-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CKgnSqmVlKMD2GqiYVRf7kHKHt0VoR2vkrFT10qowGKYMd05wMTcjRFxQNewgRt0 JocnkIDcngaXWKJ5SIsy8A== 0000950123-96-004734.txt : 19960828 0000950123-96-004734.hdr.sgml : 19960828 ACCESSION NUMBER: 0000950123-96-004734 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960827 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WITTER DEAN AMERICAN VALUE FUND CENTRAL INDEX KEY: 0000314366 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133013834 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02978 FILM NUMBER: 96621107 BUSINESS ADDRESS: STREET 1: ONE WORLD TRADE CTR CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123922550 MAIL ADDRESS: STREET 1: TWO WORLD TRADE CENTER CITY: NEW YORK STATE: NY ZIP: 10048 FORMER COMPANY: FORMER CONFORMED NAME: WITTER DEAN INDUSTRY VALUED SECURITIES INC DATE OF NAME CHANGE: 19870429 FORMER COMPANY: FORMER CONFORMED NAME: INTERCAPITAL INDUSTRY VALUED SECURITIES INC DATE OF NAME CHANGE: 19850902 N-30D 1 N-30D 1 DEAN WITTER AMERICAN VALUE FUND Two World Trade Center, New York, New York 10048 LETTER TO THE SHAREHOLDERS June 30, 1996 DEAR SHAREHOLDER: Over the six months ended June 30, 1996, moderate levels of inflation and corporate earnings growth helped the U.S. equity market increase 10.10 percent, as measured by the Standard & Poor's 500 Composite Stock Price Index (S&P 500). During the same period, Dean Witter American Value Fund posted a total return of 6.76 percent. However, the Fund's performance relative to its peer group continues to be impressive, with a one year ranking in the top 24 percent of all growth funds, as measured by Lipper Analytical Services, Inc. Longer-term performance also remains attractive, with a five-year ranking in the top 16 percent and a 10-year ranking in the top 17 percent. (Lipper data are based on total return and do not reflect sales charges.) POSITIONING THE FUND'S PORTFOLIO As the first quarter of 1996 progressed, the U.S. economy gathered momentum as employment, industrial production and consumer spending began to accelerate. When evidence of an economic rebound mounted, the portfolio, which had been balanced in a "barbell" fashion between steady growth and economically sensitive or cyclical industries, was tilted toward the cyclical end to take advantage of the expected growth that lay ahead. A lesser exposure to steady growth industries was maintained because the portfolio manager believed that corporate earnings would decelerate as the year progressed. Steady growth groups represented in the portfolio included health care (drugs, health care services and medical supply), consumer staples (beverages, cosmetics and household products) and consumer business services (funeral homes, education services and data processing). These industries historically appreciate in the face of sluggish corporate profit growth because of their relative earnings advantage. Financial groups such as banks were also retained on the basis of the portfolio manager's expectation that their earnings could continue to outpace overall profits. 2 DEAN WITTER AMERICAN VALUE FUND LETTER TO THE SHAREHOLDERS June 30, 1996, continued On the economically sensitive side, investment holdings included technology (networking, computer software and communications) and consumer cyclicals (automobiles, retail, apparel, airlines and lodging). The portfolio manager focused in this area in an effort to capitalize on signs of continued capital spending in select high-growth technology areas. Consumer cyclical industries were purchased on the belief that that sector would experience a rebound in the wake of rising employment. Purchases also included several stocks in the agriculture-related, aerospace and energy industries. These industries were purchased because they represent long-term themes relating to increased demand emanating from the faster-growing developing countries in Asia and Latin America. At the end of the period, significant holdings included Cisco Systems, Inc., Boeing Co., Tellabs, Inc., Thermo Electron Corp., Monsanto Co., Citicorp, Hilton Hotels Corp., Microsoft Corp., Gap, Inc., Johnson & Johnson and Pfizer, Inc. LOOKING AHEAD After a strong first half, the portfolio manager expects the economy to pause for the remainder of the year to allow pent-up consumer and capital spending to rebuild. Additionally, slowing unit demand and higher wages could pressure corporate earnings profitability and result in diminished capital spending. Following this respite, a more robust, broad-based economic rebound is anticipated to unfold over the course of 1997, boosted by a simultaneous recovery in developing and developed countries alike. Against this backdrop, it is anticipated that commodity cyclical groups (chemicals, paper, aluminum and machinery) and