<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC. TWO WORLD TRADE CENTER, NEW YORK,
NEW YORK 10048
LETTER TO THE SHAREHOLDERS FEBRUARY 29, 1996
DEAR SHAREHOLDER:
During the 12-month period ended February 29, 1996, robust corporate earnings,
benign inflation and a steadily advancing bond market combined to propel stocks
higher and higher, as evidenced by the Dow Jones Industrial Average's vault
first over 4,000 and then 5,000. The Standard & Poor's 500 Composite Stock Price
Index (S&P 500 Index) and NASDAQ Index were also strong during the year, each
reaching new heights. Despite a brief 100-point detour in mid-December (brought
about by anxiety over budget wrangling in Washington, an economy perceived to be
weakening and a belief that the Federal Reserve Board would not cut interest
rates, which it subsequently did), equities continued to advance into the new
calendar year.
Interest rates moved sharply downward during the period under review, as
economic growth slowed to a more sustainable level and inflationary fears all
but disappeared. As a result, the Federal Reserve Board eased monetary policy by
lowering the federal-funds rate by 25 basis points three times, first in early
July, again in mid-December and again in late January. Overall, the fixed-income
markets in general, and the U.S. Treasury market in particular, reacted
favorably. The yield on 30-year U.S. Treasury bonds declined from 7.44 percent
on February 28, 1995, to 6.48 percent on February 29, 1996. Similarly, two-year
U.S. Treasury note yield declined from 6.76 percent to 5.44 percent during the
year.
PERFORMANCE AND PORTFOLIO
Against this favorable backdrop, Dean Witter Dividend Growth Securities Inc.
produced a total return of 30.01 percent for the 12-month period ended February
29, 1996 (excluding any applicable sales charges), compared to a return of 34.67
percent for the broad-based S&P 500 Index. The accompanying chart illustrates
the growth of a $10,000 investment in the Fund on February 28, 1986 through the
fiscal year ended February 29, 1996 versus a similar investment in the issues
that comprise the S&P 500 Index.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
LETTER TO THE SHAREHOLDERS FEBRUARY 29, 1996, CONTINUED
In our opinion, the Fund's slight underperformance relative to the S&P 500 Index
during the period under review was largely due to the exceptional strength of
small-capitalization stocks, in particular technology stocks which generally
afford little or no current yield. Since one of the Fund's primary investment
objectives is to provide a reasonable current yield, the Fund has little
exposure to this sector.
During the fiscal year, six portfolio holdings were sold: Petrie Stores Corp.,
Toys "R" Us (a spin-off from Petrie Stores), Kmart Corp., Eastman Chemical
Company and U.S. West Media Group (a spin-off from U.S. West, Inc.) due to
valuations and Woolworth Corp. due to the elimination of its dividend. Four new
portfolio positions were initiated with the purchases of shares of Dayton-Hudson
Corp., Federal National Mortgage Association, Lincoln National Corp. and
Goodyear Tire & Rubber Co. These issues were added because of their perceived
undervaluations.
LOOKING AHEAD
[GRAPHIC]
We believe that the outlook for the
economy continues to be favorable. In
fact, we have been convinced for some
months that our economy was stronger
than many experts believed. We also
remain strongly convinced that the
outlook for quality common stocks over
time is very positive. Consequently, we
remain confident and relatively fully
invested.
[GRAPHIC]
We appreciate your support of Dean
Witter Dividend Growth Securities Inc.
