<PAGE>
DEAN WITTER STRATEGIST FUND TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS JULY 31, 1996
DEAR SHAREHOLDER:
We are pleased to present the Dean Witter Strategist Fund annual report for the
fiscal year ended July 31, 1996. Among the topics to be covered will be this
past year's performance, the investment decisions leading to those returns, and
other information relating to the general operations of the Fund.
PERFORMANCE AND COMPARATIVE RETURNS
For the fiscal year ended July 31, 1996, Dean Witter Strategist Fund provided
investors with a total return of 11.47 percent, comprised of both net asset
value appreciation and dividend and capital gain distributions totaling $1.58.
This performance compares favorably to the Fund's peer group of flexible funds,
as tabulated by Lipper Analytical Services, Inc., which provided an average
return of 9.78 percent. Over the same period, a fixed balanced composite (55
percent equities as represented by the S&P 500, 35 percent fixed income as
represented by the Lehman Brothers Government/Corporate Bond Index and 10
percent cash) would have provided a return of 11.40 percent. The accompanying
chart illustrates the growth of a $10,000 investment in the Fund since inception
(October 1988) through the fiscal year ended July 31, 1996 versus a similar
hypothetical investment in the issues that comprise the S&P 500 Index and the
Lehman Brothers Government/ Corporate Bond Index.
ASSET GROWTH
During the fiscal year ended July 31, 1996, the Fund's assets under management
grew from $878 million to $1.3 billion. This substantial increase is
attributable in large part to the Fund's merger with Dean Witter Managed Assets
Trust in December 1995, in addition to asset value appreciation and
contributions from new and existing investors. At fiscal year end, the Fund was
the fifth largest flexible portfolio fund, according to Lipper Analytical
Services, Inc.
<PAGE>
DEAN WITTER STRATEGIST FUND
LETTER TO THE SHAREHOLDERS JULY 31, 1996, CONTINUED
INVESTMENT STRATEGY
As a flexible fund, Dean Witter Strategist Fund adjusts the mix between stocks,
bonds and cash in an effort to maximize total return and lower risk. During the
past fiscal year, the following asset allocation changes were made:
<TABLE>
<CAPTION>
FIXED
EQUITY INCOME CASH
------ ---------- -----
<S> <C> <C> <C>
July 31, 1995........................... 50% 40% 10%
October 20, 1995........................ 75% 20% 5%
February 12, 1996....................... 70% 25% 5%
July 23, 1996........................... 50% 40% 10%
</TABLE>
This past year's asset allocation changes, which resulted in the performance
results cited above, evolved from two very different periods of economic
expectation. Our first major allocation change into equities in the fall of 1995
was the result of our analysis that stable inflation, a robust U.S. dollar, and
strong corporate earnings forecasts pointed to a slow but steady economic growth
pattern. This move was somewhat contrary to the prevailing view that the U.S.
economy risked recession in early 1996. However, our analysis proved to be
correct as our shift toward stocks, and away from bonds, led directly to the
Fund's superior performance versus its peers from the fall to early summer.
Another major asset allocation change was made just recently, with an eye once
again toward a contrarian view. With stocks rallying sharply in 1996, the
consensus held that the U.S. economy would continue to expand, causing the
Federal Reserve Board to raise interest rates. We differed from this prevailing
opinion when we noticed a slight deterioration in corporate earnings forecasts
in June and July. Corporate activity can be, at times, an early harbinger of the
economy as a whole and we felt that this data should indeed be factored into our
allocation. Therefore, we shifted out of equities (where more subdued earnings
growth might hurt price/earnings multiples) and into bonds (where yields on
30-year government debt had climbed to over 7 percent). We believe that the
total return potential of bonds and stocks over the coming six months does not
differ greatly and thus does not justify overweighting either asset class at
this time. At the July 31st fiscal year end, the Fund's asset allocation target
stood at 50 percent equities, 40 percent bonds and 10 percent cash.
EQUITY PORTFOLIO ANALYSIS
The equity portfolio, which is managed from a "top-down" or industry selection
perspective, continued to hold large investments in consumer staples (i.e. food,
beverages and health care), technology, financial services and consumer
cyclicals. Energy, basic materials and industrials were also represented, though
not overweighted. Abbott Laboratories, PepsiCo Inc., Hewlett-Packard Co.,
Teradyne, Inc., Wells Fargo & Co., Roosevelt Financial Group, Inc., Chrysler
Corp., Nike, Inc. and Pier 1 Imports, Inc. represent some of the Fund's equity
holdings at this time.
