<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST TWO WORLD TRADE CENTER, NEW
YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1996
DEAR SHAREHOLDER:
During the Fund's fiscal year, gold pierced the $400 per ounce price level in
January 1996 for the first time since August 1993. It continued to advance to a
February peak of $414.70, a level not seen since August 1990. The price then
steadily declined, with the exception of a brief rally in August, to a September
low of $377.70. This decline was attributed to the possibility that partial
funding for a debt relief program for underdeveloped nations may come from gold
sales by the International Monetary Fund. However, the proposal was subsequently
shelved and, even if approved, such a sale would be unlikely to occur before the
second half of 1997 or 1998. The price of gold steadied in October and closed
the fiscal year at $378.10.
In the first half of 1996, the gap between natural supply (mine production and
scrap) and fabrication demand narrowed. According to the Gold Fields Mineral
Service Report, total gold supply outpaced industrial and jewelry demand by 48.3
to 47.9 million troy ounces. For the year, however, demand is expected to
marginally exceed supply, 96.3 versus 95.9 million ounces, for the first time
since 1993. Next year, the demand/supply balance is expected to improve further
- -- demand growth exceeding supply growth, 3.6% to 2.3%.
Official bullion sales by central banks are expected to rise by two million
ounces to eight million ounces this year and drop back to six million in 1997.
Therefore, the surplus available for investment is expected to decline
significantly from its 1995 level of 10.7 million ounces to 7.6 million ounces
for 1996 and down to 4.3 million ounces in 1997. This projected improvement in
the demand/supply balance should provide support for increases in the price of
gold in the year ahead.
FUND PERFORMANCE
For the year ended October 31, 1996, Dean Witter Precious Metals and Minerals
Trust posted a total return of 15.93 percent, including a long-term capital gain
distribution of $.19 per share payable on
<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1996, CONTINUED
December 29, 1995 to shareholders of record as of December 21, 1995. Over the
same period, the Lipper Gold-Oriented Funds Index produced a total return of
18.76 percent and the Standard & Poor's 500 Composite Stock Index (S&P 500)
produced a total return of 24.05 percent. The accompanying chart illustrates the
performance of a $10,000 investment in the Fund versus the performance of
similar hypothetical investments in the Lipper Gold-Oriented Funds Index and the
S&P 500.
THE PORTFOLIO
[GRAPHIC]
Common stock shares of North American
and Australian gold producers held in
the Fund's portfolio reflected the
changes in the price of gold. Gold
stocks in general and the Fund in
particular had strong gains starting in
late October of 1995 into late May of
1996. While bullion price weakness
caused a sell-off in the shares of
precious metal companies going into the
summer and fall, prices seem to have
now stabilized. The Fund has emphasized
companies with growing production and
reserves, and has increased exposure to
exploration companies and smaller
producers, including Getchell Gold
Corp., Crown Resources Corp., Golden
Star Resource Ltd., and Geomaque
Explorations Ltd. Other key holdings
include Barrick Gold Corp., Newmont
Mining Corp., and Placer Dome Inc.
GOING FORWARD
[GRAPHIC]
The Fund is positioned to benefit from
the expected rise in gold prices as
demand continues to grow, particularly
in the months ahead with the
traditionally strong holiday season
approaching. Moreover, the Fund's
increased exposure to new, emerging
producers may enhance returns as new
discoveries are made and mines are
brought into production. Whole new
areas of the world, including the South
<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1996, CONTINUED
Pacific (Malaysia, Indonesia and the Philippines), South America (Chile, Peru
and Brazil), and East and West Africa (Kenya, Tanzania and Ghana), are in the
very early stages of exploration, discovery and production. As discoveries are
made, and again when production commences, valuations tend to be enhanced,
sometimes significantly. The stocks that should do well are those companies that
show strong growth in production and reserves. These companies generally have
the management experience as well as the geological and financial resources to
continue building shareholder value well into the future. We also anticipate
that they may insulate the Fund somewhat from fluctuations in the price of gold.
