<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC. TWO WORLD TRADE CENTER,
LETTER TO THE SHAREHOLDERS, AUGUST 31, 2000 NEW YORK, NEW YORK 10048
DEAR SHAREHOLDER:
The 12-month period ended August 31, 2000, proved to be an extremely difficult
one for high-yield bond investors, as the high-yield market remained mired in
one of its worst slumps in the past 20 years. Concern over a rapidly growing
U.S. economy and the threat of inflation prompted the Federal Reserve Board to
continue its policy of raising short-term interest rates. As a result of the
Fed's actions and the ensuing higher-interest-rate environment, the financial
markets became worried about a potential hard landing for the U.S. economy and
its effect on future corporate earnings. These fears resulted in an extremely
weak fixed-income market during 1999 and an increasingly volatile equity market
in the first half of 2000. As investors became more risk averse, we witnessed a
severe flight to quality in the fixed-income markets, with the high-yield sector
being hit exceptionally hard. Much as in the last major high-yield market
correction ten years ago, significant investor outflows have greatly exaggerated
the decline, creating an extremely oversold market.
Credit spreads within the fixed-income markets widened dramatically over the
past year and a half as investors came to favor higher-quality securities. As a
result of this flight to quality, the yield spread between high-yield bonds and
comparable U.S. government securities is now approaching its widest margin in
history. Spreads have also broadened between the different tiers within the
high-yield sector as investors have gravitated toward the highest-quality end of
the marketplace. As a result of this trend, lower-yielding, higher-quality
BB-rated bonds have held up significantly better than those in the
higher-yielding, lower-quality B-rated sector. Much as we saw in the high-yield
bear market of 1989 and 1990, investors' reactions have resulted in a sharp
decline in the prices of many high-yield bonds, driving market yields
substantially higher in the process so that yield spreads on many B-rated bonds
are approaching their highest levels on record.
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
LETTER TO THE SHAREHOLDERS, AUGUST 31, 2000, CONTINUED
PERFORMANCE
During the twelve-month period ended August 31, 2000, Morgan Stanley Dean Witter
High Yield Securities' Class A and D shares produced returns of -8.88 percent
and -8.69 percent, respectively. The Fund underperformed the Lehman Brothers
U.S. Corporate High Yield Index, which returned 1.13 percent. For the same
period, the Fund's Class B and C shares had total returns of -9.39 percent and
-9.66 percent, respectively. The performance of the Fund's four share classes
varies because of differing expenses. Total return figures shown assume the
reinvestment of all distributions but do not reflect the deduction of any
applicable sales charges.
The Fund's underperformance relative to its benchmark was due primarily to focus
on the B-rated sector of the high-yield market. As outlined above, B-rated
securities sharply underperformed the higher-quality end of the high-yield
market.
PORTFOLIO STRATEGY
As discussed, the past year and a half has been one of the most difficult
periods for the high-yield market, particularly the B-rated sector, the market's
largest one. As a result of the substantial weakness in the high-yield market,
we have seen high-yield bond prices decline sharply and yields rise dramatically
over this period. Although the Fund's position in the more defensive,
higher-quality end of the market held up relatively well in the turbulent market
environment, its long-term core position in the B-rated sector was adversely
affected over the past year. With prices on many high-yield issues at or near
10-year lows and currently trading at significant discounts to their stated
maturity value, we currently view the high-yield sector as extremely
undervalued, although the timing of a recovery is still very uncertain at this
point. As the market outlook improves over time, we would expect to see investor
flows turn positive once again, creating strong demand for many of today's
depressed high-yield bonds. In light of our positive long-term outlook based on
historically low valuations, we are maintaining our focus on this sector of the
market, which we believe offers the Fund long-term total return potential.
From an industry perspective we view the telecommunications sector as a
potentially rewarding investment opportunity, given the worldwide movement
toward providing expanded global telecommunications services, including voice,
video and data services over a combination of hardline and wireless networks.
The powerful combination of exciting growth prospects for the industry over the
next few years, along with the likelihood of the formation of strategic
partnerships with other major
2
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
LETTER TO THE SHAREHOLDERS, AUGUST 31, 2000, CONTINUED
players, provides a fundamental backdrop for strong revenue growth, higher
profitability and future significant credit improvement. Included among the
Fund's current holdings are a number of telecom companies that over the past
year have either announced important strategic partnerships or have raised
equity capital to fuel future growth and profits. With the recent high-yield
market weakness we have seen many of these telecom bonds decline sharply in
price as investor nervousness spread to this large but volatile sector of the
market. Despite the recent sector weakness, we view the longer-term prospects of
this important industry very positively and feel that at today's depressed
levels many of these bonds represent outstanding investment opportunities.
LOOKING AHEAD
In light of today's substantially higher yields, near-record yield spreads over
U.S. government bonds and significantly discounted bond prices, we view the
high-yield market as a potentially rewarding long-term investment opportunity.
Assuming a soft landing in the economy with growth continuing into 2001, we
would expect the high-yield market to recover over time and bond prices to
rebound from their current extremely depressed levels, much as they did in the
early 1990s period following the last high-yield bear market. Although the
B-rated segment of the market has clearly not been a good investment performer
over the past 18 months, we remain confident that its attractive yield and
capital appreciation potential remain intact for long-term investors.
We appreciate your ongoing support of Morgan Stanley Dean Witter High Yield
Securities 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 HIGH YIELD SECURITIES INC.
