MORGAN STANLEY DEAN WITTER STRATEGIST FUND, N-30D, 2000-10-02

MORGAN STANLEY DEAN WITTER STRATEGIST FUND
N-30D, 2000-10-02

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<PAGE>

MORGAN STANLEY DEAN WITTER STRATEGIST TWO WORLD TRADE CENTER
FUND NEW YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS JULY 31, 2000

DEAR SHAREHOLDER:

During the twelve-month period ended July 31, 2000, equity and fixed-income
assets traded in uneven and often unexpected patterns. Average returns for both
equities, as measured by the Standard & Poor's 500 Index (S&P 500), and bonds,
as measured by the 10-year U.S. government note, provided similar performance
results during this period. Stocks, however, performed best during the first
half of the period, while bonds rallied in the second half.

As the new calendar year began, fears surrounding the millennium bug faded and
investors turned to more mundane macroeconomic concerns related to interest
rates, inflation and earnings growth. Aggressive interest-rate increases by the
Federal Reserve Board surprised most investors; however, powerful earnings
growth and positive news on the inflation front offset the near-term threat that
the central bank had moved too quickly to slow economic growth. As attention
turns to the general elections in November and the year 2000 comes to a close,
investors will focus once again on the Federal Reserve's intentions and weigh
whether interest rate hikes will likely resume.

PERFORMANCE

Against this backdrop, Morgan Stanley Dean Witter Strategist Fund's Class B
shares produced a total return of 12.79 percent for the 12-month period ended
July 31, 2000. During the same period, the S&P 500 returned 8.97 percent, while
the Lehman Brothers Government/ Credit Index returned 5.72 percent. The Fund's
Class A, C and D shares returned 13.48 percent, 12.62 percent and 13.79 percent,
respectively, for the fiscal year. The performance of the Fund's four share
classes varies because of differing expenses. Total return figures assume the
reinvestment of all distributions but do not reflect the deduction of any
applicable sales charges.

<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
LETTER TO THE SHAREHOLDERS JULY 31, 2000, CONTINUED

PORTFOLIO STRATEGY

The Fund's mandate, as a fully flexible asset allocation portfolio, is to seek
the optimal mix of stocks, bonds and cash needed to achieve competitive total
returns with less overall volatility than any single asset class. In 1999,
during a rare period of low inflation, above-trendline earnings growth and
relatively easy credit, the Fund maintained an aggressive allocation toward
stocks while holding only incremental positions in bonds and cash.

This strategy shifted in November as the Fund's allocation target prompted a
more conservative blend of assets. Our equity exposure was reduced from an
above-average weighting of 70 percent of assets to an average exposure of 55
percent of assets, while the Fund's cash reserve was increased to an
above-average 25 percent weighting (10 percent is considered neutral). The bond
portfolio remained unchanged at 20 percent of assets.

This decision was not prompted by a specific deterioration in the macroeconomic
fundamentals, nor was it a direct reaction to any single event. Rather it was
made as a result of the extreme valuations that many of the market's leaders had
achieved in the winter of 1999. We decided to take some profits and reduce the
Fund's equity exposure in light of this performance. While this move may have
been a bit premature, the Fund was ultimately rewarded in that the period from
last December to this July proved quite volatile, with mixed results from a
number of equity sectors.

The Fund's equity portfolio, while it remains a smaller part of the total Fund,
still held a well-diversified collection of companies. At period-end, our focus
industries included technology (e.g., software, hardware and
telecommunications), financial services (e.g., insurance and banking), energy
(e.g., oil services and diversified refiners) and health care, with a specific
emphasis on biotechnology. Sprint Corporation (long distance), Intel Corporation
(semiconductors), EMC Corporation (data storage), PE Corporation: Celera
Genomics (gene mapping) and Johnson & Johnson (health care) are among the Fund's
largest equity positions.

The fixed-income portfolio consisted of 91 issues at the end of July. U.S.
government-issued and government agency bonds represented 56 percent of the
total fixed-income portfolio, while corporate-issued paper represented 41
percent. The portfolio's average maturity was 9.7 years and its average
duration, a measurement of bond price volatility relative to interest rate
movements, was 5.3 years.

LOOKING AHEAD

After a multi-year period of strong performance for equity markets as a whole,
as well as a genuine lack of investor interest in bonds during this same period,
we anticipate a more volatile and

2
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
LETTER TO THE SHAREHOLDERS JULY 31, 2000, CONTINUED

challenging environment ahead. As investors seek to lessen their portfolios'
volatility, they may choose to rotate into less volatile asset classes. As
valuation levels have climbed -- especially for growth stocks -- so have
expectations that the companies that represent these sectors can continue to
perform at high levels of profitability. With many sectors and asset classes
represented, a diversified portfolio of stocks, bonds and cash can help protect
the investor against any single asset class's volatility, while still providing
competitive total returns.

We appreciate your ongoing support of Morgan Stanley Dean Witter Strategist Fund
and look forward to continuing to serve your investment needs.

Very truly yours,

<TABLE>
<S> <C>
/s/ CHARLES A. FIUMEFREDDO /s/ MITCHELL M. MERIN
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
CHAIRMAN OF THE BOARD PRESIDENT
</TABLE>

3
<PAGE>

MORGAN STANLEY DEAN WITTER STRATEGIST FUND
FUND PERFORMANCE JULY 31, 2000

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

GROWTH OF $10,000 CLASS B
($ in Thousands)

<TABLE>
<CAPTION>
FUND S&P 500(4) LEHMAN(5)
JULY-1990 $10,000 $10,000 $10,000
JULY-1991 $11,567 $11,278 $11,023
<S> <C> <C> <C> <C>
July-1992 $12,941 $12,718 $12,747
July-1993 $13,923 $13,826 $14,153
July-1994 $14,415 $14,539 $14,135
July-1995 $16,729 $18,324 $15,566
July-1996 $18,648 $21,350 $16,392
July-1997 $24,193 $32,465 $18,161
July-1998 $27,282 $38,724 $19,626
July-1999 $29,799 $46,550 $20,083
July-2000 $33,610 (3) $50,725 $21,231
</TABLE>

PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH
LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS A, CLASS C, AND
CLASS D SHARES WILL VARY FROM THE PERFORMANCE OF CLASS B SHARES SHOWN ABOVE
DUE TO DIFFERENCES IN SALES CHARGES AND EXPENSES.

