Dean Witter American Value Fund
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
===============================================================================
For the year 1993, the Dean Witter American Value Fund turned in a
solid performance both relative to market indices and compared with its
competitive growth fund universe. The Fund's total return during this period
was 18.70 percent (not including the Fund's contingent deferred sales charge;
see the chart for further details). This performance compares favorably with
the Standard & Poor's Composite Index of 500 Stocks (S&P 500), which returned
10 percent. For the year, the Fund finished in the top 16 percent of all growth
funds as measured by Lipper Analytical Services, Inc. an independent research
organization generally considered to be the leading monitor of the mutual fund
industry.
The Fund's long-term track record continues to be strong, according to
Lipper, with a ranking in the top 11 percent for the five-year period ended
December 31, 1993 and the top 16 percent for the trailing nine years. The
Fund's net assets grew significantly during the year from $458 million at year-
end 1992 to $1.2 billion by year-end 1993.
The accompanying chart illustrates the performance of a $10,000
investment in the Fund for the 10-year period ended December 31, 1993 versus
the performance of a similar investment in the stocks that comprise the S&P
500.
DEAN WITTER AMERICAN VALUE FUND
GROWTH OF $10,000
($ IN THOUSANDS)
===================================================================
| DATE | TOTAL | S&P 500 |
===================================================================
| December 31, 1983 | $10,000 | $10,000 |
- -------------------------------------------------------------------
| December 31, 1984 | $ 9,168 | $10,627 |
- -------------------------------------------------------------------
| December 31, 1985 | $11,900 | $13,999 |
- -------------------------------------------------------------------
| December 31, 1986 | $13,782 | $16,612 |
- -------------------------------------------------------------------
| December 31, 1987 | $14,173 | $17,484 |
- -------------------------------------------------------------------
| December 31, 1988 | $15,710 | $20,378 |
- -------------------------------------------------------------------
| December 31, 1989 | $19,699 | $26,825 |
- -------------------------------------------------------------------
| December 31, 1990 | $19,522 | $25,996 |
- -------------------------------------------------------------------
| December 31, 1991 | $30,504 | $33,901 |
- -------------------------------------------------------------------
| December 31, 1992 | $31,675 | $36,480 |
- -------------------------------------------------------------------
| December 31, 1993 | $37,599(3) | $40,164 |
===================================================================
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
===========================================================
| Non-Standard | 18.70(1) | 19.07(1) | 14.16(1) |
- -----------------------------------------------------------
| Standard (-CDSC) | 13.70(2) | 18.87(2) | 14.16(2) |
===========================================================
| _____ Fund _____ S&P 500 (4) |
===================================
Past performance is not predictive of future returns.
__________________
(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 contingent deferred sales
charge (CDSC) (1 year-5%, 5 years-2%, 10 years-0%). See the
Fund's current prospectus for complete details on fees and sales
charges.
(3) Closing value assuming a complete redemption on December 31, 1993.
(4) The S&P 500 is a broad-based index, the performance of which is
based on the average performance of 500 widely held common stocks.
The index does not include any expenses, fees or charges.
<PAGE>
MARKET ENVIRONMENT
The stock market continued its upward momentum during 1993, though at a
modest rate relative to previous years. However, stocks were not universally up
during the year and thus the key to generating positive returns was identifying
and selecting for investment the right industry sectors. The significant
rotation in group leadership that began in 1992 continued in 1993, with
industrial stocks up and consumer stocks by-and-large underperforming or even
declining.
As we stated in the Fund's semiannual report to shareholders dated June
30, 1993, this shift in group leadership is expected to continue for both
technical and fundamental reasons. On the technical side, the outperformance
over the past 13 1/2 years of consumer stocks versus industrial issues is
unprecedented in the post-World War II era. With industrials up, this pattern
seems to have corrected itself and, from a technical standpoint,
underperformance by consumer stocks should persist. We note, however, that
selected industrial stocks are relatively more attractive than historically has
been the case.
Fundamentals also suggest consumer stocks will continue to lag.
Consumer companies profitability measures are near historic highs, while
slowing demographics, weak balance sheets and sluggish hiring trends are
pressuring consumer spending. Consumer companies have also been hurt by the
influx of large discount retailers. Additionally, pricing power seems to be
shifting from consumer companies to industrial companies whose operating rates
are approaching the flexible pricing inflation points of past cycles.
PORTFOLIO STRATEGY
The Fund's solid performance is the result of the successful
identification of those industries most likely to deliver the strongest
earnings momentum. In that connection, the Fund entirely avoided the hardest
hit market sector, consumer non-durables--companies whose products are used
only for a short period of time--such as foods, apparel and cosmetics.
