<PAGE> 1
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND Two World Trade Center
LETTER TO THE SHAREHOLDERS January 31, 2000 New York, New York 10048
DEAR SHAREHOLDER:
The six-month period ended January 31, 2000, began with the financial markets
believing that economic recovery was gaining enough traction to warrant a change
in the favorable monetary policy that had graced the capital markets since 1994.
During the summer, the Federal Reserve Board raised interest rates two times,
pressuring the equity and bond markets downward. Industry sectors that were
particularly penalized by this market correction included
interest-rate-sensitive groups, consumer issues and health care. The technology
sector suffered only a mild correction. Economically sensitive groups, which
performed well during the second quarter, declined significantly as a result of
the Federal Reserve's attempt to temper the economy's strength.
Market sentiment shifted again during the fourth quarter as investors assumed
that the Fed would tighten rates only once more in order to achieve its aim of
slowing economic growth. Although the equity markets reacted positively to this
change in sentiment, the market's breadth remained poor, with only the
technology sector moving ahead.
As the new year began, market volatility increased as concern about further
Federal Reserve tightening permeated the financial markets. In early February,
the Fed raised short-term rates for a fourth time since early summer, sending
stock prices sharply lower.
PERFORMANCE
For the six-month period ended January 31, 2000, Morgan Stanley Dean Witter
Aggressive Equity Fund's Class A, B, C and D shares returned 37.26 percent,
36.72 percent, 36.72 percent and 37.37 percent, respectively. For the same
period, the Standard & Poor's 500 Composite Stock Price Index (S&P 500) returned
5.59 percent. The performance of the Fund's four share classes varies because of
differing expenses. Total return figures assume the reinvestment of all
distributions and do not reflect the deduction of any applicable sales charges.
<PAGE> 2
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
LETTER TO THE SHAREHOLDERS January 31, 2000, continued
PORTFOLIO STRATEGY
The equity market underwent a major rotation during the second quarter of 1999,
leading to steady growth stocks falling out of favor. Groups such as health care
posted declines during this period, while retailers and financials significantly
underperformed the overall market. The Fund, which utilizes a top-down sector
rotation discipline to select industries expected to have the strongest relative
earnings, based on our economic outlook, reoriented its portfolio to emphasize
groups with greater global exposure. Given our more favorable outlook for
worldwide growth, we overweighted the Fund in basic cyclicals, capital goods and
technology stocks and reduced our commitments to consumer staples, financials
and health care.
While breadth or group participation narrowed sharply during the second quarter
of 1999, the market posted overall positive returns for the period. However,
this was not the case in the third quarter, which ended the period down and
resulted in a further narrowing in market breadth. The market reacted negatively
to the Federal Reserve's shift toward a series of rate hikes in its attempt to
slow the rate of economic growth. Within this context, the Fund reduced its
exposure to sectors having less economic sensitivity. The proceeds were not
redeployed until the market had stabilized later in the quarter. This strategy
benefited the Fund's relative performance during this period of high market
volatility.
With investors believing that the Federal Reserve would remain on the sidelines
until after the new year, the market rebounded sharply in the fourth quarter,
but inside a narrow range. Technology groups, particularly those related to the
new economy, far outperformed the broader market. One reason for this lopsided
rebound was the unusual nature of the global economic recovery, which has yet to
accelerate business for the basic cyclical and capital goods companies that have
traditionally benefited during the early stages of a recovery. Instead, demand
has focused on technology products, particularly companies that sell goods that
serve e-commerce and expanding bandwidth. Many of these companies are small and
medium-sized ones. Consequently, the Fund ended the fiscal year with
approximately 40 percent of its assets invested in small and mid-sized
companies.
LOOKING AHEAD
We believe the global economic recovery will continue. However, continued
strength in the U.S. economy could lead the Federal Reserve to raise interest
rates further. Rising rates could pressure valuations in the first half of 2000.
By the second half of the year, interest rates should subside and economic
growth decelerate to more sustainable levels, positioning the markets for a nice
rebound.
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
LETTER TO THE SHAREHOLDERS January 31, 2000, continued
We appreciate your ongoing support of Morgan Stanley Dean Witter Aggressive
Equity Fund and look forward to continuing to serve your investment needs.
<TABLE>
<S> <C>
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO /s/ MITCHELL M. MERIN
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
</TABLE>
3
<PAGE> 4
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
FUND PERFORMANCE January 31, 2000
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A*
- ----------------------------------------------
<S> <C> <C>
PERIOD ENDED 1/31/00
- -------------------------
Since Inception (2/24/99) 49.20%(1) 41.37%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS B**
- ----------------------------------------------
<S> <C> <C>
PERIOD ENDED 1/31/00
- -------------------------
Since Inception (2/24/99) 48.20%(1) 43.20%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C+
- ----------------------------------------------
<S> <C> <C>
PERIOD ENDED 1/31/00
- -------------------------
Since Inception (2/24/99) 48.20%(1) 47.20%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS D++
- ----------------------------------------------
<S> <C> <C>
PERIOD ENDED 1/31/00
- -------------------------
Since Inception (2/24/99) 49.60%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
- ---------------------
<TABLE>
<C> <S>
(1) Figure shown assumes reinvestment of all distributions and
does not reflect the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and
the deduction of the maximum applicable sales charge. See
the Fund's current prospectus for complete details on fees
and sales charges.
