<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
During the greater part of the past 12 months, a relatively low inflation
rate and stable consumer prices continued to buoy the bond market as interest
rates continued to fall. During this period, the sluggish, slow-growth economy
described in past letters to shareholders remained in place, plodding toward
recovery from the recession of 1991. Breaking this pattern, however, economic
activity accelerated near the end of the fiscal year ended February 28, 1994,
while interest rates moved higher.
Lower interest rates for much of Dean Witter Dividend Growth Securities's
fiscal year, and then advancing economic activity, provided the backdrop for
common stock prices to advance. For the 12-month period ended February 28, 1994,
the Standard & Poor's Index of 500 stocks (S&P 500) recorded a total return of
8.30 percent. Following the trend of the broader market, but exceeding the
performance results of the index, the Fund's total return was 9.98 percent.
We believe that the Fund's
outperformance of the S&P 500 over
this period is largely the result of
the maintenance of a
well-diversified portfolio of
high-quality common stocks, with
representation in both the
economically sensitive cyclical
sector and the long-term growth area
of the market. These sectors
performed well at different times.
Additionally, we believe that the
continued use of stringent filtering
processes to monitor the progress of
current investments, as well as to
select additional securities, also
has played a key role in the Fund's
outperformance of the index for the
fiscal year. The accompanying chart
illustrates the growth of a $10,000
investment in the Fund from February
29, 1984 through the fiscal year
ended February 28, 1994, versus a
similar investment in the issues
that comprise the S&P 500.
As we mentioned in our
semiannual report to shareholders on
August 31, 1993, the merger of
Sprint Corp. and Centel Corp. was
completed, and the Fund's position
in Centel was exchanged for shares
of Sprint Corp. One new common stock
position was initiated during the
fiscal year with the purchase of
shares of Phelps Dodge, the U.S.'s
largest producer of copper. Also,
taking advantage of price strength
in bonds, significant profits were
realized in two U.S. Treasury issues
(the 7.875 percent bond due February
15, 2000 and the 7.625 per-
cent bond due February 15, 2007), both of which were callable issues. Near the
end of the period, as interest rates rose, additional assets were committed to
longer-term U.S. Treasury bonds. This brought the portfolio's exposure to
fixed-income issues back to a reasonably normal historical level.
<PAGE>
We believe that the outlook for both the economy and the securities markets
in general are favorable over the long term. We also remain strongly convinced
that the common stocks of well-established companies will perform relatively
well over the months ahead. Consequently, we remain confident, patient and
relatively fully invested.
We appreciate your support of Dean Witter Dividend Growth Securities and
look forward to continuing to serve your investment needs in the future.
Very truly yours,
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------- -----------------
<C> <S> <C>
COMMON STOCKS (85.1%)
AEROSPACE (4.1%)
1,800,000 Martin Marietta Corp............... $ 82,800,000
1,450,000 Raytheon Co........................ 89,900,000
1,525,000 United Technologies Corp........... 103,700,000
-----------------
276,400,000
-----------------
ALUMINUM (2.3%)
2,250,000 Alcan Aluminium, Ltd. (ADR)+....... 53,437,500
1,335,000 Aluminum Co. of America............ 100,458,750
-----------------
153,896,250
-----------------
APPAREL (0.8%)
1,000,000 V.F. Corp.......................... 51,000,000
-----------------
AUTO PARTS (1.2%)
1,100,000 TRW, Inc........................... 80,437,500
-----------------
AUTOMOBILES (3.7%)
