UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-09713
Active Assets Institutional Money Trust
(Exact name of registrant as specified in charter)
1221 Avenue of the Americas, New York, New York 10020
(Address of principal executive offices) (Zip code)
Ronald E. Robison
1221 Avenue of the Americas, New York, New York 10020
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: June 30, 2006
Date of reporting period: December 31, 2005
Item 1 - Report to Shareholders
Welcome, Shareholder:
In this report, you'll learn about how your investment in Active Assets
Institutional Money Trust performed during the semiannual period. We will
provide an overview of the market conditions, and discuss some of the factors
that affected performance during the reporting period. In addition, this report
includes the Fund's financial statements and a list of Fund investments.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE FUND BEING
OFFERED.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO PASS. THERE
IS NO ASSURANCE THAT A MUTUAL FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE. AN
INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND
SEEKS TO PRESERVE THE VALUE OF AN INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE
TO LOSE MONEY BY INVESTING IN THE FUND. PLEASE SEE THE PROSPECTUS FOR MORE
COMPLETE INFORMATION ON INVESTMENT RISKS.
FUND REPORT
For the six months ended December 31, 2005
MARKET CONDITIONS
During the six-month period ended December 31, 2005, the Federal Open Market
Committee (the "Fed") continued its pattern of raising short-term rates begun in
June of 2004. Through 13 steps of 25 basis points each -- including four during
the six months covered by this report -- the Fed increased its target rate for
federal funds to 4.25 percent.
Short-term rates rose alongside the federal funds rate, providing increased
return opportunities for investors in money market funds.
PERFORMANCE ANALYSIS
As of December 31, 2005, Active Assets Institutional Money Trust had net assets
of approximately $868 million and an average portfolio maturity of 28 days. For
the six-month period ended December 31, 2005, the Fund provided a total return
of 1.86 percent. For the seven-day period ended December 31, 2005, the Fund
provided an effective annualized yield of 4.28 percent and a current yield of
4.19 percent, while its 30-day moving average yield for December was 4.13
percent. Past performance is no guarantee of future results.
Throughout the six months ended December 31, 2005, we shortened the weighted
average maturity of the Fund as money market rates continued to rise. At the
same time, we targeted maturities around upcoming Fed meetings in order to
capitalize on possible further interest rate increases. Our strategy in managing
the portfolio remained consistent with the Fund's long-term focus on
preservation of capital and liquidity. We adhered to a conservative approach in
managing the portfolio, emphasizing high-quality money market obligations. As in
the past, we avoided the use of derivatives or structured notes that might
fluctuate excessively with changing interest rates.
There is no guarantee that any sectors mentioned will continue to perform well
or that securities in such sectors will be held by the Fund in the future.
2
<Table>
<Caption>
PORTFOLIO COMPOSITION
Commercial Paper 52.6%
Floating Rate Notes 22.8
Repurchase Agreements 21.4
Certificates of Deposit 3.2
</Table>
<Table>
<Caption>
MATURITY SCHEDULE
1 - 30 Days 66.8%
31 - 60 Days 20.9
61 - 90 Days 8.2
91 - 120 Days 1.2
121+ Days 2.9
</Table>
Data as of December 31, 2005. Subject to change daily. All percentages for
portfolio composition and maturity schedule are as a percentage of total
investments. These data are provided for informational purposes only and should
not be deemed a recommendation to buy or sell the securities mentioned. Morgan
Stanley is a full-service securities firm engaged in securities trading and
brokerage activities, investment banking, research and analysis, financing and
financial advisory services.
INVESTMENT STRATEGY
THE FUND INVESTS IN HIGH QUALITY, SHORT-TERM DEBT OBLIGATIONS. IN SELECTING
INVESTMENTS, THE FUND'S "INVESTMENT ADVISER," MORGAN STANLEY INVESTMENT ADVISORS
INC., SEEKS TO MAINTAIN THE FUND'S SHARE PRICE AT $1.00. THE SHARE PRICE
REMAINING STABLE AT $1.00 MEANS THAT THE FUND WOULD PRESERVE THE PRINCIPAL VALUE
OF YOUR INVESTMENT.
