<PAGE>
DEAN WITTER MID-CAP GROWTH FUND TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS NOVEMBER 30, 1995
DEAR SHAREHOLDER:
Since Dean Witter Mid-Cap Growth Fund commenced operations in the fall of 1994,
the investing environment has been quite favorable. As we noted in the Fund's
annual report to shareholders last May, a little more than a year ago the stock
and bond markets were bottoming as investors became concerned that an
excessively strong economy would spur inflationary pressures and send interest
rates higher. However, around the time the Fund was introduced investors became
convinced that the economy was moderating and growth stocks and bonds quickly
surged ahead.
Dean Witter Mid-Cap Growth Fund actively participated in this environment,
posting a total return of 29.05 percent for the six-month period ended November
30, 1995, versus 14.87 percent for the Standard & Poor's 500 Composite Stock
Price Index (S&P 500) and 16.15 percent for the Standard & Poor's MidCap Index.
For the trailing 12 months ended November 30, 1995, the Fund's total return was
40.55 percent, compared to 36.93 percent for the S&P 500 and 32.48 percent for
the S&P MidCap Index.
POSITIONING THE FUND'S PORTFOLIO
The Fund's industry selection focus has proven to be effective. At the beginning
of 1995, the portfolio manager took a top-down look at the year ahead and
concluded that while economic growth was likely to slow (allowing interest rates
to decline), the economy would remain vibrant enough to support investment and
capital spending for most of the year. As a result, for the first three quarters
of the year, the Fund was heavily tilted toward technology with a peak weighting
of 40 to 45 percent. Financial stocks were also a major theme in the portfolio
given the portfolio manager's outlook for modest economic growth and benign
inflation and interest rates. For much of the past year, financial stocks have
represented 20 percent of the Fund's net assets. Over the period under review,
the technology and financial sectors provided the strongest returns in the
market and thus played a major role in the Fund's performance.
<PAGE>
DEAN WITTER MID-CAP GROWTH FUND
LETTER TO THE SHAREHOLDERS NOVEMBER 30, 1995, CONTINUED
In September evidence began to mount that suggested that the economy was further
decelerating and entering the latter stages of the economic expansion. At that
time the portfolio manager began to pare back the Fund's technology holdings
because capital spending tends to drop off late in the economic cycle. By the
end of November technology represented less than 15 percent of net assets.
Significant holdings in this sector include Cisco Systems, Inc. U.S. Robotics
Corp., FORE Systems, Inc. and Cascade Communications Corp.
While the Fund's technology exposure was decreasing, the interest-rate sensitive
portion of the portfolio was being increased because that sector historically
has appreciated in the face of sluggish economic growth and falling interest
rates. By the end of November, interest-rate sensitive holdings represented 31
percent of the Fund and included positions in Green Tree Financial Corp. and
SunAmerica Inc. Fifteen percent of the interest-rate sensitive allocation was
invested in long-term U.S. Treasury securities as these instruments are
particularly sensitive to interest rates, but hold no credit risk, as they are
backed by the U.S. government.
Since credit delinquencies at this stage of the business cycle tend to rise the
exposure to many consumer lenders was reduced. Equity holdings in this area
include Exel, Ltd., TIG Holdings, Inc. and UJP Financial Corp. The portfolio's
commitment to the health-care industry was expanded to 14 percent because this
sector has little economic sensitivity. Names here include Amgen Inc., Biogen
Inc., Boston Scientific Corp. and Healthsource, Inc. Early-cycle consumer
cyclicals that typically outperform at this juncture, such as homebuilders,
retail drugs and specialty retail have been added to the portfolio and as of
November 30, 1995, also represented approximately 14 percent of the Fund's net
assets. Issues held in this sector include Centex Corp., Clayton Homes Inc.,
Eckerd Corp. and Estee Lauder Companies (Class A). Approximately eight percent
of the Fund was invested in steady growth consumer/business services companies
such as DST Systems, Inc. and First Data Corp. Capital goods represented five
percent of the Fund with such holdings as Loral Corp. (aerospace) and Pioneer
Hi-Bred International, Inc. and Potash Corp. of Saskatchewan, Inc.
