<PAGE>
DEAN WITTER UTILITIES FUND
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
The favorable lower interest rate environment that prevailed throughout most
of 1993 was followed by a turn toward higher rates over the final two months of
the year. Dean Witter Utilities Fund responded favorably under these conditions,
producing a competitive total return of 12.79 percent for the fiscal year ended
December 31, 1993.
(GRAPH)
After eight strong months in 1993 the
electric utilities sector began to
underperform in the fall. Clearly,
historically high industry valuation
levels and a turn to higher interest rates
triggered this downturn, but other factors
also were at work, most notably
uncertainty over competition within the
industry. Unanswered questions regarding
regulation and dividend payouts were part
of the equation as well. In response to
this environment, the Fund realized
selective capital gains from the electric
utility sector. These funds on balance
were reinvested in other utility-related
areas, specifically the natural gas and
telecommunications sectors. The foreign
securities in the portfolio were increased
during the year to 6 percent of total
assets; we expect to further broaden the
Fund's non-U.S. exposure to up to 10
percent of total assets. To enhance the
Fund's income and take advantage of
declining interest rates, the Fund's
fixed-income allocation was increased to
34 percent of total assets at year end
from 32 percent as of June 30, 1993. The
accompanying chart illustrates the growth
of a $10,000 investment in the Fund from
inception (April 29, 1988) through the
fiscal year ended December 31, 1993 versus
a similar investment in the issues that
comprise the Standard & Poor's 500.
PORTFOLIO MAKEUP
The Fund maintained a near fully
invested position throughout the fiscal
year. This is likely to continue in 1994 as we remain relatively optimistic
regarding interest rates and believe that inflation will remain within a narrow
range of its modest 1993 level. As of December 31, 1993, the portfolio's equity
allocation was 62 percent of assets. The majority of the Fund's holdings were in
the electric utility sector, followed by the telephone/telecommunications and
natural gas sectors. Key holdings within these respective sectors were Texas
Utilities, AT&T and The Williams Companies. Within the equity investment
component, 9 percent was allocated to selected foreign securities. Telefonos de
Mexico was the largest holding within this sub-sector. A 34 percent allocation
to high-quality, fixed-income securities accounted for the balance of the
portfolio, while 3 percent was held in cash equivalents. The portfolio's
fixed-income
<PAGE>
holdings had an average rating of "A3" and "A", as measured by Moody's Investors
Service, Inc. and Standard & Poor's Corp., respectively.
During 1993, the Fund continued to attract new investors as its asset base
grew to $3.88 billion at year-end from $2.93 billion at the end of 1992. On
December 31, 1993, the Fund paid a quarterly and special dividend of $0.145 and
$0.033 per share, respectively, to shareholders of record on December 23, 1993,
with the full-year payout totaling $0.613 per share. On that same date, the Fund
also paid short-and long-term capital gains distributions of $0.047 and $0.060,
respectively, to shareholders of record on December 23, 1993. Future quarterly
distributions will be based primarily on the level of interest rates and overall
portfolio strategy.
LOOKING AHEAD
We believe the Fund is well-positioned to meet its objective of relatively
low volatility, above-average yield and good long-term growth. Through its
growing portfolio of non-U.S. securities, the Fund is poised to participate in
the wide range of new global telecommunications markets and services. The Fund
remains well-positioned to benefit from the restructuring and growth of the
natural gas industry, as well as from an increasingly competitive and
deregulated electric utilities sector.
We appreciate your support of Dean Witter Utilities Fund, and look forward
to serving your future investment needs and objectives.
Very truly yours,
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
<PAGE>
Dean Witter Utilities Fund
Portfolio of Investments DECEMBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- --------- ----------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (31.2%)
ELECTRIC UTILITIES (22.8%)
$ 1,499 AEP Generating Co..................................................... 9.81% 12/ 7/22 $ 1,879,444
2,000 Arizona Public Service Company........................................ 7.625 6/15/99 2,147,840
7,000 Arizona Public Service Company........................................ 7.25 8/ 1/23 6,720,420
14,000 Arizona Public Service Company........................................ 8.00 2/ 1/25 14,592,760
17,000 Arkansas Power & Light Company........................................ 7.00 10/ 1/23 15,821,730
10,000 BVPS II Funding....................................................... 8.68 6/ 1/17 11,363,800
5,000 Carolina Power & Light Company........................................ 8.20 7/ 1/22 5,401,900
3,000 Central Hudson Gas & Electric Corp.................................... 9.25 5/ 1/21 3,502,410
5,000 Central Power & Light Company......................................... 7.50 4/ 1/23 5,069,900
6,000 Chugach Electric Company.............................................. 9.14 3/15/22 7,058,520
5,000 Cincinnati Gas & Electric Company..................................... 10.125 5/ 1/20 5,412,000
8,000 Cincinnati Gas & Electric Company..................................... 8.50 9/ 1/22 8,863,200
12,000 Cincinnati Gas & Electric Company..................................... 7.20 10/ 1/23 11,699,040
10,000 Commonwealth Edison Company........................................... 7.50 7/ 1/13 10,068,800
5,000 Commonwealth Edison Company........................................... 9.50 5/ 1/16 5,613,500
6,000 Commonwealth Edison Company........................................... 8.875 10/ 1/21 6,756,780
10,000 Commonwealth Edison Company........................................... 8.50 7/15/22 10,628,000
5,000 Commonwealth Edison Company........................................... 8.375 9/15/22 5,293,200
5,000 Commonwealth Edison Company........................................... 7.75 7/15/23 5,027,100
10,000 Consolidated Edison of New York....................................... 7.50 6/15/23 10,200,100
16,000 Consumer Power Company................................................ 7.375 9/15/23 15,465,920
10,000 CTC Beaver Valley Funding Corp........................................ 9.00 6/ 1/17 9,404,900
5,000 CTC Mansfield Funding Corp............................................ 10.25 3/30/03 5,150,000
5,000 CTC Mansfield Funding Corp............................................ 11.125 9/30/16 5,275,000
10,000 Dayton Power & Light Company.......................................... 8.15 1/15/26 10,703,400
5,000 Detroit Edison Company................................................ 7.74 6/ 1/18 5,069,600
5,000 Detroit Edison Company................................................ 8.27 8/ 1/22 5,382,750
