<PAGE>
DEAN WITTER AMERICAN VALUE FUND
Two World Trade Center, New York, New York 10048
LETTER TO THE SHAREHOLDERS
December 31, 1995
DEAR SHAREHOLDER:
Following a lean 1994, the past year was very generous to holders of financial
assets. The nearly record returns posted by stocks and bonds are primarily
attributable to a moderation in economic activity in 1995, from 1994's
breakneck pace to a slower, less inflationary rate of growth. Against this
backdrop, Dean Witter American Value Fund produced a total return of 42.20
percent for the fiscal year ended December 31, 1995. This performance compares
quite favorably with that of the Standard & Poor's 500 Composite Stock Price
Index (S&P 500), which registered a total return of 37.57 percent, as well as
that of the average growth fund, which had a total return of 30.79 percent,
according to Lipper Analytical Services, Inc. For the fiscal year ended
December 31, 1995, the Fund ranked #29 of 572 growth funds (top 5 percent),
according to Lipper.
Over the long term, the Fund's performance relative to its Lipper peer group
has been perennially strong. For the five years ended December 31, 1995, the
Fund ranked #30 of 237 growth funds (top 13 percent); for the ten-year period
through year-end 1995, the Fund was among the top 14 percent of all growth
funds (#22 of 153 funds). Furthermore, according to Lipper, only 20 percent
(112 of 570) of all domestic and international equity funds outperformed the
S&P 500 over the ten years ended December 31, 1995 -- Dean Witter American
Value Fund was one of them. Individually, the Fund ranked #80 of 570 equity
funds (top 14 percent) for the last decade.
The accompanying chart compares the performance of a $10,000 investment in the
Fund for the 10 years ended December 31, 1995, with the performance of a
similar hypothetical investment in the issues comprising the S&P 500.
DEAN WITTER AMERICAN VALUE FUND
<TABLE>
<CAPTION>
GROWTH OF $10,000
DATE TOTAL S&P 500
<S> <C> <C>
December 31, 1985 $10,000 $10,000
December 31, 1986 $11,582 $11,867
December 31, 1987 $11,911 $12,490
December 31, 1988 $13,202 $14,557
December 31, 1989 $16,555 $19,162
December 31, 1990 $16,406 $18,569
December 31, 1991 $25,635 $24,215
December 31, 1992 $26,619 $26,058
December 31, 1993 $31,597 $28,680
December 31, 1994 $29,465 $29,058
December 31, 1995 $41,900(3) $39,975
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
42.20(1) 20.63(1) 15.40(1)
37.20(2) 20.44(2) 15.40(2)
_____Fund _____S&P 500 (4)
Past performance is not predictive of future returns.
<FN>
________________________________________
(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, 1995.
(4) The Standard & Poor's 500 Composite Stock Price Index (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 performance of the index does not include any
expenses, fees or charges. The Index is unmanaged and should not be considered an investment.
</TABLE>
POSITIONING THE FUND'S PORTFOLIO
The Fund's industry selection focus continued to be effective in 1995. At the
beginning of the year, the portfolio manager took a top-down look at the year
ahead and concluded that while economic growth was likely to slow (allowing
interest rates to decline), the economy would remain vibrant
<PAGE>
DEAN WITTER AMERICAN VALUE FUND
LETTER TO THE SHAREHOLDERS December 31, 1995, continued
enough to support investment and capital spending for most of the year. As a
result, for the first three quarters of the year the Fund was heavily tilted
toward technology, with a peak weighting of 40 to 45 percent.
Financial stocks were also a major theme in the portfolio, given the portfolio
manager's outlook for modest economic growth and benign inflation and interest
rates. For most of the year financials represented 20 percent of the Fund's net
assets. Over the Fund's fiscal year, the technology and financial sectors
provided the strongest returns in the market and thus played a major role in the
Fund's performance.
In September evidence began to mount which suggested that the economy was
further decelerating and entering the latter stages of the economic expansion.
At that time, the portfolio manager began to pare back the Fund's technology
holdings, because capital spending tends to drop off late in the economic cycle.
