<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC. Two World Trade Center,
New York, New York 10048
LETTER TO THE SHAREHOLDERS August 31, 1996
DEAR SHAREHOLDER:
During the six months ended August 31, 1996, interest rates advanced in a
generally volatile manner, inflation remained at a low and reasonable level,
corporate profits continued to increase, and the dollar continued to
strengthen against other major currencies. These factors combined to provide
the environment for common stock prices to record a small advance.
PERFORMANCE AND PORTFOLIO
For the six-month period ended August 31, 1996, the Standard & Poor's 500
Composite Stock Price Index (S&P 500) posted a total return of 2.97 percent.
For the same period, Dean Witter Dividend Growth Securities Inc. provided
investors with a total return of 3.73 percent.
In our opinion, the Fund outperformed the S&P 500 over this period largely
because of our stringent screening processes which guide us in selecting
relatively undervalued stocks with attractive yields. One of the Fund's
primary investment objectives is to provide reasonable current income and we
remain mindful of and strongly committed to this important goal.
We are convinced that our ongoing use of rigorous screens in selecting
securities for the Fund, as well as in monitoring the progress of current
investments, will be crucial to the Fund's performance over the longer term.
We will continue our relentless search for high-quality, dividend-paying
stocks which appear to be undervalued.
Over the past six months, we sold three portfolio holdings: 360
Communications Co. (a spin-off of Sprint Corp.), Payless Shoesource, Inc.
(a spin-off of May Department Stores Co.) and Imation (a spin-off of
Minnesota Mining & Manufacturing Co.) We initiated three new portfolio
positions with purchases in USX-Marathon Group, International Paper Co. and
GPU, Inc.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
LETTER TO THE SHAREHOLDERS August 31, 1996, continued
LOOKING AHEAD
We believe that the outlook for the economy continues to be favorable. In
fact, we have been convinced for some months that the economy was stronger
than many experts believed. We also remain committed to our positive outlook
for quality common stocks. Consequently, we remain confident and relatively
fully invested.
We appreciate your support of Dean Witter Dividend Growth Securities Inc. and
look forward to continuing to serve your investment needs in the future.
Very truly yours,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS August 31, 1996 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (86.3%)
Aerospace (4.5%)
1,800,000 Lockheed Martin Corp. .......................................... $151,425,000
3,000,000 Raytheon Co. ................................................... 154,500,000
1,550,000 United Technologies Corp. ...................................... 174,762,500
---------------
480,687,500
---------------
Aluminum (2.2%)
2,250,000 Alcan Aluminium Ltd. (Canada) .................................. 70,593,750
2,670,000 Aluminum Co. of America ........................................ 165,873,750
---------------
236,467,500
---------------
Apparel (0.6%)
1,100,000 VF Corp. ....................................................... 64,625,000
---------------
Auto Parts (1.0%)
1,150,000 TRW, Inc. ...................................................... 106,375,000
---------------
Automotive (2.3%)
3,800,000 Ford Motor Co. ................................................. 127,300,000
2,350,000 General Motors Corp. ........................................... 116,912,500
---------------
244,212,500
---------------
Banks (5.3%)
2,050,000 BankAmerica Corp. .............................................. 158,875,000
2,600,000 KeyCorp ........................................................ 104,325,000
1,500,000 Morgan (J.P.) & Co., Inc. ...................................... 131,437,500
1,900,000 NationsBank Corp. .............................................. 161,737,500
---------------
556,375,000
---------------
Beverages - Soft Drinks (3.2%)
4,000,000 Coca Cola Co. .................................................. 200,000,000
5,000,000 PepsiCo Inc. ................................................... 143,750,000
---------------
343,750,000
---------------
Chemicals (5.1%)
1,575,000 Dow Chemical Co. ............................................... 125,606,250
1,950,000 Du Pont (E.I.) de Nemours & Co., Inc. .......................... 160,143,750
1,200,000 Grace (W.R.) & Co. ............................................. 78,750,000
5,500,000 Monsanto Co. ................................................... 176,687,500
---------------
541,187,500
