<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
Two World Trade Center
New York, New York 10048
Dear Shareholder:
- --------------------------------------------------------------------------------
During the past six months, interest rates rose sharply as economic activity
continued to accelerate from the slow-growth pace which had persisted since the
end of the last recession. In spite of higher interest rates, a more robust
economy provided the backdrop for common stock prices to advance in general.
For the six-month period ended August 31, 1994, Dean Witter Dividend Growth
Securities posted a total return of 1.69 percent, compared to 3.29 percent for
the broad-based Standard & Poor's 500 Composite Stock Price Index (S&P 500). The
Fund's underperformance relative to the S&P 500 during this period is
attributable to the impact of rising interest rates on the prices of many of the
Fund's securities. Particularly affected by this scenario were the bond segment
and common stock positions in such interest-rate sensitive industries as
electric utilities and telephones.
During the reporting period, the Fund's Chemed Corp holding was sold at a
profit. Two new positions were initiated in Deere & Co., the nation's largest
manufacturer of farm equipment, and a leading manufacturer of construction
machinery, and May Department Stores, a large department store chain.
We believe the long-term outlook for both the economy and the securities
markets, especially the common stocks of well-established companies, is
favorable. Consequently, we remain confident, patient and relatively fully
invested. Going forward, we believe continued use of the Fund's stringent,
proprietary screening process to monitor the progress of current investments and
to select additional securities, should help the Fund achieve its objectives
over the long term. The Fund will continue to search for high-quality,
dividend-paying stocks that appear to be undervalued.
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 AUGUST 31, 1994 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------- ------------------
<C> <S> <C>
COMMON STOCKS (86.2%)
AEROSPACE (4.1%)
1,800,000 Martin Marietta Corp................................................................... $ 91,575,000
1,450,000 Raytheon Co............................................................................ 98,056,250
1,550,000 United Technologies Corp............................................................... 98,618,750
------------------
288,250,000
------------------
ALUMINUM (2.4%)
2,250,000 Alcan Aluminium, Ltd. (ADR)............................................................ 58,500,000
1,335,000 Aluminum Co. of America................................................................ 112,140,000
------------------
170,640,000
------------------
APPAREL (0.8%)
1,000,000 V.F. Corp.............................................................................. 52,875,000
------------------
AUTO PARTS (1.2%)
1,100,000 TRW, Inc............................................................................... 82,500,000
------------------
AUTOMOBILES (3.1%)
3,700,000 Ford Motor Co.......................................................................... 108,225,000
2,250,000 General Motors Corp.................................................................... 113,062,500
------------------
221,287,500
------------------
BANKS (5.2%)
2,050,000 BankAmerica Corp....................................................................... 101,218,750
2,175,000 Keycorp................................................................................ 71,503,125
1,400,000 Morgan (J.P.) & Co., Inc............................................................... 92,225,000
1,800,000 NationsBank Corp....................................................................... 100,350,000
------------------
365,296,875
------------------
BEVERAGES (2.6%)
2,250,000 Coca Cola Co. (The).................................................................... 103,500,000
2,500,000 PepsiCo, Inc........................................................................... 82,812,500
------------------
186,312,500
------------------
CHEMICALS (6.2%)
1,600,000 Dow Chemical Co. (The)................................................................. 120,200,000
1,950,000 Du Pont (E.I.) De Nemours & Co......................................................... 117,975,000
500,000 Eastman Chemical Co.................................................................... 26,375,000
1,425,000 Grace (W.R.) & Co...................................................................... 57,356,250
1,425,000 Monsanto Co............................................................................ 117,740,625
------------------
439,646,875
------------------
COAL (0.4%)
500,000 MAPCO, Inc............................................................................. 28,625,000
------------------
COMPUTERS (2.8%)
2,100,000 Honeywell, Inc......................................................................... 75,337,500
1,800,000 International Business Machines Corp................................................... 123,525,000
------------------
198,862,500
------------------
</TABLE>
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1994 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- CONGLOMERATES (2.9%) ----------------
<C> <S> <C>
1,875,000 Minnesota Mining & Manufacturing Co....................................................... $ 103,359,375
2,050,000 Tenneco, Inc.............................................................................. 100,962,500
----------------
204,321,875
----------------
COSMETICS (3.3%)
