<PAGE> 1
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES Two World Trade Center
LETTER TO THE SHAREHOLDERS February 29, 2000 New York, New York 10048
DEAR SHAREHOLDER:
During the six-month period ended February 29, 2000, interest rates continued to
rise as the economy displayed considerable vigor and the unemployment rate fell
to 4 percent. Y2K concerns early in the period gradually abated, giving way to
escalating business and consumer spending that culminated in a fourth-quarter
GDP rate of 6.9 percent. The ongoing technological revolution allowed
productivity to soar and wages and salaries to outpace the still relatively tame
inflation rate.
In this economic environment, the Federal Reserve Board remained vigilant,
fighting the threat of inflation by raising the federal-funds rate to 5.75
percent and intimating that further increases were to come. While long-term U.S.
Treasury yields rose initially, upward pressure was softened by expectations for
a decrease in new Treasury note and bond sales because of the Treasury's
burgeoning tax receipts and attendant growing budget surplus. On February 29,
2000, yields for 5- and 30-year Treasuries were 6.60 percent and 6.15 percent,
respectively, compared to 5.87 percent and 6.06 percent on August 31, 1999.
Corporate yields were affected less by supply factors than by stock market
volatility and a general tiering of the market that valued liquidity at a
particularly high premium. New issuance, augmented by a need to finance
corporate mergers and acquisitions with public debt, was sufficiently abundant
to satisfy investor demand easily. For the first two months of 2000, as measured
by Lehman Brothers, the Corporate Bond Index provided less than one-third the
return of the U.S. Treasury Index.
PERFORMANCE
For the six-month period ended February 29, 2000, Morgan Stanley Dean Witter
Intermediate Income Securities' Class B shares posted a total return of 0.16
percent compared to 1.45 percent for the Lehman Intermediate
Government/Corporate Bond Index. The Fund's Class A, C and D shares returned
0.64 percent, 0.27 percent and 0.58 percent, respectively. The performance of
the Fund's four share classes varies
<PAGE> 2
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
LETTER TO THE SHAREHOLDERS February 29, 2000, continued
because of differing expenses. The total return figures given assume the
reinvestment of all distributions and do not reflect the deduction of any
applicable sales charges.
The Fund's return was reflective of the rise in interest rates and the impact of
erratic liquidity conditions for corporate bonds. The Fund held two positions
that declined substantially more than the market as a whole, adversely affecting
the Fund's net asset value. Both Oakwood Homes and Stewart Brothers were
downgraded to below investment grade and are being monitored. Given the
illiquidity in the marketplace, we believe that the secondary markets are not
reflective of the bonds' true values and will therefore continue to hold them,
barring future unforeseen negative credit events.
The Fund was also affected negatively by the shift in yields among varying
maturities. Among Treasuries, interest rates rose the most for short and
intermediate maturities, while 30-year bonds rose only marginally. As measured
by Lehman Brothers, Treasuries with maturities from five to 10 years provided
negative rates of return for the period under review. For most of the period,
approximately 50 percent of the Fund's investments had maturities between 5 and
10 years, and their market values suffered accordingly. The Fund's lack of
participation in the mortgage-backed market further exacerbated its relative
performance, as this sector outperformed U.S. Treasuries, agencies and
corporates. The Fund did see considerable outperformance in a number of its
corporate holdings, however, including Republic of Korea, British Sky
Broadcasting, Israel Electric, Niagara Mohawk, Oracle, Teleglobe, and United
Utilities.
PORTFOLIO STRATEGY
For most of the period, cash reserves were held to between 3 and 5 percent of
investable assets as rising interest rates and a soaring stock market continued
to encourage outflows from bond funds into equities. As the Fund's assets
declined, larger positions were reduced, while quality and liquidity were
emphasized for new purchases. Corporate spreads versus Treasuries were subject
to wide swings, creating opportunities at times to sell corporates at attractive
levels versus Treasuries. The Fund used these periods to reduce its exposure to
three credits, each representing more than 3 percent of net assets at their
times of sale: Applied Materials, Republic of Korea, and Shawmut Bank. Other
issues sold included Sears, U.S. West Capital, Citicorp, AT&T and British Sky
Broadcasting. The majority of new corporates purchased were rated at least "A"
and included U.S. West Communications, Duke Capital, Textron, Procter & Gamble,
Electronic Data Systems and Sempra Energy.
