<PAGE>
DEAN WITTER STRATEGIST FUND TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS
DEAR SHAREHOLDER:
Interest rates continued to rise through the fall of 1994 as the Federal Reserve
Board maintained its restrictive monetary policy in an effort to slow economic
growth to more moderate levels and stem inflation. Specifically, the central
bank raised interest rates two times during the past six months. On August 16,
1994, with the economy -- especially the manufacturing sector -- still speeding
along, rates were increased 50 basis points (0.50 percentage points). Despite
the August rate rise, growth remained strong into the fourth quarter of 1994:
unemployment was down, sales of new cars and trucks reached a seven-year high,
and housing sales recovered from levels seen in the summer. In response, on
November 15, the central bank made a concerted effort to emphasize its
anti-inflationary objective by hiking rates another 75 basis points. On February
1, 1995, subsequent to the end of Dean Witter Strategist Fund's semiannual
period, rates went up another 50 basis points in an expected move that marked
the seventh increase in 12 months. This move brought the federal-funds and
discount rates to 6.00 percent and 5.25 percent, respectively.
While growth will continue in 1995, the effect of 12 months of rising interest
rates is likely to take its toll. By mid-1995, we expect the economy to slow
vis-a-vis the rapid pace experiecned in 1994 and inflation to stabilize in the
3.00 to 3.50 percent range.
During the Federal Reserve Board's campaign against inflation, short-and
intermediate-term rates rose much more than long-term rates -- for some
maturities, by as much as two or three times. Overall, bonds, stung by steeply
higher interest rates, have experienced their most severe bear market in
decades, with the yield on the 30-year U.S. Treasury bond briefly reaching 8.20
percent during 1994's fourth quarter. Given the Federal Reserve Board's
determination to stay ahead of inflation, a 1995 yield range for the 30-year
bond of 7.25 percent to 8.00 percent seems within reason.
Regrettably, the broader market averages did not tell the whole story of 1994's
stock performance. A look at 2800 companies on the American and New York Stock
Exchanges and the National Association of Securities Dealers Automated
Quotations system (NASDAQ) reveals that since February 1994 (when the Federal
Reserve Board initiated its
<PAGE>
DEAN WITTER STRATEGIST FUND
LETTER TO THE SHAREHOLDERS, CONTINUED
tighter monetary policy), 69 percent of these issues have exhibited returns of
zero or less. What's more, one-half of these stocks experienced declines of at
least 10 percent, while one-third were down more than 20 percent.
Thus far in 1995, as evidenced by the impressive returns posted by the Standard
& Poor's Composite Index of 500 Stocks, the equity market has been much
healthier. Corporations have recorded profits during this period mainly on their
ability to utilize capacity, rather than on price increases. This has been the
case because of aggressive domestic and international competition. Domestic
labor costs have been held in check, although the inability to raise prices has
not curtailed profitability. As the economy expands, however, labor costs may
eventually rise, but international competition will keep price increases
difficult to achieve. As such, corporate profit growth is expected to continue,
albeit at a slower pace.
Dean Witter Strategist Fund is a fully flexible mutual fund which can invest in
any combination of stocks, bonds, and/or money-market instruments to achieve its
stated objective of total return. For the six-month period ended January 31,
1995, the Fund provided a total return of 0.49 percent. The Fund paid quarterly
dividend/capital gain distributions totaling $0.634 per share. On January 31,
1995, the Fund had net assets in excess of $766 million.
The Fund completed the first half of its fiscal year positioned more defensively
than normal, reflecting our concerns over a continual rising rate environment
and an economy demonstrating sustained growth. At the end of the period,
equities represent 63 percent of total assets (versus the Fund's historical
equity weighting of 65 percent), while fixed-income investments totaled 21
percent of assets (versus 30 percent historically). Money-market and cash
positions also totaled 16 percent of assets (versus 5 percent historically).
