<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO TWO WORLD TRADE
CENTER, NEW YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS JUNE 30, 1996
DEAR SHAREHOLDER:
The first eight months of fiscal year ended June 30, 1996 was favorable to
equity investors, as a slowing economy combined with strong corporate earnings,
lower interest rates and benign inflation propelled stocks higher. By March
1996, however, investor expectations took a dramatic turn as balanced budget
hopes faded, political uncertainty arose, economic reports hinted at stronger
growth and expectations of lower interest rates vanished. The government
shutdown and severe winter weather combined to delay economic releases and
foster confusion as to the true course of the economy. On the political front,
the Republican primaries temporarily deflected the focus from a balanced budget
deal to a shorter-term emphasis on jobs and flat taxes. But probably the most
damaging event to impact the stock market during the final three months of the
fiscal year was the sharp increase in long-term interest rates.
PERFORMANCE AND PORTFOLIO
Against this backdrop, Dean Witter Value-Added Market Series, Equity Portfolio
produced a total return of 19.27 percent for the twelve-month period ended June
30, 1996, compared to a return of 26.00 percent for the Standard & Poor's 500
Composite Stock Price Index (S&P 500 Index). The accompanying chart illustrates
the growth of a $10,000 investment in the Fund since inception (December 1,
1987) through the fiscal year ended June 30, 1996 versus a similar investment in
the issues that comprise the S&P 500 Index.
The Fund is index-oriented, investing in the 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 outperform larger-capitalization companies. For
most of the fiscal year, the S&P 500's performance was driven by
large-capitalization multinational corporations, as well as stocks in the
technology sector. These two areas are more heavily weighted in the Index than
in the Fund. As a
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
LETTER TO THE SHAREHOLDERS JUNE 30, 1996, CONTINUED
result, the Fund underperformed the Index for the full fiscal year. However, the
Fund did outperform the Index during the first quarter of 1996 when the Fund's
larger-than-market weight in the outperforming financial, transportation and
cyclical sectors and its lower-than-market weight in the underperforming
consumer and utilities sectors, contributed to its outperformance. The Fund
continued to outperform the market through mid-May, before losing ground over
the last six weeks of the fiscal year as a result of a sharp relative decline in
the stock of cyclical and financial companies, two areas in which the Fund has a
greater-than-market weight.
LOOKING AHEAD
[GRAPHIC]
Notwithstanding the stock market
correction that occurred throughout
July, we believe the primary bullish
trend of equity prices should remain
intact over the long term. The next
advance in the equities markets should
be helped by better than expected
corporate profits and a gradual decline
in interest rates. We expect the dollar
will continue its improving trend,
attracting foreign investors to both
equity and fixed-income markets, as
currency translation gains and the
current high yields prove especially
enticing. In addition, history shows us
that presidential cycles tend to be
favorable for equities, especially
going into the latter part of 1996.
[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, 1996
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (97.0%)
AEROSPACE & DEFENSE (1.5%)
21,200 Boeing Co........................... $ 1,847,050
28,000 General Dynamics Corp............... 1,736,000
21,000 Lockheed Martin Corp................ 1,764,000
35,600 McDonnell Douglas Corp.............. 1,726,600
28,500 Northrop Grumman Corp............... 1,941,562
35,500 Raytheon Co......................... 1,832,687
33,500 Rockwell International Corp......... 1,917,875
16,000 United Technologies Corp............ 1,840,000
---------------
14,605,774
---------------
AIRLINES (0.7%)
21,500 AMR Corp.*.......................... 1,956,500
22,000 Delta Air Lines, Inc................ 1,826,000
62,000 Southwest Airlines Co............... 1,805,750
105,000 USAir Group, Inc.*.................. 1,890,000
---------------
7,478,250
---------------
ALUMINUM (0.4%)
58,000 Alcan Aluminum Ltd. (Canada)........ 1,769,000
30,500 Aluminum Co. of America............. 1,749,937
33,000 Reynolds Metals Co.................. 1,720,125
---------------
5,239,062
---------------
AUTO PARTS - AFTER MARKET (0.7%)
79,000 Cooper Tire & Rubber Co............. 1,757,750
52,000 Echlin, Inc......................... 1,969,500
37,500 Genuine Parts Co.................... 1,715,625
37,000 Goodyear Tire & Rubber Co........... 1,785,250
---------------
7,228,125
---------------
AUTOMOBILES (0.5%)
29,500 Chrysler Corp....................... 1,829,000
58,500 Ford Motor Co....................... 1,893,937
34,000 General Motors Corp................. 1,780,750
---------------
5,503,687
---------------
BANKS - MONEY CENTER (1.1%)
24,000 BankAmerica Corp.................... 1,818,000
26,000 Bankers Trust New York Corp......... 1,920,750
28,000 Chase Manhattan Corp................ 1,977,500
22,000 Citicorp............................ 1,817,750
46,000 First Chicago NBD Corp.............. 1,799,750
21,200 Morgan (J.P.) & Co., Inc............ 1,794,050
---------------
11,127,800
---------------
BANKS - REGIONAL (4.1%)
53,500 Banc One Corp....................... 1,819,000
36,000 Bank of Boston Corp................. 1,782,000
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
37,000 Bank of New York Co., Inc........... $ 1,896,250
28,500 Barnett Banks, Inc.................. 1,738,500
43,500 Boatmen's Bancshares, Inc........... 1,734,562
41,500 Comerica, Inc....................... 1,851,937
46,500 Corestates Financial Corp........... 1,790,250
32,000 Fifth Third Bancorp................. 1,720,000
31,000 First Bank System, Inc.............. 1,798,000
30,500 First Union Corp.................... 1,856,687
44,000 Fleet Financial Group, Inc.......... 1,914,000
48,000 KeyCorp............................. 1,860,000
32,000 Mellon Bank Corp.................... 1,824,000
53,000 National City Corp.................. 1,861,625
23,500 NationsBank Corp.................... 1,941,687
51,000 Norwest Corp........................ 1,778,625
59,000 PNC Bank Corp....................... 1,755,250
30,500 Republic New York Corp.............. 1,898,625
48,500 SunTrust Banks, Inc................. 1,794,500
49,500 U.S. Bancorp........................ 1,782,000
43,000 Wachovia Corp....................... 1,881,250
8,000 Wells Fargo & Co.................... 1,911,000
---------------
40,189,748
---------------
BEVERAGES - ALCOHOLIC (0.7%)
25,500 Anheuser-Busch Companies, Inc....... 1,912,500
45,500 Brown-Forman Corp. (Class B)........ 1,820,000
100,000 Coors (Adolph) Co................... 1,787,500
52,200 Seagram Co. Ltd. (Canada)........... 1,755,225
---------------
7,275,225
---------------
BEVERAGES - SOFT DRINKS (0.4%)
39,600 Coca Cola Co........................ 1,935,450
55,000 PepsiCo Inc......................... 1,945,625
---------------
3,881,075
---------------
BROADCAST MEDIA (0.6%)
99,000 Comcast Corp.
