<PAGE> 1
DEAN WITTER HIGH YIELD SECURITIES INC.
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- - --------------------------------------------------------------------------------
The high-yield bond market was very rewarding for investors in 1993.
Benefiting from the general decline in interest rates that characterized the
first 10 months of the year, as well as the continued improvement in corporate
credit quality, the high-yield market concluded 1993 as one of the fixed-income
market's top performers. What's more, 1993 marked the third successive year of
excellent returns for this market. In early 1994, the market is again off to a
strong start.
The high-yield market's continued strength was reflected in Dean Witter
High Yield Securities' total return for the six-month period ended February 28,
1994 of 11.76 percent, based on a net asset value (NAV) of $7.91 per share at
the close of the period and income dividends totaling $0.53 per share, including
an extra income dividend of $0.20 per share paid on December 31, 1993. The
Fund's total return for the trailing 12-month period ended February 28, 1994 was
an impressive 26.23 percent. As of February 28, 1994, the Fund's net assets
totaled more than $579 million.
Over the past six months, the Fund continued to distribute regular monthly
income dividends at a rate of $0.055 per share. With interest rates still near
historical lows despite the recent uptick, shareholders should be aware that in
1994 it may be difficult for the Fund to meet or exceed the total income
distributions of the past 12 months. As always, however, the Fund will strive to
provide shareholders with an attractive level of income.
INVESTMENT STRATEGY
Our outlook for the high-yield market entering 1993 was favorable, based on
an improving economy and a low interest rate environment, and the Fund entered
the year positioned to take advantage of a rising market. As the year began, we
saw many financially sound and fundamentally improving companies still trading
at sharply discounted prices within the B-rated sector of the market. The Fund
continued to maintain its focus on discounted, B-rated bonds during the
six-month period under review, as this sector in our opinion offered the most
attractive return potential. As the economic environment improved in the second
half of 1993, and as many issuers took steps toward upgrading their credit
quality, the Fund was rewarded by the above-average appreciation realized in
many of these discounted, B-rated issues. Some of the top performers held by the
Fund during the six-month period were Ivex Holdings, Gaylord Container Corp. and
Stone Container Corp. In most cases, as the issuer's prospects have improved, so
too have their bond prices.
During the six-month period ended February 28, 1994, the Fund also was able
to capitalize on the ability of bond issuers to strengthen their credit quality
by refinancing debt in the prevailing low interest rate environment. As this
trend has accelerated, the Fund has captured significant capital appreciation.
Among the Fund's current holdings, several issuers have recently completed
refinancings, including American Standard, Inc., Container Corp. and Fort Howard
Corp. Finally, the Fund's focus on financially sound issuers with improving
credit trends, coupled with the strengthening economic environment, kept credit
disappointments during the six-month period to a minimum. This, in turn,
resulted in more appreciation for the Fund's shareholders, as well as a steady
level of income throughout the period.
<PAGE> 2
MARKET OUTLOOK
Looking further into 1994, we remain optimistic about the prospects for the
high-yield bond market, based on our expectations for continued growth in the
economy and further improvements in corporate credit quality. We would expect
more high-yield issuers to either tap the equity markets in order to pay down
debt or refinance their existing debt in today's lower interest rate
environment. If the economy continues to recover and high-yield issuers work
toward strengthening their balance sheets, we would anticipate that the
attractive yields available today will provide investors not only with a healthy
yield advantage over alternative fixed-income products, but also with an
excellent opportunity for further capital appreciation in the event yields
decline.
We appreciate your support of Dean Witter High Yield Securities and look
forward to continuing to serve your investment needs.
