<PAGE>
Two World Trade Center, New York, New York 10048
DEAN WITTER HIGH YIELD SECURITIES INC.
LETTER TO THE SHAREHOLDERS February 28, 1998
DEAR SHAREHOLDER:
Continuing the trend of recent years, high-yield bonds remained one of the
better-performing sectors of the fixed-income market for the calendar year
1997. Benefiting from a healthy economy, improved credit quality and a
relatively favorable interest-rate environment, the high-yield market posted
a strong double-digit return for the year.
Reviewing the past six-month period, despite some market weakness in October
and November, as a result of the foreign market crisis, the sector finished
on a high note. Continued strength in the economy has resulted in solid
earnings improvements on the part of many high-yield companies and has
provided the fuel for the sharp equity market advance experienced during the
period. Many high-yield companies have taken advantage of higher equity
valuations to raise equity and strengthen their own balance sheets. The
resulting credit quality improvement has helped keep the high-yield market's
performance strong relative to that of many of the other fixed-income
markets.
PERFORMANCE AND PORTFOLIO STRATEGY
For the six-month period ended February 28, 1998, the Fund's Class A, B, C
and D shares had total returns of 5.08 percent, 4.54 percent, 4.62 percent
and 5.19 percent, respectively versus 6.44 percent and 6.86 percent for the
Lehman High Yield Index and the Lipper High Yield Bond Fund Index.
Performance of the Fund's four share classes varies because of differing
sales charges and expenses. On February 28, 1998, the Fund's net assets
exceeded $2.2 billion.
As the economy has continued to expand over the past few years, the Fund has
tended to concentrate on B-rated issues. In a growing economy one can
generally find undervalued, upgrade candidates in this sector of the market
that provide attractive yields as well as appreciation potential. Given our
expectation for continued growth in the economy this year, we feel that many
of these issues remain very attractive investments. However, in light of the
lower market yields available today and the
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
LETTER TO THE SHAREHOLDERS February 28, 1998, continued
potential for a modest correction in the market, we have taken some defensive
steps for the portfolio over the past year. This includes increasing our
allocation to the higher-quality end of the market (BB-rated issues or
higher). We feel that these holdings may better protect shareholders during a
potentially nervous market environment, as well as provide the portfolio
flexibility to take advantage of higher, more attractive market yields in the
future. In addition, the Fund has sold many of its heavily cyclical positions
and is now focused mainly on more predictable, recession-resistant and growth
sectors of the economy, such as food/beverage, health care,
telecommunications, media and cable. In some of these sectors, such as media
and telecommunications, we expect to see continued consolidation, which may
bode well for many of the Fund's individual holdings. Finally, in keeping
with our more conservative posture, we continue to limit our exposure to the
foreign high-yield markets, given the potential risk associated with the
ongoing foreign market crisis.
LOOKING AHEAD
The one-to two-year outlook for the high-yield market remains favorable, with
our expectations for continued economic growth. We caution, however, that
during this period the possibility exists for another round of investor
nervousness in reaction to potential Federal Reserve Board moves or another
disruption in the foreign markets.
We thank you for your continued support of Dean Witter High Yield Securities
and look forward to continuing to serve your investment needs.
Very truly yours,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS February 28, 1998 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE BONDS (93.5%)
Aerospace (0.6%)
$13,000 Sabreliner Corp. (Series B) ................................. 12.50 % 04/15/03 $ 13,715,000
--------------
Automotive (3.4%)
30,000 General Motors Acceptance Corp. ............................. 15.00 03/17/98 30,096,900
43,700 Toyota Motor Credit Corp. ................................... 15.00 09/25/98 45,927,389
--------------
76,024,289
--------------
Broadcast Media (6.9%)
13,350 Adams Outdoor Advertising L.P. .............................. 10.75 03/15/06 14,818,500
33,500 Australis Holdings Ltd. (Australia) ......................... 15.00 ++ 11/01/02 15,075,000
4,404 Australis Media Ltd. -144A* (Australia) ..................... 0.00 11/01/00 2,950,688
15,000 Capstar Broadcasting Partners ............................... 12.75 ++ 02/01/09 11,212,500
19,950 Echostar DBS Corp. .......................................... 12.50 07/01/02 22,144,500
15,500 Paxson Communications Corp. ................................. 11.625 10/01/02 16,836,875
20,749 Spanish Broadcasting System, Inc. ........................... 12.50 06/15/02 23,861,350
14,000 STC Broadcasting, Inc. ...................................... 11.00 03/15/07 15,470,000
44,865 TCI Satellite Entertainment Corp. -144A*..................... 12.25 ++ 02/15/07 31,854,150
