<PAGE> 1
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND Two World Trade Center,
New York, New York 10048
LETTER TO SHAREHOLDERS June 30, 1998
DEAR SHAREHOLDER:
As 1998 began, the financial markets were braced for a tangible impact from the
implosion seen in many of the world's developing countries, as well as Japan,
which comprise nearly 40 percent of the world economy. Thus far, however,
falloffs in these countries and the resulting plunge in worldwide interest rates
have stimulated the consumer and domestically oriented sectors in the United
States. More specifically, the drop in interest rates spurred a refinancing
boomlet, lowering monthly mortgage costs and leading to an acceleration in
housing and retail sales. Consumer spending bounded ahead to levels not seen in
a decade.
However, it also became apparent that the Asian drag manifested itself in the
more internationally oriented sectors of the U.S. economy, such as
manufacturing, capital goods and technology. Evidence continued to build
throughout the first six months of the year that these industries in particular
would bear the brunt of pricing pressure and falling unit growth. Earnings
disappointments proliferated in this segment of the economy.
PERFORMANCE
For the six-month period ended June 30, l998, Morgan Stanley Dean Witter
American Value Fund's Class A, B, C and D shares produced total returns of 20.17
percent, 19.86 percent, 19.70 percent and 20.28 percent, respectively. Over the
same period, the Standard & Poor's 500 Composite Stock Price Index (S&P 500) and
the Lipper Analytical Services, Inc. Growth Funds Index registered total returns
of 17.70 percent and 15.57 percent, respectively. Performance of the Fund's
share classes varies because of differing expenses.
Within the Lipper Growth Funds universe the Fund was ranked #52 out of 884 funds
(top 6 percent) for the year ended June 30, 1998. For the 5 and 10 years ended
June 30, 1998, the Fund was ranked #156 out of 338
<PAGE> 2
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
LETTER TO THE SHAREHOLDERS June 30, 1998, continued
growth funds (top 46 percent) and #33 out of 181 growth funds (top 18%),
respectively. Lipper rankings are based on total return and do not include any
sales charges.
POSITIONING OF THE FUND
The Fund was well-positioned for the developments of the first half of l998,
with the portfolio heavily tilted toward consumer and domestically oriented
industries. One area of emphasis, financial stocks, which as of June 30, 1998
represented nearly 14 percent of net assets, was characterized by bank (Wells
Fargo & Co., Mellon Bank Corp.), brokerage (Merrill Lynch & Co. Inc., Paine
Webber Group, Inc.) and life insurance (Equitable Companies, Inc., Travelers
Group, Inc.) holdings.
Another notable area of concentration, health care, represented approximately 12
percent of net assets and included primarily drug stocks (Bristol-Myers Squibb
Co., Schering-Plough Corp.), with some miscellaneous hospital- and medical
device-related stocks (HBO & Co., Medtronic, Inc.).
Consumer staples represented nearly 9 percent of net assets, and included drug
stores (Walgreen Co., Rite Aid Corp.), grocery stores (Safeway, Inc., Kroger
Co.), and household products (Colgate-Palmolive Co., Procter & Gamble Co.).
Nearly 7 percent of the Fund's net assets was exposed to media stocks, which
consisted primarily of radio (Chancellor Media Corp.), television (CBS Corp.)
and cable (Viacom, Inc.) issues.
The broad consumer cyclical segments of the market combined to represent nearly
15 percent of net assets and included retail (Lowe's Companies, Inc., Costco
Companies, Inc.) with some assorted automobile (Ford Motor Co., General Motors
Corp.), restaurant (Starbucks Corp., McDonald's corp.) and airline (Southwest
Airlines Co.) stocks.
The Fund had very limited manufacturing exposure and was underweighted in
technology issues, given record pricing pressure and slowing capital spending
trends.
LOOKING AHEAD
We believe that the manufacturing and capital goods sectors will increasingly
slow the consumer-oriented industries as the year progresses. Corporate
profitability is likely to experience increasing pressure from slower exports,
an increase in cheaper imports, rising wages (two-thirds of the average
company's costs) and little or no pricing flexibility. Against such a backdrop,
capital spending is expected to slow further while payroll growth diminishes,
potentially putting a cap on future consumer spending.