(agriculture).
WHY MID-CAP STOCKS?
The mid-cap sector continues to prove itself an attractive investment option
relative to larger issues. As we have said in the past, over the last 70 years,
these stocks have significantly outperformed large-capitalization stocks given
their higher inherent earnings-growth rates. The more sluggish corporate
earnings environment we foresee going forward should further highlight the
earnings
<PAGE>
DEAN WITTER MID-CAP GROWTH FUND
LETTER TO THE SHAREHOLDERS NOVEMBER 30, 1995, CONTINUED
advantage of mid caps versus large caps. Also, as market leadership narrows, the
experience and established track records of mid-cap companies relative to more
untried, less-dominant smaller companies will become all the more valuable.
LOOKING AHEAD
We expect the economy to experience a protracted economic slowdown extending
into the latter part of 1996 and possibly into 1997. Falling interest rates,
expanding price/earnings ratios and modest earnings growth on the order of five
percent should continue to drive the broader markets considerably higher.
However, we expect the market to narrow as fewer and fewer companies will be
able to sustain their growth rates. For those companies that can sustain
earnings growth rates of 10 percent or more, price/earnings ratios should
continue to expand. Therefore, industry and company selection will become
increasingly critical in terms of portfolio management.
In the face of a narrowing market, we will continue to focus on economic and
industry trends and look for evidence of fundamental strength or weakness. In
addition, bottom-up analysis -- the examination of outside and internal earnings
and valuation screens -- remains a hallmark of the portfolio manager's strategy.
Given our economic outlook, we believe the Fund is correctly positioned in those
industries that can best deliver their earnings potential despite a slowing
economy.
We appreciate your support of Dean Witter Mid-Cap Growth Fund and look forward
to continuing to serve your investment needs and objectives.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER MID-CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (75.3%)
AGRICULTURE (3.4%)
10,000 Arcadian Corp....................... $ 207,500
20,000 IMC Global, Inc..................... 1,547,500
45,000 Pioneer Hi-Bred International,
Inc................................. 2,576,250
35,000 Potash Corp. of Saskatchewan,
Inc................................. 2,419,375
---------------
6,750,625
---------------
BANKS (3.6%)
27,000 Bank of Boston Corp................. 1,252,125
20,000 Baybanks, Inc....................... 1,655,000
15,000 Crestar Financial Corp.............. 915,000
37,000 Mercantile Bancorporation, Inc...... 1,697,375
50,000 UJP Financial Corp.................. 1,675,000
---------------
7,194,500
---------------
BIOTECHNOLOGY (2.4%)
26,000 Amgen Inc.*......................... 1,290,250
28,000 Biochem Pharma, Inc.*............... 1,078,000
27,000 Biogen Inc.*........................ 1,471,500
10,000 Cephalon Inc.*...................... 277,500
7,000 Genzyme Corp.*...................... 456,750
10,000 Gilead Sciences, Inc.*.............. 257,500
---------------
4,831,500
---------------
CABLE/CELLULAR (0.4%)
15,000 Glenayre Technologies, Inc.*........ 858,750
---------------
CAPITAL EQUIPMENT (1.2%)
67,500 Loral Corp.......................... 2,286,563
---------------
COMMUNICATIONS - EQUIPMENT & SOFTWARE (3.3%)
20,000 3Com Corp.*......................... 915,000
30,000 Gandalf Technologies Inc.*.......... 510,000
20,000 Picturetel Corp.*................... 780,000
35,000 Quarterdeck Corp.*.................. 1,115,625
20,000 Silicon Graphics, Inc.*............. 730,000
15,000 Sun Microsystems, Inc.*............. 1,261,875
40,000 WorldCom, Inc.*..................... 1,295,000
---------------
6,607,500
---------------
COMPUTER SOFTWARE (1.5%)
10,000 Business Objects S.A. (ADR)
(France)*........................... 487,500
23,200 Informix Corp.*..................... 640,900
12,500 Intuit, Inc.*....................... 1,050,000
21,200 Peoplesoft, Inc.*................... 885,100
---------------
3,063,500
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
CONSUMER BUSINESS SERVICES (4.1%)
40,000 Accustaff, Inc.*.................... $ 1,180,000
40,000 Alternative Resources Corp.*........ 1,160,000
21,000 Computer Sciences Corp.*............ 1,527,750
39,400 DST Systems, Inc.*.................. 1,137,675
28,718 First Data Corp..................... 2,038,978
20,000 Service Corp. International......... 812,500
15,000 Transaction Systems Architects, Inc.
