<PAGE>
DEAN WITTER INFORMATION FUND Two World Trade Center,
LETTER TO THE SHAREHOLDERS March 31, 1998 New York, New York 10048
DEAR SHAREHOLDER:
During the fiscal year ended March 31, 1998, Dean Witter Information Fund
continued to invest in all aspects of the communications and information
industries, choosing companies with solid demand, proven management,
proprietary technology and strategic relationships or alliances.
THE ENVIRONMENT
Notable events during the year confirmed our enthusiasm for the information
and communications industries. A continued surge in Worldwide Web advertising
and commerce deals drove interest in holdings like America Online (AOL),
Excite and RealNetworks. Microsoft invested $1 billion in the cable TV
industry, and more than 100,000 Americans have begun accessing the Web via
cable modems. Emerging telecommunications companies were driven by strong
customer additions, initial public offerings (IPOs) and acquisitions such as
Teleport Communications by AT&T and LCI International by Qwest Communications
(LCI had recently acquired U.S. Long Distance). WorldCom acquired Brooks
Fiber, AOL and CompuServe's Internet networks, and is in the process of
acquiring MCI in the largest acquisition ever in the United States.
In technology, large vendors continue to widen their leads over smaller
firms, in part because, as their products and services become more strategic
to users, purchasing decisions have moved up to the level of Chief Executive
and even to Boards of Directors, who tend to choose low-risk vendors over
best-of-breed products. These events show that the information revolution
continues apace.
PERFORMANCE REVIEW
The past 12 months were very rewarding for U.S. stocks, and even more so for
the Fund. The Fund's Class B shares posted a total return of 56.10 percent
for the fiscal year versus 47.97 percent for the Standard & Poor's 500
Composite Stock Price Index (S&P 500) and 36.44 percent for the
<PAGE>
DEAN WITTER INFORMATION FUND
LETTER TO THE SHAREHOLDERS March 31, 1998, continued
Lipper Analytical Services, Inc. Science and Technology Funds Index. Since
their inception on July 28, 1997, through March 31, 1998, the Fund's Class A,
C and D shares posted total returns of 22.66 percent, 21.96 percent and 22.75
percent, respectively. The performance of the Fund's four share classes
varies because of differing sales charges and expenses.
The accompanying chart illustrates the growth of a hypothetical investment in
the Fund's Class B shares from inception (November 28, 1995), through the
fiscal year ended March 31, 1998, versus similar investments in the issues
that comprise the S&P 500 and the Lipper Science and Technology Funds Index.
A number of market sectors helped the Fund outperform its benchmarks for the
fiscal year. Areas of particular strength included internet-related stocks,
radio broadcasters, emerging telecommunications carriers--both wireline and
wireless--and companies that provide technology to the telecommunications
industry.
THE PORTFOLIO
At the end of the fiscal year, net assets stood at $269 million. As of March
31, 1998, 48 percent of the Fund's net assets was invested in information
technology (semiconductors, equipment and software), with 27 percent in
information services (consulting, wireline/wireless telecommunication and
business services) and 23 percent in information distribution and content
(media, broadcasters and cable). The balance of the portfolio was held in
cash equivalents. Foreign stocks and American Depository Receipts (ADRs)
represented 17 percent of net assets. ADRs are receipts for foreign stocks
held in U.S. banks.
Significant holdings within the Fund's major areas of interest include BMC
Software, Saville Systems and Vitesse (information technology); America
Online, Keane and Telebras (information services); and Chancellor, Outdoor
Systems and Clear Channel Communications (information distribution and
content).
GOING FORWARD
The fundamentals underpinning the industry sectors in which the Fund invests
remain robust. Service providers continue to spend heavily on equipment and
information systems as they prepare for new competition and customers with
new-found freedom to choose providers. The group is expected to perform well
over the long run as technology continues to gain in importance as a
component of worldwide spending. Radio broadcast stocks also are expected to
exhibit strength as a result of continued industry consolidation, which
should lead to pricing power. Emerging Web-based media stocks seem likely to
take a noticeable piece of the $184 billion U.S. advertising pie, and
eventually some piece of the $180 billion spent annually overseas. Service
firms that leverage new technology, such as America Online, E*Trade and the
wireless providers, are signing up a tremendous number of new subscribers. We
plan to participate in this growth where corporate business plans appear to
make the most sense.
