<PAGE>
DEAN WITTER STRATEGIST FUND
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
We are pleased to present the annual report on the operations of Dean Witter
Strategist Fund for the fiscal year ended July 31, 1994. For the 12 months ended
July 31, 1994, the Fund provided shareholders with a total return, not
reflecting the contingent deferred sales charge was 3.53 percent compared to
5.15 percent for the U.S. stock market as represented by the broad-based
Standard & Poor's Composite Stock Price Index (S & P 500). On July 31, the
Fund's total assets under management were $806 million.
A PERIOD OF RISING INTEREST RATES AND DECLINING STOCK PRICES
During the fiscal year, interest rates, both in the U.S. and abroad, became
the focal point for stock and bond investors as stronger than anticipated
economic recoveries around the world sparked inflationary fears for the first
time in many months. While the second half of calendar 1993 seemed to point to
sustained, moderate growth, economic releases
in the first quarter of 1994 painted a very
disturbing picture: fourth quarter U.S. gross
domestic product at its strongest growth rate
in five years; auto sales approaching all-time
historical levels; factory capacity
utilization nearing 90 percent; housing demand
accelerating in the wake of 20-year lows in
interest rates; and, finally, industrial and
basic materials prices spiking upward on
strong demand. Investors began to anticipate
(and fear) a reaction from the Federal Reserve
Board, selling off fixed-income investments in
the hopes of "cashing out" profits from the
previous year before monetary policy shifted.
The balance of the first half of 1994
became a tug-of-war between those investors
expecting interest rate increases and those
regarding each increase as the right medicine
for an overheating economy. When the dust
settled, the Federal Reserve had raised its
target for federal-funds rate three times and
the discount rate once, boosting short-term
rates from 3.00 percent to 4.25 percent. This
resulted in a sell-off in bonds of 4.3 percent
for the first half of 1994, as measured by the
Lehman Government/Corporate Bond Index. The
stock market, which offset a price/earnings
multiple contraction tied to higher interest
rates with stronger earnings growth, posted a
first-half loss of only 3.4 percent, as
measured by the S & P 500.
A SHIFT IN STRATEGY
During fiscal 1994, the Fund shifted its
investments to a more cautious allocation in
response to the change in Federal Reserve
Board policy. The Fund's cash position was
increased to 10 percent, while its equity
position was reduced from 75 percent
<PAGE>
to 60 percent and its bond position was increased from 25 percent to 30 percent.
While the short-term drop in the value of stocks and bonds resulting from higher
rates was unsettling, it is our belief that the Federal Reserve Board acted
prudently in its attempts to keep inflationary pressures in check and secure a
moderate growth path for the economy well into 1995. Therefore, the Fund's
allocation maintains a nearly fully invested strategy in long-term financial
assets, which we expect to outperform cash in the second half of 1994. The
accompanying chart illustrates the growth of a $10,000 investment in the Fund
from inception on October 31, 1988 through July 31, 1994, versus the performance
of a similar hypothetical investment in the issues that comprise the S & P 500.
Our equity investment strategy shifted as well during fiscal 1994. After an
extended period of overweighting basic materials, industrial and consumer
cyclical companies, we shifted our overweighted positions back to the consumer
service, consumer staple and financial sectors, where value, combined with a
more defensive characteristic, makes these investments more attractive. For
example, profits in Chrysler, Phelps Dodge, Monsanto and Bethlehem Steel were
reinvested in Merck, Citicorp, Johnson & Johnson and Nike.
The bond portfolio closed the fiscal year invested equally among three
sectors: U.S. government bonds, U.S. corporate bonds, and non-U.S. government
and corporate issuers. The portfolio's maturity concentration placed it roughly
at the 12-year to 15-year range of the yield curve, where attractive yields can
be obtained with less volatility than the 20-year to 30-year range. All
fixed-income investments continue above investment grade, as the Fund's
prospectus requires.
LOOKING AHEAD
In coming months, we expect the U.S. economy to grow within a moderate band
of three percent to four percent. This level should not disturb either the
Federal Reserve Board or the fixed-income markets, which appear to be settling
within a yield range of seven percent to eight percent on the long-term end. As
long as inflation continues to be held in check, a stable bond market should
provide a favorable backdrop for stocks, where earnings growth is expected to
continue at above-average levels.
