<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
-----------------------------------------------------------------------------
Fixed-income market conditions have steadily improved since late last
year. Bonds began to rally on signs of slower economic growth in the wake of
progressive tightening of monetary policy by the Federal Reserve Board. The
trend toward lower long-term interest rates reversed the prevailing pattern
during 1994, when rapidly rising rates created a severe bear market in bonds.
Long-term municipal bond yields, as tracked by The Bond Buyer Revenue Bond
Index* , moved from 6.97 percent in December to 6.28 percent at the end of
June. This 69 basis point decline in yield corresponded to a 6 percent price
increase for municipal bonds with 30-year maturities. One-year yields
declined 116 basis points over the past six months and the yield spread
(difference between long- and short-term municipal bond interest rates)
widened.
The seasonal demand for municipals in December and January more than
offset the uncertainty caused by the Orange County, California bankruptcy
filing. Tax-exempt bonds outperformed U.S. Treasury bonds through February.
The ratio of the Revenue Bond Index yield to the 30-year U.S. Treasury bond
yield moved from a high of 89 percent in December to 84 percent by the end of
February. A declining ratio means that municipal bond prices have been
stronger than U.S. Treasury prices. Congressional tax reform proposals that
advocated the flat tax concept were partially responsible for municipals
underperforming Treasuries from March through June. By the end of June, the
Revenue Bond Index/Treasury bond yield ratio had risen to 95 percent.
The pace of new-issue underwriting over the first six months of 1995 was
25 percent below the same period last year. With bond maturities and calls
for redemption estimated to exceed new issues coming to market this year, the
outstanding supply of municipal securities is expected to decline. This
scarcity of municipal issues should strengthen market conditions.
PERFORMANCE
Dean Witter Tax-Exempt Securities Trust's total return for the first half
of 1995 was 9.11 percent. The Fund's net asset value on June 30, 1995 was
$11.67 per share. Tax-free dividends totaling $0.33 per share were
distributed during this period. At the end of June, the Fund had net assets
in excess of $1.3 billion. Since its inception on March 27, 1980, the Fund
has provided shareholders with an average annual total return of 9.89
percent.
PORTFOLIO STRUCTURE
The Fund reduced its defensive position of short-term investments and
refunded bonds (backed by U.S. government securities held in escrow) from 21
to 18 percent of net assets over the past six months. Long-term investments
were diversified among 14 specific municipal sectors and 121 separate
credits. The three largest municipal sectors-electric revenue bonds, refunded
issues and general obligation
----------------
*The Bond Buyer Revenue Bond Index is an arithmetic average of the yields of
25 selected municipal revenue bonds with 30-year maturities. Credit ratings
of these bonds range from Aa1 to Baa1 by Moody's and AA+ to A- by Standard &
Poor's.
<PAGE>
bonds-represented 35 percent of net assets. New York, California,
Massachusetts, Pennsylvania and Washington contain the largest amount of
long-term, unrefunded holdings among the 36 states represented in the
portfolio. The average maturity and call protection of the Fund's long-term
holdings was 18 and 7 years, respectively. The credit quality ratings of the
long-term portfolio are summarized below:
<TABLE>
<CAPTION>
MOODY'S OR STANDARD & POOR'S RATINGS PERCENT
--------------------------------------- -----------
<S> <C>
Aaa or AAA ............................. 37%
Aa or AA ............................... 25
A or A ................................. 27
Baa or BBB ............................. 6
Not rated .............................. 5
</TABLE>
LOOKING AHEAD
Slower economic growth in 1995 and the extent of the Federal Reserve
Board's previous interest rate moves have improved bond market expectations.
The decreasing supply of municipal bonds as a result of significant bond
maturities, calls for redemption and diminished new-issue supply should be
positive for the market. Tax reduction proposals will continue to receive
publicity and cloud the outlook for municipal bonds. However, to achieve
significant reductions in tax rates, elected officials and the public must
address difficult issues such as the mortgage interest deduction and
middle-class tax burden. With long-term tax-exempt bonds yielding more than
90 percent of the yield on Treasuries, the market appears to have discounted
much of the possibility that a flat tax might eventually become law.
Among the factors that will determine the Fund's future dividend level are
changes in market yields and the sale of portfolio holdings which are
expected to be redeemed. Even with the move to higher yields that occurred
last year, the Fund cannot replace the yield attributable to many older
investments which may be called or sold in the next few years.