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
LETTER TO THE SHAREHOLDERS February 29, 2000, continued
Rising interest rates prompted the Fund to modestly reduce the portfolio's
duration and its exposure to financial issues. The average duration fell to a
low of 4.18 years on January 31 before rising again to 4.29 years on February
29, still down from 4.36 years six months earlier. Financial holdings as a
percent of investments declined to 24.2 percent from 27.9 percent over the same
period. Treasury commitments more than doubled for the first five months of the
period as the Fund sought safety from corporate spread volatility in this
sector. Allocations to this sector had been 4.5 percent in August, but rose to
10.8 percent of investments before being reduced in favor of corporate bonds in
February. On February 29, U.S. Treasuries represented 5.3 percent of
investments. The greatest increase by sector was in the Fund's allocation to
utilities, rising from 8.6 percent to 12.6 percent of invested assets.
LOOKING AHEAD
Despite efforts by the Fed to subdue economic growth by raising short-term
interest rates, domestic production and consumer demand remain robust. Ongoing
tight labor markets, insatiable consumer demand, and surging rates of
productivity all suggest that further rate increases may be in store over the
next several months.
Until such time as interest rates check corporate profits and individuals' stock
market gains, we can expect yields for fixed-income securities to rise. Given
this investment environment, the Fund will look to improve its liquidity
characteristics by once again increasing its allocation to Treasuries if the
yield differentials between corporates and U.S. government securities narrow.
Not only are Treasuries viewed as a safe haven, but the burgeoning Treasury
surplus and accompanying reduced supply of future Treasury debt could serve to
mitigate market pressures on the prices of these securities.
We appreciate your ongoing support of Morgan Stanley Dean Witter Intermediate
Income Securities and look forward to continuing to serve your investment needs.
<TABLE>
<S> <C>
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO /s/ MITCHELL M. MERIN
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
</TABLE>
3
<PAGE> 4
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
FUND PERFORMANCE February 29, 2000
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A SHARES*
- ----------------------------------------------
<S> <C> <C>
PERIOD ENDED 2/29/00
- -------------------------
1 Year 0.16(1) -4.10(2)
Since Inception (7/28/97) 3.38(1) 1.66(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES+
- ----------------------------------------------
<S> <C> <C>
PERIOD ENDED 2/29/00
- -------------------------
1 Year -0.51(1) -1.46(2)
Since Inception (7/28/97) 2.76(1) 2.76(2)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
<TABLE>
<CAPTION>
CLASS B SHARES**
- ----------------------------------------------
<S> <C> <C>
PERIOD ENDED 2/29/00
- -------------------------
1 Year -0.73(1) -5.44(2)
5 Years 4.84(1) 4.52(2)
10 Years 5.87(1) 5.87(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS D SHARES++
- ----------------------------------------------
<S> <C>
PERIOD ENDED 2/29/00
- -------------------------
1 Year 0.12(1)
Since Inception (7/28/97) 3.56(1)
</TABLE>
- ---------------------
<TABLE>
<S> <C>
(1) Figure shown assumes reinvestment of all distributions and
does not reflect the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and
the deduction of the maximum applicable sales charge. See
the Fund's current prospectus for complete details on fees
and sales charges.
* The maximum front-end sales charge for Class A is 4.25%.
** The maximum contingent deferred sales charge (CDSC) for
Class B is 5.0%. The CDSC declines to 0% after six years.
+ The maximum CDSC for Class C shares is 1% for shares
redeemed within one year of purchase.
++ Class D shares have no sales charge.
