<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO TWO WORLD TRADE
CENTER, NEW YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS JUNE 30, 1997
DEAR SHAREHOLDER:
Despite a short-lived correction in the first quarter of 1997, the past twelve
months were marked by strong corporate earnings, a benign inflationary
environment and steady economic expansion, a combination that continues to push
the stock market higher.
In late 1996 and early 1997, large-capitalization stocks dominated smaller and
mid-sized issues as investors grew increasingly concerned that the Federal
Reserve Board was poised to raise interest rates. A mild correction slowed an
exuberant stock market in March when the central bank did indeed tighten rates,
the first such move since 1994. By April, however, it was apparent that
inflation was subdued and any further Federal Reserve Board action would be less
severe than previously anticipated.
While larger-stock returns continue to outperform, smaller and mid-sized stocks
recently have shown signs of breaking out of their slump.
PERFORMANCE AND PORTFOLIO
For the fiscal year ended June 30, 1997, Dean Witter Value-Added Market
Series-Equity Portfolio produced a total return of 24.71 percent, versus 34.72
percent for the Standard & Poor's 500 Composite Stock Price Index (S&P 500). For
the first six months of 1997, the Fund's total return was 15.61 percent, versus
20.62 percent for the S&P 500.
The accompanying chart illustrates the growth of a hypothetical $10,000
investment in the Fund from inception (December 1, 1987) through June 30, 1997,
versus a similar investment in the issues that comprise the S&P 500 and the
Lipper Analytical Services, Inc. Growth and Income Funds Index.
The Fund is index-oriented, investing in stocks that comprise the S&P 500, its
benchmark index. Unlike the S&P 500, however, the Fund weights all stock
positions equally, thereby emphasizing the stocks of small- and mid-sized
companies, which historically outperform larger stocks.
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
LETTER TO THE SHAREHOLDERS JUNE 30, 1997, CONTINUED
While the Fund performed well over the
most recent six- and twelve-month
periods, the results were overshadowed
by the S&P 500's returns. During the
fiscal year ended June 30, 1997, the S&P
500 was driven by large-capitalization
multinationals and technology stocks.
These sectors are more heavily weighted
in the S&P 500 than in the Fund's
portfolio.
LOOKING AHEAD
The outlook for the remainder of 1997 is
positive, with only a minor uptick in
inflation expected. Longer term, we
expect the historical trend of small-cap
stock outperformance relative to the
stocks of larger companies to resume.
This would benefit the Fund going
forward because, as mentioned earlier,
the portfolio's equal weighting
structure results in an emphasis on the
stocks of smaller and mid-sized
companies.
On June 30, 1997, the Fund's Board of
Trustees approved a proposal to adopt a
multiple class share structure. Through
this arrangement the Fund will offer
four classes of shares with various
sales charges, ongoing fees and other
features. This conversion occurred on
July 28, 1997. Existing shares
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
LETTER TO THE SHAREHOLDERS JUNE 30, 1997, CONTINUED
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000
($ in Thousands)
<S> <C> <C> <C>
Fund S&P 500(4) Lipper(5)
Dec-87 $10,000 $10,000 $10,000
Jun-88 $12,556 $12,129 $11,486
Jun-89 $14,674 $14,614 $13,564
Jun-90 $15,580 $17,020 $14,802
Jun-91 $16,486 $18,276 $15,674
Jun-92 $18,437 $20,723 $17,776
Jun-93 $21,848 $23,544 $20,684
Jun-94 $22,342 $23,874 $21,495
Jun-95 $27,126 $30,091 $25,682
Jun-96 $32,353 $37,913 $31,301
Jun-97 40346(3) $51,070 $40,379
Average Annual Total Returns
Life of
1 Year 5 Years Fund
24.71(1) 16.96(1) 15.67(1)
19.71(2) 16.74(2) 15.67(2)
Past performance is not predictive of future
returns.
(1) Total return figures shown assume
reinvestment
of all distributions and do not reflect the
deduction
of any sales charges.
(2) Total return figures shown assume
reinvestment
of all distributions and the deduction of the
maximum
applicable contingent deferred sales charge
(CDSC)
(1 year-5%, 5 years-2%, life of fund-0%).
See the Fund's current prospectus for complete
details on fees and sales charges.
(3) Closing value assuming a complete
redemption
on June 30, 1997.
(4) The Standard & Poor's 500 Composite Stock
Price Index (S&P 500) is a broad-based index,
the
performance of which is based on the average
performance of 500 widely held common stocks.
The index does not include any expenses, fees
or charges. The Index is unmanaged and should
not be considered an investment.
(5) The Lipper Growth and Income Funds Index
is
an equally-weighted performance index of the
largest
qualifying funds (based on net assets) in the
Lipper Growth and Income Funds objective. The
Index,
which is adjusted for capital gains
distributions
and income dividends, is unmanaged and should
not
be considered an investment. There are
currently
30 funds represented in this index.
</TABLE>
were designated Class B. A prospectus supplement, which includes complete
details regarding this change, was mailed with your June 1997 statement.
