WITTER DEAN HIGH YIELD SECURITIES INC, 485BPOS, 1996-10-24

WITTER DEAN HIGH YIELD SECURITIES INC
485BPOS, 1996-10-24

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 24, 1996

REGISTRATION NOS.: 2-64782
811-2932
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------

FORM N-1A
REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933
/X/
PRE-EFFECTIVE AMENDMENT NO. ____ / /

POST-EFFECTIVE AMENDMENT NO. 20

/X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
/X/

AMENDMENT NO. 21

/X/
-------------------

DEAN WITTER HIGH YIELD
SECURITIES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 392-1600

SHELDON CURTIS, ESQ.
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)

COPY TO:
DAVID M. BUTOWSKY, ESQ.
GORDON ALTMAN BUTOWSKY
WELTZEN SHALOV & WEIN
114 WEST 47TH STREET
NEW YORK, NEW YORK 10036
-------------------

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after this Post-Effective Amendment becomes effective.

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
_X_ immediately upon filing pursuant to paragraph (b)
___ on (date) pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)
___ on (date) pursuant to paragraph (a) of rule 485.

THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO SECTION (a) (1) OF RULE 24f-2 UNDER THE
INVESTMENT COMPANY ACT OF 1940. THE REGISTRANT HAS FILED THE RULE 24f-2 NOTICE,
FOR ITS FISCAL YEAR ENDED AUGUST 31, 1996, WITH THE SECURITIES AND EXCHANGE
COMMISSION ON OCTOBER 4, 1996.

AMENDING THE PROSPECTUS AND UPDATING FINANCIAL STATEMENTS

-------------------------------------------------------
-------------------------------------------------------
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.

CROSS-REFERENCE SHEET

FORM N-1A

<TABLE>
<S> <C>
ITEM CAPTION
PART A PROSPECTUS
1. ......................................... Cover Page
2. ......................................... Prospectus Summary; Summary of Fund Expenses
3. ......................................... Financial Highlights; Performance Information
4. ......................................... Prospectus Summary; Investment Objective and Policies; The Fund and
its Management; Cover Page; Investment Restrictions; Appendix
5. ......................................... The Fund and Its Management; Back Cover; Investment Objectives and
Policies
6. ......................................... Dividends, Distributions and Taxes; Additional Information
7. ......................................... Purchase of Fund Shares; Shareholder Services
8. ......................................... Redemptions and Repurchases; Shareholder Services
9. ......................................... Not Applicable

PART B STATEMENT OF ADDITIONAL INFORMATION
10. ......................................... Cover Page
11. ......................................... Table of Contents
12. ......................................... The Fund and Its Management
13. ......................................... Investment Practices and Policies; Investment Restrictions; Portfolio
Transactions and Brokerage
14. ......................................... Directors and Officers
15. ......................................... The Fund and Its Management; Directors and Officers
16. ......................................... The Fund and Its Management; The Distributor; Custodian and Transfer
Agent; Independent Accountants; Shareholder Services
17. ......................................... Portfolio Transactions and Brokerage
18. ......................................... Shares of the Fund
19. ......................................... Purchase of Fund Shares; Redemptions and Repurchases; Financial
Statements; Shareholder Services
20. ......................................... Dividends, Distributions and Taxes
21. ......................................... Not applicable
22. ......................................... Performance Information
23. ......................................... Experts; Financial Statements
</TABLE>

PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>

<TABLE>
<S> <C>
PROSPECTUS TABLE OF CONTENTS
OCTOBER 24, 1996 Prospectus Summary/2
Dean Witter High Yield Summary of Fund Expenses/3
Securities Inc. (the "Fund") is an open-end Financial Highlights/4
diversified management investment company whose The Fund and its Management/5
primary investment objective is to earn a high Investment Objectives and Policies/5
level of current income. As a secondary Special Risk Considerations/6
objective, the Fund will seek capital Investment Restrictions/10
appreciation, but only when consistent with its Purchase of Fund Shares/11
primary objective. The Fund seeks high current Shareholder Services/13
income by investing principally in fixed-income Redemptions and Repurchases/16
securities which are rated in the lower Dividends, Distributions and Taxes/17
categories by established rating services (Baa Performance Information/18
or lower by Moody's Investors Service, Inc. or Additional Information/18
BBB or lower by Standard & Poor's Corporation) Appendix/20
or are non- rated securities of comparable SHARES OF THE FUND ARE NOT DEPOSITS OR
quality. OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
INVESTORS SHOULD CAREFULLY ANY BANK, AND THE SHARES ARE NOT FEDERALLY
CONSIDER THE RELATIVE RISKS, INCLUDING THE RISK INSURED BY THE FEDERAL DEPOSIT INSURANCE
OF DEFAULT, OF INVESTING IN HIGH YIELD CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
SECURITIES, WHICH ARE COMMONLY KNOWN AS JUNK OTHER AGENCY.
BONDS. BONDS OF THIS TYPE ARE CONSIDERED TO BE THESE SECURITIES HAVE NOT BEEN APPROVED OR
SPECULATIVE WITH REGARD TO THE PAYMENT OF DISAPPROVED BY THE SECURITIES AND EXCHANGE
INTEREST AND RETURN OF PRINCIPAL. INVESTORS COMMISSION OR ANY STATE SECURITIES COMMISSION
SHOULD ALSO BE COGNIZANT OF THE FACT THAT SUCH NOR HAS THE COMMISSION OR ANY STATE SECURITIES
SECURITIES ARE NOT GENERALLY MEANT FOR COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
SHORT-TERM INVESTING AND SHOULD ASSESS THE RISKS OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
ASSOCIATED WITH AN INVESTMENT IN THE FUND. (See CONTRARY IS A CRIMINAL OFFENSE.
"Investment Objectives and Policies.") DEAN WITTER DISTRIBUTORS INC.
This Prospectus sets forth DISTRIBUTOR
concisely the information you should know before
investing in the Fund. It should be read and
retained for future reference. Additional
information about the Fund is contained in the
Statement of Additional Information, dated
October 24, 1996, which has been filed with the
Securities and Exchange Commission, and which is
available at no charge upon request of the Fund
at the address or telephone numbers listed
below. The Statement of Additional Information
is incorporated herein by reference.
Dean Witter
High Yield Securities Inc.
Two World Trade Center
New York, New York 10048
(212) 392-2550 or
(800) 869-NEWS (toll-free)
</TABLE>

<PAGE>

<TABLE>
<S> <C>
PROSPECTUS SUMMARY
- ---------------------------------------------------------------------------------------------------
The Fund An open-end diversified management investment company investing principally in
lower-rated fixed-income securities (see page 5).
- ---------------------------------------------------------------------------------------------------
Shares Offered Common stock of $0.01 par value (see page 18).
- ---------------------------------------------------------------------------------------------------
Offering The price of the shares offered by this prospectus varies with the changes in the
Price value of the Fund's investments. The offering price, determined once daily as of
4:00 P.M., New York time, on each day that the New York Stock Exchange is open,
is equal to the net asset value plus a sales charge of 5.5% of the offering
price, scaled down on purchases of $25,000 or over (see page 11).
- ---------------------------------------------------------------------------------------------------
Minimum Minimum initial investment, $1,000 ($100 if the account was opened through
Purchase EasyInvest-SM-); minimum subsequent investment, $100 (see page 11).
- ---------------------------------------------------------------------------------------------------
Investment A high level of current income primarily; capital appreciation is secondary (see
Objectives page 5).
- ---------------------------------------------------------------------------------------------------
Investment High yield fixed-income securities, principally rated Baa/BBB or lower, and
Policies non-rated securities of comparable quality. However, the Fund may also invest in
municipal securities, futures
and options and common stock under certain circumstances (see pages 5 through
10).
- ---------------------------------------------------------------------------------------------------
Investment Dean Witter InterCapital Inc., the Investment Manager of the Fund, and its
Manager wholly-owned subsidiary, Dean Witter Services Company, Inc., serve in various
investment management, advisory, management and administrative capacities to 100
investment companies and other portfolios, with assets of approximately $86.5
billion at September 30, 1996 (see page 5).
- ---------------------------------------------------------------------------------------------------
Management The monthly fee is at an annual rate of 1/2 of 1% of average daily net assets,
Fee scaled down on assets over $500 million (see page 5).
- ---------------------------------------------------------------------------------------------------
Dividends and Income dividends are declared and paid monthly; capital gains, if any, may be
Capital Gains distributed at least annually. Dividends and distributions are automatically
Distributions reinvested in additional shares at net asset value (without sales charge), unless
the shareholder elects to receive cash (see page 17).
- ---------------------------------------------------------------------------------------------------
Distributor Dean Witter Distributors Inc. (see page 11).
- ---------------------------------------------------------------------------------------------------
Sales 5.5% of offering price (5.82% of amount invested); reduced charges on purchases
Charge of $25,000 or more (see page 11).
- ---------------------------------------------------------------------------------------------------
Redemption Shares are redeemable by the shareholder at net asset value. An account may be
involuntarily redeemed if the shares owned have a value of less than $100 or, if
the account was opened through EasyInvest-SM-, if after twelve months the
shareholder has invested less than $1,000 in the account (see pages 16-17).
- ---------------------------------------------------------------------------------------------------
Risks Compared with higher rated, lower yielding fixed-income securities, portfolio
securities of the Fund may be subject to greater risk of loss of income and
principal, including the risk of default, and greater risk of increases and
decreases in net asset value due to market fluctuations. The Fund may purchase
foreign securities, when-issued and delayed delivery and when, as and if issued
securities and other securities subject to repurchase agreements which involve
certain special risks. The Fund may purchase common stock which is exchangeable
for fixed-income securities in circumstances involving takeovers or
recapitalizations. The Fund may also invest in futures and options which may be
considered speculative in nature and may involve greater risks than those
customarily assumed by certain other investment companies which do not invest in
such instruments. Investors should review the investment objectives and policies
of the Fund carefully and consider their ability to assume the risks involved in
purchasing shares of the Fund (see pages 5 through 11).
- ---------------------------------------------------------------------------------------------------
THE ABOVE IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION APPEARING ELSEWHERE IN THE
PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION.
</TABLE>

2
<PAGE>
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

The following table illustrates all expenses and fees that a shareholder of the
Fund will incur. The expenses and fees set forth in the table are for the fiscal
year ended August 31, 1996.

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
- -----------------------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)............ 5.50%
Maximum Sales Charge Imposed on Reinvested Dividends..................................... None
Deferred Sales Charge.................................................................... None
Redemption Fees.......................................................................... None
Exchange Fees............................................................................ None
</TABLE>

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- -----------------------------------------------------------------------------------------
<S> <C>
Management Fees.......................................................................... .50%
Other Expenses........................................................................... .16%
Total Fund Operating Expenses............................................................ .66%
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual
return and (2) redemption at the end of each time
period:.......................................... $ 61 $ 75 $ 90 $ 133
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES OF THE FUND MAY BE GREATER OR
LESS THAN THOSE SHOWN.

The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. For a more complete description of these costs and expenses, see
"The Fund and its Management" and "Purchase of Fund Shares" in this Prospectus.
There are reduced sales charges on purchases of $25,000 or more (see "Purchase
of Fund Shares" in this Prospectus).

3
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The following ratios and per share data for a share of capital stock
outstanding throughout each period have been audited by Price Waterhouse LLP,
independent accountants. The financial highlights should be read in conjunction
with the financial statements, the notes thereto and the unqualified report of
independent accountants which are contained in the Statement of Additional
Information. Further information about the performance of the Fund is contained
in the Fund's Annual Report to Stockholders, which may be obtained without
charge upon request to the Fund.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED AUGUST 31
----------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
---------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period.... $ 6.77 $ 6.83 $ 7.58 $ 7.23 $ 5.92 $ 6.78 $ 10.40 $ 11.99 $ 13.72 $ 14.16
----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net investment income... 0.83 0.80 0.79 0.89 0.95 0.94 1.48 1.67 1.84 1.82
Net realized and
unrealized gain
(loss)................. (0.12) (0.06) (0.68) 0.54 1.04 (0.86) (3.78) (1.48) (1.77) (0.46)
----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations............. 0.71 0.74 0.11 1.43 1.99 0.08 (2.30) 0.19 0.07 1.36
----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less dividends and
distributions from:
Net investment
income............... (0.77) (0.80) (0.86) (1.08) (0.68) (0.94) (1.32) (1.75) (1.80) (1.80)
Paid-in-capital....... -- -- -- -- -- -- -- (0.03) -- --
----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total dividends and
distributions.......... (0.77) (0.80) (0.86) (1.08) (0.68) (0.94) (1.32) (1.78) (1.80) (1.80)
----- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period................. $6.71 $6.77 $6.83 $7.58 $7.23 $5.92 $6.78 $10.40 $11.99 $13.72
----- -------- -------- -------- -------- -------- -------- -------- -------- --------
----- -------- -------- -------- -------- -------- -------- -------- -------- --------
TOTAL INVESTMENT
RETURN+.................. 11.07% 11.98% 0.93% 22.29% 35.46% 4.67% (23.28)% 1.39% 0.97% 10.07%
RATIOS TO AVERAGE NET
ASSETS:
Expenses................ 0.66% 0.79% 0.69% 0.67% 0.77% 0.87% 0.60% 0.49% 0.49% 0.51%
Net investment income... 12.27% 12.06% 10.40% 12.14% 13.96% 16.47% 17.67% 14.61% 14.79% 12.83%
SUPPLEMENTAL DATA:
Net assets, end of
period, in millions.... $460 $455 $478 $540 $512 $436 $690 $1,794 $2,140 $2,034
Portfolio turnover
rate................... 49% 74% 127% 173% 113% 93% 21% 55% 107% 176%
- ---------------
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD. CALCULATED BASED ON THE NET ASSET VALUE OF THE LAST BUSINESS DAY OF THE PERIOD.
</TABLE>

4
<PAGE>
THE FUND AND ITS MANAGEMENT
- --------------------------------------------------------------------------------

Dean Witter High Yield Securities Inc. (the "Fund") is an open-end
diversified management investment company incorporated in Maryland on June 14,
1979.

Dean Witter InterCapital Inc. ("InterCapital" or the "Investment Manager"),
whose address is Two World Trade Center, New York, New York 10048, is the Fund's
Investment Manager. The Investment Manager, which was incorporated in July,
1992, is a wholly-owned subsidiary of Dean Witter, Discover & Co. ("DWDC"), a
balanced financial services organization providing a broad range of nationally
marketed credit and investment products.

InterCapital and its wholly-owned subsidiary, Dean Witter Services Company
Inc., serve in various investment management, advisory, management and
administrative capacities to 100 investment companies, 30 of which are listed on
the New York Stock Exchange, with combined total assets of approximately $83.6
billion as of September 30, 1996. The Investment Manager also manages, and
advises managers of, common stock portfolios of pension plans, other
institutions and individuals which aggregated approximately $2.9 billion at such
date.

The Fund has retained the Investment Manager to provide administrative
services, manage its business affairs and manage the investment of the Fund's
assets, including the placing of orders for the purchase and sale of portfolio
securities. InterCapital has retained Dean Witter Services Company Inc. to
perform the aforementioned administrative services for the Fund.

The Fund's Board of Directors reviews the various services provided by or
under the direction of the Investment Manager to ensure that the Fund's general
investment policies and programs are being properly carried out and that
administrative services are being provided to the Fund in a satisfactory manner.

INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------

The primary investment objective of the Fund is to earn a high level of
current income. As a secondary objective, the Fund will seek capital
appreciation, but only when consistent with its primary objective. Capital
appreciation may result, for example, from an improvement in the credit standing
of an issuer whose securities are held in the Fund's portfolio or from a general
decline in interest rates, or a combination of both. Conversely, capital
depreciation may result, for example, from a lowered credit standing or a
general rise in interest rates, or a combination of both. There is no assurance
that the objectives will be achieved.

The higher yields sought by the Fund are generally obtainable from
securities rated in the lower cate-
gories by recognized rating services. The Fund seeks high current income by
investing principally in fixed-income securities rated Baa or lower by Moody's
Investors Service, Inc. ("Moody's"), or BBB or lower by Standard & Poor's
Corporation ("Standard & Poor's"). Fixed-income securities rated Baa by Moody's
or BBB by Standard & Poor's have speculative characteristics greater than those
of more highly rated bonds, while fixed-income securities rated Ba or BB or
lower by Moody's and Standard & Poor's, respectively, are considered to be
speculative investments. Furthermore, the Fund does not have any minimum quality
rating standard for its investments. As such, the Fund may invest in securities
rated as low as Caa, Ca or C by Moody's or CCC, CC, C or C1 by Standard &
Poor's. Fixed-income securities rated Caa or Ca by Moody's may already be in
default on payment of interest or principal, while bonds rated C

5
<PAGE>
by Moody's, their lowest bond rating, can be regarded as having extremely poor
prospects of ever attaining any real investment standing. Bonds rated C1 by
Standard & Poor's, their lowest bond rating, are no longer making interest
payments. For a further discussion of the characteristics and risks associated
with high yield securities, see "Special Investment Considerations" below. A
description of corporate bond ratings is contained in the Appendix.

Non-rated securities will also be considered for investment by the Fund when
the Investment Manager believes that the financial condition of the issuers of
such securities, or the protection afforded by the terms of the securities
themselves, makes them appropriate investments for the Fund.

In circumstances where the Investment Manager determines that investment in
municipal obligations would facilitate the Fund's ability to accomplish its
investment objectives, it may invest up to 10% of its total assets in such
obligations, including municipal bonds issued at a discount.

All fixed-income securities are subject to two types of risks: the credit
risk and the interest rate risk. The credit risk relates to the ability of the
issuer to meet interest or principal payments or both as they come due.
Generally, higher yielding bonds are subject to a credit risk to a greater
extent than higher quality bonds. The interest rate risk refers to the
fluctuations in net asset value of any portfolio of fixed-income securities
resulting solely from the inverse relationship between price and yield of
fixed-income securities; that is, when the general level of interest rates
rises, the prices of outstanding fixed-income securities generally decline, and
when interest rates fall, prices generally rise.

The ratings of fixed-income securities by Moody's and Standard & Poor's are
a generally accepted barometer of credit risk. However, as the creditworthiness
of issuers of lower-rated fixed-income securities is more problematical than
that of issuers of higher-rated fixed-income securities, the achievement of the
Fund's investment objective will be more dependent upon the Investment Manager's
own credit analysis than would be the case with a mutual fund investing
primarily in higher quality bonds. The Investment Manager will utilize a
security's credit rating as simply one indication of an issuer's
creditworthiness and will principally rely upon its own analysis of any security
currently held by the Fund or potentially purchasable by the Fund for its
portfolio.

In determining which securities to purchase or hold for the Fund's portfolio
and in seeking to reduce credit and interest rate risks, the Investment Manager
will rely on information from various sources, including: the rating of the
security; research, analysis and appraisals of brokers and dealers, including
DWR; the views of the Fund's directors and others regarding economic
developments and interest rate trends; and the Investment Manager's own analysis
of factors it deems relevant. The extent to which the Investment Manager is
successful in reducing depreciation or losses arising from either interest rate
or credit risks depends in part on the Investment Manager's portfolio management
skills and judgment in evaluating the factors affecting the value of securities.
No assurance can be given regarding the degree of success that will be achieved.

SPECIAL RISK CONSIDERATIONS

Because of the special nature of the Fund's investment in high yield
securities, commonly known as junk bonds, the Investment Manager must take
account of certain special considerations in assessing the risks associated with
such investments. Although the growth of the high yield securities market in the
1980s had paralleled a long economic expansion, recently many issuers have been
affected by adverse economic and market conditions. It should be recognized that
an economic downturn or increase in interest rates is likely to have a negative
effect on the high yield bond market and on the value of the high yield
securities held by the Fund, as well as on the ability of the securities'
issuers to repay principal and interest on their borrowings.

The prices of high yield securities have been found to be less sensitive to
changes in prevailing interest rates than higher-rated investments, but are
likely to be more sensitive to adverse economic changes or individual corporate
developments. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial stress which
would adversely affect their ability to service their principal and interest
payment obligations, to meet their projected business goals or to obtain
additional financing. If the issuer of a fixed-income security owned by the Fund
defaults, the Fund may incur additional expenses to seek recovery. In addition,
periods of economic uncertainty and change can be expected to result in an
increased volatility of market prices of high yield securities and a concomitant
volatility in the net asset value of a share of the Fund.

6
<PAGE>
Moreover, the market prices of certain of the Fund's portfolio securities which
are structured as zero coupon and payment-in-kind securities are affected to a
greater extent by interest rate changes and thereby tend to be more volatile
than securities which pay interest periodically and in cash (see "Dividends,
Distributions and Taxes" for a discussion of the tax ramifications of
investments in such securities).

The secondary market for high yield securities may be less liquid than the
markets for higher quality securities and, as such, may have an adverse effect
on the market prices of certain securities. The limited liquidity of the market
may also adversely affect the ability of the Fund's Directors to arrive at a
fair value for certain high yield securities at certain times and could make it
difficult for the Fund to sell certain securities. In addition, new laws and
potential new laws may have an adverse effect upon the value of high yield
securities and a concomitant negative impact upon the net asset value of a share
of the Fund.

During the fiscal year ended August 31, 1996, the monthly dollar weighted
average ratings of the debt obligations held by the Fund, expressed as a
percentage of the Fund's total investments, were as follows:

<TABLE>
<CAPTION>
PERCENTAGE OF
RATINGS TOTAL INVESTMENTS
-------------------- ----------------------
<S> <C>
AAA/Aaa 0.1%
AA/Aa 0.0%
A/A 6.2%
BBB/Baa 0.0%
BB/Ba 6.2%
B/B 74.9%
CCC/Caa 6.6%
CC/Ca 0.0%
C/C 0.0%
D 0.0%
Unrated 6.0%
</TABLE>

Consistent with its primary investment objective, the Fund anticipates that,
under normal conditions, at least 65% of the value of its total assets will be
invested in the lower-rated and non-rated fixed-income securities previously
described. However, when the difference between yields derived from such
securities and those derived from higher rated issues are relatively narrow, the
Fund may invest in the higher rated issues since they may provide similar yields
with somewhat less risk. Fixed-income securities appropriate for the Fund may
include both convertible and nonconvertible debt securities and preferred stock.

Pending investment of proceeds from the sale of shares of the Fund or of its
portfolio securities or at other times when market conditions dictate a more
"defensive" investment strategy, the Fund may invest without limit in money
market instruments, including commercial paper of corporations organized under
the laws of any state or political subdivision of the United States,
certificates of deposit, bankers' acceptances and other obligations of domestic
banks or domestic branches of foreign banks, or foreign branches of domestic
banks, in each case having total assets of at least $500 million, and
obligations issued or guaranteed by the United States Government (including zero
coupon securities), or foreign governments or their respective instrumentalities
or agencies. The yield on these securities will generally tend to be lower than
the yield on other securities to be purchased by the Fund. To the extent the
Fund purchases Eurodollar certificates of deposit issued by foreign branches of
domestic United States banks, consideration will be given to their domestic
marketability, the lower reserve requirements normally mandated for overseas
banking operations, the possible impact of interruptions in the flow of
international currency transactions and economic developments which might
adversely affect the payment of principal or interest.

PUBLIC UTILITIES. The Fund's investments in public utilities, if any, may
be subject to certain risks incurred by the Fund due to Federal, State or
municipal regulatory changes, insufficient rate increases or cost overruns.

REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements, which
may be viewed as a type of secured lending by the Fund, and which typically
involve the acquisition by the Fund of debt securities, from a selling financial
institution such as a bank, savings and loan association or broker-dealer. The
agreement provides that the Fund will sell back to the institution, and that the
institution will repurchase, the underlying security at a specified price and at
a fixed time in the future, usually not more than seven days from the date of
purchase. While repurchase agreements involve certain risks not associated with
direct investments in debt securities, including the risk

7
<PAGE>
of default or bankruptcy of the selling institution, the Fund follows procedures
designed to minimize such risks.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Fund may purchase
securities on a when-issued or delayed delivery basis; I.E., delivery and
payment can take place a month or more after the date of the transaction. These
securities are subject to market fluctuation and no interest accrues to the
purchaser prior to settlement. At the time the Fund makes the commitment to
purchase such securities, it will re-cord the transaction and thereafter reflect
the value, each day, of such security in determining its net asset value. An
increase in the percentage of the Fund's assets committed to the purchase of
securities on a when-issued or delayed delivery basis may increase the
volatility of the Fund's net asset value.

FOREIGN SECURITIES. The Fund may invest up to 20% of its total assets in
fixed-income securities issued by foreign governments and other foreign issuers
and in foreign currency issues of domestic issuers, but not more than 10% of its
total assets in such securities, whether issued by a foreign or domestic issuer,
which are denominated in foreign currency. Foreign securities investments may be
affected by changes in currency rates or exchange control regulations, changes
in governmental administration or economic or monetary policy (in the United
States and abroad) or changed circumstances in dealings between nations. Costs
will be incurred in connection with conversions between various currencies held
by the Fund.

Investments in foreign securities will also occasion risks relating to
political and economic developments abroad, including the possibility of
expropriations or confiscatory taxation, limitations on the use or transfer of
Fund assets and any effects of foreign social, economic or political
instability. Foreign companies are not subject to the regulatory requirements of
U.S. companies and, as such, there may be less publicly available information
about such companies. Moreover, foreign companies are not subject to uniform
accounting, auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies. Finally, in the event of a
default of any foreign debt obligations, it may be more difficult for the Fund
to obtain or enforce a judgment against the issuers of such securities.

Securities of foreign issuers may be less liquid than comparable securities
of U.S. issuers and, as such, their price changes may be more volatile.
Furthermore, foreign exchanges and broker-dealers are generally subject to less
government and exchange scrutiny and regulation than their American
counterparts. Brokerage commissions, dealer concessions and other transaction
costs may be higher on foreign markets than in the U.S. In addition, differences
in clearance and settlement procedures on foreign markets may occasion delays in
settlements of the Fund's trades effected in such markets. As such, the
inability to dispose of portfolio securities due to settlement delays could
result in losses to the Fund due to subsequent declines in value of such
securities and the inability of the Fund to make intended security purchases due
to settlement problems could result in a failure of the Fund to make potentially
advantageous investments.

COMMON STOCKS. The Fund may invest in common stocks in an amount up to 20%
of its total assets in the circumstances described below when consistent with
the Fund's investment objectives. First, the Fund may purchase common stock
which is included in a unit with fixed-income securities purchased by the Fund.
Second, the Fund may acquire common stock when fixed-income securities owned by
the Fund are converted by the issuer into common stock. Third, the Fund may
exercise warrants attached to fixed-income securities purchased by the Fund.
Finally, the Fund may purchase the common stock of companies involved in
takeovers or recapitalizations where the issuer or a stockholder has offered, or
pursuant to a

8
<PAGE>
"going private" transaction is effecting, a transaction involving the issuance
of newly issued fixed-income securities to the holders of such common stock.

ZERO COUPON SECURITIES. A portion of the fixed-income securities purchased
by the Fund may be zero coupon securities. Such securities are purchased at a
discount from their face amount, giving the purchaser the right to receive their
full value at maturity. The interest earned on such securities is, implicitly,
automatically compounded and paid out at maturity. While such compounding at a
constant rate eliminates the risk of receiving lower yields upon reinvestment of
interest if prevailing interest rates decline, the owner of a zero coupon
security will be unable to participate in higher yields upon reinvestment of
interest received on interest-paying securities if prevailing interest rates
rise.