--------------
154,223,563
--------------
Business Services (4.4%)
28,000 Anacomp, Inc. (Series B) .................................... 10.875 04/01/04 29,680,000
13,000 Comforce Operating Inc. ..................................... 12.00 12/01/07 13,910,000
42,700 Xerox Credit Corp. .......................................... 15.00 06/26/98 43,904,567
11,700 Xerox Credit Corp. .......................................... 15.00 10/07/98 12,327,003
--------------
99,821,570
--------------
Cable & Telecommunications (18.3%)
20,000 21st Century Telecom Group -144A* ........................... 12.25 ++ 02/15/08 10,800,000
15,700 Adelphia Communications, Inc. (Series B) .................... 9.875 03/01/07 17,113,000
13,500 Advanced Radio Telecommunication (Units)++ .................. 14.00 02/15/07 14,647,500
32,625 American Communications Services, Inc. ...................... 13.75 07/15/07 39,313,125
16,099 Cablevision Systems Corp. ................................... 9.875 04/01/23 17,708,900
14,750 Charter Communication South East L.P. (Series B) ............ 11.25 03/15/06 16,556,875
20,031 Clearnet Communications Inc. (Canada) ....................... 14.75 ++ 12/15/05 16,225,110
24,060 Falcon Holdings Group L.P. (Series B) ....................... 11.00 + 09/15/03 25,593,653
19,000 FrontierVision Operating Partners, L.P. ..................... 11.00 10/15/06 21,090,000
10,800 Globalstar L.P./Capital Corp. ............................... 10.75 11/01/04 10,881,000
14,900 GST Equipment Funding, Inc. ................................. 13.25 05/01/07 17,433,000
13,800 Hyperion Telecommunication, Inc.
(Series A) ................................................ 13.00 ++ 04/15/03 10,315,500
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS February 28, 1998 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------------
$23,000 Hyperion Telecommunication, Inc.
(Series B) ................................................ 12.25 % 09/01/04 $ 25,990,000
56,800 In-Flight Phone Corp. (Series B)(a) ......................... 14.00 ++ 05/15/02 7,952,000
14,000 IXC Communications, Inc. (Series B) ......................... 12.50 10/01/05 16,205,000
10,000 James Cable Partners L.P. ................................... 10.75 08/15/04 10,650,000
20,000 Nextel Communications, Inc. ................................. 10.65 ++ 09/15/07 12,950,000
8,500 NextLink Communications, Inc. ............................... 12.50 04/15/06 9,732,500
19,750 Paging Network, Inc. ........................................ 10.125 08/01/07 20,540,000
5,000 Paging Network, Inc. ........................................ 10.00 10/15/08 5,187,500
15,050 Peoples Telephone Co., Inc. ................................. 12.25 07/15/02 15,990,625
16,000 Rifkin Acquisition Partners L.P. ............................ 11.125 01/15/06 17,720,000
11,000 Talton Holdings, Inc. -144A* ................................ 11.00 06/30/07 12,210,000
20,230 USA Mobile Communications
Holdings, Inc. ............................................ 9.50 02/01/04 19,623,100
22,000 Winstar Communications, Inc. ................................ 14.00 ++ 10/15/05 18,150,000
--------------
410,578,388
--------------
Chemicals (1.2%)
25,645 Harris Chemical North America, Inc. ......................... 10.75 10/15/03 27,183,700
--------------
Computer Equipment (3.5%)
46,700 IBM Credit Corp. ............................................ 15.00 02/02/99 50,516,324
8,175 Unisys Corp. ................................................ 11.75 10/15/04 9,503,437
17,500 Unisys Corp. ................................................ 12.00 04/15/03 19,906,250
--------------
79,926,011
--------------
Computers (0.5%)
10,000 Advanced Micro Devices, Inc. ................................ 11.00 08/01/03 10,900,000
--------------
Consumer Products (1.2%)
11,000 J.B Williams Holdings, Inc. ................................. 12.00 03/01/04 11,495,000
30,000 Renaissance Cosmetics, Inc. ................................. 11.75 02/15/04 15,300,000
--------------
26,795,000
--------------
Containers (1.2%)
12,500 Mail-Well Corp. ............................................. 10.50 02/15/04 13,468,750
14,725 Packaging Resources, Inc. ................................... 11.625 05/01/03 14,430,500
--------------
27,899,250
--------------
Drug Stores (0.5%)
10,000 Community Distributors -144A* ............................... 10.25 10/15/04 10,300,000
--------------
Electrical & Alarm Systems (0.8%)
22,000 Mosler, Inc. ................................................ 11.00 04/15/03 18,920,000
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS February 28, 1998 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------------
Entertainment/Gaming & Lodging (10.7%)
$ 13,850 AMF Group Inc. (Series B) ................................... 10.875% 03/15/06 $ 15,217,687
20,500 Fitzgerald Gaming Corp. -144A* .............................. 12.25 12/15/04 21,012,500
7,000 Horseshoe Gaming L.L.C. (Series B) .......................... 12.75 09/30/00 7,787,500
25,500 Lady Luck Gaming Finance Corp. .............................. 11.875 03/01/01 26,328,750
16,000 Motels of America, Inc. (Series B) .......................... 12.00 04/15/04 15,600,000