10,000 Detroit Edison Company................................................ 7.77 3/15/23 10,218,100
20,000 DQU II Funding Corp................................................... 8.70 6/ 1/16 22,479,000
10,000 Duke Power Company.................................................... 8.75 3/ 1/21 10,469,000
5,000 Duke Power Company.................................................... 8.625 3/ 1/22 5,660,900
15,000 Duke Power Company.................................................... 7.00 7/ 1/33 14,476,650
5,000 Duquesne Lighting Company............................................. 7.625 4/15/23 5,035,900
5,000 Florida Power & Light Company......................................... 7.75 2/ 1/23 5,107,150
5,000 Florida Power & Light Company......................................... 7.625 6/ 1/24 5,063,450
1,000 GG1A Funding Corp..................................................... 11.07 1/15/04 1,056,930
3,000 GG1A Funding Corp..................................................... 11.50 1/15/14 3,263,700
10,000 Gulf States Utility Company........................................... 8.94 1/ 1/22 10,891,700
13,000 Gulf States Utility Company........................................... 8.70 4/ 1/24 14,254,630
5,000 Houston Light & Power Company......................................... 8.75 3/ 1/22 5,581,000
13,000 Houston Light & Power Company......................................... 7.75 3/15/23 13,343,850
12,000 Illinois Power Company................................................ 8.75 7/ 1/21 13,220,280
5,000 Illinois Power Company................................................ 8.00 2/15/23 5,136,850
10,000 Illinois Power Company................................................ 7.50 7/15/25 9,877,700
5,000 Jersey Central Power & Light Company.................................. 10.125 4/ 1/19 5,365,500
15,000 Jersey Central Power & Light Company.................................. 6.75 11/ 1/25 13,960,500
8,000 Long Island Lighting Company.......................................... 8.90 7/15/19 8,357,200
5,000 Long Island Lighting Company.......................................... 9.75 5/ 1/21 5,674,700
10,000 Long Island Lighting Company.......................................... 9.00 11/ 1/22 10,428,200
14,100 Long Island Lighting Company.......................................... 8.20 3/15/23 13,852,263
5,000 Long Island Lighting Company.......................................... 9.625 7/ 1/24 5,694,450
7,000 Louisiana Land & Exploration Co. (The)................................ 7.65 12/ 1/23 6,907,390
</TABLE>
<PAGE>
Dean Witter Utilities Fund
Portfolio of Investments DECEMBER 31, 1993 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- --------- ----------------
<C> <S> <C> <C> <C>
$ 4,000 Monongahela Power Company............................................. 8.875% 8/ 1/19 $ 4,268,000
10,100 National Cooperative Services Corp.................................... 9.375 1/ 2/11 10,668,630
2,903 National Rural Utilities Finance Corp................................. 9.48 1/ 1/12 3,150,684
5,250 National Rural Utilities Finance Corp................................. 9.00 9/ 1/21 6,176,887
5,000 New York State Electric & Gas Corp.................................... 6.75 10/15/02 5,093,200
5,000 New York State Electric & Gas Corp.................................... 9.875 2/ 1/20 5,574,900
3,000 New York State Electric & Gas Corp.................................... 8.875 11/ 1/21 3,368,940
2,000 Niagara Mohawk Power Corp............................................. 9.75 11/ 1/05 2,496,700
4,955 Niagara Mohawk Power Corp............................................. 8.77 1/ 1/18 5,367,751
3,750 Niagara Mohawk Power Corp............................................. 8.75 4/ 1/22 4,127,175
14,000 Niagara Mohawk Power Corp............................................. 8.50 7/ 1/23 15,027,460
5,000 Niagara Mohawk Power Corp............................................. 7.875 4/ 1/24 5,082,050
5,000 Northeast Utilities................................................... 8.58 12/ 1/06 5,831,100
5,000 Ohio Edison Company................................................... 8.25 4/ 1/02 5,600,650
5,000 Ohio Edison Company................................................... 7.375 9/15/02 5,292,150
7,000 Old Dominion Electric Company......................................... 8.76 12/ 1/22 8,159,480
7,000 Pacific Gas & Electric Company........................................ 8.25 11/ 1/22 7,611,800
15,000 Pacific Gas & Electric Company........................................ 6.75 10/ 1/23 14,033,250
6,750 Pacific Gas & Electric Company........................................ 7.25 3/ 1/26 6,648,818
25,000 Pacific Gas & Electric Company........................................ 7.25 8/ 1/26 24,693,250
5,000 Pennsylvania Power & Light Company.................................... 10.00 1/ 1/19 5,374,000
3,000 Pennsylvania Power & Light Company.................................... 9.25 10/ 1/19 3,430,200
2,000 Pennsylvania Power & Light Company.................................... 9.375 7/ 1/21 2,374,260
5,000 Pennsylvania Power & Light Company.................................... 8.50 5/ 1/22 5,452,250
5,500 Pennsylvania Power & Light Company.................................... 7.875 2/ 1/23 5,768,675
15,000 Pennsylvania Power & Light Company.................................... 6.75 10/ 1/23 14,033,250
8,000 Philadelphia Electric Company......................................... 8.625 6/ 1/22 8,689,440
7,000 Philadelphia Electric Company......................................... 8.25 9/ 1/22 7,340,830
10,000 Philadelphia Electric Company......................................... 7.75 5/ 1/23 9,976,000
5,000 Philadelphia Electric Company......................................... 7.25 11/ 1/24 4,735,200
5,000 PNPP II (Perry Nuclear Power Plant) Funding Corp...................... 9.12 5/30/16 5,675,250
4,000 Potomac Edison Company................................................ 9.25 6/ 1/19 4,280,000
10,000 Potomac Electric Power Company........................................ 7.25 7/ 1/23 9,827,700
12,250 Public Service Company of Colorado.................................... 8.75 3/ 1/22 13,719,755
4,900 Public Service Electric & Gas Company................................. 9.75 7/ 1/20 5,328,750
20,000 Public Service Electric & Gas Company................................. 7.00 9/ 1/24 19,218,400
4,000 South Carolina Electric Company....................................... 8.875 8/15/21 4,498,920
7,000 South Carolina Electric Company....................................... 7.625 6/ 1/23 7,094,430
5,000 South Carolina Electric Company....................................... 7.50 6/15/23 5,005,550
8,000 Southern California Edison Company.................................... 8.875 5/ 1/23 8,956,320
5,000 Southern California Edison Company.................................... 8.875 6/ 1/24 5,590,000
14,000 Southern California Edison Company.................................... 7.25 3/ 1/26 13,827,800
2,000 Systems Energy Resource............................................... 11.375 9/ 1/16 2,107,960
4,000 Texas Utilities Electric Company...................................... 7.46 1/ 1/15 4,070,760
5,000 Texas Utilities Electric Company...................................... 10.00 8/ 1/19 5,447,700