and look forward to continuing to serve
your investment needs.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 29, 1996
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (86.5%)
AEROSPACE (4.6%)
1,800,000 Lockheed Martin Corp............. $ 137,250,000
3,000,000 Raytheon Co...................... 150,375,000
1,550,000 United Technologies Corp......... 166,625,000
-----------------
454,250,000
-----------------
ALUMINUM (2.3%)
2,250,000 Alcan Aluminium Ltd. (Canada).... 68,625,000
2,670,000 Aluminum Co. of America.......... 151,522,500
-----------------
220,147,500
-----------------
APPAREL (0.6%)
1,075,000 VF Corp.......................... 57,781,250
-----------------
AUTO PARTS (1.0%)
1,125,000 TRW, Inc......................... 97,453,125
-----------------
AUTO PARTS - AFTER MARKET (1.0%)
2,105,000 Goodyear Tire & Rubber Co........ 99,987,500
-----------------
AUTOMOTIVE (2.4%)
3,800,000 Ford Motor Co.................... 118,750,000
2,350,000 General Motors Corp.............. 120,437,500
-----------------
239,187,500
-----------------
BANKS (5.1%)
2,050,000 BankAmerica Corp................. 146,062,500
2,400,000 KeyCorp.......................... 90,300,000
1,500,000 Morgan (J.P.) & Co., Inc......... 122,812,500
1,900,000 NationsBank Corp................. 140,125,000
-----------------
499,300,000
-----------------
BEVERAGES - SOFT DRINKS (3.3%)
2,025,000 Coca Cola Co..................... 163,518,750
2,500,000 PepsiCo Inc...................... 158,125,000
-----------------
321,643,750
-----------------
CHEMICALS (5.5%)
1,575,000 Dow Chemical Co.................. 126,393,750
1,950,000 Du Pont (E.I.) de Nemours & Co.,
Inc.............................. 149,175,000
1,350,000 Grace (W.R.) & Co................ 93,150,000
1,250,000 Monsanto Co...................... 168,281,250
-----------------
537,000,000
-----------------
COAL (0.3%)
500,000 MAPCO Inc........................ 27,250,000
-----------------
COMPUTERS (1.8%)
1,400,000 International Business Machines
Corp............................. 171,675,000
-----------------
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
CONGLOMERATES (2.6%)
1,950,000 Minnesota Mining & Manufacturing
Co............................... $ 126,993,750
2,375,000 Tenneco Inc...................... 132,703,125
-----------------
259,696,875
-----------------
COSMETICS (3.7%)
1,500,000 Avon Products, Inc............... 120,562,500
2,950,000 Gillette Co...................... 159,668,750
1,592,500 International Flavors &
Fragrances Inc................... 79,824,063
-----------------
360,055,313
-----------------
DRUGS (7.6%)
3,300,000 Abbott Laboratories.............. 137,775,000
1,600,000 American Home Products Corp...... 157,600,000
1,675,000 Bristol-Myers Squibb Co.......... 142,584,375
2,775,000 Schering-Plough Corp............. 155,746,875
2,800,000 SmithKline Beecham PLC (ADR)
(United Kingdom)................. 153,300,000
-----------------
747,006,250
-----------------
ELECTRIC - MAJOR (2.4%)
1,900,000 General Electric Co.............. 143,450,000
5,000,000 Westinghouse Electric Corp....... 92,500,000
-----------------
235,950,000
-----------------
FINANCE (1.5%)
1,000,000 Beneficial Corp.................. 52,000,000
1,360,000 Household International, Inc..... 91,460,000
-----------------
143,460,000
-----------------
FINANCIAL - MISCELLANEOUS (1.2%)
3,800,400 Federal National Mortgage
Assoc............................ 120,187,650
-----------------
FOODS (1.0%)
2,900,000 Quaker Oats Company (The)........ 99,687,500
-----------------
HOUSEHOLD APPLIANCES (0.8%)
1,400,000 Whirlpool Corp................... 77,875,000
-----------------
INSURANCE (2.4%)
1,700,000 Aetna Life & Casualty Co......... 128,562,500
1,925,000 Lincoln National Corp............ 105,875,000
-----------------
234,437,500
-----------------
MACHINERY - AGRICULTURAL (1.7%)
4,200,000 Deere & Co....................... 164,325,000
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 29, 1996, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
MANUFACTURING - DIVERSIFIED (1.2%)
2,250,000 Honeywell, Inc................... $ 119,250,000
-----------------
METALS & MINING (1.0%)
1,600,000 Phelps Dodge Corp................ 97,800,000
-----------------
NATURAL GAS (2.8%)
1,650,000 Burlington Resources, Inc........ 60,018,750
650,000 El Paso Natural Gas Co........... 21,937,500
3,050,000 ENRON Corp....................... 111,706,250
2,000,000 NorAm Energy Corp................ 18,000,000
2,250,000 Panhandle Eastern Corp........... 64,406,250
-----------------
276,068,750
-----------------
OFFICE EQUIPMENT (2.5%)
2,400,000 Pitney Bowes, Inc................ 115,800,000
1,025,000 Xerox Corp....................... 133,506,250
-----------------
249,306,250
-----------------
OIL - DOMESTIC (2.4%)
1,750,000 Amoco Corp....................... 121,625,000
1,000,000 Atlantic Richfield Co............ 109,500,000
-----------------
231,125,000
-----------------
OIL INTEGRATED - INTERNATIONAL (4.2%)
1,675,000 Exxon Corp....................... 133,162,500
1,300,000 Mobil Corp....................... 142,512,500
