<PAGE> 1
MORGAN STANLEY DEAN WITTER INFORMATION FUND Two World Trade Center
LETTER TO THE SHAREHOLDERS September 30, 1999 New York, New York 10048
DEAR SHAREHOLDER:
During the six-month period ended September 30, 1999, financial markets around
the world continued to experience volatility. After a peak in the domestic
markets in the middle of July, stock prices pulled back toward the end of the
period amid concerns that the U.S. economy might be growing too fast. This
concern was manifested in two Federal Reserve Board moves, in June and August,
that raised the federal-funds rate a total of 50 basis points while inflation
remained low and the economy continued to grow. The world continued to evolve
toward an information-based economy, and as a result, the sectors targeted by
Morgan Stanley Dean Witter Information Fund continued to prosper.
PERFORMANCE AND PORTFOLIO STRATEGY
During the six-month period ended September 30, 1999, the Fund's Class B shares
produced a total return of 30.55 percent, compared with 0.37 percent for the S&P
500 Composite Stock Price Index (S&P 500) and 22.12 for the Lipper Science &
Technology Funds Index. For the same period, the Fund's Class A, C and D shares
posted total returns of 30.92 percent, 30.50 percent and 31.08 percent,
respectively. The performance of the Fund's four share classes varies because of
differing expenses. (The total return figures shown assume the reinvestment of
all distributions and do not reflect the deduction of any applicable sales
charges.)
The Fund's outperformance relative to the market and its peers was primarily due
to stock selection and an overweighting in semiconductors and communications
equipment, combined with an underweighting in Internet-related issues, which
experienced some difficulty during the period. Investments that contributed
positively to the Fund's performance included Nokia, Conexant, Qualcomm,
Uniphase and Vitesse.
The Fund continues to invest in companies that we believe are best positioned to
capitalize on the growth of various sectors within the communications and
information industries. The Fund's managers seek
<PAGE> 2
MORGAN STANLEY DEAN WITTER INFORMATION FUND
LETTER TO THE SHAREHOLDERS September 30, 1999, continued
companies with an established market presence, proven management, leading-edge
technology, demonstrable customer demand, and strategic relationships or
alliances. As of September 30, 1999, the Fund's net assets were approximately
$1.1 billion.
At the end of September, the Fund held approximately 72 percent of its
investments in information technology, 22 percent in information services, 5
percent in information distribution and content and the remaining 1 percent in
cash. We continue to favor sectors that will benefit from the expansion of the
Internet, including technology components and related broadband equipment. The
Fund's top holdings as of September 30 included Cisco Systems, Microsoft, JDS
Uniphase, Intel, and Sun Microsystems.
LOOKING AHEAD
We believe that the fundamentals underpinning the information and technology
sectors remain robust and that these sectors will outperform over the long term
as technology continues to gain importance as a component of worldwide spending.
Our one concern for the technology sector in the short term is that as January
1, 2000 approaches and Y2K-related spending is likely reduced, certain
technology firms may see correspondingly reduced demand as a result of companies
potentially minimizing their technology purchases.
We continue to believe that the role the Internet plays in our information
economy will become even more important. Because of this trend, we plan to
monitor this sector closely for promising investment opportunities in the
future.
We appreciate your ongoing support of Morgan Stanley Dean Witter Information
Fund and look forward to continuing to serve your investment needs.
<TABLE>
<S> <C>
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO /s/ MITCHELL M. MERIN
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
</TABLE>
2
<PAGE> 3
MORGAN STANLEY DEAN WITTER INFORMATION FUND
FUND PERFORMANCE September 30, 1999
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A*
- ----------------------------------------------
<S> <C> <C>
PERIOD ENDED 9/30/99
- -------------------------
Since Inception (7/28/97) 51.81(1) 48.09(2)
1 Year 112.88(1) 101.70(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C++
- ----------------------------------------------
<S> <C> <C>
PERIOD ENDED 9/30/99
- -------------------------
Since Inception (7/28/97) 50.76(1) 50.76(2)
1 Year 111.61(1) 110.61(2)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
<TABLE>
<CAPTION>
CLASS B+
- -----------------------------------------------
<S> <C> <C>
PERIOD ENDED 9/30/99
- --------------------------
Since Inception (11/28/95) 30.70(1) 30.45(2)
1 Year 111.79(1) 106.79(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS D#
- ----------------------------------------------
<S> <C> <C>
PERIOD ENDED 9/30/99
- -------------------------
Since Inception (7/28/97) 52.24(1)