13,925 Players International, Inc. ................................. 10.875 04/15/05 15,317,500
15,900 Plitt Theaters, Inc. (Canada) ............................... 10.875 06/15/04 17,410,500
10,000 Resort At Summerlin -144A* .................................. 13.00 + 12/15/07 10,262,500
17,000 Riviera Holdings Corp. ...................................... 10.00 08/15/04 17,467,500
14,100 Station Casinos, Inc. ....................................... 9.625 06/01/03 14,664,000
13,500 Station Casinos, Inc. ....................................... 10.125 03/15/06 15,120,000
19,750 Stuart Entertainment, Inc. (Series B) ....................... 12.50 11/15/04 14,121,250
47,300 Walt Disney Co. ............................................. 15.00 12/14/98 50,682,896
--------------
240,992,583
--------------
Finance (6.5%)
45,000 Commercial Credit Co. ....................................... 15.00 07/10/98 46,456,650
50,750 General Electric Capital Corp. .............................. 15.00 01/21/99 54,793,760
43,700 Household Finance Corp. ..................................... 15.00 09/25/98 45,865,335
--------------
147,115,745
--------------
Foods & Beverages (9.8%)
27,081 Envirodyne Industries, Inc. ................................. 10.25 12/01/01 27,081,000
3,500 Fleming Companies, Inc. ..................................... 10.50 12/01/04 3,714,375
15,221 Fleming Companies, Inc. ..................................... 10.625 12/15/01 16,248,417
3,500 Fleming Companies, Inc. ..................................... 10.625 07/31/07 3,731,875
51,500 General Mills, Inc. ......................................... 15.00 01/29/99 55,767,805
54,250 PepsiCo, Inc. ............................................... 15.00 08/06/98 56,373,888
10,000 Sparkling Spring Water -144A* (Canada) ...................... 11.50 11/15/07 10,800,000
105,075 Specialty Foods Acquisition Corp.
(Series B) ................................................ 13.00 ++ 08/15/05 46,233,000
--------------
219,950,360
--------------
Healthcare (1.6%)
16,975 Unilab Corp. ................................................ 11.00 04/01/06 17,993,500
16,500 Unison Healthcare Corp. -144A* .............................. 12.25 11/01/06 9,735,000
7,000 Universal Hospital Services, Inc. -144A* .................... 10.25 03/01/08 7,070,000
--------------
34,798,500
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS February 28, 1998 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------------
Manufacturing (2.9%)
$ 11,900 Berry Plastics Corp. ........................................ 12.25 % 04/15/04 $ 13,090,000
9,075 Cabot Safety Corp. .......................................... 12.50 07/15/05 10,186,688
15,500 International Wire Group, Inc. .............................. 11.75 06/01/05 17,224,375
10,500 Outsourcing Services Group, Inc. -144A* ..................... 10.875 03/01/06 10,710,000
12,230 Uniroyal Technology Corp. ................................... 11.75 06/01/03 12,841,500
--------------
64,052,563
--------------
Manufacturing -Diversified (5.6%)
7,500 Eagle Picher Industries, Inc. -144A* ........................ 9.375 03/01/08 7,537,500
10,000 High Voltage Engineering, Inc. .............................. 10.50 08/15/04 10,600,000
15,870 Interlake Corp. ............................................. 12.00 11/15/01 17,615,700
18,400 Interlake Corp. ............................................. 12.125 03/01/02 19,044,000
13,350 J.B. Poindexter & Co., Inc. ................................. 12.50 05/15/04 13,149,750
20,000 Jordan Industries, Inc. (Series B) .......................... 10.375 08/01/07 20,800,000
57,338 Jordan Industries, Inc. (Series B) .......................... 11.75 ++ 04/01/09 36,696,320
--------------
125,443,270
--------------
Oil & Gas (3.1%)
16,000 Petro Stopping Centers L.P. ................................. 10.50 02/01/07 17,120,000
49,700 Texaco Capital LLC .......................................... 15.00 01/13/99 53,540,816
--------------
70,660,816
--------------
Publishing (2.1%)
14,950 American Media Operations, Inc. ............................. 11.625 11/15/04 16,220,750
7,500 MDC Communications Corp. .................................... 10.50 12/01/06 8,100,000
7,500 Perry-Judds -144A* .......................................... 10.625 12/15/07 7,875,000
14,100 United States Banknote Corp. ................................ 10.375 06/01/02 14,223,375
--------------
46,419,125
--------------
Restaurants (4.9%)
American Restaurant Group Holdings,
141,992 Inc. -144A* (d) ........................................... 0.00 12/15/05 26,978,480
6,000 Ameriking, Inc. ............................................. 10.75 12/01/06 6,390,000
16,621 Carrols Corp. ............................................... 11.50 08/15/03 17,618,260
34,207 FRD Acquisition Corp. (Series B) ............................ 12.50 07/15/04 37,969,770
15,500 Friendly Ice Cream Corp. .................................... 10.50 12/01/07 16,430,000
5,000 Perkins Family Restaurants, L.P. -144A* ..................... 10.125 12/15/07 5,162,500
--------------
110,549,010
--------------
Retail -Food Chains (2.5%)
9,185 Eagle Food Centers, Inc. .................................... 8.625 04/15/00 9,024,263