800,000 Avon Products, Inc........................................................................ 47,300,000
1,650,000 Gillette Co. (The)........................................................................ 119,418,750
1,592,500 International Flavors & Fragrances, Inc................................................... 69,870,938
----------------
236,589,688
----------------
DRUGS (6.8%)
3,300,000 Abbott Laboratories....................................................................... 99,000,000
1,600,000 American Home Products Corp............................................................... 95,000,000
1,675,000 Bristol Myers Squibb Co................................................................... 96,312,500
1,500,000 Schering-Plough Corp...................................................................... 104,812,500
2,800,000 SmithKline Beechman PLC (ADR)............................................................. 87,150,000
----------------
482,275,000
----------------
ELECTRIC - MAJOR (2.0%)
1,900,000 General Electric Co....................................................................... 94,525,000
3,600,000 Westinghouse Electric Corp................................................................ 50,850,000
----------------
145,375,000
----------------
FINANCE (1.4%)
1,000,000 Beneficial Corp........................................................................... 43,000,000
1,360,000 Household International, Inc.............................................................. 53,720,000
----------------
96,720,000
----------------
FOODS (1.3%)
1,100,000 Quaker Oats Co. (The)..................................................................... 88,412,500
----------------
HOUSEHOLD APPLIANCES (1.1%)
1,400,000 Whirlpool Corp............................................................................ 76,825,000
----------------
INSURANCE (1.1%)
1,650,000 Aetna Life & Casualty Co.................................................................. 81,468,750
----------------
MACHINERY - DIVERSIFIED (1.4%)
1,375,000 Deere & Co................................................................................ 102,093,750
----------------
METALS & MINING (1.3%)
1,475,000 Phelps Dodge Corp......................................................................... 93,662,500
----------------
NATURAL GAS (2.7%)
1,125,000 Burlington Resources, Inc................................................................. 42,328,125
600,000 El Paso Natural Gas Co.................................................................... 19,725,000
2,950,000 Enron Corp................................................................................ 89,975,000
1,900,000 Panhandle Eastern Corp.................................................................... 41,562,500
----------------
193,590,625
----------------
</TABLE>
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1994 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- OFFICE EQUIPMENT (2.8%) ----------------
<C> <S> <C>
2,150,000 Pitney Bowes, Inc......................................................................... $ 82,775,000
1,075,000 Xerox Corp................................................................................ 115,159,375
----------------
197,934,375
----------------
OIL - DOMESTIC (2.9%)
1,750,000 Amoco Corp................................................................................ 101,281,250
1,000,000 Atlantic Richfield Co..................................................................... 107,125,000
----------------
208,406,250
----------------
OIL INTEGRATED - INTERNATIONAL (4.5%)
1,675,000 Exxon Corp................................................................................ 99,662,500
1,300,000 Mobil Corp................................................................................ 109,525,000
975,000 Royal Dutch Petroleum Co. (ADR)........................................................... 109,809,375
----------------
318,996,875
----------------
PAPER & FOREST PRODUCTS (2.5%)
1,050,000 Georgia Pacific Corp...................................................................... 78,093,750
2,150,000 Weyerhaeuser Co........................................................................... 98,631,250
----------------
176,725,000
----------------
PHOTOGRAPHY (1.5%)
2,175,000 Eastman Kodak Co.......................................................................... 108,206,250
----------------
RAILROADS (3.8%)
1,575,000 Burlington Northern, Inc.................................................................. 82,687,500
1,700,000 Conrail, Inc.............................................................................. 93,500,000
1,200,000 CSX Corp.................................................................................. 92,700,000
----------------
268,887,500
----------------
RETAIL (1.1%)
3,400,000 K-Mart Corp............................................................................... 58,225,000
390,000 Petrie Stores Corp........................................................................ 10,335,000
800,000 Woolworth (F.W.) Co....................................................................... 13,000,000
----------------
81,560,000
----------------
RETAIL - DEPARTMENT STORES (0.9%)
1,600,000 May Department Stores Co.................................................................. 65,600,000
----------------
SOAP & HOUSEHOLD PRODUCTS (1.6%)
1,850,000 Procter & Gamble Co....................................................................... 112,618,750
----------------
TELECOMMUNICATIONS (1.3%)
2,350,000 U.S. West, Inc............................................................................ 94,881,250