FUND PERFORMANCE AUGUST 31, 2000
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF $10,000 -- CLASS A AND D SHARES
($ in Thousands)
<TABLE>
<CAPTION>
CLASS A CLASS D LEHMAN(4)
<S> <C> <C> <C>
August 1990 $9,575 $10,000 $10,000
August 1991 $9,997 $10,467 $12,463
August 1992 $13,509 $14,178 $15,110
August 1993 $16,480 $17,339 $17,346
August 1994 $16,592 $17,500 $17,916
August 1995 $18,532 $19,596 $20,398
August 1996 $20,533 $21,765 $22,367
August 1997 $23,558 $25,032 $25,715
August 1998 $23,652 $25,190 $26,543
August 1999 $24,000 $25,611 $27,633
August 2000 $21,869(3) $23,385(3) $27,944
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH
LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS A, CLASS B, CLASS C,
AND CLASS D SHARES WILL VARY DUE TO DIFFERENCES IN SALES CHARGES AND
EXPENSES.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
---------------------------------------------------------------------------------------------------------------------
CLASS A SHARES* CLASS B SHARES**
-------------------------------------------------------- --------------------------------------------------------
PERIOD ENDED (8/31/00) PERIOD ENDED (8/31/00)
------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
1 Year (8.88)%(1) (12.75)%(2) 1 Year (9.39)%(1) (13.33)%(2)
5 Years 3.37(1) 2.47(2) Since Inception (7/28/97) (2.73)(1) (3.16)(2)
10 Years 8.61(1) 8.14(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES+ CLASS D SHARES#
-------------------------------------------------------- --------------------------------------------------------
PERIOD ENDED (8/31/00) PERIOD ENDED (8/31/00)
------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
1 Year (9.66)%(1) (10.45)%(2) 1 Year (8.69)%(1)
Since Inception (7/28/97) (2.84)(1) (2.84)(2) 5 Years 3.60(1)
10 Years 8.87(1)
</TABLE>
------------------------
PRIOR TO JULY 28, 1997 THE FUND OFFERED ONLY ONE CLASS OF SHARES. BECAUSE THE
DISTRIBUTION ARRANGEMENT FOR CLASS A MOST CLOSELY RESEMBLED THE DISTRIBUTION
ARRANGEMENT APPLICABLE PRIOR TO THE IMPLEMENTATION OF MULTIPLE CLASSES (I.E.,
CLASS A IS SOLD WITH A FRONT-END SALES CHARGE), HISTORICAL PERFORMANCE
INFORMATION HAS BEEN RESTATED TO REFLECT THE ACTUAL MAXIMUM SALES CHARGE
APPLICABLE TO CLASS A (I.E., 4.25%) AS COMPARED TO THE 5.50% SALES CHARGE IN
EFFECT PRIOR TO JULY 28, 1997. IN ADDITION, CLASS A SHARES ARE NOW SUBJECT TO AN
ONGOING 12b-1 FEE WHICH IS REFLECTED IN THE RESTATED PERFORMANCE FOR THAT CLASS.
BECAUSE ALL SHARES OF THE FUND HELD PRIOR TO JULY 28, 1997 WERE DESIGNATED
CLASS D SHARES, THE FUND'S HISTORICAL PERFORMANCE HAS BEEN RESTATED TO REFLECT
THE ABSENCE OF ANY SALES CHARGE.
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable sales charge. See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value assuming a complete redemption on August 31, 2000.
(4) The Lehman Brothers U.S. Corporate High Yield Index tracks the performance
of all below investment-grade securities which have at least $100 million
in outstanding issuance, a maturity greater than one year, and are issued
in fixed-rate U.S. dollar denominations. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
* The maximum front-end sales charge for Class A is 4.25%.
** The maximum contingent deferred sales charge (CDSC) for Class B is 5.0%.
The CDSC declines to 0% after six years.
+ The maximum contingent deferred sales charge for Class C shares is 1% for
shares redeemed within one year of purchase.
# Class D shares have no sales charge.
4
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (95.1%)
ADVERTISING/MARKETING SERVICES (0.5%)
$ 10,000 Interep National Radio Sales Inc.................. 10.00% 07/01/08 $ 8,900,000
--------------
AEROSPACE & DEFENSE (1.2%)
15,000 Loral Space & Communications Ltd.................. 9.50 01/15/06 11,456,250
12,500 Sabreliner Corp. - 144A*.......................... 11.00 06/15/08 10,343,750
--------------
21,800,000
--------------
BEVERAGES: NON-ALCOHOLIC (0.4%)
10,000 Sparkling Spring Water (Canada)................... 11.50 11/15/07 7,800,000
--------------
BROADCAST/MEDIA (0.8%)
5,000 Jones International Networks Ltd.................. 11.75 07/01/05 5,000,000
10,000 Tri-State Outdoor Media Group, Inc................ 11.00 05/15/08 8,650,000
--------------
13,650,000
--------------
BROADCASTING (2.4%)
10,000 Capstar Broadcasting Partners, Inc................ 12.75++ 02/01/09 9,400,000
6,000 Cumulus Media Inc................................. 10.375 07/01/08 5,460,000
14,000 STC Broadcasting, Inc............................. 11.00 03/15/07 13,860,000
14,555 XM Satellite Radio Inc. (Units)++................. 14.00 03/15/10 13,390,600
--------------
42,110,600
--------------
CABLE/SATELLITE TV (4.0%)
50,687 Australis Holdings Property Ltd. (Australia)
(a)............................................. 15.00++ 11/01/02 506,870
4,404 Australis Media Ltd. - 144A* (Australia) (a)...... 0.00 11/01/00 602,117
8,212 Classic Cable Inc................................. 10.50 03/01/10 6,815,960
19,000 Diva Systems Corp. (Series B)..................... 12.625++ 03/01/08 7,790,000
9,955 FrontierVision Operating Partners, L.P............ 11.00 10/15/06 10,029,662
10,000 James Cable Partners L.P. (Series B).............. 10.75 08/15/04 8,700,000
44,400 Knology Holdings, Inc............................. 11.875++ 10/15/07 22,200,000
15,000 Ono Finance PLC (United Kingdom).................. 13.00 05/01/09 14,250,000
--------------
70,894,609
--------------
CASINO/GAMING (1.5%)
22,000 Aladdin Gaming Holdings/Capital Corp.