1,850,000 Ford Motor Co...................... 114,931,250
2,250,000 General Motors Corp................ 131,062,500
-----------------
245,993,750
-----------------
BANKS (4.9%)
2,000,000 BankAmerica Corp................... 86,250,000
1,275,000 Morgan (J.P.) & Co., Inc........... 86,859,375
1,750,000 NationsBank Corp................... 85,531,250
2,175,000 Society Corp....................... 68,512,500
-----------------
327,153,125
-----------------
BEVERAGES (2.7%)
2,250,000 Coca Cola Co. (The)................ 95,906,250
2,250,000 PepsiCo, Inc....................... 88,031,250
-----------------
183,937,500
-----------------
CHEMICALS (5.9%)
1,600,000 Dow Chemical Co. (The)............. 101,800,000
1,975,000 Du Pont (E.I.) De Nemours & Co..... 105,415,625
468,750 Eastman Chemical Co................ 19,570,312
1,400,000 Grace (W.R.) & Co.................. 62,650,000
1,425,000 Monsanto Co........................ 109,190,625
-----------------
398,626,562
-----------------
COAL (0.5%)
500,000 MAPCO, Inc......................... 30,562,500
-----------------
COMPUTERS (2.4%)
2,100,000 Honeywell, Inc..................... 70,350,000
1,700,000 International Business Machines
Corp............................. 89,887,500
-----------------
160,237,500
-----------------
CONGLOMERATES (3.0%)
900,000 Minnesota Mining & Manufacturing
Co............................... 94,837,500
1,925,000 Tenneco, Inc....................... 107,318,750
-----------------
202,156,250
-----------------
COSMETICS (2.7%)
300,000 Avon Products, Inc................. 17,362,500
1,725,000 Gillette Co. (The)................. 106,518,750
1,592,500 International Flavors & Fragrances,
Inc.............................. 59,121,563
-----------------
183,002,813
-----------------
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------- -----------------
<C> <S> <C>
DRUGS (6.5%)
3,250,000 Abbott Laboratories................ $ 89,781,250
1,500,000 American Home Products Corp........ 89,812,500
1,600,000 Bristol-Myers Squibb Co............ 88,400,000
1,500,000 Schering-Plough Corp............... 89,625,000
2,750,000 SmithKline Beechman PLC (ADR)+..... 75,968,750
-----------------
433,587,500
-----------------
ELECTRIC--MAJOR (1.9%)
935,000 General Electric Co................ 98,525,625
2,200,000 Westinghouse Electric Corp......... 31,900,000
-----------------
130,425,625
-----------------
FINANCE (1.3%)
1,000,000 Beneficial Corp.................... 37,750,000
1,360,000 Household International, Inc....... 47,090,000
-----------------
84,840,000
-----------------
FOODS (1.1%)
1,150,000 Quaker Oats Co. (The).............. 73,025,000
-----------------
HOUSEHOLD APPLIANCES (1.4%)
1,400,000 Whirlpool Corp..................... 94,850,000
-----------------
INSURANCE (1.4%)
1,600,000 Aetna Life & Casualty Co........... 96,000,000
-----------------
METALS & MINING (0.6%)
700,000 Phelps Dodge Corp.................. 39,287,500
-----------------
NATURAL GAS (3.2%)
1,600,000 Arkla, Inc......................... 12,800,000
1,100,000 Burlington Resources, Inc.......... 47,300,000
600,000 El Paso Natural Gas Co............. 23,175,000
2,950,000 Enron Corp......................... 94,031,250
1,700,000 Panhandle Eastern Corp............. 37,187,500
-----------------
214,493,750
-----------------
OFFICE EQUIPMENT (2.9%)
2,000,000 Pitney Bowes, Inc.................. 87,750,000
1,100,000 Xerox Corp......................... 106,700,000
-----------------
194,450,000
-----------------
OIL--DOMESTIC (2.7%)
1,750,000 Amoco Corp......................... 91,437,500
900,000 Atlantic Richfield Co.............. 90,675,000
-----------------
182,112,500
-----------------
OIL INTEGRATED--INTERNATIONAL (4.5%)
1,525,000 Exxon Corp......................... 98,934,375
1,300,000 Mobil Corp......................... 102,212,500
975,000 Royal Dutch Petroleum Co. (ADR) +.. 104,203,125
-----------------
305,350,000
-----------------
PAPER & FOREST PRODUCTS (2.6%)