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------------------------------------------------------------
CLASS A SHARES* CLASS B SHARES**
------------------------------------------- ---------------------------------------------
PERIOD ENDED 7/31/00 PERIOD ENDED 7/31/00
-------------------- --------------------
<S> <C> <C> <C> <C> <C>
1 Year 13.48%(1) 7.53%(2) 1 Year 12.79%(1) 7.79%(2)
Since Inception (7/28/97) 12.98%(1) 10.97%(2) 5 Year 14.97%(1) 14.74%(2)
10 Year 12.89%(1) 12.89%(2)
</TABLE>

<TABLE>
<CAPTION>
CLASS C SHARES+ CLASS D SHARES#
------------------------------------------- ---------------------------------------------
PERIOD ENDED 7/31/00 PERIOD ENDED 7/31/00
-------------------- --------------------
<S> <C> <C> <C> <C> <C>
1 Year 12.62%(1) 11.62%(2) 1 Year 13.79%(1)
Since Inception (7/28/97) 12.13%(1) 12.13%(2) Since Inception (7/28/97) 13.26%(1)
</TABLE>

------------------------

(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 July 31, 2000.
(4) The Standard and Poor's 500 Index (S & P 500) is a broad-based index, the
performance of which is based on the performance of 500 widely held common
stocks chosen for market size, liquidity and industry group representation.
The Index does not include any expenses, fees or charges. The Index is
unmanaged and should not be considered an investment.
(5) The Lehman Brothers U.S. Government/Credit Index (formerly Lehman Brothers
Government/Corporate Index) tracks the performance of government and
corporate obligations, including U.S. government agency and Treasury
securities and corporate and Yankee bonds. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
* The maximum front-end sales charge for Class A is 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 contingent deferred sales charge for Class C shares is 1% for
shares redeemed within one year of purchase.
# Class D shares have no sales charge.

4
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 2000

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (54.2%)
AEROSPACE (0.6%)
501,200 Lockheed Martin Corp................................................................ $ 14,096,250
--------------
AIRLINES (0.3%)
200,000 AMR Corp.*.......................................................................... 6,612,500
--------------
AUTO PARTS: O.E.M. (0.7%)
1,100,000 Delphi Automotive Systems Corp...................................................... 16,293,750
--------------
BEVERAGES - NON-ALCOHOLIC (1.0%)
513,000 PepsiCo, Inc........................................................................ 23,501,812
--------------
BIOTECHNOLOGY (2.9%)
195,000 COR Therapeutics, Inc.*............................................................. 15,697,500
70,000 Human Genome Sciences, Inc.*........................................................ 8,456,875
350,000 PE Corporation - Celera Genomics Group.............................................. 30,406,250
93,000 QLT PhotoTherapeutics Inc.*......................................................... 6,126,375
70,000 Trimeris, Inc.*..................................................................... 3,998,750
--------------
64,685,750
--------------
CABLE TELEVISION (0.3%)
200,000 EchoStar Communications Corp. (Class A)*............................................ 7,887,500
--------------
CELLULAR TELEPHONE (0.6%)
300,000 Vodafone Group PLC - SP (ADR) (United Kingdom)...................................... 12,937,500
--------------
CLOTHING/SHOE/ACCESSORY STORES (1.4%)
359,585 Gap, Inc. (The)..................................................................... 12,877,638
345,800 Payless ShoeSource, Inc.*........................................................... 17,851,925
--------------
30,729,563
--------------
COMPUTER COMMUNICATIONS (1.2%)
403,068 Cisco Systems, Inc.*................................................................ 26,375,762
--------------
COMPUTER SOFTWARE (0.6%)
200,000 Microsoft Corp.*.................................................................... 13,962,500
--------------
CONTRACT DRILLING (1.2%)
420,000 Diamond Offshore Drilling, Inc...................................................... 15,776,250
221,696 Transocean Sedco Forex Inc.*........................................................ 10,973,952
--------------
26,750,202
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
DISCOUNT CHAINS (0.4%)
280,040 Costco Wholesale Corp.*............................................................. $ 9,118,802
--------------
DIVERSIFIED ELECTRONIC PRODUCTS (0.5%)
100,000 JDS Uniphase Corp.*................................................................. 11,812,500
--------------
DIVERSIFIED FINANCIAL SERVICES (2.6%)
300,000 American Express Co................................................................. 17,006,250
430,000 AXA Financial, Inc.................................................................. 16,447,500
364,337 Citigroup, Inc...................................................................... 25,708,530
--------------
59,162,280
--------------
E.D.P. PERIPHERALS (1.4%)
368,000 EMC Corp.*.......................................................................... 31,326,000
--------------
ELECTRONIC COMPONENTS (1.1%)
500,000 Jabil Circuit, Inc.*................................................................ 25,031,250
--------------
ELECTRONIC DATA PROCESSING (1.0%)
750,000 Micron Electronics, Inc.*........................................................... 7,921,875
150,000 Sun Microsystems, Inc.*............................................................. 15,815,625
--------------
23,737,500
--------------
ELECTRONIC PRODUCTION EQUIPMENT (1.0%)
260,000 KLA-Tencor Corp.*................................................................... 13,845,000
150,000 Novellus Systems, Inc.*............................................................. 8,090,625
--------------
21,935,625
--------------
INTEGRATED OIL COMPANIES (0.6%)
250,000 Royal Dutch Petroleum Co. (ADR) (Netherlands)....................................... 14,562,500
--------------
INTERNET SERVICES (2.1%)
250,000 America Online, Inc.*............................................................... 13,328,125
260,000 BEA Systems, Inc.*.................................................................. 11,196,250
250,000 Digital Island, Inc.*............................................................... 7,171,875
150,000 Inktomi Corp.*...................................................................... 16,050,000
--------------
47,746,250
--------------
INVESTMENT BANKERS/BROKERS/
SERVICES (0.7%)
130,000 Merrill Lynch & Co., Inc............................................................ 16,802,500
--------------
MAJOR BANKS (2.0%)
200,000 Chase Manhattan Corp................................................................ 9,937,500
450,000 Mellon Financial Corp............................................................... 16,959,375
430,000 Wells Fargo & Co.................................................................... 17,764,375
--------------
44,661,250
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 2000, CONTINUED