8,000 Texas Utilities Electric Company...................................... 10.625 9/ 1/20 9,265,280
12,000 Texas Utilities Electric Company...................................... 8.875 2/ 1/22 13,283,760
5,000 Texas Utilities Electric Company...................................... 8.75 11/ 1/23 5,504,600
10,000 Texas Utilities Electric Company...................................... 7.875 4/ 1/24 10,202,300
9,000 Union Electric Company................................................ 8.25 10/15/22 9,875,610
8,000 United Illuminating Company........................................... 10.24 1/ 2/20 9,100,720
8,000 Utilicorp United, Inc................................................. 9.00 11/15/21 9,220,160
10,000 Utilicorp United, Inc................................................. 8.00 3/ 1/23 10,096,000
3,000 Western Resources, Inc................................................ 8.50 7/ 1/22 3,329,790
</TABLE>
<PAGE>
Dean Witter Utilities Fund
Portfolio of Investments DECEMBER 31, 1993 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- --------- ----------------
<C> <S> <C> <C> <C>
$ 7,000 Western Resources, Inc................................................ 7.65% 4/15/23 $ 7,131,320
5,000 Wisconsin Electric Power Company...................................... 7.25 8/ 1/04 5,500,450
19,000 Wisconsin Electric Power Company...................................... 7.70 12/15/27 19,943,160
5,000 Wisconsin Power & Light Co............................................ 8.60 3/15/27 5,742,800
----------------
883,241,232
----------------
NATURAL GAS (3.3%)
3,000 Anadarko Petroleum Corp............................................... 8.75 2/15/98 3,322,140
5,000 ANR Pipeline Company.................................................. 9.625 11/ 1/21 5,975,850
7,000 Arkla, Inc............................................................ 10.00 11/15/19 7,970,340
14,500 Coastal Corp.......................................................... 9.625 5/15/12 16,963,550
5,000 Colorado Interstate Gas Co............................................ 10.00 6/15/05 6,161,650
5,000 El Paso Natural Gas Company........................................... 7.75 1/15/02 5,382,350
10,000 Enron Corp............................................................ 7.00 8/15/23 9,461,900
5,150 Mitchell Energy/Development Corp...................................... 11.25 2/15/99 5,356,000
5,000 Mitchell Energy/Development Corp...................................... 9.25 1/15/02 5,574,300
596 National Fuel Gas Company............................................. 9.50 7/ 1/19 641,296
5,000 Northern Illinois Gas Co.............................................. 9.00 7/ 1/19 5,352,000
5,000 Northwest Pipeline Corp............................................... 10.65 11/15/18 5,373,200
2,000 Northwest Pipeline Corp............................................... 9.00 8/ 1/22 2,233,840
9,000 Panhandle Eastern Pipeline Corp....................................... 7.95 3/15/23 9,219,780
3,000 Southwest Gas Corp.................................................... 9.375 2/ 1/17 3,183,750
5,000 Tennesse Gas Pipeline Co.............................................. 6.00 12/15/11 4,276,550
5,000 Texas Eastern Transmission Corp....................................... 10.375 11/15/00 6,102,250
10,000 The Williams Companies................................................ 8.875 9/15/12 11,411,500
8,000 The Williams Companies................................................ 9.375 11/15/21 9,451,280
3,000 Transco Energy Co..................................................... 9.625 6/15/00 3,281,550
1,550 Transcontinental Gas Pipeline Corp.................................... 9.125 2/ 1/17 1,635,250
----------------
128,330,326
----------------
TELECOMMUNICATIONS (5.1%)
10,000 ALLTEL Corp........................................................... 6.50 11/ 1/13 9,497,200
5,000 ALLTEL Corp........................................................... 9.50 3/ 1/21 5,777,550
10,000 American Telephone & Telegraph Company................................ 8.125 7/15/24 10,887,500
13,000 American Telephone & Telegraph Company................................ 8.625 12/ 1/31 14,811,550
2,000 Ameritech Capital Funding Corp........................................ 8.85 6/ 1/05 2,408,060
5,000 BellSouth Telecommunications.......................................... 8.25 7/ 1/32 5,488,000
10,000 BellSouth Telecommunications.......................................... 7.50 6/15/33 10,152,100
5,000 BellSouth Telecommunications.......................................... 6.75 10/15/33 4,680,500
6,000 General Telephone & Electric Corp..................................... 8.50 4/ 1/17 6,494,160
5,000 General Telephone & Electric Corp..................................... 10.25 11/ 1/20 6,250,600
5,000 General Telephone & Electric Corp..................................... 8.75 11/ 1/21 5,755,000
24,300 General Telephone & Electric Corp..................................... 7.83 5/ 1/23 25,449,147
5,000 MCI Communications Corp............................................... 8.25 1/20/23 5,483,250
15,000 MCI Communications Corp............................................... 7.75 3/15/24 15,605,100
5,000 New Jersey Bell....................................................... 6.80 12/15/24 4,801,000
5,000 Pacific Bell.......................................................... 7.25 7/ 1/02 5,330,550
5,000 Pacific Bell.......................................................... 8.50 8/15/31 5,583,950
5,500 Pacific Bell.......................................................... 7.75 9/15/32 5,628,645
5,000 South Central Bell.................................................... 8.50 8/ 1/29 5,358,000
7,000 Sprint Corporation.................................................... 8.125 7/15/02 7,691,040
10,000 Sprint Corporation.................................................... 9.25 4/15/22 11,920,100
5,000 Telephone & Data Systems, Inc......................................... 10.00 1/15/21 6,047,600
5,000 Telephone & Data Systems, Inc......................................... 9.58 11/19/21 5,911,000
</TABLE>
<PAGE>
Dean Witter Utilities Fund
Portfolio of Investments DECEMBER 31, 1993 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- --------- ----------------
<C> <S> <C> <C> <C>
$ 6,000 U.S. West Communications, Inc......................................... 8.875% 6/ 1/31 $ 6,902,340
5,000 U.S. West Communications, Inc......................................... 6.875 9/15/33 4,669,500
----------------
198,583,442
----------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $1,142,450,298)....................................... 1,210,155,000
----------------
U.S. GOVERNMENT AGENCIES & OBLIGATIONS (2.5%)
1,000 Cooperative Utilities Trust (Cajun Electric).......................... 9.65 3/15/98 1,096,900
5,000 Cooperative Utilities Trust (Cajun Electric).......................... 8.92 3/15/19 5,829,500
2,741 Government National Mortgage Association.............................. 9.50 6/15/20 2,964,093
5,000 Tennessee Valley Authority............................................ 6.00 1/15/97 5,149,219
6,000 Tennessee Valley Authority............................................ 0.00 4/15/03 3,292,500
