<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
Two World Trade Center,
New York, New York 10048
LETTER TO THE SHAREHOLDERS January 31, 1997
DEAR SHAREHOLDER:
In general, 1996 was a positive period for global equity and fixed income
markets. The U.S. economy continued its impressive expansion without
generating undue inflationary pressure while growth, albeit gradual, returned
to Japan, Europe and Latin America. Among the major equity markets, the U.S.
remained the best performer, followed by Latin America, continental Europe
and Hong Kong. Japan, after a recovery rally early in 1996, corrected from
its June highs and weakened considerably during the latter part of the year.
PERFORMANCE
For the fiscal year ended January 31, 1997, Dean Witter Global Asset
Allocation Fund provided a total return of 4.58 percent versus 11.07 percent
for the Morgan Stanley Capital International World Index and 14.07 percent
for the Lipper Global Flexible Portfolio Funds Index. The accompanying chart
compares the performance of a $10,000 investment in the Fund from inception
(February 28, 1995) through the fiscal year ended January 31, 1997, with the
performance of similar hypothetical investments in the Morgan Stanley Capital
International World Index and the Lipper Global Flexible Portfolio Funds
Index.
The Fund's underperformance versus its benchmarks is attributable to the
regional allocation decisions we made throughout 1996. For example, our heavy
exposure in Japan and our underexposure in the United States and Europe
negatively impacted performance. However, we believe that the Japanese equity
market will recover and outperform other world equity markets over the long
term.
ASSET ALLOCATION UPDATE
As has been the case since inception in February 1995, Dean Witter Global
Asset Allocation Fund continues to be significantly overweighted in equity
markets around the globe. As interest rates (primarily in the United States)
rose from their lows in 1996, the Fund reduced its cash holdings in order
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
LETTER TO THE SHAREHOLDERS January 31, 1997, continued
to increase its fixed income exposure. At the end of January 1997, the Fund's
strategic allocation target was 80 percent global equities, 17 percent global
fixed income instruments and 3 percent U.S. cash equivalents.
THE PORTFOLIO
Both the equity and fixed income portfolios are extensively diversified
throughout global markets. The equity portfolio has holdings in Japan (27
percent, of equity holdings), Europe (27 percent), the United States (25
percent), the Pacific Rim (16 percent) and Latin America (5 percent).
At fiscal year-end, the fixed-income portfolio was invested in both U.S. and
European debt instruments, including government and corporate bonds. We made
our most recent shifts into the fixed-income sector from cash investments to
increase the portfolio's exposure to the U.S. bond market. U.S. treasuries
and U.S. corporates now represent over half of the Fund's total fixed income
investments, with the balance in German, Danish, British and Italian
corporate bonds.
The Fund is strategically diversified across global industries, as detailed
in the accompanying report. Among the largest industry groups represented are
computers-systems (Diebold, Inc., Hewlett-Packard Co., Siemens), aerospace &
defense (Boeing Co., Rolls-Royce PLC), consumer goods (PepsiCo, Inc., Canon,
Inc.) and financials (Citicorp, Banco Bilbao Vizcaya, Royal & Sun Alliance
Insurance Group PLC).
LOOKING AHEAD
As global industrial economies seem to be settling into a gradual growth
cycle, with low inflation and accommodative central bank policies, the
outlook for global long-dated financial assets continues to be
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
GROWTH OF $10,000
DATE TOTAL MSCI WORLD IX LIPPER IX
=================================================================
February 28,1995 $10,000 $10,000 $10,000
- -----------------------------------------------------------------
January 31, 1996 $12,389 $12,116 $11,993
- -----------------------------------------------------------------
January 31, 1997 $12,556 (3) $13,458 $13,680
=================================================================
CUMULATIVE TOTAL RETURNS
ONE YEAR LIFE OF FUND
================================================
4.58 (1) 14.40 (1)
------------------------------------------------
-0.42 (2) 12.56 (2)
================================================
=================================================================
_______ Fund ________ MSCI WORLD IX (4) _______ LIPPER IX (5)
=================================================================
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
- ----------------------------------------
(1) Figure shown assumes reinvestment of all distributions and does not
reflect the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction
of the maximum applicable contingent deferred sales charge (CDSC) (1 year
- 5%, since inception - 4%). See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value after the deduction of a 4% CDSC, assuming a complete
redemption on January 31, 1997.
(4) The Morgan Stanley Capital International World Index (MSCI) measures
performance for a diverse range of global stock markets including the
U.S., Canada, Europe, Australia, New Zealand and the Far East. The index
does not include any expenses, fees or charges or reinvestment of
dividends. The Index is unmanaged and should not be considered an
investment.
(5) The Lipper Global Flexible Portfolio Funds Index is an equally-weighted
performance index of the largest qualifying funds (based on net assets)
in the Lipper Global Flexible Portfolio Funds objective. The Index, which
is adjusted for capital gains distributions and income dividends, is
unmanaged and should not be considered an investment. There are currently
10 funds represented in this Index.
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
LETTER TO THE SHAREHOLDERS January 31, 1997, continued
positive. U.S. budget negotiations, the mid-year takeover of Hong Kong by
China and the eventual fall elections in Great Britain will all likely add
volatility to global markets. However, barring unforeseen calamity, the
general macroeconomic world view appears bright.
We appreciate your support and look forward to continuing to serve your
investment needs.