(Class A Special)................... 1,806,750
100,000 Tele-Communications, Inc. (Class
A)*................................. 1,800,000
105,000 U.S. West Media Group*.............. 1,916,250
---------------
5,523,000
---------------
BUILDING MATERIALS (0.6%)
61,000 Masco Corp.......................... 1,845,250
46,500 Owens-Corning Fiberglas Corp........ 1,999,500
40,000 Sherwin-Williams Co................. 1,860,000
---------------
5,704,750
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
CHEMICALS (1.9%)
32,000 Air Products & Chemicals, Inc....... $ 1,848,000
22,500 Dow Chemical Co..................... 1,710,000
23,500 Du Pont (E.I.) de Nemours & Co...... 1,859,437
29,500 Eastman Chemical Co................. 1,795,812
48,000 Goodrich (B.F.) Co.................. 1,794,000
31,500 Hercules, Inc....................... 1,740,375
60,000 Monsanto Co......................... 1,950,000
48,500 Praxair, Inc........................ 2,049,125
28,000 Rohm & Haas Co...................... 1,757,000
44,500 Union Carbide Corp.................. 1,768,875
---------------
18,272,624
---------------
CHEMICALS - DIVERSIFIED (0.7%)
32,500 Avery Dennison Corp................. 1,783,437
78,000 Engelhard Corp...................... 1,794,000
27,500 FMC Corp.*.......................... 1,794,375
35,500 PPG Industries, Inc................. 1,730,625
---------------
7,102,437
---------------
CHEMICALS - SPECIALTY (0.9%)
25,000 Grace (W.R.) & Co................... 1,771,875
29,000 Great Lakes Chemical Corp........... 1,805,250
50,000 Morton International, Inc........... 1,862,500
56,500 Nalco Chemical Co................... 1,779,750
33,500 Sigma-Aldrich Corp.................. 1,775,500
---------------
8,994,875
---------------
COMMUNICATIONS - EQUIPMENT/MANUFACTURERS (2.0%)
42,000 3Com Corp.*......................... 1,916,250
37,000 Andrew Corp.*....................... 1,998,000
71,500 Bay Networks, Inc.*................. 1,841,125
27,000 Cabletron Systems, Inc.*............ 1,852,875
34,500 Cisco Systems, Inc.*................ 1,953,562
64,000 DSC Communications Corp.*........... 1,920,000
62,000 General Instrument Corp.*........... 1,790,250
37,000 Northern Telecom Ltd. (Canada)...... 2,011,875
115,000 Scientific-Atlanta, Inc............. 1,782,500
29,000 Tellabs, Inc.*...................... 1,935,750
---------------
19,002,187
---------------
COMPUTER SOFTWARE & SERVICES (2.0%)
62,000 Autodesk, Inc....................... 1,844,500
49,000 Automatic Data Processing, Inc...... 1,892,625
39,000 Ceridian Corp.*..................... 1,969,500
26,000 Computer Associates International,
Inc................................. 1,852,500
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
24,500 Computer Sciences Corp.*............ $ 1,831,375
24,500 First Data Corp..................... 1,950,812
16,500 Microsoft Corp.*.................... 1,980,000
135,000 Novell, Inc.*....................... 1,856,250
50,000 Oracle Corp......................... 1,968,750
30,000 Shared Medical Systems Corp......... 1,927,500
---------------
19,073,812
---------------
COMPUTERS - SYSTEMS (2.5%)
194,000 Amdahl Corp.*....................... 2,085,500
85,000 Apple Computer, Inc.*............... 1,774,375
40,000 COMPAQ Computer Corp.*.............. 1,970,000
141,000 Data General Corp.*................. 1,833,000
40,000 Digital Equipment Corp.*............ 1,800,000
93,000 EMC Corp.*.......................... 1,732,125
18,000 Hewlett-Packard Co.................. 1,793,250
154,000 Intergraph Corp.*................... 1,867,250
18,000 International Business Machines
Corp................................ 1,782,000
74,000 Silicon Graphics, Inc.*............. 1,776,000
33,500 Sun Microsystems, Inc.*............. 1,968,125
181,000 Tandem Computers Inc.*.............. 2,239,875
262,000 Unisys Corp.*....................... 1,866,750
---------------
24,488,250
---------------
CONGLOMERATES (0.6%)
