<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND Two World Trade Center,
LETTER TO THE SHAREHOLDERS January 31, 1998 New York, New York 10048
DEAR SHAREHOLDER:
The performances of global capital markets were mixed during the last twelve
months. Asian equity markets experienced the most turmoil and, in October,
these markets plunged under weak currencies and economic instability.
Indonesia was the hardest hit, losing 83.89 percent of its value, followed by
Malaysia (down 72.23 percent) and Thailand (down 68.82 percent). Even
Hong Kong, whose currency has remained stable, declined 32.52 percent. And,
once again the Japanese market disappointed investors, falling 6.56 percent.
The economy there slowed after the government reversed an income tax rebate
and increased a consumption tax. Investor confidence in Japan was continually
shaken as the financial system appeared ever more fragile and politicians
lost credibility while attempting to deal with the economic slump.
In contrast to the Asian downturn, markets in the United States and Europe
continued to rally. The U.S. equity market was, once again, one of the
world's top performers, with the Standard & Poor's 500 Composite Stock Price
Index (S&P 500) advancing 26.84 percent. In Europe the dual catalysts of weak
domestic currencies and positive sentiment toward Economic and Monetary Union
(EMU) sent those equity markets higher. Especially strong performance was
seen in Portugal (+44.42 percent), Switzerland (+45.99 percent) and Italy
(+34.53 percent). Core European markets also did well with Germany up 29.37
percent and the Netherlands up 26.68 percent.
Global bonds and the U.S. dollar were strong performers over the last
year. The economic crisis in Asia reinforced the disinflationary trend of the
world economy, causing bond yields to drop in the United States and Europe.
The U.S. dollar continued to strengthen, appreciating by 10.4 percent
against the German mark and by 4.6 percent against the Japanese yen.
PERFORMANCE
For the fiscal year ended January 31, 1998, Dean Witter Global Asset
Allocation Fund Class B provided a total return of 3.29 percent versus
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
LETTER TO THE SHAREHOLDERS January 31, 1998, continued
15.97 percent for the Morgan Stanley Capital International World Index and
10.34 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, 1998, with the performance of similar hypothetical investments in the
Morgan Stanley Capital International World Index and the Lipper Global
Flexible Portfolio Funds Index.
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
GROWTH OF $10,000 -- CLASS B
($ IN THOUSANDS)
Date Total MSCI WORLD IX(4) LIPPER IX(5)
- ----------------------------------------------------------------------------
February 28, 1995 $10,000 $10,000 $10,000
January 31, 1996 $12,389 $12,116 $11,993
January 31, 1997 $12,956 $13,458 $13,680
January 31, 1998 $13,082(3) $15,607 $15,095
Average Annual Total Returns
1 year Life of Fund
-----------------------------
3.29(1) 10.48(1)
-1.55(2) 9.62(2)
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-3%). See the fund's prospectus for complete details on
fees and sales charges.
(3) Closing value after the deduction of a 3% CDSC, assuming a complete
redemption on January 31, 1998.
(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.
------------------
The Fund's underperformance relative to its benchmarks was due to
overweightings in Japan and Asia during the period under review. In response
to the continuing decline of these markets and the still uncertain economic
environment there, the Fund has reduced its exposure to those markets. The
regional allocation targets for the beginning of the fiscal year are Europe,
38 percent (overweighted); United States, 35 percent (underweighted); Japan,
6 percent (underweighted); Emerging Asia, 6 percent (overweighted); Latin
America, 6 percent (overweighted); and other, 1 percent. The remaining 8
percent of the equity portfolio is held in cash. The Fund's asset target mix
is 70 percent equity, 20 percent fixed income and 10 percent money market
investments.
In October 1997, Trust Company of the West (TCW) informed the Fund's Board of
Trustees of its intention to resign as sub-adviser. On November 6, 1997, the
Board of Trustees of Dean Witter Global Asset Allocation Fund unanimously
recommended that a new investment management agreement between InterCapital
and Dean Witter Global Asset Allocation Fund be submitted to shareholders of
the Fund for approval at a special meeting scheduled for February 26, 1998.
If the new investment management agreement is approved by shareholders,
InterCapital will assume the investment advisory function formerly performed
by TCW upon effectiveness of the new investment management agreement.
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
LETTER TO THE SHAREHOLDERS January 31, 1998, continued
LOOKING AHEAD
We expect that world markets overall will continue to perform well over the
coming year but that Asian markets will remain volatile. However, we believe
that the asset allocation targets we have set for the Fund will reduce the
impact these markets will have on the Fund's performance.