</TABLE>
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
PORTFOLIO OF INVESTMENTS February 29, 2000 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (92.3%)
Cable Television (0.8%)
$1,000 Cox Enterprises Inc. - 144A*.......... 6.625% 06/14/02 $ 981,620
------------
Casino/Gambling (2.3%)
3,000 Mirage Resorts, Inc. ................. 6.75 02/01/08 2,634,570
------------
Cellular Telephone (1.8%)
2,000 Vodafone Airtouch PLC (United
Kingdom) - 144A*..................... 7.75 02/15/10 1,989,160
------------
Clothing/Shoe/Accessory Stores (2.7%)
3,000 TJX Companies, Inc. .................. 6.625 06/15/00 2,999,520
------------
Computer Software (1.7%)
2,000 Oracle Corp. ......................... 6.91 02/15/07 1,912,160
------------
Diversified Manufacturing (1.6%)
2,000 Tyco International Group S.A.
(Luxembourg) ........................ 5.875 11/01/04 1,850,940
------------
E.D.P. Services (1.7%)
2,000 Electronic Data Systems............... 6.85 10/15/04 1,954,040
------------
Electric Utilities (15.8%)
2,000 Duke Capital Corp. ................... 7.25 10/01/04 1,973,420
2,500 Israel Electric Co., Ltd.
(Israel) - 144A*..................... 7.75 03/01/09 2,400,650
1,066 Niagara Mohawk Power Corp. ........... 7.25 10/01/02 1,056,929
2,000 Public Services Co. of Colorado....... 6.875 07/15/09 1,906,680
3,000 System Energy Resources, Inc. ........ 7.71 08/01/01 3,014,010
5,000 United Utilities Corp. (United
Kingdom)............................. 6.45 04/01/08 4,540,000
3,000 Western Resources, Inc. .............. 6.875 08/01/04 2,836,350
------------
17,728,039
------------
Electronic Production Equipment (1.8%)
2,185 Applied Materials, Inc. .............. 6.75 10/15/07 2,064,650
------------
Finance Companies (3.4%)
2,000 Ford Motor Credit Corp. .............. 6.70 07/16/04 1,932,700
2,000 General Motor Acceptance Corp. ....... 5.75 11/10/03 1,889,640
------------
3,822,340
------------
Food Chains (1.8%)
2,000 Kroger Co. ........................... 8.05 02/01/10 1,996,160
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
PORTFOLIO OF INVESTMENTS February 29, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Forest Products (4.2%)
$5,049 Noranda Forest, Inc. (Canada)......... 6.875% 11/15/05 $ 4,722,734
------------
Home Building (1.0%)
2,000 Oakwood Homes Corp. .................. 8.125 03/01/09 1,140,000
------------
Industrial Machinery/Components (2.5%)
3,000 Atlas Copco (Sweden) - 144A*.......... 6.50 04/01/08 2,752,800
------------
Investment Bankers/Brokers/Services
(4.7%)
2,000 Donaldson, Lufkin & Jenrette, Inc. ... 8.00 03/01/05 2,002,500
2,500 Lehman Brothers Holdings, Inc. ....... 6.125 07/15/03 2,373,175
1,000 Paine Webber Group, Inc. ............. 6.375 05/15/04 942,430
------------
5,318,105
------------
Life Insurance (1.8%)
2,000 Conseco Inc. ......................... 8.75 02/09/04 2,011,820
------------
Major Banks (11.1%)
2,000 Bank of America Corp. ................ 7.80 02/15/10 1,985,180
2,000 Bank One Texas N.A. .................. 6.25 02/15/08 1,806,940
1,000 Bankers Trust Corp. .................. 6.70 10/01/07 927,740
2,000 Citicorp.............................. 6.375 11/15/08 1,822,360
3,000 Morgan (J.P.) & Co. Inc. (Series A)... 6.00 01/15/09 2,632,800
3,145 Shawmut Bank Connecticut, N.A. ....... 8.625 02/15/05 3,251,018
------------
12,426,038
------------
Major Chemicals (1.7%)
2,100 Millennium America, Inc. ............. 7.00 11/15/06 1,892,016
------------
Major U.S. Telecommunications (3.1%)