commodity technology groups (semiconductors, semiconductor capital equipment and computers) are poised to be standout performers. These industries are expected to be driven by very inexpensive valuations and significantly accelerating earnings resulting from robust worldwide industrial production and capital spending. In the meantime, the portfolio manager believes that the Fund's portfolio is appropriately positioned to take advantage of those steady growth industries that are still outpacing overall corporate earnings growth, as well as those industries that are currently benefiting from an economic lift. 3 DEAN WITTER AMERICAN VALUE FUND LETTER TO THE SHAREHOLDERS June 30, 1996, continued We appreciate your support of Dean Witter American Value Fund and look forward to continuing to serve your investment needs and objectives. Very truly yours, /s/ CHARLES A. FIUMEFREDDO CHARLES A. FIUMEFREDDO Chairman of the Board 4 DEAN WITTER AMERICAN VALUE FUND PORTFOLIO OF INVESTMENTS June 30, 1996 (unaudited)
NUMBER OF SHARES VALUE - ----------------------------------------------------------- COMMON STOCKS (94.3%) Agriculture Related (3.1%) 350,000 Case Corp. ................ $ 16,800,000 400,000 IMC Global, Inc. .......... 15,050,000 880,000 Monsanto Co. .............. 28,600,000 265,000 Pioneer Hi-Bred International, Inc. ....... 14,011,875 200,000 Potash Corp. of Saskatchewan, Inc. (Canada)................... 13,250,000 -------------- 87,711,875 -------------- Apparel & Footwear (1.9%) 146,349 Fila Holding SpA (ADR) (Italy).................... 12,622,601 263,900 Jones Apparel Group, Inc.*...................... 12,964,088 230,000 Nike, Inc. (Class B)....... 23,632,500 100,000 Nine West Group, Inc.*..... 5,112,500 -------------- 54,331,689 -------------- Auto Related (3.1%) 392,600 AutoZone, Inc.*............ 13,642,850 300,000 Chrysler Corp. ............ 18,600,000 450,000 Ford Motor Co. ............ 14,568,750 500,000 Harley-Davidson, Inc. ..... 20,562,500 200,000 Harman International Industries, Inc. .......... 9,850,000 230,000 Honda Motor Co. (Japan).... 5,954,964 230,000 Toyota Motor Corp. (Japan).................... 5,745,282 -------------- 88,924,346 -------------- Banks (2.8%) 350,000 BankAmerica Corp. ......... 26,512,500 320,300 Citicorp................... 26,464,788 100,000 First Bank System, Inc. ... 5,800,000 247,400 NationsBank Corp. ......... 20,441,425 -------------- 79,218,713 -------------- Basic Cyclicals (0.2%) 100,000 Air Products & Chemicals, Inc. ...................... 5,775,000 -------------- Biotechnology (1.5%) 100,000 Amgen Inc.*................ 5,375,000 210,000 Biochem Pharma, Inc.*...... 7,848,750 550,000 Centocor, Inc.*............ 16,431,250 415,000 IDEC Pharmaceuticals Corp.*..................... 9,545,000 54,800 Interneuron Pharmaceuticals, Inc.*..... 1,616,600 100,000 QLT Phototherapeutics, Inc.*...................... 1,825,000 -------------- 42,641,600 -------------- Capital Goods (2.8%) 320,000 Boeing Co. ................ $ 27,880,000 200,000 Lockheed Martin Corp. ..... 16,800,000 313,000 Raychem Corp. ............. 22,496,875 100,000 United Technologies Corp. ..................... 11,500,000 -------------- 78,676,875 -------------- Communications Equipment & Software (9.8%) 193,800 ACT Networks, Inc.*........ 6,250,050 155,000 Adtran, Inc.*.............. 10,966,250 497,600 Ascend Communications, Inc.*...................... 27,927,800 480,000 Cascade Communications Corp.*..................... 32,640,000 797,000 Cisco Systems, Inc.*....... 45,130,124 508,100 Lucent Technologies, Inc. ...................... 19,244,288 263,000 Newbridge Networks Corp.* (Canada)................... 17,226,500 200,000 Pairgain Technologies, Inc.*...................... 12,400,000 11,500 Premiere Technologies, Inc.*...................... 353,625 148,000 Premisys Communications, Inc.*...................... 9,028,000 211,500 Shiva Corp.*............... 16,867,125 355,000 Stratacom, Inc.*........... 19,968,750 557,300 Tellabs, Inc.*............. 37,199,775 245,000 U.S. Robotics Corp.*....... 20,886,250 100,000 WinStar Communications, Inc.*...................... 2,475,000 -------------- 278,563,537 -------------- Computer Services (5.7%) 159,000 BDM International Inc.*.... 7,353,750 270,000 Cambridge Technology Partners, Inc.*............ 8,235,000 160,400 CBT Group PLC (ADR)* (Ireland).................. 7,218,000 200,000 Computer Horizons Corp.*... 7,850,000 151,000 Computer Sciences Corp.*... 11,287,250 297,000 DST Systems, Inc.*......... 9,504,000 51,800 Electronic Data Systems Corp. ..................... 2,784,250 326,321 First Data Corp. .......... 25,983,310 11,400 First USA Paymentech, Inc.*...................... 456,000 350,000 Gartner Group, Inc.*....... 12,818,750 45,000 HNC Software, Inc.*........ 2,025,000 100,000 Keane, Inc.*............... 3,687,500 9,700 NOVA Corp.*................ 327,375 147,400 Remedy Corp.*.............. 10,686,500 12,800 Renaissance Solutions, Inc.*...................... 352,000