10,000 Mrs. Fields Original -144A* ................................. 10.125 12/01/04 10,075,000
15,000 Pantry, Inc. -144A* ......................................... 10.25 10/15/07 15,637,500
8,748 Pueblo Xtra International, Inc. (Series C) .................. 9.50 08/01/03 8,223,120
14,500 Pueblo Xtra International, Inc. ............................. 9.50 08/01/03 13,630,000
--------------
56,589,883
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS February 28, 1998 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
-----------------------------------------------------------------------------------------------------------------
Textiles (0.5%)
$23,517 U.S. Leather, Inc. (b) ...................................... 10.25% 07/31/03 $ 11,288,160
--------------
Transportation (0.8%)
17,500 Alpha Shipping PLC -144A* (United Kingdom) .................. 9.50 02/15/08 17,193,750
--------------
TOTAL CORPORATE BONDS
(Identified Cost $2,113,979,835) ................................................... 2,101,340,536
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
- -----------
<S> <C> <C>
COMMON STOCKS (c)(0.8%)
Automotive (0.0%)
709 Northern Holdings Industrial Corp. (d)* ........................ --
-------------
Entertainment/Gaming & Lodging (0.0%)
7,500 Motels of America, Inc. -144A* ................................. 375,000
781,421 Vagabond Inns, Inc. (Class D)(a) ............................... 781
-------------
375,781
-------------
Foods & Beverages (0.0%)
574,725 Specialty Foods Acquisition Corp. -144A* ....................... 574,725
-------------
Healthcare (0.2%)
1,358,200 Unilab Corp. ................................................... 3,735,050
-------------
Restaurants (0.0%)
38,057 American Restaurant Group Holdings, Inc. -144A* ................ 381
-------------
Retail (0.6%)
2,779,700 County Seat Store Corp. (d)(e) ................................. 14,073,622
-------------
Textiles (0.0%)
12,000 JPS Textiles Group, Inc. (Class A) ............................. 120
-------------
TOTAL COMMON STOCKS
(Identified Cost $79,138,173) .................................. 18,759,679
-------------
PREFERRED STOCK (0.2%)
Restaurants (0.2%)
3,500 American Restaurant Group Holdings, Inc. -144A* (Units)++
(Identified Cost $3,500,000) ................................... 3,552,500
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS February 28, 1998 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
WARRANTS (c)(0.1%)
Aerospace (0.0%)
9,000 Sabreliner Corp. -144A* ........................................ 04/15/03 $ 90,000
----------------
Broadcast Media (0.0%)
32,500 Australis Holdings Ltd. -144A* (Australia) ..................... 10/30/01 325
----------------
Cable & Telecommunications (0.1%)
35,000 Hyperion Telecommunication, Inc. -144A* ........................ 04/01/01 2,975,000
----------------
Containers (0.0%)
10,000 Crown Packaging Holdings, Ltd. -144A* .......................... 11/01/03 100
----------------
Entertainment/Gaming & Lodging (0.0%)
5,000 Boomtown, Inc. -144A* .......................................... 11/01/98 --
207,312 Fitzgeralds Gaming Corp. ....................................... 12/19/98 932,904
7,000 Fitzgeralds South Inc. -144A* .................................. 03/15/99 --
10,000 Resort At Summerlin -144A* ..................................... 12/15/07 230
----------------
933,134
----------------
Retail (0.0%)
10,000 County Seat Holdings Co. ....................................... 10/15/98 --
----------------
TOTAL WARRANTS
(Identified Cost $2,711,249) ............................................. 3,998,559
----------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE
- ----------- ---------------------------------------------------------------- -------- ----------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS (4.2%)
U.S. GOVERNMENT AGENCIES (f)(4.0%)
$15,850 Federal Farm Credit Bank ....................................... 5.42% 03/02/98 15,847,613
25,000 Federal Home Loan Mortgage Corp. ............................... 5.41 03/03/98 24,992,486
50,000 Federal National Mortgage Assoc. ............................... 5.61 03/02/98 49,992,209
----------------
TOTAL U.S. GOVERNMENT AGENCIES
(Amortized Cost $90,832,308) ..................................................... 90,832,308
----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
PORTFOLIO OF INVESTMENTS February 28, 1998 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT (0.2%)
$3,600 The Bank of New York (dated 02/27/98; proceeds $3,672,424)(g)
(Identified Cost $3,600,416) .................................. 5.438% 03/02/98 $ 3,600,416
---------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $94,432,724) .................................. 94,432,724
---------------
TOTAL INVESTMENTS
(Identified Cost $2,293,761,981)(h) ............................ 98.8% 2,222,083,998
OTHER ASSETS IN EXCESS OF LIABILITIES ................................... 1.2 26,346,286
----------- ---------------
NET ASSETS .............................................................. 100.0% $2,248,430,284
=========== ===============
</TABLE>
- ------------
* Resale is restricted to qualified institutional investors.