We appreciate your support of Dean Witter Global Asset Allocation Fund 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, 1998
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON AND PREFERRED
STOCKS AND BONDS (89.4%)
ARGENTINA (0.5%)
Banking
2,209 Banco de Galicia y Buenos Aires S.A. de C.V. (ADR) .............. $ 48,460
--------------
Energy
2,700 Yacimentos Petroliferos Fiscales S.A. (ADR) ..................... 82,181
--------------
Multi-Industry
11,791 Perez Companc S.A. (Class B) .................................... 77,850
--------------
Telecommunications
1,000 Telefonica de Argentina S.A. (Class B)(ADR) ..................... 34,625
--------------
TOTAL ARGENTINA ................................................. 243,116
--------------
AUSTRALIA (0.6%)
Telecommunications
6,500 Telstra Corp. Ltd. (ADR)* ....................................... 293,719
--------------
BRAZIL (1.5%)
Metals & Mining
2,840 Companhia Vale do Rio Doce S.A. (Pref.)(ADR) .................... 54,847
--------------
Petroleum
944,000 Petroleo Brasileiro S.A. (Pref.) ................................ 201,745
--------------
Telecommunications
3,410 Telecomunicacoes Brasileiras S.A. (ADR) ........................ 378,510
143,234 Telecomunicacoes de Sao Paulo S.A. (Pref.)(RCP)* ............... 41,454
--------------
419,964
--------------
Utilities - Electric
1,400 Centrais Electricas Brasileiras S.A. - Electrobras (ADR) ......... 30,100
2,260 Companhia Energetica de Minas Gerais S.A. (ADR) ................. 88,140
260,000 Companhia Energetica de Minas Gerais S.A. (Pref.) .............. 10,280
--------------
128,520
--------------
TOTAL BRAZIL .................................................... 805,076
--------------
CHILE (0.3%)
Beverages - Soft Drinks
1,420 Embotelladora Andina S.A. (Series A)(ADR) ....................... $ 28,400
--------------
Telecommunications
3,125 Compania de Telecomunicaciones de Chile S.A. (ADR) .............. 75,195
--------------
Utilities - Electric
2,000 Enersis S.A. (ADR) ............................................. 52,875
--------------
TOTAL CHILE .................................................... 156,470
--------------
COLOMBIA (0.1%)
Banking
3,500 Banco Industrial Colombiano S.A. (ADR) .......................... 41,781
--------------
DENMARK (2.4%)
Air Transport
1,200 Kobenhavns Lufthavne AS ........................................ 138,584
--------------
Government Obligations
Kingdom of Denmark
DKK 1,400K 7.00% due 12/15/04 .............................................. 221,815
Kingdom of Denmark
DKK 1,300K 8.00% due 05/15/03 .............................................. 212,610
Kingdom of Denmark
DKK 1,720K 8.00% due 03/15/06 .............................................. 289,665
Kingdom of Denmark
DKK 800K 9.00% due 11/15/00 .............................................. 127,968
--------------
852,058
--------------
Pharmaceuticals
1,880 Novo-Nordisk AS (Series B) ...................................... 269,708
--------------
TOTAL DENMARK ................................................... 1,260,350
--------------
<PAGE>
FINLAND (0.8%)
Insurance
7,060 Pohjola Insurance Co. "B" ....................................... 303,453
--------------
Telecommunication Equipment
1,400 Nokia Oyj (A Shares) ............................................ 109,731
--------------
TOTAL FINLAND ................................................... 413,184
--------------
FRANCE (3.7%)
Banks - Money Center
43 Banque Nationale de Paris ....................................... 2,221
4,500 Credit Commercial de France .................................... 306,313
--------------
308,534
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1998, continued
SHARES/PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------
Electronics - Semiconductors
1,960 SGS-Thomson Microelectronics N.V.* ............................. $ 134,247
--------------
Household Products
2,060 Societe BIC S.A. ............................................... 150,673
--------------
Insurance
2,700 AXA-UAP ......................................................... 224,174
--------------
Leisure
1,500 Accor S.A. ..................................................... 295,082
--------------
Media
1,380 Canal Plus ..................................................... 278,229
--------------
Oil & Gas
1,690 Elf Aquitaine S.A. .............................................. 190,764
1,650 Total S.A. (B Shares) ........................................... 171,715
--------------
362,479
--------------
Telecommunication Equipment
1,400 Alcatel Alsthom S.A. ........................................... 185,662
--------------
TOTAL FRANCE ................................................... 1,939,080
--------------
GERMANY (4.1%)
Automotive
280 Bayerische Motoren Werke (BMW) AG .............................. 223,510
--------------
Chemicals - Diversified
2,950 Hoechst AG ..................................................... 103,710
--------------
Government Obligations
German Unity Fund
DEM 175K 8.00% due 01/12/02 .............................................. 108,062
DEM 605K Germany (Federal Republic) 5.25% due 10/20/98 ................... 334,520
DEM 661K Germany (Federal Republic) 6.25% due 01/04/24 ................... 391,830
DEM 695K Germany (Federal Republic) 6.50% due 10/14/05 ................... 417,684
DEM 455K Germany (Federal Republic) 7.25% due 10/21/02 ................... 277,154
--------------
1,529,250
--------------
Steel Related
1,050 SGL Carbon AG .................................................. 132,039
--------------
Utilities - Electric
2,650 VEBA AG ......................................................... 183,138
--------------
TOTAL GERMANY ................................................... 2,171,647
--------------
HONG KONG (2.7%)
Banking
37,400 Hang Seng Bank Ltd. ............................................. $ 295,021
--------------
Conglomerates
70,000 Hutchison Whampoa, Ltd. ......................................... 411,871
--------------
Real Estate
41,000 Hong Kong Land Holdings Ltd. ................................... 66,010
--------------
Telecommunications
160,000 Hong Kong Telecommunications Ltd. .............................. 333,118
--------------
Utilities - Electric
55,000 CLP Holdings Ltd. ............................................... 302,276
--------------
TOTAL HONG KONG ................................................. 1,408,296
--------------
ITALY (1.9%)
Government Obligations
Italy (Republic of)
ITL 615,000K 7.75% due 11/01/06 ............................................. 396,607
Italy (Republic of)
ITL 245,000K 10.00% due 08/01/03 ............................................. 166,646
--------------
563,253
--------------
Household Furnishings &
Appliances
6,400 Industrie Natuzzi SpA (ADR) ..................................... 156,800
--------------