The Federal Reserve Board, showing no signs of slowing its assault on the
current growth cycle, raised interest rates another 50 basis points on February
1, 1995 -- the seventh increase in 12 months -- in response to continued
concerns over high capacity utilization figures, strong retail sales and the
historically inflationary unemployment rate, now well below 6 percent
nationally. Nevertheless, we are beginning to sense that the central bank's
ongoing restrictive monetary policy is
<PAGE>
DEAN WITTER STRATEGIST FUND
LETTER TO THE SHAREHOLDERS, CONTINUED
finally beginning to have the desired effect on the economy, as recent reports
of negligible producer price inflation, slowing auto sales and increased layoff
activity seem to indicate a gradual slowdown. Nevertheless, according to many
analysts, the ultimate restraining effect of the central bank's rate increases
has not yet been fully realized in the economy. In this environment, further,
albeit probably modest, tightening is possible.
We are inclined to view these indicators of a potential economic slowdown as an
opportunity to boost the Fund's long-term bond position, where current real
rates of return of more than 5 percent are historically attractive. Given this,
we may use a portion of the Fund's cash reserves to raise its bond allocation,
leaving the equity position undisturbed.
The Fund's equity portfolio currently overweights financials (Wells Fargo & Co.,
Citicorp), consumer staples (Abbott Laboratories,
Colgate-Palmolive Co.) and technology issues (Hewlett-Packard Co., International
Business Machines Corp); market value weights basic materials (Georgia Gulf
Corp., Bethlehem Steel Corp.), energy (Texaco Inc., Exxon Corp.) and consumer
cyclicals (Pier 1 Imports, Inc., The Limited, Inc.); and underweights utilities
(Bell Atlantic Corp.) and industrial companies (Honeywell, Inc.).
The fixed-income portfolio is currently made up of U.S. government bonds (11
percent of net assets), U.S. corporate bonds (8 percent) and foreign debt paper
(3 percent). The average maturity is approximately 12 years and all debt ratings
are investment grade or higher.
We appreciate your support of Dean Witter Strategist Fund and look forward to
continuing to serve your investment needs.
Very truly yours,
[SIG]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JANUARY 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (63.4%)
AIRCRAFT & AEROSPACE (2.3%)
180,000 Boeing Co........................... $ 8,010,000
250,000 Honeywell, Inc...................... 8,625,000
---------------
16,635,000
---------------
AIRLINES (0.5%)
200,000 Northwest Airlines Corp. (Class
A)*................................. 3,675,000
---------------
ALUMINUM (1.0%)
160,000 Reynolds Metals Co.................. 8,000,000
---------------
AUTOMOTIVE (0.5%)
160,000 Ford Motor Co....................... 4,040,000
---------------
BANKS - MONEY CENTER (2.0%)
200,000 Chemical Banking Corp............... 7,775,000
180,000 Citicorp............................ 7,312,500
---------------
15,087,500
---------------
BANKS - REGIONAL (2.5%)
200,000 Bank of Boston Corp................. 5,600,000
70,000 First Interstate Bancorp............ 5,180,000
140,000 Norwest Corp........................ 3,360,000
35,000 Wells Fargo & Co.................... 5,149,375
---------------
19,289,375
---------------
BEVERAGES - SOFT DRINKS (1.1%)
230,000 PepsiCo Inc......................... 8,481,250
---------------
CABLE/CELLULAR (1.1%)
310,000 Airtouch Communications, Inc........ 8,525,000
---------------
CHEMICALS (1.8%)
100,000 Dow Chemical Co..................... 6,237,500
50,000 duPont (E.I.) de Nemours & Co....... 2,662,500
70,000 Monsanto Co......................... 5,145,000
---------------
14,045,000
---------------
CHEMICALS - SPECIALTY (1.1%)
200,000 Georgia Gulf Corp.*................. 6,200,000
