<PAGE>
DEAN WITTER UTILITIES FUND
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
The higher interest rate environment that began late in 1993 continued
through the first six months of 1994. The financial markets reacted immediately
to increased interest rates, with stock and bond prices tumbling. Amid this
background, Dean Witter Utilities Fund ended the first half of the year with a
total return of -10.55 percent, compared with a total return of -10.77 percent
for the Standard & Poor's Utilities Index. Since inception on April 29, 1988,
the Fund has realized an average annual total return of 9.48 percent.
On June 30, 1994, the Fund paid a quarterly dividend of $0.145 per share to
shareholders of record on June 23, 1994. On that same date, the Fund also
declared and paid short-and long-term capital gains of $0.0002 and $0.0171 per
share, respectively. The future amount of quarterly distributions will be
influenced by the level and direction of interest rates and overall portfolio
strategy.
PORTFOLIO INCREASES TELEPHONE/TELECOMMUNICATIONS EMPHASIS
While the Fund maintained its near fully-invested position, there was a
de-emphasis of electric utilities in favor of the telephone/telecommunications
sector. The combination of higher interest rates and industry-wide uncertainty
associated with increased competition gave cause for this tempering in
allocation of the electrics. On June 30, 1994, 65 percent of the portfolio's
assets were allocated to equities, of which 54 percent were directed to the
electric utility sector, 34 percent to telecommunications and 12 percent to
natural gas. Among the key portfolio holdings from each investment sector at
mid-year were Texas Utilities, AT & T and Williams Companies. Within the equity
component of the Fund are selective foreign securities, accounting for 9 percent
of net assets. The balance of the portfolio was allocated to high-quality,
fixed-income securities (32 percent) and cash (1 percent). The portfolio's
fixed-income securities have a weighted average rating of "A3" and "A-," as
measured by Moody's Investors Service, Inc. and Standard & Poor's Corp.,
respectively.
LOOKING AHEAD
We believe the Fund's portfolio is structured to favorably participate in
the newly developing utility environment, which encompasses various forms of
deregulation and competition. The Fund's trend toward a greater emphasis in the
telecommunications sector, including cellular communications, will continue as
strong domestic and foreign growth from expanding global communications mediums
is maintained throughout at least the balance of the decade. During the
remainder of 1994, foreign securities (American Depositary Receipts) are
expected to reach 10 percent of net assets.
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 JUNE 30, 1994 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- --------- ----------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (30.7%)
NATURAL GAS (3.5%)
$ 5,000 ANR Pipeline Company................................................ 9.625% 11/ 1/21 $ 5,490,800
7,000 Arkla, Inc.......................................................... 10.00 11/15/19 7,407,190
14,500 Coastal Corp........................................................ 9.625 5/15/12 15,414,660
5,000 Colorado Interstate Gas Co.......................................... 10.00 6/15/05 5,618,650
10,000 Enron Corp.......................................................... 7.00 8/15/23 8,353,300
7,000 Louisiana Land & Exploration Co. (The).............................. 7.65 12/ 1/23 6,175,820
5,000 Mitchell Energy/Development Corp.................................... 9.25 1/15/02 5,299,350
596 National Fuel Gas Company........................................... 9.50 7/ 1/19 641,785
5,000 Northern Illinois Gas Co............................................ 9.00 7/ 1/19 5,332,500
5,000 Northwest Pipeline Corp............................................. 10.65 11/15/18 5,413,600
2,000 Northwest Pipeline Corp............................................. 9.00 8/ 1/22 2,016,240
9,000 Panhandle Eastern Pipeline Corp..................................... 7.95 3/15/23 8,369,460
3,000 Southwest Gas Corp.................................................. 9.375 2/ 1/17 2,893,770
5,000 Tennesse Gas Pipeline Co............................................ 6.00 12/15/11 3,859,200
5,000 Texas Eastern Transmission Corp..................................... 10.375 11/15/00 5,576,700
10,000 The Williams Companies.............................................. 8.875 9/15/12 10,238,900
8,000 The Williams Companies.............................................. 9.375 11/15/21 8,549,600
3,000 Transco Energy Co................................................... 9.625 6/15/00 3,023,760
1,550 Transcontinental Gas Pipeline Corp.................................. 9.125 2/ 1/17 1,478,777
----------------
111,154,062
----------------
TELECOMMUNICATIONS (5.8%)
10,000 ALLTEL Corp......................................................... 6.50 11/ 1/13 8,394,900
5,000 ALLTEL Corp......................................................... 9.50 3/ 1/21 5,260,950
5,000 AT&T Corp........................................................... 8.125 7/15/24 4,876,250
13,000 AT&T Corp........................................................... 8.625 12/ 1/31 13,798,330
5,000 BellSouth Telecommunications........................................ 8.25 7/ 1/32 4,904,650
10,000 BellSouth Telecommunications........................................ 7.50 6/15/33 9,086,800
5,000 BellSouth Telecommunications........................................ 6.75 10/15/33 4,123,300
10,000 Century Telephone Enterprises, Inc.................................. 8.25 5/ 1/24 9,635,500
6,000 General Telephone & Electric Corp................................... 8.50 4/ 1/17 5,787,960