FIXED-INCOME PORTFOLIO ANALYSIS
The bond portfolio, nearly half of the Fund overall, is well diversified among
many issuers and all are rated investment grade, at the time of purchase, as
prescribed by our prospectus. Approximately
<PAGE>
DEAN WITTER STRATEGIST FUND
LETTER TO THE SHAREHOLDERS JULY 31, 1996, CONTINUED
55 percent are U.S. government issues, with the remainder consisting of U.S.
corporate and Canadian government issues, and mortgage-backed securities. The
fixed-income portfolio's average yield is 7 percent, the average maturity is 9.5
years and the portfolio's average duration is 5.5 years. (A fund's average
duration is a measure of its sensitivity to interest rate fluctuations).
LOOKING AHEAD: 1996 AND BEYOND
We view the balance of 1996 as a
challenging time for stock and bond
investors for a number of reasons.
First, the U.S. economic expansion, the
longest in our post-World War II
history, has matured with corporate
profit margins at record highs for the
longest period since the early 1960s.
Second, wage pressures and labor demands
have become apparent in many industries,
raising the fear of inflationary trends.
Other commodity prices have firmed as
well, further adding to inflationary
concerns. Finally, with stock and bond
gains averaging well above their
historical norms during the 1990s,
investor expectations may be
unreasonably high.
[GRAPHIC]
However, having cited these risks, it
appears likely that a slowing U.S.
economy would favor the Fund's
well-diversified approach. Interest
rates may decline as expectation builds
toward a move by the Federal Reserve
Board to cut rates. In addition,
corporations by and large have chosen
not to expand dramatically through
plant additions, thus limiting risk in
a severe slowdown. In fact, corporate
cash flows and balance sheets are
extremely strong, a sign that any
slowdown will likely prove less painful
to corporate America than it might have
in past cycles.
[GRAPHIC]
In conclusion, we appreciate your
continued support of Dean Witter
Strategist Fund and look forward to
continuing to serve your investment
needs in the future.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1996
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (49.9%)
AEROSPACE & DEFENSE (1.3%)
100,000 General Motors Corp. (Class H).... $ 5,700,000
166,000 Honeywell, Inc.................... 8,798,000
25,700 Rockwell International Corp....... 1,349,250
-----------------
15,847,250
-----------------
ALUMINUM (0.7%)
150,000 Aluminum Co. of America........... 8,700,000
-----------------
AUTO PARTS (0.1%)
9,000 TRW, Inc.......................... 813,375
-----------------
AUTOMOTIVE (1.0%)
288,000 Chrysler Corp..................... 8,172,000
130,000 Ford Motor Co..................... 4,225,000
-----------------
12,397,000
-----------------
BANKS - MONEY CENTER (0.8%)
80,000 Citicorp.......................... 6,550,000
48,000 Morgan (J.P.) & Co., Inc.......... 4,128,000
-----------------
10,678,000
-----------------
BANKS - REGIONAL (0.4%)
20,000 Wells Fargo & Co.................. 4,657,500
-----------------
BEVERAGES - SOFT DRINKS (0.6%)
227,800 PepsiCo Inc....................... 7,204,175
-----------------
BROADCAST MEDIA (0.8%)
550,000 U.S. West Media Group*............ 9,487,500
-----------------
BROKERAGE (0.7%)
65,000 Merrill Lynch & Co., Inc.......... 3,924,375
90,000 Morgan Stanley Group, Inc......... 4,387,500
-----------------
8,311,875
-----------------
BUSINESS SYSTEMS (0.7%)
170,000 Electronic Data Systems Corp...... 8,988,750
-----------------
CHEMICALS (1.1%)
60,000 Dow Chemical Co................... 4,462,500
10,000 Du Pont (E.I.) de Nemours & Co.,
Inc............................... 807,500
290,000 Monsanto Co....................... 9,062,500
-----------------
14,332,500
-----------------
CHEMICALS - SPECIALTY (1.2%)
207,600 Georgia Gulf Corp................. 6,383,700
16,000 PPG Industries, Inc............... 788,000
200,000 Praxair, Inc...................... 7,675,000
12,000 Rohm & Haas Co.................... 714,000
-----------------
15,560,700
-----------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMUNICATIONS - EQUIPMENT & SOFTWARE (1.1%)