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO
PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE
MONEY BY INVESTING IN THE FUND.
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
EACH MORGAN STANLEY FUND PROVIDES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS IN
ITS SEMIANNUAL AND ANNUAL REPORTS WITHIN 60 DAYS OF THE END OF THE FUND'S SECOND
AND FOURTH FISCAL QUARTERS BY FILING THE SCHEDULE ELECTRONICALLY WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEMIANNUAL REPORTS ARE FILED ON
FORM N-CSRS AND THE ANNUAL REPORTS ARE FILED ON FORM N-CSR. MORGAN STANLEY ALSO
DELIVERS THE SEMIANNUAL AND ANNUAL REPORTS TO FUND SHAREHOLDERS AND MAKES THESE
REPORTS AVAILABLE ON ITS PUBLIC WEB SITE, WWW.MORGANSTANLEY.COM. EACH MORGAN
STANLEY FUND ALSO FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC
FOR THE FUND'S FIRST AND THIRD FISCAL QUARTERS ON FORM N-Q. MORGAN STANLEY DOES
NOT DELIVER THE REPORTS FOR THE FIRST AND THIRD FISCAL QUARTERS TO SHAREHOLDERS,
NOR ARE THE REPORTS POSTED TO THE MORGAN STANLEY PUBLIC WEB SITE. YOU MAY,
HOWEVER, OBTAIN THE FORM N-Q FILINGS (AS WELL AS THE FORM N-CSR AND N-CSRS
FILINGS) BY ACCESSING THE SEC'S WEB SITE, HTTP://WWW.SEC.GOV. YOU MAY ALSO
REVIEW AND COPY THEM AT THE SEC'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC.
INFORMATION ON THE OPERATION OF THE SEC'S PUBLIC REFERENCE ROOM MAY BE OBTAINED
BY CALLING THE SEC AT (800) SEC-0330. YOU CAN
3
ALSO REQUEST COPIES OF THESE MATERIALS, UPON PAYMENT OF A DUPLICATING FEE, BY
ELECTRONIC REQUEST AT THE SEC'S E-MAIL ADDRESS (PUBLICINFO@SEC.GOV) OR BY
WRITING THE PUBLIC REFERENCE SECTION OF THE SEC, WASHINGTON, DC 20549-0102.
HOUSEHOLDING NOTICE
TO REDUCE PRINTING AND MAILING COSTS, THE FUND ATTEMPTS TO ELIMINATE DUPLICATE
MAILINGS TO THE SAME ADDRESS. THE FUND DELIVERS A SINGLE COPY OF CERTAIN
SHAREHOLDER DOCUMENTS, INCLUDING SHAREHOLDER REPORTS, PROSPECTUSES AND PROXY
MATERIALS, TO INVESTORS WITH THE SAME LAST NAME WHO RESIDE AT THE SAME ADDRESS.
YOUR PARTICIPATION IN THIS PROGRAM WILL CONTINUE FOR AN UNLIMITED PERIOD OF TIME
UNLESS YOU INSTRUCT US OTHERWISE. YOU CAN REQUEST MULTIPLE COPIES OF THESE
DOCUMENTS BY CALLING (800) 350-6414, 8:00 A.M. TO 8:00 P.M., ET. ONCE OUR
CUSTOMER SERVICE CENTER HAS RECEIVED YOUR INSTRUCTIONS, WE WILL BEGIN SENDING
INDIVIDUAL COPIES FOR EACH ACCOUNT WITHIN 30 DAYS.
4
EXPENSE EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including advisory fees
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period 07/01/05 - 12/31/05.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
expenses based on the Fund's actual expense ratio and an assumed rate of return
of 5% per year before expenses, which is not the Fund's actual return. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period. You may use this
information to compare the ongoing cost of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. Therefore, the second line of the table is useful in
comparing ongoing costs, and will not help you determine the relative total cost
of owning different funds that have transactional costs, such as sales charges
(loads), and redemption fees, or exchange fees.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD *
------------- ------------- ---------------
07/01/05 -
07/01/05 12/31/05 12/31/05
------------- ------------- ---------------
Actual (1.86% return)....................................... $1,000.00 $1,018.60 $0.98
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,024.51 $0.98
</Table>
- ------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.19%
multiplied by the average account value over the period, multiplied by
186**/365 (to reflect the one-half year period).
