<PAGE> 1
DEAN WITTER STRATEGIST FUND Two World Trade Center, New York, New York 10048
LETTER TO THE SHAREHOLDERS January 31, 1997
DEAR SHAREHOLDER:
For the six-month period ended January 31, 1997, Dean Witter Strategist Fund
provided a total return of 14.57 percent. This performance compares favorably to
the Fund's peer group of 207 flexible portfolio funds, as measured by Lipper
Analytical Services, Inc., which posted an average total return of 13.89 percent
for the same six-month time period. For the 1996 calendar year, a fixed balanced
composite of 55 percent equities (as represented by the Standard & Poor's 500
Composite Stock Index), 35 percent fixed income (as represented by the Lehman
Brothers Government/Corporate Bond Index) and 10 percent cash would have
provided a total return of 14.1 percent, or 120 basis points (1.2 percent) below
our active allocation strategy, which provided a total return of 15.3 percent.
ASSET ALLOCATION UPDATE
As a flexible portfolio, Dean Witter Strategist Fund combines stocks, bonds and
cash in an effort to maximize total return and lower risk. During the past year,
we made just one major asset allocation shift. We moved from being overweighted
in equities to being slightly underweighted -- from approximately 65 percent to
approximately 50 percent of assets. We shifted these liquidated assets to bonds
and increased the Fund's bond portfolio from approximately 20 percent to
approximately 40 percent of assets. Cash equivalent holdings decreased from
approximately 18 percent to approximately 6 percent of assets. This move was
based on a combination of factors, including a decline in the number of
companies able to exceed earnings growth expectations, as well as the increased
availability of attractive competitive yields in the bond market.
At the end of the period under review, we continue to favor overweighting
long-dated financial assets and maintaining low cash levels. There are three
variables which carry the greatest weight in determining this overall allocation
strategy. Both inflation (which continued to surprise on the moderate side) and
Federal Reserve policy (which remained
<PAGE> 2
DEAN WITTER STRATEGIST FUND
LETTER TO THE SHAREHOLDERS January 31, 1997, continued
neutral) failed to meet our bearish expectations throughout 1996. The most
important factor, however, was developments in corporate earnings growth, which
grew increasingly more inconsistent throughout 1996 and raised concerns over the
long-term sustainability of 15 percent-plus earnings growth forecasts.
The Fund's equity portfolio is overweighted in sectors that we believe offer
above-average earnings growth potential. Among these are consumer cyclicals
(especially growth retailers), consumer staples (especially pharmaceuticals),
aerospace/defense, technology and financials. At the end of the period under
review, our five largest equity positions were Pier 1 Imports, Inc., General
Motors Corp. (Class H), Thiokol Corp., Microsoft Corp. and Pharmacia & Upjohn,
Inc.
The Fund's fixed-income portfolio is overweighted in corporate bonds (65 percent
of total bond portfolio value) and underweighted in government treasury issues.
We believe that premium yields and strong corporate cash flows make corporate
bonds the preferred investment vehicle within the bond market.
We appreciate your continued support and look forward to serving your investment
needs.
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO
- -----------------------------------
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE> 3
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS January 31, 1997 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (53.5%)
Aerospace & Defense (5.7%)
270,000 General Motors Corp. (Class
H)........................ $ 16,470,000
194,000 Honeywell, Inc. ........... 13,992,250
260,000 Litton Industries, Inc.*... 11,700,000
140,000 Lockheed Martin Corp. ..... 12,880,000
160,000 McDonnell Douglas Corp. ... 10,760,000
280,000 Thiokol Corp. ............. 15,680,000
------------
81,482,250
------------
Airlines (0.5%)
250,000 Continental Airlines, Inc.