+ Payment-in-kind security.
++ Consists of one or more classes of securities traded together as a
unit; bonds or preferred stocks with attached warrants.
++ 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 security; bond in default.
(c) Non-income producing securities.
(d) Acquired through exchange offer.
(e) Includes 997,289 shares which are due from the issuer pursuant to a
reorganization.
(f) Securities were purchased on a discount basis. The interest rates
shown have been adjusted to reflect a money market equivalent yield.
(g) Collateralized by $117,623 U.S. Treasury Note 7.125% due 09/30/99
valued at $123,779, $1,000,000 Federal Home Loan Banks 6.615% due
08/15/07 valued at $1,049,328, $1,000,000 Federal Home Loan Mortgage
Assoc. Corp. 6.525% due 01/03/07 valued at $1,048,517, $388,364
Federal National Mortgage Assoc. 7.29% due 11/08/06 valued at
$405,502 and $1,020,000 Federal National Mortgage Assoc. 6.28% due
11/12/02 valued at $1,045,300.
(h) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$108,014,380 and the aggregate gross unrealized depreciation is
$179,692,363, resulting in net unrealized depreciation of
$71,677,983.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $2,293,761,981).......................... $2,222,083,998
Receivable for:
Interest................................................. 51,802,967
Capital stock sold....................................... 13,001,498
Prepaid expenses and other assets.......................... 253,717
----------------
TOTAL ASSETS............................................. 2,287,142,180
----------------
LIABILITIES:
Payable for:
Investments purchased ................................... 32,415,136
Dividends and distributions to shareholders ............. 3,097,362
Capital stock repurchased ............................... 1,233,457
Plan of distribution fee................................. 1,039,845
Investment management fee ............................... 692,006
Accrued expenses and other payables ....................... 234,090
----------------
TOTAL LIABILITIES........................................ 38,711,896
----------------
NET ASSETS............................................... $2,248,430,284
================
COMPOSITION OF NET ASSETS:
Paid-in-capital ........................................... $3,226,411,823
Net unrealized depreciation................................ (71,677,983)
Accumulated undistributed net investment income .......... 3,100,698
Accumulated net realized loss.............................. (909,404,254)
----------------
NET ASSETS .............................................. $2,248,430,284
================
CLASS A SHARES:
Net Assets................................................. $ 22,606,894
Shares Outstanding (500,000,000 authorized, $.01 par
value).................................................... 3,332,454
NET ASSET VALUE PER SHARE ............................... $6.78
=====
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 4.44% of net asset value) ........ $7.08
=====
CLASS B SHARES:
Net Assets................................................. $1,732,703,099
Shares Outstanding (500,000,000 authorized, $.01 par
value).................................................... 255,828,178
NET ASSET VALUE PER SHARE ............................... $6.77
=====
CLASS C SHARES:
Net Assets................................................. $31,879,849
Shares Outstanding (500,000,000 authorized, $.01 par
value).................................................... 4,701,489
NET ASSET VALUE PER SHARE ............................... $6.78
=====
CLASS D SHARES:
Net Assets................................................. $461,240,442
Shares Outstanding (500,000,000 authorized, $.01 par
value).................................................... 67,982,429
NET ASSET VALUE PER SHARE ............................... $6.78
=====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the six months ended February 28, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME .......................... $ 91,324,830
--------------
EXPENSES
Plan of distribution fee (Class A
shares).................................. 11,677
Plan of distribution fee (Class B
shares).................................. 3,715,184
Plan of distribution fee (Class C
shares).................................. 74,836
Investment management fee................. 3,095,112
Transfer agent fees and expenses.......... 542,022
Registration fees......................... 135,564
Professional fees ........................ 48,748
Shareholder reports and notices .......... 43,850
Custodian fees ........................... 38,495
Directors' fees and expenses ............. 8,503
Other..................................... 9,401
--------------
TOTAL EXPENSES ......................... 7,723,392
--------------
NET INVESTMENT INCOME .................. 83,601,438
--------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss ........................ (5,676,343)
Net change in unrealized depreciation ... (8,246,438)
--------------
NET LOSS ............................... (13,922,781)
--------------
NET INCREASE ............................. $ 69,678,657
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997*
- -------------------------------------------------- ----------------- ----------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ............................. $ 83,601,438 $ 55,526,474
Net realized loss ................................. (5,676,343) (39,986,189)
Net change in unrealized depreciation ............. (8,246,438) 50,139,683
----------------- ----------------
NET INCREASE .................................... 69,678,657 65,679,968
----------------- ----------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME:
Class A shares..................................... (634,950) (12,761)
Class B shares..................................... (60,268,386) (95,764)
Class C shares..................................... (952,391) (32,881)
Class D shares..................................... (25,771,783) (57,967,266)
----------------- ----------------