** Adjusted to reflect non-business day accruals.
5
Active Assets Institutional Money Trust
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 (UNAUDITED)
<Table>
<Caption>
ANNUALIZED
PRINCIPAL YIELD
AMOUNT IN ON DATE OF MATURITY
THOUSANDS DESCRIPTION PURCHASE DATES VALUE
- ------------------------------------------------------------------------------------------------------
Commercial Paper (52.6%)
Asset-Backed - Auto (2.3%)
$ 9,991 DaimlerChrysler Revolving Auto Conduit LLC
Series I................................ 4.34 % 01/20/06 $ 9,970,618
10,000 DaimlerChrysler Revolving Auto Conduit LLC
Series II............................... 4.41 02/08/06 9,956,200
------------
19,926,818
------------
Asset-Backed - Consumer (11.3%)
16,000 Barton Capital LLC*....................... 4.33 01/17/06 15,973,182
13,581 Bryant Park Funding LLC*.................. 4.13-4.33 01/12/06-01/20/06 13,556,986
10,000 Gemini Securitization Corp., LLC*......... 4.33 01/23/06 9,976,028
29,000 Regency Markets No. 1 LLC*................ 4.10-4.34 01/10/06-01/20/06 28,957,607
29,408 Thames Asset Global Securitization*....... 4.31-4.38 01/11/06-02/03/06 29,358,925
------------
97,822,728
------------
Asset-Backed - Corporate (2.7%)
9,370 Amsterdam Funding Corp.*.................. 4.31 01/18/06 9,353,251
10,000 Atlantis One Funding*..................... 4.44 04/18/06 9,872,833
4,200 Eureka Securitization Inc.*............... 4.27 01/11/06 4,196,033
------------
23,422,117
------------
Asset-Backed - Diversified (0.6%)
5,000 Jupiter Securitization Corp.*............. 4.30 02/01/06 4,982,801
------------
Asset-Backed - Mortgages (7.3%)
20,000 Mortgage Interest Networking Trust Series
A1+ P1.................................. 4.32-4.33 01/09/06-01/12/06 19,982,058
43,218 Sydney Capital Corp.*..................... 4.24-4.46 01/05/06-03/14/06 42,986,109
------------
62,968,167
------------
Asset-Backed - Securities (15.4%)
29,046 Cancara Asset Securitization LLC*......... 4.26-4.37 01/05/06-01/31/06 29,020,755
47,315 Golden Fish LLC*.......................... 4.37-4.38 01/11/06-01/31/06 47,207,385
25,000 Grampian Funding LLC*..................... 4.00-4.17 02/07/06-02/17/06 24,885,795
32,900 Solitaire Funding LLC*.................... 4.26-4.62 01/31/06-06/13/06 32,622,392
------------
133,736,327
------------
Asset-Backed - Structured Investment
Vehicles (1.9%)
6,500 Dorada Finance Inc.*...................... 4.28 01/25/06 6,483,118
10,000 White Pine Finance LLC*................... 4.10 02/01/06 9,967,456
------------
16,450,574
------------
</Table>
See Notes to Financial Statements
6
Active Assets Institutional Money Trust
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 (UNAUDITED) continued
<Table>
<Caption>
ANNUALIZED
PRINCIPAL YIELD
AMOUNT IN ON DATE OF MATURITY
THOUSANDS DESCRIPTION PURCHASE DATES VALUE
- ------------------------------------------------------------------------------------------------------
Finance - Corporate (0.8%)
$ 7,000 CIT Group Inc. ........................... 4.34 % 02/03/06 $ 6,974,020
------------
Insurance (2.4%)
5,175 Irish Life & Permanent plc*............... 4.13 01/13/06 5,169,121
16,000 Jefferson-Pilot Corp.*.................... 4.31 01/03/06 16,000,000
------------
21,169,121
------------
International Banks (7.9%)
7,700 CBA (Delaware) Finance Inc. .............. 4.26 01/30/06 7,675,630
10,000 Danske Corp. ............................. 4.33 01/30/06 9,967,750
6,100 HBOS Treasury Services plc................ 4.33 02/01/06 6,078,870
15,500 Nordea North America, Inc. ............... 4.24-4.52 01/20/06-05/25/06 15,314,747
10,000 Santander Central Hispano Fin (Del)