We appreciate your ongoing support of Dean Witter Tax-Exempt Securities
Trust 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 TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS June 30, 1995 (unaudited)
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<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
------------ --------- ---------- --------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (94.5%)
GENERAL OBLIGATION (8.6%)
North Slope Borough, Alaska,
$ 3,500 Refg 1990 Ser I (MBIA) ........................................... 0.00% 06/30/99 $ 2,868,110
3,900 Ser 1992 A (MBIA) ................................................ 0.00 06/30/03 2,518,815
5,000 Ser 1992 A Conv (MBIA) ........................................... 5.90 06/30/03 5,223,350
15,000 Ser 1994 B (CGIC) ................................................ 0.00 06/30/05 8,500,950
4,000 Connecticut, College Savings 1989 Ser A ........................... 0.00 07/01/08 1,916,360
10,000 Florida Board of Education, Capital Outlay Refg 1995 Ser A ....... 5.50 06/01/13 9,603,300
Massachusetts,
1,500 Refg 1992 Ser B ................................................... 6.50 08/01/08 1,622,505
10,000 Refg 1993 Ser A .................................................. 5.50 02/01/11 9,526,800
8,000 1994 Ser C (FGIC) ................................................ 6.75 11/01/12 8,618,160
4,000 Clark County, Nevada, Transportation Ser 1992 A (AMBAC) .......... 6.50 06/01/17 4,236,760
New York City, New York,
12,000 1990 Ser D ........................................................ 6.00 08/01/07 11,687,640
10,000 1990 Ser D ....................................................... 6.00 08/01/08 9,682,600
10,000 Pennsylvania, First Ser 1995 (FGIC) ............................... 5.50 05/01/12 9,617,100
7,500 Shelby County, Tennessee, Refg 1995 Ser A ......................... 5.625 04/01/14 7,283,625
20,120 King County, Washington, Ltd Tax 1995 (MBIA) ...................... 6.00 01/01/23 19,643,559
------------ --------------
124,520 112,549,634
------------ --------------
EDUCATIONAL FACILITIES REVENUE (5.3%)
10,000 FSU Financial Assistance Inc, Florida, Impr & Refg Ser 1994 ...... 5.25 10/01/15 9,348,500
7,000 Massachusetts Health & Educational Facilities Authority,
Boston University Ser (MBIA) ...................................... 6.66 10/01/31 7,375,060
15,000 New Hampshire Higher Educational & Health Facilities Authority,
Dartmouth College Ser 1993 ........................................ 5.375 06/01/23 13,888,950
2,000 New Jersey Development Authority, The Seeing Eye Inc 1991 ........ 7.30 04/01/11 2,044,700
New York State Dormitory Authority, State University
5,000 Ser 1989 B ....................................................... 0.00 05/15/02 3,354,650
20,000 Ser 1990 B ....................................................... 7.00 05/15/16 20,814,800
10,000 New York State, City University - John Jay College COPs .......... 7.25 08/15/07 10,338,000
2,000 Pennsylvania Higher Educational Facilities Authority, University
of Pennsylvania Ser 1987 .......................................... 6.625 01/01/17 2,046,560
------------ --------------
71,000 69,211,220
------------ --------------
ELECTRIC REVENUE (14.0%)
25,000 Salt River Project Agricultural Improvement & Power District,
Arizona, Refg 1993 Ser C .......................................... 5.50 01/01/10 24,510,750
10,000 Sacramento Municipal Utility District, California, Refg 1994 Ser I
(MBIA) ............................................................ 5.75 01/01/15 9,603,700
20,000 Southern California Public Power Authority, Mead - Adelanto 1994
Ser A (AMBAC) ..................................................... 5.15 07/01/15 18,187,200
10,000 Municipal Electric Authority of Georgia, Fifth Crossover Ser ..... 6.50 01/01/17 10,365,600
19,000 Nebraska Public Power District, Power 1993 Ser C .................. 5.00 01/01/17 16,617,400
15,000 New York State Power Authority, Gen Purpose Ser CC ................ 5.25 01/01/18 13,517,850
5,000 North Carolina Municipal Power Agency #1, Catawba Ser 1988 ....... 6.00 01/01/15 4,762,850
Puerto Rico Electric Power Authority, Power
6,000 Ser N ............................................................ 5.00 07/01/12 5,313,240
15,000 Ser O ............................................................ 0.00 07/01/17 3,946,950
15,000 South Carolina Public Service Authority, 1995 Refg Ser A (AMBAC)
(WI) .............................................................. 6.25 01/01/22 15,174,750
6,000 Austin, Texas, Combined Utilities Refg Ser 1993 A ................. 5.75 11/15/13 5,788,500
</TABLE>