SEE NOTES TO FINANCIAL STATEMENTS 5 DEAN WITTER AMERICAN VALUE FUND PORTFOLIO OF INVESTMENTS June 30, 1996 (unaudited) continued
NUMBER OF SHARES VALUE - ----------------------------------------------------------- 350,000 Reuters Holdings PLC (ADR) (United Kingdom)........... $ 25,331,250 18,000 Sapient Corp.*............. 742,500 487,000 Sterling Commerce, Inc.*... 18,079,875 104,500 Transaction Systems Architects, Inc. (Class A)*........................ 7,001,500 -------------- 161,723,810 -------------- Computer Software (6.9%) 100,000 Arbor Software Corp.*...... 5,950,000 62,800 Atria Software, Inc.*...... 3,140,000 284,000 Baan Company NV* (Netherlands).............. 9,656,000 200,000 BMC Software, Inc.*........ 11,900,000 227,500 Business Objects S.A. (ADR)* (France)............ 9,156,875 360,000 Citrix Systems, Inc.*...... 13,590,000 121,200 Cognos, Inc.* (Canada)..... 2,757,300 228,000 Computer Associates International, Inc. ....... 16,245,000 100,300 Edify Corp.*............... 2,607,800 178,000 Forte Software, Inc.*...... 9,300,500 285,000 Microsoft Corp.*........... 34,199,999 685,000 Oracle Corp.*.............. 26,971,875 300,000 Parametric Technology Corp.*..................... 12,975,000 238,000 Peoplesoft, Inc.*.......... 16,898,000 100,500 Rational Software Corp.*... 5,401,875 232,000 Viasoft, Inc.*............. 14,935,000 -------------- 195,685,224 -------------- Conglomerates (2.0%) 250,000 General Electric Co. ...... 21,625,000 850,000 Thermo Electron Corp.*..... 35,381,250 -------------- 57,006,250 -------------- Consumer Business Services (2.2%) 82,600 AccuStaff, Inc.*........... 2,250,850 360,000 Apollo Group, Inc. (Class A)*........................ 9,900,000 116,200 CUC International, Inc.*... 4,125,100 104,400 Corporate Express, Inc.*... 4,176,000 32,000 DeVRY, Inc.*............... 1,440,000 509,400 National Education Corp.*..................... 7,258,950 33,000 Reynolds & Reynolds Co. (Class A).................. 1,757,250 408,200 Service Corp. International.............. 23,471,500 206,000 Verifone, Inc.*............ 8,703,500 -------------- 63,083,150 -------------- Consumer Products (8.2%) 300,000 American Stores Co. ....... $ 12,375,000 200,000 Anheuser-Busch Companies, Inc. ...................... 15,000,000 294,600 Avon Products, Inc. ....... 13,293,825 200,000 Black & Decker Corp. ...... 7,725,000 150,000 Callaway Golf Co. ......... 4,987,500 49,000 Clorox Co. ................ 4,342,625 350,000 Coca Cola Co. ............. 17,106,250 200,000 Colgate-Palmolive Co. ..... 16,950,000 450,000 Dial Corp. ................ 12,881,250 442,400 Gillette Co. .............. 27,594,700 150,000 Kimberly-Clark Corp. ...... 11,587,500 300,000 Kroger Co.*................ 11,850,000 820,000 PepsiCo Inc. .............. 29,007,499 150,000 Philip Morris Companies, Inc. ...................... 15,600,000 200,000 Procter & Gamble Co. ...... 18,125,000 200,000 Safeway, Inc.*............. 6,600,000 160,000 Stanley Works.............. 4,760,000 100,000 Vons Companies, Inc.*...... 3,737,500 -------------- 233,523,649 -------------- Drugs (3.3%) 500,500 American Home Products Corp. ..................... 30,092,563 200,000 IDEXX Laboratories, Inc.*...................... 7,800,000 400,000 Lilly (Eli) & Co. ......... 26,000,000 400,000 Pfizer, Inc. .............. 28,550,000 -------------- 92,442,563 -------------- Energy (6.0%) 760,000 Baker Hughes, Inc. ........ 24,985,000 200,800 BJ Services Co.*........... 7,053,100 80,000 Chesapeake Energy Corp.*... 7,190,000 343,400 Diamond Offshore Drilling, Inc.*...................... 19,659,650 250,000 Dresser Industries, Inc. ...................... 7,375,000 340,000 Global Marine, Inc.*....... 4,717,500 350,000 Halliburton Co. ........... 19,425,000 100,000 Louisiana Land & Exploration Co. ........... 5,762,500 200,000 Marine Drilling Company, Inc.*...................... 2,000,000 225,000 Reading & Bates Corp.*..... 4,978,125 200,000 Rowan Companies, Inc.*..... 2,950,000 270,000 Schlumberger, Ltd. ........ 22,747,500 197,000 Smith International, Inc.*...................... 5,934,625 200,000 Sonat Offshore Drilling, Inc. ...................... 10,100,000 390,000 Tidewater, Inc. ........... 17,111,250 150,000 Western Atlas, Inc.*....... 8,737,500 -------------- 170,726,750 --------------
SEE NOTES TO FINANCIAL STATEMENTS 6 DEAN WITTER AMERICAN VALUE FUND PORTFOLIO OF INVESTMENTS June 30, 1996 (unaudited) continued