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
LETTER TO THE SHAREHOLDERS June 30, 1998, continued
Given this outlook, the Fund may reduce its consumer cyclical holdings over the
remainder of l998, and add to more defensive industries, such as consumer
staples, telecommunications and electric utilities. Interest rates may decline
to new lower levels, adding stability to the stock market, particularly to those
industries that may continue to deliver positive earnings growth.
We appreciate your support of Morgan Stanley Dean Witter American Value Fund and
look forward to continuing to serve your investment needs and objectives.
Very truly yours,
/S/ CHARLES A. FIUMEFREDDO
CHARLES A. FIUMEFREDDO
Chairman of the Board
3
<PAGE> 4
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (87.3%)
Agriculture Related (0.3%)
320,000 Delta & Pine Land Co. ....... $ 14,240,000
--------------
Apparel & Footwear (0.2%)
248,800 Jones Apparel Group, Inc.*... 9,096,750
--------------
Auto Related (1.4%)
650,000 Ford Motor Co. .............. 38,350,000
510,000 General Motors Corp. ........ 34,074,375
--------------
72,424,375
--------------
Banks (3.8%)
1,602,000 Corporacion Bancaria de
Espana S.A. (Spain)......... 35,915,537
440,000 BankBoston Corp. ............ 24,475,000
9,725,000 Credito Italiano SpA
(Italy)..................... 50,820,580
340,000 Mellon Bank Corp. ........... 23,672,500
120,000 Morgan (J.P.) & Co., Inc. ... 14,055,000
255,000 NationsBank Corp. ........... 19,507,500
67,000 Wells Fargo & Co. ........... 24,723,000
--------------
193,169,117
--------------
Basic Cyclicals (0.5%)
355,000 DuPont (E.I.) de Nemours &
Co., Inc. .................. 26,491,875
--------------
Biotechnology (0.8%)
388,000 Centocor, Inc.*.............. 14,065,000
195,200 Genentech, Inc. (Special)*... 13,249,200
245,000 Quintiles Transnational
Corp.*...................... 12,035,625
--------------
39,349,825
--------------
Cable & Telecommunications (3.3%)
1,600,000 Comcast Corp. (Class A
Special).................... 64,900,000
845,000 Cox Communications, Inc.
(Class A)*.................. 40,929,687
716,000 Time Warner, Inc. ........... 61,173,250
--------------
167,002,937
--------------
Capital Goods (1.4%)
810,000 General Electric Co. ........ 73,710,000
--------------
Communications Equipment (6.5%)
155,400 Alcatel Alsthom (France)..... 31,569,832
738,500 Alcatel Alsthom (ADR)
(France).................... 30,047,719
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
1,570,000 Ascend Communications,
Inc.*....................... $ 77,715,000
300,000 CIENA Corp.*................. 20,850,000
600,000 Cisco Systems, Inc.*......... 55,237,500
118,000 Glenayre Technologies,
Inc.*....................... 1,268,500
400,000 Loral Space & Communications
Ltd.*....................... 11,300,000
775,000 Lucent Technologies Inc. .... 64,470,312
395,000 Nokia Corp. (ADR) (Class A)
(Finland)................... 28,662,187
92,800 Northern Telecom Ltd.
(Canada).................... 5,266,400
135,000 Tellabs, Inc.*............... 9,660,937
--------------
336,048,387
--------------
Computer Hardware (0.9%)
500,000 Dell Computer Corp.*......... 46,375,000
--------------
Computer Software (5.5%)
740,000 BMC Software, Inc.*.......... 38,433,750
251,000 CBT Group Public Limited Co.