* The maximum front-end sales charge for Class A is 5.25%.
** The maximum contingent deferred sales charge (CDSC) for
Class B is 5.0%. The CDSC declines to 0% after six years.
+ The maximum CDSC for Class C shares is 1% for shares
redeemed within one year of purchase.
++ Class D shares have no sales charge.
</TABLE>
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS January 31, 2000 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (96.4%)
Advertising (2.4%)
60,000 DoubleClick Inc.*.......... $ 5,928,750
80,000 Interpublic Group of
Companies, Inc. .......... 3,680,000
36,200 Lamar Advertising Co.*..... 2,135,800
105,000 Omnicom Group, Inc. ....... 9,837,187
29,000 True North Communications,
Inc. ..................... 1,205,312
170,000 WPP Group, PLC (United
Kingdom).................. 2,700,032
90,000 Young & Rubicam, Inc. ..... 4,848,750
--------------
30,335,831
--------------
Alcoholic Beverages (1.3%)
183,510 Coors (Adolph) Co.
(Class B)................. 8,900,235
18,000 LVMH - Moet Hennessy Louis
Vuitton (France).......... 7,179,019
--------------
16,079,254
--------------
Aluminum (1.3%)
114,400 Alcan Aluminium, Ltd.
(Canada).................. 4,468,750
164,400 Alcoa, Inc. ............... 11,456,625
--------------
15,925,375
--------------
Biotechnology (4.6%)
13,000 Abgenix, Inc. ............. 1,714,375
11,500 Affymetrix, Inc.*.......... 2,662,250
115,700 Alkermes, Inc.*............ 7,657,894
160,000 Amgen Inc.*................ 10,190,000
24,000 COR Therapeutics, Inc.*.... 634,500
45,400 Genentech, Inc.*........... 6,378,700
80,000 Human Genome Sciences,
Inc.*..................... 7,850,000
9,900 IDEC Pharmaceuticals
Corp.*.................... 1,248,637
44,200 Immunex Corp.*............. 5,779,150
18,000 MedImmune, Inc.*........... 2,620,125
36,100 Millennium Pharmaceuticals,
Inc.*..................... 6,766,494
11,300 PE Corporation - Celera
Genomics Group*........... 2,276,244
22,100 Sequenom Inc.*............. 574,600
--------------
56,352,969
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
Broadcasting (4.5%)
210,000 CBS Corp.*................. $ 12,245,625
86,650 Citadel Communications
Corp.*.................... 4,289,175
140,000 Clear Channel
Communications, Inc.*..... 12,092,500
25,000 Cox Radio, Inc. (Class
A)*....................... 2,200,000
61,200 Entercom Communications
Corp.*.................... 3,251,250
55,000 Grupo Televisa S.A. (GDR)
(Mexico)*................. 3,052,500
50,000 Hispanic Broadcasting
Corp.*.................... 5,196,875
21,100 Radio One, Inc.*........... 1,614,150
80,000 Univision Communications,
Inc. (Class A)*........... 8,570,000
108,350 USA Networks, Inc.*........ 5,370,097
33,000 XM Satellite Radio Holdings
Inc. (Class A)*........... 952,875
--------------
58,835,047
--------------
Cable Television (2.2%)
43,500 AT&T Corp. - Liberty Media
Group (Class A)*.......... 2,223,937
8,000 Canal Plus (France)........ 1,292,573
122,000 Comcast Corp. (Class A
Special)*................. 5,612,000
165,000 Cox Communications, Inc.
(Class A)*................ 8,054,062
82,200 EchoStar Communications
Corp. (Class A)*.......... 6,689,025
30,400 United Pan-Europe
Communications NV (ADR)
(Netherlands)*............ 3,876,000
--------------
27,747,597
--------------
Cellular Telephone (2.7%)
40,000 Crown Castle International
Corp.*.................... 1,262,500
85,000 Nextel Communications, Inc.
(Class A)*................ 9,036,562
175 NTT Mobile Communication
Network, Inc. (Japan)..... 5,929,994
40,300 Sprint Corp. (PCS
Group)*................... 4,435,519
45,000 Vodafone AirTouch PLC (ADR)
(United Kingdom)*......... 2,520,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS January 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
60,000 Voicestream Wireless
Corp.*.................... $ 7,038,750
45,000 Western Wireless Corp.
