N-30D 1 n-30d.txt MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES 1 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND Two World Trade Center LETTER TO THE SHAREHOLDERS June 30, 2000 New York, New York 10048 DEAR SHAREHOLDER: Calendar year 2000 began much as the previous year had left off, with technology stocks surging to new highs while the rest of the market lay in wait for a change in investor sentiment. That fateful day came in March as two government-related stories became the catalysts for a sharp correction in new-economy stocks. The first story centered on a suggestion from the federal government that genomic companies should be restricted in their patent ability. The second concerned a ruling in favor of the Justice Department's case that Microsoft had used its monopoly status to restrict competition. Further contributing to the market's correction was a decision by the Federal Reserve Board that the economy was too hot and needed to be slowed. This development also held the implication that earnings growth would peak in the first quarter of 2000 and decelerate thereafter. This increase in earnings uncertainty further sparked a rotation out of new-economy issues and into more stable growth sectors such as consumer staples and health- care stocks. Cyclical growth sectors such as technology were further slammed by concerns about future earnings shortfalls and higher interest rates and inflation, while biotechnology stocks were negatively affected by fears of government interference. PERFORMANCE For the six-month period ended June 30, 2000, Morgan Stanley Dean Witter American Opportunities Fund's Class B shares produced a total return of -4.46 percent compared to -0.43 percent for the Standard & Poor's 500 Stock Index (S&P 500).(1) For the same period, the Fund's Class A, C and D shares returned -4.25 percent, -4.61 percent and -4.13 percent, respectively. The performance of the Fund's four share classes varies because of differing expenses. Total return figures assume the reinvestment of all distributions but do not reflect the deduction of any applicable sales charges. --------------------- (1) The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based index the performance of which is based on the performance of 500 widely held common stocks chosen for market size, liquidity and industry representation. The performance of the index does not include any expenses, fees or charges. The index is unmanaged and should not be considered an investment. 2 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND LETTER TO THE SHAREHOLDERS June 30, 2000, continued PORTFOLIO STRATEGY The Fund began the year with a significant emphasis on technology and biotechnology. Then, with the signal from the Federal Reserve that they were going to move to restrain the pace of economic growth by lifting interest rates, we began to adjust our portfolio weightings. First we eliminated any highly valued issues that were not currently profitable. Next we reduced our overall exposure to technology stocks. We significantly peeled back the technology groups that were most economically sensitive, such as semiconductors and semiconductor equipment. We added to the health-care sector with the purchase of drug, generics, specialty pharmacy and health-care services groups. Financials were also added, given our view that interest rates would fall in the face of a decelerating economy. Brokers and insurance group holdings were increased. We also purchased select consumer staples. LOOKING AHEAD As the Fund enters the second half of its fiscal year, many consumer, industrial and monetary indicators are signaling that the economy has begun to slow. In addition, many important measures of inflation have begun to reverse, suggesting that the Federal Reserve appears to have successfully engineered a soft landing. During similar periods the markets have responded quite favorably, with groups such as health care, technology, financials and consumer staples assuming market leadership. We believe that the Fund is well positioned to benefit from this outlook. We appreciate your continuing support of the Morgan Stanley Dean Witter American Opportunities Fund and look forward to continuing to serve your investment needs. Very truly yours, /s/ CHARLES A. FIUMEFREDDO /s/ MITCHELL M. MERIN CHARLES A. FIUMEFREDDO MITCHELL M. MERIN Chairman of the Board President
2 3 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND FUND PERFORMANCE June 30, 2000 AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------
CLASS A SHARES* ---------------------------------------------- PERIOD ENDED 6/30/00 ------------------------- 1 Year 25.32%(1) 18.74%(2) Since Inception (7/28/97) 26.68%(1) 24.37%(2)
CLASS B SHARES** ------------------------------------------------ PERIOD ENDED 6/30/00 ------------------------- 1 Year 24.69%(1) 19.69%(2) 5 Years 25.79%(1) 25.63%(2) 10 Years 20.59%(1) 20.59%(2)
CLASS C SHARES+ ------------------------------------------------ PERIOD ENDED 6/30/00 ------------------------- 1 Year 24.34%(1) 23.34%(2) Since Inception (7/28/97) 25.71%(1) 25.71%(2)
CLASS D SHARES++ ------------------------------------------------ PERIOD ENDED 6/30/00 ------------------------- 1 Year 25.61%(1) Since Inception (7/28/97) 26.98%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. --------------------- (1) Figure shown assumes reinvestment of all distributions and does not reflect the deduction of any sales charges. (2) Figure shown assumes reinvestment of all distributions and the deduction of the maximum applicable sales charge. See the Fund's current prospectus for complete details on fees and sales charges. * The maximum front-end sales charge for Class A is 5.25%. ** The maximum contingent deferred sales charge (CDSC) for Class B is 5.0%. The CDSC declines to 0% after six years. + The maximum CDSC for Class C shares is 1% for shares redeemed within one year of purchase. ++ Class D shares have no sales charge.