Telecommunications
25,000 Telecom Italia Mobile SpA ....................................... 119,206
26,250 Telecom Italia SpA .............................................. 181,822
--------------
301,028
--------------
TOTAL ITALY ..................................................... 1,021,081
--------------
<PAGE>
JAPAN (4.7%)
Automotive
9,000 Suzuki Motor Co. Ltd. ........................................... 82,979
--------------
Banking
6,000 Bank of Tokyo-Mitsubishi Ltd. ................................... 86,998
4,000 Mitsubishi Trust & Banking ..................................... 46,336
--------------
133,334
--------------
Building & Construction
4,000 Sekisui House Ltd. .............................................. 33,097
--------------
Business Services
8,000 Ricoh Co., Ltd. ................................................. 94,563
-------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1998, continued
SHARES/PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------
Chemicals
16,000 Asahi Chemical Industrial Co. Ltd. .............................. $ 63,672
7,000 Shin-Etsu Chemical Co. .......................................... 155,556
--------------
219,228
--------------
Electrical Equipment
5,000 Sumitomo Electric Industries ................................... 73,680
--------------
Electronic & Electrical
Equipment
5,000 Canon, Inc. ..................................................... 121,355
9,000 Hitachi, Ltd. ................................................... 70,922
7,000 Matsushita Electric Industrial Co., Ltd. ....................... 105,359
6,000 NGK Insulators, Ltd. ........................................... 54,846
1,500 Sony Corp. ...................................................... 138,298
--------------
490,780
--------------
Engineering & Construction
8,000 Kajima Corp. ................................................... 27,423
--------------
Financial Services
1,000 Japan Associated Finance ....................................... 47,675
3,000 Nomura Securities Co. Ltd. ..................................... 40,189
--------------
87,864
--------------
Insurance
5,000 Tokio Marine & Fire Insurance Co. ............................... 55,556
--------------
Machinery
5,000 Daifuku Co. Ltd. ............................................... 26,990
1,100 Keyence Corp. ................................................... 166,430
8,000 Minebea Co., Ltd. ............................................... 85,106
15,000 NSK Ltd. ........................................................ 53,073
--------------
331,599
--------------
Manufacturing
1,900 Sony Music Entertainment Inc. .................................. 67,376
--------------
Pharmaceuticals
3,000 Yamanouchi Pharmaceutical Co. ................................... 72,813
--------------
Real Estate
5,000 Mitsubishi Estate Co. Ltd. ..................................... 55,162
4,000 Mitsui Fudosan Co. Ltd. ........................................ 39,716
--------------
94,878
--------------
Retail
2,700 Family Mart Co. Ltd. ........................................... 103,191
2,000 Ito-Yokado Co. Ltd. ............................................ 104,964
--------------
208,155
--------------
Steel & Iron
28,000 NKK Corp. ....................................................... $ 30,670
9,000 Yamato Kogyo Co., Ltd. ......................................... 81,560
--------------
112,230
--------------
Telecommunications
19 DDI Corp. ...................................................... 60,788
15 Nippon Telegraph & Telephone Corp. .............................. 135,934
--------------
196,722
--------------
Textiles - Apparel
7,000 Tokyo Style .................................................... 71,710
--------------
TOTAL JAPAN ..................................................... 2,453,987
--------------
MALAYSIA (0.6%)
Telecommunications
138,000 Telekom Malaysia Berhad ......................................... 339,642
--------------
MEXICO (1.5%)
Banking
8,750 Grupo Financiero Inbursa S.A. de C.V. (B Shares) ................ 27,615
--------------
Building & Construction
4,000 Apasco S.A. de C.V. ............................................ 26,005
2,300 Empresa ICA Sociedad Controladora S.A. de C.V. (ADR)* ........... 31,337
--------------
57,342
--------------
<PAGE>
Building Materials
20,300 Cemex S.A. de C.V. (B Shares) ................................... 85,903
--------------
Conglomerates
9,443 ALFA S.A. de C.V. (Class A) ..................................... 50,229
15,900 Grupo Carso S.A. de C.V. (Series A1)* ........................... 90,589
--------------
140,818
--------------
Food, Beverage, Tobacco & Household Products
11,300 Fomento Economico Mexicano S.A. de C.V. (B Shares) .............. 70,792
2,730 Panamerican Beverages, Inc. (Class A)(ADR) ...................... 88,725
--------------
159,517
--------------
Media Group
1,700 Grupo Televisa S.A. (GDR)* ...................................... 54,719
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1998, continued
SHARES/PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------
Paper & Forest Products
15,600 Kimberly-Clark de Mexico S.A. de C.V. (A Shares) ................ $ 67,397
--------------
Retail
19,000 Cifra S.A. de C.V. (C Shares)* ................................. 32,116
2,212 Cifra S.A. de C.V. (Series V) ................................... 4,021
--------------
36,137
--------------
Telecommunications
2,700 Telefonos de Mexico S.A. de C.V. (Series L)(ADR) ................ 132,975
--------------
TOTAL MEXICO ................................................... 762,423
--------------
NETHERLANDS (2.9%)
Chemicals
780 Akzo Nobel NV .................................................. 141,192
--------------
Electrical Equipment
2,160 Philips Electronics NV .......................................... 145,837
--------------
Insurance
2,528 Aegon NV ........................................................ 241,188
4,771 ING Groep NV .................................................... 218,452
--------------
459,640
--------------
Publishing
9,000 Ver Ned Uitgev Ver Bezit NV ..................................... 251,880
1,212 Wolters Kluwer NV ............................................... 164,014
--------------
415,894
--------------
Record & Tape Distribution
3,100 PolyGram NV ..................................................... 138,332
--------------
Retail
4,656 Koninklijke Ahold NV ............................................ 128,273
--------------
Semiconductor Equipment
1,500 ASM Lithography Holding NV* .................................... 103,313
--------------
TOTAL NETHERLANDS ............................................... 1,532,481
--------------
PERU (0.1%)
Brewery
45,169 Union de Cervecerias Peruanas Backus & Johnston S.A. (T Shares) . 38,400
--------------
Telecommunications
Telefonica del Peru S.A.
