<PAGE> 1
DEAN WITTER AMERICAN VALUE FUND Two World Trade Center, New York, New York 10048
LETTER TO THE SHAREHOLDERS June 30, 1996
DEAR SHAREHOLDER:
Over the six months ended June 30, 1996, moderate levels of inflation and
corporate earnings growth helped the U.S. equity market increase 10.10 percent,
as measured by the Standard & Poor's 500 Composite Stock Price Index (S&P 500).
During the same period, Dean Witter American Value Fund posted a total return of
6.76 percent. However, the Fund's performance relative to its peer group
continues to be impressive, with a one year ranking in the top 24 percent of all
growth funds, as measured by Lipper Analytical Services, Inc. Longer-term
performance also remains attractive, with a five-year ranking in the top 16
percent and a 10-year ranking in the top 17 percent. (Lipper data are based on
total return and do not reflect sales charges.)
POSITIONING THE FUND'S PORTFOLIO
As the first quarter of 1996 progressed, the U.S. economy gathered momentum as
employment, industrial production and consumer spending began to accelerate.
When evidence of an economic rebound mounted, the portfolio, which had been
balanced in a "barbell" fashion between steady growth and economically sensitive
or cyclical industries, was tilted toward the cyclical end to take advantage of
the expected growth that lay ahead. A lesser exposure to steady growth
industries was maintained because the portfolio manager believed that corporate
earnings would decelerate as the year progressed.
Steady growth groups represented in the portfolio included health care (drugs,
health care services and medical supply), consumer staples (beverages, cosmetics
and household products) and consumer business services (funeral homes, education
services and data processing). These industries historically appreciate in the
face of sluggish corporate profit growth because of their relative earnings
advantage. Financial groups such as banks were also retained on the basis of the
portfolio manager's expectation that their earnings could continue to outpace
overall profits.
<PAGE> 2
DEAN WITTER AMERICAN VALUE FUND
LETTER TO THE SHAREHOLDERS June 30, 1996, continued
On the economically sensitive side, investment holdings included technology
(networking, computer software and communications) and consumer cyclicals
(automobiles, retail, apparel, airlines and lodging). The portfolio manager
focused in this area in an effort to capitalize on signs of continued capital
spending in select high-growth technology areas. Consumer cyclical industries
were purchased on the belief that that sector would experience a rebound in the
wake of rising employment. Purchases also included several stocks in the
agriculture-related, aerospace and energy industries. These industries were
purchased because they represent long-term themes relating to increased demand
emanating from the faster-growing developing countries in Asia and Latin
America.
At the end of the period, significant holdings included Cisco Systems, Inc.,
Boeing Co., Tellabs, Inc., Thermo Electron Corp., Monsanto Co., Citicorp, Hilton
Hotels Corp., Microsoft Corp., Gap, Inc., Johnson & Johnson and Pfizer, Inc.
LOOKING AHEAD
After a strong first half, the portfolio manager expects the economy to pause
for the remainder of the year to allow pent-up consumer and capital spending to
rebuild. Additionally, slowing unit demand and higher wages could pressure
corporate earnings profitability and result in diminished capital spending.
Following this respite, a more robust, broad-based economic rebound is
anticipated to unfold over the course of 1997, boosted by a simultaneous
recovery in developing and developed countries alike. Against this backdrop, it
is anticipated that commodity cyclical groups (chemicals, paper, aluminum and
machinery) and commodity technology groups (semiconductors, semiconductor
capital equipment and computers) are poised to be standout performers. These
industries are expected to be driven by very inexpensive valuations and
significantly accelerating earnings resulting from robust worldwide industrial
production and capital spending.
In the meantime, the portfolio manager believes that the Fund's portfolio is
appropriately positioned to take advantage of those steady growth industries
that are still outpacing overall corporate earnings growth, as well as those
industries that are currently benefiting from an economic lift.
<PAGE> 3
DEAN WITTER AMERICAN VALUE FUND
LETTER TO THE SHAREHOLDERS June 30, 1996, continued
We appreciate your support of Dean Witter American Value Fund and look forward
to continuing to serve your investment needs and objectives.
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE> 4
DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS June 30, 1996 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (94.3%)
Agriculture Related (3.1%)
350,000 Case Corp. ................ $ 16,800,000
400,000 IMC Global, Inc. .......... 15,050,000
880,000 Monsanto Co. .............. 28,600,000
265,000 Pioneer Hi-Bred
International, Inc. ....... 14,011,875
200,000 Potash Corp. of
Saskatchewan, Inc.
