<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY TWO WORLD TRADE CENTER NEW
FUND YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS JULY 31, 1999
DEAR SHAREHOLDER:
We are pleased to present Morgan Stanley Dean Witter Aggressive Equity Fund's
first annual report to shareholders. The Fund, which commenced operations on
February 24, 1999, seeks capital growth.
MARKET OVERVIEW
Over the course of the first half of 1999, the economic outlook changed and
consequently so did the market leadership. The year began much as 1998 ended,
with expectations for modest, below-trend global economic growth accompanied by
a continued deceleration of inflation. Against this backdrop, the same growth
stocks that led in 1998 (financials, retail, Internet and technology)
outperformed in early 1999.
By the second quarter, however, expectations began to change as it became
evident that first-quarter U.S. economic and profit growth had been much
stronger than expected. Also, economies in non-Japan Asia were rebounding much
more quickly and strongly than anticipated. In Europe, evidence began to build
that the consumer economy there was gradually reviving. Given all these
developments, investors began to lift their global growth assumptions.
Responding to these upward revisions in global economic expectations, commodity
indexes moved upward for the first time in several years, pulling interest rates
up with them. The sum total of these events led to a rotation in sector
leadership away from more expensively priced domestic growth stocks to more
globally exposed value and economically sensitive stocks.
Another major development in the second quarter of 1999 was a turnaround in the
performance of small- and mid-sized companies. These stocks began to soar as it
became evident that global earnings had bottomed out. Historically, when this
inflection point has been reached, small- and mid-capitalization stocks
outperform both in terms of earnings and price appreciation.
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
LETTER TO THE SHAREHOLDERS JULY 31, 1999, CONTINUED
PERFORMANCE AND PORTFOLIO STRATEGY
From its inception through July 31, 1999, Morgan Stanley Dean Witter Aggressive
Equity Fund's Class A, B, C and D shares returned 8.70 percent, 8.40 percent,
8.40 percent and 8.90 percent, respectively. For the same period, the Standard &
Poor's 500 Composite Stock Price Index (S&P 500) returned 6.69 percent, while
the Lipper Capital Appreciation Funds Index returned 10.81 percent. Performance
of the Fund's four share classes varies because of differing expenses.
The Fund's performance was driven by its sector rotation approach. The Fund's
portfolio management team looks to capitalize on change by overweighting sectors
that are best positioned to show above-average earnings growth, relative to the
S&P 500. Early in the year, the focus of the Fund was domestically oriented
growth industries. At that time the U.S. economy was by far the strongest major
economy in the world and the portfolio was tilted to industries and companies
that would best stand to benefit more from domestic trends. Major sector
emphases included beneficiaries of decelerating inflation and falling interest
rates, which stimulated consumer spending. Sectors emphasized included
interest-related industries (e.g., banks, brokers, miscellaneous financials,
life insurance, autos, consumer electronics, retailing and restaurants),
selective technology groups (e.g., high growth, noncommodity groups like the
Internet, communication equipment and select semiconductor stocks), domestic
industries with internal growth drivers (e.g., radio, cable companies,
broadcasters and satellite companies) and steady growth industries (e.g., drugs,
domestic and foreign wireless and wireline telephone companies).
In the second quarter, the portfolio was broadened to include industries with
greater global exposure and economic sensitivity, given growing signs of
economic revival abroad and continued strength on the domestic front. Industries
sold or reduced in order to fund purchases in more economically sensitive and
globally exposed groups included banks, autos, drugs, cable, consumer staples
and miscellaneous financials. Cyclical and industrial groups added or expanded
included basic cyclicals, capital goods, energy and energy services,
semiconductors and semiconductor equipment.
Additionally, the Fund was broadened out in terms of its capitalization mix. The
portfolio moved from primarily having a concentration in large-capitalization
issues to more of a blend of large-, medium-and small-sized companies.
2
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
LETTER TO THE SHAREHOLDERS JULY 31, 1999, CONTINUED
LOOKING AHEAD
We believe that the global economy will rebound to a more normalized rate of
growth over the next 18 months. This should occur as economies in emerging
markets and Japan increasingly stabilize and move ahead. Likewise, we believe
that the European bloc will work its way back to precontagion growth rates
driven by an improvement in exports and a revival in consumer spending. The Fund
has positioned itself for this global acceleration with purchases in the
technology, industrial and basic cyclical sectors. U.S. domestic growth, while
likely to slow from its previous torrid pace, is expected to remain solid. Fund
positions in media, retail, health care, consumer electronics, business services
and select financial stocks should benefit from this domestic outlook. As global
earnings accelerate over the next 12 to 18 months, we expect to tilt the Fund's
capitalization mix gradually in favor of mid- and small-sized companies.
On May 1, 1999, Mitchell M. Merin was named President of the Morgan Stanley Dean
Witter Funds. Mr. Merin is the President and Chief Operating Officer of Asset
Management for Morgan Stanley Dean Witter & Co. and President, Chief Executive
Officer and Director of Morgan Stanley Dean Witter Advisors Inc., the Fund's
investment manager. He also serves as Chairman, Chief Executive Officer and
Director of the Fund's distributor and transfer agent.