Very truly yours,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1997
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED
STOCKS, BONDS, WARRANTS
AND RIGHTS (97.6%)
ARGENTINA (0.5%)
Banking
1,880 Banco de Galicia y Buenos Aires S.A. de C.V. (ADR) .............. $ 45,825
1,610 Banco Frances del Rio de la Plata S.A. (ADR) .................... 48,300
-------------
94,125
-------------
Energy
2,700 Yacimentos Petroliferos Fiscales S.A. (ADR) ..................... 75,263
-------------
Food, Beverage, Tobacco & Household Products
1,100 Disco S.A. (ADR)* ............................................... 29,700
-------------
Multi-Industry
17,298 Perez Companc S.A. (Class B) .................................... 129,261
-------------
TOTAL ARGENTINA ................................................. 328,349
-------------
BELGIUM (0.3%)
Retail
3,750 G.I.B. Holdings Ltd. ........................................... 174,068
-------------
BRAZIL (1.4%)
Appliances & Household Durables
3,500 Refrigeracao Parana S.A. (ADR)* ................................. 33,469
-------------
Banking
4,250,000 Banco Bradesco S.A. (Pref.) ..................................... 34,143
-------------
Brewery
153,600 Companhia Cervejaria Brahma (Conv. Pref.) ....................... 93,429
-------------
Energy
944,000 Petroleo Brasileiro S.A. (Pref.) ................................ 181,469
-------------
Industrials
25,000 Dixie Toga S.A. (Pref.) ......................................... 19,845
-------------
Metals & Mining
2,840 Companhia Vale do Rio Doce S.A. (Pref.)(ADR) .................... 63,368
-------------
Steel & Iron
84,500,000 Usinas Siderurgicas de Minas Gerais S.A. (Pref.) ................ 96,170
-------------
Telecommunications
3,280 Telecomunicacoes Brasileiras S.A. (ADR) ......................... $ 286,180
17,871 Telecomunicacoes de Sao Paulo S.A.* ............................. 4,119
217,000 Telecomunicacoes de Sao Paulo S.A. (Pref.) ...................... 50,846
-------------
341,145
-------------
Utilities-Electric
1,600 Companhia Energetica de Minas Gerais S.A. (Pref.)(ADR) .......... 66,800
-------------
TOTAL BRAZIL ................................................... 929,838
-------------
CANADA (0.5%)
Telecommunication Equipment
10,000 Newbridge Networks Corp.* ....................................... 345,000
-------------
CHILE (0.4%)
Beverages-Soft Drinks
1,420 Embotelladora Andina S.A. (ADR) ................................. 44,730
-------------
Investment Companies
21,000 The Five Arrows Chile Investment Trust Ltd. .................... 60,375
-------------
Telecommunications
3,125 Compania de Telecommunicaciones de Chile S.A. (ADR) ............. 77,734
-------------
Utilities-Electric
2,100 Enersis S.A. (ADR) .............................................. 64,838
-------------
TOTAL CHILE ..................................................... 247,677
-------------
COLOMBIA (0.1%)
Banking
3,500 Banco Industrial Colombiano S.A. (ADR) .......................... 60,813
-------------
DENMARK (2.7%)
Air Transport
1,465 Kobenhavns Lufthavne AS ......................................... 160,472
-------------
Government Obligations
Kingdom of Denmark
DKK 2,000K 7.00% due 12/15/04............................................. 335,071
Kingdom of Denmark
DKK 1,500K 8.00% due 03/15/06............................................. 264,424
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1997, continued
SHARES/PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------
Kingdom of Denmark
DKK 2,800K 8.00% due 05/13/03............................................. $ 497,441
Kingdom of Denmark
DKK 1,750K 9.00% due 11/15/00............................................. 319,100
-------------
1,416,036
-------------
Pharmaceuticals
1,880 Novo-Nordisk AS (Series B) ...................................... 174,363
-------------
TOTAL DENMARK ................................................... 1,750,871
-------------
FRANCE (3.3%)
Building Materials
1,000 Imetal S.A. ..................................................... 153,791
-------------
Energy
2,300 Elf Aquitaine S.A. .............................................. 223,204
-------------
Financial Services
1,950 Cetelem ........................................................ 243,155
-------------
Foods & Beverages
580 LVMH Moet-Hennessy Louis Vuitton ................................ 146,743
3,800 SEITA ........................................................... 144,075
-------------
290,818
-------------
Household Products
1,030 Societe BIC S.A. ................................................ 164,175
-------------
Insurance
2,700 AXA-UAP ......................................................... 178,097
3,500 Scor ........................................................... 125,870
-------------
303,967
-------------
Oil & Gas
1,650 Total S.A. (B Shares) ........................................... 141,935
-------------
Pharmaceuticals
1,345 Sanofi S.A. ..................................................... 134,901
-------------
Retail
420 Carrefour Supermarche ........................................... 251,992
673 Castorama Dubois Investissement ................................. 110,677
Castorama Dubois Investissement
3.15% due 01/01/03
26 (Conv. Pref.).................................................. 5,798
-------------
368,467
-------------
Steel & Iron
9,500 Usinor Sacilor .................................................. 134,942
-------------
TOTAL FRANCE ................................................... 2,159,355
-------------
GERMANY (3.7%)
Automotive
Bayerische Motoren Werke
280 (BMW) AG....................................................... $ 179,240
580 Volkswagen AG ................................................... 272,179
-------------
451,419
-------------
Chemicals
4,638 BASF AG ......................................................... 167,836
3,700 Bayer AG ........................................................ 140,441
2,100 SGL Carbon AG ................................................... 277,189
-------------
585,466
-------------
Consumer Products
1,400 Adidas AG ....................................................... 132,337
-------------
Government Obligations
German Unity Fund
DEM 290K 8.00% due 01/12/02............................................. 202,152
DEM 250K Germany (Federal Republic) 6.50% due 10/14/05 ................... 160,951
DEM 390K Germany (Federal Republic) 7.25% due 10/21/02 ................... 264,720
Treuhandanstalt
DEM 520K 5.00% due 12/17/98 ............................................ 326,305
-------------
954,128
-------------
Pharmaceuticals
1,850 Gehe AG ......................................................... 122,039
-------------
Utilities-Electric
2,650 VEBA AG ......................................................... 146,512
-------------
TOTAL GERMANY ................................................... 2,391,901
-------------
HONG KONG (7.5%)
Banking
57,000 Guoco Group Ltd. ................................................ 322,196
19,600 HSBC Holdings PLC ............................................... 454,038
-------------
776,234
-------------
Conglomerates
75,000 Hutchison Whampoa, Ltd. ......................................... 566,224
38,000 Swire Pacific Ltd. (Class A) .................................... 349,413
-------------
915,637
-------------
Leisure
78,000 Hong Kong & Shanghai Hotels Ltd. ................................ 143,443
-------------
Real Estate
64,000 Cheung Kong (Holdings) Ltd. ..................................... 596,745
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1997, continued
SHARES/PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------
51,000 Henderson Land Development Co. Ltd. ............................. $ 472,241
179,000 Hong Kong Land Holdings Ltd. .................................... 495,830
91,000 Hysan Development Co. Ltd. ...................................... 331,178
54,000 New World Development Co. Ltd. .................................. 333,114
