<PAGE> 1
DEAN WITTER MID-CAP GROWTH FUND Two World Trade Center, New York,
New York 10048
LETTER TO THE SHAREHOLDERS November 30, 1997
DEAR SHAREHOLDER:
The stock market, aided by low inflation, gained 13.60 percent for the six-month
period ended November 30, 1997. Long-term interest rates declined as an
anticipation of slowing world economic growth, due to the financial turmoil in
Asia, outweighed concerns about increasing wage inflation in the United States
when the unemployment rate hit a 24-year low of 4.6 percent in November.
Mid-capitalization stocks, as measured by the Standard & Poor's Midcap Index
(S&P Midcap Index) generally underperformed larger-capitalization stocks during
the six-month period under review as investors favored well-known and larger
companies in response to the Asian currency crisis.
PERFORMANCE AND PORTFOLIO STRATEGY
On July 28, 1997, Dean Witter Mid-Cap Growth Fund began offering four classes of
shares -- A, B, C and D -- each with its own sales charge and distribution fee
structure. A revised prospectus, which includes complete details regarding the
Fund's conversion to multiple classes of shares, was mailed to shareholders in
midsummer.
During the six-month period ended November 30, 1997, the Fund's Class B shares
produced a return of 15.72 percent, compared to a return of 11.43 percent for
the Lipper Mid Cap Funds Index and a return of 15.84 percent for the S&P Midcap
Index.
Early in the fiscal year, the Fund was positioned toward more economically
sensitive industries (e.g., technology, media and financial services). Then the
character of the market leadership started to change toward small-capitalization
and economically sensitive companies. This shift was brought on by three trends
manifesting themselves in May and June. The first was a capital gains tax cut
that caused the markets to favor capital-appreciation stocks over
dividend-paying stocks. The second was a strengthening of the dollar and
economic turbulence in Asia. During such times, small and mid-tier stocks that
are domestically
<PAGE> 2
DEAN WITTER MID-CAP GROWTH FUND
LETTER TO THE SHAREHOLDERS November 30, 1997, continued
oriented tend to perform better. The last trend was that the earnings of mid-cap
stocks accelerated faster than those of larger-cap stocks, causing the group to
outperform.
Throughout September, market leadership continued to be centered on
mid-capitalization stocks as money that would normally flow into more
speculative foreign markets began being directed toward more speculative U.S.
stocks. However, this burgeoning outperformance was abruptly halted when market
turbulence in Asia reverberated around the world.
During October and November, it was the industries with the greatest foreign
exposure and economic sensitivity that experienced the most severe corrections.
The market leadership narrowed and only large defensive stocks performed well in
this environment. During this time, the Fund reduced its overweighted position
in technology and overweighted the interest-sensitive and health care groups.
LOOKING AHEAD
Going forward, we believe that domestically oriented mid-capitalization equities
should perform well over the long term. Furthermore, due to a potential slowing
of the world's economies and the easing of inflationary pressures as a result of
the Asian currency crisis, relative earnings advantages will accrue to growth
companies that are not economically sensitive. We believe that these companies
should be able to grow their earnings at a steady 15 to 20 percent. Such growth
stocks have consistently outperformed the general market during periods of
slower economic growth. Additionally, as worldwide economic growth remains
modest and U.S. productivity strong, inflation should remain in check.
In this market environment, we anticipate increasing the Fund's exposure to the
health care sector (e.g., hospital, small drug companies and medical device
manufacturers) and consumer staples (e.g., food and drugstores). Finally, we
believe that the consumer and business service sectors that stand to benefit
from the consolidation in the television and radio industries will also perform
well.