We appreciate your ongoing support of Morgan Stanley Dean Witter Aggressive
Equity 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
3
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY
FUND
FUND PERFORMANCE JULY 31, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------------------------------------------
CLASS A* CLASS B+
- ----------------------------------------------- -----------------------------------------------
PERIOD ENDED 7/31/99 PERIOD ENDED 7/31/99
- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Since Inception (2/24/99) 8.70%(1) 2.99%(2) Since Inception (2/24/99) 8.40%(1) 3.40%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C++ CLASS D++
- ----------------------------------------------- -----------------------------------------------
PERIOD ENDED 7/31/99 PERIOD ENDED 7/31/99
- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Since Inception (2/24/99) 8.40%(1) 7.40%(2) Since Inception (2/24/99) 8.90%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICATIVE OF FUTURE RETURNS.
- ------------------------
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable sales charge. See the Fund's current prospectus for
complete details on fees and sales charges.
* The maximum front-end sales charge for Class A is 5.25%.
+ The maximum CDSC for Class B is 5.0%. The CDSC declines to 0% after six
years.
++ The maximum CDSC for Class C shares is 1% for shares redeemed within one year
of purchase.
++ Class D shares have no sales charge.
4
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (90.1%)
ADVERTISING (1.5%)
137,000 Interpublic Group of Companies, Inc.................................................... $ 5,754,000
77,000 Omnicom Group, Inc..................................................................... 5,457,375
------------
11,211,375
------------
AEROSPACE (0.4%)
44,000 United Technologies Corp............................................................... 2,934,250
------------
AIRLINES (0.7%)
285,000 Southwest Airlines Co.................................................................. 5,272,500
------------
ALCOHOLIC BEVERAGES (0.7%)
18,000 LVMH-Moet Hennessy Louis Vuitton (France).............................................. 5,115,919
------------
ALUMINUM (0.7%)
90,000 Alcoa Inc.............................................................................. 5,388,750
------------
APPAREL (0.5%)
60,000 Jones Apparel Group, Inc.*............................................................. 1,972,500
60,000 Tommy Hilfiger Corp.*.................................................................. 2,216,250
------------
4,188,750
------------
AUTO PARTS: O.E.M. (0.3%)
22,000 Eaton Corp............................................................................. 2,176,625
------------
BEVERAGES - NON-ALCOHOLIC (0.1%)
58,000 Pepsi Bottling Group, Inc.............................................................. 1,370,250
------------
BIOTECHNOLOGY (4.0%)
49,500 Amgen Inc.*............................................................................ 3,805,312
76,000 Biogen, Inc.*.......................................................................... 5,225,000
140,000 Cephalon, Inc.*........................................................................ 2,625,000
150,000 COR Therapeutics, Inc.*................................................................ 2,990,625
50,500 Genentech, Inc.*....................................................................... 7,171,000
36,000 IDEC Pharmaceuticals Corp.*............................................................ 3,566,250
70,000 MedImmune, Inc.*....................................................................... 5,578,125
------------
30,961,312
------------
BOOKS/MAGAZINES (0.6%)
140,000 Reader's Digest Assoc., Inc. (Class A)................................................. 4,873,750
------------
BROADCASTING (3.0%)
160,000 CBS Corp.*............................................................................. 7,030,000
80,000 Clear Channel Communications, Inc.*.................................................... 5,565,000
60,000 Grupo Televisa S.A. (GDR) (Mexico)*.................................................... 2,295,000
50,000 Hispanic Broadcasting Corp.*........................................................... 3,556,250
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
65,000 Univision Communications, Inc. (Class A)*.............................................. $ 4,501,250
------------
22,947,500
------------
BUILDING MATERIALS/DIY CHAINS (0.7%)
89,000 Home Depot, Inc. (The)................................................................. 5,679,312
------------
CABLE TELEVISION (2.1%)
26,000 Canal Plus (France).................................................................... 1,830,020
45,000 Century Communications Corp. (Class A)*................................................ 1,999,687
55,000 Comcast Corp. (Class A Special)........................................................ 2,117,500
86,000 EchoStar Communications Corp. (Class A)*............................................... 5,869,500
59,000 Insight Communications Co., Inc.*...................................................... 1,758,937
7,800 Sogecable, S.A. (Spain)*............................................................... 220,020
544,000 Telewest Communications PLC (United Kingdom)*.......................................... 2,346,375
------------
16,142,039
------------
CASINO/GAMBLING (0.3%)
50,000 MGM Grand, Inc.*....................................................................... 2,259,375
------------
CELLULAR TELEPHONE (2.3%)
140,000 Nextel Communications, Inc. (Class A)*................................................. 7,490,000
448 NTT Mobile Communication Network, Inc. (Japan)......................................... 6,964,541
40,300 Sprint Corp. (PCS Group)*.............................................................. 2,443,187
15,000 Western Wireless Corp. (Class A)*...................................................... 523,125
------------
17,420,853
------------
CLOTHING/SHOE/ACCESSORY STORES (0.8%)
50,000 Abercrombie & Fitch Co. (Class A)*..................................................... 2,075,000
37,700 Intimate Brands, Inc................................................................... 1,623,456
185,000 Next PLC (United Kingdom).............................................................. 2,039,847
------------
5,738,303
------------
COMPUTER COMMUNICATIONS (2.4%)