(Class B)*................ 6,968,750
------------
Aluminum (0.7%)
150,000 Aluminum Co. of America.... 10,350,000
------------
Apparel (0.1%)
31,000 Liz Claiborne, Inc. ....... 1,305,875
------------
Auto Parts (0.1%)
18,000 TRW, Inc. ................. 913,500
------------
Automotive (0.7%)
288,000 Chrysler Corp. ............ 10,044,000
11,700 Ford Motor Co. ............ 375,862
------------
10,419,862
------------
Banks (0.8%)
37,000 Wells Fargo & Co. ......... 11,275,750
------------
Banks - Money Center (0.8%)
102,000 Citicorp................... 11,870,250
------------
Beverages - Soft Drinks
(0.6%)
227,800 PepsiCo Inc. .............. 7,944,525
------------
Brokerage (1.0%)
14,000 Morgan Stanley Group,
Inc. ..................... 799,750
266,666 Travelers Group, Inc. ..... 13,966,632
------------
14,766,382
------------
Cable/Cellular (0.7%)
550,000 U.S. West Media Group*..... 10,243,750
------------
Chemicals (2.0%)
110,000 Du Pont (E.I.) de Nemours &
Co. ...................... 12,058,750
220,000 Monsanto Co. .............. 8,332,500
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
16,000 PPG Industries, Inc. ...... $ 856,000
150,000 Praxair, Inc. ............. 6,956,250
------------
28,203,500
------------
Communications - Equipment
&
Software (1.7%)
180,000 Cisco Systems, Inc.*....... 12,532,500
252,400 Comsat Corp. .............. 6,814,800
160,000 Newbridge Networks Corp.*
(Canada).................. 5,520,000
------------
24,867,300
------------
Computer Software (1.6%)
146,800 Microsoft Corp.*........... 14,955,250
200,000 Oracle Corp.*.............. 7,750,000
------------
22,705,250
------------
Computers (2.0%)
383,500 Apple Computer, Inc.*...... 6,327,750
200,000 Dell Computer Corp.*....... 13,225,000
150,000 Gateway 2000, Inc.*........ 9,150,000
------------
28,702,750
------------
Computers - Peripheral
Equipment (0.6%)
153,600 Seagate Technology,
Inc.*..................... 7,910,400
------------
Computers - Systems (2.5%)
219,500 Diebold, Inc. ............. 12,950,500
170,000 Electronic Data Systems
Corp. .................... 7,820,000
112,000 Hewlett-Packard Co. ....... 5,894,000
300,000 Sun Microsystems, Inc.*.... 9,487,500
------------
36,152,000
------------
Consumer Products (1.6%)
126,700 Colgate-Palmolive Co. ..... 12,258,225
220,000 Tupperware Corp. .......... 10,312,500
------------
22,570,725
------------
Electrical Equipment (1.8%)
129,000 Emerson Electric Co. ...... 12,738,750
129,000 General Electric Co. ...... 13,287,000
------------
26,025,750
------------
Electronic Components
(0.1%)
12,000 Johnson Controls, Inc. .... 1,032,000
------------
Entertainment/Gaming (1.0%)
420,000 Circus Circus Enterprises,
Inc.*..................... 14,805,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 4
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS January 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
Financial Services (1.7%)
200,000 American Express Co. ...... $ 12,475,000
290,000 Federal National Mortgage
Assoc. ................... 11,455,000
------------
23,930,000
------------
Foods (1.5%)
88,000 Campbell Soup Co. ......... 7,304,000
150,000 General Mills, Inc. ....... 10,162,500
90,000 Quaker Oats Company (The) . 3,453,750
------------
20,920,250
------------
Forest Products, Paper &
Packaging (0.6%)
200,000 Champion International
Corp. .................... 8,375,000
------------
Hardware & Tools (0.7%)
250,000 Black & Decker Corp. ...... 8,375,000
36,000 Stanley Works.............. 1,368,000
------------
9,743,000
------------
Healthcare - Miscellaneous (1.7%)
554,000 Humana, Inc.*.............. 10,526,000
170,000 PacifiCare Health Systems,
Inc. (Class B)*........... 13,642,500
------------
24,168,500
------------
