<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
LETTER TO THE SHAREHOLDERS April 30, 1999
Two World Trade Center,
New York, New York 10048
DEAR SHAREHOLDER:
The six-month period ended April 30, 1999 was one of stabilization in the gold
market. After two and a half years of declining prices, gold hit a 19-year low
of $273 per ounce in August 1998. Then, in the aftermath of the near-collapse
of a major hedge fund last summer, the Federal Reserve Board began to
aggressively ease monetary policy, which resulted in a weakening of the U.S.
dollar versus other major currencies and, consequently, a reversal in the price
of gold.
After a rally to $300 per ounce in September, the price of gold drifted to a
year-end level of $288 and remained between roughly $280 and $290 in the first
four months of 1999. The gold market had to deal with the prospects of
International Monetary Fund sales of official gold holdings to fund debt relief
for poor nations, the passage of a Swiss plebiscite to delink its currency from
gold, and a rebounding dollar. At the same time, industrial commodity prices
rose, on the increasing belief that the global economic cycle was bottoming.
Economists upgraded global GDP forecasts and analysts revised metal prices
upward, including the price of gold. Thus, the improving demand-driven economic
outlook, combined with limited supply-side adjustments on the part of
producers, set the stage for a more positive environment for precious metals.
PERFORMANCE AND PORTFOLIO
For the six-month period under review, Morgan Stanley Dean Witter Precious
Metals and Minerals Trust's Class B shares posted a total return of 3.59
percent versus 5.28 percent for the Lipper Gold Funds Index and 22.31 percent
for the Standard & Poor's 500 Composite Stock Price Index (S&P 500). For the
same period, the Fund's Class A, C and D shares produced total returns of 4.16
percent, 3.59 percent and 3.78 percent, respectively. Performance of the Fund's
four share classes varies because of differing expenses.
The Fund's performance reflected the generally lackluster environment of the
precious metals market. We believe, however, that this environment is
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
LETTER TO THE SHAREHOLDERS April 30, 1999, continued
likely to improve as pessimism about gold abates. The Fund's key holdings
include Stillwater Mining, Barrick Gold, Euro-Nevada Mining, Getchell Gold and
Placer Dome.
LOOKING AHEAD
On May 7, 1999, the Bank of England announced that it planned to sell 415
metric tons of its 715-metric-ton gold reserves. The United Kingdom plans to
sell 125 metric tons of its reserves by March 31, 2000, and reduce its holdings
to 300 metric tons over a three- to five-year period. The market's initial
response was negative, with the gold price dropping more than $10 per ounce.
However, we believe that this announcement by the U.K. will create a degree of
central bank transparency that should reduce ambiguity and eventually restore
investor confidence. The decision also demonstrates the seriousness of the gold
policy of the European Central Bank (ECB). The U.K. is likely to join the
European Monetary Union (EMU), which would put its gold holdings under the
jurisdiction of the ECB. The ECB is unlikely to approve gold sales; therefore,
the U.K. would have to sell its reserves before joining EMU. Finally, we
believe that the U.K.'s intention to sell gold is unlikely to spark other
official sector sales, because G-10 officials have indicated that they have no
intention to sell in light of the U.K. decision. Thus, after a month or two of
stabilization, we believe the gold market is likely to join the broad metals
market in rising to higher levels.
We believe that the long-term outlook for precious metals appears promising.
Demand is strong and production growth is slowing as high-cost mines continue
to close. Future trends may depend on the market's perception of official
sector sales and on the response from central bankers to the world's fragile
economic condition. If central banks move toward inflationary policies to help
stagnant economies recover from burdensome debt loads, we would expect a
recovery in the price of gold.
On May 1, 1999, Mitchell M. Merin was named President of the Morgan Stanley
Dean Witter Funds. Mr. Merin is also the President and Chief Operating Officer
of Asset Management of Morgan Stanley Dean Witter & Co. and President, Chief
Executive Officer and Director of Morgan Stanley Dean Witter Advisors Inc., the
Fund's Investment Manager. He also serves as Chairman, Chief Executive Officer
and Director of the Fund's distributor and transfer agent.
2
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
LETTER TO THE SHAREHOLDERS April 30, 1999, continued
We appreciate your ongoing support of Morgan Stanley Dean Witter Precious
Metals and Minerals Trust and look forward to continuing to serve your
investment needs.