(Series B)...................................... 13.50++ 03/01/10 12,320,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 20,500 Fitzgeralds Gaming Corp. (Series B) (b)........... 12.25% 12/15/04 $ 11,275,000
3,850 Riviera Holdings Corp............................. 10.00 08/15/04 3,542,000
--------------
27,137,000
--------------
CELLULAR TELEPHONE (4.8%)
8,000 Dobson Communications Corp. - 144A*............... 10.875 07/01/10 8,000,000
10,500 Dobson/Sygnet Communications...................... 12.25 12/15/08 10,710,000
29,800 Dolphin Telecom PLC (United Kingdom)
(Series B)...................................... 14.00++ 05/15/09 5,960,000
25,025 Dolphin Telecom PLC (United Kingdom).............. 11.50++ 06/01/08 6,256,250
13,000 Nextel Communications, Inc........................ 10.65++ 09/15/07 10,497,500
11,050 Nextel Partners Inc............................... 14.00++ 02/01/09 7,735,000
13,000 Tritel PCS Inc.................................... 12.75++ 05/15/09 9,100,000
13,099 Triton PCS Inc.................................... 11.00++ 05/01/08 9,889,745
5,000 Voicestream Wireless Corp......................... 11.50 09/15/09 5,600,000
10,000 Voicestream Wireless Corp......................... 10.375 11/15/09 10,800,000
--------------
84,548,495
--------------
CHEMICALS: SPECIALTY (0.9%)
10,000 Lyondell Chemical Co. (Series B).................. 9.875 05/01/07 10,200,000
6,000 Octel Developments PLC (United Kingdom)........... 10.00 05/01/06 5,670,000
--------------
15,870,000
--------------
COMMERCIAL PRINTING/FORMS (0.1%)
13,000 Premier Graphics Inc. (b)......................... 11.50 12/01/05 910,000
--------------
CONSUMER/BUSINESS SERVICES (2.9%)
28,000 Anacomp, Inc. (Series B).......................... 10.875 04/01/04 6,440,000
5,900 Anacomp, Inc. (Series D).......................... 10.875 04/01/04 1,357,000
13,000 Comforce Operating, Inc........................... 12.00 12/01/07 7,020,000
23,500 MDC Communications Corp. (Canada)................. 10.50 12/01/06 22,560,000
15,200 Muzak LLC......................................... 9.875 03/15/09 13,300,000
--------------
50,677,000
--------------
CONTAINERS/PACKAGING (3.5%)
11,900 Berry Plastics Corp............................... 12.25 04/15/04 11,483,500
13,250 Berry Plastics Corp............................... 11.00 07/15/07 12,057,500
27,081 Envirodyne Industries, Inc........................ 10.25 12/01/01 18,685,890
10,000 LLS Corp.......................................... 11.625 08/01/09 9,450,000
14,715 Packaging Resources, Inc. (b)..................... 11.625 05/01/03 10,300,500
--------------
61,977,390
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
DIVERSIFIED MANUFACTURING (4.4%)
$ 19,650 Eagle-Picher Industries, Inc...................... 9.375% 03/01/08 $ 16,309,500
6,200 Jordan Industries, Inc. (Class D)................. 10.375 08/01/07 5,828,000
20,000 Jordan Industries, Inc. (Series B)................ 10.375 08/01/07 18,800,000
57,338 Jordan Industries, Inc. (Series B)................ 11.75++ 04/01/09 37,269,700
--------------
78,207,200
--------------
DRUGSTORE CHAINS (1.1%)
10,000 Community Distributors, Inc. (Series B)........... 10.25 10/15/04 7,800,000
2,000 Rite Aid Corp..................................... 6.875 08/15/13 800,000
20,675 Rite Aid Corp..................................... 7.70 02/15/27 8,270,000
2,000 Rite Aid Corp. - 144A*............................ 6.625 12/15/08 820,000
5,060 Rite Aid Corp. - 144A*............................ 7.375 12/15/28 2,024,000
--------------
19,714,000
--------------
ELECTRONIC DISTRIBUTORS (0.0%)
20,000 CHS Electronics, Inc. (a) (b)..................... 9.875 04/15/05 400,000
--------------
ELECTRONIC EQUIPMENT/INSTRUMENTS (1.0%)
15,450 High Voltage Engineering, Inc..................... 10.75 08/15/04 10,660,500
8,000 Telecommunication Techniques Co................... 9.75 05/15/08 7,520,000
--------------
18,180,500
--------------
ELECTRONICS/APPLIANCES (1.3%)
84,930 International Semi-Tech Microelectronics, Inc.
(Canada) (a) (b)................................ 11.50 08/15/03 849,300
10,000 Salton Inc........................................ 10.75 12/15/05 9,775,000
13,000 Windmere-Durable Holdings, Inc.................... 10.00 07/31/08 12,545,000
--------------
23,169,300
--------------
ENGINEERING & CONSTRUCTION (0.8%)
5,000 Metromedia Fiber Network, Inc..................... 10.00 12/15/09 4,925,000
10,000 Metromedia Fiber Network, Inc. (Series B)......... 10.00 11/15/08 9,850,000
--------------
14,775,000
--------------
ENTERTAINMENT & LEISURE (0.1%)
10,850 AMF Bowling Worldwide Inc. (Series B)............. 10.875 03/15/06 2,278,500
--------------
ENVIRONMENTAL SERVICES (1.1%)
22,000 Allied Waste North America, Inc. (Series B)....... 10.00 08/01/09 19,745,000
--------------
FINANCE/RENTAL/LEASING (0.3%)
9,000 Neff Corp......................................... 10.25 06/01/08 5,040,000
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FOOD DISTRIBUTORS (2.4%)
$ 9,965 Fleming Companies, Inc. (Series B)................ 10.50% 12/01/04 $ 9,068,150
28,275 Fleming Companies, Inc. (Series B)................ 10.625 07/31/07 23,609,625
10,000 Volume Services America, Inc...................... 11.25 03/01/09 9,150,000
--------------
41,827,775
--------------
FOOD RETAIL (1.0%)
8,062 Eagle Food Centers Inc............................ 11.00 04/15/05 5,240,462
16,500 Pueblo Xtra International, Inc.................... 9.50 08/01/03 7,755,000
9,748 Pueblo Xtra International, Inc. (Series C)........ 9.50 08/01/03 4,581,560
--------------
17,577,022
--------------
FOOD: SPECIALTY/CANDY (1.6%)
200,598 SFAC New Holdings Inc. (c)........................ 13.00++ 06/15/09 28,083,671
--------------
HOTELS/RESORTS/CRUISELINES (0.3%)
13,000 Epic Resorts LLC (Series B)....................... 13.00 06/15/05 5,720,000
--------------
HOUSEHOLD/PERSONAL CARE (0.5%)
8,868 J.B. Williams Holdings, Inc....................... 12.00 03/01/04 8,779,320
--------------
INDUSTRIAL SPECIALTIES (2.3%)
10,000 Cabot Safety Corp................................. 12.50 07/15/05 10,200,000
14,500 Indesco International, Inc........................ 9.75 04/15/08 5,437,500
15,963 International Wire Group, Inc..................... 11.75 06/01/05 16,042,815
10,500 Outsourcing Services Group, Inc. (Series B)....... 10.875 03/01/06 8,400,000
--------------
40,080,315
--------------
INTERNET SOFTWARE/SERVICES (4.5%)
12,500 Colo.com - 144A* (Units)++........................ 13.875 03/15/10 12,750,000
13,300 Cybernet Internet Services Inc.................... 14.00 07/01/09 5,719,000
31,600 Globix Corp....................................... 12.50 02/01/10 23,700,000
11,000 PSINet, Inc....................................... 10.50 12/01/06 9,460,000
14,500 PSINet, Inc....................................... 11.00 08/01/09 12,470,000
3,120 Verio Inc......................................... 10.375 04/01/05 3,433,685
5,000 Verio Inc......................................... 11.25 12/01/08 5,884,550
5,000 Verio Inc......................................... 10.625 11/15/09 5,908,700
--------------
79,325,935
--------------
MEDICAL SPECIALTIES (0.6%)
26,500 MEDIQ/PRN Life Support Services, Inc. (b)......... 11.00 06/01/08 795,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 3,000 Universal Hospital Services, Inc. (Issued
