<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND TWO WORLD TRADE CENTER,
LETTER TO THE SHAREHOLDERS MAY 31, 2000 NEW YORK, NEW YORK 10048
DEAR SHAREHOLDER:
For most of the 12-month period ended May 31, 2000, Japanese equities rose on
optimism about a long-awaited economic recovery. Then in April and May prices
fell sharply. This steep decline stemmed from investor anxiety over increased
volatility in global markets resulting from U.S. Federal Reserve Board
interest-rate hikes and reemerging concern for the sustainability of Japan's
economic recovery. The negative investor sentiment was further exacerbated by
the heavy losses suffered by several high-profile new-economy stocks toward the
end of the period.
In the first few months of the fiscal year, several large Japanese banks,
including Industrial Bank of Japan, the Dai-Ichi Kangyo Bank and Fuji Bank,
announced mergers. In addition, once-fierce competitors Hitachi and NEC
announced a cooperative venture. Deregulation benefited key Japanese industries,
including brokerage firms, airlines and insurance companies. However, mindful of
the still-fragile economic environment, the Bank of Japan continued to maintain
a zero-interest-rate policy. Last September's announcement of a second
consecutive rise in Japan's gross domestic product prompted foreign investors to
increase allocations to Japan significantly. However, because of Y2K concerns
and limited domestic economic activity, the frantic pace of investment in
Japanese equities subsided by year-end.
In early 2000, demand for Japanese stocks continued to wane as the Federal
Reserve Board continued to raise interest rates and fears emerged of an economic
slowdown in Japan. Investors began to favor value-oriented old-economy companies
in the wake of a dramatic collapse of leading Japanese new-economy stocks.
PERFORMANCE AND PORTFOLIO STRATEGY
For the 12-month period ended May 31, 2000, Morgan Stanley Dean Witter Japan
Fund's Class B shares produced a total return of 32.28 percent, compared to
29.69 percent for the Morgan Stanley Capital International (MSCI) Japan Index.
For the same period, the Fund's
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
LETTER TO THE SHAREHOLDERS MAY 31, 2000, CONTINUED
Class A, C and D shares posted total returns of 33.25 percent, 32.10 percent and
33.25 percent, respectively. The performance of the Fund's four share classes
varies because each class has different expenses. The total return figures given
assume the reinvestment of all distributions but do not reflect the deduction of
any applicable sales charges. The accompanying chart compares the Fund's
performance to that of the MSCI Japan Index.
Given Japan's problems with banking, real estate and nonperforming loans in
1999, the Fund's sub-advisor, Morgan Stanley Dean Witter Investment Management
Inc., believed that the yen was overvalued and thus employed a currency hedge.
Because the huge flow of capital into Japan during the second half of 1999
resulted in a rapid appreciation of the yen, this hedge affected the Fund's
performance negatively. At the end of the period, the Fund was no longer using a
currency hedge.
Although the Fund's holdings include high-quality technology stocks such as
Sony, NEC and Fujitsu, the sub-advisor has avoided taking positions in many of
the new-economy Japanese companies because of valuations it believes excessively
high. This strategy prevented losses during the tech-stock bloodbath in
April and May. Beginning last December, the Fund took on new positions in food,
warehousing, basic materials and other economically sensitive industries.
LOOKING AHEAD
Morgan Stanley Dean Witter Investment Management believes that merger and
acquisition activity will be an important catalyst for renewing investor
interest in Japanese equities during the next few months. Leading economic
indicators, including rising industrial production and a trend toward improving
consumer confidence, suggest that a meaningful economic recovery may be in store
for Japan during the second half of 2000.
We appreciate your ongoing support of Morgan Stanley Dean Witter Japan Fund and
look forward to continuing to serve your investment needs.