(ADR) (Ireland)*............ 13,428,500
900,000 Computer Associates
International, Inc. ........ 50,006,250
625,000 Compuware Corp.*............. 31,914,062
700,000 Legato Systems, Inc.*........ 27,300,000
700,000 Microsoft Corp.*............. 75,862,500
675,000 Platinum Technology, Inc.*... 19,279,687
158,000 Software AG Systems, Inc.*... 4,621,500
535,000 Veritas Software Corp.*...... 22,102,187
--------------
282,948,436
--------------
Construction (1.6%)
400,000 Masco Corp. ................. 24,200,000
1,000,000 Maytag Corp. ................ 49,375,000
150,000 Whirlpool Corp. ............. 10,312,500
--------------
83,887,500
--------------
Consumer - Noncyclical (3.4%)
544,700 Clorox Co. .................. 51,950,762
300,000 Colgate-Palmolive Co. ....... 26,400,000
85,850 Groupe Danone (France)....... 23,617,782
5,440 Nestle S.A. (Registered)
(Switzerland)............... 11,624,911
245,000 Procter & Gamble Co. ........ 22,310,312
440,000 Rubbermaid, Inc. ............ 14,602,500
600,000 Seagram Co. Ltd. (Canada).... 24,562,500
--------------
175,068,767
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS June 30, 1998 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
Consumer Business Services (2.6%)
235,800 Apollo Group, Inc. (Class
A)*......................... $ 7,796,138
520,000 Automatic Data Processing,
Inc. ....................... 37,895,000
300,000 Gartner Group, Inc. (Class
A)*......................... 10,481,250
609,300 Paychex, Inc. ............... 24,752,813
600,000 Snyder Communications,
Inc.*....................... 26,400,000
575,000 U.S.A. Waste Services,
Inc.*....................... 28,390,625
--------------
135,715,826
--------------
Consumer Products (5.5%)
900,600 CVS Corp. ................... 35,067,113
1,361,000 Fred Meyer, Inc.*............ 57,842,500
1,100,000 Kroger Co.*.................. 47,162,500
1,110,000 Rite Aid Corp. .............. 41,694,375
1,401,000 Safeway, Inc.*............... 57,003,188
1,020,000 Walgreen Co. ................ 42,138,750
--------------
280,908,426
--------------
Drugs (8.0%)
500,000 ALZA Corp.*.................. 21,625,000
670,000 American Home Products
Corp. ...................... 34,672,500
540,000 Bristol-Myers Squibb Co. .... 62,066,250
1,280,000 Forest Laboratories, Inc.*... 45,760,000
405,000 Lilly (Eli) & Co. ........... 26,755,313
375,000 Merck & Co., Inc. ........... 50,156,250
430,000 Pfizer, Inc. ................ 46,735,625
620,000 Schering-Plough Corp. ....... 56,807,500
940,000 Warner-Lambert Co. .......... 65,212,500
--------------
409,790,938
--------------
Energy (1.1%)
180,000 Camco International Inc. .... 14,017,500
84,085 Coflexip, S.A. (ADR)
(France).................... 5,129,185
180,000 Cooper Cameron Corp.*........ 9,180,000
600,000 Global Industries Ltd.*...... 10,087,500
200,000 Halliburton Co. ............. 8,912,500
115,000 Schlumberger Ltd. ........... 7,855,938
--------------
55,182,623
--------------
Entertainment (1.1%)
1,081,000 Electronic Arts Inc.*........ 58,374,000
--------------
Financial - Miscellaneous (6.3%)
410,000 American Express Co. ........ 46,740,000
710,000 Amvescap PLC (United
Kingdom).................... 6,925,961
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
328,701 Associates First Capital
Corp. (Class A)............. $ 25,268,889
454,050 Edwards (A.G.), Inc. ........ 19,382,259
600,000 Fannie Mae................... 36,450,000
758,700 Freddie Mac.................. 35,706,319
500,000 Hambrecht & Quist Group*..... 18,156,250
335,000 Lehman Brothers Holdings,
Inc. ....................... 25,983,438
441,500 Merrill Lynch & Co., Inc. ... 40,728,375
600,000 Paine Webber Group, Inc. .... 25,725,000
525,000 Providian Financial Corp. ... 41,245,313
--------------
322,311,804
--------------
Healthcare Products & Services (2.5%)
1,344,000 HBO & Co. ................... 47,376,000
960,000 Health Management Associates,
Inc. (Class A)*............. 32,100,000
400,000 Healthsouth Corp.*........... 10,675,000
1,114,796 Total Renal Care Holdings,
Inc.*....................... 38,460,462
--------------
128,611,462
--------------
Insurance (3.7%)
700,000 Equitable Companies, Inc. ... 52,456,250
200,000 Hartford Financial Services
Group Inc. ................. 22,875,000
200,205 Marsh & McLennan Companies,
Inc. ....................... 12,099,890
182,900 Nationwide Financial
Services, Inc. (Class A).... 9,327,900
300,000 ReliaStar Financial Corp. ... 14,400,000
560,000 SunAmerica Inc. ............. 32,165,000
125,000 Torchmark Corp. ............. 5,718,750
640,000 Travelers Group, Inc. ....... 38,800,000
--------------
187,842,790
--------------
Internet (4.4%)
380,000 Amazon.com, Inc.*............ 37,881,250
685,000 America Online, Inc.......... 72,610,000
300,000 At Home Corp. (Series A)*.... 14,175,000
150,000 Inktomi Corp.*............... 5,943,750
