<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN Two World Trade Center,
Opportunities Fund New York, New York 10048
Letter to the Shareholders December 31, 1999
DEAR SHAREHOLDER:
Calendar year 1999 began much as 1998 ended, with expectations for modest,
below-trend global economic growth accompanied by a continued deceleration of
inflation. Against this backdrop, the same growth stocks that led in 1998
(financial, retail, Internet and technology) outperformed in early 1999.
By the second quarter of the year, however, the markets appeared to recognize
that the foundation for a synchronized global economic recovery was in place.
Initially this realization sparked a rotation out of the domestic growth stocks
that had led the market for the past two years to long-ignored economically
sensitive groups such as basic cyclicals, energy services and capital goods.
As the third quarter began, it became clearer to the financial markets that the
economic recovery was gaining enough traction to warrant a change in the
favorable monetary policy that had graced the capital markets since 1994. During
the summer, the Federal Reserve Board raised interest rates two times,
pressuring the equity and bond markets downward. Industry sectors that were
particularly penalized by the market correction included interest-rate-sensitive
groups, consumer issues and health care. The technology sector suffered only a
mild correction. Economically sensitive groups, which performed well during the
second quarter, declined significantly as a result of the Federal Reserve's
attempts to temper the economy's strength.
Market sentiment shifted again during the fourth quarter, as investors assumed
that the Fed would tighten rates only once more in order to achieve its aim of
slowing economic growth. Although the equity markets reacted positively to this
change in sentiment, the market's breadth remained poor, with only the
technology sector skyrocketing ahead.
PERFORMANCE
For the 12-month period ended December 31, 1999, Morgan Stanley Dean Witter
American Opportunities Fund's Class B shares produced a total
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Letter to the Shareholders December 31, 1999, continued
return of 46.12 percent, compared to 21.04 percent for the Standard & Poor's 500
Composite Stock Price Index (S&P 500). For the same period, the Fund's Class A,
C and D shares returned 46.94 percent, 45.75 percent and 47.22 percent,
respectively. (The performance of the Fund's four share classes varies because
of differing expenses. Total return figures assume the reinvestment of all
distributions and do not reflect the deduction of any applicable sales charges.)
The accompanying chart compares the performance of the Fund to that of the S&P
500 Index.
PORTFOLIO STRATEGY
Throughout the first quarter of 1999, the Fund's portfolio was positioned much
as it had been during the prior two years, with an emphasis on domestically
oriented companies that we believed would benefit from the relative strength of
the U.S. economy. Market leaders during this period included financial
companies, select steady growth technology groups and consumer cyclicals.
As mentioned, the equity market underwent a major rotation during the second
quarter leading to steady growth stocks falling out of favor. Groups such as
health care posted declines during this period, while retailers and financials
significantly underperformed the overall market. The Fund, which utilizes a
top-down sector rotation discipline to select industries expected to have the
strongest relative earnings based on our economic outlook, reoriented its
portfolio to emphasize groups with greater global exposure. Given our more
favorable outlook for worldwide growth, we overweighted the Fund in basic
cyclicals, capital goods and technology stocks and reduced our commitments to
consumer staples, financials and health care.
While breadth or group participation narrowed sharply during the second quarter
of 1999, the market posted overall positive returns for the period. However,
this was not the case in the third quarter, which ended the period down and
resulted in a further narrowing in market breadth. The market reacted negatively
to the Federal Reserve's shift toward a series of rate hikes in its attempt to
slow the rate of economic growth. Within this context, the Fund reduced its
exposure to sectors with less economic sensitivity. The proceeds were not
redeployed until the market had stabilized later in the quarter. This strategy
benefited the Fund's relative performance during this period of high market
volatility.
With investors believing that the Federal Reserve would remain on the sidelines
until after the new year, the market rebounded sharply in the fourth quarter,
but within a narrow range. Technology groups - particularly those related to the
new economy - far outperformed the broader market. One reason for this lopsided
rebound was the unusual nature of the global economic recovery, which has yet to
accelerate business for the basic cyclical and capital goods companies that have
traditionally benefited during the
2
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Letter to the Shareholders December 31, 1999, continued
early stages of a recovery. Instead, demand has focused on technology products,
particularly companies that sell goods that serve e-commerce and expanding
bandwidth needs. During the fourth quarter, the Fund's performance benefited
from its increased exposure to these companies.
LOOKING AHEAD
We believe the global economic recovery will continue into the next year.
However, the early part of 2000 could see some concerns related to excess
inventories that may have been built up for Y2K-related reasons. Continued
strength in the U.S. economy could lead the Federal Reserve to raise interest
rates further. Rising rates could pressure valuations in the first half of 2000.
By the second half of the year, interest rates should subside and economic
growth decelerate to more sustainable levels, positioning the markets for a nice
rebound.
We appreciate your ongoing support of Morgan Stanley Dean Witter American
Opportunities Fund and look forward to continuing to serve your future
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 AMERICAN OPPORTUNITIES FUND
Fund Performance December 31, 1999
GROWTH OF $10,000 CLASS B
($ in Thousands)
Date Total S&P 500
December 31, 1989 $10,000 $10,000
December 31, 1990 $9,910 $9,691
December 31, 1991 $15,485 $12,637
December 31, 1992 $16,079 $13,599
December 31, 1993 $19,087 $14,968
December 31, 1994 $17,799 $15,165
December 31, 1995 $25,310 $20,858
December 31, 1996 $27,976 $25,645
December 31, 1997 $36,801 $34,199
December 31, 1998 $48,236 $43,971
December 31, 1999 $70,482(3) $53,222
-- Fund -- S&P 500(4)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. PERFORMANCE FOR CLASS A,
CLASS C, AND CLASS D SHARES WILL VARY FROM THE PERFORMANCE OF CLASS B SHARES
SHOWN ABOVE DUE TO DIFFERENCES IN SALES CHARGES AND EXPENSES.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
CLASS B SHARES*
- ----------------------------------------------------------
PERIOD ENDED 12/31/99
- -----------------------
1 Year 46.12%(1) 41.12%(2)
5 Years 31.69%(1) 31.55%(2)
10 Years 21.56%(1) 21.56%(2)
CLASS C SHARES++
- --------------------------------------------------------------
PERIOD ENDED 12/31/99
- ---------------------
1 Year 45.75%(1) 44.75%(2)
Since Inception (7/28/97) 34.35%(1) 34.35%(2)
CLASS A SHARES+
- --------------------------------------------------------------
PERIOD ENDED 12/31/99
- ---------------------
1 Year 46.94%(1) 39.23%(2)
Since Inception (7/28/97) 35.39%(1) 32.42%(2)
CLASS D SHARES#
- --------------------------------------------------------------
PERIOD ENDED 12/31/99
- ---------------------
1 Year 47.22%(1)
Since Inception (7/28/97) 35.71%(1)
- ---------------
(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 December 31, 1999.