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
RESULTS OF SPECIAL MEETING (UNAUDITED)
On May 21, 1997, a special meeting of the Fund's shareholders was held for the
purpose of voting on four separate matters, the results of which were as
follows:
(1) APPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE FUND AND DEAN
WITTER INTERCAPITAL INC. IN CONNECTION WITH THE MERGER OF MORGAN STANLEY GROUP
INC. WITH DEAN WITTER
DISCOVER & CO.:
<TABLE>
<CAPTION>
<S> <C>
For..................................................................................... 20,504,438
Against................................................................................. 494,539
Abstain................................................................................. 1,773,063
(2) ELECTION OF TRUSTEES:
Michael Bozic
For..................................................................................... 21,457,035
Withheld................................................................................ 1,315,005
Charles A. Fiumefreddo
For..................................................................................... 21,504,912
Withheld................................................................................ 1,267,128
Edwin J. Garn
For..................................................................................... 21,510,650
Withheld................................................................................ 1,261,390
John R. Haire
For..................................................................................... 21,478,513
Withheld................................................................................ 1,293,527
Wayne E. Hedien
For..................................................................................... 21,506,443
Withheld................................................................................ 1,265,597
Dr. Manuel H. Johnson
For..................................................................................... 21,524,649
Withheld................................................................................ 1,247,391
Michael E. Nugent
For..................................................................................... 21,532,167
Withheld................................................................................ 1,239,873
</TABLE>
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
RESULTS OF SPECIAL MEETING (UNAUDITED) CONTINUED
<TABLE>
<S> <C>
Philip J. Purcell
For..................................................................................... 21,521,069
Withheld................................................................................ 1,250,971
John L. Schroeder
For..................................................................................... 21,513,108
Withheld................................................................................ 1,258,932
(3) APPROVAL OF A NEW INVESTMENT POLICY WITH RESPECT TO INVESTMENTS IN CERTAIN OTHER INVESTMENT
COMPANIES:
For..................................................................................... 18,657,304
Against................................................................................. 1,910,935
Abstain................................................................................. 2,203,801
(4) RATIFICATION OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS:
For..................................................................................... 20,876,817
Against................................................................................. 304,625
Abstain................................................................................. 1,590,598
</TABLE>
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (97.2%)
AEROSPACE & DEFENSE (0.9%)
47,000 Boeing Co......................... $ 2,493,937
33,000 General Dynamics Corp............. 2,475,000
27,000 Lockheed Martin Corp.............. 2,796,187
37,000 McDonnell Douglas Corp............ 2,534,500
32,000 Northrop Grumman Corp............. 2,810,000
-----------------
13,109,624
-----------------
AGRICULTURE RELATED (0.4%)
127,000 Archer-Daniels-Midland Co......... 2,984,500
35,000 Pioneer Hi-Bred International,
Inc............................. 2,800,000
-----------------
5,784,500
-----------------
AIR FREIGHT (0.2%)
48,000 Federal Express Corp.*............ 2,772,000
-----------------
AIRLINES (0.8%)
26,500 AMR Corp.*........................ 2,451,250
30,500 Delta Air Lines, Inc.............. 2,501,000
100,000 Southwest Airlines Co............. 2,587,500
81,500 US Airways Group Inc.*............ 2,852,500
-----------------
10,392,250
-----------------
ALUMINUM (0.6%)
73,000 Alcan Aluminum Ltd. (Canada)...... 2,532,187
34,500 Aluminum Co. of America........... 2,600,437
36,500 Reynolds Metals Co................ 2,600,625
-----------------
7,733,249
-----------------
AUTO PARTS & EQUIPMENT (1.5%)
117,000 Cooper Tire & Rubber Co........... 2,574,000
73,000 Dana Corp......................... 2,774,000
74,000 Echlin, Inc....................... 2,664,000
72,000 Genuine Parts Co.................. 2,439,000
44,000 Goodyear Tire & Rubber Co......... 2,785,750
94,000 ITT Industries, Inc............... 2,420,500
65,000 Snap-On, Inc...................... 2,559,375
44,000 TRW, Inc.......................... 2,499,750
-----------------
20,716,375
-----------------
AUTOMOBILES (0.6%)
77,000 Chrysler Corp..................... 2,526,562
75,000 Ford Motor Co..................... 2,831,250
45,000 General Motors Corp............... 2,505,937
-----------------
7,863,749
-----------------
BANKS - MONEY CENTER (1.1%)
43,000 BankAmerica Corp.................. 2,776,187
30,000 Bankers Trust New York Corp....... 2,610,000
25,500 Chase Manhattan Corp.............. 2,475,094
22,000 Citicorp.......................... 2,652,375
41,500 First Chicago NBD Corp............ 2,510,750
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
23,500 Morgan (J.P.) & Co., Inc.......... $ 2,452,812
-----------------
15,477,218
-----------------
BANKS - REGIONAL (4.0%)
51,500 Banc One Corp..................... 2,494,531
63,000 Bank of New York Co., Inc......... 2,740,500
34,500 BankBoston Corp................... 2,486,156
52,000 Barnett Banks, Inc................ 2,730,000
41,500 Comerica, Inc..................... 2,822,000
45,500 CoreStates Financial Corp......... 2,445,625
31,000 Fifth Third Bancorp............... 2,542,000
31,000 First Bank System, Inc............ 2,646,625
28,000 First Union Corp.................. 2,590,000
41,000 Fleet Financial Group, Inc........ 2,593,250
44,500 KeyCorp........................... 2,486,437
64,000 Mellon Bank Corp.................. 2,888,000
50,000 National City Corp................ 2,625,000
42,000 NationsBank Corp.................. 2,709,000
51,000 Norwest Corp...................... 2,868,750
59,000 PNC Bank Corp..................... 2,455,875
26,000 Republic New York Corp............ 2,795,000
45,500 SunTrust Banks, Inc............... 2,505,344
45,000 U.S. Bancorp...................... 2,885,625
42,000 Wachovia Corp..................... 2,449,125
9,000 Wells Fargo & Co.................. 2,425,500
-----------------
55,184,343
-----------------
BEVERAGES - ALCOHOLIC (0.8%)
60,000 Anheuser-Busch Companies, Inc..... 2,516,250
51,400 Brown-Forman Corp. (Class B)...... 2,508,962
110,000 Coors (Adolph) Co................. 2,901,250
64,000 Seagram Co. Ltd. (Canada)......... 2,576,000
-----------------
10,502,462
-----------------
BEVERAGES - SOFT DRINKS (0.6%)