We appreciate your support of Dean Witter Precious Metals and Minerals Trust and
look forward to continuing to serve your investment objectives.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (88.9%)
AUSTRALIA (13.7%)
GOLD
400,000 Acacia Resources Limited*............ $ 753,508
165,000 Great Central Mines.................. 500,188
400,000 Menzies Gold NL*..................... 189,960
160,000 Plutonic Resources Ltd............... 759,840
--------------
2,203,496
--------------
GOLD MINING
400,000 Delta Gold*.......................... 759,840
15,000 Lihir Gold Ltd. (ADR)*............... 528,750
325,949 Mount Edon Gold Mines Ltd.*.......... 420,522
240,000 Newcrest Mining Ltd.................. 828,226
328,293 Normandy Poseidon Ltd................ 446,932
500,000 Placer Pacific Ltd................... 569,880
431,303 Ross Mining N.L...................... 426,720
105,000 Sons of Gwalia Ltd................... 677,326
650,000 St. Barbara Mines Ltd.*.............. 370,422
125,375 Western Mining Corp. Holdings Ltd.... 786,928
--------------
5,815,546
--------------
METALS & MINING
200,000 Pasminco Ltd......................... 310,268
--------------
TOTAL AUSTRALIA...................... 8,329,310
--------------
CANADA (40.0%)
GOLD
120,000 Bema Gold Corporation*............... 722,027
5,000 Bro-X Minerals Ltd.*................. 14,575
125,000 Geomaque Explorations Ltd.*.......... 312,991
50,000 Kazakhstan Minerals Corp.*........... 337,500
40,000 Nevsun Resources Ltd.*............... 304,956
15,000 Southwestern Gold Corp.*............. 249,458
120,000 Triton Mining Corp.*................. 417,072
200,000 Vengold Inc.*........................ 261,604
65,000 Viceroy Resource Corp.*.............. 318,223
350,000 William Resources, Inc.*............. 423,798
--------------
3,362,204
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
GOLD MINING
100,000 Agnico-Eagle Mines Ltd............... $ 1,400,000
100,000 Barrick Gold Corp.................... 2,612,500
50,000 Bre-X Minerals Ltd.*................. 837,133
130,000 Cambior, Inc......................... 1,818,536
170,200 Dayton Mining Corp.*................. 1,088,639
100,000 Echo Bay Mines Ltd................... 781,250
75,000 Eldorado Corporation Ltd.*........... 482,099
110,000 Goldcorp, Inc.*...................... 1,018,613
46,600 Golden Knight Resources, Inc.*....... 267,950
100,000 Indomin Resources Ltd.*.............. 362,508
150,000 Kinross Gold Corp.*.................. 1,086,012
95,000 Miramar Mining Corp.*................ 468,644
100,000 Pegasus Gold, Inc.*.................. 1,000,000
100,000 Placer Dome, Inc..................... 2,400,000
125,000 Prime Resources Group, Inc........... 920,287
120,000 Royal Oak Mines, Inc.*............... 450,000
55,000 Teck Corp. (B Shares)................ 1,161,336
200,000 TVX Gold, Inc.*...................... 1,500,000
--------------
19,655,507
--------------
METALS & MINING
30,000 Aber Resources Ltd*.................. 468,645
65,000 Greenstone Resources Ltd.*........... 825,921
--------------
1,294,566
--------------
TOTAL CANADA......................... 24,312,277
--------------
PERU (0.6%)
GOLD
20,000 Compania de Minas Buenaventura S.A.