5,000 General Telephone & Electric Corp................................... 10.25 11/ 1/20 5,656,550
24,300 General Telephone & Electric Corp................................... 7.83 5/ 1/23 22,190,760
5,000 MCI Communications Corp............................................. 8.25 1/20/23 4,887,100
15,000 MCI Communications Corp............................................. 7.75 3/15/24 13,952,250
5,000 New Jersey Bell..................................................... 6.80 12/15/24 4,248,950
5,000 Pacific Bell........................................................ 8.50 8/15/31 4,976,700
5,000 South Central Bell.................................................. 8.50 8/ 1/29 4,928,750
7,000 Sprint Corporation.................................................. 8.125 7/15/02 7,083,020
10,000 Sprint Corporation.................................................. 9.25 4/15/22 10,883,900
14,500 Tele Communications Inc............................................. 9.80 2/ 1/12 15,324,905
5,000 Tele Communications Inc............................................. 10.125 4/15/22 5,438,350
5,000 Telephone & Data Systems, Inc....................................... 10.00 1/15/21 5,638,050
5,000 Telephone & Data Systems, Inc....................................... 9.58 11/19/21 5,509,900
6,000 U.S. West Communications, Inc....................................... 8.875 6/ 1/31 6,211,500
5,000 U.S. West Communications, Inc....................................... 6.875 9/15/33 4,171,150
----------------
186,970,475
----------------
<PAGE>
</TABLE>
DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS JUNE 30, 1994 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- --------- ----------------
<C> <S> <C> <C> <C>
UTILITIES - ELECTRIC (21.4%)
$ 1,499 AEP Generating Co................................................... 9.81% 12/ 7/22 $ 1,624,535
14,000 Arizona Public Service Company...................................... 8.00 2/ 1/25 12,831,000
17,000 Arkansas Power & Light Company...................................... 7.00 10/ 1/23 13,962,780
10,000 BVPS II Funding..................................................... 8.68 6/ 1/17 9,157,000
5,000 Carolina Power & Light Company...................................... 8.20 7/ 1/22 4,840,750
3,000 Central Hudson Gas & Electric Corp.................................. 9.25 5/ 1/21 3,157,230
6,000 Chugach Electric Company............................................ 9.14 3/15/22 6,241,260
5,000 Cincinnati Gas & Electric Company................................... 10.125 5/ 1/20 5,391,300
8,000 Cincinnati Gas & Electric Company................................... 8.50 9/ 1/22 7,840,240
12,000 Cincinnati Gas & Electric Company................................... 7.20 10/ 1/23 10,344,720
5,000 Commonwealth Edison Company......................................... 9.50 5/ 1/16 5,006,900
6,000 Commonwealth Edison Company......................................... 8.875 10/ 1/21 5,667,780
10,000 Commonwealth Edison Company......................................... 8.50 7/15/22 9,224,900
5,000 Commonwealth Edison Company......................................... 8.375 9/15/22 4,581,250
11,000 Consumer Power Company.............................................. 7.375 9/15/23 9,242,090
5,000 Cooperative Utilities Trust (Cajun Electric)........................ 8.92 3/15/19 5,203,700
10,000 CTC Beaver Valley Funding Corp...................................... 9.00 6/ 1/17 7,885,700
5,000 CTC Mansfield Funding Corp.......................................... 10.25 3/30/03 4,825,000
5,000 CTC Mansfield Funding Corp.......................................... 11.125 9/30/16 4,825,000
10,000 Dayton Power & Light Company........................................ 8.15 1/15/26 9,767,100
5,000 Detroit Edison Company.............................................. 7.74 6/ 1/18 4,574,850
5,000 Detroit Edison Company.............................................. 8.27 8/ 1/22 4,836,050
10,000 Detroit Edison Company.............................................. 7.77 3/15/23 9,094,700
20,000 DQU II Funding Corp................................................. 8.70 6/ 1/16 19,298,400
10,000 Duke Power Company.................................................. 8.75 3/ 1/21 10,070,800
5,000 Duke Power Company.................................................. 8.625 3/ 1/22 5,018,150
9,000 Duke Power Company.................................................. 7.00 7/ 1/33 7,649,100
5,000 Duquesne Lighting Company........................................... 7.625 4/15/23 4,472,900
5,000 Florida Power & Light Company....................................... 7.75 2/ 1/23 4,609,100
5,000 Florida Power & Light Company....................................... 7.625 6/ 1/24 4,527,150
10,000 GGIB Funding Corp................................................... 7.43 1/15/11 8,931,800
10,000 Gulf States Utility Company......................................... 8.94 1/ 1/22 9,959,100
13,000 Gulf States Utility Company......................................... 8.70 4/ 1/24 12,687,090
5,000 Houston Light & Power Company....................................... 8.75 3/ 1/22 5,035,850
13,000 Houston Light & Power Company....................................... 7.75 3/15/23 11,878,100
12,000 Illinois Power Company.............................................. 8.75 7/ 1/21 11,720,400
5,000 Illinois Power Company.............................................. 8.00 2/15/23 4,554,450
10,000 Illinois Power Company.............................................. 7.50 7/15/25 8,708,800
5,000 Indianapolis Power Co............................................... 7.05 2/ 1/24 4,319,300
10,000 Jersey Central Power & Light Company................................ 6.75 11/ 1/25 8,016,800
