WITTER DEAN UTILITIES FUND, N-30D, 1998-02-27

WITTER DEAN UTILITIES FUND
N-30D, 1998-02-27

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<PAGE>
DEAN WITTER UTILITIES FUND TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997

DEAR SHAREHOLDER:

During 1997, the utilities industry benefited from a blend of improving industry
fundamentals, a favorable interest-rate environment and the continuation of
industry-wide merger and acquisition activity. Further benefiting the sector's
performance was persistent stock market volatility and, during the second half
of the year, the Asian currency crisis, which prompted investors to seek the
relative safety and defensive posture that utilities offer.

AN OVERVIEW OF THE INDUSTRY

In this context, electric utilities were a chief beneficiary of the cautious
investment environment, with much of the impetus being a flight to quality and
safety. Additionally, electric utilities continued to witness fair and balanced
deregulation initiatives by many state utility commissions, which tempered the
market's concerns and strengthened shareholder confidence. Electric utility
merger and acquisition activity, such as the recent American Electric
Power/Central & Southwest proposal, was consistently evident throughout the year
as many companies strove to enhance their earnings outlook and expand their
product offerings in preparation for the new competitive environment.

The telecommunications sector also performed well in 1997, since the sector
benefited from numerous mergers and acquisitions (e.g., Bell Atlantic Corp. and
Nynex;) as well as from strong earnings growth fueled by an expanding economy
and high-growth applications including wireless, data and selective
international investments. Further reflecting the sector's strong performance
was a turnaround in the share price of AT&T, whose new management and objectives
appealed to investors.

While mild weather patterns toward the end of 1997 adversely affected natural
gas prices, gas pipeline companies (e.g., Williams Companies Inc. and El Paso
Energy) exhibited strong overall performance benefiting from strong growth in
core earnings and anticipation of a future acceleration in nonregulated
earnings.
<PAGE>
DEAN WITTER UTILITIES FUND
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED

PERFORMANCE AND PORTFOLIO STRATEGY

On July 28, 1997, Dean Witter Utilities Fund began offering four classes of
shares -- A, B, C and D -- each with its own sales charge and distribution fee
structure. A revised prospectus, which includes complete details regarding the
Fund's conversion to multiple classes of shares, was mailed to shareholders in
midsummer.

For the twelve-month period ended
December 31, 1997, the Fund's Class B
shares provided a total return of 25.79
percent, compared to a return of 26.01
percent for the Lipper Utility Funds
Average (Lipper Average) and 33.35
percent for the broad-based Standard &
Poor's 500 Composite Stock Price Index
(S&P 500 Index). While the utilities
sector and the Fund lagged the general
market for the year, investors did
participate in and benefit from the
stability and growth characteristics of
utilities during the latter, more
volatile part of 1997. The accompanying
chart illustrates the growth of a
$10,000 investment in the Fund from
inception (April 29, 1988) through
December 31, 1997, versus a similar
hypothetical investment in the issues
that comprise the S&P 500 Index and the
Lipper Average.

The Fund remained fully invested
throughout 1997, reflecting the
underlying defensive theme apparent
across the financial markets and
improved investor confidence in
utilities due to the tempering of
regulatory concerns and more evident
growth
fundamentals. On December 31, 1997, 90 percent of the Fund's net assets were
allocated to utility and utility-related equities. Within this component, 55
percent was allocated to electric utilities, 33 percent to telecommunications
and 12 percent to natural gas. The Fund's fixed-income portfolio accounted for 9
percent of net assets, with 1 percent held in cash and cash equivalents. The
fixed-income component was well diversified, with an average credit rating of
Baa1 and BBB as measured
<PAGE>
DEAN WITTER UTILITIES FUND
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED

by Moody's Investors Service Inc. and Standard & Poor's Corporation,
respectively. Further enhancing overall Fund diversification were selective
foreign securities, which accounted for 8 percent of net assets and focused on
the growth area of global telecommunications.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
Growth of $10,000 -- Class
B
($ in Thousands)
Average Annual Total
Returns
Life of
1 Year 5 Years Fund
<S> <C> <C> <C>
25.79%(1) 11.50%(1) 11.97%(1)
20.79%(2) 11.24%(2) 11.97%(2)
Lipper
Fund S&P 500(4) Avg.(5)
April 29, 1988 $10,000 $10,000 $10,000
December 31, 1988 $10,790 $10,890 $11,027
December 31, 1989 $13,435 $14,335 $14,266
December 31, 1990 $13,400 $13,891 $14,122
December 31, 1991 $15,930 $18,115 $17,076
December 31, 1992 $17,325 $19,494 $18,695
December 31, 1993 $18,541 $21,456 $21,491
December 31, 1994 $17,607 $21,738 $19,542
December 31, 1995 $22,610 $29,900 $24,940
December 31, 1996 $ 23,740 $ 36,763 $ 27,389
December 31, 1997 $29,863(3) $ 49,024 $ 34,425
</TABLE>

PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of 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-0%). See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value assuming a complete redemption on December 31, 1997.
(4) The Standard & Poor's 500 Composite Stock Price Index (S&P 500) is a
broad-based Index, the performance of which is based on the average
performance of 500 widely held common stocks. The index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
(5) The Lipper Utility Funds Average tracks the performance of funds which
invest 65% of their equity portfolio in utility shares, as reported by
Lipper Analytical Services.