Inc. ................................... 4.25 01/20/06 9,980,072
10,100 Skandinaviska Enskilda Banken AB*......... 4.33 02/03/06 10,062,602
10,000 Spintab AB................................ 4.41 03/28/06 9,898,500
------------
68,978,171
------------
Total Commercial Paper (Cost $456,430,844)................................. 456,430,844
------------
Floating Rate Notes (22.8%)
Asset-Backed - Structured Investment Vehicles (3.4%)
5,000 Beta Finance*............................. 4.35+ 01/17/06++ 5,000,662
10,000 Dorada Finance Inc.*...................... 4.35+ 01/17/06++ 10,000,277
15,000 White Pine Finance LLC*................... 4.33+ 01/25/06++ 14,998,289
------------
29,999,228
------------
Banking (3.2%)
28,000 Wells Fargo & Co. ........................ 4.54-4.58+ 03/03/06-03/15/06++ 28,024,635
------------
28,024,635
------------
Domestic Banks (4.8%)
10,000 SouthTrust Bank, N.A. .................... 4.44+ 03/01/06++ 10,002,762
21,300 U.S. Bank, N.A., Cincinnati............... 4.23-4.31+ 01/30/06++ 21,298,996
10,000 Wells Fargo Bank, N.A. ................... 4.30+ 01/03/06++ 10,000,000
------------
41,301,758
------------
Finance - Automotive (1.1%)
9,690 Toyota Motor Credit Corp. ................ 4.31-4.36+ 02/23/06-02/27/06++ 9,690,579
------------
Financial Conglomerates (1.3%)
10,988 General Electric Capital Corp. ........... 4.46-4.63+ 02/03/06-03/20/06++ 10,995,662
------------
</Table>
See Notes to Financial Statements
7
Active Assets Institutional Money Trust
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2005 (UNAUDITED) continued
<Table>
<Caption>
ANNUALIZED
PRINCIPAL YIELD
AMOUNT IN ON DATE OF MATURITY
THOUSANDS DESCRIPTION PURCHASE DATES VALUE
- ------------------------------------------------------------------------------------------------------
y International Banks (2.1%)
$ 10,000 Barclays Bank plc......................... 4.31+ % 01/23/06++ $ 9,999,190
8,000 Royal Bank of Scotland plc................ 4.23-4.26+ 01/03/06-01/05/06++ 7,998,235
------------
17,997,425
------------
Investment Banks/Brokers (6.9%)
40,000 Banc of America Securities, LLC*.......... 4.33+ 01/03/06++ 40,000,000
20,000 Goldman Sachs Group, Inc. (The)*.......... 4.37+ 01/03/06++ 20,000,000
------------
60,000,000
------------
Total Floating Rate Notes (Cost $198,009,287).............................. 198,009,287
------------
Repurchase Agreements (21.3%)
65,200 Banc of America Securities, LLC (dated
12/30/05; proceeds $65,230,934) (a)..... 4.27 01/03/06 65,200,000
120,000 Goldman Sachs & Co. (dated 12/30/05;
proceeds $120,057,610) (b).............. 4.30-4.33 01/03/06 120,000,000
------------
Total Repurchase Agreements (Cost $185,200,000)............................ 185,200,000
------------
Certificates of Deposit (3.2%)
Domestic Banks (2.6%)
13,000 Citibank, N.A. ........................... 4.19 01/27/06 13,000,000
10,000 First Tennessee Bank, N.A. ............... 4.21 01/26/06 9,999,773
------------
22,999,773
------------
International Banks (0.6%)
5,000 Deutsche Bank AG.......................... 4.61 10/16/06 4,995,748
------------
Total Certificates of Deposit (Cost $27,995,521)........................... 27,995,521
------------
</Table>
<Table>
Total Investments (Cost $867,635,652) (c)........................... 99.9% 867,635,652
Other Assets in Excess of Liabilities............................... 0.1 444,039
----- ------------
Net Assets.......................................................... 100.0% $868,079,691
===== ============
</Table>
- ---------------------
<Table>
* Resale is restricted to qualified institutional investors.