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MAJOR CHEMICALS (0.9%)
700,000 Dow Chemical Co. (The).............................................................. $ 20,125,000
--------------
MAJOR PHARMACEUTICALS (3.2%)
320,784 Johnson & Johnson................................................................... 29,852,961
300,000 Merck & Co., Inc.................................................................... 21,506,250
500,000 Pfizer Inc.......................................................................... 21,562,500
--------------
72,921,711
--------------
MAJOR U.S. TELECOMMUNICATIONS (1.8%)
194,750 AT&T Corp........................................................................... 6,025,078
1,000,000 Sprint Corp. (FON Group)............................................................ 35,625,000
--------------
41,650,078
--------------
MANAGED HEALTH CARE (0.7%)
200,000 UnitedHealth Group Inc.............................................................. 16,362,500
--------------
MEDIA CONGLOMERATES (0.8%)
462,060 Disney (Walt) Co. (The)............................................................. 17,875,946
--------------
MEDICAL SPECIALTIES (2.0%)
250,000 Baxter International, Inc........................................................... 19,437,500
295,200 PE Corporation - PE Biosystems Group................................................ 25,737,750
--------------
45,175,250
--------------
MILITARY/GOV'T/TECHNICAL (1.2%)
150,000 General Dynamics Corp............................................................... 8,465,625
324,720 General Motors Corp. (Class H)...................................................... 8,402,130
400,000 Raytheon Co. (Class B)*............................................................. 9,700,000
--------------
26,567,755
--------------
MOTOR VEHICLES (0.7%)
360,650 Ford Motor Co....................................................................... 16,792,766
--------------
MULTI-LINE INSURANCE (2.2%)
950,000 Allstate Corp....................................................................... 26,184,375
270,938 American International Group, Inc................................................... 23,757,832
--------------
49,942,207
--------------
MULTI-SECTOR COMPANIES (0.7%)
314,160 General Electric Co................................................................. 16,159,605
--------------
OIL & GAS PRODUCTION (0.7%)
273,400 Kerr-McGee Corp..................................................................... 15,002,825
--------------
OILFIELD SERVICES/EQUIPMENT (1.0%)
160,000 Schlumberger Ltd.................................................................... 11,830,000
147,000 Smith International, Inc.*.......................................................... 10,492,125
--------------
22,322,125
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OTHER SPECIALTY STORES (0.8%)
492,720 Bed Bath & Beyond, Inc.*............................................................ $ 18,138,255
--------------
PACKAGED FOODS (0.9%)
603,040 General Mills, Inc.................................................................. 20,729,500
--------------
PRECIOUS METALS (1.6%)
800,000 Barrick Gold Corp. (Canada)......................................................... 12,750,000
690,000 Newmont Mining Corp................................................................. 12,247,500
1,460,000 Placer Dome Inc. (Canada)........................................................... 12,410,000
--------------
37,407,500
--------------
PROPERTY - CASUALTY INSURERS (0.8%)
500,000 ACE, Ltd. (Bermuda)................................................................. 18,000,000
--------------
SAVINGS & LOAN ASSOCIATIONS (1.2%)
582,420 Golden West Financial Corp.......................................................... 26,791,320
--------------
SEMICONDUCTORS (3.2%)
100,000 Advanced Micro Devices, Inc.*....................................................... 7,193,750
100,000 Altera Corp.*....................................................................... 9,818,750
200,000 Cypress Semiconductor Corp.*........................................................ 7,462,500
488,160 Intel Corp.......................................................................... 32,584,680
200,000 Micron Technology, Inc.*............................................................ 16,300,000
--------------
73,359,680
--------------
TELECOMMUNICATION EQUIPMENT (5.6%)
100,000 Corning Inc......................................................................... 23,393,750
37,800 Corvis Corporation*................................................................. 3,112,003
845,000 Motorola, Inc....................................................................... 27,937,813
300,000 Nortel Networks Corp. (Canada)...................................................... 22,312,500
350,000 Scientific - Atlanta, Inc........................................................... 26,950,000
200,000 Sycamore Networks, Inc.*............................................................ 24,662,500
--------------
128,368,566
--------------

