<PAGE> 1
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST Two World Trade Center
LETTER TO THE SHAREHOLDERS March 31, 2000 New York, New York 10048
DEAR SHAREHOLDER:
During the six-month period ended March 31, 2000, investors witnessed
unprecedented appreciation in the technology-laden Nasdaq, while stocks of more
traditional companies suffered from slowing growth rates and capital outflows
before surging upward toward the end of the period. Correctly assuming that the
Y2K computer bug would cause little disruption, investors bid up technology
stocks in anticipation of strong corporate spending and consumer demand in 2000.
Access to inexpensive capital through private and public equity as well as the
convertible market enabled high-growth companies to fund their business plans
with little impact from rising interest rates. Buoyed by heavy new issuance and
strong performance from technology and telecommunications stocks, convertibles
outperformed the broader equity markets during the period.
PERFORMANCE
For the six-month period ended March 31, 2000, Morgan Stanley Dean Witter
Convertible Securities Trust's Class B shares posted a total return of 34.54
percent compared to 19.18 percent for the Goldman Sachs Convertible 100 Index*.
For the same period, the Fund's Class A, C and D shares returned 35.15 percent,
34.55 percent and 35.27 percent, respectively. The performance of the Fund's
four share classes varies because of differing expenses. The total return
figures given assume the reinvestment of all distributions but do not reflect
the deduction of any applicable sales charges.
The Fund's core positions in the Internet infrastructure, semiconductor and
telecommunications sectors all contributed positively to its outperformance
during the period. Participation in the primary market also benefited the Fund,
because convertible financing catalyzed the stocks of many entrants new to the
convertible universe. Investments in
---------------------
*The Goldman Sachs Convertible 100 Index tracks the performance of 100 equally
weighted convertible issues with market capitalizations of at least $100
million. The Index does not include any expenses, fees or charges. The Index is
unmanaged and should not be considered an investment.
<PAGE> 2
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
LETTER TO THE SHAREHOLDERS March 31, 2000, continued
biotechnology also proved highly profitable for the Fund because of excitement
surrounding the sequencing of the human genome, though in recent weeks these
stocks have given back much of their gains.
PORTFOLIO STRATEGY
The Fund uses a growth-oriented, bottom-up approach to evaluate companies and
determine their investment merits, seeking to identify companies and sectors
with strong underlying fundamentals and solid long-term growth potential. Over
the course of the past year we have increased the Fund's exposure to the
technology and telecommunications sectors to better reflect the composition of
the convertible universe, maintaining overweighted or underweighted positions
based on the outlook we held for various industries. The addition of
high-quality large-cap issues has also improved the Fund's credit profile while
offering substantial equity participation. As of March 31, 2000, the Fund had
exposure to 47 different industries and maintained a weighting of approximately
25 percent in equities.
In attempting to control volatility, the Fund generally concentrates on issues
with shorter maturities while diversifying its assets across a wide range of
industries. The Fund also searches for convertible securities with good
risk/reward characteristics. These traits include relatively high yield, to
support the convertible if the underlying stock declines, and reasonable
conversion premiums to ensure participation in any appreciation of the
underlying stock.
LOOKING AHEAD
Despite the significant gains made by convertibles during the period, we believe
the market remains highly attractive from a risk/reward perspective. It is our
expectation that convertibles can perform well over the long run, offering
potentially competitive returns in modestly increasing, stable or declining
equity markets, though they may tend to lag equities during very strong periods.
We appreciate your ongoing support of Morgan Stanley Dean Witter Convertible
Securities Trust and look forward to continuing to serve your investment needs.
<TABLE>
<S> <C>
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO /s/ MITCHELL M. MERIN
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
</TABLE>
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
FUND PERFORMANCE March 31, 2000
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A*
----------------------------------------------
<S> <C> <C>
PERIOD ENDED 3/31/00
-------------------------
Since Inception (7/28/97) 14.62(1) 12.33(2)
1 Year 41.76(1) 34.32(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS B**
----------------------------------------------
<S> <C> <C>
PERIOD ENDED 3/31/00
-------------------------
1 Year 40.59(1) 35.59(2)
5 Year 16.22(1) 15.99(2)
10 Year 11.77(1) 11.77(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C+
----------------------------------------------
<S> <C> <C>
PERIOD ENDED 3/31/00
-------------------------
Since Inception (7/28/97) 13.73(1) 13.73(2)
1 Year 40.81(1) 39.81(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS D++
----------------------------------------------
<S> <C> <C>
PERIOD ENDED 3/31/00
-------------------------
Since Inception (7/28/97) 14.82(1)
1 Year 41.99(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE.
WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
---------------------
<TABLE>
<S> <C>
(1) Figure shown assumes reinvestment of all distributions and
does not reflect the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and
the deduction of the maximum applicable sales charge. See
the Fund's current prospectus for complete details on fees
and sales charges.