1 Year 113.70(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 5.25%.
+ The maximum contingent deferred sales charge (CDSC) for
Class B is 5.0%. The CDSC declines to 0% after six years.
++ The maximum contingent deferred sales charge (CDSC) for
Class C shares is 1% for shares redeemed within one year of
purchase.
# Class D shares have no sales charge.
</TABLE>
3
<PAGE> 4
MORGAN STANLEY DEAN WITTER INFORMATION FUND
PORTFOLIO OF INVESTMENTS September 30, 1999 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (99.0%)
Advertising (1.2%)
100,000 DoubleClick Inc.*.......... $ 11,912,500
20,200 FreeShop.com, Inc.*........ 232,300
30,000 Lamar Advertising Co.
(Class A)*................ 1,481,250
--------------
13,626,050
--------------
Biotechnology (0.0%)
40,000 Hyseq, Inc.*............... 197,500
--------------
Broadcasting (2.4%)
180,000 AMFM, Inc.*................ 10,957,500
80,000 CBS Corp. ................. 3,700,000
142,024 Clear Channel
Communications, Inc.*..... 11,344,167
30,000 USA Networks, Inc.*........ 1,162,500
--------------
27,164,167
--------------
Cable Television (2.5%)
310,000 AT&T Corp. - Liberty Media
Group (Class A)*.......... 11,508,750
70,000 Cablevision Systems Corp.
(Class A)*................ 5,092,500
60,000 EchoStar Communications
Corp. (Class A)*.......... 5,448,750
113,500 PrimaCom AG (ADR)
(Germany)*................ 3,092,875
8,200 Tivo Inc.*................. 245,487
42,200 United Pan-Europe
Communications NV (Class
A) (ADR) (Netherlands)*... 2,571,562
--------------
27,959,924
--------------
Catalog/Specialty
Distribution (1.1%)
150,000 Amazon.com, Inc.*.......... 11,990,625
--------------
Cellular Telephone (0.6%)
65,000 Powertel, Inc.*............ 3,575,000
70,000 Western Wireless Corp.
(Class A)*................ 3,136,875
--------------
6,711,875
--------------
Computer Communications (4.0%)
90,000 3Com Corp.*................ 2,581,875
9,100 Alteon Websystems Inc.*.... 859,950
100,000 Applied Micro Circuits
Corp.*.................... 5,693,750
500,000 Cisco Systems, Inc.*....... 34,250,000
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
7,800 Foundry Networks*.......... $ 982,800
7,400 Juniper Networks, Inc.*.... 1,347,262
--------------
45,715,637
--------------
Computer Software (14.1%)
235,000 Aspect Development,
Inc.*..................... 5,933,750
330,000 BMC Software, Inc.*........ 23,595,000
230,000 Citrix Systems, Inc.*...... 14,231,250
240,000 Computer Associates
International, Inc. ...... 14,700,000
460,000 Compuware Corp.*........... 11,960,000
235,000 Entrust Technologies
Inc.*..................... 5,258,125
389,000 Gensym Corp.*.............. 1,410,125
40,400 Inet Technologies, Inc.*... 1,610,950
90,000 JDA Software Group,
Inc.*..................... 1,046,250
296,300 Legato Systems, Inc.*...... 12,907,569
335,000 Mastech Corp.*............. 4,522,500
130,000 Mercury Interactive
Corp.*.................... 8,385,000
350,000 Microsoft Corp.*........... 31,696,875
118,300 NetIQ Corp.*............... 3,504,637
140,000 Novell, Inc.*.............. 2,887,500
180,000 Oracle Corp.*.............. 8,190,000
180,000 Serena Software, Inc.*..... 3,037,500
150,000 Sterling Software, Inc.*... 3,000,000
--------------
157,877,031
--------------
Diversified Commercial Services (0.1%)
60,000 Saleslogix Corp*........... 1,192,500
--------------
Diversified Electronic Products (3.1%)
260,854 JDS Uniphase Corp.*........ 29,672,142
205,000 RSA Security Inc.*......... 5,432,500
--------------
35,104,642
--------------
Diversified Manufacturing (1.1%)
120,000 Tyco International Ltd.