100,000 Praxair, Inc........................ 2,012,500
---------------
8,212,500
---------------
COMMUNICATIONS - EQUIPMENT & SOFTWARE (1.2%)
270,000 Cisco Systems, Inc.*................ 9,011,250
---------------
COMPUTER SERVICES (1.2%)
230,000 General Motors Corp. (Class E)...... 8,883,750
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------
<C> <S> <C>
COMPUTER SOFTWARE (1.9%)
80,000 Broderbund Software, Inc............ $ 3,680,000
100,000 Microsoft Corp.*.................... 5,925,000
120,000 Sybase, Inc.*....................... 5,205,000
---------------
14,810,000
---------------
COMPUTERS - SYSTEMS (2.9%)
30,000 Hewlett-Packard Co.................. 3,015,000
100,000 International Business Machines
Corp................................ 7,212,500
350,000 Novell, Inc.*....................... 6,168,750
180,000 Sun Microsystems, Inc.*............. 5,850,000
---------------
22,246,250
---------------
DRUGS & HEALTHCARE (2.9%)
300,000 Abbott Laboratories................. 10,612,500
200,000 Johnson & Johnson................... 11,625,000
---------------
22,237,500
---------------
ELECTRIC EQUIPMENT (2.3%)
136,000 Emerson Electric Co................. 8,568,000
170,000 General Electric Co................. 8,755,000
---------------
17,323,000
---------------
ELECTRICAL HOUSEHOLD APPLIANCES (0.6%)
300,000 Maytag Corp......................... 4,462,500
---------------
ELECTRONICS - DEFENSE (1.2%)
246,000 Loral Corp.......................... 9,563,250
---------------
ELECTRONICS - SEMICONDUCTORS/COMPONENTS (3.1%)
170,000 Applied Materials, Inc.*............ 6,502,500
60,000 Intel Corp.......................... 4,147,500
120,000 Micron Technology, Inc.............. 5,295,000
130,000 Motorola, Inc....................... 7,686,250
---------------
23,631,250
---------------
FINANCIAL SERVICES (1.0%)
203,733 Travelers, Inc...................... 7,512,654
---------------
FOODS (1.8%)
168,000 Campbell Soup Co.................... 7,266,000
120,000 General Mills, Inc.................. 6,810,000
---------------
14,076,000
---------------
HEALTH CARE - MISCELLANEOUS (2.2%)
100,000 Coventry Corp.*..................... 2,587,500
200,000 Diagnostek, Inc.*................... 3,125,000
200,000 Humana, Inc.*....................... 4,575,000
130,000 Mid Atlantic Medical Services,
Inc.*............................... 3,087,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JANUARY 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------
<C> <S> <C>
136,000 Wellpoint Health Networks, Inc.*.... $ 3,757,000
---------------
17,132,000
---------------
HOSPITAL MANAGEMENT (1.0%)
200,000 Columbia/HCA Healthcare Corp........ 8,025,000
---------------
HOTELS/MOTELS (0.3%)
175,000 Hammons (John Q) Hotels, Inc........ 2,121,875
---------------
HOUSEHOLD PRODUCTS (0.9%)
110,000 Colgate-Palmolive Co................ 6,916,250
---------------
INSURANCE (1.1%)
80,000 American International Group,
Inc................................. 8,330,000
---------------
LEISURE TIME/EQUIPMENT (0.4%)
22,000 Cannondale Corp..................... 264,000
110,000 Harley-Davidson, Inc................ 2,997,500
---------------
3,261,500
---------------
LIFE INSURANCE (1.1%)
250,000 Providian Corp...................... 8,562,500
---------------
MACHINERY - CONSTRUCTION & MATERIALS (0.8%)
205,000 Ingersoll-Rand Co................... 6,508,750
---------------
METALS (0.8%)
112,000 Phelps Dodge Corp................... 5,866,000
---------------
OFFICE EQUIPMENT & SUPPLIES (1.3%)
150,000 Alco Standard Corp.................. 9,637,500
---------------
OIL DRILLING & SERVICES (1.7%)
300,000 Dresser Industries, Inc............. 5,850,000
130,000 Schlumberger Ltd. (ADR)............. 6,857,500
---------------
12,707,500
---------------
OIL INTEGRATED - DOMESTIC (0.9%)
370,100 Occidental Petroleum Corp........... 6,939,375
---------------
OIL INTEGRATED - INTERNATIONAL (4.5%)