(Class A)*.......................... 408,750
---------------
8,265,653
---------------
CONSUMER PRODUCTS (4.8%)
12,500 Boston Beer Company, Inc. (Class
A)*................................. 321,875
25,000 Clorox, Co.......................... 1,893,750
70,000 Coca-Cola Enterprises, Inc.......... 2,030,000
55,000 Estee Lauder Companies (Class A)*... 2,000,625
30,000 Mondavi (Robert) Corp. (The) (Class
A)*................................. 952,500
35,000 Oakley, Inc.*....................... 1,120,000
5,000 Staples, Inc.*...................... 127,500
20,000 Tambrands, Inc...................... 1,042,500
---------------
9,488,750
---------------
ENERGY (1.3%)
50,000 Apache Corp......................... 1,331,250
64,000 Enron Oil & Gas Co.................. 1,344,000
---------------
2,675,250
---------------
ENTERTAINMENT (3.0%)
45,000 CUC International, Inc.*............ 1,710,000
35,000 Hollywood Entertainment Corp.*...... 564,375
50,000 Macromedia, Inc.*................... 2,318,750
2,000 Pixar, Inc.*........................ 81,500
10,000 Polygram NV (ADR) (Netherlands)..... 600,000
10,000 Scholastic Corp.*................... 687,500
---------------
5,962,125
---------------
FINANCIAL - MISCELLANEOUS (7.0%)
55,000 Ahmanson (H.F.) & Co................ 1,471,250
70,000 Bear Stearns Companies, Inc......... 1,522,500
100,000 Countrywide Credit Industries,
Inc................................. 2,200,000
4,000 Donaldson, Lufkin & Jenrette,
Inc.*............................... 133,000
15,000 Federal National Mortgage
Association......................... 1,642,500
25,000 Golden West Financial Corp.......... 1,278,125
60,000 Great Western Financial Corp........ 1,530,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER MID-CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
30,000 Green Tree Financial Corp........... $ 847,500
12,000 MGIC Investment Corp................ 667,500
25,000 Morgan Stanley Group, Inc........... 2,156,250
21,000 Washington Federal, Inc............. 506,625
---------------
13,955,250
---------------
HEALTHCARE PRODUCTS & SERVICES (6.8%)
20,000 Becton, Dickinson & Co.............. 1,395,000
12,000 Cerner Corp.*....................... 315,000
20,000 Compdent Corp.*..................... 685,000
20,000 HBO & Co............................ 1,495,000
41,500 Healthsource, Inc.*................. 2,593,750
40,000 Healthsouth Rehabilitation Corp.*... 1,210,000
15,000 Medic Computer Systems, Inc.*....... 948,750
8,000 Omnicare, Inc....................... 302,000
3,000 Pacificare Health Systems, Inc.
(Class A)*.......................... 252,750
21,000 Pacificare Health Systems, Inc.