Very truly yours,
/s/ Charles A. Fiumefreddo /s/ Mitchell M. Merin
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
CHAIRMAN OF THE BOARD PRESIDENT
2
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
FUND PERFORMANCE MAY 31, 2000
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF $10,000-CLASS B SHARES
($ in Thousands)
<TABLE>
<CAPTION>
FUND MSCI JAPAN
<S> <C> <C>
April 1996 $10,000 $10,000
May 1996 $9,610 $9,548
May 1997 $8,790 $8,140
May 1998 $6,670 $5,880
May 1999 $7,997 $7,092
May 2000 $10,378 $9,198
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS A, CLASS C, AND
CLASS D SHARES WILL VARY FROM THE PERFORMANCE OF CLASS B SHARES SHOWN ABOVE
DUE TO DIFFERENCES IN SALES CHARGES AND EXPENSES.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------------------------------------------------------------
CLASS A SHARES* CLASS B SHARES**
-------------------------------------------- ---------------------------------------------
PERIOD ENDED 5/31/00 PERIOD ENDED 5/31/00
------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
1 Year 33.25%(1) 26.25%(2) 1 Year 32.28%(1) 27.28%(2)
From Inception (7/28/97) 5.97 (1) 3.97 (2) From Inception (4/26/96) 1.38 (1) 0.91 (2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES+ CLASS D SHARES#
--------------------------------------------- ---------------------------------------------
PERIOD ENDED 5/31/00 PERIOD ENDED 5/31/00
------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
1 Year 32.10%(1) 31.10%(2) 1 Year 33.25%(1)
From Inception (7/28/97) 5.19 (1) 5.19 (2) From Inception (7/28/97) 6.32 (1)
</TABLE>
------------------------
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable sales charge. See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value after the deduction of a 2% CDSC, assuming a complete
redemption on May 31, 2000.
(4) The Morgan Stanley Capital International Japan Index is a capitalization
weighted index that measures performance, in U.S. dollars, of companies
listed on the Tokyo Stock Exchange. The performance of the Index assumes
reinvestment of net dividends. "Net dividends" reflects a reduction in
dividends after taking into account withholding of taxes by certain foreign
countries represented in the index. The index does not take into account
the Fund's expenses, fees, or charges. The index is unmanaged and should
not be considered an investment.
* 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.
3
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
PORTFOLIO OF INVESTMENTS MAY 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (96.3%)
BUILDING PRODUCTS (0.6%)
433,000 Sanwa Shutter Corp..................................................................... $ 1,365,677
------------
CONSUMER ELECTRONICS/APPLIANCES (5.5%)
120,300 Aiwa Co., Ltd.......................................................................... 1,802,268
107,200 Rinnai Corp............................................................................ 2,317,032
103,000 Sony Corp.............................................................................. 9,315,863
------------
13,435,163
------------
CONSUMER SPECIALTIES (1.3%)
345,000 Casio Computer Co., Ltd................................................................ 3,296,382
------------
DIVERSIFIED ELECTRONIC PRODUCTS (15.4%)
554,000 Hitachi Ltd............................................................................ 6,855,621
43,800 Kyocera Corp........................................................................... 7,264,787
289,000 Matsushita Electric Industrial Co., Ltd................................................ 6,822,866
352,000 NEC Corp............................................................................... 8,914,286
775,000 Toshiba Corp........................................................................... 7,476,809
------------
37,334,369
------------
E.D.P. PERIPHERALS (2.2%)
172,000 Mitsumi Electric Co., Ltd.............................................................. 5,424,861
------------
ELECTRICAL PRODUCTS (1.1%)
180,000 Furukawa Electric Co., Ltd............................................................. 2,571,429
------------
ELECTRONIC COMPONENTS (3.1%)
61,000 TDK Corp............................................................................... 7,503,339
------------
ELECTRONIC DATA PROCESSING (3.4%)
292,000 Fujitsu Ltd............................................................................ 8,261,596
------------
ELECTRONIC DISTRIBUTORS (0.9%)
102,000 Ryosan Co., Ltd........................................................................ 2,114,749
------------
FINANCE COMPANIES (2.3%)
222,900 Hitachi Credit Corp.................................................................... 5,479,453
------------
FOOD CHAINS (1.4%)
84,800 FamilyMart Co., Ltd.................................................................... 3,374,694
------------
HOME BUILDING (2.3%)
563,000 Sekisui Chemical Co., Ltd.............................................................. 1,932,375
372,000 Sekisui House Ltd...................................................................... 3,616,475
------------
5,548,850
------------
HOME FURNISHINGS (0.2%)
34,000 Sangetsu Co., Ltd...................................................................... 592,950
------------
INDUSTRIAL MACHINERY/COMPONENTS (10.9%)
400,000 Amada Co., Ltd......................................................................... 3,450,835
381,000 Daifuku Co., Ltd....................................................................... 3,329,332
255,000 Daikin Industries, Ltd................................................................. 5,073,980