(4) The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based index, the
performance of which is based on the average performance of 500 widely held
common stocks. The performance of the Index does not include any expenses,
fees or charges. The Index is unmanaged and should not be considered an
investment.
* The maximum CDSC for Class B is 5.0%. The CDSC declines to 0% after six
years.
+ The maximum front-end sales charge for Class A is 5.25%.
++ The maximum CDSC for Class C shares is 1% for shares redeemed within one
year of purchase.
# Class D shares have no sales charge.
4
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Portfolio of Investments December 31, 1999
NUMBER OF
SHARES VALUE
- ----------------- ---------------
COMMON STOCKS (90.4%)
Advertising (2.5%)
300,000 DoubleClick Inc.* ..................... $ 75,918,750
705,000 Interpublic Group of
Companies, Inc. ..................... 40,669,687
1,030,000 Omnicom Group, Inc. ................... 103,000,000
2,695,500 WPP Group, PLC (United
Kingdom) ............................ 42,684,057
275,000 Young & Rubicam, Inc. ................. 19,456,250
--------------
281,728,744
--------------
Air Freight/Delivery Services (0.1%)
71,200 United Parcel Service, Inc. ........... 4,912,800
--------------
Alcoholic Beverages (1.3%)
774,200 Anheuser-Busch Companies, Inc.......... 54,871,425
30,000 Coors (Adolph) Co. (Class B) .......... 1,575,000
208,260 LVMH-Moet Hennessy Louis
Vuitton (France) .................... 93,150,379
--------------
149,596,804
--------------
Aluminum (1.8%)
1,400,000 Alcan Aluminium, Ltd. (Canada) ........ 57,662,500
1,500,000 Alcoa, Inc. ........................... 124,500,000
186,000 Reynolds Metals Co. ................... 14,252,250
--------------
196,414,750
--------------
Biotechnology (2.3%)
1,870,000 Amgen Inc.* ........................... 112,200,000
125,000 COR Therapeutics, Inc.* ............... 3,359,375
600,800 Genentech, Inc.* ...................... 80,807,600
80,000 Human Genome Sciences, Inc.* .......... 12,200,000
260,000 MedImmune, Inc.* ...................... 43,095,000
--------------
251,661,975
--------------
Broadcasting (3.4%)
1,805,000 CBS Corp.* ............................ 115,407,187
1,283,000 Clear Channel Communications,
Inc.* ............................... 114,507,750
300,000 Hispanic Broadcasting Corp.* .......... 27,600,000
1,043,375 Infinity Broadcasting Corp.
(Series A)* ......................... 37,757,133
160,000 Univision Communications, Inc.
(Class A)* .......................... 16,350,000
1,015,000 USA Networks, Inc.* ................... 56,015,312
--------------
367,637,382
--------------
Building Materials/DIY Chains (1.2%)
1,710,000 Home Depot, Inc. (The) ................ 117,241,875
389,000 Lowe's Companies, Inc. ................ 23,242,750
--------------
140,484,625
--------------
NUMBER OF
SHARES VALUE
- ----------------- ---------------
Cable Television (4.2%)
1,705,800 AT&T Corp. - Liberty Media
Group (Class A)* .................... $ 96,804,150
81,500 Canal Plus (France) ................... 11,845,055
2,752,000 Comcast Corp.
(Class A Special)* .................. 138,976,000
2,167,200 Cox Communications, Inc.
(Class A)* .......................... 111,610,800
1,165,000 EchoStar Communications Corp.
(Class A)* .......................... 113,296,250
10,400 Sogecable, S.A. (Spain)* .............. 663,184
--------------
473,195,439
--------------
Casino/Gambling (0.0%)
52,000 MGM Grand, Inc. ....................... 2,616,250
--------------
Cellular Telephone (3.8%)
50,000 Crown Castle International Corp.*...... 1,600,000
980,000 Nextel Communications, Inc.
(Class A)* .......................... 101,001,250
1,100,000 Sprint Corp. (PCS Group)* ............. 112,750,000
630,000 Vodafone AirTouch PLC (ADR)
(United Kingdom)* ................... 31,185,000
5,020,735 Vodafone AirTouch PLC (United
Kingdom) ............................ 24,860,463
935,000 Voicestream Wireless Corp.* ........... 132,653,125
315,000 Western Wireless Corp.