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS June 30, 1995 (unaudited) (continued)
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
------------ --------- ---------- --------------
<C> <S> <C> <C> <C>
Intermountain Power Agency, Utah,
$ 15,000 Refg 1985 Ser H .................................................. 6.00% 07/01/21 $ 14,289,900
5,000 Refg 1985 Ser I .................................................. 6.00 07/01/21 4,840,250
8,000 Refg 1993 Ser A .................................................. 5.00 07/01/23 6,863,520
8,000 Lewis County Public Utility District #1, Washington, Cowlitz Falls
Hydro Refg Ser 1993 ............................................... 5.50 10/01/13 7,601,600
8,000 Snohomish County Public Utility District #1, Washington,
1993 Ser (FGIC) ................................................... 6.00 01/01/18 7,816,560
15,000 Washington Public Power Supply System, Proj #2 Refg Ser 1994 A ... 6.00 07/01/07 15,179,100
------------ --------------
205,000 184,379,720
------------ --------------
HOSPITAL REVENUE (7.4%)
3,000 Baxter County, Arkansas, Baxter County Regional Hospital Inc Impr
& Refg Ser 1992 ................................................... 7.50 09/01/21 3,155,760
10,000 California Health Facilities Financing Authority,
Kaiser Permanente Ser 1985 ........................................ 5.55 08/15/25 8,980,000
3,850 Colorado Springs, Colorado, Memorial Hospital Refg Ser 1995 (MBIA) 6.00 12/15/24 3,802,645
6,000 Connecticut Health & Educational Facilities Authority,
Yale-New Haven Hospital Ser F (MBIA) .............................. 7.10 07/01/25 6,545,100
Massachusetts Health & Educational Facilities Authority,
1,500 Malden Hospital - FHA Insured Mtge Ser A ......................... 5.00 08/01/16 1,289,685
10,000 New England Medical Center Ser G (MBIA) .......................... 5.375 07/01/24 9,006,900
Rochester, Minnesota, Mayo Foundation/Mayo Medical Center
7,000 Ser 1992 I ....................................................... 5.75 11/15/21 6,805,120
3,700 Ser 1992 F ....................................................... 6.25 11/15/21 3,754,649
15,000 Missouri Health & Educational Facilities Authority,
Barnes-Jewish Inc/Christian Health Services Ser 1993 A ........... 5.25 05/15/14 13,738,050
6,000 New York State Medical Care Facilities Finance Agency,
Presbyterian Hospital - FHA Insured Mtge 1984 Ser A Refg ......... 5.25 08/15/14 5,601,480
10,000 Charlotte-Mecklenburg County Hospital Authority, North Carolina,
Ser 1992 .......................................................... 6.00 01/01/22 9,999,800
4,000 Cuyahoga County, Ohio, The Cleveland Clinic Foundation
Refg Ser 1988 A ................................................... 8.00 12/01/15 4,293,200
9,000 North Central Texas Health Facilities Development Corporation,
University Medical Center Inc Ser 1987 ............................ 7.75 04/01/17 9,212,040
7,000 Fairfax County Industrial Development Authority, Virginia,
Inova Health System Foundation Refg Ser 1993 A .................... 5.25 08/15/19 6,401,080
5,000 University of Virginia, Refg Ser E ................................ 6.00 06/01/13 4,945,600
------------ --------------
101,050 97,531,109
------------ --------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (7.4%)
10,000 Jefferson County, Kentucky, Louisville Gas & Electric Co 1993
Ser B ............................................................. 5.625 08/15/19 9,487,600
1,510 Maryland Industrial Development Financing Authority,
Medical Waste Assocs LP 1989 Ser (AMT) ............................ 8.75 11/15/10 1,510,000
7,000 Becker, Minnesota, Northern States Power Co Ser A 1989 ........... 6.80 04/01/07 7,351,400
18,000 Claiborne County, Mississippi, Middle South Energy Inc Ser C ..... 9.875 12/01/14 20,922,300
10,000 Clark County, Nevada, Nevada Power Co Ser 1992 A (AMT) (FGIC) .... 6.70 06/01/22 10,442,300
10,000 Washoe County, Nevada, Sierra Pacific Power Co Ser 1987 (AMBAC) .. 6.30 12/01/14 10,166,700
</TABLE>
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS June 30, 1995 (unaudited) (continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
------------ --------- ---------- --------------
<C> <S> <C> <C> <C>
$ 8,000 Alliance Airport Authority, Texas, AMR Corp Ser 1990 (AMT) ....... 7.50% 12/01/29 $ 8,326,240
Matagorda County Navigational District #1, Texas,
Central Power & Light Co
7,000 Collateralized Ser 1984 A ........................................ 7.50 12/15/14 7,697,060
10,000 Ser 1986 (AMT) ................................................... 7.875 12/01/16 10,496,600
