<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC. TWO WORLD TRADE CENTER, NEW YORK, NEW
YORK 10048
LETTER TO THE SHAREHOLDERS
DEAR SHAREHOLDER:
The fiscal year ended August 31, 1995 began on a weak note with all of the
fixed-income markets reporting disappointing performance results during the
second half of calendar 1994. Concerns over the strength of the economy, Federal
Reserve Board actions and inflation prospects created a great deal of
uncertainty during 1994's weak market environment.
However, in sharp contrast, the fixed-income markets rebounded nicely during the
second half of the Fund's fiscal year as economic growth slowed and inflation
fears began to subside. The high-yield market recorded a strong 1995 first half,
benefiting from the rally in the U.S. Treasury market, which drove long-term
interest rates significantly lower, as well as from the continued strength in
corporate earnings. As is typical in a decelerating economic environment
however, high-yield bonds have lagged the 1995 Treasury market rally, as
concerns over the severity of the economic slowdown have offset some of the
benefit of lower interest rates.
For the twelve-month period ended August 31, 1995, the Fund's total return was
11.98 percent. As of August 31, 1995, the Fund had net assets in excess of $455
million. Over the past twelve months, the Fund continued to distribute regular
income dividends at a rate of $0.055 per share per month. For the full fiscal
year, income dividends totaled approximately $0.80 per share, including an extra
income dividend of $0.142 per share paid on December 30, 1994. The accompanying
chart illustrates the growth of a $10,000 investment in the Fund for the
ten-year period ended August 31, 1995 versus the performance of the Lehman
Brothers Mutual Fund Corporate/High Yield Index. (The Fund commenced operations
on September 26, 1979.)
INVESTMENT STRATEGY
The Fund's overall investment strategy entering calendar 1995 was to capitalize
on the opportunity created by the 1994 market correction by positioning the Fund
for an eventual rebound in the high-yield bond market. Despite the fact that
corporate credit quality remained strong, the 1994 market correction pushed
yields on many B-rated issues 300-400 basis points higher (to the 13-14 percent
range) and caused
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
LETTER TO THE SHAREHOLDERS, CONTINUED
bond prices in some cases to decline by as much as 15-20 percent (to the $80-85
range). In light of these opportunities, the Fund increased its emphasis on
discounted issues during the second half of 1994, which should provide more
capital appreciation potential for the Fund. While the Fund's portfolio is still
positioned for further upside in the high-yield market, it maintains a sizable
position in various defensive securities, which should provide the flexibility
needed to take advantage of any interim opportunities that may arise.
MARKET OUTLOOK
[GRAPHIC]
Given our outlook for continued, albeit
slower
economic growth, we find that many of
today's B-rated issues, which are
yielding more than 600 basis points (6
percent) above U.S. Treasury securities
and are trading at significant
discounts, offer excellent long-term
return potential. Over the near term,
we expect continued volatility in the
financial markets as investors attempt
to assess the economy's strength, the
level of interest rates and possible
Federal Reserve Board actions. However,
despite any potential short-term
weakness, we consider today's
high-yield market to be an attractive
long-term opportunity for investors.
Many current high-yield issues provide
an attractive yield advantage over U.S.
Treasury securities, with the
opportunity for substantial capital
appreciation if the high-yield market
continues its recovery.