650,000 Intuit Inc.*................. 39,812,500
143,100 Preview Travel, lnc.*........ 4,892,231
325,000 Yahoo! Inc.*................. 51,146,875
--------------
226,461,606
--------------
Media Group (6.5%)
1,105,000 CBS Corp. ................... 35,083,750
1,010,000 Chancellor Media Corp.*...... 50,121,250
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS June 30, 1998 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
480,000 Clear Channel Communications,
Inc.*....................... $ 52,380,000
438,000 Jacor Communications,
Inc.*....................... 25,842,000
1,205,000 News Corp., Ltd. (ADR)
(Australia)................. 38,710,625
1,462,500 Outdoor Systems, Inc.*....... 40,950,000
623,100 Univision Communications,
Inc. (Class A)*............. 23,210,475
600,000 USA Networks, Inc.*.......... 15,075,000
865,000 Viacom, Inc. (Class B)*...... 50,386,250
53,800 Young & Rubicam, Inc.*....... 1,721,600
--------------
333,480,950
--------------
Medical Supplies (1.7%)
330,000 Becton, Dickinson & Co. ..... 25,616,250
230,000 Boston Scientific Corp.*..... 16,473,750
350,900 Medtronic, Inc. ............. 22,369,875
285,300 Sofamor Danek Group, Inc.*... 24,696,281
--------------
89,156,156
--------------
Restaurants (2.5%)
766,700 Brinker International,
Inc.*....................... 14,758,975
495,000 Cracker Barrell Old Country
Store, Inc. ................ 15,716,250
500,000 McDonald's Corp. ............ 34,500,000
700,000 Outback Steakhouse, Inc.*.... 27,256,250
650,000 Starbucks Corp.*............. 34,693,750
--------------
126,925,225
--------------
Retail (10.4%)
362,595 Abercrombie & Fitch Co.
(Class A)*.................. 15,954,180
401,000 Barnes & Noble, Inc.*........ 15,012,438
955,000 Costco Companies, Inc.*...... 60,224,688
1,200,000 Dayton Hudson Corp. ......... 58,200,000
150,000 Dollar General Corp. ........ 5,934,375
300,000 Dollar Tree Stores, Inc.*.... 12,150,000
700,000 Family Dollar Stores,
Inc. ....................... 12,950,000
700,000 Gap, Inc. (The).............. 43,137,500
200,000 Hasbro, Inc. ................ 7,862,500
645,000 Home Depot, Inc. ............ 53,575,313
2,250,000 Kmart Corp.*................. 43,312,500
1,360,000 Limited (The), Inc. ......... 45,050,000
1,600,000 Lowe's Companies, Inc. ...... 64,900,000
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
512,500 Proffitt's, Inc.*............ $ 20,692,188
1,000,000 TJX Companies, Inc. ......... 24,125,000
810,000 Wal-Mart Stores, Inc. ....... 49,207,500
--------------
532,288,182
--------------
Telecommunications (1.0%)
650,000 AirTouch Communications,
Inc.*....................... 37,984,375
73,000 ICG Communications, Inc.*.... 2,664,500
211,500 Intermedia Communications
Inc.*....................... 8,856,563
--------------
49,505,438
--------------
Transportation (0.4%)
760,000 Southwest Airlines Co. ...... 22,515,535
--------------
TOTAL COMMON STOCKS
(Identified Cost
$3,613,569,234).............. 4,478,883,930
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ----------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS
(9.3%)
$ 161,000 U.S. Treasury Strip 0.00% due
05/15/19.................... 48,747,580
188,000 U.S. Treasury Strip 0.00% due
11/15/19.................... 55,319,000
200,000 U.S. Treasury Strip 0.00% due
05/15/20.................... 57,160,000
262,000 U.S. Treasury Strip 0.00% due
02/15/21.................... 71,730,360
190,600 U.S. Treasury Strip 0.00% due
05/15/21.................... 51,446,752
163,400 U.S. Treasury Strip 0.00% due
08/15/21.................... 43,474,204
142,500 U.S. Treasury Bond 6.125% due
11/15/27.................... 152,541,975
--------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS
(Identified Cost
$467,523,889)............... 480,419,871
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS June 30, 1998 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (3.8%)
U.S. GOVERNMENT AGENCY (a) (3.4%)
$ 177,000 Federal Home Loan Mortgage
Corp. 5.85% due 07/01/98
(Amortized Cost
$177,000,000)............... 177,000,000
--------------
REPURCHASE AGREEMENT (0.4%)
18,127 The Bank of New York 5.50%
due 07/01/98 (dated
06/30/98, proceeds
$18,129,401)(b) (Identified
Cost $18,126,632)........... 18,126,632
--------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $195,126,632)... 195,126,632
--------------
TOTAL INVESTMENTS
(Identified Cost $4,276,219,755)
(c)................................ 100.4% $5,154,430,433
LIABILITIES IN EXCESS OF
OTHER ASSETS........................ (0.4) (21,075,206)
---- --------------
NET ASSETS......................... 100.0% $5,133,355,227
===== ==============
</TABLE>
- ---------------------
<TABLE>
<C> <S>
ADR American Depository Receipt.
* Non-income producing security.
(a) Security was purchased on a discount basis. The
interest rate shown has been adjusted to reflect