54,000 Teledyne, Inc....................... 1,950,750
620 Teledyne, Inc. (Series E) (Pref.)
$1.20+.............................. 9,532
34,000 Tenneco Inc......................... 1,738,250
23,300 Textron Inc......................... 1,861,087
---------------
5,559,619
---------------
CONTAINERS - METAL & GLASS (0.4%)
65,000 Ball Corp........................... 1,868,750
38,500 Crown Cork & Seal Co., Inc.*........ 1,732,500
---------------
3,601,250
---------------
CONTAINERS - PAPER (0.6%)
56,500 Bemis Company, Inc.................. 1,977,500
128,000 Stone Container Corp................ 1,760,000
38,500 Temple-Inland Inc................... 1,799,875
---------------
5,537,375
---------------
COSMETICS (0.8%)
42,000 Alberto-Culver Co. (Class B)........ 1,947,750
40,000 Avon Products, Inc.................. 1,805,000
31,500 Gillette Co......................... 1,964,812
37,000 International Flavors & Fragrances
Inc................................. 1,762,125
---------------
7,479,687
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
DISTRIBUTORS - CONSUMER PRODUCTS (0.6%)
120,000 Fleming Cos., Inc................... $ 1,725,000
61,000 SuperValu Stores, Inc............... 1,921,500
52,600 Sysco Corp.......................... 1,801,550
---------------
5,448,050
---------------
ELECTRICAL EQUIPMENT (1.7%)
43,500 AMP, Inc............................ 1,745,437
20,000 Emerson Electric Co................. 1,807,500
21,500 General Electric Co................. 1,859,750
49,000 General Signal Corp................. 1,855,875
24,500 Grainger (W.W.), Inc................ 1,898,750
34,000 Honeywell, Inc...................... 1,853,000
27,000 Raychem Corp........................ 1,940,625
47,000 Thomas & Betts Corp................. 1,762,500
93,000 Westinghouse Electric Corp.......... 1,743,750
---------------
16,467,187
---------------
ELECTRONICS - DEFENSE (0.2%)
90,000 EG & G, Inc......................... 1,923,750
---------------
ELECTRONICS - INSTRUMENTATION (0.4%)
39,000 Perkin-Elmer Corp................... 1,881,750
45,000 Tektronix, Inc...................... 2,013,750
---------------
3,895,500
---------------
ELECTRONICS - SEMICONDUCTORS (1.5%)
134,000 Advanced Micro Devices, Inc.*....... 1,825,750
59,000 Applied Materials, Inc.*............ 1,792,125
27,000 Intel Corp.......................... 1,981,125
67,000 LSI Logic Corp.*.................... 1,742,000
72,000 Micron Technology, Inc.............. 1,863,000
30,500 Motorola, Inc....................... 1,917,687
118,500 National Semiconductor Corp.*....... 1,836,750
35,000 Texas Instruments Inc............... 1,745,625
---------------
14,704,062
---------------
ENGINEERING & CONSTRUCTION (0.4%)
28,500 Fluor Corp.......................... 1,863,187
39,500 Foster Wheeler Corp................. 1,772,562
---------------
3,635,749
---------------
ENTERTAINMENT (0.8%)
50,000 King World Productions Inc.*........ 1,818,750
46,000 Time Warner, Inc.................... 1,805,500
48,000 Viacom, Inc. (Class B)*............. 1,866,000
29,591 Walt Disney Co...................... 1,860,534
---------------
7,350,784
---------------
FINANCIAL - MISCELLANEOUS (1.4%)
41,500 American Express Co................. 1,851,937
52,000 American General Corp............... 1,891,500
22,000 Federal Home Loan Mortgage Corp..... 1,881,000
58,000 Federal National Mortgage Assoc..... 1,943,000
60,500 Green Tree Financial Corp........... 1,890,625
67,000 MBNA Corp........................... 1,909,500
21,800 Transamerica Corp................... 1,765,800
---------------
13,133,362
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
FOODS (2.5%)
93,000 Archer-Daniels-Midland Co........... $ 1,778,625
27,000 Campbell Soup Co.................... 1,903,500
43,800 ConAgra, Inc........................ 1,987,425
25,000 CPC International Inc............... 1,800,000
32,500 General Mills, Inc.................. 1,771,250
58,000 Heinz (H.J.) Co..................... 1,761,750
24,000 Hershey Foods Corp.................. 1,761,000
24,000 Kellogg Co.......................... 1,758,000
52,500 Quaker Oats Company (The)........... 1,791,562
29,000 Ralston-Ralston Purina Group........ 1,859,625
57,000 Sara Lee Corp....................... 1,845,375
13,500 Unilever NV (ADR) (Netherlands)..... 1,959,187
35,500 Wrigley (Wm.) Jr. Co. (Class A)..... 1,792,750
---------------
23,770,049
---------------
GOLD MINING (1.1%)
67,500 Barrick Gold Corp. (Canada)......... 1,830,937
162,000 Echo Bay Mines Ltd. (Canada)........ 1,741,500
106,000 Homestake Mining Co................. 1,815,250
34,500 Newmont Mining Corp................. 1,703,437
73,000 Placer Dome Inc. (Canada)........... 1,742,875
130,000 Santa Fe Pacific Gold Corp.......... 1,836,250
---------------
10,670,249
---------------
HARDWARE & TOOLS (0.6%)
50,000 Black & Decker Corp................. 1,931,250
37,500 Snap-On, Inc........................ 1,776,562
66,000 Stanley Works....................... 1,963,500
---------------
5,671,312
---------------
HEALTHCARE - DIVERSIFIED (1.4%)
45,500 Abbott Laboratories................. 1,979,250
49,500 Allergan, Inc....................... 1,942,875
33,000 American Home Products Corp......... 1,984,125
22,000 Bristol-Myers Squibb Co............. 1,980,000
38,000 Johnson & Johnson................... 1,881,000
48,000 Mallinckrodt Group, Inc............. 1,866,000
36,000 Warner-Lambert Co................... 1,980,000
---------------
13,613,250
---------------
HEALTHCARE - DRUGS (1.0%)
29,000 Lilly (Eli) & Co.................... 1,885,000
28,000 Merck & Co., Inc.................... 1,809,500
26,400 Pfizer, Inc......................... 1,884,300
45,500 Pharmacia & Upjohn, Inc............. 2,019,062
30,000 Schering-Plough Corp................ 1,882,500
---------------
9,480,362
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
HEALTHCARE - MISCELLANEOUS (0.8%)
65,000 Alza Corp.*......................... $ 1,779,375