01/26/99)....................................... 10.25% 03/01/08 $ 2,070,000
10,000 Universal Hospital Services, Inc. (Issued
02/25/98)....................................... 10.25 03/01/08 6,900,000
--------------
9,765,000
--------------
MEDICAL/NURSING SERVICES (1.0%)
7,500 Pediatric Services of America, Inc. (Series A).... 10.00 04/15/08 5,250,000
12,000 Unilab Finance Corp............................... 12.75 10/01/09 12,960,000
--------------
18,210,000
--------------
MOVIES/ENTERTAINMENT (0.2%)
29,250 Regal Cinemas, Inc................................ 9.50 06/01/08 2,632,500
--------------
OFFICE EQUIPMENT/SUPPLIES (1.3%)
10,000 Burhmann US Inc................................... 12.25 11/01/09 10,300,000
22,000 Mosler, Inc....................................... 11.00 04/15/03 13,200,000
--------------
23,500,000
--------------
OIL REFINING/MARKETING (0.0%)
53,800 Transamerican Refining Corp. (Series B) (a) (b)... 16.00 06/30/03 672,500
--------------
OTHER CONSUMER SERVICES (0.4%)
10,000 Source Media, Inc................................. 12.00 11/01/04 6,800,000
--------------
OTHER CONSUMER SPECIALTIES (1.6%)
35,000 Samsonite Corp.................................... 10.75 06/15/08 28,700,000
--------------
PUBLISHING: BOOKS/MAGAZINES (1.0%)
4,500 American Media Operations, Inc.................... 10.25 05/01/09 4,488,750
10,500 Perry-Judds, Inc.................................. 10.625 12/15/07 9,345,000
5,000 Phoenix Color Corp................................ 10.375 02/01/09 4,200,000
--------------
18,033,750
--------------
RESTAURANTS (3.9%)
141,992 American Restaurant Group Holdings, Inc. - 144A*
(c)............................................. 0.00 12/15/05 39,757,760
34,207 FRD Acquisition Corp. (Series B).................. 12.50 07/15/04 12,656,590
20,000 Friendly Ice Cream Corp........................... 10.50 12/01/07 16,500,000
--------------
68,914,350
--------------
RETAIL - SPECIALTY (2.2%)
9,000 Mrs. Fields Holdings Co........................... 14.00++ 12/01/05 4,050,000
1,000 National Wine & Spirits........................... 10.125 01/15/09 970,000
18,225 Pantry, Inc....................................... 10.25 10/15/07 17,860,500
17,500 Petro Stopping Centers L.P........................ 10.50 02/01/07 15,750,000
--------------
38,630,500
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SPECIALTY TELECOMMUNICATIONS (12.8%)
$ 11,500 Birch Telecom Inc................................. 14.00% 06/15/08 $ 6,900,000
23,950 DTI Holdings, Inc. (Series B)..................... 12.50++ 03/01/08 9,101,000
29,088 Esprit Telecom Group PLC (United Kingdom)......... 10.875 06/15/08 15,998,400
17,085 Esprit Telecom Group PLC (United Kingdom)......... 11.50 12/15/07 9,909,300
47,000 Firstworld Communications, Inc.................... 13.00++ 04/15/08 14,570,000
16,500 Globenet Comm Group Ltd. (Bermuda)................ 13.00 07/15/07 16,747,500
15,000 Pac-West Telecom Inc. (Series B).................. 13.50 02/01/09 14,400,000
3,000 Primus Telecommunications Group, Inc.............. 11.75 08/01/04 1,950,000
7,000 Primus Telecommunications Group, Inc.............. 11.25 01/15/09 4,410,000
7,000 Primus Telecommunications Group, Inc.............. 12.75 10/15/09 4,480,000
32,900 Primus Telecommunications Group, Inc.
(Series B)...................................... 9.875 05/15/08 19,740,000
2,000 RSL Communications PLC (United Kingdom)........... 9.125 03/01/08 470,000
9,000 RSL Communications PLC (United Kingdom)........... 10.50 11/15/08 2,880,000
3,000 RSL Communications PLC (United Kingdom)........... 9.875 11/15/09 720,000
13,000 Tele1 Europe BV (Netherlands)..................... 13.00 05/15/09 12,935,000
12,000 Versatel Telecom BV (Netherlands) (Issued
05/27/98)....................................... 13.25 05/15/08 11,460,000
18,000 Versatel Telecom BV (Netherlands) (Issued
12/03/98)....................................... 13.25 05/15/08 17,190,000
21,695 Viatel Inc........................................ 11.25 04/15/08 12,366,150
6,750 Viatel Inc. (Issued 3/19/99)...................... 11.50 03/15/09 3,847,500
18,000 Viatel Inc. (Issued 12/08/99)..................... 11.50 03/15/09 10,260,000
35,100 World Access, Inc. (c)............................ 13.25 01/15/08 29,835,000
11,500 Worldwide Fiber Inc. (Canada)..................... 12.00 08/01/09 10,580,000
--------------
230,749,850
--------------
TELECOMMUNICATION EQUIPMENT (1.6%)
17,100 SBA Communications Corp........................... 12.00++ 03/01/08 12,996,000
18,500 Spectrasite Holdings, Inc......................... 12.00++ 07/15/08 12,580,000
3,500 Spectrasite Holdings, Inc......................... 11.25++ 04/15/09 2,091,250
--------------
27,667,250
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TELECOMMUNICATIONS (14.4%)
$ 19,250 CapRock Communications Corp....................... 11.50% 05/01/09 $ 11,935,000
16,750 CapRock Communications Corp. (Series B)........... 12.00 07/15/08 10,552,500
20,000 Covad Communications Group, Inc................... 12.50 02/15/09 15,900,000
61,075 e. Spire Communications, Inc...................... 13.75 07/15/07 31,759,000
26,700 Focal Communications Corp. (Series B)............. 12.125 02/15/08 16,687,500
28,250 GST Equipment Funding, Inc. (a)................... 13.25 05/01/07 18,503,750
15,000 Hyperion Telecommunication, Inc. (Series B)....... 12.25 09/01/04 14,475,000
26,500 Level 3 Communications, Inc....................... 9.125 05/01/08 23,750,625
15,000 MGC Communications Inc. - 144A*................... 13.00 04/01/10 12,450,000
1,500 Nextlink Communications LLC....................... 12.50 04/15/06 1,515,000
17,500 NEXTLINK Communications, Inc...................... 9.00 03/15/08 15,618,750
12,500 NEXTLINK Communications, Inc...................... 10.75 11/15/08 12,062,500
9,000 NEXTLINK Communications, Inc...................... 10.75 06/01/09 8,685,000
56,800 Normex Technologies Corp. (Series B) (a) (b)...... 14.00 05/15/02 2,272,000
27,850 Rhythms Netconnections, Inc....................... 12.75 04/15/09 17,545,500
14,965 Rhythms Netconnections, Inc. (Series B)........... 13.50++ 05/15/08 5,911,175
13,850 Startec Global Communications Corp................ 12.00 05/15/08 11,080,000
11,300 Talton Holdings, Inc (Series B)................... 11.00 06/30/07 9,379,000
12,000 Williams Communications Group Inc................. 10.875 10/01/09 11,550,000
--------------
251,632,300
--------------
TRUCKS/CONSTRUCTION/FARM MACHINERY (0.7%)
13,350 J.B. Poindexter & Co., Inc........................ 12.50 05/15/04 12,615,750
--------------
WIRELESS COMMUNICATIONS (7.7%)
13,500 Advanced Radio Telecom Corp....................... 14.00 02/15/07 11,880,000
18,150 AMSC Acquisition Co., Inc. (Series B)............. 12.25 04/01/08 13,612,500
9,000 Arch Communications, Inc.......................... 12.75 07/01/07 6,300,000
7,200 Arch Escrow Corp.................................. 13.75 04/15/08 5,256,000
65,300 CellNet Data Systems Inc. (a)..................... 14.00++ 10/01/07 4,571,000
19,610 Globalstar LP/Capital Corp........................ 10.75 11/01/04 5,588,850
10,000 Metricom Inc...................................... 13.00 02/15/10 6,750,000
16,739 Orbcomm Global LP/Capital Corp. (Series B)........ 14.00 08/15/04 2,510,850