8,000 Long Island Lighting Company........................................ 8.90 7/15/19 6,716,960
5,000 Long Island Lighting Company........................................ 9.75 5/ 1/21 4,823,050
14,100 Long Island Lighting Company........................................ 8.20 3/15/23 11,058,489
5,000 Long Island Lighting Company........................................ 9.625 7/ 1/24 4,784,850
4,000 Monongahela Power Company........................................... 8.875 8/ 1/19 4,252,200
10,100 National Cooperative Services Corp.................................. 9.375 1/ 2/11 10,942,138
2,903 National Rural Utilities Finance Corp............................... 9.48 1/ 1/12 3,196,638
5,250 National Rural Utilities Finance Corp............................... 9.00 9/ 1/21 5,670,893
</TABLE>
<PAGE>
DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS JUNE 30, 1994 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- --------- ----------------
<C> <S> <C> <C> <C>
$ 5,000 New York State Electric & Gas Corp.................................. 9.875% 2/ 1/20 $ 5,423,550
3,000 New York State Electric & Gas Corp.................................. 8.875 11/ 1/21 3,028,830
8,955 Niagara Mohawk Power Corp........................................... 8.77 1/ 1/18 8,398,178
3,750 Niagara Mohawk Power Corp........................................... 8.75 4/ 1/22 3,605,813
10,000 Niagara Mohawk Power Corp........................................... 8.50 7/ 1/23 9,457,400
5,000 Northeast Utilities................................................. 8.58 12/ 1/06 5,008,800
7,000 Old Dominion Electric Company....................................... 8.76 12/ 1/22 6,948,410
7,000 Pacific Gas & Electric Company...................................... 8.25 11/ 1/22 6,719,090
15,000 Pacific Gas & Electric Company...................................... 6.75 10/ 1/23 12,273,750
6,750 Pacific Gas & Electric Company...................................... 7.25 3/ 1/26 5,820,323
13,000 Pacific Gas & Electric Company...................................... 7.25 8/ 1/26 11,205,480
3,000 Pennsylvania Power & Light Company.................................. 9.25 10/ 1/19 3,179,910
2,000 Pennsylvania Power & Light Company.................................. 9.375 7/ 1/21 2,111,600
5,500 Pennsylvania Power & Light Company.................................. 7.875 2/ 1/23 5,182,980
10,000 Pennsylvania Power & Light Company.................................. 6.75 10/ 1/23 8,227,900
8,000 Philadelphia Electric Company....................................... 8.625 6/ 1/22 7,781,200
7,000 Philadelphia Electric Company....................................... 8.25 9/ 1/22 6,558,230
10,000 Philadelphia Electric Company....................................... 7.75 5/ 1/23 8,893,800
5,000 Philadelphia Electric Company....................................... 7.25 11/ 1/24 4,199,350
5,000 PNPP II (Perry Nuclear Power Plant) Funding Corp.................... 9.12 5/30/16 4,980,250
4,000 Potomac Edison Company.............................................. 9.25 6/ 1/19 4,264,280
10,000 Potomac Electric Power Company...................................... 7.25 7/ 1/23 8,726,800
7,000 Public Service Co................................................... 7.25 1/ 1/24 5,939,500
12,250 Public Service Company of Colorado.................................. 8.75 3/ 1/22 12,084,380
4,900 Public Service Electric & Gas Company............................... 9.75 7/ 1/20 5,315,176
20,000 Public Service Electric & Gas Company............................... 7.00 9/ 1/24 16,695,200
10,000 Selkirk Cogen Fundg Corp.--144A**................................... 8.98 6/26/12 9,851,500
4,000 South Carolina Electric Company..................................... 8.875 8/15/21 4,088,560
7,000 South Carolina Electric Company..................................... 7.625 6/ 1/23 6,357,050
5,000 South Carolina Electric Company..................................... 7.50 6/15/23 4,508,300
8,000 Southern California Edison Company.................................. 8.875 5/ 1/23 8,078,160
5,000 Southern California Edison Company.................................. 8.875 6/ 1/24 5,049,650
14,000 Southern California Edison Company.................................. 7.25 3/ 1/26 12,139,680
2,000 Systems Energy Resource............................................. 11.375 9/ 1/16 2,159,420
5,000 Texas Utilities Electric Company.................................... 10.00 8/ 1/19 5,323,400
8,000 Texas Utilities Electric Company.................................... 10.625 9/ 1/20 8,915,040
12,000 Texas Utilities Electric Company.................................... 8.875 2/ 1/22 11,870,640
5,000 Texas Utilities Electric Company.................................... 8.75 11/ 1/23 4,947,050
10,000 Texas Utilities Electric Company.................................... 7.875 4/ 1/24 9,094,900
9,000 Union Electric Company.............................................. 8.25 10/15/22 8,748,900
8,000 United Illuminating Company......................................... 10.24 1/ 2/20 7,933,360
8,000 Utilicorp United, Inc............................................... 9.00 11/15/21 7,990,080
10,000 Utilicorp United, Inc............................................... 8.00 3/ 1/23 8,993,400
19,000 Wisconsin Electric Power Company.................................... 7.70 12/15/27 17,694,700
5,000 Wisconsin Power & Light Co.......................................... 8.60 3/15/27 5,076,000
----------------
683,878,313
----------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $1,033,827,315)..................................... 982,002,850
----------------
<PAGE>
</TABLE>
DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS JUNE 30, 1994 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- --------- ----------------