39,000 Coca Cola Co...................... 2,632,500
74,500 PepsiCo, Inc...................... 2,798,406
105,500 Whitman Corp...................... 2,670,469
-----------------
8,101,375
-----------------
BIOTECHNOLOGY (0.2%)
45,000 Amgen Inc.*....................... 2,612,812
-----------------
BROADCAST MEDIA (0.6%)
127,000 Comcast Corp. (Class A Special)... 2,706,687
180,000 Tele-Communications, Inc. (Class
A)*............................. 2,666,250
129,000 U.S. West Media Group, Inc.*...... 2,612,250
-----------------
7,985,187
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
BUILDING MATERIALS (0.6%)
33,500 Armstrong World Industries,
Inc............................. $ 2,458,062
61,000 Masco Corp........................ 2,546,750
62,000 Owens-Corning..................... 2,673,750
-----------------
7,678,562
-----------------
BUSINESS SERVICES (0.2%)
75,000 Cognizant Corp.................... 3,037,500
-----------------
CHEMICALS (1.5%)
32,000 Air Products & Chemicals, Inc..... 2,600,000
28,500 Dow Chemical Co................... 2,483,062
44,000 Du Pont (E.I.) De Nemours & Co.,
Inc............................. 2,766,500
43,000 Eastman Chemical Co............... 2,730,500
59,000 Monsanto Co....................... 2,540,687
48,500 Praxair, Inc...................... 2,716,000
29,000 Rohm & Haas Co.................... 2,611,812
52,500 Union Carbide Corp................ 2,470,781
-----------------
20,919,342
-----------------
CHEMICALS - DIVERSIFIED (0.8%)
120,000 Engelhard Corp.................... 2,512,500
34,500 FMC Corp.*........................ 2,740,594
59,500 Goodrich (B.F.) Co................ 2,577,094
44,500 PPG Industries, Inc............... 2,586,562
-----------------
10,416,750
-----------------
CHEMICALS - SPECIALTY (1.5%)
62,000 Ecolab, Inc....................... 2,960,500
46,000 Grace (W. R.) & Co................ 2,535,750
52,000 Great Lakes Chemical Corp......... 2,723,500
55,000 Hercules, Inc..................... 2,633,125
49,000 International Flavors & Fragrances
Inc............................. 2,474,500
82,000 Morton International, Inc......... 2,475,375
65,000 Nalco Chemical Co................. 2,510,625
78,500 Sigma-Aldrich Corp................ 2,742,594
-----------------
21,055,969
-----------------
COMMUNICATIONS EQUIPMENT (1.8%)
96,000 Andrew Corp.*..................... 2,688,000
119,000 DSC Communications Corp.*......... 2,647,750
101,500 General Instrument Corp.*......... 2,537,500
32,000 Harris Corp....................... 2,688,000
40,000 Lucent Technologies, Inc.......... 2,882,500
36,000 Motorola, Inc..................... 2,736,000
33,000 Northern Telecom Ltd. (Canada).... 3,003,000
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
127,000 Scientific-Atlanta, Inc........... $ 2,778,125
50,000 Tellabs, Inc.*.................... 2,787,500
-----------------
24,748,375
-----------------
COMPUTER HARDWARE (2.3%)
276,000 Amdahl Corp.*..................... 2,415,000
168,000 Apple Computer, Inc.*............. 2,383,500
28,500 COMPAQ Computer Corp.*............ 2,828,625
107,000 Data General Corp.*............... 2,782,000
24,000 Dell Computer Corp.*.............. 2,817,000
75,000 Digital Equipment Corp.*.......... 2,657,812
46,000 Hewlett-Packard Co................ 2,576,000
229,900 Intergraph Corp.*................. 1,925,412
29,000 International Business Machines
Corp............................ 2,615,437
165,000 Silicon Graphics, Inc.*........... 2,475,000
77,000 Sun Microsystems, Inc.*........... 2,863,437
190,000 Tandem Computers Inc.*............ 3,847,500
-----------------
32,186,723
-----------------
COMPUTER - NETWORKING (0.8%)
60,000 3Com Corp.*....................... 2,696,250
107,000 Bay Networks, Inc.*............... 2,842,187
86,000 Cabletron Systems, Inc.*.......... 2,434,875
43,000 Cisco Systems, Inc.*.............. 2,886,375
-----------------
10,859,687
-----------------
COMPUTER SOFTWARE & SERVICES (1.9%)
72,000 Adobe Systems, Inc................ 2,524,500
75,000 Autodesk, Inc..................... 2,873,437
52,000 Computer Associates International,
Inc............................. 2,895,750
36,000 Computer Sciences Corp.*.......... 2,596,500
22,000 Microsoft Corp.................... 2,781,625
360,000 Novell, Inc.*..................... 2,486,250
56,000 Oracle Corp.*..................... 2,817,500
58,000 Parametric Technology Corp.*...... 2,465,000
48,500 Shared Medical Systems Corp....... 2,606,875
327,000 Unisys Corp.*..................... 2,493,375
-----------------
26,540,812
-----------------
COMPUTERS - PERIPHERAL EQUIPMENT (0.3%)
69,000 EMC Corp.*........................ 2,691,000
75,000 Seagate Technology, Inc.*......... 2,639,062
-----------------
5,330,062
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
CONSUMER - NONCYCLICAL (0.4%)
78,500 American Greetings Corp. (Class
A).............................. $ 2,904,500
110,000 Jostens, Inc...................... 2,942,500
-----------------
5,847,000
-----------------
CONTAINERS - METAL & GLASS (0.4%)
89,400 Ball Corp......................... 2,687,587
46,000 Crown Cork & Seal Co., Inc........ 2,458,125
-----------------
5,145,712
-----------------
CONTAINERS & PACKAGING (0.7%)
58,900 Bemis Company, Inc................ 2,547,425
190,000 Stone Container Corp.............. 2,719,375
45,000 Temple-Inland, Inc................ 2,430,000
49,000 Union Camp Corp................... 2,450,000
-----------------
10,146,800
-----------------
DATA PROCESSING (0.8%)
54,000 Automatic Data Processing, Inc.... 2,538,000
64,000 Ceridian Corp.*................... 2,704,000
69,000 Equifax, Inc...................... 2,565,937
62,000 First Data Corp................... 2,724,125
-----------------
10,532,062
-----------------
DISTRIBUTORS - CONSUMER PRODUCTS (0.7%)
44,000 Cardinal Health, Inc.............. 2,519,000
137,000 Fleming Companies, Inc............ 2,466,000
74,500 Supervalu, Inc.................... 2,570,250
70,000 Sysco Corp........................ 2,555,000
-----------------
10,110,250
-----------------
ELECTRICAL EQUIPMENT (1.9%)
63,000 AMP, Inc.......................... 2,630,250
46,500 Emerson Electric Co............... 2,560,406
43,000 General Electric Co............... 2,811,125
57,000 General Signal Corp............... 2,486,625
33,000 Grainger (W.W.), Inc.............. 2,580,187
34,000 Honeywell, Inc.................... 2,579,750
34,000 Raychem Corp...................... 2,528,750
41,500 Rockwell International Corp....... 2,448,500
51,000 Thomas & Betts Corp............... 2,680,687
125,000 Westinghouse Electric Corp........ 2,890,625
-----------------
26,196,905
-----------------
ELECTRONICS - DEFENSE (0.2%)
51,000 Raytheon Co....................... 2,601,000
-----------------
ELECTRONICS - INSTRUMENTATION (0.6%)
125,000 EG & G, Inc....................... 2,812,500
36,000 Perkin-Elmer Corp................. 2,864,250
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
48,000 Tektronix, Inc.................... $ 2,880,000
-----------------
8,556,750
-----------------
ELECTRONICS - SEMICONDUCTORS (1.1%)
70,000 Advanced Micro Devices, Inc.*..... 2,520,000
17,500 Intel Corp........................ 2,477,344
77,000 LSI Logic Corp.*.................. 2,464,000
66,000 Micron Technology, Inc.*.......... 2,635,875
91,500 National Semiconductor Corp.*..... 2,802,187
30,000 Texas Instruments, Inc............ 2,521,875
-----------------
15,421,281
-----------------
ENGINEERING & CONSTRUCTION (0.6%)
49,000 Fluor Corp........................ 2,704,187
62,000 Foster Wheeler Corp............... 2,511,000