1,050,000 Georgia Pacific Corp............... 74,812,500
2,150,000 Weyerhaeuser Co.................... 102,125,000
-----------------
176,937,500
-----------------
PHOTOGRAPHY (1.4%)
2,175,000 Eastman Kodak Co................... 93,525,000
-----------------
RAILROADS (4.6%)
1,575,000 Burlington Northern, Inc........... 99,028,125
1,700,000 Conrail, Inc....................... 105,612,500
</TABLE>
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------- -----------------
<C> <S> <C>
1,200,000 CSX Corp........................... $ 105,600,000
-----------------
310,240,625
-----------------
RETAIL (1.9%)
3,400,000 K-Mart Corp........................ 64,600,000
470,000 Petrie Stores Corp................. 12,807,500
2,250,000 Woolworth (F.W.) Co................ 49,500,000
-----------------
126,907,500
-----------------
SOAP & HOUSEHOLD PRODUCTS (1.6%)
1,850,000 Procter & Gamble Co................ 106,143,750
-----------------
TELECOMMUNICATIONS (1.4%)
2,250,000 U.S. West, Inc..................... 92,250,000
-----------------
TELEPHONES (5.0%)
1,675,000 Bell Atlantic Corp................. 91,706,250
2,850,000 GTE Corp........................... 92,981,250
4,080,000 Sprint Corp........................ 151,470,000
-----------------
336,157,500
-----------------
UNCLASSIFIED (0.1%)
150,000 Chemed Corp........................ 4,856,250
-----------------
UTILITIES--ELECTRIC (4.8%)
3,025,000 Commonwealth Edison Co............. 80,918,750
2,300,000 FPL Group, Inc..................... 77,625,000
1,975,000 Houston Industries, Inc............ 79,740,625
2,575,000 Pacific Gas & Electric Co.......... 81,434,375
-----------------
319,718,750
-----------------
TOTAL COMMON STOCKS (IDENTIFIED
COST $3,993,305,764)............. 5,708,562,500
-----------------
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS)
- -----------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS (14.2%)
$ 50,000 U.S. Treasury Bond
8.125% due 8/15/19................ 57,671,875
90,000 U.S. Treasury Bond
8.00% due 11/15/21................ 103,204,687
50,000 U.S. Treasury Bond
7.125% due 2/15/23................ 52,203,125
250,000 U.S. Treasury Bond
6.250% due 8/15/23................ 236,484,375
110,000 U.S. Treasury Note
4.625% due 11/30/94............... 110,515,625
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS) VALUE
- ----------- -----------------
<C> <S> <C>
$ 250,000 U.S. Treasury Note 4.00% due
1/31/96........................... $ 246,992,187
30,000 U.S. Treasury Note 8.875% due
2/15/96........................... 32,325,000
85,000 U.S. Treasury Note 6.375% due
1/15/99........................... 87,842,188
25,000 U.S. Treasury Note 8.00% due
5/15/01........................... 27,929,688
-----------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $929,114,015).... 955,168,750
-----------------
SHORT-TERM INVESTMENTS (0.8%)
COMMERCIAL PAPER (A) (0.1%)
10,000 Ford Motor Credit Co. 3.40% due
3/1/94 (Amortized Cost
$10,000,000)...................... 10,000,000
-----------------
REPURCHASE AGREEMENT (0.1%)
5,773 The Bank of New York 3.375% due
3/1/94 (dated 2/28/94; proceeds
$5,773,342; collateralized by
$585,654 U.S. Treasury Bond 8.125%
due 8/15/21 valued at $629,472 and
$5,257,088 U.S. Treasury Bill due
6/02/94 valued at $5,208,785)
(Identified Cost $5,772,801)...... 5,772,801
-----------------
U.S. GOVERNMENT AGENCY (A) (0.6%)
37,000 Federal Home Loan Mortgage Corp.
3.30% due 3/1/94 (Amortized Cost
$37,000,000)...................... 37,000,000
-----------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $52,772,801)..... 52,772,801
-----------------
TOTAL INVESTMENTS (IDENTIFIED
COST $4,975,192,580)(B)........ 100.1% 6,716,504,051
LIABILITIES IN EXCESS
OF OTHER ASSETS................ (0.1) (4,805,347)
---------- -----------------
NET ASSETS....................... 100.0% $ 6,711,698,704
---------- -----------------
---------- -----------------
<FN>
- ------------------
+ AMERICAN DEPOSITORY RECEIPT.