* The maximum front-end sales charge for Class A is 5.25%.
** The maximum contingent deferred sales charge (CDSC) for
Class B is 5.0%. The CDSC declines to 0% after six years.
+ The maximum CDSC for Class C shares is 1% for shares
redeemed within one year of purchase.
++ Class D shares have no sales charge.
</TABLE>
3
<PAGE> 4
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 2000 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CONVERTIBLE BONDS (66.4%)
Advertising (1.1%)
$ 2,000 Getty Images Inc. - 144A**........... 5.00 % 03/15/07 $ 1,601,380
2,000 Young & Rubicam Inc. - 144A**........ 3.00 01/15/05 1,834,500
------------
3,435,880
------------
Aerospace (0.9%)
4,000 Spacehab, Inc. - 144A**.............. 8.00 10/15/07 2,880,000
------------
Assisted Living Services (0.2%)
1,340 Emeritus Corp. - 144A**.............. 6.25 01/01/06 631,475
------------
Auto Parts: O.E.M. (0.9%)
3,600 MascoTech, Inc. ..................... 4.50 12/15/03 2,682,000
------------
Biotechnology (3.9%)
2,000 Affymetrix, Inc. - 144A**............ 4.75 02/15/07 1,391,940
1,750 Alkermes, Inc. - 144A**.............. 3.75 02/15/07 1,448,405
4,000 Centocor, Inc. ...................... 4.75 02/15/05 4,414,040
1,750 Cor Therapeutics, Inc. - 144A**...... 5.00 03/01/07 1,926,453
1,500 CV Therapeutics, Inc. - 144A**....... 4.75 03/07/07 1,335,555
1,000 Human Genome Sciences,
Inc. - 144A**....................... 3.75 03/15/07 602,440
1,000 Imclone Systems Inc. - 144A**........ 5.50 03/01/05 867,720
------------
11,986,553
------------
Broadcasting (2.6%)
3,000 Clear Channel Communications,
Inc. ............................... 1.50 12/01/02 2,814,630
2,500 Scandinavian Broadcasting System SA
(Luxembourg)........................ 7.00 12/01/04 5,362,650
------------
8,177,280
------------
Cable Television (2.4%)
2,400 EchoStar Communications
Corp. - 144A**...................... 4.875 01/01/07 4,429,200
2,000 Liberty Media Group - 144A**......... 4.00 11/15/29 3,141,180
------------
7,570,380
------------
Catalog/Specialty Distribution (0.2%)
500 Amazon.com, Inc. .................... 4.75 02/01/09 495,755
------------
Cellular Telephone (1.3%)
500 Nextel Communications, Inc. ......... 4.75 07/01/07 1,609,355
2,000 Nextel Communications,
Inc. - 144A**....................... 5.25 01/15/10 2,380,260
------------
3,989,615
------------
Clothing/Shoe/Accessory Stores (0.8%)
2,800 Genesco Inc. ........................ 5.50 04/15/05 2,372,132
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Computer Communications (1.1%)
$ 2,000 Juniper Networks, Inc. .............. 4.75 % 03/15/07 $ 2,007,680
1,500 Redback Networks, Inc. - 144A**...... 5.00 04/01/07 1,449,375
------------
3,457,055
------------
Computer Software (3.3%)
8,000 Network Associates, Inc. ............ 0.00 02/13/18 3,178,480
2,000 Rational Software Corp. - 144A**..... 5.00 02/01/07 2,459,980
1,000 Siebel Systems Inc. - 144A**......... 5.50 09/15/06 2,641,220
500 Veritas Software Corp. .............. 1.856 08/13/06 1,834,610
------------
10,114,290
------------
Contract Drilling (1.1%)
9,000 Pride International, Inc. ........... 0.00 04/24/18 3,483,810
------------
Diversified Commercial Services
(0.8%)
2,750 Metamor Worldwide, Inc. ............. 2.94 08/15/04 2,369,318
------------
Diversified Electronic Products
(1.1%)
3,000 SCI Systems, Inc. ................... 3.00 03/15/07 3,466,260
------------
E.D.P. Peripherals (1.2%)
2,500 EMC Corp. ........................... 6.00 05/15/04 3,743,750
------------
E.D.P. Services (0.7%)
1,750 BEA Systems, Inc. - 144A**........... 4.00 12/15/06 2,151,958
------------
Electrical Products (1.0%)
750 Oak Industries, Inc. ................ 4.875 03/01/08 3,124,028
------------
Electronic Components (1.5%)
2,000 Burr-Brown Corp. - 144A**............ 4.25 02/15/07 2,213,680
1,500 Sanmina Corp. ....................... 4.25 05/01/04 2,394,120
------------
4,607,800
------------
Electronic Data Processing (0.4%)
1,500 Hewlett-Packard Co. ................. 0.00 10/14/17 1,142,265
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Electronic Production Equipment
(4.8%)
$ 2,000 Advanced Energy Industries, Inc. .... 5.25 % 11/15/06 $ 2,415,000
2,500 Amkor Technology, Inc. - 144A**...... 5.00 03/15/07 2,763,550
1,500 ASM Lithography Holding N.V.