975,000 Royal Dutch Petroleum Co. (ADR)
(Netherlands).................... 134,306,250
-----------------
409,981,250
-----------------
PAPER & FOREST PRODUCTS (1.1%)
2,450,000 Weyerhaeuser Co.................. 103,818,750
-----------------
PHOTOGRAPHY (1.6%)
2,175,000 Eastman Kodak Co................. 155,512,500
-----------------
RAILROADS (3.7%)
1,575,000 Burlington Northern Santa Fe
Corp............................. 126,000,000
1,700,000 Conrail, Inc..................... 122,612,500
2,500,000 CSX Corp......................... 112,187,500
-----------------
360,800,000
-----------------
RETAIL (1.1%)
1,450,000 Dayton-Hudson Corp............... 107,843,750
-----------------
RETAIL - DEPARTMENT STORES (1.2%)
2,550,000 May Department Stores Co......... 118,893,750
-----------------
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
SOAP & HOUSEHOLD PRODUCTS (1.6%)
1,850,000 Procter & Gamble Co.............. $ 151,700,000
-----------------
TELECOMMUNICATIONS (1.0%)
3,000,000 U.S. West, Inc................... 98,250,000
-----------------
TELEPHONES (4.1%)
1,750,000 Bell Atlantic Corp............... 115,718,750
3,000,000 GTE Corp......................... 128,625,000
3,750,000 Sprint Corp...................... 161,250,000
-----------------
405,593,750
-----------------
UTILITIES - ELECTRIC (4.2%)
2,425,000 FPL Group, Inc................... 108,215,625
4,500,000 Houston Industries, Inc.......... 101,812,500
3,650,000 Pacific Gas & Electric Co........ 93,531,250
3,300,000 Unicom Corp...................... 105,600,000
-----------------
409,159,375
-----------------
TOTAL COMMON STOCKS
(IDENTIFIED COST
$4,731,564,454).................. 8,463,459,838
-----------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS (11.9%)
$ 50,000 U.S. Treasury Bond
8.125% due 08/15/19.............. 58,718,750
90,000 U.S. Treasury Bond
8.00% due 11/15/21............... 104,850,000
50,000 U.S. Treasury Bond
7.125% due 02/15/23.............. 53,039,063
525,000 U.S. Treasury Bond
6.25% due 08/15/23............... 499,898,437
450,000 U.S. Treasury Bond
6.00% due 02/15/26............... 421,453,125
25,000 U.S. Treasury Note
8.00% due 05/15/01............... 27,457,031
-----------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST
$1,167,380,687).................. 1,165,416,406
-----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 29, 1996, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (a) (1.1%)
COMMERCIAL PAPER
AEROSPACE (0.2%)
$ 20,000 Raytheon Co.
5.21% due 03/05/96............... $ 19,988,444
-----------------
AUTOMOTIVE - FINANCE (0.3%)
28,400 Ford Motor Credit Co.
5.21% due 03/12/96 to
03/18/96......................... 28,340,740
-----------------
FINANCE - DIVERSIFIED (0.6%)
55,650 General Electric Capital Corp.
5.21% to 5.28% due 03/07/96 to
03/14/96......................... 55,564,823
-----------------
TOTAL SHORT-TERM INVESTMENTS
(AMORTIZED COST $103,894,007).... 103,894,007
-----------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$6,002,839,148) (B)........ 99.5% 9,732,770,251
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES...... 0.5 49,335,726
----- -------------
NET ASSETS................. 100.0% $9,782,105,977
----- -------------
----- -------------
<FN>
- ---------------------
ADR American Depository Receipt.
(a) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $6,002,839,148; the
aggregate gross unrealized appreciation is $3,778,664,589 and the
aggregate gross unrealized depreciation is $48,733,486, resulting in net
unrealized appreciation of $3,729,931,103.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $6,002,839,148).......................... $9,732,770,251
Cash........................................................ 34,657
Receivable for:
Dividends............................................... 34,813,375
Capital stock sold...................................... 23,480,714
Interest................................................ 5,483,413
Prepaid expenses and other assets........................... 164,719
--------------
TOTAL ASSETS........................................... 9,796,747,129
--------------
LIABILITIES:
Payable for:
Plan of distribution fee................................ 5,759,357
Capital stock repurchased............................... 4,635,971
Investment management fee............................... 3,142,892
Accrued expenses and other payables......................... 1,102,932
--------------
TOTAL LIABILITIES...................................... 14,641,152
--------------
NET ASSETS:
Paid-in-capital............................................. 5,973,046,655
Net unrealized appreciation................................. 3,729,931,103
Accumulated undistributed net investment income............. 61,941,516
Accumulated undistributed net realized gain................. 17,186,703
--------------
NET ASSETS............................................. $9,782,105,977
--------------
--------------
NET ASSET VALUE PER SHARE,
246,728,139 SHARES OUTSTANDING (500,000,000 SHARES
AUTHORIZED OF $.01 PAR VALUE).............................