(A) COMMERCIAL PAPER AND U.S. GOVERNMENT AGENCY WERE PURCHASED ON A DISCOUNT
BASIS. THE RATES SHOWN HAVE BEEN ADJUSTED TO REFLECT A BOND EQUIVALENT
YIELD.
(B) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $4,975,192,580; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $1,865,726,273 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $124,414,802, RESULTING IN NET UNREALIZED
APPRECIATION OF $1,741,311,471.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
Dean Witter Dividend Growth Securities Inc.
Financial Statements
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities
February 28, 1994
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $4,975,192,580)....... $6,716,504,051
Receivable for:
Capital stock sold.................... 27,364,396
Dividends............................. 26,033,125
Interest.............................. 6,443,186
Prepaid expenses and other assets....... 11,520
---------------
Total Assets.................... 6,776,356,278
---------------
LIABILITIES:
Payable for:
Investments purchased................. 52,634,460
Capital stock repurchased............. 3,940,472
Plan of distribution fee (Note 3)..... 4,191,510
Investment management fee (Note 2).... 2,349,369
Accrued expenses and other payables
(Note 4)............................... 1,541,763
---------------
Total Liabilities............... 64,657,574
---------------
NET ASSETS:
Paid-in-capital......................... 4,972,477,382
Accumulated undistributed net investment
income................................. 25,864,803
Accumulated net realized loss on
investments............................ (27,954,952)
Net unrealized appreciation on
investments............................ 1,741,311,471
---------------
Net Assets...................... $ 6,711,698,704
---------------
---------------
Net Asset Value Per Share, 217,480,921
shares outstanding (500,000,000 shares
authorized of $.01 par value).......... $30.86
-------------
-------------
</TABLE>
- ------------------------------------------------------------------------------
Statement of Operations For the year ended
February 28, 1994
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income
Dividends (net of $736,725 foreign
withholding tax)....................... $170,511,702
Interest................................ 54,397,921
-------------
Total Income...................... 224,909,623
-------------
Expenses
Plan of distribution fee (Note 3)....... 49,135,342
Investment management fee (Note 2)...... 26,921,563
Transfer agent fees and expenses (Note
4)..................................... 6,100,641
Registration fees....................... 720,773
Shareholder reports and notices......... 291,629
Custodian fees.......................... 288,745
Professional fees....................... 70,107
Directors' fees and expenses (Note 4)... 35,790
Other................................... 57,932
-------------
Total Expenses.................... 83,622,522
-------------
Net Investment Income........... 141,287,101
-------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (Note 1) :
Net realized gain on investments........ 25,830,137
Net change in unrealized appreciation on
investments............................ 396,814,113
-------------
Net Gain on Investments........... 422,644,250
-------------
Net Increase in Net Assets
Resulting from Operations..... $ 563,931,351
-------------
-------------
</TABLE>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the year For the
ended year ended
February 28, February 29,
1994 1993
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................................... $ 141,287,101 $ 122,938,892
Net realized gain (loss) on investments................................. 25,830,137 (53,785,088)
Net change in unrealized appreciation on investments.................... 396,814,113 359,912,029
---------------- ----------------
Net increase in net assets resulting from operations................ 563,931,351 429,065,833
---------------- ----------------
Dividends and distributions to shareholders from:
Net investment income................................................... (137,991,103) (116,675,177)
Net realized gain on investments........................................ -0- (6,169,166)
---------------- ----------------
Total dividends and distributions................................... (137,991,103) (122,844,343)
---------------- ----------------
Net increase from capital stock transactions (Note 5)..................... 900,256,045 1,008,744,141
---------------- ----------------
Total increase...................................................... 1,326,196,293 1,314,965,631
NET ASSETS:
Beginning of period....................................................... 5,385,502,411 4,070,536,780
---------------- ----------------
End of period (including undistributed net investment income of
$25,864,803 and $22,568,805, respectively)............................... $6,711,698,704 $5,385,502,411
---------------- ----------------
---------------- ----------------
</TABLE>
See Notes to Financial Statements
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Organization and Accounting Policies--Dean Witter Dividend Growth Securities
Inc. (the "Fund") is registered under the Investment Company Act of 1940, as
amended (the "Act"), as a diversified, open-end management investment company
and was incorporated in Maryland on December 22, 1980.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS--(1) an equity portfolio security listed or
traded on the New York or American Stock Exchange is valued at its latest
sale price taken at 4:00 p.m. New York time on that exchange (if there were
no sales that day, the security is valued at the latest bid price); (2) all
other portfolio securities for which over-the-counter market quotations are
readily available are valued at the latest bid price; (3) when market
quotations are not readily available, including circumstances under which it
is determined by the Investment Manager that sale and bid prices are not
reflective of a security's market value, portfolio securities are valued at
their fair value as determined in good faith under procedures established by
and under the general supervision of the Fund's Board of Directors
(valuation of 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) the fair value of short-term debt securities which
mature at a date less than sixty days subsequent to the valuation date are
determined on an amortized cost or amortized value basis; and (5) the value
of other assets will be determined in good faith at fair value under
procedures established by and under the general supervision of the Fund's
Board of Directors.