2
<PAGE>
DEAN WITTER INFORMATION FUND
LETTER TO THE SHAREHOLDERS March 31, 1998, continued
We appreciate your support of Dean Witter Information 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
3
<PAGE>
DEAN WITTER INFORMATION FUND
FUND PERFORMANCE March 31, 1998
GROWTH OF $10,000-CLASS B
($ in Thousands)
$28
24
20 $19,047
16 $13,834
12 $13,650(3)
8
November 28, March 31, March 31, March 31,
1995 1996 1997 1998
- -----------------------------------------------------------------------------
= Fund = S&P 500(4) = Lipper(3)
- -----------------------------------------------------------------------------
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. PERFORMANCE FOR CLASS
A, CLASS C, AND CLASS D SHARES WILL VARY FROM THE PERFORMANCE OF CLASS B
SHARES SHOWN ABOVE DUE TO DIFFERENCES IN SALES CHARGES AND EXPENSES.
AVERAGE ANNUAL TOTAL RETURNS*
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B SHARES**
- ----------------------------------------------------
PERIOD ENDED 3/31/98
- --------------------------
<S> <C> <C>
1 year 56.10%(1) 51.10%(2)
Since Inception (11/28/95) 15.30%(1) 14.23%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES++
- ---------------------------------------------------
PERIOD ENDED 3/31/98
- -------------------------
<S> <C> <C>
SINCE INCEPTION (7/28/97) 21.96%(1) 20.96%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS A SHARES+
- ---------------------------------------------------
PERIOD ENDED 3/31/98
- -------------------------
<S> <C> <C>
Since Inception (7/28/97) 22.66%(1) 16.22%(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS D SHARES++
- ---------------------------------------------------
PERIOD ENDED 3/31/98
- -------------------------
<S> <C> <C>
Since Inception (7/28/97) 22.75%(1)
</TABLE>
<PAGE>
- ------------
(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 sales charge. See the Fund's current
prospectus for complete details on fees and sales charges.
(3) Closing value after the deduction of a 3% CDSC, assuming a complete
redemption on March 31, 1998.
(4) The Standard & Poor's 500 Stock Index (S&P 500) is a broad-based index,
the performance of which is based on the average performance of 500
widely held common stocks. The performance of the Index does not include
any expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
(5) The Lipper Science and Technology Funds Index is an equally-weighted
performance index of the largest qualifying funds (based on net assets)
in the Lipper Science and Technology 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.
* For periods of less than one year, the Fund quotes its total return on a
non-annualized basis.
** The maximum contingent deferred sales charge (CDSC) for Class B shares
is 5.0%. The CDSC declines to 0% after six years.
+ The maximum front-end sales charge for Class A shares is 5.25%.
++ The maximum contingent deferred sales charge for Class C shares is 1%
for shares redeemed within one year of purchase.
++ Class D shares have no sales charge.
