<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
LETTER TO THE SHAREHOLDERS January 31, 2000
Two World Trade Center, New York, New York 10048
DEAR SHAREHOLDER:
During the six-month period ended January 31, 2000, the financial markets
continued to trade in the volatile pattern that has been characteristic of the
last three years. Amid this increase in volatility, the equity markets reached
new highs during the period, while fixed-income investments continued to
decline in value within an environment of rising interest rates.
The second half of 1999 ushered in a period of concern surrounding the Y2K
computer bug and its potential impact on information technology systems around
the globe. As a result, equity markets weakened during the third quarter of
1999, with the Standard & Poor's 500 Composite Stock Price Index (S&P 500)
falling by more than 6 percent. By the fourth quarter, however, investors
gradually shifted their attention back to profitability and the business cycle,
which accelerated dramatically through year-end. With Y2K issues eclipsed by
strong global demand for telecommunications and technology solutions, the
equity markets rallied powerfully in December and January.
PERFORMANCE AND PORTFOLIO STRATEGY
For the six-month period ended January 31, 2000, Morgan Stanley Dean Witter
Strategist Fund's Class B shares posted a total return of 12.06 percent
compared to 5.59 percent for the S&P 500 and 0.38 percent for the Lehman
Brothers Government/Corporate Bond Index. For the same period, the Fund's Class
A, C and D shares returned 12.45 percent, 12.02 percent and 12.58 percent,
respectively. The performance of the Fund's four share classes varies because
of differing expenses. Total return figures assume the reinvestment of all
distributions and do not reflect the deduction of any applicable sales charges.
During the period under review, the Fund's asset allocation was adjusted to
reflect increased concerns over rising equity valuations. 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 a competitive total return with less
overall volatility than a single asset class fund.
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
LETTER TO THE SHAREHOLDERS January 31, 2000, continued
To more aptly reflect the rise in equity valuations, especially in the
leadership sectors of technology and telecommunications, the Fund's equity
holdings were reduced from an overweighted position of 70 percent of total
assets to a neutral weight of 55 percent. The bond allocation, at 20 percent of
assets, remained unchanged, while cash reserves were allowed to rise to an
overweighted position of 25 percent of total assets. The benchmark blend, or
equally weighted portfolio allocation, is generally regarded to be 55 percent
equities, 35 percent bonds and 10 percent cash.
The Fund's equity portion continues to focus on sectors with outstanding
earnings growth potential such as technology - including software and
telecommunications - health care, with an emphasis on biotechnology, consumer
cyclicals and energy, including oil services. Among the Fund's largest equity
positions are PE Celera Genomics (biotechnology), PE Biosystems (analysis
devices), Sun Microsystems (computer systems), Johnson & Johnson (health care)
and Microsoft (software).
At the end of January, the Fund's fixed-income portfolio was comprised of 79
issues, with U.S. government-issued and government agency bonds representing 62
percent of the total fixed-income portfolio and corporate-issued paper
accounting for 38 percent. The portfolio's average yield was 7.08 percent,
while the average maturity was 9.84 years. Average duration, a measurement of
bond price sensitivity to interest-rate movements, was 5.37 years.
LOOKING AHEAD
After a long period of strong performance for equity markets as a whole, as
well as a genuine lack of investor interest in bond markets this past year, we
anticipate a more volatile and challenging year ahead as investors more
frequently gravitate toward the most profitable asset class. 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. We believe that a diversified portfolio of stocks,
bonds and cash, representing many different sectors, can protect the investor
against the volatility of any single asset class while still providing
competitive total returns over the long term.
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,
/s/ Charles A. Fiumefreddo /s/ Mitchell M. Merin
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
2
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
FUND PERFORMANCE January 31, 2000, continued
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A SHARES*
- ---------------------------------------------------------------
PERIOD ENDED 1/31/00
- ---------------------------
<S> <C> <C>
1 Year 18.93%(1) 12.68%(2)
Since Inception (7/28/97) 15.33%(1) 12.88%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES+
- ---------------------------------------------------------------
PERIOD ENDED 1/31/00
- ---------------------------
<S> <C> <C>
1 Year 17.99%(1) 16.99%(2)
Since Inception (7/28/97) 14.46%(1) 14.46%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS B SHARES**
- ---------------------------------------------------------
PERIOD ENDED 1/31/00
- ---------------------
<S> <C> <C>
1 Year 18.09%(1) 13.09%(2)
5 Years 18.18%(1) 17.97%(2)
10 Years 14.26%(1) 14.26%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS D SHARES++
- -----------------------------------------------
PERIOD ENDED 1/31/00
- ---------------------------
<S> <C>
1 Year 19.16%(1)
Since Inception (7/28/97) 15.60%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
- ---------------
(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.
3
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS January 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- -------------------
<S> <C> <C>
COMMON STOCKS (65.1%)
Advertising (0.1%)
40,000 Young & Rubicam, Inc. ................ $ 2,155,000
--------------
Auto Parts: O.E.M. (0.8%)
1,000,000 Delphi Automotive Systems Corp. 17,312,500
--------------
Beverages - Non-Alcoholic (1.9%)
1,110,000 Coca-Cola Enterprises Inc. ........... 28,027,500
413,000 PepsiCo, Inc. ........................ 14,093,625
--------------
42,121,125
--------------
Biotechnology (6.1%)
70,000 Affymetrix, Inc.* .................... 16,205,000
280,000 Human Genome Sciences, Inc.* ......... 27,475,000
360,000 PE Corporation-Celera Genomics
Group .............................. 72,517,500
160,000 QLT Phototherapeutics, Inc.