1,300 (B Shares)(ADR) ................................................ 25,513
--------------
TOTAL PERU ...................................................... 63,913
--------------
SINGAPORE (1.9%)
Airlines
79,000 Singapore Airlines Ltd. ......................................... $ 516,672
--------------
Banking
120,800 Overseas-Chinese Banking Corp. Ltd. ............................. 504,362
--------------
TOTAL SINGAPORE ................................................. 1,021,034
--------------
SPAIN (2.0%)
Banks
6,750 Banco Bilbao Vizcaya ............................................ 235,880
4,980 Banco Popular Espanol S.A. ..................................... 375,667
--------------
611,547
--------------
Government Obligations
Spain (Government of)
ESP 28,000K 7.90% due 02/28/02 .............................................. 201,299
Spain (Government of)
ESP 16,600K 8.80% due 04/30/06 .............................................. 132,104
--------------
333,403
--------------
Telecommunications
3,400 Telefonica de Espana S.A. ....................................... 111,141
--------------
TOTAL SPAIN ..................................................... 1,056,091
--------------
<PAGE>
SWEDEN (3.0%)
Automobiles
3,400 Volvo AB (B Shares) ............................................. 93,086
--------------
Business Services
7,440 Assa Abloy AB (Series B) ........................................ 183,509
5,940 Securitas AB (Series "B" Free) .................................. 173,615
--------------
357,124
--------------
Electrical Equipment
4,950 Ericsson (L.M.) Telephone Co. AB (Series "B" Free) .............. 194,127
--------------
Government Obligations
Sweden (Government of)
SEK 4,600K 6.00% due 02/09/05 .............................................. 584,460
Sweden (Kingdom of)
SEK 300K 8.00% due 08/15/07 .............................................. 43,399
--------------
627,859
--------------
Multi-line Insurance
2,750 Skandia Forsakrings AB .......................................... 143,459
--------------
Pharmaceuticals
8,533 Astra AB (B Shares) ............................................. 151,011
--------------
TOTAL SWEDEN .................................................... 1,566,666
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1998, continued
SHARES/PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
SWITZERLAND (2.8%)
Airlines
215 Sairgroup* ..................................................... $ 276,761
--------------
Banking
1,875 Credit Suisse Group-Reg ........................................ 298,844
85 UBS-Bearer ...................................................... 120,992
--------------
419,836
--------------
Foods & Beverages
100 Nestle S.A. ..................................................... 159,553
--------------
Pharmaceuticals
180 Novartis AG ..................................................... 308,537
30 Roche Holdings AG .............................................. 311,789
--------------
620,326
--------------
TOTAL SWITZERLAND ............................................... 1,476,476
--------------
UNITED KINGDOM (12.5%)
Aerospace
44,091 Rolls-Royce PLC ................................................ 149,087
--------------
Auto Parts
32,660 BBA Group PLC .................................................. 191,527
--------------
Building Materials
39,357 Blue Circle Industries PLC ...................................... 208,298
--------------
Electrical Equipment
18,909 BICC Group (The) PLC ............................................ 43,861
38,580 General Electric Co. PLC ........................................ 241,368
--------------
285,229
--------------
Financial Services
29,000 Abbey National PLC .............................................. 582,669
779 HSBC Holdings PLC ............................................... 20,360
--------------
603,029
--------------
Food, Beverage, Tobacco & Household Products
7,770 B.A.T. Industries PLC ........................................... 70,823
16,067 Bass PLC ........................................................ 254,581
--------------
325,404
--------------
Government Obligations
pounds
sterling 43K United Kingdom Treasury Gilt 7.50% due 12/07/06 ................. 76,848
pounds
sterling 162K United Kingdom Treasury Gilt 8.50% due 12/07/05 ................. 302,998
--------------
379,846
--------------
Insurance
28,646 Prudential Corp. PLC ............................................ $ 384,173
39,113 Royal & Sun Alliance Insurance Group PLC ....................... 442,765
--------------
826,938
--------------
Leisure
11,956 Granada Group PLC ............................................... 188,075
27,401 Rank Group PLC ................................................. 134,167
--------------
322,242
--------------
Multi-Industry
54,803 Tomkins PLC .................................................... 295,418
--------------
Natural Gas
36,150 BG PLC .......................................................... 194,868
--------------
Oil - International - Integrated
81,457 Shell Transport & Trading Co. PLC ............................... 553,530
--------------
Pharmaceuticals
28,024 Glaxo Wellcome PLC ............................................. 752,119
--------------
Publishing
15,445 EMAP PLC ........................................................ 264,909
--------------
Retail
14,201 Great Universal Stores PLC ...................................... 170,732
13,000 Kingfisher PLC .................................................. 203,436
--------------
374,168
--------------
<PAGE>
Telecommunications
56,545 British Telecommunications PLC .................................. 540,343
41,306 Securicor PLC ................................................... 222,547
--------------
762,890
--------------
Transportation
7,201 British Airways PLC ............................................ 60,579
--------------
TOTAL UNITED KINGDOM ............................................ 6,550,081
--------------
UNITED STATES (38.6%)
Aerospace & Defense
4,980 General Motors Corp. (Class H) .................................. 172,432
--------------
Air Transport
7,340 Continental Airlines, Inc. (Class B)* .......................... 340,392
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1998, continued
SHARES/PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
Automotive
9,730 Chrysler Corp. ................................................. $ 338,726
7,490 Ford Motor Co. ................................................. 381,990
--------------
720,716
--------------
Banking
3,750 BankBoston Corp. ............................................... 335,625
$ 100K Central Fidelity Capital I -144A** 6.75% due 04/15/27 ........... 101,925
2,850 Chase Manhattan Corp. ........................................... 305,484
2,530 Citicorp ........................................................ 301,070
5,440 First Tennessee National Corp. .................................. 320,280
4,750 Washington Mutual, Inc. ......................................... 305,187
--------------
1,669,571
--------------
Beverages - Soft Drinks
8,400 PepsiCo, Inc. ................................................... 302,925
--------------
Chemicals
10,300 Georgia Gulf Corp. ............................................. 336,037
7,300 Monsanto Co. ................................................... 346,294
--------------
682,331
--------------
Computer Software
7,000 HBO & Co. ....................................................... 366,188
2,360 Microsoft Corp.* ............................................... 352,082
--------------
718,270
--------------
Computers
9,880 COMPAQ Computer Corp. ........................................... 297,018
10,740 Gateway 2000, Inc.* ............................................ 404,764
--------------
701,782
--------------
Computers - Systems ............................................
8,900 Sun Microsystems, Inc.* ........................................ 426,644
--------------
Electrical Equipment
4,460 General Electric Co. ........................................... 345,650
4,630 Honeywell, Inc. ................................................ 324,389
--------------
670,039
--------------
Electronics -
Semiconductors/Components
4,040 Intel Corp. .................................................... 327,240
--------------
Entertainment
3,520 The Walt Disney Co. ............................................ 375,100
Financial Services
Associates Corp. N.A.