U.S. GOVERNMENT AGENCIES & OBLIGATIONS (1.8%)
<C> <S> <C> <C> <C>
$ 1,535 Government National Mortgage Association............................ 9.5 % 6/15/20 $ 1,618,060
6,000 Tennessee Valley Authority.......................................... 0.00 4/15/03 2,872,500
10,000 Tennessee Valley Authority.......................................... 7.75 12/15/22 9,192,284
18,000 Tennessee Valley Authority.......................................... 8.625 11/15/29 18,157,500
1,200 Tennessee Valley Authority.......................................... 0.00 4/15/42 240,000
10,000 Tennessee Valley Authority.......................................... 7.25 7/15/43 8,712,200
5,000 Tennessee Valley Authority.......................................... 7.85 6/15/44 4,607,100
15,000 U.S. Treasury Bond.................................................. 6.25 8/15/23 12,616,406
----------------
TOTAL U.S. GOVERNMENT AGENCIES & OBLIGATIONS (IDENTIFIED COST $60,695,756).................
58,016,050
----------------
<CAPTION>
NUMBER OF
SHARES
- -----------
<C> <S> <C> <C> <C>
PREFERRED STOCKS (0.6%)
NATURAL GAS (0.0%)
9,100 ENSERCH Corp. Series E - ARP.......................................................... 900,900
----------------
UTILITIES - ELECTRIC (0.6%)
144,500 Arizona Public Service Company 7.25% Series W......................................... 3,179,000
27,965 Gulf States Utilities Company 9.96%................................................... 2,870,328
29,000 Illinois Power Company $8.24.......................................................... 1,421,000
160,000 Long Island Lighting Company 7.95%.................................................... 3,760,000
20,849 Louisiana Power & Light Co. 12.64%.................................................... 628,076
125,000 Louisiana Power & Light Co. 8.00% Series 92........................................... 3,000,000
30,000 Public Service Electric & Gas Company 7.40%........................................... 2,730,000
----------------
17,588,404
----------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST $19,757,286).................................. 18,489,304
----------------
COMMON STOCKS (64.7%)
NATURAL GAS (7.7%)
345,000 Atlanta Gas Light Company............................................................. 11,686,875
410,000 Burlington Resources, Inc............................................................. 16,963,750
550,000 Coastal Corp.......................................................................... 14,850,000
350,000 Consolidated Natural Gas Company...................................................... 13,212,500
655,000 EL Paso Natural Gas Company........................................................... 21,123,750
950,000 Enron Corp............................................................................ 31,112,500
610,000 ENSERCH Corp.......................................................................... 8,768,750
315,000 Louisiana Land & Exploration Co. (The)................................................ 13,387,500
185,000 MDU Resources Group, Inc.............................................................. 4,948,750
235,000 New Jersey Resources Corp............................................................. 5,170,000
680,000 Panhandle Eastern Pipeline Corp....................................................... 13,430,000
420,000 Sonat, Inc............................................................................ 12,915,000
790,000 Tenneco, Inc.......................................................................... 36,636,250
1,230,000 The Williams Companies................................................................ 35,208,750
150,000 Washington Gas Light Company.......................................................... 5,662,500
----------------
245,076,875
----------------
TELECOMMUNICATION - LONG DISTANCE (1.8%)
1,040,000 AT&T Corp............................................................................. 56,550,000
----------------
<PAGE>
</TABLE>
DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS JUNE 30, 1994 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- ----------------
<C> <S> <C> <C> <C>
TELECOMMUNICATIONS (20.5%)
845,000 Airtouch Communications Corp.*........................................................ $ 19,963,125
1,270,000 ALLTEL Corp........................................................................... 31,908,750
1,140,000 Ameritech Corp........................................................................ 43,605,000
670,000 BCE, Inc.............................................................................. 21,691,250
540,000 Bell Atlantic Corp.................................................................... 30,240,000
500,000 BellSouth Corp........................................................................ 30,875,000
325,000 British Telecommunications PLC (ADR).................................................. 18,321,875
235,000 Cable & Wireless PLC (ADR)............................................................ 4,376,875
590,000 Century Telephone Enterprises, Inc.................................................... 15,266,250
170,000 Compania de Telefonos de Chile (ADR).................................................. 14,535,000
830,000 Comsat Corp........................................................................... 19,297,500
220,000 Ericsson (L.M.) TEL (ADR)............................................................. 10,890,000
1,100,000 GTE Corp.............................................................................. 34,650,000
1,140,000 Hong Kong Telecommunications, Ltd. (ADR).............................................. 21,375,000
1,565,000 MCI Communications Corp............................................................... 34,625,625