(Netherlands) - 144A**.............. 4.25 11/30/04 1,797,240
2,500 Integrated Process Equipment
Corp. .............................. 6.25 09/15/04 2,009,425
2,000 Kulicke & Soffa Industries
Inc. - 144A**....................... 4.75 12/15/06 3,027,539
1,750 Lam Research Corp. .................. 5.00 09/01/02 2,773,383
------------
14,786,137
------------
Engineering & Construction (1.2%)
4,000 Emcor Group, Inc. ................... 5.75 04/01/05 3,678,360
------------
Financial Publishing/Services (0.6%)
2,000 Aether Systems, Inc. ................ 6.00 03/22/05 1,850,000
------------
Generic Drugs (1.0%)
2,500 Alpharma Inc. - 144A**............... 3.00 06/01/06 3,205,475
------------
Internet Services (2.8%)
3,800 America Online, Inc. ................ 0.00 12/06/19 2,063,818
2,000 Digital Island, Inc. ................ 6.00 02/15/05 1,400,300
1,250 Exodus Communications, Inc. ......... 4.75 07/15/08 2,588,325
1,000 Interliant, Inc. - 144A**............ 7.00 02/16/05 701,480
1,000 Internet Capital Group, Inc. ........ 5.50 12/21/04 896,160
1,000 MindSpring Enterprises, Inc. ........ 5.00 04/15/06 990,000
------------
8,640,083
------------
Major Pharmaceuticals (0.7%)
2,500 Roche Holdings Inc. - 144A**......... 0.00 01/19/15 2,071,625
------------
Major U.S. Telecommunications (2.8%)
2,500 Bell Atlantic Financial
Service - 144A** (exchangeable into
Cable & Wireless Communications
common stock)....................... 4.25 09/15/05 3,553,375
5,000 Bell Atlantic Financial
Service - 144A** (exchangeable into
Telecom Corporation of New Zealand
common stock)....................... 5.75 04/01/03 5,075,000
------------
8,628,375
------------
Managed Health Care (0.7%)
3,000 Wellpoint Health Networks, Inc. ..... 0.00 07/02/19 2,043,750
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Medical Specialties (1.5%)
$ 2,000 Alza Corp. .......................... 5.00 % 05/01/06 $ 2,157,720
1,000 Inhale Therapeutic Systems - 144A**.. 5.00 02/08/07 1,073,760
1,500 Invitrogen Corp. - 144A**............ 5.50 03/01/07 1,313,070
------------
4,544,550
------------
Medical/Nursing Services (0.3%)
2,000 Continucare Corp. - 144A** (a)....... 8.00 10/31/02 30,000
2,000 Greenery Rehabilitation Group,
Inc. ............................... 8.75 04/01/15 1,015,000
------------
1,045,000
------------
Metals Fabrications (0.3%)
1,000 Tower Automotive, Inc. .............. 5.00 08/01/04 852,820
------------
Oil & Gas Production (0.9%)
2,400 Kerr-McGee Corp. .................... 5.25 02/15/10 2,758,104
------------
Other Telecommunications (7.4%)
1,500 CoreComm Ltd. (Bermuda).............. 6.00 10/01/06 2,570,640
2,500 Efficient Networks, Inc. - 144A**.... 5.00 03/15/05 2,513,650
1,000 iBasis, Inc. ........................ 5.75 03/15/05 655,620
3,000 Level 3 Communications, Inc. ........ 6.00 03/15/10 3,005,160
1,750 NTL Inc. ............................ 7.00 12/15/08 4,300,888
2,500 Pinnacle Holdings, Inc. - 144A**..... 5.50 09/15/07 2,240,625
3,000 Primus Telecommunications Group,
Inc. - 144A**....................... 5.75 02/15/07 3,165,300
1,750 SA Telecommunications, Inc. - 144A**
(a)................................. 10.00 08/15/06 52,500
3,000 Telefonos de Mexico S.A. (Mexico).... 4.25 06/15/04 4,569,449
------------
23,073,832
------------
Precision Instruments (0.6%)
1,800 Thermo Optek Corp. - 144A**.......... 5.00 10/15/00 1,908,414
------------
Property - Casualty Insurers (0.4%)
500 Berkshire Hathaway, Inc. ............ 1.00 12/02/01 1,328,295
------------
Real Estate Investment Trusts (1.8%)
2,650 Center Trust Inc. (Series A)......... 7.50 01/15/01 2,438,000