10,000 Weston, Wisconsin, Wisconsin Public Service Corp Refg Ser 1993 A . 6.90 02/01/13 10,695,300
------------ --------------
91,510 97,095,500
------------ --------------
MORTGAGE REVENUE - MULTI-FAMILY (2.5%)
Massachusetts Housing Finance Agency,
4,875 GNMA-Backed Ser 1985 A ........................................... 9.125 12/01/20 5,097,446
2,060 Hsg Dev 1986 Ser A (AMT) ......................................... 7.75 12/01/19 2,140,423
7,000 Michigan Housing Development Authority, Rental Ser A (Bifurcated
FSA) .............................................................. 6.50 04/01/23 7,105,980
New York City Housing Development Corporation, New York,
4,619 Ruppert Proj - FHA Insured Sec 223F .............................. 6.50 11/15/18 4,702,305
4,479 Stevenson Commons Proj - FHA Insured Sec 223F .................... 6.50 05/15/18 4,526,392
9,000 Wisconsin Housing & Economic Development Authority,
Home Ownership 1991 Ser (AMT) ..................................... 7.10 10/25/22 9,401,490
------------ --------------
32,033 32,974,036
------------ --------------
MORTGAGE REVENUE - SINGLE FAMILY (5.1%)
2,440 California Housing Finance Agency, Home Cap Apprec 1983 Ser B .... 0.00 08/01/15 307,050
12,100 Illinois Housing Development Authority, Residential 1991 Ser C
(AMT) ............................................................. 6.875 02/01/18 12,538,504
8,100 Nebraska Investment Finance Authority, GNMA-Backed 1990 Ser (AMT) 7.631 09/10/30 8,676,477
4,010 North Carolina Housing Finance Agency, Ser Q (AMT) ................ 8.00 03/01/18 4,227,462
7,500 Ohio Housing Finance Agency, GNMA-Backed 1990 Ser A (AMT) ........ 6.903 03/01/31 7,760,025
Pennsylvania Housing Finance Agency,
8,000 Ser 1993-37 A .................................................... 5.45 10/01/17 7,370,400
10,000 Ser 1991-31 (AMT) ................................................ 7.00 10/01/23 10,463,100
Tennessee Housing Development Agency, Mortgage Finance
4,000 1993 Ser A ....................................................... 5.90 07/01/18 3,872,880
12,700 1993 Ser A ....................................................... 5.95 07/01/28 12,221,591
------------ --------------
68,850 67,437,489
------------ --------------
NURSING & HEALTH RELATED FACILITIES REVENUE (0.3%)
4,000 Maine Health & Higher Educational Facilities Authority, Ser 1992 B
(FSA) ............................................................. 5.50 07/01/22 3,659,520
------------ --------------
PUBLIC FACILITIES REVENUE (3.6%)
10,000 Los Angeles Convention & Exhibition Center Authority, California,
1993 Refg Ser A COPs (MBIA) ....................................... 5.375 08/15/18 9,176,100
5,000 Palm Beach County, Florida, Criminal Justice Ser 1990 (FGIC) ..... 6.00 06/01/13 5,020,800
10,000 Metropolitan Pier & Exposition Authority, Illinois, McCormick
Place Ser 1992 A .................................................. 6.50 06/15/27 10,242,500
10,000 Michigan Building Authority, 1993 Refg Ser I (AMBAC) ............. 5.30 10/01/16 9,198,100
6,000 Saint Louis Industrial Development Authority, Missouri,
Kiel Center Refg Ser 1992 (AMT) ................................... 7.75 12/01/13 6,238,980
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS June 30, 1995 (unaudited) (continued)
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
------------ --------- ---------- --------------
<C> <S> <C> <C> <C>
Ohio Building Authority, Correctional
$ 5,000 1985 Ser C BIGS .................................................. 9.75%+ 10/01/05 $ 5,979,200
2,000 Refg 1986 Ser B .................................................. 7.125 09/01/09 2,092,820
------------ --------------
48,000 47,948,500
------------ --------------
RESOURCE RECOVERY REVENUE (6.7%)
Connecticut Resources Recovery Authority,
9,000 American REF-FUEL Co of Southeastern Connecticut 1988 Ser A
(AMT) ............................................................. 8.00 11/15/15 9,920,610
4,950 Bridgeport RESCO Ser A ........................................... 7.625 01/01/09 5,212,449
6,835 Broward County, Florida, SES Broward County South Ser 1984 ....... 7.95 12/01/08 7,497,653
7,000 Savannah Resource Recovery Development Authority, Georgia,
Savannah Energy Systems Co Ser 1992 ............................... 6.30 12/01/06 7,206,710
10,000 Northeast Maryland Waste Disposal Authority, Montgomery County Ser
1993 A (AMT) ...................................................... 6.30 07/01/16 9,885,300
3,000 Greater Detroit Resource Recovery Authority, Michigan, Ser C ..... 9.25 12/13/08 3,133,530
9,000 Mercer County Improvement Authority, New Jersey, Refg Ser A 1992