1,260,000 NYNEX Corp............................................................................ 47,722,500
750,000 Pacific Telesis Group, Inc............................................................ 23,156,250
160,000 Philippine Long Distance Telephone.................................................... 9,440,000
990,000 Rochester Telephone Corp.............................................................. 22,398,750
980,000 Southwestern Bell Corp................................................................ 42,630,000
940,000 Sprint Corporation.................................................................... 32,782,500
385,000 Telecommunications Corp. New Zealand, Ltd. (ADR)...................................... 16,362,500
130,000 Telefonica de Argentina (ADR)......................................................... 7,572,500
670,000 Telefonica Espana, SA (ADR)........................................................... 26,967,500
760,000 Telefonos de Mexico, SA Series L (ADR)................................................ 42,465,000
770,000 U.S. West, Inc........................................................................ 32,243,750
----------------
655,362,500
----------------
UTILITIES - ELECTRIC (34.8%)
1,310,000 Allegheny Power Systems, Inc.......................................................... 27,510,000
675,000 American Electric Power, Inc.......................................................... 19,068,750
340,000 Atlantic Energy, Inc.................................................................. 5,780,000
835,000 Baltimore Gas & Electric Company...................................................... 17,743,750
640,000 Boston Edison Company................................................................. 16,800,000
270,000 Carolina Power & Light Company........................................................ 6,243,750
205,000 Centerior Energy Corp................................................................. 2,075,625
990,000 Central & South West Corp............................................................. 21,037,500
980,000 Cincinnati Gas & Electric Company..................................................... 21,315,000
200,000 CIPSCO, Inc........................................................................... 5,100,000
640,000 CMS Energy Corp....................................................................... 13,360,000
1,035,000 Commonwealth Edison Company........................................................... 23,546,250
740,000 Consolidated Edison Company New York, Inc............................................. 19,610,000
325,000 Delmarva Power & Light Company........................................................ 5,890,625
1,225,000 Detroit Edison Company................................................................ 30,318,750
1,010,000 Dominion Resources, Inc............................................................... 36,738,750
1,200,000 DPL, Inc.............................................................................. 23,700,000
370,000 DQE, Inc.............................................................................. 10,961,250
500,000 Duke Power Company.................................................................... 17,875,000
405,000 Empresa Nacional de Electricidad SA (ADR)............................................. 18,174,375
</TABLE>
<PAGE>
DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS JUNE 30, 1994 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- ----------------
<C> <S> <C> <C> <C>
175,000 Enersis SA (ADR)...................................................................... $ 3,696,875
860,000 Entergy Corp.......................................................................... 21,285,000
640,000 Florida Progress Corp................................................................. 16,560,000
800,000 FPL Group, Inc........................................................................ 23,900,000
1,100,000 General Public Utilities Corp......................................................... 28,875,000
675,000 Houston Industries, Inc............................................................... 22,021,875
950,000 Illinova Corp......................................................................... 17,812,500
1,055,000 Kansas City Power & Light Company..................................................... 20,440,625
1,280,000 Long Island Lighting Company.......................................................... 22,720,000
690,000 Montana Power Company................................................................. 15,438,750
205,000 Motorola, Inc......................................................................... 9,122,500
950,000 New England Electric System........................................................... 30,993,750
650,000 New York State Electric & Gas Corp.................................................... 15,437,500
750,000 Niagara Mohawk Power Corp............................................................. 11,343,750
860,000 NIPSCO Industries, Inc................................................................ 25,370,000
1,375,000 Northeast Utilities................................................................... 29,906,250
305,000 Northern States Power Company, Minnesota.............................................. 12,543,125
1,210,000 Ohio Edison Company................................................................... 21,628,750
215,000 Oklahoma Gas & Electric Company....................................................... 6,530,625
1,040,000 Pacific Gas & Electric Company........................................................ 24,700,000
1,025,000 Pacificorp............................................................................ 17,296,875