Very truly yours,
Charles A. Fiumefreddo
Chairman of the Board
<PAGE> 3
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS February 28, 1994 (unaudited)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- - ----------- --------- ---------- -------------
<S> <C> <C> <C>
CORPORATE BONDS (83.6%)
AEROSPACE (4.3%)
$ 14,490 PA Holdings Corp....... 13.75% 7/15/99 $15,449,963
9,000 Sabreliner Corp........ 12.50 4/15/03 9,180,000
---------
24,629,963
---------
AIRLINES (4.5%)
20,250 GPA Delaware, Inc...... 8.75 12/16/98 17,718,750
19,043 Trans World Airlines,
Inc................... 8.00 + 11/ 3/00 8,450,441
---------
26,169,191
---------
AUTOMOTIVE (0.5%)
3,000 Envirotest Systems
Corp.................. 9.625 4/ 1/03 3,105,000
---------
BUILDING & CONSTRUCTION (2.8%)
15,521 American Standard,
Inc................... 14.25 6/30/03 16,297,050
---------
CABLE & TELECOMMUNICATIONS (4.6%)
15,950 Cablevision Systems
Corp.................. 14.00 11/15/03 16,588,000
10,000 Marcus Cable Co........ 11.875 10/ 1/05 10,300,000
---------
26,888,000
---------
CHEMICALS (5.1%)
10,235 General Chemical
Corp.................. 14.00 11/ 1/98 11,360,850
16,480 Georgia Gulf Corp...... 15.00 4/15/00 18,086,889
---------
29,447,739
---------
COMPUTER EQUIPMENT (4.4%)
17,397 Memorex Telex
Corp.(b).............. 10.00 + 2/15/98 4,175,166
17,900 Unisys Corp............ 15.00* 7/ 1/97 21,099,625
---------
25,274,791
---------
CONSUMER PRODUCTS (1.8%)
9,750 Playtex Family Products
Corp.................. 14.75 12/15/97 10,310,625
---------
ELECTRICAL & ALARM SYSTEMS (0.4%)
2,500 Mosler Inc............. 11.00 4/15/03 2,387,500
---------
ENTERTAINMENT, GAMING & LODGING (12.9%)
16,025 Aztar Mortgage Funding,
Inc................... 13.50 9/15/96 16,706,063
7,000 Belle Casino,
Inc. - 144A**......... 12.00 10/15/00 7,035,000
15,900 Fair Lanes, Inc.(b).... 11.875 8/15/97 11,219,517
12,000 Hollywood Casino
Corp.................. 14.00 4/ 1/98 13,710,000
10,000 Treasure Bay Gaming &
Resort,
Inc. - 144A**......... 12.25 11/15/00 9,800,000
17,016 Trump Plaza Holding
Assoc................. 12.50 + 6/15/03 16,505,520
---------
74,976,100
---------
FOOD & BEVERAGE (0.4%)
4,000 Specialty Foods
Acquisition Corp...... 13.00 ++ 8/15/05 2,120,000
---------
FOREST & PAPER PRODUCTS (6.0%)
2,300 Container Corp......... 13.50 12/ 1/99 2,553,000
7,300 Container Corp......... 15.50 ++ 12/ 1/04 14,527,000
18,250 Fort Howard Corp....... 14.125++ 11/ 1/04 17,428,750
---------
34,508,750
---------
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- - ----------- --------- ---------- -------------
<S> <C> <C> <C>
HEALTHCARE PRODUCTS (4.8%)
$ 17,960 Alco Health Services
Corp.................. 14.50% 9/15/99 $19,688,650
7,500 Scherer R.P. Corp...... 14.00 11/ 1/99 8,175,000
---------
27,863,650
---------
MANUFACTURING (6.5%)
18,000 MS Essex Holdings,
Inc................... 16.00++ 5/15/04 16,200,000
14,665 Snydergeneral Corp..... 14.25 11/15/00 15,508,238
5,500 Uniroyal Technology
Corp.................. 11.75 6/ 1/03 5,720,000
---------
37,428,238
---------
MANUFACTURING -- DIVERSIFIED INDUSTRIES (4.0%)
10,450 Interlake Corp......... 12.125 3/ 1/02 10,998,625
15,584 Thermadyne Industries,
Inc.(b)............... 10.25+* 11/ 1/99 11,904,355
---------
22,902,980
---------
OIL & GAS (2.8%)
15,500 Presidio Oil Co.