NUMBER OF SHARES VALUE - ----------------------------------------------------------- Entertainment/Gaming & Lodging (5.1%) 100,000 Circus Circus Enterprises, Inc.*...................... $ 4,100,000 404,400 HFS, Inc.*................. 28,308,000 256,000 Hilton Hotels Corp. ....... 28,800,000 38,000 International Game Technology................. 641,250 390,000 ITT Corp.*................. 25,837,500 450,000 MGM Grand, Inc.*........... 17,943,750 500,000 Mirage Resorts, Inc.*...... 27,000,000 400,000 Showboat, Inc. ............ 12,050,000 -------------- 144,680,500 -------------- Financial-Miscellaneous (3.1%) 321,200 Associates First Capital Corp.*..................... 12,085,150 248,200 First USA, Inc. ........... 13,651,000 238,500 Green Tree Financial Corp. ..................... 7,453,125 194,000 Household International, Inc. ...................... 14,744,000 240,000 Merrill Lynch & Co., Inc. ...................... 15,630,000 480,000 Morgan Stanley Group, Inc. ...................... 23,580,000 -------------- 87,143,275 -------------- Healthcare Products & Services (4.3%) 7,300 Aksys, Ltd.*............... 107,675 371,000 HBO & Co. ................. 25,042,500 655,000 Health Management Associates, Inc. (Class A)*........................ 13,263,750 120,000 Healthsouth Corp.*......... 4,320,000 778,000 PhyCor, Inc.*.............. 29,369,500 150,000 Physio-Control International Corp.*....... 2,625,000 40,000 Quintiles Transnational Corp.*..................... 2,610,000 54,300 Renal Treatment Centers, Inc.*...................... 1,561,125 163,000 RoTech Medical Corp.*...... 3,137,750 433,000 Shared Medical Systems Corp. ..................... 27,820,250 27,800 Sunrise Assisted Living, Inc.*...................... 667,200 55,600 Total Renal Care Holdings, Inc.*...................... 2,349,100 250,600 Vivra, Inc.*............... 8,238,475 -------------- 121,112,325 -------------- Housing Related (0.7%) 800,000 Bed, Bath & Beyond, Inc.*...................... 21,100,000 11,600 Oakwood Homes Corp. ....... 239,250 -------------- 21,339,250 -------------- Insurance (2.5%) 427,300 Allstate Corp. ............ $ 19,495,563 200,000 American International Group, Inc. ............... 19,725,000 450,000 Conseco Inc. .............. 18,000,000 45,100 Exel, Ltd. (Bermuda)....... 3,179,550 180,000 SunAmerica, Inc. .......... 10,170,000 -------------- 70,570,113 -------------- Internet (0.6%) 62,000 America Online, Inc.*...... 2,697,000 171,000 Security Dynamics Technologies, Inc.*........ 14,022,000 -------------- 16,719,000 -------------- Media (3.3%) 245,500 Clear Channel Communications, Inc.*...... 20,223,063 295,000 Emmis Broadcasting Corp. (Class A)*................. 14,602,500 330,000 Evergreen Media Corp. (Class A)*................. 13,942,500 315,000 General Motors Corp. (Class H)......................... 18,939,375 509,000 Infinity Broadcasting Corp. (Class A)*................. 15,270,000 111,000 Jacor Communications, Inc.*...................... 3,427,125 200,000 Lin Television Corp.*...... 7,100,000 5,000 Telemundo Group, Inc. (Class A)*................. 116,250 -------------- 93,620,813 -------------- Medical Supplies (3.3%) 153,500 Becton, Dickinson & Co. ... 12,318,375 567,100 Guidant Corp. ............. 27,929,675 10,500 Heartport, Inc.*........... 315,000 690,000 Johnson & Johnson.......... 34,155,000 200,000 Physician Sales & Service, Inc.*...................... 4,850,000 178,500 Target Therapeutics, Inc.*...................... 7,273,875 104,000 Thermo Cardiosystems, Inc.*...................... 4,654,000 100,000 Thermolase Corp.*.......... 2,725,000 20,000 Trex Medical Corp.*........ 377,500 -------------- 94,598,425 -------------- Restaurants (0.5%) 200,000 Cracker Barrell Old Country Stores, Inc. .............. 4,800,000 52,000 Lone Star Steakhouse & Saloon, Inc.*.............. 1,956,500 233,000 Starbucks Corp.*........... 6,553,125 -------------- 13,309,625 --------------
SEE NOTES TO FINANCIAL STATEMENTS 7 DEAN WITTER AMERICAN VALUE FUND PORTFOLIO OF INVESTMENTS June 30, 1996 (unaudited) continued
NUMBER OF SHARES VALUE - ----------------------------------------------------------- Retail (6.7%) 250,200 Dayton-Hudson Corp. ....... $ 25,801,875 750,000 Federated Department Stores, Inc.*.............. 25,593,750 800,000 Gap, Inc. ................. 25,700,000 506,900 Gucci Group NV (Italy)..... 32,695,050 485,000 Home Depot, Inc. .......... 26,190,000 220,000 Pacific Sunwear of California, Inc.*.......... 5,170,000 206,400 Price/Costco, Inc.*........ 4,411,800 470,000 Sears, Roebuck & Co. ...... 22,853,750 75,000 Staples, Inc.*............. 1,453,125 250,000 Tiffany & Co. ............. 18,250,000 50,000 Urban Outfitters, Inc.*.... 1,237,500 -------------- 189,356,850 -------------- Semiconductors (0.1%) 47,000 Intel Corp. ............... 3,448,625 -------------- Telecommunications (1.7%) 637,000 MFS Communication Company, Inc.*...................... 23,888,036 457,000 WorldCom, Inc.*............ 25,249,250 -------------- 49,137,286 -------------- Transportation (2.9%) 300,000 AMR Corp.