We appreciate your support of Dean Witter Strategist Fund and look forward
to continuing to serve your financial needs and objectives.
Very truly yours,
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------
<C> <S> <C>
COMMON STOCKS (60.9%)
AEROSPACE (0.9%)
180,000 Allied-Signal, Inc............................................... $ 6,885,000
---------------
ALUMINUM (1.0%)
160,000 Reynolds Metals Co............................................... 8,060,000
---------------
AUTOMOBILES (1.9%)
50,600 Daimler Benz Aktiengesellschaft (ADR)............................ 2,580,600
260,000 Ford Motor Company............................................... 8,255,000
80,000 General Motors Corp.............................................. 4,110,000
---------------
14,945,600
---------------
BANKS - MONEY CENTER (1.9%)
200,000 Chemical Banking Corp............................................ 7,675,000
180,000 Citicorp......................................................... 7,425,000
---------------
15,100,000
---------------
BANKS - REGIONAL (3.1%)
200,000 Bank of Boston Corporation....................................... 5,275,000
100,000 First Interstate Bancorp......................................... 7,512,500
140,000 Norwest Corp..................................................... 3,657,500
55,000 Wells Fargo & Co................................................. 8,545,625
---------------
24,990,625
---------------
BEVERAGES - SOFT DRINKS (0.9%)
230,000 PepsiCo, Inc..................................................... 7,015,000
---------------
CHEMICALS (2.5%)
100,000 Dow Chemical Co. (The)........................................... 6,912,500
135,000 duPont (E.I.) deNemours & Co..................................... 8,015,625
70,000 Monsanto Co...................................................... 5,381,250
---------------
20,309,375
---------------
CHEMICALS - SPECIALTY (1.8%)
250,000 Georgia Gulf Corp.*.............................................. 8,968,750
250,000 Praxair, Inc..................................................... 5,625,000
---------------
14,593,750
---------------
COMPUTER SOFTWARE (1.6%)
120,000 Microsoft Corp.*................................................. 6,180,000
170,000 Oracle Systems Corp.*............................................ 6,481,250
---------------
12,661,250
---------------
COMPUTER SOFTWARE SERVICES (1.0%)
230,000 General Motors Corp. (Class E)................................... 8,107,500
---------------
COMPUTERS - SYSTEMS (0.5%)
180,000 Sun Microsystems, Inc.*.......................................... 4,005,000
---------------
DRUGS (1.1%)
300,000 Merck & Co., Inc................................................. 8,887,500
---------------
ELECTRIC EQUIPMENT (3.1%)
136,000 Emerson Electric Co.............................................. 8,262,000
170,000 General Electric Corp............................................ 8,563,750
250,000 Honeywell, Inc................................................... 7,875,000
---------------
24,700,750
---------------
<PAGE>
</TABLE>
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------
<C> <S> <C>
ELECTRONICS - DEFENSE (1.1%)
246,000 Loral Corp....................................................... $ 9,163,500
---------------
ELECTRONICS - SEMICONDUCTORS (1.4%)
80,000 Intel Corp....................................................... 4,720,000
130,000 Motorola, Inc.................................................... 6,890,000
---------------
11,610,000
---------------
FINANCE (1.2%)
112,000 Federal National Mortgage Association............................ 9,716,000
---------------
FINANCIAL SERVICES (1.4%)
99,500 Sunamerica, Inc.................................................. 4,514,813
203,733 Travelers, Inc................................................... 6,748,656
---------------
11,263,469
---------------
FOODS (1.5%)
168,000 Campbell Soup Co................................................. 6,216,000
75,000 Quaker Oats Co. (The)............................................ 5,662,500
---------------
11,878,500
---------------
HEALTH CARE DIVERSIFIED (2.2%)