4
<PAGE>
DEAN WITTER INFORMATION FUND
PORTFOLIO OF INVESTMENTS March 31, 1998
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------------------------------------------------------- --------------
<S> <C> <C>
COMMON STOCKS (98.3%)
Advertising (5.0%)
105,000 Lamar Advertising Co. (Class A)* ................................ $ 3,629,062
50,000 Omnicom Group, Inc. ............................................. 2,353,125
180,000 Outdoor Systems, Inc.* .......................................... 6,311,250
25,000 Snyder Communications, Inc.* .................................... 1,171,875
--------------
13,465,312
--------------
Broadcasting (10.9%)
130,000 Chancellor Media Corp. (Class A)* ............................... 5,963,750
50,000 Cinar Films, Inc. (Class B)(Canada)* ............................ 2,125,000
55,000 Clear Channel Communications, Inc.* ............................. 5,390,000
94,500 Cox Radio, Inc. (Class A)* ...................................... 4,583,250
40,000 Heftel Broadcasting Corp. (Class A)* ............................ 1,790,000
60,000 Jacor Communications, Inc.* ..................................... 3,543,750
40,000 Time Warner, Inc. ............................................... 2,880,000
80,000 Univision Communications, Inc. (Class A)* ....................... 2,980,000
--------------
29,255,750
--------------
Commercial Services (0.9%)
20,000 FDX Corp.* ...................................................... 1,422,500
10,000 International Network Services* ................................. 290,625
60,000 Mecon, Inc.* .................................................... 652,500
--------------
2,365,625
--------------
Communications Equipment (11.8%)
110,000 Advanced Fibre Communications, Inc.* ............................ 4,001,250
100,000 Ascend Communications, Inc.* .................................... 3,787,500
121,000 CIENA Corp.* .................................................... 5,150,062
65,000 Cisco Systems, Inc.* ............................................ 4,444,375
100,000 Digital Lightwave, Inc.* ........................................ 609,375
120,000 Digital Microwave Corp.* ........................................ 1,762,500
98,500 Innova Corp.* ................................................... 1,526,750
100,000 Natural Microsystems Corp.* ..................................... 3,962,500
10,000 Newbridge Networks Corp. (Canada)* .............................. 268,750
90,000 P-COM, Inc.* .................................................... 1,800,000
85,000 Positron Fiber Systems Corp. (Class A)(Canada)* ................. 653,437
10,000 Powerwave Technologies, Inc.* ................................... 131,875
90,000 Premisys Communications, Inc.* .................................. 2,581,875
50,000 Yurie Systems, Inc.* ............................................ 1,209,375
--------------
31,889,624
--------------
Computer Services (7.3%)
60,000 American Management Systems, Inc.* .............................. $ 1,642,500
35,000 Checkfree Holdings Corp.* ....................................... 770,000
140,000 Condor Technology Solutions, Inc.* .............................. 1,960,000
57,000 Keane, Inc.* .................................................... 3,220,500
55,000 PRT Group, Inc.* ................................................ 536,250
150,000 Saville Systems Ireland PLC (ADR)(Ireland)* ..................... 7,575,000
40,000 SunGard Data Systems, Inc.* ..................................... 1,472,500
80,000 Unisys Corp.* ................................................... 1,520,000
80,000 VideoServer, Inc.* .............................................. 995,000
--------------
19,691,750
--------------
Computer Software (22.2%)
102,300 American Software, Inc. (Class A)* .............................. 805,613
70,000 Aspect Development, Inc.* ....................................... 3,815,000
40,000 Autodesk, Inc. ................................................. 1,722,500
90,000 BEA Systems, Inc.* .............................................. 2,531,250
80,000 BMC Software, Inc.* ............................................. 6,705,000
130,000 Business Objects S.A. (ADR)(France)* ............................ 1,950,000
90,000 Computer Associates International, Inc. ......................... 5,197,500
90,000 Compuware Corp.* ................................................ 4,438,125
60,000 CrossKeys Systems Corp. (Canada)* ............................... 675,000
120,000 Emulex Corp.* ................................................... 1,095,000
109,000 FlexiInternational Software, Inc.* .............................. 1,335,250
20,000 Genesys Telecommunications Laboratories, Inc.* .................. 757,500
79,000 Geoworks Corp.* ................................................ 587,563
50,000 Harbinger Corp.* ................................................ 1,875,000
20,000 HBO & Co. ...................................................... 1,206,250
20,000 Interlink Computer Sciences, Inc.* .............................. 108,750
50,000 INTERSOLV, Inc.* ................................................ 887,500
33,000 Legato Systems, Inc.* ........................................... 1,955,250
50,000 Lernout & Hauspie Speech Products N.V. (ADR)(Belgium)* .......... 4,350,000
30,000 Manugistics Group, Inc.* ........................................ 1,680,000
40,000 Micro Focus Group PLC (ADR)(United Kingdom)* .................... 1,890,000
70,000 Network Associates, Inc.* ....................................... 4,637,500
100,000 Remedy Corp.* ................................................... 1,950,000
50,000 VERITAS Software Corp.* ......................................... 2,950,000
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
DEAN WITTER INFORMATION FUND