104,700 Fuji Machine Manufacturing Co., Ltd.................................................... 5,050,464
<CAPTION>
NUMBER OF
SHARES VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
334,000 Minebea Co., Ltd....................................................................... $ 3,944,174
930,000 Mitsubishi Heavy Industries Ltd........................................................ 3,226,531
517,000 Tsubakimoto Chain Co................................................................... 2,412,347
------------
26,487,663
------------
INDUSTRIAL SPECIALTIES (1.8%)
210,000 Fujitec Co., Ltd....................................................................... 1,838,961
259,000 Lintec Corp............................................................................ 2,553,961
------------
4,392,922
------------
INTERNATIONAL BANKS (0.3%)
62,000 Bank of Tokyo-Mitsubishi, Ltd.......................................................... 776,438
------------
MAJOR PHARMACEUTICALS (2.1%)
218,000 Sankyo Co., Ltd........................................................................ 5,025,325
------------
MARINE TRANSPORTATION (0.6%)
170,000 Mitsubishi Logistics Corp.............................................................. 1,356,215
------------
MEAT/POULTRY/FISH (0.9%)
157,000 Nippon Meat Packers, Inc............................................................... 2,126,345
------------
MOTOR VEHICLES (5.0%)
682,000 Nissan Motor Co., Ltd.*................................................................ 3,574,490
263,000 Suzuki Motor Corp...................................................................... 3,232,607
118,000 Toyota Motor Corp...................................................................... 5,352,690
------------
12,159,787
------------
OFFICE EQUIPMENT/SUPPLIES (6.3%)
172,000 Canon, Inc............................................................................. 7,913,915
359,000 Ricoh Co., Ltd......................................................................... 7,493,043
------------
15,406,958
------------
OTHER PHARMACEUTICALS (4.2%)
131,000 Ono Pharmaceutical Co., Ltd............................................................ 4,739,332
119,000 Yamanouchi Pharmaceutical Co., Ltd..................................................... 5,420,130
------------
10,159,462
------------
OTHER TELECOMMUNICATIONS (2.8%)
576 Nippon Telegraph & Telephone Corp...................................................... 6,839,332
------------
PHOTOGRAPHIC PRODUCTS (2.5%)
175,000 Fuji Photo Film Co., Ltd............................................................... 6,103,896
------------
POLLUTION CONTROL EQUIPMENT (1.4%)
163,000 Kurita Water Industries Ltd............................................................ 3,417,254
------------
PRINTING/FORMS (1.8%)
232,000 Dai Nippon Printing Co., Ltd........................................................... 3,953,469
80,000 Nissha Printing Co., Ltd............................................................... 471,243
------------
4,424,712
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
PORTFOLIO OF INVESTMENTS MAY 31, 2000, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REAL ESTATE (1.2%)
256,000 Mitsubishi Estate Co., Ltd............................................................. $ 3,008,831
------------
RECREATIONAL PRODUCTS/TOYS (4.3%)
54,700 Nintendo Co., Ltd...................................................................... 8,118,738
262,000 Yamaha Corp............................................................................ 2,381,818
------------
10,500,556
------------
SEMICONDUCTORS (2.2%)
17,000 Rohm Co., Ltd.......................................................................... 5,298,701
------------
SPECIALTY CHEMICALS (6.0%)
695,000 Daicel Chemical Industries, Ltd........................................................ 2,050,185
488,000 Kaneka Corp............................................................................ 5,020,334
566,000 Mitsubishi Chemical Corp............................................................... 2,210,445
239,000 NIFCO Inc.............................................................................. 2,656,048
403,000 Shin-Etsu Polymer Co., Ltd............................................................. 2,635,575
------------
14,572,587
------------
SPECIALTY FOODS/CANDY (0.7%)
108,000 House Foods Corp....................................................................... 1,601,967
------------
UTILITIES (1.1%)
102,800 Tokyo Electric Power Co................................................................ 2,565,232
------------
WHOLESALE DISTRIBUTORS (0.5%)
105,000 Nissei Sangyo Co., Ltd................................................................. 1,344,156
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $172,829,034)......................................................... 233,871,851
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (4.7%)
U.S. GOVERNMENT AGENCY
$ 11,500 Federal Home Loan Banks 6.30% due 06/01/00 (AMORTIZED COST $11,500,000)................ $ 11,500,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $184,329,034) (b)........................................................ 101.0% 245,371,851
LIABILITIES IN EXCESS OF OTHER ASSETS..................................................... (1.0) (2,372,747)
----- -------------
NET ASSETS................................................................................ 100.0% $ 242,999,104
----- -------------
----- -------------
</TABLE>
---------------------
* Non-income producing security.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $67,428,034 and the
aggregate gross unrealized depreciation is $6,385,217 resulting in net
unrealized appreciation of $61,042,817.