186,000 Chevron Corp........................ 8,300,250
125,000 Exxon Corp.......................... 7,812,500
95,000 Mobil Corp.......................... 8,205,625
170,000 Texaco, Inc......................... 10,476,250
---------------
34,794,625
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------
<C> <S> <C>
RAILROAD EQUIPMENT (0.5%)
116,500 Trinity Industries, Inc............. $ 3,844,500
---------------
RAILROADS (1.5%)
100,000 Conrail, Inc........................ 5,350,000
88,000 CSX Corp............................ 6,303,000
---------------
11,653,000
---------------
RESTAURANTS (0.9%)
220,000 McDonald's Corp..................... 7,177,500
---------------
RETAIL (1.0%)
325,200 Wal-Mart Stores, Inc................ 7,479,600
---------------
RETAIL - SPECIALTY (2.6%)
150,000 Home Depot, Inc..................... 7,012,500
640,000 Pier 1 Imports, Inc................. 6,080,000
470,000 Price Enterprises, Inc.*............ 6,462,500
---------------
19,555,000
---------------
RETAIL - SPECIALTY APPAREL (0.9%)
128,000 Gap, Inc............................ 4,160,000
150,000 Limited (The), Inc.................. 2,531,250
---------------
6,691,250
---------------
SHOES (2.2%)
130,000 Nike, Inc. (Class B)................ 9,230,000
210,000 Reebok International Ltd............ 7,980,000
---------------
17,210,000
---------------
STEEL & IRON (0.4%)
220,000 Bethlehem Steel Corp.*.............. 3,437,500
---------------
TELEPHONE - LONG DISTANCE (0.8%)
315,000 MCI Communications Corp............. 5,748,750
---------------
TRUCKERS (0.3%)
50,000 Roadway Services, Inc............... 2,500,000
---------------
U.S. GOVERNMENT AGENCY (0.5%)
52,000 Federal National Mortgage
Association......................... 3,718,000
---------------
UTILITIES - TELEPHONE (0.8%)
120,000 Bell Atlantic Corp.................. 6,510,000
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $457,622,698)...... 486,076,004
---------------
</TABLE>
<TABLE>
<S> <S> <C>
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JANUARY 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
------------------------------------------------------------------
<S> <S> <C>
CORPORATE BONDS (11.5%)
AUTOMOTIVE FINANCE (1.3%)
$ 5,000 Ford Motor Credit Co.
8.21% due 03/16/99.................. $ 5,020,600
5,000 General Motors Acceptance Corp.
8.00% due 10/01/99.................. 4,903,300
---------------
9,923,900
---------------
BANKS - INTERNATIONAL (1.1%)
10,000 Bank of China
8.25% due 03/15/14.................. 8,723,400
---------------
BANKS - MONEY CENTER (1.2%)
5,000 Chemical Banking Corp.
7.00% due 06/01/05.................. 4,472,150
5,000 First National Bank of Boston
8.375% due 12/15/02................. 4,966,650
---------------
9,438,800
---------------
BANKS - REGIONAL (0.7%)
5,000 Midlantic Corp.
9.25% due 09/01/99.................. 5,164,600
---------------
BROADCAST MEDIA (1.2%)
5,000 News America Holdings, Inc.
9.25% due 02/01/13.................. 4,921,750
5,000 Time Warner Entertainment Co., LP
8.375% due 07/15/33................. 4,052,600
---------------
8,974,350
---------------
BROKERAGE (0.6%)
5,000 Paine Webber Group, Inc.
6.68% due 02/10/04.................. 4,378,150
---------------
CANADIAN GOVERNMENT & AGENCIES (1.5%)
6,000 New Brunswick Province
7.625% due 06/29/04................. 5,766,840
5,500 Quebec Province
8.625% due 01/19/05................. 5,537,455
---------------
11,304,295
---------------
FINANCE (0.7%)
5,000 General Electric Capital Corp.
7.96% due 02/02/98.................. 5,018,750
---------------
FOREIGN GOVERNMENT (0.5%)
5,000 Republic of Italy
6.875% due 09/27/23................. 3,971,750
---------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
------------------------------------------------------------------
<S> <S> <C>
INDUSTRIALS (0.7%)
$ 5,000 Joy Technologies, Inc.