Among the Fund's largest equity holdings on December 31, 1997 were Ameritech,
SBC Communications Inc. and Bell Atlantic Corp. (telecommunications), Duke Power
Co., CINergy Corporation and New Century Energies (electric utilities), and the
Williams Companies and Enron Corporation (natural gas). Included among the
Fund's major foreign holdings were BCE Inc. and Telefonica Espana S.A.

LOOKING AHEAD

During 1998, the Fund anticipates maintaining its fixed-income component at or
near current levels while modestly reducing its allocation to electric utilities
in favor of selective telecommunications and natural gas companies. Depending on
the international equity market fundamentals and overall Fund strategy, an
increase in foreign exposure is likely, given the immense opportunities created
by the growth of worldwide telecommunications infrastructure. Furthermore, we
believe that the long-term outlook for the energy and telecommunications sectors
is positive, as these sectors continue to benefit from globalization,
privatization and strong product demand.

We appreciate your support of Dean Witter Utilities Fund and look forward to
serving your future needs and investment objectives.

Very truly yours,

[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (89.5%)
NATURAL GAS (10.5%)
660,000 AGL Resources, Inc.................................................................. $ 13,488,750
330,000 Burlington Resources, Inc........................................................... 14,788,125
400,000 Coastal Corp........................................................................ 24,775,000
340,000 Consolidated Natural Gas Co......................................................... 20,570,000
529,821 EEX Corp.*.......................................................................... 4,801,503
530,335 El Paso Natural Gas Co.............................................................. 35,267,277
1,184,137 Enron Corp.......................................................................... 49,215,694
230,000 New Jersey Resources Corp........................................................... 9,214,375
70,000 Royal Dutch Petroleum Co. (ADR) (Netherlands)....................................... 3,793,125
280,000 Sonat, Inc.......................................................................... 12,810,000
285,000 Washington Gas Light Co............................................................. 8,817,187
2,120,000 Williams Companies, Inc............................................................. 60,155,000
--------------
257,696,036
--------------
TELECOMMUNICATIONS (29.7%)
200,000 360 DEG. Communications Co.*........................................................ 4,037,500
620,000 Airtouch Communications, Inc.*...................................................... 25,768,750
900,000 ALLTEL Corp......................................................................... 36,956,250
680,000 Ameritech Corp...................................................................... 54,740,000
360,000 AT&T Corp........................................................................... 22,050,000
985,000 BCE, Inc. (Canada).................................................................. 32,812,812
606,000 Bell Atlantic Corp.................................................................. 55,146,000
825,000 BellSouth Corp...................................................................... 46,457,812
145,000 British Telecommunications PLC (ADR) (United Kingdom)............................... 11,645,312
205,000 Cable & Wireless PLC (ADR) (United Kingdom)......................................... 5,573,437
545,000 Century Telephone Enterprises, Inc.................................................. 27,147,812
283,750 Compania de Telecommunicaciones de Chile S.A. (ADR) (Chile)......................... 8,477,031
300,000 Ericsson (L.M.) Telephone Co. (Class B) (ADR) (Sweden).............................. 11,193,750
152,500 France Telecom S.A. (ADR) (France)*................................................. 5,490,000
610,000 Frontier Corp....................................................................... 14,678,125
820,000 GTE Corp............................................................................ 42,845,000
675,000 Hong Kong Telecommunications, Ltd. (ADR) (Hong Kong)................................ 13,921,875
165,000 LCI International, Inc.*............................................................ 5,073,750
149,405 Lucent Technologies Inc............................................................. 11,933,724
725,000 MCI Communications Corp............................................................. 31,039,062
170,000 Philippine Long Distance Telephone Co. (ADR) (Philippines).......................... 3,825,000
894,806 SBC Communications, Inc............................................................. 65,544,539
675,000 Sprint Corp......................................................................... 39,571,875
470,000 Telecommunications Corp. New Zealand, Ltd. (ADR) (New Zealand)...................... 18,212,500
275,000 Telefonica de Argentina S.A. (ADR) (Argentina)...................................... 10,243,750
365,000 Telefonica Espana S.A. (ADR) (Spain)................................................ 33,237,812
335,000 Telefonos de Mexico S.A. de C.V. (Series L) (ADR) (Mexico).......................... 18,780,937
124,750 Telstra Corp., Ltd. (ADR) (Australia)*.............................................. 5,208,312
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
660,000 U.S. West Communications Group, Inc................................................. $ 29,782,500
430,000 U.S. West Media Group, Inc.*........................................................ 12,416,250
175,000 Vodafone Group PLC (ADR) (United Kingdom)........................................... 12,687,500
367,000 WorldCom, Inc.*..................................................................... 11,101,750
--------------
727,600,727
--------------
UTILITIES - ELECTRIC (49.3%)
1,040,000 Allegheny Energy, Inc............................................................... 33,800,000
670,000 American Electric Power Co.......................................................... 34,588,750
785,000 Baltimore Gas & Electric Co......................................................... 26,739,063
550,000 Boston Edison Co.................................................................... 20,831,250
250,000 Carolina Power & Light Co........................................................... 10,609,375
565,000 Central & South West Corp........................................................... 15,290,313
1,090,470 CINergy Corp........................................................................ 41,778,632
615,000 CMS Energy Corp..................................................................... 27,098,438
695,000 Consolidated Edison Co. of New York, Inc............................................ 28,495,000
890,000 Dominion Resources, Inc............................................................. 37,880,625
1,005,000 DPL, Inc............................................................................ 28,893,750
530,000 DQE, Inc............................................................................ 18,616,250
750,000 DTE Energy Co....................................................................... 26,015,625
1,021,862 Duke Power Co....................................................................... 56,585,608
1,285,000 Edison International................................................................ 34,935,938
1,105,000 Endesa S.A. (ADR) (Spain)........................................................... 20,097,188
935,000 Enova Corp.......................................................................... 25,303,438
595,000 Entergy Corp........................................................................ 17,812,813
730,000 FirstEnergy Corp.*.................................................................. 21,170,000
550,000 Florida Progress Corp............................................................... 21,587,500
725,000 FPL Group, Inc...................................................................... 42,910,938
1,010,000 GPU, Inc............................................................................ 42,546,250
1,200,000 Houston Industries, Inc............................................................. 32,025,000
710,000 Illinova Corp....................................................................... 19,125,625
695,000 Kansas City Power & Light Co........................................................ 20,545,938
505,000 Long Island Lighting Co............................................................. 15,213,125
1,052,500 New Century Energies, Inc........................................................... 50,454,219
720,000 New England Electric System......................................................... 30,780,000
515,000 New York State Electric & Gas Corp.................................................. 18,282,500
790,000 NIPSCO Industries, Inc.............................................................. 39,055,625
335,000 Northern States Power Co............................................................ 19,513,750
905,000 PacifiCorp.......................................................................... 24,717,813
615,000 Peco Energy Co...................................................................... 14,913,750
335,000 PG & E Corp......................................................................... 10,196,563
870,000 Pinnacle West Capital Corp.......................................................... 36,866,250
445,000 Potomac Electric Power Co........................................................... 11,486,563
655,000 PP&L Resources, Inc................................................................. 15,679,063
710,000 Public Service Enterprise Group, Inc................................................ 22,498,125
95,000 Puget Sound Power & Light Co........................................................ 2,867,813
350,000 Rochester Gas & Electric Corp....................................................... 11,900,000
800,000 SCANA Corp.......................................................................... 23,950,000
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED

TOTAL COMMON STOCKS
(IDENTIFIED COST $1,299,313,973).................................................... 2,193,018,979
--------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE
- ---------- ------ --------
<C> <S> <C> <C> <C>
CORPORATE BONDS (9.2%)
NATURAL GAS (1.8%)
$ 5,000 ANR Pipeline Co............................................................... 9.625% 11/01/21 6,527,000
10,000 Coastal Corp.................................................................. 9.625 05/15/12 12,621,000
5,000 Colorado Interstate Gas Co.................................................... 10.00 06/15/05 6,031,900
5,000 Northwest Pipeline Corp....................................................... 10.65 11/15/18 5,303,900
5,000 Transco Energy Co............................................................. 9.875 06/15/20 6,773,850
5,000 Williams Companies, Inc....................................................... 9.375 11/15/21 6,376,850
------------
43,634,500
------------
TELECOMMUNICATIONS (1.4%)
6,000 GTE Corp...................................................................... 7.90 02/01/27 6,299,580
5,000 Southwestern Bell Telephone Co................................................ 7.375 07/15/27 5,209,550
5,000 Sprint Corp................................................................... 9.25 04/15/22 6,390,900
5,000 Telephone & Data Systems, Inc................................................. 10.00 01/15/21 5,968,700
5,000 Telephone & Data Systems, Inc................................................. 9.58 11/19/21 5,441,450
5,000 U.S. West Communications Group, Inc........................................... 7.125 11/15/43 5,046,300
------------
34,356,480
------------
UTILITIES - ELECTRIC (6.0%)
1,499 AEP Generating Co............................................................. 9.81 12/07/22 1,943,512
5,000 Arizona Public Service Co..................................................... 7.25 08/01/23 5,013,600
3,000 CE Elec UK (United Kingdom)................................................... 6.995 12/30/07 3,047,280
6,000 Chugach Electric Co........................................................... 9.14 03/15/22 6,899,760
5,000 Cincinnati Gas & Electric Co.................................................. 7.20 10/01/23 5,042,650
5,000 Commonwealth Edison Co........................................................ 8.375 02/15/23 5,403,650
5,000 Consumers Energy Co........................................................... 7.375 09/15/23 4,987,250
10,783 DQU II Funding Corp........................................................... 8.70 06/01/16 12,100,683
5,000 Gulf States Utilities Co...................................................... 8.94 01/01/22 5,454,800
7,000 Indiantown Cogeneration LP.................................................... 9.26 12/15/10 7,939,680
3,000 Long Island Lighting Co....................................................... 8.90 07/15/19 3,168,750
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 5,100 Long Island Lighting Co....................................................... 8.20% 03/15/23 $ 5,424,768
5,250 National Rural Utilities Cooperative Finance Corp............................. 9.00 09/01/21 5,776,207
5,000 New York State Electric & Gas Corp............................................ 8.875 11/01/21 5,412,200
5,270 Niagara Mohawk Power Corp..................................................... 8.77 01/01/18 5,899,765
5,000 Niagara Mohawk Power Corp..................................................... 9.50 03/01/21 5,333,750
5,000 Pacificorp.................................................................... 6.71 01/15/26 4,915,650
10,250 Public Service Company of Colorado............................................ 8.75 03/01/22 11,328,812
5,000 Public Service Company of Oklahoma............................................ 7.375 04/01/23 5,204,150
5,000 Public Service Electric & Gas Co.............................................. 7.00 09/01/24 4,942,300
5,000 Selkirk Cogen Funding Corp.................................................... 8.98 06/26/12 5,682,450
4,750 Southwest Gas Corp............................................................ 8.00 08/01/26 5,413,623
221 Systems Energy Resources, Inc................................................. 11.375 09/01/16 235,840
5,000 Texas Utilities Electric Co................................................... 8.875 02/01/22 5,527,050
5,000 Texas Utilities Electric Co................................................... 7.375 10/01/25 5,087,950
5,000 Virginia Electric Power Co.................................................... 8.625 10/01/24 5,627,900
5,000 Wisconsin Power & Light Co.................................................... 8.60 03/15/27 5,630,100
------------
148,444,130
------------