(Series B)............ 13.925*** 7/15/02 16,430,000
---------
RESTAURANTS (4.7%)
19,000 American Restaurant
Group Holdings
(Units) - 144A**...... 14.00++ 12/15/05 10,260,000
5,000 Carrols Corp........... 11.50 8/15/03 5,250,000
6,000 Flagstar Corp.......... 11.25 11/ 1/04 6,150,000
5,290 Foodmaker, Inc......... 14.25 5/15/98 5,620,625
---------
27,280,625
---------
RETAIL (3.5%)
10,000 Cort Furniture Rental
Corp.................. 12.00 9/ 1/00 10,300,000
10,000 County Seat Stores Co.
(Units)............... 12.00 10/ 1/01 10,050,000
---------
20,350,000
---------
RETAIL -- FOOD CHAINS (5.7%)
10,300 Big Bear Stores Co..... 13.75 6/15/99 11,021,000
92,000 Grand Union Capital
Corp. (Series A)...... 0.00 1/15/07 11,730,000
10,500 Purity Supreme, Inc.
(Series B)............ 11.75 8/ 1/99 10,290,000
---------
33,041,000
---------
TEXTILES (3.2%)
1,638 Farley, Inc. (Conv.)... 0.00 1/ 1/12 146,866
18,000 JPS Textiles Group,
Inc................... 10.85 6/ 1/99 18,540,000
---------
18,686,866
---------
TRANSPORTATION (0.7%)
3,503 Greyhound Lines Inc.
(Conv.)............... 8.50 3/31/07 3,888,330
---------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $520,938,887)........................... 483,986,398
---------
U.S. GOVERNMENT OBLIGATIONS (5.3%)
15,000 U.S. Treasury Note..... 13.125 5/15/94 15,288,281
15,000 U.S. Treasury Note..... 12.625 8/15/94 15,602,344
---------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $32,100,781)............................ 30,890,625
---------
</TABLE>
<PAGE> 4
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS February 28, 1994 (unaudited) (continued)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Value
- - ----------- -------------
<S> <C>
PREFERRED STOCK(A)(D) (0.3%)
AIRLINES (0.3%)
678,319 Trans World Airlines, Inc. 12.00%+
(Identified Cost $11,065,282)............ $ 1,992,562
----------
COMMON STOCKS(A) (6.6%)
AIRLINES (0.3%)
344,895 Trans World Airlines, Inc.(d) ............ 1,767,587
----------
AUTO PARTS (0.6%)
301,500 Harvard Industries, Inc.
(Class B)(d) ............................ 3,542,625
----------
BUILDING & CONSTRUCTION (2.9%)
542,928 USG Corp.(d) ............................. 16,492,219
----------
ENTERTAINMENT, GAMING & LODGING (0.2%)
223,504 SPI Holding, Inc.(d) ..................... 1,424,838
----------
FOOD & BEVERAGE (0.0%)
60,000 Specialty Foods Acquisition
Corp. - 144A**........................... 120,000
----------
HEALTHCARE (2.5%)
605,001 Charter Medical Corp.(d).................. 14,141,898
----------
TEXTILES (0.1%)
12,000 JPS Textiles Group, Inc.(d)............... 504,001
----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $129,273,367)........................ 37,993,168
----------
</TABLE>
<TABLE>
<CAPTION>
Number of Expiration
Warrants Date Value
- - ----------- ------------ -------------
<S> <C> <C>
WARRANTS(A)(1.3%)
AEROSPACE (0.0%)
9,000 Sabreliner Corp.(d)....... 4/15/03 180,000
----------
BUILDING & CONSTRUCTION (0.8%)
253,460 USG Corp.(d).............. 5/ 6/98 4,372,185
----------
ENTERTAINMENT, GAMING & LODGING (0.3%)
5,000 Belle Casino,
Inc. - 144A**............ 10/15/03 550,000
5,000 Boomtown Inc. - 144A**.... 11/ 1/98 165,625
13,052 Casino America, Inc....... 11/15/96 119,100
50,000 Treasure Bay Gaming &
Resort, Inc. - 144A**.... 11/15/98 300,000
1,000 Trump Plaza Holding
Assoc.................... 6/18/96 850,000
----------
1,984,725
----------
</TABLE>
<TABLE>
<CAPTION>
Number of Expiration
Warrants Date Value
- - ----------- ------------ -------------
<S> <C> <C>
FOREST & PAPER PRODUCTS (0.1%)
10,000 Crown
Packaging - 144A**....... 10/15/03 $ 300,000
----------
MANUFACTURING (0.0%)
55,000 Uniroyal Technology
Corp..................... 6/ 1/03 151,250
----------
MANUFACTURING -- DIVERSIFIED (0.0%)
4,048 Reliance Group Holdings... 1/28/97 7,590
1,674,500 Thermadyne Industries,
Inc.(d).................. 12/31/00 117,215
----------
124,805
----------
RETAIL (0.1%)