(Canada)................... 13,250,000
--------------
87,711,875
--------------
Apparel & Footwear (1.9%)
146,349 Fila Holding SpA (ADR)
(Italy).................... 12,622,601
263,900 Jones Apparel Group,
Inc.*...................... 12,964,088
230,000 Nike, Inc. (Class B)....... 23,632,500
100,000 Nine West Group, Inc.*..... 5,112,500
--------------
54,331,689
--------------
Auto Related (3.1%)
392,600 AutoZone, Inc.*............ 13,642,850
300,000 Chrysler Corp. ............ 18,600,000
450,000 Ford Motor Co. ............ 14,568,750
500,000 Harley-Davidson, Inc. ..... 20,562,500
200,000 Harman International
Industries, Inc. .......... 9,850,000
230,000 Honda Motor Co. (Japan).... 5,954,964
230,000 Toyota Motor Corp.
(Japan).................... 5,745,282
--------------
88,924,346
--------------
Banks (2.8%)
350,000 BankAmerica Corp. ......... 26,512,500
320,300 Citicorp................... 26,464,788
100,000 First Bank System, Inc. ... 5,800,000
247,400 NationsBank Corp. ......... 20,441,425
--------------
79,218,713
--------------
Basic Cyclicals (0.2%)
100,000 Air Products & Chemicals,
Inc. ...................... 5,775,000
--------------
Biotechnology (1.5%)
100,000 Amgen Inc.*................ 5,375,000
210,000 Biochem Pharma, Inc.*...... 7,848,750
550,000 Centocor, Inc.*............ 16,431,250
415,000 IDEC Pharmaceuticals
Corp.*..................... 9,545,000
54,800 Interneuron
Pharmaceuticals, Inc.*..... 1,616,600
100,000 QLT Phototherapeutics,
Inc.*...................... 1,825,000
--------------
42,641,600
--------------
Capital Goods (2.8%)
320,000 Boeing Co. ................ $ 27,880,000
200,000 Lockheed Martin Corp. ..... 16,800,000
313,000 Raychem Corp. ............. 22,496,875
100,000 United Technologies
Corp. ..................... 11,500,000
--------------
78,676,875
--------------
Communications Equipment &
Software (9.8%)
193,800 ACT Networks, Inc.*........ 6,250,050
155,000 Adtran, Inc.*.............. 10,966,250
497,600 Ascend Communications,
Inc.*...................... 27,927,800
480,000 Cascade Communications
Corp.*..................... 32,640,000
797,000 Cisco Systems, Inc.*....... 45,130,124
508,100 Lucent Technologies,
Inc. ...................... 19,244,288
263,000 Newbridge Networks Corp.*
(Canada)................... 17,226,500
200,000 Pairgain Technologies,
Inc.*...................... 12,400,000
11,500 Premiere Technologies,
Inc.*...................... 353,625
148,000 Premisys Communications,
Inc.*...................... 9,028,000
211,500 Shiva Corp.*............... 16,867,125
355,000 Stratacom, Inc.*........... 19,968,750
557,300 Tellabs, Inc.*............. 37,199,775
245,000 U.S. Robotics Corp.*....... 20,886,250
100,000 WinStar Communications,
Inc.*...................... 2,475,000
--------------
278,563,537
--------------
Computer Services (5.7%)
159,000 BDM International Inc.*.... 7,353,750
270,000 Cambridge Technology
Partners, Inc.*............ 8,235,000
160,400 CBT Group PLC (ADR)*
(Ireland).................. 7,218,000
200,000 Computer Horizons Corp.*... 7,850,000
151,000 Computer Sciences Corp.*... 11,287,250
297,000 DST Systems, Inc.*......... 9,504,000
51,800 Electronic Data Systems
Corp. ..................... 2,784,250
326,321 First Data Corp. .......... 25,983,310
11,400 First USA Paymentech,
Inc.*...................... 456,000
350,000 Gartner Group, Inc.*....... 12,818,750
45,000 HNC Software, Inc.*........ 2,025,000
100,000 Keane, Inc.*............... 3,687,500
9,700 NOVA Corp.*................ 327,375
147,400 Remedy Corp.*.............. 10,686,500
12,800 Renaissance Solutions,
Inc.*...................... 352,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS June 30, 1996 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
350,000 Reuters Holdings PLC (ADR)
(United Kingdom)........... $ 25,331,250
18,000 Sapient Corp.*............. 742,500
487,000 Sterling Commerce, Inc.*... 18,079,875
104,500 Transaction Systems
Architects, Inc. (Class
A)*........................ 7,001,500
--------------
161,723,810
--------------
Computer Software (6.9%)
100,000 Arbor Software Corp.*...... 5,950,000
62,800 Atria Software, Inc.*...... 3,140,000
284,000 Baan Company NV*
(Netherlands).............. 9,656,000
200,000 BMC Software, Inc.*........ 11,900,000
227,500 Business Objects S.A.