TOTAL CORPORATE BONDS
(IDENTIFIED COST $202,992,657)................................................................... 226,435,110
------------

U.S. GOVERNMENT AGENCY OBLIGATIONS (0.3%)
7,000 Fannie Mae.................................................................... 0.00 10/09/19 1,825,040
5,000 Tennessee Valley Authority.................................................... 6.875 12/15/43 5,033,950
------------

TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(IDENTIFIED COST $6,354,985)..................................................................... 6,858,990
------------
</TABLE>

<TABLE>
<CAPTION>
<C> <S> <C>
SHORT-TERM INVESTMENTS (0.9%)
U.S. GOVERNMENT AGENCY (a) (0.6%)
15,100 Federal Home Loan Mortgage Corp.
(AMORTIZED COST $15,097,483)...................................................... 15,097,483
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (0.3%)
$ 7,861 The Bank of New York 3.875% due 01/02/98 (dated 12/31/97; proceeds $7,862,511) (b)
(IDENTIFIED COST $7,860,819)...................................................... $ 7,860,819
--------------

TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $22,958,302)....................................................... 22,958,302
--------------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $1,531,619,917) (C).................................................... 99.9 % 2,449,271,381

CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.......................................... 0.1 3,091,371
------ ---------------

NET ASSETS.............................................................................. 100.0 % $ 2,452,362,752
------ ---------------
------ ---------------
</TABLE>

- ---------------------

ADR American Depository Receipt.
* Non-income producing security.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) Collateralized by $4,376,521 U.S. Treasury Bill 5.915% due 06/04/98 valued
at $4,279,189 and $3,558,730 U.S. Treasury Note 6.125% due 08/15/07 valued
at $3,738,847.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $920,163,262 and the
aggregate gross unrealized depreciation is $2,511,798, resulting in net
unrealized appreciation of $917,651,464.

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $1,531,619,917).......................................................... $2,449,271,381
Cash........................................................................................ 15,466
Receivable for:
Dividends............................................................................... 6,521,142
Investments sold........................................................................ 4,988,612
Interest................................................................................ 4,626,332
Shares of beneficial interest sold...................................................... 2,084,068
Foreign withholding taxes reclaimed..................................................... 165,509
Prepaid expenses and other assets........................................................... 93,274
--------------
TOTAL ASSETS........................................................................... 2,467,765,784
--------------
LIABILITIES:
Payable for:
Dividends and distributions to shareholders............................................. 7,763,903
Shares of beneficial interest repurchased............................................... 3,813,321
Plan of distribution fee................................................................ 2,140,121
Investment management fee............................................................... 1,180,366
Investments purchased................................................................... 296,468
Accrued expenses and other payables......................................................... 208,853
--------------
TOTAL LIABILITIES...................................................................... 15,403,032
--------------
NET ASSETS............................................................................. $2,452,362,752
--------------
--------------
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................. $1,512,693,562
Net unrealized appreciation................................................................. 917,651,464
Accumulated undistributed net investment income............................................. 2,160,653
Accumulated undistributed net realized gain................................................. 19,857,073
--------------
NET ASSETS............................................................................. $2,452,362,752
--------------
--------------
CLASS A SHARES:
Net Assets.................................................................................. $3,581,103
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 210,576
NET ASSET VALUE PER SHARE.............................................................. $17.01
--------------
--------------