By the end of December technology represented less than 10 percent of net
assets. Significant holdings in this area include Cisco Systems, Inc., Sun
Microsystems, Inc. and Ascend Communications.
As the Fund's technology exposure was decreasing, the interest-rate
sensitive-portion of the portfolio was being increased, because that sector
historically has appreciated in the face of sluggish economic growth and falling
interest rates. At the end of the fiscal year, interest-rate-sensitive holdings
represented approximately 40 percent of the Fund. Of this allocation, 17 percent
was invested in long-term U.S. Treasury bonds, as these instruments are
particularly sensitive to interest rates but hold no credit risk, because they
are backed by the U.S. government. Since credit delinquencies tend to rise at
this stage of the business cycle, exposure to many consumer lenders was reduced.
Equity holdings in this area include Travelers Group, American International
Group and Federal National Mortgage Association. The portfolio's commitment to
health care was expanded to approximately 20 percent because this sector has
little economic sensitivity. Names here include Amgen Inc., American Home
Products, SmithKline Beecham and United Healthcare.
<PAGE>
DEAN WITTER AMERICAN VALUE FUND
LETTER TO THE SHAREHOLDERS December 31, 1995, continued
Capital goods represented 8 percent of the Fund with such holdings as Boeing
Co., Loral Corp., Case Corp. and Monsanto Co. Consumer staples represented about
7 percent of the Fund, with holdings such as Kimberly-Clark, Philip Morris Cos.
and Procter & Gamble. Approximately 5 percent of net assets was invested in
steady growth consumer/business services companies such as DST Systems, Inc.
LOOKING AHEAD
We expect the economy to experience a protracted economic slowdown extending
into the latter part of 1996. Falling interest rates, expanding price/earnings
ratios and modest earnings growth on the order of 5 percent should continue to
drive the broader markets higher. However, we expect the market to narrow, as
fewer and fewer companies will be able to sustain their recent growth rates. For
those companies that can sustain earnings growth rates of 10 percent or more,
price/earnings ratios should continue to expand. We believe most of these
companies are to be found in the interest-rate-sensitive, health care and
consumer staples groups, and thus have positioned the portfolio accordingly.
At some point later in the year we expect the market to begin to look out over
the earnings valley as further Federal Reserve Board rate cuts enable investors
to extend their investment horizons. At that time we expect market leadership to
move toward early-cycle groups such as automobiles, housing-related, chemicals
and papers, as well as back into select technology groups such as computer
hardware and software. In this scenario, we expect to rotate the Fund's assets
among these market sectors.
In the face of a narrowing market, we will continue to focus on economic and
industry trends and look for evidence of fundamental strength or weakness. In
addition, bottom-up analysis -- the examination of outside and internal earnings
and valuation screens -- remains a hallmark of the portfolio manager's strategy.
Given our economic outlook, we believe the Fund is correctly positioned in those
industries that can best deliver their earnings potential despite a slowing
economy.
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>
DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS December 31, 1995
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (78.4%)
Aerospace (1.1%)
350,000 Boeing Company ................................................. $ 27,431,250
--------------
Agriculture Related (2.9%)
400,000 Case Corp. ..................................................... 18,300,000
400,000 IMC Global, Inc. ............................................... 16,350,000
410,000 Pioneer Hi-Bred International, Inc. ............................ 22,806,250
160,000 Potash Corp. of Saskatchewan, Inc. (Canada) .................... 11,340,000
--------------
68,796,250
--------------
Banks (3.2%)
200,000 Bank of Boston Corp. ........................................... 9,250,000
350,000 BankAmerica Corp. .............................................. 22,662,500
280,000 Chase Manhattan Corp. .......................................... 16,975,000
140,000 First Interstate Bancorp ....................................... 19,110,000
40,000 Wells Fargo & Co. .............................................. 8,640,000
--------------
76,637,500
--------------
Beverages - Soft Drinks (0.8%)
360,000 PepsiCo Inc. ................................................... 20,115,000
--------------
Biotechnology (3.1%)
420,000 Amgen Inc.* .................................................... 24,885,000
160,000 Biochem Pharma, Inc.* .......................................... 6,400,000
338,000 Biogen Inc.* ................................................... 20,618,000
400,000 Centocor, Inc.* ................................................ 12,350,000
65,000 Cephalon Inc.* ................................................. 2,648,750
70,000 Chiron Corp.* .................................................. 7,735,000
--------------
74,636,750
--------------
Cable/Cellular (0.1%) ..........................................