TOTAL COMMON STOCKS
(COST $925,202,368)................................................................. 1,233,422,135
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 2000, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS (8.9%)
CABLE TELEVISION (0.8%)
$ 4,000 Comcast Corp.
8.375% due 11/01/05............................................................... $ 4,111,520
4,000 Continental Cablevision Inc.
8.50% due 09/15/01................................................................ 4,043,960
5,000 Continental Cablevision, Inc.
9.50% due 08/01/13................................................................ 5,460,650
4,000 Time Warner Inc.
8.18% due 08/15/07................................................................ 4,085,280
--------------
17,701,410
--------------
DEPARTMENT STORES (0.2%)
4,000 Saks, Inc.
7.00% due 07/15/04................................................................ 3,423,520
--------------
DIVERSIFIED FINANCIAL SERVICES (0.3%)
4,000 AXA Financial Inc.
7.75% due 08/01/10................................................................ 3,956,280
2,000 General Electric Capital Corp.
7.25% due 05/03/04................................................................ 2,012,800
--------------
5,969,080
--------------
DIVERSIFIED MANUFACTURING (0.0%)
100 Tyco International Group SA (Luxembourg)
6.375% due 06/15/05............................................................... 95,015
--------------
ELECTRIC UTILITIES (1.2%)
4,000 Alabama Power Co.
7.85% due 05/15/03................................................................ 4,026,560
4,000 Commonwealth Edison Company
8.375% due 09/15/22............................................................... 3,985,200
4,000 Connecticut Light & Power Co.
7.75% due 06/01/02................................................................ 4,018,280
3,000 South Carolina Electric & Gas Co.
7.50% due 06/15/05................................................................ 3,015,570
4,000 Texas Utilities Electric Co.
8.125% due 02/01/02............................................................... 4,040,520
4,000 Texas Utilities Electric Co.
8.25% due 04/01/04................................................................ 4,127,680
4,000 TXU Electrical Capital V
8.175% due 01/30/37............................................................... 4,055,000
--------------
27,268,810
--------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
FINANCE COMPANIES (1.0%)
$ 4,000 Ford Motor Credit Corp.
7.60% due 08/01/05................................................................ $ 3,995,000
2,906 Ford Motor Credit Corp.
6.125% due 01/09/06............................................................... 2,700,139
4,000 Ford Motor Credit Corp.
5.80% due 01/12/09................................................................ 3,493,840
5,000 General Motors Acceptance Corp.
7.625% due 06/15/04............................................................... 5,017,050
4,000 General Motors Acceptance Corp.
7.50% due 07/15/05................................................................ 3,982,200
4,000 Household Finance Corp.
8.00% due 05/09/05................................................................ 4,043,560
100 MBNA Capital I (Series A)
8.278% due 12/01/26............................................................... 84,795
--------------
23,316,584
--------------
INTEGRATED OIL COMPANIES (0.3%)
4,000 BP Amoco PLC
5.90% due 04/15/09................................................................ 3,643,520
4,000 Phillips Petroleum Co.
8.75% due 05/25/10................................................................ 4,217,240
--------------
7,860,760
--------------
INVESTMENT BANKERS/BROKERS/
SERVICES (0.2%)
4,000 Lehman Brothers Holdings Inc.
8.25% due 06/15/07................................................................ 4,034,400
--------------
LIFE INSURANCE (0.2%)
4,750 Prudential Insurance Co. - 144A**
6.375% due 07/23/06............................................................... 4,403,250
--------------
MAJOR BANKS (0.7%)
4,000 Bankamerica Corp.
6.375% due 02/15/08............................................................... 3,699,000
4,000 BankBoston National
7.00% due 09/15/07................................................................ 3,812,680
4,000 Wells Fargo Financial
7.60% due 05/03/05................................................................ 4,015,400
4,000 U.S. Bancorp
6.75% due 10/15/05................................................................ 3,828,520
--------------
15,355,600
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 2000, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MAJOR PHARMACEUTICALS (0.3%)
$ 3,500 Abbott Laboratories
6.40% due 12/01/06................................................................ $ 3,375,890
4,000 Johnson & Johnson
6.95% due 09/01/29................................................................ 3,878,280
--------------
7,254,170
--------------
MAJOR U.S. TELECOMMUNICATIONS (0.5%)
4,000 Sprint Capital Corp.
7.625% due 06/10/02............................................................... 4,008,680
4,000 Sprint Capital Corp.
6.125% due 11/15/08............................................................... 3,576,040
5,000 U.S. West Communications, Inc. - 144A**
7.625% due 06/09/03............................................................... 5,005,500
--------------
12,590,220
--------------
MEDIA CONGLOMERATES (0.3%)
4,000 Time Warner Entertainment Co.
8.375% due 03/15/23............................................................... 4,125,080
3,000 Viacom Inc.
7.875% due 07/30/30............................................................... 2,970,840
--------------
7,095,920
--------------
MID-SIZED BANKS (0.2%)
4,000 Compass Bank
8.10% due 08/15/09................................................................ 3,952,200
--------------
MOTOR VEHICLES (0.2%)
4,000 DaimlerChrysler North American Holdings Co.
7.75% due 06/15/05................................................................ 4,036,560
--------------
MOVIES/ENTERTAINMENT (0.2%)
5,000 Paramount Communications, Inc.
7.50% due 01/15/02................................................................ 5,007,600
--------------
OIL REFINING/MARKETING (0.3%)
3,500 Repsol International Finance (Netherlands)
7.45% due 07/15/05................................................................ 3,495,625
4,000 Tosco Corp.
8.125% due 02/15/30............................................................... 4,024,160
--------------
7,519,785
--------------
OIL/GAS TRANSMISSION (0.2%)
4,000 El Paso Energy Corp.
6.75% due 05/15/09................................................................ 3,743,160
--------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OTHER TELECOMMUNICATIONS (0.4%)
$ 4,000 AT&T Canada Inc. (Canada)
7.65% due 09/15/06................................................................ $ 3,981,640
2,000 Cable & Wireless Optus Ltd. - 144A** (Australia)
8.00% due 06/22/10................................................................ 2,001,100
4,000 US West Capital Funding, Inc.
6.875% due 08/15/01............................................................... 3,978,080
--------------
9,960,820
--------------
PACKAGE GOODS/COSMETICS (0.3%)
4,000 Proctor & Gamble Co.
6.60% due 12/15/04................................................................ 3,920,520
4,000 Proctor & Gamble Co.
6.45% due 01/15/26................................................................ 3,558,520
--------------
7,479,040
--------------
PACKAGED FOODS (0.2%)
4,000 Bestfoods
6.625% due 04/15/28............................................................... 3,530,200
--------------
PROPERTY - CASUALTY INSURERS (0.1%)
4,000 Liberty Mutual Insurance Co. - 144A**
7.697% due 10/15/97............................................................... 2,965,040
--------------
RAILROADS (0.4%)
924 Southern Pacific Transportation Co. (Series B)
7.28% due 04/30/15................................................................ 871,984
4,000 Union Pacific Corp.
6.34% due 11/25/03................................................................ 3,836,280
4,000 Union Pacific Corp.
6.625% due 02/01/08............................................................... 3,713,520
--------------
8,421,784
--------------
SAVINGS & LOAN ASSOCIATIONS (0.4%)
4,000 Washington Mutual Financial Corp.
8.25% due 06/15/05................................................................ 4,060,040
4,000 Washington Mutual Financial Corp.
8.25% due 04/01/10................................................................ 3,975,800
--------------
8,035,840
--------------
SMALLER BANKS (0.0%)
100 Centura Capital
Trust I - 144A**
8.845% due 06/01/27............................................................... 92,206
--------------

TOTAL CORPORATE BONDS
(COST $201,637,891)................................................................. 201,112,974
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 2000, CONTINUED

TOTAL FOREIGN GOVERNMENT & AGENCY OBLIGATIONS
(COST $12,551,322).................................................................. 12,597,511
--------------

U.S. GOVERNMENT & AGENCY OBLIGATIONS (11.9%)
Federal Home Loan Banks
10,000 4.875% due 01/22/02............................................................... 9,716,200
Federal Home Loan Mortgage Corp.
10,000 5.125% due 10/15/08............................................................... 8,752,600
18,000 7.375% due 05/15/03............................................................... 18,184,140
Federal National Mortgage Assoc.
12,000 5.625% due 05/14/04............................................................... 11,464,680
8,000 7.125% due 02/15/05............................................................... 8,040,160
U.S. Treasury Bond
15,500 5.50% due 08/15/28................................................................ 14,487,230
11,000 6.00% due 02/15/26................................................................ 10,940,160
6,100 6.125% due 08/15/29............................................................... 6,280,316
47,800 6.25% due 08/15/23................................................................ 48,791,850
100 6.375% due 08/15/27............................................................... 104,683
200 6.625% due 02/15/27............................................................... 215,634
1,565 6.875% due 08/15/25............................................................... 1,727,979
150 7.625% due 02/15/25............................................................... 179,517
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
$ U.S. Treasury Note
28,450 4.00% due 10/31/00................................................................ $ 28,286,413
35,000 5.375% due 02/15/01............................................................... 34,799,800
20,000 5.50% due 08/31/01................................................................ 19,804,400
3,300 5.625% due 11/30/00............................................................... 3,292,212
1,000 5.625% due 02/28/01............................................................... 995,440
100 5.75% due 08/15/03................................................................ 98,449
6,500 5.875% due 11/30/01............................................................... 6,454,240
3,000 5.875% due 11/15/04............................................................... 2,960,730
6,000 6.25% due 02/28/02................................................................ 5,986,620
1,140 6.25% due 02/15/03................................................................ 1,137,469
4,000 6.50% due 03/31/02................................................................ 4,006,280
2,600 6.50% due 08/15/05................................................................ 2,631,330
14,000 6.50% due 02/15/10................................................................ 14,461,580
1,150 6.625% due 06/30/01............................................................... 1,151,794
1,000 6.625% due 05/15/07............................................................... 1,024,180
2,100 6.875% due 05/15/06............................................................... 2,166,717
1,100 7.25% due 05/15/04................................................................ 1,135,068
2,000 7.25% due 08/15/04................................................................ 2,069,620
75 7.50% due 11/15/01................................................................ 75,955
--------------

TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(COST $266,748,343)................................................................. 271,423,446
--------------

SHORT-TERM INVESTMENTS (25.1%)
U.S. GOVERNMENT AGENCIES (a) (25.0%)
200,000 Federal Home Loan Banks
6.38% due 08/09/00................................................................ 199,716,444
220,000 Federal Home Loan Banks
6.43% due 08/01/00................................................................ 220,000,000
150,000 Federal Home Loan Mortgage Corp. 6.39% due 08/15/00................................. 149,627,250
--------------

TOTAL U.S. GOVERNMENT AGENCIES
(COST $569,343,694)................................................................. 569,343,694
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 2000, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (0.1%)
$ 2,914 The Bank of New York 6.50% due 08/01/00 (dated 07/31/00; proceeds $2,914,610) (b)
(COST $2,914,084)................................................................. $ 2,914,084
--------------

TOTAL SHORT-TERM INVESTMENTS
(COST $572,257,778)................................................................. 572,257,778
--------------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(COST $1,978,397,702) (c)............................................................... 100.7% 2,290,813,844

LIABILITIES IN EXCESS OF OTHER ASSETS................................................... (0.7) (16,742,326)
----- ---------------

NET ASSETS.............................................................................. 100.0% $ 2,274,071,518
----- ---------------
----- ---------------
</TABLE>

---------------------

ADR American Depository Receipt.
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
(a) Purchased on a discount basis. The interest rate shown has been adjusted to
reflect a money market equivalent yield.
(b) Collateralized by $2,987,704 Federal Home Loan Mortgage Corp. 0% due
08/29/00 valued at $2,972,374.
(c) The aggregate cost for federal income tax purposes approximates the
aggregate cost for book purposes. The aggregate gross unrealized
appreciation is $349,956,504 and the aggregate gross unrealized
depreciation is $37,540,362, resulting in net unrealized appreciation of
$312,416,142.

SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2000

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(cost $1,978,397,702)..................................................................... $2,290,813,844
Receivable for:
Investments sold........................................................................ 29,491,498
Interest................................................................................ 9,849,454
Shares of beneficial interest sold...................................................... 2,706,698
Dividends............................................................................... 717,316
Prepaid expenses and other assets........................................................... 50,819
--------------
TOTAL ASSETS........................................................................... 2,333,629,629
--------------
LIABILITIES:
Payable for:
Investments purchased................................................................... 54,184,784
Shares of beneficial interest repurchased............................................... 2,429,036
Plan of distribution fee................................................................ 1,678,382
Investment management fee............................................................... 1,016,589
Accrued expenses and other payables......................................................... 249,320
--------------
TOTAL LIABILITIES...................................................................... 59,558,111
--------------
NET ASSETS............................................................................. $2,274,071,518
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................. $1,665,100,741
Net unrealized appreciation................................................................. 312,415,301
Accumulated undistributed net investment income............................................. 8,429,296
Accumulated undistributed net realized gain................................................. 288,126,180
--------------
NET ASSETS............................................................................. $2,274,071,518
==============
CLASS A SHARES:
Net Assets.................................................................................. $110,599,841
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 5,357,365
NET ASSET VALUE PER SHARE.............................................................. $20.64
==============

MAXIMUM OFFERING PRICE PER SHARE
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE)...................................... $21.78
==============
CLASS B SHARES:
Net Assets.................................................................................. $2,043,540,377
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 98,977,600
NET ASSET VALUE PER SHARE.............................................................. $20.65
==============
CLASS C SHARES:
Net Assets.................................................................................. $39,006,486
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 1,896,151
NET ASSET VALUE PER SHARE.............................................................. $20.57
==============
CLASS D SHARES:
Net Assets.................................................................................. $80,924,814
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 3,915,692
NET ASSET VALUE PER SHARE.............................................................. $20.67
==============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 2000

<TABLE>
<S> <C>
NET INVESTMENT INCOME

INCOME
Interest..................................................................................... $ 53,516,580
Dividends (net of $56,272 foreign withholding tax)........................................... 10,443,973
-------------

TOTAL INCOME............................................................................ 63,960,553
-------------

EXPENSES
Plan of distribution fee (Class A shares).................................................... 212,252
Plan of distribution fee (Class B shares).................................................... 17,844,463
Plan of distribution fee (Class C shares).................................................... 271,510
Investment management fee.................................................................... 11,430,100
Transfer agent fees and expenses............................................................. 1,644,743
Registration fees............................................................................ 166,810
Shareholder reports and notices.............................................................. 145,361
Custodian fees............................................................................... 145,053
Professional fees............................................................................ 76,996
Trustees' fees and expenses.................................................................. 16,165
Other........................................................................................ 27,471
-------------

TOTAL EXPENSES.......................................................................... 31,980,924
-------------

NET INVESTMENT INCOME................................................................... 31,979,629
-------------

NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain/loss on:
Investments.............................................................................. 346,620,493
Foreign exchange transactions............................................................ (2,591)
-------------

NET GAIN................................................................................ 346,617,902
-------------
Net change in unrealized appreciation/depreciation on:
Investments.............................................................................. (130,382,266)
Net translation of other assets and liabilities denominated in foreign currencies........ (1,139)
-------------

NET DEPRECIATION........................................................................ (130,383,405)
-------------

NET GAIN................................................................................ 216,234,497
-------------

NET INCREASE................................................................................. $ 248,214,126
=============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
JULY 31, 2000 JULY 31, 1999
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment income....................................................... $ 31,979,629 $ 18,966,053
Net realized gain........................................................... 346,617,902 176,815,551
Net change in unrealized appreciation....................................... (130,383,405) (21,193,908)
-------------- --------------