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 on the identified cost
method. Dividend income is recorded on the ex-dividend date. 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 income to its shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS--The Fund records dividends
and distributions to its shareholders on the record date. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassifications.
Dividends and distributions which exceed net investment income and net
realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they
exceed net investment income and net realized capital gains for tax
purposes, they are reported as distributions of paid-in-capital.
E. REPURCHASE AGREEMENTS--The Fund's custodian takes possession on behalf of
the Fund of the collateral pledged for investments in repurchase agreements.
It is the policy of the Fund to value the underlying collateral daily on a
mark-to-market basis to determine that the value, including accrued
interest, is at least equal to the repurchase price plus accrued interest.
In the event of default of the obligation to repurchase, the Fund has the
right to liquidate the collateral and apply the proceeds in satisfaction of
the obligation.
2. Investment Management Agreement--Pursuant to an Investment Management
Agreement (the "Agreement") with Dean Witter InterCapital Inc. (the "Investment
Manager"), the Fund pays its Investment Manager a management fee, accrued 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: 0.625% of the portion
of the daily net assets not exceeding $250 million; 0.50% of the portion of the
daily net assets exceeding $250 million but not exceeding $1 billion; 0.475% of
the portion of the daily net assets exceeding $1 billion but not exceeding $2
billion; 0.45% of the portion of the daily net assets exceeding $2 billion but
not exceeding $3 billion; 0.425% of the portion of the daily net assets
exceeding $3 billion but not exceeding $4 billion; 0.40% of the portion of the
daily net assets exceeding $4 billion
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
but not exceeding $5 billion; 0.375% of the portion of the daily net assets
exceeding $5 billion but not exceeding $6 billion and 0.35% of the portion of
the daily net assets exceeding $6 billion.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes office space and facilities, equipment, clerical,
bookkeeping and certain legal services, and pays the salaries of all personnel,
including officers of the Fund who are employees of the Investment Manager. The
Investment Manager also bears the cost of 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, pursuant to which the Fund pays the Distributor a fee, which is
accrued daily and payable monthly, at an annual rate of 1.0% of the lesser of:
(a) the average daily aggregate gross sales of the Fund's shares since the
inception of the Plan on July 2, 1984 (not including reinvestments of dividends
or capital gains distributions), less the average daily aggregate net asset
value of the Fund's shares redeemed since the Plan's inception upon which a
contingent deferred sales charge has been imposed or waived; or (b) the average
daily net assets of the Fund attributable to shares issued, net of related
shares redeemed, since inception of the Plan. Amounts paid under the Plan are
paid to the Distributor to compensate it for the services it provided and the
expenses borne by it and others in the distribution of the Fund's shares,
including the payment of commissions for sales of the Fund's shares and
incentive compensation to and expenses of the account executives of Dean Witter
Reynolds Inc., an affiliate of the Investment Manager, and other employees or
selected dealers who engage in or support distribution of the Fund's 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 the Fund's shares to other than current shareholders and
preparation, printing and distribution of sales literature and advertising
materials, and the opportunity costs in advancing such amounts, which
compensation would be in the form of a carrying charge on any unreimbursed
expenses.
