<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND TWO WORLD TRADE CENTER, NEW YORK, NEW
YORK 10048
LETTER TO THE SHAREHOLDERS JULY 31, 1996
DEAR SHAREHOLDER:
We are pleased to present the semiannual report to shareholders of Dean Witter
Global Asset Allocation Fund for the six-month period ended July 31, 1996. The
Fund is fully flexible and may invest in any combination of global equities,
bonds and money market instruments.
Dean Witter Global Asset Allocation Fund produced a total return of 0.99 percent
for the six-month period ended July 31, 1996, compared to a return of 0.67
percent for the Morgan Stanley Capital International World Index (MSCI World
Index) and a return of 1.54 percent for the Lipper Global Flexible Fund Index.
On July 31, 1996, the Fund's net assets were approximately $60 million, an
increase of 35 percent during the period under review.
ASSET ALLOCATION AND THE GLOBAL MARKETPLACE
As has been the case since its inception in February 1995, the Fund continues to
maintain a significant overweight to equity markets around the globe. Cash
holdings were reduced and used to increase the Fund's fixed-income exposure as
interest rates (primarily in the United States) rose from their lows early in
1996. At the end of July, the Fund's strategic allocation target stood at 77
percent global equities, 17 percent global fixed-income instruments and 6
percent cash equivalent holdings.
In general terms, world equity markets continue to appear extremely attractive
when compared to potential returns in both bond and cash investments. As central
banks throughout the world continued to push interest rates lower (Germany,
United Kingdom) or, at the very least, maintain the historic low levels achieved
in past months (United States, Japan), economies continue to possess the
potential to expand and fuel corporate profit growth. In the U.S., the economic
recovery is quite mature, however, the world's economies are only now showing
signs of coordinated growth. Japan, for example, emerged from its most
devastating recession since World War II earlier in 1996, while Latin American
countries are now beginning to enjoy sustained economic
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
LETTER TO THE SHAREHOLDERS JULY 31, 1996, CONTINUED
growth. Europe, by and large, continues to await recovery, as both Germany and
the United Kingdom appear close to resuming gradual growth.
PORTFOLIO HOLDINGS
Both the equity and fixed-income portfolios are extensively diversified
throughout the global markets. The equity portfolio's regional allocation
features overweighted positions in Japan (30 percent of the equity portfolio),
the Pacific Rim (10 percent) and Latin America (6 percent) as compared to the
MSCI World Index. Assets allocated to the United States (34 percent) and Europe
(20 percent) represent underweightings, a position consistent with these
markets' higher valuations.
The Fund continues to maintain a diversified strategy toward global industries.
Among the largest industry groups represented in the portfolio are electronics
(Diebold, Inc., Hewlett-Packard Co.); industrials (Boeing Co., Rolls-Royce PLC);
consumer goods (PepsiCo Inc., Canon, Inc., Hermes International) and financials
(Citicorp, Banco Bilbao Vizcaya, Royal & Sun Alliance Insurance Group PLC).
The fixed-income portfolio is invested in both U.S. and European debt
instruments, including government and corporate bonds. The Fund's most recent
shifts into the fixed-income sector from cash were made with the intention of
increasing the portfolio's exposure to the U.S. bond market. On July 31, 1996,
U.S. Treasury securities and corporate issues represented over half of the
Fund's fixed-income investments, with the balance being held in German, Danish,
British, French and Italian corporate and government bonds.
LOOKING AHEAD
With the national elections in the United States this fall and a number of
foreign policy issues gaining greater attention, global economic growth should
continue to be the paramount issue for world leaders and central banks.
Coordinated recoveries around the globe could lead to inflationary risks
increasing and commodity shortages occurring, however, these risks should not
outweigh the merits of profit growth for investors. Overall, the forecast for
the world's equity markets appears bright.
We appreciate your support of Dean Witter Global Asset Allocation 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 GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS AND BONDS (93.2%)
ARGENTINA (0.6%)
BANKING
2,680 Banco de Galicia y Buenos Aires
S.A. de C.V. (ADR)............. $ 57,620
1,400 Banco Frances del Rio de la
Plata S.A. (ADR)............... 33,425
--------------
91,045
--------------
ENERGY
2,700 Yacimentos Petroliferos
Fiscales S.A. (ADR)............ 56,700
--------------
MULTI-INDUSTRY
24,298 Perez Companc S.A. (Class B)... 141,905
--------------
STEEL & IRON
600 Siderar S.A. (A Shares) (ADR)*
- 144A**....................... 11,625
--------------
TELECOMMUNICATIONS
3,100 Telefonica de Argentina S.A.
(ADR).......................... 72,462
--------------
TOTAL ARGENTINA................ 373,737
--------------
AUSTRIA (0.2%)
TRANSPORTATION
2,200 Flughafen Wien AG.............. 144,695
--------------
BELGIUM (0.2%)
RETAIL
2,400 G.I.B. Holdings Ltd............ 106,206
--------------
BRAZIL (2.0%)
APPLIANCES & HOUSEHOLD DURABLES
3,500 Refrigeracao Parana S.A.
(ADR)*......................... 46,594
--------------
BANKING
10,050K Banco Bradesco S.A. (Pref.).... 79,368
--------------
BREWERY
192,000 Companhia Cervejaria Brahma
(Pref.)*....................... 117,323
--------------
ENERGY
642,000 Petroleo Brasileiro S.A.
(Pref.)........................ 71,932
--------------
METALS & MINING
2,840 Companhia Vale do Rio Doce S.A.