Similarly, consumer growth groups historically held by growth funds, such as
retailing and restaurants, were weighted at below-traditional levels.
The capital goods sector, including technology-related industries
(which outpaced the general market), was emphasized during the fiscal year.
Key holdings in this sector at year-end included Oracle Systems Corp., Applied
Materials Inc. and DSC Communications Corp. We expect these industries to
experience sustained strong earnings momentum as companies around the world
strive to keep costs down in a competitive, slow-growth economic environment.
Also, many of President Clinton's minimum wage and health care proposals may
discourage hiring and focus management on increasing the productivity of
existing employee bases. On the industrial front, stocks like Caterpillar
Tractor and General Electric, which will benefit from rising exports,
favorable currency exchange rates and reduced cost structures were also favored
in the Fund.
The Fund's performance was aided during the course of the year by
holdings in the consumer cyclicals sector.
The automobile and auto parts groups benefited from significant
international cost advantages, strong product cycles and market share gains.
Stimulated by 25-year-low mortgage rates, household furnishings and appliances
issues also outperformed and a greatly improved supply/demand outlook propelled
hotel stocks.
LOOKING AHEAD
We expect to further expand the Fund's commitment to industrial stocks
as the European and Japanese economies bottom toward the second half of 1994
and accelerate into 1995. As this occurs, interest rates may start inching up
as the world's major industrialized economies experience a synchronized
expansion for the first time in years. At the same time, valuation will become
more of a focus and we will work to reduce the Fund's price/earning ratio.
We appreciate your support of Dean Witter American Value Fund and look
forward to continue serving your investment needs and objectives.
Very truly yours,
Charles A. Fiumefreddo
Chairman of the Board
<PAGE>
<TABLE>
DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS December 31, 1993
===================================================================================================================================
<CAPTION>
Number of
Shares Value
- --------- -----
<C> <S> <C>
COMMON STOCKS (95.7%)
AUTO RELATED (8.3%)
150,000 Allied Signal, Inc........................................................................ $ 11,850,000
105,000 China Tire Holdings Ltd................................................................... 2,808,750
140,000 Chrysler Corp............................................................................. 7,455,000
140,000 Dana Corp................................................................................. 8,382,500
80,000 Federal Mogul............................................................................. 2,320,000
275,500 Ford Motor Co............................................................................. 17,769,750
320,000 General Motors Corp....................................................................... 17,560,000
215,000 Gentex Corp.*............................................................................. 7,525,000
290,000 Magna International, Inc.................................................................. 14,427,500
95,000 Mascotech, Inc............................................................................ 2,648,125
85,000 Morton International, Inc................................................................. 7,947,500
-----------
100,694,125
-----------
BANKS (0.6%)
200,000 Citicorp*................................................................................. 7,350,000
-----------
CYCLICAL COMMODITIES (0.4%)
80,000 Rohm and Haas Co.......................................................................... 4,760,000
-----------
COMMUNICATIONS--EQUIPMENT
& SOFTWARE (6.6%)
225,000 Antec Corp.*.............................................................................. 5,400,000
75,000 Cabletron Systems, Inc.*.................................................................. 8,437,500
123,000 Chipcom Corp.*............................................................................ 6,119,250
230,000 Cisco System, Inc.*....................................................................... 14,835,000
40,000 FTP Software, Inc.*....................................................................... 1,040,000
266,000 General Instruments Corp.*................................................................ 14,929,250
50,000 Summa Four, Inc.*......................................................................... 1,937,500
180,000 Tellabs, Inc.*............................................................................ 8,415,000
200,000 ThreeCom Corp.*........................................................................... 9,375,000
155,000 Wellfleet Communications, Inc.*........................................................... 9,958,750
-----------
80,447,250
-----------
COMPUTER SOFTWARE (3.4%)
515,000 Oracle Systems Corp.*..................................................................... 14,806,250
270,000 Parametric Technology Corp.*.............................................................. 10,327,500
150,750 Platinum Software Corp.*.................................................................. 3,768,750
301,000 Sybase, Inc.*............................................................................. 12,642,000
-----------
41,544,500
-----------
CONSUMER/BUSINESS
SERVICES (2.9%)
270,175 CUC International, Inc.*.................................................................. 9,726,300
200,000 First Data Corp........................................................................... 8,150,000
180,000 Reuters Holdings PLC (ADS)++.............................................................. 14,197,500
70,000 Scholastic Corp.*......................................................................... 2,992,500
-----------
35,066,300
-----------
CONSUMER PRODUCTS (1.7%)
64,100 Buenos Aires Embotelladora SA (ADR)+...................................................... 2,884,500
100,000 Coca Cola Femsa SA (ADR)*+................................................................ 3,275,000
245,000 General Nutrition Co. Inc.*............................................................... 6,860,000
140,000 Nature's Bounty*.......................................................................... 2,800,000
142,500 Perrigo Co.*.............................................................................. 4,845,000
-----------
20,664,500
-----------
ELECTRONIC COMPONENTS (4.4%)
277,000 DSC Communications Corp.*................................................................. 17,000,875
730,000 EMC Corp. Mass.*.......................................................................... 12,045,000
220,000 General Motors (Class H).................................................................. 8,552,500
<PAGE>
<CAPTION>
Number of
Shares Value
- --------- -----
<C> <S> <C>
ELECTRONIC COMPONENTS (con't.)