17,000 Applied Micro Circuits Corp.*.......................................................... 1,593,750
215,000 Cisco Systems, Inc.* **................................................................ 13,356,875
21,200 Juniper Networks, Inc.*................................................................ 3,434,400
------------
18,385,025
------------
COMPUTER HARDWARE (0.2%)
23,700 Gateway Inc.*.......................................................................... 1,805,644
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMPUTER SOFTWARE (5.1%)
10,000 BackWeb Technologies Ltd. (Israel)*.................................................... $ 256,250
70,000 Citrix Systems, Inc.*.................................................................. 3,635,625
170,000 Microsoft Corp.* **.................................................................... 14,577,500
135,000 Oracle Corp.*.......................................................................... 5,138,437
130,000 Siebel Systems, Inc.*.................................................................. 7,661,875
14,000 TIBCO Software Inc.*................................................................... 415,625
126,000 Veritas Software Corp.*................................................................ 7,103,250
------------
38,788,562
------------
COMPUTER/VIDEO CHAINS (2.2%)
80,000 Best Buy Co., Inc.*.................................................................... 5,970,000
120,000 Circuit City Stores, Inc. - Circuit City Group......................................... 5,670,000
100,000 Tandy Corp............................................................................. 5,131,250
------------
16,771,250
------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS (0.2%)
7,000 Astec Industries, Inc.*................................................................ 236,250
40,000 Manitowoc Co., Inc..................................................................... 1,662,500
------------
1,898,750
------------
CONSUMER ELECTRONICS/APPLIANCES (1.2%)
74,000 Sony Corp. (ADR) (Japan)............................................................... 9,263,875
------------
CONSUMER SPECIALTIES (0.5%)
4,600 The Swatch Group AG (Switzerland)...................................................... 3,594,232
------------
CONTAINERS/PACKAGING (0.5%)
60,000 Temple-Inland, Inc..................................................................... 3,795,000
------------
CONTRACT DRILLING (1.0%)
115,500 ENSCO International Inc................................................................ 2,360,531
291,500 Rowan Companies, Inc.*................................................................. 5,483,844
------------
7,844,375
------------
DEPARTMENT STORES (0.3%)
50,500 Federated Department Stores, Inc.*..................................................... 2,591,281
------------
DISCOUNT CHAINS (1.2%)
57,000 Ames Department Stores, Inc.*.......................................................... 2,322,750
60,000 Dollar General Corp.................................................................... 1,586,250
115,000 Wal-Mart Stores, Inc................................................................... 4,858,750
------------
8,767,750
------------
DIVERSIFIED COMMERCIAL SERVICES (0.9%)
48,000 CheckFree Holdings Corp.*.............................................................. 1,419,000
60,000 Concord EFS, Inc.*..................................................................... 2,036,250
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
54,600 SABRE Group Holdings, Inc.*............................................................ $ 3,429,562
------------
6,884,812
------------
DIVERSIFIED ELECTRONIC PRODUCTS (1.8%)
216,000 Hitachi Ltd. (Japan)................................................................... 2,178,865
33,000 Honeywell, Inc......................................................................... 3,953,812
38,000 JDS Uniphase Corp.*.................................................................... 3,434,250
70,000 Rockwell International Corp............................................................ 4,116,875
------------
13,683,802
------------
DIVERSIFIED FINANCIAL SERVICES (1.5%)
37,200 American Express Co.................................................................... 4,901,100
85,000 Citigroup Inc.......................................................................... 3,787,812
41,100 Equitable Companies, Inc............................................................... 2,640,675
------------
11,329,587
------------
DIVERSIFIED MANUFACTURING (2.3%)
70,000 AlliedSignal, Inc...................................................................... 4,528,125
49,000 Mannesmann AG (Germany)................................................................ 7,453,784
21,000 Minnesota Mining & Manufacturing Co.................................................... 1,846,687
40,000 Tyco International Ltd. (Bermuda)*..................................................... 3,907,500
------------
17,736,096
------------
E.D.P. PERIPHERALS (1.4%)
120,000 EMC Corp.*............................................................................. 7,267,500
54,000 Lexmark International Group, Inc. (Class A)*........................................... 3,402,000
------------
10,669,500
------------
E.D.P. SERVICES (1.0%)
148,000 First Data Corp........................................................................ 7,335,250
------------
ELECTRIC UTILITIES (1.1%)
80,000 AES Corp. (The)*....................................................................... 4,800,000
43,000 Calpine Corp.*......................................................................... 3,233,062
------------
8,033,062
------------
ELECTRONIC COMPONENTS (0.5%)
46,000 SanDisk Corp.*......................................................................... 3,513,250
------------
ELECTRONIC DATA PROCESSING (0.2%)
35,000 Unisys Corp.*.......................................................................... 1,428,437
------------
ELECTRONIC PRODUCTION EQUIPMENT (3.7%)
155,000 Amkor Technology, Inc.*................................................................ 2,373,438
211,000 Applied Materials, Inc.*............................................................... 15,165,625
80,000 ASM Lithography Holding NV (Netherlands)*.............................................. 4,808,686
77,000 Teradyne, Inc.*........................................................................ 5,741,313
------------
28,089,062