261,400 Cisco Systems, Inc.*.............. $ 13,527,450
-----------------
COMPUTER EQUIPMENT (1.0%)
56,200 Komag Inc.*....................... 1,152,100
76,800 Seagate Technology, Inc.*......... 3,715,200
530,000 Teradyne, Inc.*................... 7,155,000
-----------------
12,022,300
-----------------
COMPUTER SERVICES (1.1%)
257,500 Diebold, Inc...................... 14,098,125
-----------------
COMPUTER SOFTWARE (1.3%)
73,400 Microsoft Corp.*.................. 8,642,850
200,000 Oracle Corp.*..................... 7,800,000
-----------------
16,442,850
-----------------
COMPUTERS (2.0%)
280,000 Dell Computer Corp.*.............. 15,505,000
250,000 Gateway 2000, Inc.*............... 10,000,000
-----------------
25,505,000
-----------------
COMPUTERS - SYSTEMS (1.7%)
195,800 Hewlett-Packard Co................ 8,615,200
44,000 International Business Machines
Corp.............................. 4,746,500
150,000 Sun Microsystems, Inc.*........... 8,175,000
-----------------
21,536,700
-----------------
DRUGS & HEALTHCARE (1.3%)
160,000 Abbott Laboratories............... 7,040,000
194,744 Johnson & Johnson................. 9,299,026
-----------------
16,339,026
-----------------
ELECTRICAL EQUIPMENT (1.1%)
71,000 Emerson Electric Co............... 5,990,625
89,300 General Electric Co............... 7,356,087
-----------------
13,346,712
-----------------
ELECTRICAL HOUSEHOLD APPLIANCES (0.2%)
121,500 Maytag Corp....................... 2,430,000
-----------------
ENTERTAINMENT (1.2%)
200,000 Carnival Corp. (Class A).......... 5,375,000
330,000 Circus Circus Enterprises,
Inc.*............................. 10,147,500
-----------------
15,522,500
-----------------
FINANCIAL SERVICES (1.9%)
150,000 American Express Co............... 6,562,500
80,000 Beneficial Corp................... 4,320,000
240,000 Federal National Mortgage
Assoc............................. 7,620,000
140,000 Travelers Group, Inc.............. 5,915,000
-----------------
24,417,500
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1996, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
FOODS (1.5%)
88,000 Campbell Soup Co.................. $ 5,973,000
150,000 General Mills, Inc................ 8,137,500
140,000 Quaker Oats Company (The)......... 4,480,000
-----------------
18,590,500
-----------------
FOREST PRODUCTS, PAPER & PACKAGING (1.5%)
254,000 Champion International Corp....... 10,731,500
210,000 International Paper Co............ 7,953,750
-----------------
18,685,250
-----------------
HARDWARE & TOOLS (0.8%)
250,000 Black & Decker Corp............... 9,187,500
36,000 Stanley Works..................... 1,026,000
-----------------
10,213,500
-----------------
HEALTHCARE - MISCELLANEOUS (1.5%)
554,000 Humana, Inc.*..................... 9,279,500
140,000 PacifiCare Health Systems (Class
B)*............................... 9,450,000
-----------------
18,729,500
-----------------
HOSPITAL MANAGEMENT (0.6%)
143,000 Columbia/HCA Healthcare Corp...... 7,328,750
-----------------
HOUSEHOLD PRODUCTS (0.8%)
126,700 Colgate-Palmolive Co.............. 9,945,950
9,700 Tambrands, Inc.................... 395,275
-----------------
10,341,225
-----------------
INDUSTRIALS (0.0%)
5,500 AlliedSignal, Inc................. 323,125
-----------------
INSURANCE (0.4%)
50,000 American International Group,
Inc............................... 4,706,250
-----------------
LABELS (0.1%)
17,000 Avery Dennison Corp............... 879,750
-----------------
MACHINERY - CONSTRUCTION & MATERIALS (0.3%)
12,000 Johnson Controls, Inc............. 864,000
70,000 Parker-Hannifin Corp.............. 2,441,250
-----------------
3,305,250
-----------------
MEDICAL PRODUCTS & SUPPLIES (0.3%)
99,000 Baxter International, Inc......... 4,120,875
-----------------
METALS - MISCELLANEOUS (0.4%)
80,700 Phelps Dodge Corp................. 4,741,125
-----------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
OFFICE EQUIPMENT & SUPPLIES (0.7%)
200,000 Alco Standard Corp................ $ 8,750,000
-----------------
OIL DRILLING & SERVICES (1.2%)
360,000 Dresser Industries, Inc........... 9,720,000
70,000 Schlumberger, Ltd................. 5,600,000
-----------------
15,320,000
-----------------
OIL INTEGRATED - DOMESTIC (0.6%)