[GRAPHIC]
We thank you for your continued support
of Dean Witter High Yield Securities
Inc. and look forward to continuing to
serve your investment needs.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (87.4%)
AEROSPACE (1.8%)
$ 9,000 Sabreliner Corp. (Series B)................. 12.50 % 04/15/03 $ 8,100,000
---------------
AIRLINES (4.3%)
22,250 GPA Delaware, Inc........................... 8.75 12/15/98 19,691,250
---------------
AUTOMOTIVE (2.6%)
16,323 Envirotest Systems, Inc..................... 9.625 04/01/03 12,038,212
---------------
CABLE & TELECOMMUNICATIONS (2.7%)
7,106 Adelphia Communications Corp. (Series B).... 9.50+ 02/15/04 6,040,338
15,100 In-Flight Phone Corp. (Units)+++ - 144A**... 14.00++ 05/15/02 6,040,000
---------------
12,080,338
---------------
COMPUTER EQUIPMENT (8.1%)
17,000 IBM Credit Corp............................. 15.00 06/13/96 18,120,470
16,900 Unisys Corp................................. 13.50 07/01/97 18,632,250
---------------
36,752,720
---------------
CONSUMER PRODUCTS (2.1%)
5,500 J.B. Williams Holdings, Inc................. 12.00 03/01/04 5,555,000
4,000 Thermoscan, Inc............................. 13.5625* 08/15/01 4,060,000
---------------
9,615,000
---------------
CONTAINERS (2.4%)
19,100 Ivex Holdings Corp. (Series B).............. 13.25++ 03/15/05 10,887,000
---------------
ELECTRICAL & ALARM SYSTEMS (1.9%)
11,000 Mosler, Inc................................. 11.00 04/15/03 8,800,000
---------------
ENTERTAINMENT/GAMING & LODGING (5.8%)
3,500 Fitzgeralds Gaming Corp. - 144A**........... 14.00* 03/15/96 2,730,000
7,870 Motels of America, Inc. (Series B).......... 12.00 04/15/04 7,988,050
5,000 Six Flags Theme Parks Corp. - 144A**........ 12.25++ 06/15/05 3,662,500
41,982 Spectravision, Inc. (c)..................... 11.65 12/01/02 2,537,858
12,380 Trump Castle Funding, Inc................... 11.75 11/15/03 9,594,500
---------------
26,512,908
---------------
FOODS & BEVERAGES (13.3%)
23,771 Envirodyne Industries, Inc.................. 10.25 12/01/01 19,135,655
17,000 PepsiCo Inc................................. 15.00 06/14/96 18,139,680
10,443 Seven Up/RC Bottling Co. Southern
California, Inc. (d)........................ 11.50 08/01/99 4,725,140
35,250 Specialty Foods Acquisition Corp. (Series
B).......................................... 13.00++ 08/15/05 18,506,250
---------------
60,506,725
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1995, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MANUFACTURING (5.0%)
$ 5,000 Alpine Group, Inc. - 144A**................. 12.25 % 07/15/03 $ 4,600,000
7,000 Berry Plastics Corp......................... 12.25 04/15/04 7,315,000
4,000 Cabot Safety Corp. - 144A**................. 12.50 07/15/05 4,170,000
7,000 Uniroyal Technology Corp.................... 11.75 06/01/03 6,510,000
---------------
22,595,000
---------------
MANUFACTURING - DIVERSIFIED (7.5%)
8,390 Foamex L.P.................................. 11.875 10/01/04 8,222,200
9,500 Interlake Corp.............................. 12.125 03/01/02 9,500,000
5,000 J.B. Poindexter & Co., Inc.................. 12.50 05/15/04 4,887,500
18,920 Jordan Industries, Inc...................... 11.75++ 08/01/05 11,493,950
5,000 Starcraft Industrial Corp. (c).............. 16.50 01/15/98 --
---------------
34,103,650
---------------
OIL & GAS (3.4%)
8,000 Deeptech International, Inc................. 12.00 12/15/00 6,240,000
11,000 Empire Gas Corp............................. 7.00 07/15/04 9,157,500
---------------
15,397,500
---------------
PUBLISHING (7.1%)
15,000 Affiliated Newspapers Investments, Inc...... 13.25++ 07/01/06 8,550,000
16,343 BFP Holdings, Inc. (Series B)............... 13.50++ 04/15/04 11,440,100
3,000 Garden State Newspapers, Inc................ 12.00 07/01/04 2,865,000
8,600 United States Banknote Corp................. 10.375 06/01/02 6,966,000
3,150 United States Banknote Corp................. 11.625 08/01/02 2,457,000
---------------
32,278,100
---------------
RESTAURANTS (8.9%)
26,057 American Restaurant Group Holdings, Inc..... 14.00++ 12/15/05 12,246,790
10,000 Carrols Corp................................ 11.50 08/15/03 9,875,000
24,000 Flagstar Corp............................... 11.25 11/01/04 18,420,000
---------------
40,541,790
---------------
RETAIL (5.1%)
10,000 Cort Furniture Rental Corp.................. 12.00 09/01/00 10,050,000
5,000 County Seat Stores Co....................... 12.00 10/01/02 4,875,000
8,000 Thrifty Payless, Inc........................ 12.25 04/15/04 8,280,000
---------------
23,205,000
---------------
TEXTILES (0.0%)
1,638 Farley, Inc. (Conv.)........................ 0.00 01/01/12 150,483
---------------
TEXTILES - APPAREL MANUFACTURERS (4.4%)
16,669 JPS Textile Group, Inc...................... 10.85 06/01/99 16,168,930
4,500 U.S. Leather, Inc........................... 10.25 07/31/03 3,735,000