+ Rate shown is the rate in effect at December 31, 2005.
++ Date of next interest rate reset.
(a) Collateralized by Freddie Mac 5.50% due 12/01/20 - 06/01/35
valued at $66,504,000.
(b) Collateralized by Freddie Mac 4.00% - 5.50% due
09/01/09 - 11/01/35 valued at $122,400,000.
(c) Cost is the same for federal income tax purposes.
</Table>
8
See Notes to Financial Statements
Active Assets Institutional Money Trust
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
December 31, 2005 (unaudited)
<Table>
Assets:
Investments in securities, at value
(cost $867,635,652) (including repurchase agreements of
$185,200,000)............................................. $867,635,652
Cash........................................................ 6,844
Interest receivable......................................... 935,016
Prepaid expenses and other assets........................... 66,025
------------
Total Assets............................................ 868,643,537
------------
Liabilities:
Payable for:
Dividends to shareholders............................... 399,705
Investment advisory fee................................. 78,012
Administration fee...................................... 39,006
Transfer agent fee...................................... 22
Accrued expenses and other payables......................... 47,101
------------
Total Liabilities....................................... 563,846
------------
Net Assets.............................................. $868,079,691
============
Composition of Net Assets:
Paid-in-capital............................................. $867,970,391
Accumulated undistributed net investment income............. 109,300
------------
Net Assets.............................................. $868,079,691
============
Net Asset Value Per Share
868,079,691 shares outstanding (unlimited shares authorized
of $.01 par value).......................................... $1.00
============
</Table>
See Notes to Financial Statements
9
Active Assets Institutional Money Trust
FINANCIAL STATEMENTS continued
Statement of Operations
For the six months ended December 31, 2005 (unaudited)
<Table>
Net Investment Income:
Interest Income............................................. $12,806,378
-----------
Expenses
Investment advisory fee..................................... 332,712
Administration fee.......................................... 166,356
Professional fees........................................... 38,456
Custodian fees.............................................. 21,199
Shareholder reports and notices............................. 16,670
Registration fees........................................... 15,325
Trustees' fees and expenses................................. 3,557
Transfer agent fees and expenses............................ 1,582
Other....................................................... 23,804
-----------
Total Expenses.......................................... 619,661
-----------
Net Investment Income....................................... $12,186,717
===========
</Table>
See Notes to Financial Statements
10
Active Assets Institutional Money Trust
FINANCIAL STATEMENTS continued
Statement of Changes in Net Assets
<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
DECEMBER 31, 2005 JUNE 30, 2005
----------------- -------------
(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income....................................... $ 12,186,717 $ 16,375,223
Dividends to shareholders from net investment income........ (12,186,717) (16,375,208)
Net increase (decrease) from transactions in shares of
beneficial interest....................................... 332,642,750 (400,621,113)
------------ -------------
Net Increase (Decrease)................................. 332,642,750 (400,621,098)
Net Assets:
Beginning of period......................................... 535,436,941 936,058,039
------------ -------------
End of Period
(Including accumulated undistributed net investment income
of $109,300 and $109,300, respectively)..................... $868,079,691 $ 535,436,941
============ =============
</Table>
See Notes to Financial Statements
11
Active Assets Institutional Money Trust
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2005 (UNAUDITED)
1. Organization and Accounting Policies
Active Assets Institutional Money Trust (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund's investment objective is high
current income, preservation of capital and liquidity. The Fund was organized as
a Massachusetts business trust on November 23, 1999 and commenced operations on
February 15, 2000.
The following is a summary of significant accounting policies:
A. Valuation of Investments -- Portfolio securities are valued at amortized
cost, which approximates market value.
B. Accounting for Investments -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Discounts are accreted and premiums are amortized over the life of the
respective securities. Interest income is accrued daily.
C. Repurchase Agreements -- The Fund may invest directly with institutions in
repurchase agreements. The Fund's custodian receives the collateral, which is
marked-to-market daily to determine that the value of the collateral does not
decrease below the repurchase price plus accrued interest.