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,
/S/ CHARLES A. FIUMEFREDDO
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE> 3
DEAN WITTER MID-CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (91.0%)
Agriculture Related (3.5%)
190,000 Dekalb Genetics Corp. (Class
B).......................... $ 7,386,250
173,333 Delta & Pine Land Co. ....... 4,571,667
75,000 Pioneer Hi-Bred
International, Inc. ........ 7,659,375
------------
19,617,292
------------
Apparel & Footwear (0.4%)
50,000 Jones Apparel Group, Inc.*... 2,437,500
------------
Auto Related (0.9%)
148,000 Budget Group, Inc. (Class
A)*......................... 5,254,000
------------
Banks (10.2%)
55,000 AmSouth Bancorporation....... 2,863,437
50,000 Bay View Capital Corp. ...... 1,650,000
50,000 City National Corp. ......... 1,625,000
45,000 Comerica, Inc. .............. 3,833,437
120,000 Crestar Financial Corp. ..... 6,165,000
47,000 First American Corp. ........ 2,314,750
53,500 First of America Bank
Corp. ...................... 3,143,125
166,000 First Security Corp. ........ 5,623,250
120,000 Golden State Bancorp Inc.*... 3,997,500
110,000 North Fork Bancorporation,
Inc. ....................... 3,341,250
100,000 Southtrust Corp. ............ 5,450,000
100,000 State Street Corp. .......... 5,950,000
50,000 Union Planters Corp. ........ 3,087,500
60,000 Washington Mutual, Inc. ..... 4,132,500
30,000 Westamerica Bancorporation... 2,737,500
53,000 Zions Bancorporation......... 2,126,625
------------
58,040,874
------------
Biotechnology (4.7%)
140,000 Alkermes, Inc.*.............. 2,765,000
255,300 BioChem Pharma, Inc.
(Canada)*................... 6,510,150
131,000 Centocor, Inc.*.............. 5,698,500
145,000 Gilead Sciences, Inc.*....... 5,002,500
100,000 IDEC Pharmaceuticals Corp.*.. 3,493,750
115,000 Vertex Pharmaceuticals,
Inc.*....................... 3,162,500
------------
26,632,400
------------
Capital Goods (0.3%)
75,000 Wyman-Gordon Co.*............ 1,603,125
------------
Chemicals (0.5%)
65,000 Monsanto Co. ................ 2,839,687
------------
Communications Equipment (1.9%)
105,400 Bay Networks, Inc.*.......... 3,168,587
50,000 Brightpoint, Inc.*........... 803,125
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
60,000 CIENA Corp.*................. $ 3,251,250
2,700 Excel Switching Corp.*....... 65,137
74,000 Newbridge Networks Corp.
(Canada)*................... 3,117,250
------------
10,405,349
------------
Computer Equipment (0.3%)
190,000 Diamond Multimedia Systems,
Inc.*....................... 1,876,250
------------
Computer Software (6.5%)
170,000 BEA Systems, Inc.*........... 2,411,875
107,250 Computer Associates
International, Inc.*........ 5,583,703
170,000 Compuware Corp.*............. 5,939,375
80,000 Electronics for Imaging,
Inc.*....................... 3,840,000
165,000 Manugistics Group, Inc.*..... 5,754,375
75,000 PeopleSoft, Inc.*............ 4,903,125
88,500 Software AG Systems, Inc.*... 901,594
176,000 Veritas Software Co.*........ 7,667,000
------------
37,001,047
------------
Computer Software & Services (1.9%)
90,000 Arbor Software Corp.*........ 2,722,500
39,000 Citrix Systems, Inc.*........ 2,788,500
130,000 Legato Systems, Inc.*........ 4,940,000
------------
10,451,000
------------
Construction (0.5%)
60,000 Miller (Herman), Inc. ....... 3,030,000
------------
Consumer - Noncyclical (1.3%)
104,000 Alberto-Culver Co. (Class
B).......................... 3,243,500
38,000 Clorox, Co. ................. 2,949,750
40,000 Consolidated Cigar Holdings
Inc. (Class A)*............. 1,102,500
------------
7,295,750
------------
Consumer Business Services (3.4%)
158,300 Allied Waste Industries,
Inc.*....................... 3,452,919
275,000 Corporate Express, Inc.*..... 4,296,875
173,000 Corrections Corp. of
America*.................... 5,990,125
125,000 Eastern Environmental
Services, Inc.*............. 2,937,500
85,000 U.S.A. Waste Services,
Inc.*....................... 2,810,312
------------
19,487,731
------------
Consumer Products (7.0%)
113,000 CVS Corp. ................... 7,500,375
110,000 Dean Foods Co. .............. 5,843,750
103,000 Dominick's Supermarkets,
Inc.*....................... 4,004,125
220,000 Kroger Co.*.................. 7,576,250
146,000 Rite Aid Corp. .............. 9,599,500
81,000 Safeway, Inc.*............... 4,920,750
------------
39,444,750
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 4
DEAN WITTER MID-CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS November 30, 1997 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
Drugs (2.1%)
128,000 Dura Pharmaceuticals,
Inc.*....................... $ 5,584,000
152,100 Medicis Pharmaceutical Corp.