A zero coupon security pays no interest to its holder during its life.
Therefore, to the extent the Fund invests in zero coupon securities, it will not
receive current cash available for distribution to shareholders. In addition,
zero coupon securities are subject to substantially greater price fluctuations
during periods of changing prevailing interest rates than are comparable
securities which pay interest on a current basis. Current federal tax law
requires that a holder (such as the Fund) of a zero coupon security accrue a
portion of the discount at which the security was purchased as income each year
even though the Fund receives no interest payments in cash on the security
during the year.

FUTURES CONTRACTS AND OPTIONS ON FUTURES. The Fund may invest in financial
futures contracts ("futures contracts") and related options thereon. The Fund
may sell a futures contract or a call option thereon or purchase a put option on
such futures contract, if the Investment Manager anticipates interest rates to
rise, as a hedge against a decrease in the value of the Fund's portfolio
securities. If the Investment Manager anticipates that interest rates will
decline, the Fund may purchase a futures contract or a call option thereon or
sell a put option on such futures contract to protect against an increase in the
price of the securities the Fund intends to purchase. These futures contracts
and related options thereon will be used only as a hedge against anticipated
interest rate changes.

The Fund may not enter into futures contracts or purchase related options
thereon if immediately thereafter the amount committed to margin plus the amount
paid for premiums for unexpired options on futures contracts exceeds 5% of the
value of the Fund's total assets. The Fund may not purchase or sell futures
contracts or related options thereon if, immediately thereafter, more than
one-third of its net assets would be hedged.

OPTIONS. The Fund may purchase or sell (write) listed options on debt
securities as a means of achieving additional return or of hedging the value of
the Fund's portfolio. The Fund may only write covered options which are listed
on national securities exchanges. The Fund may not write covered options in an
amount exceeding 20% of the value of its total assets. The Fund may only buy
options which are listed on national securities exchanges. The Fund will not
purchase options if, as a result, the aggregate cost of all outstanding options
exceeds 10% of the Fund's total assets.

For a discussion of futures and options, including the risks of such
transactions, see the Statement of Additional Information.

PRIVATE PLACEMENTS. The Fund may invest up to 5% of its total assets in
securities which are subject to restrictions on resale because they have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), or which are otherwise not readily marketable. (See "Investment
Restrictions" in the Statement of Additional Information.) These securities are
generally referred to as private placements or restricted securities.
Limitations on the resale of such securities may have an adverse effect on their
marketability, and may prevent the Fund from disposing of them promptly at
reasonable prices. The Fund may have to bear the expense of registering such
securities for resale and the risk of substantial delays in effecting such
registration.

The Securities and Exchange Commission has adopted Rule 144A under the
Securities Act, which permits the Fund to sell restricted securities to
qualified institutional buyers without limitation. The Investment Manager,
pursuant to procedures adopted by the Board of Directors of the Fund, will make
a determination as to the liquidity of each restricted security

9
<PAGE>

purchased by the Fund. If a restricted security is determined to be "liquid",
such security will not be considered to be "restricted" for purposes of the
above-disclosed 5% limitation and will not be included within the category
"illiquid securities", which under current policy may not exceed 15% of the
Fund's total assets. However, investing in Rule 144A securities could have the
effect of increasing the level of Fund illiquidity to the extent the Fund, at a
particular point of time, may be unable to find qualified institutional buyers
interested in purchasing such securities.

PORTFOLIO MANAGEMENT

The Fund is actively managed by the Investment Manager with a view to
achieving the Fund's investment objective. The Fund is managed within
InterCapital's Taxable Income Group, which managed approximately $12.9 billion
in assets at September 30, 1996. Peter M. Avelar is a Senior Vice President of
InterCapital and a member of InterCapital's Taxable Income Group. Mr. Avelar has
been the primary portfolio manager of the Fund since January, 1991. He has been
managing fixed portfolios consisting of fixed-income and equity securities at
InterCapital for over five years.

Securities purchased by the Fund are, generally, sold by dealers acting as
principal for their own accounts. Pursuant to an order issued by the Securities
and Exchange Commission, the Fund may effect principal transactions in certain
money market instruments with Dean Witter Reynolds Inc. ("DWR"), a broker-dealer
affiliate of InterCapital. In addition, the Fund may incur brokerage commissions
on transactions conducted through DWR.

Although the Fund does not intend to engage in substantial short-term
trading, it may sell portfolio securities without regard to the length of time
that they have been held, in order to take advantage of new investment
opportunities or yield differentials, or because the Fund desires to preserve
gains or limit losses due to changing economic conditions, interest rate trends,
or the financial condition of the issuer. The Fund's portfolio turnover rate for
the fiscal year ended August 31, 1996 was 49%. The Fund will incur underwriting
discount costs (on underwritten securities) and brokerage costs commensurate
with its portfolio turnover rate. Short term gains and losses may result from
such portfolio transactions. See "Dividends, Distributions and Taxes" for a
discussion of the tax implications of the Fund's trading policy.

Except as otherwise noted, all investment policies and practices discussed
above are not fundamental policies of the Fund and, as such may be changed
without shareholder approval.

INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------

The investment restrictions listed below are among the restrictions that
have been adopted by the Fund as fundamental policies. Under the Investment
Company Act of 1940, as amended (the "Act"), a fundamental policy may not be
changed without the vote of a majority of the outstanding voting securities of
the Fund, as defined in the Act.

The Fund may not:

1. Acquire common stocks in excess of 20% of its total assets.

2. Invest more than 5% of its total assets in the securities of any one
issuer (other than obligations of, or guaranteed by, the United States
Government, its agencies or instrumentalities).

3. Purchase more than 10% of the voting securities, or more than 10% of
any class of securities, of any issuer. For purposes of this restriction,
all outstanding debt securities of an issuer are considered as one class and
all preferred stocks of an issuer are considered as one class.

4. Invest more than 25% of its total assets in securities of issuers in
any one industry. For purposes of this restriction, gas, electric, water and
telephone utilities will each be treated as being a separate industry. This
restriction does not apply to obligations issued or guaranteed by the United
States Government or its agencies or instrumentalities.

5. Invest more than 5% of its total assets in securities of companies
having a record, together with predecessors, of less than three years of
continuous operation. This restriction shall not apply to any obligation of
the United States Government, its agencies or instrumentalities.

10
<PAGE>
PURCHASE OF FUND SHARES
- --------------------------------------------------------------------------------

The Fund offers its shares for sale to the public on a continuous basis.
Pursuant to a Distribution Agreement between the Fund and Dean Witter
Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager,
shares of the Fund are distributed by the Distributor and offered by DWR and
other dealers who have entered into agreements with the Distributor ("Selected
Broker-Dealers"). The principal executive office of the Distributor is located
at Two World Trade Center, New York, New York 10048.

The minimum initial purchase is $1,000. Subsequent purchases of $100 or more
may be made by sending a check, payable to Dean Witter High Yield Securities
Inc., directly to Dean Witter Trust Company (the "Transfer Agent") at P.O. Box
1040, Jersey City, N.J. 07303 (see Investment Application at the back of this
Prospectus), or by contacting a DWR or other Selected Broker-Dealer account
executive. The minimum initial purchase in the case of investments through
EasyInvest-SM-, an automatic purchase plan (see "Shareholder Services"), is
$100, provided that the schedule of automatic investments will result in
investments totalling at least $1,000 within the first twelve months.

In the case of purchases made pursuant to Systematic Payroll Deduction plans
(including Individual Retirement plans), the Fund, in its discretion, may accept
such Purchases without regard to any minimum amounts which would otherwise be
required if the Fund has reason to believe that additional purchases will
increase the amount of the purchase of shares in all accounts under such plans
to at least $1,000. Certificates for shares purchased will not be issued unless
a request is made by the shareholder in writing to the Transfer Agent. The
offering price will be the net asset value per share next determined following
receipt of an order (see "Determination of Net Asset Value" below), plus a sales
charge (expressed as a percentage of the offering price) on a single transaction
as shown in the following table:

<TABLE>
<CAPTION>
SALES CHARGE
----------------------------------------
PERCENTAGE APPROXIMATE
AMOUNT OF OF PUBLIC PERCENTAGE OF
SINGLE TRANSACTION OFFERING PRICE AMOUNT INVESTED
------------------------------ ------------------ -------------------
<S> <C> <C>
Less than $25,000............. 5.50% 5.82%
$25,000 but less than
$50,000...................... 5.00 5.26
$50,000 but less than
$100,000..................... 4.25 4.44
$100,000 but less than
$250,000..................... 3.25 3.36
$250,000 but less than
$500,000..................... 2.50 2.56
$500,000 but less than
$1,000,000................... 1.75 1.78
$1,000,000 and over........... 0.50 0.50
</TABLE>

Upon notice to all Selected Broker-Dealers, the Distributor may reallow up
to the full applicable sales charge as shown in the above schedule during
periods specified in such notice. During periods when substantially the entire
sales charge is reallowed, such Selected Broker-Dealers may be deemed to be
underwriters as that term is defined in the Securities Act.

The above schedule of sales charges is applicable to purchases in a single
transaction by, among others: (a) an individual; (b) an individual, his or her
spouse and their children under the age of 21 purchasing shares for his or her
own accounts; (c) a trustee or other fiduciary purchasing shares for a single
trust estate or a single fiduciary account; (d) a pension, profit-sharing or
other employee benefit plan qualified or non-qualified under Section 401 of the
Internal Revenue Code; (e) tax-exempt organizations enumerated in Section 501
(c) (3) or (13) of the Internal Revenue Code; (f) employee benefit plans
qualified under Section 401 of the Internal Revenue Code of a single employer or
of employers who are "affiliated persons" of each other within the meaning of
Section 2(a) (3) (c) of the Act; and for investments in Individual Retirement
Accounts of employees of a single employer through Systematic Payroll Deduction
plans; or (g) any other organized group of persons, whether incorporated or not,
provided the organization has been in existence for at least six months and

11
<PAGE>
has some purpose other than the purchase of redeemable securities of a
registered investment company at a discount. Shares of the Fund may be sold at
their net asset value, without the imposition of a sales charge, to the employee
benefit plans established by DWR and SPS Transaction Services, Inc. (an
affiliate of DWR) for their employees as qualified under Section 401(k) of the
Internal Revenue Code.

Sales personnel are compensated for selling shares of the Fund at the time
of their sale by the Distributor and/or Selected Broker-Dealer. In addition,
some sales personnel of the Selected Broker-Dealer will receive various types of
non-cash compensation such as special sales incentives, including trips,
educational and/or business seminars and merchandise.

Shares are sold through the Distributor on a normal three business day
settlement basis; that is, payment is due on the third business day (settlement
date) after the order is placed with the Distributor. Since DWR and other
Selected Broker-Dealers forward investors' funds on settlement date, they will
benefit from the temporary use of the funds if payment is made prior thereto. As
noted above, orders placed directly with the Transfer Agent must be accompanied
by payment. Investors will be entitled to receive income dividends and capital
gains distributions if their order is received by the close of business on the
day prior to the record date for such dividends and distributions. The Fund and
the Distributor reserve the right to reject any purchase order.

ANALOGOUS DEAN WITTER FUNDS. The Distributor and the Investment Manager
serve in the same capacities for Dean Witter High Income Securities, an open-end
investment company with investment objectives and policies similar to those of
the Fund. Unlike the Fund, however, shares of Dean Witter High Income Securities
are offered to the public at net asset value, with a contingent deferred sales
charge assessed upon redemptions within five years of purchase, as well as an
annual Rule 12b-1 distribution fee, rather than a sales charge imposed at the
time of purchase. These two Dean Witter Funds have differing fees and expenses,
which will affect performance. Investors who would like to receive a prospectus
for Dean Witter High Income Securities should call the telephone numbers listed
on the front cover of this Prospectus, or may call their account executive for
additional information.

REDUCED SALES CHARGES

COMBINED PURCHASE PRIVILEGE. Investors may have the benefit of reduced
sales charges in accordance with the above schedule by combining purchases of
shares of the Fund in single transactions with the purchase of shares of Dean
Witter Tax-Exempt Securities Trust and of Dean Witter Funds which are sold with
a contingent deferred sales charge ("CDSC funds"). The sales charge payable on
the purchase of shares of the Fund and Dean Witter Tax-Exempt Securities Trust
will be at their respective rates applicable to the total amount of the combined
concurrent purchases of shares of the Fund, Dean Witter Tax-Exempt Securities
Trust and the CDSC funds.

RIGHT OF ACCUMULATION. The above persons and entities may also benefit from
a reduction of the sales charges in accordance with the above schedule if the
cumulative net asset value of shares purchased in a single transaction, together
with shares previously purchased (including shares of Dean Witter Tax-Exempt
Securities Trust and CDSC funds, and of certain other Dean Witter funds acquired
in exchange for shares of such funds) which are held at the time of such
transaction, amounts to $25,000 or more.

The Distributor must be notified by DWR or other Selected Broker-Dealer or
the shareholder at the time a purchase order is placed that the purchase
qualifies for the reduced charge under the Right of Accumulation. Similar
notification must be made in writing by the dealer or shareholder when such an
order is placed by mail. The reduced sales charge will not be granted if: (a)
such notification is not furnished at the time of the order; or (b) a review of
the records of the Selected Broker-Dealer or the Transfer Agent fails to confirm
the investor's represented holdings.

LETTER OF INTENT. The foregoing schedule of reduced sales charges will also
be available to investors who enter into a written Letter of Intent providing
for the purchase, within a thirteen-month period, of shares of the Fund from DWR
or other Selected Broker-Dealer. The cost of shares of the Fund or shares of
Dean Witter Tax-Exempt Securities Trust which were previously purchased at a
price including a front-end sales charge during the 90-day period prior to the
date of receipt by the Distributor of the Letter of Intent, or of shares of
other Dean Witter funds acquired in exchange for shares of such funds acquired
during such period at a price including a front-end sales

12
<PAGE>
charge, which are still owned by the shareholder, may also be included in
determining the applicable reduction.

For further information concerning purchases of the Fund's shares, contact
DWR or other Selected Broker-Dealer or consult the Statement of Additional
Information.

DETERMINATION OF NET ASSET VALUE

The net asset value per share of the Fund is determined once daily at 4:00
p.m., New York time on each day that the New York Stock Exchange is open (or, on
days when the New York Stock Exchange closes prior to 4:00 p.m., at such earlier
time), by taking the value of all assets of the Fund, subtracting all its
liabilities, dividing by the number of shares outstanding and adjusting to the
nearest cent. The net asset value per share will not be determined on Good
Friday and on such other federal and non-federal holidays as are observed by the
New York Stock Exchange.

In the calculation of the Fund's net asset value: (1) an equity portfolio
security listed or traded on the New York or American Stock Exchange or other
domestic or foreign exchange or quoted by NASDAQ is valued at its latest sale
price on that exchange or quotation service; (if there were no sales that day,
the security is valued at the latest bid price); and (2) all other portfolio
securities for which over-the-counter market quotations are readily available
are valued at the latest bid price. 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 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).

Certain of the Fund's portfolio securities may be valued by an outside
pricing service approved by the Fund's Directors. The pricing service may
utilize a matrix system incorporating security quality, maturity and coupon as
the evaluation model parameters, and/or research 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.

Municipal securities will be valued for the Fund by an outside computer
matrix pricing service approved by the Board of Directors. Periodically, the
Investment Manager and the Board of Directors review the continued
appropriateness of the prices obtained through the service.

Short-term debt securities with remaining maturities of 60 days or less at
the time of purchase are valued at amortized cost, unless the Board determines
such does not reflect the securities' fair value, in which case these securities
will be valued at their fair market value as determined by the Board of
Directors. Other short-term debt securities will be valued on a marked-to-market
basis until such time as they reach a maturity of 60 days, whereupon they will
be valued at amortized cost using their value on the 61st day unless the
Directors determine such does not reflect the securities' market value, in which
case these securities will be valued at their fair market value as determined by
the Board of Directors. Listed options on debt securities are valued at the
latest sale price on the exchange on which they are listed unless no sales of
such options have taken place that day, in which case, they will be valued at
the mean between their closing bid and asked prices. Unlisted options on debt
securities and all options on equity securities are valued at the mean between
their latest bid and asked price. Futures are valued at the latest sale price on
the commodities exchange on which they trade unless the Directors determine that
such price does not reflect their market value, in which case they will be
valued at their fair value as determined by the Board of Directors. 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 Board of
Directors.

SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------

AUTOMATIC INVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. All income dividends
and capital gains distributions are automatically paid in full and fractional
shares of the Fund (or, if specified by the shareholder, any other open-end
investment company for which InterCapital serves as investment manager
(collectively

13
<PAGE>
with the Fund, the "Dean Witter Funds")), unless the shareholder requests that
they be paid in cash. Each purchase of shares of the Fund is made upon the
condition that the Transfer Agent is thereby automatically appointed as agent of
the investor to receive all dividends and capital gains distributions on shares
owned by the investor. Such dividends and distributions will be paid in shares
of the Fund (or in cash if the shareholder so requests), at the net asset value
per share (without sales charge), as of the close of business on the record
date. At any time an investor may request the Transfer Agent in writing to have
subsequent dividends and/or capital gains distributions paid to him or her in
cash rather than shares. To assure sufficient time to process the changes, such
request should be received by the Transfer Agent at least five business days
prior to the record date of the dividend or distribution. In the case of
recently purchased shares for which registration instructions have not been
received on the record date, cash payments will be made to DWR or other Selected
Broker-Dealer through whom shares were purchased and will be forwarded to the
shareholder upon receipt of proper instructions.

INVESTMENT OF DISTRIBUTIONS RECEIVED IN CASH. Any shareholder who receives a
cash payment representing a dividend or capital gains distribution may invest
such dividend or distribution at the net asset value (without sales charge) next
determined after receipt by the Transfer Agent by returning the check or the
proceeds to the Transfer Agent within 30 days after the payment date.

EASYINVEST-SM-. Shareholders may subscribe to EasyInvest, an automatic
purchase plan which provides for any amount from $100 to $5,000 to be
transferred automatically from a checking or savings account, on a semi-monthly,
monthly or quarterly basis, to the Fund's Transfer Agent for investment in
shares of the Fund (see "Purchase of Fund Shares" and "Redemptions and
Repurchases -- Involuntary Redemption").

SYSTEMATIC WITHDRAWAL PLAN. A withdrawal plan is available for shareholders
who own or purchase shares of the Fund having a minimum value of $10,000 based
upon the then current offering price. The plan provides for monthly or quarterly
(March, June, September, December) checks in any amount, not less than $25, or
in any whole percentage of the account balance, on an annualized basis.

Withdrawal plan payments should not be considered as dividends, yields or
income. If periodic withdrawal plan payments continuously exceed net investment
income and net capital gains, the shareholder's original investment will be
correspondingly reduced and ultimately exhausted.

Each withdrawal constitutes a redemption of shares and any gain or loss
realized must be recognized for federal income tax purposes. Although the
shareholder may make additional investments of $2,500 or more under the
Systematic Withdrawal Plan, withdrawals made concurrently with purchases of
additional shares are inadvisable because of the sales charges applicable to the
purchase of additional shares.

Shareholders should contact their DWR or other Selected Broker-Dealer,
account executive or the Transfer Agent for further information about any of the
above services.

TAX-SHELTERED RETIREMENT PLANS. Retirement plans are available through the
Investment Manager for use by the self-employed, eligible Individual Retirement
Accounts and Custodial Accounts under Section 403(b)(7) of the Internal Revenue
Code. Adoption of such plans should be on advice of legal counsel or tax
adviser.

For further information regarding plan administration, custodial fees and
other details, investors should contact the Fund.

SYSTEMATIC PAYROLL DEDUCTION PLAN. There is also available to employers a
Systematic Payroll Deduction Plan by which their employees may invest in the
Fund. For further information please contact the Fund.

EXCHANGE PRIVILEGE

The Fund makes available to its shareholders an "Exchange Privilege"
allowing the exchange of shares of the Fund for shares of other Dean Witter
Funds sold with a front-end (at time of purchase) sales-charge ("FESC funds"),
Dean Witter Funds sold with a contingent deferred sales charge ("CDSC funds"),
five Dean Witter Funds which are money market funds and Dean Witter Short-Term
Bond Fund, Dean Witter Limited Term Municipal Trust, Dean Witter Short-Term U.S.
Treasury Trust, Dean Witter Balanced Income Fund, Dean Witter Balanced Growth
Fund and Dean Witter Intermediate Term U.S. Treasury Trust (the foregoing eleven
non-FESC and non-CDSC

14
<PAGE>
funds are hereinafter referred to as the "Exchange Funds"). Exchanges may be
made after the shares of the Fund acquired by purchase (not by exchange or
dividend reinvestment) have been held for thirty days. There is no holding
period for exchanges of shares acquired by exchange or dividend reinvestment.
However, shares of CDSC funds, including shares acquired in exchange for shares
of FESC funds, may not be exchanged for shares of FESC funds. Thus, shareholders
who exchange their Fund shares for shares of CDSC funds may subsequently
exchange those shares for shares of other CDSC funds or Exchange Funds but may
not reacquire FESC fund shares by exchange.

An exchange to another FESC fund, to a CDSC fund, or to a non-money market
fund Exchange Fund is on the basis of the next calculated net asset value per
share of each fund after the exchange order is received. When exchanging into a
money market fund from the Fund, shares of the Fund are redeemed out of the Fund
at their next calculated net asset value and the proceeds of the redemption are
used to purchase shares of the money market fund at their net asset value
determined the following business day. Subsequent exchanges between any of the
Exchange Funds, FESC funds and CDSC funds can be effected on the same basis
(except that CDSC fund shares may not be exchanged for shares of FESC funds).
Shares of a CDSC fund acquired in exchange for shares of an FESC fund (or in
exchange for shares of other Dean Witter Funds for which shares of an FESC fund
have been exchanged) are not subject to any contingent deferred sales charge
upon their redemption.

Purchases and exchanges should be made for investment purposes only. A
pattern of frequent exchanges may be deemed by the Investment Manager to be
abusive and contrary to the best interests of the Fund's other shareholders and,
at the Investment Manager's discretion, may be limited by the Fund's refusal to
accept additional purchases and/or exchanges from the investor. Although the
Fund does not have any specific definition of what constitutes a pattern of
frequent exchanges, and will consider all relevant factors in determining
whether a particular situation is abusive and contrary to the best interests of
the Fund and its other shareholders, investors should be aware that the Fund and
each of the other Dean Witter Funds may in their discretion limit or otherwise
restrict the number of times this Exchange Privilege may be exercised by any
investor. Any such restriction will be made by the Fund on a prospective basis
only, upon notice to the shareholder not later than ten days following such
shareholder's most recent exchange.

The Exchange Privilege may be terminated or revised at any time by the Fund
and/or any of such Dean Witter Funds for which shares of the Fund may be
exchanged, upon such notice as may be required by applicable regulatory
agencies. Shareholders maintaining margin accounts with DWR or another Selected
Broker-Dealer are referred to their account executive regarding restrictions on
exchange of shares of the Fund pledged in the margin account.

The current prospectus for each fund describes its investment objective(s)
and policies, and shareholders should obtain a copy and examine it carefully
before investing. Exchanges are subject to the minimum investment requirement
and any other conditions imposed by each fund. An exchange will be treated for
federal income tax purposes the same as a repurchase or redemption of shares, on
which the shareholder may realize a capital gain or loss. However, the ability
to deduct capital losses on an exchange may be limited in situations where there
is an exchange of shares within ninety days after the shares are purchased. The
Exchange Privilege is only available in states where an exchange may legally be
made.

If DWR or another Selected Broker-Dealer is the current dealer of record and
its account numbers are part of the account information, shareholders may
initiate an exchange of shares of the Fund for shares of any of the Dean Witter
Funds (for which the Exchange Privilege is available) pursuant to this Exchange
Privilege by contacting their DWR or other Selected Broker-Dealer account
executive (no Exchange Privilege Authorization Form is required). Other
shareholders (and those shareholders who are clients of DWR or other Selected
Broker-Dealer but who wish to make exchanges directly by telephoning the
Transfer Agent) must complete and forward to the Transfer Agent an Exchange
Privilege Authorization form, copies of which may be obtained from the Transfer
Agent, to initiate an exchange. If the Authorization Form is used, exchanges may
be made in writing or by contacting the Transfer Agent at (800) 869-NEWS
(toll-free). The Fund will employ reasonable procedures to confirm that exchange
instructions communicated over the telephone are genuine. Such procedures may
include requiring various forms

15
<PAGE>
of personal identification such as name, mailing address, social security or
other tax identification number and DWR or other Selected Broker-Dealer account
number (if any). Telephone instructions may also be recorded. If such procedures
are not employed, the Fund may be liable for any losses due to unauthorized or
fraudulent instructions.

Telephone exchange instructions will be accepted if received by the Transfer
Agent between 9:00 a.m. and 4:00 p.m. New York time, on any day the New York
Stock Exchange is open. Any shareholder wishing to make an exchange who has
previously filed an Exchange Privilege Form and who is unable to reach the Fund
by telephone should contact his or her DWR or other Selected Broker-Dealer
account executive, if appropriate, or make a written exchange request.
Shareholders are advised that during periods of drastic economic or market
changes, it is possible that the telephone exchange procedures may be difficult
to implement, although this has not been the experience of the Dean Witter Funds
in the past.

Shareholders should contact their DWR or other Selected Broker-Dealer
account executive or the Transfer Agent for further information about the
Exchange Privilege.

REDEMPTIONS AND REPURCHASES
- --------------------------------------------------------------------------------

REDEMPTION. Shares of the Fund can be redeemed for cash at any time at the
current net asset value per share next determined (without any redemption or
other charge). If shares are held in a shareholder's account without a stock
certificate, a written request for redemption is required. If certificates are
held by the shareholder(s), the shares may be redeemed by surrendering the
certificate(s) with a written request for redemption along with any additional
information requested by the Transfer Agent. The stock certificate, or an
accompanying stock power, and the request for redemption, must be signed by the
shareholder(s) exactly as the shares are registered. Each request for
redemption, whether or not accompanied by a stock certificate, must be sent to
the Fund's Transfer Agent at P.O. Box 983, Jersey City, N.J. 07303, who will
redeem the shares at their net asset value next determined (see "Purchase of
Fund Shares--Determination of Net Asset Value") after it receives the request,
and certificate, if any, in good order. Any redemption request received after
such determination will be redeemed at the price next determined.

REPURCHASE. DWR and other Selected Broker-Dealers are authorized to
repurchase, as agent for the Fund, shares represented by a stock certificate
which is delivered to any of their offices. Shares held in a shareholder's
account without a stock certificate may also be repurchased by DWR and other
Selected Broker-Dealers upon the telephonic request of the shareholder. The
repurchase price is the net asset value next determined (see "Purchase of Fund
Shares -- Determination of Net Asset Value") after such repurchase order is
received by DWR or other Selected Broker-Dealer. Repurchase orders received by
DWR and other Selected Broker-Dealers prior to 4:00 p.m. New York time on any
business day will be priced at the net asset value per share that is based on
that day's close provided that, if presented by a DWR or other Selected
Broker-Dealer, they are time-stamped by DWR or other Selected Broker-Dealer no
later than 4:00 p.m. New York time on such day. It is the responsibility of DWR
and other Selected Broker-Dealers to transmit orders received by them to the
Distributor prior to 4:00 p.m. New York time on such day. If the DWR or other
Selected Broker-Dealer should fail to do so, the shareholder's entitlement to
that day's closing price must be settled between the shareholder and the
Selected Broker-Dealer. Repurchase orders received by DWR and other Selected
Broker-Dealers after 4:00 p.m. New York time, will be priced on the basis of the
next business day's close. Selected Broker-Dealers may charge for their services
in connection with the repurchase, but neither the Fund nor the Distributor or
DWR charges a fee. Payment for shares repurchased may be made by the Fund to the
Distributor for the account of the shareholder. The offer by DWR and other
Selected Broker-Dealers to repurchase shares from shareholders may be suspended
by them at any time. In that event shareholders may redeem their shares through
the Fund's Transfer Agent as set forth above under "Redemption".