930,000 Peco Energy Co........................................................................ 24,528,750
1,015,000 Pennsylvania Power & Light Company.................................................... 19,919,375
995,000 Pinnacle West Capital Corp............................................................ 16,293,125
610,000 Portland General Corp................................................................. 10,370,000
595,000 Potomac Electric Power Company........................................................ 11,379,375
890,000 PSI Resources, Inc.................................................................... 18,801,250
870,000 Public Service Company, Colorado...................................................... 22,728,750
1,180,000 Public Service Enterprise Group, Inc.................................................. 30,680,000
340,000 Puget Sound Power & Light Company..................................................... 6,375,000
550,000 Rochester Gas & Electric Corp......................................................... 11,962,500
1,050,000 San Diego Gas & Electric Company...................................................... 19,425,000
385,000 SCANA Corp............................................................................ 16,506,875
1,610,000 SCE Corp.............................................................................. 20,728,750
1,560,000 Southern Company...................................................................... 29,250,000
400,000 Southwestern Public Service Company................................................... 9,950,000
425,000 TECO Energy, Inc...................................................................... 8,128,125
1,160,000 Texas Utilities Electric Company...................................................... 36,395,000
1,000,000 Union Electric Company................................................................ 31,750,000
515,000 Utilicorp United, Inc................................................................. 14,741,875
830,000 Washington Water Power Company........................................................ 11,931,250
----------------
1,112,318,125
----------------
TOTAL COMMON STOCKS (IDENTIFIED COST $1,933,861,585).................................. 2,069,307,500
----------------
<PAGE>
</TABLE>
DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS JUNE 30, 1994 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS) VALUE
- ---------- ----------------
SHORT-TERM INVESTMENTS (1.4%)
<C> <S> <C> <C> <C>
COMMERCIAL PAPER(A)(0.6%)
AUTOMOTIVE FINANCE (0.6%)
$ 18,400 Ford Motor Credit Co. 4.10% due 7/1/94 (Amortized Cost $18,400,000).................... $ 18,400,000
----------------
U.S. GOVERNMENT AGENCY (A) (0.6%)
18,000 Student Loan Market Association 4.174% due 7/1/94 (Amortized Cost $18,000,000)......... 18,000,000
----------------
REPURCHASE AGREEMENT (0.3%)
8,767 The Bank of New York 6% due 7/1/94 (dated 6/30/94; proceeds $8,768,322; collateralized
by $4,150,768 U.S. Treasury Note 6.5% due 5/15/97 valued at $4,185,526 and $4,770,887
U.S. Treasury Note 6% due 6/30/96 valued at $4,756,693) (Identified Cost
$8,766,881).......................................................................... 8,766,881
----------------
TOTAL SHORT-TERM INVESTMENTS (IDENTIFIED COST $45,166,881)............................. 45,166,881
----------------
TOTAL INVESTMENTS (IDENTIFIED COST $3,093,308,823) (B)................................. 99.2% 3,172,982,585
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES......................................... 0.8 25,967,223
---------- ----------------
NET ASSETS............................................................................. 100.0% $ 3,198,949,808
---------- ----------------
---------- ----------------
<FN>
- ------------------
ADR-AMERICAN DEPOSITORY RECEIPT.
* NON-INCOME PRODUCING SECURITY.
** RESALE IS RESTRICTED TO QUALIFIED INSTITUTIONAL INVESTORS.
(A) SECURITIES WERE 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 $3,094,321,970; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $259,947,552 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $181,286,937, RESULTING IN NET UNREALIZED
APPRECIATION OF $78,660,615.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1994 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $3,093,308,823) (Note
1).................................... $ 3,172,982,585
Cash.................................... 427
Receivable for:
Interest.............................. 24,338,440
Dividends............................. 10,417,521
Shares of beneficial interest sold.... 4,023,129
Foreign withholding taxes reclaimed... 126,891
Prepaid expenses and other assets....... 168,559
---------------
TOTAL ASSETS.................... 3,212,057,552
---------------
LIABILITIES:
Payable for:
Shares of beneficial interest
repurchased......................... 5,010,282
Plan of distribution fee (Note 3)..... 2,701,427
Dividends to shareholders............. 2,312,187
Investment management fee (Note 2).... 1,430,507
Investments purchased (Note 4)........ 1,137,405
Accrued expenses and other payables
(Note 4).............................. 515,936
---------------
TOTAL LIABILITIES............... 13,107,744
---------------
NET ASSETS:
Paid-in-capital......................... 3,105,506,937
Accumulated undistributed net investment
income................................ 9,068,461
Accumulated undistributed net realized
gains................................. 4,700,648
Net unrealized appreciation............. 79,673,762
---------------
NET ASSETS...................... $ 3,198,949,808
---------------
---------------
NET ASSET VALUE PER SHARE, 255,273,519
shares outstanding (unlimited shares
authorized of $.01 par value).........
