.30) (0.27) (0.27)**
Net realized gain........... (0.68) (1.32) (1.65) (0.60) (0.22) --
------ -------- ------ ------ ------ ------
Total dividends and
distributions............... (0.82) (1.60) (1.93) (0.90) (0.49) (0.27)
------ -------- ------ ------ ------ ------
Net asset value, end of
period...................... $11.80 $ 13.09 $14.99 $14.66 $13.01 $11.92
====== ======== ====== ====== ====== ======
TOTAL RETURN+................ (3.48)%(1) (2.14)% 16.23% 19.82% 13.44% 22.13%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses..................... 1.86 %(2)(4) 1.79%(4) 1.80%(4) 1.87% 1.92%(3) -- (2)(3)
Net investment income........ 2.19 %(2)(4) 2.06%(4) 1.88%(4) 2.18% 2.31%(3) 4.25%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands................... $121,000 $163,953 $203,132 $110,909 $119,416 $47,596
Portfolio turnover rate...... 18 %(1) 48% 49% 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
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.
</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 FOR THE YEAR FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED ENDED THROUGH
JULY 31, 2000 JANUARY 31, 2000 JANUARY 31, 1999 JANUARY 31, 1998
-----------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period................. $13.10 $15.01 $14.68 $14.69
------ ------ ------ ------
Income (loss) from investment operations:
Net investment income............................... 0.20 0.44 0.37 0.24
Net realized and unrealized gain (loss)............. (0.61) (0.60) 2.03 0.48
------ ------ ------ ------
Total income (loss) from investment operations....... (0.41) (0.16) 2.40 0.72
------ ------ ------ ------
Less dividends and distributions from:
Net investment income............................... (0.21) (0.43) (0.42) (0.22)
Net realized gain................................... (0.68) (1.32) (1.65) (0.51)
------ ------ ------ ------
Total dividends and distributions.................... (0.89) (1.75) (2.07) (0.73)
------ ------ ------ ------
Net asset value, end of period....................... $11.80 $13.10 $15.01 $14.68
====== ====== ====== ======
TOTAL RETURN+........................................ (3.03)%(1) (1.20)% 17.28% 4.88%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................. 0.86 %(2)(3) 0.80 %(3) 0.81%(3) 0.86%(2)
Net investment income................................ 3.19 %(2)(3) 3.05 %(3) 2.87%(3) 3.08%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.............. $2,921 $3,188 $1,853 $16
Portfolio turnover rate.............................. 18 %(1) 48 % 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
18
<PAGE> 19
MORGAN STANLEY DEAN WITTER BALANCED GROWTH FUND
CHANGE IN INDEPENDENT ACCOUNTANTS
On July 1, 2000, PricewaterhouseCoopers LLP resigned as independent accountants
of the Fund.
The reports of PricewaterhouseCoopers LLP on the financial statements of the
Fund for the past two fiscal years contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle.
In connection with its audits for the most recent fiscal years and through July
1, 2000, there have been no disagreements with PricewaterhouseCoopers LLP on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements if not resolved to the
satisfaction of PricewaterhouseCoopers LLP would have caused them to make
reference thereto in their report on the financial statements for such periods.
The Fund, with the approval of its Board of Trustees and its Audit Committee,
engaged Deloitte & Touche LLP as its new independent accountants as of July 1,
2000.
19
<PAGE> 20
TRUSTEES
----------------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
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
TRANSFER AGENT
----------------------------------
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
----------------------------------
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
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 Distributors Inc., member NASD.
MORGAN STANLEY
DEAN WITTER
BALANCED
GROWTH FUND
Semiannual Report
July 31, 2000