5,000 Tennessee Valley Authority............................................ 7.75 12/15/22 5,198,440
18,000 Tennessee Valley Authority............................................ 8.625 11/15/29 20,404,800
1,200 Tennessee Valley Authority............................................ 0.00 4/15/42 304,500
10,000 Tennessee Valley Authority............................................ 7.25 7/15/43 9,946,000
38,000 U.S. Treasury Bond.................................................... 6.25 8/15/23 37,501,250
5,000 U.S. Treasury Note.................................................... 4.75 9/30/98 4,917,187
----------------
TOTAL U.S. GOVERNMENT AGENCIES & OBLIGATIONS (IDENTIFIED COST $92,166,319)................... 96,604,389
----------------
<CAPTION>
NUMBER OF
SHARES
- -----------
<C> <S> <C> <C> <C>
PREFERRED STOCKS (0.8%)
ELECTRIC UTILITIES (0.6%)
144,500 Arizona Public Service Company 7.25%.................................................... 3,594,437
27,965 Gulf States Utilities Company 9.96%..................................................... 2,923,881
29,000 Illinois Power Company $8.24............................................................ 1,479,000
160,000 Long Island Lighting Company 7.95%...................................................... 4,240,000
125,000 Louisiana Power & Light Co. 8% Series 92................................................ 3,250,000
30,049 Louisiana Power & Light Co. 12.64%...................................................... 957,812
30,000 Public Service Electric & Gas Company 7.52%............................................. 2,970,000
25,000 Public Service Electric & Gas Company 7.40%............................................. 2,481,250
20,000 Western Resources, Inc. 7.58%........................................................... 2,142,500
----------------
24,038,880
----------------
NATURAL GAS (0.2%)
120,000 Atlanta Gas Light Co. 7.70%............................................................. 3,195,000
50,000 ENSERCH Corp. Series 'D' ARP............................................................ 2,562,500
9,100 ENSERCH Corp. Series 'E' ARP............................................................ 921,375
----------------
6,678,875
----------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST $29,814,437).................................... 30,717,755
----------------
COMMON STOCKS (61.7%)
ELECTRIC UTILITIES (36.3%)
1,310,000 Allegheny Power Systems, Inc............................................................ 34,715,000
710,000 American Electric Power, Inc............................................................ 26,358,750
345,000 Atlantic Energy, Inc.................................................................... 7,503,750
860,000 Baltimore Gas & Electric Company........................................................ 21,822,500
655,000 Boston Edison Company................................................................... 19,486,250
280,000 Carolina Power & Light Company.......................................................... 8,435,000
</TABLE>
<PAGE>
Dean Witter Utilities Fund
Portfolio of Investments DECEMBER 31, 1993 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ----------------
<C> <S> <C> <C> <C>
555,000 Centerior Energy Corp................................................................... $ 7,284,375
990,000 Central & South West Corp............................................................... 29,947,500
955,000 Cincinnati Gas & Electric Company....................................................... 26,262,500
200,000 CIPSCO, Inc............................................................................. 6,150,000
640,000 CMS Energy Corp......................................................................... 16,080,000
1,015,000 Commonwealth Edison Company............................................................. 28,673,750
725,000 Consolidated Edison Company New York, Inc............................................... 23,290,625
335,000 Delmarva Power & Light Company.......................................................... 7,914,375
1,240,000 Detroit Edison Company.................................................................. 37,200,000
1,010,000 Dominion Resources, Inc................................................................. 45,828,750
1,200,000 DPL, Inc................................................................................ 24,750,000
370,000 DQE, Inc................................................................................ 12,765,000
500,000 Duke Power Company...................................................................... 21,187,500
325,000 Empresa Nacional De Electricidad S.A. ADR+.............................................. 15,437,500
150,000 Enersis S.A. ADR+....................................................................... 3,525,000
860,000 Entergy Corp............................................................................ 30,960,000
640,000 Florida Progress Corp................................................................... 21,520,000
850,000 FPL Group, Inc.......................................................................... 33,256,250
1,090,000 General Public Utilities Corp........................................................... 33,653,750
765,000 Houston Industries, Inc................................................................. 36,433,125
950,000 Illinois Power Company.................................................................. 21,018,750
1,065,000 Kansas City Power & Light Company....................................................... 24,495,000
1,320,000 Long Island Lighting Company............................................................ 32,175,000
260,000 Louisiana Land & Exploration Co. (The).................................................. 10,432,500
185,000 MDU Resources Group, Inc................................................................ 5,827,500
700,000 Montana Power Company................................................................... 18,025,000
960,000 New England Electric System............................................................. 37,560,000
650,000 New York State Electric & Gas Corp...................................................... 19,987,500
750,000 Niagara Mohawk Power Corp............................................................... 15,187,500
850,000 NIPSCO Industries, Inc.................................................................. 27,943,750
1,385,000 Northeast Utilities..................................................................... 32,893,750
305,000 Northern States Power Company, Minnesota................................................ 13,153,125
1,210,000 Ohio Edison Company..................................................................... 27,527,500
225,000 Oklahoma Gas & Electric Company......................................................... 8,325,000
1,040,000 Pacific Gas & Electric Company.......................................................... 36,530,000
1,005,000 Pacificorp.............................................................................. 19,346,250