PORTFOLIO OF INVESTMENTS March 31, 1998, continued
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------------------------------------------------------- --------------
<S> <C> <C>
80,000 Visio Corp.* ................................................... $ 3,410,000
49,100 Visual Networks, Inc.* .......................................... 1,258,188
--------------
59,773,739
--------------
Computers -Systems (1.6%)
30,000 Dell Computer Corp.* ............................................ 2,030,625
30,000 Storage Technology Corp.* ....................................... 2,281,875
--------------
4,312,500
--------------
Electronics (2.8%)
139,500 Anaren Microwave, Inc.* ......................................... 3,069,000
170,000 Electronics for Imaging, Inc.* .................................. 4,420,000
--------------
7,489,000
--------------
Electronics -Capital Equipment (1.9%)
10,000 ASM Lithography Holding N.V. (ADR)(Netherlands)* ................ 923,750
130,000 Cymer, Inc.* ................................................... 2,624,375
40,000 Newport Corp. ................................................... 782,500
70,000 Semitool, Inc.* ................................................. 875,000
--------------
5,205,625
--------------
Entertainment (2.3%)
45,000 Electronic Arts, Inc.* .......................................... 2,109,375
90,000 Gemstar International Group Ltd. (ADR)(Virgin Islands)* ......... 2,688,750
50,000 Imax Corp. (Canada)* ............................................ 1,415,625
--------------
6,213,750
--------------
Internet (5.3%)
60,000 America Online, Inc.* ........................................... 4,098,750
66,000 At Home Corp. (Series A)* ....................................... 2,219,250
50,000 E*TRADE Group, Inc.* ............................................ 1,243,750
70,000 Icon CMT Corp.* ................................................. 1,085,000
129,000 RealNetworks, Inc.* ............................................ 3,708,750
60,000 Ticketmaster Group, Inc.* ...................................... 1,803,750
--------------
14,159,250
--------------
Media (4.7%)
30,000 Scripps (E.W.) Co. (Class A) .................................... 1,659,375
40,000 Sinclair Broadcast Group, Inc. (Class A)* ....................... 2,302,500
120,000 Tele-Communications Liberty Media Group (Class A)* .............. 4,117,500
85,000 Viacom, Inc. (Class B)* ......................................... 4,568,750
--------------
12,648,125
--------------
Semiconductors (7.6%)
100,000 Adaptec, Inc.* .................................................. $ 1,962,500
175,200 Galileo Technology, Ltd. (ADR)(Israel)* ......................... 4,818,000
50,000 Intel Corp. ..................................................... 3,900,000
34,900 Kopin Corp.* .................................................... 612,931
50,000 Sheldahl, Inc.* ................................................. 556,250
30,000 Texas Instruments, Inc. ......................................... 1,623,750
100,000 Vitesse Semiconductor Corp.* .................................... 4,700,000
60,000 Xilinx, Inc.* .................................................. 2,246,250
--------------
20,419,681
--------------
Telecommunications (7.9%)
70,000 Intermedia Communications, Inc.* ................................ 5,573,750
100,000 LCI International, Inc.* ........................................ 3,850,000
40,000 Pacific Gateway Exchange, Inc.* ................................. 2,275,000
32,000 Portugal Telecom S.A. (ADR)(Portugal) ........................... 1,678,000
35,000 RCN Corp.* ...................................................... 1,741,250
30,000 Telecom Italia SpA (ADR)(Italy) ................................. 2,383,125
60,000 PT Telekomunikasi Indonesia (ADR)(Indonesia) .................... 588,750
50,000 Teligent, Inc. (Class A)* ....................................... 1,543,750
40,000 WinStar Communications, Inc.* ................................... 1,712,500
--------------
21,346,125
--------------
<PAGE>
Wireless Communication (6.1%)
45,000 Airtouch Communications, Inc.* .................................. 2,202,188
40,000 Iridium World Communications, Ltd. (Class A)* ................... 2,490,000
4,030 Mannesman AG (Germany) .......................................... 2,951,439
50,000 Millicom International Cellular S.A. (Luxembourg)* .............. 2,200,000
500,000 Telecom Italia Mobile SpA (Italy) ............................... 2,688,718
30,000 Telecomunicacoes Brasileiras S.A. (ADR)(Brazil) ................. 3,894,375
--------------
16,426,720
--------------
TOTAL COMMON STOCKS
(Identified Cost $202,826,847) .................................. 264,662,576
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
DEAN WITTER INFORMATION FUND
PORTFOLIO OF INVESTMENTS March 31, 1998, continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENT (A)(2.4%)
U.S. GOVERNMENT AGENCY
Federal Home Loan Mortgage Corp. 5.48% due 04/01/98 (Amortized
$6,500 Cost $6,500,000) .............................................. $ 6,500,000
------------
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $209,326,847)(B) .......................................... 100.7% 271,162,576
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS ........................................................... (0.7) (1,859,962)
----- ------------
NET ASSETS ................................................................. 100.0% $269,302,614
===== ============
</TABLE>
- ------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Security was purchased on a discount basis. The interest rate shown
has been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$66,391,035 and the aggregate gross unrealized depreciation is
$4,555,306, resulting in net unrealized appreciation of $61,835,729.