(Class A)*................ 2,449,687
--------------
32,673,012
--------------
Clothing/Shoe/Accessory Stores (0.1%)
29,800 Gap, Inc. (The)............ 1,331,687
--------------
Computer Communications (2.0%)
26,750 Applied Micro Circuits
Corp.*.................... 3,950,641
90,000 Cisco Systems, Inc.* **.... 9,849,375
20,000 Emulex Corp.*.............. 1,992,500
35,000 Juniper Networks, Inc.*.... 4,735,937
15,500 Redback Networks, Inc.*.... 2,884,937
40,000 Xircom, Inc.*.............. 1,972,500
--------------
25,385,890
--------------
Computer Software (6.9%)
50,000 Business Objects S.A. (ADR)
(France)*................. 3,362,500
47,400 Check Point Software
Technologies Ltd.
(Israel)*................. 5,219,925
20,000 Citrix Systems, Inc.*...... 2,743,750
88,000 Computer Associates
International, Inc. ...... 6,044,500
34,700 E.piphany, Inc.*........... 5,482,600
35,300 i2 Technologies, Inc.*..... 6,777,600
23,900 Intuit Inc.*............... 1,441,469
51,000 Macromedia, Inc.*.......... 3,474,375
30,000 MicroStrategy Inc.*........ 4,166,250
303,160 Oracle Corp.*.............. 15,139,052
45,000 Rational Software Corp.*... 2,337,187
150,000 SAP AG (ADR) (Germany)..... 9,778,125
27,500 Sapient Corp.*............. 2,430,312
30,000 Siebel Systems, Inc.*...... 2,750,625
20,000 TIBCO Software, Inc.*...... 3,080,000
35,000 TSI International Software
Ltd.*..................... 2,143,750
60,000 Veritas Software Corp.*.... 8,748,750
--------------
85,120,770
--------------
Construction/Agricultural Equipment/
Trucks (0.4%)
110,000 Deere & Co................. 4,805,625
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
Consumer Electronics/Appliances (0.2%)
10,000 Sony Corp. (ADR) (Japan)... $ 2,539,375
--------------
Consumer Specialties (0.4%)
4,600 The Swatch Group AG
(Switzerland)............. 4,663,569
--------------
Contract Drilling (1.9%)
255,000 ENSCO International
Inc. ..................... 5,833,125
73,200 Global Marine, Inc.*....... 1,303,875
20,800 Nabors Industries, Inc.*... 616,200
252,200 R&B Falcon Corp.*.......... 3,199,787
202,500 Rowan Companies, Inc.*..... 4,594,219
73,950 Santa Fe International
Corp. .................... 1,978,162
145,680 Transocean Sedco Forex
Inc. ..................... 4,634,445
--------------
22,159,813
--------------
Discount Chains (1.9%)
35,000 BJ's Wholesale Club,
Inc.*..................... 1,225,000
211,700 Costco Wholesale Corp.*.... 10,360,069
225,000 Wal-Mart Stores, Inc. ..... 12,318,750
--------------
23,903,819
--------------
Diversified Commercial Services (0.1%)
31,000 CheckFree Holdings Corp.*.. 1,817,375
--------------
Diversified Electronic Products (1.2%)
10,000 Caliper Technologies
Corp. .................... 1,384,375
37,000 JDS Uniphase Corp.*........ 7,543,375
37,500 Koninklijke (Royal) Philips
Electronics NV
(Netherlands)............. 5,476,695
--------------
14,404,445
--------------
Diversified Financial Services (3.5%)
85,000 American Express Co.**..... 14,009,062
82,200 AXA Financial, Inc. ....... 2,676,637
475,000 Citigroup, Inc. ........... 27,282,812
--------------
43,968,511
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS January 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
E.D.P. Peripherals (0.7%)
35,000 Kopin Corp. ............... $ 2,463,125
45,000 Network Appliance, Inc.*... 4,514,062
14,500 QLogic Corp.*.............. 2,216,687
--------------
9,193,874
--------------
E.D.P. Services (2.7%)
50,000 Amdocs Ltd.*............... 2,659,375
112,400 BEA Systems, Inc.*......... 8,465,125
140,000 Computer Sciences Corp.*... 12,862,500
135,000 Electronic Data Systems
Corp. .................... 9,129,375
--------------
33,116,375
--------------
Electric Utilities (1.1%)
78,600 AES Corp. (The)*........... 6,297,825
100,000 Calpine Corp.*............. 7,312,500
--------------
13,610,325
--------------
Electronic Components (0.4%)
29,000 E-Tek Dynamics, Inc.*...... 5,278,000
--------------
Electronic Data Processing (0.6%)
96,000 Sun Microsystems, Inc.*.... 7,536,000
--------------
Electronic Production Equipment (2.6%)
64,100 Applied Materials, Inc.*... 8,793,719
85,000 ASM Lithography Holding NV
(Netherlands)*............ 10,063,048
800 Chartered Semiconductors
(ADR) (Singapore)*........ 65,400
60,000 Cymer, Inc.*............... 3,300,000
52,400 KLA-Tencor Corp.*.......... 3,071,950
35,000 PRI Automation, Inc.*...... 2,450,000
12,600 Rudolph Technologies,
Inc.*..................... 562,275
11,011 Taiwan Semiconductor
Manufacturing Co. Ltd.