14,000 Sun Hung Kai Properties Ltd. .................................... 158,091
-------------
2,387,199
-------------
Telecommunications
165,600 Hong Kong Telecommunications Ltd. .............................. 286,376
-------------
Utilities
221,000 Hong Kong & China Gas Co. Ltd. .................................. 416,405
-------------
TOTAL HONG KONG ................................................ 4,925,294
-------------
ITALY (2.8%)
Energy
27,500 Ente Nazionale Idrocarburi SpA .................................. 153,365
-------------
Government Obligations
Italy (Republic of)
ITL 320,000K 9.50% due 02/01/01............................................. 218,561
Italy (Republic of)
ITL 800,000K 10.00% due 08/01/03............................................ 574,441
Italy (Republic of)
ITL 440,000K 10.50% due 04/01/00............................................ 302,705
Italy (Republic of)
ITL 320,000K 10.50% due 11/01/00............................................ 224,020
-------------
1,319,727
-------------
Household Furnishings & Appliances
6,400 Industrie Natuzzi SpA (ADR) ..................................... 147,200
-------------
Telecommunications
60,000 Telecom Italia Mobile SpA ....................................... 178,288
-------------
TOTAL ITALY .................................................... 1,798,580
-------------
JAPAN (22.0%)
Automotive
65,000 Suzuki Motor Co. Ltd. ........................................... 615,885
-------------
Banking
26,000 Asahi Bank, Ltd. ................................................ $ 177,803
20,000 Bank of Tokyo-Mitsubishi Ltd. ................................... 293,318
20,000 Mitsubishi Trust & Banking ...................................... 205,982
13,000 Sanwa Bank, Ltd. ................................................ 142,457
19,000 Sumitomo Trust & Banking ........................................ 148,719
-------------
968,279
-------------
Building & Construction
27,000 Kandenko Co., Ltd. .............................................. 229,134
19,000 Nishimatsu Construction Co. ..................................... 144,805
17,000 Sekisui House Ltd. .............................................. 151,273
-------------
525,212
-------------
Business Services
33,000 Ricoh Co., Ltd. ................................................. 364,340
-------------
Chemicals
70,000 Asahi Chemical Industrial Co. Ltd. .............................. 362,198
67,000 Nippon Zeon Co. Ltd. ............................................ 257,246
27,000 Shin-Etsu Chemical Co. .......................................... 493,862
-------------
1,113,306
-------------
Electrical Equipment
20,000 Sumitomo Electric Industries ................................... 268,600
-------------
Electronic & Electrical Equipment
4,400 Advantest Corp. ................................................. 236,006
29,000 Canon, Inc. ..................................................... 614,073
41,000 Hitachi, Ltd. ................................................... 368,213
5,000 Kyocera Corp.* .................................................. 293,318
27,000 Matsushita Electric Industrial Co., Ltd.* ....................... 407,102
26,000 NGK Insulators, Ltd. ............................................ 227,074
7,000 Sony Corp. ...................................................... 471,781
-------------
2,617,567
-------------
Engineering & Construction
33,000 Kajima Corp. .................................................... 203,922
-------------
Financial Services
3,000 Japan Associated Finance ........................................ 182,170
47,000 New Japan Securities Co., Ltd.* ................................. 138,634
16,000 Nomura Securities Co. Ltd. ...................................... 204,334
8,400 Promise Co., Ltd ................................................ 349,510
-------------
874,648
-------------
Insurance
24,000 Tokio Marine & Fire Insurance Co. ............................... 217,517
-------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1997, continued
SHARES/PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------
International Trade
41,000 Mitsubishi Corp. ............................................... $ 378,347
-------------
Machinery
25,000 Daifuku Co. Ltd. ................................................ 282,195
81,000 Kawasaki Heavy Industries* ...................................... 315,671
3,800 Keyence Corp. ................................................... 425,805
33,000 Minebea Co., Ltd. ............................................... 263,195
56,000 Mitsubishi Heavy Industries, Ltd. ............................... 402,801
60,000 NSK Ltd. ........................................................ 335,668
-------------
2,025,335
-------------
Manufacturing
6,900 Sony Music Entertainment Inc. .................................. 245,028
-------------
Metals & Mining
73,000 Mitsubishi Materials Corp. ...................................... 268,254
-------------
Pharmaceuticals
14,000 Yamanouchi Pharmaceutical Co. .................................. 261,844
-------------
Real Estate
21,000 Mitsubishi Estate Co. Ltd. ...................................... 233,583
17,000 Mitsui Fudosan Co. .............................................. 175,084
-------------
408,667
-------------
Retail
11,000 Ito-Yokado Co. Ltd. ............................................. 509,352
-------------
Retail-Specialty
20,000 Best Denki Co. Ltd. ............................................ 212,573
11,000 Joshin Denki .................................................... 106,039
-------------
318,612
-------------
Steel & Iron
179,000 NKK Corp.* ...................................................... 362,808
36,000 Yamato Kogyo Co., Ltd. .......................................... 290,681
-------------
653,489
-------------
Telecommunications
68 DDI Corp. ....................................................... 416,281
44 Nippon Telegraph & Telephone .................................... 317,212
-------------
733,493
-------------
Textiles
58,000 Teijin Ltd. ..................................................... 214,089
-------------
Textiles-Apparel
21,000 Tokyo Style ..................................................... 256,077
-------------
Transportation
41 East Japan Railway Co. .......................................... $ 170,932
32,000 Nippon Yusen Kabushiki Kaish .................................... 125,237
-------------
296,169
-------------
TOTAL JAPAN .................................................... 14,338,032
-------------
MALAYSIA (3.5%)
Automotive
57,000 Diversified Resources Berhad .................................... 220,175
-------------
Banking
63,000 Public Finance Berhad ........................................... 113,564
-------------
Building & Construction
42,000 Gamuda Berhad ................................................... 163,924
3,000 Gamuda Berhad (Rights) .......................................... 4,611
6,000 Gamuda Berhad (Warrants) due 05/01/97 ........................... 6,977
44,000 Metacorp Berhad ................................................. 125,699
40,000 Road Builder (M) Holdings Berhad ................................ 239,810
57,000 United Engineers (Malaysia) Berhad Ltd. ......................... 511,447
-------------
1,052,468
-------------
Entertainment
51,000 Resorts World Berhad ............................................ 256,508
-------------
Financial Services
28,000 Arab Malaysian Finance Berhad ................................... 172,373
-------------
Leisure
154,000 Magnum Corporation Berhad ....................................... 309,822
-------------
Property
60,000 Sunway City Berhad .............................................. 147,266
-------------
TOTAL MALAYSIA ................................................. 2,272,176
-------------
MEXICO (1.4%)
Banking
8,750 Grupo Financiero Inbursa, S.A. de C.V. (B Shares) ............... 31,350
-------------
Brewery
Grupo Modelo S.A. de C.V.