*................. 27,300,000 29,000 Continental Airlines, Inc. (Class B)*................. 1,790,750 300,000 Delta Air Lines, Inc. ..... 24,900,000 520,000 UAL Corp.*................. 27,950,000 -------------- 81,940,750 -------------- TOTAL COMMON STOCKS (Identified Cost $2,417,555,309)............ 2,677,011,868 -------------- PRINCIPAL AMOUNT IN THOUSANDS VALUE U.S. GOVERNMENT OBLIGATION (2.5%) $ 79,000 U.S. Treasury Bond 6.00% due 02/15/26 (Identified Cost $68,692,656)............... 70,075,469 -------------- PRINCIPAL AMOUNT IN THOUSANDS VALUE - ----------------------------------------------------------- SHORT-TERM INVESTMENTS (6.4%) U.S. GOVERNMENT AGENCIES (a) (6.1%) $173,744 Federal Home Loan Mortgage Corp. 5.27% - 5.52% due 07/01/96 - 07/03/96........ $ 173,731,778 -------------- REPURCHASE AGREEMENT (0.3%) 9,511 The Bank of New York 5.125% due 07/01/96 (dated 06/28/96; proceeds $9,515,460; collateralized by $9,650,781 U.S. Treasury Note 5.625% due 10/31/97 valued at $9,701,626) (Identified Cost $9,511,398)................ 9,511,398 -------------- TOTAL SHORT-TERM INVESTMENTS (Identified Cost $183,243,176)... 183,243,176 -------------- TOTAL INVESTMENTS (Identified Cost $2,669,491,141) (b)......... 103.2% 2,930,330,513 LIABILITIES IN EXCESS OF OTHER ASSETS.................... (3.2) (90,889,157) ------ -------------- NET ASSETS....................... 100.0% $2,839,441,356 ====== ==============
- --------------------- ADR American Depository Receipt. * Non-income producing security. (a) Securities were purchased on a discount basis. The interest rates shown have been adjusted to reflect a money market equivalent yield. (b) The aggregate cost for federal income tax purposes approximates identified cost. The aggregate gross unrealized appreciation was $303,409,046 and the aggregate gross unrealized depreciation was $42,569,674, resulting in net unrealized appreciation of $260,839,372. SEE NOTES TO FINANCIAL STATEMENTS 8 DEAN WITTER AMERICAN VALUE FUND FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES For the six months ended June 30, 1996 (unaudited) ASSETS: Investments in securities, at value (identified cost $2,669,491,141)................................... $2,930,330,513 Receivable for: Investments sold................................................ 22,033,140 Shares of beneficial interest sold.............................. 8,994,289 Interest........................................................ 1,788,073 Dividends....................................................... 1,144,772 Prepaid expenses and other assets................................... 147,320 -------------- TOTAL ASSETS.................................................... 2,964,438,107 -------------- LIABILITIES: Payable for: Investments purchased........................................... 119,440,246 Plan of distribution fee........................................ 1,985,140 Investment management fee....................................... 1,175,859 Dividends and distributions to shareholders..................... 1,100,971 Shares of beneficial interest repurchased....................... 782,821 Accrued expenses.................................................... 511,714 -------------- TOTAL LIABILITIES............................................... 124,996,751 -------------- NET ASSETS: Paid-in-capital..................................................... 2,421,480,495 Net unrealized appreciation......................................... 260,839,372 Accumulated net investment loss..................................... (2,926,586) Accumulated undistributed net realized gain......................... 160,048,075 -------------- NET ASSETS...................................................... $2,839,441,356 ============== NET ASSET VALUE PER SHARE, 103,925,074 shares outstanding (unlimited shares authorized of $.01 par value).................... $27.32 ======
SEE NOTES TO FINANCIAL STATEMENTS 9 DEAN WITTER AMERICAN VALUE FUND FINANCIAL STATEMENTS, continued STATEMENT OF OPERATIONS For the six months ended June 30, 1996 (unaudited) NET INVESTMENT INCOME: INCOME Dividends (net of $59,636 foreign withholding tax).................... $ 10,312,452 Interest.............................................................. 6,519,992 ------------ TOTAL INCOME...................................................... 16,832,444 ------------ EXPENSES Plan of distribution fee.............................................. 11,154,667 Investment management fee............................................. 6,656,826 Transfer agent fees and expenses...................................... 1,368,100 Custodian fees........................................................ 224,420 Registration fees..................................................... 177,765 Shareholder reports and notices....................................... 