3 4 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND PORTFOLIO OF INVESTMENTS June 30, 2000 (unaudited)
NUMBER OF SHARES VALUE --------------------------------------------------------------------- COMMON STOCKS (88.4%) Advertising (0.3%) 349,000 Omnicom Group, Inc. ........ $ 31,082,813 --------------- Alcoholic Beverages (1.2%) 2,005,000 Anheuser-Busch Companies, Inc. ...................... 149,748,438 --------------- Beverages - Non-Alcoholic (1.6%) 4,450,260 PepsiCo, Inc. .............. 197,758,429 --------------- Biotechnology (4.9%) 400,000 Abgenix, Inc.*.............. 47,925,000 1,065,000 Amgen Inc.*................. 74,816,250 795,330 COR Therapeutics, Inc.*..... 67,801,883 223,500 Genentech, Inc.*............ 38,442,000 420,000 Human Genome Sciences, Inc.*...................... 55,991,250 530,000 IDEC Pharmaceuticals Corp.*..................... 62,142,500 650,000 Immunex Corp.*.............. 32,134,375 1,880,000 MedImmune, Inc.*............ 139,002,499 673,270 Millennium Pharmaceuticals, Inc.*...................... 75,280,001 --------------- 593,535,758 --------------- Broadcasting (1.7%) 1,329,260 Clear Channel Communications, Inc.*...... 99,694,500 770,000 Infinity Broadcasting Corp. (Series A)*................ 28,056,875 360,000 Univision Communications, Inc. (Class A)*............ 37,260,000 1,872,800 USA Networks, Inc.*......... 40,499,300 --------------- 205,510,675 --------------- Cable Television (1.6%) 2,504,080 AT&T Corp. - Liberty Media Group (Class A)*........... 60,723,940 2,180,000 Comcast Corp. (Class A Special)*.................. 88,426,250 961,700 Cox Communications, Inc. (Class A)*................. 43,817,456 --------------- 192,967,646 --------------- Cellular Telephone (0.9%) 1,760,000 Sprint Corp. (PCS Group)*... 104,720,000 --------------- Computer Communications (3.1%) 3,561,600 Cisco Systems, Inc.*........ 226,384,200 610,530 Extreme Networks, Inc.*..... 64,067,492 599,640 Juniper Networks, Inc.*..... 87,247,620 --------------- 377,699,312 ---------------
NUMBER OF SHARES VALUE --------------------------------------------------------------------- Computer Software (4.7%) 422,490 Check Point Software Technologies Ltd. (Israel)*.................. $ 89,673,503 446,890 i2 Technologies, Inc.*...... 46,588,283 3,436,515 Oracle Corp.* (Japan)....... 292,217,506 756,200 Siebel Systems, Inc.*....... 123,685,962 167,920 Veritas Software Corp.*..... 18,974,960 --------------- 571,140,214 --------------- Contract Drilling (2.6%) 1,695,000 ENSCO International Inc. ... 60,702,187 1,700,600 Global Marine, Inc.*........ 47,935,663 925,300 Nabors Industries, Inc.*.... 38,457,781 780,000 Noble Drilling Corp.*....... 32,126,250 2,090,000 R & B Falcon Corp.*......... 49,245,625 1,128,700 Rowan Companies, Inc.*...... 34,284,263 913,956 Transocean Sedco Forex Inc. ...................... 48,839,524 --------------- 311,591,293 --------------- Department Stores (0.4%) 768,160 Kohl's Corp. ............... 42,728,900 --------------- Diversified Commercial Services (0.5%) 1,440,000 Paychex, Inc. .............. 60,480,000 --------------- Diversified Electronic Products (1.7%) 1,140,000 JDS Uniphase Corp.*......... 136,586,250 1,510,000 Phillips Electronics (Netherlands).............. 71,192,514 --------------- 207,778,764 --------------- Diversified Financial Services (3.0%) 1,830,700 American Express Co. ....... 95,425,238 3,830,390 Citigroup, Inc. ............ 230,780,997 425,000 Providian Financial Corp. ..................... 38,250,000 --------------- 364,456,235 --------------- E.D.P. Peripherals (1.4%) 1,995,220 EMC Corp.*.................. 153,507,238 254,630 Network Appliance, Inc.*.... 20,481,801 --------------- 173,989,039 --------------- E.D.P. Services (0.6%) 16,400 Amdocs Ltd.*................ 1,258,700 903,380 Automatic Data Processing, Inc. ...................... 48,387,291 415,000 First Data Corp. ........... 20,594,375 --------------- 70,240,366 --------------- Electric Utilities (0.3%) 587,680 Calpine Corp.*.............. 38,639,960 ---------------
SEE NOTES TO FINANCIAL STATEMENTS 4 5 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND PORTFOLIO OF INVESTMENTS June 30, 2000 (unaudited) continued