Hospital Management (0.6%)
214,500 Columbia/HCA Healthcare
Corp. .................... 8,472,750
------------
Household Appliances (0.2%)
121,500 Maytag Corp. .............. 2,490,750
------------
Industrials (0.0%)
5,500 AlliedSignal, Inc. ........ 386,375
------------
Insurance (0.8%)
95,000 American International
Group, Inc. .............. 11,506,875
------------
Labels (0.1%)
34,000 Avery Dennison Corp. ...... 1,245,250
------------
Leisure (0.5%)
100,000 Carnival Corp. (Class A)... 3,675,000
50,000 Walt Disney Co. ........... 3,662,500
------------
7,337,500
------------
Medical Products & Supplies (0.3%)
99,000 Baxter International,
Inc. ..................... 4,566,375
------------
Natural Gas - Distribution (0.6%)
202,500 Williams Companies,
Inc. ..................... 8,125,312
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
Office Equipment & Supplies (0.6%)
200,000 Ikon Office Solutions,
Inc. ..................... $ 8,825,000
------------
Oil Drilling & Services
(0.4%)
150,000 Dresser Industries,
Inc. ..................... 5,081,250
6,300 Schlumberger, Ltd. ........ 700,088
------------
5,781,338
------------
Oil Integrated - Domestic (0.5%)
56,000 Atlantic Richfield Co. .... 7,406,000
------------
Oil Integrated - International (2.4%)
133,000 Chevron Corp. ............. 8,827,875
80,000 Exxon Corp. ............... 8,290,000
62,000 Mobil Corp. ............... 8,137,500
79,000 Texaco, Inc. .............. 8,364,125
------------
33,619,500
------------
Paper (0.2%)
100,000 Unisource Worldwide,
Inc. ..................... 2,175,000
------------
Paper & Forest Products (0.4%)
150,000 International Paper Co. ... 6,131,250
------------
Pharmaceuticals (4.6%)
160,000 Abbott Laboratories........ 8,700,000
128,400 American Home Products
Corp. .................... 8,137,350
194,744 Johnson & Johnson.......... 11,222,123
151,000 Lilly (Eli) & Co. ......... 13,155,875
102,200 Merck & Co., Inc. ......... 9,274,650
400,000 Pharmacia & Upjohn,
Inc. ..................... 14,900,000
------------
65,389,998
------------
Publishing - Newspaper
(0.1%)
13,000 Gannett Co., Inc. ......... 996,125
------------
Retail - Department Stores (0.1%)
4,000 Dayton-Hudson Corp. ....... 150,500
16,000 May Department Stores
Co. ...................... 712,000
------------
862,500
------------
Retail - Specialty (3.7%)
470,000 Bed Bath & Beyond, Inc.*... 12,925,000
350,000 Costco Companies, Inc.*.... 9,275,000
144,000 Home Depot, Inc. .......... 7,128,000
189,360 Payless ShoeSource,
Inc.*..................... 7,101,000
900,000 Pier 1 Imports, Inc. ...... 16,650,000
------------
53,079,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS January 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
Retail - Specialty Apparel (0.0%)
10,000 Gap, Inc. ................. $ 287,500
------------
Savings & Loan Associations (1.0%)
170,000 Golden West Financial Corp.... 11,411,250
100,000 Great Western Financial
Corp. .................... 3,162,500
------------
14,573,750
------------
Semiconductors (1.8%)
300,000 Micron Technology, Inc. ... 10,425,000
470,000 Teradyne Inc.*............. 14,511,250
------------
24,936,250
------------
Shipping (0.6%)
345,800 APL Ltd. .................. 8,299,200
------------
Shoes (0.6%)
130,000 Nike, Inc. (Class B)....... 8,823,750
------------
Steel (0.6%)
17,000 Bethlehem Steel Corp.*..... 144,500
150,000 Nucor Corp. ............... 7,800,000
------------
7,944,500
------------
TOTAL COMMON STOCKS
(Identified Cost $558,897,504).. 760,914,167
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ---------
<S> <C> <C>
CORPORATE BONDS (25.9%)
Airlines (1.3%)
$ 6,900 America West Airlines, Inc.
6.86% due 07/02/04........ 6,839,625
5,000 United Air Lines, Inc.