105,000 McDermott International, Inc...... 3,064,687
-----------------
8,279,874
-----------------
ENTERTAINMENT (1.1%)
87,000 Brunswick Corp.................... 2,718,750
136,000 Harrah's Entertainment, Inc.*..... 2,482,000
72,900 King World Productions, Inc....... 2,551,500
57,000 Time Warner, Inc.................. 2,750,250
83,000 Viacom, Inc. (Class B)*........... 2,490,000
32,999 Walt Disney Co.................... 2,648,170
-----------------
15,640,670
-----------------
FINANCE - CONSUMER (1.2%)
38,500 Beneficial Corp................... 2,735,906
80,000 Countrywide Credit Industries,
Inc............................. 2,495,000
73,000 Green Tree Financial Corp......... 2,600,625
25,500 Household International, Inc...... 2,994,656
76,500 MBNA Corp......................... 2,801,812
77,000 Providian Financial Corp.......... 2,473,625
-----------------
16,101,624
-----------------
FINANCE - DIVERSIFIED (1.4%)
38,000 American Express Co............... 2,831,000
58,665 American General Corp............. 2,801,254
58,000 Fannie Mae........................ 2,530,250
82,000 Federal Home Loan Mortgage
Corp............................ 2,818,750
24,500 MBIA Inc.......................... 2,763,906
58,000 MGIC Investment Corp.............. 2,780,375
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
65,950 Morgan Stanley, Dean Witter,
Discover & Co. (Note 4)......... $ 2,839,972
-----------------
19,365,507
-----------------
FOODS (2.3%)
54,000 Campbell Soup Co.................. 2,700,000
43,800 ConAgra, Inc...................... 2,808,675
28,000 CPC International Inc............. 2,584,750
38,500 General Mills, Inc................ 2,507,312
58,000 Heinz (H.J.) Co................... 2,675,250
51,000 Hershey Foods Corp................ 2,820,937
31,500 Kellogg Co........................ 2,697,187
61,000 Quaker Oats Company (The)......... 2,737,375
30,500 Ralston-Ralston Purina Group...... 2,506,719
61,000 Sara Lee Corp..................... 2,539,125
13,500 Unilever N.V. (ADR)
(Netherlands)................... 2,943,000
36,500 Wrigley (Wm.) Jr. Co. (Class A)... 2,445,500
-----------------
31,965,830
-----------------
GOLD & PRECIOUS METALS MINING (1.1%)
115,000 Barrick Gold Corp. (Canada)....... 2,530,000
438,000 Battle Mountain Gold Co........... 2,491,125
445,000 Echo Bay Mines Ltd. (Canada)...... 2,558,750
189,000 Homestake Mining Co............... 2,468,812
72,220 Newmont Mining Corp............... 2,816,580
151,000 Placer Dome Inc. (Canada)......... 2,472,625
-----------------
15,337,892
-----------------
HARDWARE & TOOLS (0.4%)
73,000 Black & Decker Corp............... 2,714,687
64,000 Stanley Works..................... 2,560,000
-----------------
5,274,687
-----------------
HEALTHCARE - DIVERSIFIED (2.2%)
42,500 Abbott Laboratories............... 2,836,875
86,000 Allergan, Inc..................... 2,735,875
89,000 Alza Corp.*....................... 2,581,000
36,000 American Home Products Corp....... 2,754,000
175,000 Beverly Enterprises, Inc.*........ 2,843,750
34,000 Bristol-Myers Squibb Co........... 2,754,000
111,000 Heathsouth Corp.*................. 2,768,062
41,000 Johnson & Johnson................. 2,639,375
68,000 Mallinckrodt Group, Inc........... 2,584,000
91,000 Manor Care, Inc................... 2,968,875
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
23,500 Warner-Lambert Co................. $ 2,919,875
-----------------
30,385,687
-----------------
HEALTHCARE - DRUGS (1.0%)
26,000 Lilly (Eli) & Co.................. 2,842,125
28,000 Merck & Co., Inc.................. 2,898,000
24,000 Pfizer, Inc....................... 2,868,000
74,000 Pharmacia & Upjohn, Inc........... 2,571,500
59,000 Schering-Plough Corp.............. 2,824,625
-----------------
14,004,250
-----------------
HEALTHCARE HMOS (0.4%)
117,000 Humana, Inc.*..................... 2,705,625
49,000 United Healthcare Corp............ 2,548,000
-----------------
5,253,625
-----------------
HEAVY DUTY TRUCKS & PARTS (0.6%)
40,000 Cummins Engine Co., Inc........... 2,822,500
167,000 Navistar International Corp.*..... 2,880,750
57,000 PACCAR, Inc....................... 2,643,375
-----------------
8,346,625
-----------------
HOME BUILDING (0.8%)
63,000 Centex Corp....................... 2,559,375
92,000 Fleetwood Enterprises, Inc........ 2,742,750
161,800 Kaufman & Broad Home Corp......... 2,841,612
79,000 Pulte Corp........................ 2,730,437
-----------------
10,874,174
-----------------
HOSPITAL MANAGEMENT (0.4%)
68,000 Columbia/HCA Healthcare Corp...... 2,673,250
96,000 Tenet Healthcare Corp.*........... 2,838,000
-----------------
5,511,250
-----------------
HOTELS/MOTELS (0.8%)
44,000 HFS Incorporated*................. 2,552,000
91,000 Hilton Hotels Corp................ 2,417,187
45,000 ITT Corp.*........................ 2,747,812
44,000 Marriot International, Inc........ 2,700,500
-----------------
10,417,499
-----------------
HOUSEHOLD FURNISHINGS & APPLIANCES (0.4%)
110,000 Maytag Corp....................... 2,873,750
49,000 Whirlpool Corp.................... 2,673,562
-----------------
5,547,312
-----------------
HOUSEHOLD PRODUCTS (0.8%)
21,500 Clorox Co......................... 2,838,000
43,000 Colgate-Palmolive Co.............. 2,805,750
50,000 Kimberly-Clark Corp............... 2,487,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
19,000 Procter & Gamble Co............... $ 2,683,750
-----------------
10,815,000
-----------------
HOUSEWARES (0.8%)
70,500 Fortune Brands, Inc............... 2,630,531
64,500 Newell Co......................... 2,555,812
94,000 Rubbermaid, Inc................... 2,796,500
68,000 Tupperware Corp................... 2,482,000
-----------------
10,464,843
-----------------
INSURANCE BROKERS (0.4%)
54,000 Aon Corp.......................... 2,794,500
39,000 Marsh & McLennan Companies,
Inc............................. 2,783,625
-----------------
5,578,125
-----------------
INVESTMENT BANKING/BROKERAGE (0.6%)
46,000 Merrill Lynch & Co., Inc.......... 2,742,750
45,000 Salomon, Inc...................... 2,503,125
62,000 Schwab (Charles) Corp............. 2,522,625
-----------------
7,768,500
-----------------
LIFE & HEALTH INSURANCE (1.2%)
27,000 Aetna Inc......................... 2,764,125
67,000 Conseco Inc....................... 2,479,000
38,500 Jefferson-Pilot Corp.............. 2,690,187
40,000 Torchmark Corp.................... 2,850,000
27,800 Transamerica Corp................. 2,601,037
64,000 UNUM Corp......................... 2,688,000
-----------------
16,072,349
-----------------
MACHINERY - DIVERSIFIED (2.0%)
44,000 Case Corp......................... 3,030,500
27,000 Caterpillar, Inc.................. 2,899,125
113,000 Cincinnati Milacron, Inc.......... 2,930,937
53,000 Cooper Industries, Inc............ 2,636,750
51,000 Deere & Co........................ 2,798,625
44,500 Dover Corp........................ 2,736,750
61,000 Harnischfeger Industries, Inc..... 2,531,500
47,000 Ingersoll-Rand Co................. 2,902,250
42,800 NACCO Industries, Inc. (Class
A).............................. 2,415,525
86,000 Timken Co......................... 3,058,375
-----------------
27,940,337
-----------------
MANUFACTURING (1.2%)
65,000 Avery Dennison Corp............... 2,608,125
50,000 Briggs & Stratton Corp............ 2,500,000
151,000 Giddings & Lewis, Inc............. 3,133,250
56,000 Millipore Corp.................... 2,464,000
110,000 Pall Corp......................... 2,557,500
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