NET INCREASE........................................................... 248,214,126 174,587,696
-------------- --------------

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares.......................................................... (1,571,516) (846,187)
Class B shares.......................................................... (22,161,327) (16,039,877)
Class C shares.......................................................... (314,168) (91,734)
Class D shares.......................................................... (1,590,141) (1,409,321)
Net realized gain
Class A shares.......................................................... (6,239,051) (4,000,964)
Class B shares.......................................................... (157,446,517) (129,295,238)
Class C shares.......................................................... (1,738,094) (696,343)
Class D shares.......................................................... (6,302,510) (5,750,340)
-------------- --------------

TOTAL DIVIDENDS AND DISTRIBUTIONS...................................... (197,363,324) (158,130,004)
-------------- --------------
Net increase from transactions in shares of beneficial interest............. 236,166,642 201,010,037
-------------- --------------

NET INCREASE........................................................... 287,017,444 217,467,729

NET ASSETS:
Beginning of period......................................................... 1,987,054,074 1,769,586,345
-------------- --------------

END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $8,429,296 AND
$2,089,265, RESPECTIVELY)............................................... $2,274,071,518 $1,987,054,074
============== ==============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 2000

1. ORGANIZATION AND ACCOUNTING POLICIES

Morgan Stanley Dean Witter Strategist Fund (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a non-diversified,
open-end management investment company. The Fund's investment objective is to
maximize the total return of its investments. The Fund seeks to achieve its
objective by actively allocating its assets among major asset categories of
equity and fixed-income securities and money market instruments. The Fund was
organized as a Massachusetts business trust on August 5, 1988 and commenced
operations on October 31, 1988. On July 28, 1997, the Fund converted to a
multiple class share structure.

The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.

The following is a summary of significant accounting policies:

A. VALUATION OF INVESTMENTS -- (1) an equity portfolio security listed or traded
on the New York or American Stock Exchange, NASDAQ, or other exchange is valued
at its latest sale price prior to the time when assets are valued; if there were
no sales that day, the security is valued at the latest bid price (in cases
where securities are traded on more than one exchange, the securities are valued
on the exchange designated as the primary market pursuant to procedures adopted
by the Trustees); (2) all other portfolio securities for which over-the-counter
market quotations are readily available are valued at the latest available bid
price; (3) when market quotations are not readily available, including
circumstances under which it is determined by Morgan Stanley Dean Witter
Advisors Inc. (the "Investment Manager") that sale or bid prices are not
reflective of a security's market value, portfolio securities are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision of the 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

14
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 2000, CONTINUED

similar factors); (4) certain of the Fund's portfolio securities may be valued
by an outside pricing service 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.
Discounts are accreted over the life of the respective securities. Dividend
income and other distributions are recorded on the ex-dividend date, except for
certain dividends on foreign securities which are recorded as soon as the Fund
is informed after the ex-dividend date. Interest income is accrued daily.

C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.

D. FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities, other assets and liabilities and forward foreign currency
contracts are translated at the exchange rates prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the
exchange rates prevailing on the respective dates of such transactions. The
resultant exchange gains and losses are included in the Statement of Operations
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.

15
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 2000, CONTINUED

E. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward foreign
currency contracts which are valued daily at the appropriate exchange rates. The
resultant unrealized exchange gains and losses are included in the Statement of
Operations as unrealized 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.

F. 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.

G. 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 the Fund pays the Investment
Manager 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: 0.60% to the portion of daily net assets not exceeding $500
million; 0.55% to the portion of daily net assets exceeding $500 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; and 0.45% to the
portion of daily net assets exceeding $2 billion, but not exceeding $3 billion.
Effective May 1, 2000, the Aggreement was amended to reduce the annual rate to
0.425% of the portion of daily net assets in excess of $3 billion.

16
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 2000, 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 implementation of the Plan on November 8, 1989 (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
implementation of the Plan upon which a contingent deferred sales charge has
been imposed or waived; or (b) the average daily net assets of Class B
attributable to shares issued, net of related shares redeemed, since the Plan's
inception; 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
$40,072,188 at July 31, 2000.

In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended July 31, 2000, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.25% and
1.0%, respectively.

The Distributor has informed the Fund that for the year ended July 31, 2000, it
received contingent deferred sales charges from certain redemptions of the
Fund's Class A shares, Class B shares and

17
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 2000, CONTINUED

Class C shares of $4,716, $1,805,051 and $15,580, respectively and received
$128,147 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/maturities/prepayments of
portfolio securities, excluding short-term investments, for the year ended July
31, 2000 aggregated $3,144,071,120 and $3,433,723,797, respectively. Included in
the aforementioned are purchases and sales/maturities/ prepayments of U.S.
Government securities of $640,156,562 and $677,200,475, respectively.

For the year ended July 31, 2000, the Fund incurred brokerage commissions with
Dean Witter Reynolds Inc., an affiliate of the Investment Manager and
Distributor, of $155,037, for portfolio transactions executed on behalf of the
Fund.

For the year ended July 31, 2000, the Fund incurred brokerage commissions of
$274,028 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 July 31, 2000, the Fund had
transfer agent fees and expenses payable of approximately $700.

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 July 31, 2000 included in
Trustees' fees and expenses in the Statement of Operations amounted to $4,604.
At July 31, 2000, the Fund had an accrued pension liability of $70,849 which is
included in accrued expenses in the Statement of Assets and Liabilities.