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
FINANCE COMPANIES (1.3%)
34,600 Capital One Financial Corp............................................................. $ 1,604,575
121,700 MBNA Corp.............................................................................. 3,468,450
29,000 NextCard, Inc.*........................................................................ 1,047,625
5,000 Shohkoh Fund & Co., Ltd. (Japan)....................................................... 3,711,790
------------
9,832,440
------------
FLUID CONTROLS (0.1%)
21,800 Parker-Hannifin Corp................................................................... 1,028,688
------------
FOREST PRODUCTS (0.8%)
128,000 Georgia-Pacific Group.................................................................. 5,752,000
------------
GENERIC DRUGS (0.5%)
105,000 Alpharma Inc. (Class A)................................................................ 3,898,125
------------
HOTELS/RESORTS (0.6%)
100,000 Four Seasons Hotels, Inc. (Canada)..................................................... 4,587,500
------------
INDUSTRIAL MACHINERY/COMPONENTS (0.5%)
40,000 Illinois Tool Works Inc................................................................ 2,972,500
9,500 Ingersoll-Rand Co...................................................................... 610,969
------------
3,583,469
------------
INTERNET SERVICES (0.4%)
3,800 Ask Jeeves, Inc.*...................................................................... 165,775
6,400 Commerce One, Inc.*.................................................................... 318,400
15,000 Engage Technologies, Inc............................................................... 517,500
25,000 RealNetworks, Inc.*.................................................................... 1,907,813
5,000 Vignette Corp.*........................................................................ 320,000
------------
3,229,488
------------
INVESTMENT MANAGERS (0.1%)
93,000 Amvescap PLC (United Kingdom).......................................................... 861,819
------------
LIFE INSURANCE (0.3%)
5,900 American General Corp.................................................................. 456,513
35,000 Lincoln National Corp.................................................................. 1,750,000
------------
2,206,513
------------
MAJOR BANKS (0.8%)
45,000 Chase Manhattan Corp................................................................... 3,459,375
23,000 Morgan (J.P.) & Co., Inc............................................................... 2,941,125
------------
6,400,500
------------
MAJOR PHARMACEUTICALS (0.7%)
77,000 Bristol-Myers Squibb Co................................................................ 5,120,500
------------
MAJOR U.S. TELECOMMUNICATIONS (1.4%)
115,000 Bell Atlantic Corp..................................................................... 7,331,250
20,000 MCI WorldCom, Inc.*.................................................................... 1,650,000
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
26,800 Sprint Corp. (FON Group)............................................................... $ 1,385,225
------------
10,366,475
------------
MANAGED HEALTH CARE (0.4%)
48,000 United HealthCare Corp................................................................. 2,928,000
------------
MEDIA CONGLOMERATES (1.4%)
134,400 Fox Entertainment Group, Inc. (Series A)*.............................................. 3,343,200
41,500 Time Warner Inc........................................................................ 2,988,000
100,000 Viacom, Inc. (Class A)*................................................................ 4,193,750
------------
10,524,950
------------
MEDICAL EQUIPMENT & SUPPLIES (0.8%)
60,000 VISX, Inc.*............................................................................ 6,067,500
------------
MEDICAL SPECIALTIES (1.6%)
120,200 Boston Scientific Corp.*............................................................... 4,875,613
45,000 Guidant Corp........................................................................... 2,635,313
40,000 Minimed, Inc.*......................................................................... 3,040,000
38,800 St. Jude Medical, Inc.*................................................................ 1,442,875
------------
11,993,801
------------
MILITARY/GOV'T/TECHNICAL (0.8%)
110,000 General Motors Corp. (Class H)*........................................................ 6,111,875
------------
MOVIES/ENTERTAINMENT (0.6%)
112,100 Premier Parks Inc.*.................................................................... 4,336,869
------------
MULTI-LINE INSURANCE (1.2%)
60,000 American International Group, Inc...................................................... 6,967,500
22,000 CIGNA Corp............................................................................. 1,940,125
------------
8,907,625
------------
NEWSPAPERS (0.4%)
44,000 Gannett Co., Inc....................................................................... 3,179,000
------------
OIL & GAS PRODUCTION (1.0%)
187,000 Apache Corp............................................................................ 7,935,813
------------
OIL/GAS TRANSMISSION (1.6%)
79,800 Dynegy Inc............................................................................. 1,915,200
90,000 Enron Corp............................................................................. 7,666,875
65,000 Williams Companies, Inc................................................................ 2,734,063
------------
12,316,138
------------
OILFIELD SERVICES/EQUIPMENT (2.3%)
110,000 Baker Hughes Inc....................................................................... 3,829,375
60,000 BJ Services Co.*....................................................................... 1,833,750
40,000 Halliburton Co......................................................................... 1,845,000
61,000 Schlumberger, Ltd...................................................................... 3,694,313
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
160,300 Weatherford International, Inc.*....................................................... $ 6,281,756
------------
17,484,194
------------
OTHER CONSUMER SERVICES (0.2%)
32,000 E-LOAN, Inc.*.......................................................................... 1,242,000
------------
OTHER PHARMACEUTICALS (0.5%)
73,000 Biovail Corporation International (Canada)*............................................ 4,101,688