32,000 Amgen Inc.*......................... 1,720,000
160,000 Beverly Enterprises, Inc.*.......... 1,920,000
46,000 Manor Care, Inc..................... 1,811,250
---------------
7,230,625
---------------
HEALTHCARE HMOS (0.6%)
96,000 Humana, Inc.*....................... 1,716,000
36,500 U.S. Healthcare, Inc................ 2,002,937
38,000 United Healthcare Corp.............. 1,919,000
---------------
5,637,937
---------------
HEAVY DUTY TRUCKS & PARTS (1.2%)
45,500 Cummins Engine Co., Inc............. 1,837,062
60,000 Dana Corp........................... 1,860,000
32,000 Eaton Corp.......................... 1,876,000
73,000 ITT Industries, Inc................. 1,834,125
185,000 Navistar International Corp.*....... 1,826,875
39,000 PACCAR, Inc......................... 1,901,250
---------------
11,135,312
---------------
HOME BUILDING (0.6%)
60,000 Centex Corp......................... 1,867,500
126,000 Kaufman & Broad Home Corp........... 1,827,000
65,000 Pulte Corp.......................... 1,738,750
---------------
5,433,250
---------------
HOSPITAL MANAGEMENT (0.6%)
34,000 Columbia/HCA Healthcare Corp........ 1,814,750
190,000 Community Psychiatric Centers*...... 1,805,000
88,500 Tenet Healthcare Corp.*............. 1,891,687
---------------
5,511,437
---------------
HOTELS/MOTELS (0.8%)
67,000 Harrah's Entertainment, Inc.*....... 1,892,750
17,800 Hilton Hotels Corp.*................ 2,002,500
30,000 ITT Corp.*.......................... 1,987,500
38,000 Marriot International Inc........... 2,042,500
---------------
7,925,250
---------------
HOUSEHOLD FURNISHINGS & APPLIANCES (0.6%)
33,500 Armstrong World Industries Inc...... 1,930,438
89,000 Maytag Corp......................... 1,857,875
36,500 Whirlpool Corp...................... 1,811,313
---------------
5,599,626
---------------
HOUSEHOLD PRODUCTS (0.8%)
21,500 Clorox Co........................... 1,905,438
23,500 Colgate-Palmolive Co................ 1,991,625
23,000 Kimberly-Clark Corp................. 1,776,750
20,000 Procter & Gamble Co................. 1,812,500
---------------
7,486,313
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
HOUSEWARES (0.6%)
60,000 Newell Co........................... $ 1,837,500
66,000 Rubbermaid, Inc..................... 1,798,500
47,000 Tupperware Corp.*................... 1,985,750
---------------
5,621,750
---------------
INSURANCE BROKERS (0.6%)
88,000 Alexander & Alexander Services,
Inc................................. 1,738,000
36,000 Aon Corp............................ 1,827,000
18,500 Marsh & McLennan Cos., Inc.......... 1,785,250
---------------
5,350,250
---------------
INVESTMENT BANKING/BROKERAGE (1.0%)
33,500 Dean Witter, Discover & Co. (Note
4).................................. 1,917,875
30,500 Merrill Lynch & Co., Inc............ 1,986,313
39,000 Morgan Stanley Group, Inc........... 1,915,875
43,000 Salomon, Inc........................ 1,892,000
44,250 Travelers Group, Inc................ 2,018,906
---------------
9,730,969
---------------
LEISURE TIME (0.6%)
93,000 Bally Entertainment Corp.*.......... 2,557,500
87,000 Brunswick Corp...................... 1,740,000
95,000 Outboard Marine Corp................ 1,721,875
---------------
6,019,375
---------------
LIFE INSURANCE (1.2%)
36,500 Jefferson-Pilot Corp................ 1,884,313
38,500 Lincoln National Corp............... 1,780,625
43,000 Providian Corp...................... 1,843,625
43,000 Torchmark Corp...................... 1,881,250
32,000 UNUM Corp........................... 1,992,000
60,500 USLIFE Corp......................... 1,988,938
---------------
11,370,751
---------------
MACHINE TOOLS (0.4%)
83,000 Cincinnati Milacron, Inc............ 1,992,000
111,000 Giddings & Lewis, Inc............... 1,803,750
---------------
3,795,750
---------------
MACHINERY - DIVERSIFIED (1.9%)
44,000 Briggs & Stratton Corp.............. 1,809,500
36,000 Case Corp........................... 1,728,000
29,500 Caterpillar, Inc.................... 1,998,625
44,000 Cooper Industries, Inc.............. 1,826,000
47,000 Deere & Co.......................... 1,880,000
53,000 Harnischfeger Industries, Inc....... 1,762,250
46,000 Ingersoll-Rand Co................... 2,012,500
33,000 NACCO Industries, Inc. (Class A).... 1,827,375
48,500 Timken Co........................... 1,879,375
41,500 Varity Corp.*....................... 1,997,188
---------------
18,720,813
---------------
MANUFACTURED HOUSING (0.2%)
64,000 Fleetwood Enterprises, Inc.......... 1,984,000
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
MANUFACTURING - DIVERSIFIED (1.9%)
31,500 AlliedSignal, Inc................... $ 1,799,438
45,000 Crane Co............................ 1,845,000
40,500 Dover Corp.......................... 1,868,063
26,000 Illinois Tool Works Inc............. 1,758,250
25,500 Johnson Controls, Inc............... 1,772,250
42,500 Millipore Corp...................... 1,779,688
76,000 Pall Corp........................... 1,833,500
47,000 Parker-Hannifin Corp................ 1,991,625
55,000 Trinova Corp........................ 1,835,625
46,000 Tyco International Ltd.............. 1,874,500
---------------
18,357,939
---------------
MEDICAL PRODUCTS & SUPPLIES (1.8%)
53,500 Bard (C.R.), Inc.................... 1,819,000
47,000 Bausch & Lomb, Inc.................. 1,997,500
41,500 Baxter International, Inc........... 1,960,875
22,500 Becton, Dickinson & Co.............. 1,805,625
134,000 Biomet, Inc.*....................... 1,892,750
43,000 Boston Scientific Corp.*............ 1,935,000
35,000 Medtronic Inc....................... 1,960,000
52,500 St. Jude Medical, Inc.*............. 1,745,625
60,000 United States Surgical Corp......... 1,860,000
---------------
16,976,375
---------------
METALS - MISCELLANEOUS (0.9%)
64,000 ASARCO, Inc......................... 1,768,000
75,500 Cyprus Amax Minerals Co............. 1,708,188
60,500 Freeport-McMoran Copper & Gold, Inc.