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT MAY 31, 2000:
<TABLE>
<CAPTION>
CONTRACTS IN EXCHANGE DELIVERY UNREALIZED
TO DELIVER FOR DATE APPRECIATION
-----------------------------------------------------------
<S> <C> <C> <C>
JPY 287,945,436 $2,692,337 06/01/00 $21,229
JPY 264,834,670 $2,483,446 06/02/00 $26,724
-------
Total unrealized appreciation......... $47,953
=======
</TABLE>
CURRENCY ABBREVIATION:
------------------------
<TABLE>
<S> <C>
JPY Japanese Yen.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $184,329,034).............................................................. $245,371,851
Cash (including $53,014 in foreign currency).................................................. 369,399
Unrealized appreciation on open forward foreign currency contracts............................ 47,953
Receivable for:
Investments sold.......................................................................... 5,127,830
Dividends................................................................................. 741,490
Shares of beneficial interest sold........................................................ 564,346
Interest.................................................................................. 14,307
Deferred organizational expenses.............................................................. 36,193
Prepaid expenses and other assets............................................................. 53,062
------------
TOTAL ASSETS............................................................................. 252,326,431
------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased................................................. 8,820,754
Investment management fee................................................................. 219,001
Plan of distribution fee.................................................................. 208,580
Accrued expenses and other payables........................................................... 78,992
------------
TOTAL LIABILITIES........................................................................ 9,327,327
------------
NET ASSETS............................................................................... $242,999,104
============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................... $235,383,485
Net unrealized appreciation................................................................... 61,060,724
Accumulated net investment loss............................................................... (1,709,969)
Accumulated net realized loss................................................................. (51,735,136)
------------
NET ASSETS............................................................................... $242,999,104
============
CLASS A SHARES:
Net Assets.................................................................................... $ 5,314,424
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 524,409
NET ASSET VALUE PER SHARE................................................................ $10.13
============
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE)......................................... $10.69
============
CLASS B SHARES:
Net Assets.................................................................................... $210,006,301
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 20,842,200
NET ASSET VALUE PER SHARE................................................................ $10.08
============
CLASS C SHARES:
Net Assets.................................................................................... $ 10,791,549
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 1,083,205
NET ASSET VALUE PER SHARE................................................................ $9.96
============
CLASS D SHARES:
Net Assets.................................................................................... $ 16,886,830
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 1,651,922
NET ASSET VALUE PER SHARE................................................................ $10.22
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 2000
<TABLE>
<S> <C>
NET INVESTMENT LOSS:
INCOME
Dividends (net of $217,807 foreign withholding tax)............................................ $ 1,289,859
Interest....................................................................................... 502,726
-----------
TOTAL INCOME.............................................................................. 1,792,585
-----------
EXPENSES
Investment management fee...................................................................... 2,273,030
Plan of distribution fee (Class A shares)...................................................... 12,397
Plan of distribution fee (Class B shares)...................................................... 2,169,661
Plan of distribution fee (Class C shares)...................................................... 115,628
Transfer agent fees and expenses............................................................... 391,726
Registration fees.............................................................................. 162,112
Custodian fees................................................................................. 104,213
Shareholder reports and notices................................................................ 95,370
Professional fees.............................................................................. 89,325
Organizational expenses........................................................................ 40,143
Trustees' fees and expenses.................................................................... 12,469
Other.......................................................................................... 10,962
-----------
TOTAL EXPENSES............................................................................ 5,477,036
-----------