$ 100K 6.375% due 08/15/99 ............................................ 101,009
6,190 Fannie Mae ..................................................... 382,233
6,560 Travelers Group, Inc. .......................................... 324,720
--------------
807,962
Insurance
3,100 American International Group, Inc. ............................. $ 341,969
Orion Capital Trust I
$ 200K 8.73% due 01/01/37 ............................................. 216,500
--------------
558,469
--------------
Oil -International -Integrated
5,200 Exxon Corp. ..................................................... 308,425
--------------
Oil Related
4,250 Mobil Corp. .................................................... 289,531
5,530 Texaco, Inc. ................................................... 287,906
--------------
577,437
--------------
Packaged Foods
4,290 General Mills, Inc. ............................................ 319,337
--------------
Paper Products
7,100 Bowater, Inc. ................................................... 347,900
5,740 Champion International Corp. .................................... 293,816
--------------
641,716
--------------
<PAGE>
Pharmaceuticals
4,500 American Home Products Corp. ................................... 429,469
4,990 Johnson & Johnson .............................................. 334,018
2,270 Warner-Lambert Co. .............................................. 341,635
--------------
1,105,122
--------------
Railroad Equipment
7,020 Trinity Industries, Inc. ....................................... 317,655
--------------
Retail - Department Stores
25,000 Kmart Corp. ..................................................... 275,000
--------------
Retail - Specialty
9,760 Bed Bath & Beyond, Inc.* ........................................ 386,740
5,680 Home Depot, Inc. ................................................ 342,575
12,400 Pep Boys-Manny, Moe & Jack ...................................... 271,250
--------------
1,000,565
--------------
Savings & Loans Association
3,600 Golden West Financial Corp. .................................... 303,975
--------------
Steel
6,430 Nucor Corp. .................................................... 306,229
--------------
Telecommunication Equipment
5,700 Cisco Systems, Inc.* ........................................... 359,456
--------------
Tobacco
7,530 Philip Morris Companies, Inc. ................................... 312,495
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS January 31, 1998, continued
SHARES/PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------
U.S. Government Obligations
U.S. Treasury Bond
$1,250K 6.875% due 08/15/25 ............................................ $ 1,417,675
U.S. Treasury Note
$ 50K 5.625% due 11/30/00 ............................................ 50,346
U.S. Treasury Note
$1,100K 5.875% due 04/30/98 ............................................ 1,101,375
U.S. Treasury Note
$ 175K 6.50% due 04/30/99 ............................................. 177,518
U.S. Treasury Note
$ 250K 6.50% due 05/15/05 ............................................. 264,610
U.S. Treasury Note
$1,150K 6.625% due 06/30/01 ............................................ 1,193,424
U.S. Treasury Note
$ 570K 6.875% due 08/31/99 ............................................ 583,281
U.S. Treasury Note
$1,000K 6.875% due 05/15/06 ............................................ 1,086,340
U.S. Treasury Note
$ 75K 7.50% due 11/15/01 ............................................. 80,304
--------------
5,954,873
--------------
TOTAL UNITED STATES ............................................ 20,256,158
--------------
VENEZUELA (0.2%)
Telecommunications
2,300 Compania Anonima Nacional Telefonos de Venezuela (Class D)(ADR)* 84,525
--------------
TOTAL COMMON AND PREFERRED STOCKS
AND BONDS
(Identified Cost $41,265,351) ................................... 46,917,277
--------------
</TABLE>
<TABLE>
<CAPTION>
CURRENCY DESCRIPTION,
AMOUNT EXPIRATION DATE
IN THOUSANDS AND STRIKE PRICE VALUE
- -------------- ---------------------------------------------------------------- ----------
<S> <C> <C>
PURCHASED CALL OPTION ON
FOREIGN CURRENCY (0.1%)
FEBRUARY 10, 1998/YEN 120.72
yen 700 (Identified Cost $17,255) ......................................$ 34,230
----------
PRINCIPAL
AMOUNT
- --------------
SHORT-TERM INVESTMENT (a) (9.5%)
U.S. GOVERNMENT AGENCY
Federal Home Loan Mortgage Corp. 5.57% due 02/02/98 (Amortized
$5,000K Cost $4,998,969) 4,998,969
----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $46,281,575)(b) . 99.0% 51,950,476
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES.................... 1.0 521,061
-------- ------------
NET ASSETS........................ 100.0% $52,471,537
======== ============
</TABLE>
- ------------
ADR American Depository Receipt.
GDR Global Depository Receipt.
RCP Receipt shares.
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 is
$7,665,499 and the aggregate gross unrealized depreciation is
$1,996,598, resulting in net unrealized appreciation of $5,668,901.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
SUMMARY OF INVESTMENTS January 31, 1998
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- -------- ------------- -----------
<S> <C> <C>
Aerospace.................... $ 149,087 0.3%
Aerospace & Defense.......... 172,432 0.3
Air Transport................ 478,976 0.9
Airlines..................... 793,433 1.5
Auto Parts................... 191,527 0.4
Automobiles.................. 93,086 0.2
Automotive................... 1,027,205 2.0
Banking...................... 3,139,980 6.0
Banks........................ 611,547 1.2
Banks - Money Center......... 308,534 0.6
Beverages - Soft Drinks...... 331,325 0.6
Brewery...................... 38,400 0.1
Building & Construction ..... 90,439 0.2
Building Materials........... 294,201 0.6
Business Services............ 451,687 0.9
Chemicals.................... 1,042,751 2.0
Chemicals - Diversified...... 103,710 0.2
Computer Software............ 718,270 1.4
Computers ................... 701,782 1.3
Computers - Systems.......... 426,644 0.8
Conglomerates................ 552,689 1.1
Currency Option ............. 34,230 0.1
Electrical Equipment......... 1,368,912 2.6
Electronic & Electrical
Equipment................... 490,780 0.9
Electronics - Semiconductors. 134,247 0.3
Electronics
- Semiconductors/Components. 327,240 0.6
Energy....................... 82,181 0.2
Engineering & Construction .. 27,423 0.1
Entertainment................ 375,100 0.7
Financial Services........... 1,498,855 2.8
Food, Beverage, Tobacco, &
Household Products.......... 484,921 0.9
Foods & Beverages............ 159,553 0.3
Government Obligations....... 4,285,669 8.2
Household Furnishings &
Appliances.................. 156,800 0.3
Household Products........... 150,673 0.3
Insurance.................... 2,428,230 4.6
Leisure...................... 617,324 1.2
Machinery.................... 331,599 0.6
Manufacturing................ 67,376 0.1
Media ....................... 278,229 0.5
Media Group.................. 54,719 0.1
Metals & Mining.............. 54,847 0.1
Multi-Industry............... $ 373,268 0.7%
Multi-Line Insurance......... 143,459 0.3
