<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO TWO WORLD TRADE
CENTER, NEW YORK, NEW
YORK 10048
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1995
DEAR SHAREHOLDER:
The six-month period ended December 31, 1995 was favorable to equity investors.
Robust corporate earnings, benign inflation and a steadily advancing bond market
combined to propel stocks higher and higher in 1995, as evidenced by the Dow
Jones Industrial Average's (DJIA) vault over 4000 and then 5000. The S&P 500 and
NASDAQ Indexes also were strong during the period. Despite a brief 100-point
detour in mid-December (brought about by anxiety over budget wrangling in
Washington, an economy perceived to be weakening and the belief that the Federal
Reserve Board would not cut interest rates, which it subsequently did), equities
continued to chug along through year end.
PERFORMANCE
Against this backdrop, Dean Witter Value-Added Market Series -- Equity Portfolio
produced a total return of 9.89 percent for the six-month period ended December
31, 1995, compared to a return of 14.46 percent for the Standard & Poor's 500
Composite Stock Price Index (S&P 500 Index). Although the Fund registered strong
returns for the last six months, it lagged the capitalization-weighted S&P 500
Index. The Fund invests in substantially all of the stocks included in the S&P
500 Index. Unlike the Index, however, the Fund equally weights all stock
positions, thereby emphasizing the stocks of smaller- to medium-capitalized
companies. Large-capitalization stocks and the technology sector, which were
among the market leaders during this period, are areas where the Fund is
under-represented.
LOOKING AHEAD
Looking forward, the expected continued easing of rates by the Federal Reserve
should help improve the economy and thus sustain corporate earnings growth.
Profit margins are expected to increase as well with companies restructuring to
reduce labor costs and increase productivity at the same time. Also, if the
Federal Reserve continues to lower rates,
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1995, CONTINUED
the reduced cost of financing will be beneficial to smaller firms. Such a
scenario bodes well for the equity markets in general and the Fund in
particular.
We appreciate your support of Dean Witter Value-Added Market Series -- Equity
Portfolio and look forward to continuing to serve your financial needs.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (97.4%)
AEROSPACE & DEFENSE (1.6%)
21,200 Boeing Company...................... $ 1,661,550
28,000 General Dynamics Corp............... 1,655,500
21,000 Lockheed Martin Corp................ 1,659,000
17,000 McDonnell Douglas Corp.............. 1,564,000
24,500 Northrop Grumman Corp............... 1,568,000
32,600 Raytheon Co......................... 1,540,350
31,700 Rockwell International Corp......... 1,676,137
16,000 United Technologies Corp............ 1,518,000
---------------
12,842,537
---------------
AIRLINES (0.8%)
20,500 AMR Corp.*.......................... 1,522,125
20,500 Delta Air Lines, Inc................ 1,514,438
65,000 Southwest Airlines Co............... 1,511,250
125,000 USAir Group, Inc.*.................. 1,656,250
---------------
6,204,063
---------------
ALUMINUM (0.6%)
48,500 Alcan Aluminum Ltd. (Canada)........ 1,509,563
30,500 Aluminum Co. of America............. 1,612,687
27,400 Reynolds Metals Co.................. 1,551,525
---------------
4,673,775
---------------
AUTO PARTS - AFTER MARKET (0.8%)
64,000 Cooper Tire & Rubber Co............. 1,576,000
41,500 Echlin, Inc......................... 1,514,750
37,500 Genuine Parts Co.................... 1,537,500
37,000 Goodyear Tire & Rubber Co........... 1,678,875
---------------
6,307,125
---------------
AUTOMOBILES (0.6%)
29,500 Chrysler Corp....................... 1,633,563
52,500 Ford Motor Co....................... 1,522,500
30,000 General Motors Corp................. 1,586,250
---------------
4,742,313
---------------
BANKS - MONEY CENTER (1.3%)
23,500 BankAmerica Corp.................... 1,521,625
23,500 Bankers Trust New York Corp......... 1,562,750
24,500 Chase Manhattan Corp................ 1,485,312
24,500 Chemical Banking Corp............... 1,439,375
22,000 Citicorp............................ 1,479,500
42,000 First Chicago NBD Corp.............. 1,659,000
19,000 Morgan (J.P.) & Co., Inc............ 1,524,750
---------------
10,672,312
---------------
BANKS - REGIONAL (4.4%)
41,000 Banc One Corp....................... 1,547,750
32,000 Bank of Boston Corp................. 1,480,000
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
33,000 Bank of New York Co., Inc........... $ 1,608,750
25,000 Barnett Banks, Inc.................. 1,475,000
38,500 Boatmen's Bancshares, Inc........... 1,573,687
39,000 Comerica, Inc....................... 1,564,875
41,500 Corestates Financial Corp........... 1,571,813
31,000 First Bank System, Inc.............. 1,538,375
22,000 First Fidelity Bancorp, Inc......... 1,658,250
12,000 First Interstate Bancorp............ 1,638,000
26,500 First Union Corp.................... 1,474,062
40,000 Fleet Financial Group, Inc.......... 1,630,000
44,000 KeyCorp............................. 1,595,000
30,000 Mellon Bank Corp.................... 1,612,500
45,000 National City Corp.................. 1,490,625
22,000 NationsBank Corp.................... 1,531,750
46,000 Norwest Corp........................ 1,518,000
53,000 PNC Bank Corp....................... 1,709,250
24,000 Republic New York Corp.............. 1,491,000
22,500 SunTrust Banks, Inc................. 1,541,250
49,500 U.S. Bancorp........................ 1,658,250
32,500 Wachovia Corp....................... 1,486,875
7,500 Wells Fargo & Co.................... 1,620,000
---------------
36,015,062