(Class B)........................... 1,928,438
54,500 Inco Ltd. (Canada).................. 1,757,625
28,000 Phelps Dodge Corp................... 1,746,500
---------------
8,908,751
---------------
MISCELLANEOUS (2.1%)
64,000 Airtouch Communications, Inc.*...... 1,808,000
70,500 American Greetings Corp. (Class
A).................................. 1,921,125
51,000 Corning, Inc........................ 1,957,125
63,000 Dial Corp........................... 1,803,375
39,500 Harcourt General, Inc............... 1,975,000
30,000 Harris Corp......................... 1,830,000
93,000 Jostens, Inc........................ 1,836,750
26,000 Minnesota Mining & Manufacturing
Co.................................. 1,794,000
34,000 Pioneer Hi-Bred International,
Inc................................. 1,797,750
20,500 TRW, Inc............................ 1,842,438
72,000 Whitman Corp........................ 1,737,000
---------------
20,302,563
---------------
MULTI-LINE INSURANCE (0.8%)
24,500 Aetna Life & Casualty Co............ 1,751,750
20,000 American International Group,
Inc................................. 1,972,500
15,000 CIGNA Corp.......................... 1,768,125
37,000 ITT Hartford Group, Inc.*........... 1,970,250
---------------
7,462,625
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
OFFICE EQUIPMENT & SUPPLIES (0.8%)
38,500 Alco Standard Corp.................. $ 1,742,125
100,000 Moore Corp. Ltd. (Canada)........... 1,887,500
37,000 Pitney Bowes, Inc................... 1,766,750
37,000 Xerox Corp.......................... 1,979,500
---------------
7,375,875
---------------
OIL & GAS DRILLING (0.4%)
55,500 Helmerich & Payne, Inc.............. 2,032,688
132,000 Rowan Companies, Inc.*.............. 1,947,000
---------------
3,979,688
---------------
OIL - DOMESTIC INTEGRATED (2.2%)
34,000 Amerada Hess Corp................... 1,823,250
46,000 Ashland Oil, Inc.................... 1,822,750
15,000 Atlantic Richfield Co............... 1,777,500
31,500 Kerr-McGee Corp..................... 1,917,563
35,000 Louisiana Land & Exploration Co..... 2,016,875
70,000 Occidental Petroleum Corp........... 1,732,500
43,500 Pennzoil Co......................... 2,011,875
48,000 Phillips Petroleum Co............... 2,010,000
62,000 Sun Co., Inc........................ 1,883,250
56,500 Unocal Corp......................... 1,906,875
90,000 USX-Marathon Group.................. 1,811,250
---------------
20,713,688
---------------
OIL - EXPLORATION & PRODUCTION (0.6%)
43,500 Burlington Resources, Inc........... 1,870,500
121,000 Oryx Energy Co.*.................... 1,966,250
155,000 Santa Fe Energy Resources, Inc.*.... 1,840,625
---------------
5,677,375
---------------
OIL - INTERNATIONAL INTEGRATED (1.1%)
26,000 Amoco Corp.......................... 1,881,750
31,000 Chevron Corp........................ 1,829,000
20,500 Exxon Corp.......................... 1,780,938
16,000 Mobil Corp.......................... 1,794,000
11,600 Royal Dutch Petroleum Co.
(Netherlands)....................... 1,783,500
21,000 Texaco, Inc......................... 1,761,375
---------------
10,830,563
---------------
OIL WELL EQUIPMENT & SERVICE (1.2%)
60,000 Baker Hughes Inc.................... 1,972,500
62,000 Dresser Industries, Inc............. 1,829,000
36,000 Halliburton Co...................... 1,998,000
84,000 McDermott International, Inc........ 1,753,500
24,000 Schlumberger, Ltd................... 2,022,000
31,000 Western Atlas, Inc.*................ 1,805,750
---------------
11,380,750
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
PAPER & FOREST PRODUCTS (2.3%)
49,000 Boise Cascade Corp.................. $ 1,794,625
43,000 Champion International Corp......... 1,795,250
26,000 Georgia-Pacific Corp................ 1,846,000
47,000 International Paper Co.............. 1,733,125
72,000 James River Corp. of Virginia....... 1,899,000
77,000 Louisiana-Pacific Corp.............. 1,703,625
37,000 Mead Corp........................... 1,919,375
46,000 Potlatch Corp....................... 1,799,750
35,500 Union Camp Corp..................... 1,730,625
60,000 Westvaco Corp....................... 1,792,500
43,000 Weyerhaeuser Co..................... 1,827,500
32,000 Willamette Industries, Inc.......... 1,896,000
---------------
21,737,375
---------------
PERSONAL LOANS (0.4%)
32,500 Beneficial Corp..................... 1,824,063
26,500 Household International, Inc........ 2,014,000
---------------
3,838,063
---------------
PHOTOGRAPHY/IMAGING (0.4%)
23,000 Eastman Kodak Co.................... 1,788,250
40,000 Polaroid Corp....................... 1,825,000
---------------
3,613,250
---------------
POLLUTION CONTROL (0.6%)
60,000 Browning-Ferris Industries, Inc..... 1,740,000
180,000 Laidlaw Inc. (Class B) (Canada)..... 1,822,500
56,500 WMX Technologies, Inc............... 1,850,375
---------------
5,412,875
---------------
PROPERTY - CASUALTY INSURANCE (1.4%)
41,000 Allstate Corp....................... 1,870,625
40,000 Chubb Corp.......................... 1,995,000
11,500 General Re Corp..................... 1,750,875
23,000 Loews Corp.......................... 1,814,125
56,000 SAFECO Corp......................... 1,981,000
35,000 St. Paul Companies, Inc............. 1,872,500
110,000 USF&G Corp.......................... 1,801,250
---------------
13,085,375
---------------
PUBLISHING (0.5%)
28,000 Dun & Bradstreet Corp............... 1,750,000
39,000 McGraw-Hill, Inc.................... 1,784,250
40,000 Meredith Corp....................... 1,670,000
---------------
5,204,250
---------------
PUBLISHING - NEWSPAPER (1.2%)
48,000 Dow Jones & Co., Inc................ 2,004,000
25,300 Gannett Co., Inc.................... 1,789,975
25,000 Knight-Ridder Newspapers, Inc....... 1,812,500
56,000 New York Times Co. (Class A)........ 1,827,000
45,500 Times Mirror Co. (Class A).......... 1,979,250
26,000 Tribune Co.......................... 1,888,250
---------------
11,300,975
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
RAILROADS (0.9%)
22,000 Burlington Northern Santa Fe
Corp................................ $ 1,779,250
26,000 Conrail, Inc........................ 1,725,750
38,500 CSX Corp............................ 1,857,625
21,500 Norfolk Southern Corp............... 1,822,125
25,500 Union Pacific Corp.................. 1,781,813
---------------
8,966,563
---------------
RESTAURANTS (1.2%)
170,000 Darden Restaurants, Inc............. 1,827,500
80,000 Luby's Cafeterias, Inc.............. 1,880,000
37,500 McDonald's Corp..................... 1,753,125
205,000 Ryan's Family Steak Houses, Inc.*... 1,896,250
170,000 Shoney's Inc.*...................... 1,848,750
103,000 Wendy's International, Inc.......... 1,918,375
---------------
11,124,000
---------------
RETAIL - DEPARTMENT STORES (1.1%)
53,000 Dillard Department Stores, Inc.