7
<PAGE>
DEAN WITTER INFORMATION FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $209,326,847)............. $271,162,576
Cash........................................ 2,957,749
Receivable for:
Investments sold ......................... 9,297,272
Shares of beneficial interest sold ...... 206,288
Dividends................................. 17,388
Deferred organizational expenses............ 95,438
Prepaid expenses and other assets........... 92,997
--------------
TOTAL ASSETS ............................. 283,829,708
--------------
LIABILITIES:
Payable for:
Investments purchased..................... 13,856,471
Plan of distribution fee.................. 229,530
Shares of beneficial interest
repurchased.............................. 200,742
Investment management fee................. 172,934
Accrued expenses............................ 67,417
--------------
TOTAL LIABILITIES ........................ 14,527,094
--------------
NET ASSETS ............................... $269,302,614
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital ............................ $195,109,859
Net unrealized appreciation ................ 61,835,729
Net investment loss......................... (93)
Accumulated undistributed net realized
gain....................................... 12,357,119
--------------
NET ASSETS ............................... $269,302,614
==============
CLASS A SHARES:
Net Assets.................................. $205,769
Shares Outstanding (unlimited authorized,
$.01 par value)............................ 14,682
NET ASSET VALUE PER SHARE ................ $14.02
==============
MAXIMUM OFFERING PRICE PER SHARE
(net asset value plus 5.54% of net
asset value)............................. $14.80
==============
CLASS B SHARES:
Net Assets.................................. $267,384,459
Shares Outstanding (unlimited authorized,
$.01 par value)............................ 19,180,309
NET ASSET VALUE PER SHARE ................ $13.94
==============
CLASS C SHARES:
Net Assets.................................. $ 248,750
Shares Outstanding (unlimited authorized,
$.01 par value)............................ 17,839
NET ASSET VALUE PER SHARE ................ $13.94
==============
CLASS D SHARES:
Net Assets.................................. $ 1,463,636
Shares Outstanding (unlimited authorized,
$.01 par value)............................ 104,357
NET ASSET VALUE PER SHARE ................ $ 14.03
==============
</TABLE>
Statement of Operations
For the year ended March 31, 1998*
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $64,118 foreign withholding
tax)......................................... $ 604,787
Interest...................................... 598,848
-------------
TOTAL INCOME ............................... 1,203,635
-------------
EXPENSES
Plan of distribution fee (Class A shares) .... 193
Plan of distribution fee (Class B shares) .... 2,387,929
Plan of distribution fee (Class C shares) .... 554
Investment management fee..................... 1,793,392
Transfer agent fees and expenses.............. 465,618
Professional fees............................. 50,834
Shareholder reports and notices............... 48,839
Registration fees............................. 43,520
Custodian fees................................ 40,165
Organizational expenses....................... 35,839
Trustees' fees and expenses................... 15,407
Other......................................... 11,603
-------------
TOTAL EXPENSES ............................. 4,893,893
-------------
NET INVESTMENT LOSS ........................ (3,690,258)
-------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain............................. 47,488,489
Net change in unrealized depreciation ........ 61,837,292
-------------
NET GAIN ................................... 109,325,781
-------------
NET INCREASE ................................. $105,635,523
=============
</TABLE>
- ------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
DEAN WITTER INFORMATION FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
1998* 1997
- ---------------------------------------------------- ------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss.................................... $ (3,690,258) $ (3,163,565)
Net realized gain (loss)............................... 47,488,489 (32,902,627)
Net change in unrealized depreciation ................. 61,837,292 (12,858,100)
--------------- --------------
NET INCREASE (DECREASE).............................. 105,635,523 (48,924,292)
Net increase (decrease) from transactions in shares of
beneficial interest................................... (50,059,140) 55,329,540
--------------- --------------
NET INCREASE ........................................ 55,576,383 6,405,248
NET ASSETS:
Beginning of period.................................... 213,726,231 207,320,983
--------------- --------------
END OF PERIOD
(Including a net investment loss of $93
and $0, respectively)................................ $269,302,614 $213,726,231
=============== ==============
</TABLE>
- ------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
DEAN WITTER INFORMATION FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1998
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter Information 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 long-term
capital appreciation. The Fund seeks to achieve its investment objective by