4,000 Macerich Company (Eurobond).......... 7.25 12/15/02 3,320,000
------------
5,758,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Semiconductors (9.4%)
$ 2,000 Advanced Micro Devices, Inc. ........ 6.00 % 05/15/05 $ 3,254,480
2,000 Cirrus Logic, Inc. .................. 6.00 12/15/03 1,850,380
1,000 Conexant Systems, Inc. - 144A**...... 4.00 02/01/07 902,020
3,250 Cypress Semiconductor Corp. ......... 4.00 02/01/05 4,130,619
2,250 Lattice Semiconductors
Corp. - 144A**...................... 4.75 11/01/06 3,956,333
1,000 Level One Communications, Inc. ...... 4.00 09/01/04 4,264,979
750 LSI Logic Corp. ..................... 4.25 03/15/04 3,504,563
2,000 Semtech Corp. - 144A**............... 4.50 02/01/07 1,876,880
1,200 STMicroelectronics N.V.
(Netherlands)....................... 0.00 09/22/09 1,970,712
2,000 TriQuint Semiconductor,
Inc. - 144A**....................... 4.00 03/01/07 1,531,240
2,000 Vitesse Semiconductor
Corp. - 144A**...................... 4.00 03/15/05 2,075,480
------------
29,317,686
------------
Telecommunication Equipment (2.7%)
3,000 American Tower Corp. - 144A**........ 5.00 02/15/10 3,341,220
2,500 CommScope, Inc. - 144A**............. 4.00 12/15/06 2,974,750
2,500 Gilat Satellite Networks
Ltd. - 144A** (Israel).............. 4.25 03/15/05 2,077,900
------------
8,393,870
------------
TOTAL CONVERTIBLE BONDS
(Identified Cost $183,980,488)............................ 205,765,980
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
---------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS (23.5%)
Auto Parts: O.E.M. (0.0%)
120,000 BTI Capital Trust - 144A** $3.25*......................... 15,000
-----------
Biotechnology (0.7%)
63,500 Sicor Inc. - 144A** $3.75................................. 2,095,500
-----------
Cable Television (1.4%)
20,000 MediaOne Group, Inc. $3.041............................... 1,040,000
50,000 UnitedGlobalCom, Inc. (Series D) $3.50.................... 3,337,500
-----------
4,377,500
-----------
Cellular Telephone (0.8%)
13,800 Omnipoint Corp. $3.50..................................... 2,556,450
-----------
Containers/Packaging (0.4%)
25,000 Sealed Air Corp. (Series A) $2.00......................... 1,298,438
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------------------------
<C> <S> <C>
E.D.P. Services (1.4%)
72,000 Amdocs Automatic Common Exchange Securities $1.51......... $ 4,464,000
-----------
Electric Utilities (1.7%)
32,500 Alliant Energy Resources Inc. - 144A** $4.858............. 2,746,250
27,000 Reliant Energy, Inc. $1.16................................ 2,629,125
-----------
5,375,375
-----------
International Banks (0.9%)
110,000 National Australia Bank, Ltd. $1.969 (Australia)
(Units)+.................................................. 2,660,625
-----------
Internet Services (1.7%)
65,000 PSINet, Inc. (Series C) - 144A** $3.375................... 2,695,469
50,000 Verio, Inc. (Series A) - 144A** $3.375.................... 2,733,350
-----------
5,428,819
-----------
Metals Fabrications (0.3%)
25,000 Tower Automotive, Inc. $3.375............................. 881,250
-----------
Military/Gov't/Technical (1.0%)
50,000 Titan Capital Trust - 144A** $2.875....................... 3,018,750
-----------
Movies/Entertainment (0.8%)
55,000 Premier Parks Inc. $4.05.................................. 2,337,500
-----------
Newspapers (0.8%)
17,500 Tribune Co. $3.14......................................... 2,487,188
-----------
Oil & Gas Production (2.4%)
82,000 Apache Corp. $2.015....................................... 3,689,999