(Class A)*.................. 6,502,275
------------
12,086,275
------------
Energy (6.5%)
24,000 Bayard Drilling Technologies,
Inc.*....................... 441,000
50,000 Coflexip S.A. (ADR)
(France).................... 2,475,000
98,000 Cooper Cameron Corp.*........ 5,971,875
100,000 Diamond Offshore Drilling,
Inc.*....................... 4,987,500
45,000 EVI, Inc. ................... 2,314,687
119,000 Falcon Drilling Company,
Inc.*....................... 3,837,750
81,000 Global Marine, Inc.*......... 2,131,312
90,000 Halter Marine Group, Inc.*... 2,508,750
30,200 IRI International Corp.*..... 486,975
105,000 Marine Drilling Company,
Inc.*....................... 2,388,750
38,000 Pride International, Inc.*... 1,049,750
90,000 Rowan Companies, Inc.*....... 3,060,000
47,000 Smith International, Inc.*... 3,008,000
48,000 Stolt Comex Seaway, S.A.*.... 2,352,000
------------
37,013,349
------------
Financial - Miscellaneous (1.9%)
31,000 Affiliated Managers Group,
Inc.*....................... 775,000
67,150 Edwards (A.G.), Inc. ........ 2,274,706
40,000 Finova Group Inc. ........... 1,885,000
3,400 Legg Mason, Inc. ............ 164,475
81,000 Paine Webber Group, Inc. .... 2,723,625
63,000 Providian Financial Corp. ... 2,775,938
------------
10,598,744
------------
Healthcare Products & Services (7.2%)
34,000 Capital Senior Living
Corp.*...................... 439,875
159,000 Concentra Managed Care,
Inc.*....................... 5,386,125
75,000 Health Care & Retirement
Corp.*...................... 2,953,125
247,500 Health Management Associates,
Inc. (Class A)*............. 6,063,750
218,000 Healthsouth Corp.*........... 5,722,500
170,000 IDX Systems Corp.*........... 5,100,000
252,800 Renal Treatment Centers,
Inc.*....................... 8,421,400
140,000 Tenet Healthcare Corp.*...... 4,436,250
90,000 Total Renal Care Holdings,
Inc.*....................... 2,328,750
------------
40,851,775
------------
Hotels/Motels (1.0%)
50,000 HFS, Inc.*................... 3,431,250
60,900 MGM Grand, Inc.*............. 2,382,713
------------
5,813,963
------------
Insurance (2.2%)
18,000 Executive Risk, Inc. ........ 1,170,000
76,000 Hartford Life, Inc. (Class
A).......................... 2,916,500
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<S> <C>
105,000 HCC Insurance Holdings,
Inc. ....................... $ 1,968,750
23,000 Protective Life Corp. ....... 1,290,875
70,000 Provident Companies, Inc. ... 2,296,875
60,000 UNUM Corp. .................. 2,846,250
------------
12,489,250
------------
Internet (3.9%)
55,000 America Online, Inc.*........ 4,152,500
114,000 Check Point Software
Technologies Ltd.