(AMT) (FGIC) ...................................................... 6.70 04/01/13 9,404,280
9,000 Union County Utilities Authority, New Jersey, 1991 Ser A (AMT) ... 7.20 06/15/14 9,292,950
10,000 Hempstead Industrial Development Agency, New York,
1985 American REF-FUEL Co of Hempstead ............................ 7.40 12/01/10 10,307,600
6,000 New York State Environmental Facilities Corporation, Huntington
1989 Ser A (AMT) .................................................. 7.50 10/01/12 6,255,840
5,000 Onondaga County Resource Recovery Agency, New York, 1992 Ser (AMT) 6.875 05/01/06 4,971,050
5,000 Fairfax County Economic Development Authority, Virginia,
Ogden Martin Systems of Fairfax Inc Ser 1988 A (AMT) ............. 7.75 02/01/11 5,448,950
------------ --------------
84,785 88,536,922
------------ --------------
TRANSPORTATION FACILITIES REVENUE (9.6%)
Mid-Bay Bridge Authority, Florida,
8,965 Sr Lien Crossover Refg Ser 1993 A ................................ 6.00 10/01/13 8,534,590
2,500 Jr Lien Advance Refg Ser 1993 D .................................. 6.125 10/01/22 2,309,000
10,000 Atlanta, Georgia, Airport Ser 1990 (AMT) .......................... 6.25 01/01/21 9,949,400
8,100 Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales Tax
Refg Ser K ........................................................ 7.25 07/01/10 8,796,762
5,000 Hawaii, Airports Second Ser 1991 (AMT) ............................ 7.00 07/01/18 5,198,300
Kentucky Turnpike Authority,
9,000 Economic Development Road Refg Ser 1995 (AMBAC) .................. 6.50 07/01/08 9,907,470
30,000 Resource Recovery Road Refg 1987 Ser A ........................... 5.00 07/01/08 28,063,200
11,000 New Jersey Highway Authority, Sr Parkway Refg 1992 Ser ........... 6.25 01/01/14 11,247,060
7,000 Ohio Turnpike Commission, 1994 Ser A .............................. 5.75 02/15/24 6,687,870
Pennsylvania Turnpike Commission,
5,000 Ser L of 1991 (MBIA) ............................................. 6.00 06/01/15 4,942,400
10,000 Ser A of 1986 .................................................... 6.00 12/01/17 9,926,300
10,000 Puerto Rico Highway & Transportation Authority, Refg Ser X ....... 5.50 07/01/15 9,388,800
4,000 Virginia Transportation Board, US Route 58 Corridor Ser 1993 B ... 5.625 05/15/13 3,849,240
7,000 Port of Seattle, Washington, Ser 1992 B (AMT) ..................... 6.00 11/01/17 6,839,350
------------ --------------
127,565 125,639,742
------------ --------------
WATER & SEWER REVENUE (8.1%)
10,000 Birmingham Water Works & Sewer Board, Alabama, Ser 1994 .......... 5.50 01/01/20 9,301,900
10,000 Phoenix Civic Improvement Corporation, Arizona, Jr Lien Water Ser
1994 .............................................................. 5.45 07/01/19 9,365,300
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS June 30, 1995 (unaudited) (continued)
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
------------ --------- ---------- --------------
<C> <S> <C> <C> <C>
$ 10,000 California Department of Water Resources, Central Valley Refg
Ser L ............................................................ 5.50% 12/01/23 $ 9,069,400
5,000 Central Coast Water Authority, California, Ser 1992 (AMBAC) ...... 6.60 10/01/22 5,282,800
19,750 East Bay Municipal Utility District, California, Water Refg Ser
1993 (MBIA) ....................................................... 5.00 06/01/21 17,006,330
10,000 Los Angeles, California, Wastewater Ser 1994-A (MBIA) ............ 5.875 06/01/24 9,629,800
2,315 Boston Water & Sewer Commission, Massachusetts, Ser A 1986 ....... 7.875 11/01/13 2,463,831
Massachusetts Water Resources Authority,
10,000 1993 Ser C ....................................................... 5.25 12/01/15 9,057,600
10,000 Refg 1992 Ser B .................................................. 5.50 11/01/15 9,272,300
4,000 Detroit, Michigan, Sewage Refg Ser 1993-A (FGIC) .................. 5.70 07/01/13 3,851,960
8,500 New York City Municipal Water Finance Authority, New York, 1994
Ser B ............................................................. 5.30 06/15/06 8,347,510
Philadelphia, Pennsylvania, Water & Wastewater
10,000 Ser 1993 (CGIC) .................................................. 5.50 06/15/15 9,301,600
5,000 Ser 1995 (MBIA) .................................................. 5.625 08/01/18 4,709,850
------------ --------------
114,565 106,660,181
------------ --------------
OTHER REVENUE (2.8%)
3,500 Denver, Colorado, Excise Tax Ser 1985 A ........................... 5.00 11/01/08 3,301,095
New York Local Government Assistance Corporation,
9,000 Ser 1993 C Refg .................................................. 5.375 04/01/14 8,275,950