13,610 Paging Network, Inc. (b).......................... 8.875 02/01/06 4,627,400
42,580 Paging Network, Inc. (b).......................... 10.125 08/01/07 14,477,200
25,196 Paging Network, Inc. (b).......................... 10.00 10/15/08 8,566,640
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 20,230 USA Mobile Communications Holdings, Inc........... 9.50 % 02/01/04 $ 15,779,400
18,800 USA Mobile Communications Holdings, Inc........... 14.00 11/01/04 15,980,000
31,000 Winstar Communications, Inc. - 144A*.............. 14.75 04/15/10 12,477,500
10,000 Winstar Communications, Inc. - 144A*.............. 12.75 04/15/10 8,600,000
--------------
136,977,340
--------------
TOTAL CORPORATE BONDS
(COST $2,504,300,986)................................................................ 1,684,679,722
--------------
CONVERTIBLE BONDS (0.1%)
HOTELS/RESORTS/CRUISELINES (0.1%)
1,643 Premier Cruises Ltd. - 144A* (COST $1,643,000).... 10.00+ 08/15/05 1,610,140
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
------------
<C> <S> <C>
COMMON STOCKS (d) (1.2%)
APPAREL/FOOTWEAR RETAIL (0.0%)
2,621,192 County Seat Stores, Inc. (c)...................................................... 23,591
--------------
CASINO/GAMING (0.0%)
207,312 Fitzgerald Gaming Corp............................................................ 207
--------------
FOOD RETAIL (0.0%)
61,033 Eagle Food Centers, Inc. (c)...................................................... 68,662
--------------
FOOD: SPECIALTY/CANDY (0.0%)
10,908 SFAC New Holdings Inc. (c)........................................................ 2,727
574,725 Specialty Foods Acquisition Corp. - 144A*......................................... 143,681
--------------
146,408
--------------
HOTELS/RESORTS/CRUISELINES (0.2%)
7,500 Motels of America, Inc. - 144A*................................................... 1,875
981,277 Premier Holdings Inc. (c)......................................................... 2,943,831
781,421 Vagabond Inns, Inc. (Class D)..................................................... 781
--------------
2,946,487
--------------
MEDICAL/NURSING SERVICES (0.0%)
1,151,324 Raintree Healthcare Corp. (c)..................................................... 10,362
--------------
MOTOR VEHICLES (0.0%)
709 Northern Holdings Industrial Corp. (c)*........................................... 1
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
RESTAURANTS (0.0%)
38,057 American Restaurant Group Holdings, Inc. - 144A*.................................. $ 9,514
--------------
SPECIALTY TELECOMMUNICATIONS (1.0%)
264,189 Tele1 Europe Holding AB (ADR) (Sweden)*........................................... 3,236,315
486,691 Versatel Telecom International NV (ADR) (Netherlands)............................. 13,901,112
94,263 World Access, Inc. (c)............................................................ 854,259
--------------
17,991,686
--------------
TELECOMMUNICATION EQUIPMENT (0.0%)
196,000 FWT Inc. (Class A) (c)............................................................ 1,960
--------------
TEXTILES (0.0%)
1,754,730 United States Leather, Inc. (c)................................................... 15,793
--------------
TOTAL COMMON STOCKS
(COST $131,797,350)............................................................... 21,214,671
--------------
PREFERRED STOCKS (0.1%)
OIL REFINING/MARKETING (0.0%)
94,432 Transamerica Refining Corp. (Conv.) (Class B)*.................................... 944
51,938 Transamerica Refining Corp. (Conv.) (Class C)*.................................... 520
136,926 Transamerica Refining Corp. (Conv.) (Class D)*.................................... 1,369
283,295 Transamerica Refining Corp. (Conv.) (Class E)*.................................... 2,833
--------------
5,666
--------------
RESTAURANTS (0.1%)
4,404 American Restaurant Group Holdings, Inc. (Series B)............................... 1,321,200
--------------
TELECOMMUNICATION EQUIPMENT (0.1%)
1,960,000 FWT Inc. (Series A)............................................................... 980,000
--------------
TOTAL PREFERRED STOCKS
(COST $14,518,815)................................................................ 2,306,866
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE
------------ ----------
<C> <S> <C> <C>
WARRANTS (d) (0.3%)
AEROSPACE & DEFENSE (0.0%)
9,000 Sabreliner Corp. - 144A*.............................................. 04/15/03 90,000
--------------
CABLE/SATELLITE TV (0.1%)
57,000 Diva Systems Corp. - 144A*............................................ 03/01/08 798,000
15,000 Ono Finance PLC - 144A* (United Kingdom).............................. 05/31/09 1,500,000
--------------
2,298,000
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
CASINO/GAMING (0.0%)
220,000 Aladdin Gaming, Inc. - 144A*.......................................... 03/01/10 $ 2,200
--------------
HOTELS/RESORTS/CRUISELINES (0.0%)
13,000 Epic Resorts LLC - 144A*.............................................. 06/15/05 130
--------------
INTERNET SOFTWARE/SERVICES (0.0%)
13,300 Cybernet Internet Services Inc. - 144A*............................... 07/01/09 66,500
--------------
OIL REFINING/MARKETING (0.0%)
33,800 Transamerican Refining Corp. - 144A*.................................. 06/30/03 34
20,000 Transamerican Refining Corp. - 144A*.................................. 06/30/03 20
--------------
54
--------------
RESTAURANTS (0.0%)
3,500 American Restaurant Group Holdings, Inc. - 144A*...................... 08/15/08 35
--------------
RETAIL - SPECIALTY (0.0%)
9,000 Mrs. Fields Holding Inc............................................... 12/01/05 90,000
--------------
SPECIALTY TELECOMMUNICATIONS (0.1%)
11,500 Birch Telecom Inc. - 144A*............................................ 06/15/08 1,150,000
119,750 DTI Holdings Inc. - 144A*............................................. 03/01/08 1,197
47,000 Firstworld Communications, Inc. - 144A*............................... 04/15/08 940,000
--------------
2,091,197
--------------
TELECOMMUNICATIONS (0.0%)
11,850 Startec Global Communications Corp. - 144A*........................... 05/15/08 11,850
--------------
WIRELESS COMMUNICATIONS (0.0%)
10,000 Metricom, Inc......................................................... 02/15/10 300,000
16,250 Motient Corp. - 144A*................................................. 04/01/08 568,750
--------------
868,750
--------------
TOTAL WARRANTS
(COST $7,758,300)................................................................. 5,518,716
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 2000, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENT (0.5%)
REPURCHASE AGREEMENT
$ 9,685 The Bank of New York (dated 08/31/00; proceeds
$9,686,430) (e) (COST 9,684,698)...................... 6.438% 09/01/00 $ 9,684,698
--------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(COST $2,669,703,149) (F)................................. 97.3% 1,725,014,813
OTHER ASSETS IN EXCESS OF LIABILITIES..................... 2.7 47,158,184
----- ---------------
NET ASSETS................................................ 100.0% $ 1,772,172,997
----- ---------------
----- ---------------
</TABLE>
---------------------
ADR American Depository Receipt.