---------------
Coal (0.2%)
500,000 MAPCO Inc. ..................................................... 26,937,500
---------------
Computers (1.5%)
1,400,000 International Business Machines Corp. .......................... 160,125,000
---------------
Conglomerates (2.4%)
1,950,000 Minnesota Mining & Manufacturing Co. ........................... 134,062,500
2,400,000 Tenneco, Inc. .................................................. 119,400,000
---------------
253,462,500
---------------
Cosmetics (3.8%)
3,000,000 Avon Products, Inc. ............................................ 143,625,000
2,950,000 Gillette Co. ................................................... 188,062,500
1,600,000 International Flavors & Fragrances Inc. ........................ 68,800,000
---------------
400,487,500
---------------
Drugs (7.6%)
3,300,000 Abbott Laboratories ............................................ 148,912,500
3,200,000 American Home Products Corp. ................................... 189,600,000
1,675,000 Bristol-Myers Squibb Co. ....................................... 146,981,250
2,775,000 Schering-Plough Corp. .......................................... 155,053,125
2,800,000 SmithKline Beecham PLC (ADR) (United Kingdom) .................. 163,100,000
---------------
803,646,875
---------------
Electric - Major (2.3%)
1,900,000 General Electric Co. ........................................... 157,937,500
5,000,000 Westinghouse Electric Corp. .................................... 81,875,000
---------------
239,812,500
---------------
Finance (1.6%)
1,000,000 Beneficial Corp. ............................................... 56,375,000
1,360,000 Household International, Inc. .................................. 107,780,000
---------------
164,155,000
---------------
Financial - Miscellaneous (1.1%)
3,800,400 Federal National Mortgage Assoc. ............................... 117,812,400
---------------
Foods (0.9%)
2,950,000 Quaker Oats Company (The) ...................................... 96,981,250
---------------
Household Appliances (0.7%)
1,500,000 Whirlpool Corp. ................................................ 73,500,000
---------------
Insurance (2.0%)
1,700,000 Aetna Inc. ..................................................... 112,412,500
2,300,000 Lincoln National Corp. ......................................... 101,775,000
---------------
214,187,500
---------------
Machinery - Agricultural (1.6%)
4,150,000 Deere & Co. .................................................... 164,962,500
---------------
Manufacturing - Diversified (1.2%)
2,250,000 Honeywell, Inc. ................................................ 130,781,250
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS August 31, 1996 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Metals & Mining (1.0%)
1,700,000 Phelps Dodge Corp. ............................................. $ 102,850,000
---------------
Natural Gas (2.4%)
1,850,000 Burlington Resources, Inc. ..................................... 78,856,250
675,000 El Paso Natural Gas Co. ........................................ 28,096,875
3,050,000 ENRON Corp. .................................................... 122,381,250
1,400,000 NorAm Energy Corp. ............................................. 20,475,000
---------------
249,809,375
---------------
Office Equipment (2.7%)
2,400,000 Pitney Bowes, Inc. ............................................. 115,800,000
3,075,000 Xerox Corp. .................................................... 168,740,625
---------------
284,540,625
---------------
Oil - Domestic (3.2%)
1,750,000 Amoco Corp. .................................................... 120,750,000
1,000,000 Atlantic Richfield Co. ......................................... 116,750,000
5,000,000 USX-Marathon Group ............................................. 104,375,000
---------------
341,875,000
---------------
Oil Integrated - International (4.1%)
1,675,000 Exxon Corp. .................................................... 136,303,125
1,300,000 Mobil Corp. .................................................... 146,575,000
975,000 Royal Dutch Petroleum Co. (ADR) (Netherlands) .................. 145,640,625
---------------
428,518,750
---------------
Paper & Forest Products (2.1%)
2,700,000 International Paper Co. ........................................ 108,000,000
2,450,000 Weyerhaeuser Co. ............................................... 109,331,250
---------------
217,331,250
---------------
Photography (1.5%)
2,175,000 Eastman Kodak Co. .............................................. 157,687,500
---------------
Railroads (3.5%)
1,575,000 Burlington Northern Santa Fe Corp. ............................. 126,000,000