investing primarily in common stocks and securities convertible into common
stocks of domestic and foreign companies which are involved in the
communications and information industry. The Fund was organized as a
Massachusetts business trust on December 8, 1994 and commenced operations on
November 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 by Dean Witter InterCapital Inc. (the
"Investment Manager") that sale or bid prices are not reflective of a
security's market value, portfolio securities are valued at their fair value
as determined in good faith under procedures established by and under the
general supervision of the Trustees; and (4) short-term debt securities
having a maturity date of more than sixty days at time of purchase are valued
on a mark-to-market basis until sixty days prior to
10
<PAGE>
DEAN WITTER INFORMATION FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1998, continued
maturity and thereafter at amortized cost based on their value on the 61st
day. Short-term debt securities having a maturity date of sixty days or less
at the time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). Realized gains
and losses on security transactions are determined by the identified cost
method. Dividend income and other distributions are recorded on the
ex-dividend date except for certain dividends on foreign securities which are
recorded as soon as the Fund is informed after the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are
allocated to each class of shares based upon the relative net asset value on
the date such items are recognized. Distribution fees are charged directly to
the respective class.
D. 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 and in
the Statement of Assets and Liabilities as part of the related foreign
currency denominated asset or liability. 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.
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.
11
<PAGE>
DEAN WITTER INFORMATION FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1998, continued
G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends
and distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends
and distributions which exceed net investment income and net realized capital
gains for financial reporting purposes but not for tax purposes are reported
as dividends in excess of net investment income or distributions in excess of
net realized capital gains. To the extent they exceed net investment income
and net realized capital gains for tax purposes, they are reported as
distributions of paid-in-capital.
H. ORGANIZATIONAL EXPENSES -- The Investment Manager paid the organizational
expenses of the Fund in the amount of approximately $179,000 which have been
reimbursed for the full amount thereof. Such expenses have been deferred and
are being amortized on the straight-line method over a period not to exceed
five years from commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined as of the
close of each business day: 0.75% to the portion of daily net assets not
exceeding $500 million; and 0.725% to the portion of daily net assets
exceeding $500 million.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities,
equipment, clerical, bookkeeping and certain legal services and pays the
salaries of all personnel, including officers of the Fund who are employees
of the Investment Manager. The Investment Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the
Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted
a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The
Plan provides that the Fund will pay the Distributor a fee which is accrued
daily and paid monthly at the following annual rates: (i) Class A - up to
0.25% of the average daily net assets of
12
<PAGE>
DEAN WITTER INFORMATION FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1998, continued
Class A; (ii) Class B - 1.0% of the lesser of: (a) the average daily aggregate
gross sales of the Class B shares since the inception of the Fund (not
including reinvestment of dividend or capital gain distributions) less the
average daily aggregate net asset value of the Class B shares redeemed since
the Fund's inception upon which a contingent deferred sales charge has been
imposed or waived; or (b) the average daily net assets of Class B; and (iii)
Class C -up to 1.0% of the average daily net assets of Class C. In the case
of Class A shares, amounts paid under the Plan are paid to the Distributor
for services provided. In the case of Class B and Class C shares, amounts
paid under the Plan are paid to the Distributor for services provided and the
expenses borne by it and others in the distribution of the shares of these
Classes, including the payment of commissions for sales of these Classes and
incentive compensation to, and expenses of, the account executives of Dean
Witter Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and
Distributor, and others who engage in or support distribution of the shares
or who service shareholder accounts, including overhead and telephone
expenses; printing and distribution of prospectuses and reports used in
connection with the offering of these shares to other than current
shareholders; and preparation, printing and distribution of sales literature
and advertising materials. In addition, the Distributor may utilize fees paid
pursuant 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 $11,792,699 at March 31,
1998.
