<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO TWO WORLD TRADE
CENTER, NEW YORK, NEW
YORK 10048
LETTER TO THE SHAREHOLDERS
DEAR SHAREHOLDER:
The stock market advanced during the first six months of 1995, after a sustained
period of lackluster performance during the second half of 1994. The factors
which adversely impacted the financial markets for the last two quarters of last
year -- an overheated economy, rising interest rates and inflation -- reversed
themselves and helped both the stock and bond markets move higher. Evidence of a
slowing U.S. economy without either a recession or a peaking of inflation,
combined with an easing move by the Federal Reserve Board, have sent the markets
to new highs. Moreover, in contrast with 1994, the stock market advance has been
very broad, with all industries participating and all capitalization sectors
(large, medium and small companies) rising.
New factory orders continued to buoy production early in the year, despite
evidence of a slowdown in inventory build-ups. Productivity gains, though
declining, continued to sustain corporate earnings, even as economic
expectations became more subdued. Globally, the U.S. market was the beneficiary
of a "flight to quality," as the Mexican financial crisis triggered declines in
other emerging markets worldwide.
Led by technology and financial stocks, the U.S. equity market scaled new
heights during the second quarter of 1995, increasing an impressive 10.28
percent, as measured by the Dow Jones Industrial Average (the Standard & Poor's
500 Composite Stock Price Index increased 9.55 percent). Clearly, the bulls had
much to celebrate: the expectation of slower U.S. growth (without a recession),
the ongoing containment of inflation, continued corporate profit increases, a
proposed balanced budget bill, slower growth overseas, a strengthening U.S.
dollar and the conviction that the Federal Reserve Board's work may be done for
this cycle.
PERFORMANCE AND PORTFOLIO
During the fiscal year ended June 30, 1995, Dean Witter Value-Added Market
Series--Equity Portfolio produced a total return of 21.41 percent versus 26.05
percent for the Standard & Poor's 500 Composite Stock Price Index (S&P 500). For
the first six months of 1995, the Fund's total return was 17.35 percent, while
the S&P 500 returned 20.20 percent. On June 30, 1995, the Fund's net assets
totaled about $642 million.
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
LETTER TO THE SHAREHOLDERS, CONTINUED
The Fund is index-oriented, investing in stocks that comprise its benchmark
index, the S&P 500 Index. Unlike the S&P 500, however, the Fund equally weights
all stock positions, thereby emphasizing the stocks of small- and mid-sized
companies which historically have outperformed larger-capitalized companies.
While Value Added registered strong returns for the most recent six-and
twelve-month periods, the results were overshadowed by the S&P 500 Index. During
this period, the S&P 500's performance was driven by large-capitalization
multinationals, as well as stocks in the technology and financial sectors, all
of which are more heavily weighted in the S&P 500 Index than in the Fund. The
accompanying chart illustrates the growth of a $10,000 investment in the Fund
from inception (December 1, 1987) through the fiscal year ended June 30, 1995
versus the performance of the S&P 500 Index. The Fund began to outperform the
S&P 500 in October of 1990, when the performance of small- and mid-sized stocks
started to rebound after a period of underperformance relative to larger-cap
issues. In fact, since October 1990, through June 30, 1995, the Fund's
cumulative return was 121.5 percent versus 105.7 percent for the S&P 500.
LOOKING AHEAD
[GRAPHIC]
Near-term, the equity markets could
easily pull up for a breather as both
individuals and institutions rush to
take some profits. Still, barring
seriously negative news on the economic
front or in the bond market, the
bedrock for a continued strong domestic
equity market remains in place as the
housing sector responds to lower
interest rates, business
fixed-investment remains vigorous and
the U.S. trade deficit shrinks.
[GRAPHIC]
We appreciate your support of Dean
Witter Value-Added Market Series-Equity
Portfolio and look forward to
continuing to serve your financial
needs and objectives.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (96.2%)
AEROSPACE & DEFENSE (1.6%)
21,200 Boeing Company...................... $ 1,327,650
28,000 General Dynamics Corp............... 1,242,500
21,000 Lockheed Corp....................... 1,325,625
17,000 McDonnell Douglas Corp.............. 1,304,750
22,500 Northrop Grumman Corp............... 1,172,812
15,300 Raytheon Co......................... 1,187,663
25,500 Rockwell International Corp......... 1,166,625
16,000 United Technologies Corp............ 1,250,000
---------------
9,977,625
---------------
AIRLINES (0.8%)
17,700 AMR Corp.*.......................... 1,320,862
18,000 Delta Air Lines, Inc................ 1,327,500
55,800 Southwest Airlines Co............... 1,332,225
114,000 USAir Group, Inc.*.................. 1,325,250
---------------
5,305,837
---------------
ALUMINUM (0.6%)
39,300 Alcan Aluminum Ltd. (Canada)........ 1,188,825
27,000 Aluminum Co. of America............. 1,353,375
26,000 Reynolds Metals Co.................. 1,345,500
---------------
3,887,700
---------------
AUTO PARTS - AFTER MARKET (0.9%)
51,000 Cooper Tire & Rubber Co............. 1,243,125
34,000 Echlin, Inc......................... 1,181,500
32,000 Genuine Parts Co.................... 1,212,000
30,000 Goodyear Tire & Rubber Co........... 1,237,500
82,000 SPX Corp............................ 932,750
---------------
5,806,875
---------------
AUTOMOBILES (0.6%)
28,000 Chrysler Corp....................... 1,340,500
43,000 Ford Motor Co....................... 1,279,250
25,000 General Motors Corp................. 1,171,875
---------------
3,791,625
---------------
BANKS - MONEY CENTER (1.3%)
23,500 BankAmerica Corp.................... 1,236,687
20,000 Bankers Trust New York Corp......... 1,240,000
28,000 Chase Manhattan Corp................ 1,316,000