(Pref.) (ADR).................. 53,605
--------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
PAPER & FOREST PRODUCTS
6,300 Aracruz Celulose S.A. (ADR).... $ 53,550
--------------
STEEL & IRON
84,500K Usinas Siderurgicas de Minas
Gerais S.A. (Pref.)............ 90,089
--------------
TELECOMMUNICATIONS
5,310 Telecomunicacoes Brasileiras
S.A. (ADR)..................... 384,975
17,871 Telecomunicacoes de Sao Paulo
S.A............................ 3,052
217,000 Telecomunicacoes de Sao Paulo
S.A. (Pref.)*.................. 42,843
--------------
430,870
--------------
UTILITIES - ELECTRIC
8,600 Centrais Electricas Brasileiras
S.A. (ADR)..................... 115,025
4,700 Companhia Energetica de Minas
Gerais S.A. (Pref.) (ADR)...... 128,662
--------------
243,687
--------------
TOTAL BRAZIL................... 1,187,018
--------------
CANADA (0.5%)
TELECOMMUNICATION EQUIPMENT
6,300 Newbridge Networks Corp.*...... 274,050
--------------
CHILE (0.8%)
BANKING
800 Banco BHIF (ADR)*.............. 15,200
--------------
BEVERAGES - SOFT DRINKS
2,620 Embotelladora Andina S.A.
(ADR).......................... 96,940
--------------
INVESTMENT COMPANIES
39,000 The Five Arrows Chile
Investment Trust Ltd........... 109,590
--------------
TELECOMMUNICATIONS
1,700 Compania de Telecommunicaciones
de Chile S.A. (ADR)............ 165,112
--------------
UTILITIES - ELECTRIC
3,200 Enersis S.A. (ADR)............. 97,600
--------------
TOTAL CHILE.................... 484,442
--------------
COLOMBIA (0.1%)
BANKING
4,800 Banco Industrial Colombiano
S.A. (ADR)..................... 75,000
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
DENMARK (1.3%)
FOREIGN GOVERNMENT
DKK 1,750K Kingdom of Denmark 9.00% due
11/15/00....................... $ 340,665
DKK 1,750K Kingdom of Denmark 7.00% due
12/15/04....................... 305,989
--------------
646,654
--------------
PHARMACEUTICALS
940 Novo-Nordisk AS (Series B)..... 136,182
--------------
TOTAL DENMARK.................. 782,836
--------------
FRANCE (2.0%)
APPAREL
335 Hermes International........... 82,878
--------------
FINANCIAL SERVICES
975 Cetelem Group.................. 213,696
--------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
580 LVMH Moet-Hennessy Louis
Vuitton........................ 128,399
3,800 SEITA.......................... 167,942
--------------
296,341
--------------
INSURANCE
3,500 Scor S.A....................... 134,858
--------------
PHARMACEUTICALS
1,345 Sanofi S.A..................... 104,590
--------------
RETAIL
420 Carrefour Supermarche.......... 230,344
673 Castorama Dubois
Investissement................. 131,610
FRF 26K Castorama Dubois Investissement
3.15% due 01/01/03 (Conv.)..... 6,271
--------------
368,225
--------------
TOTAL FRANCE................... 1,200,588
--------------
GERMANY (3.5%)
AUTOMOTIVE
315 Volkswagen AG.................. 106,961
--------------
CHEMICALS
3,500 BASF AG........................ 94,007
1,000 SGL Carbon AG.................. 110,153
--------------
204,160
--------------
CONSUMER PRODUCTS
1,400 Adidas AG...................... 109,338
--------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
FOREIGN GOVERNMENT
DEM 325K Bundesrepublic Deutschland
8.375% due 05/21/01............ $ 248,280
DEM 390K Germany (Federal Republic)
7.25% due 10/21/02............. 284,005
DEM 400K Germany (Federal Republic)
6.25% due 04/26/06............. 269,311
DEM 400K Treuhandanstalt
5.00% due 12/17/98............. 276,047
DEM 250K Treuhandanstalt
7.00% due 11/25/99............. 181,392
DEM 450K Treuhandanstalt
7.50% due 09/09/04............. 328,676
--------------
1,587,711
--------------
PHARMACEUTICALS
185 Gehe AG........................ 114,706
--------------
TOTAL GERMANY.................. 2,122,876
--------------
HONG KONG (6.3%)
BANKING
24,800 HSBC Holdings PLC.............. 396,059
--------------
BUILDING & CONSTRUCTION
106,000 New World Infrastructure
Ltd.*.......................... 230,280
80,000 Road King Infrastructure
Ltd............................ 68,794
--------------
299,074
--------------
CONGLOMERATES
258,000 First Pacific Co. Ltd.......... 392,011
46,000 Hutchison Whampoa, Ltd......... 274,815
37,200 Jardine Matheson Holdings
Ltd............................ 225,060
41,000 Swire Pacific Ltd. (Class A)... 351,245
--------------
1,243,131
--------------
OIL RELATED
109,000 Hong Kong & China Gas Co.
Ltd............................ 172,665
--------------
REAL ESTATE
57,000 Cheung Kong (Holdings) Ltd..... 388,811
45,000 Henderson Land Development Co.
Ltd............................ 321,503
158,000 Hong Kong Land Holdings Ltd.... 331,800
29,000 Sun Hung Kai Properties Ltd.... 273,755
--------------
1,315,869
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS
196,600 Hong Kong Telecommunications
Ltd............................ $ 324,141
--------------
TOTAL HONG KONG................ 3,750,939
--------------
ITALY (1.4%)
ENERGY
27,500 Ente Nazionale Idrocarburi
SpA............................ 123,913
--------------
FOREIGN GOVERNMENT
ITL 440,000K Italy (Republic of)
10.50% due 04/01/00............ 305,188
ITL 420,000K Italy (Republic of)
10.50% due 11/01/00............ 292,534
--------------
597,722
--------------
TELECOMMUNICATIONS
60,000 Telecom Italia Mobile SpA...... 125,692
--------------
TOTAL ITALY.................... 847,327
--------------
JAPAN (29.7%)
AUTOMOTIVE
74,000 Suzuki Motor Co. Ltd........... 879,963
--------------
BANKING
23,000 Asahi Bank, Ltd................ 256,273
15,000 Bank of Tokyo - Mitsubishi
Ltd............................ 316,011
18,000 Mitsubishi Trust & Banking..... 300,000
15,000 Sanwa Bank, Ltd................ 261,236
22,000 Sumitomo Trust & Banking....... 288,389
--------------
1,421,909
--------------
BUILDING & CONSTRUCTION
31,000 Kandenko Co., Ltd.............. 388,951
20,000 Nishimatsu Construction Co..... 202,247
17,000 Sekisui House Ltd.............. 186,236
--------------
777,434
--------------
BUSINESS SERVICES
33,000 Ricoh Corp., Ltd............... 333,708
--------------
CHEMICALS
63,000 Asahi Chemical Industrial Co.