$17.95
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE)......................................
CLASS B SHARES:
Net Assets.................................................................................. $2,430,270,457
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 142,638,009
NET ASSET VALUE PER SHARE.............................................................. $17.04
--------------
--------------
CLASS C SHARES:
Net Assets.................................................................................. $1,405,078
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 82,379
NET ASSET VALUE PER SHARE.............................................................. $17.06
--------------
--------------
CLASS D SHARES:
Net Assets.................................................................................. $17,106,114
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)................................... 1,006,969
NET ASSET VALUE PER SHARE.............................................................. $16.99
--------------
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997*

<TABLE>
<S> <C>
NET INVESTMENT INCOME:

INCOME
Dividends (net of $1,166,042 foreign withholding tax)......................................... $ 91,250,894
Interest...................................................................................... 23,462,840
------------

TOTAL INCOME............................................................................. 114,713,734
------------

EXPENSES
Plan of distribution fee (Class A shares)..................................................... 5,899
Plan of distribution fee (Class B shares)..................................................... 23,748,377
Plan of distribution fee (Class C shares)..................................................... 1,568
Investment management fee..................................................................... 13,037,906
Transfer agent fees and expenses.............................................................. 2,354,616
Shareholder reports and notices............................................................... 196,108
Custodian fees................................................................................ 125,837
Professional fees............................................................................. 77,744
Registration fees............................................................................. 30,136
Trustees' fees and expenses................................................................... 16,683
Other......................................................................................... 27,078
------------

TOTAL EXPENSES........................................................................... 39,621,952
------------

NET INVESTMENT INCOME.................................................................... 75,091,782
------------

NET REALIZED AND UNREALIZED GAIN:
Net realized gain............................................................................. 199,367,128
Net change in unrealized appreciation......................................................... 261,162,998
------------

NET GAIN................................................................................. 460,530,126
------------

NET INCREASE.................................................................................. $535,621,908
------------
------------
</TABLE>

- ---------------------

* Class A, Class C and Class D shares were issued July 28, 1997.

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1997* DECEMBER 31, 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>

INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment income................................................ $ 75,091,782 $ 107,181,452
Net realized gain.................................................... 199,367,128 38,088,040
Net change in unrealized appreciation................................ 261,162,998 (21,800,001)
------------------ -----------------

NET INCREASE.................................................... 535,621,908 123,469,491
------------------ -----------------

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares................................................... (150,922 ) --
Class B shares................................................... (73,193,086 ) (112,326,026)
Class C shares................................................... (6,635 ) --
Class D shares................................................... (344,827 ) --

Net realized gain
Class A shares................................................... (252,328 ) --
Class B shares................................................... (194,864,905 ) (13,000,035)
Class C shares................................................... (57,955 ) --
Class D shares................................................... (1,198,655 ) --
------------------ -----------------

TOTAL DIVIDENDS AND DISTRIBUTIONS............................... (270,069,313 ) (125,326,061)
------------------ -----------------
Net decrease from transactions in shares of beneficial interest...... (490,134,824 ) (642,069,697)
------------------ -----------------

NET DECREASE.................................................... (224,582,229 ) (643,926,267)

NET ASSETS:
Beginning of period.................................................. 2,676,944,981 3,320,871,248
------------------ -----------------

END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $2,160,653 AND
$764,341, RESPECTIVELY).......................................... $ 2,452,362,752 $ 2,676,944,981
------------------ -----------------
------------------ -----------------
</TABLE>

- ---------------------

* Class A, Class C and Class D shares were issued July 28, 1997.

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997

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's investment objective is to provide
current income and long-term growth of income and capital. The Fund seeks to
achieve its objective by investing primarily in equity and fixed income
securities of companies engaged in the public utilities industry. The Fund was
organized as a Massachusetts business trust on December 8, 1987 and commenced
operations on April 29, 1988. On July 28, 1997, the Fund commenced offering
three additional classes of shares, with the then current shares, other than
shares held by certain employee benefit plans established by Dean Witter
Reynolds Inc. and its affiliate, SPS Transaction Services, Inc., designated as
Class B shares. Shares held by those employee benefit plans prior to July 28,
1997 have been designated Class D shares.

The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase, some Class
A shares, and most Class B shares and Class C shares are subject to a contingent
deferred sales charge imposed on shares redeemed within one year, six years and
one year, respectively. Class D shares are not subject to a sales charge.
Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.