70,000 Atlantic Richfield Co............. 8,120,000
-----------------
OIL INTEGRATED - INTERNATIONAL (2.8%)
150,000 Chevron Corp...................... 8,681,250
130,000 Exxon Corp........................ 10,692,500
70,000 Mobil Corp........................ 7,726,250
90,000 Texaco, Inc....................... 7,650,000
-----------------
34,750,000
-----------------
PHARMACEUTICALS (1.9%)
128,400 American Home Products Corp....... 7,286,700
104,800 Lilly (Eli) & Co.................. 5,868,800
102,200 Merck & Co., Inc.................. 6,566,350
63,000 Pfizer, Inc....................... 4,402,125
-----------------
24,123,975
-----------------
PUBLISHING - NEWSPAPER (0.1%)
13,000 Gannett Co., Inc.................. 853,125
-----------------
RAILROADS (0.7%)
143,100 Conrail, Inc...................... 9,373,050
-----------------
RETAIL - DEPARTMENT STORES (0.6%)
100,000 Dayton-Hudson Corp................ 3,025,000
114,000 May Department Stores Co.......... 5,115,750
-----------------
8,140,750
-----------------
RETAIL - SPECIALTY (3.6%)
500,000 Bed Bath & Beyond, Inc.*.......... 10,937,500
144,000 Home Depot, Inc................... 7,272,000
189,360 Payless ShoeSource, Inc.*......... 6,130,530
700,000 Pier 1 Imports, Inc............... 11,812,500
450,000 Price/Costco, Inc.*............... 9,168,750
-----------------
45,321,280
-----------------
RETAIL - SPECIALTY APPAREL (0.2%)
100,000 Gap, Inc.......................... 2,975,000
-----------------
SAVINGS & LOAN ASSOCIATIONS (1.7%)
400,000 California Federal Bank*.......... 9,050,000
110,000 Golden West Financial Corp........ 6,105,000
395,000 Roosevelt Financial Group, Inc.... 6,320,000
-----------------
21,475,000
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1996, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
SHIPPING (0.7%)
365,800 APL Ltd........................... $ 8,550,575
-----------------
SHOES (0.7%)
80,000 Nike, Inc. (Class B).............. 8,230,000
-----------------
STEEL & IRON (0.5%)
637,000 Bethlehem Steel Corp.*............ 6,370,000
-----------------
TELECOMMUNICATIONS (0.9%)
130,000 ITT Corp.*........................ 7,377,500
80,000 Newbridge Networks Corp.*
(Canada).......................... 3,480,000
-----------------
10,857,500
-----------------
TEXTILES - APPAREL MANUFACTURERS (0.1%)
50,900 Liz Claiborne, Inc................ 1,660,613
-----------------
TOBACCO (0.9%)
106,000 Philip Morris Companies, Inc...... 11,090,250
-----------------
UTILITIES - GAS (0.5%)
150,000 Williams Companies, Inc........... 6,881,250
-----------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $533,479,736).... 626,974,256
-----------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS (16.3%)
BANKS (3.0%)
$ 5,000 Banque Paribas of New York
8.35% due 06/15/07................ 5,168,550
4,950 CoreStates Financial Corp.
9.625% due 02/15/01............... 5,442,129
7,000 First Nationwide Bank
10.00% due 10/01/06............... 7,778,960
5,000 Fleet Financial Group, Inc.
8.125% due 07/01/04............... 5,204,400
5,000 Landeskreditbank NV 7.875% due
04/15/04 (Germany)................ 5,210,850
4,000 Midland Bank PLC
7.625% due 06/15/06
(United Kingdom).................. 4,022,960
5,000 National Bank of Canada 8.125% due
08/15/04 (Canada)................. 5,182,900
-----------------
38,010,749
-----------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
BROADCAST MEDIA (0.9%)
$ 10,000 Time Warner, Inc.
9.625% due 05/01/02............... $ 10,943,100
-----------------
BROKERAGE (1.2%)
5,000 Lehman Brothers Holdings,
Inc. 7.625% due 07/15/99.......... 5,082,750
5,000 Lehman Brothers Holdings,
Inc. 8.75% due 03/15/05........... 5,296,350
4,950 Paine Webber Group, Inc.
8.25% due 05/01/02................ 5,116,369
-----------------
15,495,469
-----------------
CABLE TELEVISION EQUIPMENT (0.4%)
5,000 Continental Cablevision, Inc.
8.30% due 05/15/06................ 5,123,200
-----------------
FINANCIAL (2.9%)
3,000 Arkwright CSN Trust -
144A** 9.625% due 08/15/26........ 3,075,000
5,000 Commercial Credit Co.
10.00% due 05/15/09............... 5,978,150
5,000 Price Reit Inc.
7.25% due 11/01/00................ 4,932,150
4,950 RHG Finance Corp.