Ltd............................ 430,618
60,000 Nippon Zeon Co. Ltd............ 340,449
24,000 Shin-Etsu Chemical Co.......... 424,719
--------------
1,195,786
--------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
ELECTRONIC & ELECTRICAL EQUIPMENT
4,400 Advantest Corp................. $ 171,798
24,000 Canon, Inc..................... 453,933
37,000 Hitachi, Ltd................... 337,088
4,000 Kyocera Corp................... 273,783
24,000 Matsushita Electric Industrial
Co. Ltd........................ 417,977
30,000 NGK Insulators................. 331,461
5,000 Sony Corp...................... 316,011
--------------
2,302,051
--------------
ENGINEERING & CONSTRUCTION
20,000 Kajima Corp.................... 191,011
--------------
FINANCIAL SERVICES
3,000 Japan Associated Finance....... 339,888
36,000 New Japan Securities Co.,
Ltd.*.......................... 184,382
14,000 Nomura Securities Co. Ltd...... 245,131
7,400 Promise Co., Ltd............... 355,449
--------------
1,124,850
--------------
INSURANCE
22,000 Tokio Marine & Fire Insurance
Co............................. 273,970
--------------
INTERNATIONAL TRADE
37,000 Mitsubishi Corp................ 467,697
--------------
MACHINERY
29,000 Daifuku Co. Ltd................ 434,457
5,600 Fanuc, Ltd..................... 216,030
15,000 Kawasaki Heavy Industries...... 72,753
3,400 Keyence Corp................... 436,142
58,000 Komatsu Ltd.................... 531,667
25,000 Minebea Co., Ltd............... 203,652
64,000 Mitsubishi Heavy Industries,
Ltd............................ 542,322
54,000 NSK Ltd........................ 380,225
--------------
2,817,248
--------------
MANUFACTURING
6,200 Sony Music Entertainment
Inc............................ 277,491
--------------
METALS & MINING
42,000 Mitsubishi Materials Corp...... 212,360
--------------
NATURAL GAS
54,000 Osaka Gas Co................... 195,169
--------------
PHARMACEUTICALS
13,000 Yamanouchi Pharmaceutical
Co............................. 284,831
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
REAL ESTATE
24,000 Mitsubishi Estate Co. Ltd...... $ 314,607
20,000 Mitsui Fudosan Co.............. 258,427
--------------
573,034
--------------
RETAIL
5,000 Ito-Yokado Co. Ltd............. 288,858
--------------
RETAIL - SPECIALTY
3,800 Autobacs Seven Co.............. 359,363
18,000 Best Denki Co. Ltd............. 262,921
20,000 Joshin Denki................... 297,753
--------------
920,037
--------------
STEEL & IRON
136,000 NKK Corp.*..................... 388,389
32,000 Yamato Kogyo Co., Ltd.......... 353,558
--------------
741,947
--------------
TELECOMMUNICATIONS
61 DDI Corp....................... 492,912
40 Nippon Telegraph & Telephone... 285,393
--------------
778,305
--------------
TEXTILES
23,000 Kuraray Co. Ltd................ 251,966
66,000 Teijin Ltd..................... 346,067
--------------
598,033
--------------
TEXTILES - APPAREL
19,000 Tokyo Style.................... 320,225
--------------
TRANSPORTATION
52 East Japan Railway Co.......... 270,225
41,000 Nippon Yusen Kabushiki Kaish... 230,721
--------------
500,946
--------------
UTILITIES
14,100 Kyushu Electric Power.......... 310,253
--------------
TOTAL JAPAN.................... 17,787,116
--------------
MALAYSIA (2.1%)
BANKING
47,000 DCB Holdings Berhad............ 143,178
--------------
BUILDING & CONSTRUCTION
44,000 Metacorp Berhad................ 112,875
34,000 Road Builder (M) Holdings
Berhad......................... 141,735
48,000 United Engineers Malaysia
Berhad......................... 323,232
--------------
577,842
--------------
ENTERTAINMENT
8,000 Genting Berhad................. 55,155
--------------
LEISURE
154,000 Magnum Corporation Berhad...... 240,741
--------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS
81,000 Technology Resources Industries
Berhad*........................ $ 248,376
--------------
TOTAL MALAYSIA................. 1,265,292
--------------
MEXICO (1.7%)
BANKING
8,000 Grupo Financiero Inbursa S.A.
de C.V. (B Shares)............. 31,650
--------------
BREWERY
4,400 Grupo Modelo S.A. de C.V.
(Series C)..................... 20,135
--------------
BUILDING & CONSTRUCTION
7,600 Empresa ICA Sociedad
Controladora S.A. de C.V.
(ADR)*......................... 101,650
--------------
BUILDING MATERIALS
50,300 Cemex S.A. de C.V. (B
Shares)........................ 179,761
--------------
CONGLOMERATES
21,500 Grupo Carso S.A. de C.V.
(Series A1)*................... 85,342
27,143 Grupo Industria Alfa S.A. de
C.V. (A Shares)................ 108,100
--------------
193,442
--------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
1,600 Empresas la Moderna S.A. de
C.V. (ADR)..................... 27,800
35,500 Fomento Economico Mexicano S.A.
de C.V. (B Shares)............. 92,694
2,365 Panamerican Beverages, Inc.