330,000 Cort Furniture Rental
Corp..................... 9/ 1/98 413,667
----------
RETAIL -- FOOD CHAINS (0.0%)
36,387 Purity Supreme, Inc....... 8/ 1/97 1,819
----------
TOTAL WARRANTS
(IDENTIFIED COST $3,113,794).......................... 7,528,451
----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount (in
thousands)
- - -----------
<S> <C>
SHORT-TERM INVESTMENTS (2.7%)
COMMERCIAL PAPER(E)(2.2%)
AUTOMOTIVE FINANCE (2.2%)
$ 12,500 Ford Motor Credit Corp.
3.21% due 3/ 1/94 (Amortized
Cost $12,500,000)....................... 12,500,000
----------
REPURCHASE AGREEMENT (0.5%)
3,063 The Bank of New York 3.375% due 3/1/94
(dated 2/28/94; proceeds $3,063,444;
collateralized by $3,026,353 U.S. Trea-
sury Bill 3.45% due 4/21/94 valued at
$3,011,557 and $119,350 U.S. Treasury
Bond 6.25% due 8/15/23 valued at
$112,863)(Identified Cost $3,063,157)... 3,063,157
----------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $15,563,157)......................... 15,563,157
----------
TOTAL INVESTMENTS
(IDENTIFIED COST $712,055,268)(F)............... 99.8% 577,954,361
-----------
OTHER ASSETS IN EXCESS OF
LIABILITIES....................................... 0.2 1,307,274
-----------
NET ASSETS.......................................100.0% $579,261,635
</TABLE> -----------
-----------
- - ---------------
<TABLE>
<C> <S>
* Adjustable rate. Rate shown is the rate in effect at February 28, 1994.
** Resale is restricted to qualified Institutional Investors.
*** Floating rate. Coupon is linked to the Gas Index. Rate shown is the rate in effect at February 28, 1994.
+ Payment in kind security.
++ Currently zero coupon under terms of the initial offering.
(a) Non-income producing.
(b) Non-income producing, bond in default.
(c) Non-income producing, issuer in bankruptcy.
(d) Acquired through exchange offer.
(e) Commercial paper was purchased on a discount basis. The interest rate shown has been adjusted to reflect a bond
equivalent yield.
(f) The aggregate cost for federal income tax purposes is $713,712,022; the aggregate gross unrealized appreciation
is $16,196,365 and the aggregate gross unrealized depreciation is $151,954,026, resulting in net unrealized
depreciation of $135,757,661.
</TABLE>
See Notes to Financial Statements
<PAGE> 5
DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1994 (unaudited)
- - -----------------------------------------
ASSETS:
Investments in securities, at value
(identified cost $712,055,268) (Note
1).. $ 577,954,361
Receivable for:
Interest............................... 13,846,690
Investments sold....................... 8,083,523
Capital stock sold..................... 1,111,748
Prepaid expenses and other receivables... 1,034,585
--------------
TOTAL ASSETS..................... 602,030,907
--------------
LIABILITIES:
Payable for:
Investments purchased.................. 20,917,099
Capital stock repurchased.............. 224,279
Dividends to shareholders................ 1,158,953
Investment management fee payable (Note
2)..................................... 218,080
Accrued expenses (Note 3)................ 250,861
--------------
TOTAL LIABILITIES................ 22,769,272
--------------
NET ASSETS:
Paid-in-capital.......................... 1,602,516,730
Accumulated net realized loss on
investments............................ (890,081,560)
Net unrealized depreciation on
investments............................ (134,100,907)
Accumulated undistributed net investment
income................................. 927,372
--------------
NET ASSETS....................... $ 579,261,635
--------------
--------------
NET ASSET VALUE PER SHARE 73,195,124
shares outstanding (400,000,000 shares
authorized of $.01 par value).......... $7.91
-----
-----
MAXIMUM OFFERING PRICE PER SHARE
(net asset value plus 5.82% of net
asset
value)*............................... $8.37
-----
</TABLE> -----
- - ---------------
*On sales of $25,000 or more, the offering price is reduced.