Very truly yours,
/s/ Charles A. Fiumfreddo
CHARLES A. FIUMFREDDO
Chairman of the Board
/s/ Mitchell M. Merin
MITCHELL M. MERIN
President
3
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
PORTFOLIO OF INVESTMENTS April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- -----------------
<S> <C> <C>
COMMON STOCKS (94.4%)
AUSTRALIA (16.9%)
Precious Metals
800,000 Acacia Resources Ltd. .................. $ 1,111,152
800,000 Delta Gold NL .......................... 1,243,432
25,000 Lihir Gold Ltd. (ADR)* ................. 446,875
400,000 Newcrest Mining Ltd.* .................. 918,023
1,000,000 Normandy Mining Ltd. ................... 866,434
200,000 Rangers Minerals NL* ................... 522,506
1,250,000 Ross Mining NL ......................... 768,878
-----------
TOTAL AUSTRALIA ........................ 5,877,300
-----------
CANADA (44.6%)
Other Metals/Minerals
125,000 Aber Resources Ltd.* ................... 831,333
25,000 Dia Met Minerals Ltd. (Class A)*........ 338,533
-----------
1,169,866
-----------
Precious Metals
220,000 Agnico-Eagle Mines Ltd. ................ 1,357,559
131,300 Barrick Gold Corp. ..................... 2,645,514
135,000 Euro-Nevada Mining Corp. ............... 2,309,393
85,000 Franco Nevada Mining Corp. Ltd.......... 1,643,469
40,000 Francisco Gold Corp.* .................. 342,818
350,000 Geomaque Explorations Ltd.* ............ 347,960
200,000 Goldcorp Inc. (Class A)* ............... 1,206,719
170,000 IAMGOLD, International African
Mining Gold Corp.* ..................... 454,577
50,000 IAMGOLD, International African
Mining Gold Corp. -- 144A* ............. 133,699
300,000 Meridian Gold Inc.* .................... 1,725,000
150,000 Pacific Rim Mining Corp.* .............. 169,695
125,000 Placer Dome, Inc. (ADR) ................ 1,765,625
125,000 Repadre Capital Corp.* ................. 222,832
-----------
14,324,860
-----------
TOTAL CANADA ........................... 15,494,726
-----------
GHANA (2.6%)
Precious Metals
100,000 Ashanti Goldfield Co., Ltd. (GDR)....... 900,000
-----------
UNITED KINGDOM (1.9%)
Other Metals/Minerals
10,000 Rio Tinto PLC (ADR) .................... 681,250
-----------
UNITED STATES (28.3%)
Consumer Specialties
50,000 Lazare Kaplan International, Inc.*...... 450,000
-----------
Precious Metals
200,000 Battle Mountain Gold Co. ............... 562,500
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------- -----------------
<S> <C> <C>
65,000 Getchell Gold Corp.* ................... $ 2,218,125
181,750 Homestake Mining Co. ................... 1,737,985
70,000 Newmont Mining Corp. ................... 1,684,375
112,500 Stillwater Mining Co.* ................. 3,185,156
-----------
9,388,141
-----------
TOTAL UNITED STATES .................... 9,838,141
-----------
ZIMBABWE (0.1%)
Other Metals/Minerals
120,000 Zimbabwe Platinum Mines Ltd.*........... 28,572
-----------
TOTAL COMMON STOCKS
(Identified Cost $34,098,234) .......... 32,819,989
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ----------
<S> <C> <C>
SHORT-TERM INVESTMENT (a) (7.5%)
U.S. GOVERNMENT AGENCY
$ 2,600 Student Loan Marketing Assoc.
4.80% due 05/03/99
(Amortized Cost $2,599,307).............. 2,599,307
---------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $36,697,541) (b) ......... 101.9 % 35,419,296
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS .............................. (1.9) (668,355)
------- -----------
NET ASSETS ................................ 100.0 % $34,750,941
======= ===========
</TABLE>
- --------------------------------
ADR American Depository Receipt.
GDR Global Depository Receipt.
* Non-income producing security.
(a) Security was purchased on a discount basis. The interest rate
shown has been adjusted to reflect a money market equivalent
yield.
(b) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$3,972,322 and the aggregate gross unrealized depreciation is
$5,250,567, resulting in net unrealized depreciation of
$1,278,245.