(Canada)* .......................... 10,960,000
130,000 Trimeris, Inc.* ...................... 6,873,750
--------------
134,031,250
--------------
Building Materials/DIY Chains (0.8%)
314,040 Home Depot, Inc. (The) ............... 17,782,515
--------------
Cable Television (1.5%)
200,000 EchoStar Communications Corp.
(Class A)* ......................... 16,275,000
205,000 MediaOne Group, Inc.* ................ 16,297,500
--------------
32,572,500
--------------
Casino/Gambling (0.6%)
1,160,000 Park Place Entertainment Corp.* ...... 12,180,000
--------------
Catalog/Specialty Distribution (0.1%)
200,000 Webvan Group Inc.* ................... 3,000,000
--------------
Cellular Telephone (1.6%)
400,000 Vodafone AirTouch PLC (ADR)
(United Kingdom) ................... 22,400,000
100,000 Voicestream Wireless Corp.* .......... 11,731,250
--------------
34,131,250
--------------
Clothing/Shoe/Accessory Stores (0.7%)
359,585 Gap, Inc. (The) ...................... 16,068,955
--------------
Computer Communications (1.1%)
226,534 Cisco Systems, Inc.* ................. 24,791,315
--------------
Computer Software (3.0%)
156,000 Adobe Systems, Inc. .................. 8,580,000
400,000 Microsoft Corp.* ..................... 39,125,000
550,000 Novell, Inc.* ........................ 18,356,250
--------------
66,061,250
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- -------------------
<S> <C> <C>
Construction/Agricultural
Equipment/Trucks (1.0%)
300,000 Caterpillar, Inc. .................... $ 12,731,250
240,000 PACCAR, Inc. ......................... 9,930,000
--------------
22,661,250
--------------
Consumer Electronics/Appliances (1.2%)
173,600 Maytag Corp. ......................... 7,030,800
331,900 Whirlpool Corp. ...................... 19,333,175
--------------
26,363,975
--------------
Contract Drilling (1.2%)
620,000 Diamond Offshore Drilling, Inc. ...... 17,166,250
281,696 Transocean Sedco Forex Inc. .......... 8,961,454
--------------
26,127,704
--------------
Discount Chains (0.7%)
330,040 Costco Wholesale Corp.* .............. 16,151,332
--------------
Diversified Financial Services (2.2%)
100,000 American Express Co. ................. 16,481,250
430,000 AXA Financial, Inc. .................. 14,001,875
324,337 Citigroup, Inc. ...................... 18,629,106
--------------
49,112,231
--------------
Diversified Manufacturing (0.9%)
399,056 Honeywell International Inc. ......... 19,154,688
--------------
E.D.P. Peripherals (1.2%)
244,000 EMC Corp.* ........................... 25,986,000
--------------
Electronic Data Processing (3.9%)
800,000 Compaq Computer Corp. ................ 21,900,000
150,000 Hewlett-Packard Co. .................. 16,237,500
600,000 Sun Microsystems, Inc.* .............. 47,100,000
--------------
85,237,500
--------------
Electronic Production Equipment (0.9%)
300,000 Jabil Circuit, Inc.* ................. 18,975,000
--------------
Integrated Oil Companies (1.9%)
170,000 Atlantic Richfield Co. ............... 13,090,000
147,506 Exxon Mobil Corp. .................... 12,316,751
273,400 Kerr-McGee Corp. ..................... 15,139,525
--------------
40,546,276
--------------
Internet Services (1.4%)
180,000 America Online, Inc.* ................ 10,248,750
100,000 At Home Corp. (Series A)* ............ 3,600,000
160,000 Inktomi Corp.* ....................... 15,910,000
--------------
29,758,750
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS January 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- -------------------
<S> <C> <C>
Investment Bankers/Brokers/
Services (0.5%)
130,000 Merrill Lynch & Co., Inc. ............ $ 11,277,500
--------------
Major Banks (2.4%)
205,700 Chase Manhattan Corp. ................ 16,545,994
550,000 Mellon Financial Corp. ............... 18,871,875
400,000 Wells Fargo & Co. .................... 16,000,000
--------------
51,417,869
--------------
Major Chemicals (1.0%)
104,000 Dow Chemical Co. ..................... 12,116,000
180,880 Du Pont (E.I.) de Nemours & Co.,
Inc. ............................... 10,671,920
--------------
22,787,920
--------------
Major Pharmaceuticals (4.5%)
124,880 Abbott Laboratories .................. 4,074,210
320,784 Johnson & Johnson .................... 27,607,473
300,000 Merck & Co., Inc. .................... 23,643,750
600,000 Pfizer, Inc. ......................... 21,825,000
215,810 Warner-Lambert Co. ................... 20,488,462
--------------
97,638,895
--------------
Major U.S. Telecommunications (0.8%)
330,000 AT&T Corp. ........................... 17,407,500
--------------
Managed Health Care (0.1%)
40,000 Wellpoint Health Networks, Inc.*...... 2,720,000
--------------