83,110 Trustees' fees and expenses........................................... 30,520 Professional fees..................................................... 25,914 Other................................................................. 15,210 ------------ TOTAL EXPENSES.................................................... 19,736,532 ------------ NET INVESTMENT LOSS............................................... (2,904,088) ------------ NET REALIZED AND UNREALIZED GAIN: Net realized gain..................................................... 169,505,599 Net change in unrealized appreciation................................. 4,362,056 ------------ NET GAIN.......................................................... 173,867,655 ------------ NET INCREASE.......................................................... $170,963,567 ============
SEE NOTES TO FINANCIAL STATEMENTS 10 DEAN WITTER AMERICAN VALUE FUND FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED JUNE 30, 1996 DECEMBER 31, 1995 ------------------------------------------------------------------------------ (unaudited) INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income (loss)....................... $ (2,904,088) $ $1,115,260 Net realized gain.................................. 169,505,599 449,119,481 Net change in unrealized appreciation.............. 4,362,056 204,343,705 -------------- --------------- NET INCREASE................................... 170,963,567 654,578,446 -------------- --------------- DIVIDENDS AND DISTRIBUTIONS FROM: Net investment income.............................. (1,126,332) (193,886) Net realized gain.................................. (159,729,315) (231,910,868) -------------- --------------- TOTAL.......................................... (160,855,647) (232,104,754) -------------- --------------- Net increase from transactions in shares of beneficial interest............................... 440,446,057 476,459,623 -------------- --------------- TOTAL INCREASE................................. 450,553,977 898,933,315 NET ASSETS: Beginning of period................................ 2,388,887,379 1,489,954,064 -------------- --------------- END OF PERIOD (Including a net investment loss of $2,926,586 and undistributed net investment income of $1,103,834).................................... $2,839,441,356 $ 2,388,887,379 ============== ===============
SEE NOTES TO FINANCIAL STATEMENTS 11 DEAN WITTER AMERICAN VALUE FUND NOTES TO FINANCIAL STATEMENTS June 30, 1996 (unaudited) 1. ORGANIZATION AND ACCOUNTING POLICIES Dean Witter American Value 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 capital growth consistent with an effort to reduce volatility. The Fund seeks to achieve its objective by investing in a diversified portfolio of securities consisting principally of common stocks. The Fund was incorporated in Maryland in 1979, commenced operations on March 27, 1980 and reorganized as a Massachusetts business trust on April 30, 1987. 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 or American 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; (2) all other portfolio securities for which over-the-counter market quotations are readily available are valued at the latest available bid price prior to the time of valuation; (3) when market quotations are not readily available, including circumstances under which it is determined by the Investment Manager that sale or bid prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Trustees (valuation of debt securities for which market quotations are not readily available may be based upon current market prices of securities which are comparable in coupon, rating and maturity or an appropriate matrix utilizing similar factors); and (4) short-term debt 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. Discounts are accreted over the life of the respective securities. Interest income is accrued daily. 12 DEAN WITTER AMERICAN VALUE FUND NOTES TO FINANCIAL STATEMENTS June 30, 1996 (unaudited) continued C. 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. D. 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. 2. INVESTMENT MANAGEMENT AGREEMENT Pursuant to an Investment Management Agreement with Dean Witter InterCapital Inc. (the "Investment Manager"), 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 at the close of each business day: 0.625% to the portion of daily net assets not exceeding $250 million and 0.50% to the portion of daily net assets exceeding $250 million. Effective May 1, 1996, the annual rate was reduced to 0.475% of net assets in excess of $2.5 billion. 