(ADR)* (France)............ 9,156,875
360,000 Citrix Systems, Inc.*...... 13,590,000
121,200 Cognos, Inc.* (Canada)..... 2,757,300
228,000 Computer Associates
International, Inc. ....... 16,245,000
100,300 Edify Corp.*............... 2,607,800
178,000 Forte Software, Inc.*...... 9,300,500
285,000 Microsoft Corp.*........... 34,199,999
685,000 Oracle Corp.*.............. 26,971,875
300,000 Parametric Technology
Corp.*..................... 12,975,000
238,000 Peoplesoft, Inc.*.......... 16,898,000
100,500 Rational Software Corp.*... 5,401,875
232,000 Viasoft, Inc.*............. 14,935,000
--------------
195,685,224
--------------
Conglomerates (2.0%)
250,000 General Electric Co. ...... 21,625,000
850,000 Thermo Electron Corp.*..... 35,381,250
--------------
57,006,250
--------------
Consumer Business
Services (2.2%)
82,600 AccuStaff, Inc.*........... 2,250,850
360,000 Apollo Group, Inc. (Class
A)*........................ 9,900,000
116,200 CUC International, Inc.*... 4,125,100
104,400 Corporate Express, Inc.*... 4,176,000
32,000 DeVRY, Inc.*............... 1,440,000
509,400 National Education
Corp.*..................... 7,258,950
33,000 Reynolds & Reynolds Co.
(Class A).................. 1,757,250
408,200 Service Corp.
International.............. 23,471,500
206,000 Verifone, Inc.*............ 8,703,500
--------------
63,083,150
--------------
Consumer Products (8.2%)
300,000 American Stores Co. ....... $ 12,375,000
200,000 Anheuser-Busch Companies,
Inc. ...................... 15,000,000
294,600 Avon Products, Inc. ....... 13,293,825
200,000 Black & Decker Corp. ...... 7,725,000
150,000 Callaway Golf Co. ......... 4,987,500
49,000 Clorox Co. ................ 4,342,625
350,000 Coca Cola Co. ............. 17,106,250
200,000 Colgate-Palmolive Co. ..... 16,950,000
450,000 Dial Corp. ................ 12,881,250
442,400 Gillette Co. .............. 27,594,700
150,000 Kimberly-Clark Corp. ...... 11,587,500
300,000 Kroger Co.*................ 11,850,000
820,000 PepsiCo Inc. .............. 29,007,499
150,000 Philip Morris Companies,
Inc. ...................... 15,600,000
200,000 Procter & Gamble Co. ...... 18,125,000
200,000 Safeway, Inc.*............. 6,600,000
160,000 Stanley Works.............. 4,760,000
100,000 Vons Companies, Inc.*...... 3,737,500
--------------
233,523,649
--------------
Drugs (3.3%)
500,500 American Home Products
Corp. ..................... 30,092,563
200,000 IDEXX Laboratories,
Inc.*...................... 7,800,000
400,000 Lilly (Eli) & Co. ......... 26,000,000
400,000 Pfizer, Inc. .............. 28,550,000
--------------
92,442,563
--------------
Energy (6.0%)
760,000 Baker Hughes, Inc. ........ 24,985,000
200,800 BJ Services Co.*........... 7,053,100
80,000 Chesapeake Energy Corp.*... 7,190,000
343,400 Diamond Offshore Drilling,
Inc.*...................... 19,659,650
250,000 Dresser Industries,
Inc. ...................... 7,375,000
340,000 Global Marine, Inc.*....... 4,717,500
350,000 Halliburton Co. ........... 19,425,000
100,000 Louisiana Land &
Exploration Co. ........... 5,762,500
200,000 Marine Drilling Company,
Inc.*...................... 2,000,000
225,000 Reading & Bates Corp.*..... 4,978,125
200,000 Rowan Companies, Inc.*..... 2,950,000
270,000 Schlumberger, Ltd. ........ 22,747,500
197,000 Smith International,
Inc.*...................... 5,934,625