4,400 (Series C)..................................................... 26,406
-------------
Building & Construction
4,000 Apasco S.A. de C.V. ............................................ 28,816
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1997, continued
SHARES/PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------
2,300 Empresa ICA Sociedad Controladora S.A. de C.V. (ADR)* ........... $ 34,787
-------------
63,603
-------------
Building Materials
20,300 Cemex S.A. de C.V. (B Shares) ................................... 83,382
-------------
Conglomerates
Grupo Carso S.A. de C.V.
15,900 (Series A1).................................................... 97,658
20,443 Grupo Industria Alfa S.A. de C.V. (A Shares) .................... 106,597
-------------
204,255
-------------
Food, Beverage, Tobacco & Household Products
11,300 Fomento Economico Mexicano S.A. de C.V. (B Shares) .............. 39,836
2,365 Panamerican Beverages, Inc. (Class A)(ADR) ..................... 123,867
-------------
163,703
-------------
Media Group
1,200 Grupo Televisa S.A. (GDR)* ...................................... 31,050
-------------
Paper & Forest Products
3,120 Kimberly-Clark de Mexico S.A. de C.V. (A Shares) ................ 64,676
-------------
Retail
29,000 Cifra S.A. de C.V. (C Shares)* .................................. 38,518
-------------
Steel & Iron
4,400 Tubos de Acero de Mexico S.A. de C.V. (ADR)* .................... 77,000
-------------
Telecommunications
3,000 Telefonos de Mexico S.A. de C.V. (Series L)(ADR) ................ 112,875
-------------
TOTAL MEXICO ................................................... 896,818
-------------
NETHERLANDS (2.7%)
Banking
2,450 ABN-AMRO Holding NV ............................................. 161,221
-------------
Chemicals
780 Akzo Nobel ...................................................... 109,564
-------------
Food Processing
1,035 Nutricia Verenigde Bedrijven NV ................................. 148,476
-------------
Insurance
2,480 Aegon NV ........................................................ $ 151,740
4,650 ING Groep NV .................................................... 175,105
-------------
326,845
-------------
Publishing
12,250 Elsevier NV ..................................................... 188,380
9,000 Ver Ned Uitgev Ver Bezit NV ..................................... 174,591
1,200 Wolters Kluwer NV ............................................... 148,019
-------------
510,990
-------------
Record & Tape Distribution
3,100 PolyGram NV ..................................................... 136,445
-------------
Retail
2,200 Gucci Group NV .................................................. 148,476
4,045 Koninklijke Ahold NV ............................................ 249,474
-------------
397,950
-------------
TOTAL NETHERLANDS .............................................. 1,791,491
-------------
PERU (0.2%)
Brewery
Cervercia Backus &
41,706 Johnston S.A................................................... 34,716
-------------
Metals & Mining
Companhia de Minas Buenaventura S.A.
3,600 (A Shares)..................................................... 24,681
900 Companhia de Minas Buenaventura S.A. (ADR) ...................... 14,287
-------------
38,968
-------------
Telecommunications
2,000 Telefonica del Peru S.A. (ADR) .................................. 43,250
-------------
TOTAL PERU ..................................................... 116,934
-------------
SINGAPORE (1.6%)
Banking
8,000 Development Bank of Singapore, Ltd. ............................. 110,890
34,000 Overseas Union Bank, Ltd. ....................................... 275,519
-------------
386,409
-------------
Electrical Equipment
22,000 Elec & Eltek International Co. Ltd. ............................. 106,480
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1997, continued
SHARES/PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------
16,000 GP Batteries International Ltd. ................................. $ 50,560
-------------
157,040
-------------
Real Estate
47,000 DBS Land Ltd. ................................................... 193,773
43,000 Parkway Holdings Ltd. ........................................... 169,640
-------------
363,413
-------------
Shipbuilding
25,000 Sembawang Corp. Ltd. ........................................... 142,167
-------------
TOTAL SINGAPORE ................................................ 1,049,029
-------------
SPAIN (2.1%)
Banks
4,000 Banco Bilbao Vizcaya ............................................ 242,739
1,020 Banco Popular Espanol S.A. ...................................... 185,254
-------------
427,993
-------------
Financial Services
1,250 Corporacion Financiera Alba ..................................... 114,415
-------------
Gas
600 Gas Natural SDG S.A. ............................................ 140,584
-------------
Government Obligation
Spain (Government of)
ESP 55,000K 8.40% due 04/30/01............................................. 436,670
-------------
Telecommunications
6,800 Telefonica de Espana S.A. ....................................... 159,279
-------------
Utilities
9,404 Iberdrola S.A. ................................................. 112,170
-------------
TOTAL SPAIN .................................................... 1,391,111
-------------
SWEDEN (1.6%)
Auto Trucks & Parts
6,000 Scania AB (A Shares) ............................................ 151,494
-------------
Business Services
12,400 Assa Abloy AB (Series B) ........................................ 232,678
5,940 Securitas AB (Series "B" Free) .................................. 176,205
-------------
408,883
-------------
Electrical Equipment
4,950 Ericsson (L.M.) Telephone Co. AB (Series "B" Free) .............. 165,961
-------------
Multi-Line Insurance
5,500 Skandia Forsakrings AB .......................................... 147,976
-------------
Pharmaceuticals
3,200 Astra AB (B Shares) ............................................. $ 149,231
-------------
TOTAL SWEDEN ................................................... 1,023,545
-------------
SWITZERLAND (1.3%)
Chemicals