49,000 Parker-Hannifin Corp.............. $ 2,973,687
-----------------
16,236,562
-----------------
MANUFACTURING - DIVERSIFIED (2.8%)
60,000 Aeroquip-Vickers, Inc............. 2,835,000
31,500 AlliedSignal, Inc................. 2,646,000
51,000 Corning, Inc...................... 2,836,875
69,000 Crane Co.......................... 2,885,062
32,000 Eaton Corp........................ 2,794,000
52,000 Illinois Tool Works, Inc.......... 2,596,750
61,000 Johnson Controls, Inc............. 2,504,812
26,000 Minnesota Mining & Manufacturing
Co.............................. 2,652,000
55,000 National Service Industries,
Inc............................. 2,677,813
58,000 Tenneco, Inc...................... 2,620,875
43,600 Textron Inc....................... 2,893,950
75,000 Thermo Electron Corp.*............ 2,550,000
41,000 Tyco International Ltd............ 2,852,063
32,000 United Technologies Corp.......... 2,656,000
-----------------
38,001,200
-----------------
MEDICAL PRODUCTS & SUPPLIES (2.0%)
79,000 Bard (C.R.), Inc.................. 2,868,688
62,000 Bausch & Lomb, Inc................ 2,921,750
52,000 Baxter International, Inc......... 2,717,000
49,500 Becton, Dickinson & Co............ 2,505,938
150,000 Biomet, Inc....................... 2,793,750
41,500 Boston Scientific Corp.*.......... 2,549,656
35,000 Guidant Corp...................... 2,975,000
34,000 Medtronic, Inc.................... 2,754,000
68,000 St. Jude Medical, Inc.*........... 2,652,000
70,000 United States Surgical Corp....... 2,607,500
-----------------
27,345,282
-----------------
METALS & MINING (1.0%)
87,000 ASARCO Inc........................ 2,664,375
104,000 Cyprus Amax Minerals Co........... 2,548,000
87,000 Freeport-McMoran Copper & Gold,
Inc. (Class B).................. 2,707,875
86,000 Inco Ltd. (Canada)................ 2,585,375
32,000 Phelps Dodge Corp................. 2,726,000
-----------------
13,231,625
-----------------
MULTI-LINE INSURANCE (1.2%)
20,000 American International Group,
Inc............................. 2,987,500
15,800 CIGNA Corp........................ 2,804,500
34,000 Hartford Financial Services Group
Inc............................. 2,813,500
42,500 Lincoln National Corp............. 2,735,938
26,000 Loews Corp........................ 2,603,250
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
44,000 Travelers Group, Inc.............. $ 2,774,750
-----------------
16,719,438
-----------------
OFFICE EQUIPMENT & SUPPLIES (0.4%)
126,000 Moore Corp. Ltd. (Canada)......... 2,480,625
39,000 Pitney Bowes, Inc................. 2,710,500
-----------------
5,191,125
-----------------
OIL & GAS DRILLING & EQUIPMENT (1.4%)
66,000 Baker Hughes, Inc................. 2,553,375
77,000 Dresser Industries, Inc........... 2,868,250
36,000 Halliburton Co.................... 2,853,000
50,000 Helmerich & Payne, Inc............ 2,881,250
109,000 Rowan Companies, Inc.*............ 3,072,438
22,000 Schlumberger, Ltd................. 2,750,000
38,000 Western Atlas, Inc.*.............. 2,783,500
-----------------
19,761,813
-----------------
OIL - EXPLORATION & PRODUCTION (0.6%)
57,000 Burlington Resources, Inc......... 2,515,125
125,000 Oryx Energy Co.*.................. 2,640,625
170,000 Santa Fe Energy Resources,
Inc.*........................... 2,496,875
-----------------
7,652,625
-----------------
OIL INTEGRATED - DOMESTIC (2.3%)
48,000 Amerada Hess Corp................. 2,667,000
57,000 Ashland, Inc...................... 2,643,375
36,000 Atlantic Richfield Co............. 2,538,000
39,500 Kerr-McGee Corp................... 2,503,313
47,200 Louisiana Land & Exploration
Co.............................. 2,696,300
100,000 Occidental Petroleum Corp......... 2,506,250
42,500 Pennzoil Co....................... 3,261,875
58,000 Phillips Petroleum Co............. 2,537,500
85,000 Sun Co., Inc...................... 2,635,000
100,000 Union Pacific Resources Group,
Inc............................. 2,487,500
64,000 Unocal Corp....................... 2,484,000
90,000 USX-Marathon Group................ 2,598,750
-----------------
31,558,863
-----------------
OIL INTEGRATED - INTERNATIONAL (1.2%)
28,500 Amoco Corp........................ 2,477,719
36,000 Chevron Corp...................... 2,661,750
44,000 Exxon Corp........................ 2,706,000
36,500 Mobil Corp........................ 2,550,438
54,000 Royal Dutch Petroleum Co. (ADR)
(Netherlands)................... 2,936,250
23,500 Texaco, Inc....................... 2,555,625
-----------------
15,887,782
-----------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
PAPER & FOREST PRODUCTS (2.1%)
71,000 Boise Cascade Corp................ $ 2,507,188
52,500 Champion International Corp....... 2,900,625
32,500 Georgia-Pacific Corp.............. 2,774,688
53,000 International Paper Co............ 2,573,813
75,000 James River Corp. of Virginia..... 2,775,000
123,000 Louisiana-Pacific Corp............ 2,598,375
40,000 Mead Corp......................... 2,490,000
55,000 Potlatch Corp..................... 2,488,750
85,000 Westvaco Corp..................... 2,672,188
47,000 Weyerhaeuser Co................... 2,444,000
37,000 Willamette Industries, Inc........ 2,590,000
-----------------
28,814,627
-----------------
PERSONAL PRODUCTS (0.6%)
91,000 Alberto-Culver Co. (Class B)...... 2,548,000
40,000 Avon Products, Inc................ 2,822,500
30,500 Gillette Co....................... 2,889,875
-----------------
8,260,375
-----------------
PHOTOGRAPHY/IMAGING (0.8%)
32,000 Eastman Kodak Co.................. 2,456,000
101,000 Ikon Office Solutions, Inc........ 2,518,688
52,000 Polaroid Corp..................... 2,886,000
37,000 Xerox Corp........................ 2,918,375
-----------------
10,779,063
-----------------
POLLUTION CONTROL (0.2%)
182,000 Laidlaw, Inc. (Class B)
(Canada)........................ 2,513,875
-----------------
PROPERTY - CASUALTY INSURANCE (1.2%)
39,500 Allstate Corp..................... 2,883,500
42,000 Chubb Corp........................ 2,808,750
13,500 General Re Corp................... 2,457,000
56,000 Safeco Corp....................... 2,614,500
35,000 St. Paul Companies, Inc........... 2,668,750
114,500 USF&G Corp........................ 2,748,000
-----------------
16,180,500
-----------------
PUBLISHING (0.9%)
63,000 Dow Jones & Co., Inc.............. 2,531,813
95,000 Dun & Bradstreet Corp............. 2,493,750
45,000 McGraw-Hill, Inc.................. 2,646,563
90,000 Meredith Corp..................... 2,610,000
44,500 Times Mirror Co. (Class A)........ 2,458,625
-----------------
12,740,751
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
PUBLISHING - NEWSPAPER (0.8%)
28,000 Gannett Co., Inc.................. $ 2,765,000
54,000 Knight-Ridder Newspapers, Inc..... 2,649,375
56,000 New York Times Co. (Class A)...... 2,772,000
58,000 Tribune Co........................ 2,787,625
-----------------
10,974,000
-----------------
RAILROADS (0.8%)
28,500 Burlington Northern Santa Fe
Corp............................ 2,561,438
49,000 CSX Corp.......................... 2,719,500
26,500 Norfolk Southern Corp............. 2,669,875
37,500 Union Pacific Corp................ 2,643,750
-----------------
10,594,563
-----------------
RESTAURANTS (0.6%)
287,000 Darden Restaurants, Inc........... 2,600,938
52,000 McDonald's Corp................... 2,512,250
107,000 Wendy's International, Inc........ 2,775,313
-----------------
7,888,501
-----------------
RETAIL - DEPARTMENT STORES (1.4%)
78,000 Dillard Department Stores, Inc.