(Bermuda)................. 12,390,000
--------------
E.D.P. Peripherals (5.3%)
320,000 EMC Corp.*................. 22,860,000
290,000 Network Appliance, Inc.*... 20,771,250
92,500 Qlogic Corp.*.............. 6,457,656
181,000 Seagate Technology,
Inc.*..................... 5,577,062
210,000 Storage Technology
Corp.*.................... 4,042,500
--------------
59,708,468
--------------
E.D.P. Services (2.7%)
180,000 BEA Systems, Inc.*......... 6,345,000
40,000 Cambridge Technology
Partners, Inc.*........... 577,500
100,000 CIBER, Inc.*............... 1,531,250
120,000 Concord Communications,
Inc.*..................... 4,755,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE> 5
MORGAN STANLEY DEAN WITTER INFORMATION FUND
PORTFOLIO OF INVESTMENTS September 30, 1999 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
302,400 First Data Corp. .......... $ 13,267,800
71,000 Keane, Inc.*............... 1,619,687
97,900 Netsolve Inc.*............. 1,737,725
--------------
29,833,962
--------------
Electronic Components
(3.0%)
149,100 Anaren Microwave, Inc.*.... 4,212,075
55,000 AVX Corp. ................. 1,931,875
140,000 Sanmina Corp.*............. 10,832,500
255,000 Solectron Corp.*........... 18,312,187
--------------
35,288,637
--------------
Electronic Data Processing (7.1%)
390,000 Dell Computer Corp.*....... 16,306,875
125,000 Gateway, Inc.*............. 5,554,688
130,000 Hewlett-Packard Co. ....... 11,960,000
170,000 International Business
Machines Corp. ........... 20,633,750
270,000 Sun Microsystems, Inc.*.... 25,110,000
--------------
79,565,313
--------------
Electronic Distributors
(0.1%)
80,000 Ingram Micro Inc. (Class
A)*....................... 1,030,000
--------------
Electronic Production Equipment (5.7%)
100,000 Advanced Energy Industries,
Inc.*..................... 3,081,250
190,000 Applied Materials, Inc.*... 14,748,750
249,500 ATMI, Inc.*................ 9,262,688
190,000 Cymer, Inc.*............... 6,578,750
95,000 Etec Systems, Inc.*........ 3,556,563
145,000 Novellus Systems, Inc.*.... 9,778,438
470,000 Teradyne, Inc.*............ 16,567,500
--------------
63,573,939
--------------
Internet Services (11.0%)
130,000 America Online, Inc.*...... 13,520,000
65,200 Art Technology Group
Inc.*..................... 2,477,600
62,932 At Home Corp. (Series
A)*....................... 2,607,745
39,100 Bluestone Software*........ 904,188
220,000 CNet Inc.*................. 12,306,250
90,300 Digex, Inc.*............... 2,138,981
80,000 eBay Inc.*................. 11,280,000
160,000 Exodus Communications,
Inc.*..................... 11,530,000
55,000 GoTo.com, Inc.*............ 2,866,875
50,300 ITXC Corp.*................ 1,600,169
19,100 Kana Communications,
Inc.*..................... 952,613
120,000 Lycos, Inc.*............... 6,015,000
60,000 Network Solutions, Inc.