180 Novartis AG* .................................................... 206,203
-------------
Conglomerates
120 ABB AG-Bearer ................................................... 153,586
-------------
Insurance
Schweizerische Rueckversicherungs-
215 Gesellschaft................................................... 211,976
-------------
Pharmaceuticals
30 Roche Holdings AG ............................................... 263,608
-------------
TOTAL SWITZERLAND .............................................. 835,373
-------------
UNITED KINGDOM (8.3%)
Aerospace
29,000 Rolls-Royce PLC ................................................. 111,302
-------------
Auto Parts
31,000 BBA Group PLC ................................................... 173,654
-------------
Banking
7,000 HSBC Holdings PLC ............................................... 167,268
18,000 National Westminster Bank PLC ................................... 222,045
-------------
389,313
-------------
Building Materials
36,000 Blue Circle Industries PLC ...................................... 223,846
27,000 Redland PLC ..................................................... 146,926
-------------
370,772
-------------
Chemicals
18,000 Courtaulds PLC .................................................. 111,491
-------------
Electrical Equipment
18,909 BICC Group (The) PLC ............................................ 86,857
31,000 General Electric Co. PLC ........................................ 193,252
-------------
280,109
-------------
Food, Beverage, Tobacco & Household Products
13,500 Bass PLC ........................................................ $ 182,793
-------------
Government Obligations
pounds
sterling 110K United Kingdom Treasury Gilt 7.50% due 12/07/06 ................. 177,155
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1997, continued
SHARES/PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------
pounds
sterling 100K United Kingdom Treasury Gilt 7.75% due 09/08/06 ................. $ 163,101
pounds
sterling 95K United Kingdom Treasury Gilt 9.50% due 04/18/05 ................. 171,743
pounds
sterling 55K United Kingdom Treasury Gilt 10.00% due 09/08/03 ................ 100,145
-------------
612,144
-------------
Insurance
27,000 Prudential Corp. PLC ............................................ 232,921
40,804 Royal & Sun Alliance Insurance Group PLC ........................ 312,167
-------------
545,088
-------------
Leisure
10,000 Granada Group PLC ............................................... 143,725
-------------
Multi-Industry
36,000 Tomkins PLC ..................................................... 161,331
16,000 Williams Holdings PLC ........................................... 83,098
-------------
244,429
-------------
Oil -International Integrated
17,800 Shell Transport & Trading Co. PLC ............................... 306,541
-------------
Paper
18,000 De La Rue PLC ................................................... 167,668
-------------
Pharmaceuticals
24,500 Glaxo Wellcome PLC .............................................. 391,730
-------------
Publishing
14,000 EMAP PLC ........................................................ 177,015
-------------
Retail
9,000 Great Universal Stores PLC ...................................... 93,485
26,500 W.H. Smith Group PLC ............................................ 181,529
-------------
275,014
-------------
Telecommunications
47,000 British Telecommunications PLC .................................. 321,204
51,762 Securicor PLC ................................................... 241,494
-------------
562,698
-------------
Transportation
27,000 British Airways PLC ............................................. 256,256
-------------
Utilities
13,000 Seven Trent Water PLC ........................................... 146,270
-------------
TOTAL UNITED KINGDOM ........................................... 5,448,012
-------------
UNITED STATES (29.7%)
Aerospace & Defense
3,100 Boeing Co. ..................................................... $ 332,087
General Motors Corp.
5,600 (Class H)...................................................... 341,600
5,600 McDonnell Douglas Corp. ........................................ 376,600
11,700 Watkins-Johnson Co. ............................................. 312,975
-------------
1,363,262
-------------
Automotive
9,300 Chrysler Corp. .................................................. 324,337
-------------
Banking
4,200 BankAmerica Corp. .............................................. 468,825
$ 100K Banque Paribas of New York 6.875% due 03/01/09 .................. 95,280
3,850 Citicorp ........................................................ 448,044
$ 100K Standard Federal Bankcorp 7.75% due 07/17/06 .................... 103,757
9,300 Washington Mutual, Inc. ......................................... 504,525
-------------
1,620,431
-------------
Chemicals
7,200 Monsanto Co. .................................................... 272,700
-------------
Computer Software
5,000 Microsoft Corp.* ................................................ 509,375
-------------
Computers-Systems
5,900 Diebold, Inc. ................................................... 348,100
7,500 Hewlett-Packard Co. ............................................. 394,687
-------------
742,787
-------------
Drugs & Healthcare
4,900 American Home Products Corp. ................................... 310,537
3,000 Bristol-Myers Squibb Co. ........................................ 381,000
6,000 Johnson & Johnson ............................................... 345,750
4,000 Pfizer, Inc. ................................................... 371,500
-------------
1,408,787
-------------
Electronics
3,300 General Electric Co. ........................................... 339,900
-------------
Electronics -Semiconductors/Components
3,400 Intel Corp. .................................................... 551,225
-------------
Financial Services
Associates Corp. N.A.
$ 100K 6.375% due 08/15/99............................................ 100,018
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1997, continued
SHARES/PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------
Conseco, Inc.