Provided that the Plan continues in effect, any cumulative expenses
incurred, but not yet recovered, may be recovered through future distribution
fees from the Fund and contingent deferred sales charges from the Fund's
shareholders.
The Distributor has informed the Fund that it received approximately
$6,568,000 in contingent deferred sales charges from certain redemptions of the
Fund's shares for the year ended February 28, 1994. The Fund's shareholders pay
such charges which are not an expense of the Fund.
4. Security Transactions and Transactions with Affiliates--The cost of
purchases and the proceeds from sales of portfolio securities for the year ended
February 28, 1994, excluding short-term investments, aggregated $1,832,397,805
and $777,382,830, respectively, including purchases and sales of U.S. Government
securities of $992,884,719 and $767,396,125, respectively. For the same period,
the Fund paid brokerage commissions of $199,065 to Dean Witter Reynolds Inc. for
transactions executed on behalf of the Fund.
Included in the Fund's payable for investments purchased is $8,039,175 for
unsettled trades with Dean Witter Reynolds Inc.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At February 28, 1994, the Fund had
transfer agent fees and expenses payable of approximately $1,058,000.
On April 1, 1991, the Fund established an unfunded noncontributory defined
benefit pension plan covering all Independent Directors of the Fund who will
have served as an Independent Director for at least five years at the time of
retirement. Benefits under this plan are based on years of service and
compensation during the last five years of service. Aggregate pension costs for
the year ended February 28, 1994, included in Directors' fees and expenses in
the Statement of Operations, amounted to $11,554. At February 28, 1994, the Fund
had an accrued pension liability of $40,660 which is included in accrued
expenses in the Statement of Assets and Liabilities.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
5. Capital Stock--Transactions in capital stock were as follows:
<TABLE>
<S> <C> <C> <C> <C>
FOR THE YEAR ENDED FOR THE YEAR ENDED
FEBRUARY 28, 1994 FEBRUARY 28, 1993
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
Sold.................................................... 52,400,350 $1,583,778,568 54,290,034 $1,483,462,274
Reinvestment of dividends and distributions............. 4,255,666 128,128,068 4,193,664 114,004,567
----------- -------------- ----------- --------------
56,656,016 1,711,906,636 58,483,698 1,597,466,841
Repurchased............................................. (26,834,265) (811,650,591) (21,557,199) (588,722,700)
----------- -------------- ----------- --------------
Net increase............................................ 29,821,751 $ 900,256,045 36,926,499 $1,008,744,141
----------- -------------- ----------- --------------
----------- -------------- ----------- --------------
</TABLE>
6. Federal Income Tax Status--During the year ended February 28, 1994, the Fund
utilized approximately $5,956,000 of its net capital loss carryovers. At
February 28, 1994, the Fund had a net capital loss carryover of approximately
$27,955,000, which will be available through February 28, 2001. To the extent
that this capital loss carryover is used to offset future capital gains, it is
probable that the gains so offset will not be distributed to shareholders.
The Fund had permanent book/tax differences primarily attributable to
dividend redesignations. To reflect cumulative reclassifications arising from
permanent book/tax differences for the year ended February 28, 1993, accumulated
undistributed net investment income was charged and accumulated net realized
loss on investments was credited for $120,303.
1994 FEDERAL INCOME TAX NOTICE (UNAUDITED)
During the fiscal year ended February 28, 1994, 100% of the income dividends
qualified for the dividends received deduction available to corporations.