8.875% due 10/01/05............... 5,097,114
5,000 Rodamco NV 7.30% due 05/15/05
(Netherlands)..................... 4,971,500
7,000 Sun Canada Financial Co. -
144A** 6.625% due 12/15/07........ 6,510,000
5,800 Terra Nova Holdings
10.75% due 07/01/05
(United Kingdom).................. 6,467,000
-----------------
37,030,914
-----------------
FINANCIAL SERVICES (2.2%)
4,835 American Annuity Group
9.50% due 08/15/01................ 5,076,750
9,900 Conseco, Inc.
10.50% due 12/15/04............... 11,288,673
6,000 Household Finance Corp.
7.65% due 05/15/07................ 6,082,320
5,000 Lumbermens Mutual Casualty -
144A**
9.15% due 07/01/26................ 5,150,000
-----------------
27,597,743
-----------------
FOREIGN GOVERNMENT AGENCY (0.8%)
5,000 Quebec Province 7.125% due
02/09/24 (Canada)................. 4,576,450
5,000 Quebec Province 8.625% due
12/01/26 (Canada)................. 5,369,700
-----------------
9,946,150
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1996, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
HOSPITAL MANAGEMENT (0.4%)
$ 4,900 Columbia/HCA Healthcare
Corp. 7.50% due 11/15/95.......... $ 4,618,250
-----------------
INDUSTRIALS (2.8%)
1,000 Jet Equipment Trust - 144A**
10.91% due 08/15/14............... 1,120,000
3,000 Joy Technologies Inc.
10.25% due 09/01/03............... 3,300,750
4,950 Lockheed Martin Corp.
7.70% due 06/15/08................ 5,045,634
5,000 Mitchell Energy & Development
Corp.
8.00% due 07/15/99................ 5,059,250
5,153 Pennzoil Co.
10.125% due 11/15/09.............. 6,060,752
5,000 Reliance Industries PLC - 144A**
9.375% due 06/24/26 (India)....... 5,150,000
5,000 Reliance Industries Ltd. - 144A**
10.50% due 08/06/46 (India)....... 5,043,750
4,950 WMX Technologies Inc.
7.10% due 08/01/26................ 4,980,938
-----------------
35,761,074
-----------------
RETAIL - DEPARTMENT STORES (0.4%)
5,000 Dayton-Hudson Co.
7.50% due 07/15/06................ 4,968,600
-----------------
TELECOMMUNICATIONS (0.7%)
3,000 TCI Communications, Inc.
8.75% due 08/01/15................ 2,915,580
5,000 Tele-Communications, Inc.
9.80% due 02/01/12................ 5,359,800
-----------------
8,275,380
-----------------
TOBACCO (0.2%)
3,000 RJR Nabisco, Inc.
8.75% due 08/15/05................ 2,945,100
-----------------
UTILITIES - ELECTRIC (0.4%)
4,950 Niagara Mohawk Power
Corp. 9.25% due 10/01/01.......... 4,870,157
-----------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $207,129,655).... 205,585,886
-----------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT & AGENCIES OBLIGATIONS (22.5%)
$ 5,000 Federal Home Loan Mortgage Corp.
6.75% due 02/01/00................ $ 4,993,750
480 Federal Home Loan Mortgage Corp.
8.50% due 07/01/02................ 489,510
206 Federal Home Loan Mortgage Corp.
9.00% due 08/01/02................ 212,264
2,500 Private Export Funding Corp. 7.95%
due 11/01/06...................... 2,606,000
3,000 U.S. Treasury Bond
6.25% due 08/15/23................ 2,700,937
15,850 U.S. Treasury Bond
7.625% due 02/15/25............... 16,954,547
17,850 U.S. Treasury Bond
6.875% due 08/15/25............... 17,523,680
23,000 U.S. Treasury Note
6.00% due 08/31/97................ 22,996,406
32,050 U.S. Treasury Note
6.50% due 04/30/99................ 32,160,172
5,000 U.S. Treasury Note
6.375% due 05/15/99............... 5,000,000
25,000 U.S. Treasury Note
6.875% due 08/31/99............... 25,300,781
8,500 U.S. Treasury Note
7.875% due 11/15/99............... 8,850,625
35,000 U.S. Treasury Note
7.75% due 12/31/99................ 36,367,188
5,000 U.S. Treasury Note
6.875% due 03/31/00............... 5,060,937
15,000 U.S. Treasury Note
6.75% due 04/30/00................ 15,119,531
25,000 U.S. Treasury Note
5.625% due 11/30/00............... 24,148,437
7,000 U.S. Treasury Note
7.50% due 11/15/01................ 7,278,906
18,950 U.S. Treasury Note
5.75% due 08/15/03................ 17,966,969
15,000 U.S. Treasury Note
7.25% due 08/15/04................ 15,464,063
7,000 U.S. Treasury Note
7.50% due 02/15/05................ 7,330,313
5,000 U.S. Treasury Note
6.50% due 05/15/05................ 4,912,500
10,000 U.S. Treasury Note
7.00% due 07/15/06................ 10,143,750
-----------------
TOTAL U.S. GOVERNMENT & AGENCIES
OBLIGATIONS
(IDENTIFIED COST $289,198,174).... 283,581,266
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1996, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (a) (16.5%)
U.S. GOVERNMENT AGENCIES
$ 49,300 Federal Home Loan Banks 5.62% due
08/01/96.......................... $ 49,300,000
98,961 Federal Home Loan Mortgage Corp.
