<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC. TWO WORLD TRADE CENTER, NEW YORK,
NEW YORK 10048
LETTER TO THE SHAREHOLDERS
DEAR SHAREHOLDER:
Interest rates continued to rise through the fall of 1994 as the Federal Reserve
Board maintained its restrictive monetary policy in an effort to slow economic
growth to more moderate levels and stem inflation. Specifically, the central
bank raised interest rates two times during the past six months. On November 15,
1994, with the economy still speeding along, rates were increased 75 basis
points (0.75 percentage points). Despite the November rate increase, growth
remained strong into early 1995. On February 1, 1995, rates were raised another
50 basis points in an expected move that marked the seventh increase in 12
months. This move brought the federal-funds and discount rates to 6.00 percent
and 5.25 percent, respectively, the highest these rates had been since 1991.
While growth is expected to continue in 1995, the effect of 12 months of rising
interest rates is likely to take its toll. By mid-1995, we expect the economy to
slow vis-a-vis the rapid pace experienced in 1994 and inflation to stabilize in
the 3.00 to 3.50 percent range.
Performance
Despite the big increase in interest rates, advancing economic activity provided
the backdrop for common stock prices to also advance. For the 12-month period
ended February 28, 1995, the Standard & Poor's Composite Index of 500 Stocks
(S&P 500) recorded a total return of 7.39 percent. For the same period, Dean
Witter Dividend Growth Securities posted a total return of 3.25 percent (see the
accompanying chart for additional performance information). Since its inception
on March 30, 1981, however, the Fund has performed in line with the S&P 500,
providing an average annual total return of 13.90 percent, versus 13.92 percent
for the index.
The accompanying chart illustrates the growth of a $10,000 investment in the
Fund from February 28, 1985 through February 28, 1995, versus a similar
hypothetical investment in the issues that comprise the S&P 500.
We believe the Fund's underperformance of the S&P 500 over the recently
concluded fiscal year was largely the result of the impact of rising interest
rates on the prices of many of the portfolio's holdings. Specifically, the
portfolio's bond holdings, and the common stocks representing the electric
utility and telephone industries, were volatile during the year. In an effort to
improve performance in the near future, we have repositioned the portfolio so
that fewer assets are committed to interest rate and economically sensitive
issues. Therefore, more assets will be committed to growth-type issues. Results
are already starting to improve, as reflected in performance for the three
months
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
LETTER TO THE SHAREHOLDERS, CONTINUED
ended February 28, 1995, during which the Fund registered a total return of 8.12
percent, basically in line with the S&P 500's 8.19 percent total return.
Based on the Fund's screening process two portfolio holdings, Chemed Corp. and
Georgia-Pacific, became fully valued during the fiscal year and were sold at a
profit. Two new portfolio positions were initiated with the purchases of 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. In our view, the common stocks of these companies
appeared undervalued in the marketplace and had attractive long-term profit
potential.
Corporate Profits
[GRAPHIC]
The strong profit growth recorded by
many corporations to this point has
stemmed predominantly from increased
capacity utilization. Businesses have
not, however, been able to add to
profits through price increases because
of aggressive domestic and
international competition. Labor costs
have remained under control, so this
inability to raise prices has not been
a major factor. However, as the economy
expands further, labor costs will most
likely begin to rise, and the easy
profit gains which have come as a
result of utilizing idle capacity will
dissipate. With international
competition still strong, we are
unlikely to see much in the way of
price increases; thus, corporate profit
growth will continue in 1995, but --
like the U.S. economy -- at a slower
pace.
Going Forward
[GRAPHIC]
Our long term outlook for both the
economy and the securities markets in
general are favorable. We also remain
strongly convinced that the common
stocks of well-established companies
will perform relatively well in the
months ahead. Consequently, we remain
confident, patient and relatively fully
invested.