(Class A)* .......................... 20,986,875
--------------
425,036,713
--------------
Clothing/Shoe/Accessory Stores (0.5%)
1,134,200 Gap, Inc. (The) ....................... 52,173,200
--------------
Computer Communications (2.3%)
85,000 Brocade Communications
Systems, Inc.* ...................... 14,938,750
80,000 CacheFlow Inc.* ....................... 10,455,000
1,101,000 Cisco Systems, Inc.* .................. 117,875,812
92,910 Cobalt Networks, Inc.* ................ 9,941,370
294,440 Emulex Corp.* ......................... 33,253,317
126,600 Juniper Networks, Inc.* ............... 42,949,050
195,000 Redback Networks, Inc.* ............... 34,454,062
--------------
263,867,361
--------------
Computer Software (9.2%)
323,050 Check Point Software
Technologies Ltd. (Israel)* ......... 64,165,806
200,000 Citrix Systems, Inc.* ................. 24,587,500
200,000 E.piphany, Inc.* ...................... 44,500,000
4,300 Great Plains Software, Inc.* .......... 321,425
188,900 i2 Technologies, Inc.* ................ 36,764,662
488,500 Intuit Inc.* .......................... 29,248,937
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Portfolio of Investments December 31, 1999, continued
NUMBER OF
SHARES VALUE
- ----------------- ---------------
296,000 Legato Systems, Inc.* ................ $ 20,350,000
550,000 Macromedia, Inc.* .................... 40,218,750
140,000 Mercury Interactive Corp.* ........... 15,111,250
1,440,000 Microsoft Corp.* ..................... 168,030,000
30,000 Novell, Inc.* ........................ 1,196,250
30,700 OpenTV Corp.* ........................ 2,463,675
2,395,000 Oracle Corp.* ........................ 268,240,000
1,596,400 Parametric Technology Corp.* ......... 43,102,800
430,000 Rational Software Corp.* ............. 21,123,750
5,200 Red Hat, Inc.* ....................... 1,097,525
539,500 Sapient Corp.* ....................... 76,002,062
300,000 TSI International Software Ltd.*...... 16,950,000
1,114,715 Veritas Software Corp.* .............. 159,473,915
--------------
1,032,948,307
--------------
Construction/Agricultural
Equipment/Trucks (0.0%)
20,000 Astec Industries, Inc.* .............. 376,250
--------------
Consumer Electronics/ Appliances (1.3%)
507,500 Sony Corp. (Japan) ................... 150,432,890
--------------
Contract Drilling (1.6%)
1,695,000 ENSCO International Inc. ............. 38,773,125
459,200 Nabors Industries, Inc.* ............. 14,206,500
910,300 Noble Drilling Corp.* ................ 29,812,325
2,372,800 R&B Falcon Corp.* .................... 31,439,600
1,008,700 Rowan Companies, Inc.* ............... 21,876,181
1,238,856 Transocean Sedco Forex Inc. .......... 41,733,961
--------------
177,841,692
--------------
Discount Chains (3.8%)
1,122,000 Costco Wholesale Corp.* .............. 102,312,375
1,410,000 Dayton Hudson Corp. .................. 103,546,875
3,165,800 Wal-Mart Stores, Inc. ................ 218,835,925
--------------
424,695,175
--------------
Diversified Commercial Services (0.2%)
220,000 CheckFree Holdings Corp.* ............ 22,990,000
--------------
Diversified Electronic Products (1.3%)
120,000 Gemstar International Group Ltd.
(Virgin Islands)* .................. 8,535,000
540,000 JDS Uniphase Corp.* .................. 87,075,000
377,500 Koninklijke (Royal) Philips
Electronics NV (Netherlands) ....... 51,258,082
--------------
146,868,082
--------------
Diversified Financial Services (2.1%)
621,000 American Express Co.** ............... 103,241,250
20,000 AXA Financial, Inc. .................. 677,500
NUMBER OF
SHARES VALUE
- ----------------- ---------------
2,486,000 Citigroup Inc. ....................... $ 138,128,375
--------------
242,047,125
--------------
Drugstore Chains (0.0%)
37,500 CVS Corp. ............................ 1,497,656
100,000 Walgreen Co. ......................... 2,925,000
--------------
4,422,656
--------------
E.D.P. Peripherals (0.8%)
100,000 EMC Corp.* ........................... 10,925,000
50,000 Lexmark International Group, Inc.
(Class A)* ........................... 4,525,000
544,000 Network Appliance, Inc.* ............. 45,152,000
76,990 QLogic Corp.* ........................ 12,308,776
450,000 Seagate Technology, Inc.* ............ 20,953,125
--------------
93,863,901
--------------
E.D.P. Services (0.9%)
316,430 Amdocs Ltd.* ......................... 10,916,835
1,100,000 BEA Systems, Inc.* ................... 77,000,000
115,000 Razorfish, Inc.* ..................... 10,925,000
--------------
98,841,835
--------------
Electrical Products (0.0%)
88,000 American Power Conversion
Corp.* ............................. 2,315,500
--------------
<PAGE>
Electronic Components (0.2%)
195,000 E -Tek Dynamics, Inc.* ............... 26,178,750
18,000 Rambus Inc.* ......................... 1,212,750
--------------
27,391,500
--------------
Electronic Data Processing (1.8%)
210,000 Apple Computer, Inc.* ................ 21,577,500
2,380,000 Sun Microsystems, Inc.* .............. 184,152,500
60,000 Unisys Corp.* ........................ 1,916,250
--------------
207,646,250
--------------
Electronic Production Equipment (1.5%)
614,880 Applied Materials, Inc.* ............. 77,859,180
843,800 ASM Lithography Holding N.V.
(Netherlands)* ..................... 95,243,925
--------------
173,103,105
--------------
Fluid Controls (0.2%)
409,200 Parker-Hannifin Corp. ................ 20,997,075
--------------
Food Distributors (0.0%)
80,000 U.S. Foodservice* .................... 1,340,000
--------------
Forest Products (0.3%)
575,000 Georgia-Pacific Corp. ................ 29,181,250
--------------
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Portfolio of Investments December 31, 1999, continued
NUMBER OF
SHARES VALUE
- ----------------- ---------------
Generic Drugs (0.0%)
40,000 Alpharma Inc. (Class A) .................. $ 1,230,000
20,000 Watson Pharmaceuticals, Inc.* ............ 716,250
--------------
1,946,250
--------------
Hospital/Nursing Management (0.0%)
20,000 Res-Care, Inc.* .......................... 253,750
--------------
Insurance Brokers/Services (0.1%)
136,400 Marsh & McLennan Companies,
Inc. ................................... 13,051,775
--------------
Integrated Oil Companies (0.5%)
600,000 Exxon Mobil Corp. ........................ 48,337,500
109,890 Kerr-McGee Corp. ......................... 6,813,180
--------------
55,150,680
--------------
International Banks (0.5%)
1,839,000 Fuji Bank, Ltd. (The) (Japan) ............ 17,864,674