5.18% - 5.21% due
08/09/96 - 08/15/96............... 98,804,244
60,000 Tennessee Valley Authority 5.20%
due 08/02/96 - 08/06/96........... 59,974,000
-----------------
TOTAL SHORT-TERM INVESTMENTS
(AMORTIZED COST $208,078,244)..... 208,078,244
-----------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$1,237,885,809) (B)........ 105.2% 1,324,219,652
LIABILITIES IN EXCESS OF
CASH AND OTHER ASSETS...... (5.2) (64,914,879)
----- -------------
NET ASSETS................. 100.0% $1,259,304,773
----- -------------
----- -------------
<FN>
- ---------------------
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
(a) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $1,239,843,014; the
aggregate gross unrealized appreciation is $107,346,687 and the aggregate
gross unrealized depreciation is $22,970,049, resulting in net unrealized
appreciation of $84,376,638.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $1,237,885,809).......................... $1,324,219,652
Cash........................................................ 39,461
Receivable for:
Investments sold........................................ 12,725,365
Interest................................................ 9,611,323
Shares of beneficial interest sold...................... 1,413,846
Dividends............................................... 550,164
Principal paydowns...................................... 13,558
Receivable from affiliate................................... 61,659
Prepaid expenses and other assets........................... 13,389
--------------
TOTAL ASSETS........................................... 1,348,648,417
--------------
LIABILITIES:
Payable for:
Investments purchased................................... 86,454,606
Plan of distribution fee................................ 1,036,320
Shares of beneficial interest repurchased............... 812,502
Investment management fee............................... 638,563
Accrued expenses and other payables......................... 401,653
--------------
TOTAL LIABILITIES...................................... 89,343,644
--------------
NET ASSETS:
Paid-in-capital............................................. 1,087,622,356
Net unrealized appreciation................................. 86,333,843
Accumulated undistributed net investment income............. 4,346,240
Accumulated undistributed net realized gain................. 81,002,334
--------------
NET ASSETS............................................. $1,259,304,773
--------------
--------------
NET ASSET VALUE PER SHARE,
78,583,914 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$16.02
--------------
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1996
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Interest.................................................... $ 26,559,194
Dividends................................................... 12,772,090
------------
TOTAL INCOME........................................... 39,331,284
------------
EXPENSES
Plan of distribution fee.................................... 9,851,971
Investment management fee................................... 6,414,184
Transfer agent fees and expenses............................ 1,123,176
Registration fees........................................... 211,708
Shareholder reports and notices............................. 123,956
Custodian fees.............................................. 79,221
Professional fees........................................... 67,457
Trustees' fees and expenses................................. 19,406
Other....................................................... 15,923
------------
TOTAL EXPENSES......................................... 17,907,002
------------
NET INVESTMENT INCOME.................................. 21,424,282
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain........................................... 97,968,604
Net change in unrealized appreciation....................... (3,107,509)
------------
NET GAIN............................................... 94,861,095
------------
NET INCREASE................................................ $116,285,377
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
JULY 31, 1996 JULY 31, 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 21,424,282 $ 18,982,173
Net realized gain........................................... 97,968,604 56,953,694
Net change in unrealized appreciation....................... (3,107,509) 45,494,865
------------- --------------
NET INCREASE........................................... 116,285,377 121,430,732
------------- --------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income....................................... (21,021,721) (15,997,877)
Net realized gain........................................... (70,591,947) (25,273,043)
------------- --------------
TOTAL.................................................. (91,613,668) (41,270,920)
------------- --------------
Net increase (decrease) from transactions in shares of
beneficial interest....................................... 357,037,738 (8,813,901)
------------- --------------
TOTAL INCREASE......................................... 381,709,447 71,345,911
NET ASSETS:
Beginning of period......................................... 877,595,326 806,249,415
------------- --------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$4,346,240 AND $3,987,969, RESPECTIVELY)................ $1,259,304,773 $ 877,595,326
------------- --------------
------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1996
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's investment objective is to maximize
the total return of its investments. The Fund seeks to achieve its objective by
actively allocating its assets among major asset categories of equity and
fixed-income securities and money market instruments. The Fund was organized as
a Massachusetts business trust on August 5, 1988 and commenced operations on
October 31, 1988.