155,148 Ericsson (L.M.) Telephone Co. AB (ADR) (Sweden) ................ 3,005,993
--------------
Capital Goods (2.7%)
111,700 AlliedSignal, Inc. ............................................. 5,305,750
303,000 Lockheed Martin Corp. .......................................... 23,937,000
737,500 Loral Corp. .................................................... 26,089,062
100,000 United Technologies Corp. ...................................... 9,487,500
--------------
64,819,312
--------------
Chemicals (1.1%)
210,000 Monsanto Co. ................................................... 25,725,000
--------------
Commercial Services (0.5%)
300,000 America Online, Inc.* .......................................... 11,175,000
--------------
Communications -
Equipment & Software (2.2%)
333,800 Ascend Communications, Inc.* ................................... 27,079,525
350,000 Cisco Systems, Inc.* ........................................... 26,118,750
--------------
53,198,275
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Communications - Software & Services (1.6%)
90,000 Adobe Systems, Inc. ............................................ $ 5,580,000
28,800 CKS Group, Inc.* ............................................... 1,116,000
120,000 Elcom International, Inc.* ..................................... 1,800,000
150,000 Intuit, Inc.* .................................................. 11,700,000
150,000 Quarterdeck Corp.* ............................................. 4,106,250
280,000 Sun Microsystems, Inc.* ........................................ 12,775,000
--------------
37,077,250
--------------
Computer Services (1.9%)
275,600 Computer Sciences Corp.* ....................................... 19,360,900
376,321 First Data Corp. ............................................... 25,166,467
--------------
44,527,367
--------------
Computer Software (0.8%)
150,000 Macromedia, Inc.* .............................................. 7,781,250
260,000 PeopleSoft, Inc.* .............................................. 11,050,000
--------------
18,831,250
--------------
Consumer Business Services (3.3%)
200,000 Automatic Data Processing, Inc. ................................ 14,850,000
200,000 DST Systems, Inc.* ............................................. 5,700,000
470,000 General Motors Corp. (Class E) ................................. 24,440,000
275,000 Reuters Holdings PLC (ADR) (United Kingdom) .................... 15,193,750
400,000 Service Corp. International .................................... 17,600,000
--------------
77,783,750
--------------
Consumer Products (5.1%)
220,000 Coca Cola Co. .................................................. 16,335,000
300,000 Dial Corp. ..................................................... 8,887,500
138,000 Estee Lauder Companies (Class A)* .............................. 4,812,750
32,400 Helene Curtis Industries Inc. .................................. 1,024,650
400,000 Kimberly-Clark Corp. ........................................... 33,100,000
80,000 Mondavi (Robert) Corp. (The) (Class A)* ........................ 2,200,000
47,600 Oakley, Inc.* .................................................. 1,618,400
241,000 Procter & Gamble Co. ........................................... 20,003,000
300,000 Ralston-Ralston Purina Group ................................... 18,712,500
450,000 Sara Lee Corp. ................................................. 14,343,750
--------------
121,037,550
--------------
Drugs (4.8%)
300,000 American Home Products Corp.* .................................. 29,100,000
320,000 Bristol-Myers Squibb Co. ....................................... 27,480,000
340,000 Pfizer, Inc. ................................................... 21,420,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS December 31, 1995, continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
200,000 Pharmacia & Upjohn, Inc. ....................................... $ 7,750,000
530,000 SmithKline Beecham PLC (ADR) (United Kingdom) .................. 29,415,000
--------------
115,165,000
--------------
Energy (0.3%)
200,000 Sonat, Inc. .................................................... 7,125,000
--------------
Entertainment (1.6%)
525,000 C U C International, Inc.* ..................................... 17,915,625
350,000 Walt Disney Co. ................................................ 20,650,000
--------------
38,565,625
--------------
Financial - Miscellaneous (7.2%)
400,000 Ahmanson (H.F.) & Co. .......................................... 10,600,000
665,000 Bear Stearns Companies, Inc. ................................... 13,216,875
600,000 Countrywide Credit Industries, Inc. ............................ 13,050,000