(Israel)*................... 5,144,250
227,000 Checkfree Corp.*............. 5,916,188
130,000 E*TRADE Group, Inc.*......... 3,250,000
88,000 Netscape Communications
Corp.*...................... 2,508,000
30,000 Security Dynamics
Technologies, Inc.*......... 1,016,250
------------
21,987,188
------------
Media Group (7.3%)
55,000 Applied Graphics
Technologies, Inc.*......... 2,543,750
10,000 Cablevision Systems Corp.
(Class A)*.................. 819,375
67,500 Chancellor Media Corp.*...... 4,050,000
36,400 Clear Channel Communications,
Inc.*....................... 2,466,100
95,000 Comcast Corp. (Class A
Special).................... 2,660,000
86,537 Hearst-Argyle Television,
Inc.*....................... 2,531,207
66,000 Heftel Broadcasting Corp.
(Class A)*.................. 4,875,750
55,800 Jacor Communications,
Inc.*....................... 2,427,300
190,000 Outdoor Systems, Inc.*....... 5,866,250
15,000 TCA Cable TV, Inc. .......... 622,500
60,000 Telemundo Group, Inc. (Class
A)*......................... 2,482,500
103,000 TV Azteca, S.A. de C.V. (ADR)
(Mexico)*................... 2,130,813
85,000 Universal Outdoor Holdings,
Inc.*....................... 3,782,500
62,100 Univision Communications,
Inc. (Class A)*............. 4,133,531
------------
41,391,576
------------
Medical Supplies (1.2%)
185,000 Mentor Corp. ................ 6,232,188
26,000 North American Scientific,
Inc.*....................... 523,250
14,900 Somnus Medical Technologies,
Inc.*....................... 167,625
------------
6,923,063
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
DEAN WITTER MID-CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS November 30, 1997 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
Real Estate Investment Trust (0.5%)
145,000 Catellus Development
Corp.*...................... $ 2,682,500
5,900 Trammell Crow Co.*........... 129,800
------------
2,812,300
------------
Restaurants (1.7%)
200,000 Foodmaker, Inc.*............. 3,100,000
155,000 Showbiz Pizza Time, Inc.*.... 3,332,500
100,000 Starbucks Corp.*............. 3,475,000
------------
9,907,500
------------
Retail (4.6%)
76,700 99 Cents Only Stores*........ 2,765,994
108,000 Barnes & Noble, Inc.*........ 3,341,250
147,000 Costco Companies Inc.*....... 6,513,938
57,800 Eagle Hardware & Garden,
Inc.*....................... 982,600
180,000 General Nutrition Companies,
Inc.*....................... 6,142,500
206,000 Proffitt's, Inc.*............ 6,295,875
------------
26,042,157
------------
Semiconductors (0.8%)
99,000 Vitesse Semiconductor
Corp.*...................... 4,405,500
------------
Telecommunications (3.1%)
130,000 ICG Communications, Inc.*.... 3,022,500
60,000 Intermedia Communications
Inc.*....................... 2,955,000
165,000 LCI International, Inc.*..... 4,547,813
110,000 Pacific Gateway Exchange,
Inc.*....................... 4,276,250
60,200 Teleport Communications Group
Inc.*....................... 2,942,275
------------
17,743,838
------------
Transportation (1.1%)
15,700 C.H. Robinson Worldwide,
Inc. ....................... 329,700
50,000 Knightsbridge Tankers Ltd.