1,000 Sprint Capital Corp. ................. 6.375 05/01/09 909,760
3,000 U.S. West Communications, Inc. ....... 5.625 11/15/08 2,603,640
------------
3,513,400
------------
Mid-sized Banks (4.3%)
3,000 Capital One Bank...................... 6.375 02/15/03 2,876,610
2,000 Star Bank N.A. ....................... 6.375 03/01/04 1,913,880
------------
4,790,490
------------
Military/Gov't/Technical (2.5%)
2,850 Raytheon Co. ......................... 6.30 08/15/00 2,841,792
------------
Multi-Sector Companies (1.8%)
2,000 Textron Inc. ......................... 6.75 09/15/02 1,971,360
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
PORTFOLIO OF INVESTMENTS February 29, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Natural Gas (1.8%)
$2,000 Sempra Energy Corp. .................. 7.95 % 03/01/10 $ 2,011,080
------------
Oil & Gas Production (1.7%)
2,000 Union Pacific Resource Group Inc. .... 6.50 05/15/05 1,873,220
------------
Oil/Gas Transmission (1.8%)
2,000 Columbia Energy Group (Series A)...... 6.39 11/28/00 1,988,500
------------
Oilfield Services & Equipment (1.6%)
2,000 Petro Geo - Services ASA (Norway)..... 6.625 03/30/08 1,818,920
------------
Other Consumer Services (2.1%)
3,000 Stewart Enterprises, Inc. ............ 6.70 12/01/03 2,334,540
------------
Other Telecommunications (3.3%)
2,000 Frontier Corp. ....................... 7.25 05/15/04 1,830,160
2,000 Teleglobe Inc. (Canada)............... 7.20 07/20/09 1,914,680
------------
3,744,840
------------
Packaged Goods/Cosmetics (0.9%)
1,000 Proctor & Gamble Co. ................. 6.875 09/15/09 963,330
------------
Rental/Leasing Companies (2.9%)
3,350 Hertz Corp. .......................... 6.00 01/15/03 3,217,843
------------
Textiles (2.1%)
3,000 Burlington Industries, Inc. .......... 7.25 09/15/05 2,389,740
------------
TOTAL CORPORATE BONDS
(Identified Cost $109,833,166)........................... 103,655,767
------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS
(12.0%)
2,000 Federal Home Loan Banks............... 6.75 02/01/02 1,995,620
32 Federal Home Loan Mortgage Corp. ..... 8.50 12/01/01 32,384
23 Federal Home Loan Mortgage Corp. ..... 8.50 01/01/02 23,378
66 Federal Home Loan Mortgage Corp. ..... 8.50 07/01/02 66,067
43 Federal Home Loan Mortgage Corp. ..... 9.00 08/01/02 42,994
1,500 Federal National Mortgage Assoc. ..... 5.90 06/18/01 1,478,610
12 Federal National Mortgage Assoc. ..... 8.50 12/01/01 12,290
2,000 Federal National Mortgage Corp. ...... 5.125 02/13/04 1,864,840
1,620 Private Export Funding Corp. ......... 6.86 04/30/04 1,613,520
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
PORTFOLIO OF INVESTMENTS February 29, 2000 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$1,450 U.S. Treasury Note.................... 6.25 % 01/31/02 $ 1,441,924
5,000 U.S. Treasury Note.................... 6.125 08/15/07 4,841,651
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Identified Cost $13,632,780)............................ 13,413,278
------------
SHORT TERM INVESTMENT (0.7%)
REPURCHASE AGREEMENT
841 The Bank of New York (dated 02/29/00;
proceeds $841,338) (a)
(Identified Cost $841,205)............ 5.688 03/01/00 841,205
------------
TOTAL INVESTMENTS
(Identified Cost $124,307,151) (b).............. 105.0% 117,910,250
LIABILITIES IN EXCESS OF OTHER ASSETS........... (5.0) (5,658,490)
---- ------------
NET ASSETS...................................... 100.0% $112,251,760
===== ============
</TABLE>
- ---------------------
* Resale is restricted to qualified institutional investors.