200,000 Sonat Offshore Drilling,
Inc. ...................... 10,100,000
390,000 Tidewater, Inc. ........... 17,111,250
150,000 Western Atlas, Inc.*....... 8,737,500
--------------
170,726,750
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS June 30, 1996 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
- -----------------------------------------------------------
Entertainment/Gaming &
Lodging (5.1%)
100,000 Circus Circus Enterprises,
Inc.*...................... $ 4,100,000
404,400 HFS, Inc.*................. 28,308,000
256,000 Hilton Hotels Corp. ....... 28,800,000
38,000 International Game
Technology................. 641,250
390,000 ITT Corp.*................. 25,837,500
450,000 MGM Grand, Inc.*........... 17,943,750
500,000 Mirage Resorts, Inc.*...... 27,000,000
400,000 Showboat, Inc. ............ 12,050,000
--------------
144,680,500
--------------
Financial-Miscellaneous (3.1%)
321,200 Associates First Capital
Corp.*..................... 12,085,150
248,200 First USA, Inc. ........... 13,651,000
238,500 Green Tree Financial
Corp. ..................... 7,453,125
194,000 Household International,
Inc. ...................... 14,744,000
240,000 Merrill Lynch & Co.,
Inc. ...................... 15,630,000
480,000 Morgan Stanley Group,
Inc. ...................... 23,580,000
--------------
87,143,275
--------------
Healthcare Products & Services
(4.3%)
7,300 Aksys, Ltd.*............... 107,675
371,000 HBO & Co. ................. 25,042,500
655,000 Health Management
Associates, Inc. (Class
A)*........................ 13,263,750
120,000 Healthsouth Corp.*......... 4,320,000
778,000 PhyCor, Inc.*.............. 29,369,500
150,000 Physio-Control
International Corp.*....... 2,625,000
40,000 Quintiles Transnational
Corp.*..................... 2,610,000
54,300 Renal Treatment Centers,
Inc.*...................... 1,561,125
163,000 RoTech Medical Corp.*...... 3,137,750
433,000 Shared Medical Systems
Corp. ..................... 27,820,250
27,800 Sunrise Assisted Living,
Inc.*...................... 667,200
55,600 Total Renal Care Holdings,
Inc.*...................... 2,349,100
250,600 Vivra, Inc.*............... 8,238,475
--------------
121,112,325
--------------
Housing Related (0.7%)
800,000 Bed, Bath & Beyond,
Inc.*...................... 21,100,000
11,600 Oakwood Homes Corp. ....... 239,250
--------------
21,339,250
--------------
Insurance (2.5%)
427,300 Allstate Corp. ............ $ 19,495,563
200,000 American International
Group, Inc. ............... 19,725,000
450,000 Conseco Inc. .............. 18,000,000
45,100 Exel, Ltd. (Bermuda)....... 3,179,550
180,000 SunAmerica, Inc. .......... 10,170,000
--------------
70,570,113
--------------
Internet (0.6%)
62,000 America Online, Inc.*...... 2,697,000
171,000 Security Dynamics
Technologies, Inc.*........ 14,022,000
--------------
16,719,000
--------------
Media (3.3%)
245,500 Clear Channel
Communications, Inc.*...... 20,223,063
295,000 Emmis Broadcasting Corp.
(Class A)*................. 14,602,500
330,000 Evergreen Media Corp.
(Class A)*................. 13,942,500
315,000 General Motors Corp. (Class
H)......................... 18,939,375
509,000 Infinity Broadcasting Corp.
(Class A)*................. 15,270,000
111,000 Jacor Communications,
Inc.*...................... 3,427,125
200,000 Lin Television Corp.*...... 7,100,000
5,000 Telemundo Group, Inc.