300,000 Abbott Laboratories.............................................. 8,437,500
200,000 Johnson & Johnson................................................ 9,400,000
---------------
17,837,500
---------------
HEALTH CARE MISCELLANEOUS (2.2%)
100,000 Coventry Corp.*.................................................. 3,350,000
200,000 Diagnostek, Inc.*................................................ 4,525,000
200,000 Humana, Inc.*.................................................... 3,750,000
65,000 Mid Atlantic Medical Services, Inc.*............................. 2,689,375
136,000 Wellpoint Health Co.*............................................ 3,519,000
---------------
17,833,375
---------------
HOSPITAL MANAGEMENT (1.0%)
200,000 Columbia HCA Healthcare Corp..................................... 8,100,000
---------------
HOUSEHOLD APPLIANCES (0.8%)
128,000 Whirlpool Corp................................................... 6,512,000
---------------
HOUSEHOLD PRODUCTS (0.7%)
110,000 Colgate-Palmolive Co............................................. 5,871,250
---------------
LIFE INSURANCE (1.0%)
250,000 Providian Corp................................................... 7,718,750
---------------
MACHINERY - CONSTRUCTION & MATERIALS (0.9%)
205,000 Ingersoll Rand Co................................................ 7,456,875
---------------
METALS (1.1%)
142,000 Phelps Dodge Corp................................................ 8,768,500
---------------
MULTI-LINE INSURANCE (0.9%)
80,000 American International Group, Inc................................ 7,540,000
---------------
NATURAL GAS - DISTRIBUTION (1.1%)
270,000 Williams Cos., Inc............................................... 8,808,750
---------------
<PAGE>
</TABLE>
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------
<C> <S> <C>
OIL DRILLING & SERVICES (1.7%)
300,000 Dresser Industries, Inc.......................................... $ 6,337,500
130,000 Schlumberger, Ltd. (ADR)......................................... 7,670,000
---------------
14,007,500
---------------
OIL INTEGRATED - DOMESTIC (0.9%)
370,100 Occidental Petroleum Corp........................................ 7,355,737
---------------
OIL INTEGRATED - INTERNATIONAL (4.3%)
186,000 Chevron Corp..................................................... 8,253,750
125,000 Exxon Corp....................................................... 7,437,500
95,000 Mobil Corp....................................................... 7,968,125
170,000 Texaco, Inc...................................................... 10,795,000
---------------
34,454,375
---------------
RAILROAD EQUIPMENT (0.5%)
116,500 Trinity Industries, Inc.......................................... 3,713,437
---------------
RAILROADS (1.8%)
150,000 Conrail, Inc..................................................... 8,062,500
88,000 CSX Corp......................................................... 6,831,000
---------------
14,893,500
---------------
RESTAURANTS (0.7%)
220,000 McDonald's Corp.................................................. 5,967,500
---------------
RETAIL (1.5%)
140,000 Penney (J.C.) Co., Inc........................................... 6,930,000
225,200 Wal-Mart Stores, Inc............................................. 5,630,000
---------------
12,560,000
---------------
RETAIL - SPECIALTY (2.6%)
128,000 Gap, Inc......................................................... 4,928,000
150,000 Home Depot, Inc.................................................. 6,150,000
540,000 Pier 1 Imports, Inc.............................................. 3,982,500
400,000 Price/Costco, Inc.*.............................................. 6,000,000
---------------
21,060,500
---------------
SHOES (2.1%)
70,000 Fila Holdings SPA (ADR).......................................... 1,102,500
130,000 Nike, Inc. Class B............................................... 7,995,000
210,000 Reebok International, Ltd........................................ 7,455,000
---------------
16,552,500
---------------
STEEL & IRON (0.6%)
220,000 Bethlehem Steel Corp.*........................................... 4,895,000
---------------
TELECOMMUNICATIONS (4.4%)