2,580,000 Sakura Bank, Ltd. (The) (Japan) .......... 14,941,890
1,715,000 Sumitomo Bank Ltd. (The)
(Japan) ................................ 23,471,777
--------------
56,278,341
--------------
Internet Services (10.9%)
115,000 Akamai Technologies, Inc.* ............... 37,676,875
270,000 Allaire Corp.* ........................... 39,504,375
1,280,000 America Online, Inc.* .................... 96,560,000
300,000 Ariba, Inc.* ............................. 53,100,000
111,500 Art Technology Group, Inc.* .............. 14,501,969
600,000 BroadVision, Inc.* ....................... 102,037,500
227,000 Calico Commerce, Inc.* ................... 12,002,625
240,000 Inktomi Corp.* ........................... 21,270,000
25,870 Internet Capital Group, Inc.* ............ 4,386,582
220,000 Kana Communications, Inc.* ............... 44,948,750
55,000 Liberate Technologies, Inc.* ............. 14,093,750
565,000 Lycos, Inc.* ............................. 44,952,812
400,000 Portal Software, Inc.* ................... 41,000,000
139,820 Preview Systems, Inc.* ................... 8,948,480
270,000 RealNetworks, Inc.* ...................... 32,484,375
200,000 Scient Corp.* ............................ 17,150,000
1,080,000 USWeb Corp.* ............................. 47,992,500
1,330,000 VeriSign, Inc.* .......................... 254,196,250
629,620 Vignette Corp.* .......................... 102,588,709
540,000 Yahoo! Inc.* ............................. 233,651,250
--------------
1,223,046,802
--------------
Investment Bankers/
Brokers/Services (2.4%)
1,175,000 Goldman Sachs Group,
Inc. (The) ............................. 110,670,313
1,186,840 Lehman Brothers Holdings, Inc. ........... 100,510,513
NUMBER OF
SHARES VALUE
- ----------------- ---------------
425,100 Merrill Lynch & Co., Inc. ................ $ 35,495,850
606,500 Paine Webber Group, Inc. ................. 23,539,781
--------------
270,216,457
--------------
Investment Managers (0.0%)
25,000 Amvescap PLC (United
Kingdom) ............................... 290,556
--------------
Major Banks (0.7%)
985,000 Chase Manhattan Corp. (The) .............. 76,522,188
--------------
Major Pharmaceuticals (2.1%)
1,080,000 American Home Products Corp. ............. 42,592,500
570,975 Johnson & Johnson ........................ 53,172,047
12,000 Lilly (Eli) & Co. ........................ 798,000
510,000 Merck & Co., Inc.* ....................... 34,201,875
50,000 Pharmacia & Upjohn, Inc. ................. 2,250,000
20,000 Schering-Plough Corp. .................... 843,750
1,237,200 Warner-Lambert Co. ....................... 101,373,075
--------------
235,231,247
--------------
Major U.S. Telecommunications (0.4%)
810,000 MCI WorldCom, Inc.* ...................... 42,930,000
--------------
Marine Transportation (0.1%)
228,700 Tidewater, Inc. .......................... 8,233,200
--------------
<PAGE>
Media Conglomerates (1.2%)
790,000 News Corporation Ltd. (The)
(ADR) (Australia) ...................... 30,217,500
604,000 Time Warner Inc. ......................... 43,752,250
980,000 Viacom, Inc. (Class B)* .................. 59,228,750
--------------
133,198,500
--------------
Medical Specialties (0.0%)
15,000 Biomet, Inc. ............................. 599,063
20,000 Minimed, Inc.* ........................... 1,465,000
--------------
2,064,063
--------------
Mid-Sized Banks (0.3%)
20,000 Fifth Third Bancorp ...................... 1,466,250
574,200 Northern Trust Corp. ..................... 30,647,925
--------------
32,114,175
--------------
Military/Gov't/Technical (1.0%)
45,000 General Dynamics Corp. ................... 2,373,750
1,203,600 General Motors Corp. (Class H)* .......... 115,545,600
--------------
117,919,350
--------------
Multi-Line Insurance (1.5%)
1,200,000 American International Group,
Inc. ................................... 129,750,000
300,000 AXA (France)* ............................ 41,760,816
--------------
171,510,816
--------------
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Portfolio of Investments December 31, 1999, continued
NUMBER OF
SHARES VALUE
- ----------------- ---------------
Multi-Sector Companies (1.9%)
1,360,000 General Electric Co.** ................ $ 210,460,000
--------------
Newspapers (0.6%)
420,000 New York Times Co. (The)
(Class A) ........................... 20,632,500
840,000 Tribune Co. ........................... 46,252,500
--------------
66,885,000
--------------
Oil & Gas Production (0.3%)
559,750 Devon Energy Corp. .................... 18,401,781
750,400 EOG Resources, Inc. ................... 13,178,900
--------------
31,580,681
--------------
Oil/Gas Transmission (0.3%)
851,600 Enron Corp. ........................... 37,789,750
--------------
Oilfield Services/Equipment (1.5%)
1,063,000 BJ Services Co.* ...................... 44,446,688
305,000 Cooper Cameron Corp.* ................. 14,925,938
203,300 Halliburton Co. ....................... 8,182,825
960,000 Schlumberger Ltd. ..................... 54,000,000
769,000 Smith International, Inc.* ............ 38,209,688
255,000 Weatherford International, Inc.* ...... 10,184,063
--------------
169,949,202
--------------
Other Consumer Services (0.4%)
546,000 Preview Travel, lnc.* ................. 28,460,250
555,000 Ticketmaster Online-CitySearch,
Inc. (Series B)* .................... 21,332,813
--------------
49,793,063
--------------
Other Metals/Minerals (0.0%)
1,000 BRO-X Minerals Ltd. (Canada)* ......... 484
--------------
Other Pharmaceuticals (0.0%)
60,000 Elan Corp. PLC (ADR)
(Ireland)* .......................... 1,770,000
14,000 Forest Laboratories, Inc.* ............ 860,125
30,000 Sepracor, Inc.* ....................... 2,975,625
--------------
5,605,750
--------------
Other Specialty Stores (0.1%)
320,200 Zale Corp.* ........................... 15,489,675
--------------
Other Telecommunications (3.6%)
620,000 Covad Communications Group,
Inc.* ............................... 34,487,500
3,300 DDI Corp. (Japan) ..................... 45,196,635
635 Japan Telecom Co. Ltd. (Japan) ........ 25,469,575
162,000 KDD Corp. (Japan) ..................... 22,441,010
230,000 Mannesmann AG (Germany) ............... 55,404,493
5,167 Nippon Telegraph & Telephone
Corp. (Japan) ....................... 88,458,716
NUMBER OF
SHARES VALUE
- ----------------- ---------------
350,000 NTL Inc.* ............................. $ 43,575,000
116,900 PanAmSat Corp.* ....................... 6,904,406
920,000 Sonera Oyj (Finland) .................. 62,969,115
175,500 Telefonos de Mexico S.A.