(ADR)*............................... 335,000
--------------
UNITED KINGDOM (3.4%)
GOLD MINING
86,537 Ashanti Goldfields Ltd............... 1,449,495
16,537 AGSM Preference Share................ 53,580
--------------
1,503,075
--------------
METALS & MINING
10,000 RTZ Corp. PLC (ADR).................. 647,500
--------------
TOTAL UNITED KINGDOM................. 2,150,575
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
UNITED STATES (31.2%)
GOLD
25,000 Crown Resource Corp.*................ $ 146,875
130,000 Meridian Gold Inc.*.................. 568,750
--------------
715,625
--------------
GOLD MINING
100,000 Amax Gold, Inc.*..................... 550,000
59,200 Battle Mountain Gold Co.............. 453,547
170,000 Battle Mountain Gold Co. (Class A)... 1,296,250
125,000 Canyon Resources Corp.*.............. 320,312
70,000 Freeport-McMoran Copper & Gold, Inc.
(Class A)............................ 2,030,000
65,000 Getchell Gold Corp.*................. 2,892,500
75,000 Golden Star Resources Ltd.*.......... 1,396,875
100,000 Homestake Mining Co.................. 1,425,000
25,000 Newmont Gold Co...................... 1,153,125
50,000 Newmont Mining Corp.................. 2,312,500
100,000 Santa Fe Pacific Gold Corp........... 1,187,500
--------------
15,017,609
--------------
PLATINUM & PALLADIUM
50,000 Stillwater Mining Co.*............... 825,000
--------------
SILVER
90,000 Coeur D'Alene Mines Corp............. 1,316,250
195,000 Hecla Mining Co.*.................... 1,096,875
--------------
2,413,125
--------------
TOTAL UNITED STATES.................. 18,971,359
--------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $52,949,509)........ 54,098,521
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS (5.5%)
$ 1,000 U.S. Treasury Bond 6.25%
due 08/15/23......................... $ 939,330
900 U.S. Treasury Note 7.50%
due 05/15/02......................... 957,843
825 U.S. Treasury Note 7.875%
due 11/15/99......................... 869,195
500 U.S. Treasury Note 8.75%
due 08/15/00......................... 545,835
--------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $3,127,641)......... 3,312,203
--------------
SHORT-TERM INVESTMENTS (a) (7.2%)
U.S. GOVERNMENT AGENCY
4,400 Federal Home Loan Mortgage Corp.
5.17% to 5.53% due 11/01/96 to
11/06/96 (Amortized Cost
$4,398,564).......................... 4,398,564
--------------
TOTAL INVESTMENTS
(IDENTIFIED COST $60,475,714)
(B).......................... 101.6% 61,809,288
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS............. (1.6) (968,046)
----- -----------
NET ASSETS................... 100.0% $60,841,242
----- -----------
----- -----------
<FN>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Securities were purchased on a discount basis. The interest rates shown
reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $62,057,491; the
aggregate gross unrealized appreciation is $5,348,396 and the aggregate
gross unrealized depreciation is $5,596,599, resulting in a net unrealized
depreciation of $248,203.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $60,475,714)............................. $61,809,288
Cash........................................................ 50,963
Receivable for:
Shares of beneficial interest sold...................... 185,730
Interest................................................ 83,715
Dividends............................................... 34,065
Prepaid expenses............................................ 23,502
-----------
TOTAL ASSETS........................................... 62,187,263
-----------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased............... 1,175,185
Plan of distribution fee................................ 52,622
Investment management fee............................... 42,097
Accrued expenses and other payables......................... 76,117
-----------
TOTAL LIABILITIES...................................... 1,346,021
-----------
NET ASSETS:
Paid-in-capital............................................. 56,573,350
Net unrealized appreciation................................. 1,333,584
Accumulated net investment loss............................. (567,810)
Accumulated undistributed net realized gain................. 3,502,118
-----------
NET ASSETS............................................. $60,841,242
-----------
-----------
NET ASSET VALUE PER SHARE,
5,460,908 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$11.14
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $37,068 foreign withholding tax).......... $ 473,856
Interest.................................................... 459,717
----------
TOTAL INCOME........................................... 933,573
----------
EXPENSES
Plan of distribution fee.................................... 654,543
Investment management fee................................... 523,635
Transfer agent fees and expenses............................ 95,140
Professional fees........................................... 55,762
Shareholder reports and notices............................. 48,118
Registration fees........................................... 47,526
Custodian fees.............................................. 34,337
Trustees' fees and expenses................................. 21,271