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 pursuant to which the Fund pays the Distributor compensation, accrued daily 13 DEAN WITTER AMERICAN VALUE FUND NOTES TO FINANCIAL STATEMENTS June 30, 1996 (unaudited) continued and payable monthly, at an annual rate of 1.0% of the lesser of: (a) the average daily aggregate gross sales of the Fund's shares since the implementation of the Plan on April 30, 1984 (not including reinvestment of dividend or capital gain distributions) less the average daily aggregate net asset value of the Fund's shares redeemed since the Fund's implementation of the Plan upon which a contingent deferred sales charge has been imposed or upon which such charge has been waived; or (b) the Fund's average daily net assets attributable to shares issued, net of related shares redeemed since implementation of the Plan. Amounts paid under the Plan are paid to the Distributor to compensate it for the services provided and the expenses borne by it and others in the distribution of the Fund's shares, including the payment of commissions for sales of the Fund's shares and incentive compensation to, and expenses of, the account executives of Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and Distributor, and other employees or selected broker-dealers who engage in or support distribution of the Fund's shares or who service shareholder accounts, including, overhead and telephone expenses, printing and distribution of prospectuses and reports used in connection with the offering of the Fund's shares to other than current shareholders and preparation, printing and distribution of sales literature and advertising materials. In addition, the Distributor may be compensated under the Plan for its opportunity costs in advancing such amounts which compensation would be in the form of a carrying charge on any unreimbursed expenses incurred by the Distributor. Provided that the Plan continues in effect, any cumulative expenses incurred but not yet recovered, may be recovered through future distribution fees from the Fund and contingent deferred sales charges from the Fund's shareholders. The Distributor has informed the Fund that for the six months ended June 30, 1996, it received approximately $1,897,000 in contingent deferred sales charges from certain redemptions of the Fund's shares. The Fund's shareholders pay such charges which are not an expense of the Fund. 4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the six months ended June 30, 1996 aggregated $4,403,083,198 and $4,116,614,802, respectively. Included in the aforementioned are purchases and sales of U.S. Government securities of $113,205,097 and $479,913,843, respectively. For the six months ended June 30, 1996, the Fund incurred $482,102 in brokerage commissions with DWR for portfolio transactions executed on behalf of the Fund. At June 30, 1996, the Fund's receivable for investments sold included unsettled trades with DWR of $4,029,553. 14 DEAN WITTER AMERICAN VALUE FUND NOTES TO FINANCIAL STATEMENTS June 30, 1996 (unaudited) continued Dean Witter Trust Company, an affiliate of the Investment Manager and Distributor, is the Fund's transfer agent. At June 30, 1996, the Fund had transfer agent fees and expenses payable of approximately $200,000. The Fund has an unfunded noncontributory defined benefit pension plan covering all independent Trustees of the Fund who will have served as independent Trustees for at least five years at the time of retirement. Benefits under this plan are based on years of service and compensation during the last five years of service. Aggregate pension costs for the six months ended June 30, 1996 included in Trustees' fees and expenses in the Statement of Operations amounted to $18,781. At June 30, 1996, the Fund had an accrued pension liability of $40,792 which is included in accrued expenses in the Statement of Assets and Liabilities. 5. SHARES OF BENEFICIAL INTEREST Transactions in shares of beneficial interest were as follows:
FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED JUNE 30, 1996 DECEMBER 31, 1995 --------------------------- ---------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ----------- ------------ (unaudited) Sold....................................................... 22,336,602 $618,086,035 27,784,767 $726,405,402 Reinvestment of dividends and distributions................ 3,064,739 87,614,458 8,258,700 219,428,179 ---------- ------------ ----------- ------------ 25,401,341 705,700,493 36,043,467 945,833,581 Repurchased................................................ (9,439,375) (265,254,436) (18,333,417) (469,373,958) ---------- ------------ ----------- ------------ Net increase............................................... 15,961,966 $440,446,057 17,710,050 $476,459,623 ========== ============ =========== ============