10.125% due 03/22/15...... 5,931,150
5,000 United Air Lines, Inc.
9.35% due 04/07/16........ 5,518,750
------------
18,289,525
------------
Automotive (0.4%)
5,000 General Motors Corp.
9.125% due 07/15/01....... 5,468,950
------------
Automotive - Finance (0.5%)
6,900 GMAC Pass Thru Asset Trust
97 -144A**
6.50% due 01/17/00........ 6,917,250
------------
Bank Holding Companies (1.9%)
5,000 North Fork Bancorp -144A**
8.70% due 12/15/26........ 5,087,500
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
<C> <S> <C>
$ 7,500 Provident Bank -144A**
8.60% due 12/01/26........ $ 7,565,625
4,800 Standard Federal Bancorp
7.75% due 07/17/06........ 4,980,336
5,000 U.S. Bancorp Capital
-144A**
8.27% due 12/15/26........ 5,137,500
4,000 Union Planters Co.
6.25% due 11/01/03........ 3,840,480
------------
26,611,441
------------
Banks (2.0%)
5,780 Central Fidelity Banks,
Inc.
8.15% due 11/15/02........ 6,108,997
5,000 First Empire Capital Trust
1
8.234% due 02/01/27....... 5,043,750
5,000 First National Bank Corp.
6.50% due 01/14/00........ 5,018,750
5,000 First Nationwide Bank
10.00% due 10/01/06....... 5,748,700
6,900 People's Bank-Bridgeport
7.20% due 12/01/06........ 6,764,070
------------
28,684,267
------------
Banks - International
(1.5%)
4,800 Banque Paribas of New York
6.875% due 03/01/09....... 4,573,440
5,000 Dao Heng Bank Ltd. -144A**
(Hong Kong)
7.75% due 01/24/07........ 5,050,000
5,000 Merita Bank Ltd. -144A**
(Finland)
7.50% due 12/29/49........ 5,037,500
7,000 Skandinaviska Enskilda
Banken -144A** (Sweden)
8.125% due 09/06/49....... 7,350,000
------------
22,010,940
------------
Brokerage (1.5%)
4,920 Lehman Brothers Holdings,
Inc.
6.625% due 11/15/00....... 4,891,858
5,000 Lehman Brothers Holdings,
Inc.
8.75% due 03/15/05........ 5,441,750
5,740 Paine Webber Group, Inc.
8.25% due 05/01/02........ 6,055,126
5,000 Paine Webber Group, Inc.
8.875% due 03/15/05....... 5,476,250
------------
21,864,984
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS January 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------
<S> <C> <C>
Cable Television Equipment (1.2%)
$ 5,000 Continental Cablevision,
Inc.
9.50% due 08/01/13........ $ 5,725,250
10,000 Tele-Communications, Inc.
9.80% due 02/01/12........ 11,063,100
------------
16,788,350
------------
Cable/Cellular (0.3%)
5,000 360 degrees Communication
Co.
7.125% due 03/01/03....... 4,949,100
------------
Financial (0.3%)
4,900 Vesta Capital Trust 1
-144A**
8.525% due 01/15/27....... 4,955,125
------------
Financial Services (4.1%)
5,000 Advanta Corp.
6.384% due 08/07/98....... 5,001,650
3,500 Advanta Corp.
7.28% due 07/30/01........ 3,554,005
10,000 Arkwright CSN Trust -144A**
9.625% due 08/15/26....... 11,062,500
6,900 Capital One Bank
8.125% due 03/01/00....... 7,151,298
5,400 Commercial Credit Group
7.875 due 02/01/25........ 5,802,138
5,000 Firstar Capital Trust I
-144A**
8.32% due 12/15/26........ 5,125,000
4,900 Markel Capital Trust I
-144A**
8.71% due 01/01/46........ 5,004,125
6,900 MBNA Capital Inc.
8.278% due 12/01/26....... 6,977,625
4,000 Pxre Capital Trust I
-144A**
8.85% due 02/01/27........ 4,055,000
4,950 RHG Finance Corp.