(Class A)...................... 101,991
--------------
222,485
--------------
MULTI-LINE INSURANCE
21,500 Invercorporacion S.A. (Series
A1)*........................... 3,487
--------------
PAPER & FOREST PRODUCTS
3,120 Kimberly-Clark de Mexico S.A.
de C.V. (A Shares)............. 52,501
--------------
RETAIL
29,000 Cifra S.A. de C.V. (C
Shares)*....................... 39,314
--------------
STEEL & IRON
9,000 Tubos de Acero de Mexico S.A.
de C.V. (ADR)*................. 89,437
--------------
TELECOMMUNICATIONS
3,000 Telefonos de Mexico S.A. de
C.V. (Series L) (ADR).......... 91,875
--------------
TOTAL MEXICO................... 1,025,737
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
NETHERLANDS (1.9%)
BUILDING & CONSTRUCTION
1,939 Hunter Douglas NV.............. $ 127,334
--------------
FOOD PROCESSING
1,411 Nutricia Vereenigde Bedrijven
NV............................. 150,477
--------------
INSURANCE
2,447 Aegon NV....................... 112,264
4,580 ING Groep NV................... 140,544
--------------
252,808
--------------
PUBLISHING
7,250 Elsevier NV.................... 110,141
9,000 Ver Ned Uitgev Ver Bezit NV.... 148,711
1,372 Wegener NV..................... 149,473
--------------
408,325
--------------
RETAIL
4,005 Koninklijke Ahold NV........... 203,619
--------------
TOTAL NETHERLANDS.............. 1,142,563
--------------
PERU (0.3%)
BREWERY
83,706 Cervercia Backus & Johnston
S.A............................ 91,081
--------------
METALS & MINING
3,600 Companhia de Minas Buenaventura
S.A. (A Shares)................ 30,987
900 Companhia de Minas Buenaventura
S.A. (ADR)*.................... 16,087
--------------
47,074
--------------
TELECOMMUNICATIONS
2,000 CPT Telefonica del Peru S.A.
(ADR).......................... 43,750
--------------
TOTAL PERU..................... 181,905
--------------
SINGAPORE (1.3%)
BANKING
8,000 Overseas Chinese Banking Corp.,
Ltd............................ 89,474
800 Overseas Chinese Banking Corp.,
Ltd............................ 9,004
34,000 Overseas Union Bank, Ltd....... 202,166
--------------
300,644
--------------
CONGLOMERATES
19,000 Keppel Corp., Ltd.............. 143,909
--------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
REAL ESTATE
47,000 DBS Land Ltd................... $ 148,383
25,000 Singapore Land Ltd............. 160,154
--------------
308,537
--------------
TOTAL SINGAPORE................ 753,090
--------------
SPAIN (0.5%)
BANKS
4,000 Banco Bilbao Vizcaya........... 167,952
--------------
GAS
600 Gas Natural SDG S.A............ 116,899
--------------
TOTAL SPAIN.................... 284,851
--------------
SWEDEN (2.2%)
BUSINESS SERVICES
12,400 Assa Abloy AB (Series B)....... 195,599
11,040 Securitas AB
(Series "B" Free).............. 272,940
--------------
468,539
--------------
FOREIGN GOVERNMENT
SEK 2,000K Sweden (Kingdom of) 13.00% due
06/15/01....................... 368,567
SEK 400K Sweden (Kingdom of) 10.25% due
05/05/03....................... 67,640
--------------
436,207
--------------
INSURANCE
3,900 Scandia Forsakrings AB......... 97,306
--------------
MACHINERY
5,418 Kalmar Industries AB........... 106,419
--------------
MEDICAL SUPPLIES
5,000 Getinge Industrier AB (B
Shares)........................ 85,696
--------------
TELECOMMUNICATIONS
4,950 Ericsson (L.M.) Telephone Co.
AB (Series "B" Free)........... 99,479
--------------
TOTAL SWEDEN................... 1,293,646
--------------
SWITZERLAND (1.0%)
CONGLOMERATES
130 ABB AG - Bearer................ 154,002
--------------
INSURANCE
130 Schweizerische
Rueckversicherungs-
Gesellschaft................... 129,131
--------------
PHARMACEUTICALS
15 Roche Holdings AG.............. 110,651
180 Sandoz AG...................... 200,902
--------------
311,553
--------------
TOTAL SWITZERLAND.............. 594,686
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
UNITED KINGDOM (5.4%)
AEROSPACE
46,000 Rolls-Royce PLC................ $ 155,270
--------------
AUTO PARTS
17,000 BBA Group PLC.................. 77,215
--------------
BANKING
4,000 HSBC Holdings PLC.............. 66,078
10,000 National Westminster Bank
PLC............................ 97,374
--------------
163,452
--------------
BUILDING & CONSTRUCTION
9,000 Williams Holdings PLC.......... 46,478
--------------
BUILDING MATERIALS
20,000 Blue Circle Industries PLC..... 112,618
15,000 Redland PLC.................... 96,830
--------------
209,448
--------------
BUSINESS SERVICES
10,000 De La Rue PLC.................. 93,952
--------------
CHEMICALS
10,000 Courtaulds PLC................. 68,131
--------------
ELECTRICAL EQUIPMENT
17,000 General Electric Co. PLC....... 100,221
14,750 The BICC Group PLC............. 73,076
--------------
173,297
--------------
FOREIGN GOVERNMENT
L 75K United Kingdom Treasury Gilt
10.00% due 02/26/01............ 128,693
L 150K United Kingdom Treasury Gilt
8.00% due 06/10/03............. 238,137
L 100K United Kingdom Treasury Gilt
8.50% due 12/07/05............. 162,355
L 80K United Kingdom Treasury Gilt
7.75% due 09/08/06............. 122,768
L 100K United Kingdom Treasury Gilt
9.00% due 10/13/08............. 167,411
--------------
819,364
--------------
INSURANCE
15,000 Prudential Corp. PLC........... 101,263
22,804 Royal & Sun Alliance Insurance
Group PLC...................... 134,083
--------------
235,346
--------------
LEISURE
10,000 Granada Group PLC.............. 125,140
--------------
MULTI-INDUSTRY
20,000 Tomkins PLC.................... 78,397
--------------
NATURAL GAS
26,000 British Gas PLC................ 77,651
--------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
OIL - INTERNATIONAL INTEGRATED
7,300 Shell Transport & Trading Co.