----------------
TELEPHONES (4.9%)
1,700,000 Bell Atlantic Corp........................................................................ 93,075,000
2,975,000 GTE Corp.................................................................................. 94,456,250
4,080,000 Sprint Corp............................................................................... 161,670,000
----------------
349,201,250
----------------
UTILITIES - ELECTRIC (4.1%)
3,050,000 Commonwealth Edison Co.................................................................... 73,200,000
2,400,000 FPL Group, Inc............................................................................ 75,300,000
</TABLE>
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1994 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------- ----------------
<C> <S> <C>
2,150,000 Houston Industries, Inc................................................................... $ 74,712,500
2,800,000 Pacific Gas & Electric Co................................................................. 68,950,000
----------------
292,162,500
----------------
UTILITIES - GAS (0.2%)
1,600,000 NorAm Energy Corp......................................................................... 11,600,000
----------------
TOTAL COMMON STOCKS (IDENTIFIED COST $4,302,909,532)...................................... 6,122,410,938
----------------
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE
- --------- ----------- -----------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (12.3%)
$ 50,000 U.S. Treasury Bond............................................. 8.125% 8/15/19 52,625,000
90,000 U.S. Treasury Bond............................................. 8.00 11/15/21 95,146,875
50,000 U.S. Treasury Bond............................................. 7.125 2/15/23 47,406,250
250,000 U.S. Treasury Bond............................................. 6.25 8/15/23 211,953,125
80,000 U.S. Treasury Note............................................. 4.625 11/30/94 79,937,500
250,000 U.S. Treasury Note............................................. 4.00 1/31/96 243,867,187
30,000 U.S. Treasury Note............................................. 8.875 2/15/96 31,228,125
85,000 U.S. Treasury Note............................................. 6.375 1/15/99 83,924,219
25,000 U.S. Treasury Note............................................. 8.00 5/15/01 26,359,375
------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (IDENTIFIED COST $899,231,203)...................... 872,447,656
------------------
SHORT-TERM INVESTMENTS (1.0%)
COMMERCIAL PAPER (a) (0.9%)
AUTOMOTIVE FINANCE (0.6%)
39,560 Ford Motor Credit Co........................................... 4.70 9/ 1/94 39,560,000
------------------
FINANCE - DIVERSIFIED (0.3%)
25,000 General Electric Capital Corp.................................. 4.70 9/19/94 24,941,250
------------------
TOTAL COMMERCIAL PAPER (AMORTIZED COST $64,501,250)................................... 64,501,250
------------------
REPURCHASE AGREEMENT (0.1%)
4,963 The Bank of New York 4.625% due 9/1/94 (dated 8/31/94; proceeds
$4,963,198; collateralized by $5,053,915 U.S. Treasury Note
6.25% due 8/31/96 valued at $5,061,811) (Identified Cost
$4,962,560).................................................................................. 4,962,560
----------
TOTAL SHORT-TERM INVESTMENTS (IDENTIFIED COST $69,463,810).................................... 69,463,810
----------------
TOTAL INVESTMENTS (IDENTIFIED COST $5,271,604,545) (B)......................... 99.5% 7,064,322,404
OTHER ASSETS IN EXCESS OF LIABILITIES.......................................... 0.5 38,140,722
---------- ----------------
NET ASSETS..................................................................... 100.0% $ 7,102,463,126
---------- ----------------
---------- ----------------
<FN>
- ------------------
ADR AMERICAN DEPOSITORY RECEIPT.
(A) COMMERCIAL PAPER WAS PURCHASED ON A DISCOUNT BASIS. THE INTEREST RATES
SHOWN HAVE BEEN ADJUSTED TO REFLECT A BOND EQUIVALENT YIELD.
(B) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $5,271,604,545; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $1,930,054,747 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $137,336,888, RESULTING IN NET UNREALIZED
APPRECIATION OF $1,792,717,859.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1994 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $5,271,604,545) (Note
1).................................... $ 7,064,322,404
Receivable for:
Dividends............................. 30,388,560
Capital stock sold.................... 17,147,328
Interest.............................. 6,439,205
Prepaid expenses and other assets....... 47,137
---------------
TOTAL ASSETS.................... 7,118,344,634
---------------
LIABILITIES:
Payable for:
Investments purchased (Note 4)........ 2,810,575
Plan of distribution fee (Note 3)..... 5,379,925
Capital stock repurchased............. 4,268,636
Investment management fee (Note 2).... 2,688,472
Accrued expenses (Note 4)............... 733,900
---------------
TOTAL LIABILITIES............... 15,881,508
---------------
NET ASSETS:
Paid-in-capital......................... 5,298,408,032
Accumulated undistributed net investment
income................................ 49,414,054
Accumulated net realized loss on
investments........................... (38,076,819)
Net unrealized appreciation on
investments........................... 1,792,717,859
---------------
NET ASSETS...................... $ 7,102,463,126
---------------
---------------
NET ASSET VALUE PER SHARE, 228,295,157
shares outstanding (500,000,000 shares
authorized of $.01 par value).........