(Class A)*................ 5,505,000
22,750 Netzero Inc.*.............. 590,078
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
32,200 Quest Software, Inc.*...... $ 1,497,300
75,000 Tumblweed Communications*.. 1,978,125
260,000 USWeb Corp.*............... 8,921,250
200,000 VerticalNet, Inc.*......... 7,400,000
80,000 XOOM.com, Inc.*............ 3,970,000
140,000 Yahoo! Inc.*............... 25,103,750
--------------
123,164,924
--------------
Major U.S. Telecommunications (1.0%)
90,000 Bell Atlantic Corp. ....... 6,058,125
70,000 MCI WorldCom, Inc.*........ 5,026,875
--------------
11,085,000
--------------
Media Conglomerates (0.8%)
100,000 Time Warner Inc. .......... 6,075,000
80,000 Viacom, Inc. (Class B)*.... 3,380,000
--------------
9,455,000
--------------
Office Equipment/Supplies (0.3%)
70,000 Polycom, Inc.*............. 3,333,750
--------------
Office/Plant Automation (0.4%)
425,000 Manugistics Group, Inc.*... 4,435,938
--------------
Oilfield Services/Equipment (0.4%)
227,400 Veritas DGC Inc.*.......... 4,377,450
--------------
Other Telecommunications (1.4%)
110,000 COLT Telecom Group PLC
(ADR) (United Kingdom)*... 10,491,250
220,000 Intermedia Communications,
Inc.*..................... 4,771,250
--------------
15,262,500
--------------
Recreational Products/Toys (1.4%)
210,000 Electronic Arts Inc.*...... 15,185,625
--------------
Semiconductors (15.9%)
270,000 Conexant Systems, Inc.*.... 19,608,750
260,000 Cypress Semiconductor
Corp.*.................... 5,590,000
100,000 Fairchild Semiconductor
International (Class
A)*....................... 2,350,000
150,000 Galileo Technology Ltd.
(Israel)*................. 3,750,000
330,000 Genesis Microchip, Inc.*... 5,816,250
360,000 Intel Corp. ............... 26,752,500
285,000 Linear Technology Corp. ... 16,743,750
248,000 LSI Logic Corp.*........... 12,772,000
140,000 SDL, Inc.*................. 10,683,750
160,000 STMicroelectronics NV
(Netherlands)............. 11,840,000
280,000 Texas Instruments, Inc. ... 23,030,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE> 6
MORGAN STANLEY DEAN WITTER INFORMATION FUND
PORTFOLIO OF INVESTMENTS September 30, 1999 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------
<C> <S> <C>
210,000 Vitesse Semiconductor
Corp.*.................... $ 17,928,750
330,000 Xilinx, Inc.*.............. 21,615,000
--------------
178,480,750
--------------
Telecommunications Equipment (12.3%)
130,000 ADC Telecommunications,
Inc.*..................... 5,443,750
60,000 Comverse Technology,
Inc.*..................... 5,655,000
350,000 Corning Inc. .............. 23,996,875
310,000 Lucent Technologies
Inc. ..................... 20,111,250
230,000 Motorola, Inc. ............ 20,240,000
260,000 Nokia Corp. (ADR)
(Finland)................. 23,351,250
105,000 QUALCOMM Inc.*............. 19,858,125
100,000 Scientific - Atlanta,
Inc. ..................... 4,956,250
170,000 Tekelec*................... 2,337,500
275,000 Visual Networks, Inc.*..... 11,670,313
--------------
137,620,313
--------------
TOTAL COMMON STOCKS
(Identified Cost
$868,222,849).............. 1,111,331,520
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ---------
<C> <S> <C>
SHORT-TERM INVESTMENT (a)(1.1%)
U.S. GOVERNMENT AGENCY
$ 13,000 Federal Home Loan Mortgage Corp.
5.20% due 10/01/99
(Amortized Cost
$13,000,000)................. 13,000,000
--------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
- ----------------------------------------------------------
<S> <C> <C>
100.1% $1,124,331,520
TOTAL INVESTMENTS
(Identified Cost $881,222,849)
(b)............................