11,000 Ser 1994 A ....................................................... 5.50 04/01/17 10,335,380
10,000 Ser 1995 A ....................................................... 6.00 04/01/24 9,692,900
5,000 Houston, Texas, Sr Lien Hotel Occupancy Tax Refg Ser 1995 (FSA) .. 5.50 07/01/11 4,814,700
------------ --------------
38,500 36,420,025
------------ --------------
REFUNDED (13.1%)
9,000 Los Angeles Convention & Exhibition Center Authority, California,
Ser 1985 COPs ..................................................... 9.00 12/01/20 11,912,670
10,000 University of California, UCLA Medical Center Ser 1986 ........... 6.90 12/01/16 10,594,900
7,500 South Central Connecticut Regional Water Authority, 1986 Ser ..... 7.125 08/01/12 7,899,900
8,160 Altamonte Springs Health Facilities Authority, Florida,
Adventist Health/Sunbelt Inc Ser 1984 (MBIA) ...................... 7.90 10/01/14 8,705,741
2,500 Mid-Bay Bridge Authority, Florida, Ser 1991 A
(Crossover Refunded) .............................................. 6.875 10/01/22 2,798,725
4,750 Baltimore, Maryland, Water Refg Ser 1990-A (MBIA) ................. 6.50 07/01/20 5,140,355
8,000 Massachusetts Health & Educational Facilities Authority,
Brigham & Women's Hospital Ser B .................................. 7.125 07/01/07 8,252,800
8,500 Albuquerque, New Mexico, Joint Water & Sewer 1986 Ser A .......... 6.00 07/01/15 9,010,765
14,000 New York State Dormitory Authority, Suffolk County Judicial Ser
1986 (ETM) ........................................................ 7.375 07/01/16 16,299,780
10,000 Ohio Building Authority, Correctional 1986 Ser A .................. 7.35 08/01/06 11,227,000
25,000 Intermountain Power Agency, Utah, Refg 1985 Ser H (GAINS) ........ 10.00+ 07/01/12 21,577,250
5,000 Salt Lake City, Utah, IHC Hospital Inc Ser of 1983 (ETM) ......... 5.00 06/01/15 4,365,200
10,000 Fairfax County, Virginia, Sewer Ser A (AMBAC) ..................... 7.00 11/15/16 11,155,200
28,000 Fairfax County Industrial Development Authority, Virginia,
Fairfax Hospital System Inc/Inova Health Ser 1991 ................. 6.801 08/29/23 31,433,640
10,000 Richmond, Virginia, Public Utilities Ser A ........................ 8.00 01/15/18 11,084,100
------------ --------------
160,410 171,458,026
------------ --------------
1,271,788 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $1,188,102,364) ................................... 1,241,501,624
------------ --------------
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
PORTFOLIO OF INVESTMENTS June 30, 1995 (unaudited) (continued)
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
------------ --------- ---------- --------------
<C> <S> <C> <C> <C>
SHORT-TERM MUNICIPAL OBLIGATIONS (5.2%)
$ 20,000 Massachusetts, Fiscal Recovery 1990 Ser A ......................... 7.25% 06/01/96 $ 20,614,800
12,000 Grapevine Industrial Development Corporation, Texas, American
Airlines Inc Ser 1985 (mandatory put 12/01/95) .................... 9.25 12/01/12 12,487,080
11,000 Gulf Coast Waste Disposal Authority, Texas, Amoco Oil Co
Ser 1992 (Demand 07/03/95) ........................................ 4.40* 10/01/17 11,000,000
24,000 Salt Lake, Utah, Service Station Holdings (Demand 07/03/95) ...... 4.25* 02/01/08 24,000,000
------------ --------------
67,000 TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS
(IDENTIFIED COST $67,067,845) ............................................................ 68,101,880
------------ --------------
$1,338,788 TOTAL INVESTMENTS (IDENTIFIED COST $1,255,170,209) (A) ........... 99.7% 1,309,603,504
============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .................... 0.3 4,588,527
---------- --------------
NET ASSETS ........................................................ 100.0% $1,314,192,031
========== ==============
<FN>
---------------
AMT Alternative Minimum Tax.
BIGS Bond Income Growth Security.
COPs Certificates of Participation.
ETM Escrowed to Maturity.
GAINS Growth and Income Security.
WI Security purchased on a when issued basis.
* Current coupon of variable rate security.
+ Currently a zero coupon bond that will convert to interest rate shown at
a future date.
(a) The aggregate cost for federal income tax purposes is $1,255,170,209; the
aggregate gross unrealized appreciation is $76,988,873 and the aggregate
gross unrealized depreciation is $22,555,578, resulting in net unrealized
depreciation of $54,433,295.
Bond Insurance:
---------------
AMBAC AMBAC Indemnity Corporation.
CGIC Capital Guaranty Insurance Company.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Company.