$39.65
--------------
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 29, 1996
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $926,417 foreign withholding tax)......... $ 223,952,048
Interest.................................................... 66,355,603
--------------
TOTAL INCOME........................................... 290,307,651
--------------
EXPENSES
Plan of distribution fee.................................... 66,486,095
Investment management fee................................... 34,849,553
Transfer agent fees and expenses............................ 7,443,212
Custodian fees.............................................. 421,272
Shareholder reports and notices............................. 385,454
Registration fees........................................... 288,384
Professional fees........................................... 53,423
Directors' fees and expenses................................ 26,061
Other....................................................... 76,386
--------------
TOTAL EXPENSES......................................... 110,029,840
--------------
NET INVESTMENT INCOME.................................. 180,277,811
--------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 17,186,743
Net change in unrealized appreciation....................... 1,976,893,191
--------------
NET GAIN............................................... 1,994,079,934
--------------
NET INCREASE................................................ $2,174,357,745
--------------
--------------
</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 FOR THE YEAR
ENDED ENDED
FEBRUARY 29, 1996 FEBRUARY 28, 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 180,277,811 $ 163,780,281
Net realized gain........................................... 17,186,743 49,160,950
Net change in unrealized appreciation....................... 1,976,893,191 11,726,441
----------------- -----------------
NET INCREASE........................................... 2,174,357,745 224,667,672
----------------- -----------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income....................................... (158,425,268) (149,556,111)
Net realized gain........................................... (21,206,038) --
----------------- -----------------
TOTAL.................................................. (179,631,306) (149,556,111)
----------------- -----------------
Net increase from capital stock transactions................ 686,811,213 313,758,060
----------------- -----------------
TOTAL INCREASE......................................... 2,681,537,652 388,869,621
NET ASSETS:
Beginning of period......................................... 7,100,568,325 6,711,698,704
----------------- -----------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$61,941,516 AND $40,088,973, RESPECTIVELY).............. $ 9,782,105,977 $ 7,100,568,325
----------------- -----------------
----------------- -----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 29, 1996
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's investment objective is to
provide reasonable current income and long-term growth of income and capital.
The Fund seeks to achieve its objective by investing primarily in common stock
of companies with a record of paying dividends and the potential for increasing
dividends. The Fund was incorporated in Maryland on December 22, 1980 and
commenced operations on March 30, 1981.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates. The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York 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 and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 29, 1996, CONTINUED
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 ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with Dean Witter InterCapital
Inc. (the "Investment Manager"), the Fund pays 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; 0.35% to the portion of daily
net assets exceeding $6 billion but not exceeding $8 billion; and 0.325% to 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
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 29, 1996, CONTINUED
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 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 and selected broker-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 29, 1996,
it received approximately $9,400,000 in contingent deferred sales charges from
certain redemptions of the Fund's shares.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 29, 1996, CONTINUED
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 29, 1996 aggregated
$1,533,420,557 and $798,106,403, respectively. Included in the aforementioned
are purchases and sales of U.S. Government securities of $1,006,467,882 and
$564,428,125, respectively.