(Class A)*.......................... 1,934,500
55,100 Federated Department Stores,
Inc.*............................... 1,880,288
40,000 May Department Stores Co............ 1,750,000
30,500 Mercantile Stores Co., Inc.......... 1,788,063
41,500 Nordstrom, Inc...................... 1,836,375
33,500 Penney (J.C.) Co., Inc.............. 1,758,750
---------------
10,947,976
---------------
RETAIL - DRUG STORES (0.6%)
45,000 Longs Drug Stores Corp.............. 2,008,125
61,000 Rite Aid Corp....................... 1,814,750
52,500 Walgreen Co......................... 1,758,750
---------------
5,581,625
---------------
RETAIL - FOOD CHAINS (1.2%)
45,000 Albertson's Inc..................... 1,861,875
53,000 American Stores Co.................. 2,186,250
55,000 Giant Food, Inc. (Class A).......... 1,973,125
59,500 Great Atlantic & Pacific Tea Co.,
Inc................................. 1,956,063
49,000 Kroger Co.*......................... 1,935,500
53,000 Winn-Dixie Stores, Inc.............. 1,874,875
---------------
11,787,688
---------------
RETAIL - GENERAL MERCHANDISE (0.8%)
19,300 Dayton-Hudson Corp.................. 1,990,313
165,000 Kmart Corp.*........................ 2,041,875
38,000 Sears, Roebuck & Co................. 1,847,750
71,500 Wal-Mart Stores, Inc. (Class A)..... 1,814,313
---------------
7,694,251
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
RETAIL - SPECIALTY (1.8%)
56,000 Circuit City Stores, Inc............ $ 2,023,000
37,000 Home Depot, Inc..................... 1,998,000
49,500 Lowe's Companies, Inc............... 1,788,188
48,000 Melville Corp....................... 1,944,000
55,000 Pep Boys-Manny Moe & Jack........... 1,870,000
94,000 Price/Costco, Inc.*................. 2,009,250
38,000 Tandy Corp.......................... 1,800,250
69,000 Toys 'R' Us, Inc.*.................. 1,966,500
93,000 Woolworth Corp.*.................... 2,092,500
---------------
17,491,688
---------------
RETAIL - SPECIALTY APPAREL (0.8%)
288,000 Charming Shoppes, Inc............... 1,998,000
62,000 Gap, Inc............................ 1,991,750
92,000 Limited (The), Inc.................. 1,978,000
62,000 TJX Companies, Inc.................. 2,092,500
---------------
8,060,250
---------------
SAVINGS & LOAN COMPANIES (0.6%)
70,000 Ahmanson (H.F.) & Co................ 1,890,000
35,000 Golden West Financial Corp.......... 1,960,000
76,000 Great Western Financial Corp........ 1,814,500
---------------
5,664,500
---------------
SHOES (0.8%)
117,000 Brown Group Inc..................... 2,032,875
19,500 Nike, Inc. (Class B)................ 2,003,625
62,000 Reebok International Ltd. (United
Kingdom)............................ 2,084,750
212,000 Stride Rite Corp.................... 1,749,000
---------------
7,870,250
---------------
SPECIALIZED SERVICES (1.6%)
53,500 Block (H.&R.), Inc.................. 1,745,438
55,000 CUC International, Inc.*............ 1,952,500
54,500 Ecolab, Inc......................... 1,798,500
38,000 Interpublic Group of Companies,
Inc................................. 1,781,250
49,000 National Service Industries, Inc.... 1,917,125
102,000 Ogden Corp.......................... 1,848,750
117,500 Safety-Kleen Corp................... 2,056,250
34,500 Service Corp. International......... 1,983,750
---------------
15,083,563
---------------
SPECIALTY PRINTING (0.6%)
53,000 Deluxe Corp......................... 1,881,500
50,000 Donnelley (R.R.) & Sons Co.......... 1,743,750
73,000 Harland (John H.) Co................ 1,797,625
---------------
5,422,875
---------------
STEEL (1.1%)
354,000 Armco, Inc.*........................ 1,770,000
150,000 Bethlehem Steel Corp.*.............. 1,781,250
90,000 Inland Steel Industries, Inc........ 1,766,250
36,000 Nucor Corp.......................... 1,822,500
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
63,000 USX-U.S. Steel Group................ $ 1,787,625
93,000 Worthington Industries, Inc......... 1,918,125
---------------
10,845,750
---------------
TELECOMMUNICATIONS - LONG DISTANCE (0.8%)
30,000 AT&T Corp........................... 1,860,000
73,000 MCI Communications Corp............. 1,861,500
44,000 Sprint Corp......................... 1,848,000
32,500 WorldCom, Inc.*..................... 1,795,625
---------------
7,365,125
---------------
TEXTILES (1.0%)
67,000 Fruit of the Loom, Inc. (Class
A)*................................. 1,708,500
53,500 Liz Claiborne, Inc.................. 1,852,438
69,000 Russell Corp........................ 1,906,125
40,500 Springs Industries, Inc. (Class
A).................................. 2,045,250
30,000 VF Corp............................. 1,788,750
---------------
9,301,063
---------------
TOBACCO (0.6%)
40,000 American Brands, Inc................ 1,815,000
19,000 Philip Morris Companies, Inc........ 1,976,000
57,500 UST, Inc............................ 1,969,375
---------------
5,760,375
---------------
TOYS (0.4%)
49,000 Hasbro Inc.......................... 1,751,750
65,625 Mattel, Inc......................... 1,878,516
---------------
3,630,266
---------------
TRANSPORTATION - MISCELLANEOUS (0.4%)
24,500 Federal Express Corp.*.............. 2,009,000
70,000 Ryder System, Inc................... 1,968,750
---------------
3,977,750
---------------
TRUCKERS (0.5%)
52,000 Caliber System, Inc................. 1,768,000
81,000 Consolidated Freightways, Inc....... 1,711,125
130,000 Yellow Corp.*....................... 1,706,250
---------------
5,185,375
---------------
UTILITIES - ELECTRIC (5.2%)
45,000 American Electric Power Co., Inc.... 1,918,125
68,000 Baltimore Gas & Electric Co......... 1,929,500
52,000 Carolina Power & Light Co........... 1,976,000
64,000 Central & South West Corp........... 1,856,000
59,000 CINergy Corp........................ 1,888,000
67,500 Consolidated Edison Co. of New York,
Inc................................. 1,974,375
47,000 Dominion Resources, Inc............. 1,880,000
63,000 DTE Energy Co....................... 1,945,125
34,500 Duke Power Co....................... 1,768,125
110,000 Edison International................ 1,938,750
69,000 Entergy Corp........................ 1,957,875
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1996, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
43,000 FPL Group, Inc...................... $ 1,978,000
57,000 General Public Utilities Corp....... 2,009,250
81,000 Houston Industries, Inc............. 1,994,625
236,000 Niagara Mohawk Power Corp.*......... 1,829,000
41,000 Northern States Power Co............ 2,024,375
84,000 Ohio Edison Co...................... 1,837,500
81,000 Pacific Gas & Electric Co........... 1,883,250
88,000 PacifiCorp.......................... 1,958,000
74,000 PECO Energy Co...................... 1,924,000
78,000 PP&L Resources, Inc................. 1,842,750
71,000 Public Service Enterprise Group,
Inc................................. 1,943,625
77,000 Southern Co......................... 1,896,125
45,000 Texas Utilities Co.................. 1,923,750
66,000 Unicom Corp......................... 1,839,750
45,000 Union Electric Co................... 1,811,250
---------------
49,727,125
---------------
UTILITIES - NATURAL GAS (2.8%)
42,900 Coastal Corp........................ 1,791,075
38,000 Columbia Gas System, Inc............ 1,980,750
37,000 Consolidated Natural Gas Co......... 1,933,250
57,000 Eastern Enterprises................. 1,895,250
45,000 Enron Corp.......................... 1,839,375