Media Conglomerates (0.8%)
462,060 Disney (Walt) Co. .................... 16,778,554
--------------
Medical Specialties (0.3%)
100,000 Baxter International, Inc. ........... 6,387,500
--------------
Military/Gov't/Technical (1.1%)
208,240 General Motors Corp. (Class H)* ...... 23,427,000
--------------
Motor Vehicles (0.8%)
360,650 Ford Motor Co. ....................... 17,942,337
--------------
Multi-Line Insurance (1.3%)
265,625 American International Group,
Inc. ............................... 27,658,203
--------------
Multi-Sector Companies (0.6%)
104,720 General Electric Co. ................. 13,967,030
--------------
Oilfield Services/Equipment (1.5%)
200,000 Schlumberger Ltd. .................... 12,212,500
400,000 Smith International, Inc.* ........... 20,525,000
--------------
32,737,500
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- -------------------
<S> <C> <C>
Other Specialty Stores (1.1%)
442,720 Bed Bath & Beyond, Inc.* ............. $ 12,036,450
395,400 Williams-Sonoma, Inc.* ............... 12,529,238
--------------
24,565,688
--------------
Other Telecommunications (0.8%)
150,000 Level 3 Communications, Inc.* ........ 17,690,625
--------------
Package Goods/Cosmetics (0.9%)
326,200 Colgate-Palmolive Co. ................ 19,327,350
--------------
Packaged Foods (0.6%)
453,040 General Mills, Inc. .................. 14,129,185
--------------
Paper (1.4%)
260,000 Boise Cascade Corp. .................. 9,197,500
291,090 Champion International Corp. ......... 17,028,765
130,000 Willamette Industries, Inc. .......... 5,330,000
--------------
31,556,265
--------------
Precious Metals (2.0%)
500,000 Barrick Gold Corp. (Canada) .......... 8,187,500
1,220,000 Homestake Mining Co. ................. 8,082,500
790,000 Newmont Mining Corp. ................. 16,096,250
1,160,000 Placer Dome Inc. (Canada) ............ 10,440,000
--------------
42,806,250
--------------
Precision Instruments (2.8%)
400,000 PE Corporation-PE Biosystems
Group .............................. 59,900,000
--------------
Savings & Loan Associations (0.8%)
582,420 Golden West Financial Corp. .......... 17,144,989
--------------
Semiconductors (2.6%)
154,080 Intel Corp. .......................... 15,234,660
100,000 Micron Technology, Inc.* ............. 6,218,750
100,000 PMC - Sierra, Inc. (Canada)* ......... 18,043,750
100,000 STMicroelectronics NV
(Netherlands) ...................... 16,837,500
--------------
56,334,660
--------------
Steel/Iron Ore (0.9%)
3,000,000 Bethlehem Steel Corp.* ............... 20,437,500
--------------
Telecommunication Equipment (0.7%)
115,000 Motorola, Inc. ....................... 15,726,250
--------------
TOTAL COMMON STOCKS
(Identified Cost $922,493,565) ....... 1,424,048,936
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS January 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ---------------- --------------
<S> <C> <C>
CORPORATE BONDS (7.4%)
Aerospace (0.4%)
$ 4,000 Lockheed Martin Corp.
7.45% due 06/15/04 ............ $ 3,891,360
5,000 Lockheed Martin Corp.
8.20% due 12/01/09 ............ 4,926,850
--------------
8,818,210
--------------
Alcoholic Beverages (0.2%)
4,000 Seagram (Joseph E.) & Sons, Inc.
6.80% due 12/15/08 ............ 3,718,360
--------------
Broadcasting (0.1%)
3,000 Liberty Media Group - 144A**
8.25% due 02/01/30 ............ 2,973,750
--------------
Cable Television (0.4%)
5,000 Continental Cablevision, Inc.
9.50% due 08/01/13 ............ 5,471,700
4,000 Tele-Communications, Inc.
8.35% due 02/15/05 ............ 4,124,000
--------------
9,595,700
--------------
Department Stores (0.2%)
4,000 Saks, Inc.
7.00% due 07/15/04 ............ 3,759,160
--------------
Discount Chains (0.2%)
4,000 Wal-Mart Stores, Inc.
6.875% due 08/10/09 ........... 3,816,760
--------------
Diversified Financial Services (0.2%)
4,000 General Electric Capital Corp.
6.52% due 10/08/02 ............ 3,937,680
--------------
Diversified Manufacturing (0.0%)
100 Tyco International Group SA
(Luxembourg)
6.375% due 06/15/05 ........... 92,901
--------------
Electric Utilities (0.4%)
1,900 Enserch Corp.
7.125% due 06/15/05 ........... 1,824,665
4,000 Public Service Electric & Gas Co.
6.00% due 05/01/00 ............ 3,993,000
4,000 Texas Utilities Electric Co.
8.125% due 02/01/02 ........... 4,047,440
--------------
9,865,105
--------------
Finance Companies (0.9%)
4,000 Ford Motor Credit Co.
6.375% due 11/05/08 ........... 3,638,280
$ 4,000 General Motors Acceptance Corp.
6.75% due 12/10/02 ............ $ 3,944,040
4,000 General Motors Acceptance Corp.
7.75% due 01/19/10 ............ 3,972,960
4,000 Heller Financial, Inc.
5.75% due 09/25/01 ............ 3,901,160
4,000 IBM Credit Corp.