(Bermuda)................... 1,506,250
79,000 U.S. Airways Group Inc.*..... 4,354,875
------------
6,190,825
------------
Utilities - Electric (2.6%)
153,000 Consolidated Edison Co. of
New York, Inc. ............. 5,775,750
100,000 New York State Electric & Gas
Corp. ...................... 3,075,000
77,000 Pinnacle West Capital
Corp. ...................... 2,969,313
110,000 SCANA Corp. ................. 3,038,750
------------
14,858,813
------------
TOTAL COMMON STOCKS
(Identified Cost
$431,191,167)................ 516,532,871
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (11.8%)
U.S. GOVERNMENT AGENCIES (a) (11.4%)
$ 55,000 Federal Farm Credit Banks
5.46% due 12/01/97.......... $ 55,000,000
10,000 Federal Home Loan Mortgage
Corp. 5.63% due 12/01/97.... 10,000,000
------------
TOTAL U.S. GOVERNMENT
AGENCIES
(Amortized Cost
$65,000,000)................ 65,000,000
------------
REPURCHASE AGREEMENT (0.4%)
2,385 The Bank of New York 5.375%
due 12/01/97 (dated
11/30/97; proceeds
$2,386,423) (b)
(Identified Cost
$2,385,354)................. 2,385,354
------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $67,385,354)... 67,385,354
------------
TOTAL INVESTMENTS
(Identified Cost $498,576,521)
(c)............................. 102.8% 583,918,225
LIABILITIES IN EXCESS OF
OTHER ASSETS..................... (2.8) (16,122,354)
----- ------------
NET ASSETS....................... 100.0% $567,795,871
===== ============
</TABLE>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Securities were purchased on a discount basis. The
interest rates shown have been adjusted to reflect
a money market equivalent yield.
(b) Collateralized by $1,248,027 Government National
Mortgage Assoc. 9.00% due 11/15/27 valued at
$1,337,963 and $1,038,194 Government National
Mortgage Assoc. 6.75% due 11/15/27 valued at
$1,095,099.
(c) The aggregate cost for federal income tax purposes
approximates identified cost. The aggregate gross
unrealized appreciation is $99,885,568 and the
aggregate gross unrealized depreciation is
$14,543,864, resulting in net unrealized
appreciation of $85,341,704.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
DEAN WITTER MID-CAP GROWTH FUND
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1997 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $498,576,521)........... $583,918,225
Receivable for:
Investments sold...................... 7,104,507
Shares of beneficial interest sold.... 956,284
Dividends............................. 185,583
Deferred organizational expenses.......... 57,724
Prepaid expenses and other assets......... 107,779
------------
TOTAL ASSETS.......................... 592,330,102
------------
LIABILITIES:
Payable for:
Investments purchased................. 23,571,807
Plan of distribution fee.............. 465,863
Investment management fee............. 348,444
Shares of beneficial interest
repurchased.......................... 69,028
Accrued expenses and other payables....... 79,089
------------
TOTAL LIABILITIES..................... 24,534,231
------------
NET ASSETS............................ $567,795,871
============
COMPOSITION OF NET ASSETS:
Paid-in-capital........................... $434,479,884
Net unrealized appreciation............... 85,341,704
Net investment loss....................... (3,065,513)
Accumulated undistributed net realized
gain..................................... 51,039,796
------------
NET ASSETS............................ $567,795,871
============
CLASS A SHARES:
Net Assets................................ $806,538
Shares Outstanding (unlimited authorized,
$.01 par value).......................... 47,083
NET ASSET VALUE PER SHARE............. $17.13
======
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net
asset value)....................... $18.08
======
CLASS B SHARES:
Net Assets................................ $564,241,347
Shares Outstanding (unlimited authorized,
$.01 par value).......................... 33,027,885
NET ASSET VALUE PER SHARE............. $17.08
======
CLASS C SHARES:
Net Assets................................ $2,611,412
Shares Outstanding (unlimited authorized,
$.01 par value).......................... 152,842
NET ASSET VALUE PER SHARE............. $17.09
======
CLASS D SHARES:
Net Assets................................ $136,574
Shares Outstanding (unlimited authorized,
$.01 par value).......................... 7,968
NET ASSET VALUE PER SHARE............. $17.14
======
STATEMENT OF OPERATIONS
For the six months ended November 30, 1997
(unaudited)*
NET INVESTMENT INCOME:
INCOME
Dividends (net of $1,418 foreign
withholding tax)......................... $ 1,032,983
Interest.................................. 826,600
------------
TOTAL INCOME.......................... 1,859,583
------------
EXPENSES
Plan of distribution fee (Class A
shares).................................. 498