91,000 ENSERCH Corp........................ 1,979,250
62,500 NICOR, Inc.......................... 1,773,438
187,500 NorAm Energy Corp................... 2,039,063
78,000 ONEOK, Inc.......................... 1,950,000
66,000 Pacific Enterprises................. 1,955,250
55,000 PanEnergy Corp...................... 1,808,125
52,500 Peoples Energy Corp................. 1,758,750
44,000 Sonat, Inc.......................... 1,980,000
37,000 Williams Cos., Inc.................. 1,831,500
---------------
26,515,076
---------------
UTILITIES - TELEPHONE (1.8%)
58,500 Alltel Corp......................... 1,798,875
32,500 Ameritech Corp...................... 1,929,688
29,000 Bell Atlantic Corp.................. 1,848,750
48,500 BellSouth Corp...................... 2,055,188
42,000 GTE Corp............................ 1,879,500
39,500 NYNEX Corp.......................... 1,876,250
59,000 Pacific Telesis Group............... 1,991,250
36,000 SBC Communications, Inc............. 1,773,000
58,000 U.S. West Communications Group...... 1,848,750
---------------
17,001,251
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $670,112,037)...... 932,348,426
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (2.7%)
U.S. GOVERNMENT AGENCY
$ 26,150 Federal Home Loan Mortgage Corp.
5.52% due 07/01/96 (Amortized Cost
$26,150,000)........................ $ 26,150,000
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$696,262,037) (B)........... 99.7% 958,498,426
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES....... 0.3 3,095,970
----- ------------
NET ASSETS.................. 100.0% $961,594,396
----- ------------
----- ------------
<FN>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
+ Acquired through a special stock dividend.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation was $282,973,317 and the
aggregate gross unrealized depreciation was $20,736,928, resulting in net
unrealized appreciation of $262,236,389.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $696,262,037)............................ $958,498,426
Cash........................................................ 84,909
Receivable for:
Investments sold........................................ 14,048,545
Shares of beneficial interest sold...................... 2,438,158
Dividends............................................... 1,338,317
Dividends from affiliate (Note 4)....................... 7,370
Prepaid expenses............................................ 46,691
------------
TOTAL ASSETS........................................... 976,462,416
------------
LIABILITIES:
Payable for:
Investments purchased................................... 13,274,642
Plan of distribution fee................................ 667,244
Investment management fee............................... 373,553
Shares of beneficial interest repurchased............... 240,293
Accrued expenses............................................ 312,288
------------
TOTAL LIABILITIES...................................... 14,868,020
------------
NET ASSETS:
Paid-in-capital............................................. 679,820,640
Net unrealized appreciation................................. 262,236,389
Accumulated undistributed net investment income............. 3,193,088
Accumulated undistributed net realized gain................. 16,344,279
------------
NET ASSETS............................................. $961,594,396
------------
------------
NET ASSET VALUE PER SHARE,
35,497,139 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$27.09
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $50,936 foreign withholding tax).......... $ 16,990,132
Dividends from affiliates (Note 4).......................... 23,940
Interest.................................................... 1,788,704
------------
TOTAL INCOME........................................... 18,802,776
------------
EXPENSES
Plan of distribution fee.................................... 7,035,667
Investment management fee................................... 3,897,002
Transfer agent fees and expenses............................ 792,662
Registration fees........................................... 137,241
S&P license fee............................................. 121,567
Shareholder reports and notices............................. 99,090
Custodian fees.............................................. 63,489
Professional fees........................................... 58,277
Trustees' fees and expenses................................. 17,178
Other....................................................... 4,908
------------
TOTAL EXPENSES......................................... 12,227,081
------------
NET INVESTMENT INCOME.................................. 6,575,695
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 22,043,253
Net change in unrealized appreciation....................... 110,384,142
------------
NET GAIN............................................... 132,427,395
------------
NET INCREASE................................................ $139,003,090
------------
------------
</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 YEAR FOR THE YEAR
ENDED ENDED
JUNE 30, JUNE 30,
1996 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 6,575,695 $ 5,303,965
Net realized gain........................................... 22,043,253 7,157,102
Net change in unrealized appreciation....................... 110,384,142 92,711,754
------------ ------------
NET INCREASE........................................... 139,003,090 105,172,821
------------ ------------
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.................................................. 192,491,722 87,296,348
------------ ------------
TOTAL INCREASE......................................... 319,507,367 186,377,349
NET ASSETS:
Beginning of period......................................... 642,087,029 455,709,680
------------ ------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$3,193,088 AND $4,812,981, RESPECTIVELY)................ $961,594,396 $642,087,029
------------ ------------
------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter Value-Added Market Series -- Equity Portfolio (the "Fund") is
registered under the Investment Company Act of 1940, amended (the "Act"), as a
diversified, open-end management investment company. The Fund's investment
objective is high level of total return on its assets through a combination of
capital appreciation and current income. The Fund seeks to achieve its objective
by investing, on an equally-weighted basis, in a diversified portfolio of common
stocks of the companies which are represented in the Standard & Poor's 500
Composite Stock Price Index. The Fund was organized as a Massachusetts business
trust on May 27, 1987 and commenced operations on December 1, 1987.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates. The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York or American Stock Exchange is valued at its latest sale price on that
exchange prior to the time when assets are valued; if there were no sales that
day, the security is valued at the latest bid price; (2) all other portfolio
securities for which over-the-counter market quotations are readily available
are valued at the latest available bid price prior to the time of valuation; (3)
when market quotations are not readily available, 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.