PAYMENT FOR SHARES REDEEMED OR REPURCHASED. Payment for shares presented for
repurchase or redemption will be made by check within seven days

16
<PAGE>
after receipt by the Transfer Agent of the certificate and/or written request in
good order. Such payment may be postponed or the right of redemption suspended
at times when normal trading is not taking place on the New York Stock Exchange.
If the shares to be redeemed have recently been purchased by check, payment of
the redemption proceeds may be delayed for the minimum time needed to verify
that the check used for investment has been honored (not more than fifteen days
from the time of investment of the check by the Transfer Agent). Shareholders
maintaining Margin Accounts with DWR and other Selected Broker Dealers are
referred to their account executive regarding restrictions on redemption of
shares of the Fund pledged in the Margin Account.

REINSTATEMENT PRIVILEGE. A shareholder who has had his or her shares
redeemed or repurchased and has not previously exercised this reinstatement
privilege may, within thirty days after the date of the redemption or
repurchase, reinstate any portion or all of the proceeds of such redemption or
repurchase in shares of the Fund at net asset value (without a sales charge)
next determined after a reinstatement request, together with the proceeds, is
received by the Transfer Agent.

INVOLUNTARY REDEMPTION. The Fund reserves the right, on sixty days' notice,
to redeem at their net asset value the shares of any shareholder whose shares
have a value of less than $100 as a result of redemptions or repurchases, or
such lesser amount as may be fixed by the Board of Directors or, in the case of
an account opened through EasyInvest, if after twelve months the shareholder has
invested less than $1,000 in the account. However, before the Fund redeems such
shares and sends the proceeds to the shareholder, it will notify the shareholder
that the value of the shares is less than the applicable amount and allow the
shareholder sixty days in which to make an additional investment in an amount
which will increase the value of the account to at least the applicable amount
or more before the redemption is processed.

DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS. The Fund intends to declare and pay monthly
income dividends and to distribute net short-term and net long-term capital
gains, if any, at least once each year. The Fund may, however, determine either
to distribute or to retain all or part of any long-term capital gains in any
year for reinvestment.

All dividends and capital gains distributions will be paid in additional
Fund shares (without sales charge) and automatically credited to the
shareholder's account without issuance of a stock certificate unless the
shareholder requests in writing that all dividends be paid in cash and such
request is received by the Transfer Agent at least five business days prior to
the record date for such distributions. (See "Shareholder Services--Automatic
Investment of Dividends and Distributions".)

TAXES. Because the Fund intends to distribute all of its net investment
income and net capital gains to shareholders and otherwise continue to qualify
as a regulated investment company under Subchapter M of the Internal Revenue
Code, it is not expected that the Fund will be required to pay any Federal
income tax on such income and capital gains.

With respect to the Fund's investments in zero coupon and payment-in-kind
bonds, the Fund accrues income prior to any actual cash payments by their
issuers. In order to continue to comply with Subchapter M of the Internal
Revenue Code and remain able to forego payment of Federal income tax on its
income and capital gains, the Fund must distribute all of its net investment
income, including income accrued from zero coupon and payment-in-kind bonds. As
such, the Fund may be required to dispose of some of its portfolio securities
under disadvantageous circumstances to generate the cash required for
distribution.

Shareholders will normally have to pay Federal income taxes, and any
applicable state and/or local income taxes, on the dividends and distributions
they receive from the Fund. Such dividends and distributions, to the extent they
are derived from net investment income or net short-term capital gains, are
taxable to the shareholder as ordinary dividend income regardless of whether the
shareholder receives such distributions in additional shares or in cash. Any
dividends declared in the last calendar quarter of any year to shareholders of
record for that period which are paid in the following year prior to February 1
will be

17
<PAGE>
deemed received by the shareholder in the prior year. Since the Fund's income is
expected to be derived primarily from interest rather than dividends, only a
small portion, if any, of such dividends and distributions is expected to be
eligible for the Federal dividends received deduction available to corporations.

Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long a shareholder has
held the Fund's shares and regardless of whether the distribution is received in
additional shares or in cash. Capital gains distributions are not eligible for
the dividends received deduction. Capital gains may be generated by transactions
in options and futures contracts engaged in by the Fund.

The Fund may at times make payments from sources other than income or net
capital gains. Payments from such sources will, in effect, represent a

return of a portion of each shareholder's investment. All, or a portion, of such
payments will not be taxable to shareholders.

After the end of the calendar year, shareholders will receive a statement of
their dividends and capital gains distributions for tax purposes, including
information as to the portion taxable as ordinary income and the portion taxable
as capital gains.

To avoid being subject to a 31% Federal backup withholding tax on taxable
dividends, capital gains distributions and the proceeds of redemptions and
repurchases, shareholders' taxpayer identification numbers must be furnished and
certified as to their accuracy.

Shareholders should consult their tax advisers regarding specific questions
as to state or local taxes and as to the applicability of the foregoing to their
current federal tax situation.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Fund may quote its "yield" and/or its "total return"
in advertisements and sales literature. Both the yield and the total return of
the Fund are based on historical earnings and are not intended to indicate
future performance. The yield of the Fund will be computed by dividing the
Fund's net investment income over a 30-day period by an average value (using the
average number of shares entitled to receive dividends and the maximum offering
price per share at the end of the period), all in accordance with applicable
regulatory requirements. Such amount will be compounded for six months and then
annualized for a twelve-month period to derive the Fund's yield.

The "average annual total return" of the Fund refers to a figure reflecting
the average annualized percentage increase (or decrease) in the value of an
initial investment in the Fund of $1,000 over periods of one, five and ten
years. Average annual total return reflects all income earned by the Fund, any
appreciation or depreciation of the Fund's assets, all expenses incurred by the
Fund and all sales charges incurred by shareholders, for the stated periods. It
also assumes reinvestment of all dividends and distributions paid by the Fund.

In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. Such calculations may or may not reflect the
imposition of the front-end sales charge which, if reflected, would reduce the
performance quoted. The Fund may advertise the growth of hypothetical
investments of $10,000, $50,000 or $100,000 in shares of the Fund by adding 1 to
the Fund's aggregate total return to date and multiplying by $9,450, $47,875 or
$96,750 ($10,000, $50,000 or $100,000 adjusted for 5.5%, 4.25% and 3.25% sales
charges, respectively). The Fund from time to time may also advertise its
performance relative to certain performance rankings and indexes compiled by
independent organizations.

ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS. All shares of the Fund are of common stock of $0.01 par
value and are equal as to earnings, assets and voting privileges. There are no
conversion, pre-emptive or other subscription rights. In the event of
liquidation, each share of common stock of the Fund is entitled to its portion
of all of the Fund's assets after all debts and expenses have been paid. The
shares do not have cumulative voting rights.

18
<PAGE>
Under ordinary circumstances, the Fund is not required, nor does it intend,
to hold Annual Meetings of Stockholders. The Directors may call Special Meetings
of Stockholders for action by stockholder vote as may be required by the Act or
the Fund's By-Laws.

CODE OF ETHICS. Directors, officers and employees of InterCapital, Dean
Witter Services Company Inc. and the Distributor are subject to a strict Code of
Ethics adopted by those companies. The Code of Ethics is intended to ensure that
the interests of shareholders and other clients are placed ahead of any personal
interest, that no undue personal benefit is obtained from a person's employment
activities and that actual and potential conflicts of interest are avoided. To
achieve these goals and comply with regulatory requirements, the Code of Ethics
requires, among other things, that personal securities transactions by employees
of the companies be subject to an advance clearance process to monitor that no
Dean Witter Fund is engaged at the same time in a purchase or sale of the same
security. The Code of Ethics bans the purchase of securities in an initial
public offering, and also prohibits engaging in futures and options transactions
and profiting on short-term trading (that is, a purchase within 60 days of a
sale or a sale within 60 days of a purchase) of a security. In addition,
investment personnel may not purchase or sell a security for their personal
account within 30 days before or after any transaction in any Dean Witter Fund
managed by them. Any violations of the Code of Ethics are subject to sanctions,
including reprimand, demotion or suspension or termination of employment. The
Code of Ethics comports with regulatory requirements and the recommendations in
the 1994 report by the Investment Company Institute Advisory Group on Personal
Investing.

SHAREHOLDER INQUIRIES. All inquiries regarding the Fund should be directed
to the Fund at the telephone numbers or address set forth on the front cover of
this Prospectus.

19
<PAGE>
APPENDIX -- RATINGS OF INVESTMENTS
- --------------------------------------------------------------------------------

MOODY'S INVESTORS SERVICE INC. ("MOODY'S")
BOND RATINGS

<TABLE>
<S> <C>
Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa Bonds which are rated Baa are considered as medium grade obligations; i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Bonds rated Aaa, Aa, A and Baa are considered investment grade bonds.

Ba Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate, and therefore not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of desirable investments.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca Bonds which are rated Ca present obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
</TABLE>

20
<PAGE>
CONDITIONAL RATING: Municipal bonds for which the security depends
upon the completion of some act or the fulfillment of some condition are
rated conditionally. These are bonds secured by (a) earnings of projects
under construction, (b) earnings of projects unseasoned in operation
experience, (c) rentals which begin when facilities are completed, or
(d) payments to which some other limiting condition attaches.
Parenthetical rating denotes probable credit stature upon completion of
construction or elimination of basis of condition.

RATING REFINEMENTS: Moody's may apply numerical modifiers, 1, 2 and
3 in each generic rating classification from Aa through B in its
corporate and municipal bond rating system. The modifier 1 indicates
that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and a modifier 3
indicates that the issue ranks in the lower end of its generic rating
category.

COMMERCIAL PAPER RATINGS

Moody's Commercial Paper ratings are opinions of the ability to
repay punctually promissory obligations not having an original maturity
in excess of nine months. Moody's employs the following three
designations, all judged to be investment grade, to indicate the
relative repayment capacity of rated issuers: Prime-1, Prime-2, Prime-3.

Issuers rated Prime-1 have a superior capacity for repayment of
short-term promissory obligations. Issuers rated Prime-2 have a strong
capacity for repayment of short-term promissory obligations; and Issuers
rated Prime-3 have an acceptable capacity for repayment of short-term
promissory obligations. Issuers rated Not Prime do not fall within any
of the Prime rating categories.

STANDARD & POOR'S CORPORATION ("STANDARD & POOR'S")

BOND RATINGS

A Standard & Poor's bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
This assessment may take into consideration obligors such as guarantors,
insurers, or lessees.

The ratings are based on current information furnished by the issuer
or obtained by Standard & Poor's from other sources it considers
reliable. The ratings are based, in varying degrees, on the following
considerations: (1) likelihood of default-capacity and willingness of
the obligor as to the timely payment of interest and repayment of
principal in accordance with the terms of the obligation; (2) nature of
and provisions of the obligation; and (3) protection afforded by, and
relative position of, the obligation in the event of bankruptcy,
reorganization or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.

Standard & Poor's does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information.
The ratings may be changed, suspended or withdrawn as a result of
changes in, or unavailability of, such information, or for other
reasons.

<TABLE>
<S> <C>
AAA Debt rated AAA has the highest rating assigned by Standard & Poor's. Capacity to
pay interest and repay principal is extremely strong.
AA Debt rated AA has a very strong capacity to pay interest and repay principal and
differs from the highest-rated issues only in small degree.
</TABLE>

21
<PAGE>
<TABLE>
<S> <C>
A Debt rated A has a strong capacity to pay interest and repay principal although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
BBB Debt rated BBB is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than for debt in higher-rated categories.
Bonds rated AAA, AA, A and BBB are considered investment grade bonds.

BB Debt rated BB has less near-term vulnerability to default than other speculative
grade debt. However, it faces major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payment.
B Debt rated B has a greater vulnerability to default but presently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial or economic conditions would likely impair capacity or willingness to
pay interest and repay principal.
CCC Debt rated CCC has a current identifiable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions to meet
timely payments of interest and repayments of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.
CC The rating CC is typically applied to debt subordinated to senior debt which is
assigned an actual or implied CCC rating.
C The rating C is typically applied to debt subordinated to senior debt which is
assigned an actual or implied CCC- debt rating.
CI The rating CI is reserved for income bonds on which no interest is being paid.
NR Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that Standard & Poor's does not rate a
particular type of obligation as a matter of policy.

Bonds rated BB, B, CCC, CC and C are regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest degree
of speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

Plus (+) or minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
ratings categories.

In the case of municipal bonds, the foregoing ratings are sometimes followed by
a "p" which indicates that the rating is provisional. A provisional rating
assumes the successful completion of the project being financed by the bonds
being rated and indicates that payment of debt service requirements is largely
or entirely dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent to completion
of the project, makes no comment on the likelihood or risk of default upon
failure of such completion.
</TABLE>

22
<PAGE>
COMMERCIAL PAPER RATINGS

Standard and Poor's commercial paper rating is a current assessment
of the likelihood of timely payment of debt having an original maturity
of no more than 365 days. The commercial paper rating is not a
recommendation to purchase or sell a security. The ratings are based
upon current information furnished by the issuer or obtained by S&P from
other sources it considers reliable. The ratings may be changed,
suspended, or withdrawn as a result of changes in or unavailability of
such information. Ratings are graded into group categories, ranging from
"A" for the highest quality obligations to "D" for the lowest. Ratings
are applicable to both taxable and tax-exempt commercial paper. The
categories are as follows:

Issues assigned A ratings are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined
with the designation 1, 2 and 3 to indicate the relative degree of
safety.

<TABLE>
<S> <C>
A-1 indicates that the degree of safety regarding timely payment is very strong.
A-2 indicates capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as overwhelming as for issues
designated "A-1".
A-3 indicates a satisfactory capacity for timely payment. Obligations carrying this
designation are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
</TABLE>

23
<PAGE>
THE DEAN WITTER FAMILY OF FUNDS

MONEY MARKET FUNDS
Dean Witter Liquid Asset Fund Inc.
Dean Witter Tax-Free Daily Income Trust
Dean Witter New York Municipal Money Market Trust
Dean Witter California Tax-Free Daily Income Trust
Dean Witter U.S. Government Money Market Trust

EQUITY FUNDS
Dean Witter American Value Fund
Dean Witter Natural Resource Development Securities Inc.
Dean Witter Dividend Growth Securities Inc.
Dean Witter Developing Growth Securities Trust
Dean Witter World Wide Investment Trust
Dean Witter Value-Added Market Series
Dean Witter Utilities Fund
Dean Witter Capital Growth Securities
Dean Witter European Growth Fund Inc.
Dean Witter Pacific Growth Fund Inc.
Dean Witter Precious Metals and Minerals Trust
Dean Witter Health Sciences Trust
Dean Witter Global Dividend Growth Securities
Dean Witter Global Utilities Fund
Dean Witter International SmallCap Fund
Dean Witter MidCap Growth Fund
Dean Witter Balanced Growth Fund
Dean Witter Capital Appreciation Fund
Dean Witter Information Fund

Dean Witter Japan Fund

Dean Witter Income Builder Fund

Dean Witter Special Value Fund

FIXED-INCOME FUNDS
Dean Witter High Yield Securities Inc.
Dean Witter Tax-Exempt Securities Trust
Dean Witter U.S. Government Securities Trust
Dean Witter California Tax-Free Income Fund
Dean Witter New York Tax-Free Income Fund
Dean Witter Convertible Securities Trust
Dean Witter Federal Securities Trust
Dean Witter World Wide Income Trust
Dean Witter Intermediate Income Securities
Dean Witter Global Short-Term Income Fund Inc.
Dean Witter Multi-State Municipal Series Trust
Dean Witter Premier Income Trust
Dean Witter Short-Term U.S. Treasury Trust
Dean Witter Diversified Income Trust
Dean Witter Limited Term Municipal Trust
Dean Witter Short-Term Bond Fund
Dean Witter National Municipal Trust
Dean Witter High Income Securities
Dean Witter Balanced Income Fund
Dean Witter Hawaii Municipal Trust
Dean Witter Intermediate Term U.S. Treasury Trust

ASSET ALLOCATION FUNDS

Dean Witter Strategist Fund

Dean Witter Global Asset Allocation Fund

ACTIVE ASSETS ACCOUNT PROGRAM
Active Assets Money Trust
Active Assets Tax-Free Trust
Active Assets Government Securities Trust
Active Assets California Tax-Free Trust

DEAN WITTER RETIREMENT SERIES
Liquid Asset Series
U.S. Government Money Market Series
U.S. Government Securities Series
Intermediate Income Securities Series
American Value Series
Capital Growth Series
Dividend Growth Series
Strategist Series
Utilities Series
Value-Added Market Series
Global Equity Series
<PAGE>

Dean Witter
High Yield Securities Inc.
Two World Trade Center
New York, New York 10048
BOARD OF DIRECTORS
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell Dean Witter
John L. Schroeder High Yield
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive
Officer
Sheldon Curtis
Vice President, Secretary and Securities
General Counsel
Peter M. Avelar
Vice President
Thomas F. Caloia
Treasurer
CUSTODIAN
The Bank of New York
90 Washington Street
New York, New York 10286
TRANSFER AGENT AND
DIVIDEND DISBURSING 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
PROSPECTUS -- OCTOBER 24, 1996
Dean Witter InterCapital Inc.

<PAGE>
STATEMENT OF ADDITIONAL INFORMATION

DEAN WITTER
OCTOBER 24, 1996

HIGH YIELD
SECURITIES INC.

- ----------------------------------------------------------------------

Dean Witter High Yield Securities Inc. (the "Fund") is an open-end
diversified management investment company whose investment objective is to earn
a high level of current income. As a secondary objective, the Fund will seek
capital appreciation, but only when consistent with its primary objective. The
Fund seeks high current income by investing principally in fixed-income
securities which are rated in the lower categories by established rating
services (Baa or lower by Moody's Investors Service, Inc. or BBB or lower by
Standard & Poor's Corporation) or are non-rated securities of comparable
quality. Such securities are commonly known as junk bonds. (See "Investment
Practices and Policies".)

A Prospectus for the Fund, dated October 24, 1996, which provides the basic
information you should know before investing in the Fund, may be obtained
without charge by request of the Fund at its address or telephone numbers listed
below or from the Fund's Distributor, Dean Witter Distributors Inc., or from
Dean Witter Reynolds Inc. at any of its branch offices. This Statement of
Additional Information is not a Prospectus. It contains information in addition
to and more detailed than that set forth in the Prospectus. It is intended to
provide additional information regarding the activities and operations of the
Fund, and should be read in conjunction with the Prospectus.

Dean Witter High Yield Securities Inc.
Two World Trade Center
New York, New York 10048
(212) 392-2550 or
(800) 869-NEWS (toll-free)

<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
The Fund and its Management....................... 3
Directors and Officers............................ 6
Investment Practices and Policies................. 11
Investment Restrictions........................... 18
Portfolio Transactions and Brokerage.............. 19
Purchase of Fund Shares........................... 20
Shareholder Services.............................. 22
Redemptions and Repurchases....................... 25
Dividends, Distributions and Taxes................ 26
Performance Information........................... 27
Description of Common Stock....................... 28
Custodian and Transfer Agent...................... 28
Independent Accountants........................... 29
Reports to Shareholders........................... 29
Legal Counsel..................................... 29
Experts........................................... 29
Registration Statement............................ 29
Financial Statements -- August 31, 1996........... 30
Report of Independent Accountants.................
</TABLE>

2
<PAGE>
THE FUND AND ITS MANAGEMENT
- --------------------------------------------------------------------------------

THE FUND

The Fund was incorporated under Maryland law on June 14, 1979, under the
name InterCapital High Yield Securities Inc. On March 16, 1983, the Fund's
shareholders approved a change in the Fund's name, effective March 21, 1983, to
Dean Witter High Yield Securities Inc.

THE INVESTMENT MANAGER

Dean Witter InterCapital Inc. (the "Investment Manager" or "InterCapital"),
a Delaware corporation, whose address is Two World Trade Center, New York, New
York 10048, is the Fund's Investment Manager. InterCapital is a wholly-owned
subsidiary of Dean Witter, Discover & Co., a Delaware corporation. In an
internal reorganization which took place in January, 1993, InterCapital assumed
the investment advisory, administrative and management activities previously
performed by the InterCapital Division of Dean Witter Reynolds Inc. ("DWR"), a
broker-dealer affiliate of InterCapital. (As hereinafter used in this Statement
of Additional Information, the terms "InterCapital" and "Investment Manager"
refer to DWR's InterCapital Division prior to the internal reorganization and to
Dean Witter InterCapital Inc. thereafter.) The daily management of the Fund and
research relating to the Fund's portfolio are conducted by or under the
direction of officers of the Fund and of the Investment Manager, subject to
review by the Fund's Board of Directors. In addition, Directors of the Fund
provide guidance on economic factors and interest rate trends. Information as to
these Directors and officers is contained under the caption "Directors and
Officers".

InterCapital is also the investment manager or investment adviser of the
following management investment companies: Active Assets Money Trust, Active
Assets Tax-Free Trust, Active Assets California Tax-Free Trust, Active Assets
Government Securities Trust, Dean Witter Liquid Asset Fund Inc., InterCapital
Income Securities Inc., Dean Witter Strategist Fund, Dean Witter Tax-Free Daily
Income Trust, Dean Witter Developing Growth Securities Trust, Dean Witter
Tax-Exempt Securities Trust, Dean Witter Natural Resource Development Securities
Inc., Dean Witter Dividend Growth Securities Inc., Dean Witter American Value
Fund, Dean Witter U.S. Government Money Market Trust, Dean Witter Variable
Investment Series, Dean Witter World Wide Investment Trust, Dean Witter Select
Municipal Reinvestment Fund, Dean Witter U.S. Government Securities Trust, Dean
Witter California Tax-Free Income Fund, Dean Witter New York Tax-Free Income
Fund, Dean Witter Convertible Securities Trust, Dean Witter Federal Securities
Trust, Dean Witter Value-Added Market Series, High Income Advantage Trust, High
Income Advantage Trust II, Dean Witter Government Income Trust, Dean Witter
Utilities Fund, Dean Witter California Tax-Free Daily Income Trust, Dean Witter
World Wide Income Trust, Dean Witter Intermediate Income Securities, High Income
Advantage Trust III, Dean Witter Capital Growth Securities, Dean Witter European
Growth Fund Inc., Dean Witter Precious Metals and Minerals Trust, Dean Witter
New York Municipal Money Market Trust, Dean Witter Global Short-Term Income Fund
Inc., Dean Witter Multi-State Municipal Series Trust, Dean Witter Premier Income
Trust, Dean Witter Short-Term U.S. Treasury Trust, Dean Witter Diversified
Income Trust, InterCapital Quality Municipal Investment Trust, InterCapital
Insured Municipal Bond Trust, Dean Witter Pacific Growth Fund Inc., Dean Witter
Health Sciences Trust, Dean Witter Retirement Series, InterCapital Insured
Municipal Trust, InterCapital California Quality Municipal Securities,
InterCapital California Insured Municipal Income Trust, InterCapital Quality
Municipal Income Trust, InterCapital Quality Municipal Securities, InterCapital
New York Quality Municipal Securities, InterCapital Insured Municipal
Securities, InterCapital Insured California Municipal Securities, Dean Witter
Global Dividend Growth Securities, Dean Witter Limited Term Municipal Trust,
Dean Witter Short-Term Bond Fund, Dean Witter Global Utilities Fund, Dean Witter
National Municipal Trust, Dean Witter High Income Securities, Dean Witter
International SmallCap Fund, Dean Witter Mid-Cap Growth Fund, Dean Witter Select
Dimensions Investment Series, Dean Witter Global Asset Allocation Fund, Dean
Witter Balanced Growth Fund, Dean Witter Balanced Income Fund, Dean Witter
Hawaii Municipal Trust, Dean Witter Capital Appreciation Fund, Dean Witter
Intermediate Term U.S. Treasury Trust, Dean Witter Information Fund, Dean Witter
Japan Fund, Dean Witter Income Builder Fund, Dean Witter Special Value Fund,
InterCapital Insured Municipal Income Trust, Municipal Income Trust, Municipal
Income Trust II, Municipal Income Trust III, Municipal Income Opportunities
Trust, Municipal Income Opportunities

3
<PAGE>

Trust II, Municipal Income Opportunities Trust III, Municipal Premium Income
Trust and Prime Income Trust. The foregoing investment companies, together with
the Fund, are collectively referred to as the Dean Witter Funds. In addition,
Dean Witter Services Company Inc. ("DWSC"), a wholly-owned subsidiary of
InterCapital, serves as manager for the following investment companies for which
TCW Funds Management, Inc. is the investment adviser: TCW/DW Core Equity Trust,
TCW/DW North American Government Income Trust, TCW/DW Latin American Growth
Fund, TCW/DW Income and Growth Fund, TCW/DW Small Cap Growth Fund, TCW/DW
Balanced Fund, TCW/DW Total Return Trust, TCW/DW Mid-Cap Equity Trust, TCW/DW
Global Telecom Trust, TCW/DW Strategic Income Trust, TCW/DW Emerging Markets
Opportunites Trust, TCW/DW Term Trust 2000, TCW/DW Term Trust 2002 and TCW/DW
Term Trust 2003 (the "TCW/DW Funds"). InterCapital also serves as: (i)
sub-adviser to Templeton Global Opportunities Trust, an open-end investment
company; (ii) administrator of The BlackRock Strategic Term Trust Inc., a
closed-end investment company; and (iii) sub-administrator of MassMutual
Participation Investors and Templeton Global Governments Income Trust,
closed-end investment companies.

Pursuant to an Investment Management Agreement (the "Agreement") with the
Investment Manager, the Fund has retained the Investment Manager to manage the
investment of the Fund's assets, including the placing of orders for the
purchase and sale of portfolio securities. The Investment Manager obtains and
evaluates such information and advice relating to the economy, securities
markets, and specific securities as it considers necessary or useful to
continuously manage the assets of the Fund in a manner consistent with its
investment objectives and policies.

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, such office space, facilities,
equipment, clerical help and bookkeeping and certain legal services as the Fund
may reasonably require in the conduct of its business, including the preparation
of prospectuses, statements of additional information, proxy statements and
reports required to be filed with federal and state securities commissions
(except insofar as the participation or assistance of independent accountants
and attorneys is, in the opinion of the Investment Manager, necessary or
desirable). In addition, the Investment Manager 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 service, heat,
light, power and other utilities provided to the Fund.

Effective December 31, 1993, pursuant to a Services Agreement between
InterCapital and DWSC, DWSC began to provide the administrative services to the
Fund which were previously performed directly by InterCapital. On April 17,
1995, DWSC was reorganized in the State of Delaware, necessitating the entry
into a new Services Agreement by InterCapital and DWSC on that date. The
foregoing internal reorganization did not result in any change in the nature or
scope of the administrative services being provided to the Fund or any of the
fees being paid by the Fund for the overall services being performed under the
terms of the existing Agreement.