[GRAPHIC]
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,
[SIG]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (86.0%)
AEROSPACE (4.1%)
1,800,000 Martin Marietta Corp............. $ 85,950,000
1,475,000 Raytheon Co...................... 103,987,500
1,550,000 United Technologies Corp......... 102,881,250
-----------------
292,818,750
-----------------
ALUMINUM (2.2%)
2,250,000 Alcan Aluminum Ltd............... 54,562,500
2,670,000 Aluminum Co. of America.......... 104,130,000
-----------------
158,692,500
-----------------
APPAREL (0.7%)
1,000,000 V.F. Corp........................ 51,500,000
-----------------
AUTO PARTS (1.0%)
1,100,000 TRW, Inc......................... 72,325,000
-----------------
AUTOMOTIVE (2.7%)
3,700,000 Ford Motor Co.................... 96,662,500
2,300,000 General Motors Corp.............. 98,037,500
-----------------
194,700,000
-----------------
BANKS (4.9%)
2,050,000 BankAmerica Corp................. 98,656,250
2,175,000 Keycorp.......................... 63,075,000
1,450,000 Morgan (J.P.) & Co., Inc......... 93,525,000
1,900,000 NationsBank Corp................. 94,762,500
-----------------
350,018,750
-----------------
BEVERAGES - SOFT DRINKS (3.1%)
2,175,000 Coca Cola Co..................... 119,625,000
2,500,000 PepsiCo, Inc..................... 97,812,500
-----------------
217,437,500
-----------------
CHEMICALS (5.9%)
1,575,000 Dow Chemical Co. (The)........... 105,525,000
1,950,000 DuPont (E.I.) de Nemours & Co.... 109,443,750
525,000 Eastman Chemical Co.............. 28,743,750
1,425,000 Grace (W.R.) & Co................ 64,125,000
1,405,000 Monsanto Co...................... 111,346,250
-----------------
419,183,750
-----------------
COAL (0.4%)
500,000 MAPCO, Inc....................... 27,312,500
-----------------
COMPUTERS (3.0%)
2,150,000 Honeywell, Inc................... 78,206,250
1,775,000 International Business Machines
Corp............................. 133,568,750
-----------------
211,775,000
-----------------
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
CONGLOMERATES (2.8%)
1,875,000 Minnesota Mining & Manufacturing
Co............................... $ 102,656,250
2,150,000 Tenneco, Inc..................... 97,825,000
-----------------
200,481,250
-----------------
COSMETICS (3.5%)
975,000 Avon Products, Inc............... 54,843,750
1,500,000 Gillette Co...................... 118,687,500
1,592,500 International Flavors &
Fragrances, Inc.................. 76,639,063
-----------------
250,170,313
-----------------
DRUGS (7.9%)
3,300,000 Abbott Laboratories.............. 117,150,000
1,600,000 American Home Products Corp...... 114,400,000
1,675,000 Bristol-Myers Squibb Co.......... 103,850,000
1,450,000 Schering-Plough Corp............. 113,643,750
2,800,000 Smithkline Beecham PLC (ADR)..... 108,850,000
-----------------
557,893,750
-----------------
ELECTRIC - MAJOR (2.3%)
1,900,000 General Electric Co.............. 104,262,500
3,750,000 Westinghouse Electric Corp....... 58,125,000
-----------------
162,387,500
-----------------
FINANCE (1.4%)
1,000,000 Beneficial Corp.................. 37,125,000
1,360,000 Household International, Inc..... 59,500,000
-----------------
96,625,000
-----------------
FOODS (1.1%)
2,400,000 Quaker Oats Co. (The)............ 78,300,000
-----------------
HOUSEHOLD APPLIANCES (1.1%)
1,400,000 Whirlpool Corp................... 76,125,000
-----------------
INSURANCE (1.3%)
1,675,000 Aetna Life & Casualty Co......... 90,031,250
-----------------
MACHINERY - AGRICULTURAL (1.5%)
1,400,000 Deere & Co....................... 107,275,000
-----------------
METALS & MINING (1.2%)
1,500,000 Phelps Dodge Corp................ 81,750,000
-----------------
NATURAL GAS (3.0%)
1,125,000 Burlington Resources, Inc........ 43,312,500
600,000 El Paso Natural Gas Co........... 18,450,000
2,950,000 Enron Corp....................... 97,350,000
1,600,000 NorAm Energy Corp................ 9,000,000
1,950,000 Panhandle Eastern Corp........... 43,875,000
-----------------
211,987,500
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
OFFICE EQUIPMENT (2.7%)
2,250,000 Pitney-Bowes, Inc................ $ 79,875,000
1,025,000 Xerox Corp....................... 113,646,875
-----------------
193,521,875
-----------------
OIL - DOMESTIC (3.0%)
1,750,000 Amoco Corp....................... 103,687,500
1,000,000 Atlantic Richfield Co............ 109,625,000
-----------------
213,312,500
-----------------
OIL INTEGRATED - INTERNATIONAL (4.6%)
1,675,000 Exxon Corp....................... 107,200,000
1,300,000 Mobil Corp....................... 113,100,000
975,000 Royal Dutch Petroleum Co.