D. Federal Income Tax Policy -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Accordingly, no federal income tax provision is required.
E. Dividends and Distributions to Shareholders -- The Fund records dividends and
distributions to shareholders as of the close of each business day.
F. Use of Estimates -- 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.
2. Investment Advisory/Administration Agreements
Pursuant to an Investment Advisory Agreement with Morgan Stanley Investment
Advisors Inc. (the "Investment Adviser"), the Fund pays the Investment Adviser
an advisory fee, accrued daily and payable monthly, by applying the annual rate
of 0.10% to the net assets of the Fund determined as of the close of each
business day.
12
Active Assets Institutional Money Trust
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2005 (UNAUDITED) continued
Pursuant to an Administration Agreement with Morgan Stanley Services Company
Inc. (the "Administrator"), an affiliate of the Investment Adviser, the Fund
pays an administration fee, accrued daily and payable monthly, by applying the
annual rate 0.05% to the Fund's daily net assets.
The Investment Adviser has agreed to cap the Fund's operating expenses (except
for brokerage fees) by assuming the Fund's "other expenses" and/or waiving the
Fund's advisory fees, and the Administrator has agreed to waive the Fund's
administrative fees, to the extent that such operating expenses exceed 0.20% of
the average daily net assets of the Fund on an annualized basis.
3. Security Transactions and Transactions with Affiliates
The cost of purchases and proceeds from sales/maturities of portfolio securities
for the six months ended December 31, 2005, aggregated $17,194,320,471 and
$16,868,672,756, respectively.
Morgan Stanley Trust, an affiliate of the Investment Adviser and Administrator,
is the Fund's transfer agent.
The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan")
which allows each independent Trustee to defer payment of all, or a portion, of
the fees he receives for serving on the Board of Trustees. Each eligible Trustee
generally may elect to have the deferred amounts credited with a return equal to
the total return on one or more of the Morgan Stanley funds that are offered as
investment options under the Compensation Plan. Appreciation/depreciation and
distributions received from these investments are recorded with an offsetting
increase/decrease in the deferred compensation obligation and do not affect the
net asset value of the Fund.
4. Shares of Beneficial Interest
Transactions in shares of beneficial interest, at $1.00 per share, were as
follows:
<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
DECEMBER 31, 2005 JUNE 30, 2005
----------------- --------------
(unaudited)
Shares sold................................................. 1,717,981,380 3,372,493,472
Shares issued in reinvestment of dividends.................. 11,828,344 16,351,360
-------------- --------------
1,729,809,724 3,388,844,832
Shares redeemed............................................. (1,397,166,974) (3,789,465,945)
-------------- --------------
Net increase (decrease) in shares outstanding............... 332,642,750 (400,621,113)
============== ==============
</Table>
13
Active Assets Institutional Money Trust
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2005 (UNAUDITED) continued
5. Legal Matters
The Investment Adviser, certain affiliates of the Investment Adviser, certain
officers of such affiliates and certain investment companies advised by the
Investment Adviser or its affiliates, including the Fund, are named as
defendants in a consolidated class action. This consolidated action also names
as defendants certain individual Trustees and Directors of the Morgan Stanley
funds. The consolidated amended complaint, filed in the United States District
Court Southern District of New York on April 16, 2004, generally alleges that
defendants, including the Fund, violated their statutory disclosure obligations
and fiduciary duties by failing properly to disclose (i) that the Investment
Adviser and certain affiliates of the Investment Adviser allegedly offered
economic incentives to brokers and others to recommend the funds advised by the
Investment Adviser or its affiliates to investors rather than funds managed by
other companies, and (ii) that the funds advised by the Investment Adviser or
its affiliates, including the Fund, allegedly paid excessive commissions to
brokers in return for their efforts to recommend these funds to investors. The
complaint seeks, among other things, unspecified compensatory damages,
rescissionary damages, fees and costs. The defendants have moved to dismiss the
action and intend to otherwise vigorously defend it. On March 9, 2005,
Plaintiffs sought leave to supplement their complaint to assert claims on behalf
of other investors. While the Fund and Adviser believe that each has meritorious
defenses, the ultimate outcome of this matter is not presently determinable at
this stage of the litigation, and no provision has been made in the Fund's
financial statements for the effect, if any, of this matter.