1,700,000 Conrail, Inc. .................................................. 115,812,500
2,500,000 CSX Corp. ...................................................... 126,562,500
---------------
368,375,000
---------------
Retail (1.4%)
4,350,000 Dayton-Hudson Corp. ............................................ 150,075,000
---------------
Retail - Department Stores (1.1%)
2,550,000 May Department Stores Co. ...................................... 116,025,000
---------------
Soap & Household Products (1.6%)
1,850,000 Procter & Gamble Co. ........................................... 164,418,750
---------------
Telecommunications (0.9%)
3,350,000 U.S. West, Inc. ................................................ 98,825,000
---------------
Telephones (3.5%)
1,800,000 Bell Atlantic Corp. ............................................ 101,250,000
3,000,000 GTE Corp. ...................................................... 118,125,000
3,750,000 Sprint Corp. ................................................... 152,343,750
---------------
371,718,750
---------------
Tire & Rubber Goods (1.0%)
2,300,000 Goodyear Tire & Rubber Co. ..................................... 104,937,500
---------------
Utilities - Electric (4.5%)
2,425,000 FPL Group, Inc. ................................................ 107,306,250
3,100,000 GPU, Inc. ...................................................... 97,650,000
4,500,000 Houston Industries, Inc. ....................................... 97,875,000
3,450,000 Pacific Gas & Electric Co. ..................................... 78,056,250
4,000,000 Unicom Corp. ................................................... 92,000,000
---------------
472,887,500
---------------
Utilities - Natural Gas (0.7%)
2,250,000 PanEnergy Corp. ................................................ 74,531,250
---------------
TOTAL COMMON STOCKS
(Identified Cost $5,088,837,974) ............................... 9,124,938,025
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (10.2%)
$ 50,000 U.S. Treasury Bond 8.125% due 08/15/19 ......................... 54,621,000
90,000 U.S. Treasury Bond 8.00% due 11/15/21 .......................... 97,365,600
50,000 U.S. Treasury Bond 7.125% due 02/15/23 ......................... 49,139,500
525,000 U.S. Treasury Bond 6.25% due 08/15/23 .......................... 462,588,000
450,000 U.S. Treasury Bond 6.00% due 02/15/26 .......................... 386,307,000
25,000 U.S. Treasury Note 8.00% due 05/15/01 .......................... 26,273,250
---------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Identified Cost $1,167,380,686) ................................ 1,076,294,350
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS August 31, 1996 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (3.1%)
COMMERCIAL PAPER (a) (2.2%)
Aerospace (0.1%)
$15,000 Raytheon Co. 5.25% due 09/19/96 ................................ $ 14,960,626
---------------
Automotive - Finance (0.5%)
50,000 Ford Motor Credit Co. 5.25% due 09/24/96 ....................... 49,832,292
---------------
Finance - Consumer (0.5%)
50,000 American Express Credit Corp. 5.28% due 09/16/96 ............... 49,890,000
---------------
Finance - Diversified (0.1%)
11,500 General Electric Capital Corp. 5.25% due 09/09/96 .............. 11,486,583
---------------
Industrials (0.5%)
52,750 General Electric Co. 5.28% to 5.29% due 09/09/96 to 09/12/96 ... 52,677,055
---------------
Office Equipment (0.5%)
50,000 IBM Credit Corp. 5.31% due 10/15/96 ............................ 49,675,500
---------------
Telephones (0.1%)
8,162 BellSouth Telecommunications Inc. 5.25% due 09/10/96 ........... 8,151,287
---------------
TOTAL COMMERCIAL PAPER
(Amortized Cost $236,673,343) .................................. 236,673,343
---------------
U.S. GOVERNMENT AGENCIES (a) (0.9%)
Federal Home Loan Mortgage Corp. 5.18% to 5.22% due 09/03/96 to
92,450 09/20/96 (Amortized Cost $92,333,654) .......................... 92,333,654
---------------
REPURCHASE AGREEMENT (0.0%)
The Bank of New York 5.125% due 09/03/96 (dated 08/30/96;
proceeds $3,846,302; collateralized by $2,962,621 U.S. Treasury
Bond 11.625% due 11/15/04 valued at $3,920,995) (Identified Cost
$ 3,844 $3,844,113) .................................................... $ 3,844,113
---------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $332,851,110) ................................. 332,851,110
---------------
</TABLE>
TOTAL INVESTMENTS
(Identified Cost
$6,589,069,770) (b) ..... 99.6% 10,534,083,485
OTHER ASSETS IN EXCESS OF
LIABILITIES .............. 0.4 40,912,187
-------- --------------
NET ASSETS ............... 100.0% $10,574,995,672
======== ==============
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 $6,589,069,770.