---------------
19,903,930
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1995, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TRANSPORTATION (1.0%)
$ 7,266 Transtar Holdings L.P. (Series B)........... 13.375++% 12/15/03 $ 4,577,580
---------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $437,770,091)....................................... 397,737,186
---------------
U.S. GOVERNMENT OBLIGATION (0.7%)
3,000 U.S. Treasury Note (Identified Cost
$3,086,406)................................. 11.50 11/15/95 3,034,688
---------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<C> <S> <C>
PREFERRED STOCK (a) (0.0%)
UTILITIES - ELECTRIC
100,000 TGX Corp. (Identified Cost $830,000) (b)................................ 12,500
---------------
COMMON STOCKS (a) (8.5%)
AUTOMOTIVE (0.0%)
709 Northern Holdings Industrial Corp. (Restricted) (b)..................... --
---------------
BUILDING & CONSTRUCTION (3.1%)
516,600 USG Corp. (b)........................................................... 14,012,776
---------------
COMPUTER EQUIPMENT (0.1%)
477,769 Memorex Telex NV (ADR) (Netherlands) (b)................................ 656,932
---------------
CONSUMER PRODUCTS (0.1%)
52,000 Thermoscan, Inc. (Class B) - 144A**..................................... 442,000
---------------
ENTERTAINMENT/GAMING & LODGING (0.3%)
7,500 Motels of America, Inc. - 144A**........................................ 675,000
781,421 Vagabond Inns, Inc. (Class D) (c)....................................... 859,563
---------------
1,534,563
---------------
FOODS & BEVERAGES (0.2%)
273,750 Specialty Foods Acquisition Corp. - 144A**.............................. 752,813
---------------
MANUFACTURING - DIVERSIFIED (3.4%)
851,263 Thermadyne Holdings Corp. (b)........................................... 15,322,734
---------------
PUBLISHING (1.0%)
15,000 Affiliated Newspapers Investments, Inc. (Class B)....................... 450,000
130,744 BFP Holdings, Inc. (Class D) - 144A**................................... 3,922,320
---------------
4,372,320
---------------
RESTAURANTS (0.1%)
26,057 American Restaurant Group Holdings, Inc. - 144A**....................... 390,855
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<C> <S> <C>
RETAIL (0.2%)
228,000 Thrifty Payless Holdings, Inc. (Class C)................................ $ 940,500
---------------
TEXTILES (0.0%)
12,000 JPS Textile Group, Inc. (Restricted).................................... 168,000
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $132,573,762).......................................... 38,593,493
---------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS (a) (0.4%)
AEROSPACE (0.0%)
9,000 Sabreliner Corp. (Restricted) - 144A**................... 04/15/03 90,000
---------------
CONTAINERS (0.1%)
10,000 Crown Packaging Holdings, Ltd. (Canada) - 144A**......... 11/01/03 550,000
---------------
ENTERTAINMENT/GAMING & LODGING (0.0%)
5,000 Boomtown, Inc. - 144A**.................................. 11/01/98 55,000
13,052 Casino America, Inc...................................... 11/15/96 8,157
3,500 Fitzgeralds Gaming Corp. - 144A**........................ 03/15/99 35,000
---------------
98,157
---------------
MANUFACTURING (0.1%)
10,000 BPC Holdings Corp........................................ 04/15/04 125,000
70,000 Uniroyal Technology Corp................................. 06/01/03 175,000
---------------
300,000
---------------
OIL & GAS (0.0%)
15,180 Empire Gas Corp.......................................... 07/15/04 151,800
---------------
RETAIL (0.2%)
10,000 County Seat Holdings Co.................................. 10/15/98 225,000
330,000 New Cort Holdings Corp................................... 09/01/98 536,250
---------------
761,250
---------------
RETAIL - FOOD CHAINS (0.0%)
50,797 Grand Union Co. (Series 1) (b)........................... 06/16/00 50,797
101,594 Grand Union Co. (Series 2) (b)........................... 06/16/00 50,797
---------------
101,594
---------------
TOTAL WARRANTS
(IDENTIFIED COST $1,507,617).......................................... 2,052,801
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1995, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENT (1.3%)
REPURCHASE AGREEMENT
$ 6,117 The Bank of New York (dated 08/31/95;
proceeds $6,117,972; collateralized by
$11,994,594 U.S. Treasury Principal Strip
due 05/15/05 valued at $6,424,668)
(Identified Cost $6,116,984)................ 5.8125 % 09/01/95 $ 6,116,984
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST $581,884,860) (E)........... 98.3% 447,547,652
OTHER ASSETS IN EXCESS OF LIABILITIES........ 1.7 7,897,691
----- ------------
NET ASSETS................................... 100.0% $455,445,343
----- ------------
----- ------------
<FN>
- ---------------------
ADR American Depository Receipt.