(ADR)............................ 109,321,875
-----------------
329,621,875
-----------------
PAPER & FOREST PRODUCTS (1.2%)
2,150,000 Weyerhaeuser Co.................. 87,612,500
-----------------
PHOTOGRAPHY (1.6%)
2,175,000 Eastman Kodak Co................. 110,925,000
-----------------
RAILROADS (3.9%)
1,575,000 Burlington Northern, Inc......... 88,200,000
1,700,000 Conrail, Inc..................... 93,925,000
1,200,000 CSX Corp......................... 93,300,000
-----------------
275,425,000
-----------------
RETAIL (0.9%)
3,400,000 K Mart Corp...................... 43,350,000
325,000 Petrie Stores Corp............... 6,743,750
800,000 Woolworth Corp................... 12,200,000
-----------------
62,293,750
-----------------
RETAIL - DEPARTMENT STORES (1.1%)
2,200,000 May Department Stores Co......... 80,300,000
-----------------
SOAP & HOUSEHOLD PRODUCTS (1.7%)
1,825,000 Procter & Gamble Co.............. 121,362,500
-----------------
TELECOMMUNICATIONS (1.3%)
2,350,000 U S West, Inc.................... 91,062,500
-----------------
TELEPHONES (4.3%)
1,700,000 Bell Atlantic Corp............... 91,162,500
2,975,000 GTE Corp......................... 99,290,625
3,980,000 Sprint Corp...................... 116,415,000
-----------------
306,868,125
-----------------
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
UTILITIES - ELECTRIC (4.6%)
2,400,000 FPL Group, Inc................... $ 86,100,000
2,200,000 Houston Industries, Inc.......... 84,150,000
2,950,000 Pacific Gas & Electric Co........ 75,593,750
3,100,000 Unicom Corp...................... 79,050,000
-----------------
324,893,750
-----------------
TOTAL COMMON STOCKS
(IDENTIFIED COST
$4,326,085,806).................. 6,105,989,688
-----------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS (11.2%)
$ 50,000 U.S. Treasury Bond
8.125% due 08/15/19.............. 52,921,875
90,000 U.S. Treasury Bond
8.00% due 11/15/21............... 94,387,500
50,000 U.S. Treasury Bond
7.125% due 02/15/23.............. 47,679,687
250,000 U.S. Treasury Bond
6.25% due 08/15/23............... 212,968,750
250,000 U.S. Treasury Note
4.00% due 01/31/96............... 244,531,250
30,000 U.S. Treasury Note
8.875% due 02/15/96.............. 30,656,250
85,000 U.S. Treasury Note
6.375% due 01/15/99.............. 83,233,594
25,000 U.S. Treasury Note
8.00% due 05/15/01............... 26,125,000
-----------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $819,369,876)... 792,503,906
-----------------
SHORT-TERM INVESTMENTS (2.3%)
COMMERCIAL PAPER (a) (2.2%)
ELECTRIC - MAJOR (1.0%)
70,000 General Electric Credit Corp.
5.98% due 04/03/95............... 69,618,208
-----------------
FINANCE - DIVERSIFIED (0.7%)
50,000 American Express Credit Corp.
6.10% due 03/20/95............... 49,840,347
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1995, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------------
<C> <S> <C>
OFFICE EQUIPMENT & SUPPLIES (0.5%)
$ 35,000 IBM Credit Corp. 6.05% due
03/06/95......................... $ 34,970,736
-----------------
TOTAL COMMERCIAL PAPER
(AMORTIZED COST $154,429,291).... 154,429,291
-----------------
REPURCHASE AGREEMENT (0.1%)
11,497 The Bank of New York 6.00% due
03/01/95 (dated 02/28/95;
proceeds $11,499,366;
collateralized by $12,890,515
U.S. Treasury Note 4.75% due
09/30/98 valued at $12,210,292)
(Identified Cost $11,497,450).... 11,497,450
-----------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $165,926,741)... 165,926,741
-----------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$5,311,382,423) (B)........ 99.5% 7,064,420,335
OTHER ASSETS IN EXCESS OF
LIABILITIES................ 0.5 36,147,990
----- -------------
NET ASSETS................. 100.0% $7,100,568,325
----- -------------
----- -------------
<FN>
- ---------------------
ADR American Depository Receipt.