Plan of distribution fee (Class B
shares).................................. 2,553,852
Plan of distribution fee (Class C
shares).................................. 4,873
Investment management fee................. 1,917,045
Transfer agent fees and expenses.......... 282,122
Registration fees......................... 63,170
Shareholder reports and notices........... 33,732
Professional fees......................... 26,282
Custodian fees............................ 17,839
Organizational expenses................... 15,156
Trustees' fees and expenses............... 7,052
Other..................................... 3,475
------------
TOTAL EXPENSES........................ 4,925,096
------------
NET INVESTMENT LOSS................... (3,065,513)
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain......................... 36,611,714
Net change in unrealized appreciation..... 31,357,276
------------
NET GAIN.............................. 67,968,990
------------
NET INCREASE.............................. $ 64,903,477
============
- ---------------------
* Class A, Class C and Class D shares were issued July
28, 1997.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
DEAN WITTER MID-CAP GROWTH FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
NOVEMBER 30, 1997* MAY 31, 1997
- --------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss................................. $ (3,065,513) $ (3,745,901)
Net realized gain................................... 36,611,714 18,972,626
Net change in unrealized appreciation............... 31,357,276 10,689,644
------------ ------------
NET INCREASE.................................... 64,903,477 25,916,369
Distributions from net realized gain - Class B
shares............................................. -- (28,296,177)
Net increase from transactions in shares of
beneficial interest................................ 84,140,465 111,860,026
------------ ------------
NET INCREASE.................................... 149,043,942 109,480,218
NET ASSETS:
Beginning of period................................. 418,751,929 309,271,711
------------ ------------
END OF PERIOD
(Including a net investment loss of $3,065,513
and $0, respectively)........................... $567,795,871 $418,751,929
============ ============
</TABLE>
- ---------------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
DEAN WITTER MID-CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS November 30, 1997 (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's investment objective is to seek
long-term capital growth. The Fund seeks to achieve its objective by investing
primarily in domestic and foreign equity securities of "mid- cap" companies. The
Fund was organized as a Massachusetts business trust on May 25, 1994 and
commenced operations on September 29, 1994. On July 28, 1997, the Fund commenced
offering three additional classes of shares, with the then current shares
designated as Class B shares.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase, some Class
A shares, and most Class B shares and Class C shares are subject to a contingent
deferred sales charge imposed on shares redeemed within one year, six years and
one year, respectively. Class D shares are not subject to a sales charge.
Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
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 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 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 (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
<PAGE> 9
DEAN WITTER MID-CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS November 30, 1997 (unaudited) continued
securities having a maturity date of more than sixty days at time of purchase
are valued on a mark-to-market basis until sixty days prior to maturity and
thereafter at amortized cost based on their value on the 61st day. Short-term
debt securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
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.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. 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.
E. 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.
F. ORGANIZATIONAL EXPENSES -- The Investment Manager paid the organizational
expenses of the Fund in the amount of approximately $156,000 which have been
reimbursed for the full amount thereof. Such expenses have been deferred and are
being amortized on the straight-line method over a period not to exceed five
years from the commencement of operations.
<PAGE> 10
DEAN WITTER MID-CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS November 30, 1997 (unaudited) continued
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 as of the close of each
business day: 0.75% to the portion of net assets not exceeding $500 million and
0.725% to the portion of the daily net assets exceeding $500 million.