18
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 2000, 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
JULY 31, 2000 JULY 31, 1999
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold............................................................. 3,318,317 $ 70,298,802 1,934,094 $ 37,196,680
Reinvestment of dividends and distributions...................... 359,691 7,127,658 245,489 4,408,793
Acquisition of Dean Witter Global Asset Allocation Fund.......... -- -- 15,373 288,931
Redeemed......................................................... (1,515,494) (31,717,315) (724,574) (14,041,119)
----------- ------------- ----------- -------------
Net increase - Class A........................................... 2,162,514 45,709,145 1,470,382 27,853,285
----------- ------------- ----------- -------------

CLASS B SHARES
Sold............................................................. 18,765,850 394,709,126 16,874,303 326,909,527
Reinvestment of dividends and distributions...................... 8,188,679 162,143,354 7,311,689 131,234,901
Acquisition of Dean Witter Global Asset Allocation Fund.......... -- -- 2,202,447 41,353,775
Redeemed......................................................... (18,930,130) (395,536,400) (17,441,832) (337,838,267)
----------- ------------- ----------- -------------
Net increase - Class B........................................... 8,024,399 161,316,080 8,946,607 161,659,936
----------- ------------- ----------- -------------

CLASS C SHARES
Sold............................................................. 1,298,818 27,199,414 575,043 11,155,902
Reinvestment of dividends and distributions...................... 100,045 1,979,888 41,974 752,113
Acquisition of Dean Witter Global Asset Allocation Fund.......... -- -- 7,608 142,546
Redeemed......................................................... (305,671) (6,397,242) (211,043) (4,034,449)
----------- ------------- ----------- -------------
Net increase - Class C........................................... 1,093,192 22,782,060 413,582 8,016,112
----------- ------------- ----------- -------------

CLASS D SHARES
Sold............................................................. 657,345 13,809,612 546,959 10,529,031
Reinvestment of dividends and distributions...................... 366,091 7,274,623 367,018 6,620,451
Acquisition of Dean Witter Global Asset Allocation Fund.......... -- -- 667 12,537
Acquisition of Dean Witter Retirement Series - Strategist
Series.......................................................... -- -- 897,233 16,687,220
Redeemed......................................................... (702,780) (14,724,878) (1,565,127) (30,368,535)
----------- ------------- ----------- -------------
Net increase - Class D........................................... 320,656 6,359,357 246,750 3,480,704
----------- ------------- ----------- -------------
Net increase in Fund............................................. 11,600,761 $ 236,166,642 11,077,321 $ 201,010,037
=========== ============= =========== =============
</TABLE>

19
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 2000, CONTINUED

6. FEDERAL INCOME TAX STATUS

Foreign currency losses incurred after October 31 ("post-October losses") within
the taxable year are deemed to arise on the first business day of the Fund's
next taxable year. The Fund incurred and will elect to defer net foreign
currency losses of approximately $3,000 during fiscal 2000.

At July 31, 2000, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales.

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.

Forward contracts involve elements of market risk in excess of the amounts
reflected in the Statement of Asset 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 July 31, 2000, there were no outstanding forward contracts.

8. FUND ACQUISITIONS

As of the close business on September 11, 1998, the Fund acquired all the net
assets of Dean Witter Retirement Series - Strategist Series ("Retirement
Strategist") pursuant to a plan of reorganization approved by shareholders of
Retirement Strategist on August 19, 1998. The acquisition was accomplished by a
tax-free exchange of 897,233 Class D shares of the Fund at a net asset value of
$18.60 per share for 1,340,444 shares of Retirement Strategist. The net assets
of the Fund and Retirement Strategist immediately before the acquisition were
$1,627,181,276 and $16,687,220, respectively, including unrealized appreciation
of $2,135,461 for Retirement Strategist. Immediately after the acquisition, the
combined net assets of the Fund amounted to $1,643,868,496.

As of close business on September 18, 1998, the Fund acquired all the net assets
of Dean Witter Global Asset Allocation Fund ("Global") pursuant to a plan of
reorganization approved by the shareholders of Global on August 19, 1998. The
acquisition was accomplished by a tax-free exchange of 15,373 Class A shares of
the Fund at a net asset value of $18.79 per share for 25,295 Class A shares of
Global; 2,202,447 Class B shares of the Fund at a net asset value of $18.77 per
share for

20
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 2000, CONTINUED

3,610,474 Class B shares of Global; 7,608 Class C shares of the Fund at a net
asset value of $18.73 per share for 12,522 Class C shares of Global; and 667
Class D shares of the Fund at a net asset value of $18.81 per share for 1,097
Class D shares of Global. The net assets of the Fund and Global immediately
before the acquisition were $1,661,862,178 and $41,797,789, respectively,
including unrealized appreciation of $4,590,506 for Global. Immediately after
the acquisition, the combined net assets of the Fund amounted to $1,703,659,967.

21
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST 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 ENDED JULY 31, JULY 28, 1997*
-------------------------------- THROUGH
2000 1999 1998 JULY 31, 1997
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES++

SELECTED PER SHARE DATA:

Net asset value, beginning of period........................ $ 20.16 $ 20.23 $ 18.75 $18.40
-------- ------- ------- ------

Income from investment operations:
Net investment income.................................... 0.44 0.32 0.36 0.01
Net realized and unrealized gain......................... 2.16 1.46 2.06 0.34
-------- ------- ------- ------

Total income from investment operations..................... 2.60 1.78 2.42 0.35
-------- ------- ------- ------

Less dividends and distributions from:
Net investment income.................................... (0.37) (0.32) (0.43) --
Net realized gain........................................ (1.75) (1.53) (0.51) --
-------- ------- ------- ------

Total dividends and distributions........................... (2.12) (1.85) (0.94) --
-------- ------- ------- ------

Net asset value, end of period.............................. $ 20.64 $ 20.16 $ 20.23 $18.75
======== ======= ======= ======

TOTAL RETURN+............................................... 13.48% 10.01% 13.48% 1.90%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 0.88%(3) 0.87%(3) 0.91% 0.92%(2)

Net investment income....................................... 2.06%(3) 1.66%(3) 1.85% 5.06%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $110,600 $64,418 $34,891 $79

Portfolio turnover rate..................................... 187% 121% 92% 158%
</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>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
FINANCIAL HIGHLIGHTS, CONTINUED

FOR THE YEAR ENDED JULY 31,
-----------------------------------------------------------
2000++ 1999++ 1998++ 1997*++ 1996
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES

SELECTED PER SHARE DATA:

Net asset value, beginning of period.................. $20.16 $20.23 $18.75 $16.02 $15.87
---------- ------- ------- ------- --------

Income from investment operations:
Net investment income.............................. 0.29 0.19 0.24 0.39 0.30
Net realized and unrealized gain................... 2.18 1.46 2.06 4.10 1.43
---------- ------- ------- ------- --------

Total income from investment operations............... 2.47 1.65 2.30 4.49 1.73
---------- ------- ------- ------- --------

Less dividends and distributions from:
Net investment income.............................. (0.23) (0.19) (0.31) (0.36) (0.32)
Net realized gain.................................. (1.75) (1.53) (0.51) (1.40) (1.26)
---------- ------- ------- ------- --------

Total dividends and distributions..................... (1.98) (1.72) (0.82) (1.76) (1.58)
---------- ------- ------- ------- --------

Net asset value, end of period........................ $20.65 $20.16 $20.23 $18.75 $16.02
========== ======= ======= ======= ========

TOTAL RETURN+......................................... 12.79% 9.23% 12.77% 29.73% 11.47%

RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................. 1.53%(1) 1.57%(1) 1.54% 1.56% 1.58%

Net investment income................................. 1.41%(1) 0.96%(1) 1.24% 2.29% 1.88%

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............... $2,043,540 $1,833,935 $1,659,037 $1,540,880 $1,259,305

Portfolio turnover rate............................... 187% 121% 92% 158% 174%
</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 November 8, 1989 (and with respect to such shares, certain shares
acquired through reinvestment of dividends and capital gains distributions
(collectively the "Old Shares")) and shares held by certain employee
benefit plans established by Dean Witter Reynolds Inc., have been
designated Class B shares. The Old Shares and shares held by those employee
benefit plans prior to July 28, 1997 have been designated Class D shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Reflects overall Fund ratios for investment income and non-class specific
expenses.

SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
FINANCIAL HIGHLIGHTS, CONTINUED

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED JULY 31, JULY 28, 1997*
------------------------------- THROUGH
2000 1999 1998 JULY 31, 1997
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS C SHARES++

SELECTED PER SHARE DATA:

Net asset value, beginning of period........................ $20.11 $20.19 $18.75 $18.40
------- ------- ------- ------

Income from investment operations:
Net investment income.................................... 0.29 0.16 0.21 0.01
Net realized and unrealized gain......................... 2.15 1.47 2.06 0.34
------- ------- ------- ------

Total income from investment operations..................... 2.44 1.63 2.27 0.35
------- ------- ------- ------

Less dividends and distributions from:
Net investment income.................................... (0.23) (0.18) (0.32) --
Net realized gain........................................ (1.75) (1.53) (0.51) --
------- ------- ------- ------

Total dividends and distributions........................... (1.98) (1.71) (0.83) --
------- ------- ------- ------

Net asset value, end of period.............................. $20.57 $20.11 $20.19 $18.75
======= ======= ======= ======

TOTAL RETURN+............................................... 12.62% 9.15% 12.66% 1.90%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.63%(3) 1.65%(3) 1.66% 1.67%(2)

Net investment income....................................... 1.31%(3) 0.88%(3) 1.08% 4.38%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $39,006 $16,147 $7,861 $114

Portfolio turnover rate..................................... 187% 121% 92% 158%
</TABLE>

---------------------

SEE NOTES TO FINANCIAL STATEMENTS
24
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
FINANCIAL HIGHLIGHTS, CONTINUED

SELECTED PER SHARE DATA:

Net asset value, beginning of period........................ $20.18 $20.25 $18.75 $18.40
------- ------- ------- -------

Income from investment operations:
Net investment income.................................... 0.48 0.37 0.41 0.01
Net realized and unrealized gain......................... 2.18 1.45 2.06 0.34
------- ------- ------- -------

Total income from investment operations..................... 2.66 1.82 2.47 0.35
------- ------- ------- -------

Less dividends and distributions from:
Net investment income.................................... (0.42) (0.36) (0.46) --
Net realized gain........................................ (1.75) (1.53) (0.51) --
------- ------- ------- -------

Total dividends and distributions........................... (2.17) (1.89) (0.97) --
------- ------- ------- -------

Net asset value, end of period.............................. $20.67 $20.18 $20.25 $18.75
======= ======= ======= =======

TOTAL RETURN+............................................... 13.79% 10.23% 13.80% 1.90%

RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 0.63%(3) 0.65%(3) 0.66% 0.67%(2)

Net investment income....................................... 2.31%(3) 1.88%(3) 2.12% 5.40%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $80,925 $72,554 $67,797 $57,938

Portfolio turnover rate..................................... 187% 121% 92% 158%
</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
25
<PAGE>

INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER STRATEGIST FUND

We have audited the accompanying statement of assets and liabilities of Morgan
Stanley Dean Witter Strategist Fund (the "Fund"), including the portfolio of
investments, as of July 31, 2000, and the related statements of operations and
changes in net assets, and financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statement
of changes in net assets for the year ended July 31, 1999 and the financial
highlights for each of the respective stated periods ended July 31, 1999 were
audited by other auditors whose report, dated September 10, 1999, expressed an
unqualified opinion on that statement and the financial highlights.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at July 31,
2000 by correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Morgan Stanley Dean
Witter Strategist Fund as of July 31, 2000, the results of its operations, the
changes in its net assets and the financial highlights for the year then ended
in conformity with accounting principles generally accepted in the United States
of America.

Deloitte & Touche LLP
NEW YORK, NEW YORK
SEPTEMBER 18, 2000

2000 FEDERAL TAX NOTICE (UNAUDITED)

During the fiscal year ended July 31, 2000, the Fund paid to its
shareholders $1.58 per share from long-term capital gains. For
such period, 27.48% of the income paid qualified for the dividends
received deduction available to corporations.
Of the Fund's ordinary income dividends paid during the fiscal
year ended July 31, 2000, 27.74% was attributable to qualifying
Federal obligations. Please consult your tax advisor to determine
if any portion of the dividends you received is exempt from state
income tax.

26
<PAGE>

MORGAN STANLEY DEAN WITTER STRATEGIST FUND
CHANGE IN INDEPENDENT ACCOUNTANTS

On July 1, 2000, PricewaterhouseCoopers LLP resigned as independent accountants
of the Fund.

The reports of PricewaterhouseCoopers LLP on the financial statements of the
Fund for the past two fiscal years contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle.

In connection with its audits for the two most recent fiscal years and through
July 1, 2000, there have been no disagreements with PricewaterhouseCoopers LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of PricewaterhouseCoopers LLP would have caused them to make
reference thereto in their report on the financial statements for such years.

The Fund, with the approval of its Board of Trustees and its Audit Committee,
engaged Deloitte & Touche LLP as its new independent accountants as of July 1,
2000.

27
<PAGE>

TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder

OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer

Mitchell M. Merin
President

Barry Fink
Vice President, Secretary and General Counsel

Mark Bavoso
Vice President

Thomas F. Caloia
Treasurer

TRANSFER AGENT
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311

INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281

INVESTMENT MANAGER
Morgan Stanley Dean Witter Advisors Inc.
Two World Financial 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 Distributors Inc., member NASD.

MORGAN STANLEY DEAN WITTER STRATEGIST FUND

[GRAPHICAL REPRESENTATION]

ANNUAL REPORT
JULY 31, 2000