(Series L) (ADR) (Mexico) ........... 19,743,750
--------------
404,650,200
--------------
Package Goods/Cosmetics (0.6%)
1,038,600 Colgate-Palmolive Co. ................. 67,509,000
--------------
Paper (0.5%)
1,000,000 International Paper Co. ............... 56,437,500
--------------
Recreational Products/Toys (0.6%)
811,250 Electronic Arts Inc.* ................. 68,145,000
--------------
Semiconductors (1.6%)
230,000 Broadcom Corp. (Class A)* ............. 62,631,875
870,000 Conexant Systems, Inc.* ............... 57,474,375
76,000 Micron Technology, Inc.* .............. 5,909,000
160,000 SDL, Inc.* ............................ 34,880,000
154,880 STMicroelectronics NV
(Netherlands) ....................... 23,454,640
--------------
184,349,890
--------------
Telecommunications Equipment (8.1%)
10,000 Alcatel (ADR) (France) ................ 450,000
137,300 Alcatel (France) ...................... 31,485,966
50,000 AVT Corp.* ............................ 2,350,000
165,700 CIENA Corp.* .......................... 9,527,750
515,000 Comverse Technology, Inc.* ............ 74,514,063
1,090,000 Corning Inc. .......................... 140,541,875
2,091,031 Ericsson (L.M.)
Telefonaktiebolaqet (ADR)
(Sweden) ............................ 137,223,909
430,000 General Instrument Corp.* ............. 36,550,000
30,000 Gilat Satellite Networks Ltd.
(Israel)* ........................... 3,555,000
821,700 Motorola, Inc. ........................ 120,995,325
12,300 Next Level Communications, Inc......... 921,731
672,000 Nokia Corp. (ADR) (Finland) ........... 127,680,000
657,300 Nortel Networks Corp. (Canada) ........ 66,387,300
1,248,200 RF Micro Devices, Inc.* ............... 85,189,650
907,100 Scientific-Atlanta, Inc. .............. 50,457,438
70,000 Sycamore Networks, Inc.* .............. 21,253,750
--------------
909,083,757
--------------
TOTAL COMMON STOCKS
(Identified Cost $6,691,595,759)....... 10,184,315,738
--------------
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Portfolio of Investments December 31, 1999, continued
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------- ------------------
SHORT-TERM INVESTMENTS (9.4%)
U.S. GOVERNMENT AGENCIES (a) (9.4%)
$ 300,000 Federal Home Loan Banks
5.65% due 01/07/00 ................. $ 299,717,500
456,000 Federal Home Loan Mortgage
Corp. 1.50% due 01/03/00 ........... 455,962,000
300,000 Federal Home Loan Mortgage
Corp. 4.50% due 01/05/00 ........... 299,850,000
---------------
TOTAL U.S. GOVERNMENT AGENCIES
(Amortized cost $1,055,529,500)..... 1,055,529,500
---------------
REPURCHASE AGREEMENT (0.0%)
4,102 The Bank of New York 1.50%
due 01/03/00 (dated 12/31/99;
proceeds $4,102,270) (b)
(Identified Cost $4,101,758)........ 4,101,758
---------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $1,059,631,258)...... 1,059,631,258
---------------
TOTAL INVESTMENTS
(Identified Cost $7,751,227,017) (c)..... 99.8% 11,243,946,996
OTHER ASSETS IN EXCESS OF
LIABILITIES ............................. 0.2 16,954,955
----- --------------
NET ASSETS .............................. 100.0% $11,260,901,951
===== ===============
- --------------------------------
ADR American Depository Receipt.
* Non-income producing security.
** Some or all of these securities are segregated in connection with open
futures contracts.
(a) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(b) Collateralized by $2,877,085 U.S. Treasury Bond 11.25% due 02/15/15 valued
at $4,187,057.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $3,562,116,867 and the
aggregate gross unrealized depreciation is $69,396,888, resulting in net
unrealized appreciation of $3,492,719,979.
FUTURES CONTRACT OPEN AT DECEMBER 31, 1999:
DESCRIPTION UNDERLYING
NUMBER OF DELIVERY MONTH FACE AMOUNT UNREALIZED
CONTRACTS AND YEAR AT VALUE LOSS
- ----------------------------------------------------------------
S&P 500 Futures
(1,441) March/2000 $534,683,050 $(23,185,862)
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT DECEMBER 31, 1999:
CONTRACTS TO IN DELIVERY UNREALIZED
DELIVER EXCHANGE FOR DATE DEPRECIATION
- ----------------------------------------------------------------
$ 5,131 JPY 523,315 01/04/00 $(11)
EUR 6,531 $ 6,563 01/03/00 (5)
EUR 8,089 $ 8,129 01/03/00 (6)
-------
Total unrealized depreciation ........ $(22)
======
Currency Abbreviations:
- -----------------------
EUR Euro.
JPY Japanese Yen.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value
(identified cost $7,751,227,017)................................. $11,243,946,996
Receivable for :
Shares of beneficial interest sold ............................. 26,105,106
Investments sold ............................................... 12,190,039
Dividends ...................................................... 1,739,488
Foreign withholding taxes reclaimed ............................ 424,501
Prepaid expenses and other assets ................................. 198,415
---------------
TOTAL ASSETS ................................................... 11,284,604,545
---------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased ...................... 8,762,077
Plan of distribution fee ....................................... 5,665,896
Investment management fee ...................................... 3,988,712
Investments purchased .......................................... 2,938,782
Variation margin on futures contracts .......................... 1,224,850
Accrued expenses and other payables ............................... 1,122,277
---------------
TOTAL LIABILITIES .............................................. 23,702,594
---------------
NET ASSETS ..................................................... $11,260,901,951
===============
COMPOSITION OF NET ASSETS:
Paid-in-capital ................................................... $ 7,735,522,881
Net unrealized appreciation ....................................... 3,469,516,027
Accumulated net investment loss ................................... (46,524)
Accumulated undistributed net realized gain ....................... 55,909,567
---------------
NET ASSETS ..................................................... $11,260,901,951
===============
CLASS A SHARES:
Net Assets ........................................................ $306,542,241
Shares Outstanding (unlimited authorized, $.01 par value) ......... 7,071,772
NET ASSET VALUE PER SHARE ...................................... $43.35
======
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) .............. $45.75
======
CLASS B SHARES:
Net Assets ........................................................ $10,388,725,776
Shares Outstanding (unlimited authorized, $.01 par value) ......... 243,677,256
NET ASSET VALUE PER SHARE ...................................... $42.63
======
CLASS C SHARES:
Net Assets ........................................................ $245,942,431
Shares Outstanding (unlimited authorized, $.01 par value) ......... 5,806,934
NET ASSET VALUE PER SHARE ...................................... $42.35
======
CLASS D SHARES:
Net Assets ........................................................ $319,691,503
Shares Outstanding (unlimited authorized, $.01 par value) ......... 7,322,430
NET ASSET VALUE PER SHARE ...................................... $43.66
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Financial Statements, continued
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT LOSS:
INCOME
Interest ............................................................. $ 44,021,858
Dividends (net of $910,107 foreign withholding tax)................... 42,744,595
--------------
TOTAL INCOME ...................................................... 86,766,453
--------------
EXPENSES
Plan of distribution fee (Class A shares) ............................ 405,293
Plan of distribution fee (Class B shares) ............................ 55,393,868
Plan of distribution fee (Class C shares) ............................ 1,370,461
Investment management fee ............................................ 36,774,969
Transfer agent fees and expenses ..................................... 7,411,636
Registration fees .................................................... 1,080,338
Custodian fees ....................................................... 742,794
Shareholder reports and notices ...................................... 494,559
Professional fees .................................................... 99,903
Trustees' fees and expenses .......................................... 18,631