TOTAL DIVIDENDS.................................. (87,627,510) (58,108,672)
----------------- ----------------
Net increase from capital stock transactions ...... 1,764,310,337 34,294,665
----------------- ----------------
NET INCREASE .................................... 1,746,361,484 41,865,961
NET ASSETS:
Beginning of period................................ 502,068,800 460,202,839
----------------- ----------------
END OF PERIOD
(Including undistributed net investment income
of $3,100,698 and $7,755,090, respectively) ..... $2,248,430,284 $502,068,800
================= ================
</TABLE>
- ------------
* Class A, Class B and Class C shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS February 28, 1998 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter High Yield Securities Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. 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 and commenced operations on
September 26, 1979. On July 28, 1997, the Fund commenced offering three
additional classes of shares, with the then current shares designated as
Class D shares.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase, some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year,
six years and one year, respectively. Class D shares are not subject to a
sales charge. Additionally, Class A shares, Class B shares and Class C shares
incur distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at
its latest sale price on that exchange prior to the time when assets are
valued; if there were no sales that day, the security is valued at the latest
bid price (in cases where securities are traded on more than one exchange,
the securities are valued on the exchange designated as the primary market
pursuant to procedures adopted by the Directors); (2) all other portfolio
securities for which over-the-counter market quotations are readily available
are valued at the latest available bid price prior to the time of valuation;
(3) when market quotations are not readily available, including circumstances
under which it is determined by Dean Witter InterCapital Inc. (the
"Investment Manager") that sale or bid prices are not reflective of a
security's market value, portfolio securities are valued at their fair value
as determined in good faith under procedures established by and under the
general supervision of the 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 may utilize a
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS February 28, 1998 (unaudited) continued
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.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are
allocated to each class of shares based upon the relative net asset value on
the date such items are recognized. Distribution fees are charged directly to
the respective class.
D. 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.
E. 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.
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS February 28, 1998 (unaudited) continued
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, 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.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities,
equipment, clerical, bookkeeping and certain legal services and pays the
salaries of all personnel, including officers of the Fund who are employees
of the Investment Manager. The Investment Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the
Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted
a Plan of Distribution (the "Plan"), pursuant to Rule 12b-1 under the Act.
The Plan provides that the Fund pay the Distributor a fee which is accrued
daily and paid monthly at the following annual rates: (i) Class A -up to
0.25% of the average daily net assets of Class A; (ii) Class B -0.75% of the
average daily net assets of Class B; and (iii) Class C -up to 0.85% of the
average daily net assets of Class C. In the case of Class A shares, amounts
paid under the Plan are paid to the Distributor for services provided. In the
case of Class B and Class C shares, amounts paid under the Plan are paid to
the Distributor for services provided and the expenses borne by it and others
in the distribution of the shares of these Classes, including the payment of
commissions for sales of these Classes and incentive compensation to, and
expenses of, the account executives of Dean Witter Reynolds Inc. ("DWR"), an
affiliate of the Investment Manager and Distributor, and others who engage in
or support distribution of the shares or who service shareholder accounts,
including overhead and telephone expenses; printing and distribution of
prospectuses and reports used in connection with the offering of these shares
to other than current shareholders; and preparation, printing and
distribution of sales literature and advertising materials. In addition, the
Distributor may utilize fees paid pursuant to the Plan,
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS February 28, 1998 (unaudited) continued
in the case of Class B shares, to compensate DWR and other selected
broker-dealers for their opportunity costs in advancing such amounts, which
compensation would be in the form of a carrying charge on any unreimbursed
expenses.
In the case of Class B shares, provided that the Plan continues in effect,
any cumulative expenses incurred by the Distributor but not yet recovered may
be recovered through the payment of future distribution fees from the Fund
pursuant to the Plan and contingent deferred sales charges paid by investors
upon redemption of Class B shares. Although there is no legal obligation for
the Fund to pay expenses incurred in excess of payments made to the
Distributor under the Plan and the proceeds of contingent deferred sales
charges paid by investors upon redemption of shares, if for any reason the
Plan is terminated, the Directors will consider at that time the manner in
which to treat such expenses. The Distributor has advised the Fund that such
excess amounts, including carrying charges, totaled $43,339,086 at February
28, 1998.