35,400 Kerr-McGee Corp. $1.825................................... 1,597,425
35,000 Newfield Financial Trust I $3.25.......................... 2,023,438
-----------
7,310,862
-----------
Oilfield Services/Equipment (0.5%)
35,000 EVI Inc. $2.50............................................ 1,621,725
-----------
Other Telecommunications (5.4%)
45,600 BroadWing Inc. $3.375..................................... 2,644,800
42,800 DECS Trust VI $2.465...................................... 3,517,625
127,500 Intermedia Communications, Inc. $1.75..................... 4,143,749
38,500 MGC Communications, Inc. $3.625........................... 2,367,750
44,000 WinStar Communications, Inc. (Series D) $3.50............. 4,123,680
-----------
16,797,604
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------------------------
<C> <S> <C>
Railroads (0.5%)
35,400 Union Pacific Capital Trust $3.125........................ $ 1,399,716
-----------
Tools/Hardware (1.1%)
109,000 Metromedia International Group, Inc. $3.625............... 3,488,000
-----------
Unregulated Power Generation (1.7%)
50,000 AES Trust III $3.375...................................... 3,375,000
35,000 Calpine Capital Trust II - 144A** $2.75................... 1,951,250
-----------
5,326,250
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified Cost $66,028,988)............................. 72,940,552
-----------
COMMON STOCKS AND RIGHTS (1.4%)
Computer Software (0.3%)
10,000 Microsoft Corp.*.......................................... 1,066,250
-----------
Other Consumer Services (0.3%)
80,000 Cendant Corp. (Rights)*................................... 900,000
-----------
Other Telecommunications (0.2%)
25,000 Flag Telecom Holdings Ltd. (Bermuda)*..................... 567,188
-----------
Telecommunication Equipment (0.6%)
13,158 QUALCOMM Incorporated*.................................... 1,963,008
-----------
TOTAL COMMON STOCKS AND RIGHTS
(Identified Cost $2,239,667).............................. 4,496,446
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE
--------- ------- ---------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS (5.9%)
U.S. GOVERNMENT AGENCY (b) (2.9%)
$ 9,000 Federal Home Loan Mortgage Corp.
(Amortized Cost $8,995,575)......... 5.90% 04/04/00 8,995,575
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENT (3.0%)
$ 9,175 The Bank of New York
(dated 03/31/00; proceeds
$9,176,880)(c)
(Identified Cost $9,175,335)........ 6.063 04/03/00 $ 9,175,335
------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $18,170,910)............................. 18,170,910
------------
TOTAL INVESTMENTS
(Identified Cost $270,420,053) (d)................ 97.2% 301,373,888
OTHER ASSETS IN EXCESS OF LIABILITIES............. 2.8 8,530,511
----- ------------
NET ASSETS....................................... 100.0% $309,904,399
===== ============
</TABLE>
---------------------
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
+ Consists of more than one class of securities traded together as a unit;
stocks with attached warrants.
(a) Non-income producing security; bond in default.
(b) Purchased on a discount basis. The interest rate shown has been adjusted to
reflect a money market equivalent yield.
(c) Collateralized by $6,692,682 U.S. Treasury Note 5.875% due 11/30/01 valued
at $6,756,820 and $2,579,062 U.S. Treasury Note 6.125% due 12/31/01 valued
at $2,602,030.
(d) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $54,925,780 and the
aggregate gross unrealized depreciation is $23,971,945, resulting in net
unrealized appreciation of $30,953,835.