500,000 Silicon Graphics*......................................................................... $ 12,375,000
67,000 Zebra Technologies Corp.*................................................................. 3,785,500
-----------
53,758,875
-----------
ELECTRONICS--
SEMICONDUCTORS (6.7%)
200,000 Altera Corp.*............................................................................. 6,525,000
266,000 Intel Corp................................................................................ 16,492,000
230,000 Linear Technology Corp.................................................................... 8,912,500
400,000 LSI Logic*................................................................................ 6,400,000
150,000 Maxim Integrated Products, Inc.*.......................................................... 7,125,000
105,000 Microchip Technology, Inc.*............................................................... 4,068,750
180,000 Micron Technology, Inc.................................................................... 8,347,500
110,000 Motorola, Inc............................................................................. 10,161,250
190,000 Texas Instruments, Inc.................................................................... 12,065,000
70,000 Zilog, Inc.*.............................................................................. 2,100,000
-----------
82,197,000
-----------
ENERGY (1.5%)
200,000 Anardarko Petroleum....................................................................... 9,075,000
50,000 Landmark Graphics Corp.*.................................................................. 912,500
205,000 Seagull Energy Corp.*..................................................................... 5,201,875
149,500 Snyder Oil Corp........................................................................... 2,653,625
-----------
17,843,000
-----------
ENTERTAINMENT (3.3%)
300,000 Blockbuster Entertainment Corp............................................................ 9,187,500
442,000 Electronic Arts* ......................................................................... 13,260,000
143,000 Gaylord Entertainment Co.
(Class A)................................................................................ 4,021,875
15,200 Marvel Entertainment Group, Inc.*......................................................... 414,200
125,000 Polygram NV (ADR)+ ....................................................................... 4,921,875
190,000 Time Warner, Inc.......................................................................... 8,407,500
-----------
40,212,950
-----------
ENTERTAINMENT/GAMING (3.4%)
64,000 Mikohn Gaming Corp.*...................................................................... 960,000
625,000 Mirage Resorts*........................................................................... 14,921,875
262,500 President Riverboat Casinos*.............................................................. 5,775,000
422,600 Promus Cos. Inc.*......................................................................... 19,333,950
-----------
40,990,825
-----------
FINANCIAL--
MISCELLANEOUS (1.6%)
140,000 BHC Financial, Inc........................................................................ 3,850,000
150,000 First Financial Management Corp........................................................... 8,512,500
187,700 First USA, Inc............................................................................ 6,710,275
-----------
19,072,775
-----------
HEALTH EQUIPMENT &
SERVICES (6.1%)
110,000 Chiron Corp.*............................................................................. 9,185,000
100,000 Elan Corp. (ADS)*++....................................................................... 4,237,500
100,000 Genesis Health Ventures Corp.*............................................................ 2,350,000
800,000 Humana Corp.*............................................................................. 14,100,000
400,000 National Medical Enterprises.............................................................. 5,600,000
200,000 Oxford Health Plans, Inc.*................................................................ 10,600,000
95,000 Pyxis Corp.*.............................................................................. 7,101,250
100,000 Sciclone Pharmaceuticals*................................................................. 2,287,500
250,000 United Healthcare Corp.*.................................................................. 18,968,750
-----------
74,430,000
-----------
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS December 31, 1993 (continued)
===================================================================================================================================
<CAPTION>
Number of
Shares Value
- --------- -----
<C> <S> <C>
HOTELS/MOTELS (3.0%)
300,000 Hospitality Franchise
Systems, Inc.*........................................................................... $ 15,937,500
247,250 La Quinta Inns, Inc....................................................................... 8,715,562
425,000 Marriott International, Inc. ............................................................. 12,325,000
-----------
36,978,062
-----------
HOUSING & HOME
FURNISHINGS (3.8%)
296,200 Bed Bath & Beyond*........................................................................ 10,144,850