Other....................................................... 5,678
----------
TOTAL EXPENSES......................................... 1,486,010
----------
NET INVESTMENT LOSS.................................... (552,437)
----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain (loss) on:
Investments............................................. 3,867,377
Foreign exchange transactions........................... (6,284)
----------
NET GAIN............................................... 3,861,093
Net change in unrealized depreciation on investments........ 4,900,602
----------
NET GAIN............................................... 8,761,695
----------
NET INCREASE................................................ $8,209,258
----------
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss......................................... $ (552,437) $ (451,320)
Net realized gain........................................... 3,861,093 1,085,550
Net change in unrealized appreciation/depreciation.......... 4,900,602 (9,565,932)
---------------- ----------------
NET INCREASE (DECREASE)................................ 8,209,258 (8,931,702)
Distributions from net realized gain........................ (1,036,713) (1,383,398)
Net decrease from transactions in shares of beneficial
interest.................................................. (1,779,587) (7,680,413)
---------------- ----------------
NET INCREASE (DECREASE)................................ 5,392,958 (17,995,513)
NET ASSETS:
Beginning of period......................................... 55,448,284 73,443,797
---------------- ----------------
END OF PERIOD
(INCLUDING ACCUMULATED NET INVESTMENT LOSS OF $567,810
AND $30,895, RESPECTIVELY).............................. $60,841,242 $ 55,448,284
---------------- ----------------
---------------- ----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1996
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter Precious Metals and Minerals Trust (the "Fund") is registered under
the Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund's investment objective is
long-term capital appreciation. The Fund will attempt to achieve its investment
objective by investing principally in the securities of foreign and domestic
companies engaged in the exploration, mining, fabrication, processing,
distribution or trading of precious metals and minerals or in companies engaged
in financing, managing, controlling or operating companies engaged in these
activities and also by investing a portion of its assets in gold, silver,
platinum and palladium bullion and coins. The Fund was organized as a
Massachusetts business trust on December 28, 1989 and commenced operations on
August 6, 1990.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect 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 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 the Investment Manager that sale
and bid prices are not reflective of a security's market value, portfolio
securities are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Trustees
(valuation of debt securities for which market quotations are not readily
available may be based upon current market prices of securities which are
comparable in coupon, rating and maturity or an appropriate matrix utilizing
similar factors); and (4) 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.
<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1996, CONTINUED
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.
Dividend income and other distributions are recorded on the ex-dividend date
except for certain dividends from foreign securities which are recorded as soon
as the Fund is informed after the ex-dividend date. Discounts are accreted over
the life of the respective securities. Interest income is accrued daily.
C. FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities, other assets and liabilities and forward contracts are
translated at the exchange rates prevailing at the end of the period; and (2)
purchases, sales, income and expenses are translated at the exchange rates
prevailing on the respective dates of such transactions. The resultant exchange
gains and losses are included in the Statement of Operations as realized and
unrealized gain/loss on foreign exchange transactions. Pursuant to U.S. Federal
income tax regulations, certain foreign exchange gains/losses included in
realized and unrealized gain/loss are included in or are a reduction of ordinary
income for federal income tax purposes. The Fund does not isolate that portion
of the results of operations arising as a result of changes in the foreign
exchange rates from the changes in the market prices of the securities.
D. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward foreign
currency contracts which are valued daily at the appropriate exchange rates. The
resultant unrealized exchange gains and losses are included in the Statement of
Operations as unrealized foreign currency gain or loss and in the Statement of
Assets and Liabilities as part of the related foreign currency denominated asset
or liability. The Fund records realized gains or losses on delivery of the
currency or at the time the forward contract is extinguished (compensated) by
entering into a closing transaction prior to delivery.