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. The Plan
provides that the Fund will pay the Distributor a fee which is accrued daily and
paid monthly at the following annual rates: (i) Class A -- up to 0.25% of the
average daily net assets of Class A; (ii) Class B -- 1.0% of the lesser of: (a)
the average daily aggregate gross sales of the Class B shares since the
inception of the Fund (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net asset value of the Class B
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or waived; or (b) the average daily net assets of
Class B; and (iii) Class C -- up to 1.0% of the average daily net assets of
Class C. In the case of Class A shares, amounts paid under the Plan are paid to
the Distributor for services provided. In the case of Class B and Class C
shares, amounts paid under the Plan are paid to the Distributor for services
provided and the expenses borne by it and others in the distribution of the
shares of these Classes, including the payment of commissions for sales of these
Classes 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 others who engage in or support distribution of the 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 these shares to other than current shareholders; and
preparation, printing and distribution of sales literature and advertising
materials. In addition, the Distributor may utilize fees paid pursuant
<PAGE> 11
DEAN WITTER MID-CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS November 30, 1997 (unaudited) continued
to the Plan, in the case of Class B shares, to compensate DWR and other selected
broker-dealers for their opportunity costs in advancing such amounts, which
compensation would be in the form of a carrying charge on any unreimbursed
expenses.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. 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 $13,758,516 at November 30, 1997.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to account executives may be reimbursed in the subsequent
calendar year. For the period ended November 30, 1997, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.25% and
1.0%, respectively.
The Distributor has informed the Fund that for the period ended November 30,
1997, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $349,396 and $3,069,
respectively and received approximately $25,000 in front-end sales charges from
sales of the Fund's Class A shares. The respective 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, 1997 aggregated
$339,900,356 and $296,430,171, respectively.
For the six months ended November 30, 1997, the Fund incurred $59,208 in
brokerage commissions with DWR for portfolio transactions executed on behalf of
the Fund. At November 30, 1997, the Fund's receivable for investments sold and
payable for investments purchased included unsettled trades with DWR of
$2,589,481 and $1,127,545, respectively.
<PAGE> 12
DEAN WITTER MID-CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS November 30, 1997 (unaudited) continued
For the six months ended November 30, 1997, the Fund incurred $31,640 in
brokerage commissions with Morgan Stanley & Co., Inc., an affiliate of the
Investment Manager, for portfolio transactions executed on behalf of the Fund.
Dean Witter Trust FSB, an affiliate of the Investment Manager and Distributor,
is the Fund's transfer agent. At November 30, 1997, the Fund had transfer agent
fees and expenses payable of approximately $6,300.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
NOVEMBER 30, 1997 MAY 31, 1997
---------------------------- -----------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARES*
Sold....................................................... 47,697 $ 815,245 -- --
Redeemed................................................... (614) (10,545) -- --
---------- ------------ ---------- -------------
Net increase - Class A..................................... 47,083 804,700 -- --
---------- ------------ ---------- -------------
CLASS B SHARES
Sold....................................................... 13,010,879 218,221,911 21,016,632 $ 298,480,486
Reinvestment of distributions.............................. -- -- 1,950,535 26,449,257
Redeemed................................................... (8,359,843) (137,692,265) (15,064,395) (213,069,717)
---------- ------------ ---------- -------------
Net increase - Class B..................................... 4,651,036 80,529,646 7,902,772 111,860,026
---------- ------------ ---------- -------------
CLASS C SHARES*
Sold....................................................... 172,620 3,017,564 -- --
Redeemed................................................... (19,778) (347,035) -- --
---------- ------------ ---------- -------------
Net increase - Class C..................................... 152,842 2,670,529 -- --
---------- ------------ ---------- -------------
CLASS D SHARES*
Sold....................................................... 7,968 135,590 -- --
---------- ------------ ---------- -------------
Net increase in Fund....................................... 4,858,929 $ 84,140,465 7,902,772 $ 111,860,026
========== ============ ========== =============
</TABLE>
- ---------------------
* For the period July 28, 1997 (issue date) through November 30, 1997.