26,000 Chemical Banking Corp............... 1,228,500
22,500 Citicorp............................ 1,302,187
19,300 First Chicago Corp.................. 1,155,587
16,700 Morgan (J.P.) & Co., Inc............ 1,171,087
---------------
8,650,048
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
BANKS - REGIONAL (4.1%)
41,000 Banc One Corp....................... $ 1,322,250
35,000 Bank of Boston Corp................. 1,312,500
29,000 Bank of New York Co., Inc........... 1,170,875
23,000 Barnett Banks, Inc.................. 1,178,750
35,000 Boatmen's Bancshares, Inc........... 1,229,375
37,000 Corestates Financial Corp........... 1,290,375
22,000 First Fidelity Bancorp, Inc......... 1,298,000
15,500 First Interstate Bancorp............ 1,243,875
25,500 First Union Corp.................... 1,153,875
32,500 Fleet Financial Group, Inc.......... 1,206,562
39,000 Keycorp............................. 1,223,625
28,000 Mellon Bank Corp.................... 1,165,500
39,500 National City Corp.................. 1,160,312
22,000 NationsBank Corp.................... 1,179,750
39,000 NBD Bancorp, Inc.................... 1,248,000
40,000 Norwest Corp........................ 1,150,000
44,700 PNC Bank Corp....................... 1,178,962
41,500 Shawmut National Corp............... 1,322,812
20,300 SunTrust Banks, Inc................. 1,182,475
51,000 U.S. Bancorp........................ 1,224,000
32,500 Wachovia Corp....................... 1,161,875
6,500 Wells Fargo & Co.................... 1,171,625
---------------
26,775,373
---------------
BEVERAGES - ALCOHOLIC (0.8%)
22,000 Anheuser-Busch Companies, Inc....... 1,251,250
36,000 Brown-Forman Corp. (Class B)........ 1,201,500
72,000 Coors (Adolph) Co................... 1,152,000
35,200 Seagram Co. Ltd. (Canada)........... 1,218,800
---------------
4,823,550
---------------
BEVERAGES - SOFT DRINKS (0.4%)
19,300 Coca Cola Co........................ 1,230,375
27,500 PepsiCo Inc......................... 1,254,687
---------------
2,485,062
---------------
BROADCAST MEDIA (0.8%)
12,000 Capital Cities/ABC, Inc............. 1,296,000
18,500 CBS Inc............................. 1,239,500
66,000 Comcast Corp. (Class A Special)..... 1,221,000
57,500 Tele-Communications, Inc............ 1,344,063
---------------
5,100,563
---------------
BUILDING MATERIALS (0.6%)
44,400 Masco Corp.......................... 1,198,800
34,500 Owens-Corning Fiberglas Corp.*...... 1,272,187
34,000 Sherwin-Williams Co................. 1,211,250
---------------
3,682,237
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
CHEMICALS (1.9%)
21,000 Air Products & Chemicals, Inc....... $ 1,170,750
16,500 Dow Chemical Co..................... 1,185,937
17,000 Du Pont (E.I.) De Nemours & Co.,
Inc................................. 1,168,750
21,000 Eastman Chemical Company............ 1,249,500
24,000 Goodrich (B.F.) Co.................. 1,287,000
27,000 Hercules, Inc....................... 1,316,250
13,500 Monsanto Co......................... 1,216,687
52,000 Praxair, Inc........................ 1,300,000
21,500 Rohm & Haas Co...................... 1,179,812
38,000 Union Carbide Corp.................. 1,268,250
---------------
12,342,936
---------------
CHEMICALS - DIVERSIFIED (1.0%)
29,000 Avery Dennison Corp................. 1,160,000
30,500 Engelhard Corp...................... 1,307,687
41,000 First Mississippi Corp.............. 1,399,125
19,500 FMC Corp.*.......................... 1,311,375
29,000 PPG Industries, Inc................. 1,247,000
---------------
6,425,187
---------------
CHEMICALS - SPECIALTY (1.0%)
21,500 Grace (W.R.) & Co................... 1,319,562
19,500 Great Lakes Chemical Corp........... 1,174,875
43,500 Morton International, Inc........... 1,272,375
32,700 Nalco Chemical Co................... 1,189,462
27,000 Sigma-Aldrich Corp.................. 1,323,000
---------------
6,279,274
---------------
COMMUNICATIONS - EQUIPMENT/MANUFACTURERS (1.4%)
23,000 Andrew Corp.*....................... 1,328,250
24,000 Cabletron Systems, Inc.............. 1,278,000
26,000 Cisco Systems, Inc.*................ 1,313,000
29,000 DSC Communications Corp.*........... 1,348,500
110,000 M/A-Com, Inc.*...................... 1,292,500
32,500 Northern Telecom Ltd. (Canada)...... 1,186,250
53,800 Scientific-Atlanta, Inc............. 1,183,600
---------------
8,930,100
---------------
COMPUTER SOFTWARE & SERVICES (2.2%)
27,900 Autodesk, Inc....................... 1,185,750
19,500 Automatic Data Processing, Inc...... 1,226,063
34,500 Ceridian Corp.*..................... 1,272,187
19,500 Computer Associates International,
Inc................................. 1,321,125
22,000 Computer Sciences Corp.*............ 1,251,250
20,700 First Data Corp..................... 1,177,312
26,000 Lotus Development Corp.*............ 1,657,500
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
14,700 Microsoft Corp.*.................... $ 1,328,512
64,000 Novell, Inc.*....................... 1,272,000
34,500 Oracle Systems Corp.*............... 1,328,250
30,000 Shared Medical Systems Corp......... 1,203,750
---------------
14,223,699
---------------
COMPUTERS - SYSTEMS (2.6%)
105,200 Amdahl Corp.*....................... 1,170,350
28,000 Apple Computer, Inc................. 1,298,500
29,000 COMPAQ Computer Corp.*.............. 1,315,875
55,500 Cray Research, Inc.*................ 1,352,812
138,000 Data General Corp.*................. 1,328,250
29,000 Digital Equipment Corp.*............ 1,181,750
18,000 Hewlett-Packard Co.................. 1,341,000
108,500 Intergraph Corp.*................... 1,207,062
13,700 International Business Machines
Corp................................ 1,315,200
29,700 Silicon Graphics, Inc.*............. 1,184,287
27,000 Sun Microsystems, Inc.*............. 1,309,500
82,500 Tandem Computers Inc.*.............. 1,330,312
116,000 Unisys Corp.*....................... 1,261,500
---------------
16,596,398
---------------
CONGLOMERATES (0.8%)
11,000 ITT Corp............................ 1,292,500
49,500 Teledyne, Inc....................... 1,212,750
27,500 Tenneco Inc......................... 1,265,000