---------------
BEVERAGES - ALCOHOLIC (0.7%)
22,000 Anheuser-Busch Companies, Inc....... 1,471,250
41,000 Brown-Forman Corp. (Class B)........ 1,496,500
73,000 Coors (Adolph) Co................... 1,615,125
42,000 Seagram Co. Ltd. (Canada)........... 1,454,250
---------------
6,037,125
---------------
BEVERAGES - SOFT DRINKS (0.4%)
19,800 Coca Cola Co........................ 1,470,150
27,500 PepsiCo Inc......................... 1,536,563
---------------
3,006,713
---------------
BROADCAST MEDIA (0.7%)
12,000 Capital Cities/ABC, Inc............. 1,480,500
81,000 Comcast Corp. (Class A)............. 1,468,125
84,000 Tele-Communications, Inc.*.......... 1,669,500
77,000 U.S. West Media Group............... 1,463,000
---------------
6,081,125
---------------
BUILDING MATERIALS (0.6%)
48,500 Masco Corp.......................... 1,521,687
34,500 Owens-Corning Fiberglas Corp.*...... 1,548,188
40,000 Sherwin-Williams Co................. 1,630,000
---------------
4,699,875
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
CHEMICALS (1.9%)
28,500 Air Products & Chemicals, Inc....... $ 1,503,375
21,500 Dow Chemical Co..................... 1,513,063
23,500 Du Pont (E.I.) de Nemours & Co...... 1,642,062
24,000 Eastman Chemical Company............ 1,503,000
24,000 Goodrich (B.F.) Co.................. 1,635,000
26,000 Hercules, Inc....................... 1,465,750
13,500 Monsanto Co......................... 1,653,750
48,500 Praxair, Inc........................ 1,630,812
23,000 Rohm & Haas Co...................... 1,480,625
40,000 Union Carbide Corp.................. 1,500,000
---------------
15,527,437
---------------
CHEMICALS - DIVERSIFIED (0.8%)
32,500 Avery Dennison Corp................. 1,629,063
70,000 Engelhard Corp...................... 1,522,500
23,000 FMC Corp.*.......................... 1,555,375
34,500 PPG Industries, Inc................. 1,578,375
---------------
6,285,313
---------------
CHEMICALS - SPECIALTY (1.0%)
25,500 Grace (W.R.) & Co................... 1,507,687
22,000 Great Lakes Chemical Corp........... 1,584,000
43,500 Morton International, Inc........... 1,560,563
52,000 Nalco Chemical Co................... 1,566,500
32,500 Sigma-Aldrich Corp.................. 1,608,750
---------------
7,827,500
---------------
COMMUNICATIONS - EQUIPMENT/MANUFACTURERS (1.4%)
39,000 Andrew Corp.*....................... 1,491,750
21,000 Cabletron Systems, Inc.*............ 1,701,000
22,000 Cisco Systems, Inc.*................ 1,641,750
45,000 DSC Communications Corp.*........... 1,659,374
38,500 Northern Telecom Ltd. (Canada)...... 1,655,500
103,500 Scientific-Atlanta, Inc............. 1,552,500
40,000 Tellabs, Inc.*...................... 1,480,000
---------------
11,181,874
---------------
COMPUTER SOFTWARE & SERVICES (1.9%)
43,000 Autodesk, Inc....................... 1,462,000
22,000 Automatic Data Processing, Inc...... 1,633,500
36,000 Ceridian Corp.*..................... 1,485,000
29,000 Computer Associates International,
Inc................................. 1,649,374
22,000 Computer Sciences Corp.*............ 1,545,500
22,000 First Data Corp..................... 1,471,250
17,000 Microsoft Corp.*.................... 1,491,750
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
100,000 Novell, Inc.*....................... $ 1,412,500
37,000 Oracle Systems Corp.*............... 1,563,250
31,500 Shared Medical Systems Corp......... 1,701,000
---------------
15,415,124
---------------
COMPUTERS - SYSTEMS (2.5%)
177,000 Amdahl Corp.*....................... 1,504,500
46,000 Apple Computer, Inc................. 1,460,500
31,500 COMPAQ Computer Corp.*.............. 1,512,000
69,000 Cray Research, Inc.*................ 1,707,750
119,000 Data General Corp.*................. 1,636,250
27,000 Digital Equipment Corp.*............ 1,731,375
18,000 Hewlett-Packard Co.................. 1,507,500
105,000 Intergraph Corp.*................... 1,653,750
17,000 International Business Machines
Corp................................ 1,559,750
54,000 Silicon Graphics, Inc.*............. 1,485,000
36,500 Sun Microsystems, Inc.*............. 1,665,312
138,000 Tandem Computers Inc.*.............. 1,466,250
260,000 Unisys Corp.*....................... 1,462,500
---------------
20,352,437
---------------
CONGLOMERATES (0.6%)
62,000 Teledyne, Inc....................... 1,588,750
34,000 Tenneco Inc......................... 1,687,250
20,800 Textron Inc......................... 1,404,000
---------------
4,680,000
---------------
CONTAINERS - METAL & GLASS (0.4%)
53,000 Ball Corp........................... 1,457,500
40,000 Crown Cork & Seal Co., Inc.*........ 1,670,000
---------------
3,127,500
---------------
CONTAINERS - PAPER (0.6%)
58,000 Bemis Company, Inc.................. 1,486,250
112,000 Stone Container Corp................ 1,610,000
34,500 Temple-Inland Inc................... 1,522,313
---------------
4,618,563
---------------
COSMETICS (0.7%)
44,500 Alberto-Culver Co................... 1,529,687
20,000 Avon Products, Inc.................. 1,507,500
30,500 Gillette Co......................... 1,589,813
30,500 International Flavors & Fragrances
Inc................................. 1,464,000
---------------
6,091,000
---------------
DISTRIBUTORS - CONSUMER PRODUCTS (0.6%)
76,000 Fleming Cos., Inc................... 1,567,500
48,000 Super Valu Stores, Inc.............. 1,512,000
52,600 Sysco Corp.......................... 1,709,500
---------------
4,789,000
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
ELECTRICAL EQUIPMENT (1.7%)
39,000 AMP, Inc............................ $ 1,496,625
18,500 Emerson Electric Co................. 1,512,375
21,500 General Electric Co................. 1,548,000
49,000 General Signal Corp................. 1,586,375
23,500 Grainger (W.W.), Inc................ 1,556,875