</TABLE>
-------------------------------------------------------------------------------
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
<S> <C>
Alabama .........0.7%
Alaska ......... 1.4
Arizona ........ 2.6
Arkansas ....... 0.2
California ..... 8.4
Colorado ....... 0.5
Connecticut ... 2.4
Florida ........ 4.1
Georgia ........ 2.8
Hawaii ......... 0.4
Illinois ....... 1.7
Kentucky ....... 3.6
Maine .......... 0.3
Maryland ....... 1.3%
Massachusetts . 7.2
Michigan ....... 1.8
Minnesota ...... 1.4
Mississippi ... 1.6
Missouri ....... 1.5
Nebraska ....... 1.9
Nevada ......... 1.9
New Hampshire . 1.1
New Jersey ..... 2.4
New Mexico ..... 0.7
New York ....... 12.1
North Carolina 1.4%
Ohio ........... 2.9
Pennsylvania .. 4.4
Puerto Rico ... 1.4
South Carolina 1.2
Tennessee ...... 1.8
Texas .......... 5.3
Utah ........... 5.8
Virginia ....... 5.7
Washington ..... 4.3
Wisconsin ...... 1.5
------
Total .......... 99.7%
======
</TABLE>
-------------------------------------------------------------------------------
See Notes to Financial Statements
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
FINANCIAL STATEMENTS
-----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995 (unaudited)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $1,255,170,209) .......... $1,309,603,504
Cash ....................................... 435,873
Receivable for:
Interest .................................. 20,191,063
Shares of beneficial interest sold ....... 539,805
Prepaid expenses and other assets .......... 65,814
--------------
TOTAL ASSETS ............................ 1,330,836,059
--------------
LIABILITIES:
Payable for:
Investments purchased ..................... 14,536,663
Shares of beneficial interest repurchased 1,085,814
Investment management fee ................. 465,794
Dividends to shareholders ................. 417,040
Accrued expenses and other payables ....... 138,717
--------------
TOTAL LIABILITIES ....................... 16,644,028
--------------
NET ASSETS:
Paid-in-capital ............................ 1,250,665,990
Net unrealized appreciation ................ 54,433,295
Accumulated undistributed net realized gain 9,092,746
--------------
NET ASSETS .............................. $1,314,192,031
==============
NET ASSET VALUE PER SHARE, 112,584,704
shares outstanding (unlimited shares
authorized of $.01 par value) ............. $11.67
==============
MAXIMUM OFFERING PRICE PER SHARE, (net
asset value plus 4.17% of net asset
value)* ................................... $12.16
==============
</TABLE>
---------------
*On sales of $25,000 or more the offering price is reduced.
STATEMENT OF OPERATIONS
For the six months ended June 30, 1995 (unaudited)
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME ....................... $ 41,894,223
--------------
EXPENSES
Investment management fee ............ 2,796,912
Transfer agent fees and expenses .... 244,299
Shareholder reports and notices ..... 45,176
Professional fees .................... 36,825
Trustees' fees and expenses .......... 14,421
Registration fees .................... 13,868
Custodian fees ....................... 238
Other ................................ 25,079
--------------
TOTAL EXPENSES ...................... 3,176,818
--------------
NET INVESTMENT INCOME ............... 38,717,405
--------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain .................... 9,126,306
Net change in unrealized depreciation 68,403,422
--------------
NET GAIN ............................ 77,529,728
--------------
NET INCREASE ........................ $116,247,133
==============
</TABLE>
---------------
See Notes to Financial Statements
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
FINANCIAL STATEMENTS (continued)
-----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR
ENDED JUNE 30, 1995 ENDED DECEMBER
(UNAUDITED) 31, 1994
----------------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ...................................... $ 38,717,405 $ 86,889,974
Net realized gain .......................................... 9,126,306 317,254
Net change in unrealized appreciation/depreciation ......... 68,403,422 (174,483,958)
----------------------- -----------------
Net increase (decrease) ................................... 116,247,133 (87,276,730)
----------------------- -----------------
Dividends and distributions to shareholders from:
Net investment income ...................................... (38,943,406) (86,663,973)
Net realized gain .......................................... (316,958) (3,275,754)
----------------------- -----------------
Total ..................................................... (39,260,364) (89,939,727)
Net decrease from transactions in shares of beneficial
interest ..................................................... (58,078,199) (109,486,128)
----------------------- -----------------
Total increase (decrease) ................................. 18,908,570 (286,702,585)
NET ASSETS:
Beginning of period .......................................... 1,295,283,461 1,581,986,046
----------------------- -----------------
END OF PERIOD (including undistributed net investment income
of $0 and $226,001, respectively) ........................... $1,314,192,031 $1,295,283,461
======================= =================
</TABLE>
See Notes to Financial Statements
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited)
-----------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- Dean Witter Tax-Exempt Securities
Trust (the "Fund") is registered under the Investment Company Act of 1940, as
amended (the "Act"), as a diversified, open-end management investment
company. The Fund was incorporated in Maryland in 1979, reorganized as a
Massachusetts business trust on April 30, 1987 and commenced operations on
March 27, 1980.