(ADR) (Taiwan)............ 569,819
51,000 Teradyne, Inc.*............ 3,302,250
--------------
32,178,461
--------------
Food Distributors (0.7%)
250,000 SYSCO Corp. ............... 8,890,625
--------------
Generic Drugs (0.2%)
95,000 Mylan Laboratories,
Inc. ..................... 2,529,375
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
Hospital/Nursing Management (0.8%)
460,000 Health Management
Associates, Inc. (Class
A)*....................... $ 6,411,250
180,000 Tenet Healthcare Corp.*.... 4,095,000
--------------
10,506,250
--------------
Hotels/Resorts (0.3%)
79,000 Royal Caribbean Cruises
Ltd. ..................... 3,905,562
--------------
Integrated Oil Companies (1.1%)
155,000 Exxon Mobil Corp. ......... 12,942,500
11,800 Kerr-McGee Corp. .......... 653,425
--------------
13,595,925
--------------
Internet Services (6.6%)
17,300 Allaire Corp.*............. 2,147,362
20,600 Ariba, Inc.*............... 3,350,075
39,400 Art Technology Group,
Inc.*..................... 4,235,500
55,000 BroadVision, Inc.*......... 7,002,187
25,000 Digex, Inc.*............... 2,120,312
22,000 Inktomi Corp.*............. 2,187,625
15,000 Intertrust Technologies
Corp.*.................... 2,165,625
27,300 Interwoven, Inc.*.......... 3,422,737
14,000 Kana Communications,
Inc.*..................... 3,496,500
68,000 Lycos, Inc.*............... 4,993,750
66,500 Portal Software, Inc.*..... 3,300,063
32,000 PSINet, Inc.*.............. 2,558,000
25,000 Quest Software, Inc.*...... 2,414,063
20,000 RealNetworks, Inc.*........ 3,143,750
22,200 Scient Corp.*.............. 1,662,225
20,700 Verio Inc.*................ 1,324,800
100,200 VeriSign, Inc.*............ 16,150,988
10,000 VerticalNet, Inc.*......... 2,382,500
67,300 Vignette Corp.*............ 13,039,375
10,880 Vitria Technology, Inc.*... 1,060,800
--------------
82,158,237
--------------
Investment Bankers/Brokers/Services (3.3%)
54,000 Donaldson, Lufkin &
Jenrette, Inc. ........... 2,581,875
140,000 Goldman Sachs Group, Inc.
(The)..................... 12,827,500
162,000 Lehman Brothers Holdings,
Inc. ..................... 11,583,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS January 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
148,000 Merrill Lynch & Co.,
Inc. ..................... $ 12,839,000
43,600 Paine Webber Group,
Inc. ..................... 1,675,875
--------------
41,507,250
--------------
Investment Managers (0.1%)
93,000 Amvescap PLC (United
Kingdom).................. 1,016,006
--------------
Major Banks (1.0%)
160,000 Bank of New York Co.,
Inc. ..................... 6,500,000
75,000 Chase Manhattan Corp.
(The)..................... 6,032,813
--------------
12,532,813
--------------
Major Pharmaceuticals (2.5%)
100,000 American Home Products
Corp. .................... 4,706,250
360,000 Pfizer, Inc. .............. 13,095,000
135,000 Warner-Lambert Co. ........ 12,816,563
--------------
30,617,813
--------------
Major U.S. Telecommunications (1.1%)
250,000 AT&T Corp. ................ 13,187,500
--------------
Media Conglomerates (2.6%)
370,000 Disney (Walt) Co. ......... 13,435,625
85,000 News Corporation Ltd. (The)
(ADR) (Australia)......... 4,074,688
120,000 Time Warner Inc. .......... 9,592,500
100,000 Viacom, Inc. (Class A)*.... 5,581,250
--------------
32,684,063
--------------
Medical Equipment & Supplies (1.1%)
290,000 Medtronic, Inc. ........... 13,267,500
--------------
Medical Specialties (0.9%)
190,000 Cytyc Corp.*............... 5,711,875
65,000 Inhale Therapeutic Systems,
Inc.*..................... 3,798,438
21,480 Qiagen N.V.