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE> 12
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2000 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $270,420,053)............................. $301,373,888
Receivable for:
Investments sold........................................ 11,922,202
Shares of beneficial interest sold...................... 2,528,152
Interest................................................ 1,921,228
Dividends............................................... 148,475
Prepaid expenses and other assets........................... 64,434
------------
TOTAL ASSETS............................................ 317,958,379
------------
LIABILITIES:
Payable for:
Investments purchased................................... 7,360,552
Plan of distribution fee................................ 270,593
Investment management fee............................... 164,143
Shares of beneficial interest repurchased............... 141,564
Accrued expenses and other payables......................... 117,128
------------
TOTAL LIABILITIES....................................... 8,053,980
------------
NET ASSETS.............................................. $309,904,399
============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................. $316,932,677
Net unrealized appreciation................................. 30,953,835
Accumulated undistributed net investment income............. 3,100,816
Accumulated net realized loss............................... (41,082,929)
------------
NET ASSETS.............................................. $309,904,399
============
CLASS A SHARES:
Net Assets.................................................. $4,303,027
Shares Outstanding (unlimited authorized, $.01 par value)... 241,483
NET ASSET VALUE PER SHARE............................... $17.82
============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value)........ $18.81
============
CLASS B SHARES:
Net Assets.................................................. $300,209,443
Shares Outstanding (unlimited authorized, $.01 par value)... 16,852,675
NET ASSET VALUE PER SHARE............................... $17.81
============
CLASS C SHARES:
Net Assets.................................................. $4,558,782
Shares Outstanding (unlimited authorized, $.01 par value)... 256,631
NET ASSET VALUE PER SHARE............................... $17.76
============
CLASS D SHARES:
Net Assets.................................................. $833,147
Shares Outstanding (unlimited authorized, $.01 par value)... 46,778
NET ASSET VALUE PER SHARE............................... $17.81
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended March 31, 2000 (unaudited)
NET INVESTMENT INCOME:
Interest.................................................... $ 4,149,974
Dividends................................................... 2,267,896
-----------
TOTAL INCOME............................................ 6,417,870
-----------
EXPENSES
Plan of distribution fee (Class A shares)................... 2,468
Plan of distribution fee (Class B shares)................... 1,350,705
Plan of distribution fee (Class C shares)................... 17,706
Investment management fee................................... 830,433
Transfer agent fees and expenses............................ 166,890
Professional fees........................................... 43,247
Registration fees........................................... 39,754
Shareholder reports and notices............................. 34,709
Custodian fees.............................................. 10,133
Trustees' fees and expenses................................. 8,897
Other....................................................... 3,514
-----------
TOTAL EXPENSES.......................................... 2,508,456
-----------
NET INVESTMENT INCOME................................... 3,909,414
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 31,467,384
Net change in unrealized depreciation....................... 44,461,885
-----------
NET GAIN................................................ 75,929,269
-----------
NET INCREASE................................................ $79,838,683
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE YEAR
MARCH 31, ENDED
2000 SEPTEMBER 30, 1999
--------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income.............................. $ 3,909,414 $ 11,642,268
Net realized gain (loss)........................... 31,467,384 (8,530,348)
Net change in unrealized
appreciation/depreciation......................... 44,461,885 32,992,426
------------ ------------
NET INCREASE................................... 79,838,683 36,104,346
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME:
Class A shares..................................... (126,098) (66,995)
Class B shares..................................... (6,800,584) (12,469,366)
Class C shares..................................... (93,746) (147,630)
Class D shares..................................... (9,012) (64,653)
------------ ------------
TOTAL DIVIDENDS................................ (7,029,440) (12,748,644)
------------ ------------
Net increase (decrease) from transactions in shares
of beneficial interest............................ 1,573,627 (56,326,246)
------------ ------------
NET INCREASE (DECREASE)........................ 74,382,870 (32,970,544)
NET ASSETS:
Beginning of period................................ 235,521,529 268,492,073
------------ ------------
END OF PERIOD
(Including undistributed net investment income
of $3,100,816 and $6,220,842, respectively).... $309,904,399 $235,521,529
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE> 15
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 2000 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Convertible Securities Trust (the "Fund") is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
a diversified, open-end management investment company. The Fund's investment
objective is to seek a high level of total return on its assets through a
combination of current income and capital appreciation. The Fund was organized
as a Massachusetts business trust on May 21, 1985 and commenced operations on
October 31, 1985. 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 and 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); (4) certain portfolio securities may be valued by an outside
pricing service
15
<PAGE> 16
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 2000 (unaudited) continued
approved by the Trustees. The pricing service may utilize a matrix system
incorporating security quality, maturity and coupon as the evaluation model
parameters, and/or research and evaluations by its staff, including review of
broker-dealer market price quotations, if available, in determining what it
believes is the fair valuation of the portfolio securities valued by such
pricing service; and (5) short-term debt securities having a maturity date of
more than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily.
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.
16
<PAGE> 17
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 2000 (unaudited) continued
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with the Investment Manager, the
Fund pays the Investment Manager a management fee, accrued daily and payable
monthly, by applying the following annual rates to the Fund's net assets
determined as of the close of each business day: 0.60% to the portion of the
daily net assets not exceeding $750 million; 0.55% to the portion of the daily
net assets exceeding $750 million but not exceeding $1 billion; 0.50% to the
portion of daily net assets exceeding $1 billion but not exceeding $1.5 billion;
0.475% to the portion of daily net assets exceeding $1.5 billion but not
exceeding $2 billion; 0.45% to the portion of daily net assets exceeding $2
billion but not exceeding $3 billion; and 0.425% to the portion of daily net
assets exceeding $3 billion.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund 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 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 totaled
$85,109,446 at March 31, 2000.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C,
17
<PAGE> 18
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 2000 (unaudited) continued
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 March 31, 2000, the distribution fee was accrued for Class A shares
and Class C shares at the annual rate of 0.23% and 0.99%, respectively.