* Resale is restricted to qualified institutional investors.
+ Payment-in-kind security.
++ Currently a zero coupon bond that will pay interest at the rate shown at a
future specified date.
++ Consists of one or more classes of securities traded together as a unit;
bonds with attached warrants.
(a) Issuer in bankruptcy.
(b) Non-income producing security; bond in default.
(c) Acquired through exchange offer.
(d) Non-income producing securities.
(e) Collateralized by $14,593,725 Federal National Mortgage Assoc. 7.998% due
08/01/28 valued at $9,880,253.
(f) The aggregate cost for federal income tax purposes approximates the
aggregate cost for book purposes. The aggregate gross unrealized
appreciation is $38,429,897 and the aggregate gross unrealized depreciation
is $983,118,233, resulting in net unrealized depreciation of $944,688,336.
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $2,669,703,149)................................... $1,725,014,813
Receivable for:
Interest................................................................................ 50,012,920
Capital stock sold...................................................................... 4,630,696
Prepaid expenses and other assets........................................................... 138,952
--------------
TOTAL ASSETS........................................................................... 1,779,797,381
--------------
LIABILITIES:
Payable for:
Capital stock repurchased............................................................... 4,265,193
Investments purchased................................................................... 1,573,028
Plan of distribution fee................................................................ 972,370
Investment management fee............................................................... 621,160
Accrued expenses and other payables......................................................... 192,633
--------------
TOTAL LIABILITIES...................................................................... 7,624,384
--------------
NET ASSETS............................................................................. $1,772,172,997
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................. $3,175,159,265
Net unrealized depreciation................................................................. (944,688,336)
Dividends in excess of net investment income................................................ (2,808,348)
Accumulated net realized loss............................................................... (455,489,584)
--------------
NET ASSETS............................................................................. $1,772,172,997
==============
CLASS A SHARES:
Net Assets.................................................................................. $ 57,273,029
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 13,173,595
NET ASSET VALUE PER SHARE.............................................................. $4.35
==============
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 4.44% OF NET ASSET VALUE)...................................... $4.54
==============
CLASS B SHARES:
Net Assets.................................................................................. $1,381,008,060
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 318,378,888
NET ASSET VALUE PER SHARE.............................................................. $4.34
==============
CLASS C SHARES:
Net Assets.................................................................................. $ 86,950,510
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 20,020,246
NET ASSET VALUE PER SHARE.............................................................. $4.34
==============
CLASS D SHARES:
Net Assets.................................................................................. $ 246,941,398
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 56,793,347
NET ASSET VALUE PER SHARE.............................................................. $4.35
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2000
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME.............................................................................. $ 306,202,922
-------------
EXPENSES
Plan of distribution fee (Class A shares).................................................... 135,074
Plan of distribution fee (Class B shares).................................................... 12,574,558
Plan of distribution fee (Class C shares).................................................... 840,794
Investment management fee.................................................................... 8,439,728
Transfer agent fees and expenses............................................................. 1,608,009
Custodian fees............................................................................... 148,502
Shareholder reports and notices.............................................................. 139,816
Registration fees............................................................................ 118,574
Professional fees............................................................................ 78,551
Directors' fees and expenses................................................................. 17,345
Other........................................................................................ 52,519
-------------
TOTAL EXPENSES.......................................................................... 24,153,470
-------------
NET INVESTMENT INCOME................................................................... 282,049,452
-------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss............................................................................ (16,496,280)
Net change in unrealized depreciation........................................................ (457,477,753)
-------------
NET LOSS................................................................................ (473,974,033)
-------------
NET DECREASE................................................................................. $(191,924,581)
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
AUGUST 31, 2000 AUGUST 31, 1999
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income..................................................... $ 282,049,452 $ 289,651,675
Net realized loss......................................................... (16,496,280) (65,548,410)
Net change in unrealized depreciation..................................... (457,477,753) (193,563,887)
-------------- --------------
NET INCREASE (DECREASE).............................................. (191,924,581) 30,539,378
-------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A shares............................................................ (9,668,632) (7,768,308)
Class B shares............................................................ (229,455,500) (229,484,007)
Class C shares............................................................ (13,449,909) (10,585,900)
Class D shares............................................................ (42,391,609) (47,045,091)
-------------- --------------
TOTAL DIVIDENDS...................................................... (294,965,650) (294,883,306)
-------------- --------------
Net increase (decrease) from capital stock transactions................... (179,646,437) 454,019,292
-------------- --------------
NET INCREASE (DECREASE).............................................. (666,536,668) 189,675,364
NET ASSETS:
Beginning of period....................................................... 2,438,709,665 2,249,034,301
-------------- --------------
END OF PERIOD
(INCLUDING DIVIDENDS IN EXCESS OF NET INVESTMENT INCOME OF $2,808,348
AND UNDISTRIBUTED NET INVESTMENT INCOME OF $10,091,362,
RESPECTIVELY)......................................................... $1,772,172,997 $2,438,709,665
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2000
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter High Yield Securities Inc. (the "Fund") is registered
under the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's primary investment objective is to
earn a high level of current income and, as a secondary objective, capital
appreciation, but only when consistent with its primary objective. The Fund was
incorporated in Maryland on June 14, 1979 and commenced operations on
September 26, 1979. On July 28, 1997, the Fund converted to a multiple class
share structure.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity portfolio security listed or traded
on the New York or American Stock Exchange, NASDAQ, or other exchange is valued
at its latest sale price, prior to the time when assets are valued; if there
were no sales that day, the security is valued at the latest bid price (in cases
where securities are traded on more than one exchange, the securities are valued
on the exchange designated as the primary market pursuant to procedures adopted
by the Directors); (2) all other portfolio securities for which over-the-counter
market quotations are readily available are valued at the latest available bid
price. (3) when market quotations are not readily available, including
circumstances under which it is determined by Morgan Stanley Dean Witter
Advisors Inc. (the "Investment Manager"), that sale or bid prices are not
reflective of a security's market value, portfolio securities are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision of the Directors (valuation of debt securities for
which market quotations are not 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); (4) certain portfolio
securities may be valued by an outside pricing service approved
19
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2000, CONTINUED
by the Directors. The pricing service may utilize a matrix system incorporating
security quality, maturity and coupon as the evaluation model parameters, and/or
research and evaluations by its staff, including review of broker-dealer market
price quotations, if available, in determining what it believes is the fair
valuation of the portfolio securities valued by such pricing service; and
(5) short-term debt securities having a maturity date of more than sixty days at
time of purchase are valued on a mark-to-market basis until sixty days prior to
maturity and thereafter at amortized cost based on their value on the 61st day.