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 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, 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 the 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 accreted over the life of the respective securities. Dividend
income and other distributions are recorded on the ex-dividend date. Interest
income is accrued daily.
<PAGE>
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1996, CONTINUED
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.
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 the 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 exceeding $1 billion but not
exceeding $1.5 billion. Effective May 1, 1996, the annual rate was reduced to
0.475% to the portion of daily net assets in excess of $1.5 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.
<PAGE>
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1996, CONTINUED
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 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. ("DWR"), an affiliate of the Investment Manager and
Distributor, and other employees or selected broker-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.
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 $37,253,459
at July 31, 1996. Of this amount, $13,444,602 represents excess distribution
expenses of Dean Witter Managed Assets Trust, the net assets of which were
combined with those of the Fund on December 22, 1995 pursuant to an Agreement
and Plan of Reorganization.
<PAGE>
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1996, CONTINUED
The Distributor has informed the Fund that for the year ended July 31, 1996, it
received approximately $1,662,000 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, 1996 aggregated
$1,911,012,938 and $1,823,861,647, respectively. Included in the aforementioned
are purchases and sales of U.S. Government securities of $439,350,625 and
$365,547,234, respectively. For the same period, the Fund incurred brokerage
commissions with DWR of approximately $105,000 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, 1996, the Fund had
transfer agent fees and expenses payable of approximately $106,000.
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 July 31, 1996 included in
Trustees' fees and expenses in the Statement of Operations amounted to $1,205.
At July 31, 1996, the Fund had an accrued pension liability of $91,788 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 FOR THE YEAR
ENDED ENDED
JULY 31, 1996 JULY 31, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 15,621,003 $ 252,119,338 9,276,510 $137,319,676
Reinvestment of dividends and distributions...................... 5,419,616 83,797,500 2,728,962 38,146,103
Shares issued in connection with the acquisition of Dean Witter
Managed Assets Trust (Note 6)................................... 20,952,000 322,593,266 -- --
----------- -------------- ----------- ------------
41,992,619 658,510,104 12,005,472 175,465,779
Repurchased...................................................... (18,698,191) (301,472,366) (12,582,171) (184,279,680)
----------- -------------- ----------- ------------
Net increase (decrease).......................................... 23,294,428 $ 357,037,738 (576,699) $ (8,813,901)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
<PAGE>
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1996, CONTINUED
6. ACQUISITION OF DEAN WITTER MANAGED ASSETS TRUST
As of the close of business on December 22, 1995, the Fund acquired all the net
assets of Dean Witter Managed Assets Trust ("Managed Assets") pursuant to a plan
of reorganization approved by the shareholders of Managed Assets on December 19,
1995. The acquisition was accomplished by a tax-free exchange of 20,952,000
shares of the Fund at a net asset value of $15.39 for 30,683,052 shares of
Managed Assets. The net assets of the Fund and Managed Assets immediately before
the acquisition were $935,510,174 and $322,593,266, respectively, including for
Managed Assets, unrealized appreciation of $6,077,572, distributions in excess
of net investment income of $158,230 and distributions in excess of net realized
gain of $16,410. Immediately after the acquisition, the combined net assets of
the Fund amounted to $1,258,103,440.
7. FEDERAL INCOME TAX STATUS
As of July 31, 1996, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales and permanent book/tax
differences attributable to nondeductible merger expenses. To reflect
reclassifications arising from permanent book/tax differences for the year ended
July 31, 1996, paid-in-capital was charged and accumulated undistributed net
investment income was credited $113,940.