FORWARD FOREIGN CURRENCY CONTRACT OPEN AT APRIL 30, 1999:
<TABLE>
<CAPTION>
CONTRACT IN EXCHANGE DELIVERY UNREALIZED
TO DELIVER FOR DATE DEPRECIATION
- ------------ ------------- ------------ -------------
<S> <C> <C> <C>
$ 172,334 AUD 260,166 05/05/1999 $ (260)
</TABLE>
Currency Abbreviation:
AUD Australian Dollar.
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $36,697,541) ................ $35,419,296
Cash ............................................ 64,731
Receivable for:
Shares of beneficial interest sold ......... 145,696
Dividends .................................. 12,500
Prepaid expenses and other assets ............... 30,001
-----------
TOTAL ASSETS ............................... 35,672,224
-----------
LIABILITIES:
Payable for:
Shares of beneficial interest
repurchased ............................. 652,862
Investments purchased ...................... 172,073
Plan of distribution fee ................... 24,806
Investment management fee .................. 20,402
Accrued expenses and other payables ............. 51,140
-----------
TOTAL LIABILITIES .......................... 921,283
-----------
NET ASSETS ................................. $34,750,941
===========
COMPOSITION OF NET ASSETS:
Paid-in-capital ................................. $62,231,332
Net unrealized depreciation ..................... (1,278,242)
Accumulated net investment loss ................. (311,442)
Accumulated net realized loss ................... (25,890,707)
-----------
NET ASSETS ................................. $34,750,941
===========
CLASS A SHARES:
Net Assets ...................................... $ 236,645
Shares Outstanding (unlimited authorized,
$.01 par value) .............................. 44,971
NET ASSET VALUE PER SHARE .................. $ 5.26
===========
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net
asset value) ............................ $ 5.55
===========
CLASS B SHARES:
Net Assets ...................................... $32,170,143
Shares Outstanding (unlimited authorized,
$.01 par value) .............................. 6,195,943
NET ASSET VALUE PER SHARE .................. $ 5.19
===========
CLASS C SHARES:
Net Assets ...................................... $ 1,483,277
Shares Outstanding (unlimited authorized,
$.01 par value) .............................. 285,762
NET ASSET VALUE PER SHARE .................. $ 5.19
===========
CLASS D SHARES:
Net Assets ...................................... $ 860,876
Shares Outstanding (unlimited authorized,
$.01 par value) .............................. 164,832
NET ASSET VALUE PER SHARE .................. $ 5.22
===========
</TABLE>
<PAGE>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT LOSS:
INCOME
Dividends (net of $10,733 foreign
withholding tax) ............................... $ 203,038
Interest .......................................... 32,311
----------
TOTAL INCOME ................................. 235,349
----------
EXPENSES
Plan of distribution fee (Class A shares) ......... 323
Plan of distribution fee (Class B shares) ......... 140,092
Plan of distribution fee (Class C shares) ......... 6,859
Investment management fee ......................... 119,682
Transfer agent fees and expenses .................. 43,511
Professional fees ................................. 39,662
Registration fees ................................. 30,853
Shareholder reports and notices ................... 22,364
Custodian fees .................................... 7,321
Trustees' fees and expenses ....................... 5,935
Other ............................................. 2,850
----------
TOTAL EXPENSES ............................... 419,452
----------
NET INVESTMENT LOSS .......................... (184,103)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss on:
Investments .................................. (5,751,026)
Foreign exchange transactions ................ (2,590)
----------
NET LOSS ..................................... (5,753,616)
Net change in unrealized depreciation ............. 7,002,955
----------
NET GAIN ..................................... 1,249,339
----------
NET INCREASE ...................................... $1,065,236
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
APRIL 30, 1999 OCTOBER 31, 1998
---------------- -----------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss .................................. $ (184,103) $ (492,727)
Net realized loss .................................... (5,753,616) (9,649,583)
Net change in unrealized depreciation ................ 7,002,955 (420,822)
------------ -------------
NET INCREASE (DECREASE) ........................... 1,065,236 (10,563,132)
------------ -------------
Net increase from transactions in shares of beneficial
interest ........................................... 2,217,415 3,551,128
------------ -------------
NET INCREASE (DECREASE) ........................... 3,282,651 (7,012,004)
NET ASSETS:
Beginning of period .................................. 31,468,290 38,480,294
------------ -------------
END OF PERIOD
(Including accumulated net investment losses of
$311,442 and $127,339, respectively) .............. $ 34,750,941 $ 31,468,290
============ =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1999 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Precious Metals and Minerals Trust (the "Fund"), is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
a diversified, open-end management investment company. The Fund's investment
objective is long-term capital appreciation. The Fund will attempt to achieve