6.64% due 10/29/01 ............ 3,968,400
100 MBNA Capital I (Series A)
8.278% due 12/01/26 ........... 88,204
--------------
19,513,044
--------------
Integrated Oil Companies (0.2%)
4,000 Amerada Hess Corp.
7.875% due 10/01/29 ........... 3,891,120
--------------
International Banks (0.2%)
4,000 Dresdner Funding Trust - 144A**
8.151% due 06/30/31 ........... 3,798,240
--------------
Investment Bankers/Brokers/
Services (0.2%)
4,000 Bear Stearns Co., Inc.
7.625% due 02/01/05 ........... 3,939,440
--------------
Major Banks (0.9%)
8,000 BankBoston National
7.00% due 09/15/07 ............ 7,663,920
4,000 KeyCorp (Series A)
7.826% due 12/01/26 ........... 3,658,480
4,000 Society Corp.
8.125% due 06/15/02 ........... 4,044,480
4,000 U.S. Bancorp
6.75% due 10/15/05 ............ 3,829,720
--------------
19,196,600
--------------
Major Pharmaceuticals (0.3%)
3,500 Abbott Laboratories
6.40% due 12/01/06 ............ 3,323,845
4,000 Johnson & Johnson
6.95% due 09/01/29 ............ 3,790,520
--------------
7,114,365
--------------
Major U.S. Telecommunications (0.5%)
4,000 MCI WorldCom, Inc.
6.125% due 08/15/01 ........... 3,940,800
4,000 MCI Worldcom Inc.
7.55% due 04/01/04 ............ 4,001,040
4,000 Sprint Capital Corp.
6.875% due 11/15/28 ........... 3,488,640
--------------
11,430,480
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS January 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------ --------------
<S> <C> <C>
Media Conglomerates (0.2%)
$ 4,000 Time Warner, Inc.
6.625% due 05/15/29 ..................... $ 3,324,000
--------------
Mid-Sized Banks (0.2%)
4,000 Compass Bank
8.10% due 08/15/09 ...................... 4,008,160
--------------
Motor Vehicles (0.2%)
4,000 DaimlerChrysler North American
Holdings Co.
7.40% due 01/20/05 .................... 3,964,280
--------------
Oil/Gas Transmission (0.3%)
4,000 Enron Corp.
7.125% due 05/15/07 ................... 3,826,240
4,000 Yosemite Securities Trust I - 144A**
8.25% due 11/15/04 .................... 3,934,800
--------------
7,761,040
--------------
Other Telecommunications (0.3%)
4,000 U.S. West Capital Funding, Inc.
6.875% due 07/15/28 ................... 3,474,760
4,000 U.S. West Capital Funding, Inc. -
144A**
6.875% due 08/15/01 ................... 3,971,800
--------------
7,446,560
--------------
Package Goods/Cosmetics (0.3%)
4,000 Proctor & Gamble Co.
6.60% due 12/15/04 .................... 3,878,880
4,000 Proctor & Gamble Co.
6.45% due 01/15/26 .................... 3,531,960
--------------
7,410,840
--------------
Railroads (0.6%)
4,000 Norfolk Southern Corp.
6.70% due 05/01/00 .................... 4,000,240
954 Southern Pacific Transportation
Co. (Series B)
7.28% due 04/30/15 .................... 898,498
4,000 Union Pacific Corp.
6.79% due 11/09/07 .................... 3,756,680
4,000 Union Pacific Corp.
6.34% due 11/25/03 .................... 3,809,280
--------------
12,464,698
--------------
Smaller Banks (0.0%)
100 Centura Capital Trust I - 144A**
8.845% due 06/01/27 ................... 94,576
--------------
TOTAL CORPORATE BONDS
(Identified Cost $164,441,185) .......... 161,935,069
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------ ---------------
<S> <C> <C>
U.S. GOVERNMENT & AGENCY
OBLIGATIONS (11.9%)
$ 6,000 Federal Farm Credit Bank
6.00% due 10/01/01 .................... $ 5,918,760
10,000 Federal Home Loan Banks
4.875% due 01/22/02 ................... 9,620,000
Federal Home Loan Mortgage Corp.
10,000 5.125% due 10/15/08 ................... 8,587,600
11,000 6.625% due 09/15/09 ................... 10,445,930
69 8.50% due 07/01/02 .................... 67,879
47 9.00% due 08/01/02 .................... 46,609
Federal National Mortgage Assoc.