NUMBER OF SHARES VALUE --------------------------------------------------------------------- Electrical Products (0.0%) 88,000 American Power Conversion Corp.*..................... $ 3,586,000 --------------- Electronic Components (0.5%) 64,000 Flextronics International, Ltd.*...................... 4,396,000 1,065,000 Jabil Circuit, Inc.*........ 52,850,625 --------------- 57,246,625 --------------- Electronic Data Processing (2.3%) 2,450,000 Dell Computer Corp.*........ 120,815,625 400,000 Hewlett-Packard Co. ........ 49,950,000 1,227,240 Sun Microsystems, Inc.*..... 111,602,138 --------------- 282,367,763 --------------- Electronic Production Equipment (1.8%) 1,680,540 Applied Materials, Inc.*.... 152,298,938 1,325,600 ASM Lithography Holding NV (Netherlands)*............. 58,409,250 --------------- 210,708,188 --------------- Food Chains (0.5%) 1,000,000 Koninklijke Ahold NV (Netherlands).............. 29,424,152 580,000 Safeway Inc.*............... 26,172,500 --------------- 55,596,652 --------------- Generic Drugs (0.6%) 220,000 Alpharma Inc. (Class A)..... 13,695,000 601,210 Ivax Corp.*................. 24,950,215 730,000 Watson Pharmaceuticals, Inc.*...................... 39,237,500 --------------- 77,882,715 --------------- Hospital/Nursing Management (0.2%) 780,000 HCA - The Healthcare Corp. ..................... 23,692,500 --------------- Insurance Brokers/Services (0.6%) 715,000 Marsh & McLennan Companies, Inc. ...................... 74,672,813 --------------- Internet Services (1.6%) 292,720 Art Technology Group, Inc.*...................... 29,546,425 959,180 BEA Systems, Inc.*.......... 47,359,513 1,003,370 BroadVision, Inc.*.......... 50,921,028 340,050 VeriSign, Inc.*............. 59,955,065 --------------- 187,782,031 ---------------
NUMBER OF SHARES VALUE --------------------------------------------------------------------- Investment Bankers/Brokers/Services (3.0%) 1,540,000 Lehman Brothers Holdings, Inc. ...................... $ 145,626,250 1,549,100 Merrill Lynch & Co., Inc. ...................... 178,146,500 486,500 Paine Webber Group, Inc. ... 22,135,750 286,780 Schwab (Charles) Corp. ..... 9,642,978 --------------- 355,551,478 --------------- Investment Managers (0.0%) 25,000 Amvescap PLC (United Kingdom)................... 401,740 --------------- Major Banks (1.4%) 1,462,020 Bank of New York Co., Inc. ...................... 67,983,930 918,690 State Street Corp. ......... 97,438,558 --------------- 165,422,488 --------------- Major Pharmaceuticals (8.5%) 761,550 Abbott Laboratories......... 33,936,572 2,955,000 American Home Products Corp. ..................... 173,606,250 1,029,000 Aventis (France)............ 75,079,833 630,000 Johnson & Johnson........... 64,181,250 742,000 Lilly (Eli) & Co. .......... 74,107,250 6,867,500 Pfizer, Inc. ............... 329,639,999 915,000 Pharmacia Corp. ............ 47,294,063 15,975,000 SmithKline Beecham, PLC (United Kingdom)........... 209,486,564 --------------- 1,007,331,781 --------------- Managed Health Care (0.8%) 1,145,580 UnitedHealth Group, Inc. ... 98,233,485 --------------- Media Conglomerates (3.9%) 4,430,000 Disney (Walt) Co. .......... 171,939,375 297,490 Fox Entertainment Group, Inc. (Series A)*........... 9,036,259 1,576,542 News Corporation Ltd. (The) (ADR) (Australia).......... 85,921,539 2,940,000 Viacom, Inc. (Class B)*..... 200,471,250 --------------- 467,368,423 --------------- Medical Equipment & Supplies (0.5%) 1,223,800 Medtronic, Inc. ............ 60,960,538 --------------- Medical Specialties (0.9%) 712,080 ALZA Corp.*................. 42,101,730 242,900 Bausch & Lomb Inc. ......... 18,794,388 410,210 Minimed, Inc.*.............. 48,507,332 --------------- 109,403,450 --------------- Medical/Dental Distributors (0.3%) 510,000 Cardinal Health, Inc.*...... 37,740,000 ---------------
SEE NOTES TO FINANCIAL STATEMENTS 5 6 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND PORTFOLIO OF INVESTMENTS June 30, 2000 (unaudited) continued
NUMBER OF SHARES VALUE --------------------------------------------------------------------- Metals Fabrications (0.2%) 1,104,100 Grant Prideco, Inc. ........ $ 27,602,500 --------------- Mid-Sized Banks (0.8%) 20,000 Fifth Third Bancorp......... 1,265,000 1,521,170 Northern Trust Corp. ....... 98,876,050 --------------- 100,141,050 --------------- Military/Gov't/Technical (0.3%) 45,000 General Dynamics Corp. ..... 2,351,250 428,650 General Motors Corp. (Class H)*........................ 37,614,038 --------------- 39,965,288 --------------- Multi-Line Insurance (4.0%) 2,473,200 American International Group, Inc. ............... 290,601,000 785,000 AXA (France)................ 123,618,660 1,188,470 Hartford Financial Services Group, Inc. ............... 66,480,041 --------------- 480,699,701 --------------- Multi-Sector Companies (0.8%) 1,810,000 General Electric Co. ....... 95,930,000 --------------- Oil & Gas Production (1.5%) 1,110,000 Anardarko Petroleum Corp. ..................... 54,736,875 1,023,700 Apache Corp. ............... 60,206,356 559,750 Devon Energy Corp. ......... 31,450,953 1,000,000 EOG Resources, Inc. ........ 33,500,000 --------------- 179,894,184 --------------- Oil/Gas Transmission (0.5%) 160,900 Dynegy, Inc. ............... 10,991,481 840,000 Enron Corp. ................ 54,180,000 --------------- 65,171,481 --------------- Oilfield Services/Equipment (3.5%) 136,800 Baker Hughes Inc. .......... 4,377,600 1,787,330 BJ Services Co.*............ 111,708,125 618,500 Cooper Cameron Corp.*....... 40,821,000 2,576,580 Schlumberger Ltd. .......... 192,277,282 532,790 Smith International, Inc.*...................... 38,793,772 755,900 Weatherford International, Inc.*...................... 30,094,269 --------------- 418,072,048 --------------- Other Pharmaceuticals (2.1%) 645,000 Allergan, Inc. ............. 48,052,500 94,370 Celgene Corp.*.............. 5,556,034