Natural Gas.................. 194,868 0.4
Oil & Gas.................... 362,479 0.7
Oil - International
- Integrated ............... 1,439,392 2.7
Packaged Foods............... 319,337 0.6
Paper & Forest Products ..... 67,397 0.1
Paper Products .............. 641,716 1.2
Petroleum.................... 201,745 0.4
Pharmaceuticals.............. 2,971,099 5.6
Publishing .................. 680,803 1.3
Railroad Equipment........... 317,655 0.6
Real Estate.................. 160,888 0.3
Record & Tape Distribution .. 138,332 0.3
Retail ...................... 746,733 1.4
Retail - Department Stores .. 275,000 0.5
Retail - Specialty........... 1,000,565 1.9
Savings & Loans Association . 303,975 0.6
Semiconductor Equipment ..... 103,313 0.2
Steel........................ 306,229 0.6
Steel & Iron................. 112,230 0.2
Steel Related................ 132,039 0.3
Telecommunication Equipment . 654,849 1.2
Telecommunications........... 3,111,057 5.9
Textiles - Apparel........... 71,710 0.1
Tobacco...................... 312,495 0.6
Transportation .............. 60,579 0.1
U.S. Government Agency....... 4,998,969 9.5
U.S. Government Obligations 5,954,873 11.3
Utilities - Electric ........ 666,809 1.3
------------- ------
$51,950,476 99.0%
============= ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
- ---------------------------- ------------- ------------
<S> <C> <C>
Common Stocks ............... $35,948,975 68.5%
Corporate Bonds.............. 419,434 0.8
Foreign Currency Call
Option...................... 34,230 0.1
Foreign Government
Obligations................. 4,285,669 8.2
Preferred Stocks............. 308,326 0.6
U.S. Government Agency....... 4,998,969 9.5
U.S. Government Obligations . 5,954,873 11.3
------------- ------------
$51,950,476 99.0%
============= ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
January 31, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value (identified cost $46,281,575) $51,950,476
Cash (including $45,203 in foreign currency)...................... 187,716
Receivable for:
Interest ....................................................... 234,284
Investments sold ............................................... 219,189
Foreign withholding taxes reclaimed ............................ 32,523
Dividends ...................................................... 32,254
Shares of beneficial interest sold ............................. 5,830
Deferred organizational expenses ................................. 73,239
Prepaid expenses and other assets ................................ 78,353
-------------
TOTAL ASSETS.................................................... 52,813,864
-------------
LIABILITIES:
Payable for:
Investments purchased........................................... 118,812
Plan of distribution fee........................................ 45,092
Investment management fee....................................... 44,913
Shares of beneficial interest repurchased ...................... 36,796
Accrued expenses and other payables .............................. 96,714
-------------
TOTAL LIABILITIES............................................... 342,327
-------------
NET ASSETS ..................................................... $52,471,537
=============
COMPOSITION OF NET ASSETS:
Paid-in-capital .................................................. $49,192,315
Net unrealized appreciation ...................................... 5,660,048
Accumulated undistributed net investment income .................. 222,130
Distributions in excess of net realized gain ..................... (2,602,956)
-------------
NET ASSETS ..................................................... $52,471,537
=============
CLASS A SHARES:
Net Assets ....................................................... $26,956
Shares Outstanding (unlimited authorized, $.01 par value) ........ 2,344
NET ASSET VALUE PER SHARE....................................... $11.50
=======
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) ............... $12.14
======
CLASS B SHARES:
Net Assets ....................................................... $52,374,341
Shares Outstanding (unlimited authorized, $.01 par value) ........ 4,568,443
NET ASSET VALUE PER SHARE....................................... $11.46
=======
CLASS C SHARES:
Net Assets........................................................ $53,358
Shares Outstanding (unlimited authorized, $.01 par value) ....... 4,660
NET ASSET VALUE PER SHARE ...................................... $11.45
=======
CLASS D SHARES:
Net Assets ....................................................... $16,882
Shares Outstanding (unlimited authorized, $.01 par value) ....... 1,467
NET ASSET VALUE PER SHARE ...................................... $11.51
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the year ended January 31, 1998*
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Interest (net of $132 foreign withholding tax)....................... $1,044,521
Dividends (net of $77,953 foreign withholding tax) .................. 759,559
------------
TOTAL INCOME ...................................................... 1,804,080
------------
EXPENSES
Investment management fee ........................................... 621,396
Plan of distribution fee (Class A shares) ........................... 28
Plan of distribution fee (Class B shares) ........................... 580,914
Plan of distribution fee (Class C shares) ........................... 241
Professional fees ................................................... 88,295
Transfer agent fees and expenses..................................... 80,972
Shareholder reports and notices...................................... 78,146
Custodian fees ...................................................... 68,714
Registration fees.................................................... 55,755
Organizational expenses.............................................. 35,303
Trustees' fees and expenses ......................................... 13,810
Other ............................................................... 22,101
------------
TOTAL EXPENSES..................................................... 1,645,675
------------
NET INVESTMENT INCOME.............................................. 158,405
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on:
Investments ....................................................... 629,076
Foreign exchange transactions ..................................... 361,840
------------
NET GAIN........................................................... 990,916
------------
Net change in unrealized appreciation/depreciation on:
Investments ....................................................... 994,604
Translation of forward foreign currency contracts, other assets
and liabilities denominated in foreign currencies ................ (2,764)
------------
NET APPRECIATION .................................................. 991,840
------------
NET GAIN........................................................... 1,982,756
------------
NET INCREASE ........................................................ $2,141,161
============
- -------------
* Class A, Class C and Class D shares were issued July 28, 1997.