1,060,000 Pennsylvania Power & Light Company...................................................... 28,620,000
930,000 Philadelphia Electric Company........................................................... 28,132,500
995,000 Pinnacle West Capital Corp.............................................................. 22,263,125
615,000 Portland General Corp................................................................... 12,607,500
605,000 Potomac Electric Power Company.......................................................... 16,183,750
890,000 PSI Resources, Inc...................................................................... 23,585,000
850,000 Public Service Company, Colorado........................................................ 27,306,250
1,260,000 Public Service Enterprise Group, Inc.................................................... 40,320,000
380,000 Puget Sound Power & Light Company....................................................... 9,452,500
550,000 Rochester Gas & Electric Corp........................................................... 14,437,500
1,050,000 San Diego Gas & Electric Company........................................................ 26,381,250
360,000 SCANA Corp.............................................................................. 17,910,000
1,795,000 SCEcorp................................................................................. 35,900,000
780,000 Southern Company........................................................................ 34,417,500
</TABLE>
<PAGE>
Dean Witter Utilities Fund
Portfolio of Investments DECEMBER 31, 1993 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ----------------
<C> <S> <C> <C> <C>
405,000 Southwestern Public Service Company..................................................... $ 12,403,125
420,000 TECO Energy, Inc........................................................................ 9,502,500
1,135,000 Texas Utilities Electric Company........................................................ 49,088,750
1,000,000 Union Electric Company.................................................................. 39,250,000
505,000 Utilicorp United, Inc................................................................... 16,033,750
830,000 Washington Water Power Company.......................................................... 15,562,500
----------------
1,410,226,875
----------------
NATURAL GAS (6.0%)
345,000 Atlanta Gas Light Company............................................................... 13,411,875
410,000 Burlington Resources, Inc............................................................... 17,373,750
565,000 Coastal Corp............................................................................ 15,890,625
350,000 Consolidated Natural Gas Company........................................................ 16,450,000
645,000 EL Paso Natural Gas Company............................................................. 23,220,000
940,000 Enron Corp.............................................................................. 27,260,000
610,000 ENSERCH Corp............................................................................ 9,912,500
235,000 New Jersey Resources Corp............................................................... 6,080,625
680,000 Panhandle Eastern Pipeline Corp......................................................... 16,065,000
365,000 Sonat, Inc.............................................................................. 10,539,375
790,000 Tenneco, Inc............................................................................ 41,573,750
1,220,000 The Williams Companies.................................................................. 29,737,500
150,000 Washington Gas Light Company............................................................ 6,187,500
----------------
233,702,500
----------------
TELECOMMUNICATIONS (19.4%)
1,260,000 ALLTEL Corp............................................................................. 37,170,000
1,040,000 American Telephone & Telegraph Company.................................................. 54,600,000
570,000 Ameritech Corp.......................................................................... 43,747,500
645,000 BCE Inc................................................................................. 22,494,375
540,000 Bell Atlantic Corp...................................................................... 31,860,000
500,000 BellSouth Corp.......................................................................... 28,937,500
305,000 British Telecommunications Plc, ADR+.................................................... 21,693,125
175,000 Cable & Wireless PLC-ADR+............................................................... 4,200,000
590,000 Century Telephone Enterprises, Inc...................................................... 15,192,500
215,000 Compania De Telefonos De Chile ADR+..................................................... 21,903,125
830,000 Comsat Corp............................................................................. 24,692,500
260,000 Ericsson (L.M.) TEL ADR+................................................................ 10,432,500
1,080,000 GTE Corp................................................................................ 37,800,000
480,000 Hong Kong Telecommunications Ltd. ADR+.................................................. 29,880,000
1,565,000 MCI Communications Corp................................................................. 44,015,625
1,260,000 NYNEX Corp.............................................................................. 50,557,500
750,000 Pacific Telesis Group, Inc.............................................................. 40,500,000
495,000 Rochester Telephone Corp................................................................ 22,336,875
980,000 Southwestern Bell Corp.................................................................. 40,670,000
915,000 Sprint Corporation...................................................................... 31,796,250
380,000 Telecommunications Corp. New Zealand Ltd. ADR+.......................................... 19,237,500
</TABLE>
<PAGE>
Dean Witter Utilities Fund
Portfolio of Investments DECEMBER 31, 1993 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ----------------
<C> <S> <C> <C> <C>
615,000 Telefonica Espana, S.A. ADR+............................................................ $ 23,985,000
865,000 Telefonos De Mexico S.A. Series L ADR+.................................................. 58,387,500
770,000 U.S. West, Inc.......................................................................... 35,323,750
----------------
751,413,125
----------------
TOTAL COMMON STOCKS (IDENTIFIED COST $1,913,133,900).................................... 2,395,342,500
----------------
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE
- ----------- ---------------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS (3.0%)
COMMERCIAL PAPER (A)(1.8%)
AUTOMOTIVE FINANCE (0.3%)
$ 13,500 Ford Motor Credit Co.................................................. 3.352% 1/ 3/94 13,497,487
----------------
FINANCE - DIVERSIFIED (1.2%)