305,000 Bombay, Inc............................................................................... 13,725,000
300,000 Heilig-Meyers Co.......................................................................... 11,700,000
52,000 TJ International, Inc..................................................................... 1,547,000
140,000 Whirlpool Corp............................................................................ 9,310,000
-----------
46,426,850
-----------
INDUSTRIALS (8.1%)
251,000 Caterpillar, Inc.......................................................................... 22,339,000
115,000 Deere & Co................................................................................ 8,510,000
100,500 Eaton Corp................................................................................ 5,075,250
100,000 Foster Wheeler Corp....................................................................... 3,350,000
225,000 General Electric.......................................................................... 23,596,875
150,000 Grupo Tribasa, S.A. de C.V.*
(ADR)+................................................................................... 5,193,750
110,000 Johnstown America Industries*............................................................. 2,612,500
60,000 Loral Corp................................................................................ 2,265,000
72,000 Titan Wheel International, Inc............................................................ 1,800,000
201,300 Trinity Industries, Inc................................................................... 8,681,064
235,000 Varity Corp.*............................................................................. 10,516,250
125,000 Wabash National Corp...................................................................... 4,250,000
-----------
98,189,689
-----------
MEDIA (9.0%)
30,000 Capital Cities/ABC........................................................................ 18,585,000
35,000 CBS, Inc.................................................................................. 10,097,500
181,975 Clear Channel Communications*............................................................. 8,370,850
250,000 Comcast (Class A)......................................................................... 9,031,250
250,000 Grupo Televisa (GDS)+++*.................................................................. 17,500,000
225,825 Infinity Broadcasting Corp.*.............................................................. 6,774,750
170,000 News Corp. Ltd. (ADR)+.................................................................... 8,967,500
380,000 Tele-Communications, Inc.*................................................................ 11,447,500
200,000 Turner Broadcasting Systems, Inc.......................................................... 5,400,000
150,000 United International Holdings,
Inc. (Class A)*.......................................................................... 5,137,500
42,000 Viacom, Inc. (Class A)*................................................................... 2,052,750
148,000 Viacom, Inc. (Class B)*................................................................... 6,641,500
-----------
110,006,100
-----------
METALS (1.6%)
100,000 American Barrick Res. Corp................................................................ 2,850,000
72,000 Huntco, Inc. (Class A).................................................................... 2,988,000
250,000 Nucor Corp................................................................................ 13,250,000
-----------
19,088,000
-----------
PAPER & FOREST
PRODUCTS (1.4%)
131,000 Georgia Pacific Corp...................................................................... 9,006,250
98,900 Minerals Technologies, Inc................................................................ 2,868,100
115,000 Willamette Industries..................................................................... 5,692,500
-----------
17,566,850
-----------
<PAGE>
<CAPTION>
Number of
Shares Value
- --------- -----
<C> <S> <C>
PUBLISHING (2.0%)
280,000 Enquirer/Star Group, Inc.
(Class A)................................................................................ $ 5,320,000
200,000 Gannett Co................................................................................ 11,450,000
122,500 Tribune Co................................................................................ 7,365,312
-----------
24,135,312
-----------
RESTAURANT (1.0%)
150,000 Brinker International*.................................................................... 6,900,000
210,000 Lone Star Steakhouse & Saloon*............................................................ 5,722,500
-------------
12,622,500
-------------
RETAIL (1.5%)
103,500 Kohl's Corp.*............................................................................. 5,200,875
245,000 Penney (JC)............................................................................... 12,831,875
-------------
18,032,750
-------------
RETAIL -- SPECIALTY (2.5%)
196,000 Callaway Golf Co.......................................................................... 10,461,500
216,200 Fingerhut Cos............................................................................. 6,080,625
200,000 Gap, Inc.................................................................................. 7,875,000
145,000 Mens Warehouse, Inc.*..................................................................... 4,640,000