$ 50K 10.50% due 12/15/04............................................ $ 59,054
9,466 Travelers Group, Inc. .......................................... 495,782
-------------
654,854
-------------
Food, Beverage, Tobacco & Household Products
4,000 Campbell Soup Co. ............................................... 332,000
11,000 PepsiCo, Inc. .................................................. 383,625
-------------
715,625
-------------
Hardware & Tools
7,300 Black & Decker Corp. ............................................ 244,550
-------------
Healthcare-Diversified
4,000 PacifiCare Health Systems, Inc. (Class B)* ...................... 321,000
-------------
Insurance
6,900 Allstate Corp. ................................................. 453,675
$ 200K Jefferson-Pilot Capital Trust A 8.14% due 01/15/46 .............. 199,750
-------------
653,425
-------------
Office Equipment & Supplies
8,200 Ikon Office Solutions, Inc. .................................... 361,825
4,100 Unisource Worldwide, Inc. ....................................... 89,175
-------------
451,000
-------------
Oil-Domestic Integrated
3,100 Atlantic Richfield Co. ......................................... 409,975
-------------
Oil -International Integrated
4,670 Exxon Corp. ..................................................... 483,929
4,100 Texaco, Inc. ................................................... 434,087
-------------
918,016
-------------
Retail -Specialty
52,000 Charming Shoppes, Inc.* ......................................... 243,750
8,300 Circuit City Stores, Inc. ....................................... 291,538
8,400 Payless ShoeSource, Inc.* ....................................... 315,000
-------------
850,288
-------------
Savings & Loan Associations
First Nationwide Bank
$ 50K First Nationwide Bank 10.00% due 10/01/06........................ 57,487
$ 200K Great Western Financial Trust II 8.206% due 02/01/27 ............ 200,750
21,000 Roosevelt Financial Group, Inc. ................................ $ 451,500
-------------
709,737
-------------
Steel
5,800 Nucor Corp. .................................................... 301,600
-------------
Telecommunication Equipment
5,250 Cisco Systems, Inc.* ............................................ 365,531
-------------
U.S. Government Obligations
$ 2,100K U.S. Treasury Bond
6.875% due 08/15/25 ........................................... 2,104,242
$ 59K U.S. Treasury Bond
7.50% due 11/15/24............................................. 53,821
$ 225K U.S. Treasury Bond
7.625% due 02/15/25 ........................................... 245,887
$ 400K U.S. Treasury Note
5.625% due 11/30/00 ........................................... 392,448
$ 100k U.S. Treasury Note
5.75% due 08/15/03............................................. 96,706
$ 175K U.S. Treasury Note
6.50% due 04/30/99............................................. 176,971
$ 1,650K U.S. Treasury Note
6.50% due 05/15/05............................................. 1,652,921
$ 150K U.S. Treasury Note
6.625% due 03/31/97............................................ 150,302
$ 745K U.S. Treasury Note
6.875% due 08/31/99 ........................................... 759,766
$ 75K U.S. Treasury Note
7.50% due 11/15/01............................................. 78,746
-------------
5,711,810
-------------
TOTAL UNITED STATES ............................................ 19,440,215
-------------
VENEZUELA (0.0%)
Telecommunications
1,000 Compania Anonima Nacional Telefonos de Venezuela (ADR)* ......... 28,250
-------------
TOTAL COMMON AND PREFERRED STOCKS, BONDS, WARRANTS AND RIGHTS
(Identified Cost $59,085,409) ................................... 63,742,732
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1997, continued
<TABLE>
<CAPTION>
CURRENCY
AMOUNT IN
THOUSANDS VALUE
- ------------ ---------------------------------------------------------------- -------------
<S> <C> <C>
PURCHASED CALL OPTIONS ON FOREIGN CURRENCY (0.1%)
DEM 11,500 July 17, 1997/DEM 1.6026 ........................................ $ 35,650
DEM 5,000 July 17, 1997/DEM 1.6110 ....................................... 14,250
-------------
TOTAL PURCHASED CALL OPTIONS ON FOREIGN CURRENCY
(Identified Cost $31,655) ....................................... 49,900
-------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $59,117,064)(a) . 97.7% 63,792,632
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES............. 2.3 1,521,158
-------- ------------
NET ASSETS ....................... 100.0% $65,313,790
======== ============
<FN>
- ------------
ADR American Depository Receipt.
GDR Global Depository Receipt.
K In thousands.
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$8,647,895 and the aggregate gross unrealized depreciation is
$3,972,327, resulting in net unrealized appreciation of $4,675,568.
</TABLE>
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JANUARY 31, 1997:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS IN DELIVERY APPRECIATION
TO RECEIVE EXCHANGE FOR DATE (DEPRECIATION)
- ---------------------- ---------------------- ---------- --------------
<S> <C> <C> <C>
$ 46,134 ESP 6,383,142 02/05/97 $ 130
$ 687,301 SEK 4,969,184 02/06/97 1,688
DKK 1,756,650 $ 281,966 02/06/97 (1,064)
ITL 928,446,640 $ 576,639 02/06/97 (680)
--------------
Net unrealized appreciation ......................... $ 74
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
SUMMARY OF INVESTMENTS January 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
Aerospace ..................... $ 111,302 0.2%
Aerospace & Defense ........... 1,363,262 2.1
Air Transport.................. 160,472 0.2
Appliances & Household
Durables ..................... 33,469 0.1
Auto Parts .................... 173,654 0.3
Auto Trucks & Parts ........... 151,494 0.2
Automotive .................... 1,611,816 2.5
Banking ....................... 4,635,882 7.3
Banks ......................... 427,993 0.7
Beverages-Soft Drinks ......... 44,730 0.1
Brewery ....................... 154,551 0.2
Building & Construction ...... 1,641,283 2.5
Building Materials ............ 607,945 0.9
Business Services ............. 773,223 1.2
Chemicals ..................... 2,398,730 3.7
Computer Software ............. 509,375 0.8
Computers-Systems ............. 742,787 1.1
Conglomerates ................. 1,273,478 1.9
Consumer Products ............. 132,337 0.2
Drugs & Healthcare ............ 1,408,787 2.2
Electrical Equipment .......... 871,710 1.3
Electronic & Electrical
Equipment .................... 2,617,567 4.0
Electronics ................... 339,900 0.5
Electronics
-Semiconductors/Components ... 551,225 0.8
Energy ........................ 633,301 1.0
Engineering & Construction ... 203,922 0.3
Entertainment ................. 256,508 0.4
Financial Services ............ 2,059,445 3.2
Food Processing ............... 148,476 0.2
Food, Beverage, Tobacco &
Household Products ........... 1,091,821 1.7
Foods & Beverages ............. 290,818 0.4
Foreign Currency Call Options . 49,900 0.1
Gas ........................... 140,584 0.2
Government Obligations
(Foreign) .................... 4,738,705 7.3
Government Obligations (U.S.) . 5,711,810 8.7
Hardware & Tools .............. 244,550 0.4
Healthcare-Diversified ....... 321,000 0.5
Household Furnishings &
Appliances ................... 147,200 0.2
Household Products ............ 164,175 0.3
Industrials ................... 19,845 --
Insurance ..................... 2,258,818 3.4
International Trade ........... 378,347 0.6
Investment Companies .......... 60,375 0.1
Leisure ....................... $ 596,990 0.9%
Machinery...................... 2,025,335 3.0
Manufacturing ................. 245,028 0.4
Media Group.................... 31,050 --
Metals & Mining ............... 370,590 0.6
Multi-Industry................. 373,690 0.6
Multi-Line Insurance .......... 147,976 0.2
Office Equipment & Supplies .. 451,000 0.7
Oil-Domestic Integrated ...... 409,975 0.6