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS For the period
ended February 28, 1994 (unaudited)
- - -----------------------------------------
INVESTMENT INCOME:
INTEREST INCOME........................ $ 29,746,774
--------------
EXPENSES
Investment management fee (Note 2)..... 1,359,854
Transfer agent fees and
expenses (Note 3).................... 339,210
Professional fees...................... 70,245
Custodian fees......................... 42,535
Shareholder reports and notices........ 30,657
Directors' fees and expenses (Note
3)................................... 15,936
Other.................................. 6,362
--------------
TOTAL EXPENSES....................... 1,864,799
--------------
INVESTMENT INCOME - NET............ 27,881,975
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 1):
Net realized loss on investments....... (9,598,430)
Net change in unrealized depreciation
on investments....................... 43,740,695
--------------
NET GAIN ON INVESTMENTS.............. 34,142,265
--------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS........ $ 62,024,240
--------------
--------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six
months ended For the
February 28, 1994 year ended
(unaudited) August 31, 1993
------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................................. $ 27,881,975 $ 60,703,249
Net realized loss on investments...................................... (9,598,430) (155,452,598)
Net change in unrealized depreciation on investments.................. 43,740,695 192,543,541
------------------- -------------------
Net increase in net assets resulting from operations.............. 62,024,240 99,794,192
Dividends to shareholders from net investment income.................... (38,164,392) (74,108,041)
Net increase from transactions in capital stock (Note 5)................ 15,820,410 1,938,805
------------------- -------------------
Total increase.................................................... 39,680,258 27,624,956
NET ASSETS:
Beginning of period..................................................... 539,581,377 511,956,421
------------------- -------------------
END OF PERIOD (including undistributed net investment income of $927,372
and $11,209,789, respectively)......................................... $ 579,261,635 $ 539,581,377
------------------- -------------------
------------------- -------------------
</TABLE>
See Notes to Financial Statements
<PAGE> 6
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS (unaudited)
- - --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- Dean Witter High Yield Securities
Inc. (the "Fund") is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company and was
incorporated in Maryland on June 14, 1979.
The following is a summary of significant accounting policies:
A. Valuation of Investments -- (1) an equity portfolio security listed or
traded on the New York or American Stock Exchange is valued at its latest
sale price on that exchange (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 bid price; (3) when market quotations are not readily
available, portfolio securities are valued at their fair value as
determined in good faith under procedures established by and under the
general supervision of the Fund's Board of Directors (valuation of
securities for which market quotations are not readily available may be
based upon current market prices of securities which are comparable in
coupon, rating and maturity or an appropriate matrix utilizing similar
factors); (4) certain of the Fund's portfolio securities may be valued by
an outside pricing service approved by the Fund's Directors. The pricing
service utilizes a matrix system incorporating security quality, maturity
and coupon as the evaluation model parameters, and/or research and
evaluations by its staff, including review of broker-dealer market price
quotations, in determining what it believes is the fair valuation of the
portfolio securities valued by such pricing service; and (5) short-term
debt securities with remaining maturities of 60 days or less at time of
purchase are valued at amortized cost; other short-term securities are
valued on a market-to-market basis until such time as they reach a
remaining maturity of 60 days, whereupon they are valued at amortized cost
using their value on the 61st day. All other securities and other assets
are valued at their fair value as determined in good faith under procedures
established by and under the supervision of the Directors.