NET INVESTMENT LOSS....................................................................... (3,684,451)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments................................................................................ 34,563,484
Foreign exchange transactions.............................................................. (7,597,330)
-----------
NET GAIN.................................................................................. 26,966,154
-----------
Net change in unrealized appreciation/depreciation on:
Investments................................................................................ 39,299,684
Translation of forward foreign currency contracts, other assets and liabilities denominated
in foreign currencies.................................................................... 51,606
-----------
NET APPRECIATION.......................................................................... 39,351,290
-----------
NET GAIN.................................................................................. 66,317,444
-----------
NET INCREASE................................................................................... $62,632,993
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MAY 31, 2000 MAY 31, 1999
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss............................................................. $ (3,684,451) $ (2,370,409)
Net realized gain (loss)........................................................ 26,966,154 (30,073,309)
Net change in unrealized appreciation........................................... 39,351,290 58,177,914
------------ ------------
NET INCREASE............................................................... 62,632,993 25,734,196
------------ ------------
DIVIDENDS TO SHAREHOLDERS:
From net investment income
Class A shares.............................................................. -- (36,929)
Class B shares.............................................................. -- (4,101,636)
Class C shares.............................................................. -- (151,368)
Class D shares.............................................................. -- (1,483)
In excess of net investment income
Class A shares.............................................................. -- (13,129)
Class B shares.............................................................. -- (1,912,867)
Class C shares.............................................................. -- (57,074)
Class D shares.............................................................. -- (511)
------------ ------------
TOTAL DIVIDENDS............................................................ -- (6,274,997)
------------ ------------
Net increase from transactions in shares of beneficial interest................. 24,256,884 9,150,518
------------ ------------
NET INCREASE............................................................... 86,889,877 28,609,717
NET ASSETS:
Beginning of period............................................................. 156,109,227 127,499,510
------------ ------------
END OF PERIOD
(INCLUDING A NET INVESTMENT LOSS OF $1,709,969 AND DIVIDENDS IN EXCESS OF
NET INVESTMENT INCOME OF $326,899, RESPECTIVELY)............................ $242,999,104 $156,109,227
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
NOTES TO FINANCIAL STATEMENTS MAY 31, 2000
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Japan Fund (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a non-diversified,
open-end management investment company. The Fund's investment objective is to
seek long-term capital appreciation. The Fund seeks to meet its investment
objective by investing primarily in securities of issuers located in Japan. The
Fund was organized as a Massachusetts business trust on January 22, 1996 and
commenced operations on April 26, 1996. 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"), or Morgan Stanley Dean Witter Investment Management Inc. (the
"Sub-Advisor") 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
9
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
NOTES TO FINANCIAL STATEMENTS MAY 31, 2000, CONTINUED
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.
Dividend income and other distributions are recorded on the ex-dividend date
except for certain dividends on foreign securities which are recorded as soon as
the Fund is informed after the ex-dividend date. Discounts are accreted over the
life of the respective securities. Interest income is accrued daily.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities, other assets and liabilities and forward foreign currency
contracts are translated at the exchange rates prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the
exchange rates prevailing on the respective dates of such transactions. The
resultant exchange gains and losses are included in the Statement of Operations
as realized and unrealized gain/loss on foreign exchange transactions. Pursuant
to U.S. Federal income tax regulations, certain foreign exchange gains/losses
included in realized and unrealized gain/loss are included in or are a reduction
of ordinary income for federal income tax purposes. The Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the changes in the market prices of the securities.
10
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
NOTES TO FINANCIAL STATEMENTS MAY 31, 2000, CONTINUED
E. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward foreign
currency contracts which are valued daily at the appropriate exchange rates. The
resultant unrealized exchange gains and losses are included in the Statement of
Operations as unrealized foreign currency gain or loss. The Fund records
realized gains or losses on delivery of the currency or at the time the forward
contract is extinguished (compensated) by entering into a closing transaction
prior to delivery.