Expenses not expressly assumed by the Investment Manager under the Agreement
or by the Distributor of the Fund's shares (Dean Witter Distributors Inc.
("Distributors" or the "Distributor") see "Purchase of Fund Shares") will be
paid by the Fund. The expenses borne by the Fund include, but are not limited
to: charges and expenses of any registrar, custodian, stock transfer and
dividend disbursing agent; brokerage commissions; taxes; engraving and printing
of stock certificates; registration costs of the Fund and its shares under
federal and state securities laws; the cost and expense of printing, including
typesetting, and distributing prospectuses of the Fund and supplements thereto
to the Fund's shareholders; all expenses of shareholders' and directors'
meetings and of preparing, printing and mailing of proxy statements and reports
to shareholders; fees and travel expenses of directors or members of any
advisory board or committee who are not employees of the Investment Manager or
any corporate affiliate of the Investment Manager; all expenses incident to any
dividend, distribution, withdrawal or redemption options; charges and expenses
of any outside service used for pricing of the Fund's shares; fees and expenses
of legal counsel, including counsel to directors who are not interested persons
of the Fund or of the Investment Manager (not including compensation or expenses
of attorneys who are employees of the Investment Manager) and independent
accountants; membership dues of

4
<PAGE>
industry associations; interest on Fund borrowings; postage; insurance premiums
on property or personnel (including officers and directors) of the Fund which
inure to its benefit; extraordinary expenses (including, but not limited to,
legal claims and liabilities and litigation costs and any indemnification
relating thereto); and all other costs of the Fund's operation.

As full compensation for the services and facilities furnished to the Fund
and expenses of the Fund assumed by the Investment Manager, the Fund pays the
Investment Manager monthly compensation calculated daily 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 daily net assets exceeding $2 billion but not exceeding
$3 billion; and 0.30% of the portion of daily net assets exceeding $3 billion.
Total compensation accrued to the Investment Manager for the Fund's fiscal years
ended August 31, 1994, 1995 and 1996, amounted to $2,690,898, $2,241,952 and
$2,271,578, respectively.

The Agreement provides that in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations thereunder, the
Investment Manager is not liable to the Fund or any of its investors for any act
or omission by the Investment Manager or for any losses sustained by the Fund or
its investors. The Agreement in no way restricts the Investment Manager from
acting as investment manager or adviser to others.

The Agreement was initially approved by the Directors on October 30, 1992
and by the shareholders on January 12, 1993. The Agreement is substantially
identical to a prior investment management agreement which was initially
approved by the Fund's Directors on January 16, 1983 and subsequently by the
Fund's stockholders on March 16, 1983. The Agreement took effect on June 30,
1993, upon the spin-off by Sears, Roebuck and Co. of its remaining shares of
DWDC. The Agreement may be terminated at any time, without penalty, on thirty
days' notice, by the Board of Directors of the Fund, by the holders of a
majority, as defined in the Investment Company Act of 1940, as amended (the
"Act"), of the outstanding shares of the Fund, or by the Investment Manager. The
Agreement will automatically terminate in the event of its assignment (as
defined in the Act).

Under its terms, the Agreement had an initial term ending April 30, 1994,
and will continue from year to year thereafter, provided continuation of the
Agreement is approved at least annually by the vote of the holders of a
majority, as defined in the Act, of the outstanding shares of the Fund, or by
the Board of Directors of the Fund; provided that in either event such
continuance is approved annually by the vote of a majority of the Directors of
the Fund who are not parties to the Agreement or "interested persons" (as
defined in the Act) of any such party (the "Independent Directors"), which vote
must be cast in person at a meeting called for the purpose of voting on such
approval. At their meeting held on April 17, 1996, the Fund's Directors,
including all of the Independent Directors, approved the most recent continuance
of the Agreement until April 30, 1997.

The Fund has acknowledged that the name "Dean Witter" is a property right of
DWR. The Fund has agreed that DWR or its parent company may use or, at any time,
permit others to use, the name "Dean Witter". The Fund has also agreed that in
the event the Agreement between InterCapital and the Fund is terminated, or if
the affiliation between InterCapital and its parent company is terminated, the
Fund will eliminate the name "Dean Witter" from its name if DWR or its parent
company shall so request.

Mellon Bank, N.A., Mutual Funds, P.O. Box 320, Pittsburgh, Pennsylvania
15230-0320, as trustee of the Dean Witter START Plan and the SPS Transaction
Services, Inc. START Plan, employee benefit plans established by DWR and SPS
Transaction Services, Inc. (an affiliate of DWR) for their employees as
qualified under Section 401(k) of the Internal Revenue Code, owned approximately
5.6% of the outstanding shares of the Fund on October 24, 1996.

5
<PAGE>
DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------

The Directors and Executive Officers of the Fund, their principal business
occupations during the last five years and their affiliations, if any, with
InterCapital, and with the 82 Dean Witter Funds and the 14 TCW/DW Funds are
shown below.

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND
AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ---------------------------------------------------------------------
<S> <C>
Michael Bozic (55) Chairman and Chief Executive Officer of Levitz Furniture Corporation
Director (since November, 1995); Director or Trustee of the Dean Witter Funds;
c/o Levitz Furniture Corporation formerly President and Chief Executive Officer of Hills Department
6111 Broken Sound Parkway N.W. Stores (since May, 1991-July, 1995); formerly variously Chairman,
Boca Raton, Florida Chief Executive Officer, President and Chief Operating Officer
(1987-1991) of the Sears Merchandise Group of Sears, Roebuck and Co.;
Director of Eaglemark Financial Services, Inc., the United Negro
College Fund and Weirton Steel Corporation.
Charles A. Fiumefreddo* (63) Chairman and Chief Executive Officer and Director of InterCapital,
Chairman of the Board, DWSC and Distributors; Executive Vice President and Director of DWR;
President and Chief Executive Chairman, Director or Trustee, President and Chief Executive Officer
Officer and Director of the Dean Witter Funds; Chairman, Chief Executive Officer and
Two World Trade Center Trustee of the TCW/DW Funds; formerly Executive Vice President and
New York, New York Director of DWDC (until February, 1993); Chairman and Director of
Dean Witter Trust Company ("DWTC"); Director and/or officer of
various DWDC subsidiaries.
Edwin J. Garn (64) Director or Trustee of the Dean Witter Funds; formerly United States
Director Senator (R-Utah) (1974-1992) and Chairman, Senate Banking Committee
c/o Huntsman Chemical (1980-1986); formerly Mayor of Salt Lake City, Utah (1972-1974);
Corporation formerly Astronaut, Space Shuttle Discovery (April 12-19, 1985); Vice
500 Huntsman Way Chairman, Huntsman Chemical Corporation (since January 1993);
Salt Lake City, Utah Director of Franklin Quest (time management systems) and John Alden
Financial Corp.; Member of the board of various civic and charitable
organizations.
John R. Haire (71) Chairman of the Audit Committee and Chairman of the Committee of the
Director Independent Directors or Trustees and Director or Trustee of the Dean
Two World Trade Center Witter Funds; Chairman of the Audit Committee and Chairman of the
New York, New York Committee of the Independent Trustees and Trustee of the TCW/DW
Funds; formerly President, Council for Aid to Education (since
1978-1989) and Chairman and Chief Executive Officer of Anchor
Corporation, an Investment Adviser (1964-1978); Director of
Washington National Corporation (insurance).
</TABLE>

6
<PAGE>

<TABLE>
<CAPTION>
NAME, AGE, POSITION WITH FUND
AND ADDRESS PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------------------- ---------------------------------------------------------------------
Manuel H. Johnson (47) Senior Partner, Johnson Smick International, Inc., a consulting firm;
Director Koch Professor of International Economics and Director of the Center
c/o Johnson Smick International, Inc. for Global Market Studies at George Mason University (since
1133 Connecticut Avenue, N.W. September, 1990); Co-Chairman and a founder of the Group of Seven
Washington, D.C. Council (G7C), an international economic commission (since September,
1990); Director or Trustee of the Dean Witter Funds; Trustee of the
TCW/DW Funds; Director of Greenwich Capital Markets, Inc. (broker-
dealer); Director of NASDAQ (since June, 1995); formerly Vice
Chairman of the Board of Governors of the Federal Reserve System
(1986-1990) and Assistant Secretary of the U.S. Treasury (1982-1986).
<S> <C>
Michael E. Nugent (60) General Partner, Triumph Capital, L.P., a private investment
Director partnership (since 1988); Director or Trustee of the Dean Witter
c/o Triumph Capital, L.P. Funds; Trustee of the TCW/DW Funds; formerly Vice President, Bankers
237 Park Avenue Trust Company and BT Capital Corporation (1984-1988); Director of
New York, New York various business organizations.
Philip J. Purcell* (53) Chairman of the Board of Directors and Chief Executive Officer of
Director DWDC, DWR and Novus Credit Services Inc.; Director of InterCapital,
Two World Trade Center DWSC and Distributors; Director or Trustee of the Dean Witter Funds;
New York, New York Director and/or officer of various DWDC subsidiaries.

John L. Schroeder (66) Retired; Director or Trustee of the Dean Witter Funds; Trustee of the
Director TCW/DW Funds; Director of Citizens Utilities Company; formerly
c/o Gordon Altman Butowsky Executive Vice President and Chief Investment Officer of the Home
Weitzen Shalov & Wein Insurance Company (August, 1991-September, 1995) and Chairman and
Counsel to the Independent Trustees Chief Investment Officer of Axe- Houghton Management and the
114 West 47th Street Axe-Houghton Funds (1983-1991).
New York, New York

Sheldon Curtis (64) Senior Vice President, Secretary and General Counsel of InterCapital
Vice President, Secretary and DWSC; Senior Vice President, Assistant Secretary and Assistant
and General Counsel General Counsel of Distributors; Senior Vice President and Secretary
Two World Trade Center of DWTC; Assistant Secretary of DWR and Vice President, Secretary and
New York, New York General Counsel of the Dean Witter Funds and the TCW/DW Funds.

Peter M. Avelar (38) Senior Vice President of InterCapital (since April 1992); prior
Vice President thereto he was Vice President of InterCapital; Vice President of
Two World Trade Center various Dean Witter Funds.
New York, New York

Thomas F. Caloia (50) First Vice President and Assistant Treasurer of InterCapital and
Treasurer DWSC; Treasurer of the Dean Witter Funds and the TCW/DW Funds.
Two World Trade Center
New York, New York
</TABLE>

- ------------------------
*Denotes Directors who are "interested persons" of the Fund, as defined in the
Act.

In addition, Robert M. Scanlan, President and Chief Operating Officer of
InterCapital and DWSC, Executive Vice President of Distributors and DWTC and
Director of DWTC, and Joseph J. McAlinden,

7
<PAGE>

Executive Vice President and Chief Investment Officer of InterCapital and
Director of DWTC, and Robert S. Giambrone, Senior Vice President of
InterCapital, DWSC, Distributors and DWTC and Director of DWTC and Jonathan R.
Page and James F. Willison, Senior Vice Presidents of InterCapital, are also
Vice Presidents of the Fund and Barry Fink and Marilyn K. Cranney, First Vice
Presidents and Assistant General Counsels of InterCapital and DWSC, and Lou Anne
D. McInnis and Ruth Rossi, Vice Presidents and Assistant General Counsels of
InterCapital and DWSC, and Frank Bruttomesso and Carsten Otto, Staff attorneys
with InterCapital and DWSC, are also Assistant Secretaries of the Fund.

THE BOARD OF DIRECTORS, THE INDEPENDENT DIRECTORS, AND THE COMMITTEES

The Board of Directors consists of eight (8) directors. These same
individuals also serve as directors or trustees for all of the Dean Witter
Funds, and are referred to in this section as Directors. As of the date of this
Statement of Additional Information, there are a total of 82 Dean Witter Funds,
comprised of 122 portfolios. As of September 30, 1996, the Dean Witter Funds had
total net assets of approximately $78 billion and more than five million
shareholders.

Six Directors (75% of the total number) have no affiliation or business
connection with InterCapital or any of its affiliated persons and do not own any
stock or other securities issued by InterCapital's parent company, DWDC. These
are the "disinterested" or "independent" Directors. The other two Directors (the
"management Directors") are affiliated with InterCapital. Four of the six
independent Directors are also Independent Trustees of the TCW/DW Funds.

Law and regulation establish both general guidelines and specific duties for
the Independent Directors. The Dean Witter Funds seek as Independent Directors
or Trustees individuals of distinction and experience in business and finance,
government service or academia; these are people whose advice and counsel are in
demand by others and for whom there is often competition. To accept a position
on the Funds' Boards, such individuals may reject other attractive assignments
because the Funds make substantial demands on their time. Indeed, by serving on
the Funds' Boards, certain Directors or Trustees who would otherwise be
qualified and in demand to serve on bank boards would be prohibited by law from
doing so.

All of the Independent Directors serve as members of the Audit Committee and
the Committee of the Independent Directors. Three of them also serve as members
of the Derivatives Committee. During the calendar year ended December 31, 1995,
the three Committees held a combined total of fifteen meetings. The Committees
hold some meetings at InterCapital's offices and some outside InterCapital.
Management Directors or officers do not attend these meetings unless they are
invited for purposes of furnishing information or making a report.

The Committee of the Independent Directors is charged with recommending to
the full Board approval of management, advisory and administration contracts,
Rule 12b-1 plans and distribution and underwriting agreements; continually
reviewing Fund performance; checking on the pricing of portfolio securities,
brokerage commissions, transfer agent costs and performance, and trading among
Funds in the same complex; and approving fidelity bond and related insurance
coverage and allocations, as well as other matters that arise from time to time.
The Independent Directors are required to select and nominate individuals to
fill any Independent Director vacancy on the Board of any Fund that has a Rule
12b-1 plan of distribution. Most of the Dean Witter Funds have such a plan.

The Audit Committee is charged with recommending to the full Board the
engagement or discharge of the Fund's independent accountants; directing
investigations into matters within the scope of the independent accountants'
duties, including the power to retain outside specialists; reviewing with the
independent accountants the audit plan and results of the auditing engagement;
approving professional services provided by the independent accountants and
other accounting firms prior to the performance of such services; reviewing the
independence of the independent accountants; considering the range of audit and
non-audit fees; reviewing the adequacy of the Fund's system of internal
controls; and preparing and submitting Committee meeting minutes to the full
Board.

8
<PAGE>

Finally, the Board of each Fund has formed a Derivatives Committee to
establish parameters for and oversee the activities of the Fund with respect to
derivative investments, if any, made by the Fund.

DUTIES OF CHAIRMAN OF COMMITTEE OF THE INDEPENDENT DIRECTORS AND AUDIT COMMITTEE

The Chairman of the Committee of the Independent Directors and the Audit
Committee maintains an office at the Funds' headquarters in New York. He is
responsible for keeping abreast of regulatory and industry developments and the
Funds' operations and management. He screens and/or prepares written materials
and identifies critical issues for the Independent Directors to consider,
develops agendas for Committee meetings, determines the type and amount of
information that the Committees will need to form a judgment on various issues,
and arranges to have that information furnished to Committee members. He also
arranges for the services of independent experts and consults with them in
advance of meetings to help refine reports and to focus on critical issues.
Members of the Committees believe that the person who serves as Chairman of both
Committees and guides their efforts is pivotal to the effective functioning of
the Committees.

The Chairman of the Committees also maintains continuous contact with the
Funds' management, with independent counsel to the Independent Directors and
with the Funds' independent auditors. He arranges for a series of special
meetings involving the annual review of investment advisory, management and
other operating contracts of the Funds and, on behalf of the Committees,
conducts negotiations with the Investment Manager and other service providers.
In effect, the Chairman of the
Committees serves as a combination of chief executive and support staff of the
Independent Directors.

The Chairman of the Committee of the Independent Directors and the Audit
Committee is not employed by any other organization and devotes his time
primarily to the services he performs as Committee Chairman and Independent
Director or Trustee of the Dean Witter Funds and as an Independent Director and,
since July 1, 1996, as Chairman of the Committee of the Independent Trustees and
the Audit Committee of the TCW/DW Funds. The current Committee Chairman has had
more than 35 years experience as a senior executive in the investment company
industry.

ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT DIRECTORS OR TRUSTEES FOR
ALL DEAN WITTER FUNDS

The Independent Directors and the Funds' management believe that having the
same Independent Directors or Trustees for each of the Dean Witter Funds avoids
the duplication of effort that would arise from having different groups of
individuals serving as Independent Directors or Trustees for each of the Funds
or even of sub-groups of Funds. They believe that having the same individuals
serve as Independent Directors or Trustees of all the Funds tends to increase
their knowledge and expertise regarding matters which affect the Fund complex
generally and enhances their ability to negotiate on behalf of each Fund with
the Fund's service providers. This arrangement also precludes the possibility of
separate groups of Independent Directors or Trustees arriving at conflicting
decisions regarding operations and management of the Funds and avoids the cost
and confusion that would likely ensue. Finally, having the same Independent
Directors or Trustees serve on all Fund Boards enhances the ability of each Fund
to obtain, at modest cost to each separate Fund, the services of Independent
Directors or Trustees, and a Chairman of their Committees, of the caliber,
experience and business acumen of the individuals who serve as Independent
Directors or Trustees of the Dean Witter Funds.

The Fund pays each Independent Director an annual fee of $1,000 plus a per
meeting fee of $50 for meetings of the Board of Directors or committees of the
Board of Directors attended by the Director (the Fund pays the Chairman of the
Audit Committee an annual fee of $750 and pays the Chairman of the Committee of
the Independent Directors an additional annual fee of $1,200). The Fund also
reimburses such Directors for travel and other out-of-pocket expenses incurred
by them in connection with attending such meetings. Directors and officers of
the Fund who are or have been employed by the Investment Manager or an
affiliated company receive no compensation or expense reimbursement from the
Fund.

9
<PAGE>

The following table illustrates the compensation paid to the Fund's
Independent Directors by the Fund for the fiscal year ended August 31, 1996.

FUND COMPENSATION

<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
NAME OF INDEPENDENT DIRECTOR FROM THE FUND
- -------------------------------------------------------------- ---------------
<S> <C>
Michael Bozic................................................. $1,750
Edwin J. Garn................................................. 1,850
John R. Haire................................................. 3,963
Dr. Manuel H. Johnson......................................... 1,800
Michael E. Nugent............................................. 1,750
John L. Schroeder............................................. 1,800
</TABLE>

The following table illustrates the compensation paid to the Fund's
Independent Directors for the calendar year ended December 31, 1995 for services
to the 79 Dean Witter Funds and, in the case of Messrs. Haire, Johnson, Nugent
and Schroeder, the 11 TCW/DW Funds that were in operation at December 31, 1995.
With respect to Messrs. Haire, Johnson, Nugent and Schroeder, the TCW/DW Funds
are included solely because of a limited exchange privilege between those Funds
and five Dean Witter Money Market Funds. Mr. Schroeder was elected as a Trustee
of the TCW/DW Funds on April 20, 1995.

COMPENSATION FROM DEAN WITTER FUNDS AND TCW/DW FUNDS

<TABLE>
<CAPTION>
TOTAL
FOR SERVICE AS COMPENSATION
FOR SERVICE CHAIRMAN OF PAID
AS DIRECTOR OR COMMITTEES OF FOR SERVICES
TRUSTEE AND FOR SERVICE AS INDEPENDENT TO
COMMITTEE MEMBER TRUSTEE AND DIRECTORS/ 79 DEAN
OF 79 DEAN COMMITTEE MEMBER TRUSTEES AND WITTER
NAME OF INDEPENDENT WITTER OF 11 TCW/DW AUDIT FUNDS AND 11
DIRECTOR FUNDS FUNDS COMMITTEES TCW/DW FUNDS
- --------------------------- ---------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C>
Michael Bozic.............. $126,050 -- -- $126,050
Edwin J. Garn.............. 136,450 -- -- 136,450
John R. Haire.............. 98,450 $82,038 $217,350(1) 397,838
Dr. Manuel H. Johnson...... 136,450 82,038 -- 218,488
Michael E. Nugent.......... 124,200 75,038 -- 199,238
John L. Schroeder.......... 136,450 46,964 -- 183,414
</TABLE>

- ------------------------

(1) For the 79 Dean Witter Funds in operation at December 31, 1995. As noted
above, on July 1, 1996, Mr. Haire became Chairman of the Committee of the
Independent Trustees and the Audit Committee of the TCW/DW Funds in addition
to continuing to serve in such positions for the Dean Witter Funds.

As of the date of this Statement of Additional Information, 57 of the Dean
Witter Funds, including the Fund, have adopted a retirement program under which
an Independent Director or Trustee who retires after serving for at least five
years (or such lesser period as may be determined by the Board) as an
Independent Director or Trustee of any Dean Witter Fund that has adopted the
retirement program (each such Fund referred to as an "Adopting Fund" and each
such Director or Trustee referred to as an "Eligible Director" or "Eligible
Trustee") is entitled to retirement payments upon reaching the eligible
retirement age (normally, after attaining age 72). Annual payments are based
upon length of service. Currently, upon retirement, each Eligible Director or
Eligible Trustee is entitled to receive from the Adopting Fund, commencing as of
his or her retirement date and continuing for the remainder of his or her life,
an annual retirement benefit (the "Regular Benefit") equal to 25.0% of his or
her Eligible Compensation plus 0.4166666% of such Eligible Compensation for each
full month of service as an Independent Director or Trustee of any Adopting Fund
in excess of five years up to a maximum of 50.0%

10
<PAGE>

after ten years of service.

The foregoing percentages may be changed by the Board.(2) "Eligible
Compensation" is one-fifth of the total compensation earned by such Eligible
Director or Eligible Trustee for service to the Adopting Fund in the five year
period prior to the date of the Eligible Director's or Eligible Trustee's
retirement. Benefits under the retirement program are not secured or funded by
the Adopting Funds.

The following table illustrates the retirement benefits accrued to the
Fund's Independent Directors by the Fund for the fiscal year ended August 31,
1996 and by the 57 Dean Witter Funds (including the Fund) as of December 31,
1995, and the estimated retirement benefits for the Fund's Independent Directors
from the Fund as of August 31, 1996 and from the 57 Dean Witter Funds as of
December 31, 1995.

RETIREMENT BENEFITS FROM THE FUND AND ALL DEAN WITTER FUNDS

<TABLE>
<CAPTION>
FOR ALL ADOPTING FUNDS ESTIMATED ANNUAL
-------------------------------------- RETIREMENT BENEFITS BENEFITS
ESTIMATED ACCRUED AS EXPENSES UPON RETIREMENT(3)
CREDITED YEARS ESTIMATED ---------------------- ----------------------
OF SERVICE AT PERCENTAGE OF BY ALL FROM FROM ALL
RETIREMENT ELIGIBLE BY THE ADOPTING THE ADOPTING
NAME OF INDEPENDENT DIRECTOR (MAXIMUM 10) COMPENSATION FUND FUNDS FUND FUNDS
- --------------------------------- ------------------- ----------------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael Bozic.................... 10 50.0% $ 405 $ 26,359 $ 950 $ 51,550
Edwin J. Garn.................... 10 50.0 601 41,901 950 51,550
John R. Haire.................... 10 50.0 1,026 261,763 2,343 130,404
Dr. Manuel H. Johnson............ 10 50.0 248 16,748 950 51,550
Michael E. Nugent................ 10 50.0 430 30,370 950 51,550
John L. Schroeder................ 8 41.7 789 51,812 792 42,958
</TABLE>

- ------------------------

(2) An Eligible Director or Eligible Trustee may elect alternate payments of his
or her retirement benefits based upon the combined life expectancy of such
Eligible Director or Eligible Trustee and his or her spouse on the date of
such Eligible Director's or Eligible Trustee's retirement. The amount
estimated to be payable under this method, through the remainder of the
later of the lives of such Eligible Director or Eligible Trustee and spouse,
will be the actuarial equivalent of the Regular Benefit. In addition, the
Eligible Director or Eligible Trustee may elect that the surviving spouse's
periodic payment of benefits will be equal to either 50% or 100% of the
previous periodic amount, an election that, respectively, increases or
decreases the previous periodic amount so that the resulting payments will
be the actuarial equivalent of the Regular Benefit.

(3) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Director's or Trustee's elections described in
Footnote (2) above.

As of the date of this Statement of Additional Information, the aggregate
number of shares of beneficial interest of the Fund owned by the Fund's officers
and Directors as a group was less than 1 percent of the Fund's shares of
beneficial interest outstanding.

INVESTMENT PRACTICES AND POLICIES
- --------------------------------------------------------------------------------

As discussed in the Prospectus, the Fund will invest principally in
fixed-income securities rated Baa or lower by Moody's Investor's Service Inc.
("Moody's"), or BBB or lower by Standard & Poor's Corporation ("Standard &
Poor's"). The ratings of fixed-income securities by Moody's and Standard &
Poor's are a generally accepted barometer of credit risk. They are, however,
subject to certain limitations from an investor's standpoint.

Such limitations include the following: the rating of an issuer is heavily
weighted by past developments and does not necessarily reflect probable future
conditions; there is frequently a lag between the time a rating is assigned and
the time it is updated; and there may be varying degrees of difference in credit
risk of securities in each rating category. The Investment Manager will attempt
to reduce the overall portfolio credit risk through diversification and
selection of portfolio securities based on considerations mentioned below.

11
<PAGE>
While the ratings provide a generally useful guide to credit risks, they do
not, nor do they purport to, offer any criteria for evaluating the interest rate
risk. Changes in the general level of interest rates cause fluctuations in the
prices of fixed-income securities already outstanding and will therefore result
in fluctuation in net asset value of the Fund's shares. The extent of the
fluctuation is determined by a complex interaction of a number of factors. The
Investment Manager will evaluate those factors it considers relevant and will
make portfolio changes when it deems it appropriate in seeking to reduce the
risk of depreciation in the value of the Fund's portfolio. However, in seeking
to achieve the Fund's primary objective, there will be times, such as during
periods of rising interest rates, when depreciation and realization of capital
losses on securities in the portfolio will be unavoidable. Moreover, medium and
lower-rated securities and non-rated securities of comparable quality tend to be
subject to wider fluctuations in yield and market values than higher rated
securities. Such fluctuations after a security is acquired do not affect the
cash income received from that security but are reflected in the net asset value
of the Fund's portfolio.

PORTFOLIO CHARACTERISTICS

LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements and subject to Investment Restriction 8 below, the Fund may lend
its portfolio securities to brokers, dealers and other financial institutions,
provided that such loans are callable at any time by the Fund (subject to notice
provisions described below), and are at all times secured by cash or cash
equivalents, which are maintained in a segregated account pursuant to applicable
regulations and that are equal to at least the market value, determined daily,
of the loaned securities. The advantage of such loans is that the Fund continues
to receive the income on the loaned securities while at the same time earning
interest on the cash amounts deposited as collateral, which will be invested in
short-term obligations. The Fund will not lend its portfolio securities if such
loans are not permitted by the laws or regulations of any state in which its
shares are qualified for sale and will not lend more than 25% of the value of
its total assets.

A loan may be terminated by the borrower on one business day's notice, or by
the Fund on four business days' notice. If the borrower fails to deliver the
loaned securities within four days after receipt of notice, the Fund could use
the collateral to replace the securities while holding the borrower liable for
any excess of replacement cost over the value of the collateral. As with any
extensions of credit, there are risks of delay in recovery and, in some cases,
even loss of rights in the collateral should the borrower of the securities fail
financially. However, these loans of portfolio securities will only be made to
firms deemed by the Fund's management to be creditworthy and when the income
which can be earned from such loans justifies the attendant risks. Upon
termination of the loan, the borrower is required to return the securities to
the Fund. Any gain or loss in the market price during the loan period would
inure to the Fund. The creditworthiness of firms to which the Fund lends its
portfolio securities will be monitored on an ongoing basis by the Investment
Manager pursuant to procedures adopted and reviewed, on an ongoing basis, by the
Board of Directors of the Fund.