(Class A)*................. 116,250
--------------
93,620,813
--------------
Medical Supplies (3.3%)
153,500 Becton, Dickinson & Co. ... 12,318,375
567,100 Guidant Corp. ............. 27,929,675
10,500 Heartport, Inc.*........... 315,000
690,000 Johnson & Johnson.......... 34,155,000
200,000 Physician Sales & Service,
Inc.*...................... 4,850,000
178,500 Target Therapeutics,
Inc.*...................... 7,273,875
104,000 Thermo Cardiosystems,
Inc.*...................... 4,654,000
100,000 Thermolase Corp.*.......... 2,725,000
20,000 Trex Medical Corp.*........ 377,500
--------------
94,598,425
--------------
Restaurants (0.5%)
200,000 Cracker Barrell Old Country
Stores, Inc. .............. 4,800,000
52,000 Lone Star Steakhouse &
Saloon, Inc.*.............. 1,956,500
233,000 Starbucks Corp.*........... 6,553,125
--------------
13,309,625
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS June 30, 1996 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
Retail (6.7%)
250,200 Dayton-Hudson Corp. ....... $ 25,801,875
750,000 Federated Department
Stores, Inc.*.............. 25,593,750
800,000 Gap, Inc. ................. 25,700,000
506,900 Gucci Group NV (Italy)..... 32,695,050
485,000 Home Depot, Inc. .......... 26,190,000
220,000 Pacific Sunwear of
California, Inc.*.......... 5,170,000
206,400 Price/Costco, Inc.*........ 4,411,800
470,000 Sears, Roebuck & Co. ...... 22,853,750
75,000 Staples, Inc.*............. 1,453,125
250,000 Tiffany & Co. ............. 18,250,000
50,000 Urban Outfitters, Inc.*.... 1,237,500
--------------
189,356,850
--------------
Semiconductors (0.1%)
47,000 Intel Corp. ............... 3,448,625
--------------
Telecommunications (1.7%)
637,000 MFS Communication Company,
Inc.*...................... 23,888,036
457,000 WorldCom, Inc.*............ 25,249,250
--------------
49,137,286
--------------
Transportation (2.9%)
300,000 AMR Corp.*................. 27,300,000
29,000 Continental Airlines, Inc.
(Class B)*................. 1,790,750
300,000 Delta Air Lines, Inc. ..... 24,900,000
520,000 UAL Corp.*................. 27,950,000
--------------
81,940,750
--------------
TOTAL COMMON STOCKS
(Identified Cost
$2,417,555,309)............ 2,677,011,868
--------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
<C> <S> <C>
U.S. GOVERNMENT OBLIGATION
(2.5%)
$ 79,000 U.S. Treasury Bond
6.00% due 02/15/26
(Identified Cost
$68,692,656)............... 70,075,469
--------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (6.4%)
U.S. GOVERNMENT AGENCIES (a)
(6.1%)
$173,744 Federal Home Loan Mortgage
Corp. 5.27% - 5.52% due
07/01/96 - 07/03/96........ $ 173,731,778
--------------
REPURCHASE AGREEMENT (0.3%)
9,511 The Bank of New York 5.125%
due 07/01/96 (dated
06/28/96; proceeds
$9,515,460; collateralized
by $9,650,781 U.S. Treasury
Note 5.625% due 10/31/97
valued at $9,701,626)
(Identified Cost
$9,511,398)................ 9,511,398
--------------
TOTAL SHORT-TERM
INVESTMENTS
(Identified Cost $183,243,176)... 183,243,176
--------------
TOTAL INVESTMENTS
(Identified
Cost $2,669,491,141) (b)......... 103.2%
2,930,330,513
LIABILITIES IN EXCESS OF
OTHER ASSETS.................... (3.2) (90,889,157)
------ --------------
NET ASSETS....................... 100.0% $2,839,441,356
====== ==============
</TABLE>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation was $303,409,046 and the
aggregate gross unrealized depreciation was $42,569,674, resulting in net
unrealized appreciation of $260,839,372.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
DEAN WITTER AMERICAN VALUE FUND
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
For the six months ended June 30, 1996 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $2,669,491,141)................................... $2,930,330,513
Receivable for:
Investments sold................................................ 22,033,140
Shares of beneficial interest sold.............................. 8,994,289
Interest........................................................ 1,788,073
Dividends....................................................... 1,144,772
Prepaid expenses and other assets................................... 147,320
--------------
TOTAL ASSETS.................................................... 2,964,438,107
--------------
LIABILITIES:
Payable for:
Investments purchased........................................... 119,440,246
Plan of distribution fee........................................ 1,985,140
Investment management fee....................................... 1,175,859
Dividends and distributions to shareholders..................... 1,100,971
Shares of beneficial interest repurchased....................... 782,821
Accrued expenses.................................................... 511,714
--------------
TOTAL LIABILITIES............................................... 124,996,751
--------------
NET ASSETS:
Paid-in-capital..................................................... 2,421,480,495
Net unrealized appreciation......................................... 260,839,372
Accumulated net investment loss..................................... (2,926,586)
Accumulated undistributed net realized gain......................... 160,048,075
--------------
NET ASSETS...................................................... $2,839,441,356
==============
NET ASSET VALUE PER SHARE,
103,925,074 shares outstanding
(unlimited shares authorized of $.01 par value).................... $27.32
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
DEAN WITTER AMERICAN VALUE FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1996 (unaudited)
NET INVESTMENT INCOME:
INCOME
Dividends (net of $59,636 foreign withholding tax).................... $ 10,312,452
Interest.............................................................. 6,519,992
------------
TOTAL INCOME...................................................... 16,832,444
------------