10.25% due 09/01/03................. $ 5,300,000
---------------
PAPER & FOREST PRODUCTS (1.3%)
10,000 Georgia-Pacific Corp.
9.125% due 07/01/22................. 10,041,600
---------------
UTILITIES - ELECTRIC (0.7%)
5,000 Big Rivers Electric
9.50% due 02/15/17.................. 5,375,000
---------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $90,105,210)....... 87,614,595
---------------
U.S. GOVERNMENT AGENCIES & OBLIGATIONS (9.7%)
763 Federal Home Loan Mortgage Corp.
8.50% due 07/01/02.................. 765,937
324 Federal Home Loan Mortgage Corp.
9.00% due 08/01/02.................. 329,863
5,000 Federal National Mortgage
Association
5.22% due 07/10/98.................. 4,628,125
3,000 Federal National Mortgage
Association
6.40% due 01/13/04.................. 2,681,250
10,000 Private Export Funding Corp.
7.95% due 11/01/06.................. 9,976,500
1,000 U.S. Treasury Note
7.25% due 11/15/96.................. 1,000,625
5,000 U.S. Treasury Note
7.875% due 01/15/98................. 5,062,500
5,600 U.S. Treasury Note
5.125% due 11/30/98................. 5,165,125
5,000 U.S. Treasury Note
6.50% due 04/30/99.................. 4,818,750
5,000 U.S. Treasury Note
6.875% due 08/31/99................. 4,877,344
6,500 U.S. Treasury Note
7.875% due 11/15/99................. 6,594,453
12,000 U.S. Treasury Note
7.50% due 11/15/01.................. 11,962,500
16,520 U.S. Treasury Note
7.50% due 05/15/02.................. 16,476,118
---------------
TOTAL U.S. GOVERNMENT AGENCIES &
OBLIGATIONS
(IDENTIFIED COST $75,814,416)....... 74,339,090
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JANUARY 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
------------------------------------------------------------------
<S> <S> <C>
SHORT-TERM INVESTMENTS (15.3%)
COMMERCIAL PAPER (a) (13.9%)
AUTOMOTIVE FINANCE (3.3%)
$ 10,000 Ford Motor Credit Co.
5.45% due 02/01/95.................. $ 10,000,000
15,000 Ford Motor Credit Co.
5.60% due 02/07/95.................. 14,986,000
---------------
24,986,000
---------------
BANKS - REGIONAL (1.0%)
8,000 Norwest Financial, Inc.
5.60% due 02/07/95.................. 7,992,533
---------------
FINANCE - DIVERSIFIED (7.8%)
17,000 American Express Credit Corp.
5.60% due 02/10/95.................. 16,976,200
7,000 American Express Credit Corp.
5.79% due 02/22/95.................. 6,976,358
8,000 American Express Credit Corp.
5.80% due 02/22/95.................. 7,972,933
8,000 General Electric Capital Corp.
5.50% due 02/01/95.................. 8,000,000
20,000 Household Finance Corp.
5.77% due 02/03/95.................. 19,993,589
---------------
59,919,080
---------------
FINANCE - ENERGY (1.8%)
14,000 Chevron Oil Financial Corp. 5.75%
due 02/14/95........................ 13,970,931
---------------
TOTAL COMMERCIAL PAPER
(AMORTIZED COST $106,868,544)....... 106,868,544
---------------
U.S. GOVERNMENT AGENCY (a) (1.4%)
10,500 Federal Home Loan Bank 5.92% due
02/28/95 (Amortized Cost
$10,453,380)........................ 10,453,380
---------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
------------------------------------------------------------------
<S> <S> <C>
REPURCHASE AGREEMENT (0.0%)
$ 116 The Bank of New York 5.50% due
02/01/95 (dated 01/31/95; proceeds
$115,856; collateralized by U.S.
Treasury Note 8.25% due 07/15/98
valued at $118,683) (Identified Cost
$115,856)........................... $ 115,856
---------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $117,437,780)...... 117,437,780
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST $740,980,104) (B)...... 99.9% 765,467,469
OTHER ASSETS IN EXCESS OF LIABILITIES... 0.1 731,560
------ ---------------
NET ASSETS.............................. 100.0% $ 766,199,029
------ ---------------
------ ---------------
<FN>
---------------------
(a) Securities were purchased on a discount basis. The rates shown reflect a
bond equivalent yield.