35,000 Honeywell, Inc...................... 1,701,875
29,500 Raychem Corp........................ 1,677,812
21,000 Thomas & Betts Corp................. 1,548,750
90,500 Westinghouse Electric Corp.......... 1,493,250
---------------
14,121,937
---------------
ELECTRONICS - DEFENSE (0.4%)
70,500 EG & G, Inc......................... 1,709,625
48,500 Loral Corp.......................... 1,715,688
---------------
3,425,313
---------------
ELECTRONICS - INSTRUMENTATION (0.4%)
43,000 Perkin-Elmer Corp................... 1,623,250
30,500 Tektronix, Inc...................... 1,498,313
---------------
3,121,563
---------------
ELECTRONICS - SEMICONDUCTORS (1.5%)
88,000 Advanced Micro Devices, Inc.*....... 1,452,000
37,000 Applied Materials, Inc.*............ 1,452,250
26,500 Intel Corp.......................... 1,503,875
44,000 LSI Logic Corp...................... 1,441,000
37,500 Micron Technology, Inc.............. 1,485,937
26,000 Motorola, Inc....................... 1,482,000
69,000 National Semiconductor Corp.*....... 1,535,250
28,000 Texas Instruments Inc............... 1,449,000
---------------
11,801,312
---------------
ENGINEERING & CONSTRUCTION (0.6%)
24,500 Fluor Corp.......................... 1,617,000
39,500 Foster Wheeler Corp................. 1,678,750
157,000 Morrison Knudsen Co., Inc........... 667,250
58,300 Zurn Industries, Inc................ 1,246,163
---------------
5,209,163
---------------
ENTERTAINMENT (0.8%)
43,000 King World Productions Inc.*........ 1,671,625
39,000 Time Warner, Inc.................... 1,477,125
31,000 Viacom, Inc.*....................... 1,468,625
26,000 Walt Disney Co...................... 1,534,000
---------------
6,151,375
---------------
FINANCIAL - MISCELLANEOUS (1.2%)
35,500 American Express Co................. 1,468,813
46,000 American General Corp............... 1,604,250
20,000 Federal Home Loan Mortgage Corp..... 1,670,000
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
13,500 Federal National Mortgage
Association......................... $ 1,675,687
40,500 MBNA Corp........................... 1,493,437
20,300 Transamerica Corp................... 1,479,363
---------------
9,391,550
---------------
FOODS (2.5%)
85,500 Archer-Daniels-Midland Co........... 1,539,000
21,000 C P C International Inc............. 1,441,125
27,000 Campbell Soup Co.................... 1,620,000
37,000 ConAgra, Inc........................ 1,526,250
27,000 General Mills, Inc.................. 1,559,250
46,500 Heinz (H.J.) Co..................... 1,540,312
24,000 Hershey Foods Corp.................. 1,560,000
21,000 Kellogg Co.......................... 1,622,250
43,000 Quaker Oats Company (The)........... 1,483,500
24,000 Ralston-Ralston Purina Group........ 1,497,000
50,000 Sara Lee Corp....................... 1,593,750
10,500 Unilever NV (ADR) (Netherlands)..... 1,477,875
32,000 Wrigley (Wm.) Jr. Co. (Class A)..... 1,680,000
---------------
20,140,312
---------------
GOLD MINING (1.1%)
58,500 Barrick Gold Corp. (Canada)......... 1,542,937
147,000 Echo Bay Mines Ltd. (Canada)........ 1,525,125
99,000 Homestake Mining Co................. 1,546,875
36,000 Newmont Mining Corp................. 1,629,000
63,000 Placer Dome Inc..................... 1,519,875
120,000 Santa Fe Pacific Gold Corp.......... 1,455,000
---------------
9,218,812
---------------
HARDWARE & TOOLS (0.6%)
43,000 Black & Decker Corp................. 1,515,750
34,500 Snap-On, Inc........................ 1,561,125
33,000 Stanley Works....................... 1,699,500
---------------
4,776,375
---------------
HEALTHCARE - DIVERSIFIED (1.4%)
36,500 Abbott Laboratories................. 1,523,875
52,000 Allergan, Inc....................... 1,690,000
17,000 American Home Products Corp......... 1,649,000
19,500 Bristol-Myers Squibb Co............. 1,674,562
19,000 Johnson & Johnson................... 1,626,875
44,000 Mallinckrodt Group, Inc............. 1,600,500
16,500 Warner-Lambert Co................... 1,602,562
---------------
11,367,374
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
HEALTHCARE - DRUGS (1.0%)
30,000 Lilly (Eli) & Co.................... $ 1,687,500
25,600 Merck & Co., Inc.................... 1,683,200
26,400 Pfizer, Inc......................... 1,663,200
42,000 Pharmacia & Upjohn, Inc............. 1,627,500
30,000 Schering-Plough Corp................ 1,642,500
---------------
8,303,900
---------------
HEALTHCARE - MISCELLANEOUS (0.8%)
68,000 Alza Corp.*......................... 1,683,000
28,500 Amgen Inc.*......................... 1,688,625
148,000 Beverly Enterprises, Inc.*.......... 1,572,500
43,000 Manor Care, Inc..................... 1,505,000
---------------
6,449,125
---------------
HEALTHCARE HMOS (0.6%)
54,500 Humana, Inc.*....................... 1,491,938
36,500 U.S. Healthcare, Inc................ 1,692,687
25,700 United Healthcare Corp.............. 1,683,350
---------------
4,867,975
---------------
HEAVY DUTY TRUCKS & PARTS (1.1%)
41,500 Cummins Engine Co., Inc............. 1,535,500
52,000 Dana Corp........................... 1,521,000
27,700 Eaton Corp.......................... 1,485,413
63,500 ITT Industries, Inc................. 1,524,000
138,000 Navistar International Corp.*....... 1,449,000
34,000 PACCAR, Inc......................... 1,428,000
---------------
8,942,913
---------------
HOME BUILDING (0.6%)
47,500 Centex Corp......................... 1,650,625
111,500 Kaufman & Broad Home Corp........... 1,658,563
49,000 Pulte Corp.......................... 1,647,625
---------------
4,956,813
---------------
HOSPITAL MANAGEMENT (0.6%)
28,500 Columbia/HCA Healthcare Corp........ 1,446,375
132,000 Community Psychiatric Centers*...... 1,617,000
82,500 Tenet Healthcare Corp.*............. 1,711,875
---------------
4,775,250
---------------
HOTELS/MOTELS (0.8%)