For the year ended February 29, 1996, the Fund incurred brokerage commissions of
$402,635 with DWR for portfolio transactions executed on behalf of the Fund.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At February 29, 1996, the Fund had
transfer agent fees and expenses payable of approximately $617,000.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Directors of the Fund who will have served as independent
Directors/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 29,
1996, included in Directors' fees and expenses in the Statement of Operations,
amounted to $5,484. At February 29, 1996, the Fund had an accrued pension
liability of $52,580 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 29, 1996 FEBRUARY 28, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 50,150,972 $1,797,441,027 42,248,385 $1,266,049,401
Reinvestment of dividends and distributions...................... 4,681,316 166,381,580 4,679,486 138,588,041
----------- -------------- ----------- ------------
54,832,288 1,963,822,607 46,927,871 1,404,637,442
Repurchased...................................................... (35,988,870) (1,277,011,394) (36,524,071) (1,090,879,382)
----------- -------------- ----------- ------------
Net increase..................................................... 18,843,418 $ 686,811,213 10,403,800 $313,758,060
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
<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
------------------------------------------------------------------------------
1996* 1995 1994 1993 1992* 1991 1990 1989 1988* 1987
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period..... $31.16 $30.86 $28.70 $27.01 $23.50 $22.47 $20.32 $19.28 $20.63 $17.56
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment income.... 0.75 0.72 0.68 0.70 0.71 0.79 0.72 0.68 0.67 0.51
Net realized and
unrealized gain
(loss).................. 8.50 0.24 2.16 1.72 3.63 1.04 2.83 1.78 (0.99) 3.56
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations.............. 9.25 0.96 2.84 2.42 4.34 1.83 3.55 2.46 (0.32) 4.07
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less dividends and
distributions from:
Net investment
income................ (0.67) (0.66) (0.68) (0.69) (0.76) (0.80) (0.76) (0.62) (0.73) (0.52)
Net realized gain..... (0.09) -- -- (0.04) (0.07) -- (0.64) (0.80) (0.30) (0.48)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total dividends and
distributions........... (0.76) (0.66) (0.68) (0.73) (0.83) (0.80) (1.40) (1.42) (1.03) (1.00)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period.................. $39.65 $31.16 $30.86 $28.70 $27.01 $23.50 $22.47 $20.32 $19.28 $20.63
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT
RETURN+.................. 30.01% 3.25% 9.98% 9.13% 18.82% 8.51% 17.85% 13.26% (1.40)% 23.96%
RATIOS TO AVERAGE NET
ASSETS:
Expenses................. 1.31% 1.42% 1.37% 1.40% 1.42% 1.51% 1.41% 1.55% 1.55% 1.52%
Net investment income.... 2.14% 2.42% 2.31% 2.67% 2.91% 3.62% 3.46% 3.44% 3.47% 3.35%
SUPPLEMENTAL DATA:
Net assets, end of
period, in millions..... $9,782 $7,101 $6,712 $5,386 $4,071 $3,015 $2,760 $1,860 $1,824 $1,652
Portfolio turnover
rate.................... 10% 6% 13% 8% 5% 5% 3% 8% 7% 12%
<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 29, 1996, 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 29, 1996 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
APRIL 12, 1996
- --------------------------------------------------------------------------------
1996 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended February 29, 1996, the Fund paid to its
shareholders $0.09 per share from long-term capital gains. For
such period, 100% of the income paid qualified for the dividends
received deduction available to corporations.
<PAGE>
BOARD OF DIRECTORS
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn DEAN WITTER
John R. Haire DIVIDEND GROWTH
Dr. Manuel H. Johnson SECURITIES
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 (PHOTO)
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 ANNUAL REPORT
preceded or accompanied by an effective prospectus. FEBRUARY 29, 1996
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES
GROWTH OF $10,000
DATE TOTAL S&P 500
- -------------------------------------------------------------------
- -------------------------------------------------------------------
February 28, 1986 $10,000 $10,000
- -------------------------------------------------------------------
February 28, 1987 $12,396 $12,591
- -------------------------------------------------------------------
February 29, 1988 $12,223 $12,598
- -------------------------------------------------------------------
February 28, 1989 $13,843 $14,089
- -------------------------------------------------------------------
February 28, 1990 $16,313 $16,744
- -------------------------------------------------------------------
February 28, 1991 $17,702 $19,199
- -------------------------------------------------------------------
February 29, 1992 $21,034 $22,275
- -------------------------------------------------------------------
February 28, 1993 $22,955 $24,647
- -------------------------------------------------------------------
February 28, 1994 $25,247 $26,695
- -------------------------------------------------------------------
February 28, 1995 $26,067 $28,659
- -------------------------------------------------------------------
February 29, 1996 $33,890(3) $38,594
- -------------------------------------------------------------------
- -------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
----------------------------------------------------
----------------------------------------------------
30.01(1) 13.87(1) 12.98(1)
----------------------------------------------------
25.01(2) 13.63(2) 12.98(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 29, 1996.
(4) The Standard & 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 performance of the
index does not include any expenses, fees or charges. The Index is
unmanaged and should not be considered an investment.