a money market equivalent yield.
(b) Collateralized by $18,270,720 U.S. Treasury Note
5.50% due 03/31/03 valued at $18,489,164.
(c) The aggregate cost for federal income tax
purposes approximates identified cost. The
aggregate gross unrealized appreciation is
$909,533,339 and the aggregate gross unrealized
depreciation is $31,322,661, resulting in net
unrealized appreciation of $878,210,678.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $4,276,219,755)........................... $5,154,430,433
Receivable for:
Shares of beneficial interest sold...................... 12,815,151
Dividends............................................... 1,594,192
Interest................................................ 1,117,505
Foreign withholding taxes reclaimed..................... 539,649
Prepaid expenses and other assets........................... 318,255
--------------
TOTAL ASSETS............................................ 5,170,815,185
--------------
LIABILITIES:
Payable for:
Investments purchased................................... 22,716,294
Shares of beneficial interest repurchased............... 8,130,738
Plan of distribution fee................................ 3,189,460
Investment management fee............................... 2,081,111
Distributions to shareholders........................... 1,105,084
Accrued expenses and other payables......................... 237,271
--------------
TOTAL LIABILITIES....................................... 37,459,958
--------------
NET ASSETS.............................................. $5,133,355,227
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................. $3,794,135,486
Net unrealized appreciation................................. 878,207,908
Accumulated net investment loss............................. (4,962,481)
Accumulated undistributed net realized gain................. 465,974,314
--------------
NET ASSETS.............................................. $5,133,355,227
==============
CLASS A SHARES:
Net Assets.................................................. $51,570,679
Shares Outstanding (unlimited authorized, $.01 par value)... 1,502,188
NET ASSET VALUE PER SHARE............................... $34.33
==============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value)........ $36.23
==============
CLASS B SHARES:
Net Assets.................................................. $4,979,373,633
Shares Outstanding (unlimited authorized, $.01 par value)... 145,855,301
NET ASSET VALUE PER SHARE............................... $34.14
==============
CLASS C SHARES:
Net Assets.................................................. $29,060,117
Shares Outstanding (unlimited authorized, $.01 par value)... 852,912
NET ASSET VALUE PER SHARE............................... $34.07
==============
CLASS D SHARES:
Net Assets.................................................. $73,350,798
Shares Outstanding (unlimited authorized, $.01 par value)... 2,131,401
NET ASSET VALUE PER SHARE............................... $34.41
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1998 (unaudited)
NET INVESTMENT INCOME:
INCOME
Dividends (net of $541,538 foreign withholding tax)......... $ 14,685,560
Interest.................................................... 11,521,603
------------
TOTAL INCOME............................................ 26,207,163
------------
EXPENSES
Plan of distribution fee (Class A shares)................... 37,490
Plan of distribution fee (Class B shares)................... 17,128,054
Plan of distribution fee (Class C shares)................... 95,530
Investment management fee................................... 11,192,065
Transfer agent fees and expenses............................ 2,183,305
Registration fees........................................... 170,723
Custodian fees.............................................. 141,112
Shareholder reports and notices............................. 124,909
Professional fees........................................... 28,496
Trustees' fees and expenses................................. 10,056
Other....................................................... 15,874
------------
TOTAL EXPENSES.......................................... 31,127,614
------------
NET INVESTMENT LOSS..................................... (4,920,451)
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 487,141,683
Net change in unrealized appreciation....................... 357,182,317
------------
NET GAIN................................................ 844,324,000
------------
NET INCREASE................................................ $839,403,549
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JUNE 30, 1998 DECEMBER 31, 1997*
- ----------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss................................ $ (4,920,451) $ (11,954,379)
Net realized gain.................................. 487,141,683 738,335,473