NUMBER OF SHARES VALUE --------------------------------------------------------------------- 535,000 Elan Corp. PLC (ADR) (Ireland)*................. $ 25,914,063 615,000 Forest Laboratories, Inc.*...................... 62,115,000 621,100 Sepracor, Inc.*............. 74,881,368 650,500 Teva Pharmaceutical Industries Ltd. (ADR) (Israel)................... 36,062,094 --------------- 252,581,059 --------------- Package Goods/Cosmetics (0.4%) 1,032,420 Avon Products, Inc. ........ 45,942,690 --------------- Packaged Foods (0.4%) 650,000 Quaker Oats Company (The)... 48,831,250 --------------- Property - Casualty Insurers (0.5%) 229,400 ACE Ltd. (Bermuda).......... 6,423,200 838,400 Chubb Corp. ................ 51,561,600 --------------- 57,984,800 --------------- Semiconductors (8.4%) 736,500 Advanced Micro Devices, Inc.*...................... 56,894,625 135,000 Broadcom Corp. (Class A)*... 29,556,563 2,260,200 Intel Corp. ................ 302,019,224 4,357,000 Micron Technology, Inc.*.... 383,688,785 320,000 SDL, Inc.*.................. 91,260,000 639,900 STMicroelectronics NV (Netherlands).............. 41,073,581 679,650 Texas Instruments, Inc. .... 46,683,459 648,810 Xilinx, Inc.*............... 53,567,376 --------------- 1,004,743,613 --------------- Telecommunication Equipment (7.1%) 305,000 Alcatel (France)............ 19,998,020 800,000 Alcatel SA (ADR) (France)... 53,200,000 970,000 CIENA Corp.*................ 161,626,250 1,065,030 Comverse Technology, Inc.*...................... 99,047,790 910,000 Corning Inc. ............... 245,586,249 2,226,100 Nortel Networks Corp. (Canada)................... 151,931,325 1,603,600 Scientific-Atlanta, Inc. ... 119,468,200 --------------- 850,857,834 --------------- TOTAL COMMON STOCKS (Identified Cost $8,639,107,526)............ 10,638,434,010 ---------------
SEE NOTES TO FINANCIAL STATEMENTS 6 7 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND PORTFOLIO OF INVESTMENTS June 30, 2000 (unaudited) continued
PRINCIPAL AMOUNT IN THOUSANDS VALUE --------------------------------------------------------------------- SHORT-TERM INVESTMENTS (15.2%) U.S. GOVERNMENT AGENCIES (a) (15.0%) $ 400 Federal Home Loan Banks 6.45% due 07/06/00......... $ 399,641,667 1,397 Federal Home Loan Mortgage Corp. 6.57% due 07/03/00... 1,396,490,095 --------------- TOTAL U.S. GOVERNMENT AGENCIES (Amortized Cost $1,796,131,762)............ 1,796,131,762 --------------- REPURCHASE AGREEMENT (0.2%) 29,375 The Bank of New York 7.00% due 07/03/00 (dated 06/30/00; proceeds $29,380,812) (b) (Identified Cost $29,375,101)............... 29,375,101 --------------- TOTAL SHORT-TERM INVESTMENTS (Identified Cost $1,825,506,863)............ 1,825,506,863 --------------- TOTAL INVESTMENTS (Identified Cost $10,464,614,389) (c)....... 103.6% 12,463,940,873 LIABILITIES IN EXCESS OF OTHER ASSETS...................................... (3.6) (428,691,956) ---- --------------- NET ASSETS.................................. 100.0% $12,035,248,917 ====== ===============
--------------------- ADR American Depository Receipt. * Non-income producing security. (a) Purchased on a discount basis. The interest rate shown has been adjusted to reflect a money market equivalent yield. (b) Collateralized by $29,626,611 Federal Home Loan Banks 6.75% due 05/01/02 valued at $29,963,137. (c) The aggregate cost for federal income tax purposes approximates identified cost. The aggregate gross unrealized appreciation is $2,066,275,608 and the aggregate gross unrealized depreciation is $66,949,124, resulting in net unrealized appreciation of $1,999,326,484.
FUTURES CONTRACTS OPEN AT JUNE 30, 2000:
DESCRIPTION UNDERLYING NUMBER OF DELIVERY MONTH FACE AMOUNT UNREALIZED CONTRACTS AND YEAR AT VALUE LOSS --------------------------------------------------------- (3,183) NASDAQ $1,214,951,100 $(5,442,743) 100 FUTURES SEPTEMBER/2000
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JUNE 30, 2000:
UNREALIZED CONTRACTS IN EXCHANGE DELIVERY APPRECIATION TO DELIVER FOR DATE (DEPRECIATION) ------------------------------------------------------------------ $25,950,630 GBP 17,139,310 07/03/2000 32,565 $40,064,983 GBP 26,461,253 07/03/2000 50,276 $33,240,740 GBP 21,857,404 07/05/2000 (104,916) $19,830,821 GBP 13,082,743 07/06/2000 2,617 $17,728,338 EUR 18,734,374 07/31/2000 151,748 $17,965,165 EUR 18,942,603 07/31/2000 113,656 $24,106,408 EUR 25,417,976 07/31/2000 152,508 --------- Net unrealized appreciation.................... $ 398,454 ========= Currency Abbreviations: ---------------------- GBP British Pound. EUR Euro.