(Class B)*.......................... 1,811,250
30,000 Quintiles Transnational Corp.*...... 1,185,000
23,600 Shared Medical Systems Corp......... 1,014,800
10,000 United Dental Care, Inc.*........... 335,000
---------------
13,543,300
---------------
HOUSING RELATED (4.1%)
13,000 American Standard Companies,
Inc.*............................... 390,000
60,000 Centex Corp......................... 1,972,500
80,000 Clayton Homes, Inc.................. 2,240,000
50,000 Lennar Corp......................... 1,106,250
61,000 Oakwood Homes Corp.................. 2,501,000
---------------
8,209,750
---------------
INSURANCE (4.0%)
10,000 CNA Financial Corp.*................ 1,161,250
40,000 Exel, Ltd........................... 2,495,000
90,000 Prudential Reinsurance Holdings,
Inc................................. 1,878,750
30,000 SunAmerica Inc...................... 1,413,750
40,000 TIG Holdings, Inc................... 1,080,000
---------------
8,028,750
---------------
MEDIA GROUP (2.2%)
12,900 Cablevision Systems Corp. (Class
A)*................................. 715,950
10,000 Clear Channel Communications,
Inc.*............................... 788,750
35,000 Emmis Broadcasting Corp. (Class
A)*................................. 936,250
60,000 Infinity Broadcasting Corp. (Class
A)*................................. 1,920,000
---------------
4,360,950
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
MEDICAL PRODUCTS & SUPPLIES (5.0%)
45,000 Boston Scientific Corp.*............ $ 1,822,500
60,000 Guidant Corp........................ 2,242,500
50,500 Idexx Laboratories, Inc.*........... 2,234,625
15,000 InStent, Inc.*...................... 236,250
21,000 Medtronic Inc....................... 1,152,375
15,000 Physician Sales & Service, Inc.*.... 281,250
24,000 St. Jude Medical, Inc.*............. 948,000
14,000 Target Therapeutics, Inc.*.......... 1,095,500
---------------
10,013,000
---------------
MISCELLANEOUS (0.7%)
30,000 Thermo Electron Corp.*.............. 1,485,000
---------------
RESTAURANTS (2.1%)
20,000 Applebee's International, Inc....... 552,500
32,000 Boston Chicken, Inc.*............... 1,108,000
35,000 Lone Star Steakhouse & Saloon,
Inc.*............................... 1,369,375
25,000 Starbucks Corp.*.................... 1,053,125
---------------
4,083,000
---------------
RETAIL (6.9%)
40,000 Eckerd Corp.*....................... 1,705,000
40,000 General Nutrition Companies,
Inc.*............................... 880,000
75,000 Gucci Group NV (Italy)*............. 2,587,500
18,000 Luxottica Group SpA (ADR) (Italy)... 958,500
20,000 Safeway, Inc.*...................... 930,000
40,000 St. John Knits, Inc................. 1,875,000
20,000 Sunglass Hut International, Inc.*... 415,000
35,000 Tiffany & Co........................ 1,806,875
50,000 Vons Companies, Inc.*............... 1,325,000
40,000 Wolverine World Wide, Inc........... 1,260,000
---------------
13,742,875
---------------
TELECOMMUNICATIONS (5.8%)
20,000 ADC Telecommunications, Inc.*....... 910,000
13,000 Ascend Communications, Inc.*........ 919,750
14,000 Cascade Communications Corp.*....... 1,221,500
21,000 Cisco Systems, Inc.*................ 1,766,625
27,000 FORE Systems, Inc.*................. 1,559,250
19,500 Shiva Corp.*........................ 1,443,000
21,000 Stratacom, Inc.*.................... 1,569,750
20,000 U.S. Robotics Corp.*................ 2,195,000
---------------
11,584,875
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER MID-CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
UTILITIES - ELECTRIC (1.7%)
40,000 Portland General Corp............... $ 1,130,000
80,000 Scana Corp.......................... 2,160,000
---------------
3,290,000
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $132,642,677)...... 150,281,466
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS (15.1%)
U.S. Treasury Principal Strips
$ 15,650 05/15/18............................ 3,696,345
25,980 08/15/18............................ 6,051,506
22,565 11/15/18............................ 5,161,078
15,720 02/15/19............................ 3,538,088
36,300 05/15/19............................ 8,021,803
8,230 08/15/19............................ 1,789,640
8,250 11/15/19............................ 1,769,508
---------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $28,266,108)....... 30,027,968
---------------
SHORT-TERM INVESTMENTS (14.2%)
U.S. GOVERNMENT AGENCY (a) (11.0%)
22,000 Federal Home Loan Mortgage Corp.