(a) Commercial paper was purchased on a discount basis. The rates shown have
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $5,311,382,423; the
aggregate gross unrealized appreciation is $1,890,775,553 and the
aggregate gross unrealized depreciation is $137,737,641, resulting in net
unrealized appreciation of $1,753,037,912.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $5,311,382,423).......................... $7,064,420,335
Receivable for:
Dividends............................................... 29,904,088
Capital stock sold...................................... 16,480,177
Interest................................................ 5,172,686
Prepaid expenses and other assets........................... 48,144
--------------
TOTAL ASSETS........................................... 7,116,025,430
--------------
LIABILITIES:
Payable for:
Plan of distribution fee................................ 4,691,566
Capital stock repurchased............................... 4,194,118
Investments purchased................................... 3,356,125
Investment management fee............................... 2,304,881
Accrued expenses............................................ 910,415
--------------
TOTAL LIABILITIES...................................... 15,457,105
--------------
NET ASSETS:
Paid-in-capital............................................. 5,286,235,442
Net unrealized appreciation................................. 1,753,037,912
Accumulated undistributed net investment income............. 40,088,973
Accumulated undistributed net realized gain................. 21,205,998
--------------
NET ASSETS............................................. $7,100,568,325
--------------
--------------
NET ASSET VALUE PER SHARE:
227,884,721 SHARES OUTSTANDING (500,000,000 SHARES
AUTHORIZED OF $.01 PAR VALUE).............................
$31.16
--------------
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 28, 1995
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME:
Dividends (net of $835,204 foreign withholding tax)......... $201,247,669
Interest.................................................... 58,838,150
------------
TOTAL INCOME........................................... 260,085,819
------------
EXPENSES
Plan of distribution fee.................................... 59,193,009
Investment management fee................................... 29,221,606
Transfer agent fees and expenses............................ 6,877,687
Custodian fees.............................................. 331,587
Shareholder reports and notices............................. 253,329
Registration fees........................................... 239,223
Professional fees........................................... 34,874
Directors' fees and expenses................................ 28,253
Other....................................................... 125,970
------------
TOTAL EXPENSES......................................... 96,305,538
------------
NET INVESTMENT INCOME.................................. 163,780,281
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 49,160,950
Net change in unrealized appreciation....................... 11,726,441
------------
TOTAL GAIN............................................. 60,887,391
------------
NET INCREASE................................................ $224,667,672
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
FEBRUARY 28, FOR THE YEAR ENDED
1995 FEBRUARY 28, 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 163,780,281 $ 141,287,101
Net realized gain........................................... 49,160,950 25,830,137
Net change in unrealized appreciation....................... 11,726,441 396,814,113
---------------- ---------------------
NET INCREASE........................................... 224,667,672 563,931,351
Dividends to shareholders from net investment income........ (149,556,111) (137,991,103)
Net increase from capital stock transactions................ 313,758,060 900,256,045
---------------- ---------------------
TOTAL INCREASE......................................... 388,869,621 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
$40,088,973 AND $25,864,803, RESPECTIVELY).............. $ 7,100,568,325 $ 6,711,698,704
---------------- ---------------------
---------------- ---------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1995
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); and (4) short-term debt
securities having a maturity date of more than sixty days at time of purchase
are valued on a mark-to-market basis until sixty days prior to maturity and
thereafter at amortized cost based on their value on the 61st day. Short-term
debt securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily and includes the amortization of certain short-term securities.
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
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1995, CONTINUED
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
management fee, accrued daily and payable monthly, by applying the following
annual rates to the net assets of the Fund determined at the close of each
business day: 0.625% to the portion of daily net assets not exceeding $250
million; 0.50% to the portion of daily net assets exceeding $250 million but not
exceeding $1 billion; 0.475% to the portion of daily net assets exceeding $1
billion but not exceeding $2 billion; 0.45% to the portion of daily net assets
exceeding $2 billion but not exceeding $3 billion; 0.425% to the portion of
daily net assets exceeding $3 billion but not exceeding $4 billion; 0.40% to the
portion of daily net assets exceeding $4 billion but not exceeding $5 billion;
0.375% to the portion of daily net assets exceeding $5 billion but not exceeding
$6 billion and 0.35% to 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
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1995, CONTINUED
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. ("DWR"), 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.
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 year ended February 28, 1995,
it received approximately $9,851,000 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 year ended February 28, 1995 aggregated
$584,877,808 and $410,933,879, respectively. Included in the aforementioned are
purchases and sales of U.S. Government securities of $144,722,656 and
$254,998,438, respectively.
For the year ended February 28, 1995, the Fund incurred brokerage commissions of
$126,948 with DWR for portfolio transactions executed on behalf of the Fund.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1995, CONTINUED
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At February 28, 1995, the Fund had
transfer agent fees and expenses payable of approximately $611,000.