(b) The aggregate cost of investments for federal income tax purposes is
$741,337,444; the aggregate gross unrealized appreciation is $44,638,743
and the aggregate gross unrealized depreciation is $20,508,718, resulting
in net unrealized appreciation of $24,130,025.
* Non-income producing security.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $740,980,104)............................. $765,467,469
Receivable for:
Investments sold........................................ 9,710,023
Interest................................................ 3,131,347
Shares of beneficial interest sold...................... 1,218,726
Dividends............................................... 756,007
Prepaid expenses and other assets........................... 129,261
------------
TOTAL ASSETS........................................... 780,412,833
------------
LIABILITIES:
Payable for:
Investments purchased................................... 12,419,816
Plan of distribution fee................................ 633,671
Shares of beneficial interest repurchased............... 489,156
Investment management fee............................... 392,173
Accrued expenses and other payables......................... 278,988
------------
TOTAL LIABILITIES...................................... 14,213,804
------------
NET ASSETS:
Paid-in-capital............................................. 735,691,472
Net unrealized appreciation................................. 24,487,365
Accumulated undistributed net investment income............. 1,927,737
Accumulated undistributed net realized gain................. 4,092,455
------------
NET ASSETS............................................. $766,199,029
------------
------------
NET ASSET VALUE PER SHARE,
55,267,690 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$13.86
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Interest.................................................... $ 11,015,094
Dividends................................................... 5,350,844
------------
TOTAL INCOME........................................... 16,365,938
------------
EXPENSES
Plan of distribution fee.................................... 3,688,297
Investment management fee................................... 2,306,744
Transfer agent fees and expenses............................ 485,576
Custodian fees.............................................. 47,472
Professional fees........................................... 27,859
Trustees' fees and expenses................................. 14,340
Shareholder reports and notices............................. 10,031
Other....................................................... 15,928
------------
TOTAL EXPENSES......................................... 6,596,247
------------
NET INVESTMENT INCOME.................................. 9,769,691
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain........................................... 7,404,063
Net change in unrealized appreciation....................... (13,381,550)
------------
NET LOSS............................................... (5,977,487)
------------
NET INCREASE................................................ $ 3,792,204
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED
JANUARY 31, 1995 JULY 31,
(UNAUDITED) 1994
-----------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 9,769,691 $ 16,501,766
Net realized gain........................................... 7,404,063 26,073,475
Net change in unrealized appreciation....................... (13,381,550) (15,330,968)
------------------ ------------
NET INCREASE........................................... 3,792,204 27,244,273
------------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income....................................... (8,845,627) (14,241,827)
Net realized gain........................................... (25,273,044) (22,860,148)
------------------ ------------
TOTAL.................................................. (34,118,671) (37,101,975)
------------------ ------------
Net increase (decrease) from transactions in shares of
beneficial interest....................................... (9,723,919) 33,273,643
------------------ ------------
TOTAL INCREASE (DECREASE).............................. (40,050,386) 23,415,941
------------------ ------------
NET ASSETS:
Beginning of period......................................... 806,249,415 782,833,474
------------------ ------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$1,927,737 AND $1,003,673, RESPECTIVELY)................. $766,199,029 $806,249,415
------------------ ------------
------------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1995 (UNAUDITED)
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 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 on securities purchased are amortized over the life of the respective
securities. The Fund does not amortize premiums on securities purchased.
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily.
C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
<PAGE>
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1995 (UNAUDITED) CONTINUED
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends
and distributions to its shareholders on the record date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with Dean Witter InterCapital
Inc. (the "Investment Manager"), the Fund pays its Investment Manager a
management fee, accrued daily and payable monthly, 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; 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 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
<PAGE>
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1995 (UNAUDITED) CONTINUED
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. Amounts paid under the Plan are paid to the
Distributor to compensate it for the services provided and the expenses borne by
it and others in the distribution of the Fund's shares, including the payment of
commissions for sales of the Fund's shares and incentive compensation to and
expenses of the account executives of Dean Witter Reynolds Inc., an affiliate of
the Investment Manager and Distributor, 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.