PLC............................ $ 104,751
--------------
PHARMACEUTICALS
9,500 Glaxo Wellcome PLC............. 132,183
--------------
PUBLISHING
8,000 EMAP PLC....................... 85,117
--------------
RETAIL
30,000 Asda Group PLC................. 53,431
9,000 Great Universal Stores PLC..... 84,557
14,500 W.H. Smith Group PLC........... 108,263
--------------
246,251
--------------
TELECOMMUNICATIONS
26,000 British Telecommunications
PLC............................ 146,808
28,762 Securicor PLC.................. 111,848
--------------
258,656
--------------
UTILITIES
7,000 Severn Trent PLC............... 62,391
--------------
TOTAL UNITED KINGDOM........... 3,212,490
--------------
UNITED STATES (28.2%)
AEROSPACE & DEFENSE
3,200 Boeing Co...................... 283,200
4,700 General Motors Corp. (Class
H)............................. 267,900
11,700 Watkins-Johnson Co............. 253,012
--------------
804,112
--------------
AUTO PARTS
11,600 Discount Auto Parts, Inc.*..... 275,500
--------------
AUTOMOTIVE
9,500 Chrysler Corp.................. 269,562
--------------
BANKING
3,500 BankAmerica Corp............... 279,125
3,400 Citicorp....................... 278,375
--------------
557,500
--------------
CHEMICALS
9,600 Monsanto Co.................... 300,000
--------------
COMPUTER SOFTWARE
2,300 Microsoft Corp.*............... 270,825
--------------
COMPUTERS - SYSTEMS
5,600 Diebold, Inc................... 306,600
6,400 Hewlett-Packard Co............. 281,600
2,900 International Business Machines
Corp........................... 312,837
--------------
901,037
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
DRUGS & HEALTHCARE
4,900 American Home Products Corp.... $ 278,075
5,700 Johnson & Johnson.............. 272,175
3,800 Pfizer, Inc.................... 265,525
--------------
815,775
--------------
ELECTRONICS
3,400 General Electric Co............ 280,075
--------------
ELECTRONICS - SEMICONDUCTORS/COMPONENTS
3,800 Intel Corp..................... 285,000
--------------
ENTERTAINMENT
9,900 Carnival Corp. (Class A)....... 266,062
--------------
FINANCIAL SERVICES
4,500 Beneficial Corp................ 243,000
$ 50K Conseco, Inc.
10.50% due 12/15/04............ 57,013
6,700 Travelers Group, Inc........... 283,075
--------------
583,088
--------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
4,200 Campbell Soup Co............... 285,075
8,400 PepsiCo Inc.................... 265,650
--------------
550,725
--------------
HARDWARE & TOOLS
7,100 Black & Decker Corp............ 260,925
--------------
HEALTHCARE - DIVERSIFIED
4,400 PacifiCare Health Systems
(Class B)*..................... 297,000
--------------
HOSPITAL MANAGEMENT
$ 50K Columbia/HCA Healthcare Corp.
7.50% due 11/15/95............. 47,125
--------------
INSURANCE
1,078 Aetna Inc...................... 62,659
359 Aetna Inc. (Class C) $1.48
(Conv. Pref.) ................. 22,482
6,500 Allstate Corp.................. 290,875
--------------
376,016
--------------
OFFICE EQUIPMENT & SUPPLIES
6,400 Alco Standard Corp............. 280,000
--------------
OIL - INTERNATIONAL INTEGRATED
3,250 Exxon Corp..................... 267,313
3,250 Texaco, Inc.................... 276,250
--------------
543,563
--------------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
OIL INTEGRATED - DOMESTIC
2,300 Atlantic Richfield Co.......... $ 266,800
--------------
OIL WELL EQUIPMENT & SERVICE
9,900 Dresser Industries, Inc........ 267,300
--------------
RETAIL - SPECIALTY
42,000 Charming Shoppes, Inc.*........ 265,125
9,300 Payless ShoeSource, Inc.*...... 301,088
--------------
566,213
--------------
SAVINGS & LOAN ASSOCIATIONS
$ 50K First Nationwide Bank 10.00%
due 10/01/06................... 55,564
16,400 Roosevelt Financial Group,
Inc............................ 262,400
--------------
317,964
--------------
STEEL & IRON
15,500 Inland Steel Industries,
Inc............................ 269,313
--------------
TELECOMMUNICATION EQUIPMENT
5,500 Cisco Systems, Inc.*........... 284,625
--------------
TELECOMMUNICATIONS
6,600 GTE Corp....................... 272,250
6,000 NYNEX Corp..................... 269,250
--------------
541,500
--------------
TELECOMMUNICATIONS - LONG DISTANCE
7,800 Sprint Corp.................... 285,675
--------------
TOBACCO
2,700 Philip Morris Companies,
Inc............................ 282,488
--------------
U.S. GOVERNMENT OBLIGATIONS
$ 1,900K U.S. Treasury Bond
6.25% due 08/15/23............. 1,710,594
$ 50K U.S. Treasury Bond
7.50% due 11/15/24............. 52,656
$ 225K U.S. Treasury Bond 7.625% due
02/15/25....................... 240,680
$ 2,500K U.S. Treasury Bond 6.875% due
08/15/25....................... 2,454,297
$ 150K U.S. Treasury Note 6.625% due
03/31/97....................... 150,820
$ 175K U.S. Treasury Note
6.50% due 04/30/99............. 175,602
$ 195K U.S. Treasury Note 6.875% due
08/31/99....................... 197,346
$ 50K U.S. Treasury Note
7.75% due 12/31/99............. 51,953
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS JULY 31, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
$ 400K U.S. Treasury Note 5.625% due
11/30/00....................... $ 385,625
$ 75K U.S. Treasury Note
7.50% due 11/15/01............. 77,988
$ 200K U.S. Treasury Note
5.75% due 08/15/03............. 189,625
$ 100K U.S. Treasury Note
7.50% due 02/15/05............. 104,375
$ 50K U.S. Treasury Note
7.00% due 07/15/06............. 50,719
--------------
5,842,280
--------------
TOTAL UNITED STATES............ 16,888,048
--------------
TOTAL COMMON AND PREFERRED
STOCKS AND BONDS
(IDENTIFIED COST
$52,974,820)................... 55,779,138
--------------
</TABLE>
<TABLE>
<CAPTION>
CURRENCY
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
PURCHASED PUT OPTION ON FOREIGN CURRENCY (0.0%)
FRF 500 November 14, 1996/
FRF 5.192
(Identified Cost $10,100)...... 1,950
--------------
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- --------------------------------------------------------------------
SHORT-TERM INVESTMENT (a) (5.7%)
U.S. GOVERNMENT AGENCY
Federal Home Loan Banks 5.62%
due 08/01/96 (Amortized Cost
$3,400 $3,400,000)..................... $ 3,400,000
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST $56,384,920) (B)...... 98.9 % 59,181,088
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES............................ 1.1 643,271
-------- ---------------
NET ASSETS............................. 100.0 % $ 59,824,359
-------- ---------------
-------- ---------------
<FN>
- ---------------------
ADR American Depository Receipt.