310,000 Airtouch Communications*......................................... 8,060,000
120,000 AT&T Corp........................................................ 6,555,000
120,000 Bell Atlantic Corp............................................... 6,795,000
315,000 MCI Communications Corp.......................................... 7,126,875
110,000 Pacific Telesis Group............................................ 3,602,500
50,000 Telefonos de Mexico, S.A. (Series L) (ADR)....................... 3,037,500
---------------
35,176,875
---------------
TOTAL COMMON STOCKS (IDENTIFIED COST $445,207,570)............... 490,976,743
---------------
</TABLE>
<PAGE>
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- --------- ---------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (19.6%)
AUTOMOTIVE FINANCE (0.6%)
$ 5,000 Ford Capital BV........................... 9.375 % 5/15/01 $ 5,477,850
---------------
BANKING (2.2%)
2,000 Amsouth Bancorporation.................... 7.75 5/15/04 1,988,720
10,000 Bank of Boston Corporation................ 6.625 2/ 1/04 9,177,500
6,000 Midlantic Corp............................ 9.25 9/ 1/99 6,402,180
---------------
17,568,400
---------------
BANKS - INTERNATIONAL (4.8%)
5,000 Banca Commercial Italiana................. 8.25 7/15/07 4,966,950
10,000 Bank of China............................. 8.25 3/15/14 9,226,700
5,000 Kansallis-Osake-Pankki.................... 10.00 5/ 1/02 5,543,250
5,000 Royal Bank of Scotland Capital Corp....... 10.125 3/ 1/04 5,742,650
10,000 Skandinaviska Enskilda Banken............. 6.875 2/15/09 8,854,900
5,000 Toronto-Dominion Bank-N.Y................. 6.15 10/15/08 4,250,050
---------------
38,584,500
---------------
BROADCAST MEDIA (1.7%)
10,000 News American Holdings, Inc............... 8.25 8/10/18 9,125,400
5,000 Time Warner Entertainment Co.............. 8.375 7/15/33 4,462,550
---------------
13,587,950
---------------
BROKERAGE (1.8%)
5,000 Lehman Brothers Holdings, Inc............. 9.875 10/15/00 5,491,650
5,000 Morgan Stanley Group, Inc................. 7.50 2/ 1/24 4,440,000
5,000 Paine Webber Group, Inc................... 6.68 2/10/04 4,506,450
---------------
14,438,100
---------------
CANADIAN GOVERNMENT & AGENCIES (1.9%)
6,000 New Brunswick Province.................... 7.625 6/29/04 5,974,320
5,000 Quebec Province........................... 7.50 7/15/02 4,909,350
5,000 Quebec Province........................... 7.50 7/15/23 4,447,250
---------------
15,330,920
---------------
CONSUMER PRODUCTS (2.4%)
10,000 Phillip Morris Cos., Inc.................. 7.25 1/15/03 9,636,100
5,000 RJR Nabisco, Inc.......................... 8.75 4/15/04 4,493,950
5,000 Seagram, Joseph E. & Sons, Inc............ 9.00 8/15/21 5,243,250
---------------
19,373,300
---------------
OIL & GAS PRODUCTS (0.6%)
5,000 Lasmo (USA), Inc.......................... 8.375 6/ 1/23 4,686,150
---------------
PAPER & FOREST PRODUCTS (2.6%)
10,000 Boise Cascade Corp........................ 9.85 6/15/02 10,603,300
10,000 Georgia-Pacific Corp...................... 9.125 7/ 1/22 10,121,200
---------------
20,724,500
---------------
UTILITIES - ELECTRIC (1.0%)
10,000 Long Island Lighting Co................... 6.25 7/15/01 8,331,800
---------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $164,778,098)............. 158,103,470
---------------
</TABLE>
<PAGE>
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- --------- ---------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES & OBLIGATIONS (10.6%)
$ 852 Federal Home Loan Mortgage Corp........... 8.50 % 7/ 1/02 $ 868,065
353 Federal Home Loan Mortgage Corp........... 9.00 8/ 1/02 362,789
3,000 Federal National Mortgage Association..... 6.40 1/13/04 2,756,430
10,000 Private Export Funding Corp............... 6.86 4/30/04 9,887,500
17,650 Resolution Funding Corp................... 0.00 1/15/18 2,924,810
1,500 U.S. Treasury Bond........................ 10.75 8/15/05 1,899,375
6,500 U.S. Treasury Bond........................ 8.125 8/15/19 6,965,155
13,500 U.S. Treasury Bond........................ 7.125 2/15/23 13,031,719
1,000 U.S. Treasury Note........................ 7.25 11/15/96 1,023,594