Short-term debt securities having a maturity date of sixty days or less at the
time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily except where collection is not expected.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the record 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 tax purposes,
are reported as distributions of paid-in-capital.
20
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2000, CONTINUED
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, calculated daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined as of the close
of each business day: 0.50% to the portion of daily net assets not exceeding
$500 million; 0.425% to the portion of daily net assets exceeding $500 million
but not exceeding $750 million; 0.375% to the portion of daily net assets
exceeding $750 million but not exceeding $1 billion; 0.35% to the portion of
daily net assets exceeding $1 billion but not exceeding $2 billion; 0.325% to
the portion of daily net assets exceeding $2 billion but not exceeding $3
billion; and 0.30% to the portion of daily net assets exceeding $3 billion.
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 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 -- 0.75% of the average
daily net assets of Class B; and (iii) Class C -- up to 0.85% of the average
daily net assets of Class C.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Directors will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts totaled
$59,549,106 at August 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 0.85% 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
21
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2000, CONTINUED
other selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended August 31, 2000, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.20% and
0.85%, respectively.
The Distributor has informed the Fund that for the year ended August 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 $26,734, $4,887,041
and $86,304, respectively and received $187,035 in front-end sales charges from
sales of the Fund's Class A shares. The respective shareholders pay such charges
which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended August 31, 2000, aggregated
$406,418,566 and $692,827,331, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At August 31, 2000, the Fund had
transfer agent fees and expenses payable of approximately $1,200.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Directors of the Fund who will have served as independent
Directors for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended August 31, 2000 included
in Directors' fees and expenses in the Statement of Operations amounted to
$5,845. At August 31, 2000, the Fund had an accrued pension liability of $53,705
which is included in accrued expenses in the Statement of Assets and
Liabilities.
22
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2000, CONTINUED
5. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
AUGUST 31, 2000 AUGUST 31, 1999
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold............................................................. 20,398,269 $ 102,571,421 14,286,295 $ 83,691,711
Reinvestment of dividends........................................ 938,139 4,701,847 663,857 3,835,707
Redeemed......................................................... (20,620,177) (103,264,873) (7,475,634) (43,226,489)
------------ ------------- ------------ -------------
Net increase - Class A........................................... 716,231 4,008,395 7,474,518 44,300,929
------------ ------------- ------------ -------------
CLASS B SHARES
Sold............................................................. 83,309,893 422,185,285 158,254,779 925,430,936
Reinvestment of dividends........................................ 16,592,293 82,984,770 14,916,788 86,253,971
Redeemed......................................................... (131,901,232) (669,368,755) (109,357,421) (637,513,069)
------------ ------------- ------------ -------------
Net increase (decrease) - Class B................................ (31,999,046) (164,198,700) 63,814,146 374,171,838
------------ ------------- ------------ -------------
CLASS C SHARES
Sold............................................................. 10,104,080 51,348,473 20,141,052 117,563,491
Reinvestment of dividends........................................ 1,362,762 6,824,019 965,180 5,575,865
Redeemed......................................................... (11,267,273) (57,763,912) (10,489,731) (60,989,647)
------------ ------------- ------------ -------------
Net increase - Class C........................................... 199,569 408,580 10,616,501 62,149,709
------------ ------------- ------------ -------------
CLASS D SHARES
Sold............................................................. 9,035,431 45,961,462 13,701,316 80,018,104
Reinvestment of dividends........................................ 4,875,203 24,378,740 4,485,925 26,008,989
Redeemed......................................................... (17,661,637) (90,204,914) (22,704,747) (132,630,277)
------------ ------------- ------------ -------------
Net decrease - Class D........................................... (3,751,003) (19,864,712) (4,517,506) (26,603,184)
------------ ------------- ------------ -------------
Net increase (decrease) in Fund.................................. (34,834,249) $(179,646,437) 77,387,659 $ 454,019,292
============ ============= ============ =============
</TABLE>
6. FEDERAL INCOME TAX STATUS
At August 31, 2000, the Fund had a net capital loss carryover of approximately
$432,337,000, which may be used to offset future capital gains to the extent
provided by regulations, which is available through August 31 of the following
years:
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
------------------------------------------------------------------------------------
2001 2002 2003 2004 2005 2006 2007 2008
------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$45,084 $166,660 $50,599 $23,296 $39,319 $12,603 $24,919 $69,857
======= ======== ======= ======= ======= ======= ======= =======
</TABLE>
23
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2000, CONTINUED
Capital 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 losses of
approximately $11,629,000 during fiscal 2000.
At August 31, 2000, the Fund had temporary book/tax differences primarily
attributable to post-October losses, capital loss deferrals on wash sales and
interest on bonds in default and permanent book/tax differences primarily
attributable to an expired capital loss carryover. To reflect reclassifications
rising from the permanent differences, paid-in-capital was charged $182,217,561,
accumulated net realized loss was credited $182,201,073 and dividends in excess
of net investment income was credited $16,488.