Other ................................................................ 66,054
--------------
TOTAL EXPENSES .................................................... 103,858,506
--------------
NET INVESTMENT LOSS ............................................... (17,092,053)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain/loss on:
Investments ....................................................... 1,123,629,036
Futures contracts ................................................. (81,278,967)
Foreign exchange transactions ..................................... (3,160)
--------------
NET GAIN .......................................................... 1,042,346,909
--------------
Net change in unrealized appreciation/depreciation on:
Investments ....................................................... 2,370,924,746
Futures contracts ................................................. (23,185,862)
Translation of forward foreign currency contracts, other assets and
liabilities denominated in foreign currencies ................... (41,395)
--------------
NET APPRECIATION .................................................. 2,347,697,489
--------------
NET GAIN .......................................................... 3,390,044,398
--------------
NET INCREASE ......................................................... $3,372,952,345
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Financial Statements, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss .................................. $ (17,092,053) $ (4,067,589)
Net realized gain .................................... 1,042,346,909 821,025,139
Net change in unrealized appreciation ................ 2,347,697,489 554,978,703
--------------- --------------
NET INCREASE ...................................... 3,372,952,345 1,371,936,253
--------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAIN:
Class A shares ....................................... (28,551,583) (13,723,199)
Class B shares ....................................... (1,024,566,187) (795,828,381)
Class C shares ....................................... (22,478,831) (7,103,483)
Class D shares ....................................... (28,966,000) (17,168,974)
--------------- --------------
TOTAL DISTRIBUTIONS ............................... (1,104,562,601) (833,824,037)
--------------- --------------
Net increase from transactions in shares of beneficial
interest ........................................... 2,929,254,218 1,369,254,273
--------------- --------------
NET INCREASE ...................................... 5,197,643,962 1,907,366,489
NET ASSETS:
Beginning of period .................................. 6,063,257,989 4,155,891,500
--------------- --------------
END OF PERIOD
(Including accumulated net investment losses of
$46,524 and $44,936, respectively)................. $11,260,901,951 $6,063,257,989
=============== ==============
</TABLE>
See Notes to Financial Statements
12
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Notes to Financial Statements December 31, 1999
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter American Opportunities Fund (the "Fund"), formerly
Morgan Stanley 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
converted to a multiple class share structure.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS - (1) an equity security listed or traded on the New
York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (in
cases where 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") that sale or bid prices are not reflective of a security's market
value, portfolio securities are valued at their fair value as determined in good
faith under procedures established by and under the general supervision of the
Trustees (valuation of debt securities for which market quotations are not
readily available may be based upon current market prices of securities which
are comparable in coupon, rating and maturity or an appropriate matrix utilizing
similar factors); and (4) short-term debt
13
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Notes to Financial Statements December 31, 1999, continued
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. FUTURES CONTRACTS - A futures contract is an agreement between two parties to
buy and sell financial instruments at a set price on a future date. Upon
entering into such a contract, the Fund is required to pledge to the broker
cash, U.S. Government securities or other liquid portfolio securities equal to
the minimum initial margin requirement of the applicable futures exchange.
Pursuant to the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in the value of the contract
which is known as variation margin. Such receipts or payments are recorded by
the Fund as unrealized gains or losses. Upon closing of the contract, the Fund
realized a gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
E. FOREIGN CURRENCY TRANSLATION - The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities, other assets and liabilities and forward foreign currency
contracts are translated at the exchange rates prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the
exchange rates prevailing on the respective dates of such transactions. The
resultant exchange gains and losses are included in the Statement of Operations
as realized and unrealized gain/loss on foreign exchange transactions. Pursuant
to U.S. Federal income tax regulations, certain foreign exchange gains/losses
included in realized and unrealized gain/loss are included in or are a reduction
of ordinary income for federal income tax purposes. The Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the changes in the market prices of the securities.
F. FORWARD FOREIGN CURRENCY CONTRACTS - The Fund may enter into forward foreign
currency contracts which are valued daily at the appropriate exchange rates. The
resultant unrealized exchange gains and
14
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Notes to Financial Statements December 31, 1999, continued
losses are included in the Statement of Operations as unrealized gain/loss on
foreign exchange transactions. The Fund records realized gains or losses on
delivery of the currency or at the time the forward contract is extinguished
(compensated) by entering into a closing transaction prior to delivery.
G. FEDERAL INCOME TAX STATUS - It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
H. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - The Fund records dividends and
distributions to its shareholders on the 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.
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; 0.45% to the portion of daily net assets
exceeding $3.5 billion but not exceeding $4.5 billion; and 0.425% to 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.
15
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Notes to Financial Statements December 31, 1999, continued
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 (1)
services provided and the expenses borne by it and others in the distribution of
the shares of these Classes, including the payment of commissions for sales of
these Classes and incentive compensation to, and expenses of, Morgan Stanley
Dean Witter Financial Advisors and others who engage in or support distribution
of the shares or who service shareholder accounts, including overhead and
telephone expenses; (2) printing and distribution of prospectuses and reports
used in connection with the offering of these shares to other than current
shareholders; and (3) preparation, printing and distribution of sales literature
and advertising materials. In addition, the Distributor may utilize fees paid
pursuant to the Plan, in the case of Class B shares, to compensate Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and Distributor,
and other selected broker-dealers for their opportunity costs in advancing such
amounts, which compensation would be in the form of a carrying charge on any
unreimbursed expenses.
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 $126,611,964 at December 31, 1999.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will
16
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Notes to Financial Statements December 31, 1999, continued
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 year ended December 31,
1999, the distribution fee was accrued for Class A shares and Class C shares at
the annual rate of 0.22% and 1.0%, respectively.