6,500 U.S. Treasury Note........................ 7.875 11/15/99 6,820,938
4,100 U.S. Treasury Note........................ 8.50 11/15/00 4,438,890
12,000 U.S. Treasury Note........................ 7.50 11/15/01 12,367,500
15,020 U.S. Treasury Note........................ 7.50 5/15/02 15,325,094
1,500 U.S. Treasury Note........................ 6.25 2/15/03 1,421,016
5,000 U.S. Treasury Note........................ 7.25 5/15/04 5,050,000
---------------
TOTAL U.S. GOVERNMENT AGENCIES & OBLIGATIONS (IDENTIFIED COST
$86,368,505)................................................... 85,142,875
---------------
SHORT - TERM INVESTMENTS (7.9%)
COMMERCIAL PAPER(A) (3.8%)
AUTOMOTIVE FINANCE (2.8%)
23,000 Ford Motor Credit Company 4.259% due
8/8/94.......................................................... 22,980,994
----------
FINANCE - DIVERSIFIED (1.0%)
8,000 General Electric Capital Corp. 4.310% due
8/2/94.......................................................... 7,999,044
----------
TOTAL COMMERCIAL PAPER (AMORTIZED COST
$30,980,038).................................................... 30,980,038
----------
U.S. GOVERNMENT AGENCIES (A) (3.9%)
8,450 Federal Home Loan Mortgage Corp. 4.051%
due 8/1/94...................................................... 8,450,000
23,000 Federal National Mortgage Association
4.287% due 8/29/94.............................................. 22,923,614
----------
TOTAL U.S. GOVERNMENT AGENCIES (AMORTIZED
COST $31,373,614)............................................... 31,373,614
----------
REPURCHASE AGREEMENT (0.2%)
1,484 The Bank of New York 4.125% due 8/1/94
(dated 7/29/94; proceeds $1,484,126;
collateralized by $1,528,878 FNMA Medium
Term Note 5.85% due 2/2/98 valued at
$1,513,809) (Identified Cost
$1,484,126)..................................................... 1,484,126
----------
TOTAL SHORT - TERM INVESTMENTS (IDENTIFIED
COST $63,837,778)............................................... 63,837,778
-------------
TOTAL INVESTMENTS (IDENTIFIED COST $760,191,951) (B)......... 99.0% 798,060,866
OTHER ASSETS IN EXCESS OF LIABILITIES........................ 1.0 8,188,549
---------- -------------
NET ASSETS................................................... 100.0% $ 806,249,415
---------- -------------
---------- -------------
<FN>
- ------------------
ADR - AMERICAN DEPOSITORY RECEIPT.
* NON-INCOME PRODUCING SECURITY.
(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 $760,549,291; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $61,424,233 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $23,912,658, RESULTING IN NET UNREALIZED
APPRECIATION OF $37,511,575.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $760,191,951) (Note
1)...................................... $ 798,060,866
Receivable for:
Investments sold........................ 7,428,776
Interest................................ 5,132,812
Shares of beneficial interest sold...... 1,472,009
Dividends............................... 698,690
Principal paydowns...................... 23,977
Foreign withholding taxes reclaimed..... 5,650
Prepaid expenses.......................... 6,325
-------------
TOTAL ASSETS...................... 812,829,105
-------------
LIABILITIES:
Payable for:
Investments purchased................... 4,668,465
Shares of beneficial interest
repurchased........................... 676,898
Plan of distribution fee (Note 3)....... 630,574
Investment management fee (Note 2)...... 393,037
Accrued expenses and other payables (Note
4)...................................... 210,716
-------------
TOTAL LIABILITIES................. 6,579,690
-------------
NET ASSETS:
Paid-in-capital........................... 745,415,391
Accumulated undistributed net investment
income.................................. 1,003,673
Accumulated undistributed net realized
gains................................... 21,961,436
Net unrealized appreciation............... 37,868,915
-------------
NET ASSETS........................ $ 806,249,415
-------------
-------------
NET ASSET VALUE PER SHARE, 55,866,185
shares outstanding (unlimited shares
authorized of $.01 par value)...........