$12.53
---------------
---------------
</TABLE>
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1994 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME
Dividends (net of $294,562 foreign
withholding tax)................... $ 58,749,793
Interest............................. 48,550,418
--------------
TOTAL INCOME..................... 107,300,211
--------------
EXPENSES
Plan of distribution fee (Note 3).... 16,398,328
Investment management fee (Note 2)... 9,123,759
Transfer agent fees and expenses..... 1,728,589
Custodian fees....................... 105,992
Shareholder reports and notices...... 97,538
Registration fees.................... 78,496
Professional fees.................... 24,806
Trustees' fees and expenses (Note
4)................................. 14,590
Other................................ 32,337
--------------
TOTAL EXPENSES................... 27,604,435
--------------
NET INVESTMENT INCOME.......... 79,695,776
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 1):
Net realized gain.................... 5,715,316
Net change in unrealized
appreciation....................... (475,580,928)
--------------
NET LOSS ON INVESTMENTS.......... (469,865,612)
--------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS.... $ (390,169,836)
--------------
--------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED
JUNE 30, 1994 FOR THE YEAR ENDED
(UNAUDITED) DECEMBER 31, 1993
----------------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income........................................... $ 79,695,776 $ 156,417,384
Net realized gain............................................... 5,715,316 33,021,452
Net change in unrealized appreciation (depreciation)............ (475,580,928) 203,557,787
----------------------- ------------------
Net increase (decrease) in net assets resulting from
operations................................................. (390,169,836) 392,996,623
----------------------- ------------------
Dividends and distributions to shareholders from:
Net investment income........................................... (74,114,878) (155,892,059)
Net realized gain............................................... (4,390,910) (31,752,536)
----------------------- ------------------
Total dividends and distributions........................... (78,505,788) (187,644,595)
----------------------- ------------------
Net increase (decrease) from transactions in shares of beneficial
interest (Note 5)................................................ (213,489,008) 749,931,416
----------------------- ------------------
Total increase (decrease)................................... (682,164,632) 955,283,444
NET ASSETS:
Beginning of period............................................... 3,881,114,440 2,925,830,996
----------------------- ------------------
END OF PERIOD (including undistributed net investment income of
$9,068,461 and $3,487,563, respectively)......................... $ 3,198,949,808 $ 3,881,114,440
----------------------- ------------------
----------------------- ------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES--Dean Witter Utilities Fund (the
"Fund") is registered under the Investment Company Act of 1940, as amended (the
"Act"), as a diversified, open-end management investment company. The Fund was
organized as a Massachusetts business trust on December 8, 1987 and commenced
operations on April 29, 1988.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS--(1) an equity security listed or traded on the
New York or American Stock Exchange is valued at its latest sale price on
that exchange prior to the time when assets are valued (if there were no
sales that day, the security is valued at the latest bid price); (2) all
other portfolio securities for which over-the-counter market quotations are
readily available are valued at the latest available bid price prior to the
time of valuation; (3) when market quotations are not readily available,
portfolio securities are valued at their fair value as determined in good
faith under procedures established by and under the general supervision of
the Fund's Trustees; (4) certain of the Fund's portfolio securities may be
valued by an outside pricing service approved by the 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) short-term debt
securities having a maturity date of more than sixty days are valued on a
mark-to-market basis, that is, at prices based on market quotations for
securities of a similar type, yield, quality and maturity, until sixty days
prior to maturity and thereafter at amortized cost. 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 on the identified cost
method. In computing net investment income, the Fund does not amortize
premiums or accrue discounts on fixed income securities, except those
original issue discounts for which amortization is required for federal
income tax purposes. With respect to market discount, 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. 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.
D. 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.
E. 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
<PAGE>
DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions which exceed net investment income and net
realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they
exceed net investment income and net realized capital gains for tax
purposes, they are reported as distributions of paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT--Pursuant to an Investment Management
Agreement with Dean Witter InterCapital Inc. (the "Investment Manager"), the
Fund pays its Investment Manager a monthly management fee, calculated and
accrued daily, by applying the annual rate of 0.65% to the portion of daily net
assets not exceeding $500 million; 0.55% to the portion of daily net assets
exceeding $500 million but not exceeding $1 billion; 0.525% to the portion of
daily net assets exceeding $1 billion but not exceeding $1.5 billion; 0.50% to
the portion of daily net assets exceeding $1.5 billion but not exceeding $2.5
billion; 0.475% to the portion of daily net assets exceeding $2.5 billion but
not exceeding $3.5 billion; 0.45% to the portion of daily net assets exceeding
$3.5 billion but not exceeding $5 billion; and 0.425% to the portion of daily
net assets exceeding $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, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION--Shares of the Fund are distributed by Dean Witter
Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager.