8.875% due 10/01/05....... 5,133,348
------------
58,866,689
------------
Foreign Government Bonds (0.4%)
5,000 National Bank Hungary
(Hungary)
8.875% due 11/01/13....... 5,408,450
------------
Insurance (2.8%)
5,000 Associates Corp. N.A.
6.25% due 03/15/99........ 4,996,800
5,550 Associates Corp. N.A.
6.375% due 08/15/99....... 5,550,999
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------
<S> <C> <C>
$ 4,900 Conseco, Inc.
10.50% due 12/15/04....... $ 5,787,341
4,900 Farmers Insurance Exchange
-144A**
8.50% due 08/01/04........ 5,181,750
6,800 Jefferson-Pilot Capital
Trust A -144A**
8.14% due 01/15/46........ 6,791,500
5,000 Lumbermens Mutual
Casualty - 144A**
9.15% due 07/01/26........ 5,406,250
5,800 Terra Nova Holdings
(United Kingdom)
10.75% due 07/01/05....... 6,515,140
------------
40,229,780
------------
International Trade (0.5%)
6,900 Guangdong International
Trust & Investment -144A**
(China) 8.75% due
10/24/16.................. 7,150,125
------------
Machinery & Machine Tools (1.0%)
1,000 Jet Equipment Trust -144A**
10.91% due 08/15/14....... 1,160,000
3,000 Joy Technologies Inc.
10.25% due 09/01/03....... 3,302,250
10,000 Reliance Industries Ltd.
-144A** (India)
10.25% due 01/15/97....... 10,537,500
------------
14,999,750
------------
Metals & Mining (0.5%)
6,900 Freeport-McMoran C & G Co.
7.50% due 11/15/06........ 6,807,885
------------
Miscellaneous (0.5%)
6,900 Placer Dome, Inc. (Canada)
8.50% due 12/31/45........ 6,770,625
------------
Oil & Gas Products (0.7%)
5,000 Mitchell Energy &
Development Corp.
8.00% due 07/15/99........ 5,121,150
5,000 Mitchell Energy &
Development Corp.
6.75% due 02/15/04........ 4,797,950
------------
9,919,100
------------
Publishing & Television (0.4%)
5,000 Time Warner I Inc.
9.125% due 01/15/13....... 5,444,550
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS January 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------
<S> <C> <C>
Railroad Equipment (0.3%)
$ 4,900 Anixter International Inc.
8.00% due 09/15/03........ $ 4,981,732
------------
Railroads (0.4%)
5,000 Penn Central Corp.
10.625% due 04/15/00...... 5,509,500
------------
Real Estate Investment Trust (0.4%)
5,000 Price Reit, Inc.
7.25% due 11/01/00........ 5,038,000
------------
Savings & Loan Associations (0.5%)
6,800 Great Western Financial
Trust II
8.206% due 02/01/27....... 6,825,500
------------
Steel (0.4%)
5,000 Pohang Iron & Steel Co.
(South Korea)
7.375% due 05/15/05....... 5,042,750
------------
Telecommunications (1.1%)
5,000 British Telecom Finance
(United Kingdom)
9.625% due 02/15/19....... 5,476,550
3,000 TCI Communications, Inc.
8.75% due 08/01/15........ 3,038,490
6,900 Total Access Communication
-144A** (Thailand)
8.375% due 11/04/06....... 6,943,125
------------
15,458,165
------------
Tobacco (0.6%)
4,900 Philip Morris Companies,
Inc.
7.65% due 07/01/08........ 5,013,827
3,000 RJR Nabisco, Inc.
8.75% due 08/15/05........ 3,042,120
------------
8,055,947
------------
Utilities - Electric (0.4%)
4,950 Niagara Mohawk Power Corp.
9.25% due 10/01/01........ 5,082,462
------------
TOTAL CORPORATE BONDS
(Identified Cost $364,622,983).. 368,130,942
------------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS (13.8%)
394 Federal Home Loan Mortgage
Corp.
8.50% due 07/01/02........ 402,206
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------
<S> <C> <C>
$ 173 Federal Home Loan Mortgage
Corp.