64,000 Harrah's Entertainment, Inc.*....... 1,552,000
25,500 Hilton Hotels Corp.................. 1,568,250
30,000 ITT Corporation (New)............... 1,590,000
40,000 Marriot International Inc........... 1,530,000
---------------
6,240,250
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
HOUSEHOLD FURNISHINGS & APPLIANCES (0.7%)
25,000 Armstrong World Industries Inc...... $ 1,550,000
40,000 Bassett Furniture Industries,
Inc................................. 910,000
80,000 Maytag Corp......................... 1,620,000
28,500 Whirlpool Corp...................... 1,517,625
62,800 Zenith Electronics Corp.*........... 431,750
---------------
6,029,375
---------------
HOUSEHOLD PRODUCTS (0.8%)
21,500 Clorox Co........................... 1,539,938
21,000 Colgate-Palmolive Co................ 1,475,250
20,500 Kimberly-Clark Corp................. 1,696,375
18,000 Procter & Gamble Co................. 1,494,000
---------------
6,205,563
---------------
HOUSEWARES (0.6%)
60,000 Newell Co........................... 1,552,500
29,000 Premark International, Inc.......... 1,468,125
61,000 Rubbermaid, Inc..................... 1,555,500
---------------
4,576,125
---------------
INSURANCE BROKERS (0.4%)
76,500 Alexander & Alexander Services,
Inc................................. 1,453,500
17,500 Marsh & McLennan Cos., Inc.......... 1,553,125
---------------
3,006,625
---------------
INVESTMENT BANKING/BROKERAGE (1.0%)
30,500 Dean Witter, Discover & Co. (Note
4).................................. 1,433,500
30,500 Merrill Lynch & Co., Inc............ 1,555,500
19,000 Morgan Stanley Group, Inc........... 1,531,875
43,000 Salomon, Inc........................ 1,526,500
26,000 Travelers Group, Inc................ 1,634,750
---------------
7,682,125
---------------
LEISURE TIME (0.8%)
120,000 Bally Entertainment Corp.*.......... 1,680,000
74,000 Brunswick Corp...................... 1,776,000
250,000 Handleman Co........................ 1,437,500
73,000 Outboard Marine Corp................ 1,487,375
---------------
6,380,875
---------------
LIFE INSURANCE (1.2%)
34,500 Jefferson-Pilot Corp................ 1,604,250
31,000 Lincoln National Corp............... 1,666,250
37,000 Providian Corp...................... 1,507,750
34,500 Torchmark Corp...................... 1,561,125
28,300 UNUM Corp........................... 1,556,500
54,500 USLIFE Corp......................... 1,628,187
---------------
9,524,062
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
MACHINE TOOLS (0.4%)
61,000 Cincinnati Milacron, Inc............ $ 1,601,250
98,000 Giddings & Lewis, Inc............... 1,592,500
---------------
3,193,750
---------------
MACHINERY - DIVERSIFIED (1.7%)
35,500 Briggs & Stratton Corp.............. 1,539,812
25,500 Caterpillar, Inc.................... 1,498,125
44,000 Cooper Industries, Inc.............. 1,617,000
47,500 Deere & Co.......................... 1,674,375
47,500 Harnischfeger Industries, Inc....... 1,579,375
43,000 Ingersoll-Rand Co................... 1,510,375
27,000 NACCO Industries, Inc. (Class A).... 1,498,500
40,000 Timken Co........................... 1,530,000
40,000 Varity Corp.*....................... 1,485,000
---------------
13,932,562
---------------
MANUFACTURED HOUSING (0.2%)
65,000 Fleetwood Enterprises, Inc.......... 1,673,750
---------------
MANUFACTURING - DIVERSIFIED (2.0%)
31,500 AlliedSignal, Inc................... 1,496,250
45,000 Crane Co............................ 1,659,375
43,000 Dover Corp.......................... 1,585,625
26,000 Illinois Tool Works Inc............. 1,534,000
22,000 Johnson Controls, Inc............... 1,512,500
41,000 Millipore Corp...................... 1,686,125
63,500 Pall Corp........................... 1,706,562
43,000 Parker-Hannifin Corp................ 1,472,750
51,500 Trinova Corp........................ 1,474,188
46,000 Tyco International Ltd.............. 1,638,750
---------------
15,766,125
---------------
MEDICAL PRODUCTS & SUPPLIES (1.8%)
53,500 Bard (C.R.), Inc.................... 1,725,374
42,000 Bausch & Lomb, Inc.................. 1,664,250
40,000 Baxter International, Inc........... 1,675,000
22,500 Becton, Dickinson & Co.............. 1,687,500
88,000 Biomet, Inc.*....................... 1,562,000
35,500 Boston Scientific Corp.*............ 1,739,500
28,500 Medtronic Inc....................... 1,592,438
39,500 St. Jude Medical, Inc.*............. 1,688,625
68,500 United States Surgical Corp......... 1,464,187
---------------
14,798,874
---------------
METALS - MISCELLANEOUS (1.0%)
49,000 ASARCO, Inc......................... 1,568,000
60,000 Cyprus Amax Minerals Co............. 1,567,500
60,500 Freeport-McMoran Copper & Gold,
Inc................................. 1,701,563
47,000 Inco Ltd. (Canada).................. 1,562,750
24,500 Phelps Dodge Corp................... 1,525,125
---------------
7,924,938
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
MISCELLANEOUS (2.2%)
54,500 Airtouch Communications, Inc.*...... $ 1,539,625
55,000 American Greetings Corp............. 1,519,375
55,000 Corning, Inc........................ 1,760,000
56,000 Dial Corp........................... 1,659,000
38,500 Harcourt General, Inc............... 1,612,187
26,500 Harris Corp......................... 1,447,563
59,000 Jostens, Inc........................ 1,430,750
26,000 Minnesota Mining & Manufacturing
Co.................................. 1,722,500
29,000 Pioneer Hi-Bred International,
Inc................................. 1,613,124
20,500 TRW, Inc............................ 1,588,750
67,000 Whitman Corp........................ 1,557,750
---------------
17,450,624
---------------
MULTI-LINE INSURANCE (0.7%)
21,000 Aetna Life & Casualty Co............ 1,454,250
16,050 American International Group,
Inc................................. 1,484,625