14
Active Assets Institutional Money Trust
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED JUNE 30,
MONTHS ENDED ----------------------------------------------------
DECEMBER 31, 2005 2005 2004 2003 2002 2001
----------------- -------- -------- -------- -------- --------
(unaudited)
Selected Per Share Data:
Net asset value, beginning of period............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------- ------- ------- ------- -------
Net income from investment operations........... 0.018 0.021 0.009 0.014 0.024 0.058
Less dividends from net investment income....... (0.018) (0.021) (0.009)+ (0.014)+ (0.024)+ (0.058)+
------ ------- ------- ------- ------- -------
Net asset value, end of period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ======= ======= ======= ======= =======
Total Return.................................... 1.86%(1) 2.09% 0.91% 1.37% 2.45% 5.95%
Ratios to Average Net Assets:
Expenses........................................ 0.19%(2) 0.18% 0.18% 0.17% 0.17% 0.19%
Net investment income........................... 3.66%(2) 1.97% 0.91% 1.36% 2.40% 5.61%
Supplemental Data:
Net assets, end of period, in millions.......... $868 $535 $936 $1,148 $1,153 $1,146
</Table>
- ---------------------
<Table>
+ Includes capital gain distribution of less than $0.001.
(1) Not annualized.
(2) Annualized.
</Table>
15
See Notes to Financial Statements
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael E. Nugent
Fergus Reid
OFFICERS
Charles A. Fiumefreddo
Chairman of the Board
Ronald E. Robison
President and Principal Executive Officer
J. David Germany
Vice President
Dennis F. Shea
Vice President
Barry Fink
Vice President
Amy R. Doberman
Vice President
Carsten Otto
Chief Compliance Officer
Stefanie V. Chang
Vice President
Francis J. Smith
Treasurer and Chief Financial Officer
Thomas F. Caloia
Vice President
Mary E. Mullin
Secretary
TRANSFER AGENT
Morgan Stanley Trust
Harborside Financial Center, Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
INVESTMENT ADVISER
Morgan Stanley Investment Advisors Inc.
1221 Avenue of the Americas
New York, New York 10020
The financial statements included herein have been taken from the records of the
Fund without examination by the independent auditors and accordingly they do not
express an opinion thereon.
This report is submitted for the general information of the shareholders of the
Fund. For more detailed information about the Fund, its fees and expenses and
other pertinent information, please read its Prospectus. The Fund's Statement of
Additional Information contains additional information about the Fund, including
its trustees. It is available, without charge, by calling (800) 869-NEWS.
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.
Investments and services offered through Morgan Stanley DW Inc., member SIPC.
(c) 2005 Morgan Stanley
[MORGAN STANLEY LOGO]
MORGAN STANLEY FUNDS
Active Assets
Institutional
Money Trust
Semiannual Report
December 31, 2005
[MORGAN STANLEY LOGO]
RA06-00092P-Y12/05
Item 2. Code of Ethics.
Not applicable for semiannual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semiannual reports.
Item 4. Principal Accountant Fees and Services
Not applicable for semiannual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semiannual reports.
Item 6.
Refer to Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable for semiannual reports.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Applicable only to reports filed by closed-end funds.
Item 9. Closed-End Fund Repurchases
Applicable to reports filed by closed-end funds.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures
(a) The Fund's principal executive officer and principal financial officer have
concluded that the Fund's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Fund in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 12. Exhibits
(a) Code of Ethics - Not applicable for semiannual reports.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant are attached hereto as part of EX-99.CERT.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Active Assets Institutional Money Trust
/s/ Ronald E. Robison
- -------------------------------------
Ronald E. Robison
Principal Executive Officer
February 9, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
/s/ Ronald E. Robison
- -------------------------------------
Ronald E. Robison
Principal Executive Officer
February 9, 2006
/s/ Francis Smith
- -------------------------------------
Francis Smith
Principal Financial Officer
February 9, 2006
3