6. FEDERAL INCOME TAX STATUS
As of May 31, 1997, the Fund had temporary book/tax differences attributable to
capital loss deferrals on wash sales.
<PAGE> 13
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 PERIOD
MONTHS ENDED FOR THE YEAR FOR THE YEAR SEPTEMBER 29, 1994*
NOVEMBER 30, ENDED ENDED THROUGH
1997**++ MAY 31, 1997 MAY 31, 1996 MAY 31, 1995
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....... $ 14.76 $ 15.11 $ 10.81 $ 10.00
-------- -------- -------- ---------
Net investment loss........................ (0.10) (0.13) (0.10) (0.01)
Net realized and unrealized gain........... 2.42 0.94 5.60 0.84
-------- -------- -------- ---------
Total from investment operations........... 2.32 0.81 5.50 0.83
-------- -------- -------- ---------
Less distributions from net realized
gain...................................... -- (1.16) (1.20) (0.02)
-------- -------- -------- ---------
Net asset value, end of period............. $ 17.08 $ 14.76 $ 15.11 $ 10.81
======== ======== ======== =========
TOTAL INVESTMENT RETURN+................... 15.72%(1) 6.01% 53.02% 8.26%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................... 1.92%(2) 1.99% 2.05% 2.21%(2)
Net investment loss........................ (1.20)%(2) (1.06)% (1.05)% (0.16)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.... $564,241 $418,752 $309,272 $115,126
Portfolio turnover rate.................... 61%(1) 209% 328% 199%(1)
Average commission rate paid............... $0.0577 $0.0592 $0.0582 --
</TABLE>
- ---------------------
* Commencement of operations.
** Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ 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> 14
DEAN WITTER MID-CAP GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
NOVEMBER 30,
1997++
- -------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....................................................................... $ 16.43
--------
Net investment loss........................................................................................ (0.02)
Net realized and unrealized gain........................................................................... 0.72
--------
Total from investment operations........................................................................... 0.70
--------
Net asset value, end of period............................................................................. $ 17.13
========
TOTAL INVESTMENT RETURN+................................................................................... 4.26%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................................................................................... 1.19%(2)
Net investment loss........................................................................................ (0.39)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.................................................................... $807
Portfolio turnover rate.................................................................................... 61%(1)
Average commission rate paid............................................................................... $0.0577
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....................................................................... $ 16.43
--------
Net investment loss........................................................................................ (0.07)
Net realized and unrealized gain........................................................................... 0.73
--------
Total from investment operations........................................................................... 0.66
--------
Net asset value, end of period............................................................................. $ 17.09
========
TOTAL INVESTMENT RETURN+................................................................................... 4.02%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................................................................................... 1.95%(2)
Net investment loss........................................................................................ (1.11)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.................................................................... $2,611
Portfolio turnover rate.................................................................................... 61%(1)
Average commission rate paid............................................................................... $0.0577
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ 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> 15
DEAN WITTER MID-CAP GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
NOVEMBER 30,
1997++
- -------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....................................................................... $ 16.43
-------
Net investment loss........................................................................................ (0.01)
Net realized and unrealized gain........................................................................... 0.72
-------
Total from investment operations........................................................................... 0.71
-------
Net asset value, end of period............................................................................. $ 17.14
=======
TOTAL INVESTMENT RETURN+................................................................................... 4.32%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................................................................................... 0.96%(2)
Net investment loss........................................................................................ (0.12)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.................................................................... $137
Portfolio turnover rate.................................................................................... 61%(1)
Average commission rate paid............................................................................... $0.0577
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ 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
Wayne E. Hedien
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
Anita H. Kolleeny
Vice President
Peter Hermann
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust FSB
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
- ---------------
Semiannual Report
November 30, 1997