E. 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.
F. 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 that these
<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1996, CONTINUED
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 Dean Witter
InterCapital (the "Investment Manager") a management fee, accrued daily and
payable monthly, by applying the annual rate of 0.80% to the net assets of the
Fund determined as of the close of each business day.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act pursuant
to which the Fund pays the Distributor compensation, accrued daily and payable
monthly, at an annual rate of 1.0% of the lesser of: (a) the average daily
aggregate gross sales of the Fund's shares since the Fund's inception (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 inception 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. 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
<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1996, CONTINUED
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.
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 $3,103,792 at
October 31, 1996.
Provided that the Plan continues in effect, any cumulative expenses incurred by
the Distributor but not yet recovered, may be recovered through future
distribution fees from the Fund and contingent deferred sales charges from the
Fund's shareholders.
The Distributor has informed the Fund that for the year ended October 31, 1996,
it received approximately $163,000 in contingent deferred sales charges from
certain redemptions of the Fund's shares.
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 October 31, 1996 aggregated
$27,676,555 and $31,659,682, respectively. Included in the aforementioned are
purchases and sales of U.S. Government securities of $1,449,688 and $1,556,563,
respectively.
For the year ended October 31, 1996, the Fund incurred brokerage commissions of
$30,640 with DWR for portfolio 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 October 31, 1996, the Fund had
transfer agent fees and expenses payable of approximately $11,000.
<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1996, CONTINUED
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sold............................................................. 11,549,105 $136,343,744 10,016,172 $104,853,425
Reinvestment of distributions.................................... 90,619 963,279 130,623 1,296,062
------------ ------------ ------------ ------------
11,639,724 137,307,023 10,146,795 106,149,487
Repurchased...................................................... (11,855,110) (139,086,610) (10,882,589) (113,829,900)
------------ ------------ ------------ ------------
Net decrease..................................................... (215,386) $ (1,779,587) (735,794) $ (7,680,413)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
6. FEDERAL INCOME TAX STATUS
As of October 31, 1996, the Fund had temporary book/tax differences attributable
to capital loss deferrals on wash sales and income from the mark-to-market of
passive foreign investment companies.
To reflect reclassifications arising from permanent book/tax differences for the
year ended October 31, 1996, paid-in-capital was charged $93,512, accumulated
undistributed net realized gain was credited $77,990 and accumulated net
investment loss was credited $15,522.
7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
The Fund may enter into forward foreign currency contracts ("forward contracts")
to facilitate settlement of foreign currency denominated portfolio transactions
or to manage foreign currency exposure associated with foreign currency
denominated securities.
At October 31, 1996, there were no outstanding forward contracts.
Forward contracts involve elements of market risk in excess of the amounts
reflected in the Statement of Assets and Liabilities. The Fund bears the risk of
an unfavorable change in the foreign exchange rates underlying the forward
contracts. Risks may also arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their contracts.