The Fund has adopted a Plan of Distribution (the "Plan"), pursuant to Rule 12b-1
under the Act pursuant to which the Fund pays the Distributor compensation
accrued daily and payable monthly at an annual rate of 1.0% of the lesser of:
(a) the average daily aggregate gross sales of the Fund's shares since the
inception of the Fund (not including reinvestment 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. ("DWR"), an affiliate of the Investment
Manager, and other employees or selected dealers who engage in or support
distribution of the Fund's shares or who service shareholder accounts, including
overhead and telephone expenses; printing and distribution of prospectuses and
reports used in connection with the offering of the Fund's shares; 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 by the Distributor.
<PAGE>
DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
Provided that the Plan continues in effect, any cumulative expenses incurred
but not yet recovered, may be recovered through future distribution fees from
the Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the six months ended June 30,
1994, it received approximately $3,814,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares. The Fund's shareholders pay such
charges which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES--The cost of
purchases and the proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended June 30, 1994 aggregated
$203,615,548 and $338,860,871, respectively. Included in the aforementioned are
purchases and sales of U.S. Government securities of $34,079,881 and
$57,014,844, respectively. For the same period, the Fund paid brokerage
commissions of approximately $17,000 to DWR for transactions executed on behalf
of the Fund. At June 30, 1994, the Fund's payable for investments purchased
included unsettled trades with DWR of approximately $460,000.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At June 30, 1994, the Fund had
transfer agent fees and expenses payable of approximately $354,000.
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 an 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 costs for
the six months ended June 30, 1994, included in Trustees' fees and expenses in
the Statement of Operations amounted to $4,047. At June 30, 1994, the Fund had
an accrued pension liability of $43,059 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 SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 1994 DECEMBER 31, 1993
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Sold................................................... 25,081,482 $ 339,530,830 88,274,539 $1,279,510,064
Reinvestment of dividends and distributions............ 4,925,111 64,055,047 10,686,468 154,738,787
------------ -------------- ------------ --------------
30,006,593 403,585,877 98,961,007 1,434,248,851
Repurchased............................................ (45,422,082) (617,074,885) (47,067,729) (684,317,435)
------------ -------------- ------------ --------------
Net increase (decrease)................................ (15,415,489) $ (213,489,008) 51,893,278 $ 749,931,416
------------ -------------- ------------ --------------
------------ -------------- ------------ --------------
</TABLE>
6. FEDERAL INCOME TAX STATUS--At December 31, 1993, 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.
<PAGE>
DEAN WITTER UTILITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, 1994 ------------------------------------------------------------------------
(UNAUDITED) 1993 1992 1991 1990 1989
-------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period...................... $ 14.34 $ 13.37 $ 12.93 $ 11.48 $ 12.22 $ 10.41
-------------- ------------ ------------ ------------ ------------ ------------
Net investment income......... 0.31 0.61 0.63 0.65 0.65 0.63
Net realized and unrealized
gain (loss) on
investments................. (1.81) 1.09 0.47 1.45 (0.71) 1.86
-------------- ------------ ------------ ------------ ------------ ------------
Total from investment
operations.................. (1.50) 1.70 1.10 2.10 (0.06) 2.49
-------------- ------------ ------------ ------------ ------------ ------------
Less dividends and
distributions:
Dividends from net
investment income.......... (0.29) (0.61) (0.63) (0.65) (0.65) (0.67)
Distributions from net
realized gains on
investments................ (0.02) (0.12) (0.03) 0.00 (0.03) (0.01)
-------------- ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions............... (0.31) (0.73) (0.66) (0.65) (0.68) (0.68)
-------------- ------------ ------------ ------------ ------------ ------------
Net asset value, end of
period...................... $ 12.53 $ 14.34 $ 13.37 $ 12.93 $ 11.48 $ 12.22
-------------- ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------
TOTAL INVESTMENT RETURN+ ..... (10.55)%(1) 12.79% 8.75% 18.89% (0.27)% 24.51%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands).................. $3,198,950 $3,881,114 $2,925,831 $1,959,042 $1,369,038 $1,131,119
Ratio of expenses to average
net assets.................. 1.59%(2) 1.46% 1.59% 1.59% 1.67% 1.68%
Ratio of net investment income
to average net assets....... 4.58%(2) 4.32% 5.05% 5.58% 5.85% 6.07%
Portfolio turnover rate....... 6% 16% 14% 13% 13% 25%
<FN>
- ---------------
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER
UTILITIES FUND
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Edward F. Gaylor
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
LEGAL COUNSEL
Sheldon Curtis
Two World Trade Center
New York, New York 10048
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from
the records of the Fund without examination by the independent
accountants and accordingly they do not express an opinion
thereon.
This report is submitted for the general information of
shareholders of the Fund. For more detailed information about
the Fund, its officers and trustees, fees, expenses and other
pertinent information, please see the prospectus of the Fund.
This report is not authorized for distribution to prospective
investors in the Fund unless preceded or accompanied by an
effective prospectus.
SEMIANNUAL REPORT
JUNE 30, 1994