K In thousands.
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
(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 approximates identified
cost. The aggregate gross unrealized appreciation was $4,594,777 and the
aggregate gross unrealized depreciation was $1,798,609, resulting in net
unrealized appreciation of $2,796,168.
</TABLE>
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JULY 31, 1996:
<TABLE>
<CAPTION>
CONTRACTS TO IN DELIVERY UNREALIZED
RECEIVE EXCHANGE FOR DATE APPRECIATION
- ----------------------------------------------------
<S> <C> <C> <C>
ESP
25,756,336 $ 205,262 08/06/96 $ 441
-----
-----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION
SUMMARY OF INVESTMENTS JULY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- -------------------------------------------------------------------------------
<S> <C> <C>
Aerospace.................................. $ 155,270 0.3%
Aerospace & Defense........................ 804,112 1.3
Apparel.................................... 82,878 0.1
Appliances & Household Durables............ 46,594 0.1
Auto Parts................................. 352,715 0.6
Automotive................................. 1,256,486 2.1
Banking.................................... 3,275,005 5.5
Banks...................................... 167,952 0.3
Beverages - Soft Drinks.................... 96,940 0.1
Brewery.................................... 228,538 0.4
Building & Construction.................... 1,929,812 3.2
Building Materials......................... 389,209 0.7
Business Services.......................... 896,198 1.5
Chemicals.................................. 1,768,077 3.0
Computer Software.......................... 270,825 0.5
Computers - Systems........................ 901,037 1.5
Conglomerates.............................. 1,734,484 2.9
Consumer Products.......................... 109,338 0.1
Drugs & Healthcare......................... 815,775 1.4
Electrical Equipment....................... 173,296 0.3
Electronic & Electrical Equipment.......... 2,302,051 3.9
Electronics................................ 280,075 0.5
Electronics -
Semiconductors/Components................ 285,000 0.5
Energy..................................... 252,545 0.4
Engineering & Construction................. 191,011 0.3
Entertainment.............................. 321,217 0.5
Financial Services......................... 1,921,634 3.2
Food Processing............................ 150,477 0.3
Food, Beverage, Tobacco & Household
Products................................. 1,069,551 1.8
Foreign Currency Put Option................ 1,950 --
Foreign Government......................... 4,087,659 6.9
Gas........................................ 116,899 0.2
Hardware & Tools........................... 260,925 0.4
Healthcare - Diversified................... 297,000 0.5
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- -------------------------------------------------------------------------------
<S> <C> <C>
Hospital Management........................ $ 47,125 0.1%
Insurance.................................. 1,499,435 2.5
International Trade........................ 467,697 0.8
Investment Companies....................... 109,590 0.2
Leisure.................................... 365,881 0.6
Machinery.................................. 2,923,667 4.9
Manufacturing.............................. 277,491 0.5
Medical Supplies........................... 85,696 0.1
Metals & Mining............................ 313,039 0.5
Multi-Industry............................. 220,302 0.4
Multi-Line Insurance....................... 3,487 --
Natural Gas................................ 272,819 0.5
Office Equipment & Supplies................ 280,000 0.5
Oil - International Integrated............. 648,314 1.1
Oil Integrated - Domestic.................. 266,800 0.4
Oil Related................................ 172,665 0.3
Oil Well Equipment & Service............... 267,300 0.4
Paper & Forest Products.................... 106,051 0.2
Pharmaceuticals............................ 1,084,046 1.8
Publishing................................. 493,442 0.8
Real Estate................................ 2,197,439 3.7
Retail..................................... 1,252,473 2.1
Retail - Specialty......................... 1,486,250 2.5
Savings & Loan Associations................ 317,964 0.5
Steel & Iron............................... 1,202,411 2.0
Telecommunication Equipment................ 558,675 0.9
Telecommunications......................... 3,180,220 5.3
Telecommunications
- Long Distance.......................... 285,675 0.5
Textiles................................... 598,034 1.0
Textiles - Apparel......................... 320,225 0.5
Tobacco.................................... 282,487 0.5
Transportation............................. 645,641 1.1
U.S. Government Agency..................... 3,400,000 5.6
U.S. Government Obligations................ 5,842,280 9.8
Utilities.................................. 372,644 0.5
Utilities - Electric....................... 341,288 0.5
----------------- ---
$ 59,181,088 98.9%
----------------- ---
----------------- ---
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
- ------------------------------------------------------------------
<S> <C> <C>
Common Stocks........................... $ 45,259,190 75.6%
Corporate Bonds......................... 165,973 0.3
Foreign Currency Put Option............. 1,950 --
Preferred Stocks........................ 424,037 0.7
Short-Term Investment................... 3,400,000 5.7
U.S. & Foreign Government Obligations... 9,929,938 16.6
------------ ---
$ 59,181,088 98.9%
------------ ---
------------ ---
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $56,384,920)............................. $59,181,088
Cash (including $20,310 in foreign currency)................ 91,449
Receivable for:
Interest................................................ 306,327
Shares of beneficial interest sold...................... 239,578
Investments sold........................................ 205,262
Dividends............................................... 23,157
Foreign withholding taxes reclaimed..................... 21,508
Deferred organizational expenses............................ 126,342
Receivable from affiliate................................... 51,224
Prepaid expenses............................................ 23,105
-----------
TOTAL ASSETS........................................... 60,269,040
-----------
LIABILITIES:
Payable for:
Investments purchased................................... 222,374
Investment management fee............................... 53,316
Plan of distribution fee................................ 48,586
Shares of beneficial interest repurchased............... 40,888
Accrued expenses............................................ 79,517