its investment objective by investing principally in the securities of foreign
and domestic companies engaged in the exploration, mining, fabrication,
processing, distribution or trading of precious metals and minerals or in
companies engaged in financing, managing, controlling or operating companies
engaged in these activities and also by investing a portion of its assets in
gold, silver, platinum and palladium bullion and coins. The Fund was organized
as a Massachusetts business trust on December 28, 1989 and commenced operations
on August 6, 1990. 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 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 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
7
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1999 (unaudited) continued
coupon, rating and maturity or an appropriate matrix utilizing similar
factors); and (4) short-term debt securities having a maturity date of more
than sixty days at time of purchase are valued on a mark-to-market basis until
sixty days prior to maturity and thereafter at amortized cost based on their
value on the 61st day. Short-term debt securities having a maturity date of
sixty days or less at the time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date
except for certain dividends from foreign securities which are recorded as soon
as the Fund is informed after 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. 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 foreign currency gain or loss and in the
Statement of Assets and Liabilities as part of the related foreign currency
denominated asset or liability. 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.
8
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1999 (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 that 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
annual rate of 0.80% to the net assets of the Fund determined as of the close
of each business day.
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 -- 1.0% of
the lesser of: (a) the average daily aggregate gross sales of the Class B
shares since the inception of the Fund (not including reinvestment of dividend
or capital gain distributions) less the average daily aggregate net asset value
of the Class B shares redeemed since the
9
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1999 (unaudited) continued
Fund's inception upon which a contingent deferred sales charge has been imposed
or waived; or (b) the average daily net assets of Class B; and (iii) Class C --
up to 1.0% of the average daily net assets of Class C. In the case of Class A
shares, amounts paid under the Plan are paid to the Distributor for services
provided. In the case of Class B and Class C shares, amounts paid under the Plan
are paid to the Distributor for (1) services provided and the expenses borne by
it and others in the distribution of the shares of these Classes, including the
payment of commissions for sales of these Classes and incentive compensation to,
and expenses of, Morgan Stanley Dean Witter Financial Advisors and others who
engage in or support distribution of the shares or who service shareholder
accounts, including overhead and telephone expenses; (2) printing and
distribution of prospectuses and reports used in connection with the offering of
these shares to other than current shareholders; and (3) preparation, printing
and distribution of sales literature and advertising materials. In addition, the
Distributor may utilize fees paid pursuant to the Plan, in the case of Class B
shares, to compensate Dean Witter Reynolds Inc. ("DWR"), an affiliate of the
Investment Manager and Distributor, and other selected broker-dealers for their
opportunity costs in advancing such amounts, which compensation would be in the
form of a carrying charge on any unreimbursed expenses.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund
pursuant to the Plan and contingent deferred sales charges paid by investors
upon redemption of Class B shares. Although there is no legal obligation for
the Fund to pay expenses incurred in excess of payments made to the Distributor
under the Plan and the proceeds of contingent deferred sales charges paid by
investors upon redemption of shares, if for any reason the Plan is terminated,
the Trustees will consider at that time the manner in which to treat such
expenses. The Distributor has advised the Fund that such excess amounts,
including carrying charges, totaled $4,024,012 at April 30, 1999.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will 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 April 30, 1999, the distribution fee
was accrued for Class A shares and Class C shares at the annual rate of 0.22%
and 1.0%, respectively.
The Distributor has informed the Fund that for the six months ended April 30,
1999, it received contingent deferred sales charges from certain redemptions of
the Fund's Class A shares, Class B shares and Class C
10
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1999 (unaudited) continued
shares of $6, $42,419 and $1,154, respectively and received approximately
$3,794 in front-end sales charges from sales of the Fund's Class A shares. The
respective shareholders pay such charges which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the six months ended April 30, 1999
aggregated $6,305,194 and $5,942,553, respectively.
For the six months ended April 30, 1999, the Fund incurred $4,519 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At April 30, 1999, the Fund had
transfer agent fees and expenses payable of approximately $1,000.