$14.43
-------------
-------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME
Interest.............................. $ 17,652,987
Dividends (net of $4,221 foreign
withholding tax).................... 12,009,613
-------------
TOTAL INCOME...................... 29,662,600
-------------
EXPENSES
Plan of distribution fee (Note 3)..... 7,177,296
Investment management fee (Note 2).... 4,711,608
Transfer agent fees and expenses (Note
4).................................. 918,920
Shareholder reports and notices....... 102,976
Custodian fees........................ 81,346
Registration fees..................... 78,164
Professional fees..................... 43,419
Trustees' fees and expenses (Note
4).................................. 27,361
Organizational expenses (Note 1)...... 5,436
Other................................. 14,308
-------------
TOTAL EXPENSES.................... 13,160,834
-------------
NET INVESTMENT INCOME........... 16,501,766
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 1):
Net realized gain..................... 26,073,475
Net change in unrealized
appreciation........................ (15,330,968)
-------------
NET GAIN ON INVESTMENTS........... 10,742,507
-------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS..... $ 27,244,273
-------------
-------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1994 JULY 31, 1993
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................................. $ 16,501,766 $ 11,410,889
Net realized gain..................................................... 26,073,475 25,392,991
Net change in unrealized appreciation................................. (15,330,968) 2,422,221
------------------ ------------------
Net increase in net assets resulting from operations.............. 27,244,273 39,226,101
------------------ ------------------
Dividends and distributions to shareholders from:
Net investment income................................................. (14,241,827) (12,576,422)
Net realized gain..................................................... (22,860,148) (20,203,899)
------------------ ------------------
Total dividends and distributions................................. (37,101,975) (32,780,321)
------------------ ------------------
Net increase from transactions in shares of beneficial interest (Note
5)..................................................................... 33,273,643 335,585,995
------------------ ------------------
Total increase.................................................... 23,415,941 342,031,775
NET ASSETS:
Beginning of period..................................................... 782,833,474 440,801,699
------------------ ------------------
END OF PERIOD (including undistributed net investment income of
$1,003,673 and $743,729, respectively)................................. $ 806,249,415 $ 782,833,474
------------------ ------------------
------------------ ------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Organization and Accounting Policies--Dean Witter Strategist Fund (the
"Fund") is registered under the Investment Company Act of 1940, as amended (the
"Act"), as a non-diversified, open-end management investment company. The Fund
was organized as a Massachusetts business trust on August 5, 1988 and commenced
operations on October 31, 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 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 value 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. 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
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
<PAGE>
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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.
F. ORGANIZATIONAL EXPENSES--The Fund's Investment Manager paid the
organizational expenses of the Fund in the amount of approximately $110,000.
The Fund had reimbursed the Investment Manager for these expenses which were
deferred and amortized by the Fund on the straight-line method over a period
not to exceed five years from the commencement of operations. As of
January 31, 1994, these expenses were fully amortized.
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 following annual rates to the net assets of the
Fund, determined at the close of each business day: 0.60% 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; and 0.50% to the
portion of daily net assets exceeding $1 billion.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
3. Plan of Distribution--Shares of the Fund are distributed by Dean Witter
Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager.
The Fund has adopted a Plan of Distribution (the "Plan"), pursuant to Rule 12b-1
under the Act pursuant to which the Fund pays the Distributor compensation
accrued daily and payable monthly at an annual rate of (i) 1.0% of the lesser
of: (a) the average daily aggregate gross sales of the Fund's shares since the
implementation of the Plan on November 8, 1989 (not including reinvestment of
dividend or capital gain distributions), less the average daily aggregate net
asset value of the Fund's shares redeemed since the Fund's implementation of the
Plan 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
attributable to shares issued, net of related shares redeemed, since
implementation of the Plan; plus (ii) 0.25% of the Fund's average daily net
assets attributable to shares issued, net of related shares redeemed, prior to
implementation of the Plan. 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 to other than
current shareholders and preparation, printing and distribution of sales
literature and advertising materials. In addition, the Distributor may be
compensated under the Plan for its opportunity costs in advancing such amounts,
which compensation would be in the form of a carrying charge on any unreimbursed
expenses incurred by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred
but not yet recovered, may be recovered through future distribution fees from
the Fund and contingent deferred sales charges from the Fund's shareholders.
<PAGE>
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
The Distributor has informed the Fund that for the year ended July 31, 1994,
it received approximately $1,294,000 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 proceeds from sales of portfolio securities, excluding short-term
investments, for the year ended July 31, 1994, aggregated $700,892,452 and
$747,724,215, respectively. For the same period, the Fund paid brokerage
commissions of approximately $23,000 to Dean Witter Reynolds Inc. for
transactions executed on behalf of the Fund.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At July 31, 1994, the Fund had
transfer agent fees and expenses payable of approximately $100,000.
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 year ended July 31, 1994, included in Trustees' fees and expenses in the
Statement of Operations, amounted to $9,858. At July 31, 1994, the Fund had an
accrued pension liability of $43,781 which is included in accrued expenses in
the Statement of Assets and Liabilities.