-----------
TOTAL LIABILITIES...................................... 444,681
-----------
NET ASSETS:
Paid-in-capital............................................. 55,433,889
Net unrealized appreciation................................. 2,799,195
Accumulated undistributed net investment income............. 48,309
Accumulated undistributed net realized gain................. 1,542,966
-----------
NET ASSETS............................................. $59,824,359
-----------
-----------
NET ASSET VALUE PER SHARE,
5,071,957 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$11.80
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JULY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Interest (net of $185 foreign withholding tax).............. $ 388,660
Dividends (net of $29,082 foreign withholding tax).......... 309,599
-----------
TOTAL INCOME........................................... 698,259
-----------
EXPENSES
Investment management fee................................... 264,223
Plan of distribution fee.................................... 235,445
Professional fees........................................... 41,330
Custodian fees.............................................. 28,394
Transfer agent fees and expenses............................ 27,262
Organizational expenses..................................... 17,607
Registration fees........................................... 11,370
Trustees' fees and expenses................................. 9,961
Shareholder reports and notices............................. 6,837
Other....................................................... 5,849
-----------
TOTAL EXPENSES BEFORE AMOUNTS
WAIVED/REIMBURSED...................................... 648,278
LESS: AMOUNTS WAIVED/REIMBURSED........................ (757)
-----------
TOTAL EXPENSES AFTER AMOUNTS
WAIVED/REIMBURSED...................................... 647,521
-----------
NET INVESTMENT INCOME.................................. 50,738
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments............................................. 1,589,290
Foreign exchange transactions........................... (42,352)
-----------
TOTAL GAIN............................................. 1,546,938
-----------
Net change in unrealized appreciation/depreciation on:
Investments............................................. (1,250,163)
Translation of forward foreign exchange contracts, other
assets and liabilities denominated in foreign
currencies............................................ (34,725)
-----------
TOTAL DEPRECIATION..................................... (1,284,888)
-----------
NET GAIN............................................... 262,050
-----------
NET INCREASE................................................ $ 312,788
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
PERIOD
FEBRUARY
FOR THE SIX 28, 1995*
MONTHS ENDED THROUGH
JULY 31, 1996 JANUARY
(UNAUDITED) 31, 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 50,738 $ 482,720
Net realized gain........................................... 1,546,938 1,981,039
Net change in unrealized appreciation/depreciation.......... (1,284,888) 4,084,083
------------------ ----------
NET INCREASE........................................... 312,788 6,547,842
------------------ ----------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income....................................... (465,877) (1,130,515)
Net realized gain........................................... (60,968) (812,800 )
------------------ ----------
TOTAL.................................................. (526,845) (1,943,315)
------------------ ----------
Net increase from transactions in shares of beneficial
interest.................................................. 15,767,245 39,566,644
------------------ ----------
TOTAL INCREASE......................................... 15,553,188 44,171,171
NET ASSETS:
Beginning of period......................................... 44,271,171 100,000
------------------ ----------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$48,309 AND $463,448, RESPECTIVELY)..................... $59,824,359 $44,271,171
------------------ ----------
------------------ ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1996 (UNAUDITED)
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter Global Asset Allocation 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 total return on its investments. The Fund seeks to achieve its
objective through a managed investment policy utilizing a portfolio of U.S. and
foreign equity, debt and money market securities. The Fund was organized as a
Massachusetts business trust on October 18, 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 February 28, 1995.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates. The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (in
cases where securities are traded on more than one exchange; the securities are
valued on the exchange designated as the primary market 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 or
Sub-Advisers 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); (4) certain of the Fund's portfolio securities may be valued
by an outside pricing service approved by the Trustees. The pricing service
utilizes a matrix system incorporating security quality, maturity and coupon as
the evaluation model parameters, and/or research and evaluations by its staff,
including review of broker-dealer market price quotations, if available, in
determining what it believes is the fair valuation of the portfolio securities
valued by such pricing service; and (5) short-term debt securities having a
maturity date of more than sixty days at time of purchase are valued on a
mark-to-market basis until
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1996 (UNAUDITED) CONTINUED
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 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 currencies gain or loss. 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. OPTION ACCOUNTING PRINCIPLES -- When the Fund writes a call option, an amount
equal to the premium received is included in the Fund's Statement of Assets and
Liabilities as a liability which is subsequently marked-to-market to reflect the
current market value of the option written. If a written option either expires
or the Fund enters into a closing purchase transaction, the Fund realizes a gain
or loss without regard to any unrealized gain or loss on the underlying security
or currency and the
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1996 (UNAUDITED) CONTINUED
liability related to such option is extinguished. If a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security or currency and the proceeds from such sale are increased by the
premium originally received.