5. SHARES OF BENEFICIAL INTEREST
Transaction in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
APRIL 30, 1999 OCTOBER 31, 1998
------------------------------- ---------------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ............................ 963,520 $ 4,845,905 163,290 $ 830,904
Redeemed ........................ (936,603) (4,730,193) (149,939) (771,988)
-------- ------------- -------- -------------
Net increase -- Class A ......... 26,917 115,712 13,351 58,916
-------- ------------- -------- -------------
CLASS B SHARES
Sold ............................ 2,898,905 14,373,073 10,593,880 59,088,953
Redeemed ........................ (2,693,338) (13,205,398) (10,149,788) (56,742,708)
---------- ------------- ----------- -------------
Net increase -- Class B ......... 205,567 1,167,675 444,092 2,346,245
---------- ------------- ----------- -------------
CLASS C SHARES
Sold ............................ 569,096 2,794,057 604,559 3,428,478
Redeemed ........................ (492,041) (2,314,046) (465,261) (2,500,980)
---------- ------------- ----------- -------------
Net increase -- Class C ......... 77,055 480,011 139,298 927,498
---------- ------------- ----------- -------------
CLASS D SHARES
Sold ............................ 285,836 1,405,372 362,666 2,036,922
Redeemed ........................ (185,946) (951,355) (298,983) (1,818,453)
---------- ------------- ----------- -------------
Net increase -- Class D ......... 99,890 454,017 63,683 218,469
---------- ------------- ----------- -------------
Net increase in Fund ............ 409,429 $ 2,217,415 660,424 $ 3,551,128
========== ============= =========== =============
</TABLE>
11
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1999 (unaudited) continued
6. FEDERAL INCOME TAX STATUS
At October 31, 1998, the Fund had a net capital loss carryover of approximately
$20,110,000 of which $10,239,000 will be available through October 31, 2005 and
$9,871,000 will be available through October 31, 2006 to offset future capital
gains to the extent provided by regulations.
At October 31, 1998, the Fund had temporary book/tax differences attributable
to capital loss deferrals on wash sales and income from the mark-to-market of
passive foreign investment companies.
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 Assets and Liabilities. The Fund bears the risk
of an unfavorable change in the foreign exchange rates underlying the forward
contracts. Risks may also arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their contracts.
At April 30, 1999, there was an outstanding forward contract.
12
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
APRIL 30, 1999++
------------------------
(unaudited)
<S> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $ 5.01
-----------
Income (loss) from investment operations:
Net investment loss ................................... (0.03)
Net realized and unrealized gain (loss) ............... 0.21
-----------
Total income (loss) from investment operations ......... 0.18
-----------
Less dividends and distributions from:
Net investment income ................................. --
Net realized gain ..................................... --
-----------
Total dividends and distributions ...................... --
-----------
Net asset value, end of period ......................... $ 5.19
===========
TOTAL RETURN+ .......................................... 3.59 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 2.82 %(2)(3)
Net investment loss .................................... (1.25)%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $ 32,170
Portfolio turnover rate ................................ 21 %(1)
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31
-------------------------------------------------------------------
1998++ 1997*++ 1996 1995
------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $ 6.85 $ 11.14 $ 9.77 $ 11.45
---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment loss ................................... ( 0.09) ( 0.10) ( 0.10) (0.08)
Net realized and unrealized gain (loss) ............... ( 1.75) ( 3.35) 1.66 (1.38)
---------- ---------- ---------- ----------
Total income (loss) from investment operations ......... ( 1.84) ( 3.45) 1.56 (1.46)
---------- ---------- ---------- ----------
Less dividends and distributions from:
Net investment income ................................. -- ( 0.13) -- --
Net realized gain ..................................... -- ( 0.71) ( 0.19) (0.22)
---------- ---------- ---------- ----------
Total dividends and distributions ...................... -- ( 0.84) ( 0.19) (0.22)
---------- ---------- ---------- ----------
Net asset value, end of period ......................... $ 5.01 $ 6.85 $ 11.14 $ 9.77
========== ========== ========== ==========
TOTAL RETURN+ .......................................... (26.86)% (33.29)% 15.93 % (12.78)%
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 2.78 %(3) 2.36 % 2.27 % 2.29 %
Net investment loss .................................... (1.55)%(3) (1.13)% (0.84)% (0.70)%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $30,005 $ 37,964 $60,841 $55,448