(a) Collateralized by $868,460 U.S. Treasury Bond 6.125% due 11/15/27 valued at
$858,032.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $102,794 and the
aggregate gross unrealized depreciation is $6,499,695, resulting in net
unrealized depreciation of $6,396,901.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2000 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $124,307,151)............................. $117,910,250
Receivable for:
Investments sold........................................ 1,980,800
Interest................................................ 1,807,572
Shares of beneficial interest sold...................... 34,090
Principal paydowns...................................... 7,659
Prepaid expenses and other assets........................... 22,991
------------
TOTAL ASSETS............................................ 121,763,362
------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased............... 7,294,760
Investments purchased................................... 1,897,073
Dividends to shareholders............................... 78,718
Plan of distribution fee................................ 70,738
Investment management fee............................... 58,373
Accrued expenses............................................ 111,940
------------
TOTAL LIABILITIES....................................... 9,511,602
------------
NET ASSETS.............................................. $112,251,760
============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................. $129,707,361
Net unrealized depreciation................................. (6,396,901)
Accumulated net realized loss............................... (11,058,700)
------------
NET ASSETS.............................................. $112,251,760
============
CLASS A SHARES:
Net Assets.................................................. $3,425,908
Shares Outstanding (unlimited authorized, $.01 par value)... 376,808
NET ASSET VALUE PER SHARE............................... $9.09
============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 4.44% of net asset value)........ $9.49
============
CLASS B SHARES:
Net Assets.................................................. $99,449,944
Shares Outstanding (unlimited authorized, $.01 par value)... 10,935,341
NET ASSET VALUE PER SHARE............................... $9.09
============
CLASS C SHARES:
Net Assets.................................................. $1,778,533
Shares Outstanding (unlimited authorized, $.01 par value)... 195,238
NET ASSET VALUE PER SHARE............................... $9.11
============
CLASS D SHARES:
Net Assets.................................................. $7,597,375
Shares Outstanding (unlimited authorized, $.01 par value)... 835,325
NET ASSET VALUE PER SHARE............................... $9.10
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended February 29, 2000 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $ 4,360,477
-----------
EXPENSES
Plan of distribution fee (Class A shares)................... 2,538
Plan of distribution fee (Class B shares)................... 471,931
Plan of distribution fee (Class C shares)................... 7,992
Investment management fee................................... 379,374
Transfer agent fees and expenses............................ 74,910
Professional fees........................................... 52,753
Registration fees........................................... 37,592
Shareholder reports and notices............................. 28,581
Trustees' fees and expenses................................. 8,320
Other....................................................... 1,322
-----------
TOTAL EXPENSES.......................................... 1,065,313
-----------
NET INVESTMENT INCOME................................... 3,295,164
-----------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss........................................... (1,263,849)
Net change in unrealized depreciation....................... (1,699,233)
-----------
NET LOSS................................................ (2,963,082)
-----------
NET INCREASE................................................ $ 332,082
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999
- ------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................ $ 3,295,164 $ 7,604,016
Net realized loss.................................... (1,263,849) (274,339)
Net change in unrealized appreciation/depreciation... (1,699,233) (5,665,329)
------------ ------------
NET INCREASE..................................... 332,082 1,664,348
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A shares....................................... (123,871) (218,762)
Class B shares....................................... (2,847,391) (6,857,509)
Class C shares....................................... (48,126) (67,287)
Class D shares....................................... (276,769) (474,780)
------------ ------------
TOTAL DIVIDENDS.................................. (3,296,157) (7,618,338)
------------ ------------
Net decrease from transactions in shares of
beneficial interest................................. (18,435,728) (21,549,707)
------------ ------------
NET DECREASE..................................... (21,399,803) (27,503,697)
NET ASSETS:
Beginning of period.................................. 133,651,563 161,155,260
------------ ------------
END OF PERIOD
(Including undistributed net investment income of
$0 and $993, respectively)....................... $112,251,760 $133,651,563
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE> 12
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS February 29, 2000 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Intermediate Income Securities (the "Fund") is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
a diversified, open-end management investment company. The Fund's investment
objective is high current income consistent with safety of principal. The Fund
was organized as a Massachusetts business trust on September 1, 1988 and
commenced operations on May 3, 1989. 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;
(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 and bid prices are not reflective of a security's market
value, portfolio securities are valued at their fair value as determined in good
faith under procedures established by and under the general supervision of the
Trustees (valuation of debt securities for which market quotations are not
readily available may be based upon current market prices of securities which
are comparable in coupon, rating and maturity or an appropriate matrix utilizing
similar factors); (4) certain portfolio securities may be valued by an outside
pricing service approved by the Trustees.