9.00% due 08/01/02........ $ 176,522
2,500 Private Export Funding
Corp.
7.95% due 11/01/06........ 2,653,950
2,000 U.S. Treasury Bond
6.25% due 08/15/23........ 1,845,740
2,850 U.S. Treasury Bond
7.625% due 02/15/25....... 3,114,566
17,200 U.S. Treasury Note
5.625% due 11/30/00....... 16,875,264
9,950 U.S. Treasury Note
5.75% due 08/15/03........ 9,622,247
23,000 U.S. Treasury Note
6.00% due 08/31/97........ 23,058,880
5,000 U.S. Treasury Note
6.00% due 08/15/99........ 4,997,200
5,000 U.S. Treasury Note
6.375% due 05/15/99....... 5,040,550
22,050 U.S. Treasury Note
6.50% due 04/30/99........ 22,298,283
4,900 U.S. Treasury Note
6.50% due 08/31/01........ 4,945,668
3,000 U.S. Treasury Note
6.50% due 05/15/05........ 3,005,310
15,000 U.S. Treasury Note
6.75% due 04/30/00........ 15,264,450
3,200 U.S. Treasury Note
6.75% due 08/15/26........ 3,167,648
25,000 U.S. Treasury Note
6.875% due 08/31/99....... 25,495,500
5,000 U.S. Treasury Note
7.25% due 05/15/04........ 5,238,100
5,000 U.S. Treasury Note
7.25% due 08/15/04........ 5,239,500
7,000 U.S. Treasury Note
7.50% due 11/15/01........ 7,349,650
7,000 U.S. Treasury Note
7.50% due 02/15/05........ 7,448,980
20,150 U.S. Treasury Note
7.75% due 12/31/99........ 21,033,376
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
DEAN WITTER STRATEGIST FUND
PORTFOLIO OF INVESTMENTS January 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------
<S> <C> <C>
$ 8,500 U.S. Treasury Note
7.875% due 11/15/99....... $ 8,887,940
------------
TOTAL U.S. GOVERNMENT &
AGENCY OBLIGATIONS
(Identified Cost
$197,939,478)............. 197,161,530
------------
SHORT-TERM INVESTMENTS (5.7%)
U.S. GOVERNMENT AGENCY (a) (5.3%)
75,000 Federal Home Loan Mortgage
Corp.
5.26-5.48% due
02/03/97 - 02/19/97
(Amortized Cost
$74,901,678).............. 74,901,678
------------
REPURCHASE AGREEMENT (0.4%)
5,724 The Bank of New York 5.25%
due 02/03/97 (dated
01/31/97; proceeds
$5,726,256; collateralized
by $5,770,860 Federal Home
Loan Mortgage Association
6.25% due 11/10/99 valued
at $5,838,227) (Identified
Cost $5,723,752).......... 5,723,752
------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost
$80,625,430).............. 80,625,430
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
- -----------------------------------------------------------
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $1,202,085,395) (b)..98.9% $1,406,832,069
OTHER ASSETS IN EXCESS OF
LIABILITIES....................... 1.1
15,114,254
---- ---------------
NET ASSETS...................... 100.0%
$1,421,946,323
===== ===============
</TABLE>
- ---------------------
* 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 approximates identified
cost. The aggregate gross unrealized appreciation is $211,793,190 and the
aggregate gross unrealized depreciation is $7,046,516, resulting in net
unrealized appreciation of $204,746,674.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
January 31, 1997 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $1,202,085,395)...... $1,406,832,069
Receivable for:
Investments sold................... 22,179,630
Interest........................... 10,776,264
Shares of beneficial interest
sold.............................. 2,987,838
Dividends.......................... 552,093
Principal paydowns................. 12,698
Prepaid expenses and other assets...... 73,819
------------
TOTAL ASSETS....................... 1,443,414,411
------------
LIABILITIES:
Payable for:
Investments purchased.............. 18,651,999
Plan of distribution fee........... 1,047,236
Shares of beneficial interest
repurchased....................... 808,516
Investment management fee.......... 656,092
Accrued expenses and other payables.... 304,245
------------
TOTAL LIABILITIES.................. 21,468,088
------------
NET ASSETS:
Paid-in-capital........................ 1,194,579,660
Net unrealized appreciation............ 204,746,674
Accumulated undistributed net
investment income..................... 4,068,904
Accumulated undistributed net realized
gain.................................. 18,551,085
------------
NET ASSETS......................... $1,421,946,323
============
NET ASSET VALUE PER SHARE,
85,191,684 shares outstanding
(unlimited shares authorized of $.01
par value)............................ $16.69
============
STATEMENT OF OPERATIONS
For the six months ended January 31, 1997
(unaudited)
NET INVESTMENT INCOME:
INCOME
Interest............................... $ 22,817,556
Dividends.............................. 4,911,979
------------
TOTAL INCOME....................... 27,729,535
------------
EXPENSES