When voting or consent rights which accompany loaned securities pass to the
borrower, the Fund will follow the policy of calling the loaned securities, in
whole or in part as may be appropriate, to be delivered within one day after
notice, to permit the exercise of such rights if the matters involved would have
a material effect on the Fund's investment in such loaned securities. The Fund
will pay reasonable finder's, administrative and custodial fees in connection
with a loan of its securities. The Fund did not lend any of its portfolio
securities during its fiscal year ended August 31, 1996.

REPURCHASE AGREEMENTS. When cash may be available for only a few days, it
may be invested by the Fund in repurchase agreements until such time as it may
otherwise be invested or used for payments of obligations of the Fund. These
agreements, which may be viewed as a type of secured lending by the Fund,
typically involve the acquisition by the Fund of debt securities from a selling
financial institution such as a bank, savings and loan association or
broker-dealer. The agreement provides that the Fund will sell back to the
institution, and that the institution will repurchase, the underlying security
("collateral"), which is held by the Fund's Custodian, at a specified price and
at a fixed time in the future, usually not more than seven days from the date of
purchase. The Fund will accrue interest from the institution

12
<PAGE>

until the time when the repurchase is to occur. Although such date is deemed by
the Fund to be the maturity date of a repurchase agreement, the maturities of
securities subject to repurchase agreements are not subject to any limits and
may exceed one year. While repurchase agreements involve certain risks not
associated with direct investments in debt securities, the Fund follows
procedures designed to minimize such risks. These procedures include effecting
repurchase transactions only with large, well-capitalized and well-established
financial institutions, whose financial condition will be continually monitored
by the Investment Manager subject to procedures established by the Board of
Directors of the Fund. In addition, the value of the collateral underlying the
repurchase agreement will always be at least equal to the repurchase price,
including any accrued interest earned on the repurchase agreement. In the event
of a default or bankruptcy by a selling financial institution, the Fund will
seek to liquidate such collateral. However, the exercising of the Fund's right
to liquidate such collateral could involve certain costs or delays and, to the
extent that proceeds from any sale upon a default of the obligation to
repurchase were less than the repurchase price, the Fund could suffer a loss. It
is the current policy of the Fund not to invest in repurchase agreements that do
not mature within seven days if any such investment, together with any other
illiquid assets held by the Fund, amounts to more than 10% of its total assets.
The Fund's investments in repurchase agreements may at times be substantial
when, in the view of the Investment Manager, liquidity or other considerations
warrant. During the fiscal year ended August 31, 1996, the Fund's investments in
repurchase agreements did not exceed 5% of its total net assets.

SECURITIES OF FOREIGN ISSUERS. The Fund may invest up to 20% of its total
assets in fixed-income securities issued by foreign governments and other
foreign issuers and in foreign currency issues of domestic issuers, but not more
than 10% of its total assets in such securities, whether issued by a foreign or
domestic issuer, which are denominated in foreign currency. The Fund believes
that in many instances such foreign fixed-income securities may provide higher
yields than similar securities of domestic issuers. With the expiration of the
Interest Equalization Tax in 1974, many of these investments currently enjoy
increased liquidity, although such securities are generally less liquid than the
securities of United States corporations, and are certainly less liquid than
securities issued by the United States Government or its agencies.

Foreign investments involve certain risks, including the political or
economic instability of the issuer or of the country of issue, the difficulty of
predicting international trade patterns and the possibility of imposition of
exchange controls. Such securities may also be subject to greater fluctuations
in price than securities of United States corporations or of the United States
Government. In addition, there may be less publicly available information about
a foreign company than about a domestic company. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards
comparable to those applicable to domestic companies. There is generally less
government regulation of stock exchanges, brokers and listed companies abroad
than in the United States, and with respect to certain foreign countries, there
is a possibility of expropriation or confiscatory taxation, or diplomatic
developments which could affect investment in those countries. Finally, in the
event of a default of any such foreign debt obligations, it may be more
difficult for the Fund to obtain or to enforce a judgment against the issuers of
such securities. In addition to the above-mentioned risks, securities
denominated in foreign currency, whether issued by a foreign or a domestic
issuer, may be affected favorably or unfavorably by changes in currency rates
and in exchange control regulations, and costs may be incurred in connection
with conversions between various currencies. It may not be possible to hedge
against the risks of currency fluctuation.

COMMON STOCKS. As stated in the Prospectus, consistent with the Fund's
investment objectives, the Fund will invest in common stocks only in certain
circumstances. First, the Fund may purchase common stock which is included in a
unit with fixed-income securities purchased by the Fund. Second, the Fund may
acquire common stock when fixed-income securities owned by the Fund are
converted by the issuer into common stock. Third, the Fund may exercise warrants
attached to fixed-income securities purchased by the Fund. Finally, the Fund may
purchase the common stock of companies involved in takeovers or
recapitalizations where the issuer or a controlling stockholder has offered, or
pursuant to a

13
<PAGE>
"going private" transaction is effecting, a transaction involving the issuance
of newly issued fixed-income securities to holders of such common stock.
Purchasing the common stock directly in the last circumstance enables the Fund
to acquire the fixed-income securities directly from the issuer at face value,
thereby eliminating the payment of a third-party dealer mark-up. The maximum
percentage of the Fund's total assets which may be invested in common stocks at
any one time is 20%.

PUBLIC UTILITIES. As stated in the Prospectus, the Fund's investments in
public utilities, if any, may be subject to certain risks. Such utilities may
have difficulty meeting environmental standards and obtaining satisfactory fuel
supplies at reasonable costs. During an inflationary period, public utilities
also face increasing fuel, construction and other costs and may have difficulty
realizing an adequate return on invested capital. There is no assurance that
regulatory authorities will grant sufficient rate increases to cover expenses
associated with the foregoing difficulties as well as debt service requirements.
In addition, with respect to utilities engaged in nuclear power generation,
there is the possibility that Federal, State or municipal governmental
authorities may from time to time impose additional regulations or take other
governmental action which might cause delays in the licensing, construction, or
operation of nuclear power plants, or suspension of operation of such plants
which have been or are being financed by proceeds of the fixed income securities
in the Fund's portfolio.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. As discussed in the
Prospectus, from time to time, in the ordinary course of business, the Fund may
purchase securities on a when-issued or delayed delivery basis -- I.E., delivery
and payment can take place a month or more after the date of the transactions.
The securities so purchased are subject to market fluctuation and no interest
accrues to the purchaser during this period. At the time the Fund makes the
commitment to purchase securities on a when-issued, delayed delivery basis or
forward commitment basis with the intention of acquiring the securities, it will
record the transaction and thereafter reflect the value, each day, of such
security in determining the net asset value of the Fund. At the time of delivery
of the securities, the value may be more or less than the purchase price. The
Fund will also establish a segregated account with its custodian bank in which
it will maintain cash or U.S. Government Securities or other liquid portfolio
securities equal in value to commitments for such when-issued or delayed
delivery securities; subject to this requirement, the Fund may purchase
securities on such basis without limit. An increase in the percentage of the
Fund's assets committed to the purchase of securities on a when-issued or
delayed delivery basis may increase the volatility of the Fund's net asset
value. The Investment Manager and the Board of Directors do not believe that the
Fund's net asset value or income will be adversely affected by its purchase of
securities on such basis. The Fund may sell securities on a when-issued or
delayed delivery basis provided that the Fund owns the security at the time of
the sale. During the fiscal year ended August 31, 1996, the Fund did not
purchase any when-issued and delayed delivery securities.

WHEN, AS AND IF ISSUED SECURITIES. The Fund may purchase securities on a
"when, as and if issued" basis under which the issuance of the security depends
upon the occurrence of a subsequent event, such as approval of a merger,
corporate reorganization, leveraged buy-out or debt restructuring. The
commitment for the purchase of any such security will not be recognized in the
portfolio of the Fund until the Investment Manager determines that issuance of
the security is probable. At such time, the Fund will record the transaction
and, in determining its net asset value, will reflect the value of the security
daily. At such time, the Fund will also establish a segregated account with its
custodian bank in which it will maintain cash or U.S. Government Securities or
other liquid portfolio securities equal in value to recognized commitments for
such securities. Once a segregated account has been established, if the
anticipated event does not occur and the securities are not issued the Fund will
have lost an investment opportunity. The value of the Fund's commitments to
purchase the securities of any one issuer, together with the value of all
securities of such issuer owned by the Fund, may not exceed 5% of the value of
the Fund's total assets at the time the initial commitment to purchase such
securities is made (see "Investment Restrictions" in the Prospectus). Subject to
the foregoing restrictions, the Fund may purchase securities on such basis
without limit. An increase in the percentage of the Fund's assets committed to
the purchase of securities on a "when, as and if issued" basis may increase the
volatility of its net asset value. The Investment Manager and the Board of
Directors do not believe that the net asset value of the

14
<PAGE>

Fund will be adversely affected by its purchase of securities on such basis. The
Fund may also sell securities on a "when, as and if issued" basis provided that
the issuance of the security will result automatically from the exchange or
conversion of a security owned by the Fund at the time of the sale. During the
fiscal year ended August 31, 1996, the Fund did not purchase securities on a
when, as and if issued basis in an amount which exceeded 5% of its total net
assets.

FUTURES CONTRACTS AND OPTIONS ON FUTURES. As discussed in the Prospectus,
the Fund may invest in financial futures contracts ("futures contracts") and
related options thereon. These futures contracts and related options thereon
will be used only as a hedge against anticipated interest rate changes. A
futures contract sale creates an obligation by the Fund, as seller, to deliver
the specific type of instrument called for in the contract at a specified future
time for a specified price. A futures contract purchase would create an
obligation by the Fund, as purchaser, to take delivery of the specific type of
financial instrument at a specified future time at a specified price. The
specific securities delivered or taken, respectively, at settlement date, would
not be determined until or near that date. The determination would be in
accordance with the rules of the exchange on which the futures contract sale or
purchase was effected.

The Fund may sell a futures contract or a call option thereon or purchase a
put option on such futures contract, if the Investment Manager anticipates
interest rates to rise, as a hedge against a decrease in the value of the Fund's
portfolio securities. If the Investment Manager anticipates that interest rates
will decline, the Fund may purchase a futures contract or a call option thereon
or sell a put option on such futures contract to protect against an increase in
the price of the securities the Fund intends to purchase. These futures
contracts and related options thereon will be used only as a hedge against
anticipated interest rate changes.

Although the terms of futures contracts specify actual delivery or receipt
of securities, in most instances the contracts are closed out before the
settlement date without the making or taking of delivery of the securities.
Closing out of a futures contract is usually effected by entering into an
offsetting transaction. An offsetting transaction for a futures contract sale is
effected by the Fund entering into a futures contract purchase for the same
aggregate amount of the specific type of financial instrument and same delivery
date. If the price in the sale exceeds the price in the offsetting purchase, the
Fund is immediately paid the difference and thus realizes a gain. If the
offsetting purchase price exceeds the sale price, the Fund pays the difference
and realizes a loss. Similarly, the closing out of a futures contract purchase
is effected by the Fund entering into a futures contract sale. If the offsetting
sale price exceeds the purchase price, the Fund realizes a gain, and if the
offsetting sale price is less than the purchase price, the Fund realizes a loss.

Unlike a futures contract, which requires the parties to buy and sell a
security on a set date, an option on a futures contract entitles its holder to
decide on or before a future date whether to enter into such a contract. If the
holder decides not to enter into the contract, the premium paid for the contract
is lost. Since the price of the option is fixed at the point of sale, there are
no daily payments of cash to reflect the change in the value of the underlying
contract, as discussed below for futures contracts. The value of the option does
change and is reflected in the net asset value of the Fund.

The Fund is required to maintain margin deposits with brokerage firms
through which it effects futures contracts and options thereon. The initial
margin requirements vary according to the type of the underlying security. In
addition, due to current industry practice, daily variations in gains and losses
on open contracts are required to be reflected in cash in the form of variation
margin payments. The Fund may be required to make additional margin payments
during the term of the contract.

15
<PAGE>
Currently, futures contracts can be purchased on debt securities such as
U.S. Treasury Bills and Bonds, U.S. Treasury Notes with maturities between 6 1/2
and 10 years, Certificates of the Government National Mortgage Association and
Bank Certificates of Deposit. The Fund may invest in interest rate futures
contracts covering these types of financial instruments as well as in new types
of such contracts that become available in the future.

Financial futures contracts are traded in an auction environment on the
floors of several Exchanges -- principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange. Each Exchange
guarantees performance under contract provisions through a clearing corporation,
a nonprofit organization managed by the Exchange membership which is also
responsible for handling daily accounting of deposits or withdrawals of margin.

A risk in employing futures contracts to protect against the price
volatility of portfolio securities is that the prices of securities subject to
futures contracts may correlate imperfectly with the behavior of the cash prices
of the Fund's portfolio securities. The correlation may be distorted by the fact
that the futures market is dominated by short-term traders seeking to profit
from the difference between a contract or security price objective and their
cost of borrowed funds. This would reduce their value for hedging purposes over
a short time period. Such distortions are generally minor and would diminish as
the contract approached maturity.

Another risk is that the Fund's manager could be incorrect in its
expectations as to the direction or extent of various interest rate movements or
the time span within which the movements take place. For example, if the Fund
sold futures contracts for the sale of securities in anticipation of an increase
in interest rates, and then interest rates went down instead, causing bond
prices to rise, the Fund would lose money on the sale.

Put and call options on financial futures have similar characteristics as
Exchange traded options. For a further description of options, see below and
pages 7 and 8 of the Prospectus.

In addition to the risks associated in investing in options on securities,
there are particular risks associated with investing in options on futures. In
particular, the ability to establish and close out positions on such options
will be subject to the development and maintenance of a liquid secondary market.
It is not certain that this market will develop.

A substantial majority (i.e., approximately 75%) of all anticipatory hedge
transactions (transactions in which the Fund does not own at the time of the
transaction, but expects to acquire, the securities underlying the relevant
futures contract) involving the purchase of futures contracts, call options or
written put options thereon will be completed by the purchase of securities
which are the subject of the hedge.

The Fund may not enter into futures contracts or related options thereon if,
immediately thereafter, the amount committed to margin plus the amount paid for
option premiums exceeds 5% of the value of the Fund's total assets. In instances
involving the purchase of futures contracts by the Fund, an amount equal to the
market value of the futures contract will be deposited in a segregated account
of cash and cash equivalents to collateralize the position and thereby ensure
that the use of such futures contract is unleveraged. The Fund may not purchase
or sell futures contracts or related options if, immediately thereafter, more
than one-third of its net assets would be hedged.

OPTIONS. As discussed in the Prospectus, the Fund may purchase or sell
options on debt securities. The Fund would only buy options listed on national
securities exchanges, except for agreements, sometimes called cash puts, which
may accompany the purchase of a new issue of bonds from a dealer.

A call option is a contract that gives the holder of the option the right to
buy from the writer (seller) of the call option, in return for a premium, the
security underlying the option at a specified exercise price at any time during
the term of the option. The writer of the call option has the obligation upon
exercise of the option to deliver the underlying security upon payment of the
exercise price during the option period. A put option is a contract that gives
the holder of the option the right to sell to the writer, in return for a

16
<PAGE>
premium, the underlying security at a specified price during the term of the
option. The writer of the put has the obligation to buy the underlying security
upon exercise, at the exercise price during the option period. The Fund did not
enter into any options transactions during its fiscal year ended August 31,
1995, and it has no intention of doing so during the forseeable future.

The Fund will only write covered call or covered put options. The Fund may
only write covered options which are listed on national securities exchanges.
The Fund may not write covered options in an amount exceeding 20% of the value
of its total assets. A call option is "covered" if the Fund owns the underlying
security covered by the call or has an absolute and immediate right to acquire
that security without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon conversion or
exchange of other securities held in its portfolio. A call option is also
covered if the Fund holds, on a share-for-share basis, a call on the same
security as the call written where the exercise price of the call held is (i)
equal to or less than the exercise price of the call written or (ii) greater
than the exercise price of the call written if the difference is maintained by
the Fund in cash, Treasury bills or other liquid portfolio securities in a
segregated account with its custodian. A put option is "covered" if the Fund
maintains cash, Treasury bills or other liquid portfolio securities with a value
equal to the exercise price in a segregated account with its custodian, or else
holds, on a share-for-share basis, a put on the same security as the put written
where the exercise price of the put held is equal to or greater than the
exercise price of the put written.

If the Fund has written an option, it may terminate its obligation by
effecting a closing purchase transaction. This is accomplished by purchasing an
option of the same series as the option previously written. However, once the
Fund has been assigned an exercise notice, the Fund will be unable to effect a
closing purchase transaction. Similarly, if the Fund is the holder of an option
it may liquidate its position by effecting a closing sale transaction. This is
accomplished by selling an option of the same series as the option previously
purchased. There can be no assurance that either a closing purchase or sale
transaction can be effected when the Fund so desires. The Fund may only buy
options which are listed on national securities exchanges. The Fund will not
purchase options if, as a result, the aggregate cost of all outstanding options
exceeds 10% of the Fund's total assets.

The Fund will realize a profit from a closing transaction if the price of
the transaction is less than the premium received from writing the option or is
more than the premium paid to purchase the option; the Fund will realize a loss
from a closing transaction if the price of the transaction is more than the
premium received from writing the option or is less than the premium paid to
purchase the option. Since call option prices generally reflect increases in the
price of the underlying security, any loss resulting from the repurchase of a
call option may also be wholly or partially offset by unrealized appreciation of
the underlying security. If a put option written by the Fund is exercised, the
Fund may incur a loss equal to the difference between the exercise price of the
option and the sum of the sale price of the underlying security plus the premium
received from the sale of the option. Other principal factors affecting the
market value of a put or a call option include supply and demand, interest
rates, the current market price and price volatility of the underlying security
and the time remaining until the expiration date.

An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. Although the Fund will
generally purchase or write only those options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market on
an exchange will exist for any particular option. In such event, it might not be
possible to effect closing transactions in particular options, so that the Fund
would have to exercise its options in order to realize any profit and would
incur brokerage commissions upon the exercise of call options and upon the
subsequent disposition of underlying securities for the exercise of put options.
If the Fund as a covered call option writer is unable to effect a closing
purchase transaction in a secondary market, it will not be able to sell the
underlying security until the option expires or it delivers the underlying
security upon exercise.

The Fund now qualifies and intends to remain qualified as a "regulated
investment company" under the Internal Revenue Code (see "Dividends,
Distributions and Taxes"). One requirement for such

17
<PAGE>
qualification is that less than 30% of the Fund's gross income must be derived
from the gains from the sale or other disposition of securities held for less
than three months. Therefore, the Fund may be limited in its ability to engage
in futures and options transactions.

INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------

In addition to the investment restrictions enumerated in the Prospectus, the
investment restrictions listed below have been adopted by the Fund as
fundamental policies, which may not be changed without the vote of a majority of
the outstanding voting securities of the Fund, as defined in the Act. Such a
majority is defined as the lesser of (a) 67% of the shares present at a meeting
of shareholders, if the holders of more than 50% of the outstanding shares of
the Fund are present or represented by proxy, or (b) more than 50% of the
outstanding shares of the Fund.

The Fund may not:

1. Make short sales of securities;

2. Purchase securities on margin, except for such short-term loans as
are necessary for the clearance of purchases of portfolio securities;

3. Pledge its assets or assign or otherwise encumber them in excess of
4.5% of its net assets (taken at market value at the time of
pledging) and then only to secure borrowings effected within the limitations
set forth in Restriction 14. For the purpose of this restriction, collateral
arrangements with respect to the writing of options and collateral
arrangements with respect to initial margin for futures are not deemed to be
pledges of assets;

4. Engage in the underwriting of securities except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in
disposing of a portfolio security;

5. Purchase or sell real estate or interests therein, although it may
purchase securities of issuers which engage in real estate operations
and securities which are secured by real estate or interests therein;

6. Purchase or sell commodities except that the Fund may purchase
financial futures contracts and related options;

7. Make loans of money or securities, except (a) by the purchase of debt
obligations in which the Fund may invest consistent with its
investment objectives and policies; (b) by investment in repurchase
agreements (see "Portfolio Characteristics -- Repurchase Agreements"); or
(c) by lending its portfolio securities, subject to limitations described
elsewhere in this Statement of Additional Information. See "Portfolio
Characteristics -- Lending of Portfolio Securities";

8. Purchase oil, gas or other mineral leases, rights or royalty
contracts or exploration or development programs, except that the
Fund may invest in the securities of companies which invest in or sponsor
such programs;

9. Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or
acquisition of assets;

10. Invest for the purpose of exercising control or management of another
company;

11. Invest in securities of any company if, to the knowledge of the Fund,
any officer or director of the Fund or of the Investment Manager owns
more than 1/2 of 1% of the outstanding securities of such company, and such
officers and directors who own more than 1/2 of 1% own in the aggregate more
than 5% of the outstanding securities of such company; and

12. Write, purchase or sell puts, calls, or combinations thereof except
options on futures contracts or options on debt securities.

18
<PAGE>
13. Borrow money, except that the Fund may borrow for temporary purposes
in amounts not exceeding 5% (taken at the lower of cost or current
value) of its total assets (not including the amount borrowed).

As regards the above investment restrictions and those disclosed in the
Prospectus, if a percentage restriction is addressed at the time of investment,
a later increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of total or net assets will not be considered a
violation of any of the foregoing restrictions.

PORTFOLIO TRANSACTIONS AND BROKERAGE
- --------------------------------------------------------------------------------

Subject to the general supervision by the Board of Directors, the Investment
Manager is responsible for decisions to buy and sell securities and futures
contracts for the Fund, the selection of brokers and dealers to effect the
transactions, and the negotiation of brokerage commissions, if any. Purchases
and sales of securities on a stock exchange are effected through brokers who
charge a commission for their services. The Fund expects that the primary market
for the securities in which it intends to invest will generally be the
over-the-counter market. Securities are generally traded in the over-the-counter
market on a "net" basis with dealers acting as principal for their own accounts
without charging a stated commission, although the price of the security usually
includes a profit to the dealer. Options and futures transactions will usually
be effected through a broker and a commission will be charged. The Fund also
expects that securities will be purchased at times in underwritten offerings
where the price includes a fixed amount of compensation, generally referred to
as the underwriter's concession or discount. On occasion, the Fund may also
purchase certain money market instruments directly from an issuer, in which case
no commissions or discounts are paid. The Fund paid $95,014, $179,154 and
$301,392 in brokerage commissions during the fiscal years ended August 31, 1994,
1995 and 1996, respectively.

The Investment Manager currently serves as investment manager to a number of
clients, including other investment companies, and may in the future act as
investment manager or adviser to others. It is the practice of the Investment
Manager to cause purchase and sale transactions to be allocated among the Fund
and others whose assets it manages in such manner as it deems equitable. In
making such allocations among the Fund and other client accounts, various
factors may be considered, including the respective investment objectives, the
relative size of portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments
generally held and the opinions of the persons responsible for managing the
portfolios of the Fund and other client accounts. In the case of certain initial
and secondary public offerings, the Investment Manager may utilize a pro-rata
allocation process based on the size of the Dean Witter Funds involved and the
number of shares available from the public offering.

The policy of the Fund regarding purchases and sales of securities and
futures contracts for its portfolio is that primary consideration will be given
to obtaining the most favorable prices and efficient executions of transactions.
In seeking to implement the Fund's policies, the Investment Manager effects
transactions with those brokers and dealers who the Investment Manager believes
provide the most favorable prices and who are capable of providing efficient
executions. If the Investment Manager believes such prices and executions are
obtainable from more than one broker or dealer, it may give consideration to
placing portfolio transactions with those brokers and dealers who also furnish
research and other services to the Fund or the Investment Manager. Such services
may include, but are not limited to, any one or more of the following:
information as to the availability of securities for purchase or sale;
statistical or factual information or opinions pertaining to investment; wire
services; and appraisals or evaluations of portfolio securities.

The information and services received by the Investment Manager from brokers
and dealers may be of benefit to the Investment Manager in the management of
accounts of some of its other clients and may not in all cases benefit the Fund
directly. While the receipt of such information and services is useful in
varying degrees and would generally reduce the amount of research or services
otherwise performed by

19
<PAGE>
the Investment Manager and thus reduce its expenses, it is of indeterminable
value and the management fee paid to the Investment Manager is not reduced by
any amount that may be attributable to the value of such services.

Pursuant to an order of the Securities and Exchange Commission, the Fund may
effect principal transactions in certain money market instruments with DWR. The
Fund will limit its transactions with DWR to U.S. Government and Government
Agency Securities, Bank Money Instruments (I.E., Certificates of Deposit and
Bankers' Acceptances) and Commercial Paper (not including Tax-Exempt Municipal
Paper). Such transactions will be effected with DWR only when the price
available from DWR is better than that available from other dealers.

Consistent with the policy described above, brokerage transactions in
securities listed on exchanges or admitted to unlisted trading privileges may be
effected through DWR. In order for DWR to effect portfolio transactions for the
Fund, the commissions, fees or other remuneration received by DWR must be
reasonable and fair compared to the commissions, fees or other remuneration paid
to other brokers in connection with comparable transactions involving similar
securities being purchased or sold on an exchange during a comparable period of
time. This standard would allow DWR to receive no more than the remuneration
which would be expected to be received by an unaffiliated broker in a
commensurate arm's-length transaction. Furthermore, the Directors of the Fund,
including a majority of the Directors who are not "interested" Directors, have
adopted procedures which are reasonably designed to provide that any
commissions, fees or other remuneration paid to DWR are consistent with the
foregoing standard. During the fiscal year ended August 31, 1996, the Fund paid
no brokerage commissions to DWR.

PURCHASE OF FUND SHARES
- --------------------------------------------------------------------------------

As discussed in the Prospectus, shares of the Fund are distributed by Dean
Witter Distributors Inc. (the "Distributor"). The Distributor has entered into a
selected dealer agreement with DWR, which through its own sales organization
sells shares of the Fund. In addition, the Distributor may enter into agreements
with other selected broker-dealers. The Distributor, a Delaware corporation, is
a wholly-owned subsidiary of DWDC. The Directors of the Fund, including a
majority of the Directors who are not, and were not at the time they voted,
interested persons of the Fund, as defined in the Act (the "Independent
Directors"), approved, at their meeting held on October 30, 1992, the current
Distribution Agreement appointing the Distributor exclusive distributor of the
Fund's shares and providing for the Distributor to bear distribution expenses
not borne by the Fund. The Distribution Agreement took effect on June 30, 1993
upon the spin-off by Sears, Roebuck and Co. of its remaining shares of DWDC. By
its terms, the Distribution Agreement will continue in effect until April 30,
1994, and from year to year thereafter if approved by the Directors. At their
meeting held on April 17, 1996, the Directors, including all of the Independent
Directors, approved the most recent continuance of the Distribution Agreement
until April 30, 1997. The "Statement of Assets and Liabilities" set forth in the
Financial Statements contained within this Statement of Additional Information
illustrates the computation of the offering price for a share of the Fund on
August 31, 1996 and is incorporated herein by reference.

The Distributor has agreed to pay certain expenses of the offering of the
Fund's shares, including the costs of printing and distributing prospectuses and
supplements thereto used in connection with the offering and sale of the Fund's
shares. The Fund will bear the costs of initial typesetting, printing and
distribution to shareholders. The Fund and the Distributor have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act of 1933, as amended. Under the Distribution Agreement, the
Distributor uses its best efforts in rendering services to the Fund, but in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations, the Distributor is not liable to the Fund or any
of its shareholders for any error of judgment or mistake of law or for any act
or omission or for any losses sustained by the Fund or its shareholders.