50,000 Sunglass Hut International*............................................................... 1,562,500
-------------
30,619,625
-------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT (4.0%)
523,000 Applied Materials, Inc.*.................................................................. 20,266,250
165,000 KLA Instruments Corp.*.................................................................... 4,578,750
524,000 LAM Research*............................................................................. 16,899,000
125,000 Novellus Systems, Inc.*................................................................... 4,281,250
50,000 Synopsis, Inc.*........................................................................... 2,237,500
-------------
48,262,750
-------------
TELECOMMUNICATIONS (3.6%)
90,000 IDB Communications Group,
Inc.*.................................................................................... 4,905,000
214,500 Millicom, Inc.*........................................................................... 4,558,125
176,800 PacTel Corp.*............................................................................. 4,397,900
280,000 Telefonos de Mexico SA
Series L (ADR)+.......................................................................... 18,900,000
130,000 Vodafone Group PLC (ADR)+................................................................. 11,602,500
-------------
44,363,525
-------------
TRANSPORTATION
RELATED (2.9%)
170,000 Conrail, Inc.*............................................................................ 11,368,750
100,000 CSX....................................................................................... 8,100,000
150,000 Federal Express*.......................................................................... 10,631,250
100,000 Wisconsin Central Transport*.............................................................. 5,800,000
-------------
35,900,000
-------------
WIRELESS COMMUNICATIONS (0.4%)
150,750 Paging Network, Inc.*..................................................................... 4,522,500
-------------
TOTAL COMMON STOCKS
(Identified Cost
$1,070,561,329) ......................................................................... 1,165,746,613
-------------
NON CONVERTIBLE
PREFERRED STOCK (0.2%)
ENERGY (0.2%)
77,500 Snyder Oil Corp. $1.50 (Identified
Cost $2,095,000)......................................................................... 2,092,500
-------------
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS December 31, 1993 (continued)
===================================================================================================================================
<CAPTION>
Principal
Amount (in
thousands) Value
- ---------- -----
<C> <S> <C>
SHORT-TERM INVESTMENTS (2.9%)
COMMERCIAL PAPER (a) (2.1%)
AUTOMOTIVE FINANCE (0.8%)
$ 9,800 Ford Motor Credit Co. 2.9%
due 1/ 3/94.............................................................................. $ 9,798,421
FINANCE ENERGY (1.3%)
16,000 Chevron Oil Financial Co.
3.28% due 1/ 5/94........................................................................ 15,994,169
-------------
TOTAL COMMERCIAL PAPER
(Amortized Cost $25,792,590)............................................................. 25,792,590
-------------
U.S. GOVERNMENT
AGENCY (a) (0.5%)
6,300 Federal Farm Credit Bank
3.09% due 1/ 5/94 (Amortized
Cost $6,297,837)......................................................................... 6,297,837
-------------
REPURCHASE AGREEMENT (0.3%)
$ 3,307 The Bank of New York 2.75%
due 1/ 3/94 (dated 12/31/93;
proceeds $3,307,397;
collateralized by $3,317,309
U.S. Treasury Note 5.125%
due 3/31/98 valued
at $3,372,772) (Identified
Cost $3,306,639)......................................................................... $ 3,306,639
--------------
TOTAL SHORT-TERM
INVESTMENTS (Identified
Cost $35,397,066)........................................................................ 35,397,066
--------------
<S> <C> <C>
TOTAL INVESTMENTS (Identified
Cost $1,108,053,395).......................................................................... 98.8% 1,203,236,179
OTHER ASSETS IN EXCESS
OF LIABILITIES................................................................................ 1.2 14,742,180
------ --------------
NET ASSETS..................................................................................... 100.0% $1,217,978,359
------ --------------
------ --------------
<FN>
- ---------
* Non-income producing security.
+ American Depository Receipt.
++ American Depository Shares.
+++ Global Depository Shares.
(a) Commercial Paper and U.S. Government Agency were purchased on a discount basis. The interest rates shown have been adjusted
to reflect a bond equivalent yield.
(b) The aggregate cost for federal income tax purposes is $1,119,007,892; the aggregate gross unrealized appreciation is
$105,850,369 and the aggregate gross unrealized depreciation is $21,622,082, resulting in net unrealized appreciation of
$84,228,287.
See Notes to Financial Statements
</TABLE>
===============================================================================
1993 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended December 31, 1993, the Fund paid to shareholders $.379682
per share from long-term capital gains. For such period, 9.5% of the income
dividend qualified for the dividends received deduction available to
corporations.