20,800 Textron Inc......................... 1,209,000
---------------
4,979,250
---------------
CONTAINERS - METAL & GLASS (0.4%)
37,000 Ball Corp........................... 1,290,375
24,000 Crown Cork & Seal Co., Inc.*........ 1,203,000
---------------
2,493,375
---------------
CONTAINERS - PAPER (0.6%)
46,000 Bemis Company, Inc.................. 1,196,000
64,500 Stone Container Corp.*.............. 1,370,625
27,700 Temple-Inland Inc................... 1,319,212
---------------
3,885,837
---------------
COSMETICS (0.8%)
39,900 Alberto-Culver Co................... 1,206,975
18,000 Avon Products, Inc.................. 1,206,000
27,000 Gillette Co......................... 1,204,875
24,500 International Flavors & Fragrances
Inc................................. 1,218,875
---------------
4,836,725
---------------
DISTRIBUTORS - CONSUMER PRODUCTS (0.6%)
50,000 Fleming Cos., Inc................... 1,325,000
44,000 Super Valu Stores, Inc.............. 1,281,500
40,500 Sysco Corp.......................... 1,194,750
---------------
3,801,250
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
ELECTRICAL EQUIPMENT (1.7%)
28,000 AMP, Inc............................ $ 1,183,000
16,500 Emerson Electric Co................. 1,179,750
21,500 General Electric Co................. 1,212,062
29,900 General Signal Corp................. 1,188,525
20,000 Grainger (W.W.), Inc................ 1,175,000
29,000 Honeywell, Inc...................... 1,250,625
32,000 Raychem Corp........................ 1,228,000
19,000 Thomas & Betts Corp................. 1,299,125
81,500 Westinghouse Electric Corp.......... 1,191,938
---------------
10,908,025
---------------
ELECTRONICS - DEFENSE (0.4%)
73,000 EG & G, Inc......................... 1,222,750
25,500 Loral Corp.......................... 1,319,625
---------------
2,542,375
---------------
ELECTRONICS - INSTRUMENTATION (0.4%)
37,500 Perkin-Elmer Corp................... 1,331,250
26,500 Tektronix, Inc...................... 1,305,125
---------------
2,636,375
---------------
ELECTRONICS - SEMICONDUCTORS (1.4%)
35,500 Advanced Micro Devices, Inc.*....... 1,291,313
15,000 Applied Materials, Inc.*............ 1,293,750
20,500 Intel Corp.......................... 1,296,625
23,500 Micron Technology, Inc.............. 1,289,562
20,000 Motorola, Inc....................... 1,342,500
47,000 National Semiconductor Corp.*....... 1,304,250
9,700 Texas Instruments Inc............... 1,298,588
---------------
9,116,588
---------------
ENGINEERING & CONSTRUCTION (0.8%)
24,500 Fluor Corp.......................... 1,274,000
36,500 Foster Wheeler Corp................. 1,286,625
190,000 Morrison Knudsen Co., Inc........... 1,282,500
58,300 Zurn Industries, Inc................ 1,166,000
---------------
5,009,125
---------------
ENTERTAINMENT (0.8%)
30,500 King World Productions Inc.*........ 1,235,250
28,800 Time Warner, Inc.................... 1,184,400
27,000 Viacom, Inc.*....................... 1,252,125
21,800 Walt Disney Co...................... 1,212,625
---------------
4,884,400
---------------
FINANCIAL - MISCELLANEOUS (1.2%)
33,100 American Express Co................. 1,162,638
37,000 American General Corp............... 1,248,750
18,000 Federal Home Loan Mortgage Corp..... 1,237,500
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
13,900 Federal National Mortgage
Association......................... $ 1,311,812
39,000 MBNA Corp........................... 1,316,250
20,300 Transamerica Corp................... 1,182,475
---------------
7,459,425
---------------
FOODS (2.4%)
66,500 Archer-Daniels-Midland Co........... 1,238,562
19,000 C P C International Inc............. 1,173,250
24,300 Campbell Soup Co.................... 1,190,700
33,800 ConAgra, Inc........................ 1,178,775
23,000 General Mills, Inc.................. 1,181,625
27,500 Heinz (H.J.) Co..................... 1,220,313
21,800 Hershey Foods Corp.................. 1,204,450
17,000 Kellogg Co.......................... 1,213,375
35,500 Quaker Oats Co...................... 1,167,062
23,000 Ralston-Ralston Purina Group........ 1,173,000
44,000 Sara Lee Corp....................... 1,254,000
9,600 Unilever NV (ADR) (Netherlands)..... 1,249,200
25,500 Wrigley (Wm.) Jr. Co................ 1,182,563
---------------
15,626,875
---------------
GOLD MINING (1.1%)
47,500 Barrick Gold Corp................... 1,199,375
125,000 Echo Bay Mines Ltd. (Canada)........ 1,125,000
70,000 Homestake Mining Co................. 1,155,000
29,700 Newmont Mining Corp................. 1,243,688
48,000 Placer Dome Inc..................... 1,254,000
91,000 Santa Fe Pacific Gold Corp.......... 1,103,375
---------------
7,080,438
---------------
HARDWARE & TOOLS (0.6%)
41,500 Black & Decker Corp................. 1,281,313
34,500 Snap-On, Inc........................ 1,336,875
33,000 Stanley Works....................... 1,249,875
---------------
3,868,063
---------------
HEALTH CARE - MISCELLANEOUS (0.8%)
57,000 ALZA Corp.*......................... 1,332,375
16,500 Amgen Inc.*......................... 1,324,125
97,500 Beverly Enterprises, Inc.*.......... 1,206,563
42,000 Manor Care, Inc..................... 1,223,250
---------------
5,086,313
---------------
HEALTH CARE DIVERSIFIED (1.3%)
30,500 Abbott Laboratories................. 1,235,250
44,500 Allergan, Inc....................... 1,207,062
15,800 American Home Products Corp......... 1,222,525
17,500 Bristol-Myers Squibb Co............. 1,192,188
17,000 Johnson & Johnson................... 1,149,625
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
35,000 Mallinckrodt Group, Inc............. $ 1,242,500
14,000 Warner-Lambert Co................... 1,209,250
---------------
8,458,400
---------------
HEALTH CARE DRUGS (1.0%)
15,500 Lilly (Eli) & Co.................... 1,216,750
25,600 Merck & Co., Inc.................... 1,254,400
13,200 Pfizer, Inc......................... 1,219,350
30,000 Schering-Plough Corp................ 1,323,750
31,800 Upjohn & Co......................... 1,204,425
---------------
6,218,675
---------------
HEALTHCARE HMOS (0.4%)
40,500 U.S. HealthCare, Inc................ 1,240,313