EXPENSES
Plan of distribution fee.............................................. 11,154,667
Investment management fee............................................. 6,656,826
Transfer agent fees and expenses...................................... 1,368,100
Custodian fees........................................................ 224,420
Registration fees..................................................... 177,765
Shareholder reports and notices....................................... 83,110
Trustees' fees and expenses........................................... 30,520
Professional fees..................................................... 25,914
Other................................................................. 15,210
------------
TOTAL EXPENSES.................................................... 19,736,532
------------
NET INVESTMENT LOSS............................................... (2,904,088)
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain..................................................... 169,505,599
Net change in unrealized appreciation................................. 4,362,056
------------
NET GAIN.......................................................... 173,867,655
------------
NET INCREASE.......................................................... $170,963,567
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 10
DEAN WITTER AMERICAN VALUE FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JUNE 30, 1996 DECEMBER 31, 1995
------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss)....................... $ (2,904,088) $ $1,115,260
Net realized gain.................................. 169,505,599 449,119,481
Net change in unrealized appreciation.............. 4,362,056 204,343,705
-------------- ---------------
NET INCREASE................................... 170,963,567 654,578,446
-------------- ---------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income.............................. (1,126,332) (193,886)
Net realized gain.................................. (159,729,315) (231,910,868)
-------------- ---------------
TOTAL.......................................... (160,855,647) (232,104,754)
-------------- ---------------
Net increase from transactions in shares of
beneficial interest............................... 440,446,057 476,459,623
-------------- ---------------
TOTAL INCREASE................................. 450,553,977 898,933,315
NET ASSETS:
Beginning of period................................ 2,388,887,379 1,489,954,064
-------------- ---------------
END OF PERIOD
(Including a net investment loss of $2,926,586
and
undistributed net investment income of
$1,103,834).................................... $2,839,441,356 $ 2,388,887,379
============== ===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 11
DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1996 (unaudited)
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. 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 reorganized as a Massachusetts
business trust on April 30, 1987.
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 or American 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; (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 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 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.
<PAGE> 12
DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1996 (unaudited) continued
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 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 Dean Witter InterCapital
Inc. (the "Investment Manager"), the Fund pays the Investment Manager a
management fee, accrued daily and payable monthly, by applying the following
annual rates to the net assets of the Fund determined at the close of each
business day: 0.625% to the portion of daily net assets not exceeding $250
million and 0.50% to the portion of daily net assets exceeding $250 million.
Effective May 1, 1996, the annual rate was reduced to 0.475% of net assets in
excess of $2.5 billion.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by 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 pursuant
to which the Fund pays the Distributor compensation, accrued daily
<PAGE> 13
DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1996 (unaudited) continued
and payable monthly, at an annual rate of 1.0% of the lesser of: (a) the average
daily aggregate gross sales of the Fund's shares since the implementation of the
Plan on April 30, 1984 (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net asset value of the Fund's
shares redeemed since the Fund's implementation of the Plan upon which a
contingent deferred sales charge has been imposed or upon which such charge has
been waived; or (b) the Fund's average daily net assets attributable to shares
issued, net of related shares redeemed since implementation of the Plan. Amounts
paid under the Plan are paid to the Distributor to compensate it for the
services 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. ("DWR"), an affiliate of the Investment Manager and
Distributor, and other employees or selected broker-dealers 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. In addition, the
Distributor may be compensated under the Plan for its opportunity costs in
advancing such amounts which compensation would be in the form of a carrying
charge on any unreimbursed expenses incurred by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred 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 six months ended June 30,
1996, it received approximately $1,897,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares. The Fund's 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, 1996 aggregated
$4,403,083,198 and $4,116,614,802, respectively. Included in the aforementioned
are purchases and sales of U.S. Government securities of $113,205,097 and
$479,913,843, respectively.