The following is a summary of significant accounting policies:

A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (in
cases where securities are traded on more than one exchange; the securities are
valued on the exchange designated as the primary market pursuant to the
procedures adopted by the Trustees); (2) all other portfolio securities for
which over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by Dean Witter InterCapital Inc. (the "Investment Manager") that sale
or bid prices are not reflective of a security's market value, portfolio
securities are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Trustees
(valuation of debt
<PAGE>
DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997, CONTINUED

securities for which market quotations are not readily available may be based
upon current market prices of securities which are comparable in coupon, rating
and maturity or an appropriate matrix utilizing similar factors); (4) certain of
the Fund's portfolio securities may be valued by an outside pricing service
approved by the Trustees. The pricing service may utilize 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, if available, 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 at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.

B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Discounts are amortized over the life of the respective securities. Dividend
income and other distributions are recorded on the ex-dividend date. Interest
income is accrued daily.

C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.

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 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
<PAGE>
DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997, CONTINUED

income or distributions in excess of net realized capital gains. To the extent
they exceed net investment income and net realized capital gains for tax
purposes, they are reported as distributions of paid-in-capital.

2. INVESTMENT MANAGEMENT AGREEMENT

Pursuant to an Investment Management Agreement with the Investment Manager, the
Fund pays the Investment Manager a management fee, accrued daily and payable
monthly, by applying the 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. The Plan
provides that the Fund will pay the Distributor a fee which is accrued daily and
paid monthly at the following annual rates: (i) Class A -- up to 0.25% of the
average daily net assets of Class A; (ii) Class B -- 1.0% of the lesser of: (a)
the average daily aggregate gross sales of the Class B shares since the
inception of the Fund (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net asset value of the Class B
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or waived; or (b) the average daily net assets of
Class B; and (iii) Class C -- up to 1.0% of the average daily net assets of
Class C. In the case of Class A shares, amounts paid under the Plan are paid to
the Distributor for services provided. In the case of Class B and Class C
shares, amounts paid under the Plan are paid to the Distributor for services
provided
<PAGE>
DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997, CONTINUED

and the expenses borne by it and others in the distribution of the shares of
these Classes, including the payment of commissions for sales of these Classes
and incentive compensation to, and expenses of, the account executives of Dean
Witter Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and
Distributor, and others who engage in or support distribution of the 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 these shares to other than current shareholders; and
preparation, printing and distribution of sales literature and advertising
materials. In addition, the Distributor may utilize fees paid pursuant to the
Plan, in the case of Class B shares, to compensate DWR and other selected
broker-dealers for their opportunity costs in advancing such amounts, which
compensation would be in the form of a carrying charge on any unreimbursed
expenses.

In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts, including
carrying charges, totaled $63,773,437 at December 31, 1997.

In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to account executives may be reimbursed in the subsequent
calendar year. For the period ended December 31, 1997, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.25% and
1.0%, respectively.

The Distributor has informed the Fund that for the year ended December 31, 1997,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class B shares of $3,924,730 and received $16,377 in front-end sales
charges from sales of the Fund's Class A shares. The respective shareholders pay
such charges which are not an expense of the Fund.
<PAGE>
DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997, CONTINUED

4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES

The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended December 31, 1997 aggregated
$140,034,165 and $823,505,834, respectively. Included in the aforementioned are
purchases and sales of U.S. Government securities of $10,066,950 and $3,795,969,
respectively. Included in the aforementioned are sales of Citizens Utilities
Co., an affiliate of the Fund by virtue of a common Trustee, in the amount of
$4,775,800, as well as a realized loss of $161,650.

For the year ended December 31, 1997, the Fund incurred approximately $279,015
in brokerage commissions with DWR for portfolio transactions executed on behalf
of the Fund.

For the period May 31, 1997 through December 31, 1997, the Fund incurred
brokerage commissions of $2,000 with Morgan Stanley & Co., Inc., an affiliate of
the Investment Manager since May 31, 1997, for portfolio transactions executed
on behalf of the Fund.

Dean Witter Trust FSB, an affiliate of the Investment Manager and Distributor,
is the Fund's transfer agent. At December 31, 1997, the Fund had transfer agent
fees and expenses payable of approximately $40,000.

The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended December 31, 1997
included in Trustees' fees and expenses in the Statement of Operations amounted
to $2,876. At December 31, 1997, the Fund had an accrued pension liability of
$49,193 which is included in accrued expenses in the Statement of Assets and
Liabilities.

5. FEDERAL INCOME TAX STATUS

As of December 31, 1997, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales.
<PAGE>
DEAN WITTER UTILITIES FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997, CONTINUED

6. SHARES OF BENEFICIAL INTEREST

Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1997+ DECEMBER 31, 1996
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
CLASS A SHARES*
Sold............................................................. 772,410 $ 12,186,174 -- --
Reinvestment of dividends and distributions...................... 16,570 271,414 -- --
Redeemed......................................................... (578,404) (9,675,382) -- --
----------- -------------- ----------- ------------
Net increase -- Class A.......................................... 210,576 2,782,206 -- --
----------- -------------- ----------- ------------