20
<PAGE>

The Distributor has informed the Fund that it received sales charges on
sales of the Fund's shares in the approximate amounts of $2,208,000, $611,000
and $1,594,948 during the fiscal years ended August 31, 1994, 1995 and 1996,
respectively.

REDUCED SALES CHARGES

RIGHT OF ACCUMULATION. As discussed in the Prospectus, investors may
combine the current value of shares purchased in separate transactions for
purposes of benefitting from the reduced sales charges available for purchases
of shares of the Fund totalling at least $25,000 in net asset value. For
example, if any person or entity who qualifies for this privilege holds shares
of the Fund having a current value of $5,000, and purchases $20,000 of
additional shares of the Fund, the sales charge applicable to the $20,000
purchase would be 5% of the offering price.

For the purposes of this Right of Accumulation, the cumulative current net
asset value of any shares of Dean Witter Liquid Asset Fund Inc., Dean Witter
Tax-Free Daily Income Trust, Dean Witter New York Municipal Money Market Trust,
Dean Witter California Tax-Free Daily Income Trust, Dean Witter Short-Term U.S.
Treasury Trust, Dean Witter Short-Term Bond Fund, Dean Witter Balanced Income
Fund, Dean Witter Balanced Growth Fund, Dean Witter Intermediate Term U.S.
Treasury Trust, Dean Witter Limited Term Municipal Trust or Dean Witter U.S.
Government Money Market Trust originally purchased with the proceeds of shares
of the Fund or Dean Witter Tax-Exempt Securities Trust or with the proceeds of
shares of a Dean Witter Fund sold with a contingent deferred sales charge ("CDSC
fund") and held in an Exchange Privilege Account of that fund in the name of a
shareholder of the Fund (see "Shareholder Services -- Exchange Privilege") and
shares of Dean Witter Tax-Exempt Securities Trust or any CDSC fund held by the
shareholder will be added to the value of shares of the Fund owned by the
shareholder in determining the sales charge applicable to any new purchases of
Fund shares.

The Distributor must be notified by the selected broker-dealer or the
shareholder at the time a purchase order is placed that the purchase qualifies
for the reduced charge under the Right of Accumulation. Similar notification
must be made in writing by the selected broker-dealer or shareholder when such
an order is placed by mail. The reduced sales charge will not be granted if: (a)
such notification is not furnished at the time of the order; or (b) a review of
the records of the Distributor or Dean Witter Trust Company (the "Transfer
Agent") fails to confirm the investor's represented holdings.

LETTER OF INTENT. As discussed in the prospectus under the caption "Reduced
Sales Charges," reduced sales charges are available to investors who enter into
a written Letter of Intent providing for the purchase, within a thirteen-month
period, of shares of the Fund from the Distributor or from a single selected
broker-dealer which has entered into an agreement with the Distributor.

A Letter of Intent permits an investor to establish a total investment goal
to be achieved by any number of purchases over a thirteen-month period. Each
purchase made during the period will receive the reduced sales commission
applicable to the amount represented by the goal, as if it were a single
purchase. A number of shares equal in value to 5% of the dollar amount of the
Letter of Intent will be held in escrow by the Transfer Agent, in the name of
the shareholder. The initial purchase under a Letter of Intent must be equal to
at least 5% of the stated investment goal.

The Letter of Intent does not obligate the investor to purchase, nor the
Fund to sell, the indicated amount. In the event the Letter of Intent goal is
not achieved within the thirteen-month period, the investor is required to pay
the difference between the sales charge otherwise applicable to the purchases
made during this period and sales charges actually paid. Such payment may be
made directly to the Distributor or, if not paid, the Distributor is authorized
by the shareholder to liquidate a sufficient number of his or her escrowed
shares to obtain such difference.

If the goal is exceeded and purchases pass the next sales charge level, the
sales charge on the entire amount of the purchase that results in passing that
level and on subsequent purchases will be subject to further reduced sales
charges in the same manner as set forth above under RIGHT OF ACCUMULATION, but
there will be no retroactive reduction of sales charges on previous purchases.
For the purpose of determining whether the investor is entitled to a further
reduced sales charge applicable to purchases

21
<PAGE>
at or above a sales charge level which exceeds the stated goal of a Letter of
Intent, the cumulative current net asset value of any shares owned by the
investor in an Exchange Privilege Account with Dean Witter Liquid Asset Fund
Inc., Dean Witter Tax-Free Daily Income Trust, Dean Witter New York Municipal
Money Market Trust, Dean Witter California Tax-Free Daily Income Trust, Dean
Witter U.S. Government Money Market Trust, Dean Witter Limited Term Municipal
Trust, Dean Witter Short-Term Bond Fund, Dean Witter Short-Term U.S. Treasury
Trust, Dean Witter Balanced Income Fund, Dean Witter Balanced Growth Fund or
Dean Witter Intermediate Term U.S. Treasury Fund, if such shares were originally
purchased with the proceeds of shares of the Fund or Dean Witter Tax-Exempt
Securities Trust or a CDSC fund, held by the shareholder will be added to the
cost or net asset value of shares of the Fund owned by the investor. (See
"Shareholder Services -- Exchange Privilege.") However, shares of Dean Witter
Liquid Asset Fund Inc., Dean Witter Tax-Free Daily Income Trust, Dean Witter New
York Municipal Money Market Trust, Dean Witter California Tax-Free Daily Income
Trust, Dean Witter Short-Term U.S. Treasury Trust, Dean Witter Limited Term
Municipal Trust, Dean Witter Short-Term Bond Fund Dean Witter Balanced Income
Fund, Dean Witter Balanced Growth Fund, Dean Witter Intermediate Term U.S.
Treasury Fund or Dean Witter U.S. Government Money Market Trust held in an
Exchange Privilege Account and the purchase of shares of any other Dean Witter
Funds will not be included in determining whether the stated goal of a Letter of
Intent has been reached.

At any time while a Letter of Intent is in effect, a shareholder may, by
written notice to the Distributor, increase the amount of the stated goal. In
that event, only shares purchased during the previous 90-day period and still
owned by the shareholder will be included in the new sales charge reduction. The
5% escrow and minimum purchase requirements will be applicable to the new stated
goal. Investors electing to purchase shares of the Fund pursuant to a Letter of
Intent should carefully read such Letter of Intent.

ACQUISITION OF CERTAIN INVESTMENT COMPANIES. The public offering price of a
share of the Fund may be reduced to the net asset value per share in connection
with the acquisition of the assets of, or merger or consolidation with, a
personal holding company or a public or private investment company. The value of
the assets or company acquired in a tax-free transaction may, in appropriate
cases, be adjusted to reduce possible adverse tax consequences to the Fund which
might result from an acquisition of assets having net unrealized appreciation
which is disproportionately higher at the time of acquisition than the realized
or unrealized appreciation of the Fund.

DETERMINATION OF NET ASSET VALUE

As discussed in the Prospectus, the net asset value of a share of the Fund
is determined once daily at 4:00 p.m., New York time (or, on days when the New
York Stock Exchange closes prior to 4:00 p.m., at such earlier time) on each day
that the New York Stock Exchange is open. The New York Stock Exchange currently
observes the following holidays: New Year's Day; President's Day; Good Friday;
Memorial Day; Independence Day; Labor Day; Thanksgiving Day; and Christmas Day.

SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------

Upon the purchase of shares of the Fund, a Shareholder Investment Account is
opened for the investor on the books of the Fund, maintained by the Transfer
Agent. This is an open account in which shares owned by the investor are
credited by the Transfer Agent in lieu of issuance of a stock certificate. If a
stock certificate is desired, it must be requested in writing for each
transaction. Certificates are issued only for full shares and may be redeposited
in the account at any time. There is no charge to the investor for issuance of a
certificate. Whenever a shareholder instituted transaction takes place in the
Shareholder Investment Account, the shareholder will be mailed a confirmation of
the transaction from the Fund or from DWR or other selected broker-dealer.

TARGETED DIVIDENDS.-SM- In states where it is legally permissible,
shareholders may also have all income dividends and capital gains distributions
automatically invested in shares of an open-end Dean Witter Fund other than Dean
Witter High Yield Securities Inc. Such investment will be made as described
above for automatic investment in shares of the Fund, at the net asset value per
share (without

22
<PAGE>

sales charge) of the selected Dean Witter Fund as of the close of business on
the payment date of the dividend or distribution and will begin to earn
dividends, if any, in the selected Dean Witter Fund the next business day. To
participate in the Targeted Dividends program, shareholders should contact their
DWR or other selected broker-dealer account executive or the Transfer Agent.
Shareholders of the Fund must be shareholders of the Dean Witter Fund targeted
to receive investments from dividends at the time they enter the Targeted
Dividends program. Investors should review the prospectus of the targeted Dean
Witter Fund before entering the program.

EASYINVEST.-SM- Shareholders may subscribe to EasyInvest, an automatic
purchase plan which provides for any amount from $100 to $5,000 to be
transferred automatically from a checking or savings account, on a semi-monthly,
monthly or quarterly basis, to the Transfer Agent for investment in shares of
the Fund. Shares purchased through EasyInvest will be added to the shareholder's
existing account at the net asset value calculated the same business day the
transfer of funds is effected. For further information or to subscribe to
EasyInvest, shareholders should contact their DWR or other selected
broker-dealer account executive or the Transfer Agent.

INVESTMENT OF DISTRIBUTIONS RECEIVED IN CASH. As discussed in the
Prospectus, any shareholder who receives a cash payment representing a dividend
or capital gains distribution may invest such dividend or distribution at the
net asset value (without sales charge) next determined by returning the check or
the proceeds to the Transfer Agent within 30 days after the payment date. If the
shareholder returns the proceeds of a dividend or distribution, such funds must
be accompanied by a signed statement indicating that the proceeds constitute a
dividend or distribution to be invested. Such investment will be made at the net
asset value per share (without sales charge) next determined after receipt of
the proceeds by the Transfer Agent.

DIRECT INVESTMENTS THROUGH TRANSFER AGENT. A shareholder may make
additional investments in Fund shares at any time through the Shareholder
Investment Account by sending a check in any amount, not less than $100, payable
to Dean Witter High Yield Securities Inc., directly to the Fund's Transfer
Agent. After deduction of the applicable sales charge, the balance will be
applied to the purchase of Fund shares at the net asset value per share next
determined after receipt of the check or purchase payment by the Transfer Agent.
The shares so purchased will be credited to the investment account.

SYSTEMATIC WITHDRAWAL PLAN. As discussed in the Prospectus, a withdrawal
plan is available for shareholders who own or purchase shares of the Fund having
a minimum value of $10,000 based upon the then current offering price. The plan
provides for monthly or quarterly (March, June, September and December) checks
in any amount, not less than $25, or in any whole percentage of the account
balance, on an annualized basis.

Dividends and capital gains distributions on shares held under the
Systematic Withdrawal Plan will be invested in additional full and fractional
shares at net asset value (without a sales charge). Shares will be credited to
an open account for the investor by the Transfer Agent; no stock certificates
will be issued. A shareholder is entitled to a stock certificate upon written
request to the Transfer Agent, but in that event the shareholder's Systematic
Withdrawal Plan will be terminated.

The Transfer Agent acts as agent for the shareholder in tendering to the
Fund for redemption sufficient full and fractional shares to provide the amount
of the periodic withdrawal payment designated in the application. The shares
will be redeemed at their net asset value determined, at the shareholder's
option, on the tenth or twenty-fifth day (or next following business day) of the
relevant month or quarter and normally a check for the proceeds will be mailed
by the Transfer Agent within five business days after the date of redemption.
The Systematic Withdrawal Plan may be terminated at any time by the Transfer
Agent.

Any shareholder who wishes to have payments under the Withdrawal Plan made
to a third party or sent to an address other than the one listed on the account
must send complete written instructions to the Transfer Agent to enroll in the
Withdrawal Plan. The shareholder's signature on such instructions

23
<PAGE>
must be guaranteed by an eligible guarantor acceptable to the Transfer Agent
(shareholders should contact the Transfer Agent for a determination as to
whether a particular institution is an eligible guarantor). A shareholder may,
at any time, change the amount and interval of withdrawal payments through his
or her Account Executive or by written notification to the Transfer Agent. In
addition, the party and/or the address to which checks are mailed may be changed
by written notification to the Transfer Agent, with signature guarantees
required in the manner described above. The shareholder may also terminate the
Withdrawal Plan at any time by written notice to the Transfer Agent. In the
event of such termination, the account will be continued as a regular
shareholder investment account. The shareholder may also redeem all or part of
the shares held in the Withdrawal Plan account (see "Redemptions and
Repurchases" in the Prospectus) at any time.

EXCHANGE PRIVILEGE

As discussed in the Prospectus, the Fund makes available to its shareholders
an Exchange Privilege whereby shareholders of the Fund may exchange their shares
for shares of other Dean Witter Funds sold with a front-end (at time of
purchase) sales charge ("FESC funds"), for shares of Dean Witter Funds sold with
a contingent deferred sales charge ("CDSC funds"), for shares of five Dean
Witter Funds which are money market funds, and for shares of Dean Witter Limited
Term Municipal Trust, Dean Witter Short-Term Bond Fund, Dean Witter Short-Term
U.S. Treasury Trust, Dean Witter Balanced Income Fund, Dean Witter Balanced
Growth Fund, and Dean Witter Intermediate Term U.S. Treasury Trust. Exchanges
(hereinafter, the foregoing eleven non-CDSC funds and referred to as the
"Exchange Funds") may be made after the shares of the CDSC fund or FESC fund
acquired by purchase (not by exchange or dividend reinvestment) have been held
for 30 days. There is no holding period for exchanges of shares acquired by
exchange or dividend reinvestment. However, shares of CDSC funds, including
shares acquired in exchange for shares of FESC funds, may not be exchanged for
shares of FESC funds. Thus, shareholders who exchange their Fund shares for
shares of CDSC funds may subsequently exchange those shares for other CDSC
funds, or Exchange Funds but may not reacquire FESC fund shares by exchange. An
exchange will be treated for federal income tax purposes the same as a
repurchase or redemption of shares, on which the shareholder may realize a
capital gain or loss.

Any new account established through the Exchange Privilege will have the
same registration and cash dividend or dividend reinvestment plan as the present
account, unless the Transfer Agent receives written notification to the
contrary. For telephone exchanges, the exact registration of the existing
account and the account number must be provided.

Any shares held in certificate form cannot be exchanged but must be
forwarded to the Transfer Agent and deposited into the shareholder's account
before being eligible for exchange. (Certificates mailed in for deposit should
not be endorsed.)

With respect to exchanges, redemptions or repurchases, the Transfer Agent
shall be liable only for its own negligence and not for default or negligence of
its correspondents or for losses in transit. The Fund shall not be liable for
any default or negligence of the Transfer Agent. With respect to the redemption
or repurchase of shares of the Fund, the application of proceeds to the purchase
of new shares in the Fund or any other of the funds and the general
administration of the Exchange Privilege, the Transfer Agent acts as agent for
the Distributor and for the shareholder's Selected Broker-Dealer, if any, in the
performance of such functions. The Transfer Agent shall be liable for its own
negligence and not for the default or negligence of its correspondents or for
losses in transit. The Fund shall not be liable for
any default or negligence of the Transfer Agent, the Distributor or any Selected
Broker-Dealer.

The Distributor and any selected broker-dealer have authorized and appointed
the Transfer Agent to act as their agent in connection with the application of
proceeds of any redemption of Fund shares to the purchase of shares of any other
fund and the general administration of the Exchange Privilege. No commission or
discounts will be paid to the Distributor or any Dealer for any transactions
pursuant to this Exchange Privilege.

24
<PAGE>

Exchanges are subject to the minimum investment requirement and any other
conditions imposed by each fund. (The minimum initial investment is $5,000 for
Dean Witter Liquid Asset Fund Inc., Dean Witter Tax-Free Daily Income Trust,
Dean Witter New York Municipal Money Market Trust and Dean Witter California
Tax-Free Daily Income Trust although those funds may, at their discretion,
accept initial investments of as low as $1,000. The minimum initial investment
for Dean Witter Short-Term U.S. Treasury Trust is $10,000 although that fund
may, at its discretion, accept initial investments of as low as $5,000. The
minimum initial investment is $5,000 for Dean Witter Special Value Fund. The
minimum initial investment for all other Dean Witter Funds for which the
Exchange Privilege is available is $1,000.) Upon exchange into an Exchange Fund
the shares of that fund will be held in a special Exchange Privilege Account
separately from accounts of those shareholders who have acquired their shares
directly from that fund. As a result, certain services normally available to
shareholders of Exchange Funds, including the check writing feature, will not be
available for funds held in that account.

The Fund and each of the other Dean Witter Funds may limit the number of
times this Exchange Privilege may be exercised by any investor within a
specified period of time. Also, the Exchange Privilege may be terminated or
revised at any time by the Fund and/or any of the Dean Witter Funds for which
shares of the Fund have been exchanged, upon such notice as may be required by
applicable regulatory authorities (presently sixty days' prior written notice
for termination or material revision), provided that six months' prior written
notice of termination will be given to the shareholders who hold shares of
Exchange Funds, pursuant to this Exchange Privilege, and provided further that
the Exchange Privilege may be terminated or materially revised without notice at
times (a) when the New York Stock Exchange is closed for other than customary
weekends and holidays, (b) when trading on that Exchange is restricted, (c) when
an emergency exists as a result of which disposal by the Fund of securities
owned by it is not reasonably practicable or it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, (d) during any
other period when the Securities and Exchange Commission by order so permits
(provided that applicable rules and regulations of the Securities and Exchange
Commission shall govern as to whether the conditions prescribed in (b) or (c)
exist), or (e) if the Fund would be unable to invest amounts effectively in
accordance with its investment objective(s), policies and restrictions.

For further information regarding the Exchange Privilege, shareholders
should contact their DWR or other selected broker-dealer or the Transfer Agent.

REDEMPTIONS AND REPURCHASES
- --------------------------------------------------------------------------------

REDEMPTION. As stated in the Prospectus, shares of the Fund can be redeemed
for cash at any time at the net asset value per share next determined. If shares
are held in a shareholder's account without a share certificate, a written
request for redemption to the Fund's Transfer Agent at P.O. Box 983, Jersey
City, NJ 07303 is required. If certificates are held by the shareholder, the
shares may be redeemed by surrendering the certificates with a written request
for redemption. The share certificate, or an accompanying stock power, and the
request for redemption, must be signed by the shareholder or shareholders
exactly as the shares are registered. Each request for redemption, whether or
not accompanied by a share certificate, must be sent to the Fund's Transfer
Agent, which will redeem the shares at their net asset value next computed (see
"Purchase of Fund Shares" in the Prospectus) after it receives the request, and
certificate, if any, in good order. Any redemption request received after such
computation will be redeemed at the next determined net asset value. The term
"good order" means that the share certificate, if any, and request for
redemption are properly signed, accompanied by any documentation required by the
Transfer Agent, and bear signature guarantees when required by the Fund or the
Transfer Agent. If redemption is requested by a corporation, partnership, trust
or fiduciary, the Transfer Agent may require that written evidence of authority
acceptable to the Transfer Agent be submitted before such request is accepted.

Whether certificates are held by the shareholder or shares are held in a
shareholder's account, if the proceeds are to be paid to any person other than
the record owner, or if the proceeds are to be paid to a corporation (other than
the Distributor or a selected broker-dealer for the account of the shareholder),

25
<PAGE>
partnership, trust or fiduciary, or sent to the shareholder at an address other
than the registered address, signatures must be guaranteed by an eligible
guarantor acceptable to the Transfer Agent (shareholders should contact the
Transfer Agent for a determination as to whether a particular Institution is
such an eligible guarantor). A stock power may be obtained from any dealer or
commercial bank. The Fund may change the signature guarantee requirements from
time to time upon notice to shareholders, which may be by means of a revised
prospectus.

PAYMENT FOR SHARES REDEEMED OR REPURCHASED. As discussed in the Prospectus,
payment for shares presented for repurchase or redemption will be made by check
within seven days after receipt by the Transfer Agent of the certificate and/or
written request in good order. The term good order means that the Share
certificate, if any, and request for redemption are properly signed, accompanied
by any documentation required by the Transfer Agent, and bear signature
guarantees when required by the Fund or the Transfer Agent. Such payment may be
postponed or the right of redemption suspended at times (a) when the New York
Stock Exchange is closed for other than customary weekends and holidays, (b)
when trading on that Exchange is restricted, (c) when an emergency exists as a
result of which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund fairly to determine
the value of its net assets, or (d) during any other period when the Securities
and Exchange Commission by order so permits; provided that applicable rules and
regulations of the Securities and Exchange Commission shall govern as to whether
the conditions prescribed in (b) or (c) exist.

REINSTATEMENT PRIVILEGE. As described in the Prospectus, a shareholder who
has had his or her shares redeemed or repurchased and has not previously
exercised this reinstatement privilege may, within 30 days after the date of the
redemption or repurchase, reinstate any portion or all of the proceeds of such
redemption or repurchase in shares of the Fund at net asset value (without sales
charge) next determined after a reinstatement request, together with the
proceeds, is received by the Transfer Agent.

Exercise of the reinstatement privilege will not affect the federal income
tax treatment of any gain or loss realized upon the redemption or repurchase,
except that if the redemption or repurchase resulted in a loss and reinstatement
is made in shares of the Fund, some or all of the loss, depending on the amount
reinstated, will not be allowed as a deduction for federal income tax purposes
but will be applied to adjust the cost basis of the shares acquired upon
reinstatement.

INVOLUNTARY REDEMPTION. As described in the Prospectus, due to the
relatively high cost of handling small investments, the Fund reserves the right
to redeem, at net asset value, the shares of any shareholder whose shares have a
value of less than $100, or such lesser amount as may be fixed by the Board of
Directors. However, before the Fund redeems such shares and sends the proceeds
to the shareholder, it will notify the shareholder that the value of the shares
is less than $100 and allow him or her 60 days to make an additional investment
in an amount which will increase the value of his or her account to $100 or more
before the redemption is processed.

DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------

As discussed in the Prospectus, the Fund will determine either to distribute
or to retain all or part of any net long-term capital gains in any year for
reinvestment. If any such gains are retained, the Fund will pay federal income
tax thereon, and will notify shareholders that following an election by the
Fund, the shareholders will be required to include such undistributed gains in
determining their taxable income and may claim their share of the tax paid by
the Fund as a credit against their individual federal income tax.

In computing net investment income, the Fund will 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 discounts on tax-exempt bonds
issued after July 18, 1984, and all bonds purchased after April 30, 1993, a
portion of any capital

26
<PAGE>
gain realized upon disposition may be re-characterized as taxable ordinary
income in accordance with the provisions of the Internal Revenue Code. Realized
gains and losses on security transactions are determined on the identified cost
method. Dividend income is recorded on the ex-dividend date.

Gains or losses on the sales of securities by the Fund will be long-term
capital gains or losses if the securities have been held by the Fund for more
than twelve months. Gains or losses on the sale of securities held for twelve
months or less will be short-term capital gains or losses. In determining
amounts to be distributed, capital gains will be offset by any capital loss
carryovers incurred in prior years.

At August 31, 1996, the Fund had net capital loss carryovers of
approximately $937,446,000 of which, $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, $45,208,000 will be available through August
31, 2001, $166,406,000 will be available through August 31, 2002, $50,598,000
will be available through August 31, 2003, and $23,294,000 will be available
through August 31, 2004 to offset future capital gains to the extent provided by
regulations. Capital losses incurred after October 31 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,
$13,146,000 during fiscal year 1996.

Any dividend or capital gains distribution received by a shareholder from an
investment company will have the effect of reducing the net asset value of the
shareholder's stock in that company by the exact amount of the dividend or
capital gains distribution. Furthermore, capital gains distributions and some
portion of the dividends are subject to federal income taxes. If the net asset
value of the shares should be reduced below a shareholder's cost as a result of
the payment of dividends or realized long-term capital gains, such payment would
be in part a return of the shareholder's investment to the extent of such
reduction below the shareholder's cost, but nonetheless would be taxable to the
shareholder. Therefore, an investor should consider the tax implications of
purchasing Fund shares immediately prior to a distribution record date.

Shareholders should consult their attorneys or tax advisers regarding
specific questions as to state or local taxes and as to the applicability of the
foregoing to their current federal tax situation.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

As discussed in the Prospectus, from time to time the Fund may quote its
"yield" and/or its "total return" in advertisements and sales literature. Yield
is calculated for any 30-day period as follows: the amount of interest and/or
dividend income for each security in the Fund's portfolio is determined in
accordance with regulatory requirements; the total for the entire portfolio
constitutes the Fund's gross income for the period. Expenses accrued during the
period are subtracted to arrive at "net investment income". The resulting amount
is divided by the product of the maximum offering price per share on the last
day of the period multiplied by the average number of Fund shares outstanding
during the period that were entitled to dividends. This amount is added to 1 and
raised to the sixth power. 1 is then subtracted from the result and the
difference is multiplied by 2 to arrive at the annualized yield. For the 30-day
period ended August 31, 1996, the Fund's yield, calculated pursuant to this
formula was 11.73%.

The Fund's "average annual total return" represents an annualization of the
Fund's total return over a particular period and is computed by finding the
annual percentage rate which will result in the ending redeemable value of a
hypothetical $1,000 investment made at the beginning of a one, five or ten year
period, or for the period from the date of commencement of the Fund's
operations, if shorter than any of the foregoing. For the purpose of this
calculation, it is assumed that all dividends and distributions are reinvested.
The formula for computing the average annual total return involves a percentage
obtained by dividing the ending redeemable value by the amount of the initial
investment, taking a root of the quotient (where the root is equivalent to the
number of years in the period) and subtracting 1 from the result. The

27
<PAGE>

average annual total returns of the Fund for the year ended August 31, 1996, for
the five years ended August 31, 1996, and for the ten years ended August 31,
1996, were 4.96%, 14.47% and 5.92%, respectively.

In addition to the foregoing, the Fund may advertise its total return over
different periods of time by means of aggregate, average, year-by-year or other
types of total return figures. Such calculation may or may not reflect the
imposition of the maximum front end sales charge which, if reflected, would
reduce the performance quoted. For example, the average annual total return of
the Fund in the manner described in the preceding paragraph, but without the
deduction for any applicable sales charge. Based on the foregoing calculation,
the Fund's total return for year ended August 31, 1996 was 11.07%, the total
return for the five years ended August 31, 1996 was 15.77% and the total return
for the ten years ended August 31, 1996 was 6.53%.

In addition, the Fund may compute its aggregate total return for specified
periods by determining the aggregate percentage rate which will result in the
ending value of a hypothetical $1,000 investment made at the beginning of the
period. For the purpose of this calculation, it is assumed that all dividends
and distributions are reinvested. The formula for computing aggregate total
return involves a percentage obtained by dividing the ending value (without
reduction for any sales charge) by the initial $1,000 investment and subtracting
1 from the result. Based on the foregoing calculation, the Fund's total return
for the year ended August 31, 1996 was 11.07%, the total return for the
five-year period ended August 31, 1996 was 107.95%, and the total return for the
ten years ended August 31, 1996 was 88.16%.

The Fund may advertise the growth of a hypothetical investment of $10,000,
$50,000 or $100,000 in shares of the Fund by adding 1 to the Fund's aggregate
total return to date and multiplying by $9,450, $47,875 or $96,750 ($10,000,
$50,000 or $100,000 adjusted for a 5.5%, 4.25% or 3.25% sales charge). An
investment of $10,000, adjusted for the 5.5% sales charge, in the Fund at
inception would have grown to $45,359 at August 31, 1996. An investment of
$50,000, adjusted for a 4.25% sales charge would have grown to $229,795 at
August 31, 1996. An investment of $100,000, adjusted for a 3.25% sales charge,
would have grown to $464,390 at August 31, 1996. The Fund from time to time may
also advertise its performance relative to certain performance rankings and
indexes compiled by independent organizations.