30,000 United Healthcare Corp.............. 1,241,250
---------------
2,481,563
---------------
HEAVY DUTY TRUCKS & PARTS (1.0%)
28,500 Cummins Engine Co., Inc............. 1,243,313
40,500 Dana Corp........................... 1,159,312
20,000 Eaton Corp.......................... 1,162,500
85,000 Navistar International Corp.*....... 1,285,625
27,000 PACCAR, Inc......................... 1,255,500
---------------
6,106,250
---------------
HOME BUILDING (0.6%)
43,000 Centex Corp......................... 1,214,750
91,000 Kaufman & Broad Home Corp........... 1,319,500
43,500 Pulte Corp.......................... 1,218,000
---------------
3,752,250
---------------
HOSPITAL MANAGEMENT (0.6%)
28,500 Columbia/HCA Healthcare Corp........ 1,232,625
105,000 Community Psychiatric Centers*...... 1,181,250
86,000 Tenet Healthcare Corp............... 1,236,250
---------------
3,650,125
---------------
HOTELS/MOTELS (0.6%)
17,000 Hilton Hotels Corp.................. 1,194,250
33,000 Marriot International Inc........... 1,183,875
30,000 Promus Cos., Inc.*.................. 1,170,000
---------------
3,548,125
---------------
HOUSEHOLD FURNISHINGS & APPLIANCES (0.9%)
25,000 Armstrong World Industries Inc...... 1,253,125
43,300 Bassett Furniture Industries,
Inc................................. 1,190,750
80,000 Maytag Corp......................... 1,280,000
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
21,600 Whirlpool Corp...................... $ 1,188,000
160,000 Zenith Electronics Corp.*........... 1,180,000
---------------
6,091,875
---------------
HOUSEHOLD PRODUCTS (0.9%)
18,300 Clorox Co........................... 1,194,075
16,000 Colgate-Palmolive Co................ 1,170,000
20,500 Kimberly-Clark Corp................. 1,227,438
16,400 Procter & Gamble Co................. 1,178,750
26,500 Scott Paper Co...................... 1,311,750
---------------
6,082,013
---------------
HOUSEWARES (0.6%)
52,000 Newell Co........................... 1,274,000
22,500 Premark International, Inc.......... 1,167,188
43,000 Rubbermaid, Inc..................... 1,193,250
---------------
3,634,438
---------------
INSURANCE BROKERS (0.4%)
49,500 Alexander & Alexander Services,
Inc................................. 1,181,813
15,000 Marsh & McLennan Cos., Inc.......... 1,216,875
---------------
2,398,688
---------------
INVESTMENT BANKING/BROKERAGE (0.8%)
27,000 Dean Witter, Discover & Co. (Note
4).................................. 1,269,000
25,000 Merrill Lynch & Co., Inc............ 1,312,500
31,000 Salomon, Inc........................ 1,243,875
27,000 Travelers, Inc...................... 1,181,250
---------------
5,006,625
---------------
LEISURE TIME (0.8%)
108,000 Bally Entertainment Corp.*.......... 1,323,000
74,000 Brunswick Corp...................... 1,258,000
120,500 Handleman Co........................ 1,159,813
65,000 Outboard Marine Corp................ 1,275,625
---------------
5,016,438
---------------
LIFE INSURANCE (1.2%)
23,000 Jefferson-Pilot Corp................ 1,259,250
26,000 Lincoln National Corp............... 1,137,500
33,000 Providian Corp...................... 1,196,250
34,500 Torchmark Corp...................... 1,302,375
28,300 UNUM Corp........................... 1,326,563
29,300 USLIFE Corp......................... 1,179,325
---------------
7,401,263
---------------
MACHINE TOOLS (0.4%)
48,000 Cincinnati Milacron, Inc............ 1,296,000
70,500 Giddings & Lewis, Inc............... 1,251,375
---------------
2,547,375
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
MACHINERY - DIVERSIFIED (1.8%)
35,500 Briggs & Stratton Corp.............. $ 1,224,750
21,000 Caterpillar, Inc.................... 1,349,250
32,000 Cooper Industries, Inc.............. 1,264,000
15,000 Deere & Co.......................... 1,284,375
37,500 Harnischfeger Industries, Inc....... 1,298,438
33,000 Ingersoll-Rand Co................... 1,262,250
20,000 NACCO Industries, Inc. (Class A).... 1,197,500
29,000 Timken Co........................... 1,337,625
30,000 Varity Corp.*....................... 1,320,000
---------------
11,538,188
---------------
MANUFACTURED HOUSING (0.4%)
60,800 Fleetwood Enterprises, Inc.......... 1,200,800
65,700 Skyline Corp........................ 1,190,813
---------------
2,391,613
---------------
MANUFACTURING - DIVERSIFIED INDUSTRIES (2.0%)
27,500 AlliedSignal, Inc................... 1,223,750
35,000 Crane Co............................ 1,268,750
17,000 Dover Corp.......................... 1,236,750
23,000 Illinois Tool Works Inc............. 1,265,000
22,000 Johnson Controls, Inc............... 1,243,000
19,000 Millipore Corp...................... 1,282,500
53,500 Pall Corp........................... 1,190,375
34,800 Parker-Hannifin Corp................ 1,261,500
38,000 Trinova Corp........................ 1,330,000
23,000 Tyco International Ltd.............. 1,242,000
---------------
12,543,625
---------------
MEDICAL PRODUCTS & SUPPLIES (1.8%)
41,500 Bard (C.R.), Inc.................... 1,245,000
31,500 Bausch & Lomb, Inc.................. 1,307,250
35,700 Baxter International, Inc........... 1,298,588
21,000 Becton, Dickinson & Co.............. 1,223,250
79,000 Biomet, Inc.*....................... 1,214,625
41,500 Boston Scientific Corp.*............ 1,322,812
16,800 Medtronic, Inc...................... 1,295,700
25,500 St. Jude Medical, Inc.*............. 1,275,000
57,000 United States Surgical Corp......... 1,189,875
---------------
11,372,100
---------------
METALS - MISCELLANEOUS (0.8%)
43,500 ASARCO, Inc......................... 1,326,750
46,000 Cyprus Amax Minerals Co............. 1,311,000
42,500 Inco Ltd. (Canada).................. 1,200,625
22,000 Phelps Dodge Corp................... 1,298,000
---------------
5,136,375
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
MISCELLANEOUS (2.1%)
43,000 Airtouch Communications, Inc.*...... $ 1,225,500
43,000 American Greetings Corp............. 1,257,750
37,000 Corning, Inc........................ 1,211,750
49,000 Dial Corp........................... 1,212,750
27,500 Harcourt General, Inc............... 1,168,750
24,000 Harris Corp......................... 1,239,000