</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 YEAR FOR THE YEAR
ENDED ENDED
JANUARY 31, 1998* JANUARY 31, 1997
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................. $ 158,405 $ 65,971
Net realized gain...................................... 990,916 1,876,766
Net change in unrealized appreciation ................. 991,840 584,125
----------------- ----------------
NET INCREASE ........................................ 2,141,161 2,526,862
----------------- ----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -Class B shares.................. (148,714) (554,313)
Net realized gain
Class A shares........................................ (1,601) --
Class B shares........................................ (3,307,479) (2,041,599)
Class C shares........................................ (3,196) --
Class D shares........................................ (853) --
----------------- ----------------
TOTAL DIVIDENDS AND DISTRIBUTIONS ................... (3,461,843) (2,595,912)
----------------- ----------------
Net increase (decrease) from transactions in shares of
beneficial interest................................... (11,521,571) 21,111,669
----------------- ----------------
NET INCREASE (DECREASE).............................. (12,842,253) 21,042,619
NET ASSETS:
Beginning of period.................................... 65,313,790 44,271,171
----------------- ----------------
END OF PERIOD
(Including undistributed net investment income of
$222,130 and dividends in excess of net investment
income of $41,886)................................... $ 52,471,537 $65,313,790
================= ================
</TABLE>
- --------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1998
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 commenced
operations on February 28, 1995. On July 28, 1997, the Fund commenced
offering three additional classes of shares, with the then current shares
designated as Class B shares.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase, some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year,
six years and one year, respectively. Class D shares are not subject to a
sales charge. Additionally, Class A shares, Class B shares and Class C shares
incur distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at
its latest sale price on that exchange prior to the time when assets are
valued; if there were no sales that day, the security is valued at the latest
bid price (in cases where securities are traded on more than one exchange;
the 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 Dean Witter InterCapital Inc. (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 may
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1998, continued
utilize 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 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. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are
allocated to each class of shares based upon the relative net asset value on
the date such items are recognized. Distribution fees are charged directly to
the respective class.
D. 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.
E. 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.
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1998, continued
F. 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 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.
G. 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.
H. 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.
I. 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
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1998, continued
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 commencement of operations.
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.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted
a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The
Plan provides that the Fund will pay the Distributor a fee which is accrued
daily and paid monthly at the following annual rates: (i) Class A - up to
0.25% of the average daily net assets of Class A; (ii) Class B - 1.0% of the
lesser of: (a) the average daily aggregate gross sales of the Class B shares
since the inception of the Fund (not including reinvestment of dividend or
capital gain distributions) less the average daily aggregate net asset value
of the Class B shares redeemed since the Fund's inception upon which a
contingent deferred sales charge has been imposed or waived; or (b) the
average daily net assets of Class B; and (iii) Class C - up to 1.0% of the
average daily net assets of Class C. In the case of Class A shares, amounts
paid under the Plan are paid to the Distributor for services provided. In the
case of Class B and Class C shares, amounts paid under the Plan are paid to
the Distributor for services provided and the expenses borne by it and others
in the distribution of the shares of these Classes, including the payment of
commissions for sales of these Classes and incentive
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1998, continued
compensation to, and expenses of, the account executives of Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and
Distributor, and others who engage in or support distribution of the shares
or who service shareholder accounts, including overhead and telephone
expenses; printing and distribution of prospectuses and reports used in
connection with the offering of these shares to other than current
shareholders and preparation, printing and distribution of sales literature
and advertising materials. In addition, the Distributor may utilize fees paid
pursuant to the Plan, in the case of Class B shares, to compensate DWR and
other selected broker-dealers for their opportunity costs in advancing such
amounts, which compensation would be in the form of a carrying charge on any
unreimbursed expenses.
In the case of Class B shares, provided that the Plan continues in effect,
any cumulative expenses incurred by the Distributor but not yet recovered may
be recovered through the payment of future distribution fees from the Fund
pursuant to the Plan and contingent deferred sales charges paid by investors
upon redemption of Class B shares. Although there is no legal obligation for
the Fund to pay expenses incurred in excess of payments made to the
Distributor under the Plan and the proceeds of contingent deferred sales
charges paid by investors upon redemption of shares, if for any reason the
Plan is terminated, the Trustees will consider at that time the manner in
which to treat such expenses. The Distributor has advised the Fund that such
excess amounts, including carrying charges, totaled $3,856,463, at
January 31, 1998.
In the case of Class A and Class C shares, expenses incurred pursuant to the
Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net
assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses
representing a gross sales credit to account executives may be reimbursed in
the subsequent calendar year. For the period ended January 31, 1998, the
distribution fee was accrued for Class A shares and Class C shares at the
annual rate of 0.25% and 1.0%, respectively.
The Distributor has informed the Fund that for the period ended January 31,
1998, it received contingent deferred sales charges from redemptions of the
Fund's Class B shares and Class C shares of $191,520 and $33, respectively,
and received approximately $1,018 in front end sales charges from sales of
the Fund's Class A shares. The respective shareholders pay such charges which
are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the year ended January 31, 1998
aggregated $52,418,164 and $70,854,970, respectively. Included in the
aforementioned are purchases and sales of U.S. Government securities of
$12,840,577 and $12,053,968, respectively.
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1998, continued
For the period May 31, 1997 through January 31, 1998, the Fund incurred
brokerage commissions of $3,481 with Morgan Stanley & Co., Inc., an affiliate
of the Investment Manager since May 31, 1997, for portfolio transactions
executed on behalf of the Fund.
For the year ended January 31, 1998, the Fund incurred brokerage commissions
of $21,991 with DWR
for portfolio transactions executed on behalf of the Fund. At January 31,
1998, the Fund's payable for investments purchased and receivable for
investments sold included unsettled trades with DWR of
$34,738 and $78,910, respectively.
Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's
transfer agent. At January 31, 1998, the Fund had transfer agent fees and
expenses payable of approximately $1,200.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
JANUARY 31, 1998 JANUARY 31, 1997
------------------------------ ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------- --------------- ----------- --------------
<S> <C> <C> <C> <C>
CLASS A SHARES*
Sold 2,202 $ 28,364 -- --
Reinvestment of dividends and distributions 142 1,601 -- --
------------- --------------- ----------- --------------
Net increase - Class A 2,344 29,965 -- --
------------- --------------- ----------- --------------
CLASS B SHARES
Sold 637,914 7,870,323 2,505,555 $ 30,094,772
Reinvestment of dividends and distributions 277,899 3,138,105 199,063 2,368,262
Redeemed (1,863,599) (22,637,924) (944,898) (11,351,365)
------------- --------------- ----------- --------------
Net increase (decrease) - Class B (947,786) (11,629,496) 1,759,720 21,111,669
------------- --------------- ----------- --------------
CLASS C SHARES*
Sold 4,664 59,900 -- --
Reinvestment of dividends and distributions 262 2,944
Redeemed (266) (3,252) -- --
------------- --------------- ----------- --------------
Net increase - Class C 4,660 59,592 -- --
------------- --------------- ----------- --------------
CLASS D SHARES*
Sold 1,391 17,515 -- --
Reinvestment of dividends and distributions 76 853 -- --
------------- --------------- ----------- --------------
Net increase - Class D 1,467 18,368 -- --
------------- --------------- ----------- --------------
Net increase (decrease) in Fund (939,315) $(11,521,571) 1,759,720 $ 21,111,669
============= =============== =========== ==============
</TABLE>
- ---------------
* For the period July 28, 1997 (issue date) through January 31, 1998.
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1998, continued
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 $2,450,000 during fiscal 1998.
As of January 31, 1998, the Fund had temporary book/tax differences primarily
attributable to post-October losses and permanent book/tax differences
primarily attributable to foreign currency gains, tax adjustments on passive
foreign investment companies sold by the Fund and nondeductible
organizational expense. To reflect reclassifications arising from the
permanent differences, paid-in-capital was charged $32,807, distributions in
excess of net realized gain was charged $221,518 and accumulated
undistributed net investment income was credited $254,325.
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, 1998, the Fund had no outstanding forward contracts.
8. SUBSEQUENT EVENT
Effective March 2, 1998, the Investment Manager will assume directly the
sub-advisory responsibilities currently being performed by TCW Funds
Management, Inc. (TCW). The Investment Manager will retain the portion of
their fee currently paid to TCW.
<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 FOR THE YEAR FEBRUARY 28, 1995*
ENDED ENDED THROUGH
JANUARY 31, 1998**++ JANUARY 31, 1997 JANUARY 31, 1996
- --------------------------------------- ------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ... $11.84 $11.79 $10.00
------------------- ---------------- ------------------
Net investment income (loss)............ 0.03 (0.01) 0.17
Net realized and unrealized gain ...... 0.35 0.55 2.20
------------------- ---------------- ------------------
Total from investment operations ....... 0.38 0.54 2.37
------------------- ---------------- ------------------
Less dividends and distributions:
Net investment income.................. (0.03) (0.11) (0.34)
Net realized gain...................... (0.73) (0.38) (0.24)
------------------- ---------------- ------------------
Total dividends and distributions ...... (0.76) (0.49) (0.58)
------------------- ---------------- ------------------
Net asset value, end of period.......... $11.46 $11.84 $11.79
=================== ================ ==================
TOTAL INVESTMENT RETURN+................ 3.29% 4.58% 23.89%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................... 2.65% 2.53% 1.14%(2)(3)
Net investment income................... 0.25% 0.11% 1.71%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.............................. $52,374 $65,314 $44,271
Portfolio turnover rate................. 94% 63% 71%(1)
Average commission rate paid............ $0.0153 $0.0013 --
</TABLE>
- ------------
* Commencement of operations.
** Prior to July 28, 1997, the Fund issued one class of shares. All
shares of the Fund held prior to that date have been designated Class
B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on
the net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(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>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
JANUARY 31, 1998++
- ------------------------------------------ -----------------
<S> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ..... $13.09
-----------------
Net investment income ..................... 0.05
Net realized and unrealized gain .......... (0.91)
-----------------
Total from investment operations .......... (0.86)
-----------------
Less distributions from net realized gain (0.73)
-----------------
Net asset value, end of period ............ $11.50
=================
TOTAL INVESTMENT RETURN+................... (6.39)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .................................. 2.02%(2)
Net investment income ..................... 0.79%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .. $27
Portfolio turnover rate ................... 94%
Average commission rate paid .............. $0.0153
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ..... $13.09
-----------------
Net realized and unrealized gain .......... (0.91)
-----------------
Less distributions from net realized gain (0.73)
-----------------
Net asset value, end of period ............ $11.45
=================
TOTAL INVESTMENT RETURN+................... (6.79)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .................................. 2.79%(2)
Net investment income ..................... 0.07%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .. $53
Portfolio turnover rate ................... 94%
Average commission rate paid .............. $0.0153
</TABLE>
- ------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on
the net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL ASSET ALLOCATION FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
JANUARY 31, 1998++
- ------------------------------------------ -----------------
<S> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ..... $13.09
-----------------
Net investment income ..................... 0.07
Net realized and unrealized gain .......... (0.92)
-----------------
Total from investment operations .......... (0.85)
-----------------
Less distributions from net realized gain (0.73)
-----------------
Net asset value, end of period ............ $11.51
=================
TOTAL INVESTMENT RETURN+ .................. (6.32)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .................................. 1.80%(2)
Net investment income ..................... 1.08%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .. $17
Portfolio turnover rate ................... 94%
Average commission rate paid .............. $0.0153
</TABLE>
- ------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day
of the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
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, 1998, the results of
its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended and the financial highlights
for each of the periods presented, 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, 1998 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
February 13, 1998
- -------------------------------------------------------------------------------
1998 FEDERAL TAX NOTICE (unaudited)
During the year ended January 31, 1998, the Fund paid to Class A, B,
C and D shareholders $0.63 per share from long-term capital gains.
Of this $0.63 distribution, $0.12 is taxable as 28% rate gain and
$0.51 is taxable as 20% rate gain. Additionally, for such period
22.07% of the income paid qualified for the dividends received
deduction available to corporations.
- -------------------------------------------------------------------------------
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Mark Bavoso
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
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, 1998