------------
OTHER SPECIALTY STORES (0.7%)
100,000 Tiffany & Co........................................................................... 5,031,250
------------
OTHER TELECOMMUNICATIONS (1.0%)
123,000 COLT Telecom Group PLC (United Kingdom)................................................ 2,780,256
32,000 McLeodUSA, Inc. (Class A)*............................................................. 952,000
6,000 NEXTLINK Communications, Inc. (Class A)*............................................... 669,000
25,000 NTL Inc.*.............................................................................. 2,596,875
20,000 RCN Corp.*............................................................................. 833,750
------------
7,831,881
------------
PACKAGE GOODS/COSMETICS (1.1%)
90,900 Colgate-Palmolive Co................................................................... 4,488,188
82,400 Estee Lauder Companies, Inc. (Class A)................................................. 3,919,150
------------
8,407,338
------------
PAPER (1.0%)
80,200 International Paper Co................................................................. 4,100,225
76,000 Willamette Industries, Inc............................................................. 3,420,000
------------
7,520,225
------------
RAILROADS (0.2%)
26,100 Canadian National Railway Co. (Canada)................................................. 1,748,700
------------
RESTAURANTS (1.1%)
120,000 Applebee's International, Inc.......................................................... 3,757,500
140,000 Outback Steakhouse, Inc.*.............................................................. 4,663,750
------------
8,421,250
------------
SEMICONDUCTORS (7.1%)
28,000 Broadcom Corp. (Class A)*.............................................................. 3,372,250
28,000 Conexant Systems, Inc.*................................................................ 1,758,750
81,000 Intel Corp............................................................................. 5,589,000
57,000 Linear Technology Corp................................................................. 3,494,813
41,200 LSI Logic Corp.*....................................................................... 2,072,875
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
5,700 Maker Communications, Inc.*............................................................ $ 157,819
60,000 Maxim Integrated Products, Inc.*....................................................... 3,840,000
78,000 Microchip Technology Inc.*............................................................. 3,904,875
92,000 Micron Technology, Inc.*............................................................... 5,715,500
56,000 PMC - Sierra, Inc.*.................................................................... 4,382,000
40,000 STMicroelectronics NV (Netherlands).................................................... 2,858,235
49,000 STMicroelectronics NV (Netherlands) (ADR).............................................. 3,454,500
44,000 Texas Instruments, Inc................................................................. 6,336,000
28,000 TriQuint Semiconductor, Inc.*.......................................................... 1,158,500
96,000 Xilinx, Inc.*.......................................................................... 5,982,000
------------
54,077,117
------------
SHOE MANUFACTURING (0.2%)
100,000 Madden (Steven), Ltd.*................................................................. 1,318,750
------------
TELECOMMUNICATIONS (0.4%)
43,000 Telefonos de Mexico S.A. (Series L) (ADR) (Mexico)..................................... 3,246,500
------------
TELECOMMUNICATIONS EQUIPMENT (8.2%)
91,500 Comverse Technology, Inc.*............................................................. 6,913,969
94,767 Ericsson (L.M.) Telefonaktiebolaqet (ADR) (Sweden)..................................... 3,032,544
146,500 General Instrument Corp.*.............................................................. 6,647,438
99,000 Motorola, Inc.**....................................................................... 9,033,750
85,000 Nokia Corp. (ADR) (Finland)............................................................ 7,230,313
70,000 Nortel Networks Corp. (Canada)......................................................... 6,203,750
18,900 Paradyne Networks, Inc................................................................. 837,506
59,000 QUALCOMM Inc.*......................................................................... 9,204,000
112,000 RF Micro Devices, Inc.*................................................................ 8,568,000
129,500 Scientific-Atlanta, Inc................................................................ 4,726,750
------------
62,398,020
------------
WIRELESS COMMUNICATIONS (0.9%)
110,000 VoiceStream Wireless Corp.*............................................................ 4,956,875
40,000 WinStar Communications, Inc.*.......................................................... 2,095,000
------------
7,051,875
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $625,840,828)......................................................... 686,939,341
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (13.4%)
U.S. GOVERNMENT AGENCIES (a) (13.1%)
$ 50,000 Federal Home Loan Banks 4.97% due 08/02/99............................................. $ 49,993,098
50,000 Student Loan Marketing Assoc. 4.97% due 08/02/99....................................... 49,993,097
------------
TOTAL U.S. GOVERNMENT AGENCIES
(AMORTIZED COST $99,986,195)........................................................... 99,986,195
------------
REPURCHASE AGREEMENT (0.3%)
2,250 The Bank of New York 5.00% due 08/02/99 (dated 07/30/99; proceeds $2,250,931) (b)
(IDENTIFIED COST $2,249,993)......................................................... 2,249,993
------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $102,236,188)......................................................... 102,236,188
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $728,077,016) (c)........................................................ 103.5 % 789,175,529
LIABILITIES IN EXCESS OF OTHER ASSETS..................................................... (3.5) (26,794,045)
------ -------------
NET ASSETS................................................................................ 100.0 % $ 762,381,484
------ -------------
------ -------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
GDR Global Depository Receipt.