DESCRIPTION OF COMMON STOCK
- --------------------------------------------------------------------------------

The Fund is authorized to issue 400,000,000 shares of common stock of $0.01
par value. Shares of the Fund, when issued, are fully paid, non-assessable,
fully transferable and redeemable at the option of the holder. All shares are
equal as to earnings, assets and voting privileges. There are no conversion,
preemptive or other subscription rights. In the event of liquidation, each share
of common stock of the Fund is entitled to its portion of all of the Fund's
assets after all debts and expenses have been paid. Except for agreements
entered into by the Fund in its ordinary course of business within the
limitations of the Fund's fundamental investment policies (which may be modified
only by shareholder vote), the Fund will not issue any securities other than
common stock.

The shares of the Fund do not have cumulative voting rights, which means
that the holders of more than 50% of the shares voting for the election of
directors can elect 100% of the directors if they choose to do so, and in such
event, the holders of the remaining less than 50% of the shares voting for the
election of directors will not be able to elect any person or persons to the
Board of Directors.

CUSTODIAN AND TRANSFER AGENT
- --------------------------------------------------------------------------------

The Bank of New York, 90 Washington Street, New York, New York 10286 is the
Custodian of the Fund's assets. Any of the Fund's cash balances with the
Custodian in excess of $100,000 are unprotected by federal deposit insurance.
Such balances may, at times, be substantial.

28
<PAGE>
The Chase Manhattan Bank, One Chase Plaza, New York, New York 10005 acts as
Sub-Custodian for portfolio securities held outside the United States, if any,
and has contracted with various foreign banks and depositories to hold such
portfolio securities on behalf of the Fund.

Dean Witter Trust Company, Harborside Financial Center, Plaza Two, Jersey
City, New Jersey 07311 is the Transfer Agent of the Fund's shares and Dividend
Disbursing Agent for payment of dividends and distributions on Fund shares and
Agent for shareholders under various investment plans described herein. Dean
Witter Trust Company is an affiliate of Dean Witter InterCapital Inc., the
Fund's Investment Manager and of Dean Witter Distributors Inc, the Fund's
Distributor. As Transfer Agent and Dividend Disbursing Agent, Dean Witter Trust
Company's responsibilities include maintaining shareholder accounts, including
providing subaccounting and recordkeeping services for certain retirement
accounts; disbursing cash dividends and reinvesting dividends; processing
account registration changes; handling purchase and redemption transactions;
mailing prospectuses and reports; mailing and tabulating proxies; processing
share certificate transactions; and maintaining shareholder records and lists.
For these services Dean Witter Trust Company receives a per shareholder account
fee.

INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------

Price Waterhouse LLP serves as the independent accountants of the Fund. The
independent accountants are responsible for auditing the annual financial
statements of the Fund.

REPORTS TO SHAREHOLDERS
- --------------------------------------------------------------------------------

The Fund will send to shareholders, at least semi-annually, reports showing
the Fund's portfolio and other information. An annual report, containing
financial statements, together with a report by its independent accountants,
will be sent to shareholders each year.

The Fund's fiscal year ends on August 31. The financial statements of the
Fund must be audited at least once a year by independent accountants whose
selection is made annually by the Fund's Board of Directors.

LEGAL COUNSEL
- --------------------------------------------------------------------------------

Sheldon Curtis, Esq., who is an officer and the General Counsel of the
Investment Manager, is an officer and the General Counsel of the Fund.

EXPERTS
- --------------------------------------------------------------------------------

The financial statements of the Fund for the year ended August 31, 1996
included in this Statement of Additional Information and incorporated by
reference in the Prospectus have been so included and incorporated in reliance
on the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

REGISTRATION STATEMENT
- --------------------------------------------------------------------------------

This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Fund has
filed with the Securities and Exchange Commission. The complete Registration
Statement may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed by the rules and regulations of the Commission.

29
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1996

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (87.6%)
AEROSPACE (1.6%)
$ 9,000 Sabreliner Corp. (Series B)................. 12.50 % 04/15/03 $ 7,515,000
---------------
AUTOMOTIVE (3.5%)
4,000 APS, Inc.................................... 11.875 01/15/06 4,260,000
7,700 Envirotest Systems, Inc..................... 9.125 03/15/01 6,930,000
6,018 Envirotest Systems, Inc..................... 9.625 04/01/03 4,694,040
---------------
15,884,040
---------------
BROADCAST MEDIA (2.9%)
4,000 Adams Outdoor Advertising................... 10.75 03/15/06 4,090,000
4,000 Paxson Communications Corp.................. 11.625 10/01/02 4,190,000
5,000 Spanish Broadcasting System, Inc............ 7.50 06/15/02 5,150,000
---------------
13,430,000
---------------
BUSINESS SERVICES (4.1%)
4,072 Anacomp, Inc................................ 13.00+ 06/04/02 4,010,920
2,000 Pierce Leahy Corp. - 144A*.................. 11.125 07/15/06 2,085,000
12,000 Xerox Corp.................................. 15.00 06/10/97 12,788,280
---------------
18,884,200
---------------
CABLE & TELECOMMUNICATIONS (13.0%)
9,180 Adelphia Communications Corp. (Series B).... 9.50+ 02/15/04 7,561,987
5,000 American Communications Services, Inc....... 12.75++ 04/01/06 2,600,000
12,000 AT&T Capital Corp........................... 15.00 05/05/97 12,680,640
5,000 Charter Communication South East L.P.
(Series B).................................. 11.25 03/15/06 4,975,000
5,373 Falcon Holdings Group L.P. (Series B)....... 11.00+ 09/15/03 4,875,624
5,000 Hyperion Communication - 144A*.............. 13.00++ 04/15/03 2,775,000
28,500 In-Flight Phone Corp. (Series B)............ 14.00++ 05/15/02 10,687,500
4,000 IXC Communications Inc. (Series B).......... 12.50 10/01/05 4,120,000
5,050 Peoples Telephone Co., Inc.................. 12.25 07/15/02 5,087,875
4,000 Rifkin Acquisition Partners L.P............. 11.125 01/15/06 4,015,000
---------------
59,378,626
---------------
COMPUTER EQUIPMENT (3.9%)
4,000 Advanced Micro Devices...................... 11.00 08/01/03 4,070,000
5,000 Unisys Corp................................. 15.00 07/01/97 5,300,000
7,900 Unisys Corp. (Conv.)........................ 8.25 03/15/06 8,770,738
---------------
18,140,738
---------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
30
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1996, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CONSUMER PRODUCTS (1.2%)
$ 5,500 J.B Williams Holdings, Inc.................. 12.00 % 03/01/04 $ 5,527,500
---------------
CONTAINERS (3.3%)
8,000 Ivex Holdings Corp. (Series B).............. 13.25++ 03/15/05 5,040,000
5,000 Mail-Well Corp.............................. 10.50 02/15/04 4,900,000
5,000 Packaging Resources Inc. - 144A*............ 11.625 05/01/03 5,075,000
---------------
15,015,000
---------------
ELECTRICAL & ALARM SYSTEMS (2.0%)
11,000 Mosler, Inc................................. 11.00 04/15/03 9,295,000
---------------
ENTERTAINMENT/GAMING & LODGING (8.5%)
4,000 AMF Group Inc. - 144A*...................... 10.875 03/15/06 4,000,000
9,000 Fitzgeralds Gaming Corp. (Units)++.......... 13.00 12/31/02 6,750,000
5,000 Lady Luck Gaming Finance Corp............... 11.875 03/01/01 4,925,000
8,000 Motels of America, Inc. (Series B).......... 12.00 04/15/04 7,200,000
4,000 Players International, Inc.................. 10.875 04/15/05 3,940,000
4,000 Plitt Theaters, Inc. (Canada)............... 10.875 06/15/04 4,040,000
41,950 Spectravision, Inc. (a)..................... 11.65 12/01/02 4,213,778
4,000 Station Casinos, Inc........................ 9.625 06/01/03 3,820,000
---------------
38,888,778
---------------
FOODS & BEVERAGES (8.1%)
21,271 Envirodyne Industries, Inc.................. 10.25 12/01/01 18,931,190
42,650 Specialty Foods Acquisition Corp. (Series
B).......................................... 13.00++ 08/15/05 18,339,550
---------------
37,270,740
---------------
HEALTHCARE (1.4%)
8,250 Unilab Corp................................. 11.00 04/01/06 6,517,500
---------------
MANUFACTURING (5.5%)
4,150 Alpine Group, Inc........................... 12.25 07/15/03 4,305,625
5,000 Berry Plastics Corp......................... 12.25 04/15/04 5,350,000
4,000 Exide Electronics Group, Inc. (Series B).... 11.50 03/15/06 4,040,000
5,000 International Wire Group, Inc............... 11.75 06/01/05 5,118,750
7,000 Uniroyal Technology Corp.................... 11.75 06/01/03 6,650,000
---------------
25,464,375
---------------
MANUFACTURING - DIVERSIFIED (6.5%)
4,000 Foamex L.P.................................. 11.875 10/01/04 4,200,000
5,000 Interlake Corp.............................. 12.125 03/01/02 5,112,500
5,000 J.B. Poindexter & Co., Inc.................. 12.50 05/15/04 4,775,000
6,030 Jordan Industries, Inc...................... 10.375 08/01/03 5,834,025
13,420 Jordan Industries, Inc...................... 11.75++ 08/01/05 9,930,800
5,000 Starcraft Industrial Corp. (a).............. 16.50 01/15/98 --
---------------
29,852,325
---------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
31
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1996, CONTINUED

TOTAL CORPORATE BONDS
(IDENTIFIED COST $459,074,347)....................................... 403,093,418
---------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
32
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1996, CONTINUED

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (b) (4.4%)
AUTOMOTIVE (0.0%)
709 Northern Holdings Industrial Corp. (Restricted) (c)..................... $ --
---------------
COMPUTER EQUIPMENT (0.1%)
477,769 Memorex Telex NV (ADR) (Netherlands) (c)................................ 582,281
---------------
ENTERTAINMENT/GAMING & LODGING (0.1%)
7,500 Motels of America, Inc. - 144A*......................................... 525,000
781,421 Vagabond Inns, Inc. (Class D) (a)....................................... --
---------------
525,000
---------------
FOODS & BEVERAGES (1.0%)
489,055 Seven-Up/RC Bottling Co. Southern California, Inc. (c).................. 4,156,969
273,750 Specialty Foods Acquisition Corp. - 144A*............................... 410,625
---------------
4,567,594
---------------
MANUFACTURING - DIVERSIFIED (3.0%)
671,263 Thermadyne Holdings Corp. (c)........................................... 14,013,516
---------------
PUBLISHING (0.1%)
15,000 Affiliated Newspapers Investments, Inc. (Class B)....................... 525,000
---------------
RESTAURANTS (0.1%)
26,057 American Restaurant Group Holdings, Inc. - 144A*........................ 260,570
---------------
TEXTILES (0.0%)
12,000 JPS Textile Group, Inc. (Class A)....................................... --
---------------

TOTAL COMMON STOCKS
(IDENTIFIED COST $85,779,555)........................................... 20,473,961
---------------

PREFERRED STOCKS (b) (0.4%)
ENTERTAINMENT/GAMING & LODGING (0.4%)
80,000 Fitzgeralds Gaming Corp. (Units)++...................................... 1,620,000
---------------
OIL & GAS PRODUCTS (0.0%)
113,955 TGX Corp. (Series A) (c)................................................ 1,139
---------------

TOTAL PREFERRED STOCKS
(IDENTIFIED COST $2,830,000)............................................ 1,621,139
---------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
33
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1996, CONTINUED

<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS (b) (0.2%)
AEROSPACE (0.0%)
9,000 Sabreliner Corp. - 144A*................................. 04/15/03 $ 90,000
---------------
CABLE & TELECOMMUNICATIONS (0.1%)
5,000 Hyperion Communication - 144A*........................... 04/01/01 50,000
27,600 In-Flight Phone Corp. - 144A*............................ 08/31/02 276,281
---------------
326,281
---------------
CONTAINERS (0.0%)
10,000 Crown Packaging Holdings, Ltd. (Canada) - 144A*.......... 11/01/03 --
---------------
ENTERTAINMENT/GAMING & LODGING (0.0%)
5,000 Boomtown, Inc. - 144A*................................... 11/01/98 --
13,052 Casino America, Inc...................................... 11/15/96 --
8,312 Fitzgeralds Gaming Corp.................................. 12/19/98 37,407
3,500 Fitzgeralds South Inc. - 144A*........................... 03/15/99 --
---------------
37,407
---------------
MANUFACTURING (0.1%)
4,000 Exide Electronics Group, Inc. - 144A*.................... 03/15/06 80,000
70,000 Uniroyal Technology Corp................................. 06/01/03 96,250
---------------
176,250
---------------
OIL & GAS (0.0%)
15,180 Empire Gas Corp.......................................... 07/15/04 151,800
---------------
RETAIL (0.0%)
10,000 County Seat Holdings Co.................................. 10/15/98 100,000
---------------

TOTAL WARRANTS
(IDENTIFIED COST $2,992,791).......................................... 881,738
---------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
34
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1996, CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS (5.2%)
U.S. GOVERNMENT AGENCIES (d) (5.0%)
$ 12,900 Federal Home Loan Banks..................... 5.16 % 09/03/96 $ 12,896,302
10,000 Federal National Mortgage Assoc............. 5.20 09/06/96 9,992,778
---------------

TOTAL U.S. GOVERNMENT AGENCIES
(AMORTIZED COST $22,889,080)......................................... 22,889,080
---------------

REPURCHASE AGREEMENT (0.2%)
999 The Bank of New York (dated 08/30/96;
proceeds $999,231; collateralized by
$1,134,189 Federal National Mortgage Assoc.
6.50% due 03/25/23 valued at $1,018,635)
(Identified Cost $998,662).................. 5.125 09/03/96 998,662
---------------

TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $23,887,742)........................................ 23,887,742
---------------

TOTAL INVESTMENTS
(IDENTIFIED COST $574,564,435) (E)........... 97.8% 449,957,998

OTHER ASSETS IN EXCESS OF LIABILITIES........ 2.2 10,244,841
----- ------------

NET ASSETS................................... 100.0% $460,202,839
----- ------------
----- ------------

<FN>
- ---------------------
ADR American Depository Receipt.
* 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; issuer in bankruptcy.
(b) Non-income producing securities.
(c) Acquired through exchange offer.
(d) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(e) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation was $16,754,848 and the
aggregate gross unrealized depreciation was $141,361,285, resulting in net
unrealized depreciation of $124,606,437.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
35
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $574,564,435)............................ $ 449,957,998
Receivable for:
Interest................................................ 11,041,222
Capital stock sold...................................... 609,887
Prepaid expenses and other assets........................... 30,020
--------------

TOTAL ASSETS........................................... 461,639,127
--------------

LIABILITIES:
Payable for:
Dividends to shareholders............................... 926,442
Investment management fee............................... 194,706
Capital stock repurchased............................... 145,004
Accrued expenses and other payables......................... 170,136
--------------

TOTAL LIABILITIES...................................... 1,436,288
--------------

NET ASSETS:
Paid-in-capital............................................. 1,528,089,659
Net unrealized depreciation................................. (124,606,437)
Accumulated undistributed net investment income............. 10,337,288
Accumulated net realized loss............................... (953,617,671)
--------------

NET ASSETS............................................. $ 460,202,839
--------------
--------------

NET ASSET VALUE PER SHARE,
68,542,004 SHARES OUTSTANDING (400,000,000 SHARES
AUTHORIZED OF $.01 PAR VALUE).............................
$6.71
--------------
--------------

MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.82% OF NET ASSET VALUE)*..........
$7.10
--------------
--------------

<FN>
- ---------------------
* On sales of $25,000 or more, the offering price is reduced.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
36
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1996

<TABLE>
<S> <C>
NET INVESTMENT INCOME:

INTEREST INCOME............................................. $ 58,749,969
------------

EXPENSES
Investment management fee................................... 2,271,578
Transfer agent fees and expenses............................ 539,994
Custodian fees.............................................. 59,401
Shareholder reports and notices............................. 57,480
Professional fees........................................... 35,218
Registration fees........................................... 34,963
Directors' fees and expenses................................ 16,072
Other....................................................... 13,132
------------

TOTAL EXPENSES......................................... 3,027,838
------------

NET INVESTMENT INCOME.................................. 55,722,131
------------

NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss........................................... (17,329,860)
Net change in unrealized depreciation....................... 9,730,771
------------

NET LOSS............................................... (7,599,089)
------------

NET INCREASE................................................ $ 48,123,042
------------
------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
37
<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, 1996 AUGUST 31, 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C>

INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment income....................................... $ 55,722,131 $ 54,062,648
Net realized loss........................................... (17,329,860) (20,016,987)
Net change in unrealized depreciation....................... 9,730,771 15,205,812
--------------- ---------------

NET INCREASE........................................... 48,123,042 49,251,473

Dividends from net investment income........................ (51,517,938) (54,031,376)

Net increase (decrease) from capital stock transactions..... 8,152,392 (17,637,501)
--------------- ---------------

TOTAL INCREASE (DECREASE).............................. 4,757,496 (22,417,404)

NET ASSETS:
Beginning of period......................................... 455,445,343 477,862,747
--------------- ---------------

END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$10,337,288 AND $6,133,095, RESPECTIVELY)............... $ 460,202,839 $ 455,445,343
--------------- ---------------
--------------- ---------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
38
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1996

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's primary investment objective is to
earn a high level of current income and, as a secondary objective, capital
appreciation, but only when consistent with its primary objective. The Fund was
incorporated in Maryland on June 14, 1979.

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, 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 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.
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 except where collection is not expected.

39
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1996, 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, 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.

40
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1996, CONTINUED

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, 1996, aggregated
$393,514,207 and $415,856,430, respectively.

Dean Witter Trust Company, an affiliate of the Investment Manager, is the Fund's
transfer agent. At August 31, 1996, the Fund had transfer agent fees and
expenses payable of approximately $57,000.

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,
1996 included in Directors' fees and expenses in the Statement of Operations
amounted to $1,274. At August 31, 1996, the Fund had an accrued pension
liability of $49,856 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, 1996, it received
approximately $1,595,000 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 FOR THE YEAR
ENDED ENDED
AUGUST 31, 1996 AUGUST 31, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 7,479,221 $ 50,396,628 4,185,702 $ 27,764,909
Reinvestment of dividends........................................ 3,993,442 26,742,126 4,187,296 27,351,637
----------- -------------- ----------- ------------
11,472,663 77,138,754 8,372,998 55,116,546
Repurchased...................................................... (10,236,571) (68,986,362) (10,983,714) (72,754,047)
----------- -------------- ----------- ------------
Net increase (decrease).......................................... 1,236,092 $ 8,152,392 (2,610,716) $(17,637,501)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>

41
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1996, CONTINUED

5. FEDERAL INCOME TAX STATUS

At August 31, 1996, the Fund had an approximate net capital loss carryover, to
offset future capital gains to the extent provided by regulations, which is
available through August 31 in the following years:

<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
- ---------------------------------------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002 2003 2004 TOTAL
- ----------- ----------- ------------- ------------- ----------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 94,246 $ 82,210 $ 292,752 $ 182,732 $ 45,208 $ 166,406 $ 50,598 $ 23,294 $ 937,446
- ----------- ----------- ------------- ------------- ----------- ------------- ----------- ----------- -------------
- ----------- ----------- ------------- ------------- ----------- ------------- ----------- ----------- -------------
</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 $13,146,000 during fiscal 1996.

At August 31, 1996, 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, 1996,
paid-in-capital was charged and accumulated net realized loss was credited
$37,795,049.

42
<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
-------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
- -------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE
OPERATING PERFORMANCE:

Net asset value,
beginning of
period.......... $ 6.77 $ 6.83 $ 7.58 $ 7.23 $ 5.92 $ 6.78 $ 10.40 $ 11.99 $ 13.72 $ 14.16
--------- -------- -------- --------- -------- -------- --------- -------- --------- ---------

Net investment
income.......... 0.83 0.80 0.79 0.89 0.95 0.94 1.48 1.67 1.84 1.82
Net realized and
unrealized gain
(loss).......... (0.12) (0.06) (0.68) 0.54 1.04 (0.86) (3.78) (1.48) (1.77) (0.46)
--------- -------- -------- --------- -------- -------- --------- -------- --------- ---------

Total from
investment
operations...... 0.71 0.74 0.11 1.43 1.99 0.08 (2.30) 0.19 0.07 1.36
--------- -------- -------- --------- -------- -------- --------- -------- --------- ---------

Less dividends
and
distributions
from:
Net investment
income........ (0.77) (0.80) (0.86) (1.08) (0.68) (0.94) (1.32) (1.75) (1.80) (1.80)
Paid-in-capital... -- -- -- -- -- -- -- (0.03) -- --
--------- -------- -------- --------- -------- -------- --------- -------- --------- ---------

Total dividends
and
distributions... (0.77) (0.80) (0.86) (1.08) (0.68) (0.94) (1.32) (1.78) (1.80) (1.80)
--------- -------- -------- --------- -------- -------- --------- -------- --------- ---------

Net asset value,
end of period... $ 6.71 $ 6.77 $ 6.83 $ 7.58 $ 7.23 $ 5.92 $ 6.78 $ 10.40 $ 11.99 $ 13.72
--------- -------- -------- --------- -------- -------- --------- -------- --------- ---------
--------- -------- -------- --------- -------- -------- --------- -------- --------- ---------

TOTAL INVESTMENT
RETURN+.......... 11.07% 11.98% 0.93% 22.29% 35.46% 4.67% (23.28)% 1.39% 0.97% 10.07%

RATIOS TO
AVERAGE NET
ASSETS:
Expenses......... 0.66% 0.79% 0.69% 0.67% 0.77% 0.87% 0.60% 0.49% 0.49% 0.51%

Net investment
income.......... 12.27% 12.06% 10.40% 12.14% 13.96% 16.47% 17.67% 14.61% 14.79% 12.83%

SUPPLEMENTAL DATA:
Net assets, end
of period, in
millions........ $460 $455 $478 $540 $512 $436 $690 $1,794 $2,140 $2,034

Portfolio
turnover rate... 49% 74% 127% 173% 113% 93% 21% 55% 107% 176%
<FN>

- ---------------------
+ Does not reflect the deduction of sales load. Calculated based on the net
asset value as of the last business day of the period.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS

43
<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, 1996, 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 at August
31, 1996 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, 1996

44
<PAGE>

DEAN WITTER HIGH YIELD SECURITIES INC.

PART C OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) FINANCIAL STATEMENTS

(1) Financial statements and schedules, included
in Prospectus (Part A): Page in
Prospectus
----------
Financial highlights for the years August 31,
1987, 1988, 1989, 1990, 1991, 1992, 1993,
1994, 1995 and 1996..........................................4

(2) Financial statements included in the Statement of
Additional Information (Part B): Page in
SAI
---
Portfolio of Investments at August 31, 1996..................30

Statement of assets and liabilities at
August 31, 1996..............................................36

Statement of operations for the year ended
August 31, 1996..............................................37

Statement of changes in net assets for the
years ended August 31, 1995 and 1996.........................38

Notes to Financial Statements................................39

Financial highlights for the years August 31,
1987, 1988, 1989, 1990, 1991, 1992, 1993,
1994, 1995 and 1996..........................................43

(3) Financial statements included in Part C:

None

(b) EXHIBITS:

8. -- Amendment to the Custodian Agreement between Registrant and The
Bank of New York

11. -- Consent of Independent Accountants

16. -- Schedules for Computation of Performance Quotations

<PAGE>

27. -- Financial Data Schedule

________________________________
All other exhibits previously filed and incorporated
by reference.

Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

None

Item 26. NUMBER OF HOLDERS OF SECURITIES.

(1) (2)
Number of Record Holders
Title of Class at October 1, 1996
-------------- ------------------------

Shares of Common Stock 33,954

Item 27. INDEMNIFICATION.

Reference is made to Section 3.15 of the Registrant's By-Laws and Section
2-418 of the Maryland General Corporation Law.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant

2
<PAGE>

pursuant to the foregoing provisions or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer, or controlling person of the Registrant in
connection with the successful defense of any action, suit or proceeding) is
asserted against the Registrant by such director, officer or controlling person
in connection with the shares being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act, and will
be governed by the final adjudication of such issue.

The Registrant hereby undertakes that it will apply the indemnification
provision of its by-laws in a manner consistent with Release 11330 of the
Securities and Exchange Commission under the Investment Company Act of 1940, so
long as the interpretation of Sections 17(h) and 17(i) of such Act remains in
effect.

Registrant, in conjunction with the Investment Manager, Registrant's
Directors, and other registered investment management companies managed by the
Investment Manager, maintains insurance on behalf of any person who is or was a
Director, officer, employee, or agent of Registrant, or who is or was serving at
the request of Registrant as a trustee, director, officer, employee or agent of
another trust or corporation, against any liability asserted against him and
incurred by him or arising out of his position. However, in no event will
Registrant maintain insurance to indemnify any such person for any act for which
Registrant itself is not permitted to indemnify him.

Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

See "The Fund and Its Management" in the Prospectus regarding the business
of the investment adviser. The following information is given regarding
officers of Dean Witter InterCapital Inc. InterCapital is a wholly-owned
subsidiary of Dean Witter, Discover & Co. The principal address of the Dean
Witter Funds is Two World Trade Center, New York, New York 10048.

The term "Dean Witter Funds" used below refers to the following registered
investment companies:

CLOSED-END INVESTMENT COMPANIES
(1) InterCapital Income Securities Inc.

3
<PAGE>

(2) High Income Advantage Trust
(3) High Income Advantage Trust II
(4) High Income Advantage Trust III
(5) Municipal Income Trust
(6) Municipal Income Trust II
(7) Municipal Income Trust III
(8) Dean Witter Government Income Trust
(9) Municipal Premium Income Trust
(10) Municipal Income Opportunities Trust
(11) Municipal Income Opportunities Trust II
(12) Municipal Income Opportunities Trust III
(13) Prime Income Trust
(14) InterCapital Insured Municipal Bond Trust
(15) InterCapital Quality Municipal Income Trust
(16) InterCapital Quality Municipal Investment Trust
(17) InterCapital Insured Municipal Income Trust
(18) InterCapital California Insured Municipal Income Trust
(19) InterCapital Insured Municipal Trust
(20) InterCapital Quality Municipal Securities
(21) InterCapital New York Quality Municipal Securities
(22) InterCapital California Quality Municipal Securities
(23) InterCapital Insured California Municipal Securities
(24) InterCapital Insured Municipal Securities

OPEN-END INVESTMENT COMPANIES:
(1) Dean Witter Short-Term Bond Fund
(2) Dean Witter Tax-Exempt Securities Trust
(3) Dean Witter Tax-Free Daily Income Trust
(4) Dean Witter Dividend Growth Securities Inc.
(5) Dean Witter Convertible Securities Trust
(6) Dean Witter Liquid Asset Fund Inc.
(7) Dean Witter Developing Growth Securities Trust
(8) Dean Witter Retirement Series
(9) Dean Witter Federal Securities Trust
(10) Dean Witter World Wide Investment Trust
(11) Dean Witter U.S. Government Securities Trust
(12) Dean Witter Select Municipal Reinvestment Fund
(13) Dean Witter High Yield Securities Inc.
(14) Dean Witter Intermediate Income Securities
(15) Dean Witter New York Tax-Free Income Fund
(16) Dean Witter California Tax-Free Income Fund
(17) Dean Witter Health Sciences Trust
(18) Dean Witter California Tax-Free Daily Income Trust
(19) Dean Witter Global Asset Allocation Fund
(20) Dean Witter American Value Fund
(21) Dean Witter Strategist Fund
(22) Dean Witter Utilities Fund
(23) Dean Witter World Wide Income Trust
(24) Dean Witter New York Municipal Money Market Trust
(25) Dean Witter Capital Growth Securities
(26) Dean Witter Precious Metals and Minerals Trust
(27) Dean Witter European Growth Fund Inc.