211,000 Donaldson, Lufkin & Jenrette, Inc. ............................. 6,593,750
300,000 Federal Home Loan Mortgage Corp. ............................... 25,050,000
180,000 Federal National Mortgage Association .......................... 22,342,500
258,100 Golden West Financial Corp. .................................... 14,260,025
500,000 Great Western Financial Corp. .................................. 12,750,000
200,000 Green Tree Financial Corp. ..................................... 5,275,000
500,000 Merrill Lynch & Co., Inc. ...................................... 25,500,000
300,000 Morgan Stanley Group, Inc. ..................................... 24,187,500
--------------
172,825,650
--------------
Financial Services (1.2%)
450,000 Travelers Group, Inc. .......................................... 28,293,750
--------------
Health Maintenance Organizations (4.5%)
300,000 Healthcare Compare Corp.* ...................................... 13,050,000
400,000 Healthsource, Inc.* ............................................ 14,400,000
200,000 Humana, Inc.* .................................................. 5,475,000
35,000 Pacificare Health Systems, Inc. (Class A)* ..................... 3,010,000
280,000 Pacificare Health Systems, Inc. (Class B)* ..................... 24,360,000
180,000 Physio-Control International Corp.* ............................ 3,217,500
285,000 U.S. Healthcare, Inc. .......................................... 13,216,875
450,000 United Healthcare Corp. ........................................ 29,475,000
--------------
106,204,375
--------------
Healthcare -- Drugs (1.2%)
500,000 Lilly (Eli) & Co. .............................................. $ 28,125,000
--------------
Healthcare Products & Services (1.7%)
220,000 HBO & Co. ...................................................... 16,775,000
176,000 Quintiles Transnational Corp.* ................................. 7,128,000
300,000 Shared Medical Systems Corp. ................................... 16,200,000
--------------
40,103,000
--------------
Home Building (0.3%)
375,000 Clayton Homes, Inc. ............................................ 8,015,625
--------------
Hotels/Motels (0.3%)
100,000 HFS, Inc.* ..................................................... 8,175,000
--------------
Housing Related (0.5%)
289,000 American Standard, Inc.* ....................................... 8,092,000
110,800 Oakwood Homes Corp. ............................................ 4,251,950
--------------
12,343,950
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Insurance (5.3%)
260,000 Aetna Life & Casualty Co. ...................................... 18,005,000
250,000 Allstate Corp. (The)* .......................................... 10,281,250
210,000 Chubb Corp. .................................................... 20,317,500
200,000 CIGNA Corp. .................................................... 20,650,000
51,800 CNA Financial Corp.* ........................................... 5,879,300
170,000 General Re Corp. ............................................... 26,350,000
601,000 Prudential Reinsurance Holdings, Inc. .......................... 14,048,375
240,000 SunAmerica Inc. ................................................ 11,400,000
--------------
126,931,425
--------------
Media Group (1.6%)
200,000 Clear Channel Communications, Inc.* ............................ 8,825,000
100,000 Evergreen Media Corp. (Class A)* ............................... 3,175,000
710,000 Infinity Broadcasting Corp.* ................................... 26,447,500
--------------
38,447,500
--------------
Medical Products & Supplies (3.6%)
150,000 Boston Scientific Corp.* ....................................... 7,350,000
760,000 Guidant Corp. .................................................. 32,110,000
200,000 IDEXX Laboratories, Inc.* ...................................... 9,300,000
269,300 Medtronic Inc. ................................................. 15,047,137
300,000 St. Jude Medical, Inc.* ........................................ 12,825,000
200,000 Target Therapeutics, Inc.* ..................................... 8,550,000
--------------
85,182,137
--------------
Medical Services (0.1%)
120,000 Healthsouth Corp.* ............................................. 3,495,000
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS December 31, 1995, continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Medical Supplies (0.1%)
20,500 Becton, Dickinson & Co. ........................................ $ 1,537,500
--------------
Miscellaneous (1.0%)
450,000 Thermo Electron Corp.* ......................................... 23,400,000
--------------
Multi-Line Insurance (1.6%)
400,000 American International Group, Inc. ............................. 37,000,000