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996, CONTINUED
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with Dean Witter InterCapital
Inc. (the "Investment Manager"), the Fund pays the Investment Manager a
management fee, accrued daily and payable monthly, by applying the following
annual rates to the net assets of the Fund determined as of the close of each
business day: 0.50% to the portion of daily net assets not exceeding $500
million and 0.45% to the portion of daily net assets exceeding $500 million.
Effective May 1, 1996, the annual rate was reduced to 0.425% of daily net assets
in excess of $1 billion.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act pursuant
to which the Fund pays the Distributor compensation, accrued daily 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
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996, CONTINUED
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 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.
Although there is no legal obligation for the Fund to pay expenses incurred in
excess of payments made to the Distributor under the Plan and the proceeds of
contingent deferred sales charges paid by investors upon redemption of shares,
if for any reason the Plan is terminated, the Trustees will consider at that
time the manner in which to treat such expenses. The Distributor has advised the
Fund that such excess amounts, included carrying charges, totalled $53,266,045
at June 30, 1996.
The Distributor has informed the Fund that for the year ended June 30, 1996, it
received approximately $831,000 in contingent deferred sales charges from
certain redemptions of the Fund's shares.
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, 1996 aggregated $257,705,399
and $74,300,735, respectively. Included in the aforementioned are purchases of
common stock of Dean Witter, Discover & Co., an affiliate of the Investment
Manager, of $314,695.
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996, CONTINUED
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At June 30, 1996, the Fund had
transfer agent fees and expenses payable of approximately $76,000.
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. At June 30, 1996, the Fund had an accrued pension liability of
$80,102 which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 12,467,241 $ 314,913,953 8,577,823 $179,873,239
Reinvestment of dividends and distributions...................... 435,932 10,776,245 277,119 5,434,300
----------- -------------- ----------- ------------
12,903,173 325,690,198 8,854,942 185,307,539
Repurchased...................................................... (5,249,483) (133,198,476) (4,704,190) (98,011,191)
----------- -------------- ----------- ------------
Net increase..................................................... 7,653,690 $ 192,491,722 4,150,752 $ 87,296,348
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
6. FEDERAL INCOME TAX STATUS
During the year ended June 30, 1996, the Fund utilized its net capital loss
carryover of approximately $857,000.
As of June 30, 1996, the Fund had temporary book/tax differences 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,
1996 1995 1994 1993 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <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 $ 13.86 $ 12.47 $ 10.00
---------- --------- --------- ---------- --------- --------- ---------- --------- ----------
Net investment
income.......... 0.18 0.19 0.14 0.14 0.17 0.20 0.23 0.24 0.12
Net realized and
unrealized
gain............ 4.23 3.88 0.30 2.86 1.57 0.59 0.62 1.56 2.43
---------- --------- --------- ---------- --------- --------- ---------- --------- ----------
Total from
investment
operations...... 4.41 4.07 0.44 3.00 1.74 0.79 0.85 1.80 2.55
---------- --------- --------- ---------- --------- --------- ---------- --------- ----------
Less dividends
and
distributions
from:
Net investment
income........ (0.26) (0.09) (0.09) (0.12) (0.18) (0.21) (0.24) (0.24) (0.08)
Net realized
gain.......... (0.12) (0.15) (0.29) -- -- (0.06) (0.26) (0.17) --
---------- --------- --------- ---------- --------- --------- ---------- --------- ----------
Total dividends
and
distributions... (0.38) (0.24) (0.38) (0.12) (0.18) (0.27) (0.50) (0.41) (0.08)
---------- --------- --------- ---------- --------- --------- ---------- --------- ----------
Net asset value,
end of period... $ 27.09 $ 23.06 $ 19.23 $ 19.17 $ 16.29 $ 14.73 $ 14.21 $ 13.86 $ 12.47
---------- --------- --------- ---------- --------- --------- ---------- --------- ----------
---------- --------- --------- ---------- --------- --------- ---------- --------- ----------
TOTAL INVESTMENT
RETURN+.......... 19.27% 21.41% 2.26% 18.50% 11.83% 5.82% 6.17% 16.87% 25.56%(1)
RATIOS TO AVERAGE
NET ASSETS:
Expenses......... 1.51% 1.64% 1.68% 1.71% 1.80% 1.80% 1.80% 1.90% 1.60%(2)(3)
Net investment
income.......... 0.81% 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
millions........ $962 $642 $456 $311 $193 $139 $148 $78 $37
Portfolio
turnover rate... 10% 11% 19% 6% 9% 20% 10% 10% 12%(1)
Average
commission rate
paid............ $0.0302 -- -- -- -- -- -- -- --
<FN>
- ---------------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all expenses that were reimbursed 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, 1996, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended and the financial highlights for each
of the eight 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 at June 30, 1996 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
AUGUST 9, 1996
- --------------------------------------------------------------------------------
1996 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended June 30, 1996, Fund paid to shareholders
$0.086 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
Michael Bozic
Charles A. Fiumefreddo DEAN WITTER
Edwin J. Garn VALUE-ADDED
John R. Haire MARKET SERIES
Dr. Manuel H. Johnson EQUITY PORTFOLIO
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS [GRAPHIC]
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel ANNUAL REPORT
JUNE 30, 1996
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
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.
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES/EQUITY PORTFOLIO
GROWTH OF $10,000
DATE TOTAL S&P 500
------------------------------------------------------------------------------
December 1, 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 $30,091
June 30, 1996 $32,353(3) $37,913
------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS LIFE OF FUND
-----------------------------------
19.27(1) 14.43(1) 14.66(1)
14.27(2) 14.20(2) 14.66(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
thededuction 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, 1996.
(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. The Index is unmanaged and should not be
considered an investment.