4
<PAGE>

(28) Dean Witter Global Short-Term Income Fund Inc.
(29) Dean Witter Pacific Growth Fund Inc.
(30) Dean Witter Multi-State Municipal Series Trust
(31) Dean Witter Premier Income Trust
(32) Dean Witter Short-Term U.S. Treasury Trust
(33) Dean Witter Diversified Income Trust
(34) Dean Witter U.S. Government Money Market Trust
(35) Dean Witter Global Dividend Growth Securities
(36) Active Assets California Tax-Free Trust
(37) Dean Witter Natural Resource Development Securities Inc.
(38) Active Assets Government Securities Trust
(39) Active Assets Money Trust
(40) Active Assets Tax-Free Trust
(41) Dean Witter Limited Term Municipal Trust
(42) Dean Witter Variable Investment Series
(43) Dean Witter Value-Added Market Series
(44) Dean Witter Global Utilities Fund
(45) Dean Witter High Income Securities
(46) Dean Witter National Municipal Trust
(47) Dean Witter International SmallCap Fund
(48) Dean Witter Mid-Cap Growth Fund
(49) Dean Witter Select Dimensions Investment Series
(50) Dean Witter Balanced Growth Fund
(51) Dean Witter Balanced Income Fund
(52) Dean Witter Hawaii Municipal Trust
(53) Dean Witter Capital Appreciation Fund
(54) Dean Witter Intermediate Term U.S. Treasury Trust
(55) Dean Witter Information Fund
(56) Dean Witter Japan Fund
(57) Dean Witter Income Builder Fund
(58) Dean Witter Special Value Fund

The term "TCW/DW Funds" refers to the following registered investment companies:

OPEN-END INVESTMENT COMPANIES
(1) TCW/DW Core Equity Trust
(2) TCW/DW North American Government Income Trust
(3) TCW/DW Latin American Growth Fund
(4) TCW/DW Income and Growth Fund
(5) TCW/DW Small Cap Growth Fund
(6) TCW/DW Balanced Fund
(7) TCW/DW Total Return Trust
(8) TCW/DW Mid-Cap Equity Trust
(9) TCW/DW Global Telecom Trust
(10) TCW/DW Strategic Income Trust

CLOSED-END INVESTMENT COMPANIES
(1) TCW/DW Term Trust 2000
(2) TCW/DW Term Trust 2002
(3) TCW/DW Term Trust 2003
(4) TCW/DW Emerging Markets Opportunities Trust

5
<PAGE>

NAME AND POSITION OTHER SUBSTANTIAL BUSINESS, PROFESSION, VOCATION
WITH DEAN WITTER OR EMPLOYMENT, INCLUDING NAME, PRINCIPAL ADDRESS
INTERCAPITAL INC. AND NATURE OF CONNECTION
- ----------------- --------------------------------------------------

Charles A. Fiumefreddo Executive Vice President and Director of Dean
Chairman, Chief Witter Reynolds Inc. ("DWR"); Chairman, Chief
Executive Officer and Executive Officer and Director of Dean Witter
Director Distributors Inc. ("Distributors") and Dean
Witter Services Company Inc. ("DWSC"); Chairman
and Director of Dean Witter Trust Company
("DWTC"); Chairman, Director or Trustee, President
and Chief Executive Officer of the Dean Witter
Funds and Chairman, Chief Executive Officer and
Trustee of the TCW/DW Funds; Formerly Executive
Vice President and Director of Dean Witter,
Discover & Co. ("DWDC"); Director and/or officer
of various DWDC subsidiaries.

Philip J. Purcell Chairman, Chief Executive Officer and Director of
Director of DWDC and DWR; Director of DWSC and
Distributors; Director or Trustee of the Dean
Witter Funds; Director and/or officer of various
DWDC subsidiaries.

Richard M. DeMartini Executive Vice President of DWDC; President and
Director Chief Operating Officer of Dean Witter Capital;
Director of DWR, DWSC, Distributors and DWTC;
Trustee of the TCW/DW Funds; Member (since
January, 1993) and Chairman (since January,
1995) of the Board of Directors of NASDAQ.

James F. Higgins Executive Vice President of DWDC; President and
Director Chief Operating Officer of Dean Witter Financial;
Director of DWR, DWSC, Distributors and DWTC.

Thomas C. Schneider Executive Vice President and Chief Financial
Executive Vice Officer of DWDC, DWR, DWSC and Distributors;
President, Chief Director of DWR, DWSC and Distributors.
Financial Officer and
Director

Christine A. Edwards Executive Vice President, Secretary and General
Director Counsel of DWDC and DWR; Executive Vice President,
Secretary and Chief Legal Officer of Distributors;
Director of DWR, DWSC and Distributors.

Robert M. Scanlan President and Chief Operating Officer of DWSC,
President and Chief Executive Vice President of Distributors;
Operating Officer Executive Vice President and Director of DWTC;
Vice President of the Dean Witter Funds and the
TCW/DW Funds.

6
<PAGE>

John Van Heuvelen President, Chief Operating Officer and Director
Executive Vice of DWTC.
President

Joseph J. McAlinden
Executive Vice President
and Chief Investment
Officer Vice President of the Dean Witter Funds and
Director of DWTC.

Sheldon Curtis Assistant Secretary of DWR; Senior Vice President,
Senior Vice President, Secretary and General Counsel of DWSC; Senior Vice
General Counsel and President, Assistant General Counsel and Assistant
Secretary Secretary of Distributors; Senior Vice President
and Secretary of DWTC; Vice President, Secretary
and General Counsel of the Dean Witter Funds and
the TCW/DW Funds.

Peter M. Avelar
Senior Vice President Vice President of various Dean Witter Funds.

Mark Bavoso
Senior Vice President Vice President of various Dean Witter Funds.

Richard Felegy
Senior Vice President

Edward Gaylor
Senior Vice President Vice President of various Dean Witter Funds.

Robert S. Giambrone
Senior Vice President Senior Vice President of DWSC, Distributors
and DWTC and Director of DWTC; Vice President
of the Dean Witter Funds and the TCW/DW Funds.

Rajesh K. Gupta
Senior Vice President Vice President of various Dean Witter Funds.

Kenton J. Hinchcliffe
Senior Vice President Vice President of various Dean Witter Funds.

Kevin Hurley
Senior Vice President Vice President of various Dean Witter Funds.

Jenny Beth Jones Vice President of Dean Witter Special Value Fund
Senior Vice President

John B. Kemp, III Director of the Provident Savings Bank, Jersey
Senior Vice President City, New Jersey.

7
<PAGE>

Anita Kolleeny
Senior Vice President Vice President of various Dean Witter Funds.

Jonathan R. Page
Senior Vice President Vice President of various Dean Witter Funds.

Ira N. Ross
Senior Vice President Vice President of various Dean Witter Funds.

Rochelle G. Siegel
Senior Vice President Vice President of various Dean Witter Funds.

Paul D. Vance
Senior Vice President Vice President of various Dean Witter Funds.

Elizabeth A. Vetell
Senior Vice President

James F. Willison
Senior Vice President Vice President of various Dean Witter Funds.

Ronald J. Worobel
Senior Vice President Vice President of various Dean Witter Funds.

Thomas F. Caloia First Vice President and Assistant Treasurer of
First Vice President DWSC, Assistant Treasurer of Distributors;
and Assistant Treasurer and Chief Financial Officer of the
Treasurer Dean Witter Funds and the TCW/DW Funds.

Marilyn K. Cranney Assistant Secretary of DWR; First Vice President
First Vice President and Assistant Secretary of DWSC; Assistant
and Assistant Secretary Secretary of the Dean Witter Funds and the TCW/DW
Funds.

Barry Fink First Vice President and Assistant Secretary of
First Vice President DWSC; Assistant Secretary of the Dean Witter
and Assistant Secretary Funds and the TCW/DW Funds.

Michael Interrante First Vice President and Controller of DWSC;
First Vice President Assistant Treasurer of Distributors;First Vice
and Controller President and Treasurer of DWTC.

Robert Zimmerman
First Vice President

Joan Allman
Vice President

8
<PAGE>

Joseph Arcieri
Vice President Vice President of various Dean Witter Funds.

Kirk Balzer
Vice President Vice President of Dean Witter Mid-Cap Growth Fund

Douglas Brown
Vice President

Philip Casparius
Vice President

Thomas Chronert
Vice President

Rosalie Clough
Vice President

Patricia A. Cuddy
Vice President Vice President of various Dean Witter Funds.

B. Catherine Connelly
Vice President

Salvatore DeSteno
Vice President Vice President of DWSC.

Frank J. DeVito
Vice President Vice President of DWSC.

Dwight Doolan
Vice President

Bruce Dunn
Vice President

Jeffrey D. Geffen
Vice President

Deborah Genovese
Vice President

Peter W. Gurman
Vice President

John Hechtlinger
Vice President

9
<PAGE>

Peter Hermann
Vice President Vice President of various Dean Witter Funds

Elizabeth Hinchman
Vice President

David Hoffman
Vice President

David Johnson
Vice President

Christopher Jones
Vice President

James Kastberg
Vice President

Stanley Kapica
Vice President

Michael Knox
Vice President Vice President of various Dean Witter Funds

Konrad J. Krill
Vice President Vice President of various Dean Witter Funds.

Paula LaCosta
Vice President Vice President of various Dean Witter Funds.

Thomas Lawlor
Vice President

Gerard Lian
Vice President Vice President of various Dean Witter Funds.

LouAnne D. McInnis Vice President and Assistant Secretary of DWSC;
Vice President and Assistant Secretary of the Dean Witter Funds and
Assistant Secretary the TCW/DW Funds.

Sharon K. Milligan
Vice President

Julie Morrone
Vice President

David Myers
Vice President

10
<PAGE>

James Nash
Vice President

Richard Norris
Vice President

Anne Pickrell
Vice President Vice President of Dean Witter Global Short-
Term Income Fund Inc.
Hugh Rose
Vice President

Robert Rossetti
Vice President

Ruth Rossi Vice President and Assistant Secretary of DWSC;
Vice President and Assistant Secretary of the Dean Witter Funds and
Assistant Secretary the TCW/DW Funds.

Carl F. Sadler
Vice President

Rafael Scolari
Vice President Vice President of Prime Income Trust

Peter Seeley Vice President of Dean Witter World
Vice President Wide Income Trust

Jayne M. Stevlingson
Vice President Vice President of various Dean Witter Funds.

Kathleen Stromberg
Vice President Vice President of various Dean Witter Funds.

Vinh Q. Tran
Vice President Vice President of various Dean Witter Funds.

Alice Weiss
Vice President Vice President of various Dean Witter Funds.

Item 29. PRINCIPAL UNDERWRITERS

(a) Dean Witter Distributors Inc. ("Distributors"), a Delaware
corporation, is the principal underwriter of the Registrant.
Distributors is also the principal underwriter of the following
investment companies:
(1) Dean Witter Liquid Asset Fund Inc.
(2) Dean Witter Tax-Free Daily Income Trust
(3) Dean Witter California Tax-Free Daily Income Trust
(4) Dean Witter Retirement Series

11
<PAGE>

(5) Dean Witter Dividend Growth Securities Inc.
(6) Dean Witter Global Asset Allocation
(7) Dean Witter World Wide Investment Trust
(8) Dean Witter Capital Growth Securities
(9) Dean Witter Convertible Securities Trust
(10) Active Assets Tax-Free Trust
(11) Active Assets Money Trust
(12) Active Assets California Tax-Free Trust
(13) Active Assets Government Securities Trust
(14) Dean Witter Short-Term Bond Fund
(15) Dean Witter Mid-Cap Growth Fund
(16) Dean Witter U.S. Government Securities Trust
(17) Dean Witter High Yield Securities Inc.
(18) Dean Witter New York Tax-Free Income Fund
(19) Dean Witter Tax-Exempt Securities Trust
(20) Dean Witter California Tax-Free Income Fund
(21) Dean Witter Limited Term Municipal Trust
(22) Dean Witter Natural Resource Development Securities Inc.
(23) Dean Witter World Wide Income Trust
(24) Dean Witter Utilities Fund
(25) Dean Witter Strategist Fund
(26) Dean Witter New York Municipal Money Market Trust
(27) Dean Witter Intermediate Income Securities
(28) Prime Income Trust
(29) Dean Witter European Growth Fund Inc.
(30) Dean Witter Developing Growth Securities Trust
(31) Dean Witter Precious Metals and Minerals Trust
(32) Dean Witter Pacific Growth Fund Inc.
(33) Dean Witter Multi-State Municipal Series Trust
(34) Dean Witter Federal Securities Trust
(35) Dean Witter Short-Term U.S. Treasury Trust
(36) Dean Witter Diversified Income Trust
(37) Dean Witter Health Sciences Trust
(38) Dean Witter Global Dividend Growth Securities
(39) Dean Witter American Value Fund
(40) Dean Witter U.S. Government Money Market Trust
(41) Dean Witter Global Short-Term Income Fund Inc.
(42) Dean Witter Premier Income Trust
(43) Dean Witter Value-Added Market Series
(44) Dean Witter Global Utilities Fund
(45) Dean Witter High Income Securities
(46) Dean Witter National Municipal Trust
(47) Dean Witter International SmallCap Fund
(48) Dean Witter Balanced Growth Fund
(49) Dean Witter Balanced Income Fund
(50) Dean Witter Hawaii Municipal Trust
(51) Dean Witter Variable Investment Series
(52) Dean Witter Capital Appreciation Fund
(53) Dean Witter Intermediate Term U.S. Treasury Trust
(54) Dean Witter Information Fund
(55) Dean Witter Japan Fund
(56) Dean Witter Income Builder Fund
(57) Dean Witter Special Value Fund
(1) TCW/DW Core Equity Trust

12
<PAGE>

(2) TCW/DW North American Government Income Trust
(3) TCW/DW Latin American Growth Fund
(4) TCW/DW Income and Growth Fund
(5) TCW/DW Small Cap Growth Fund
(6) TCW/DW Balanced Fund
(7) TCW/DW Total Return Trust
(8) TCW/DW Mid-Cap Equity Trust
(9) TCW/DW Global Telecom Trust

(b) The following information is given regarding directors and officers of
Distributors not listed in Item 28 above. The principal address of
Distributors is Two World Trade Center, New York, New York 10048. None of
the following persons has any position or office with the Registrant.

Positions and
Office with
Name Distributors
---- -------------
Fredrick K. Kubler Senior Vice President, Assistant
Secretary and Chief Compliance
Officer.

Michael T. Gregg Vice President and Assistant
Secretary.

Item 30. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained by the Investment Manager at its offices, except records relating to
holders of shares issued by the Registrant, which are maintained by the
Registrant's Transfer Agent, at its place of business as shown in the
prospectus.

Item 31. MANAGEMENT SERVICES

Registrant is not a party to any such management-related service
contract.

Item 32. UNDERTAKINGS

Registrant hereby undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.

13
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York and State of
New York on the 24th day of October, 1996.

DEAN WITTER HIGH YIELD SECURITIES INC.

By /s/ Sheldon Curtis
----------------------------------
Sheldon Curtis
Vice President and Secretary

Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 20 has been signed below by the following persons in the
capacities and on the dates indicated.

Signatures Title Date
---------- ----- ----

(1) Principal Executive Officer President, Chief
Executive Officer,
Director and Chairman
By /s/ Charles A. Fiumefreddo 10/24/96
--------------------------
Charles A. Fiumefreddo

(2) Principal Financial Officer Treasurer and Principal
Accounting Officer

By /s/ Thomas F. Caloia 10/24/96
--------------------------
Thomas F. Caloia

(3) Majority of the Directors

Charles A. Fiumefreddo (Chairman)
Philip J. Purcell

By /s/ Sheldon Curtis 10/24/96
---------------------------
Sheldon Curtis
Attorney-in-Fact

Michael Bozic Manuel H. Johnson
Edwin J. Garn Michael E. Nugent
John R. Haire John L. Schroeder

By /s/ David M. Butowsky 10/24/96
--------------------------
David M. Butowsky
Attorney-in-Fact

<PAGE>

EXHIBIT INDEX

8. -- Amendment to the Custodian Agreement between Registrant and The
Bank of New York

11. -- Consent of Independent Accountants

16. -- Schedules for Computation of Performance Quotations

27. -- Financial Data Schedule

________________________________
All other exhibits previously filed and incorporated
by reference.

<PAGE>

AMENDMENT TO CUSTODY AGREEMENT

Amendment made as of this 17th day of April, 1996 by and between Dean
Witter High Yield Securities Inc. (the "Fund") and The Bank of New York (the
"Custodian") to the Custody Agreement between the Fund and the Custodian
dated September 20, 1991 (the "Custody Agreement"). The Custody Agreement is
hereby amended as follows:

Article XV Section 8 of the Custody Agreement shall be deleted and be
replaced by Sections 8.(a), 8.(b) and 8.(c) as set forth below:

"8. (a) The Custodian will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of Securities and moneys
owned by the Fund. The Custodian shall indemnify the Fund against and save
the Fund harmless from all liability, claims, losses and demands whatsoever,
including attorneys' fees, howsoever arising or incurred as the result of the
failure of a subcustodian which is a banking institution located in a foreign
country and identified on Schedule A attached hereto and as amended from time
to time upon mutual agreement of the parties (each, a "Subcustodian") to
exercise reasonable care with respect to the safekeeping of such Securities
and moneys to the same extent that the Custodian would be liable to the Fund
if the Custodian were holding such securities and moneys in New York. In the
event of any loss to the Fund by reason of the failure of the Custodian or a
Subcustodian to utilize reasonable care, the Custodian shall be liable to the
Fund only to the extent of the Fund's direct damages, to be determined based
on the market value of the Securities and moneys which are the subject of the
loss at the date of discovery of such loss and without reference to any
special conditions or circumstances.

8. (b) The Custodian shall not be liable for any loss which results from
(i) the general risk of investing, or (ii) investing or holding Securities and
moneys in a particular country including, but not limited to, losses resulting
from nationalization, expropriation or other governmental actions; regulation of
the banking or securities industry; currency restrictions, devaluations or
fluctuations; or market conditions which prevent the orderly execution of
securities transactions or affect the value of Securities or moneys.

8. (c) Neither party shall be liable to the other for any loss due to
forces beyond its control including, but not limited to, strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear fusion,
fission or radiation, or acts of God."

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective Officers, thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.

DEAN WITTER HIGH YIELD SECURITIES INC.

[SEAL] By:/s/ David A. Hughey
---------------------

Attest:

/s/ Robert M. Scanlan
- ------------------------

THE BANK OF NEW YORK

[SEAL] By:/s/ Steve Grunston
---------------------

Attest:

/s/ Vincent Blazewitcz
- ------------------------

<PAGE>

SCHEDULE A

COUNTRY/MARKET SUBCUSTODIAN
- -------------- ------------

Argentina The Bank of Boston
Australia ANZ Banking Group Limited
Austria Girocredit Bank AG
Bangladesh* Standard Chartered Bank
Belgium Banque Bruxelles Lambert
Botswana* Stanbic Bank Botswana Ltd.
Brazil The Bank of Boston
Canada Royal Trust/Royal Bank of Canada
Chile The Bank of Boston/Banco de Chile
China Standard Chartered Bank
Colombia Citibank, N.A.
Denmark Den Danske Bank
Euromarket CEDEL
Euroclear
First Chicago Clearing Centre
Finland Union Bank of Finland
France Banque Paribas/Credit Commercial de France
Germany Dresdner Bank A.G.
Ghana* Merchant Bank Ghana Ltd.
Greece Alpha Credit Bank
Hong Kong Hong Kong and Shanghai Banking Corp.
Indonesia Hong Kong and Shanghai Banking Corp.
Ireland Allied Irish Bank
Israel Israel Discount Bank
Italy Banca Commerciale Italiana
Japan Yasuda Trust & Banking Co., Lt.
Korea Bank of Seoul
Luxembourg Kredietbank S.A.
Malaysia Hong Kong Bank Malaysia Berhad
Mexico Banco Nacional de Mexico (Banamex)
Netherlands Mees Pierson
New Zealand ANZ Banking Group Limited
Norway Den Norske Bank
Pakistan Standard Chartered Bank
Peru Citibank, N.A.
Philippines Hong Kong and Shanghai Banking Corp.
Poland Bank Handlowy w Warsawie
Portugal Banco Comercial Portugues
Singapore United Overseas Bank
South Africa Standard Bank of South Africa Limited
Spain Banco Bilbao Vizcaya
Sri Lanka Standard Chartered Bank

<PAGE>

SCHEDULE A

COUNTRY/MARKET SUBCUSTODIAN
- -------------- ------------

Sweden Skandinaviska Enskilda Banken
Switzerland Union Bank of Switzerland
Taiwan Hong Kong and Shanghai Banking Corp.
Thailand Siam Commercial Bank
Turkey Citibank, N.A.
United Kingdom The Bank of New York
United States The Bank of New York
Uruguay The Bank of Boston
Venezuela Citibank N.A.
Zimbabwe* Stanbic Bank Zimbabwe Ltd.

*Not yet 17(f)5 compliant

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 20 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
October 11, 1996, relating to the financial statements and financial
highlights of Dean Witter High Yield Securities Inc., which appears in such
Statement of Additional Information, and to the incorporation by reference of
our report into the Prospectus which constitutes part of this Registration
Statement. We also consent to the references to us under the headings
"Independent Accountants" and "Experts" in such Statement of Additional
Information and to the reference to us under the heading "Financial
Highlights" in such Prospectus.

/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
October 11, 1996

<PAGE>

SCHEDULE FOR COMPUTATIONS OF PERFORMANCE QUOTATIONS
DEAN WITTER HIGH YIELD SECURITIES

(A) AVERAGE ANNUAL TOTAL RETURNS (I.E. STANDARDIZED COMPUTATIONS)

_ _
| ______________________ |
FORMULA: | | |
| /\ n | ERV |
T = | \ | ----------- | - 1
| \ | P |
| \| |
|_ _|

T = AVERAGE ANNUAL COMPOUND RETURN
n = NUMBER OF YEARS
ERV = ENDING REDEEMABLE VALUE
P = INITIAL INVESTMENT

(A)
$1,000 ERV AS OF AGGREGATE NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Aug-96 TOTAL RETURN YEARS - n COMPOUND RETURN - T
- ------------- ---------- ------------ --------- -------------------
<S> <C> <C> <C> <C>
31-Aug-95 $1,049.60 4.96% 1 4.96%

31-Aug-91 $1,965.10 96.51% 5 14.47%

31-Aug-86 $1,778.10 77.81% 10 5.92%

</TABLE>

(B) AVERAGE ANNUAL TOTAL RETURNS WITHOUT DEDUCTION FOR APPLICABLE
SALES CHARGE (NON STANDARD COMPUTATIONS)

_ _
| ______________________ |
FORMULA: | | |
| /\ n | EV |
t = | \ | ----------- | - 1
| \ | P |
| \| |
|_ _|

EV
TR = ---------- - 1
P

t = AVERAGE ANNUAL COMPOUND RETURN
(NO DEDUCTION FOR APPLICABLE SALES CHARGE)
n = NUMBER OF YEARS
EV = ENDING VALUE (NO DEDUCTION FOR APPLICABLE SALES CHARGE)
P = INITIAL INVESTMENT
TR = TOTAL RETURN (NO DEDUCTION FOR APPLICABLE SALES CHARGE)

(C) (B)
$1,000 EV AS OF TOTAL NUMBER OF AVERAGE ANNUAL
INVESTED - P 31-Aug-96 RETURN - TR YEARS - n COMPOUND RETURN - t
- ------------ --------- ----------- ----------- -------------------
<S> <C> <C> <C> <C>
31-Aug-95 $1,110.70 11.07% 1 11.07%

31-Aug-91 $2,079.50 107.95% 5 15.77%

31-Aug-86 $1,881.60 88.16% 10 6.53%

(E) GROWTH OF $10,000*
(F) GROWTH OF $50,000*
(G) GROWTH OF $100,000*

FORMULA: G = (TR+1)*P
G = GROWTH OF INITIAL INVESTMENT
P = INITIAL INVESTMENT
TR = TOTAL RETURN SINCE INCEPTION

*SINCE INCEPTION : ORIGINAL VALUE $9,450,$47,875 & $96,750 ADJUSTED FOR 5.5%,4.25% AND 3.25% SALES CHARGES, RESPECTIVELY.

TOTAL GROWTH OF GROWTH OF GROWTH OF
INVESTED - P RETURN - TR $10,000 INVESTMENT - E $50,000 INVESTMENT - F $100,000 INVESTMENT - G
- ------------ ------------ ----------------------- ----------------------- ------------------------
29-Sep-79 379.99 $45,359 $229,795 $464,390

</TABLE>

<PAGE>

SCHEDULE OF COMPUTATION OF YIELD QUOTATION
DW HIGH YIELD SECURITIES
30 day Yield as of 8/31/96

6
YIELD = 2([((a - b)/c * d) + 1] - 1)

WHERE: a = Dividends and interest earned during the period

b = Expenses accrued for the period

c = The average daily number of shares outstanding during the period
that were entitled to receive dividends

d = The maximum offering price per share on the last day of the period

6
YIELD = 2([((4,857,942.32 - 271,602.56)/68,218,169.871 * 7.045) + 1] - 1)

= 11.728314%

<PAGE>
<ARTICLE> 6

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 574,564,435
<INVESTMENTS-AT-VALUE> 449,957,998
<RECEIVABLES> 11,651,109
<ASSETS-OTHER> 30,020
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 461,639,127
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,436,288
<TOTAL-LIABILITIES> 1,436,288
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,528,089,659
<SHARES-COMMON-STOCK> 68,542,004
<SHARES-COMMON-PRIOR> 67,305,912
<ACCUMULATED-NII-CURRENT> 10,337,288
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (953,617,671)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (124,606,437)
<NET-ASSETS> 460,202,839
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 58,749,969
<OTHER-INCOME> 0
<EXPENSES-NET> 3,027,838
<NET-INVESTMENT-INCOME> 55,722,131
<REALIZED-GAINS-CURRENT> (17,329,860)
<APPREC-INCREASE-CURRENT> 9,730,771
<NET-CHANGE-FROM-OPS> 48,123,042
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (51,517,938)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,479,221
<NUMBER-OF-SHARES-REDEEMED> (10,236,571)
<SHARES-REINVESTED> 3,993,442
<NET-CHANGE-IN-ASSETS> 4,757,496
<ACCUMULATED-NII-PRIOR> 6,133,095
<ACCUMULATED-GAINS-PRIOR> (974,082,860)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,271,578
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,027,838
<AVERAGE-NET-ASSETS> 454,315,489
<PER-SHARE-NAV-BEGIN> 6.77
<PER-SHARE-NII> .83
<PER-SHARE-GAIN-APPREC> (.12)
<PER-SHARE-DIVIDEND> (.77)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.71
<EXPENSE-RATIO> .66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>