7,000 5.625% due 05/14/04 ................... 6,586,860
12,000 6.16% due 08/07/28 .................... 10,320,120
U.S. Treasury Bond
6,500 5.25% due 02/15/29 .................... 5,410,080
16,000 5.50% due 08/15/28 .................... 13,807,840
42,800 6.25% due 08/15/23 .................... 40,834,196
100 6.375% due 08/15/27 ................... 97,164
200 6.625% due 02/15/27 ................... 200,474
1,565 6.875% due 08/15/25 .................... 1,612,967
6,500 7.25% due 05/15/16 .................... 6,830,330
150 7.625% due 02/15/25 ................... 168,040
U.S. Treasury Note
48,450 4.00% due 10/31/00 .................... 47,665,594
33,000 5.375% due 02/15/01 ................... 32,658,450
3,300 5.625% due 11/30/00 ................... 3,282,576
1,000 5.625% due 02/28/01 ................... 991,650
100 5.75% due 08/15/03 .................... 97,075
6,500 5.875% due 11/30/01 ................... 6,416,670
6,000 6.25% due 02/28/02 .................... 5,956,800
4,000 6.25% due 08/31/02 .................... 3,961,480
1,140 6.25% due 02/15/03 .................... 1,126,685
16,600 6.50% due 08/15/05 .................... 16,413,084
7,000 6.50% due 10/15/06 .................... 6,902,210
1,150 6.625% due 06/30/01 ................... 1,150,713
1,100 6.875% due 05/15/06 ................... 1,106,556
3,000 7.00% due 07/15/06 .................... 3,036,570
1,100 7.25% due 05/15/04 .................... 1,120,856
2,000 7.25% due 08/15/04 .................... 2,038,900
75 7.50% due 11/15/01 .................... 76,067
5,000 7.875% due 11/15/04 ................... 5,222,750
--------------
TOTAL U.S. GOVERNMENT &
AGENCIES OBLIGATIONS
(Identified Cost $262,787,569) .......... 259,779,535
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS January 31, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------- -----------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (16.6%)
U.S. GOVERNMENT AGENCIES (a) (15.9%)
$ 100,000 Federal Home Loan Mortgage Corp.
5.48% due 02/22/00 .................... $ 99,680,333
248,000 Federal Home Loan Mortgage Corp.
5.75% due 02/01/00 .................... 248,000,000
--------------
TOTAL U.S. GOVERNMENT AGENCIES
(Amortized Cost $347,680,333)........... 347,680,333
--------------
REPURCHASE AGREEMENT (0.7%)
14,401 The Bank of New York 5.75%
due 02/01/00 (dated 01/31/00;
proceeds $14,403,021) (b)
(Identified Cost $14,400,721)......... 14,400,721
--------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $362,081,054).......... 362,081,054
--------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $1,711,803,373) (c)..... 101.0 % 2,207,844,594
LIABILITIES IN EXCESS OF OTHER
ASSETS .................................. (1.0) (21,362,293)
---- -------------
NET ASSETS .............................. 100.0 % $2,186,482,301
======= ==============
</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 $15,072,596 Federal Home Loan Bank 6.50% due
01/06/04 valued at $14,688,764.
(c) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$516,770,700 and the aggregate gross unrealized depreciation is
$20,729,479, resulting in net unrealized appreciation of
$496,041,221.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
January 31, 2000 (unaudited)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value
(identified cost $1,711,803,373) ................................ $2,207,844,594
Receivable for :
Investments sold ............................................... 41,912,927
Interest ....................................................... 8,514,143
Shares of beneficial interest sold ............................. 5,618,631
Dividends ...................................................... 820,117
Prepaid expenses and other assets ................................. 127,309
--------------
TOTAL ASSETS ................................................... 2,264,837,721
--------------
LIABILITIES:
Payable for:
Investments purchased .......................................... 73,308,095
Shares of beneficial interest repurchased ...................... 2,363,032
Plan of distribution fee ....................................... 1,517,035
Investment management fee ...................................... 979,058
Accrued expenses and other payables ............................... 188,200
--------------
TOTAL LIABILITIES .............................................. 78,355,420
--------------
NET ASSETS ..................................................... $2,186,482,301
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital ................................................... $1,572,268,109
Net unrealized appreciation ....................................... 496,039,839
Accumulated undistributed net investment income ................... 5,088,115
Accumulated undistributed net realized gain ....................... 113,086,238
--------------
NET ASSETS ..................................................... $2,186,482,301
==============
CLASS A SHARES:
Net Assets ........................................................ $81,311,098
Shares Outstanding (unlimited authorized, $.01 par value) ......... 3,937,390
NET ASSET VALUE PER SHARE ...................................... $20.65
======
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) ................ $21.79
======
CLASS B SHARES:
Net Assets ........................................................ $1,998,377,794
Shares Outstanding (unlimited authorized, $.01 par value) ......... 96,753,458
NET ASSET VALUE PER SHARE ...................................... $20.65
======
CLASS C SHARES:
Net Assets ........................................................ $25,784,078
Shares Outstanding (unlimited authorized, $.01 par value) ......... 1,252,388
NET ASSET VALUE PER SHARE ...................................... $20.59
======
CLASS D SHARES:
Net Assets ........................................................ $81,009,331
Shares Outstanding (unlimited authorized, $.01 par value) ......... 3,918,771
NET ASSET VALUE PER SHARE ...................................... $20.67
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the six months ended January 31, 2000 (unaudited)
<TABLE>
<CAPTION>
NET INVESTMENT INCOME:
<S> <C>
INCOME
Interest ................................................................ $ 22,537,367
Dividends (net of $9,796 foreign withholding tax) ....................... 5,561,714
------------
TOTAL INCOME ......................................................... 28,099,081
------------
EXPENSES
Plan of distribution fee (Class A shares) ............................... 89,837
Plan of distribution fee (Class B shares) ............................... 8,612,376
Plan of distribution fee (Class C shares) ............................... 99,873
Investment management fee ............................................... 5,467,095
Transfer agent fees and expenses ........................................ 813,045
Registration fees ....................................................... 91,233
Shareholder reports and notices ......................................... 69,114
Custodian fees .......................................................... 57,201
Professional fees ....................................................... 33,790
Trustees' fees and expenses ............................................. 8,234
Other ................................................................... 11,477
------------