(Netherlands)*............ 2,123,835
--------------
11,634,148
--------------
Mid-Sized Banks (0.9%)
193,400 Northern Trust Corp. ...... 11,664,438
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
Military/Gov't/Technical (0.8%)
86,400 General Motors Corp. (Class
H)*....................... $ 9,720,000
--------------
Movies/Entertainment (0.3%)
58,700 Westwood One, Inc.*........ 3,573,363
--------------
Multi-Line Insurance (0.8%)
95,000 American International
Group, Inc. .............. 9,891,875
--------------
Oil & Gas Production (0.4%)
74,800 Devon Energy Corp. ........ 2,627,350
123,300 EOG Resources, Inc. ....... 1,957,388
25,000 Union Pacific Resources
Group, Inc. .............. 275,000
--------------
4,859,738
--------------
Oil/Gas Transmission (1.4%)
130,000 Dynegy Inc. ............... 4,030,000
190,000 Enron Corp. ............... 12,813,125
--------------
16,843,125
--------------
Oilfield Services/Equipment (2.6%)
30,000 Baker Hughes Inc. ......... 738,750
254,000 BJ Services Co.*........... 10,890,250
60,000 Cooper Cameron Corp.*...... 2,970,000
187,000 Schlumberger Ltd. ......... 11,418,688
87,000 Smith International,
Inc.*..................... 4,464,188
50,000 Weatherford International,
Inc.*..................... 1,878,125
--------------
32,360,001
--------------
Other Consumer Services (0.2%)
56,000 Ticketmaster Online -
CitySearch, Inc. (Series
B)*....................... 2,037,000
--------------
Other Metals/Minerals (0.2%)
150,000 Inco Ltd. (Canada)*........ 2,850,000
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS January 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
Other Pharmaceuticals (1.2%)
84,000 Biovail Corporation
International (Canada)*... $ 4,189,500
90,000 Forest Laboratories,
Inc.*..................... 6,075,000
75,000 Teva Pharmaceutical
Industries Ltd. (ADR)
(Israel).................. 4,907,813
--------------
15,172,313
--------------
Other Specialty Stores (0.4%)
75,000 Tiffany & Co. ............. 5,550,000
--------------
Other Telecommunications (6.7%)
125,000 Aerial Communications,
Inc.*..................... 6,476,563
60,000 COLT Telecom Group PLC
(United Kingdom).......... 2,844,808
63,000 Covad Communications Group,
Inc.*..................... 4,449,375
335 DDI Corp. (Japan).......... 3,804,692
70 Japan Telecom Co. Ltd.
(Japan)................... 2,639,173
13,500 KDD Corp. (Japan).......... 1,587,274
23,000 Mannesmann AG (Germany).... 6,193,578
200,000 McLeodUSA, Inc. (Class
A)*....................... 13,737,500
350 Nippon Telegraph &
Telephone Corp. (Japan)... 5,278,347
31,250 NTL Inc.*.................. 3,929,688
79,000 PanAmSat Corp.*............ 4,147,500
33,000 Pt Multimedia - Servicos de
Telecomunicacoes e
Multimedia SGPS SA
(Portugal)*............... 2,065,496
110,000 RCN Corp.*................. 6,517,500
99,800 Sonera Oyj (Finland)....... 6,822,795
185,000 Telefonica S.A. (Spain)*... 4,649,672
43,000 Telefonos de Mexico S.A.
(Series L) (ADR)
(Mexico).................. 4,579,500
53,820 Time Warner Telecom Inc.
(Class A)*................ 3,269,565
--------------
82,993,026
--------------
Package Goods/Cosmetics (1.8%)
210,000 Colgate-Palmolive Co. ..... 12,442,500
185,000 Estee Lauder Companies,
Inc. (Class A) (The)...... 9,458,125
--------------
21,900,625
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
Paper (0.3%)
175,000 Aracruz Celulose S.A. (ADR)
(Brazil).................. $ 3,926,563
--------------
Precision Instruments (0.4%)
31,600 PE Corporation-PE
Biosystems Group.......... 4,732,100
--------------
Semiconductors (3.3%)
33,000 Broadcom Corp. (Class A)*.. 9,547,313
73,000 Conexant Systems, Inc.*.... 6,163,938
102,600 Intel Corp. ............... 10,144,575
75,000 Maxim Integrated Products,
Inc.*..................... 3,759,375
17,600 PMC - Sierra, Inc.*........ 3,175,700
19,000 SDL, Inc.*................. 4,924,563
16,800 STMicroelectronics NV
(Netherlands)............. 2,828,700
--------------
40,544,164
--------------
Services to the Health Industry (0.2%)
44,000 Healtheon/WebMD Corp.*..... 2,860,000
--------------
Telecommunication Equipment (6.5%)
70,000 American Tower Corp. (Class
A)*....................... 2,493,750
51,100 Comverse Technology,
Inc.*..................... 7,323,269
99,700 Corning Inc. .............. 15,378,725
140,000 Ericsson (L.M.)