24
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of capital stock outstanding
throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED AUGUST 31, JULY 28, 1997*
------------------------------- THROUGH
2000 1999 1998 AUGUST 31, 1997
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $ 5.51 $ 6.16 $ 6.82 $ 6.83
------- ------- ------- -------
Income (loss) from investment operations:
Net investment income.................................... 0.69 0.72 0.76 0.07
Net realized and unrealized loss......................... (1.13) (0.63) (0.71) (0.03)
------- ------- ------- -------
Total income (loss) from investment operations.............. (0.44) 0.09 0.05 0.04
------- ------- ------- -------
Less dividends from net investment income................... (0.72) (0.74) (0.71) (0.05)
------- ------- ------- -------
Net asset value, end of period.............................. $ 4.35 $ 5.51 $ 6.16 $ 6.82
======= ======= ======= =======
TOTAL RETURN+............................................... (8.88)% 1.47% 0.40% 0.65%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 0.70 %(3) 0.68%(3) 0.75%(3) 0.93%(2)
Net investment income....................................... 13.62 %(3) 12.42%(3) 11.30%(3) 11.80%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $57,273 $68,667 $30,678 $1,996
Portfolio turnover rate..................................... 20 % 36% 66% 113%
</TABLE>
---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
25
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED AUGUST 31, JULY 28, 1997*
---------------------------------------- THROUGH
2000 1999 1998 AUGUST 31, 1997
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS B SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period..................... $ 5.50 $ 6.15 $ 6.82 $ 6.83
---------- ---------- ---------- -------
Income (loss) from investment operations:
Net investment income................................. 0.66 0.69 0.73 0.07
Net realized and unrealized loss...................... (1.13) (0.64) (0.72) (0.03)
---------- ---------- ---------- -------
Total income (loss) from investment operations........... (0.47) 0.05 0.01 0.04
---------- ---------- ---------- -------
Less dividends from net investment income................ (0.69) (0.70) (0.68) (0.05)
---------- ---------- ---------- -------
Net asset value, end of period........................... $ 4.34 $ 5.50 $ 6.15 $ 6.82
========== ========== ========== =======
TOTAL RETURN+............................................ (9.39)% 0.92% (0.23)% 0.62%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................................. 1.25 %(3) 1.24%(3) 1.25 %(3) 1.42%(2)
Net investment income.................................... 13.07 %(3) 11.86%(3) 10.80 %(3) 11.28%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.................. $1,381,008 $1,927,186 $1,761,147 $15,828
Portfolio turnover rate.................................. 20 % 36% 66 % 113%
</TABLE>
---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
26
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED AUGUST 31, JULY 28, 1997*
--------------------------------------------- THROUGH
2000 1999 1998 AUGUST 31, 1997
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period $ 5.51 $ 6.15 $ 6.82 $ 6.83
---------- ---------- ---------- -------
Income (loss) from investment operations:
Net investment income................................. 0.66 0.68 0.72 0.07
Net realized and unrealized loss...................... (1.14) (0.62) (0.72) (0.03)
---------- ---------- ---------- -------
Total income (loss) from investment operations........... (0.48) 0.06 0.00 0.04
---------- ---------- ---------- -------
Less dividends from net investment income................ (0.69) (0.70) (0.67) (0.05)
---------- ---------- ---------- -------
Net asset value, end of period........................... $ 4.34 $ 5.51 $ 6.15 $ 6.82
========== ========== ========== =======
TOTAL RETURN+............................................ (9.66)% 0.99% (0.34)% 0.62%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................................. 1.35 %(3) 1.34%(3) 1.36 %(3) 1.52%(2)
Net investment income.................................... 12.97 %(3) 11.76%(3) 10.69 %(3) 11.18%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.................. $86,951 $109,142 $56,626 $5,225
Portfolio turnover rate.................................. 20 % 36% 66 % 113%
</TABLE>
---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
27
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE YEAR ENDED AUGUST 31
---------------------------------------------------------------------------
2000++ 1999++ 1998++ 1997* 1996
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS D SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period................ $ 5.51 $ 6.16 $ 6.82 $ 6.71 $ 6.77
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income............................ 0.70 0.74 0.78 0.79 0.83
Net realized and unrealized gain (loss).......... (1.13) (0.64) (0.71) 0.15 (0.12)
-------- -------- -------- -------- --------
Total income (loss) from investment operations...... (0.43) 0.10 0.07 0.94 0.71
-------- -------- -------- -------- --------
Less dividends from net investment income........... (0.73) (0.75) (0.73) (0.83) (0.77)
-------- -------- -------- -------- --------
Net asset value, end of period...................... $ 4.35 $ 5.51 $ 6.16 $ 6.82 $ 6.71
======== ======== ======== ======== ========
TOTAL RETURN+....................................... (8.69)% 1.67% 0.63% 15.01% 11.07%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................ 0.50 %(1) 0.49%(1) 0.51%(1) 0.68% 0.66%
Net investment income............................... 13.82 %(1) 12.61%(1) 11.54%(1) 11.78% 12.27%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............. $246,941 $333,714 $400,582 $479,020 $460,203
Portfolio turnover rate............................. 20 % 36% 66% 113% 49%
</TABLE>
---------------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class D shares.
++ 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) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
28
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES:
We have audited the accompanying statement of assets and liabilities of Morgan
Stanley Dean Witter High Yield Securities (the "Fund") including the portfolio
of investments, as of August 31, 2000, and the related statements of operations
and changes in net assets, and the financial highlights for the year then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statement
of changes in net assets for the year ended August 31, 1999 and the financial
highlights for each of the respective stated periods ended August 31, 1999 were
audited by other independent accountants whose report, dated October 8, 1999,
expressed an unqualified opinion on that statement and financial highlights.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 2000, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Morgan
Stanley Dean Witter High Yield Securities as of August 31, 2000, the results of
its operations, the changes in its net assets, and the financial highlights for
the year then ended, in conformity with accounting principles generally accepted
in the United States of America.
Deloitte & Touche LLP
NEW YORK, NEW YORK
OCTOBER 9, 2000
29
<PAGE>
MORGAN STANLEY DEAN WITTER HIGH YIELD SECURITIES INC.
CHANGE IN INDEPENDENT ACCOUNTANTS
On July 1, 2000 PricewaterhouseCoopers LLP resigned as independent accountants
of the Fund.
The reports of PricewaterhouseCoopers LLP on the financial statements of the
Fund for the past two fiscal years contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle.
In connection with its audit for the two most recent fiscal years and through
July 1, 2000, there have been no disagreements with PricewaterhouseCoopers LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of PricewaterhouseCoopers LLP would have caused them to make
reference thereto in their report on the financial statements for such years.
The Fund, with the approval of its Board of Directors and its Audit Committee,
engaged Deloitte & Touche LLP as its new independent accountants as of July 1,
2000.
30
<PAGE>
DIRECTORS
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin
President
Barry Fink
Vice President, Secretary and General Counsel
Peter M. Avelar
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
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
INVESTMENT MANAGER
Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and
directors, fees, expenses and other pertinent information, please see the
prospectus of the Fund.
This report is not authorized for distribution to
prospective investors in the Fund unless preceded or accompanied by an
effective prospectus. Read the prospectus carefully before investing.
Morgan Stanley Dean Witter Distributors Inc., member NASD.
MORGAN STANLEY
DEAN WITTER
HIGH YIELD
SECURITIES
[GRAPHIC]
ANNUAL REPORT
AUGUST 31, 2000