* Non-income producing security.
** Some or all of these securities are segregated in connection with open
futures contracts.
(a) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(b) Collateralized by $1,855,385 U.S. Treasury Bond 8.125% due 08/15/21 valued
at $2,300,393.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $73,636,861 and the
aggregate gross unrealized depreciation is $12,538,348, resulting in net
unrealized appreciation of $61,098,513.
FUTURES CONTRACTS OPEN AT JULY 31, 1999:
<TABLE>
<CAPTION>
NUMBER UNDERLYING
OF DESCRIPTION, DELIVERY FACE AMOUNT UNREALIZED
CONTRACTS MONTH, AND YEAR AT VALUE GAIN
- -------------------------------------------------------
<C> <S> <C> <C>
S&P 500 Futures
(475) September/1999 $(158,151,250) $4,697,725
</TABLE>
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JULY 31, 1999:
<TABLE>
<CAPTION>
CONTRACTS TO IN DELIVERY UNREALIZED
DELIVER EXCHANGE FOR DATE DEPRECIATION
- ----------------------------------------------------
<S> <C> <C> <C>
GBP 1,952 $ 3,165 08/03/99 $ (52)
</TABLE>
CURRENCY ABBREVIATION:
<TABLE>
<S> <C>
GBP British Pound.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $728,077,016).............................................................. $789,175,529
Receivable for:
Investments sold.......................................................................... 5,067,690
Shares of beneficial interest sold........................................................ 2,605,509
Variation margin.......................................................................... 2,154,302
Dividends................................................................................. 120,545
Deferred offering costs....................................................................... 110,654
Prepaid expenses and other assets............................................................. 77,924
------------
TOTAL ASSETS............................................................................. 799,312,153
------------
LIABILITIES:
Payable for:
Investments purchased..................................................................... 34,517,932
Plan of distribution fee.................................................................. 629,141
Investment management fee................................................................. 487,596
Shares of beneficial interest repurchased................................................. 338,811
Payable to bank............................................................................... 680,885
Accrued expenses and other payables........................................................... 276,304
------------
TOTAL LIABILITIES........................................................................ 36,930,669
------------
NET ASSETS............................................................................... $762,381,484
------------
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................... $714,084,780
Net unrealized appreciation................................................................... 65,797,674
Net investment loss........................................................................... (853)
Net realized loss............................................................................. (17,500,117)
------------
NET ASSETS............................................................................... $762,381,484
------------
------------
CLASS A SHARES:
Net Assets.................................................................................... $32,165,463
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 2,958,112
NET ASSET VALUE PER SHARE................................................................ $10.87
------------
------------
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE)........................................ $11.47
------------
------------
CLASS B SHARES:
Net Assets.................................................................................... $665,847,595
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 61,432,268
NET ASSET VALUE PER SHARE................................................................ $10.84
------------
------------
CLASS C SHARES:
Net Assets.................................................................................... $64,052,723
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 5,909,665
NET ASSET VALUE PER SHARE................................................................ $10.84
------------
------------
CLASS D SHARES:
Net Assets.................................................................................... $315,703
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 28,998
NET ASSET VALUE PER SHARE................................................................ $10.89
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE PERIOD FEBRUARY 24, 1999* THROUGH JULY 31, 1999
<TABLE>
<S> <C>
NET INVESTMENT LOSS:
INCOME
Interest....................................................................................... $ 1,746,496
Dividends (net of $23,195 foreign withholding tax)............................................. 1,506,081
-----------
TOTAL INCOME.............................................................................. 3,252,577
-----------
EXPENSES
Plan of distribution fee (Class A shares)...................................................... 30,722
Plan of distribution fee (Class B shares)...................................................... 2,456,789
Plan of distribution fee (Class C shares)...................................................... 251,537
Investment management fee...................................................................... 2,124,190
Transfer agent fees and expenses............................................................... 452,340
Registration fees.............................................................................. 231,341
Offering costs................................................................................. 84,447
Professional fees.............................................................................. 51,591
Custodian fees................................................................................. 43,799
Shareholder reports and notices................................................................ 18,729
Trustees' fees and expenses.................................................................... 4,417
Other.......................................................................................... 5,402
-----------
TOTAL EXPENSES............................................................................ 5,755,304
-----------
NET INVESTMENT LOSS....................................................................... (2,502,727)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss on:
Investments................................................................................ (13,186,934)
Futures contracts.......................................................................... (4,313,183)
Foreign exchange transactions.............................................................. (853)
-----------
NET LOSS.................................................................................. (17,500,970)
-----------
Net unrealized appreciation/depreciation on:
Investments................................................................................ 61,098,513