<PAGE>
Dean Witter Dividend Growth Securities Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data and ratios for a share of capital stock outstanding throughout
each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 28,
------------------------------------------------------------------------------------------------------------
1994 1993 1992* 1991 1990 1989 1988* 1987 1986 1985
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of
period.......... $ 28.70 $ 27.01 $ 23.50 $ 22.47 $ 20.32 $ 19.28 $ 20.63 $ 17.56 $ 13.79 $ 12.11
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Investment
income--net... 0.68 0.70 0.71 0.79 0.72 0.68 0.67 0.51 0.49 0.62
Realized and
unrealized
gain (loss) on
investments--net... 2.16 1.72 3.63 1.04 2.83 1.78 (0.99) 3.56 3.90 1.64
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from
investment
operations...... 2.84 2.42 4.34 1.83 3.55 2.46 (0.32) 4.07 4.39 2.26
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Less dividends
and
distributions:
Dividends from
net investment
income........ (0.68) (0.69) (0.76) (0.80) (0.76) (0.62) (0.73) (0.52) (0.52) (0.56)
Distributions
from net
realized gains
on
investments... -0- (0.04) (0.07) -0- (0.64) (0.80) (0.30) (0.48) (0.10) (0.02)
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total dividends
and
distributions... (0.68) (0.73) (0.83) (0.80) (1.40) (1.42) (1.03) (1.00) (0.62) (0.58)
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value,
end of period... $ 30.86 $ 28.70 $ 27.01 $ 23.50 $ 22.47 $ 20.32 $ 19.28 $ 20.63 $ 17.56 $ 13.79
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT
RETURN+.......... 9.98% 9.13% 18.82% 8.51% 17.85% 13.26% (1.40)% 23.96% 32.88% 19.41%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end
of period (in
thousands)...... $6,711,699 $5,385,502 $4,070,537 $3,015,499 $2,759,836 $1,859,527 $1,824,203 $1,652,138 $609,812 $115,382
Ratio of expenses
to average net
assets.......... 1.37% 1.40% 1.42% 1.51% 1.41% 1.55% 1.55% 1.52% 1.55% 1.24%
Ratio of net
investment
income to
average net
assets.......... 2.31% 2.67% 2.91% 3.62% 3.46% 3.44% 3.47% 3.35% 4.73% 6.20%
Portfolio
turnover rate... 13 % 8 % 5 % 5 % 3 % 8 % 7 % 12 % 6 % 10 %(1)
<FN>
- -----------------
* YEAR ENDED FEBRUARY 29.
+ DOES NOT INCLUDE THE DEDUCTION OF SALES LOAD.
(1) EXCLUDES LONG-TERM U.S. GOVERNMENT SECURITIES WHICH ARE INCLUDED IN
SUBSEQUENT YEARS.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
Dean Witter Dividend Growth Securities Inc.
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of Dean Witter Dividend Growth
Securities Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Dean Witter Dividend Growth
Securities Inc. (the "Fund") at February 28, 1994, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the ten years
in the period then ended, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities owned at February 28, 1994 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE
New York, New York
March 30, 1994
<PAGE>
BOARD OF DIRECTORS
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire Dean Witter
Dr. John E. Jeuck Dividend Growth
Dr. Manuel H. Johnson Securities
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Paul D. Vance
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
LEGAL COUNSEL
Sheldon Curtis
Two World Trade Center
New York, New York 10048
INDEPENDENT ACCOUNTANTS
Price Waterhouse
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
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.
Annual Report
February 28, 1994
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES
<TABLE>
<CAPTION>
GROWTH OF $10,000
($ IN THOUSANDS)
DATE TOTAL S&P 500
- ----------------------------------------------------
<S> <C> <C>
February 29, 1984 $10,000 $10,000
February 28, 1985 $11,941 $12,086
February 28, 1986 $15,868 $15,769
February 28, 1987 $19,669 $20,422
February 29, 1988 $19,394 $19,867
February 28, 1989 $21,965 $22,218
February 28, 1990 $25,885 $26,404
February 28, 1991 $28,089 $30,275
February 29, 1992 $33,375 $35,126
February 28, 1993 $36,424 $38,867
February 28, 1994 $40,061(3) $42,092
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
- ---------------------------------------------------------
<S> <C> <C> <C>
Non-Standard 9.98(1) 12.77(1) 14.89(1)
Standard (-CDSC) 4.98(2) 12.52(2) 14.89(2)
_____ Fund _____ S&P 500 (4)
Past performance is not predictive of future returns.
________________________________________
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable contingent deferred sales charge (CDSC) (1 year-5%,
5 years-2%, 10 years-0%). See the Fund's current prospectus for complete
details on fees and sales charges.
(3) Closing value assuming a complete redemption on February 28, 1994.
(4) The S&P 500 is a broad-based index, the performance of which is based on
the average performance of 500 widely held common stocks. The index does
not include any expenses, fees or charges.
</TABLE>