5.63% due 12/08/95 (Amortized Cost
$21,975,916)........................ 21,975,916
---------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (3.2%)
$ 6,436 The Bank of New York 5.875% due
12/01/95 (dated 11/30/95; proceeds
$6,436,756; collateralized by
$7,065,500 U.S. Treasury Bill 5.71%
due 09/19/96 valued at $6,771,650)
(Identified Cost $6,435,706)........ $ 6,435,706
---------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $28,411,622)....... 28,411,622
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$189,320,407)
(B)............... 104.6% 208,721,056
LIABILITIES IN
EXCESS OF OTHER
ASSETS............ (4.6) (9,207,160)
----- ------------
NET ASSETS........ 100.0% $199,513,896
----- ------------
----- ------------
<FN>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $189,612,196; the
aggregate gross unrealized appreciation is $20,907,369 and the aggregate
gross unrealized depreciation is $1,798,509, resulting in net unrealized
appreciation of $19,108,860.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER MID-CAP GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $189,320,407)............................ $ 208,721,056
Receivable for:
Investments sold........................................ 1,703,868
Shares of beneficial interest sold...................... 759,216
Dividends............................................... 52,095
Interest................................................ 1,054
Deferred organizational expenses............................ 118,266
Receivable from affiliate................................... 4,769
Prepaid expenses and other assets........................... 55,186
-------------
TOTAL ASSETS........................................... 211,415,510
-------------
LIABILITIES:
Payable for:
Investments purchased................................... 10,438,907
Shares of beneficial interest repurchased............... 1,147,628
Plan of distribution fee................................ 161,763
Investment management fee............................... 115,536
Accrued expenses and other payables......................... 37,780
-------------
TOTAL LIABILITIES...................................... 11,901,614
-------------
NET ASSETS:
Paid-in-capital............................................. 154,699,036
Net unrealized appreciation................................. 19,400,649
Accumulated net investment loss............................. (736,110)
Accumulated undistributed net realized gain................. 26,150,321
-------------
NET ASSETS............................................. $ 199,513,896
-------------
-------------
NET ASSET VALUE PER SHARE,
14,298,595 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$13.95
-----------------------------
-----------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER MID-CAP GROWTH FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Interest.................................................... $ 465,414
Dividends (net of $2,968 foreign withholding tax)........... 373,027
-----------
TOTAL INCOME........................................... 838,441
-----------
EXPENSES
Plan of distribution fee.................................... 769,197
Investment management fee................................... 586,829
Transfer agent fees and expenses............................ 79,063
Registration fees........................................... 37,231
Shareholder reports and notices............................. 29,775
Professional fees........................................... 28,559
Organizational expenses..................................... 15,156
Custodian fees.............................................. 14,932
Trustees' fees and expenses................................. 10,694
Other....................................................... 3,115
-----------
TOTAL EXPENSES......................................... 1,574,551
-----------
NET INVESTMENT LOSS.................................... (736,110)
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 24,639,986
Net change in unrealized appreciation....................... 12,980,872
-----------
NET GAIN............................................... 37,620,858
-----------
NET INCREASE................................................ $36,884,748
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER MID-CAP GROWTH FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE PERIOD
NOVEMBER 30, 1995 SEPTEMBER 29, 1994*
(UNAUDITED) THROUGH MAY 31, 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss......................................... $ (736,110) $ (102,556)
Net realized gain........................................... 24,639,986 1,744,548
Net change in unrealized appreciation....................... 12,980,872 6,419,777
----------------- --------------------
NET INCREASE........................................... 36,884,748 8,061,769
Distributions from net realized gain........................ -- (131,657)
Net increase from transactions in shares of beneficial
interest.................................................. 47,502,978 107,096,058
----------------- --------------------
TOTAL INCREASE......................................... 84,387,726 115,026,170
NET ASSETS:
Beginning of period......................................... 115,126,170 100,000
----------------- --------------------
END OF PERIOD
(INCLUDING A NET INVESTMENT LOSS OF $736,110 AND $0,
RESPECTIVELY)........................................... $199,513,896 $115,126,170
----------------- --------------------
----------------- --------------------
<FN>
- ---------------------
* Commencement of operations.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER MID-CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1995 (UNAUDITED)
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter Mid-Cap Growth Fund (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 was organized as a Massachusetts
business trust on May 25, 1994 and had no operations other than those relating
to organizational matters and the issuance of 10,000 shares of beneficial
interest for $100,000 to Dean Witter InterCapital Inc. (the "Investment
Manager") to effect the Fund's initial capitalization. The Fund commenced
operations on September 29, 1994.