5. Shares of Beneficial Interest--Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
JULY 31, 1994 JULY 31, 1993
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- --------------
<S> <C> <C> <C> <C>
Sold........................................ 12,833,544 $ 190,736,225 26,799,488 $ 391,170,413
Reinvestment of dividends and
distributions.............................. 2,333,508 34,489,407 2,097,936 30,207,970
------------ -------------- ----------- --------------
15,167,052 225,225,632 28,897,424 421,378,383
Repurchased................................. (12,951,477) (191,951,989) (5,884,829) (85,792,388)
------------ -------------- ----------- --------------
Net increase................................ 2,215,575 $ 33,273,643 23,012,595 $ 335,585,995
------------ -------------- ----------- --------------
------------ -------------- ----------- --------------
</TABLE>
6. Federal Income Tax Status--At July 31, 1994, the Fund had temporary book/tax
differences which were primarily attributable to capital loss deferrals on wash
sales and permanent book/tax differences attributable to dividend
redesignations. To reflect cumulative reclassifications arising from permanent
book/tax differences as of July 31, 1993, accumulated undistributed net
investment income was charged and accumulated undistributed net realized gains
was credited $177,013. To reflect reclassifications arising from permanent
book/tax differences for the year ended July 31, 1994, accumulated undistributed
net investment income was charged and accumulated undistributed net realized
gains was credited $1,999,995.
1994 FEDERAL INCOME TAX NOTICE (UNAUDITED)
For the year ended July 31, 1994, the Fund paid to shareholders $0.424697 per
share from long-term capital gains. For such period, 71.71% of the income
dividend qualified for the dividends received deduction available to
corporations.
<PAGE>
DEAN WITTER STRATEGIST FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE
PERIOD
OCTOBER 31,
FOR THE YEAR ENDED JULY 31, 1988*
---------------------------------------------------------------- THROUGH
1994 1993 1992 1991 1990 JULY 31, 1989
-------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period........................... $14.59 $14.39 $13.09 $11.65 $11.37 $9.45
-------- -------- -------- -------- -------- -------------
Net investment income.............. 0.30 0.26 0.27 0.27 0.23 0.38
Net realized and unrealized gain on
investments...................... 0.22 0.81 1.27 1.50 0.55 1.84
-------- -------- -------- -------- -------- -------------
Total from investment operations... 0.52 1.07 1.54 1.77 0.78 2.22
-------- -------- -------- -------- -------- -------------
Less dividends and distributions
from:
Net investment income............ (0.26) (0.31) (0.24) (0.26) (0.29) (0.30)
Net realized gains on
investments..................... (0.42) (0.56) 0.00 (0.07) (0.21) 0.00
-------- -------- -------- -------- -------- -------------
Total dividends and
distributions.................... (0.68) (0.87) (0.24) (0.33) (0.50) (0.30)
-------- -------- -------- -------- -------- -------------
Net asset value, end of period..... $14.43 $14.59 $14.39 $13.09 $11.65 $11.37
-------- -------- -------- -------- -------- -------------
-------- -------- -------- -------- -------- -------------
TOTAL INVESTMENT RETURN+........... 3.53% 7.59% 11.88% 15.67% 7.21% 23.76%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)....................... $806,249 $782,833 $440,802 $238,432 $195,687 $47,921
Ratio of expenses to average net
assets........................... 1.62% 1.62% 1.63% 1.59% 1.53% 0.97%(2)(3)
Ratio of net investment income to
average net assets............... 2.03% 1.90% 2.19% 2.37% 2.39% 6.00%(2)(3)
Portfolio turnover rate............ 90% 98% 79% 140% 101% 70%
</TABLE>
- -------------
* DATE OF COMMENCEMENT OF OPERATIONS.
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
(3) IF THE FUND HAD BORNE ALL ITS EXPENSES THAT WERE ASSUMED OR WAIVED BY THE
INVESTMENT MANAGER, THE ABOVE EXPENSE RATIO WOULD HAVE BEEN 1.48% AND THE
ABOVE NET INVESTMENT INCOME RATIO WOULD HAVE BEEN 5.48%.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of Dean Witter Strategist 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 Strategist Fund (the
"Fund") at July 31, 1994, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then ended
and for the period October 31, 1988 (commencement of operations) through July
31, 1989, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities owned at
July 31, 1994 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
September 16, 1994
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo DEAN WITTER
Edwin J. Garn STRATEGIST FUND
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
Mark A. Bavoso
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
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.