Telefonaktiebolaqet (ADR)
(Sweden).................. 10,430,000
38,000 Harmonic, Inc.*............ 3,659,875
77,000 Motorola, Inc. ............ 10,529,750
50,000 Nokia Corp. (ADR)
(Finland)................. 9,150,000
40,000 Nortel Networks Corp.
(Canada).................. 3,825,000
41,670 Research In Motion Ltd.
(Canada)*................. 2,718,968
106,200 RF Micro Devices, Inc.*.... 8,595,563
84,200 Scientific-Atlanta,
Inc. ..................... 6,488,663
--------------
80,593,563
--------------
TOTAL COMMON STOCKS
(Identified Cost
$955,319,706)............. 1,199,067,960
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS January 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (6.0%)
U.S. GOVERNMENT AGENCY (a) (5.9%)
$74,000 Federal Home Loan Mortgage
Corp. 5.75% due 02/01/00
(Amortized Cost
$74,000,000).............. $ 74,000,000
--------------
REPURCHASE AGREEMENT (0.1%)
488 The Bank of New York 5.75%
due 02/01/00 (dated
01/31/00; proceeds
$487,708) (b) (Identified
Cost $487,630)............ 487,630
--------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost
$74,487,630)............... 74,487,630
--------------
TOTAL INVESTMENTS
(Identified Cost
$1,029,807,336) (c).......... 102.4% 1,273,555,590
LIABILITIES)IN EXCESS OF
OTHER ASSETS.................. (2.4) (29,473,175)
----- --------------
NET ASSETS.................... 100.0% $1,244,082,415
===== ==============
</TABLE>
- ---------------------
<TABLE>
<C> <S>
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) Purchased on a discount basis. The interest rate
shown has been adjusted to reflect a money market
equivalent yield.
(b) Collateralized by $478,066 U.S. Treasury Bond
7.875% due 11/15/07 valued at $497,384.
(c) The aggregate cost for federal income tax
purposes approximates identified cost. The
aggregate gross unrealized appreciation is
$264,030,800 and the aggregate gross unrealized
depreciation is $20,282,546, resulting in net
unrealized appreciation of $243,748,254.
</TABLE>
FUTURES CONTRACTS OPEN AT JANUARY 31, 2000:
<TABLE>
<CAPTION>
UNDERLYING UNREALIZED
NUMBER OF DESCRIPTION, DELIVERY FACE AMOUNT APPRECIATION/
CONTRACTS MONTH, AND YEAR AT VALUE DEPRECIATION
- ----------------------------------------------------------------
<C> <S> <C> <C>
S&P 500 Futures
(401) March/2000 $(140,450,253) $ 1,063,907
NASDAQ 100 Futures
(324) March/2000 (117,045,000) (2,084,282)
-----------
Net unrealized
depreciation........................ $(1,020,375)
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
January 31, 2000 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $1,029,807,336)....... $1,273,555,590
Receivable for:
Investments sold.................... 120,527,197
Shares of beneficial interest
sold............................... 7,859,925
Dividends........................... 60,446
Foreign withholding taxes
reclaimed.......................... 23,789
Deferred offering costs................. 12,768
Prepaid expenses and other assets....... 134,028
--------------
TOTAL ASSETS........................ 1,402,173,743
--------------
LIABILITIES:
Payable for:
Investments purchased............... 146,845,108
Variation margin on futures
contracts.......................... 8,082,549
Shares of beneficial interest
repurchased........................ 1,232,802
Plan of distribution fee............ 1,014,422
Investment management fee........... 787,639
Accrued expenses and other payables..... 128,808
--------------
TOTAL LIABILITIES................... 158,091,328
--------------
NET ASSETS.......................... $1,244,082,415
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital......................... $ 901,151,657
Net unrealized appreciation............. 242,727,823
Accumulated net investment loss......... (6,529,440)
Accumulated undistributed net realized
gain................................... 106,732,375
--------------
NET ASSETS.......................... $1,244,082,415
==============
CLASS A SHARES:
Net Assets.............................. $54,330,826
Shares Outstanding (unlimited
authorized, $.01 par value)............ 3,641,979
NET ASSET VALUE PER SHARE........... $14.92
==============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net
asset value)....................... $15.75
==============
CLASS B SHARES:
$1,085,524,096
Net Assets..............................
Shares Outstanding (unlimited 73,275,654
authorized, $.01 par value)............
NET ASSET VALUE PER SHARE........... $14.81
==============
CLASS C SHARES:
$102,411,329
Net Assets..............................
Shares Outstanding (unlimited 6,913,022
authorized, $.01 par value)............
NET ASSET VALUE PER SHARE........... $14.81
==============
CLASS D SHARES:
$1,816,164
Net Assets..............................
Shares Outstanding (unlimited 121,456
authorized, $.01 par value)............