In the case of Class A shares and Class C shares, expenses incurred pursuant
to the Plan in any calendar year in excess of 0.25% or 1.0% of the average
daily net assets of Class A or Class C, respectively, will not be reimbursed
by the Fund through payments in any subsequent year, except that expenses
representing a gross sales credit to account executives may be reimbursed in
the subsequent calendar year. For the period ended March 31, 1998, the
distribution fee was accrued for Class A shares and Class C shares at the
annual rate of 0.23% and 1.0%, respectively.
13
<PAGE>
DEAN WITTER INFORMATION FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1998, continued
The Distributor has informed the Fund that for the period ended March 31,
1998, it received contingent deferred sales charges from certain redemptions
of the Fund's Class A shares, Class B shares and Class C shares of $5,
$957,856 and $94, respectively and received $7,180 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 March 31, 1998
aggregated $493,143,825, and $530,473,117, respectively.
For the year ended March 31, 1998, the Fund incurred brokerage commissions of
$70,244 with DWR for portfolio transactions executed on behalf of the Fund.
At March 31, 1998, the Fund's receivable for investments sold and payable for
investments purchased included unsettled trades with DWR of $851,097 and
$691,750, respectively.
For the period May 31, 1997 through March 31, 1998, the Fund incurred
brokerage commissions of $20,370 with Morgan Stanley & Co., Inc., an
affiliate of the Investment Manager since May 31, 1997, for portfolio
transactions executed on behalf of the Fund. At March 31, 1998, the Fund's
receivable for investments sold and payable for investments purchased
included unsettled trades with Morgan Stanley & Co., Inc. of $528,970 and
$625,500, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager
and Distributor, is the Fund's transfer agent. At March 31, 1998, the Fund
had transfer agent fees and expenses payable of approximately $5,500.
5. FEDERAL INCOME TAX STATUS
During the year ended March 31, 1998, the Fund utilized its net capital loss
carryover of approximately $19,088,000.
As of March 31, 1998, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales and permanent book/tax
differences primarily attributable to a net operating loss. To reflect
reclassifications arising from the permanent differences, paid-in-capital was
charged $3,702,150, net investment loss was credited $3,690,165 and
accumulated undistributed net realized gain was credited $11,985.
14
<PAGE>
DEAN WITTER INFORMATION FUND
NOTES TO FINANCIAL STATEMENTS March 31, 1998, continued
<TABLE>
<CAPTION>
6. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, 1998 MARCH 31, 1997
-------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
CLASS A SHARES*
Sold.............................. 15,349 $ 178,877 -- --
Reedemed.......................... (667) (8,097) -- --
--------------- --------------- --------------- --------------
Net increase-Class A............. 14,682 170,780 -- --
--------------- --------------- --------------- --------------
CLASS B SHARES
Sold.............................. 3,649,152 42,792,430 12,321,396 $136,279,927
Redeemed.......................... (8,387,989) (94,589,565) (7,831,515) (80,950,387)
--------------- --------------- --------------- --------------
Net increase (decrease)-Class B . (4,738,837) (51,797,135) 4,489,881 55,329,540
--------------- --------------- --------------- --------------
CLASS C SHARES*
Sold.............................. 19,252 242,097 -- --
Redeemed.......................... (1,413) (17,311) -- --
--------------- --------------- --------------- --------------
Net increase-Class C............. 17,839 224,786 -- --
--------------- --------------- --------------- --------------
CLASS D SHARES*
Sold.............................. 104,357 1,342,429 -- --
--------------- --------------- --------------- --------------
Net increase (decrease) in Fund .. (4,601,959) $(50,059,140) 4,489,881 $ 55,329,540
=============== =============== =============== ==============
</TABLE>
- ------------
* For the period July 28, 1997 (issue date) through March 31, 1998.