* Adjustable rate. Rate shown is the rate in effect at August 31, 1995.
** Resale is restricted to qualified institutional investors.
+++ Consists of one or more class of securities traded together as a unit;
generally bonds with attached stocks/warrants.
+ Payment-in-kind security.
++ Currently a zero coupon bond and will pay interest at the rate shown at a
future specified date.
(a) Non-income producing security.
(b) Acquired through exchange offer.
(c) Non-income producing security, issuer in bankruptcy.
(d) Non-income producing security, bond in default.
(e) The aggregate cost for federal income tax purposes is $584,504,173; the
aggregate gross unrealized appreciation is $17,241,472 and the aggregate
gross unrealized depreciation is $154,197,993, resulting in net unrealized
depreciation of $136,956,521.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $581,884,860)............................ $ 447,547,652
Receivable for:
Interest................................................ 10,621,446
Capital stock sold...................................... 400,422
Investments sold........................................ 210,010
Prepaid expenses and other assets........................... 35,200
--------------
TOTAL ASSETS........................................... 458,814,730
--------------
LIABILITIES:
Payable for:
Investments purchased................................... 1,839,861
Dividends to shareholders............................... 1,003,972
Investment management fee............................... 194,668
Capital stock repurchased............................... 130,062
Accrued expenses and other payables......................... 200,824
--------------
TOTAL LIABILITIES...................................... 3,369,387
--------------
NET ASSETS:
Paid-in-capital............................................. 1,557,732,316
Net unrealized depreciation................................. (134,337,208)
Accumulated undistributed net investment income............. 6,133,095
Accumulated net realized loss............................... (974,082,860)
--------------
NET ASSETS............................................. $ 455,445,343
--------------
--------------
NET ASSET VALUE PER SHARE,
67,305,912 SHARES OUTSTANDING (400,000,000 SHARES
AUTHORIZED OF $.01 PAR VALUE).............................
$6.77
--------------
--------------
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.82% OF NET ASSET VALUE)*..........
$7.16
--------------
--------------
<FN>
- ---------------------
* On sales of $25,000 or more, the offering price is reduced.
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1995
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $ 57,601,954
------------
EXPENSES
Investment management fee................................... 2,241,952
Transfer agent fees and expenses............................ 597,362
Professional fees........................................... 409,802
Shareholder reports and notices............................. 111,327
Registration fees........................................... 84,595
Custodian fees.............................................. 51,159
Directors' fees and expenses................................ 30,595
Other....................................................... 12,514
------------
TOTAL EXPENSES......................................... 3,539,306
------------
NET INVESTMENT INCOME.................................. 54,062,648
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss........................................... (20,016,987)
Net change in unrealized depreciation....................... 15,205,812
------------
NET LOSS............................................... (4,811,175)
------------
NET INCREASE................................................ $ 49,251,473
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
AUGUST 31, 1995 AUGUST 31, 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 54,062,648 $ 56,707,778
Net realized loss........................................... (20,016,987) (76,848,632)
Net change in unrealized depreciation....................... 15,205,812 28,298,582
--------------- ---------------
NET INCREASE........................................... 49,251,473 8,157,728
--------------- ---------------
Dividends to shareholders from net investment income........ (54,031,376) (61,815,632)
Net decrease from capital stock transactions................ (17,637,501) (8,060,726)
--------------- ---------------
TOTAL DECREASE......................................... (22,417,404) (61,718,630)
NET ASSETS:
Beginning of period......................................... 477,862,747 539,581,377
--------------- ---------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$6,133,095 AND $6,101,935, RESPECTIVELY)................ $ 455,445,343 $ 477,862,747
--------------- ---------------
--------------- ---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1995
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. The Fund was incorporated in Maryland on June 14,
1979.