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS............... (0.1) (1,309,237)
------ --------------
NET ASSETS..................... 100.0% $1,123,022,283
====== ==============
</TABLE>
- ---------------------
<TABLE>
<C> <S>
ADR American 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
$259,755,765 and the aggregate gross unrealized
depreciation is $16,647,094, resulting in net
unrealized appreciation of $243,108,671.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER INFORMATION FUND
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $881,222,849)......... $1,124,331,520
Cash.................................... 327,914
Receivable for:
Investments sold.................... 26,861,630
Shares of beneficial interest
sold............................... 8,230,239
Dividends........................... 57,448
Interest............................ 22,250
Deferred organizational expenses........ 41,630
Prepaid expenses and other assets....... 244,560
--------------
TOTAL ASSETS........................ 1,160,117,191
--------------
LIABILITIES:
Payable for:
Investments purchased............... 34,074,847
Shares of beneficial interest
repurchased........................ 1,496,683
Plan of distribution fee............ 707,599
Investment management fee........... 652,043
Accrued expenses and other payables..... 163,736
--------------
TOTAL LIABILITIES................... 37,094,908
--------------
NET ASSETS.......................... $1,123,022,283
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital......................... $811,367,739
Net unrealized appreciation............. 243,108,671
Accumulated net investment loss......... (6,168,331)
Accumulated undistributed net realized
gain................................... 74,714,204
--------------
NET ASSETS.......................... $1,123,022,283
==============
CLASS A SHARES:
Net Assets.............................. $18,072,425
Shares Outstanding (unlimited
authorized, $.01 par value)............ 819,834
NET ASSET VALUE PER SHARE........... $22.04
==============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net
asset value)....................... $23.26
==============
CLASS B SHARES:
$1,066,320,160
Net Assets..............................
Shares Outstanding (unlimited 49,218,948
authorized, $.01 par value)............
NET ASSET VALUE PER SHARE........... $21.66
==============
CLASS C SHARES:
$34,403,848
Net Assets..............................
Shares Outstanding (unlimited 1,589,747
authorized, $.01 par value)............
NET ASSET VALUE PER SHARE........... $21.64
==============
CLASS D SHARES:
$4,225,850
Net Assets..............................
Shares Outstanding (unlimited 190,317
authorized, $.01 par value)............
NET ASSET VALUE PER SHARE........... $22.20
==============
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended
September 30, 1999 (unaudited)
NET INVESTMENT LOSS:
INCOME
Interest................................. $ 922,274
Dividends (net of $7,578 foreign
withholding tax)........................ 343,101
------------
TOTAL INCOME......................... 1,265,375
------------
EXPENSES
Plan of distribution fee (Class A
shares)................................. 14,310
Plan of distribution fee (Class B
shares)................................. 3,372,178
Plan of distribution fee (Class C
shares)................................. 109,452
Investment management fee................ 3,158,745
Transfer agent fees and expenses......... 441,560
Registration fees........................ 176,623
Shareholder reports and notices.......... 65,504
Professional fees........................ 33,137
Custodian fees........................... 32,032
Organizational expenses.................. 17,969
Trustees' fees and expenses.............. 7,132
Other.................................... 5,064
------------
TOTAL EXPENSES....................... 7,433,706
------------
NET INVESTMENT LOSS.................. (6,168,331)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments.......................... 83,853,680
Foreign exchange transactions........ (5,352)
------------
NET GAIN............................. 83,848,328
------------
Net change in unrealized
appreciation........................ 136,389,458
------------
NET GAIN............................. 220,237,786
------------
NET INCREASE............................. $214,069,455
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER INFORMATION FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR
FOR THE SIX ENDED
MONTHS ENDED MARCH 31,
SEPTEMBER 30, 1999 1999
- ---------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss................................. $ (6,168,331) $ (4,787,630)
Net realized gain................................... 83,848,328 121,979,309
Net change in unrealized appreciation............... 136,389,458 44,883,484
-------------- ------------
NET INCREASE.................................... 214,069,455 162,075,163
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED
GAIN:
Class A shares...................................... (1,161,813) (70,594)
Class B shares...................................... (99,299,433) (35,107,622)
Class C shares...................................... (2,519,373) (186,602)
Class D shares...................................... (229,470) (143,401)
-------------- ------------