Net change in unrealized appreciation.............. 357,182,317 251,384,827
-------------- --------------
NET INCREASE................................... 839,403,549 977,765,921
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED
GAIN:
Class A shares..................................... (1,562,807) (1,747,209)
Class B shares..................................... (169,191,735) (680,450,520)
Class C shares..................................... (951,647) (1,454,608)
Class D shares..................................... (2,441,072) (6,581,680)
-------------- --------------
TOTAL DISTRIBUTIONS............................ (174,147,261) (690,234,017)
-------------- --------------
Net increase from transactions in shares of
beneficial interest............................... 312,207,439 769,509,113
-------------- --------------
NET INCREASE................................... 977,463,727 1,057,041,017
NET ASSETS:
Beginning of period................................ 4,155,891,500 3,098,850,483
-------------- --------------
END OF PERIOD
(Including net investment losses of $4,962,481
and $42,030, respectively)..................... $5,133,355,227 $4,155,891,500
============== ==============
</TABLE>
- ---------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter American Value Fund (the "Fund"), formerly Dean
Witter American Value 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 consistent with an
effort to reduce volatility. The Fund seeks to achieve its objective by
investing in a diversified portfolio of securities consisting principally of
common stocks. The Fund was incorporated in Maryland in 1979, commenced
operations on March 27, 1980 and was reorganized as a Massachusetts business
trust on April 30, 1987. On July 28, 1997, the Fund commenced offering three
additional classes of shares, with the then current shares, other than shares
which were purchased prior to April 30, 1984 (and with respect to such shares,
certain shares acquired through reinvestment of dividends and capital gains
distributions (collectively the "Old Shares")), designated as Class B shares.
The Old Shares have been designated Class D shares.
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, 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 Morgan Stanley Dean Witter Advisors Inc. (the "Investment
Manager"), formerly Dean Witter InterCapital Inc., that sale or bid
11
<PAGE> 12
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited) continued
prices are not reflective of a security's market value, portfolio securities are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Trustees (valuation of
debt securities for which market quotations are not readily available may be
based upon current market prices of securities which are 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. 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 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.
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited) continued
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with the Investment Manager, the
Fund pays a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined at the close of
each business day: 0.625% to the portion of daily net assets not exceeding $250
million; 0.50% to the portion of daily net assets exceeding $250 million but not
exceeding $2.5 billion; 0.475% to the portion of daily net assets exceeding $2.5
billion but not exceeding $3.5 billion and 0.45% of the portion of daily net
assets in excess of $3.5 billion but not exceeding 4.5 billion. Effective May 1,
1998, the Agreement was amended to reduce the annual rate to 0.425% of the
portion of daily net assets in excess of $4.5 billion.
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
lesser of: (a) the average daily aggregate gross sales of the Class B shares
since the inception of the Fund (not including reinvestment of dividend or
capital gain distributions) less the average daily aggregate net asset value of
the Class B shares redeemed since the Fund's inception upon which a contingent
deferred sales charge has been imposed or waived; or (b) the average daily net
assets of Class B; and (iii) Class C -- up to 1.0% of the average daily net
assets of Class C. In the case of Class 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
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, Morgan Stanley
Dean Witter Financial Advisors and others who engage in or support distribution
of the shares or who service
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited) continued
shareholder accounts, including overhead and telephone expenses; printing and
distribution of prospectuses and reports used in connection with the offering of
these shares to other than current shareholders; and 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.