--------------
Pharmaceuticals (2.5%)
395,000 Johnson & Johnson .............................................. 33,821,875
400,000 Merck & Co., Inc. .............................................. 26,300,000
--------------
60,121,875
--------------
Restaurants (0.5%)
28,000 Boston Chicken, Inc.* .......................................... 896,000
75,000 Lone Star Steakhouse & Saloon, Inc.* ........................... 2,868,750
400,000 Starbucks Corp.* ............................................... 8,350,000
--------------
12,114,750
--------------
Retail (2.1%)
470,000 Federated Department Stores, Inc.* ............................. 12,925,000
22,000 General Nutrition Companies, Inc.* ............................. 506,000
600,000 Gucci Group NV (Italy)* ........................................ 23,325,000
100,000 Home Depot, Inc. ............................................... 4,787,500
300,000 Walgreen Co. ................................................... 8,962,500
--------------
50,506,000
--------------
Telecommunications (3.5%)
100,000 ADC Telecommunications, Inc.* .................................. 3,625,000
200,000 AT&T Corp. ..................................................... 12,950,000
200,000 Cascade Communications Corp.* .................................. 17,000,000
400,000 GTE Corp. ...................................................... 17,600,000
145,000 Shiva Corp.* ................................................... 10,549,287
160,000 Stratacom, Inc.* ............................................... 11,680,000
300,000 WorldCom Inc.* ................................................. 10,575,000
--------------
83,979,287
--------------
Telecommunications Equipment (0.6%)
345,200 Picturetel Corp.* .............................................. $ 14,800,450
--------------
Tobacco (1.0%)
270,000 Philip Morris Companies, Inc. .................................. 24,435,000
--------------
Transportation (0.9%)
Burlington Northern
280,000 Santa Fe, Inc. ................................................. 21,840,000
--------------
TOTAL COMMON STOCKS (Identified Cost $1,626,106,751) ........... 1,873,530,396
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATION (17.3%)
U.S. Treasury Bond 6.875% due 08/15/25 (Identified Cost
$366,500 $404,346,875) .................................................. 413,400,547
---------------
SHORT-TERM INVESTMENTS (4.4%)
U.S. GOVERNMENT AGENCIES (a) (4.3%)
45,000 Federal Home Loan Banks 5.50% due 01/05/96 ..................... 44,972,500
58,500 Federal Home Loan Mortgage Corp. 5.75% due 01/02/96 ............ 58,490,656
---------------
TOTAL U.S. GOVERNMENT AGENCIES
(Amortized Cost $103,463,156) .................................. 103,463,156
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER AMERICAN VALUE FUND
PORTFOLIO OF INVESTMENTS December 31, 1995, continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT (0.1%)
The Bank of New York 3.00% due 01/02/96 (dated 12/29/95; proceeds
$1,871,969; collateralized by $1,866,621 U.S. Treasury Note 5.75%
due 09/30/97 valued at $1,908,772) (Identified Cost
$1,871 $1,871,345) .................................................... $ 1,871,345
---------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $105,334,501) ................................. 105,334,501
---------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $2,135,788,128) (b) 100.1% 2,392,265,444
LIABILITIES IN EXCESS OF
OTHER ASSETS ........................ (0.1) (3,378,065)
-------- ---------------
NET ASSETS .......................... 100.0% $2,388,887,379
======== ===============
</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.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER AMERICAN VALUE FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $2,135,788,128) .......... $2,392,265,444
Receivable for:
Investments sold ......................... 19,132,343
Shares of beneficial interest sold ...... 10,430,067
Interest ................................. 9,517,766
Dividends ................................ 1,501,779
Prepaid expenses and other assets .......... 65,674
--------------
TOTAL ASSETS ............................. 2,432,913,073
--------------
LIABILITIES:
Payable for:
Investments purchased .................... 37,554,057
Distributions ............................ 1,800,633
Plan of distribution fee ................. 1,696,783
Shares of beneficial interest
repurchased ............................. 1,285,982
Investment management fee ................ 1,021,540
Accrued expenses and other payables ....... 666,699
--------------
TOTAL LIABILITIES ........................ 44,025,694
--------------
NET ASSETS:
Paid-in-capital ............................ 1,981,034,438
Net unrealized appreciation ................ 256,477,316
Accumulated undistributed net investment
income .................................... 1,103,834
Accumulated undistributed net realized gain 150,271,791
--------------
NET ASSETS ............................... $2,388,887,379
==============
NET ASSET VALUE PER SHARE,
87,963,108 shares outstanding (unlimited
shares authorized of $.01 par value) ..... $ 27.16
==============
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $132,992 foreign
withholding tax) ..................... $ 17,672,185
Interest .............................. 13,839,031
-------------
TOTAL INCOME ........................ 31,511,216
-------------
EXPENSES
Plan of distribution fee .............. 17,315,269
Investment management fee ............. 9,736,912
Transfer agent fees and expenses ..... 2,362,052
Custodian fees ........................ 467,070
Registration fees ..................... 244,618
Shareholder reports and notices ...... 156,816
Professional fees ..................... 57,026
Trustees' fees and expenses ........... 32,667
Other ................................. 23,526
-------------
TOTAL EXPENSES ...................... 30,395,956
-------------
NET INVESTMENT INCOME ............... 1,115,260
-------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain ..................... 449,119,481
Net change in unrealized appreciation 204,343,705
-------------
NET GAIN ............................ 653,463,186
-------------
NET INCREASE .......................... $654,578,446
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER AMERICAN VALUE FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED DECEMBER ENDED DECEMBER
31, 1995 31, 1994
- ------------------------------------------------------ ----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................. $ 1,115,260 $ 182,792
Net realized gain (loss) .............................. 449,119,481 (58,679,520)
Net change in unrealized appreciation ................. 204,343,705 (43,049,173)
----------------- -----------------
NET INCREASE (DECREASE) ............................. 654,578,446 (101,545,901)
----------------- -----------------
Dividends and distributions from:
Net investment income ................................. (193,886) --
Net realized gain ..................................... (231,910,868) (21,279,873)
----------------- -----------------
TOTAL ............................................... (232,104,754) (21,279,873)
----------------- -----------------
Net increase from transactions in shares of beneficial
interest ............................................. 476,459,623 394,801,479
----------------- -----------------
TOTAL INCREASE ...................................... 898,933,315 271,975,705
NET ASSETS:
Beginning of period ................................... 1,489,954,064 1,217,978,359
----------------- -----------------
END OF PERIOD
(Including undistributed net investment income of
$1,103,834 and $182,460, respectively) .............. $2,388,887,379 $1,489,954,064
================= =================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS December 31, 1995
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>
DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS December 31, 1995, 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 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
average daily net assets not exceeding $250 million and 0.50% to the portion of
average 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, 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 and payable
monthly, at an annual rate of 1.0% of the lesser of: (a) the average daily
aggregate gross sales of the
<PAGE>
DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS December 31, 1995, continued
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 year ended December 31, 1995,
it received approximately $3,588,974 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 year ended December 31, 1995 aggregated
$4,980,680,540 and $4,619,658,733, respectively. Included in the aforementioned
are purchases and sales of U.S. Government securities of $1,042,009,404 and
$639,688,973, respectively.
For the year ended December 31, 1995, the Fund incurred $989,462 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.
At December 31, 1995, the Fund's payable for investments purchased included
unsettled trades with DWR of $6,647,628.
<PAGE>
DEAN WITTER AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS December 31, 1995, continued
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At December 31, 1995, the Fund had
Transfer agent fees and expenses payable of approximately $255,000.