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, portfolio securities are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Directors (valuation of
debt securities for which market quotations are not readily available may be
based upon current market prices of securities which are comparable in coupon,
rating and maturity or an appropriate matrix utilizing similar factors); (4)
certain of the Fund's portfolio securities may be valued by an outside pricing
service approved by the 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, if available, in determining what it
believes is the fair valuation of the portfolio securities valued by such
pricing service; and (5) short-term debt securities having a maturity date of
more than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Discounts on securities purchased are accreted over the life of the respective
securities. Dividend income is recognized 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.
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1995, CONTINUED
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 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% to the portion of daily net assets not exceeding $500
million; 0.425% to the portion of daily net assets exceeding $500 million but
not exceeding $750 million; 0.375% to the portion of daily net assets exceeding
$750 million but not exceeding $1 billion; 0.35% to the portion of daily net
assets exceeding $1 billion but not exceeding $2 billion; 0.325% to the portion
of daily net assets exceeding $2 billion but not exceeding $3 billion; and 0.30%
to the portion of 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, 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. 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 August 31, 1995, aggregated
$306,540,559 and $298,046,997, respectively.
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1995, CONTINUED
Dean Witter Trust Company, an affiliate of the Investment Manager, is the Fund's
transfer agent. At August 31, 1995, the Fund had transfer agent fees and
expenses payable of approximately $74,000.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Directors of the Fund who will have served as independent
Directors/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 year ended August 31,
1995 included in Directors' fees and expenses in the Statement of Operations
amounted to $7,778. At August 31, 1995, the Fund had an accrued pension
liability of $50,883 which is included in accrued expenses in the Statement of
Assets and Liabilities.
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 for the year ended August 31, 1995, it received
approximately $611,000 in commissions from the sale of shares of the Fund's
capital stock. Such commissions are deducted from the proceeds of the capital
stock shares and are not an expense of the Fund.
4. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 1995 AUGUST 31, 1994
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 4,185,702 $ 27,764,909 8,570,571 $ 65,945,121
Reinvestment of dividends........................................ 4,187,296 27,351,637 4,091,370 30,921,535
----------- -------------- ----------- ------------
8,372,998 55,116,546 12,661,941 96,866,656
Repurchased...................................................... (10,983,714) (72,754,047) (13,897,033) (104,927,382)
----------- -------------- ----------- ------------
Net decrease..................................................... (2,610,716) $ (17,637,501) (1,235,092) $ (8,060,726)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1995, CONTINUED
5. FEDERAL INCOME TAX STATUS
At August 31, 1995, the Fund had an approximate net capital loss carryover,
which may be used to offset future capital gains to the extent provided by
regulations, which are available through August 31 in the following years:
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
- ---------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 2003 Total
- ----------- ----------- ----------- ------------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 37,795 $ 94,246 $ 82,210 $ 292,752 $ 182,732 $ 45,208 $ 166,406 $ 50,626 $ 951,975
</TABLE>
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
approximately $19,488,000 during fiscal 1995.
At August 31, 1995, the Fund had temporary book/tax differences primarily
attributable to post-October losses, capital loss deferrals on wash sales and
dividend payable and permanent book/tax differences primarily attributable to an
expired capital loss carryover. To reflect reclassifications arising from
permanent book/tax differences for the year ended August 31, 1995,
paid-in-capital was charged $3,265,776, accumulated undistributed net investment
income was charged $112 and accumulated net realized loss was credited
$3,265,888.