SEE NOTES TO FINANCIAL STATEMENTS 7 8 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES June 30, 2000 (unaudited) ASSETS: Investments in securities, at value (identified cost $10,464,614,389).......................... $12,463,940,873 Cash........................................................ 1,455,547 Receivable for: Investments sold........................................ 393,394,599 Shares of beneficial interest sold...................... 21,547,644 Dividends............................................... 3,073,574 Foreign withholding taxes reclaimed..................... 626,131 Prepaid expenses and other assets........................... 587,817 --------------- TOTAL ASSETS............................................ 12,884,626,185 --------------- LIABILITIES: Payable for: Investments purchased................................... 797,553,838 Shares of beneficial interest repurchased............... 12,363,961 Plan of distribution fee................................ 6,950,302 Investment management fee............................... 4,398,730 Accrued expenses and other payables......................... 28,110,437 --------------- TOTAL LIABILITIES....................................... 849,377,268 --------------- NET ASSETS.............................................. $12,035,248,917 =============== COMPOSITION OF NET ASSETS: Paid-in-capital............................................. $ 9,240,820,585 Net unrealized appreciation................................. 1,993,874,519 Accumulated net investment loss............................. (15,881,382) Accumulated undistributed net realized gain................. 816,435,195 --------------- NET ASSETS.............................................. $12,035,248,917 =============== CLASS A SHARES: Net Assets.................................................. $392,183,770 Shares Outstanding (unlimited authorized, $.01 par value)... 9,563,983 NET ASSET VALUE PER SHARE............................... $41.01 ======= MAXIMUM OFFERING PRICE PER SHARE, (net asset value plus 5.54% of net asset value)........ $43.28 ======= CLASS B SHARES: Net Assets.................................................. $10,827,391,395 Shares Outstanding (unlimited authorized, $.01 par value)... 269,121,720 NET ASSET VALUE PER SHARE............................... $40.23 ======= CLASS C SHARES: Net Assets.................................................. $336,119,218 Shares Outstanding (unlimited authorized, $.01 par value)... 8,423,441 NET ASSET VALUE PER SHARE............................... $39.90 ======= CLASS D SHARES: Net Assets.................................................. $479,554,534 Shares Outstanding (unlimited authorized, $.01 par value)... 11,595,761 NET ASSET VALUE PER SHARE............................... $41.36 =======
SEE NOTES TO FINANCIAL STATEMENTS 8 9 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND FINANCIAL STATEMENTS, continued STATEMENT OF OPERATIONS For the six months ended June 30, 2000 (unaudited) NET INVESTMENT LOSS: INCOME Interest.................................................... $ 36,553,919 Dividends (net of $570,791 foreign withholding tax)......... 19,570,434 --------------- TOTAL INCOME............................................ 56,124,353 --------------- EXPENSES Plan of distribution fee (Class A shares)................... 443,621 Plan of distribution fee (Class B shares)................... 37,414,641 Plan of distribution fee (Class C shares)................... 1,508,016 Investment management fee................................... 26,844,928 Transfer agent fees and expenses............................ 4,461,466 Registration fees........................................... 561,488 Custodian fees.............................................. 394,364 Shareholder reports and notices............................. 251,150 Professional fees........................................... 35,293 Trustees' fees and expenses................................. 8,767 Other....................................................... 35,477 --------------- TOTAL EXPENSES.......................................... 71,959,211 --------------- NET INVESTMENT LOSS..................................... (15,834,858) --------------- NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain/loss on: Investments............................................. 1,101,520,741 Futures contracts....................................... (196,132,864) Foreign exchange transactions........................... (37,547) --------------- NET GAIN................................................ 905,350,330 --------------- Net change in unrealized appreciation/depreciation on: Investments............................................. (1,493,393,495) Futures contracts....................................... 17,743,119 Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies............................................. 8,868 --------------- NET DEPRECIATION........................................ (1,475,641,508) --------------- NET LOSS................................................ (570,291,178) --------------- NET DECREASE................................................ $ (586,126,036) ===============
SEE NOTES TO FINANCIAL STATEMENTS 9 10 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED JUNE 30, 2000 DECEMBER 31, 1999 --------------------------------------------------------------------------------------- (unaudited) INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment loss............................... $ (15,834,858) $ (17,092,053) Net realized gain................................. 905,350,330 1,042,346,909 Net change in unrealized appreciation............. (1,475,641,508) 2,347,697,489 --------------- --------------- NET INCREASE (DECREASE)....................... (586,126,036) 3,372,952,345 --------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAIN: Class A shares.................................... (4,606,163) (28,551,583) Class B shares.................................... (130,574,866) (1,024,566,187) Class C shares.................................... (4,067,112) (22,478,831) Class D shares.................................... (5,576,561) (28,966,000) --------------- --------------- TOTAL DISTRIBUTIONS........................... (144,824,702) (1,104,562,601) --------------- --------------- Net increase from transactions in shares of beneficial interest.............................. 1,505,297,704 2,929,254,218 --------------- --------------- NET INCREASE.................................. 774,346,966 5,197,643,962 NET ASSETS: Beginning of period............................... 11,260,901,951 6,063,257,989 --------------- --------------- END OF PERIOD (Including accumulated net investment losses of $15,881,382 and $46,524, respectively)..... $12,035,248,917 $11,260,901,951 =============== ===============