Oil-International Integrated .. 1,224,557 1.8
Oil & Gas ..................... 141,935 0.2
Paper ......................... 167,668 0.3
Paper & Forest Products ...... 64,676 0.1
Pharmaceuticals ............... 1,497,716 2.3
Property ...................... 147,266 0.2
Publishing .................... 688,005 1.1
Real Estate ................... 3,159,279 4.8
Record & Tape Distribution .... 136,445 0.2
Retail ........................ 1,763,369 2.7
Retail-Specialty .............. 1,168,900 1.8
Savings & Loan Associations ... 709,737 1.1
Shipbuilding .................. 142,167 0.2
Steel ......................... 301,600 0.5
Steel & Iron .................. 961,601 1.5
Telecommunication Equipment ... 710,531 1.1
Telecommunications ............ 2,523,388 3.9
Textiles ...................... 214,089 0.3
Textiles-Apparel .............. 256,077 0.4
Transportation ................ 552,425 0.8
Utilities ..................... 674,845 1.0
Utilities-Electric ............ 278,150 0.4
------------- ------
$63,792,632 97.7%
============= ======
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
- ----------------------------- ------------- ------------
<S> <C> <C>
Common Stocks ................ $51,982,832 79.6%
Convertible Preferred Stocks 99,227 0.2
Corporate Bonds .............. 816,097 1.2
Foreign Currency Call Options 49,900 0.1
Preferred Stocks ............. 382,473 0.6
Rights & Warrants ............ 11,588 --
U.S. & Foreign Government
Obligations ................. 10,450,515 16.0
------------- ------------
$63,792,632 97.7%
============= ============
</TABLE>
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $59,117,064)............ $63,792,632
Cash (including $930 in foreign
currency)................................ 892,354
Receivable for:
Investments sold........................ 1,310,742
Interest................................ 273,359
Shares of beneficial interest sold .... 131,028
Dividends............................... 31,564
Foreign withholding taxes reclaimed .... 19,804
Deferred organizational expenses.......... 108,542
Prepaid expenses and other assets ........ 51,813
Receivable from affiliate ................ 18,158
-------------
TOTAL ASSETS ........................... 66,629,996
-------------
LIABILITIES:
Payable for:
Investments purchased................... 856,965
Shares of beneficial interest
repurchased............................ 247,761
Investment management fee............... 56,200
Plan of distribution fee................ 51,696
Accrued expenses and other payables ..... 103,584
-------------
TOTAL LIABILITIES....................... 1,316,206
-------------
NET ASSETS:
Paid-in-capital........................... 60,746,693
Net unrealized appreciation .............. 4,668,208
Dividends in excess of net investment
income................................... (41,886)
Accumulated net realized loss............. (59,225)
-------------
NET ASSETS.............................. $65,313,790
=============
NET ASSET VALUE PER SHARE,
5,516,229 shares outstanding (unlimited
shares authorized of $.01 value)......... $11.84
=============
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 31, 1997
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Interest (net of $3,131 foreign withholding
tax)....................................... $ 923,088
Dividends (net of $53,211 foreign
withholding tax)........................... 632,390
-----------
TOTAL INCOME ............................. 1,555,478
-----------
EXPENSES
Investment management fee................... 589,449
Plan of distribution fee.................... 532,624
Professional fees .......................... 77,775
Transfer agent fees and expenses............ 77,059
Custodian fees.............................. 68,118
Shareholder reports and notices ............ 43,988
Organizational expenses..................... 35,407
Registration fees .......................... 32,840
Trustees' fees and expenses................. 16,842
Other....................................... 15,405
-----------
TOTAL EXPENSES............................ 1,489,507
-----------
NET INVESTMENT INCOME..................... 65,971
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain (loss) on:
Investments .............................. 1,937,217
Foreign exchange transactions............. (60,451)
-----------
NET GAIN.................................. 1,876,766
-----------
Net change in unrealized
appreciation/depreciation on:
Investments .............................. 602,842
Translation of forward foreign currency
contracts, other assets and liabilities
denominated in foreign currencies ........ (18,717)
-----------
NET APPRECIATION.......................... 584,125
-----------
NET GAIN.................................. 2,460,891
-----------
NET INCREASE................................ $2,526,862
===========
</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
FOR THE YEAR FEBRUARY 28, 1995*
ENDED THROUGH
JANUARY 31, 1997 JANUARY 31, 1996
- ------------------------------------------------------ ---------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................. $ 65,971 $ 482,720
Net realized gain...................................... 1,876,766 1,981,039
Net change in unrealized appreciation.................. 584,125 4,084,083
---------------- ------------------
NET INCREASE......................................... 2,526,862 6,547,842
---------------- ------------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income.................................. (554,313) (1,130,515)
Net realized gain...................................... (2,041,599) (812,800)
---------------- ------------------
TOTAL................................................ (2,595,912) (1,943,315)
---------------- ------------------
Net increase from transactions in shares of beneficial
interest.............................................. 21,111,669 39,566,644
---------------- ------------------
NET INCREASE......................................... 21,042,619 44,171,171
NET ASSETS:
Beginning of period.................................... 44,271,171 100,000
---------------- ------------------
END OF PERIOD
(Including dividends in excess of net investment
income of $41,886 and undistributed net investment
income of $463,448, respectively)................... $65,313,790 $44,271,171
================ ==================
</TABLE>
* Commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1997
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
pursuant to procedures adopted by the Trustees); (2) all other portfolio
securities for which over-the-counter market quotations are readily available
are valued at the latest available bid price prior to the time of valuation;
(3) when market quotations are not readily available, including circumstances
under which it is determined by the Investment Manager or by TCW Funds
Management, Inc. or Morgan Grenfell Investment Services, Ltd. (the
"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
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1997, continued
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 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 foreign
currency contracts are translated at the exchange rates prevailing at the end
of the period; and (2) purchases, sales, income and expenses are translated
at the exchange rates prevailing on the respective dates of such
transactions. The resultant exchange gains and losses are included in the
Statement of Operations as realized and unrealized gain/loss on foreign
exchange transactions. Pursuant to U.S. Federal income tax regulations,
certain foreign exchange gains/losses included in realized and unrealized
gain/loss are included in or are a reduction of ordinary income for federal
income tax purposes. The Fund does not isolate that portion of the results of
operations arising as a result of changes in the foreign exchange rates from
the changes in the market prices of the securities.
D. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward
foreign currency contracts which are valued daily at the appropriate exchange
rates. The resultant unrealized exchange gains and losses are included in the
Statement of Operations as unrealized foreign currency gain or loss. 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 liability related to
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1997, continued
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 approximately $177,000 of which
approximately $144,000 have been reimbursed. The balance has 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 the commencement of operations.
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1997, 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 the Sub-Advisers and the Investment
Manager, the Sub-Advisers 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-Adviser monthly compensation equal to 30% of
its monthly compensation.
At January 31, 1997, included in the Statement of Assets and Liabilities, was
a receivable from an affiliate which represents expense reimbursements due to
the Fund by the Investment Manager.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted
a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act
pursuant to which the Fund pays the Distributor compensation, accrued daily
and payable monthly, at an annual rate of 1.0% of the lesser of: (a) the
average daily aggregate gross sales of the Fund's shares since the Fund's
inception (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net asset value of the Fund's
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or upon which such charge has been waived; or
(b) the Fund's average daily net assets. Amounts paid under the Plan are paid
to the Distributor to compensate it for the services provided and the
expenses borne by it and others in the distribution of the Fund's shares,
including the payment of commissions for sales of the Fund's shares and
incentive compensation to, and expenses of, the account executives of Dean
Witter Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and
Distributor, and other employees or selected 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
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1997, continued
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, including carrying charges,
totaled $3,656,452 at January 31, 1997.
The Distributor has informed the Fund that for the year ended January 31,
1997, it received approximately $133,000 in contingent deferred sales charges
from redemptions of the Fund's shares.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the year ended January 31, 1997
aggregated $57,718,245 and $34,074,039, respectively. Included in the
aforementioned are purchases and sales of U.S. Government securities of
$7,630,188 and $2,965,056, respectively.
For the year ended January 31, 1997, the Fund incurred brokerage commissions
of $16,682 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 January 31, 1997, the Fund had
transfer agent fees and expenses payable of approximately $13,000.
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1997, continued
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FEBRUARY 28, 1995*
ENDED THROUGH
JANUARY 31, 1997 JANUARY 31, 1996
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold 2,505,555 $ 30,094,772 4,035,815 $42,743,175
Reinvestment of dividends and distributions 199,063 2,368,262 64,960 741,197
----------- -------------- ----------- -------------
2,704,618 32,463,034 4,100,775 43,484,372
Repurchased (944,898) (11,351,365) (354,266) (3,917,728)
----------- -------------- ----------- -------------
Net increase 1,759,720 $ 21,111,669 3,746,509 $39,566,644
=========== ============== =========== =============
</TABLE>
- -----------
* Commencement of operations.
6. FEDERAL INCOME TAX STATUS
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
approximately $56,000 during fiscal 1997.
As of January 31, 1997, the Fund had temporary book/tax differences primarily
attributable to post-October losses and income from the mark-to-market of
passive foreign investment companies ("PFICs") and permanent book/tax
differences primarily attributable to foreign currency losses, tax
adjustments on PFICs sold by the Fund and nondeductible organizational
expense. To reflect reclassifications arising from permanent book/tax
differences for the year ended January 31, 1997, dividends in excess of net
investment income was charged $16,992, paid-in-capital was charged $31,620
and accumulated net realized loss was credited $48,612.
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.
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.
At January 31, 1997, the Fund had outstanding forward contracts to facilitate
settlement of foreign currency denominated portfolio transactions.
<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 YEAR FEBRUARY 28, 1995*
ENDED THROUGH
JANUARY 31, 1997 JANUARY 31, 1996
- --------------------------------------- ---------------- ------------------
<S> <C> <C>
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 ....... 0.55 2.20
---------------- ------------------
Total from investment operations ....... 0.54 2.37
---------------- ------------------
Less dividends and distributions:
Net investment income.................. (0.11) (0.34)
Net realized gain...................... (0.38) (0.24)
---------------- ------------------
Total dividends and distributions ...... (0.49) (0.58)
---------------- ------------------
Net asset value, end of period.......... $11.84 $11.79
================ ==================
TOTAL INVESTMENT RETURN+................ 4.58% 23.89%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 2.53% 1.14%(2)(3)
Net investment income................... 0.11% 1.71%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.............................. $65,314 $44,271
Portfolio turnover rate................. 63% 71%(1)
Average commission rate paid............ $0.00126 --
</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 expenses, the annualized
expense and net investment loss ratios would have been 2.87% and
(0.02)%, respectively.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER GLOBAL ASSET ALLOCATION FUND
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Dean Witter
Global Asset Allocation Fund (the "Fund") at January 31, 1997, the results of
its operations for the year then ended, and the changes in its net assets and
the financial highlights for the year then ended and for the period February
28, 1995 (commencement of operations) through January 31, 1996, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at January
31, 1997 by correspondence with the custodian and brokers and the application
of alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
March 13, 1997
1997 FEDERAL TAX NOTICE (unaudited)
During the year ended January 31, 1997 the Fund paid to shareholders
$0.20 per share from long-term capital gains. For such period, 12.23%
of the income dividends qualified for the dividends-received-deduction
available to corporations.
<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
Barry Fink
Vice President, Secretary and General Counsel
Mark A. Bavoso
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse 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
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
GLOBAL ASSET
ALLOCATION FUND
ANNUAL REPORT
JANUARY 31, 1997