15,000 Cigna Corp.......................... 1,548,750
30,500 ITT Hartford Group, Inc.*........... 1,475,438
---------------
5,963,063
---------------
OFFICE EQUIPMENT & SUPPLIES (0.7%)
33,000 Alco Standard Corp.................. 1,505,625
81,000 Moore Corp. Ltd. (Canada)........... 1,508,625
33,500 Pitney Bowes, Inc................... 1,574,500
10,700 Xerox Corp.......................... 1,465,900
---------------
6,054,650
---------------
OIL & GAS DRILLING (0.4%)
55,500 Helmerich & Payne, Inc.............. 1,651,125
173,000 Rowan Cos., Inc.*................... 1,708,375
---------------
3,359,500
---------------
OIL - DOMESTIC INTEGRATED (2.1%)
30,000 Amerada Hess Corp................... 1,590,000
46,000 Ashland Oil, Inc.................... 1,615,750
14,000 Atlantic Richfield Co............... 1,550,500
23,000 Kerr-McGee Corp..................... 1,460,500
39,500 Louisiana Land & Exploration Co..... 1,693,563
72,500 Occidental Petroleum Corp........... 1,549,687
38,500 Pennzoil Co......................... 1,626,625
44,000 Phillips Petroleum Co............... 1,501,500
57,800 Sun Co., Inc........................ 1,582,275
52,000 Unocal Corp......................... 1,514,500
81,000 USX-Marathon Group.................. 1,579,500
---------------
17,264,400
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
OIL - EXPLORATION & PRODUCTION (0.5%)
39,000 Burlington Resources, Inc........... $ 1,530,750
111,500 Oryx Energy Co.*.................... 1,491,313
155,000 Santa Fe Energy Resources, Inc.*.... 1,491,875
---------------
4,513,938
---------------
OIL - INTERNATIONAL INTEGRATED (1.2%)
22,500 Amoco Corp.......................... 1,617,187
29,000 Chevron Corp........................ 1,522,500
19,500 Exxon Corp.......................... 1,562,438
14,000 Mobil Corp.......................... 1,568,000
11,600 Royal Dutch Petroleum Co.
(Netherland)........................ 1,637,050
21,000 Texaco, Inc......................... 1,648,500
---------------
9,555,675
---------------
OIL WELL EQUIPMENT & SERVICE (1.2%)
67,500 Baker Hughes Inc.................... 1,645,313
68,000 Dresser Industries, Inc............. 1,657,500
33,000 Halliburton Co...................... 1,670,625
76,500 McDermott International, Inc........ 1,683,000
24,000 Schlumberger Ltd. (Netherlands
Antilles)........................... 1,662,000
32,000 Western Atlas Inc.*................. 1,616,000
---------------
9,934,438
---------------
PAPER & FOREST PRODUCTS (2.5%)
44,500 Boise Cascade Corp.................. 1,540,812
37,500 Champion International Corp......... 1,575,000
32,500 Federal Paper Board Co., Inc........ 1,685,938
22,000 Georgia-Pacific Corp................ 1,509,750
43,000 International Paper Co.............. 1,628,625
63,000 James River Corp. of Virginia....... 1,519,875
61,000 Louisiana-Pacific Corp.............. 1,479,250
28,500 Mead Corp........................... 1,489,125
38,000 Potlatch Corp....................... 1,520,000
31,500 Union Camp Corp..................... 1,500,187
60,000 Westvaco Corp....................... 1,665,000
37,500 Weyerhaeuser Co..................... 1,621,875
27,000 Willamette Industries, Inc.......... 1,512,000
---------------
20,247,437
---------------
PERSONAL LOANS (0.4%)
32,500 Beneficial Corp..................... 1,515,313
26,500 Household International, Inc........ 1,566,812
---------------
3,082,125
---------------
PHOTOGRAPHY/IMAGING (0.4%)
23,000 Eastman Kodak Co.................... 1,541,000
34,500 Polaroid Corp....................... 1,634,438
---------------
3,175,438
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
POLLUTION CONTROL (0.6%)
53,000 Browning-Ferris Industries, Inc..... $ 1,563,500
160,000 Laidlaw Inc......................... 1,640,000
52,000 WMX Technologies, Inc............... 1,553,500
---------------
4,757,000
---------------
PROPERTY - CASUALTY INSURANCE (1.3%)
38,000 Allstate Corp. (The)................ 1,562,750
17,000 Chubb Corp.......................... 1,644,750
10,000 General Re Corp..................... 1,550,000
19,400 Loews Corp.......................... 1,520,475
43,000 SAFECO Corp......................... 1,483,500
28,000 St. Paul Companies, Inc............. 1,557,500
86,000 USF&G Corp.......................... 1,451,250
---------------
10,770,225
---------------
PUBLISHING (0.6%)
23,500 Dun & Bradstreet Corp............... 1,521,625
17,500 McGraw-Hill, Inc.................... 1,524,688
40,000 Meredith Corp....................... 1,675,000
---------------
4,721,313
---------------
PUBLISHING - NEWSPAPER (1.2%)
38,000 Dow Jones & Co., Inc................ 1,515,250
25,300 Gannett Co., Inc.................... 1,552,788
23,500 Knight-Ridder Newspapers, Inc....... 1,468,750
54,000 New York Times Co. (Class A)........ 1,599,750
49,000 Times Mirror Co..................... 1,659,875
26,000 Tribune Co.......................... 1,589,250
---------------
9,385,663
---------------
RAILROADS (1.0%)
21,000 Burlington Northern Santa Fe
Corp................................ 1,638,000
23,000 Conrail, Inc........................ 1,610,000
34,000 CSX Corp............................ 1,551,250
18,500 Norfolk Southern Corp............... 1,468,438
23,500 Union Pacific Corp.................. 1,551,000
---------------
7,818,688
---------------
RESTAURANTS (1.1%)
132,000 Darden Restaurants, Inc............. 1,567,500
66,000 Luby's Cafeterias, Inc.............. 1,468,500
36,000 McDonald's Corp..................... 1,624,500
205,000 Ryan's Family Steak Houses, Inc.*... 1,409,375
145,000 Shoney's Inc.*...................... 1,486,250
70,000 Wendy's International, Inc.......... 1,487,500
---------------
9,043,625
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
RETAIL - DEPARTMENT STORES (1.1%)
52,000 Dillard Department Stores, Inc.