The Fund established an unfunded noncontributory defined benefit pension plan
covering all independent Directors of the Fund who will have served as
independent Directors/Trustees for at least five years at the time of
retirement. Benefits under this plan are based on years of service and
compensation during the last five years of service. Aggregate pension costs for
the year ended February 28, 1995, included in Directors' fees and expenses in
the Statement of Operations, amounted to $8,316. At February 28, 1995, the Fund
had an accrued pension liability of $48,143 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 YEAR ENDED FOR THE YEAR ENDED
FEBRUARY 28, 1995 FEBRUARY 28, 1994
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 42,248,385 $1,266,049,401 52,400,350 $1,583,778,568
Reinvestment of dividends and distributions...................... 4,679,486 138,588,041 4,255,666 128,128,068
----------- -------------- ----------- ------------
46,927,871 1,404,637,442 56,656,016 1,711,906,636
Repurchased...................................................... (36,524,071) (1,090,879,382) (26,834,265) (811,650,591)
----------- -------------- ----------- ------------
Net increase..................................................... 10,403,800 $ 313,758,060 29,821,751 $900,256,045
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
6. FEDERAL INCOME TAX STATUS
During the year ended February 28, 1995, the Fund utilized its net capital loss
carryover of approximately $27,955,000.
<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 YEAR ENDED FEBRUARY 28,
----------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992* 1991 1990 1989 1988* 1987 1986
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <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 $ 19.28 $ 20.63 $ 17.56 $ 13.79
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Net investment
income.......... 0.72 0.68 0.70 0.71 0.79 0.72 0.68 0.67 0.51 0.49
Net realized and
unrealized gain
(loss).......... 0.24 2.16 1.72 3.63 1.04 2.83 1.78 (0.99) 3.56 3.90
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Total from
investment
operations...... 0.96 2.84 2.42 4.34 1.83 3.55 2.46 (0.32) 4.07 4.39
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Less dividends
and
distributions
from:
Net investment
income........ (0.66) (0.68) (0.69) (0.76) (0.80) (0.76) (0.62) (0.73) (0.52) (0.52)
Net realized
gain.......... -- -- (0.04) (0.07) -- (0.64) (0.80) (0.30) (0.48) (0.10)
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Total dividends
and
distributions... (0.66) (0.68) (0.73) (0.83) (0.80) (1.40) (1.42) (1.03) (1.00) (0.62)
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Net asset value,
end of period... $ 31.16 $ 30.86 $ 28.70 $ 27.01 $ 23.50 $ 22.47 $ 20.32 $ 19.28 $ 20.63 $ 17.56
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
TOTAL INVESTMENT
RETURN+.......... 3.25% 9.98% 9.13% 18.82% 8.51% 17.85% 13.26% (1.40)% 23.96% 32.88%
RATIOS TO
AVERAGE NET
ASSETS:
Expenses......... 1.42% 1.37% 1.40% 1.42% 1.51% 1.41% 1.55% 1.55% 1.52% 1.55%
Net investment
income.......... 2.42% 2.31% 2.67% 2.91% 3.62% 3.46% 3.44% 3.47% 3.35% 4.73%
SUPPLEMENTAL DATA:
Net assets, end
of period (in
millions)....... $7,101 $6,712 $5,386 $4,071 $3,015 $2,760 $1,860 $1,824 $1,652 $610
Portfolio
turnover rate... 6% 13% 8% 5% 5% 3% 8% 7% 12% 6%
<FN>
- ---------------------
* Year ended February 29.
+ Does not reflect the deduction of sales charge.
</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, 1995, 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, 1995 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
APRIL 13, 1995
- --------------------------------------------------------------------------------
1995 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended February 28, 1995, 100% of the income paid
qualified for the dividends received deduction available to
corporations.
<PAGE>
BOARD OF DIRECTORS
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
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
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
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and directors,
fees, expenses and other pertinent information, please see the prospectus of the
Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
DIVIDEND GROWTH
SECURITIES
ANNUAL REPORT
FEBRUARY 28, 1995
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES
GROWTH OF $10,000
DATE TOTAL S&P 500
February 28, 1985 $10,000 $10,000
February 28, 1986 $13,288 $13,047
February 28, 1987 $16,472 $16,897
February 29, 1988 $16,242 $16,437
February 28, 1989 $18,395 $18,382
February 28, 1990 $21,678 $21,846
February 28, 1991 $23,523 $25,049
February 29, 1992 $27,950 $29,063
February 28, 1993 $30,504 $32,157
February 28, 1994 $33,549 $34,828
February 28, 1995 $34,639(3) $37,401
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
3.25(1) 9.83(1) 13.23(1)
-1.75(2) 9.55(2) 13.23(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, 1995.
(4) The Standard and Poor's 500 Composite Stock Price Index (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.