The Distributor has informed the Fund that for year ended December 31, 1999, it
received contingent deferred sales charges from certain redemptions of the
Fund's Class A shares, Class B shares and Class C shares of $11,280, $7,677,253
and $114,042, respectively and received $1,205,689 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 December 31, 1999, aggregated
$27,328,588,646 and $26,700,710,922, respectively. Included in the
aforementioned are purchases and sales of U.S. Government securities of
$328,798,688 and $327,377,156, respectively.
For the year ended December 31, 1999, the Fund incurred $881,953 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.
For the year ended December 31, 1999, the Fund incurred brokerage commissions of
$5,118,224 with Morgan Stanley & Co., Inc., an affiliate of the Investment
Manager and Distributor, for portfolio transactions executed on behalf of the
Fund.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At December 31, 1999, the Fund had
transfer agent fees and expenses payable of approximately $74,000.
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 year ended December 31, 1999
included in Trustees' fees and expenses in the Statement of Operations amounted
to $6,000. At December 31, 1999, the Fund had an accrued pension liability of
$46,485 which is included in accrued expenses in the Statement of Assets and
Liabilities.
17
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Notes to Financial Statements December 31, 1999, continued
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- ------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ................................................ 4,338,198 $ 158,802,903 3,040,045 $ 98,844,494
Reinvestment of distributions ....................... 717,347 27,977,919 442,608 13,534,616
Shares issued in connection with the acquisition of
Morgan Stanley Dean Witter Capital Appreciation
Fund ............................................... 21,302 761,171 - -
Redeemed ............................................ (1,529,947) (56,507,414) (493,155) (16,123,421)
---------- ---------------- --------- --------------
Net increase - Class A .............................. 3,546,900 131,034,579 2,989,498 96,255,689
---------- ---------------- --------- --------------
CLASS B SHARES
Sold ................................................ 71,285,499 2,582,385,467 41,693,951 1,350,536,686
Reinvestment of distributions ....................... 25,191,185 963,793,541 24,515,681 750,904,568
Shares issued in connection with the acquisition of
Morgan Stanley Dean Witter Capital Appreciation
Fund ............................................... 6,039,569 213,444,830 - -
Redeemed ............................................ (33,894,354) (1,228,290,302) (29,339,840) (949,807,859)
----------- ---------------- ----------- --------------
Net increase - Class B .............................. 68,621,899 2,531,333,536 36,869,792 1,151,633,395
----------- ---------------- ----------- --------------
CLASS C SHARES
Sold ................................................ 4,261,820 153,567,595 1,645,951 53,383,964
Reinvestment of distributions ....................... 568,229 21,693,093 225,932 6,841,485
Shares issued in connection with the acquisition of
Morgan Stanley Dean Witter Capital Appreciation
Fund ............................................... 35,974 1,266,865 - -
Redeemed ............................................ (918,072) (33,332,226) (426,767) (13,856,699)
----------- ---------------- ----------- --------------
Net increase - Class C .............................. 3,947,951 143,195,327 1,445,116 46,368,750
----------- ---------------- ----------- --------------
CLASS D SHARES
Sold ................................................ 4,457,365 166,990,004 1,603,145 52,338,697
Reinvestment of distributions ....................... 706,696 27,710,295 512,115 15,767,494
Shares issued in connection with the acquisition of
Morgan Stanley Dean Witter Capital Appreciation
Fund ............................................... 3,051 109,510 - -
Shares issued in connection with the acquisition of
Dean Witter Retirement Series - American Value ..... - - 1,423,395 44,485,158
Redeemed ............................................ (1,898,576) (71,119,033) (1,164,596) (37,594,910)
----------- ---------------- ----------- --------------
Net increase - Class D .............................. 3,268,536 123,690,776 2,374,059 74,996,439
----------- ---------------- ----------- --------------
Net increase in Fund ................................ 79,385,286 $ 2,929,254,218 43,678,465 $1,369,254,273
=========== ================ =========== ==============
</TABLE>
18
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Notes to Financial Statements December 31, 1999, continued
6. FEDERAL INCOME TAX STATUS
As of December 31, 1999, the Fund had temporary book/tax differences primarily
attributable to the mark-to-market of open futures contracts and capital loss
deferrals on wash sales and permanent book/tax differences primarily
attributable to a net operating loss. To reflect reclassifications arising from
the permanent differences, accumulated undistributed net realized gain was
charged $17,094,799, paid-in-capital was credited $276 and accumulated net
investment loss was credited $17,094,523. .
7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
The Fund may enter into forward foreign currency contracts ("forward contracts")
to facilitate settlement of foreign currency denominated portfolio transactions
or to manage foreign currency exposure associated with foreign currency
denominated securities.
To hedge against adverse interest rate, foreign currency and market risks, the
Fund may purchase and sell interest rate, currency and index futures ("futures
contracts").
Forward contracts and futures contracts involve elements of market risk in
excess of the amounts reflected in the Statement of Assets and Liabilities. The
Fund bears the risk of an unfavorable change in the foreign exchange rates
underlying the forward contracts. Risks may also arise upon entering into these
contracts from the potential inability of the counterparties to meet the terms
of their contracts.
At December 31, 1999, the Fund had outstanding futures contracts and forward
contracts.
8. ACQUISITION OF DEAN WITTER RETIREMENT SERIES - AMERICAN VALUE SERIES
On September 11, 1998, the Fund acquired all the net assets of Dean Witter
Retirement Series - American Value Series ("Retirement American") pursuant to a
plan of reorganization approved by the shareholders of Retirement American on
August 19, 1998. The acquisition was accomplished by a tax-free exchange of
1,423,395 Class D shares of the Fund at a net asset value of $31.24 per share
for 3,765,186 shares of Retirement American. The net assets of the Fund and
Retirement American immediately before the acquisition were $4,748,265,432, and
$44,485,158, respectively, including unrealized appreciation of $3,189,940 for
Retirement American. Immediately after the acquisition, the combined assets of
the Fund amounted to $4,792,750,590.