Futures contracts.......................................................................... 4,697,725
Translation of forward foreign currency contracts, other assets and liabilities denominated
in foreign currencies.................................................................... 1,436
-----------
NET APPRECIATION.......................................................................... 65,797,674
-----------
NET GAIN.................................................................................. 48,296,704
-----------
NET INCREASE................................................................................... $45,793,977
-----------
-----------
</TABLE>
- ---------------------
* Commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
PERIOD
FEBRUARY
24, 1999*
THROUGH
JULY 31,
1999
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss......................................................................................... $(2,502,727)
Net realized loss........................................................................................... (17,500,970)
Net unrealized appreciation................................................................................. 65,797,674
-----------
NET INCREASE........................................................................................... 45,793,977
Net increase from transactions in shares of beneficial interest............................................. 716,487,507
-----------
NET INCREASE........................................................................................... 762,281,484
NET ASSETS:
Beginning of period......................................................................................... 100,000
-----------
END OF PERIOD
(INCLUDING A NET INVESTMENT LOSS OF $853)............................................................... $762,381,484
-----------
-----------
</TABLE>
- ---------------------
* Commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1999
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Aggressive Equity 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. The Fund seeks to achieve its objective by
investing primarily in equity securities of companies that are covered by Morgan
Stanley Dean Witter Equity Research. The Fund was organized as a Massachusetts
business trust on October 29, 1997 and had no operations other than those
relating to organizational matters and the issuance of 2,500 shares of
beneficial interest by each class for $25,000 of each class to Morgan Stanley
Dean Witter Advisors Inc. (the "Investment Manager") to effect the Fund's
initial capitalization. The Fund commenced operations on February 24, 1999.
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 a security is traded on more than one exchange, the security is
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 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
13
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1999, CONTINUED
readily available may be based upon current market prices of securities which
are comparable in coupon, rating and maturity or an appropriate matrix utilizing
similar factors); and (4) short-term debt securities having a maturity date of
more than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. 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.
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.
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 gains/loss on foreign exchange transactions. 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.
14
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1999, CONTINUED
F. FUTURES CONTRACTS -- A futures contract is an agreement between two parties
to buy and sell financial instruments at a set price on a future date. Upon
entering into such a contract, the Fund is required to pledge to the broker
cash, U.S. Government securities or other liquid portfolio securities equal to
the minimum initial margin requirement of the applicable futures exchange.
Pursuant to the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in the value of the contract
which is known as variation margin. Such receipts or payments are recorded by
the Fund as unrealized gains or losses. Upon closing of the contract, the Fund
realizes a gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
G. 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.
H. 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.
I. OFFERING COSTS -- The Investment Manager incurred offering costs on behalf of
the Fund in the amount of approximately $195,000 which will be reimbursed for
the full amount thereof. Such expenses were deferred and are being amortized on
the straight-line method over a period of approximately one year or less from
the commencement of operations.
15
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1999, CONTINUED
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
annual rate of 0.75% to the net assets of the Fund determined as of the close of
each business day.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund will pay the Distributor a fee which is
accrued daily and paid monthly at the following annual rates: (i) Class A -- up
to 0.25% of the average daily net assets of Class A; (ii) Class B -- 1.0% of the
average daily net assets of Class B; and (iii) Class C -- up to 1.0% of the
average daily net assets of Class C. In the case of Class A shares, amounts paid
under the Plan are paid to the Distributor for services provided. In the case of
Class B and Class C shares, amounts paid under the Plan are paid to the
Distributor for (1) services provided and the expenses borne by it and others in
the distribution of the shares of these Classes, including the payment of
commissions for sales of these Classes and incentive compensation to, and
expenses of, the Morgan Stanley Dean Witter Financial Advisors and others who
engage in or support distribution of the shares or who service shareholder
accounts, including overhead and telephone expenses; (2) printing and
distribution of prospectuses and reports used in connection with the offering of
these shares to other than current shareholders; and (3) preparation, printing
and distribution of sales literature and advertising materials. In addition, the
Distributor may utilize fees paid pursuant to the Plan, in the case of Class B
shares, to compensate Dean Witter Reynolds Inc. ("DWR"), an affiliate of the
Investment Manager and Distributor, and other selected broker-dealers for their
opportunity costs in advancing such amounts, which compensation would be in the
form of a carrying charge on any unreimbursed expenses.
16
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1999, CONTINUED
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts, including
carrying charges, totaled $27,597,713 at July 31, 1999.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the period ended July 31, 1999, 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 period ended July 31, 1999,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class A shares, Class B shares and Class C shares of $266, $445,078 and
$42,044, respectively and received $153,880 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 period ended July 31, 1999 aggregated
$1,629,058,963 and $990,031,202, respectively.