The following is a summary of significant accounting policies:
A. Valuation of Investments -- Portfolio securities are valued for the
Fund by an outside independent pricing service approved by the Trustees. The
pricing service has informed the Fund that in valuing the Fund's portfolio
securities, it uses both a computerized matrix of tax-exempt securities and
evaluations by its staff, in each case based on information concerning market
transactions and quotations from dealers which reflect the bid side of the
market each day. The Fund's portfolio securities are thus valued by reference
to a combination of transactions and quotations for the same or other
securities believed to be comparable in quality, coupon, maturity, type of
issue, call provisions, trading characteristics and other features deemed to
be relevant. 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. The Fund amortizes premiums and accretes discounts on securities
purchased over the life of the respective securities. Interest income is
accrued daily.
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 and nontaxable 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 its Investment Manager a
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
-----------------------------------------------------------------------------
management fee, accrued daily and payable monthly, by applying the following
annual rates to the Fund's net assets 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 $1.25 billion; and
0.325% to the portion of daily net assets exceeding $1.25 billion.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities,
equipment, clerical, bookkeeping and certain legal services and pays the
salaries of all personnel, including officers of the Fund who are employees
of the Investment Manager. The Investment Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the
Fund.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended June 30, 1995 aggregated
$150,011,092 and $121,010,100, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At June 30, 1995, the Fund had
transfer agent fees and expenses payable of approximately $43,000.
The Fund established an unfunded noncontributory defined benefit pension
plan covering all independent Trustees of the Fund who will have served as
independent Trustees for at least five years at the time of retirement.
Benefits under this plan are based on years of service and compensation
during the last five years of service. Aggregate pension costs for the six
months ended June 30, 1995 included in Trustees' fees and expenses in the
Statement of Operations amounted to $4,047. At June 30, 1995, the Fund had an
accrued pension liability of $49,878 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 six months ended June 30, 1995, it received
approximately $423,000 in commissions from the sale of the Fund's shares.
Such commissions are not an expense of the Fund; they are deducted from the
proceeds of the shares.
4. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994
------------------------------ -------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sold ......................... 1,801,832 $ 20,690,488 7,312,606 $ 84,305,647
Reinvestment of dividends and
distributions ............... 1,858,867 21,570,216 4,215,782 50,735,434
------------- --------------- -------------- ---------------
3,660,699 42,260,704 11,528,388 135,041,081
Repurchased .................. (8,678,690) (100,338,903) (21,399,631) (244,527,209)
------------- --------------- -------------- ---------------
Net decrease ................. (5,017,991) $ (58,078,199) (9,871,243) $(109,486,128)
============= =============== ============== ===============
</TABLE>
<PAGE>
DEAN WITTER TAX-EXEMPT SECURITIES TRUST
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED DECEMBER 31,
JUNE 30, 1995 -------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
--------------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ... $11.01 $12.41 $11.88 $11.65 $11.09 $11.28
--------------- --------- -------- -------- -------- --------
Net investment income ................... 0.33 0.70 0.77 0.79 0.80 0.80
Net realized and unrealized gain (loss) 0.66 (1.37) 0.54 0.23 0.56 (0.18)
--------------- --------- -------- -------- -------- --------
Total from investment operations ....... 0.99 (0.67) 1.31 1.02 1.36 0.62
--------------- --------- -------- -------- -------- --------
Less dividends and distributions from:
Net investment income .................. (0.33) (0.70) (0.77) (0.79) (0.80) (0.81)
Net realized gain ...................... -- * (0.03) (0.01) -- -- --
--------------- --------- -------- -------- -------- --------
Total dividends and distributions ...... (0.33) (0.73) (0.78) (0.79) (0.80) (0.81)
--------------- --------- -------- -------- -------- --------
Net asset value, end of period .......... $11.67 $11.01 $12.41 $11.88 $11.65 $11.09
=============== ========= ======== ======== ======== ========
TOTAL INVESTMENT RETURN+ ................ 9.11%(1) (5.55)% 11.23% 9.09% 12.71% 5.86%
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................... 0.48%(2) 0.47% 0.47% 0.49% 0.51% 0.51%
Net investment income .................. 5.86%(2) 6.02% 6.23% 6.74% 7.05% 7.25%
SUPPLEMENTAL DATA:
Net assets, end of period
(in millions) .......................... $1,314 $1,295 $1,582 $1,323 $1,145 $1,010
Portfolio turnover rate ................. 10%(1) 16% 13% 4% 10% 19%
</TABLE>
---------------
* Includes a distribution of $0.003 per share.
+ Does not reflect the deduction of sales load.
(1) Not annualized.
(2) Annualized.
See Notes to Financial Statements
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records
of the Fund without examination by the independent accountants and
accordingly they do not express an opinion thereon.
This report is submitted for the general information of shareholders of
the Fund. For more detailed information about the Fund, its officers and
trustees, fees, expenses and other pertinent information, please see the
prospectus of the Fund.
This report is not authorized for distribution to prospective investors
in the Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
TAX-EXEMPT
SECURITIES
TRUST
SEMIANNUAL REPORT
JUNE 30, 1995