CLASS B SHARES
Sold............................................................. 11,966,780 194,020,522 20,469,306 $305,649,321
Reinvestment of dividends and distributions...................... 13,633,251 220,842,234 6,797,078 100,198,592
Redeemed......................................................... (57,908,671) (910,948,280) (70,657,866) (1,047,917,610)
----------- -------------- ----------- ------------
Net decrease -- Class B.......................................... (32,308,640) (496,085,524) (43,391,482) (642,069,697)
----------- -------------- ----------- ------------

CLASS C SHARES*
Sold............................................................. 79,155 1,330,983 -- --
Reinvestment of dividends and distributions...................... 3,294 54,114 -- --
Redeemed......................................................... (70) (1,121) -- --
----------- -------------- ----------- ------------
Net increase -- Class C.......................................... 82,379 1,383,976 -- --
----------- -------------- ----------- ------------

CLASS D SHARES*
Sold............................................................. 128,367 2,102,719 -- --
Reinvestment of dividends and distributions...................... 94,075 1,539,246 -- --
Redeemed......................................................... (113,508) (1,857,447) -- --
----------- -------------- ----------- ------------
Net increase -- Class D.......................................... 108,934 1,784,518 -- --
----------- -------------- ----------- ------------
Net decrease in Fund............................................. (31,906,751) $ (490,134,824) (43,391,482) $(642,069,697)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>

- ---------------------
+ On July 28, 1997, 898,035 shares representing $14,269,769 were transferred
to Class D.
* For the period July 28, 1997 (issue date) through December 31, 1997.
</TABLE>
<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 YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------------
1997**++ 1996 1995 1994 1993 1992 1991 1990 1989
- ----------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS B SHARES

PER SHARE
OPERATING
PERFORMANCE:

Net asset value,
beginning of
period.......... $ 15.22 $ 15.15 $ 12.30 $ 14.34 $ 13.37 $ 12.93 $ 11.48 $ 12.22 $ 10.41
---------- --------- --------- ---------- --------- --------- ---------- --------- ---------

Net investment
income.......... 0.50 0.56 0.58 0.63 0.61 0.63 0.65 0.65 0.63

Net realized and
unrealized gain
(loss).......... 3.28 0.16 2.85 (2.04) 1.09 0.47 1.45 (0.71) 1.86
---------- --------- --------- ---------- --------- --------- ---------- --------- ---------

Total from
investment
operations...... 3.78 0.72 3.43 (1.41) 1.70 1.10 2.10 (0.06) 2.49
---------- --------- --------- ---------- --------- --------- ---------- --------- ---------

Less dividends
and
distributions
from:
Net investment
income........ (0.51) (0.58) (0.58) (0.61) (0.61) (0.63) (0.65) (0.65) (0.67)
Net realized
gain.......... (1.45) (0.07) -- (0.02) (0.12) (0.03) -- (0.03) (0.01)
---------- --------- --------- ---------- --------- --------- ---------- --------- ---------

Total dividends
and
distributions... (1.96) (0.65) (0.58) (0.63) (0.73) (0.66) (0.65) (0.68) (0.68)
---------- --------- --------- ---------- --------- --------- ---------- --------- ---------

Net asset value,
end of period... $ 17.04 $ 15.22 $ 15.15 $ 12.30 $ 14.34 $ 13.37 $ 12.93 $ 11.48 $ 12.22
---------- --------- --------- ---------- --------- --------- ---------- --------- ---------
---------- --------- --------- ---------- --------- --------- ---------- --------- ---------

TOTAL INVESTMENT
RETURN+.......... 25.79% 4.99% 28.42% (9.90)% 12.79% 8.75% 18.89% (0.27)% 24.51%

RATIOS TO AVERAGE
NET ASSETS:
Expenses......... 1.67% 1.64% 1.65% 1.64% 1.46% 1.59% 1.59% 1.67% 1.68%

Net investment
income.......... 3.15% 3.63% 4.19% 4.67% 4.32% 5.05% 5.58% 5.85% 6.07%

SUPPLEMENTAL DATA:
Net assets, end
of period, in
millions........ $ 2,430 $ 2,677 $ 3,321 $ 2,827 $ 3,881 $ 2,926 $ 1,959 $ 1,369 $ 1,131

Portfolio
turnover rate... 6% 7% 9% 11% 16% 14% 13% 13% 25%

Average
commission rate
paid............ $ 0.0555 $ 0.0547 -- -- -- -- -- -- --

<CAPTION>
FOR THE
DECEMBER
31, 1988
- ---------------------------------------
<S> <C>
CLASS B SHARES
PER SHARE
OPERATING
PERFORMANCE:
Net asset value,
beginning of
period.......... $ 10.00
----------
Net investment
income.......... 0.40
Net realized and
unrealized gain
(loss).......... 0.38
----------
Total from
investment
operations...... 0.78
----------
Less dividends
and
distributions
from:
Net investment
income........ (0.36)
Net realized
gain.......... (0.01)
----------
Total dividends
and
distributions... (0.37)
----------
Net asset value,
end of period... $ 10.41
----------
----------
TOTAL INVESTMENT
RETURN+.......... 7.90%(1)
RATIOS TO AVERAGE
NET ASSETS:
Expenses......... 1.84%(2)
Net investment
income.......... 6.69%(2)
SUPPLEMENTAL DATA
Net assets, end
of period, in
millions........ $ 458
Portfolio
turnover rate... 12%(1)
Average
commission rate
paid............ --
<FN>