57,500 Jostens, Inc........................ 1,221,875
21,500 Minnesota Mining & Manufacturing
Co.................................. 1,230,875
29,000 Pioneer Hi-Bred International,
Inc................................. 1,210,750
15,000 TRW, Inc............................ 1,198,125
67,000 Whitman Corp........................ 1,298,125
---------------
13,475,250
---------------
MULTI-LINE INSURANCE (0.6%)
20,000 Aetna Life & Casualty Co............ 1,257,500
10,700 American International Group,
Inc................................. 1,219,800
15,000 CIGNA Corp.......................... 1,164,375
---------------
3,641,675
---------------
OFFICE EQUIPMENT & SUPPLIES (0.8%)
15,500 Alco Standard Corp.................. 1,238,063
58,500 Moore Corp. Ltd. (Canada)........... 1,294,312
30,000 Pitney Bowes, Inc................... 1,151,250
10,700 Xerox Corp.......................... 1,254,575
---------------
4,938,200
---------------
OIL & GAS DRILLING (0.4%)
40,000 Helmerich & Payne, Inc.............. 1,180,000
147,000 Rowan Cos., Inc.*................... 1,194,375
---------------
2,374,375
---------------
OIL - DOMESTIC INTEGRATED (2.1%)
23,900 Amerada Hess Corp................... 1,168,113
34,000 Ashland Oil, Inc.................... 1,194,250
11,000 Atlantic Richfield Co............... 1,207,250
23,000 Kerr-McGee Corp..................... 1,233,375
29,000 Louisiana Land & Exploration Co..... 1,156,375
51,500 Occidental Petroleum Corp........... 1,178,062
25,000 Pennzoil Co......................... 1,178,125
38,000 Phillips Petroleum Co............... 1,268,250
44,000 Sun Co., Inc........................ 1,204,500
43,000 Unocal Corp......................... 1,187,875
64,000 USX-Marathon Group.................. 1,264,000
---------------
13,240,175
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
OIL - EXPLORATION & PRODUCTION (0.6%)
33,500 Burlington Resources, Inc........... $ 1,235,313
92,000 Oryx Energy Co...................... 1,265,000
120,500 Santa Fe Energy Resources, Inc.*.... 1,144,750
---------------
3,645,063
---------------
OIL - INTERNATIONAL INTEGRATED (1.1%)
17,800 Amoco Corp.......................... 1,185,925
26,500 Chevron Corp........................ 1,235,563
16,500 Exxon Corp.......................... 1,165,312
12,000 Mobil Corp.......................... 1,152,000
10,200 Royal Dutch Petroleum Co............ 1,243,125
19,000 Texaco, Inc......................... 1,246,875
---------------
7,228,800
---------------
OIL WELL EQUIPMENT & SERVICE (1.1%)
58,500 Baker Hughes Inc.................... 1,199,250
55,000 Dresser Industries, Inc............. 1,223,750
34,000 Halliburton Co...................... 1,215,500
51,000 McDermott International, Inc........ 1,230,375
18,500 Schlumberger Ltd. (Netherlands)..... 1,149,313
28,000 Western Atlas Inc.*................. 1,242,500
---------------
7,260,688
---------------
PAPER & FOREST PRODUCTS (2.3%)
32,000 Boise Cascade Corp.................. 1,296,000
25,500 Champion International Corp......... 1,329,188
38,000 Federal Paper Board Co., Inc........ 1,344,250
13,500 Georgia-Pacific Corp................ 1,171,125
15,700 International Paper Co.............. 1,346,275
47,000 James River Corp. of Virginia....... 1,298,375
49,000 Louisiana-Pacific Corp.............. 1,286,250
22,000 Mead Corp........................... 1,306,250
30,500 Potlatch Corp....................... 1,273,375
22,000 Union Camp Corp..................... 1,273,250
27,300 Westvaco Corp....................... 1,208,025
28,500 Weyerhaeuser Co..................... 1,343,062
---------------
15,475,425
---------------
PERSONAL LOANS (0.4%)
28,000 Beneficial Corp..................... 1,232,000
27,000 Household International, Inc........ 1,336,500
---------------
2,568,500
---------------
PHOTOGRAPHY/IMAGING (0.4%)
20,000 Eastman Kodak Co.................... 1,212,500
30,000 Polaroid Corp....................... 1,222,500
---------------
2,435,000
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
POLLUTION CONTROL (0.6%)
32,800 Browning-Ferris Industries, Inc..... $ 1,184,900
122,000 Laidlaw Inc......................... 1,174,250
45,000 WMX Technologies, Inc............... 1,276,875
---------------
3,636,025
---------------
PROPERTY - CASUALTY INSURANCE (1.1%)
15,000 Chubb Corp.......................... 1,201,875
9,000 General Re Corp..................... 1,204,875
9,700 Loews Corp.......................... 1,173,700
20,600 SAFECO Corp......................... 1,176,775
24,300 St. Paul Companies, Inc............. 1,196,775
75,000 USF&G Corp.......................... 1,218,750
---------------
7,172,750
---------------
PUBLISHING (0.6%)
23,500 Dun & Bradstreet Corp............... 1,233,750
15,500 McGraw-Hill, Inc.................... 1,176,062
47,500 Meredith Corp....................... 1,205,313
---------------
3,615,125
---------------
PUBLISHING - NEWSPAPER (1.1%)
34,000 Dow Jones & Co., Inc................ 1,253,750
22,500 Gannett Co., Inc.................... 1,220,625
20,500 Knight-Ridder Newspapers, Inc....... 1,165,938
54,000 New York Times Co. (Class A)........ 1,269,000
54,000 Times Mirror Co..................... 1,289,250
19,800 Tribune Co.......................... 1,215,225
---------------
7,413,788
---------------
RAILROADS (1.2%)
18,500 Burlington Northern, Inc............ 1,172,438
23,000 Conrail, Inc........................ 1,279,375
17,000 CSX Corp............................ 1,277,125
18,500 Norfolk Southern Corp............... 1,246,437
52,000 Santa Fe Pacific Corp............... 1,326,000
21,400 Union Pacific Corp.................. 1,185,025
---------------
7,486,400
---------------
RESTAURANTS (1.1%)
105,000 Darden Restaurants, Inc............. 1,141,875
59,500 Luby's Cafeterias, Inc.............. 1,197,438
33,000 McDonald's Corp..................... 1,291,125
157,000 Ryan's Family Steak Houses, Inc.*... 1,216,750
109,500 Shoney's Inc.*...................... 1,286,625
69,000 Wendy's International, Inc.......... 1,233,375
---------------
7,367,188
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
RETAIL - DEPARTMENT STORES (1.0%)
45,000 Dillard Department Stores, Inc.