(Class A)....................... 2,700,750
73,000 Federated Department Stores,
Inc.*........................... 2,536,750
54,000 Harcourt General, Inc............. 2,571,750
52,000 May Department Stores Co.......... 2,457,000
45,000 Mercantile Stores Co., Inc........ 2,832,188
61,000 Nordstrom, Inc.................... 2,989,000
48,500 Penney (J.C.) Co., Inc............ 2,531,094
-----------------
18,618,532
-----------------
RETAIL - DRUG STORES (0.8%)
50,000 CVS Corp.......................... 2,562,500
99,000 Longs Drug Stores Corp............ 2,592,563
59,500 Rite Aid Corp..................... 2,967,563
52,500 Walgreen Co....................... 2,815,313
-----------------
10,937,939
-----------------
RETAIL - FOOD CHAINS (1.2%)
74,000 Albertson's, Inc.................. 2,701,000
55,000 American Stores Co................ 2,715,625
76,000 Giant Food, Inc. (Class A)........ 2,479,500
94,000 Great Atlantic & Pacific Tea Co.,
Inc............................. 2,555,625
98,000 Kroger Co.*....................... 2,842,000
67,600 Winn-Dixie Stores, Inc............ 2,518,100
-----------------
15,811,850
-----------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
RETAIL - GENERAL MERCHANDISE (1.0%)
85,000 Costco Companies Inc.*............ $ 2,794,375
55,000 Dayton-Hudson Corp................ 2,925,313
202,000 Kmart Corp.*...................... 2,474,500
48,500 Sears, Roebuck & Co............... 2,606,875
86,000 Wal-Mart Stores, Inc. (Class A)... 2,907,875
-----------------
13,708,938
-----------------
RETAIL - SPECIALTY (1.7%)
115,000 AutoZone, Inc.*................... 2,709,688
69,000 Circuit City Stores, Inc.......... 2,453,813
41,000 Home Depot, Inc................... 2,826,438
71,000 Lowe's Companies, Inc............. 2,635,875
82,000 Pep Boys-Manny, Moe & Jack........ 2,793,125
80,000 Sherwin-Williams Co............... 2,470,000
47,000 Tandy Corp........................ 2,632,000
82,000 Toys 'R' Us, Inc.*................ 2,870,000
111,000 Woolworth Corp.*.................. 2,664,000
-----------------
24,054,939
-----------------
RETAIL - SPECIALTY APPAREL (0.8%)
490,000 Charming Shoppes, Inc.*........... 2,557,188
75,000 Gap, Inc.......................... 2,915,625
132,000 Limited (The), Inc................ 2,673,000
108,000 TJX Companies, Inc................ 2,848,500
-----------------
10,994,313
-----------------
SAVINGS & LOAN COMPANIES (0.6%)
62,000 Ahmanson (H.F.) & Co.............. 2,666,000
37,000 Golden West Financial Corp........ 2,590,000
52,000 Great Western Financial Corp...... 2,795,000
-----------------
8,051,000
-----------------
SEMICONDUCTOR EQUIPMENT (0.2%)
40,000 Applied Materials, Inc.*.......... 2,830,000
-----------------
SHOES (0.6%)
43,000 Nike, Inc. (Class B).............. 2,510,125
60,500 Reebok International Ltd.......... 2,828,375
187,000 Stride Rite Corp.................. 2,407,625
-----------------
7,746,125
-----------------
SPECIALIZED SERVICES (1.0%)
80,500 Block (H.&R.), Inc................ 2,596,125
109,000 CUC International, Inc.*.......... 2,813,563
45,000 Interpublic Group of Companies,
Inc............................. 2,759,063
160,000 Safety-Kleen Corp................. 2,700,000
75,000 Service Corp. International....... 2,465,625
-----------------
13,334,376
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
SPECIALTY PRINTING (0.6%)
78,000 Deluxe Corp....................... $ 2,661,750
71,000 Donnelley (R.R.) & Sons Co........ 2,600,375
110,000 Harland (John H.) Co.............. 2,509,375
-----------------
7,771,500
-----------------
STEEL & IRON (1.3%)
95,000 Allegheny Teledyne Inc............ 2,565,000
456,800 Armco, Inc.*...................... 1,770,100
266,000 Bethlehem Steel Corp.*............ 2,776,375
104,000 Inland Steel Industries, Inc...... 2,717,000
48,000 Nucor Corp........................ 2,712,000
82,000 USX-U.S. Steel Group.............. 2,875,125
135,000 Worthington Industries, Inc....... 2,472,188
-----------------
17,887,788
-----------------
TELECOMMUNICATIONS (0.2%)
92,000 Airtouch Communications, Inc.*.... 2,518,500
-----------------
TELECOMMUNICATIONS - LONG DISTANCE (0.8%)
70,000 AT&T Corp......................... 2,454,375
71,000 MCI Communications Corp........... 2,715,750
56,000 Sprint Corp....................... 2,947,000
90,000 WorldCom, Inc.*................... 2,874,375
-----------------
10,991,500
-----------------
TELEPHONES (1.7%)
75,000 Alltel Corp....................... 2,507,813
39,500 Ameritech Corp.................... 2,683,531
36,500 Bell Atlantic Corp................ 2,769,438
57,000 BellSouth Corp.................... 2,643,375
126,400 Frontier Corporation.............. 2,520,100
57,500 GTE Corp.......................... 2,522,813
47,000 NYNEX Corp........................ 2,708,375
47,000 SBC Communications, Inc........... 2,908,125
67,500 U.S. West Communications Group,
Inc............................. 2,543,906
-----------------
23,807,476
-----------------
TEXTILES (1.0%)
82,000 Fruit of the Loom, Inc. (Class
A)*............................. 2,542,000
53,500 Liz Claiborne, Inc................ 2,494,438
85,000 Russell Corp...................... 2,518,125
53,000 Springs Industries, Inc. (Class
A).............................. 2,795,750
32,500 VF Corp........................... 2,766,563
-----------------
13,116,876
-----------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
TOBACCO (0.4%)
61,500 Philip Morris Companies, Inc...... $ 2,729,063
90,000 UST, Inc.......................... 2,497,500
-----------------
5,226,563
-----------------
TOYS (0.4%)
90,000 Hasbro Inc........................ 2,553,750
84,000 Mattel, Inc....................... 2,845,500
-----------------
5,399,250
-----------------
TRUCKERS (0.4%)
77,000 Caliber System, Inc............... 2,868,250
79,200 Ryder System, Inc................. 2,613,600
-----------------
5,481,850
-----------------
UTILITIES - ELECTRIC (4.9%)
60,000 American Electric Power Company,
Inc............................. 2,520,000
98,000 Baltimore Gas & Electric Co....... 2,615,375
73,500 Carolina Power & Light Co......... 2,636,813
123,000 Central & South West Corp......... 2,613,750
73,000 CINergy Corp...................... 2,541,313
86,000 Consolidated Edison Co. of New
York, Inc....................... 2,531,625
71,000 Dominion Resources, Inc........... 2,600,375
92,900 DTE Energy Co..................... 2,566,363
61,000 Duke Power Co..................... 2,924,188
110,000 Edison International.............. 2,736,250
96,000 Entergy Corp...................... 2,628,000
57,000 FPL Group, Inc.................... 2,625,563
70,000 GPU, Inc.......................... 2,511,250
117,000 Houston Industries, Inc........... 2,508,188
300,000 Niagara Mohawk Power Corp.*....... 2,568,750
49,000 Northern States Power Co.......... 2,535,750
115,500 Ohio Edison Co.................... 2,519,344
120,000 Pacificorp........................ 2,640,000
123,000 PECO Energy Co.................... 2,583,000
104,000 PG & E Corp....................... 2,522,000
128,000 PP&L Resources, Inc............... 2,552,000
104,500 Public Service Enterprise Group,
Inc............................. 2,612,500
120,000 Southern Co....................... 2,625,000
75,000 Texas Utilities Co................ 2,582,813
113,000 Unicom Corp....................... 2,514,250
67,000 Union Electric Co................. 2,525,063
-----------------
67,339,523
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS JUNE 30, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
UTILITIES - NATURAL GAS (2.4%)
47,000 Coastal Corp...................... $ 2,499,813
39,000 Columbia Gas System, Inc.......... 2,544,750
47,000 Consolidated Natural Gas Co....... 2,529,188