===============================================================================
<PAGE>
<TABLE>
DEAN WITTER AMERICAN VALUE FUND
FINANCIAL STATEMENTS
===============================================================================
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1993
===============================================================================
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $1,108,053,395) (Note 1).............. $1,203,236,179
Receivable for:
Investments sold....................................... 20,103,805
Shares of beneficial interest sold..................... 9,010,895
Dividends.............................................. 608,960
Prepaid expenses and other assets....................... 25,258
--------------
TOTAL ASSETS......................................... 1,232,985,097
--------------
LIABILITIES:
Payable for:
Investments purchased.................................. 12,066,783
Shares of beneficial interest repurchased.............. 626,765
Plan of distribution fee payable (Note 3) .............. 906,505
Investment management fee payable (Note 2).............. 521,449
Distributions payable................................... 513,207
Accrued expenses (Note 4)............................... 372,029
--------------
TOTAL LIABILITIES.................................... 15,006,738
--------------
NET ASSETS:
Paid-in-capital......................................... 1,109,773,336
Net accumulated undistributed realized
gain on investments.................................... 13,022,239
Net unrealized appreciation on investments.............. 95,182,784
--------------
NET ASSETS........................................... $1,217,978,359
==============
NET ASSET VALUE PER SHARE, 52,737,735
shares outstanding (unlimited authorized
shares of $.01 par value).............................. $23.10
======
<CAPTION>
===============================================================================
STATEMENT OF OPERATIONS
For the year ended December 31, 1993
===============================================================================
<S> <C>
INVESTMENT INCOME:
INCOME
Dividends (net of $15,149 foreign
withholding tax)..................................... $ 6,258,528
Interest.............................................. 1,850,727
------------
TOTAL INCOME......................................... 8,109,255
------------
EXPENSES
Plan of distribution fee (Note 3)..................... 6,891,780
Investment management fee (Note 2).................... 4,299,335
Transfer agent fees and expenses
(Note 4)............................................. 960,706
Registration fees..................................... 339,276
Custodian fees........................................ 157,438
Shareholder reports and notices....................... 66,967
Professional fees..................................... 42,647
Trustees' fees and expenses........................... 23,475
Other................................................. 10,962
------------
TOTAL EXPENSES....................................... 12,792,586
------------
NET INVESTMENT LOSS................................. (4,683,331)
------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (Note 1):
Net realized gain on investments........................ 83,571,143
Net change in unrealized appreciation
on investments......................................... 38,314,852
------------
NET GAIN ON INVESTMENTS............................... 121,885,995
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS........................... $117,202,664
============
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
===================================================================================================================================
<CAPTION>
For the year ended For the year ended
December 31, 1993 December 31, 1992
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment (loss) income............................................. $ (4,683,331) $ 618,177
Net realized gain on investments......................................... 83,571,143 13,646,640
Net change in unrealized appreciation on investments..................... 38,314,852 11,104,488
-------------- ------------
Net increase in net assets resulting from operations.................... 117,202,664 25,369,305
-------------- ------------
Dividends and distributions to shareholders from:
Net investment income.................................................... (235,229) (553,254)
Net realized gain on investments......................................... (76,071,042) (8,695,653)
-------------- ------------
(76,306,271) (9,248,907)
-------------- ------------
Net increase from transactions in shares of Beneficial interest (Note 5).. 718,521,196 215,458,713
-------------- ------------
Total increase................................................... 759,417,589 231,579,111
NET ASSETS:
Beginning of period....................................................... 458,560,770 226,981,659
-------------- ------------
END OF PERIOD (including undistributed net investment income of $0
and $235,229, respectively).............................................. $1,217,978,359 $458,560,770
-------------- ------------
-------------- ------------
See Notes to Financial Statements
</TABLE>
<PAGE>
DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS
===============================================================================
1. ORGANIZATION AND ACCOUNTING POLICIES--Dean Witter American Value Fund (the
"Fund"), is registered under the Investment Company Act of 1940, as amended
(the "Act"), as a diversified, open-end management investment company and was
originally incorporated in Maryland in 1979 and reorganized as a Massachusetts
business trust on April 30, 1987. The Fund commenced operations on March 27,
1980.
The following is a summary of significant accounting policies:
A. Valuation of Investments--(1) an equity portfolio security listed or
traded on the New York or American Stock Exchange is valued at its latest sale
price on that exchange (if there were no sales that day, the security is valued
at the latest bid price); (2) an option is valued at the mean between the
latest bid and asked prices; (3) a futures contract is valued at the latest
sales price on the commodities exchange on which it trades unless the Board
determines that such price does not reflect its market value, in which case it
will be valued at its fair value as determined by the Trustees; (4) all other
portfolio securities for which over-the-counter market quotations are readily
available are valued at the latest bid price; (5) when market quotations are
not readily available, including circumstances under which it is determined by
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 Fund's Trustees (valuation of debt securities for which
market quotations are not readily available may be based upon current market
prices of securities which are comparable in coupon, rating and maturity or an
appropriate matrix utilizing similar factors); (6) the value of debt securities
which mature at a date less than sixty days subsequent to valuation date will
be determined on an amortized cost or amortized value basis, and (7) the value
of other assets will be determined in good faith at fair value under procedures
established by and under the general supervision of the Fund's Trustees.
B. Accounting for Investments--Security transactions are accounted for
on the trade date (date the order to buy or sell is executed). Realized gains
and losses on security transactions are determined on the identified cost
method. Dividend income is recorded on the ex-dividend date. Interest income is
accrued daily.