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 $75,785,615 at June 30, 1998.
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 June 30, 1998, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.24% and
1.0%, respectively.
The Distributor has informed the Fund that for six months ended June 30, 1998,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class A shares, Class B shares and Class C shares of $47, $2,238,741 and
$17,315, respectively and received $192,188 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.
14
<PAGE> 15
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited) continued
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 June 30, 1998, aggregated
$5,632,336,181 and $5,467,849,046, respectively. Included in the aforementioned
are purchases and sales of U.S. Government securities of $573,978,399 and
$502,919,566, respectively.
For the six months ended June 30, 1998, the Fund incurred $6,085 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.
For the six months ended June 30, 1998, the Fund incurred brokerage commissions
of $1,068,841 with Morgan Stanley & Co., Inc., an affiliate of the Investment
Manager, for portfolio transactions executed on behalf of the Fund.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees 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 six months ended June 30, 1998
included in Trustees' fees and expenses in the Statement of Operations amounted
to $2,978. At June 30, 1998, the Fund had an accrued pension liability of
$42,638 which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. FEDERAL INCOME TAX STATUS
As of December 31, 1997, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales.
15
<PAGE> 16
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1998 (unaudited) continued
6. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE FOR THE
MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997+*
--------------------------- ---------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold........................................................ 1,068,848 $ 34,746,336 539,039 $ 17,439,944
Reinvestment of distributions............................... 45,230 1,517,920 57,321 1,665,172
Redeemed.................................................... (147,264) (4,873,324) (60,986) (2,023,896)
----------- ------------- ----------- -------------
Net increase - Class A...................................... 966,814 31,390,932 535,374 17,081,220
----------- ------------- ----------- -------------
CLASS B SHARES
Sold........................................................ 16,462,197 530,585,984 26,893,089 818,085,006
Reinvestment of distributions............................... 4,799,633 160,211,773 22,224,675 644,669,591
Redeemed.................................................... (13,592,094) (438,904,655) (24,498,814) (739,128,498)
----------- ------------- ----------- -------------
Net increase - Class B...................................... 7,669,736 251,893,102 24,618,950 723,626,099
----------- ------------- ----------- -------------
CLASS C SHARES
Sold........................................................ 652,679 21,176,322 387,776 12,691,589
Reinvestment of distributions............................... 27,004 899,491 46,319 1,340,948
Redeemed.................................................... (240,638) (7,822,473) (20,228) (667,646)
----------- ------------- ----------- -------------
Net increase - Class C...................................... 439,045 14,253,340 413,867 13,364,891
----------- ------------- ----------- -------------
CLASS D SHARES
Sold........................................................ 492,523 15,954,274 332,349 10,839,979
Reinvestment of distributions............................... 65,618 2,207,382 208,632 6,067,022
Redeemed.................................................... (106,576) (3,491,591) (45,049) (1,470,098)
----------- ------------- ----------- -------------
Net increase - Class D...................................... 451,565 14,670,065 495,932 15,436,903
----------- ------------- ----------- -------------
Net increase in Fund........................................ 9,527,160 $ 312,207,439 26,064,123 $ 769,509,113
=========== ============= =========== =============
</TABLE>
- ---------------------
+ On July 28, 1997 1,183,904 shares representing $37,731,024 were transferred
to Class D.
* For Class A, C and D shares, for the period July 28, 1997 (issue date)
through December 31, 1997.