TOTAL DISTRIBUTIONS............................. (103,210,089) (35,508,219)
-------------- ------------
Net increase from transactions in shares of
beneficial interest................................ 411,587,210 204,706,149
-------------- ------------
NET INCREASE.................................... 522,446,576 331,273,093
NET ASSETS:
Beginning of period................................. 600,575,707 269,302,614
-------------- ------------
END OF PERIOD
(Including a net investment loss of $6,168,331
and $0, respectively)........................... $1,123,022,283 $600,575,707
============== ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER INFORMATION FUND
NOTES TO FINANCIAL STATEMENTS September 30, 1999 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley Dean Witter Information Fund (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 seeks to achieve its investment
objective by investing primarily in common stocks and securities convertible
into common stocks of domestic and foreign companies which are involved in the
communications and information industry. The Fund was organized as a
Massachusetts business trust on December 8, 1994 and commenced operations on
November 28, 1995. On July 28, 1997, the Fund converted to a multiple class
share structure.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase and some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year, six
years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (in
cases where securities are traded on more than one exchange; the securities are
valued on the exchange designated as the primary market pursuant to procedures
adopted by the Trustees); (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by Morgan Stanley Dean Witter Advisors Inc. (the "Investment
Manager"), that sale or bid prices are not reflective of a security's market
value, portfolio securities are valued at their fair value as determined in good
faith under procedures established by and under the general supervision of the
Trustees; and (4) short-term debt securities having a maturity date of more than
sixty days at time of purchase are valued on a
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER INFORMATION FUND
NOTES TO FINANCIAL STATEMENTS September 30, 1999 (unaudited) continued
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 on 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.
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER INFORMATION FUND
NOTES TO FINANCIAL STATEMENTS September 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 ex-dividend 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.
H. ORGANIZATIONAL EXPENSES -- The Investment Manager paid the organizational
expenses of the Fund in the amount of approximately $179,000 which have been
reimbursed for the full amount thereof. Such expenses have been deferred and are
being amortized on the straight-line method over a period not to exceed five
years from commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined as of the close
of each business day: 0.75% to the portion of daily net assets not exceeding
$500 million; and 0.725% to the portion of daily net assets exceeding $500
million.
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.
11
<PAGE> 12
MORGAN STANLEY DEAN WITTER INFORMATION FUND
NOTES TO FINANCIAL STATEMENTS September 30, 1999 (unaudited) continued
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has
adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund will pay the Distributor a fee which is
accrued daily and paid monthly at the following annual rates: (i) Class A -- up
to 0.25% of the average daily net assets of Class A; (ii) Class B -- 1.0% of the
lesser of: (a) the average daily aggregate gross sales of the Class B shares
since the inception of the Fund (not including reinvestment of dividend or
capital gain distributions) less the average daily aggregate net asset value of
the Class B shares redeemed since the Fund's inception upon which a contingent
deferred sales charge has been imposed or waived; or (b) the average daily net
assets of Class B; and (iii) Class C -- up to 1.0% of the average daily net
assets of Class C. In the case of Class 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 $23,010,793 at September 30, 1999.
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER INFORMATION FUND
NOTES TO FINANCIAL STATEMENTS September 30, 1999 (unaudited) continued
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 September 30, 1999, the distribution fee
was accrued for Class A shares and Class C shares at the annual rate of 0.25%
and 1.0%, respectively.
The Distributor has informed the Fund that for the six months ended September
30, 1999, it received contingent deferred sales charges from certain redemptions
of the Fund's Class A shares, Class B shares and Class C shares of $7,836,
$423,878, and $11,693, respectively and received $152,396 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 September 30, 1999 aggregated
$1,138,560,779 and $805,543,819, respectively.
For the six months ended September 30, 1999, the Fund incurred brokerage
commissions of $86,240 with DWR for portfolio transactions executed on behalf of
the Fund. At September 30, 1999, the Fund's receivable for investments sold and
payable for investments purchased included unsettled trades with DWR of $381,588
and $1,253,906, respectively.