(Class A)........................... $ 1,321,875
32,000 May Department Stores Co............ 1,332,000
25,500 Mercantile Stores Co., Inc.......... 1,185,750
32,000 Nordstrom, Inc...................... 1,320,000
25,000 Penney (J.C.) Co., Inc.............. 1,200,000
---------------
6,359,625
---------------
RETAIL - DRUG STORES (0.6%)
31,800 Longs Drug Stores Corp.............. 1,192,500
49,000 Rite Aid Corp....................... 1,255,625
24,500 Walgreen Co......................... 1,228,063
---------------
3,676,188
---------------
RETAIL - FOOD CHAINS (1.2%)
39,500 Albertson's Inc..................... 1,175,125
43,000 American Stores Co.................. 1,209,375
114,000 Bruno's, Inc........................ 1,325,250
45,000 Giant Food, Inc. (Class A).......... 1,276,875
49,000 Great Atlantic & Pacific Tea Co.,
Inc................................. 1,292,375
43,000 Kroger Co.*......................... 1,155,625
21,000 Winn-Dixie Stores, Inc.............. 1,212,750
---------------
8,647,375
---------------
RETAIL - GENERAL MERCHANDISE (0.8%)
19,000 Dayton Hudson Corp.................. 1,363,250
85,000 Kmart Corp.......................... 1,243,125
21,000 Sears, Roebuck & Co................. 1,257,375
44,000 Wal-Mart Stores, Inc................ 1,177,000
---------------
5,040,750
---------------
RETAIL - SPECIALTY (1.7%)
42,500 Circuit City Stores, Inc............ 1,344,063
31,000 Home Depot, Inc..................... 1,259,375
42,000 Lowe's Companies, Inc............... 1,254,750
36,000 Melville Corp....................... 1,233,000
45,300 Pep Boys-Manny Moe & Jack........... 1,211,775
78,000 Price/Costco, Inc.*................. 1,267,500
23,300 Tandy Corp.......................... 1,208,687
46,000 Toys 'R' Us, Inc.*.................. 1,345,500
79,000 Woolworth Corp...................... 1,194,875
---------------
11,319,525
---------------
RETAIL - SPECIALTY APPAREL (0.8%)
215,000 Charming Shoppes, Inc............... 1,128,750
35,000 Gap, Inc............................ 1,220,625
57,000 Limited (The), Inc.................. 1,254,000
94,000 TJX Companies, Inc.................. 1,245,500
---------------
4,848,875
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
SAVINGS & LOAN COMPANIES (0.6%)
58,000 Ahmanson (H.F.) & Co................ $ 1,276,000
28,000 Golden West Financial Corp.......... 1,319,500
58,000 Great Western Financial Corp........ 1,196,250
---------------
3,791,750
---------------
SHOES (0.8%)
54,000 Brown Group Inc..................... 1,228,500
14,200 Nike, Inc........................... 1,192,800
36,000 Reebok International Ltd. (United
Kingdom)............................ 1,224,000
115,000 Stride Rite Corp.................... 1,193,125
---------------
4,838,425
---------------
SPECIALIZED SERVICES (1.4%)
28,500 Block (H.&R.), Inc.................. 1,172,063
30,000 C U C International, Inc.*.......... 1,260,000
48,000 Ecolab, Inc......................... 1,176,000
32,500 Interpublic Group of Companies,
Inc................................. 1,218,750
40,000 National Service Industries, Inc.... 1,155,000
54,000 Ogden Corp.......................... 1,181,250
80,000 Safety-Kleen Corp................... 1,290,000
37,000 Service Corp. International......... 1,170,125
---------------
9,623,188
---------------
SPECIALTY PRINTING (0.6%)
38,500 Deluxe Corp......................... 1,275,313
35,500 Donnelley (R.R.) & Sons Co.......... 1,278,000
54,000 Harland (John H.) Co................ 1,235,250
---------------
3,788,563
---------------
STEEL (1.1%)
174,000 Armco, Inc.*........................ 1,174,500
73,500 Bethlehem Steel Corp.*.............. 1,194,375
39,200 Inland Steel Industries, Inc.*...... 1,195,600
25,000 Nucor Corp.......................... 1,337,500
34,300 USX-U.S. Steel Group................ 1,179,062
56,500 Worthington Industries, Inc......... 1,151,188
---------------
7,232,225
---------------
TELECOMMUNICATIONS - LONG DISTANCE (0.6%)
24,000 AT&T Corp........................... 1,275,000
59,000 MCI Communications Corp............. 1,290,625
38,000 Sprint Corporation.................. 1,277,750
---------------
3,843,375
---------------
TEXTILES (1.0%)
55,000 Fruit of the Loom, Inc.............. 1,161,875
50,600 Hartmarx Corp.*..................... 253,000
62,000 Liz Claiborne, Inc.................. 1,317,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
45,000 Russell Corp........................ $ 1,293,750
31,500 Springs Industries, Inc............. 1,173,375
24,500 VF Corp............................. 1,316,875
---------------
6,516,375
---------------
TOBACCO (0.6%)
31,500 American Brands, Inc................ 1,252,125
17,000 Philip Morris Companies, Inc........ 1,264,375
41,500 UST, Inc............................ 1,234,625
---------------
3,751,125
---------------
TOYS (0.4%)
39,000 Hasbro Inc.......................... 1,238,250
46,250 Mattel, Inc......................... 1,202,500
---------------
2,440,750
---------------
TRANSPORTATION - MISCELLANEOUS (0.6%)
21,200 Federal Express Corp.*.............. 1,287,900
49,100 Pittston Services Group............. 1,178,400
52,500 Ryder System, Inc................... 1,253,438
---------------
3,719,738
---------------
TRUCKERS (0.6%)
53,500 Consolidated Freightways, Inc.*..... 1,183,688
28,000 Roadway Service, Inc................ 1,309,000
64,000 Yellow Corporation.................. 1,160,000
---------------
3,652,688
---------------
UTILITIES - ELECTRIC (4.5%)
33,000 American Electric Power Co., Inc.... 1,159,125
48,000 Baltimore Gas & Electric Co......... 1,200,000
39,400 Carolina Power & Light Co........... 1,191,850
45,000 Central & South West Corp........... 1,181,250
45,500 CINergy Corp........................ 1,194,375
40,100 Consolidated Edison Co. of New York,
Inc................................. 1,182,950
39,500 Detroit Edison Co................... 1,165,250
32,400 Dominion Resources, Inc............. 1,182,600
28,300 Duke Power Co....................... 1,174,450
50,000 Entergy Corp........................ 1,206,250
30,800 FPL Group, Inc...................... 1,189,650
41,500 General Public Utilities Corp....... 1,234,625
27,500 Houston Industries, Inc............. 1,158,438
80,800 Niagara Mohawk Power Corp........... 1,191,800
25,600 Northern States Power Co............ 1,180,800
51,500 Ohio Edison Co...................... 1,165,188
44,000 Pacific Gas & Electric Co........... 1,276,000
62,000 PacifiCorp.......................... 1,162,500
43,000 PECO Energy Co...................... 1,187,875
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
44,500 Public Service Enterprise Group,
Inc................................. $ 1,234,875
67,000 SCE Corp............................ 1,147,375
52,000 Southern Co......................... 1,163,500
35,000 Texas Utilities Co.................. 1,203,125
44,500 Unicom Corp......................... 1,184,812
32,000 Union Electric Co................... 1,192,000
---------------
29,710,663
---------------
UTILITIES - NATURAL GAS (2.4%)
38,000 Coastal Corp........................ 1,154,250
5,700 Columbia Gas System, Inc.*.......... 180,975
31,000 Consolidated Natural Gas Co......... 1,170,250
39,000 Eastern Enterprises................. 1,165,125
34,500 Enron Corp.......................... 1,211,813
74,000 ENSERCH Corp........................ 1,267,250
44,800 NICOR, Inc.......................... 1,204,000
187,500 NorAm Energy Corp................... 1,218,750
56,000 ONEOK, Inc.......................... 1,197,000
53,500 Pacific Enterprises................. 1,310,750
48,500 Panhandle Eastern Corp.............. 1,182,188
47,500 Peoples Energy Corp................. 1,229,062
41,000 Sonat, Inc.......................... 1,250,500
37,000 Williams Cos., Inc.................. 1,290,375
---------------
16,032,288
---------------
UTILITIES - TELEPHONE (1.6%)
48,000 Alltel Corp......................... 1,218,000
27,900 Ameritech Corp...................... 1,227,600
21,300 Bell Atlantic Corp.................. 1,192,800
19,300 BellSouth Corp...................... 1,225,550
35,000 GTE Corp............................ 1,194,375
30,000 NYNEX Corp.......................... 1,207,500
46,000 Pacific Telesis Group............... 1,230,500
25,000 SBC Communications, Inc............. 1,190,625
29,000 U.S. West, Inc...................... 1,207,125
---------------
10,894,075
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $465,524,278)...... 617,376,525