B. Accounting for Investments -- Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). In computing
net investment income, the Fund does not amortize premiums or accrue
discounts on fixed income securities in the portfolio except those original
issue discounts for which amortization is required for federal income tax
purposes. Additionally, with respect to market discount, a portion of any
capital gain realized upon disposition may be recharacterized as investment
income. Realized gains and losses on security transactions are determined
on the identified cost method. Dividend income is recorded on the
ex-dividend date. Interest income is accrued daily except where collection
is not expected.
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
reclassifications. Dividends and
<PAGE> 7
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- - --------------------------------------------------------------------------------
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.
E. Repurchase Agreements -- The Fund's custodian takes possession on behalf
of the Fund of the collateral pledged for investments in repurchase
agreements. It is the policy of the Fund to value the underlying collateral
daily on a mark-to-market basis to determine that the value, including
accrued interest, is at least equal to the repurchase price plus accrued
interest. In the event of default of the obligation to repurchase, the Fund
has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation.
2. INVESTMENT MANAGEMENT AGREEMENT -- Pursuant to an Investment Management
Agreement (the "Agreement") with Dean Witter InterCapital Inc. (the "Investment
Manager"), the Fund pays its Investment Manager a management fee, calculated
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: 0.50% of the
portion of the daily net assets not exceeding $500 million; 0.425% of the
portion of the daily net assets exceeding $500 million but not exceeding $750
million; 0.375% of the portion of the daily net assets exceeding $750 million
but not exceeding $1 billion; 0.35% of the portion of the daily net assets
exceeding $1 billion but not exceeding $2 billion; 0.325% of the portion of the
daily net assets exceeding $2 billion but not exceeding $3 billion; and 0.30% of
the portion of the daily net assets exceeding $3 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 office space and 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 the telephone services, heat, light,
power and other utilities provided to the Fund.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and the proceeds from sales of portfolio securities for the six months
ended February 28, 1994, excluding short-term investments, aggregated
$76,171,141 and $38,909,953, respectively, including purchases of U.S.
Government securities of $12,112,031.
On April 1, 1991, the Fund established an unfunded noncontributory defined
benefit pension plan covering all independent Directors of the Fund who will
have served as an Independent Director 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 cost for
the six months ended February 28, 1994, included in Directors' fees and expenses
in the Statement of Operations, amounted to $4,720. At February 28, 1994, the
Fund had an accrued pension liability of $39, 943 which is included in accrued
expenses in the Statement of Assets and Liabilities.
<PAGE> 8
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- - --------------------------------------------------------------------------------
Shares of the Fund are distributed by Dean Witter Distributors Inc., (the
"Distributor"), an affiliate of the Investment Manager. The Distributor has
informed the Fund that during the six months ended February 28, 1994, it
received approximately $1,352,000 in commissions from the sale of shares of the
Fund's capital stock. Such commissions are deducted from the proceeds of the
capital stock sales and are not an expense of the Fund.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At February 28, 1994 the Fund had
transfer agent fees and expenses payable of $122,365.
Bowne & Co., Inc. is an affiliate of the Fund by virtue of a common Fund
Director and Director of Bowne & Co., Inc. For the six months ended February 28,
1994, the Fund paid Bowne & Co., Inc. $4,939 for printing of shareholder
reports.
4. FEDERAL INCOME TAX STATUS -- At August 31, 1993, the Fund had net capital
loss carryovers of approximately $723,701,000 of which $3,119,000 will be
available through August 31, 1995, $37,795,000 will be available through August
31, 1996, $94,246,000 will be available through August 31, 1997, $82,210,000
will be available through August 31, 1998, $292,752,000 will be available
through August 31, 1999, $182,732,000 will be available through August 31, 2000
and $30,847,000 will be available through August 31, 2001 to offset future
capital gains, to the extent provided by regulations. Capital losses incurred
after October 31 ("Post-October losses") within the taxable year are deemed to
arise on the first business day of the Fund's next taxable year. The Fund
incurred and will elect to defer a net capital loss of approximately
$154,978,000 during fiscal 1993. To the extent that these carryover losses are
used to offset future capital gains, it is probable that the gains so offset
will not be distributed to shareholders. The Fund had temporary book/tax
differences primarily attributable to Post-October losses and permanent book/tax
differences primarily attributable to expired capital loss carryovers and
dividend redesignations. To reflect cumulative reclassifications arising from
permanent book/tax differences for the year ended August 31, 1993, accumulated
undistributed net investment income was charged $6,032,880, accumulated net
realized loss on investments was credited for $11,209,066 and paid-in-capital
was charged for $5,176,186.