6. FEDERAL INCOME TAX STATUS During the year ended December 31, 1995, the Fund utilized its net capital loss carryover of approximately $34,379,000. As of December 31, 1995, the Fund had temporary book/tax differences primarily attributable to capital loss deferrals on wash sales. 15 DEAN WITTER AMERICAN VALUE FUND FINANCIAL HIGHLIGHTS Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE SIX FOR THE YEAR ENDED DECEMBER MONTHS ENDED 31, JUNE 30, ----------------------------- 1996 1995 1994 - --------------------------------------------------------------------------------------------------------------------------- (unaudited) PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period................................... $27.16 $21.21 $23.10 ------- ------ ------ Net investment income (loss)........................................... (0.03) 0.01 -- Net realized and unrealized gain (loss)................................ 1.84 8.87 (1.57) ------- ------ ------ Total from investment operations....................................... 1.81 8.88 (1.57) ------- ------ ------ Less dividends and distributions from: Net investment income............................................... (0.01) -- -- Net realized gain................................................... (1.64) (2.93) (0.32) ------- ------ ------ Total dividends and distributions...................................... (1.65) (2.93) (0.32) ------- ------ ------ Net asset value, end of period......................................... $27.32 $27.16 $21.21 ======= ====== ====== TOTAL INVESTMENT RETURN+............................................... 6.76%(1) 42.20% (6.75)% RATIOS TO AVERAGE NET ASSETS: Expenses............................................................... 1.51%(2) 1.61% 1.71% Net investment income (loss)........................................... (0.22)%(2) 0.06% 0.01% SUPPLEMENTAL DATA: Net assets, end of period, in millions................................. $2,839 $2,389 $1,490 Portfolio turnover rate................................................ 162%(1) 256% 295% Average commission rate paid........................................... $0.0590 -- -- FOR THE YEAR ENDED DECEMBER 31, --------------------------------------- 1993 1992 1991 - ----------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period................................... $20.93 $20.66 $14.39 ------ ------ ------ Net investment income (loss)........................................... (0.09) 0.03 0.05 Net realized and unrealized gain (loss)................................ 3.94 0.71 7.90 ------ ------ ------ Total from investment operations....................................... 3.85 0.74 7.95 ------ ------ ------ Less dividends and distributions from: Net investment income............................................... (0.01) (0.03) (0.03) Net realized gain................................................... (1.67) (0.44) (1.65) ------ ------ ------ Total dividends and distributions...................................... (1.68) (0.47) (1.68) ------ ------ ------ Net asset value, end of period......................................... $23.10 $20.93 $20.66 ====== ====== ====== TOTAL INVESTMENT RETURN+............................................... 18.70% 3.84% 56.26% RATIOS TO AVERAGE NET ASSETS: Expenses............................................................... 1.61% 1.72% 1.58% Net investment income (loss)........................................... (0.59)% 0.18% 0.29% SUPPLEMENTAL DATA: Net assets, end of period, in millions................................. $1,218 $459 $227 Portfolio turnover rate................................................ 276% 305% 264% Average commission rate paid........................................... -- -- --
- --------------------- + 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 TRUSTEES Michael Bozic Charles A. Fiumefreddo Edwin J. Garn John R. Haire Dr. Manuel H. Johnson Michael E. Nugent Philip J. Purcell John L. Schroeder OFFICERS Charles A. Fiumefreddo Chairman and Chief Executive Officer Sheldon Curtis Vice President, Secretary and General Counsel Anita Kolleeny Vice President Thomas F. Caloia Treasurer TRANSFER AGENT Dean Witter Trust Company Harborside Financial Center - Plaza Two Jersey City, New Jersey 07311 INDEPENDENT ACCOUNTANTS Price Waterhouse LLP 1177 Avenue of the Americas New York, New York 10036 INVESTMENT MANAGER Dean Witter InterCapital Inc. Two World Trade Center New York, New York 10048 The financial statements included herein have been taken from the records of the Fund without examination by the independent accountants and accordingly they do not express an opinion thereon. This report is submitted for the general information of shareholders of the Fund. For more detailed information about the Fund, its officers and trustees, fees, expenses and other pertinent information, please see the prospectus of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus. DEAN WITTER AMERICAN VALUE FUND SEMIANNUAL REPORT JUNE 30, 1996 -----END PRIVACY-ENHANCED MESSAGE-----