As of the six months ended September 30, 1999, the Fund incurred brokerage
commissions of $77,000 with Morgan Stanley & Co., Inc., an affiliate of the
Investment Manager and Distributor, for portfolio transactions executed on
behalf of the Fund.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent.
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER INFORMATION FUND
NOTES TO FINANCIAL STATEMENTS September 30, 1999 (unaudited) continued
5. FEDERAL INCOME TAX STATUS
As of March 31, 1999, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales.
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
SEPTEMBER 30, 1999 MARCH 31, 1999
-------------------------- ---------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold........................................................ 1,236,184 $ 25,998,950 794,860 $ 13,534,680
Reinvestment of distributions............................... 57,054 1,109,701 4,724 68,291
Redeemed.................................................... (746,604) (15,672,255) (541,066) (9,175,146)
---------- ------------- ----------- -------------
Net increase - Class A...................................... 546,634 11,436,396 258,518 4,427,825
---------- ------------- ----------- -------------
CLASS B SHARES
Sold........................................................ 20,565,725 426,005,805 20,256,885 326,607,844
Reinvestment of distributions............................... 4,877,270 93,350,967 2,344,073 32,974,532
Redeemed.................................................... (6,823,038) (140,295,016) (11,182,276) (169,607,131)
---------- ------------- ----------- -------------
Net increase - Class B...................................... 18,619,957 379,061,756 11,418,682 189,975,245
---------- ------------- ----------- -------------
CLASS C SHARES
Sold........................................................ 1,135,739 23,523,660 902,795 14,998,830
Reinvestment of distributions............................... 125,773 2,406,021 12,281 175,587
Redeemed.................................................... (298,079) (6,149,603) (306,601) (5,003,784)
---------- ------------- ----------- -------------
Net increase - Class C...................................... 963,433 19,780,078 608,475 10,170,633
---------- ------------- ----------- -------------
CLASS D SHARES
Sold........................................................ 405,615 8,452,268 370,541 5,507,461
Reinvestment of distributions............................... 7,782 152,292 691 9,984
Redeemed.................................................... (349,304) (7,295,580) (349,365) (5,384,999)
---------- ------------- ----------- -------------
Net increase - Class D...................................... 64,093 1,308,980 21,867 132,446
---------- ------------- ----------- -------------
Net increase in Fund........................................ 20,194,117 $ 411,587,210 12,307,542 $ 204,706,149
========== ============= =========== =============
</TABLE>
14
<PAGE> 15
MORGAN STANLEY DEAN WITTER INFORMATION FUND
NOTES TO FINANCIAL STATEMENTS September 30, 1999 (unaudited) continued
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 September 30, 1999, there were no outstanding forward foreign currency
contracts.