Plan of distribution fee............... 6,016,881
Investment management fee.............. 3,772,257
Transfer agent fees and expenses....... 590,197
Registration fees...................... 54,015
Custodian fees......................... 39,951
Shareholder reports and notices........ 39,182
Professional fees...................... 29,584
Trustees' fees and expenses............ 6,140
Other.................................. 5,980
------------
TOTAL EXPENSES..................... 10,554,187
------------
NET INVESTMENT INCOME.............. 17,175,348
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain...................... 46,887,807
Net change in unrealized
appreciation.......................... 118,412,831
------------
NET GAIN........................... 165,300,638
------------
NET INCREASE........................... $ 182,475,986
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 10
DEAN WITTER STRATEGIST FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JANUARY 31, 1997 JULY 31, 1996
- -------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................... $ 17,175,348 $ 21,424,282
Net realized gain................................... 46,887,807 97,968,604
Net change in unrealized appreciation............... 118,412,831 (3,107,509)
-------------- --------------
NET INCREASE.................................... 182,475,986 116,285,377
-------------- --------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income............................... (17,452,684) (21,021,721)
Net realized gain................................... (109,339,056) (70,591,947)
-------------- --------------
TOTAL........................................... (126,791,740) (91,613,668)
-------------- --------------
Net increase from transactions in shares of
beneficial interest................................ 106,957,304 357,037,738
-------------- --------------
NET INCREASE.................................... 162,641,550 381,709,447
NET ASSETS:
Beginning of period................................. 1,259,304,773 877,595,326
-------------- --------------
END OF PERIOD
(Including undistributed net investment income
of $4,068,904 and $4,346,240, respectively)..... $ 1,421,946,323 $1,259,304,773
=============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 11
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1997 (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'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, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (in
cases where securities are traded on more than one exchange; the securities are
valued on the exchange designated as the primary market pursuant to procedures
adopted by the Trustees); (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by Dean Witter InterCapital Inc. (the "Investment Manager") that sale
or bid prices are not reflective of a security's market value, portfolio
securities are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Trustees; (4)
certain of the Fund's portfolio securities may be valued by an outside pricing
service approved by the Trustees. The pricing service may utilize a matrix
system incorporating security quality, maturity and coupon as the evaluation
model parameters, and/or research and evaluations by its staff, including review
of broker-dealer market price quotations, if available, in determining what it
believes is the fair valuation of the portfolio securities valued by such
pricing service; and (5) short-term debt securities having a maturity date of
more than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by
<PAGE> 12
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1997 (unaudited) continued
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.
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 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 of daily net assets exceeding $1
billion but not exceeding $1.5 billion; and 0.475% to the portion of daily net
assets exceeding $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> 13
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1997 (unaudited) 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 the investors upon redemption of
shares, if for any reason the Plan is terminated, the Trustees will consider at
the time the manner in which to treat such expenses. The Distributor has advised
the Fund that such excess amounts, including carrying charges, totaled
$37,206,400 at January 31, 1997.
The Distributor has informed the Fund that for the six months ended January 31,
1997, it received approximately $825,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares.