When the Fund purchases a call or put option, the premium paid is recorded as an
investment and is subsequently marked-to-market to reflect the current market
value. If a purchased option expires, the Fund will realize a loss to the extent
of the premium paid. If the Fund enters into a closing sale transaction, a gain
or loss is realized for the difference between the proceeds from the sale and
the cost of the option. If a put option is exercised, the cost of the security
or currency sold upon exercise will be increased by the premium originally paid.
If a call option is exercised, the cost of the security purchased upon exercise
will be increased by the premium originally paid.
F. 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.
G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the record date. The amount of dividends
and distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Dividends and distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as dividends in excess
of net investment income or distributions in excess of net realized capital
gains. To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of paid-in-capital.
H. ORGANIZATIONAL EXPENSES -- The Investment Manager paid the organizational
expenses of the Fund in the amount of $176,647 and was reimbursed exclusive of
$29,699 which had been absorbed by the Investment Manager. Such expenses have
been deferred and are being amortized on the straight-line method over a period
not to exceed five years from commencement of operations.
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1996 (UNAUDITED) CONTINUED
2. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, calculated daily and payable monthly, by applying the
annual rate of 1.0% 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.
Under Sub-Advisory Agreements between TCW Funds Management, Inc. and Morgan
Grenfell Investment Services Ltd. (the "Sub-Advisors") and the Investment
Manager, the Sub-Advisors provide the Fund with investment advice and portfolio
management relating to the Fund's investments in securities, subject to the
overall supervision of the Investment Manager. As compensation for the services
provided pursuant to the Sub-Advisory Agreements, the Investment Manager pays
each Sub-Advisor monthly compensation equal to 30% of its monthly compensation.
The Investment Manager had undertaken to reimburse all expenses (except for the
Plan of Distribution fee and brokerage fees) and waive the compensation provided
for in the Agreement until December 31, 1995. At July 31, 1996, included in the
Statement of Assets and Liabilities, was a receivable from an affiliate which
represents expense reimbursements due 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
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1996 (UNAUDITED) CONTINUED
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 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 by the Distributor, may be recovered through future
distribution fees from the Fund and contingent deferred sales charges from the
Fund's shareholders.
Although there is no legal obligation for the Fund to pay expenses incurred in
excess of payments made to the Distributor under the Plan and the proceeds of
contingent deferred sales charges paid by investors upon redemption of shares,
if for any reason the Plan is terminated, the Trustees will consider at that
time the manner in which to treat such expenses. The Distributor has advised the
Fund that such excess amounts, included carrying charges, totaled $3,273,794 at
July 31, 1996.
The Distributor has informed the Fund that for the six months ended July 31,
1996, it received approximately $66,000 in contingent deferred sales charges
from 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 July 31, 1996 aggregated
$32,775,647 and $14,827,633, respectively. Included in the aforementioned are
purchases and sales of U.S. Government securities of $5,281,791 and $335,495,
respectively.
For the six months ended July 31, 1996, the Fund incurred brokerage commissions
of $11,579 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 July 31, 1996, the Fund had
transfer agent fees and expenses payable of approximately $1,000.
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS JULY 31, 1996 (UNAUDITED) CONTINUED
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE PERIOD
JULY 31, 1996 FEBRUARY 28, 1995*
---------------------------- THROUGH
JANUARY 31, 1996
(UNAUDITED) --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 1,615,999 $ 19,366,206 4,035,815 $ 42,743,175
Reinvestment of dividends and distributions...................... 39,029 471,857 64,960 741,197
----------- -------------- ----------- ------------
1,655,028 19,838,063 4,100,775 43,484,372
Repurchased...................................................... (339,580) (4,070,818) (354,266) (3,917,728)
----------- -------------- ----------- ------------
Net increase..................................................... 1,315,448 $ 15,767,245 3,746,509 $ 39,566,644
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
- ------------------------------
* Commencement of operations.
6. FEDERAL INCOME TAX STATUS
As of January 31, 1996, the Fund had permanent book/tax differences attributable
to foreign currency gains.
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 July 31, 1996, the Fund had outstanding forward contracts to facilitate
settlement of foreign currency denominated portfolio transactions.
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 GLOBAL ASSET ALLOCATION FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FEBRUARY 28, 1995*
MONTHS ENDED THROUGH
JULY 31, 1996 JANUARY 31, 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
(UNAUDITED)
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period......... $ 11.79 $ 10.00
------ ------
Net investment income (loss)................. (0.01) 0.17
Net realized and unrealized gain............. 0.13 2.20
------ ------
Total from investment operations............. 0.12 2.37
------ ------
Less dividends and distributions:
Net investment income..................... (0.10) (0.34)
Net realized gain......................... (0.01) (0.24)
------ ------
Total dividends and distributions............ (0.11) (0.58)
------ ------
Net asset value, end of period............... $ 11.80 $ 11.79
------ ------
------ ------
TOTAL INVESTMENT RETURN+..................... 0.99%(1) 23.89%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses..................................... 2.45%(2) 1.14%(2)(3)
Net investment income........................ 0.19%(2) 1.71%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands...... $59,824 $44,271
Portfolio turnover rate...................... 31%(1) 71%(1)
Average commission rate paid................. $0.0006 --
</TABLE>
- ---------------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge. Calculated based
on the net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) If the Investment Manager had not reimbursed all expenses, the
above annualized expense and net investment loss ratios would
have been 2.87% and (0.02)%, respectively.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Mark A. Bavoso
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
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 the distribution to prospective investors
in the Fund unless preceded or accompanied by an effective prospectus.
[LOGO]
DEAN WITTER
GLOBAL ASSET
ALLOCATION FUND
[GRAPHIC]
SEMIANNUAL REPORT
JULY 31, 1996