- ---------------------
* Commencement of operations.
** Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date, other than shares held by certain
employee benefit plans established by Dean Witter Reynolds Inc. and its
affiliate, SPS Transaction Services, Inc., have been designated Class B
shares. Shares held by those employee benefit plans prior to July 28, 1997
have been designated Class D shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
FINANCIAL HIGHLIGHTS, CONTINUED

<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
DECEMBER 31,
1997++
- ----------------------------------------------------------------------------------------
<S> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 15.89
------
Net investment income................................................. 0.27
Net realized and unrealized gain...................................... 2.52
------
Total from investment operations...................................... 2.79
------
Less dividends and distributions from:
Net investment income.............................................. (0.35)
Net realized gain.................................................. (1.32)
------
Total dividends and distributions..................................... (1.67)
------
Net asset value, end of period........................................ $ 17.01
------
------
TOTAL INVESTMENT RETURN+.............................................. 18.06%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.92%(2)
Net investment income................................................. 4.05%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $ 3,581
Portfolio turnover rate............................................... 6%
Average commission rate paid.......................................... $ 0.0555
</TABLE>

<TABLE>
<S> <C>
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 15.89
------
Net investment income................................................. 0.22
Net realized and unrealized gain...................................... 2.51
------
Total from investment operations...................................... 2.73
------
Less dividends and distributions from:
Net investment income.............................................. (0.24)
Net realized gain.................................................. (1.32)
------
Total dividends and distributions..................................... (1.56)
------
Net asset value, end of period........................................ $ 17.06
------
------
TOTAL INVESTMENT RETURN+.............................................. 17.67%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.69%(2)
Net investment income................................................. 3.14%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $ 1,405
Portfolio turnover rate............................................... 6%
Average commission rate paid.......................................... $ 0.0555
<FN>

- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER UTILITIES FUND
FINANCIAL HIGHLIGHTS, CONTINUED

<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
DECEMBER 31,
1997++
- ----------------------------------------------------------------------------------------

<S> <C>
CLASS D SHARES

PER SHARE OPERATING PERFORMANCE:

Net asset value, beginning of period.................................. $ 15.89
------

Net investment income................................................. 0.22

Net realized and unrealized gain...................................... 2.58
------

Total from investment operations...................................... 2.80
------

Less dividends and distributions from:
Net investment income.............................................. (0.38)
Net realized gain.................................................. (1.32)
------

Total dividends and distributions..................................... (1.70)
------

Net asset value, end of period........................................ $ 16.99
------
------

TOTAL INVESTMENT RETURN+.............................................. 18.13%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.67%(2)

Net investment income................................................. 4.21%(2)

SUPPLEMENTAL DATA:

Net assets, end of period, in thousands............................... $ 17,106

Portfolio turnover rate............................................... 6%

Average commission rate paid.......................................... $ 0.0555
<FN>

- ---------------------
* The date shares were first issued. Shareholders who held shares of the Fund
prior to July 28, 1997 (the date the Fund converted to a multiple class
share structure) should refer to the Financial Highlights of Class B to
obtain the historical per share data and ratio information of their shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
</TABLE>

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, 1997, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1997 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.

PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
FEBRUARY 6, 1998
<PAGE>
DEAN WITTER UTILITIES FUND
FEDERAL TAX NOTICE (UNAUDITED)

1997 FEDERAL TAX NOTICE

For the year ended December 31, 1997, the Fund paid to shareholders the
following per share amounts from long-term capital gains. These distributions
are taxable as 28% rate gains or 20% rate gains, as indicated below:

<TABLE>
<CAPTION>
PER SHARE
--------------------------
CLASS CLASS CLASS CLASS
A B C D
----- ----- ----- -----
<S> <C> <C> <C> <C>
Portion of long-term
capital gains taxable as:
28% rate gain.......... $0.46 $0.59 $0.46 $0.46
20% rate gain.......... 0.86 0.86 0.86 0.86
----- ----- ----- -----
Total long-term capital
gains.................... $1.32 $1.45 $1.32 $1.32
----- ----- ----- -----
----- ----- ----- -----
</TABLE>

For the year ended December 31, 1997, 99.91% of the income dividends qualified
for the dividends received deduction available to corporations.
<PAGE>
(This page has been left blank intentionally.)
<PAGE>

TRUSTEES
DEAN WITTER
UTILITIES FUND
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder

OFFICERS

Charles A. Fiumefreddo
Chairman and Chief Executive Officer

Barry Fink
Vice President, Secretary and General Counsel

Edward F. Gaylor
Vice President

Thomas F. Caloia
Treasurer

TRANSFER AGENT [PHOTO]

Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036

INVESTMENT MANAGER

Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048

ANNUAL REPORT
DECEMBER 31, 1997

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.