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS February 29, 2000 (unaudited) continued
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, 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 on the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the record date. The amount of dividends
and distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Dividends and distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as dividends in excess
of net investment income or distributions in excess of net realized capital
gains. To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of paid-in-capital.
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS February 29, 2000 (unaudited) continued
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, calculated daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined as of the close
of each business day: 0.60% of the portion of daily net assets not exceeding
$500 million; 0.50% of the portion of daily net assets exceeding $500 million
but not exceeding $750 million; 0.40% of the portion of the daily net assets
exceeding $750 million but not exceeding $1 billion; and 0.30% of the portion of
the daily net asset exceeding $1 billion.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund will pay the Distributor a fee which is
accrued daily and paid monthly at the following annual rates: (i) Class A -- up
to 0.25% of the average daily net assets of Class A; (ii) Class B -- 0.85% of
the lesser of : (a) the average daily aggregate gross sales of the Class B
shares since the inception of the Fund (not including reinvestment of dividend
or capital gain distributions) less the average daily aggregate net asset value
of the Class B shares redeemed since the Fund's inception upon which a
contingent deferred sales charge had been imposed or waived; or (b) the average
daily net assets of Class B; and (iii) Class C -- up to 0.85% 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
14
<PAGE> 15
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS February 29, 2000 (unaudited) continued
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 $5,057,169 at February 29, 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 0.85% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the six months ended February 29, 2000, the distribution fee
was accrued for Class A shares and Class C shares at the annual rate of 0.12%
and 0.85%, respectively.
The Distributor has informed the Fund that for the six months ended February 29,
2000, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $69,996, and $602, respectively
and received $3,404, 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.
15
<PAGE> 16
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS February 29, 2000 (unaudited) continued
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales/prepayments of portfolio
securities, excluding short-term investments, for the six months ended February
29, 2000, aggregated $49,886,018 and $55,062,055, respectively. Included in the
aforementioned are purchases and sales of U.S. Government securities of
$21,780,019 and $18,851,542, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At February 29, 2000, the Fund had
transfer agent fees and expenses payable of approximately $500.
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 February 29, 2000
included in Trustees' fees and expenses in the Statement of Operations amounted
to $2,907. At February 29, 2000, the Fund had an accrued pension liability of
$53,309 which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. FEDERAL INCOME TAX STATUS
At August 31, 1999, the Fund had a net capital loss carryover of approximately
$8,967,000, which may be used to offset future capital gains to the extent
provided by regulations, which is available through August 31 of the following
years:
<TABLE>
<CAPTION>
AMOUNT IN THOUSANDS
- -----------------------------
2003 2004 2005 2006
- ------ ---- ------ ----
<S> <C> <C> <C>
$6,103 $313 $2,351 $200
====== ==== ====== ====
</TABLE>
Capital losses incurred after October 31 ("post-October losses") within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
approximately $827,000 during fiscal 1999.
As of August 31, 1999, the Fund had temporary book/tax differences primarily
attributable to post-October losses.