72,000 Eastern Enterprises............... 2,497,500
67,000 Enron Corp........................ 2,734,438
113,000 Enserch Corp...................... 2,514,250
71,000 NICOR Inc......................... 2,547,125
163,000 NorAm Energy Corp................. 2,485,750
87,000 ONEOK Inc......................... 2,800,313
75,000 Pacific Enterprises............... 2,521,875
67,500 Peoples Energy Corp............... 2,527,031
48,000 Sonat, Inc........................ 2,460,000
62,500 Williams Companies, Inc........... 2,734,375
-----------------
33,396,408
-----------------
WASTE MANAGEMENT (0.4%)
83,500 Browning-Ferris Industries,
Inc............................. 2,776,375
77,500 Waste Management Inc.............. 2,489,688
-----------------
5,266,063
-----------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $844,911,233).... 1,331,136,225
-----------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- -----------
<C> <S> <C>
SHORT-TERM INVESTMENTS (2.1%)
U.S. GOVERNMENT AGENCY (a) (2.0%)
$ 27,000 Federal Home Loan Mortgage Corp.
6.00% due 07/01/97 (Amortized
Cost $27,000,000)............... 27,000,000
-----------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (0.1%)
$ 1,255 The Bank of New York 5.75% due
07/01/97 (dated 06/30/97;
proceeds $1,255,537;
collateralized by $590,292 U.S.
Treasury Bill 0.00% due 11/06/97
valued at $579,714; $450,000
U.S. Treasury Bond 14.25% due
02/15/02 valued at $613,484; and
$85,913 U.S. Treasury Note 5.25%
due 07/31/98 valued at $87,245)
(Identified Cost $1,255,336).... $ 1,255,336
-----------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $28,255,336)..... 28,255,336
-----------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$873,166,569) (B).......... 99.3% 1,359,391,561
OTHER ASSETS IN EXCESS OF
LIABILITIES................ 0.7 10,345,807
----- -------------
NET ASSETS................. 100.0% $1,369,737,368
----- -------------
----- -------------
<FN>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(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 is $500,418,172 and the
aggregate gross unrealized depreciation is $14,193,180, resulting in net
unrealized appreciation of $486,224,992.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $873,166,569)............................ $1,359,391,561
Receivable for:
Investments sold (Note 4)............................... 23,767,532
Shares of beneficial interest sold...................... 2,906,678
Dividends............................................... 1,565,674
Dividends from affiliate (Note 4)....................... 9,240
Prepaid expenses and other assets........................... 36,375
--------------
TOTAL ASSETS........................................... 1,387,677,060
--------------
LIABILITIES:
Payable for:
Investments purchased................................... 15,378,599
Plan of distribution fee................................ 910,656
Shares of beneficial interest repurchased............... 781,669
Investment management fee............................... 529,659
Accrued expenses and other payables......................... 339,109
--------------
TOTAL LIABILITIES...................................... 17,939,692
--------------
NET ASSETS:
Paid-in-capital............................................. 854,878,463
Net unrealized appreciation................................. 486,224,992
Accumulated undistributed net investment income............. 3,226,288
Accumulated undistributed net realized gain................. 25,407,625
--------------
NET ASSETS............................................. $1,369,737,368
--------------
--------------
NET ASSET VALUE PER SHARE,
41,557,562 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$32.96
--------------
--------------
</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, 1997
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $62,293 foreign withholding tax).......... $ 21,476,443
Dividends from affiliate (Note 4)........................... 34,320
Interest.................................................... 1,557,331
------------
TOTAL INCOME........................................... 23,068,094
------------
EXPENSES
Plan of distribution fee.................................... 9,411,862
Investment management fee................................... 5,253,245
Transfer agent fees and expenses............................ 973,501
S&P license fee............................................. 167,860
Registration fees........................................... 117,171
Shareholder reports and notices............................. 94,574
Custodian fees.............................................. 70,277
Professional fees........................................... 58,367
Trustees' fees and expenses................................. 24,746
Other....................................................... 13,902
------------
TOTAL EXPENSES......................................... 16,185,505
------------
NET INVESTMENT INCOME.................................. 6,882,589
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 29,310,632
Net change in unrealized appreciation....................... 223,988,603
------------
NET GAIN............................................... 253,299,235
------------
NET INCREASE................................................ $260,181,824
------------
------------
</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, 1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 6,882,589 $ 6,575,695
Net realized gain........................................... 29,310,632 22,043,253
Net change in unrealized appreciation....................... 223,988,603 110,384,142
------------- ------------
NET INCREASE........................................... 260,181,824 139,003,090
------------- ------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income....................................... (6,849,389) (8,195,588)
Net realized gain........................................... (20,247,286) (3,791,857)
------------- ------------
TOTAL.................................................. (27,096,675) (11,987,445)
------------- ------------
Net increase from transactions in shares of beneficial
interest.................................................. 175,057,823 192,491,722
------------- ------------
NET INCREASE........................................... 408,142,972 319,507,367
NET ASSETS:
Beginning of period......................................... 961,594,396 642,087,029
------------- ------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$3,226,288 AND $3,193,088, RESPECTIVELY)................ $1,369,737,368 $961,594,396
------------- ------------
------------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997
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 to achieve a 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 included 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, American or other domestic or foreign 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 (in
cases where a security is traded on more than one exchange, the security is
valued on the exchange designated as the primary market pursuant to procedures
adopted by the Trustees); (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by Dean Witter InterCapital Inc. (the "Investment Manager") that sale
or bid prices are not reflective of a security's market value, portfolio
securities are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Trustees; and
(4) short-term debt securities having a maturity date of more than sixty days at
time of purchase are valued on a mark-to-market basis until sixty days prior to
maturity and thereafter at amortized cost based on their value on the 61st day.