<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
FOR THE YEAR ENDED JULY 31 OCTOBER 31, 1988*
------------------------------------------------------------------------------ THROUGH
1996 1995 1994 1993 1992 1991 1990 JULY 31, 1989
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning
of period....... $ 15.87 $ 14.43 $ 14.59 $ 14.39 $ 13.09 $ 11.65 $ 11.37 $ 9.45
---------- --------- --------- ---------- --------- --------- ---------- ------
Net investment
income.......... 0.30 0.34 0.30 0.26 0.27 0.27 0.23 0.38
Net realized and
unrealized
gain............ 1.43 1.86 0.22 0.81 1.27 1.50 0.55 1.84
---------- --------- --------- ---------- --------- --------- ---------- ------
Total from
investment
operations...... 1.73 2.20 0.52 1.07 1.54 1.77 0.78 2.22
---------- --------- --------- ---------- --------- --------- ---------- ------
Less dividends
and
distributions
from:
Net investment
income........ (0.32) (0.29) (0.26) (0.31) (0.24) (0.26) (0.29) (0.30)
Net realized
gain.......... (1.26) (0.47) (0.42) (0.56) -- (0.07) (0.21) --
---------- --------- --------- ---------- --------- --------- ---------- ------
Total dividends
and
distributions... (1.58) (0.76) (0.68) (0.87) (0.24) (0.33) (0.50) (0.30)
---------- --------- --------- ---------- --------- --------- ---------- ------
Net asset value,
end of period... $ 16.02 $ 15.87 $ 14.43 $ 14.59 $ 14.39 $ 13.09 $ 11.65 $11.37
---------- --------- --------- ---------- --------- --------- ---------- ------
---------- --------- --------- ---------- --------- --------- ---------- ------
TOTAL INVESTMENT
RETURN+.......... 11.47% 16.05% 3.53% 7.59% 11.88% 15.67% 7.21% 23.76%(1)
RATIOS TO AVERAGE
NET ASSETS:
Expenses......... 1.58% 1.63% 1.62% 1.62% 1.63% 1.59% 1.53% 0.97%(2)(3)
Net investment
income.......... 1.88% 2.35% 2.03% 1.90% 2.19% 2.37% 2.39% 6.00%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end
of period, in
millions........ $1,259 $878 $806 $783 $441 $238 $196 $48
Portfolio
turnover rate... 174% 179% 90% 98% 79% 140% 101% 70%(1)
Average
commission rate
paid............ $0.0597 -- -- -- -- -- -- --
- ---------------------
* Commencement of operations.
+ 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.
(3) If the Fund had borne all its expenses that were assumed or waived by the
Investment Manager, the above annualized expense and net investment income
ratios would have been 1.48% and 5.48%, respectively.
</TABLE>
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, 1996, 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 seven 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 at July
31, 1996 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
SEPTEMBER 13, 1996
- --------------------------------------------------------------------------------
1996 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended July 31, 1996, the Fund paid to its
shareholders $0.96 per share from long-term capital gains. For
such period 35.48% of the income dividend qualified for the
dividends received deduction available to corporations.
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
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
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.
DEAN WITTER
STRATEGIST FUND
[Graphic]
ANNUAL REPORT
JULY 31, 1996
<PAGE>
DEAN WITTER STRATEGIST FUND
GROWTH OF $10,000
DATE TOTAL S&P 500 LEHMAN
- --------------------------------------------------------------
October 31, 1988 $10,000 $10,000 $10,000
- --------------------------------------------------------------
July 31, 1989 $12,376 $12,736 $11,061
- --------------------------------------------------------------
July 31, 1990 $13,267 $13,558 $11,750
- --------------------------------------------------------------
July 31, 1991 $15,346 $15,290 $12,952
- --------------------------------------------------------------
July 31, 1992 $17,169 $17,243 $14,978
- --------------------------------------------------------------
July 31, 1993 $18,472 $18,745 $16,630
- --------------------------------------------------------------
July 31, 1994 $19,125 $19,712 $16,608
- --------------------------------------------------------------
July 31, 1995 $22,195 $24,844 $18,291
- --------------------------------------------------------------
July 31, 1996 $24,741 (3) $28,947 $19,262
- --------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR FIVE YEARS LIFE OF FUND
-------------------------------------------
11.47%(1) 10.02%(1) 12.40%(1)
-------------------------------------------
6.47%(2) 9.75%(2) 12.40%(2)
-------------------------------------------
------------------------------------------------
Fund S&P 500 (4) Lehman(5)
---- ----- -----
------------------------------------------------
Past performance is not predictive of future returns.
________________________________________
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable contingent deferred sales charge (CDSC) (1 year-
5%, 5 years-2%, since inception-0%). See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value, assuming a complete redemption on July 31, 1996.
(4) The Standard and Poors 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 performance of the index
does not include any expenses, fees or charges. The index is unmanaged and
should not be considered an investment.
(5) The Lehman Brothers Government/Corporate Bond Index tracks the performance
of government and corporate obligations, including U.S. government agency
and U.S. treasury securities and corporate and yankee bonds, with
maturities of one to ten years. The performance of the Index does not
include any expenses, fees or charges. The index is unmanaged and should
not be considered an investment.