Portfolio turnover rate ................................ 36 % 53 % 46 % 23 %
<PAGE>
<CAPTION>
FOR THE YEAR
ENDED OCTOBER
31
---------------
1994
---------------
<S> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $ 10.80
----------
Income (loss) from investment operations:
Net investment loss ................................... (0.06)
Net realized and unrealized gain (loss) ............... 0.73
----------
Total income (loss) from investment operations ......... 0.67
----------
Less dividends and distributions from:
Net investment income ................................. --
Net realized gain ..................................... (0.02)
----------
Total dividends and distributions ...................... (0.02)
----------
Net asset value, end of period ......................... $ 11.45
==========
TOTAL RETURN+ .......................................... 6.18 %
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 2.28 %
Net investment loss .................................... (0.87)%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $ 73,444
Portfolio turnover rate ................................ 46 %
</TABLE>
- -------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charges. 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
13
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
APRIL 30, 1999 OCTOBER 31, 1998 OCTOBER 31, 1997
------------------------ ------------------ --------------------
(unaudited)
<S> <C> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............... $ 5.05 $ 6.86 $ 7.95
------ ------- --------
Income (loss) from investment operations:
Net investment loss ............................... (0.01) (0.05) --
Net realized and unrealized gain (loss) ........... 0.22 (1.76) (1.09)
------ ------- --------
Total income (loss) from investment operations ..... 0.21 (1.81) (1.09)
------ ------- --------
Net asset value, end of period ..................... $ 5.26 $ 5.05 $ 6.86
====== ======= ========
TOTAL RETURN+ ...................................... 4.16 %(1) (26.38)% (13.71)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................... 2.04 %(2)(3) 2.01%(3) 1.61%(2)
Net investment loss ................................ (0.47)%(2)(3) (0.78)%(3) (0.08)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ............ $ 237 $ 91 $ 32
Portfolio turnover rate ............................ 21%(1) 36 % 53 %
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ............... $ 5.01 $ 6.84 $ 7.95
----------------- ------------- --------------
Income (loss) from investment operations:
Net investment loss ............................... (0.02) (0.09) (0.02)
Net realized and unrealized gain (loss) ........... 0.20 (1.74) (1.09)
----------------- ------------- --------------
Total income (loss) from investment operations ..... 0.18 (1.83) (1.11)
----------------- ------------- --------------
Net asset value, end of period ..................... $ 5.19 $ 5.01 $ 6.84
================= ============= ==============
TOTAL RETURN+ ...................................... 3.59 %(1) (26.75)% (13.96)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................... 2.82 %(2)(3) 2.78%(3) 2.37%(2)
Net investment loss ................................ (1.25)%(2)(3) (1.55)%(3) (0.79)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ............ $1,483 $ 1,046 $ 475
Portfolio turnover rate ............................ 21 %(1) 36 % 53%
</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 charges. 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
14
<PAGE>
MORGAN STANLEY DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
APRIL 30, 1999 OCTOBER 31, 1998 OCTOBER 31, 1997
------------------------ ------------------ --------------------
(unaudited)
<S> <C> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $ 5.03 $ 6.86 $ 7.95
------- ------- --------
Income (loss) from investment operations:
Net investment income (loss) .......................... (0.02) 0.02 --
Net realized and unrealized gain (loss) ............... 0.21 (1.85) (1.09)
------- ------- --------
Total income (loss) from investment operations ......... 0.19 (1.83) (1.09)
------- ------- --------
Net asset value, end of period ......................... $ 5.22 $ 5.03 $ 6.86
======= ======= ========
TOTAL RETURN+ .......................................... 3.78 %(1) (26.68)% (13.71)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 1.82 %(2)(3) 1.78 %(3) 1.35 %(2)
Net investment income (loss) ........................... (0.25)%(2)(3) (0.55)%(3) 0.22 %(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $ 861 $ 327 $ 9
Portfolio turnover rate ................................ 21 %(1) 36 % 53 %
</TABLE>
- --------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
15
<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
George Paoletti
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.
MORGAN STANLEY
DEAN WITTER
PRECIOUS METALS
AND MINERALS TRUST
[GRAPHIC OMITTED]
SEMIANNUAL REPORT
APRIL 30, 1999