In the case of Class A shares and Class C shares, expenses incurred pursuant
to the Plan in any calendar year in excess of 0.25% or 0.85% of the average
daily net assets of Class A or Class C, respectively, will not be reimbursed
by the Fund through payments in any subsequent year, except that expenses
representing a gross sales credit to account executives may be reimbursed in
the subsequent calendar year. For the six months ended February 28, 1998, the
distribution fee was accrued for Class A shares and Class C shares at the
annual rate of 0.23% and 0.85%, respectively.
The Distributor has informed the Fund that for the six months ended February
28, 1998, it received contingent deferred sales charges from certain
redemptions of the Fund's Class B shares and Class C shares of $732,079 and
$19,041, respectively and received $226,919 in front-end sales charges from
sales of the Fund's Class A shares. The respective shareholders pay such
charges which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the six months ended February 28, 1998,
aggregated $833,041,919 and $524,755,962, respectively.
Dean Witter Trust FSB, an affiliate of the Investment Manager, is the Fund's
transfer agent. At February 28, 1998, the Fund had transfer agent fees and
expenses payable of approximately $12,000.
The Fund has an unfunded noncontributory defined benefit pension plan
covering all independent Directors of the Fund who will have served as
independent Directors for at least five years at the time of retirement.
Benefits under this plan are based on years of service and compensation
during the last five years of service. Aggregate pension costs for the six
months ended February 28, 1998 included in
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS February 28, 1998 (unaudited) continued
Directors' fees and expenses in the Statement of Operations amounted to
$1,805. At February 28, 1998, the Fund had an accrued pension liability of
$49,150 which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997*
------------------------------ ------------------------------
(UNAUDITED)
SHARES AMOUNT SHARES AMOUNT
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold................................................. 3,083,198 $ 21,035,363 292,513 $ 1,999,324
Reinvestment of dividends............................ 39,743 269,619 553 3,764
Redeemed............................................. (83,130) (565,988) (423) (2,907)
-------------- -------------- -------------- --------------
Net increase -Class A................................ 3,039,811 20,738,994 292,643 2,000,181
-------------- -------------- -------------- --------------
CLASS B SHARES
Sold................................................. 59,625,239 405,829,797 2,516,637 17,204,073
Reinvestment of dividends............................ 3,355,701 22,703,830 6,503 44,221
Shares issued in connection with the acquisition of
Dean Witter High Income Securities.................. 214,915,122 1,469,485,599 -- --
Redeemed............................................. (24,388,935) (165,855,988) (202,089) (1,383,116)
-------------- -------------- -------------- --------------
Net increase -Class B................................ 253,507,127 1,732,163,238 2,321,051 15,865,178
-------------- -------------- -------------- --------------
CLASS C SHARES
Sold................................................. 4,933,115 33,660,649 766,860 5,242,777
Reinvestment of dividends............................ 75,870 515,377 2,742 18,649
Redeemed............................................. (1,073,645) (7,313,078) (3,453) (23,617)
-------------- -------------- -------------- --------------
Net increase -Class C................................ 3,935,340 26,862,948 766,149 5,237,809
-------------- -------------- -------------- --------------
CLASS D SHARES
Sold................................................. 938,583 6,402,696 7,619,881 51,079,158
Reinvestment of dividends ........................... 2,034,575 13,843,274 4,584,033 30,556,953
Redeemed............................................. (5,220,334) (35,700,813) (10,516,313) (70,444,614)
-------------- -------------- -------------- --------------
Net increase (decrease) -Class D..................... (2,247,176) (15,454,843) 1,687,601 11,191,497
-------------- -------------- -------------- --------------
Net increase in Fund................................. 258,235,102 $1,764,310,337 5,067,444 $ 34,294,665
============== ============== ============== ==============
</TABLE>
- ------------
* For Class A, B, and C shares, for the period July 28 (issue date)
through August 31, 1997.
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS February 28, 1998 (unaudited) continued
6. FEDERAL INCOME TAX STATUS
At August 31, 1997, the Fund had a net capital loss carryover of
approximately $882,518,000 which may be used 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
- --------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004 2005
- ----------- ---------------------- ----------- ---------------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$82,234 $293,125 $182,201 $45,084 $166,660 $50,599 $23,296 $39,319
=========== ====================== =========== ====================== =========== ===========
</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 $10,031,000 during fiscal 1997.
At August 31, 1997, the Fund had temporary book/tax differences primarily
attributable to post-October losses and capital loss deferrals on wash sales.
7. ACQUISITION OF DEAN WITTER HIGH INCOME SECURITIES
As of the close of business on November 7, 1997, the Fund acquired all the
net assets of Dean Witter High Income Securities ("High Income") pursuant to
a plan of reorganization approved by the shareholders of High Income on
October 24, 1997. The acquisition was accomplished by a tax-free exchange of
214,915,122 Class B shares of the Fund at a net asset value of $6.84 per
share for 147,149,092 shares of High Income. The net assets immediately
before the acquisition were $552,658,205 for the Fund and $1,469,485,599 for
High Income, including unrealized appreciation of $43,052,745. Immediately
after the acquisition, the combined net assets of the Fund amounted to
$2,022,143,804.