C. 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.
D. 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 reclassifications. 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.
<PAGE>
DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS (continued)
===============================================================================
E. Repurchase Agreements--The Fund's custodian takes possession on
behalf of the Fund of the collateral pledged for investments in repurchase
agreements. It is the policy of the Fund to value the underlying collateral
daily on a mark-to-market basis to determine that the value, including accrued
interest, is at least equal to the repurchase price. In the event of default of
the obligation to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation.
2. INVESTMENT MANAGEMENT AGREEMENT--Pursuant to an Investment Management
Agreement (the "Agreement") with Dean Witter InterCapital Inc., (the
"Investment Manager"), the Fund pays its Investment Manager a management fee
calculated daily and payable monthly, by applying the following annual rates to
the net assets of the Fund determined as of the close of each business day:
0.625% of the portion of the daily net assets not exceeding $250 million and
0.50% of the portion of the daily net assets exceeding $250 million.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes office space and facilities, equipment, clerical,
bookkeeping and certain legal services, and pays the salaries of all personnel,
including officers of the Fund, who are employees of the Investment Manager.
The Investment Manager also bears the cost of telephone services, heat, light,
power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION--Shares of the Fund are distributed by Dean Witter
Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager.
The Fund adopted a Plan of Distribution (the "Plan"), pursuant to Rule 12b-1
under the Act pursuant to which the Fund pays the Distributor compensation
accrued daily and payable monthly, at the annual rate of 1.0% of the lesser of:
(a) the average daily aggregate gross sales of the Fund's shares since the
inception of the plan on April 30, 1984 (not including reinvestments of
dividends or capital gains distributions), less the average daily aggregate net
asset value of the Fund's shares redeemed since the Plan's inception, upon
which a contingent deferred sales charge has been imposed or waived, or (b) the
average daily net assets of the Fund attributable to shares issued, net of
related shares redeemed, since inception of the Plan. Amounts paid under the
Plan are paid to the Distributor to compensate it for the services it provided
and the expenses borne by it and others in the distribution of the Fund's
shares, including the payment of commissions for sales of the Fund's shares and
incentive compensation to and expenses of the account executives of Dean Witter
Reynolds Inc., an affiliate of the Investment Manager and others who engage in
or support distribution of the Fund's shares or who service shareholder
accounts, including overhead and telephone expenses; printing and distribution
of prospectuses and reports used in connection with the offering of the Fund's
shares to other than current shareholders and preparation, printing and
distribution of sales literature and advertising materials, and its opportunity
costs in advancing such amounts, which compensation would be in the form of a
carrying charge on any unrecovered expenses incurred by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses
incurred by the Distributor, but not yet recovered, may be recovered through
future distribution fees from the Fund and contingent deferred sales charges
from the Fund's shareholders.
The Distributor has informed the Fund that for the year ended December
31, 1993, it received approximately $886,500 in contingent deferred sales
charges from redemptions of the Fund's shares. The Fund's shareholders pay such
charges which are not an expense of the Fund.
<PAGE>
DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS (continued)
===============================================================================
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES--The cost of
purchases and the proceeds from sales of portfolio securities for the year
ended December 31, 1993, excluding short-term investments, aggregated
$2,729,197,178 and $2,136,041,574, respectively, including purchases and sales
of U.S. Government obligations of $92,693,750 and $94,465,781, respectively.
For the year ended December 31, 1993, the Fund incurred brokerage
commissions of $864,389 to Dean Witter Reynolds Inc. for transactions executed
on behalf of the Fund. At December 31, 1993, the Fund's receivables for
investments sold and payables for investments purchased included unsettled
trades with Dean Witter Reynolds Inc. of $886,044 and $7,821,707, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
the Distributor, is the Fund's transfer agent. During the year ended December
31, 1993, the Fund incurred transfer agent fees and expenses of approximately
$961,000 of which approximately $73,000 was payable at December 31, 1993.