The Distributor has informed the Fund that for the six months ended March 31,
2000, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $121,407 and $77, respectively
and received $6,676 in front-end sales charges from sales of the Fund's Class A
shares. The respective shareholders pay such charges which are not an expense of
the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended March 31, 2000 aggregated
$232,435,311 and $236,750,586, respectively.
For the six months ended March 31, 2000, the Fund incurred brokerage commissions
of $500 with Dean Witter Reynolds Inc., an affiliate of the Investment Manager
and Distributor, for portfolio transactions executed on behalf of the Fund.
For the six months ended March 31, 2000, the Fund incurred brokerage commissions
of $1,178 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 March 31, 2000, the Fund had
transfer agent fees and expenses payable of approximately $7,000.
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 six months ended March 31, 2000
included in Trustees' fees and expenses in the Statement of Operations amounted
to $2,923. At March 31, 2000, the Fund had an accrued pension liability of
$52,827 which is included in accrued expenses in the Statement of Assets and
Liabilities.
18
<PAGE> 19
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 2000 (unaudited) continued
5. FEDERAL INCOME TAX STATUS
At September 30, 1999, the Fund had a net capital loss carryover of
approximately $65,250,000 of which $62,731,000 will be available through
September 30, 2000 and $2,519,000 will be available through September 30, 2007
to offset future capital gains to the extent provided by regulations.
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
approximately $7,244,000 during fiscal 1999. As of September 30, 1999, the Fund
had temporary book/tax differences primarily attributable to post-October
losses.
6. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
MARCH 31, 2000 SEPTEMBER 30, 1999
------------------------- -------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold........................................................ 1,818,674 $ 29,163,840 1,099,363 $ 15,391,161
Reinvestment of dividends................................... 2,318 38,537 4,081 54,460
Redeemed.................................................... (1,662,319) (26,423,761) (1,097,990) (15,399,963)
---------- ------------ ---------- ------------
Net increase - Class A...................................... 158,673 2,778,616 5,454 45,658
---------- ------------ ---------- ------------
CLASS B SHARES
Sold........................................................ 1,738,126 29,330,432 2,569,889 35,097,104
Reinvestment of dividends................................... 333,572 5,456,638 751,728 9,953,748
Redeemed.................................................... (2,273,452) (37,352,585) (7,420,340) (99,844,911)
---------- ------------ ---------- ------------
Net decrease - Class B...................................... (201,754) (2,565,515) (4,098,723) (54,794,059)
---------- ------------ ---------- ------------
CLASS C SHARES
Sold........................................................ 60,942 1,037,953 95,253 1,240,659
Reinvestment of dividends................................... 4,556 74,598 8,572 113,534
Redeemed.................................................... (20,740) (328,833) (84,273) (1,108,464)
---------- ------------ ---------- ------------
Net increase - Class C...................................... 44,758 783,718 19,552 245,729
---------- ------------ ---------- ------------
CLASS D SHARES
Sold........................................................ 606,792 9,654,856 88,216 1,145,065
Reinvestment of dividends................................... 36 592 90 1,192
Redeemed.................................................... (561,404) (9,078,640) (223,273) (2,969,831)
---------- ------------ ---------- ------------
Net increase (decrease) - Class D........................... 45,424 576,808 (134,967) (1,823,574)
---------- ------------ ---------- ------------
Net increase (decrease) in Fund............................. 47,101 $ 1,573,627 (4,208,684) $(56,326,246)
========== ============ ========== ============
</TABLE>
19
<PAGE> 20
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED ENDED THROUGH
MARCH 31, 2000 SEPTEMBER 30, 1999 SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........... $13.57 $12.45 $15.07 $14.31
------ ------ ------ ------
Income (loss) from investment operations:
Net investment income......................... 0.29 0.72 0.75 0.13
Net realized and unrealized gain (loss)....... 4.44 1.18 (2.68) 0.78
------ ------ ------ ------
Total income (loss) from investment
operations.................................... 4.73 1.90 (1.93) 0.91
------ ------ ------ ------
Less dividends from net investment income...... (0.48) (0.78) (0.69) (0.15)
------ ------ ------ ------
Net asset value, end of period................. $17.82 $13.57 $12.45 $15.07
====== ====== ====== ======
TOTAL RETURN+.................................. 35.15%(1) 15.64% (13.38)% 6.40%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses....................................... 1.05%(2)(3) 1.06%(3) 1.05 %(3) 1.15%(2)
Net investment income.......................... 3.59%(2)(3) 5.31%(3) 5.16 %(3) 5.03%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands........ $4,303 $1,124 $963 $50