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 March 31, 1998, there were no outstanding forward foreign currency
contracts.
15
<PAGE>
DEAN WITTER INFORMATION FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
FOR THE YEAR FOR THE PERIOD
ENDED FOR THE YEAR NOVEMBER 28, 1995*
MARCH 31, ENDED THROUGH
1998**++ MARCH 31, 1997 MARCH 31, 1996
- -------------------------------------------------- ----------------- -------------- ------------------
<S> <C> <C> <C>
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .............. $ 8.94 $ 10.67 $10.00
----------------- -------------- ------------------
Net investment loss ............................... (0.18) (0.13) (0.01)
Net realized and unrealized gain (loss) .......... 5.18 (1.60) 0.69
----------------- -------------- ------------------
Total from investment operations .................. 5.00 (1.73) 0.68
----------------- -------------- ------------------
Less dividends in excess of net investment income -- -- (0.01)
----------------- -------------- ------------------
Net asset value, end of period .................... $13.94 $ 8.94 $10.67
================= ============== ==================
TOTAL INVESTMENT RETURN+ .......................... 56.10 % (16.31)% 6.77 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses .......................................... 2.05 % 2.01 % 2.31 %(2)
Net investment loss ............................... (1.54)% (1.16)% (0.51)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .......... $267,384 $213,726 $207,321
Portfolio turnover rate ........................... 218 % 132 % 8 %(1)
Average commission rate paid ...................... $0.0498 $0.0527 $0.0496
</TABLE>
- ------------
* Commencement of operations.
** Prior to July 28, 1997, the Fund issued one class of shares. All shares
of the Fund held prior to that date have been designated Class B
shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
DEAN WITTER INFORMATION FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
MARCH 31,
1998++
- --------------------------------------- ---------------
<S> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .. $ 11.43
---------------
Net investment loss .................... (0.08)
Net realized and unrealized gain ...... 2.67
---------------
Total from investment operations ...... 2.59
---------------
Net asset value, end of period ......... $ 14.02
===============
TOTAL INVESTMENT RETURN+ ............... 22.66 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 1.27 %(2)
Net investment loss..................... (0.93)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.............................. $ 206
Portfolio turnover rate................. 218 %
Average commission rate paid............ $0.0498
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .. $ 11.43
---------------
Net investment loss..................... (0.14)
Net realized and unrealized gain ...... 2.65
---------------
Total from investment operations ....... 2.51
---------------
Net asset value, end of period.......... $ 13.94
===============
TOTAL INVESTMENT RETURN+ ............... 21.96 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 2.05 %(2)
Net investment loss..................... (1.72)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.............................. $ 249
Portfolio turnover rate................. 218 %
Average commission rate paid............ $0.0498
</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
17
<PAGE>
DEAN WITTER INFORMATION FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
MARCH 31,
1998++
- --------------------------------------- ---------------
<S> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .. $ 11.43
---------------
Net investment loss..................... (0.07)
Net realized and unrealized gain ...... 2.67
---------------
Total from investment operations ....... 2.60
---------------
Net asset value, end of period.......... $ 14.03
===============
TOTAL INVESTMENT RETURN+ .............. 22.75 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 1.04 %(2)
Net investment loss..................... (0.82)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.............................. $ 1,464
Portfolio turnover rate................. 218 %
Average commission rate paid............ $0.0498
</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
18
<PAGE>
DEAN WITTER INFORMATION FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER INFORMATION 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
Information Fund (the "Fund") at March 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 March 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
May 8, 1998
19
<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
Edward F. Gaylor
Vice President
Peter Hermann
Vice President
Jayne Stevlingson
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Morgan Stanley 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
INFORMATION FUND
ANNUAL REPORT
MARCH 31, 1998