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 security is
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
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
(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 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.
Dividend income and other distributions are recorded on the ex-dividend date
except for certain dividends on 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.
<PAGE>
DEAN WITTER MID-CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1995 (UNAUDITED) 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 ex-dividend 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.
E. ORGANIZATIONAL EXPENSES -- The Investment Manager paid the organizational
expenses of the Fund in the amount of approximately $156,000 which have been
reimbursed by the Fund for the full amount thereof. Such expenses have been
deferred and are being amortized by the Fund on the straight-line method over a
period not to exceed five years from the commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with the Investment Manager, the
Fund pays a management fee, accrued daily and payable monthly, by applying the
annual rate of 0.75% 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.
<PAGE>
DEAN WITTER MID-CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1995 (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 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 telephone expenses,
printing and distribution of prospectuses and reports used in connection with
the offering of the Fund's shares to other than current shareholders and
preparation, printing and distribution of sales literature and advertising
materials. In addition, the Distributor may be compensated under the Plan for
its opportunity costs in advancing such amounts, which compensation would be in
the form of a carrying charge on any unreimbursed expenses incurred by the
Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred but
not yet recovered, may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the six months ended November 30,
1995, it received approximately $248,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares. The Fund's shareholders pay such
charges which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended November 30, 1995 aggregated
$241,437,247 and $211,070,016, respectively. Included in the aforementioned are
purchases of U.S. Government securities of $28,004,632.
<PAGE>
DEAN WITTER MID-CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
For the six months ended November 30, 1995, the Fund incurred $52,245 in
brokerage commissions with DWR for portfolio transactions executed on behalf of
the Fund. At November 30, 1995, the Fund's payable for investments purchased
included unsettled trades with DWR of $306,750.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At November 30, 1995, the Fund had
transfer agent fees and expenses payable of approximately $20,000.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED SEPTEMBER 29, 1994*
NOVEMBER 30, 1995 THROUGH MAY 31, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 10,264,968 $ 133,839,400 13,151,977 $133,121,351
Reinvestment of distributions.................................... -- -- 12,288 122,022
----------- -------------- ----------- ------------
10,264,968 133,839,400 13,164,265 133,243,373
Repurchased...................................................... (6,618,372) (86,336,422) (2,522,266) (26,147,315)
----------- -------------- ----------- ------------
Net increase..................................................... 3,646,596 $ 47,502,978 10,641,999 $107,096,058
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
<FN>
- ---------------------
* Commencement of operations.
</TABLE>
6. FEDERAL INCOME TAX STATUS
As of May 31, 1995, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales and permanent book/tax
differences primarily attributable to a net operating loss.
<PAGE>
DEAN WITTER MID-CAP GROWTH 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
MONTHS PERIOD
ENDED SEPTEMBER
NOVEMBER 29, 1994*
30, 1995 THROUGH MAY
(UNAUDITED) 31, 1995
- ---------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period......... $ 10.81 $ 10.00
----------- -----------
Net investment loss.......................... (0.05) (0.01)
Net realized and unrealized gain............. 3.19 0.84
----------- -----------
Total from investment operations............. 3.14 0.83
----------- -----------
Less distributions from net realized gain.... -- (0.02)
----------- -----------
Net asset value, end of period............... $ 13.95 $ 10.81
----------- -----------
----------- -----------
TOTAL INVESTMENT RETURN+..................... 29.05% (1) 8.26% (1)
RATIOS TO AVERAGE NET ASSETS:
Expenses..................................... 2.01% (2) 2.21% (2)
Net investment loss.......................... (0.94)%(2) (0.16)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands...... $199,514 $115,126
Portfolio turnover rate...................... 142% (1) 199% (1)
<FN>
- ---------------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge.
(1) Not annualized.
(2) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Anita H. Kolleeny
Vice President
Peter Hermann
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records of the
Fund without examination by the independent accountants and accordingly they do
not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of the
Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER MID-CAP GROWTH FUND
[Graphic]
SEMIANNUAL REPORT
NOVEMBER 30, 1995