For the year ended July 31, 1999, the Fund incurred $61,201 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.
At July 31, 1999, the Fund's receivable for investments sold included unsettled
trades with DWR of $557,233.
17
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1999, CONTINUED
For the year ended July 31, 1999, the Fund incurred brokerage commissions of
$190,183 with Morgan Stanley & Co., Inc., an affiliate of the Investment Manager
and Distributor, for portfolio transactions executed on behalf of the Fund.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At July 31, 1999, the Fund had
transfer agent fees and expenses payable of approximately $2,550.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 24, 1999*
THROUGH
JULY 31, 1999
----------------------------
SHARES AMOUNT
----------- --------------
<S> <C> <C>
CLASS A SHARES
Sold............................................................. 3,567,692 $ 36,584,656
Redeemed......................................................... (612,080) (6,566,789)
----------- --------------
Net increase - Class A........................................... 2,955,612 30,017,867
----------- --------------
CLASS B SHARES
Sold............................................................. 63,987,090 653,623,096
Redeemed......................................................... (2,557,322) (27,155,622)
----------- --------------
Net increase - Class B........................................... 61,429,768 626,467,474
----------- --------------
CLASS C SHARES
Sold............................................................. 6,546,680 66,475,636
Redeemed......................................................... (639,515) (6,749,672)
----------- --------------
Net increase - Class C........................................... 5,907,165 59,725,964
----------- --------------
CLASS D SHARES
Sold............................................................. 27,278 284,773
Redeemed......................................................... (780) (8,571)
----------- --------------
Net increase - Class D........................................... 26,498 276,202
----------- --------------
Net increase in Fund............................................. 70,319,043 $ 716,487,507
----------- --------------
----------- --------------
</TABLE>
- ---------------------
* Commencement of operations.
18
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1999, CONTINUED
6. FEDERAL INCOME TAX STATUS
Capital and 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
capital and foreign currency losses of approximately $5,705,000 and $1,000,
respectively during fiscal 1999.
At July 31, 1999, the Fund had temporary book/tax differences primarily
attributable to post-October losses, capital loss deferrals on wash sales and
the mark-to-market of open futures contracts and permanent book/tax differences
primarily attributable to a net operating loss and nondeductible expenses. To
reflect reclassifications arising from the permanent differences,
paid-in-capital was charged $2,502,727, net realized loss was credited $853 and
net investment loss was credited $2,501,874.
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.
To hedge against adverse interest rate, foreign currency and market risks, the
Fund may purchase and sell interest rate, currency and index futures ("futures
contracts").
Forward contracts and future contracts involve elements of market risk in excess
of the amount 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 July 31, 1999, there were outstanding forward contracts used to facilitate
settlement of foreign currency denominated portfolio transactions and
outstanding index futures contracts.
19
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout the period:
<TABLE>
<CAPTION>
FOR THE PERIOD FEBRUARY 24, 1999*
THROUGH JULY 31, 1999**
-------------------------------------------------
CLASS A CLASS B CLASS C CLASS D
SHARES SHARES SHARES SHARES
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SELECTED PER SHARE DATA:
Net asset value, beginning of
period............................ $ 10.00 $ 10.00 $ 10.00 $ 10.00
---------- ---------- ---------- ----------
Income (loss) from investment
operations:
Net investment loss.............. (0.01) (0.04) (0.04) --
Net realized and unrealized
gain.............................. 0.88 0.88 0.88 0.89
---------- ---------- ---------- ----------
Total income from investment
operations........................ 0.87 0.84 0.84 0.89
---------- ---------- ---------- ----------
Net asset value, end of period..... $ 10.87 $ 10.84 $ 10.84 $ 10.89
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
TOTAL RETURN+ (1).................. 8.70% 8.40% 8.40% 8.90%
RATIOS TO AVERAGE NET ASSETS
(2)(3):
Expenses........................... 1.31% 2.06% 2.06% 1.06%
Net investment loss................ (0.16)% (0.91)% (0.91)% 0.09%
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $32,165 $665,848 $64,053 $316
Portfolio turnover rate (1)........ 177% 177% 177% 177%
</TABLE>
- ---------------------
* Commencement of operations.
** 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
20
<PAGE>
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY
FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY 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
Aggressive Equity Fund (the "Fund") at July 31, 1999, and the results of its
operations, the changes in its net assets and the financial highlights for the
period February 24, 1999 (commencement of operations) through July 31, 1999, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
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
audit, which included confirmation of securities at July 31, 1999 by
correspondence with the custodian and brokers, provides a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
SEPTEMBER 9, 1999
21
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin
President
Barry Fink
Vice President, Secretary and General Counsel
Anita H. Kolleeny
Vice President
Michelle Kaufman
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
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 AGGRESSIVE EQUITY FUND
[GRAPHIC]
ANNUAL REPORT
JULY 31, 1999