15
<PAGE> 16
MORGAN STANLEY DEAN WITTER INFORMATION FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
SEPTEMBER 30, 1999 MARCH 31, 1999 MARCH 31, 1998
- ---------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $19.23 $14.02 $11.43
------ ------ ------
Income (loss) from investment operations:
Net investment loss........................................ (0.09) (0.11) (0.08)
Net realized and unrealized gain........................... 5.67 7.04 2.67
------ ------ ------
Total income from investment operations..................... 5.58 6.93 2.59
------ ------ ------
Less distributions from net realized gain................... (2.77) (1.72) --
------ ------ ------
Net asset value, end of period.............................. $22.04 $19.23 $14.02
====== ====== ======
TOTAL RETURN+............................................... 30.92%(1) 54.33% 22.66%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.17%(2)(3) 1.24%(3) 1.27%(2)
Net investment loss......................................... (0.87)%(2)(3) (0.74)%(3) (0.93)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $18,072 $5,253 $206
Portfolio turnover rate..................................... 99% 419% 218%
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE> 17
MORGAN STANLEY DEAN WITTER INFORMATION FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR ENDED MARCH 31, NOVEMBER 28, 1995*
MONTHS ENDED ------------------------------------ THROUGH
SEPTEMBER 30, 1999++ 1999++ 1998**++ 1997 MARCH 31, 1996
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of
period............................... $18.99 $13.94 $ 8.94 $10.67 $10.00
------ ------ ------ ------ ------
Income (loss) from investment
operations:
Net investment loss.................. (0.06) (0.22) (0.18) (0.13) (0.01)
Net realized and unrealized gain
(loss)............................. 5.50 6.99 5.18 (1.60) 0.69
------ ------ ------ ------ ------
Total income (loss) from investment
operations........................... 5.44 6.77 5.00 (1.73) 0.68
------ ------ ------ ------ ------
Less dividends and distributions:
In excess of net investment income... -- -- -- -- (0.01)
From net realized gain............... (2.77) (1.72) -- -- --
------ ------ ------ ------ ------
Total dividends and distributions..... (2.77) (1.72) -- -- (0.01)
------ ------ ------ ------ ------
Net asset value, end of period........ $21.66 $18.99 $13.94 $ 8.94 $10.67
====== ====== ====== ====== ======
TOTAL RETURN+......................... 30.55%(1) 53.44% 56.10% (16.31)% 6.77%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................. 1.74%(2)(3) 1.95%(3) 2.05% 2.01% 2.31%(2)
Net investment loss................... (1.44)%(2)(3) (1.45)%(3) (1.54)% (1.16)% (0.51)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands............................ $1,066,320 $580,994 $267,384 $213,726 $207,321
Portfolio turnover rate............... 99% 419% 218% 132% 8%(1)
</TABLE>
- ---------------------
* Commencement of operations.
** Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE> 18
MORGAN STANLEY DEAN WITTER INFORMATION FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
SEPTEMBER 30, 1999 MARCH 31, 1999 MARCH 31, 1998
- ---------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $18.98 $13.94 $11.43
------ ------ ------
Income (loss) from investment operations:
Net investment loss........................................ (0.17) (0.24) (0.14)
Net realized and unrealized gain........................... 5.60 7.00 2.65
------ ------ ------
Total income from investment operations..................... 5.43 6.76 2.51
------ ------ ------
Less distributions from net realized gain................... (2.77) (1.72) --
------ ------ ------
Net asset value, end of period.............................. $21.64 $18.98 $13.94
====== ====== ======
TOTAL RETURN+............................................... 30.50%(1) 53.36% 21.96%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.92%(2)(3) 2.01%(3) 2.05%(2)
Net investment loss......................................... (1.62)%(2)(3) (1.51)%(3) (1.72)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $34,404 $11,890 $249
Portfolio turnover rate..................................... 99% 419% 218%
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE> 19
MORGAN STANLEY DEAN WITTER INFORMATION FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
SEPTEMBER 30, 1999 MARCH 31, 1999 MARCH 31, 1998
- -------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period........................ $19.33 $14.03 $11.43
------ ------ ------
Income (loss) from investment operations:
Net investment loss........................................ (0.07) (0.08) (0.07)
Net realized and unrealized gain........................... 5.71 7.10 2.67
------ ------ ------
Total income from investment operations..................... 5.64 7.02 2.60
------ ------ ------
Less distributions from net realized gain................... (2.77) (1.72) --
------ ------ ------
Net asset value, end of period.............................. $22.20 $19.33 $14.03
====== ====== ======
TOTAL RETURN+............................................... 31.08%(1) 54.96% 22.75%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 0.92%(2)(3) 1.01%(3) 1.04%(2)
Net investment loss......................................... (0.62)%(2)(3) (0.51)%(3) (0.82)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $4,226 $2,440 $1,464
Portfolio turnover rate..................................... 99% 419% 218%
</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
19
<PAGE> 20
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
Guy G. Rutherford, Jr.
Vice President
Glen H. Frey
Assistant Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
- ----------------------------------
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
- ----------------------------------
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
- ----------------------------------
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
INFORMATION FUND
Semiannual Report
September 30, 1999