TOTAL EXPENSES ....................................................... 15,353,275
------------
NET INVESTMENT INCOME ................................................ 12,745,806
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain/loss on:
Investments .......................................................... 171,582,339
Foreign exchange transactions ........................................ (1,787)
------------
NET GAIN ............................................................. 171,580,552
------------
Net change in unrealized appreciation/depreciation on:
Investments .......................................................... 53,242,813
Net translation of other assets and liabilities denominated in foreign
currencies ......................................................... (1,680)
------------
NET APPRECIATION ..................................................... 53,241,133
------------
NET GAIN ............................................................. 224,821,685
------------
NET INCREASE ............................................................ $237,567,491
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JANUARY 31, 2000 JULY 31, 1999
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................ $ 12,745,806 $ 18,966,053
Net realized gain .................................... 171,580,552 176,815,551
Net change in unrealized appreciation ................ 53,241,133 (21,193,908)
-------------- --------------
NET INCREASE ...................................... 237,567,491 174,587,696
-------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares .................................... (570,492) (846,187)
Class B shares .................................... (8,415,581) (16,039,877)
Class C shares .................................... (86,163) (91,734)
Class D shares .................................... (674,720) (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 .................................... (1,738,095) (696,343)
Class D shares .................................... (6,302,510) (5,750,340)
-------------- --------------
TOTAL DIVIDENDS AND DISTRIBUTIONS ................. (181,473,129) (158,130,004)
-------------- --------------
Net increase from transactions in shares of beneficial
interest ........................................... 143,333,865 201,010,037
-------------- --------------
NET INCREASE ...................................... 199,428,227 217,467,729
NET ASSETS:
Beginning of period .................................. 1,987,054,074 1,769,586,345
-------------- --------------
END OF PERIOD
(Including undistributed net investment income of
$5,088,115 and $2,089,265, respectively) .......... $2,186,482,301 $1,987,054,074
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS January 31, 2000 (unaudited)
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 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 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 prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by Morgan Stanley Dean Witter Advisors Inc. (the "Investment
Manager") that sale or bid prices are not reflective of a security's market
value, portfolio securities are valued at their fair value as determined in
good faith under procedures established by and under the general supervision of
the Trustees (valuation of debt securities for which market quotations are not
readily available may be based upon current market prices of securities which
are comparable in coupon, rating and maturity or an appropriate matrix
utilizing similar factors); (4) certain of the Fund's portfolio securities may
be valued by an outside pricing service approved by the Trustees. The pricing
12
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS January 31, 2000 (unaudited) continued
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.
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.
13
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS January 31, 2000 (unaudited) continued
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.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services,
heat, light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan") pursuant to
14
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS January 31, 2000 (unaudited) continued
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; and (iii) Class C - up to 1.0% of the average
daily net assets of Class C. In the case of Class A shares, amounts paid under
the Plan are paid to the Distributor for services provided. In the case of
Class B and Class C shares, amounts paid under the Plan are paid to the
Distributor for (1) services provided and the expenses borne by it and others
in the distribution of the shares of these Classes, including the payment of
commissions for sales of these Classes and incentive compensation to, and
expenses of, Morgan Stanley Dean Witter Financial Advisors and others who
engage in or support distribution of the shares or who service shareholder
accounts, including overhead and telephone expenses; (2) printing and
distribution of prospectuses and reports used in connection with the offering
of these shares to other than current shareholders; and (3) preparation,
printing and distribution of sales literature and advertising materials. In
addition, the Distributor may utilize fees paid pursuant to the Plan, in the
case of Class B shares, to compensate Dean Witter Reynolds Inc. ("DWR"), an
affiliate of the Investment Manager and Distributor, and other selected
broker-dealers for their opportunity costs in advancing such amounts, which
compensation would be in the form of a carrying charge on any unreimbursed
expenses.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund
pursuant to the Plan and contingent deferred sales charges paid by investors
upon redemption of Class B shares. Although there is no legal obligation for
the Fund to pay expenses incurred in excess of payments made to the Distributor
under the Plan and the proceeds of contingent deferred sales charges paid by
investors upon redemption of shares, if for any reason the Plan is terminated,
the Trustees will consider at that time the manner in which to treat such
expenses. The Distributor has advised the Fund that such excess amounts,
including carrying charges, totaled $36,702,941 at January 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
15
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS January 31, 2000 (unaudited) continued
broker-dealer representatives may be reimbursed in the subsequent calendar
year. For the six months ended January 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 six months ended January 31,
2000, it received contingent deferred sales charges from certain redemptions of
the Fund's Class A shares, Class B shares and Class C shares of $148, $864,686
and $6,943, respectively and received $46,400 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 six months
ended January 31, 2000 aggregated $1,334,127,769 and $1,472,051,161,
respectively. Included in the aforementioned are purchases and
sales/maturities/prepayments of U.S. Government securities of $362,927,583 and
$353,038,297, respectively.
At January 31, 2000, the Fund's receivable for investment sold included
unsettled trades with DWR of $2,811,144. For the six months ended January 31,
2000, the Fund incurred brokerage commissions with DWR of $76,837, for
portfolio transactions executed on behalf of the Fund.