<TABLE>
5. SHARES OF BENEFICIAL INTEREST--Transactions in shares of beneficial interest were as follows:
<CAPTION>
For the year ended For the year ended
December 31, 1993 December 31, 1992
--------------------------- -------------------------
Shares Amount Shares Amount
------ ------- ------ -------
<S> <C> <C> <C> <C>
Sold....................................... 34,824,814 $812,736,396 14,702,955 $288,568,432
Reinvestment of dividends and
distributions............................. 3,202,538 72,246,949 462,710 8,747,864
---------- ------------ ---------- ------------
38,027,352 884,983,345 15,165,665 297,316,296
Repurchased................................ (7,200,270) (166,462,149) (4,239,670) (81,857,583)
---------- ------------ ---------- ------------
Net increase............................... 30,827,082 $718,521,196 10,925,995 $215,458,713
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
6. FEDERAL INCOME TAXES--The Fund had temporary book/tax differences which were
primarily attributable to realized capital loss deferrals on wash sales and
permanent book/tax differences primarily attributable to offsetting of net
realized short-term capital gains with the net operating loss and dividend
redesignations. To reflect cumulative reclassifications arising from permanent
book/tax differences as of December 31, 1992, accumulated undistributed net
investment income was credited $136,511, accumulated undistributed net realized
gain on investments was charged $98,808 and paid-in-capital was charged
$37,703. To reflect reclassifications arising from permanent book/tax
differences for the year ended December 31, 1993, accumulated undistributed net
investment income was credited and accumulated undistributed net realized gain
on investments was charged for approximately $4,700,000.
<PAGE>
<TABLE>
DEAN WITTER AMERICAN VALUE FUND
FINANCIAL HIGHLIGHTS
===================================================================================================================================
<CAPTION>
Selected data and ratios for a share of beneficial interest outstanding throughout each period:
For the year ended December 31,
------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, be-
ginning of period........ $20.93 $20.66 $14.39 $14.81 $13.19 $12.21 $12.64 $12.67 $10.06 $12.56
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Investment (loss)
income--net............. (0.09) 0.03 0.05 0.24 0.34 0.29 0.19 0.28 0.32 0.28
Realized and
unrealized gain
(loss) on invest-
ments--net.............. 3.94 0.71 7.90 (0.38) 2.99 1.03 0.20 1.76 2.61 (1.23)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations............... 3.85 0.74 7.95 (0.14) 3.33 1.32 0.39 2.04 2.93 (0.95)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less dividends and
distributions:
Dividends from net
investment income....... (0.01) (0.03) (0.03) (0.28) (0.32) (0.33) (0.23) (0.32) (0.32) (0.23)
Distributions from
capital gains........... (1.67) (0.44) (1.65) 0.00 (1.39) (0.00) (0.59) (1.75) 0.00 (1.32)
Distributions from
paid-in-capital......... 0.00 0.00 0.00 0.00 0.00 (0.01) 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total dividends and
distributions............ (1.68) (0.47) (1.68) (0.28) (1.71) (0.34) (0.82) (2.07) (0.32) (1.55)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period............ $23.10 $20.93 $20.66 $14.39 $14.81 $13.19 $12.21 $12.64 $12.67 $10.06
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Investment
Return+................... 18.70% 3.84% 56.26% (0.90)% 25.39% 10.84% 2.84% 15.82% 29.79% (8.32)%
Ratios/Supplemental
Data:
Net assets, end of period
(in thousands)........... $1,217,978 $458,561 $226,982 $89,165 $99,993 $90,053 $109,425 $78,872 $43,235 $37,946
Ratio of expenses to
average net assets....... 1.61% 1.72% 1.58% 1.70% 1.66% 1.78% 1.62% 1.39% 1.24% 1.17%
Ratio of net investment
(loss) income to
average net assets....... (0.59)% 0.18% 0.29% 1.67% 2.23% 2.15% 1.42% 2.10% 2.85% 2.84%
Portfolio turnover rate... 276 % 305% 264% 234% 196% 133% 203% 120% 61% 107%
<FN>
- ------------
+ Does not reflect the deduction of sales load.
See Notes to Financial Statements
</TABLE>
<PAGE>
DEAN WITTER AMERICAN VALUE FUND
REPORT OF INDEPENDENT ACCOUNTANTS
===============================================================================
To the Shareholders and Trustees of Dean Witter American Value Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Dean Witter American Value Fund
(the "Fund") at December 31, 1993, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the ten years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities owned at December 31, 1993 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
New York, New York
February 3, 1994
<PAGE>
TRUSTEES
- ---------------------------------------------
Jack F. Bennett
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Edward R. Telling
OFFICERS
- ---------------------------------------------
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
John W. Vander Vliet
Vice President
Anita H. Kolleeny
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
- ---------------------------------------------
Dean Witter Trust Company
Harborside Financial Center--Plaza Two
Jersey City, New Jersey 07311
LEGAL COUNSEL
- ---------------------------------------------
Sheldon Curtis
Two World Trade Center
New York, New York 10048
INDEPENDENT ACCOUNTANTS
- ---------------------------------------------
Price Waterhouse
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
- ---------------------------------------------
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
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 submitted for distribution to prospective investors
in the Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
AMERICAN
VALUE FUND
(LOGO)
ANNUAL REPORT
DECEMBER 31, 1993