SEE NOTES TO FINANCIAL STATEMENTS 10 11 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND NOTES TO FINANCIAL STATEMENTS June 30, 2000 (unaudited) 1. ORGANIZATION AND ACCOUNTING POLICIES Morgan Stanley Dean Witter American Opportunities 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 capital growth consistent with an effort to reduce volatility. The Fund seeks to achieve its objective by investing in a diversified portfolio of securities consisting principally of common stocks. The Fund was incorporated in Maryland in 1979, commenced operations on March 27, 1980 and was reorganized as a Massachusetts business trust on April 30, 1987. 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 a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market pursuant to procedures adopted by the Trustees); (2) all other portfolio securities for which over-the-counter market quotations are readily available are valued at the latest available bid price prior to the time of valuation; (3) when market quotations are not readily available, including circumstances under which it is determined by Morgan Stanley Dean Witter Advisors Inc. (the "Investment Manager") that sale or bid prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Trustees (valuation of debt securities for which market quotations are not readily available may be based upon current market prices of securities which are comparable in coupon, rating and maturity or an appropriate matrix 11 12 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND NOTES TO FINANCIAL STATEMENTS June 30, 2000 (unaudited) continued 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. 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. FUTURES CONTRACTS -- A futures contract is an agreement between two parties to buy and sell financial instruments at a set price on a future date. Upon entering into such a contract, the Fund is required to pledge to the broker cash, U.S. Government securities or other liquid portfolio securities equal to the minimum initial margin requirement of the applicable futures exchange. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract which is known as variation margin. Such receipts or payments are recorded by the Fund as unrealized gains or losses. Upon closing of the contract, the Fund realizes a gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. E. 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 12 13 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND NOTES TO FINANCIAL STATEMENTS June 30, 2000 (unaudited) continued 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. F. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward foreign currency contracts which are valued daily at the appropriate exchange rates. The resultant unrealized exchange gains and losses are included in the Statement of Operations as unrealized gain/loss on foreign exchange transactions. The Fund records realized gains or losses on delivery of the currency or at the time the forward contract is extinguished (compensated) by entering into a closing transaction prior to delivery. G. 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. H. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and distributions to its shareholders on the record date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income and net realized capital gains for financial reporting purposes but not for tax purposes are reported as dividends in excess of net investment income or distributions in excess of net realized capital gains. To the extent they exceed net investment income and net realized capital gains for tax purposes, they are reported as distributions of paid-in-capital. 2. INVESTMENT MANAGEMENT AGREEMENT Pursuant to an Investment Management Agreement with the Investment Manager, the Fund pays a management fee, accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund determined at the close of each business day: 0.625% to the portion of daily net assets not exceeding $250 million; 0.50% to the portion of daily net assets exceeding $250 million but not exceeding $2.5 billion; 0.475% to the portion of daily net assets exceeding $2.5 billion but not exceeding $3.5 billion; 0.45% to the portion of daily net assets exceeding $3.5 billion but not exceeding $4.5 billion; and 0.425% to the portion of daily net assets in excess of $4.5 billion. 13 14 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND NOTES TO FINANCIAL STATEMENTS June 30, 2000 (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 Plan on July 2, 1984 (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 attributable to shares issued, net of related shares redeemed, since the Plan's inception; and (iii) Class C -- up to 1.0% of the average daily net assets of Class C. In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by the Distributor but not yet recovered may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares. Although there is no legal obligation for the Fund to pay expenses incurred in excess of payments made to the Distributor under the Plan and the proceeds of contingent deferred sales charges paid by investors upon redemption of shares, if for any reason the Plan is terminated, the Trustees will consider at that time the manner in which to treat such expenses. The Distributor has advised the Fund that such excess amounts totaled $150,281,286 at June 30, 2000. In the case of Class A shares and Class C shares, expenses incurred pursuant to the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net assets of Class A or Class C, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses representing a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other selected broker-dealer representatives may be reimbursed in the subsequent calendar year. For the six months ended June 30, 2000, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.25% and 1.0%, respectively. The Distributor has informed the Fund that for six months ended June 30, 2000, it received contingent deferred sales charges from certain redemptions of the Fund's Class A shares, Class B shares and Class C shares of $26,667, $5,408,496, and $82,542 respectively and received $886,188 in front-end sales 14 15 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND NOTES TO FINANCIAL STATEMENTS June 30, 2000 (unaudited) continued 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 June 30, 2000, aggregated $26,253,921,072 and $25,407,938,942, respectively. Included in the aforementioned are purchases and sales of U.S. Government securities of $793,117,938 and $795,365,656, respectively. For the six months ended June 30, 2000, the Fund incurred $457,055 in brokerage commissions with DWR for portfolio transactions executed on behalf of the Fund. For the six months ended June 30, 2000, the Fund incurred brokerage commissions of $3,065,855 with Morgan Stanley & Co., Inc., an affiliate of the Investment Manager and Distributor, for portfolio transactions executed on behalf of the Fund. At June 30, 2000, the Fund's receivables for securities sold included unsettled trades with Morgan Stanley & Co., Inc. of $42,703,114. Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and Distributor, is the Fund's transfer agent. The Fund has an unfunded noncontributory defined benefit pension plan covering all independent Trustees of the Fund who will have served as independent Trustees for at least five years at the time of retirement. Benefits under this plan are based on years of service and compensation during the last five years of service. Aggregate pension costs for the six months ended June 30, 2000 included in Trustees' fees and expenses in the Statement of Operations amounted to $2,992. At June 30, 2000, the Fund had an accrued pension liability of $45,726 which is included in accrued expenses in the Statement of Assets and Liabilities. 15 16 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND NOTES TO FINANCIAL STATEMENTS June 30, 2000 (unaudited) continued 5. SHARES OF BENEFICIAL INTEREST Transactions in shares of beneficial interest were as follows:
FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED JUNE 30, 2000 DECEMBER 31, 1999 ---------------------------- ---------------------------- (unaudited) SHARES AMOUNT SHARES AMOUNT ----------- -------------- ----------- -------------- CLASS A SHARES Sold..................................................... 4,059,758 $ 175,684,837 4,338,198 $ 158,802,903 Reinvestment of distributions............................ 111,749 4,524,724 717,347 27,977,919 Shares issued in connection with the acquisition of Morgan Stanley Dean Witter Capital Appreciation Fund.... -- -- 21,302 761,171 Redeemed................................................. (1,679,296) (71,059,342) (1,529,947) (56,507,414) ----------- -------------- ----------- -------------- Net increase - Class A................................... 2,492,211 109,150,219 3,546,900 131,034,579 ----------- -------------- ----------- -------------- CLASS B SHARES Sold..................................................... 45,463,199 1,953,929,082 71,285,499 2,582,385,467 Reinvestment of distributions............................ 3,086,884 122,641,858 25,191,185 963,793,541 Shares issued in connection with the acquisition of Morgan Stanley Dean Witter Capital Appreciation Fund.... -- -- 6,039,569 213,444,830 Redeemed................................................. (23,105,619) (977,542,712) (33,894,354) (1,228,290,302) ----------- -------------- ----------- -------------- Net increase - Class B................................... 25,444,464 1,099,028,228 68,621,899 2,531,333,536 ----------- -------------- ----------- -------------- CLASS C SHARES Sold..................................................... 3,401,462 144,275,119 4,261,820 153,567,595 Reinvestment of distributions............................ 99,921 3,937,897 568,229 21,693,093 Shares issued in connection with the acquisition of Morgan Stanley Dean Witter Capital Appreciation Fund.... -- -- 35,974 1,266,865 Redeemed................................................. (884,876) (37,113,339) (918,072) (33,332,226) ----------- -------------- ----------- -------------- Net increase - Class C................................... 2,616,507 111,099,677 3,947,951 143,195,327 ----------- -------------- ----------- -------------- CLASS D SHARES Sold..................................................... 5,277,610 229,673,092 4,457,365 166,990,004 Reinvestment of distributions............................ 128,821 5,261,055 706,696 27,710,295 Shares issued in connection with the acquisition of Morgan Stanley Dean Witter Capital Appreciation Fund.... -- -- 3,051 109,510 Redeemed................................................. (1,133,100) (48,914,567) (1,898,576) (71,119,033) ----------- -------------- ----------- -------------- Net increase - Class D................................... 4,273,331 186,019,580 3,268,536 123,690,776 ----------- -------------- ----------- -------------- Net increase in Fund..................................... 34,826,513 $1,505,297,704 79,385,286 $2,929,254,218 =========== ============== =========== ==============
6. FEDERAL INCOME TAX STATUS As of December 31, 1999, the Fund had temporary book/tax differences primarily attributable to the mark-to-market of open future contracts and capital loss deferrals on wash sales. 16 17 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND NOTES TO FINANCIAL STATEMENTS June 30, 2000 (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. To hedge against adverse interest rate, foreign currency and market risks, the Fund may purchase and sell interest rate, currency and index futures ("futures contracts"). Forward contracts and futures 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 June 30, 2000, the Fund had outstanding futures contracts and forward contracts. 8. ACQUISITION OF MORGAN STANLEY DEAN WITTER CAPITAL APPRECIATION FUND On March 12, 1999, the Fund acquired all the net assets of Morgan Stanley Dean Witter Capital Appreciation Fund ("Capital Appreciation") pursuant to a plan of reorganization approved by the shareholders of Capital Appreciation on October 29, 1998. The acquisition was accomplished by a tax-free exchange of 21,302 Class A shares of the Fund at a net asset value of $35.74 per share for 60,567 Class A shares of Capital Appreciation; 6,039,569 Class B shares of the Fund at a net asset value of $35.35 per share for 17,217,642 Class B shares of Capital Appreciation; 35,974 Class C shares of the Fund at a net asset value of $35.22 per share for 102,177 Class C shares of Capital Appreciation; and 3,051 Class D shares of the Fund at a net asset value of $35.90 per share for 8,685 Class D shares of Capital Appreciation. The net assets of the Fund and Capital Appreciation immediately before the acquisition were $7,027,067,112 and $215,582,364, respectively, including unrealized appreciation of $42,624,304 for Capital Appreciation. Immediately after the acquisition, the combined assets of the Fund amounted to $7,242,649,476. 17 18 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND FINANCIAL HIGHLIGHTS Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE PERIOD FOR THE SIX FOR THE YEAR FOR THE YEAR JULY 28, 1997* MONTHS ENDED ENDED ENDED THROUGH JUNE 30, 2000 DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997 ---------------------------------------------------------------------------------------------------------- (unaudited) CLASS A SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period..... $43.35 $33.16 $29.59 $31.87 ------ ------ ------ ------ Income (loss) from investment operations: Net investment income................... 0.04 0.10 0.15 0.05 Net realized and unrealized gain (loss)................................ (1.89) 14.80 8.71 2.32 ------ ------ ------ ------ Total income (loss) from investment operations.............................. (1.85) 14.90 8.86 2.37 ------ ------ ------ ------ Less distributions from net realized gain.................................... (0.49) (4.71) (5.29) (4.65) ------ ------ ------ ------ Net asset value, end of period........... $41.01 $43.35 $33.16 $29.59 ====== ====== ====== ====== TOTAL RETURN+............................ (4.25)%(1) 46.94% 31.78% 7.70%(1) RATIOS TO AVERAGE NET ASSETS: Expenses................................. 0.80 %(2)(3) 0.81%(3) 0.86%(3) 0.92%(2) Net investment income.................... 0.14 %(2)(3) 0.28%(3) 0.43%(3) 0.38%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands............................... $392,184 $306,542 $116,894 $15,844 Portfolio turnover rate.................. 238 %(1) 378% 321% 275%
--------------------- * 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 19 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND FINANCIAL HIGHLIGHTS, continued