<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
AUGUST 6,
1990*
FOR THE YEAR ENDED OCTOBER 31 THROUGH
------------------------------------------------------------------ OCTOBER 31,
1996 1995 1994 1993 1992 1991 1990
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period....................... $ 9.77 $ 11.45 $ 10.80 $ 7.87 $ 8.59 $ 8.57 $ 10.00
--------- --------- --------- --------- --------- ----- ------
Net investment income
(loss)....................... (0.10) (0.08) (0.06) (0.04) (0.05) 0.06 0.05
Net realized and unrealized
gain (loss).................. 1.66 (1.38) 0.73 2.97 (0.62) 0.03 (1.48)
--------- --------- --------- --------- --------- ----- ------
Total from investment
operations................... 1.56 (1.46) 0.67 2.93 (0.67) 0.09 (1.43)
--------- --------- --------- --------- --------- ----- ------
Less dividends and
distributions from:
Net investment income...... -- -- -- -- (0.04) (0.07) --
Net realized gain.......... (0.19) (0.22) (0.02) -- (0.01) -- --
--------- --------- --------- --------- --------- ----- ------
Total dividends and
distributions................ (0.19) (0.22) (0.02) -- (0.05) (0.07) 0.00
--------- --------- --------- --------- --------- ----- ------
Net asset value, end of
period....................... $ 11.14 $ 9.77 $ 11.45 $ 10.80 $ 7.87 $ 8.59 $ 8.57
--------- --------- --------- --------- --------- ----- ------
--------- --------- --------- --------- --------- ----- ------
TOTAL INVESTMENT RETURN+...... 15.93% (12.78)% 6.18% 37.23% (7.97)% 1.23% (14.30)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses...................... 2.27% 2.29% 2.28% 2.79% 3.30% 2.18%(4) 1.49%(2)(3)
Net investment income
(loss)....................... (0.84)% (0.70)% (0.87)% (1.07)% (0.74)% 0.93%(4) 2.99%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.................... $60,841 $55,448 $73,444 $45,204 $15,135 $11,246 $5,843
Portfolio turnover rate....... 46% 23% 46% 25% 9% 11% --
Average commission rate
paid......................... $0.0217 -- -- -- -- -- --
<FN>
- ---------------------
* Commencement of operations.
+ Does not reflect the deduction of sales charges. 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 expenses that were assumed or waived by the
Investment Manager (after application of the Fund's expense limitation),
the above annualized expense and net investment income ratios would have
been 3.50% and 0.98%, respectively.
(4) If the Fund had borne all expenses that were assumed or waived by the
Investment Manager (after application of the Fund's expense limitation),
the above annualized expense and net investment income ratios would have
been 3.50% and (0.39)%, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER PRECIOUS METALS AND MINERALS TRUST
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 Precious Metals and
Minerals Trust (the "Fund") at October 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 six years
in the period then ended and for the period August 6, 1990 (commencement of
operations) through October 31, 1990, 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 October 31, 1996 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
DECEMBER 13, 1996
- --------------------------------------------------------------------------------
1996 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended October 31, 1996, the Fund paid to
shareholders $0.19 per share from long-term capital gains.
<PAGE>
DEAN WITTER PRECIOUS METALS
GROWTH OF $10,000
DATE TOTAL S&P LIPPER IX
-----------------------------------------------------------------
August 6, 1990 $10,000 $10,000 $10,000
October 31, 1990 $ 8,570 $ 9,179 $ 8,663
October 31, 1991 $ 8,675 $12,251 $ 9,060
October 31, 1992 $ 7,984 $13,469 $ 7,436
October 31, 1993 $10,956 $15,476 $11,871
October 31, 1994 $11,634 $16,072 $13,717
October 31, 1995 $10,147 $20,313 $11,158
October 31, 1996 $11,764 (3) $25,198 $13,251
-----------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS LIFE OF FUND
-------------------------------------------------------
15.93 (1) 6.28 (1) 2.64 (1)
10.93 (2) 5.96 (2) 2.64 (2)
-------------------------------------------------------
-------------------------------------------------------
_____Fund _____S&P 500 (4) _____LIPPER IX (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 October 31, 1996.
(4) The Standard & Poor's 500 Composite Stock Price Index (S&P 500) is a broad-
based index, the performance of which is based on the average performance
of 500 widely held common stocks. The 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 Lipper Gold-Oriented Funds Index is an equally-weighted performance
index of the largest- qualifying funds (based on net assets) in the Lipper
Gold-Oriented Funds objective. The Index, which is adjusted for capital
gains distributions and income dividends, is unmanaged and should not be
considered an investment. There are currently 10 funds represented in this
Index.