<PAGE> 14
DEAN WITTER STRATEGIST FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1997 (unaudited) continued
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended January 31, 1997 aggregated
$937,420,719 and $892,680,557, respectively. Included in the aforementioned are
purchases and sales/prepayments of U.S. Government securities of $78,691,375 and
$167,972,128, respectively.
For the same period, the Fund incurred brokerage commissions with DWR of
approximately $29,300 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 January 31, 1997, the Fund had
transfer agent fees and expenses payable of approximately $115,600.
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. At January 31, 1997, the Fund had an accrued pension liability of
$88,462 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
JANUARY 31, 1997
----------------------------- FOR THE YEAR ENDED
(unaudited) JULY 31, 1996
-----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold...................................................... 10,937,149 $ 184,536,765 15,621,003 $ 252,119,338
Reinvestment of dividends and distributions............... 7,090,040 114,806,533 5,419,616 83,797,500
Shares issued in connection with the acquisition of Dean
Witter Managed Assets Trust.............................. -- -- 20,952,000 322,593,266
----------- -------------- ------------ ------------
18,027,189 299,343,298 41,992,619 658,510,104
Repurchased............................................... (11,419,419) (192,385,994) (18,698,191) (301,472,366)
----------- -------------- ------------ ------------
Net increase.............................................. 6,607,770 $ 106,957,304 23,294,428 $ 357,037,738
=========== ============== ============ ============
</TABLE>
6. FEDERAL INCOME TAX STATUS
At July 31, 1996, the Fund had temporary book/tax differences which were
primarily attributable to capital loss deferrals on wash sales.
<PAGE> 15
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 FOR THE YEAR ENDED JULY 31
MONTHS ENDED ----------------------------------
JANUARY 31, 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................................ $ 16.02 $ 15.87 $14.43
------ ------ ------
Net investment income............................................... 0.21 0.30 0.34
Net realized and unrealized gain.................................... 2.08 1.43 1.86
------ ------ ------
Total from investment operations.................................... 2.29 1.73 2.20
------ ------ ------
Less dividends and distributions from:
Net investment income............................................ (0.22) (0.32) (0.29)
Net realized gain................................................ (1.40) (1.26) (0.47)
------ ------ ------
Total dividends and distributions................................... (1.62) (1.58) (0.76)
------ ------ ------
Net asset value, end of period...................................... $ 16.69 $ 16.02 $15.87
====== ====== ======
TOTAL INVESTMENT RETURN+............................................ 14.57%(1) 11.47% 16.05%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................................ 1.55%(2) 1.58% 1.63%
Net investment income............................................... 2.53%(2) 1.88% 2.35%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions.............................. $1,422 $1,259 $878
Portfolio turnover rate............................................. 72%(1) 174% 179%
Average commission rate paid........................................ $0.0585 $0.0597 --
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JULY 31
-------------------------------------------------
1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................................ $ 14.59 $ 14.39 $13.09
------ ------ ------
Net investment income............................................... 0.30 0.26 0.27
Net realized and unrealized gain.................................... 0.22 0.81 1.27
------ ------ ------
Total from investment operations.................................... 0.52 1.07 1.54
------ ------ ------
Less dividends and distributions from:
Net investment income............................................ (0.26) (0.31) (0.24)
Net realized gain................................................ (0.42) (0.56) --
------ ------ ------
Total dividends and distributions................................... (0.68) (0.87) (0.24)
------ ------ ------
Net asset value, end of period...................................... $ 14.43 $ 14.59 $14.39
====== ====== ======
TOTAL INVESTMENT RETURN+............................................ 3.53% 7.59% 11.88%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................................ 1.62% 1.62% 1.63%
Net investment income............................................... 2.03% 1.90% 2.19%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions.............................. $ 806 $ 783 $441
Portfolio turnover rate............................................. 90% 98% 79%
Average commission rate paid........................................ -- -- --
</TABLE>
- ---------------------
+ 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.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 16
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
Barry Fink
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
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.
DEAN WITTER
STRATEGIST FUND
[PHOTO]
SEMIANNUAL REPORT
JANUARY 31, 1997