16
<PAGE> 17
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR ENDED DECEMBER 31,
MONTHS ENDED ----------------------------------------------------
JUNE 30, 1998++ 1997*++ 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..................... $29.51 $27.01 $27.16 $21.21 $23.10 $20.93
------ ------ ------ ------ ------ ------
Net investment income (loss)............................. (0.04) (0.10) (0.08) 0.01 -- (0.09)
Net realized and unrealized gain (loss).................. 5.87 8.34 2.86 8.87 (1.57) 3.94
------ ------ ------ ------ ------ ------
Total from investment operations......................... 5.83 8.24 2.78 8.88 (1.57) 3.85
------ ------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income................................... -- -- (0.01) -- -- (0.01)
Net realized gain....................................... (1.20) (5.74) (2.92) (2.93) (0.32) (1.67)
------ ------ ------ ------ ------ ------
Total dividends and distributions........................ (1.20) (5.74) (2.93) (2.93) (0.32) (1.68)
------ ------ ------ ------ ------ ------
Net asset value, end of period........................... $34.14 $29.51 $27.01 $27.16 $21.21 $23.10
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN+................................. 19.86 %(1) 31.55 % 10.53 % 42.20% (6.75)% 18.70 %
RATIOS TO AVERAGE NET ASSETS:
Expenses................................................. 1.37 %(2) 1.46 % 1.53 % 1.61% 1.71 % 1.61 %
Net investment income (loss)............................. (0.23)%(2) (0.34)% (0.33)% 0.06% 0.01 % (0.59)%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions................... $4,979 $4,078 $3,099 $2,389 $1,490 $1,218
Portfolio turnover rate.................................. 125 %(1) 275 % 279 % 256% 295 % 276 %
</TABLE>
- ---------------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date, other than shares which were purchased
prior to April 30, 1984 (and with respect to such shares, certain shares
acquired through reinvestment of dividends and capital gains distributions
(collectively the "Old Shares")), have been designated Class B shares. The
Old Shares have been designated Class D shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE> 18
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JULY 28, 1997*
MONTHS ENDED THROUGH
JUNE 30, 1998++ DECEMBER 31, 1997++
- ---------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................ $29.59 $31.87
------ ------
Net investment income....................................... 0.05 0.05
Net realized and unrealized gain............................ 5.89 2.32
------ ------
Total from investment operations............................ 5.94 2.37
------ ------
Less distributions from net realized gain................... (1.20) (4.65)
------ ------
Net asset value, end of period.............................. $34.33 $29.59
====== ======
TOTAL INVESTMENT RETURN+.................................... 20.17%(1) 7.70%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 0.85%(2) 0.92%(2)
Net investment income....................................... 0.32%(2) 0.38%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $51,571 $15,844
Portfolio turnover rate..................................... 125%(1) 275%
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................ $29.49 $31.87
------ ------
Net investment loss......................................... (0.07) (0.05)
Net realized and unrealized gain............................ 5.85 2.32
------ ------
Total from investment operations............................ 5.78 2.27
------ ------
Less distributions from net realized gain................... (1.20) (4.65)
------ ------
Net asset value, end of period.............................. $34.07 $29.49
====== ======
TOTAL INVESTMENT RETURN+.................................... 19.70 %(1) 7.39 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.61 %(2) 1.66 %(2)
Net investment loss......................................... (0.44)%(2) (0.36)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $29,060 $12,204
Portfolio turnover rate..................................... 125 %(1) 275 %
</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
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE> 19
MORGAN STANLEY DEAN WITTER AMERICAN VALUE FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JULY 28, 1997*
MONTHS ENDED THROUGH
JUNE 30, 1998++ DECEMBER 31, 1997++
- ---------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................ $29.63 $31.87
------ ------
Net investment income....................................... 0.11 0.07
Net realized and unrealized gain............................ 5.87 2.34
------ ------
Total from investment operations............................ 5.98 2.41
------ ------
Less distributions from net realized gain................... (1.20) (4.65)
------ ------
Net asset value, end of period.............................. $34.41 $29.63
====== ======
TOTAL INVESTMENT RETURN+.................................... 20.28%(1) 7.83%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 0.61%(2) 0.64%(2)
Net investment income....................................... 0.55%(2) 0.50%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $73,351 $49,772
Portfolio turnover rate..................................... 125%(1) 275%
</TABLE>
- ---------------------
* The date shares were first issued. Shareholders who held shares of the Fund
prior to July 28, 1997 (the date the Fund converted to a multiple class
share structure) should refer to the Financial Highlights of Class B to
obtain the historical per share data and ratio information of their shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE> 20
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn MORGAN STANLEY
John R. Haire DEAN WITTER
Wayne E. Hedien AMERICAN
Dr. Manuel H. Johnson VALUE FUND
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Anita H. Kolleeny
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Morgan Stanley Dean Witter Trust FSB [PHOTO]
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.
SEMIANNUAL REPORT JUNE 30, 1998