9. ACQUISITION OF MORGAN STANLEY DEAN WITTER CAPITAL APPRECIATION FUND
On March 12, 1999, the Fund acquired all the net assets of Morgan Stanley Dean
Witter Capital Appreciation ("Capital Appreciation") pursuant to a plan of
reorganization approved by the shareholders
19
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Notes to Financial Statements December 31, 1999, continued
of Capital Appreciation on October 29, 1998. The acquisition was accomplished by
a tax-free exchange of 21,302 Class A shares of the Fund at a net asset value of
$35.74 per share for 60,567 Class A shares of Capital Appreciation; 6,039,569
Class B shares of the Fund at a net asset value of $35.35 per share for
17,217,642 Class B shares of Capital Appreciation; 35,974 Class C shares of the
Fund at a net asset value of $35.22 per share for 102,177 Class C shares of
Capital Appreciation; and 3,051 Class D shares of the Fund at a net asset value
of $35.90 per share for 8,685 Class D shares of Capital Appreciation. The net
assets of the Fund and Capital Appreciation immediately before the acquisition
were $7,027,067,112 and $215,582,364, respectively, including unrealized
appreciation of $42,624,304 for Capital Appreciation. Immediately after the
acquisition, the combined assets of the Fund amounted to $7,242,649,476.
20
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Financial Highlights
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
------------------- ------------------- ------------------
<S> <C> <C> <C>
CLASS A SHARES #
SELECTED PER SHARE DATA:
Net asset value, beginning of period .............. $33.16 $29.59 $31.87
------ ------ ------
Income from investment operations:
Net investment income ............................ 0.10 0.15 0.05
Net realized and unrealized gain ................. 14.80 8.71 2.32
------ ------ ------
Total income from investment operations ........... 14.90 8.86 2.37
------ ------ ------
Less distributions from net realized gain ......... (4.71) (5.29) (4.65)
------ ------ ------
Net asset value, end of period .................... $43.35 $33.16 $29.59
====== ====== ======
TOTAL RETURN+ ..................................... 46.94% 31.78% 7.70%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .......................................... 0.81%(3) 0.86%(3) 0.92%(2)
Net investment income ............................. 0.28%(3) 0.43%(3) 0.38%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ........... $306,542 $116,894 $ 15,844
Portfolio turnover rate ........................... 378% 321% 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.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Financial Highlights, continued
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
1999# 1998# 1997*# 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............ $32.85 $29.51 $27.01 $27.16 $21.21
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income (loss) ................... (0.09) (0.03) (0.10) (0.08) 0.01
Net realized and unrealized gain ............... 14.58 8.66 8.34 2.86 8.87
------ ------ ------ ------ ------
Total income from investment operations ......... 14.49 8.63 8.24 2.78 8.88
------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income .......................... - - - (0.01) -
Net realized gain .............................. (4.71) (5.29) (5.74) (2.92) (2.93)
------ ------ ------ ------ ------
Total dividends and distributions ............... (4.71) (5.29) (5.74) (2.93) (2.93)
------ ------ ------ ------ ------
Net asset value, end of period .................. $42.63 $32.85 $29.51 $27.01 $27.16
====== ====== ====== ====== ======
TOTAL RETURN+ ................................... 46.12 % 31.07 % 31.55 % 10.53 % 42.20%
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 1.33 %(1) 1.39 %(1) 1.46 % 1.53 % 1.61%
Net investment income (loss) .................... (0.24)%(1) (0.10)%(1) (0.34)% (0.33)% 0.06%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions .......... $10,389 $5,750 $4,078 $3,099 $2,389
Portfolio turnover rate ......................... 378 % 321 % 275 % 279 % 256%
</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 amount 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) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Financial Highlights, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
------------------- ------------------- ------------------
<S> <C> <C> <C>
CLASS C SHARES#
SELECTED PER SHARE DATA:
Net asset value, beginning of period .............. $32.74 $29.49 $31.87
------ ------ ------
Income (loss) from investment operations:
Net investment loss .............................. (0.18) (0.10) (0.05)
Net realized and unrealized gain ................. 14.50 8.64 2.32
------ ------ ------
Total income from investment operations ........... 14.32 8.54 2.27
------ ------ ------
Less distributions from net realized gain ......... (4.71) (5.29) (4.65)
------ ------ ------
Net asset value, end of period .................... $42.35 $32.74 $29.49
====== ====== ======
TOTAL RETURN+ ..................................... 45.75 % 30.78 % 7.39 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .......................................... 1.59 %(3) 1.61 %(3) 1.66 %(2)
Net investment loss ............................... (0.50)%(3) (0.32)%(3) (0.36)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ........... $245,942 $60,861 $12,204
Portfolio turnover rate ........................... 378 % 321 % 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.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Financial Highlights, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
------------------- ------------------- ------------------
<S> <C> <C> <C>
CLASS D SHARES#
SELECTED PER SHARE DATA:
Net asset value, beginning of period .............. $33.31 $29.63 $31.87
------ ------ ------
Income from investment operations:
Net investment income ............................ 0.18 0.24 0.07
Net realized and unrealized gain ................. 14.88 8.73 2.34
------ ------ ------
Total income from investment operations ........... 15.06 8.97 2.41
------ ------ ------
Less distributions from net realized gain ......... (4.71) (5.29) (4.65)
------ ------ ------
Net asset value, end of period .................... $43.66 $33.31 $29.63
====== ====== ======
TOTAL RETURN+ ..................................... 47.22% 32.12% 7.83%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .......................................... 0.59%(3) 0.61%(3) 0.64%(2)
Net investment income ............................. 0.50%(3) 0.68%(3) 0.50%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ........... $319,692 $135,022 $49,772
Portfolio turnover rate ........................... 378% 321% 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.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
24
<PAGE>
MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
Report of Independent Accountants
TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Morgan Stanley Dean Witter American
Opportunities Fund (the "Fund"), formerly Morgan Stanley Dean Witter American
Value Fund, at December 31, 1999, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
indicated, in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
February 8, 2000
1999 FEDERAL TAX NOTICE (unaudited)
During the year ended December 31, 1999, the Fund paid to its shareholders
$0.81 per share from long-term capital gains. For such period, 3.74% of
the ordinary dividends paid qualified for the dividends received deduction
available to corporations.
25
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin
President
Barry Fink
Vice President, Secretary and General Counsel
Anita H. Kolleeny
Vice President
Michelle Kaufman
Assistant Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
This report is submitted for the general information of shareholders
of the Fund. For more detailed information about the Fund, its officers
and trustees, fees, expenses and other pertinent information, please see
the prospectus of the Fund.
This report is not authorized for distribution to prospective investors
in the Fund unless preceded or accompanied by an effective prospectus.
Read the prospectus carefully before investing.
MORGAN STANLEY
DEAN WITTER
AMERICAN
OPPORTUNITIES
FUND
[GRAPHIC OMITTED]
ANNUAL REPORT
DECEMBER 31, 1999