$31.11
---------------
---------------
</TABLE>
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED AUGUST 31, 1994 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME
Dividends (net of $464,511 foreign
withholding tax).................... $ 100,283,094
Interest.............................. 28,622,466
-------------
TOTAL INCOME...................... 128,905,560
-------------
EXPENSES
Plan of distribution fee (Note 3)..... 29,100,725
Investment management fee (Note 2).... 14,605,047
Transfer agent fees and expenses (Note
4).................................. 3,286,928
Registration fees..................... 201,831
Custodian fees........................ 140,434
Professional fees..................... 90,806
Shareholder reports and notices....... 66,600
Directors' fees and expenses (Note
4).................................. 14,420
Other................................. 50,068
-------------
TOTAL EXPENSES.................... 47,556,859
-------------
NET INVESTMENT INCOME........... 81,348,701
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 1):
Net realized loss on investments...... (10,121,867)
Net change in unrealized appreciation
on investments...................... 51,406,388
-------------
NET GAIN ON INVESTMENTS........... 41,284,521
-------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS..... $ 122,633,222
-------------
-------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE
AUGUST 31, 1994 YEAR ENDED
(UNAUDITED) FEBRUARY 28, 1994
--------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income.................................................... $ 81,348,701 $ 141,287,101
Net realized gain (loss) on investments.................................. (10,121,867) 25,830,137
Net change in unrealized appreciation on investments..................... 51,406,388 396,814,113
--------------- ------------------
Net increase in net assets resulting from operations................. 122,633,222 563,931,351
Dividends to shareholders from net investment income....................... (57,799,450) (137,991,103)
Net increase from capital stock transactions (Note 5)...................... 325,930,650 900,256,045
--------------- ------------------
Total increase....................................................... 390,764,422 1,326,196,293
NET ASSETS:
Beginning of period........................................................ 6,711,698,704 5,385,502,411
--------------- ------------------
END OF PERIOD (including undistributed net investment income of $49,414,054
and $25,864,803, respectively)............................................ $7,102,463,126 $ 6,711,698,704
--------------- ------------------
--------------- ------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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.
The Fund was incorporated in Maryland on December 22, 1980 and commenced
operations on March 30, 1981.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS--(1) an equity security listed or traded on the
New York or American Stock Exchange is valued at its latest sale price on
that exchange prior to the time when assets are valued; if there were no
sales that day, the security is valued at the latest bid price; (2) all
other portfolio securities for which over-the-counter market quotations are
readily available are valued at the latest available bid price prior to the
time of valuation; (3) when market quotations are not readily available,
including circumstances under which it is determined by the Investment
Manager that sale or bid prices are not reflective of a security's market
value, portfolio securities are valued at their fair value as determined in
good faith under procedures established by and under the general supervision
of the 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) short-term debt
securities having a maturity date of more than sixty days are valued on a
mark-to-market basis, that is, at prices based on market quotations for
securities of a similar type, yield, quality and maturity, until sixty days
prior to maturity and thereafter at amortized cost, using the 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; and (5) all other
securities and other assets are valued at their fair value as determined in
good faith under procedures established by and under the general supervision
of the 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 recognized on the ex-dividend date. Interest
income is recognized on an accrual basis. Discounts on securities purchased
are amortized over the life of the respective securities. The Fund does not
amortize premiums on securities purchased.
C. 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.
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 differ-
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
ences 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 monthly management fee, calculated and
accrued daily, by applying the following annual rates to the net assets of the
Fund determined at the close of each business day: 0.625% of the portion of
daily net assets not exceeding $250 million; 0.50% of the portion of daily net
assets exceeding $250 million but not exceeding $1 billion; 0.475% of the
portion of daily net assets exceeding $1 billion but not exceeding $2 billion;
0.45% of the portion of daily net assets exceeding $2 billion but not exceeding
$3 billion; 0.425% of the portion of daily net assets exceeding $3 billion but
not exceeding $4 billion; 0.40% of the portion of daily net assets exceeding $4
billion but not exceeding $5 billion; 0.375% of the portion of daily net assets
exceeding $5 billion but not exceeding $6 billion; and 0.35% of the portion of
daily net assets exceeding $6 billion. Effective May 1, 1994, the Agreement was
amended to reduce the annual fee to 0.325% of the portion of daily net assets
exceeding $8 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 pursuant to which the Fund pays the Distributor compensation
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
implementation of the Plan on July 2, 1984 (not including reinvestment of
dividend or capital gain distributions), less the average daily aggregate net
asset value of the Fund's shares redeemed since the Fund's implementation of the
Plan upon which a contingent deferred sales charge has been imposed or upon
which such charge has been waived; or (b) the Fund's average daily net assets
attributable to shares issued, net of related shares redeemed, since
implementation of the Plan. Amounts paid under the Plan are paid to the
Distributor to compensate it for the services 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 Distributor, 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. In addition, the
Distributor may be compensated under the Plan for its opportunity costs in
advancing such amounts, which compensation would be in the form of a carrying
charge on any unreimbursed expenses incurred by the Distributor.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
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 for the six months ended August
31, 1994, it received approximately $4,137,000 in contingent deferred sales
charges from certain redemptions of the Fund's shares. 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 proceeds from sales of portfolio securities, excluding short-term
investments, for the six months ended August 31, 1994 aggregated $362,554,892
and $72,557,866, respectively.