For the six months ended January 31, 2000, the Fund incurred brokerage
commissions of $156,028 with Morgan Stanley & Co., Inc. an affiliate of the
Investment Manager and Distributor, for portfolio transactions executed on
behalf of the Fund. At January 31, 2000, the Fund's payable for investments
purchased included unsettled trades with Morgan Stanley & Co., Inc. of
$12,954,110.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager
and Distributor, is the Fund's transfer agent. At January 31, 2000, the Fund
had transfer agent fees and expenses payable of approximately $1,200.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent 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 January 31, 2000
included in Trustees' fees and expenses in the Statement of Operations amounted
to $2,315. At January 31, 2000, the Fund had an accrued pension liability of
$72,628 which is included in accrued expenses in the Statement of Assets and
Liabilities.
16
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS January 31, 2000 (unaudited) continued
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JANUARY 31, 2000
--------------------------------
(unaudited)
SHARES AMOUNT
-------------- -----------------
<S> <C> <C>
CLASS A SHARES
Sold ............................................................ 1,113,112 $ 22,548,383
Reinvestment of dividends and distributions ..................... 20,488 404,871
Acquisition of Dean Witter Global Asset Allocation Fund ......... - -
Redeemed ........................................................ (391,061) (8,006,417)
--------- ---------------
Net increase - Class A .......................................... 742,539 14,946,837
--------- ---------------
CLASS B SHARES
Sold ............................................................ 15,141,502 305,008,132
Reinvestment of dividends and distributions ..................... 376,884 7,440,740
Acquisition of Dean Witter Global Asset Allocation Fund ......... - -
Redeemed ........................................................ (9,718,129) (199,522,633)
---------- ---------------
Net increase - Class B .......................................... 5,800,257 112,926,239
---------- ---------------
CLASS C SHARES
Sold ............................................................ 561,206 11,404,960
Reinvestment of dividends and distributions ..................... 4,164 81,913
Acquisition of Dean Witter Global Asset Allocation Fund ......... - -
Redeemed ........................................................ (115,941) (2,383,697)
---------- ---------------
Net increase - Class C .......................................... 449,429 9,103,176
---------- ---------------
CLASS D SHARES
Sold ............................................................ 568,636 11,405,804
Reinvestment of dividends and distributions ..................... 30,734 608,223
Acquisition of Dean Witter Global Asset Allocation Fund ......... - -
Acquisition of Dean Witter Retirement Series - Strategist
Series ......................................................... - -
Redeemed ........................................................ (275,635) (5,656,414)
---------- ---------------
Net increase - Class D .......................................... 323,735 6,357,613
---------- ---------------
Net increase in Fund ............................................ 7,315,960 $ 143,333,865
========== ===============
<CAPTION>
FOR THE YEAR
ENDED
JULY 31, 1999
----------------------------------
SHARES AMOUNT
---------------- -----------------
<S> <C> <C>
CLASS A SHARES
Sold ............................................................ 1,934,094 $ 37,196,680
Reinvestment of dividends and distributions ..................... 245,489 4,408,793
Acquisition of Dean Witter Global Asset Allocation Fund ......... 15,373 288,931
Redeemed ........................................................ (724,574) (14,041,119)
--------- ---------------
Net increase - Class A .......................................... 1,470,382 27,853,285
--------- ---------------
CLASS B SHARES
Sold ............................................................ 16,874,303 326,909,527
Reinvestment of dividends and distributions ..................... 7,311,689 131,234,901
Acquisition of Dean Witter Global Asset Allocation Fund ......... 2,202,447 41,353,775
Redeemed ........................................................ (17,441,832) (337,838,267)
----------- ---------------
Net increase - Class B .......................................... 8,946,607 161,659,936
----------- ---------------
CLASS C SHARES
Sold ............................................................ 575,043 11,155,902
Reinvestment of dividends and distributions ..................... 41,974 752,113
Acquisition of Dean Witter Global Asset Allocation Fund ......... 7,608 142,546
Redeemed ........................................................ (211,043) (4,034,449)
----------- ---------------
Net increase - Class C .......................................... 413,582 8,016,112
----------- ---------------
CLASS D SHARES
Sold ............................................................ 546,959 10,529,031
Reinvestment of dividends and distributions ..................... 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 ........................................................ (1,565,127) (30,368,535)
----------- ---------------
Net increase - Class D .......................................... 246,750 3,480,704
----------- ---------------
Net increase in Fund ............................................ 11,077,321 $ 201,010,037
=========== ===============
</TABLE>
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 1999.
17
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS January 31, 2000 (unaudited) continued
At July 31, 1999, the Fund had temporary book/tax differences primarily
attributable to post-October losses and 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 January 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 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.