For the six months ended June 30, 1996, the Fund incurred $482,102 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.
At June 30, 1996, the Fund's receivable for investments sold included unsettled
trades with DWR of $4,029,553.
<PAGE> 14
DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS June 30, 1996 (unaudited) continued
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At June 30, 1996, the Fund had
transfer agent fees and expenses payable of approximately $200,000.
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, 1996
included in Trustees' fees and expenses in the Statement of Operations amounted
to $18,781. At June 30, 1996, the Fund had an accrued pension liability of
$40,792 which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JUNE 30, 1996 DECEMBER 31, 1995
--------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------
(unaudited)
<S> <C> <C> <C> <C>
Sold....................................................... 22,336,602 $618,086,035 27,784,767 $726,405,402
Reinvestment of dividends and distributions................ 3,064,739 87,614,458 8,258,700 219,428,179
---------- ------------ ----------- ------------
25,401,341 705,700,493 36,043,467 945,833,581
Repurchased................................................ (9,439,375) (265,254,436) (18,333,417) (469,373,958)
---------- ------------ ----------- ------------
Net increase............................................... 15,961,966 $440,446,057 17,710,050 $476,459,623
========== ============ =========== ============
</TABLE>
6. FEDERAL INCOME TAX STATUS
During the year ended December 31, 1995, the Fund utilized its net capital loss
carryover of approximately $34,379,000. As of December 31, 1995, the Fund had
temporary book/tax differences primarily attributable to capital loss deferrals
on wash sales.
<PAGE> 15
DEAN WITTER AMERICAN VALUE FUND
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 DECEMBER
MONTHS ENDED 31,
JUNE 30, -----------------------------
1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................................... $27.16 $21.21 $23.10
------- ------ ------
Net investment income (loss)........................................... (0.03) 0.01 --
Net realized and unrealized gain (loss)................................ 1.84 8.87 (1.57)
------- ------ ------
Total from investment operations....................................... 1.81 8.88 (1.57)
------- ------ ------
Less dividends and distributions from:
Net investment income............................................... (0.01) -- --
Net realized gain................................................... (1.64) (2.93) (0.32)
------- ------ ------
Total dividends and distributions...................................... (1.65) (2.93) (0.32)
------- ------ ------
Net asset value, end of period......................................... $27.32 $27.16 $21.21
======= ====== ======
TOTAL INVESTMENT RETURN+............................................... 6.76%(1) 42.20% (6.75)%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................................... 1.51%(2) 1.61% 1.71%
Net investment income (loss)........................................... (0.22)%(2) 0.06% 0.01%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions................................. $2,839 $2,389 $1,490
Portfolio turnover rate................................................ 162%(1) 256% 295%
Average commission rate paid........................................... $0.0590 -- --
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------
1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................................... $20.93 $20.66 $14.39
------ ------ ------
Net investment income (loss)........................................... (0.09) 0.03 0.05
Net realized and unrealized gain (loss)................................ 3.94 0.71 7.90
------ ------ ------
Total from investment operations....................................... 3.85 0.74 7.95
------ ------ ------
Less dividends and distributions from:
Net investment income............................................... (0.01) (0.03) (0.03)
Net realized gain................................................... (1.67) (0.44) (1.65)
------ ------ ------
Total dividends and distributions...................................... (1.68) (0.47) (1.68)
------ ------ ------
Net asset value, end of period......................................... $23.10 $20.93 $20.66
====== ====== ======
TOTAL INVESTMENT RETURN+............................................... 18.70% 3.84% 56.26%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................................... 1.61% 1.72% 1.58%
Net investment income (loss)........................................... (0.59)% 0.18% 0.29%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions................................. $1,218 $459 $227
Portfolio turnover rate................................................ 276% 305% 264%
Average commission rate paid........................................... -- -- --
</TABLE>
- ---------------------
+ 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.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 16
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Anita Kolleeny
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
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
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.
DEAN WITTER
AMERICAN
VALUE FUND
SEMIANNUAL REPORT
JUNE 30, 1996