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 year ended December 31, 1995
included in Trustees' fees and expenses in the Statement of Operations amounted
to $12,001. At December 31, 1995, the Fund had an accrued pension liability of
$22,479 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 YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sold 27,784,767 $ 726,405,402 31,171,952 $ 693,824,171
Reinvestment of dividends and distributions 8,258,700 219,428,179 988,724 20,179,867
-------------- --------------- -------------- ---------------
36,043,467 945,833,581 32,160,676 714,004,038
Repurchased (18,333,417) (469,373,958) (14,645,353) (319,202,559)
-------------- --------------- -------------- ---------------
Net increase 17,710,050 $ 476,459,623 17,515,323 $ 394,801,479
============== =============== ============== ===============
</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>
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 YEAR ENDED DECEMBER 31,
--------------------------------------------------
1995 1994 1993 1992 1991
- -------------------------- -------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period ...... $21.21 $23.10 $20.93 $20.66 $14.39
-------- --------- --------- -------- --------
Net investment income
(loss) ................... 0.01 -- (0.09) 0.03 0.05
Net realized and
unrealized gain (loss) .. 8.87 (1.57) 3.94 0.71 7.90
-------- --------- --------- -------- --------
Total from investment
operations ............... 8.88 (1.57) 3.85 0.74 7.95
-------- --------- --------- -------- --------
Less dividends and distributions from:
Net investment income .. -- -- (0.01) (0.03) (0.03)
Net realized gain ....... (2.93) (0.32) (1.67) (0.44) (1.65)
Paid-in-capital ......... -- -- -- -- --
-------- --------- --------- -------- --------
Total dividends and
distributions ............ (2.93) (0.32) (1.68) (0.47) (1.68)
-------- --------- --------- -------- --------
Net asset value,
end of period ............ $27.16 $21.21 $23.10 $20.93 $20.66
======== ========= ========= ======== ========
TOTAL INVESTMENT RETURN+ 42.20% (6.75)% 18.70% 3.84% 56.26%
RATIOS TO
AVERAGE NET ASSETS:
Expenses .................. 1.61% 1.71% 1.61% 1.72% 1.58%
Net investment income
(loss) ................... 0.06% 0.01% (0.59)% 0.18% 0.29%
SUPPLEMENTAL DATA:
Net assets, end of period,
in millions .............. $2,389 $1,490 $1,218 $459 $227
Portfolio turnover rate .. 256% 295% 276% 305% 264%
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986
- -------------------------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period ...... $14.81 $13.19 $12.21 $12.64 $12.67
--------- -------- -------- -------- --------
Net investment income
(loss) ................... 0.24 0.34 0.29 0.19 0.28
Net realized and
unrealized gain (loss) .. (0.38) 2.99 1.03 0.20 1.76
--------- -------- -------- -------- --------
Total from investment
operations ............... (0.14) 3.33 1.32 0.39 2.04
--------- -------- -------- -------- --------
Less dividends and distributions from:
Net investment income .. (0.28) (0.32) (0.33) (0.23) (0.32)
Net realized gain ....... -- (1.39) -- (0.59) (1.75)
Paid-in-capital ......... -- -- (0.01) -- --
--------- -------- -------- -------- --------
Total dividends and
distributions ............ (0.28) (1.71) (0.34) (0.82) (2.07)
--------- -------- -------- -------- --------
Net asset value,
end of period ............ $14.39 $14.81 $13.19 $12.21 $12.64
========= ======== ======== ======== ========
TOTAL INVESTMENT RETURN+ (0.90)% 25.39% 10.84% 2.84% 15.82%
RATIOS TO
AVERAGE NET ASSETS:
Expenses .................. 1.70% 1.66% 1.78% 1.62% 1.39%
Net investment income
(loss) ................... 1.67% 2.23% 2.15% 1.42% 2.10%
SUPPLEMENTAL DATA:
Net assets, end of period,
in millions .............. $ 89 $ 100 $ 90 $ 109 $ 79
Portfolio turnover rate .. 234% 196% 133% 203% 120%
</TABLE>
- ------------
+ Does not reflect the deduction of sales charge.
SEE NOTES TO FINANCIAL STATEMENTS
<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, 1995, 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 at
December 31, 1995 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
February 7, 1996
1995 FEDERAL TAX NOTICE (unaudited)
During the year ended December 31, 1995, the Fund paid to shareholders
$0.46 per share from long-term capital gains. For such period, 4.91% of
the income paid qualified for the dividends received deduction available
to corporations.
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
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 H. 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
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
ANNUAL REPORT
DECEMBER 31, 1995