16
<PAGE> 17
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS February 29, 2000 (unaudited) continued
6. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
FEBRUARY 29, 2000 AUGUST 31, 1999
------------------------- ---------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold........................................................ 769,034 $ 7,070,470 364,951 $ 3,556,044
Reinvestment of dividends................................... 10,739 98,584 20,532 197,937
Redeemed.................................................... (785,535) (7,220,626) (358,928) (3,471,507)
---------- ------------ ----------- -------------
Net increase (decrease) - Class A........................... (5,762) (51,572) 26,555 282,474
---------- ------------ ----------- -------------
CLASS B SHARES
Sold........................................................ 7,367,040 67,885,137 20,031,737 194,361,889
Reinvestment of dividends................................... 179,361 1,650,589 396,884 3,831,712
Redeemed.................................................... (9,594,195) (88,359,801) (23,059,093) (223,519,294)
---------- ------------ ----------- -------------
Net decrease - Class B...................................... (2,047,794) (18,824,075) (2,630,472) (25,325,693)
---------- ------------ ----------- -------------
CLASS C SHARES
Sold........................................................ 154,033 1,414,406 175,120 1,695,278
Reinvestment of dividends................................... 4,765 43,910 6,052 58,156
Redeemed.................................................... (152,221) (1,394,881) (39,598) (379,949)
---------- ------------ ----------- -------------
Net increase - Class C...................................... 6,577 63,435 141,574 1,373,485
---------- ------------ ----------- -------------
CLASS D SHARES
Sold........................................................ 5,706,770 52,499,193 243,390 2,355,047
Reinvestment of dividends................................... 25,526 234,657 48,914 471,734
Acquisition of Dean Witter Retirement Series - Intermediate
Income Securities Series................................... -- -- 250,724 2,441,399
Redeemed.................................................... (5,701,990) (52,357,366) (328,222) (3,148,153)
---------- ------------ ----------- -------------
Net increase - Class D...................................... 30,306 376,484 214,806 2,120,027
---------- ------------ ----------- -------------
Net decrease in Fund........................................ (2,016,673) $(18,435,728) (2,247,537) $ (21,549,707)
========== ============ =========== =============
</TABLE>
7. FUND ACQUISITION
As of the close of business on September 11, 1998, the Fund acquired all the net
assets of Dean Witter Retirement Series -- Intermediate Income Securities Series
("Retirement Intermediate") pursuant to a plan of reorganization approved by the
shareholders of Retirement Intermediate on August 19, 1998. The acquisition was
accomplished by a tax-free exchange of 250,724 Class D shares of the Fund at a
net asset value of $9.74 per share for 247,422 shares of Retirement
Intermediate. The net assets of the Fund and Retirement Intermediate immediately
before the acquisition were $159,153,039, and $2,441,399, respectively,
including unrealized appreciation of $62,584 for Retirement Intermediate.
Immediately after the acquisition, the combined net assets of the Fund amounted
to $161,594,438.
17
<PAGE> 18
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
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
FEBRUARY 29, 2000 AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
CLASS A SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................... $ 9.30 $ 9.71 $ 9.59 $ 9.68
------ ------ ------ ------
Income (loss) from investment operations:
Net investment income.................................. 0.27 0.55 0.56 0.06
Net realized and unrealized gain (loss)................ (0.21) (0.41) 0.13 (0.10)
------ ------ ------ ------
Total income (loss) from investment operations.......... 0.06 0.14 0.69 (0.04)
------ ------ ------ ------
Less dividends from net investment income............... (0.27) (0.55) (0.57) (0.05)
------ ------ ------ ------
Net asset value, end of period.......................... $ 9.09 $ 9.30 $ 9.71 $ 9.59
====== ====== ====== ======
TOTAL RETURN+........................................... 0.64%(1) 1.39% 7.30% (0.46)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................................ 1.04%(2)(3) 1.08%(3) 1.10%(3) 2.18 %(2)
Net investment income................................... 5.84%(2)(3) 5.67%(3) 5.80%(3) 6.10 %(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands................. $3,426 $3,557 $3,457 $1,855
Portfolio turnover rate................................. 42%(1) 99% 98% 98 %
</TABLE>
- ---------------------
* The date shares were first issued.