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (a) (5.8%)
COMMERCIAL PAPER (5.1%)
AUTOMOTIVE FINANCE (2.8%)
$ 18,000 Ford Motor Credit Co. 5.93% due
07/05/95............................ 17,988,140
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1995, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
FINANCE - DIVERSIFIED (2.3%)
$ 15,000 American Express Credit Corp. 6.00%
due 07/07/95........................ $ 14,985,000
---------------
TOTAL COMMERCIAL PAPER
(AMORTIZED COST $32,973,140)........ 32,973,140
---------------
U.S. GOVERNMENT AGENCY (0.7%)
4,500 Federal Home Loan Banks 6.10% due
07/03/95 (Amortized Cost
$4,498,475)......................... 4,498,475
---------------
TOTAL SHORT-TERM INVESTMENTS
(AMORTIZED COST $37,471,615)........ 37,471,615
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$502,995,893) (B)........... 102.0% 654,848,140
LIABILITIES IN EXCESS OF
CASH AND OTHER ASSETS....... (2.0) (12,761,111)
----- ------------
NET ASSETS.................. 100.0% $642,087,029
----- ------------
----- ------------
<FN>
- ---------------------
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 is $504,046,002; the
aggregate gross unrealized appreciation is $157,741,749 and the aggregate
gross unrealized depreciation is $6,939,611, resulting in net unrealized
appreciation of $150,802,138.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $502,995,893)............................ $654,848,140
Cash........................................................ 428,232
Receivable for:
Investments sold........................................ 7,292,514
Shares of beneficial interest sold...................... 2,515,374
Dividends............................................... 941,009
Dividends from affiliate (Note 4)....................... 4,320
Prepaid expenses............................................ 62,936
------------
TOTAL ASSETS........................................... 666,092,525
------------
LIABILITIES:
Payable for:
Investments purchased................................... 22,593,312
Plan of distribution fee................................ 468,299
Shares of beneficial interest repurchased............... 434,669
Investment management fee............................... 252,251
Accrued expenses and other payables......................... 256,965
------------
TOTAL LIABILITIES...................................... 24,005,496
------------
NET ASSETS:
Paid-in-capital............................................. 487,328,918
Net unrealized appreciation................................. 151,852,247
Accumulated undistributed net investment income............. 4,812,981
Accumulated net realized loss............................... (1,907,117)
------------
NET ASSETS............................................. $642,087,029
------------
------------
NET ASSET VALUE PER SHARE,
27,843,449 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$23.06
------------
------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1995
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $29,025 foreign withholding tax).......... $ 12,492,588
Dividends from affiliate (Note 4)........................... 14,640
Interest.................................................... 1,405,098
------------
TOTAL INCOME........................................... 13,912,326
------------
EXPENSES
Plan of distribution fee.................................... 5,031,174
Investment management fee................................... 2,603,517
Transfer agent fees and expenses............................ 560,335
Shareholder reports and notices............................. 110,712
S & P license fee........................................... 79,305
Registration fees........................................... 77,454
Professional fees........................................... 66,798
Custodian fees.............................................. 41,894
Trustees' fees and expenses................................. 29,727
Other....................................................... 7,445
------------
TOTAL EXPENSES......................................... 8,608,361
------------
NET INVESTMENT INCOME.................................. 5,303,965
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 7,157,102
Net change in unrealized appreciation....................... 92,711,754
------------
NET GAIN............................................... 99,868,856
------------
NET INCREASE................................................ $105,172,821
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE YEAR
YEAR ENDED ENDED
JUNE JUNE 30,
30,1995 1994
- ---------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 5,303,965 $ 3,117,201
Net realized gain........................................... 7,157,102 7,402,929
Net change in unrealized appreciation....................... 92,711,754 (4,307,318)
----------- ------------
NET INCREASE........................................... 105,172,821 6,212,812
----------- ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income....................................... (2,290,649) (1,576,609)
Net realized gain........................................... (3,801,171) (4,901,161)
----------- ------------
TOTAL.................................................. (6,091,820) (6,477,770)
Net increase from transactions in shares of beneficial
interest.................................................. 87,296,348 145,248,538
----------- ------------
TOTAL INCREASE......................................... 186,377,349 144,983,580
NET ASSETS:
Beginning of period......................................... 455,709,680 310,726,100
----------- ------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$4,812,981 AND $1,799,665, RESPECTIVELY)................ $642,087,029 $455,709,680
----------- ------------
----------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1995
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter Value-Added Market Series -- Equity Portfolio (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 was organized as
a Massachusetts business trust on May 27, 1987 and commenced operations on
December 1, 1987.
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, 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; and (4)
short-term debt securities having a maturity date of more than sixty days at
time of purchase are valued on a market-to-market basis until sixty days prior
to maturity and thereafter at amortized cost based on their value on the 61st
day. Short-term 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 is recorded on the ex-dividend date. Interest income is accrued
daily and includes accretion of discounts of certain short-term securities.
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
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1995, CONTINUED
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 its Investment Manager a
management fee, accrued 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: 0.50% to the portion of the daily net assets not exceeding $500
million and 0.45% to the portion of the daily net assets exceeding $500 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 Fund's shares since the Fund's inception (not
including reinvestment of dividend or capital gains distributions) less the
average daily aggregate net asset value of the Fund's shares redeemed since the
Fund's inception 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. 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 others who engage in or support
distribution of the Fund's shares or who service shareholder accounts, including
overhead and telephone expenses, printing and
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1995, CONTINUED
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 June 30, 1995, it
received approximately $716,000 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 year ended June 30, 1995 aggregated $125,141,712
and $53,962,318, respectively. For the same period, the Fund incurred brokerage
commissions of $1,540 with Dean Witter Reynolds Inc. Included in the
aforementioned are purchases of common stock of Dean Witter, Discover & Co., an
affiliate of the Investment Manager, of $100,965.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At June 30, 1995, the Fund had
transfer agent fees and expenses payable of approximately $51,000.