NET ASSET VALUE PER SHARE........... $14.95
==============
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended January 31, 2000 (unaudited)
NET INVESTMENT LOSS:
INCOME
Dividends (net of $26,359 foreign
withholding tax)........................ $ 1,363,355
Interest................................. 1,201,120
------------
TOTAL INCOME......................... 2,564,475
------------
EXPENSES
Plan of distribution fee (Class A
shares)................................. 49,218
Plan of distribution fee (Class B
shares)................................. 4,140,836
Plan of distribution fee (Class C
shares)................................. 389,238
Investment management fee................ 3,551,667
Transfer agent fees and expenses......... 649,113
Registration fees........................ 107,965
Offering costs........................... 97,886
Custodian fees........................... 58,606
Shareholder reports and notices.......... 21,412
Professional fees........................ 18,482
Trustees' fees and expenses.............. 5,825
Other.................................... 2,814
------------
TOTAL EXPENSES....................... 9,093,062
------------
NET INVESTMENT LOSS.................. (6,528,587)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain/loss on:
Investments.......................... 126,158,184
Futures contracts.................... (1,925,812)
Foreign exchange transactions........ 120
------------
NET GAIN............................. 124,232,492
------------
Net change in unrealized
appreciation/depreciation on:
Investments.......................... 182,649,740
Futures contracts.................... (5,718,100)
Translation of forward foreign
currency contracts, other assets and
liabilities denominated in foreign
currencies.......................... (1,491)
------------
NET APPRECIATION..................... 176,930,149
------------
NET GAIN............................. 301,162,641
------------
NET INCREASE............................. $294,634,054
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE> 12
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FEBRUARY 24, 1999*
JANUARY 31, THROUGH
2000 JULY 31, 1999
- ----------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss................................ $ (6,528,587) $ (2,502,727)
Net realized gain (loss)........................... 124,232,492 (17,500,970)
Net change in unrealized appreciation.............. 176,930,149 65,797,674
-------------- ------------
NET INCREASE................................... 294,634,054 45,793,977
Net increase from transactions in shares of
beneficial interest............................... 187,066,877 716,487,507
-------------- ------------
NET INCREASE................................... 481,700,931 762,281,484
NET ASSETS:
Beginning of period................................ 762,381,484 100,000
-------------- ------------
END OF PERIOD
(Including accumulated net investment losses of
$6,529,440 and $853, respectively)............. $1,244,082,415 $762,381,484
============== ============
</TABLE>
- ---------------------
* Commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS January 31, 2000 (unaudited)
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 readily
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS January 31, 2000 (unaudited) continued
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> 15
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS January 31, 2000 (unaudited) 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> 16
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS January 31, 2000 (unaudited) 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> 17
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS January 31, 2000 (unaudited) 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 $30,801,612 at January 31, 2000.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the six months ended January 31, 2000, the distribution fee
was accrued for Class A shares and Class C shares at the annual rate of 0.25%
and 1.0%, respectively.
The Distributor has informed the Fund that for the six months ended January 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 $77, $1,061,635
and $41,115, respectively and received $143,053 in front-end sales charges from
sales of the Fund's Class A shares. The respective shareholders pay such charges
which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended January 31, 2000 aggregated
$1,773,713,397 and $1,570,392,703, respectively.
For the six months ended January 31, 2000, the Fund incurred $67,534 in
brokerage commissions with DWR for portfolio transactions executed on behalf of
the Fund. At January 31, 2000, the Fund's receivable for investments sold
included unsettled trades with DWR of $4,479,776.
For the six months ended January 31, 2000, the Fund incurred brokerage
commissions of $225,342 with Morgan Stanley & Co., Inc., and affiliate of the
Investment Manager and Distributor, for portfolio
17
<PAGE> 18
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS January 31, 2000 (unaudited) continued
transactions executed on behalf of the Fund. At January 31, 2000, the Fund's
payable for investments purchased and receivable for investments sold included
unsettled trades with Morgan Stanley & Co., Inc. of $4,886,048 and $7,044,088,
respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At January 31, 2000, the Fund had
transfer agent fees and expenses payable of approximately $37,000.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FEBRUARY 24, 1999*
MONTHS ENDED THROUGH
JANUARY 31, 2000 JULY 31, 1999
------------------------- -------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold........................................................ 1,426,535 $ 19,006,663 3,567,692 $36,584,656
Redeemed.................................................... (742,668) (9,293,840) (612,080) (6,566,789)
--------- ------------ --------- -----------
Net increase -- Class A..................................... 683,867 9,712,823 2,955,612 30,017,867
--------- ------------ --------- -----------
CLASS B SHARES
Sold........................................................ 19,134,080 255,745,471 63,987,090 653,623,096
Redeemed.................................................... (7,290,694) (93,750,091) (2,557,322) (27,155,622)
--------- ------------ --------- -----------
Net increase -- Class B..................................... 11,843,386 161,995,380 61,429,768 626,467,474
--------- ------------ --------- -----------
CLASS C SHARES
Sold........................................................ 1,681,071 22,834,776 6,546,680 66,475,636
Redeemed.................................................... (677,714) (8,593,079) (639,515) (6,749,672)
--------- ------------ --------- -----------
Net increase -- Class C..................................... 1,003,357 14,241,697 5,907,165 59,725,964
--------- ------------ --------- -----------
CLASS D SHARES
Sold........................................................ 977,569 13,320,967 27,278 284,773
Redeemed.................................................... (885,111) (12,203,990) (780) (8,571)
--------- ------------ --------- -----------
Net increase -- Class D..................................... 92,458 1,116,977 26,498 276,202
--------- ------------ --------- -----------
Net increase in Fund........................................ 13,623,068 $187,066,877 70,319,043 $716,487,507
========= ============ ========= ===========
</TABLE>
- ---------------
* Commencement of operations.