Short-term debt securities having a maturity date of sixty days or less at the
time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the respective life of the securities. Interest
income is accrued daily.
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997, CONTINUED
C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the 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 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; 0.45% to the portion of daily net assets
exceeding $500 million but not exceeding $1 billion; and 0.425% to the portion
of daily net assets exceeding $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
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997, CONTINUED
and payable monthly, at an annual rate of 1.0% of the lesser of: (a) the average
daily aggregate gross sales of the Fund's shares since the 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 others 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 utilize
fees paid pursuant to the Plan to compensate DWR and other selected
broker-dealers for their opportunity costs in advancing such amounts, which
compensation would be in the form of a carrying charge on any unreimbursed
distribution expenses.
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, including carrying charges, total $61,114,557 at
June 30, 1997.
The Distributor has informed the Fund that for the year ended June 30, 1997, it
received approximately $1,243,000 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, 1997 aggregated $260,623,188
and $115,034,846, respectively. Included in the aforementioned are sales of U.S.
Government securities of $172,067.
<PAGE>
DEAN WITTER VALUE-ADDED MARKET SERIES -- EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997, CONTINUED
Also included in the aforementioned are purchases and sales of common stock of
Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD"), an affiliate of the
Investment Manager, of $211,370 and $3,232,366, respectively, as well as a
realized gain of $1,188,264.
At June 30, 1997, the Fund's receivable for investments sold included unsettled
trades of MSDWD of $1,651,608.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At June 30, 1997, the Fund had
transfer agent fees and expenses payable of approximately $92,000.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended June 30, 1997, included
in Trustees' fees and expenses in the Statement of Operations, amounted to
$9,143. At June 30, 1997, the Fund had an accrued pension liability of $83,488
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 FOR THE YEAR
ENDED ENDED
JUNE 30, 1997 JUNE 30, 1996
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 13,005,357 $ 378,425,492 12,467,241 $314,913,953
Reinvestment of dividends and distributions...................... 865,747 24,803,673 435,932 10,776,245
----------- -------------- ----------- ------------
13,871,104 403,229,165 12,903,173 325,690,198
Repurchased...................................................... (7,810,681) (228,171,342) (5,249,483) (133,198,476)
----------- -------------- ----------- ------------
Net increase..................................................... 6,060,423 $ 175,057,823 7,653,690 $192,491,722
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
6. FEDERAL INCOME TAX STATUS
As of June 30, 1997, the Fund had temporary book/tax differences which were
primarily attributable to capital loss deferrals on wash sales.
7. SUBSEQUENT EVENT
On June 30, 1997, the Fund's Board of Trustees approved a proposal to adopt a
multiple class share structure. Through this arrangement, the Fund will offer
four classes of shares with various sales charges, ongoing fees and other
features. This conversion occurred on July 28, 1997.
<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
FOR THE YEAR ENDED JUNE 30 DECEMBER 1, 1987*
---------------------------------------------------------------------------------------- THROUGH
1997 1996 1995 1994 1993 1992 1991 1990 1989 JUNE 30, 1988
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE
OPERATING PERFORMANCE:
Net asset value,
beginning of
period........... $ 27.09 $ 23.06 $ 19.23 $ 19.17 $ 16.29 $ 14.73 $ 14.21 $ 13.86 $ 12.47 $ 10.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- ------
Net investment
income........... 0.17 0.18 0.19 0.14 0.14 0.17 0.20 0.23 0.24 0.12
Net realized and
unrealized gain.. 6.41 4.23 3.88 0.30 2.86 1.57 0.59 0.62 1.56 2.43
-------- -------- -------- -------- -------- -------- -------- -------- -------- ------
Total from
investment
operations....... 6.58 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......... (0.18) (0.26) (0.09) (0.09) (0.12) (0.18) (0.21) (0.24) (0.24) (0.08)
Net realized
gain........... (0.53) (0.12) (0.15) (0.29) -- -- (0.06) (0.26) (0.17) --
-------- -------- -------- -------- -------- -------- -------- -------- -------- ------
Total dividends
and
distributions.... (0.71) (0.38) (0.24) (0.38) (0.12) (0.18) (0.27) (0.50) (0.41) (0.08)
-------- -------- -------- -------- -------- -------- -------- -------- -------- ------
Net asset value,
end of period.... $ 32.96 $ 27.09 $ 23.06 $ 19.23 $ 19.17 $ 16.29 $ 14.73 $ 14.21 $ 13.86 $ 12.47
-------- -------- -------- -------- -------- -------- -------- -------- -------- ------
-------- -------- -------- -------- -------- -------- -------- -------- -------- ------
TOTAL INVESTMENT
RETURN+........... 24.71% 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.......... 1.45% 1.51% 1.64% 1.68% 1.71% 1.80% 1.80% 1.80% 1.90% 1.60%(2)(3)
Net investment
income........... 0.62% 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......... $1,370 $962 $642 $456 $311 $193 $139 $148 $78 $37
Portfolio turnover
rate............. 11% 10% 11% 19% 6% 9% 20% 10% 10% 12%(1)
Average commission
rate paid........ $0.0304 $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
Series -- Equity Portfolio (the "Fund") at June 30, 1997, 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 nine 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, 1997 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
JULY 18, 1997
1997 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended June 30, 1997, the Fund paid to shareholders
$0.40 per share from long-term capital gains. For such period,
100% of the ordinary dividends qualified for the dividends
received deduction available to corporations.