For the six months ended August 31, 1994, the Fund incurred brokerage
commissions of $63,043 with Dean Witter Reynolds Inc. for portfolio transactions
executed on behalf of the Fund. At August 31, 1994, the Fund's payable for
investments purchased included unsettled trades with Dean Witter Reynolds Inc.
of $2,810,575.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At August 31, 1994, the Fund had
transfer agent fees and expenses payable of approximately $412,000.
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 six months ended August 31, 1994, included in Directors' fees and expenses
in the Statement of Operations, amounted to $4,125. At August 31, 1994, the Fund
had an accrued pension liability of $44,497 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 MONTHS ENDED FOR THE YEAR ENDED
AUGUST 31, 1994 FEBRUARY 28, 1994
------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- ---------------- ------------- -----------------
<S> <C> <C> <C> <C>
Sold............................................. 25,246,030 $ 756,769,016 52,400,350 $ 1,583,778,568
Reinvestment of dividends........................ 1,786,170 53,578,993 4,255,666 128,128,068
------------- ---------------- ------------- -----------------
27,032,200 810,348,009 56,656,016 1,711,906,636
Repurchased...................................... (16,217,964) (484,417,359) (26,834,265) (811,650,591)
------------- ---------------- ------------- -----------------
Net increase..................................... 10,814,236 $ 325,930,650 29,821,751 $ 900,256,045
------------- ---------------- ------------- -----------------
------------- ---------------- ------------- -----------------
</TABLE>
6. Federal Income Tax Status--At February 28, 1994, the Fund has 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.
At February 28, 1994, the Fund had permanent book/tax differences
attributable to dividend redesignations.
<PAGE>
DEAN WITTER DIVIDEND GROWTH 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
AUGUST 31, FOR THE YEAR ENDED FEBRUARY 28,
1994 ---------------------------------------------------------------------------------
(UNAUDITED) 1994 1993 1992* 1991 1990
-------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning
of period.................. $30.86 $28.70 $27.01 $23.50 $22.47 $20.32
-------------- ------------- ------------- ------------- ------------- -------------
Net investment income....... 0.36 0.68 0.70 0.71 0.79 0.72
Net realized and unrealized
gain on investments........ 0.15 2.16 1.72 3.63 1.04 2.83
-------------- ------------- ------------- ------------- ------------- -------------
Total from investment
operations................. 0.51 2.84 2.42 4.34 1.83 3.55
-------------- ------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
Dividends from net
investment income........ (0.26) (0.68) (0.69) (0.76) (0.80) (0.76)
Distributions from net
realized gains on
investments.............. -0- -0- (0.04) (0.07) -0- (0.64)
-------------- ------------- ------------- ------------- ------------- -------------
Total dividends and
distributions.............. (0.26) (0.68) (0.73) (0.83) (0.80) (1.40)
-------------- ------------- ------------- ------------- ------------- -------------
Net asset value, end of
period..................... $31.11 $30.86 $28.70 $27.01 $23.50 $22.47
-------------- ------------- ------------- ------------- ------------- -------------
-------------- ------------- ------------- ------------- ------------- -------------
TOTAL INVESTMENT RETURN+.... 1.69%(1) 9.98% 9.13% 18.82% 8.51% 17.85%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in millions).............. $7,102 $6,712 $5,386 $4,071 $3,015 $2,760
Ratio of expenses to average
net assets................. 1.41%(2) 1.37% 1.40% 1.42% 1.51% 1.41%
Ratio of net investment
income to average net
assets..................... 2.41%(2) 2.31% 2.67% 2.91% 3.62% 3.46%
Portfolio turnover rate..... 1 % 13 % 8 % 5 % 5 % 3 %
<FN>
- -------------
* YEAR ENDED FEBRUARY 29.
+ DOES NOT INCLUDE THE DEDUCTION OF SALES LOAD.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
BOARD OF DIRECTORS
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo Dean Witter
Edwin J. Garn Dividend Growth
John R. Haire Securities
Dr. John E. Jeuck
Dr. Manuel H. Johnson
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 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.
Semiannual Report
August 31, 1994