5. CAPITAL STOCK -- Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
For the six
months ended For the year ended
February 28, 1994 August 31, 1993
--------------------------- ----------------------------
Shares Amount Shares Amount
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold............................ 4,908,718 $ 38,197,281 8,921,262 $ 63,424,552
Reinvestment of dividends....... 2,471,389 19,045,048 5,197,329 36,747,862
---------- ------------ ----------- ------------
7,380,107 57,242,329 14,118,591 100,172,414
Repurchased..................... (5,336,703) (41,421,919) (13,736,837) (98,233,609)
---------- ------------ ----------- ------------
Net increase.................... 2,043,404 $ 15,820,410 381,754 $ 1,938,805
---------- ------------ ----------- ------------
---------- ------------ ----------- ------------
</TABLE>
<PAGE> 9
DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS(unaudited)
- - --------------------------------------------------------------------------------
Selected data and ratios for a share of capital stock outstanding throughout
each period:
<TABLE>
<CAPTION>
For the six
months ended For the year ended August 31,
February 28, ----------------------------------------------------------
1994 1993 1992 1991 1990 1989
---------------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period.... $ 7.58 $ 7.23 $ 5.92 $ 6.78 $ 10.40 $ 11.99
---------------- -------- -------- -------- -------- ----------
Net investment
income............... .39 .89 .95 .94 1.48 1.67
Net realized and
unrealized gain
(loss) on
investments.......... .47 .54 1.04 (.86) (3.78) (1.48)
---------------- -------- -------- -------- -------- ----------
Total from investment
operations............. .86 1.43 1.99 .08 (2.30) .19
---------------- -------- -------- -------- -------- ----------
Less dividends and
distributions:
Dividends from net
investment income.... (.53) (1.08) (.68) (.94) (1.32) (1.75)
Distributions from
paid-in capital...... -0- -0- -0- -0- -0- (.03)
---------------- -------- -------- -------- -------- ----------
Total dividends and
distributions.......... (.53) (1.08) (.68) (.94) (1.32) (1.78)
---------------- -------- -------- -------- -------- ----------
Net asset value, end of
period................. $ 7.91 $ 7.58 $ 7.23 $ 5.92 $ 6.78 $ 10.40
---------------- -------- -------- -------- -------- ----------
---------------- -------- -------- -------- -------- ----------
TOTAL INVESTMENT RETURN+... 11.76%(1) 22.29% 35.46% 4.67% (23.28)% 1.39%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)......... $579,249 $539,581 $511,956 $436,354 $690,357 $1,793,520
Ratio of expenses to
average net assets..... .68%(2) .67% .77% .87% .60% .49%
Ratio of net investment
income to average net
assets................. 10.10%(2) 12.14% 13.96% 16.47% 17.67% 14.61%
Portfolio turnover
rate................... 57% 173% 113% 93% 21% 55%
</TABLE>
- - ---------------
+ Does not reflect the deduction of sales load.
(1) Not Annualized.
(2) Annualized.
See Notes to Financial Statements
<PAGE> 10
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<PAGE> 11
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<PAGE> 12
BOARD OF DIRECTORS
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Peter M. Avelar
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
LEGAL COUNSEL
Sheldon Curtis
Two World Trade Center
New York, New York 10048
INDEPENDENT ACCOUNTANTS
Price Waterhouse
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
HIGH
YIELD
SECURITIES
SEMI ANNUAL REPORT
FEBRUARY 28, 1994
<PAGE> 13
APPENDIX TO ELECTRONIC FORMAT DOCUMENT
The back cover of the Semiannual Report in the printed version contains
a picture of American currency.