(Class A)........................... $ 1,482,000
55,100 Federated Department Stores, Inc.... 1,515,250
38,000 May Department Stores Co............ 1,605,500
32,000 Mercantile Stores Co., Inc.......... 1,480,000
38,000 Nordstrom, Inc...................... 1,529,500
32,500 Penney (J.C.) Co., Inc.............. 1,547,813
---------------
9,160,063
---------------
RETAIL - DRUG STORES (0.6%)
34,500 Longs Drug Stores Corp.............. 1,651,688
49,000 Rite Aid Corp....................... 1,678,250
52,500 Walgreen Co......................... 1,568,437
---------------
4,898,375
---------------
RETAIL - FOOD CHAINS (1.2%)
45,000 Albertson's Inc..................... 1,479,375
58,500 American Stores Co.................. 1,564,875
47,500 Giant Food, Inc. (Class A).......... 1,496,250
70,000 Great Atlantic & Pacific Tea Co.,
Inc................................. 1,610,000
43,000 Kroger Co.*......................... 1,612,500
45,200 Winn-Dixie Stores, Inc.............. 1,666,750
---------------
9,429,750
---------------
RETAIL - GENERAL MERCHANDISE (0.7%)
20,500 Dayton-Hudson Corp.................. 1,537,500
223,000 KMart Corp.......................... 1,616,750
38,000 Sears, Roebuck & Co................. 1,482,000
65,000 Wal-Mart Stores, Inc. (Class A)..... 1,454,375
---------------
6,090,625
---------------
RETAIL - SPECIALTY (1.7%)
56,000 Circuit City Stores, Inc............ 1,547,000
35,000 Home Depot, Inc..................... 1,675,625
49,500 Lowe's Companies, Inc............... 1,658,250
48,000 Melville Corp....................... 1,476,000
59,000 Pep Boys-Manny Moe & Jack........... 1,511,875
100,000 Price/Costco, Inc.*................. 1,525,000
38,000 Tandy Corp.......................... 1,577,000
69,000 Toys 'R' Us, Inc.*.................. 1,500,750
111,000 Woolworth Corp...................... 1,443,000
---------------
13,914,500
---------------
RETAIL - SPECIALTY APPAREL (0.8%)
504,000 Charming Shoppes, Inc............... 1,417,500
39,000 Gap, Inc............................ 1,638,000
92,000 Limited (The), Inc.................. 1,598,500
87,500 TJX Companies, Inc.................. 1,651,563
---------------
6,305,563
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
SAVINGS & LOAN COMPANIES (0.6%)
58,000 Ahmanson (H.F.) & Co................ $ 1,537,000
28,000 Golden West Financial Corp.......... 1,547,000
58,000 Great Western Financial Corp........ 1,479,000
---------------
4,563,000
---------------
SHOES (0.8%)
100,000 Brown Group Inc..................... 1,425,000
24,000 Nike, Inc........................... 1,671,000
55,500 Reebok International Ltd. (United
Kingdom)............................ 1,567,875
204,000 Stride Rite Corp.................... 1,530,000
---------------
6,193,875
---------------
SPECIALIZED SERVICES (1.5%)
36,500 Block (H.&R.), Inc.................. 1,478,250
47,000 C U C International, Inc.*.......... 1,603,875
50,000 Ecolab, Inc......................... 1,500,000
38,000 Interpublic Group of Companies,
Inc................................. 1,648,250
49,000 National Service Industries, Inc.... 1,586,375
69,500 Ogden Corp.......................... 1,485,563
108,400 Safety-Kleen Corp................... 1,693,750
37,000 Service Corp. International......... 1,628,000
---------------
12,624,063
---------------
SPECIALTY PRINTING (0.6%)
53,000 Deluxe Corp......................... 1,537,000
40,500 Donnelley (R.R.) & Sons Co.......... 1,594,688
73,000 Harland (John H.) Co................ 1,523,875
---------------
4,655,563
---------------
STEEL (1.2%)
252,000 Armco, Inc.*........................ 1,480,500
108,000 Bethlehem Steel Corp.*.............. 1,512,000
63,000 Inland Steel Industries, Inc........ 1,582,875
30,500 Nucor Corp.......................... 1,742,313
50,000 USX-U.S. Steel Group................ 1,537,500
75,500 Worthington Industries, Inc......... 1,566,625
---------------
9,421,813
---------------
TELECOMMUNICATIONS - LONG DISTANCE (0.6%)
24,000 AT&T Corp........................... 1,554,000
59,000 MCI Communications Corp............. 1,541,375
38,000 Sprint Corporation.................. 1,515,250
---------------
4,610,625
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
TEXTILES (1.0%)
67,000 Fruit of the Loom, Inc.*............ $ 1,633,125
62,000 Liz Claiborne, Inc.................. 1,720,500
54,000 Russell Corp........................ 1,498,500
35,500 Springs Industries, Inc............. 1,468,813
30,000 VF Corp............................. 1,582,500
---------------
7,903,438
---------------
TOBACCO (0.6%)
35,500 American Brands, Inc................ 1,584,188
18,000 Philip Morris Companies, Inc........ 1,629,000
46,000 UST, Inc............................ 1,535,250
---------------
4,748,438
---------------
TOYS (0.4%)
49,000 Hasbro Inc.......................... 1,519,000
52,500 Mattel, Inc......................... 1,614,375
---------------
3,133,375
---------------
TRANSPORTATION - MISCELLANEOUS (0.6%)
21,500 Federal Express Corp.*.............. 1,588,312
49,100 Pittston Services Group............. 1,540,513
62,000 Ryder System, Inc................... 1,534,500
---------------
4,663,325
---------------
TRUCKERS (0.6%)
58,500 Consolidated Freightways, Inc....... 1,550,250
31,000 Roadway Service, Inc................ 1,515,125
120,000 Yellow Corporation.................. 1,485,000
---------------
4,550,375
---------------
UTILITIES - ELECTRIC (5.0%)
36,300 American Electric Power Co., Inc.... 1,470,150
58,500 Baltimore Gas & Electric Co......... 1,667,250
46,000 Carolina Power & Light Co........... 1,587,000
55,000 Central & South West Corp........... 1,533,125
51,000 CINergy Corp........................ 1,561,875
52,000 Consolidated Edison Co. of New York,
Inc................................. 1,664,000
41,900 Detroit Edison Co................... 1,445,550
36,000 Dominion Resources, Inc............. 1,485,000
32,000 Duke Power Co....................... 1,516,000
57,500 Entergy Corp........................ 1,681,875
35,000 FPL Group, Inc...................... 1,623,125
49,500 General Public Utilities Corp....... 1,683,000
61,000 Houston Industries, Inc............. 1,479,250
150,800 Niagara Mohawk Power Corp........... 1,451,450
31,000 Northern States Power Co............ 1,522,875
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
67,000 Ohio Edison Co...................... $ 1,574,500
55,500 Pacific Gas & Electric Co........... 1,574,812
77,000 PacifiCorp.......................... 1,636,250
49,500 PECO Energy Co...................... 1,491,188