Portfolio turnover rate........................ 92% 87% 95 % 182%
</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
20
<PAGE> 21
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR ENDED SEPTEMBER 30
MONTHS ENDED ----------------------------------------------------------------
MARCH 31, 2000++ 1999++ 1998++ 1997*++ 1996 1995
---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period..... $13.57 $12.45 $15.07 $12.72 $11.67 $10.75
------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income................... 0.23 0.61 0.65 0.60 0.55 0.60
Net realized and unrealized gain
(loss)................................ 4.42 1.18 (2.70) 2.31 1.12 0.82
------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations.............................. 4.65 1.79 (2.05) 2.91 1.67 1.42
------ ------ ------ ------ ------ ------
Less dividends from net investment
income.................................. (0.41) (0.67) (0.57) (0.56) (0.62) (0.50)
------ ------ ------ ------ ------ ------
Net asset value, end of period........... $17.81 $13.57 $12.45 $15.07 $12.72 $11.67
====== ====== ====== ====== ====== ======
TOTAL RETURN+............................ 34.54%(1) 14.62% (14.01)% 23.38% 14.70% 13.68%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................. 1.82%(2)(3) 1.85%(3) 1.81%(3) 1.84% 1.89% 1.96%
Net investment income.................... 2.82%(2)(3) 4.52%(3) 4.40%(3) 4.45% 4.78% 5.24%
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands............................... $300,209 $231,510 $263,443 $316,633 $234,334 $185,398
Portfolio turnover rate.................. 92% 87% 95% 182% 171% 138%
</TABLE>
---------------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class B 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.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE> 22
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED ENDED THROUGH
MARCH 31, 2000 SEPTEMBER 30, 1999 SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........... $13.54 $12.43 $15.06 $14.31
------ ------ ------ ------
Income (loss) from investment operations:
Net investment income......................... 0.23 0.63 0.64 0.12
Net realized and unrealized gain (loss)....... 4.41 1.17 (2.68) 0.77
------ ------ ------ ------
Total income (loss) from investment
operations.................................... 4.64 1.80 (2.04) 0.89
------ ------ ------ ------
Less dividends from net investment income...... (0.42) (0.69) (0.59) (0.14)
------ ------ ------ ------
Net asset value, end of period................. $17.76 $13.54 $12.43 $15.06
====== ====== ====== ======
TOTAL RETURN+.................................. 34.55%(1) 14.83% (14.07)% 6.26%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses....................................... 1.81%(2)(3) 1.73%(3) 1.81 %(3) 1.92%(2)
Net investment income.......................... 2.83%(2)(3) 4.64%(3) 4.40 %(3) 4.52%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands........ $4,559 $2,869 $2,390 $620
Portfolio turnover rate........................ 92% 87% 95 % 182%
</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
22
<PAGE> 23
MORGAN STANLEY DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED ENDED THROUGH
MARCH 31, 2000 SEPTEMBER 30, 1999 SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
-------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period....... $13.57 $12.44 $15.08 $14.31
------ ------ ------ ------
Income (loss) from investment operations:
Net investment income..................... 0.32 0.79 0.79 0.13
Net realized and unrealized gain (loss)... 4.41 1.15 (2.71) 0.80
------ ------ ------ ------
Total income (loss) from investment
operations................................ 4.73 1.94 (1.92) 0.93
------ ------ ------ ------
Less dividends from net investment
income.................................... (0.49) (0.81) (0.72) (0.16)
------ ------ ------ ------
Net asset value, end of period............. $17.81 $13.57 $12.44 $15.08
====== ====== ====== ======
TOTAL RETURN+.............................. 35.27%(1) 15.81% (13.19)% 6.42%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................... 0.82%(2)(3) 0.85%(3) 0.81 %(3) 0.89%(2)
Net investment income...................... 3.82%(2)(3) 5.52%(3) 5.40 %(3) 4.94%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.... $833 $18 $1,696 $21
Portfolio turnover rate.................... 92% 87% 95 % 182%
</TABLE>
---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE> 24
TRUSTEES
----------------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
----------------------------------
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin
President
Barry Fink
Vice President, Secretary and General Counsel
Peter M. Avelar
Vice President
Ellen Gold
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
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Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records of the
Fund without examination by the independent accountants and accordingly they
do not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of
the Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus. Read the
prospectus carefully before investing.
Morgan Stanley Dean Witter Distributors Inc., member NASD.
MORGAN STANLEY
DEAN WITTER
CONVERTIBLE
SECURITIES TRUST
[GRAPHIC]
Semiannual Report
March 31, 2000