29,000 Heller Financial Inc.................................................. 3.352 1/ 5/94 28,989,206
16,500 Household Finance Corp................................................ 3.282 1/ 6/94 16,492,483
----------------
45,481,689
----------------
FINANCE - ENERGY (0.3%)
12,300 Chevron Oil Finance................................................... 3.352 1/ 4/94 12,296,566
----------------
TOTAL COMMERCIAL PAPER (AMORTIZED COST $71,275,742).......................................... 71,275,742
----------------
U.S. GOVERNMENT AGENCIES (0.9%)
19,000 Federal Home Loan Banks............................................... 3.116 1/14/94 18,978,662
16,900 Federal Home Loan Mortgage Corp....................................... 3.13 1/18/94 16,875,061
----------------
TOTAL U.S. GOVERNMENT AGENCIES (AMORTIZED COST $35,853,723).................................. 35,853,723
----------------
REPURCHASE AGREEMENT (0.3%)
9,184 The Bank of New York 2.75% due 1/3/94 ( dated 12/31/93; proceeds
$9,183,897; collateralized by $9,211,420 U.S. Treasury Note 5.125%
due 3/31/98 valued at $9,365,429) (Identified Cost $9,181,793)...... 9,181,793
----------
TOTAL SHORT-TERM INVESTMENTS (IDENTIFIED COST $116,311,258)........... 116,311,258
----------------
TOTAL INVESTMENTS (IDENTIFIED COST $3,293,876,212).......................................... 99.2% 3,849,130,902
OTHER ASSETS IN EXCESS OF LIABILITIES....................................................... 0.8 31,983,538
--- ----------------
NET ASSETS.................................................................................. 100% $ 3,881,114,440
--- ----------------
--- ----------------
<FN>
- ------------------
+ AMERICAN DEPOSITORY RECEIPT.
(A) COMMERCIAL PAPER WAS PURCHASED ON A DISCOUNT BASIS. THE INTEREST RATES
SHOWN HAVE BEEN ADJUSTED TO REFLECT A BOND EQUIVALENT YIELD.
(B) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $3,294,889,359; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $578,839,710 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $24,598,167, RESULTING IN NET UNREALIZED
APPRECIATION OF $554,241,543.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $3,293,876,212) (Note
1).................................... $ 3,849,130,902
Receivable for:
Interest.............................. 27,971,138
Shares of beneficial interest sold.... 11,632,162
Dividends............................. 10,497,486
Foreign withholding taxes reclaimed... 69,771
Prepaid expenses and other assets....... 89,580
---------------
TOTAL ASSETS.................... 3,899,391,039
---------------
LIABILITIES:
Payable for:
Investments purchased (Note 4)........ 7,238,954
Distributions to shareholders......... 3,788,035
Plan of distribution fee (Note 3)..... 2,853,921
Shares of beneficial interest
repurchased......................... 2,006,275
Investment management fee (Note 2).... 1,698,566
Accrued expenses and other payables
(Note 4).............................. 690,848
---------------
TOTAL LIABILITIES............... 18,276,599
---------------
NET ASSETS:
Paid-in-capital......................... 3,318,995,945
Accumulated undistributed net investment
income................................ 3,487,563
Accumulated undistributed net realized
gains................................. 3,376,242
Net unrealized appreciation............. 555,254,690
---------------
NET ASSETS...................... $ 3,881,114,440
---------------
---------------
NET ASSET VALUE PER SHARE, 270,689,008
shares outstanding (unlimited shares
authorized of $.01 par value).........
$14.34
---------------
---------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME
Dividends (net of $638,757 foreign
withholding tax).................... $ 111,717,369
Interest.............................. 97,512,514
-------------
TOTAL INCOME...................... 209,229,883
-------------
EXPENSES
Plan of distribution fee (Note 3)..... 29,856,959
Investment management fee (Note 2).... 18,894,620
Transfer agent fees and expenses (Note
4).................................. 3,147,475
Registration fees..................... 353,017
Custodian fees........................ 232,926
Shareholder reports and notices....... 173,530
Professional fees..................... 54,572
Trustees' fees and expenses (Note
4).................................. 34,810
Organizational expenses (Note 1)...... 9,289
Other................................. 55,301
-------------
TOTAL EXPENSES.................... 52,812,499
-------------
NET INVESTMENT INCOME........... 156,417,384
-------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (Note 1):
Net realized gain on investments...... 33,021,452
Net change in unrealized appreciation
on investments...................... 203,557,787
-------------
NET GAIN ON INVESTMENTS........... 236,579,239
-------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS..... $ 392,996,623
-------------
-------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1993 DECEMBER 31, 1992
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................................ $ 156,417,384 $ 119,566,603
Net realized gain.................................................... 33,021,452 7,980,618
Net change in unrealized appreciation................................ 203,557,787 97,107,197
------------------ ------------------
Net increase in net assets resulting from operations............. 392,996,623 224,654,418
------------------ ------------------
Dividends and distributions to shareholders from:
Net investment income................................................ (155,892,059) (118,377,927)
Net realized gain.................................................... (31,752,536) (5,531,961)
------------------ ------------------
(187,644,595) (123,909,888)
------------------ ------------------
Net increase from transactions in shares of beneficial interest (Note
5).................................................................... 749,931,416 866,044,880
------------------ ------------------
Total increase................................................... 955,283,444 966,789,410
NET ASSETS:
Beginning of period.................................................... 2,925,830,996 1,959,041,586
------------------ ------------------
END OF PERIOD (including undistributed net investment income of
$3,487,563 and $2,943,467, respectively).............................. $ 3,881,114,440 $ 2,925,830,996
------------------ ------------------
------------------ ------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES--Dean Witter Utilities Fund (the
"Fund") was organized on December 8, 1987 as a Massachusetts business trust and
is registered under the Investment Company Act of 1940, as amended (the "Act"),
as a diversified, open-end management investment company. The Fund commenced
operations on April 29, 1988.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS--(1) an equity portfolio 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), and (2) all other portfolio securities for which over-the-counter
market quotations are readily available are valued at the latest 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; (4) certain of the Fund's portfolio securities
may be valued by an outside pricing service approved by the Fund's Trustees.