59,000 PP&L Resources, Inc................. 1,475,000
50,500 Public Service Enterprise Group,
Inc................................. 1,546,561
95,000 SCE Corp............................ 1,686,250
59,500 Southern Co......................... 1,465,187
40,000 Texas Utilities Co.................. 1,645,000
47,500 Unicom Corp......................... 1,555,625
36,000 Union Electric Co................... 1,503,000
---------------
40,524,898
---------------
UTILITIES - NATURAL GAS (2.7%)
42,900 Coastal Corp........................ 1,598,025
34,000 Columbia Gas System, Inc.*.......... 1,491,750
37,000 Consolidated Natural Gas Co......... 1,678,875
45,000 Eastern Enterprises................. 1,586,250
40,000 Enron Corp.......................... 1,525,000
92,400 ENSERCH Corp........................ 1,501,500
59,500 NICOR, Inc.......................... 1,636,250
187,500 NorAm Energy Corp................... 1,664,062
66,000 ONEOK, Inc.......................... 1,509,750
53,500 Pacific Enterprises................. 1,511,375
55,000 Panhandle Eastern Corp.............. 1,533,125
48,500 Peoples Energy Corp................. 1,539,875
44,000 Sonat, Inc.......................... 1,567,500
37,000 Williams Cos., Inc.................. 1,623,375
---------------
21,966,712
---------------
UTILITIES - TELEPHONE (1.8%)
54,000 Alltel Corp......................... 1,593,000
27,900 Ameritech Corp...................... 1,646,100
22,500 Bell Atlantic Corp.................. 1,504,688
38,600 BellSouth Corp...................... 1,679,100
35,000 GTE Corp............................ 1,540,000
30,000 NYNEX Corp.......................... 1,620,000
49,500 Pacific Telesis Group............... 1,664,437
28,000 SBC Communications, Inc............. 1,610,000
43,000 U.S. West, Inc...................... 1,537,250
---------------
14,394,575
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $579,856,573)...... 785,984,587
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (a) (3.3%)
COMMERCIAL PAPER (1.8%)
AUTOMOTIVE - FINANCE
$ 15,095 Ford Motor Credit Co. 5.80% due
01/02/96............................ $ 15,092,568
---------------
U.S. GOVERNMENT AGENCY (1.5%)
12,030 Federal Home Loan Mortgage Corp.
5.75% due 01/02/96.................. 12,028,079
---------------
TOTAL SHORT-TERM INVESTMENTS
(AMORTIZED COST $27,120,647)........ 27,120,647
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$606,977,220) (B)........... 100.7% 813,105,234
OTHER ASSETS IN EXCESS OF
LIABILITIES................. (0.7) (5,791,225)
----- ------------
NET ASSETS.................. 100.0% $807,314,009
----- ------------
----- ------------
<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 $608,027,329; the
aggregate gross unrealized appreciation is $218,662,661 and the aggregate
gross unrealized depreciation is $13,584,756, resulting in net unrealized
appreciation of $205,077,905.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $606,977,220)............................ $813,105,234
Receivable for:
Investments sold........................................ 12,040,934
Shares of beneficial interest sold...................... 1,999,468
Dividends............................................... 1,393,503
Dividends from affiliate (Note 4)....................... 4,880
Prepaid expenses and other assets........................... 96,788
------------
TOTAL ASSETS........................................... 828,640,807
------------
LIABILITIES:
Payable for:
Investments purchased................................... 17,866,993
Plan of distribution fee................................ 552,189
Investment management fee............................... 324,996
Shares of beneficial interest repurchased............... 270,663
Dividends............................................... 260,990
Payable to bank............................................. 1,820,038
Accrued expenses............................................ 230,929
------------
TOTAL LIABILITIES...................................... 21,326,798
------------
NET ASSETS:
Paid-in-capital............................................. 596,758,353
Net unrealized appreciation................................. 206,128,014
Accumulated undistributed net investment income............. 107,839
Accumulated undistributed net realized gain................. 4,319,803
------------
NET ASSETS............................................. $807,314,009
------------
------------
NET ASSET VALUE PER SHARE,
32,347,759 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$24.96
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $19,480 foreign withholding tax).......... $ 7,981,750
Dividends from affiliate (Note 4)........................... 9,200
Interest.................................................... 1,038,401
-----------
TOTAL INCOME........................................... 9,029,351
-----------
EXPENSES
Plan of distribution fee.................................... 3,194,602
Investment management fee................................... 1,766,856
Transfer agent fees and expenses............................ 341,566
Registration fees........................................... 67,363
S&P license fee............................................. 54,741
Shareholder reports and notices............................. 50,224
Professional fees........................................... 26,224
Custodian fees.............................................. 23,091
Trustees' fees and expenses................................. 10,010
Other....................................................... 4,228
-----------
TOTAL EXPENSES......................................... 5,538,905
-----------
NET INVESTMENT INCOME.................................. 3,490,446
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 10,018,777
Net change in unrealized appreciation....................... 54,275,767
-----------
NET GAIN............................................... 64,294,544
-----------
NET INCREASE................................................ $67,784,990
-----------
-----------
</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 SIX FOR THE YEAR
MONTHS ENDED ENDED
DECEMBER 31, 1995 JUNE 30,
(UNAUDITED) 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 3,490,446 $ 5,303,965
Net realized gain........................................... 10,018,777 7,157,102
Net change in unrealized appreciation....................... 54,275,767 92,711,754
----------------- ------------