The Fund established 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 June 30, 1995
included in Trustees' fees and expenses in the Statement of Operations amounted
to $8,163. At June 30, 1995, the Fund had an accrued pension liability of
$90,620 which is included in accrued expenses in the Statement of Assets and
Liabilities.
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1995, CONTINUED
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
JUNE 30, 1995 JUNE 30, 1994
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 8,577,823 $ 179,873,239 5,379,438 $106,212,388
Reinvestment of dividends and distributions...................... 277,119 5,434,300 307,559 6,066,139
Shares issued in connection with the acquisition of Dean Witter
Equity Income Trust (Note 6).................................... - - 5,526,681 106,440,012
----------- -------------- ----------- ------------
8,854,942 185,307,539 11,213,678 218,718,539
Repurchased...................................................... (4,704,190) (98,011,191) (3,729,607) (73,470,001)
----------- -------------- ----------- ------------
Net increase..................................................... 4,150,752 $ 87,296,348 7,484,071 $145,248,538
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
6. ACQUISITION OF DEAN WITTER EQUITY INCOME TRUST
On April 18, 1994, pursuant to a plan of reorganization approved by the
shareholders of Dean Witter Equity Income Trust ("Equity Income"), the Fund
acquired all the assets of Equity Income by a tax free exchange.
7. FEDERAL INCOME TAX STATUS
As part of the Fund's acquisition of the assets of Dean Witter Equity Income
Trust ("Equity Income"), the Fund obtained a net capital loss carryover from
Equity Income. Utilization of this carryover is subject to limitations imposed
by the Internal Revenue Code and Treasury Regulations. During the year ended
June 30, 1995, the Fund utilized approximately $2,608,000 of this carryover. At
June 30, 1995, the Fund had a net capital loss carryover remaining of
approximately $857,000 which will be available through June 30, 1999 to offset
future capital gains to the extent provided by regulations.
At June 30, 1995, the Fund had temporary book/tax differences which were
primarily attributable to capital loss deferrals on wash sales.
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE
PERIOD
DECEMBER
1, 1987*
FOR THE YEAR ENDED JUNE 30, THROUGH
--------------------------------------------------------------------------- JUNE 30,
1995 1994 1993 1992 1991 1990 1989 1988
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period............... $ 19.23 $ 19.17 $ 16.29 $ 14.73 $ 14.21 $ 13.86 $ 12.47 $ 10.00
--------- --------- --------- --------- --------- --------- --------- ---------
Net investment income.............. 0.19 0.14 0.14 0.17 0.20 0.23 0.24 0.12
Net realized and unrealized gain... 3.88 0.30 2.86 1.57 0.59 0.62 1.56 2.43
--------- --------- --------- --------- --------- --------- --------- ---------
Total from investment operations... 4.07 0.44 3.00 1.74 0.79 0.85 1.80 2.55
--------- --------- --------- --------- --------- --------- --------- ---------
Less dividends and distributions
from:
Net investment income........... (0.09) (0.09) (0.12) (0.18) (0.21) (0.24) (0.24) (0.08)
Net realized gain............... (0.15) (0.29) -- -- (0.06) (0.26) (0.17) --
--------- --------- --------- --------- --------- --------- --------- ---------
Total dividends and
distributions..................... (0.24) (0.38) (0.12) (0.18) (0.27) (0.50) (0.41) (0.08)
--------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of period..... $ 23.06 $ 19.23 $ 19.17 $ 16.29 $ 14.73 $ 14.21 $ 13.86 $ 12.47
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN+........... 21.41% 2.26% 18.50% 11.83% 5.82% 6.17% 16.87% 25.56%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 1.64% 1.68% 1.71% 1.80% 1.80% 1.80% 1.90% 1.60%(2)(3)
Net investment income.............. 1.01% 0.86% 0.86% 1.10% 1.40% 1.90% 2.30% 1.90%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $642,087 $455,710 $310,726 $192,832 $139,058 $147,539 $78,169 $36,515
Portfolio turnover rate............ 11% 19% 6% 9% 20% 10% 10% 12%(1)
<FN>
- ---------------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all expenses that were assumed or waived by the
Investment Manager, the above annualized expense and net investment income
ratios would have been 2.30% and 1.20%, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
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 Value-Added Market
Value Series -- Equity Portfolio (the "Fund") at June 30, 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 the
each of the seven years in the period then ended and for the period December 1,
1987 (commencement of operations) through June 30, 1988, 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 June 30, 1995 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
AUGUST 7, 1995
- --------------------------------------------------------------------------------
1995 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended June 30, 1995, Fund paid to shareholders
$.15 per share from long-term capital gains. For such period, 100%
of the ordinary dividend qualified for the dividends received
deduction available to corporations.
<PAGE>
TRUSTEES
Jack F. Bennett Dean Witter
Michael Bozic Value-Added
Charles A. Fiumefreddo Market Series
Edwin J. Garn Equity Portfolio
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
Kenton J. Hinchliffe
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT [GRAPHIC]
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 Annual Report
by an effective prospectus. June 30, 1995
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES/EQUITY PORTFOLIO
GROWTH OF $10,000
DATE TOTAL S&P 500
November 30, 1987 $10,000 $10,000
June 30, 1988 $12,556 $12,129
June 30, 1989 $14,674 $14,614
June 30, 1990 $15,580 $17,020
June 30, 1991 $16,486 $18,276
June 30, 1992 $18,437 $20,723
June 30, 1993 $21,848 $23,544
June 30, 1994 $22,342 $23,874
June 30, 1995 $27,126(3) $30,094
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS LIFE OF FUND
21.41(1) 11.73(1) 14.07(1)
16.41(2) 11.47(2) 14.07(2)
Fund S&P 500 (4)
------- -------
Past performance is not predictive of future returns.
- ---------------
(1) Total return figures shown assume reinvestment of all distributions and do
not reflect the deduction of any sales charges.
(2) Total return figures shown assume reinvestment of all distributions and the
deduction of the maximum applicable contingent deferred sales charge (CDSC)
(1 year-5%, 5 years-2%,life of fund-0%). See the Fund's current prospectus
for complete details on fees and sales charges.
(3) Closing value assuming a complete redemption on June 30, 1995.
(4) The Standard and 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 index does not include
any expenses, fees or charges.