<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 SIX
MONTHS ENDED FOR THE YEAR ENDED AUGUST 31
FEBRUARY 28, -----------------------------------------------
1998++ 1997* 1996 1995 1994 1993
- ----------------------------------------- ------------------ -------- -------- -------- -------- --------
(UNAUDITED)
CLASS D SHARES
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ..... $ 6.82 $ 6.71 $ 6.77 $ 6.83 $ 7.58 $ 7.23
--------- -------- -------- -------- -------- --------
Net investment income..................... 0.39 0.79 0.83 0.80 0.79 0.89
Net realized and unrealized gain (loss) .. (0.05) 0.15 (0.12) (0.06) (0.68) 0.54
--------- -------- -------- -------- -------- --------
Total from investment operations.......... 0.34 0.94 0.71 0.74 0.11 1.43
--------- -------- -------- -------- -------- --------
Less dividends from net investment
income................................... (0.38) (0.83) (0.77) (0.80) (0.86) (1.08)
--------- -------- -------- -------- -------- --------
Net asset value, end of period............ $ 6.78 $ 6.82 $ 6.71 $ 6.77 $ 6.83 $ 7.58
========= ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN+.................. 5.19%(1) 15.01% 11.07% 11.98% 0.93% 22.29%
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................. 0.56%(2) 0.68% 0.66% 0.79% 0.69% 0.67%
Net investment income..................... 11.61%(2) 11.78% 12.27% 12.06% 10.40% 12.14%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions ... $ 461 $ 479 $ 460 $ 455 $ 478 $ 540
Portfolio turnover rate................... 39%(1) 113% 49% 74% 127% 173%
</TABLE>
- ------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares
of the Fund held prior to that date have been designated
Class D shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of
the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JULY 28, 1997*
MONTHS ENDED THROUGH
FEBRUARY 28, AUGUST 31,
1998++ 1997++
- ----------------------------------------- ------------------ ----------------
(UNAUDITED)
<S> <C> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .... $ 6.82 $ 6.83
------------------ ----------------
Net investment income..................... 0.39 0.07
Net realized and unrealized loss ........ (0.06) (0.03)
------------------ ----------------
Total from investment operations.......... 0.33 0.04
------------------ ----------------
Less dividends from net investment
income................................... (0.37) (0.05)
------------------ ----------------
Net asset value, end of period............ $ 6.78 $ 6.82
================== ================
TOTAL INVESTMENT RETURN+.................. 5.08%(1) 0.65%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................. 0.75%(2) 0.93%(2)
Net investment income..................... 11.48%(2) 11.80%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions ... $23 $2
Portfolio turnover rate................... 39%(1) 113%
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .... $ 6.82 $ 6.83
------------------ ----------------
Net investment income..................... 0.37 0.07
Net realized and unrealized loss ........ (0.07) (0.03)
------------------ ----------------
Total from investment operations.......... 0.30 0.04
------------------ ----------------
Less dividends from net invesment income . (0.35) (0.05)
------------------ ----------------
Net asset value, end of period............ $ 6.77 $ 6.82
================== ================
TOTAL INVESTMENT RETURN+.................. 4.54%(1) 0.62%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................. 1.23%(2) 1.42%(2)
Net investment income..................... 10.83%(2) 11.28%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions ... $1,733 $16
Portfolio turnover rate................... 39%(1) 113%
</TABLE>
- ------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH YIELD SECURITIES INC.
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JULY 28, 1997*
MONTHS ENDED THROUGH
FEBRUARY 28, AUGUST 31,
1998++ 1997++
- ----------------------------------------- ------------------ ----------------
(UNAUDITED)
<S> <C> <C>
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .... $ 6.82 $ 6.83
------------------ ----------------
Net investment income..................... 0.37 0.07
Net realized and unrealized loss ........ (0.06) (0.03)
------------------ ----------------
Total from investment operations.......... 0.31 0.04
------------------ ----------------
Less dividends from net investment
income................................... (0.35) (0.05)
------------------ ----------------
Net asset value, end of period............ $ 6.78 $ 6.82
================== ================
TOTAL INVESTMENT RETURN+.................. 4.62%(1) 0.62%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................. 1.39%(2) 1.52%(2)
Net investment income..................... 10.82%(2) 11.18%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions ... $32 $5
Portfolio turnover rate................... 39%(1) 113%
</TABLE>
- ------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
BOARD OF DIRECTORS
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Peter M. Avelar
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records
of the Fund without examination by the independent accountants and
accordingly they do not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and directors,
fees, expenses and other pertinent information, please see the prospectus of
the Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
HIGH YIELD
SECURITIES
SEMIANNUAL REPORT
FEBRUARY 28, 1998