The pricing service utilizes a matrix system incorporating security quality,
maturity and coupon as the evaluation model parameters, and/or research and
evaluations by its staff, including review of broker-dealer market price
quotations, in determining what it believes is the fair valuation of the
portfolio securities valued by such pricing service; and (5) the fair market
value of short-term debt securities which mature at a date less than
sixty-one days subsequent to the valuation date will be determined on an
amortized cost or amortized value method; other short-term debt securities
will be valued on a mark-to-market basis until such time as they reach a
maturity of 60 days, whereupon they will be valued at amortized value unless
the Trustees determine such does not reflect the securities' fair value, in
which case these securities will be valued at their fair value as determined
by the Trustees.
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 on the identified cost
method. In computing net investment income, the Fund does not amortize
premiums or accrue discounts on fixed income securities in the portfolio,
except those original issue discounts for which amortization is required for
federal income tax purposes. Additionally, with respect to market discount
on bonds, a portion of any capital gain realized upon disposition may be
recharacterized as investment income. Dividend income is recorded on the
ex-dividend date. Interest income is accrued daily except where collection
is not expected.
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 shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS--The Fund records dividends
and distributions to its shareholders on the record date. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassifications.
Dividends and
<PAGE>
DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
distributions which exceed net investment income and net realized capital
gains for financial reporting purposes but not for tax purposes are reported
as dividends in excess of net investment income or distributions in excess
of net realized capital gains. To the extent they exceed net investment
income and net realized capital gains for tax purposes, they are reported as
distributions of paid-in-capital.
E. ORGANIZATIONAL EXPENSES--The Fund's Investment Manager paid the
organizational expenses of the Fund in the amount of approximately $141,000.
The Fund had reimbursed the Investment Manager for these costs which were
deferred and amortized by the Fund on the straight line method over a period
of sixty months from the commencement of operations. As of December 31,
1993, these expenses were fully amortized.
F. REPURCHASE AGREEMENTS--The Fund's custodian takes possession on behalf of
the Fund of the collateral pledged for investments in repurchase agreements.
It is the policy of the Fund to value the underlying collateral daily on a
mark-to-market basis to determine that the value, including accrued
interest, is at least equal to the repurchase price plus accrued interest.
In the event of default of the obligation to repurchase, the Fund has the
right to liquidate the collateral and apply the proceeds in satisfaction of
the obligation.
2. INVESTMENT MANAGEMENT AGREEMENT--Pursuant to an Investment Management
Agreement (the "Agreement") with Dean Witter InterCapital Inc. (the "Investment
Manager"), the Fund pays its Investment Manager a management fee, accrued daily
and payable monthly at an annual rate of 0.65% of the portion of the daily net
assets not exceeding $500 million; 0.55% of the portion of the daily net assets
exceeding $500 million but not exceeding $1 billion; 0.525% of the portion of
the daily net assets exceeding $1 billion but not exceeding $1.5 billion; 0.50%
of the portion of the daily net assets exceeding $1.5 billion but not exceeding
$2.5 billion; 0.475% of the portion of daily net assets exceeding $2.5 billion
but not exceeding $3.5 billion; and 0.45% of the portion of daily net assets
exceeding $3.5 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 office space and 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 under which the Fund pays the Distributor a fee which is 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 inception of
the Fund (not including reinvestments of dividends or capital gains
distributions), less the average daily aggregate net asset value of the Fund's
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or upon which such charge has been waived; or (b)
the Fund's average daily net assets. Amounts paid under the Plan are paid to the
Distributor to compensate it for the services provided and the expenses borne by
it and others in the distribution of the Fund's shares, including the payment of
commissions for sales of the Fund's shares and incentive compensation to and
expenses of Dean Witter Reynolds, Inc.'s ("DWR"), an affiliate of the Investment
Manager, account executives and others who engage in or support distribution of
the Fund's shares or who service shareholder accounts, including
<PAGE>
DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
overhead and telephone expenses; printing and distribution of prospectuses and
reports used in connection with the offering of the Fund's shares; 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.
Provided that the Plan continues in effect, any cumulative expenses
incurred, but not yet recovered, may be recovered through future distribution
fees from the Fund and contingent deferred sales charges from the Fund's
shareholders.
The Distributor has informed the Fund that for the year ended December 31,
1993, it received approximately $6,187,000 in contingent deferred sales charges
from redemptions of the Fund's shares. The Fund's shareholders pay such charges
which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES--The cost of
purchases and the proceeds from sales of portfolio securities (excluding
short-term investments) for the year ended December 31, 1993 aggregated
$1,270,362,210 and $554,564,879, respectively. Included in the aforementioned
are purchases and sales of U.S. Government securities of $107,145,843 and
$58,693,944, respectively. For the same period, the Fund paid brokerage
commissions of approximately $129,600 to DWR for transactions executed on behalf
of the Fund. At December 31, 1993 the Fund's payable for investments purchased
included unsettled trades with DWR of approximately $456,000.
On April 1, 1991, the Fund established an unfunded noncontributory defined
benefit pension plan covering all independent Trustees of the Fund who will have
served as independent Trustee 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 cost for the year ended
December 31, 1993 included in Trustees' fees and expenses in the Statement of
Operations, amounted to $12,232. At December 31, 1993 the Fund had an accrued
pension liability of $39,299 which is included in accrued expenses in the
Statement of Assets and Liabilities.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. During the year ended December 31,
1993, the Fund incurred transfer agent fees and expenses of approximately
$3,147,000, of which approximately $352,000 was payable at December 31, 1993.