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of capital stock outstanding
throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED AUGUST 31
--------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE
OPERATING PERFORMANCE:
Net asset value,
beginning of period..... $ 6.83 $ 7.58 $ 7.23 $ 5.92 $ 6.78 $ 10.40 $ 11.99 $ 13.72 $ 14.16 $ 13.40
------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Net investment income.... 0.80 0.79 0.89 0.95 0.94 1.48 1.67 1.84 1.82 1.80
Net realized and
unrealized gain
(loss).................. (0.06) (0.68) 0.54 1.04 (0.86) (3.78) (1.48) (1.77) (0.46) 0.76
------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Total from investment
operations.............. 0.74 0.11 1.43 1.99 0.08 (2.30) 0.19 0.07 1.36 2.56
------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Less dividends and
distributions from:
Net investment
income................ (0.80) (0.86) (1.08) (0.68) (0.94) (1.32) (1.75) (1.80) (1.80) (1.80)
Paid-in-capital....... -- -- -- -- -- -- (0.03) -- -- --
------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Total dividends and
distributions........... (0.80) (0.86) (1.08) (0.68) (0.94) (1.32) (1.78) (1.80) (1.80) (1.80)
------ ------ ------ ------ ------ ------- ------- ------- ------- -------
Net asset value,
end of period........... $ 6.77 $ 6.83 $ 7.58 $ 7.23 $ 5.92 $ 6.78 $ 10.40 $ 11.99 $ 13.72 $ 14.16
------ ------ ------ ------ ------ ------- ------- ------- ------- -------
------ ------ ------ ------ ------ ------- ------- ------- ------- -------
TOTAL INVESTMENT
RETURN+.................. 11.98% 0.93% 22.29% 35.46% 4.67% (23.28)% 1.39% 0.97% 10.07% 20.19%
RATIOS TO AVERAGE NET
ASSETS:
Expenses................. 0.79% 0.69% 0.67% 0.77% 0.87% 0.60% 0.49% 0.49% 0.51% 0.60%
Net investment income.... 12.06% 10.40% 12.14% 13.96% 16.47% 17.67% 14.61% 14.79% 12.83% 12.80%
SUPPLEMENTAL DATA:
Net assets, end of
period, in millions..... $455 $478 $540 $512 $436 $690 $1,794 $2,140 $2,034 $1,292
Portfolio turnover
rate.................... 74% 127% 173% 113% 93% 21% 55% 107% 176% 95%
<FN>
- ---------------------
+ Does not reflect the deduction of sales load.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF DEAN WITTER HIGH YIELD SECURITIES INC.
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 High Yield Securities
Inc. (the "Fund") at August 31, 1995, 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 ten years in the
period then ended, 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 owned at
August 31, 1995 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
OCTOBER 11, 1995
<PAGE>
BOARD OF DIRECTORS DEAN WITTER
HIGH YIELD
Jack F. Bennett SECURITIES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
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
Peter M. Avelar
Treasurer
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and directors,
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.
[GRAPHIC]
ANNUAL REPORT
AUGUST 31, 1995
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES
GROWTH OF $10,000
DATE TOTAL LEHMAN MF CORP/HIGH YLD INDEX
--------------------------------------------------------
August 31, 1985 $ 9,450 $10,000
August 31, 1986 $11,358 $12,201
August 31, 1987 $12,502 $12,627
August 31, 1988 $12,623 $13,785
August 31, 1989 $12,798 $15,589
August 31, 1990 $ 9,819 $16,370
August 31, 1991 $10,277 $18,982
August 31, 1992 $13,922 $21,967
August 31, 1993 $17,025 $24,989
August 31, 1994 $17,183 $24,592
August 31, 1995 $19,241(3) $27,923
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
------------------------------------
11.98 (1) 14.40 (1) 7.37 (1)
5.82 (2) 13.12 (2) 6.76 (2)
________ Fund _________ LEHMAN (4)
Past performance is not predictive of future returns.
________________________________________
(1) Figure shown assumes reinvestment of all distributions and
does not reflect the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and
the deduction of the maximum applicable front-end sales charge
(5.5%). See the Fund's current prospectus for complete
details on sales charges.
(3) Closing value assuming a complete redemption on August 31, 1995.
(4) The Lehman Brothers Mutual Fund Corporate/High Yield Index
is an index measuring all investment and noninvestment grade
corporate debt securities.