F. 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.
G. 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.
H. ORGANIZATIONAL EXPENSES -- The Investment Manager paid the organizational
expenses of the Fund in the amount of approximately $200,000 and was reimbursed
for the full amount thereof. 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 AND SUB-ADVISORY AGREEMENTS
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, calculated daily and payable monthly, by applying the
annual rate of 0.95% to the net assets of the Fund determined as of the close of
each business day.
11
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
NOTES TO FINANCIAL STATEMENTS MAY 31, 2000, CONTINUED
Under a Sub-Advisory Agreement between the Sub-Advisor and the Investment
Manager, the Sub-Advisor provides the Fund with investment advice and portfolio
management relating to the Fund's investments in securities, subject to the
overall supervision of the Investment Manager. As compensation for the services
provided pursuant to the Sub-Advisory Agreement, the Investment Manager pays the
Sub-Advisor monthly compensation equal to 40% of its monthly compensation.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager and
Sub-Advisor. The Fund has adopted a Plan of Distribution (the "Plan") pursuant
to Rule 12b-1 under the Act. The Plan provides that the Fund will pay the
Distributor a fee which is accrued daily and paid monthly at the following
annual rates: (i) Class A -- up to 0.25% of the average daily net assets of
Class A; (ii) Class B -- 1.0% of the lesser of: (a) the average daily aggregate
gross sales of the Class B shares since the inception of the Fund (not including
reinvestment of dividend or capital gain distributions) less the average daily
aggregate net asset value of the Class B shares redeemed since the Fund's
inception upon which a contingent deferred sales charge has been imposed or
waived; or (b) the average daily net assets of Class B; and (iii) Class C -- up
to 1.0% of the average daily net assets of Class C.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts totaled
$18,515,315 at May 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
12
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
NOTES TO FINANCIAL STATEMENTS MAY 31, 2000, CONTINUED
other selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended May 31, 2000, 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 year ended May 31, 2000, it
received contingent deferred sales charges from certain redemptions of the
Fund's Class A shares, Class B shares and Class C shares of $40,094, $537,584
and $14,899, respectively and received $41,899 in front-end sales charges from
sales of the Fund's Class A shares. The respective shareholders pay such charges
which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended May 31, 2000 aggregated $90,014,395
and $80,277,886, respectively.
For the year ended May 31, 2000, the Fund incurred $51,925 in brokerage
commissions with Morgan Stanley & Co., an affiliate of the Investment Manager,
Distributor and Sub-Advisor, for portfolio transactions executed on behalf of
the Fund.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager,
Distributor and Sub-Advisor, is the Fund's transfer agent. At May 31, 2000, the
Fund had transfer agent fees and expenses payable of approximately $1,200.
5. FEDERAL INCOME TAX STATUS
During the year ended May 31, 2000, the Fund utilized approximately $29,330,000
of its net capital loss carryover.
At May 31, 2000, the Fund had a net capital loss carryover of approximately
$51,604,000 of which $35,000 will be available through May 31, 2006 and
$51,569,000 will be available through May 31, 2007 to offset future capital
gains to the extent provided by regulations.
Foreign currency losses incurred after October 31 ("post-October losses") within
the taxable year are deemed to arise on the first business day of the Fund's
next taxable year. The Fund incurred and will elect to defer net currency losses
of approximately $554,000 during fiscal 2000.
As of May 31, 2000, the Fund had temporary book/tax differences primarily
attributable to post-October losses and income from the mark-to-market of
passive foreign investment companies ("PFICs") and permanent book/tax
differences primarily attributable to foreign currency losses, tax
13
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
NOTES TO FINANCIAL STATEMENTS MAY 31, 2000, CONTINUED
adjustments on PFICs sold by the Fund and a net operating loss. To reflect
reclassifications arising from the permanent differences, paid-in capital was
charged $9,577,228, accumulated net realized loss was credited $7,275,847 and
net investment loss was credited $2,301,381.
6. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MAY 31, 2000 MAY 31, 1999
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold............................................................. 13,917,511 $ 135,091,200 5,370,586 $ 36,662,209
Reinvestment of dividends........................................ -- -- 7,798 52,327
Redeemed......................................................... (13,633,991) (134,816,631) (5,156,270) (35,993,342)
----------- ------------- ----------- -------------
Net increase - Class A........................................... 283,520 274,569 222,114 721,194
----------- ------------- ----------- -------------
CLASS B SHARES
Sold............................................................. 37,542,765 362,544,969 28,669,856 203,289,556
Reinvestment of dividends........................................ -- -- 820,552 5,522,307
Redeemed......................................................... (36,204,878) (356,713,208) (28,729,509) (203,190,103)
----------- ------------- ----------- -------------
Net increase - Class B........................................... 1,337,887 5,831,761 760,899 5,621,760
----------- ------------- ----------- -------------
CLASS C SHARES
Sold............................................................. 3,078,547 29,056,324 846,527 5,960,654
Reinvestment of dividends........................................ -- -- 26,857 178,602
Redeemed......................................................... (2,718,993) (26,466,420) (410,037) (2,908,273)
----------- ------------- ----------- -------------
Net increase - Class C........................................... 359,554 2,589,904 463,347 3,230,983
----------- ------------- ----------- -------------
CLASS D SHARES
Sold............................................................. 8,368,176 82,657,894 5,043,403 35,816,884
Reinvestment of dividends........................................ -- -- 322 2,168
Redeemed......................................................... (6,854,177) (67,097,244) (4,999,222) (36,242,471)
----------- ------------- ----------- -------------
Net increase (decrease) - Class D................................ 1,513,999 15,560,650 44,503 (423,419)
----------- ------------- ----------- -------------
Net increase in Fund............................................. 3,494,960 $ 24,256,884 1,490,863 $ 9,150,518
=========== ============= =========== =============
</TABLE>
7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
The Fund may enter into forward foreign currency contracts ("forward contracts")
to facilitate settlement of foreign currency denominated portfolio transactions
or to manage foreign currency exposure associated with foreign currency
denominated securities.
14
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
NOTES TO FINANCIAL STATEMENTS MAY 31, 2000, CONTINUED
Forward contracts involve elements of market risk in excess of the amounts
reflected in the Statement of Assets and Liabilities. The Fund bears the risk of
an unfavorable change in the foreign exchange rates underlying the forward
contracts. Risks may also arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their contracts.
At May 31, 2000, there were outstanding forward contracts.
At May 31, 2000, the Fund's cash balance consisted principally of interest
bearing deposits with Chase Manhattan Bank N.A., the Fund's custodian.
15
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
MAY 31, 2000 MAY 31, 1999 MAY 31, 1998
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.............. $ 7.57 $ 6.72 $ 9.16
------- ------- -------
Income (loss) from investment operations:
Net investment income (loss)................... (0.10) (0.02) 0.05
Net realized and unrealized gain (loss)........ 2.66 1.31 (2.49)
------- ------- -------
Total income (loss) from investment operations.... 2.56 1.29 (2.44)
------- ------- -------
Less dividends:
From net investment income..................... -- (0.33) --
In excess of net investment income............. -- (0.11) --
------- ------- -------
Total dividends................................... -- (0.44) --
------- ------- -------
Net asset value, end of period.................... $ 10.13 $ 7.57 $ 6.72
======= ======= =======
TOTAL RETURN+..................................... 33.25 % 20.61 % (26.64)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.......................................... 1.54 %(3) 1.72 %(3) 1.83 %(2)
Net investment income (loss)...................... (0.79)%(3) (0.94)%(3) 0.75 %(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands........... $ 5,314 $ 1,823 $ 126
Portfolio turnover rate........................... 35 % 78 % 7 %
</TABLE>
---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED MAY 31, APRIL 26, 1996*
------------------------------------------------------------------ THROUGH
2000++ 1999++ 1998**++ 1997 MAY 31, 1996
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period...... $ 7.58 $ 6.67 $ 8.79 $ 9.61 $ 10.00
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment loss.................... (0.17) (0.13) (0.13) (0.16) --
Net realized and unrealized gain
(loss)................................. 2.67 1.37 (1.99) (0.66) (0.39)
------- ------- ------- ------- -------
Total income (loss) from investment
operations............................... 2.50 1.24 (2.12) (0.82) (0.39)
------- ------- ------- ------- -------
Less dividends:
From net investment income............. -- (0.22) -- -- --
In excess of net investment income..... -- (0.11) -- -- --
------- ------- ------- ------- -------
Total dividends........................... -- (0.33) -- -- --
------- ------- ------- ------- -------
Net asset value, end of period............ $ 10.08 $ 7.58 $ 6.67 $ 8.79 $ 9.61
======= ======= ======= ======= =======
TOTAL RETURN+............................. 32.28 % 19.89 % (24.12)% (8.53)% (3.90)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................. 2.33 %(3) 2.59 %(3) 2.48 % 2.43 % 2.84 %(2)
Net investment loss....................... (1.58)%(3) (1.81)%(3) (1.62)% (1.77)% (0.52)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands... $210,006 $147,812 $125,008 $239,719 $273,544
Portfolio turnover rate................... 35 % 78 % 7 % 25 % --
</TABLE>
---------------------
* Commencement of operations.
** Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
MAY 31, 2000 MAY 31, 1999 MAY 31, 1998
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 7.49 $ 6.68 $ 9.16
------- ------- -------
Income (loss) from investment operations:
Net investment loss...................................... (0.17) (0.12) (0.07)
Net realized and unrealized gain (loss).................. 2.64 1.34 (2.41)
------- ------- -------
Total income (loss) from investment operations.............. 2.47 1.22 (2.48)
------- ------- -------
Less dividends:
From net investment income............................... -- (0.30) --
In excess of net investment income....................... -- (0.11) --
------- ------- -------
Total dividends............................................. -- (0.41) --
------- ------- -------
Net asset value, end of period.............................. $ 9.96 $ 7.49 $ 6.68
======= ======= =======
TOTAL RETURN+............................................... 32.10 % 19.86 % (27.07)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 2.33 %(3) 2.58 %(3) 2.52 %(2)
Net investment loss......................................... (1.58)%(3) (1.80)%(3) (1.21)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $10,792 $5,423 $1,738
Portfolio turnover rate..................................... 35 % 78 % 7 %
</TABLE>
---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE YEAR
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
MAY 31, 2000 MAY 31, 1999 MAY 31, 1998
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 7.62 $ 6.72 $ 9.16
------- ------- -------
Income (loss) from investment operations:
Net investment loss...................................... (0.08) (0.02) (0.01)
Net realized and unrealized gain (loss).................. 2.68 1.37 (2.43)
------- ------- -------
Total income (loss) from investment operations.............. 2.60 1.35 (2.44)
------- ------- -------
Less dividends:
From net investment income............................... -- (0.34) --
In excess of net investment income....................... -- (0.11) --
------- ------- -------
Total dividends............................................. -- (0.45) --
------- ------- -------
Net asset value, end of period.............................. $ 10.22 $ 7.62 $ 6.72
======= ======= =======
TOTAL RETURN+............................................... 33.25 % 21.76 % (26.64)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.33 %(3) 1.59 %(3) 1.60 %(2)
Net investment loss......................................... (0.58)%(3) (0.81)%(3) (0.23)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $16,887 $1,051 $628
Portfolio turnover rate..................................... 35 % 78 % 7 %
</TABLE>
---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER JAPAN FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Morgan Stanley Dean Witter Japan
Fund (the "Fund") at May 31, 2000, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
indicated, in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at May 31, 2000 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
JUNE 30, 2000
20
<PAGE>
MORGAN STANLEY DEAN WITTER JAPAN 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 two 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 years.
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.
21
<PAGE>
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
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
SUB-ADVISOR
Morgan Stanley Dean Witter
Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of
the Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus. Read the
prospectus carefully before investing.
Morgan Stanley Dean Witter Distributors Inc., member NASD.
MORGAN STANLEY
DEAN WITTER
JAPAN FUND
[PHOTO]
ANNUAL REPORT
MAY 31, 2000