+ 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
18
<PAGE> 19
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR ENDED AUGUST 31
MONTHS ENDED ----------------------------------------------------------------
FEBRUARY 29, 2000 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.... $ 9.31 $ 9.70 $ 9.59 $ 9.39 $ 9.69 $ 9.51
------ ------ ------ ------ ------ ------
Income (loss) from investment
operations:
Net investment income.................. 0.24 0.49 0.51 0.53 0.55 0.59
Net realized and unrealized gain
(loss)............................... (0.22) (0.39) 0.11 0.20 (0.30) 0.19
------ ------ ------ ------ ------ ------
Total income from investment
operations............................. 0.02 0.10 0.62 0.73 0.25 0.78
------ ------ ------ ------ ------ ------
Less dividends and distribution from:
Net investment income.................. (0.24) (0.49) (0.51) (0.53) (0.55) (0.59)
Net realized gain...................... -- -- -- -- -- (0.01)
------ ------ ------ ------ ------ ------
Total dividends and distributions....... (0.24) (0.49) (0.51) (0.53) (0.55) (0.60)
------ ------ ------ ------ ------ ------
Net asset value, end of period.......... $ 9.09 $ 9.31 $ 9.70 $ 9.59 $ 9.39 $ 9.69
====== ====== ====== ====== ====== ======
TOTAL RETURN+........................... 0.16%(1) 0.92% 6.53% 7.93% 2.58% 8.56%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 1.77%(2)(3) 1.75%(3) 1.71%(1) 1.65% 1.62% 1.63%
Net investment income................... 5.11%(2)(3) 5.00%(3) 5.19%(1) 5.52% 5.69% 6.23%
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.............................. $99,450 $120,843 $151,515 $162,959 $208,911 $232,752
Portfolio turnover rate................. 42%(1) 99% 98% 98% 115% 114%
</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 held by certain employee
benefit plans established by Dean Witter Reynolds Inc. have been designated
as Class B shares. Shares held by those employee benefit plans prior to July
28, 1997 have been designated Class D shares.
+ 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> 20
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
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
FEBRUARY 29, 2000 AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
CLASS C SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................... $ 9.32 $ 9.71 $ 9.61 $ 9.68
------ ------ ------ ------
Income (loss) from investment operations:
Net investment income.................................. 0.24 0.49 0.49 0.04
Net realized and unrealized gain (loss)................ (0.21) (0.39) 0.11 (0.07)
------ ------ ------ ------
Total income (loss) from investment operations.......... 0.03 0.10 0.60 (0.03)
------ ------ ------ ------
Less dividends from net investment income............... (0.24) (0.49) (0.50) (0.04)
------ ------ ------ ------
Net asset value, end of period.......................... $ 9.11 $ 9.32 $ 9.71 $ 9.61
====== ====== ====== ======
TOTAL RETURN+........................................... 0.27%(1) 0.91% 6.39% (0.31)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................................ 1.77%(2)(3) 1.75%(3) 1.71%(3) 2.02 %(2)
Net investment income................................... 5.11%(2)(3) 5.00%(3) 5.19%(3) 4.22 %(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands................. $1,779 $1,759 $457 $38
Portfolio turnover rate................................. 42%(1) 99% 98% 98 %
</TABLE>
- ---------------------
* The date shares were first issued.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE> 21
MORGAN STANLEY DEAN WITTER INTERMEDIATE INCOME SECURITIES
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
FEBRUARY 29, 2000 AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
CLASS D SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................... $9.31 $9.70 $9.59 $9.68
---- ---- ---- ----
Income (loss) from investment operations:
Net investment income.................................. 0.27 0.57 0.59 0.05
Net realized and unrealized gain (loss)................ (0.21) (0.39) 0.11 (0.09)
---- ---- ---- ----
Total income (loss) from investment operations.......... 0.06 0.18 0.70 (0.04)
---- ---- ---- ----
Less dividends from net investment income............... (0.27) (0.57) (0.59) (0.05)
---- ---- ---- ----
Net asset value, end of period.......................... $9.10 $9.31 $9.70 $9.59
===== ===== ===== =====
TOTAL RETURN+........................................... 0.58%(1) 1.79% 7.43% (0.44)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................................ 0.92%(2)(3) 0.90%(3) 0.86%(3) 1.11 %(2)
Net investment income................................... 5.96%(2)(3) 5.85%(3) 6.04%(3) 5.91 %(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands................. $7,597 $7,493 $5,726 $4,880
Portfolio turnover rate................................. 42%(1) 99% 98% 98 %
</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.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE> 22
(This Page Intentionally Left Blank)
<PAGE> 23
(This Page Intentionally Left Blank)
<PAGE> 24
TRUSTEES
- ----------------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
- ----------------------------------
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin
President
Barry Fink
Vice President, Secretary and General Counsel
Rochelle G. Siegel
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
INTERMEDIATE
INCOME
SECURITIES
Semiannual Report
February 29, 2000