ANNUAL REPORT
JULY 31, 1994
<PAGE>
DEAN WITTER STRATEGIST FUND
GROWTH OF $10,000(1)
<TABLE>
<CAPTION>
($ IN THOUSANDS)
DATE TOTAL S&P 500
- ---------------------------------------------------------
- ---------------------------------------------------------
<S> <C> <C>
October 31, 1988 $10,000 $10,000
- ---------------------------------------------------------
July 31, 1989 $12,376 $12,736
- ---------------------------------------------------------
July 31, 1990 $13,267 $13,558
- ---------------------------------------------------------
July 31, 1991 $15,346 $15,290
- ---------------------------------------------------------
July 31, 1992 $17,169 $17,243
- ---------------------------------------------------------
July 31, 1993 $18,272 $18,745
- ---------------------------------------------------------
- ---------------------------------------------------------
July 31, 1994 $19,025(4) $19,711
- ---------------------------------------------------------
- ---------------------------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR FIVE YEARS LIFE OF FUND
- -----------------------------------------------------------
<S> <C> <C> <C>
NON STANDARD 3.53%(2) 9.10%(2) 11.94%(2)
- -----------------------------------------------------------
STANDARD (-CDSC) -1.41%(3) 8.81%(3) 11.84%(3)
- -----------------------------------------------------------
- -----------------------------------------------------------
----- Fund ===== S&P 500(5)
Past performance is not predictive of future returns.
<FN>
________________________________________
(1) At inception (October 31, 1988), the Fund imposed a 5.5% front-end sales
charge; this structure was changed to a contingent deferred sales charge on
November 8, 1989.
(2) Figures assume reinvestment of all distributions and do not reflect any
sales charges.
(3) Figures assume the deduction of the maximum applicable contingent deferred
sales charges (Year 1-5%; Year 5-2%; since inception-1%; see prospectus for
complete details on on fees and sales charges).
(4) Closing value assumes a complete redemption on July 31, 1994.
(5) The S&P 500 is a broad-based index, the performance of which is based on
the average performance of 500 widely held common stocks. The index does
not include any expenses, fees or charges.
</TABLE>
<PAGE>
[ARTICLE] 6
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] JUL-31-1994
[PERIOD-END] JUL-31-1994
[INVESTMENTS-AT-COST] 760,191,951
[INVESTMENTS-AT-VALUE] 798,060,866
[RECEIVABLES] 14,761,914
[ASSETS-OTHER] 6,325
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 812,829,105
[PAYABLE-FOR-SECURITIES] 4,668,465
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1,911,225
[TOTAL-LIABILITIES] 6,579,690
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 745,415,391
[SHARES-COMMON-STOCK] 55,866,185
[SHARES-COMMON-PRIOR] 53,650,610
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 21,961,436
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 37,868,915
[NET-ASSETS] 806,249,415
[DIVIDEND-INCOME] 12,009,613
[INTEREST-INCOME] 17,652,987
[OTHER-INCOME] 0
[EXPENSES-NET] 13,160,834
[NET-INVESTMENT-INCOME] 16,501,766
[REALIZED-GAINS-CURRENT] 26,073,475
[APPREC-INCREASE-CURRENT] (15,330,968)
[NET-CHANGE-FROM-OPS] 27,244,273
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (14,241,827)
[DISTRIBUTIONS-OF-GAINS] (22,860,148)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 12,833,544
[NUMBER-OF-SHARES-REDEEMED] (12,951,477)
[SHARES-REINVESTED] 2,333,508
[NET-CHANGE-IN-ASSETS] 23,415,941
[ACCUMULATED-NII-PRIOR] 743,729
[ACCUMULATED-GAINS-PRIOR] 16,571,101
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 4,711,608
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 13,160,834
[AVERAGE-NET-ASSETS] 811,227,220
[PER-SHARE-NAV-BEGIN] 14.59
[PER-SHARE-NII] 0.30
[PER-SHARE-GAIN-APPREC] 0.22
[PER-SHARE-DIVIDEND] (0.26)
[PER-SHARE-DISTRIBUTIONS] (0.42)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 14.43
[EXPENSE-RATIO] 1.62
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