The Distributor has informed the Fund that for the six months ended January 31,
1995, it received approximately $935,000 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 six months ended January 31, 1995 aggregated
$365,490,818 and $445,196,111, respectively. Included in the aforementioned are
purchases and sales of U.S. Government securities of $71,301,266 and
$87,924,140, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At January 31, 1995, the Fund had
transfer agent fees and expenses payable of approximately $151,000.
The Fund established 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
<PAGE>
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1995 (UNAUDITED) CONTINUED
years at the time of retirement. Benefits under this plan are based on years of
service and compensation during the last five years of service. Aggregate
pension costs for the six months ended January 31, 1995, included in Trustees'
fees and expenses in the Statement of Operations amounted to $4,114. At January
31, 1995, the Fund had an accrued pension liability of $47,523 which is included
in accrued expenses in the Statement of Assets and Liabilities.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JANUARY 31, 1995 JULY 31, 1994
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 3,434,551 $ 49,074,180 12,833,544 $190,736,225
Reinvestment of dividends and distributions...................... 2,299,720 31,656,766 2,333,508 34,489,407
----------- -------------- ----------- ------------
5,734,271 80,730,946 15,167,052 225,225,632
Repurchased...................................................... (6,332,766) (90,454,865) (12,951,477) (191,951,989)
----------- -------------- ----------- ------------
Net increase (decrease).......................................... (598,495) $ (9,723,919) 2,215,575 $ 33,273,643
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</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.
<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
SIX MONTHS
ENDED FOR THE YEAR ENDED
JANUARY JULY 31
31, 1995 -----------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................ $ 14.43 $ 14.59 $ 14.39 $ 13.09 $ 11.65 $ 11.37
---------- --------- --------- --------- --------- ---------
Net investment income.............. 0.18 0.30 0.26 0.27 0.27 0.23
Net realized and unrealized gain
(loss)............................ (0.12) 0.22 0.81 1.27 1.50 0.55
---------- --------- --------- --------- --------- ---------
Total from investment operations... 0.06 0.52 1.07 1.54 1.77 0.78
---------- --------- --------- --------- --------- ---------
Less dividends and distributions
from:
Net investment income........... (0.16) (0.26) (0.31) (0.24) (0.26) (0.29)
Net realized gain............... (0.47) (0.42) (0.56) -- (0.07) (0.21)
---------- --------- --------- --------- --------- ---------
Total dividends and
distributions..................... (0.63) (0.68) (0.87) (0.24) (0.33) (0.50)
---------- --------- --------- --------- --------- ---------
Net asset value, end of period..... $ 13.86 $ 14.43 $ 14.59 $ 14.39 $ 13.09 $ 11.65
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN+........... 0.49%(1) 3.53% 7.59% 11.88% 15.67% 7.21%
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 1.66%(2) 1.62% 1.62% 1.63% 1.59% 1.53%
Net investment income.............. 2.46%(2) 2.03% 1.90% 2.19% 2.37% 2.39%
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $766,199 $806,249 $782,833 $440,802 $238,432 $195,687
Portfolio turnover rate............ 54%(1) 90% 98% 79% 140% 101%
<FN>
---------------------
+ Does not reflect the deduction of sales charge.
(1) Not annualized.
(2) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TRUSTEES
Jack F. Bennett DEAN WITTER
Michael Bozic STRATEGIST FUND
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
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
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have
been taken from the records of the Fund without
examination by the independent accountants and
accordingly they do not express an opinion thereon.
This report is submitted for the general information
of shareholders of the Fund. For more detailed information
about the Fund, its officers and trustees, fees, expenses
and other pertinent information, please see the prospectus
of the Fund.
This report is not authorized for distribution to
prospective investors in the Fund unless preceded or
accompanied by an effective prospectus.
SEMIANNUAL REPORT
JANUARY 31, 1995