18
<PAGE> 19
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS January 31, 2000 (unaudited) 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.
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 rise upon entering into these contracts
from the potential inability of the counterparties to meet the terms of their
contracts.
At January 31, 2000, there were outstanding index futures contracts.
19
<PAGE> 20
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FEBRUARY 24, 1999*
MONTHS ENDED THROUGH
JANUARY 31, 2000 JULY 31, 1999
- ---------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $10.87 $10.00
------ ------
Income (loss) from investment operations:
Net investment loss........................................ (0.04) (0.01)
Net realized and unrealized gain........................... 4.09 0.88
------ ------
Total income from investment operations..................... 4.05 0.87
------ ------
Net asset value, end of period.............................. $14.92 $10.87
====== ======
TOTAL RETURN+(1)............................................ 37.26 % 8.70 %
RATIOS TO AVERAGE NET ASSETS(2)(3):
Expenses.................................................... 1.20 % 1.31 %
Net investment loss......................................... (0.66)% (0.16)%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $54,331 $32,165
Portfolio turnover rate(1).................................. 175 % 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> 21
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FEBRUARY 24, 1999*
MONTHS ENDED THROUGH
JANUARY 31, 2000 JULY 31, 1999
- ---------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
CLASS B SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 10.84 $10.00
------- -----
Income (loss) from investment operations:
Net investment loss........................................ (0.09) (0.04)
Net realized and unrealized gain........................... 4.06 0.88
------- -----
Total income from investment operations..................... 3.97 0.84
------- -----
Net asset value, end of period.............................. $ 14.81 $10.84
======= =====
TOTAL RETURN+(1)............................................ 36.72 % 8.40 %
RATIOS TO AVERAGE NET ASSETS(2)(3):
Expenses.................................................... 1.95 % 2.06 %
Net investment loss......................................... (1.41)% (0.91)%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $1,085,524 $665,848
Portfolio turnover rate(1).................................. 175 % 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
21
<PAGE> 22
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FEBRUARY 24, 1999*
MONTHS ENDED THROUGH
JANUARY 31, 2000 JULY 31, 1999
- ---------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $10.84 $10.00
------ ------
Income (loss) from investment operations:
Net investment loss........................................ (0.09) (0.04)
Net realized and unrealized gain........................... 4.06 0.88
------ ------
Total income from investment operations..................... 3.97 0.84
------ ------
Net asset value, end of period.............................. $14.81 $10.84
====== ======
TOTAL RETURN+(1)............................................ 36.72 % 8.40 %
RATIOS TO AVERAGE NET ASSETS(2)(3):
Expenses.................................................... 1.95 % 2.06 %
Net investment loss......................................... (1.41)% (0.91)%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $102,411 $64,053
Portfolio turnover rate(1).................................. 175 % 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
22
<PAGE> 23
MORGAN STANLEY DEAN WITTER AGGRESSIVE EQUITY FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FEBRUARY 24, 1999*
MONTHS ENDED THROUGH
JANUARY 31, 2000 JULY 31, 1999
- ---------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $10.89 $10.00
------ ------
Income (loss) from investment operations:
Net investment loss........................................ (0.04) --
Net realized and unrealized gain........................... 4.10 0.89
------ ------
Total income from investment operations..................... 4.06 0.89
------ ------
Net asset value, end of period.............................. $14.95 $10.89
====== ======
TOTAL RETURN+(1)............................................ 37.37 % 8.90%
RATIOS TO AVERAGE NET ASSETS(2)(3):
Expenses.................................................... 0.95 % 1.06%
Net investment income (loss)................................ (0.41)% 0.09%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $1,816 $316
Portfolio turnover rate(1).................................. 175 % 177%
</TABLE>
- ---------------------
* Commencement of operations.
++ 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
23
<PAGE> 24
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
The financial statements included herein have been taken from the records of the
Fund without examination by the independent accountants and accordingly they
do not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of
the Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus. Read the
prospectus carefully before investing.
MORGAN STANLEY
DEAN WITTER
Agressive
Equity Fund
Semiannual Report
January 31, 2000