NET INCREASE........................................... 67,784,990 105,172,821
----------------- ------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income....................................... (8,195,588) (2,290,649)
Net realized gain........................................... (3,791,857) (3,801,171)
----------------- ------------
TOTAL.................................................. (11,987,445) (6,091,820)
----------------- ------------
Net increase from transactions in shares of beneficial
interest.................................................. 109,429,435 87,296,348
----------------- ------------
TOTAL INCREASE......................................... 165,226,980 186,377,349
NET ASSETS:
Beginning of period......................................... 642,087,029 455,709,680
----------------- ------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$107,839 AND $4,812,981, RESPECTIVELY).................. $807,314,009 $642,087,029
----------------- ------------
----------------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 (UNAUDITED)
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 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 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 respective life of the securities. Interest
income is accrued daily.
C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the record date. The amount of dividends
and distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 (UNAUDITED) CONTINUED
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 as of the close of each business day: 0.50% to the portion
of the average daily net assets not exceeding $500 million and 0.45% to the
portion of the average 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 gain 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 other employees and selected
broker-dealers who engage in or support
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 (UNAUDITED) CONTINUED
distribution of the Fund's shares or who service shareholder accounts, including
overhead and telephone expenses, printing and distribution of prospectuses and
reports used in connection with the offering of the Fund's shares to other than
current shareholders and preparation, printing and distribution of sales
literature and advertising materials. In addition, the Distributor may be
compensated under the Plan for its opportunity costs in advancing such amounts,
which compensation would be in the form of a carrying charge on any unreimbursed
expenses incurred by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred but
not yet recovered may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the six months ended December 31,
1995, it received approximately $282,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares. The Fund's shareholders pay such
charges which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended December 31, 1995 aggregated
$136,290,117 and $31,944,418, respectively. Included in the aforementioned are
purchases of common stock of Dean Witter, Discover & Co., an affiliate of the
Investment Manager, of $172,480.
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 $39,000.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the six months ended December 31, 1995
included in Trustees' fees and expenses in the Statement of Operations amounted
to $2,232. At December 31, 1995, the Fund had an accrued pension liability of
$92,070 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 DECEMBER 31, 1995 (UNAUDITED) CONTINUED
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
DECEMBER 31, 1995 JUNE 30, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 6,424,805 $ 155,767,636 8,577,823 $179,873,239
Reinvestment of dividends and distributions...................... 435,932 10,776,245 277,119 5,434,300
----------- -------------- ----------- ------------
6,860,737 166,543,881 8,854,942 185,307,539
Repurchased...................................................... (2,356,427) (57,114,446) (4,704,190) (98,011,191)
----------- -------------- ----------- ------------
Net increase..................................................... 4,504,310 $ 109,429,435 4,150,752 $ 87,296,348
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
6. FEDERAL INCOME TAX STATUS
At June 30, 1995, the Fund had a net capital loss carryover 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
SIX
MONTHS
ENDED
DECEMBER FOR THE YEAR ENDED JUNE 30
31, 1995 -----------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period............... $ 23.06 $ 19.23 $ 19.17 $ 16.29 $ 14.73 $ 14.21
---------- --------- --------- --------- --------- ---------
Net investment income.............. 0.09 0.19 0.14 0.14 0.17 0.20
Net realized and unrealized gain... 2.19 3.88 0.30 2.86 1.57 0.59
---------- --------- --------- --------- --------- ---------
Total from investment operations... 2.28 4.07 0.44 3.00 1.74 0.79
---------- --------- --------- --------- --------- ---------
Less dividends and distributions
from:
Net investment income........... (0.26) (0.09) (0.09) (0.12) (0.18) (0.21)
Net realized gain............... (0.12) (0.15) (0.29) -- -- (0.06)
---------- --------- --------- --------- --------- ---------
Total dividends and
distributions..................... (0.38) (0.24) (0.38) (0.12) (0.18) (0.27)
---------- --------- --------- --------- --------- ---------
Net asset value, end of period..... $ 24.96 $ 23.06 $ 19.23 $ 19.17 $ 16.29 $ 14.73
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN+........... $ 9.89%(1) 21.41% 2.26% 18.50% 11.83% 5.82%
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 1.51%(2) 1.64% 1.68% 1.71% 1.80% 1.80%
Net investment income.............. 0.95%(2) 1.01% 0.86% 0.86% 1.10% 1.40%
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $807,314 $642,087 $455,710 $310,726 $192,832 $139,058
Portfolio turnover rate............ 2%(1) 11% 19% 6% 9% 20%
<FN>
- ---------------------
+ Does not reflect the deduction of sales charge.
(1) Not annualized.
(2) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<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
Kenton J. Hinchliffe
VICE PRESIDENT
Thomas F. Caloia
TREASURER
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records of the
Fund without examination by the independent accountants and accordingly they do
not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of the
Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
VALUE-ADDED
MARKET SERIES
EQUITY PORTFOLIO
[Graphic]
SEMIANNUAL REPORT
DECEMBER 31, 1995