FOR THE SIX FOR THE YEAR ENDED DECEMBER 31, MONTHS ENDED -------------------------------------------------------------------- JUNE 30, 2000++ 1999++ 1998++ 1997*++ 1996 1995 --------------------------------------------------------------------------------------------------------------------------------- (unaudited) CLASS B SHARES SELECTED PER SHARE DATA: Net asset value, beginning of period.............................. $42.63 $32.85 $29.51 $27.01 $27.16 $21.21 ------ ------ ------ ------ ------ ------ Income (loss) from investment operations: Net investment income (loss)........ (0.06) (0.09) (0.03) (0.10) (0.08) 0.01 Net realized and unrealized gain (loss)............................ (1.85) 14.58 8.66 8.34 2.86 8.87 ------ ------ ------ ------ ------ ------ Total income (loss) from investment operations.......................... (1.91) 14.49 8.63 8.24 2.78 8.88 ------ ------ ------ ------ ------ ------ Less dividends and distributions from: Net investment income............... -- -- -- -- (0.01) -- Net realized gain................... (0.49) (4.71) (5.29) (5.74) (2.92) (2.93) ------ ------ ------ ------ ------ ------ Total dividends and distributions.... (0.49) (4.71) (5.29) (5.74) (2.93) (2.93) ------ ------ ------ ------ ------ ------ Net asset value, end of period....... $40.23 $42.63 $32.85 $29.51 $27.01 $27.16 ====== ====== ====== ====== ====== ====== TOTAL RETURN+........................ (4.46)%(1) 46.12% 31.07% 31.55% 10.53% 42.20% RATIOS TO AVERAGE NET ASSETS: Expenses............................. 1.24 %(2)(3) 1.33%(3) 1.39%(3) 1.46% 1.53% 1.61% Net investment income (loss)......... (0.30)%(2)(3) (0.24)%(3) (0.10)%(3) (0.34)% (0.33)% 0.06% SUPPLEMENTAL DATA: Net assets, end of period, in millions............................ $10,827 $10,389 $5,750 $4,078 $3,099 $2,389 Portfolio turnover rate.............. 238 %(1) 378% 321% 275% 279% 256%
--------------------- * Prior to July 28, 1997, the Fund issued one class of shares. All shares of the Fund held prior to that date, other than shares which were purchased prior to April 30, 1984 (and with respect to such shares, certain shares acquired through reinvestment of dividends and capital gains distributions (collectively the "Old Shares")), have been designated Class B shares. The Old Shares have been designated Class D shares. ++ The per share amount were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses. SEE NOTES TO FINANCIAL STATEMENTS 19 20 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND FINANCIAL HIGHLIGHTS, continued
FOR THE PERIOD FOR THE SIX FOR THE YEAR FOR THE YEAR JULY 28, 1997* MONTHS ENDED ENDED ENDED THROUGH JUNE 30, 2000 DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997 --------------------------------------------------------------------------------------------------------------------------------- (unaudited) CLASS C SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period........ $42.35 $32.74 $29.49 $31.87 ------ ------ ------ ------ Income (loss) from investment operations: Net investment loss........................ (0.12) (0.18) (0.10) (0.05) Net realized and unrealized gain (loss).... (1.84) 14.50 8.64 2.32 ------ ------ ------ ------ Total income (loss) from investment operations................................. (1.96) 14.32 8.54 2.27 ------ ------ ------ ------ Less distributions from net realized gain... (0.49) (4.71) (5.29) (4.65) ------ ------ ------ ------ Net asset value, end of period.............. $39.90 $42.35 $32.74 $29.49 ====== ====== ====== ====== TOTAL RETURN+............................... (4.61)%(1) 45.75 % 30.78 % 7.39 %(1) RATIOS TO AVERAGE NET ASSETS: Expenses.................................... 1.55 %(2)(3) 1.59 %(3) 1.61 %(3) 1.66 %(2) Net investment loss......................... (0.61)%(2)(3) (0.50)%(3) (0.32)%(3) (0.36)%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands..... $336,119 $245,942 $60,861 $12,204 Portfolio turnover rate..................... 238 % 378 % 321 % 275 %
--------------------- * 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 20 21 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND FINANCIAL HIGHLIGHTS, continued
FOR THE PERIOD FOR THE SIX FOR THE YEAR FOR THE YEAR JULY 28, 1997* MONTHS ENDED ENDED ENDED THROUGH JUNE 30, 2000 DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997 --------------------------------------------------------------------------------------------------------------------------------- (unaudited) CLASS D SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period........ $43.66 $33.31 $29.63 $31.87 ------ ------ ------ ------ Income (loss) from investment operations: Net investment income...................... 0.09 0.18 0.24 0.07 Net realized and unrealized gain (loss).... (1.90) 14.88 8.73 2.34 ------ ------ ------ ------ Total income (loss) from investment operations................................. (1.81) 15.06 8.97 2.41 ------ ------ ------ ------ Less distributions from net realized gain... (0.49) (4.71) (5.29) (4.65) ------ ------ ------ ------ Net asset value, end of period.............. $41.36 $43.66 $33.31 $29.63 ====== ====== ====== ====== TOTAL RETURN+............................... (4.13)%(1) 47.22% 32.12% 7.83%(1) RATIOS TO AVERAGE NET ASSETS: Expenses.................................... 0.55 %(2)(3) 0.59%(3) 0.61%(3) 0.64%(2) Net investment income....................... 0.39 %(2)(3) 0.50%(3) 0.68%(3) 0.50%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands..... $479,555 $319,692 $135,022 $49,772 Portfolio turnover rate..................... 238 %(1) 378% 321% 275%
--------------------- * The date shares were first issued. Shareholders who held shares of the Fund prior to July 28, 1997 (the date the Fund converted to a multiple class share structure) should refer to the Financial Highlights of Class B to obtain the historical per share data and ratio information of their shares. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses. SEE NOTES TO FINANCIAL STATEMENTS 21 22 MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND CHANGE IN INDEPENDENT ACCOUNTANTS On July 1, 2000 PricewaterhouseCoopers LLP resigned as independent accountants of the Fund. The reports of PricewaterhouseCoopers LLP on the financial statements of the Fund for the past two fiscal years contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle. In connection with its audit for the two most recent fiscal years and through July 1, 2000, there have been no disagreements with PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of PricewaterhouseCoopers LLP would have caused them to make reference thereto in their report on the financial statements for such years. The Fund, with the approval of its Board of Trustees and its Audit Committee, engaged Deloitte & Touche LLP as its new independent accountants as of July 1, 2000. 22 23 (This Page Intentionally Left Blank) 24 TRUSTEES ---------------------------------- Michael Bozic Charles A. Fiumefreddo Edwin J. Garn Wayne E. Hedien James F. Higgins Dr. Manuel H. Johnson Michael E. Nugent Philip J. Purcell John L. Schroeder OFFICERS ---------------------------------- Charles A. Fiumefreddo Chairman and Chief Executive Officer Mitchell M. Merin President Barry Fink Vice President, Secretary and General Counsel Anita H. Kolleeny Vice President Michelle Kaufman Vice President Thomas F. Caloia Treasurer TRANSFER AGENT ---------------------------------- Morgan Stanley Dean Witter Trust FSB Harborside Financial Center -- Plaza Two Jersey City, New Jersey 07311 INDEPENDENT ACCOUNTANTS ---------------------------------- Deloitte & Touche LLP Two World Financial Center New York, New York 10281 INVESTMENT MANAGER ---------------------------------- Morgan Stanley Dean Witter Advisors Inc. Two World 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 Distributors Inc., member NASD. MORGAN STANLEY DEAN WITTER AMERICAN OPPORTUNITIES FUND Semiannual Report June 30, 2000