5. SHARES OF BENEFICIAL INTEREST--Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1993 DECEMBER 31, 1992
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Sold.................................................. 88,274,539 $1,279,510,064 84,488,639 $1,087,444,874
Reinvestment of dividends and distributions........... 10,686,468 154,738,787 7,817,126 100,595,556
----------- -------------- ----------- --------------
98,961,007 1,434,248,851 92,305,765 1,188,040,430
Repurchased........................................... (47,067,729) (684,317,435) (25,035,527) (321,995,550)
----------- -------------- ----------- --------------
Net increase.......................................... 51,893,278 $ 749,931,416 67,270,238 $ 866,044,880
----------- -------------- ----------- --------------
----------- -------------- ----------- --------------
</TABLE>
<PAGE>
DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
6. FEDERAL INCOME TAXES--The Fund had temporary book/tax differences which were
primarily attributable to realized capital loss deferrals on wash sales and
permanent book/tax differences primarily attributable to a distribution of
paid-in-capital. To reflect cumulative reclassifications arising from permanent
book/tax differences as of December 31, 1992, accumulated undistributed net
investment income was credited $626,248, accumulated undistributed net realized
gains was charged $17,973 and paid-in-capital was charged $608,275.
1993 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended December 31, 1993, the Fund paid to shareholders $0.07070
per share from long-term capital gains. For such period, 66% of the income
dividend qualifies for the dividends received deduction available to
corporations.
<PAGE>
Dean Witter Utilities Fund
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data and ratios for a share of beneficial interest outstanding
throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
APRIL 29,
1988*
FOR THE YEAR ENDED DECEMBER 31, THROUGH
-------------------------------------------------------------------- DECEMBER 31,
1993 1992 1991 1990 1989 1988
------------ ------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period...................... $ 13.37 $ 12.93 $ 11.48 $ 12.22 $ 10.41 $ 10.00
------------ ------------ ------------ ------------ ------------ --------------
Net investment income....... 0.61 0.63 0.65 0.65 0.63 0.40
Net realized and unrealized
gain (loss) on
investments................ 1.09 0.47 1.45 (0.71) 1.86 0.38
------------ ------------ ------------ ------------ ------------ --------------
Total from investment
operations.................. 1.70 1.10 2.10 (0.06) 2.49 0.78
------------ ------------ ------------ ------------ ------------ --------------
Less dividends and
distributions:
Dividends from net
investment income.......... (0.61) (0.63) (0.65) (0.65) (0.67) (0.36)
Distributions from net
realized gains on
investments................ (0.12) (0.03) 0.00 (0.03) (0.01) (0.01)
------------ ------------ ------------ ------------ ------------ --------------
Total dividends and
distributions............... (0.73) (0.66) (0.65) (0.68) (0.68) (0.37)
------------ ------------ ------------ ------------ ------------ --------------
Net asset value, end of
period...................... $ 14.34 $ 13.37 $ 12.93 $ 11.48 $ 12.22 $ 10.41
------------ ------------ ------------ ------------ ------------ --------------
------------ ------------ ------------ ------------ ------------ --------------
TOTAL INVESTMENT RETURN+ ..... 12.79 % 8.75 % 18.89 % (0.27 )% 24.51 % 7.90%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands).................. $ 3,881,114 $ 2,925,831 $ 1,959,042 $ 1,369,038 $ 1,131,119 $ 457,845
Ratio of expenses to average
net assets.................. 1.46 % 1.59 % 1.59 % 1.67 % 1.68 % 1.84%(2)
Ratio of net investment income
to average net assets....... 4.32 % 5.05 % 5.58 % 5.85 % 6.07 % 6.69%(2)
Portfolio turnover rate....... 16 % 14 % 13 % 13 % 25 % 12%
</TABLE>
- ---------------
* DATE OF COMMENCEMENT OF OPERATIONS.
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of Dean Witter Utilities Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Dean Witter Utilities Fund (the
"Fund") at December 31, 1993, 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 five years in the period
then ended and for the period April 29, 1988 (commencement of operations)
through December 31, 1988, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities owned at December 31, 1993 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE
1177 Avenue of the Americas
New York, New York 10036
February 11, 1994
<PAGE>
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311-3977
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311-3977
<PAGE>
DEAN WITTER UTILITIES FUND
GROWTH OF $10,000
($ IN THOUSANDS)
<TABLE>
<CAPTION>
DATE TOTAL S&P 500
<S> <C> <C>
- -------------------------------------------------------------
- -------------------------------------------------------------
April 30, 1988 $10,000 $10,000
- -------------------------------------------------------------
- -------------------------------------------------------------
December 31, 1988 $10,790 $10,890
- -------------------------------------------------------------
- -------------------------------------------------------------
December 31, 1989 $13,435 $14,335
- -------------------------------------------------------------
December 31, 1990 $13,400 $13,891
- -------------------------------------------------------------
December 31, 1991 $15,930 $18,115
- -------------------------------------------------------------
December 31, 1992 $17,325 $19,494
- -------------------------------------------------------------
December 31, 1993 $19,441 (3) $21,462
- -------------------------------------------------------------
- -------------------------------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS LIFE OF FUND
- ----------------------------------------------------------------
- ----------------------------------------------------------------
<S> <C> <C> <C>
Non-Standard 12.79(1) 12.61(1) 12.54(1)
- ----------------------------------------------------------------
Standard (-CDSC) 7.79(2) 12.36(2) 12.44(2)
- ----------------------------------------------------------------
- ----------------------------------------------------------------
<CAPTION>
----------------------------------
----------------------------------
<S> <C>
Fund S&P 500 (4)
------- -------
----------------------------------
----------------------------------
Past performance is not predictive of future returns.
<FN>
________________________________________
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable contingent deferred sales charge (CDSC) (1 year-5%,
5 years-2%, since inception-1%). See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value after the deduction of a 1% CDSC, assuming a complete
redemption on December 31, 1993.
(4) The 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.
</TABLE>