18
<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 SIX FOR THE YEAR FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED ENDED THROUGH
JANUARY 31, 2000 JULY 31, 1999 JULY 31, 1998 JULY 31, 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(unaudited)
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 .......................... 0.19 0.32 0.36 0.01
Net realized and unrealized gain ............... 2.21 1.46 2.06 0.34
------ ------ ------ ------
Total income from investment operations ......... 2.40 1.78 2.42 0.35
------ ------ ------ ------
Less dividends and distributions from:
Net investment income .......................... (0.16) (0.32) (0.43) -
Net realized gain .............................. (1.75) (1.53) (0.51) -
------ ------ ------ ------
Total dividends and distributions ............... (1.91) (1.85) (0.94) -
------ ------ ------ ------
Net asset value, end of period .................. $20.65 $20.16 $20.23 $18.75
====== ====== ====== ======
TOTAL RETURN+ ................................... 12.45%(1) 10.01% 13.48% 1.90%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 0.88%(2)(3) 0.87%(3) 0.91% 0.92%(2)
Net investment income ........................... 1.83%(2)(3) 1.66%(3) 1.85% 5.06%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $81,311 $64,418 $34,891 $79
Portfolio turnover rate ......................... 82%(1) 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
19
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JANUARY 31, 2000++
----------------------
(unaudited)
<S> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period .......... $20.16
------
Income from investment operations:
Net investment income ........................ 0.12
Net realized and unrealized gain ............. 2.21
------
Total income from investment operations ....... 2.33
------
Less dividends and distributions from:
Net investment income ........................ (0.09)
Net realized gain ............................ (1.75)
------
Total dividends and distributions ............. (1.84)
------
Net asset value, end of period ................ $20.65
======
TOTAL RETURN+ ................................ 12.06%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ...................................... 1.54%(2)(3)
Net investment income ......................... 1.17%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ....... $1,998,378
Portfolio turnover rate ....................... 82%(1)
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JULY 31
--------------------------------------------------------------------------
1999++ 1998++ 1997*++ 1996 1995
----------------- -------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period .......... $20.23 $18.75 $16.02 $15.87 $14.43
------ ------ ------ ------ ------
Income from investment operations:
Net investment income ........................ 0.19 0.24 0.39 0.30 0.34
Net realized and unrealized gain ............. 1.46 2.06 4.10 1.43 1.86
------ ------ ------ ------ ------
Total income from investment operations ....... 1.65 2.30 4.49 1.73 2.20
------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income ........................ (0.19) (0.31) (0.36) (0.32) (0.29)
Net realized gain ............................ (1.53) (0.51) (1.40) (1.26) (0.47)
------ ------ ------ ------ ------
Total dividends and distributions ............. (1.72) (0.82) (1.76) (1.58) (0.76)
------ ------ ------ ------ ------
Net asset value, end of period ................ $20.16 $20.23 $18.75 $16.02 $15.87
====== ======== ====== ====== ======
TOTAL RETURN+ ................................ 9.23% 12.77% 29.73% 11.47% 16.05%
RATIOS TO AVERAGE NET ASSETS:
Expenses ...................................... 1.57%(3) 1.54% 1.56% 1.58% 1.63%
Net investment income ......................... 0.96%(3) 1.24% 2.29% 1.88% 2.35%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ....... $1,833,935 $1,659,037 $1,540,880 $1,259,305 $877,595
Portfolio turnover rate ....................... 121% 92% 158% 174% 179%
</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) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
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
JANUARY 31, 2000 JULY 31, 1999 JULY 31, 1998 JULY 31, 1997
------------------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C>
(unaudited)
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 .......................... 0.11 0.16 0.21 0.01
Net realized and unrealized gain ............... 2.21 1.47 2.06 0.34
------ ------ ------ ------
Total income from investment operations ......... 2.32 1.63 2.27 0.35
------ ------ ------ ------
Less dividends and distributions from:
Net investment income .......................... (0.09) (0.18) (0.32) -
Net realized gain .............................. (1.75) (1.53) (0.51) -
------- ------ ------ ------
Total dividends and distributions ............... (1.84) (1.71) (0.83) -
------ ------ ------ ------
Net asset value, end of period .................. $20.59 $20.11 $20.19 $18.75
====== ====== ====== =======
TOTAL RETURN + .................................. 12.02%(1) 9.15% 12.66% 1.90%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 1.63%(2)(3) 1.65%(3) 1.66% 1.67%(2)
Net investment income ........................... 1.08%(2)(3) 0.88%(3) 1.08% 4.38%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $25,784 $16,147 $7,861 $114
Portfolio turnover rate ......................... 82%(1) 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
21
<PAGE>
MORGAN STANLEY DEAN WITTER STRATEGIST FUND
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
JANUARY 31, 2000 JULY 31, 1999 JULY 31, 1998 JULY 31, 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(unaudited)
CLASS D SHARES ++
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 .......................... 0.22 0.37 0.41 0.01
Net realized and unrealized gain ............... 2.21 1.45 2.06 0.34
------ ------ ------ ------
Total income from investment operations ......... 2.43 1.82 2.47 0.35
------ ------ ------ ------
Less dividends and distributions from:
Net investment income .......................... (0.19) (0.36) (0.46) -
Net realized gain .............................. (1.75) (1.53) (0.51) -
------ ------ ------ ------
Total dividends and distributions ............... (1.94) (1.89) (0.97) -
------ ------ ------ ------
Net asset value, end of period .................. $20.67 $20.18 $20.25 $18.75
====== ====== ====== ======
TOTAL RETURN + .................................. 12.58%(1) 10.23% 13.80% 1.90%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 0.63%(2)(3) 0.65%(3) 0.66% 0.67%(2)
Net investment income ........................... 2.08%(2)(3) 1.88%(3) 2.12% 5.40%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $81,009 $72,554 $67,797 $57,938
Portfolio turnover rate ......................... 82%(1) 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
22
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin
President
Barry Fink
Vice President, Secretary and General Counsel
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
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records of the
Fund without examination by the independent accountants and accordingly they do
not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of the
Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus. Read the
prospectus carefully before investing.
MORGAN STANLEY
DEAN WITTER
STRATEGIST FUND
[GRAPHIC OMITTED]
SEMIANNUAL REPORT
JANUARY 31, 2000