The aggregate gross unrealized appreciation is $4,104,636,857 and the
aggregate gross unrealized depreciation is $159,623,142, resulting in
net unrealized appreciation of $3,945,013,715.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $6,589,069,770) .................................... $10,534,083,485
Receivable for:
Dividends .......................................................... 35,834,639
Capital stock sold ................................................. 19,672,143
Interest ........................................................... 5,840,867
Prepaid expenses and other assets .................................... 192,756
---------------
TOTAL ASSETS ....................................................... 10,595,623,890
---------------
LIABILITIES:
Payable for:
Plan of distribution fee ........................................... 6,637,983
Investments purchased .............................................. 5,522,625
Capital stock repurchased .......................................... 3,844,511
Investment management fee .......................................... 3,496,465
Accrued expenses ..................................................... 1,126,634
---------------
TOTAL LIABILITIES .................................................. 20,628,218
---------------
NET ASSETS:
Paid-in-capital ...................................................... 6,481,508,852
Net unrealized appreciation .......................................... 3,945,013,715
Accumulated undistributed net investment income ...................... 100,880,808
Accumulated undistributed net realized gain .......................... 47,592,297
---------------
NET ASSETS ......................................................... $10,574,995,672
===============
NET ASSET VALUE PER SHARE ,
259,184,762 shares outstanding (500,000,000 shares authorized of
$.01 par value) ..................................................... $40.80
===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $719,125 foreign withholding tax) $124,195,095
Interest ........................................... 44,332,453
--------------
TOTAL INCOME ..................................... 168,527,548
--------------
EXPENSES
Plan of distribution fee ........................... 38,869,336
Investment management fee .......................... 20,586,746
Transfer agent fees and expenses ................... 4,145,632
Registration fees .................................. 231,133
Custodian fees ..................................... 217,688
Shareholder reports and notices .................... 212,120
Professional fees .................................. 22,715
Directors' fees and expenses ....................... 10,926
Other .............................................. 38,496
--------------
TOTAL EXPENSES ................................... 64,334,792
--------------
NET INVESTMENT INCOME ............................ 104,192,756
--------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain .................................. 47,592,366
Net change in unrealized appreciation .............. 215,082,612
--------------
NET GAIN ......................................... 262,674,978
--------------
NET INCREASE ....................................... $366,867,734
==============
</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 SIX MONTHS FOR THE YEAR
ENDED ENDED
AUGUST 31, 1996 EBRUARY 29, 1996
- -------------------------------------------------- ------------------ -----------------
<S> <C> <C>
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ............................. $ 104,192,756 $ 180,277,811
Net realized gain ................................. 47,592,366 17,186,743
Net change in unrealized appreciation ............. 215,082,612 1,976,893,191
------------------ -----------------
NET INCREASE .................................... 366,867,734 2,174,357,745
------------------ -----------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income ............................. (65,253,464) (158,425,268)
Net realized gain ................................. (17,186,772) (21,206,038)
------------------ -----------------
TOTAL ........................................... (82,440,236) (179,631,306)
------------------ -----------------
Net increase from capital stock transactions ..... 508,462,197 686,811,213
------------------ -----------------
TOTAL INCREASE .................................. 792,889,695 2,681,537,652
NET ASSETS:
Beginning of period ............................... 9,782,105,977 7,100,568,325
------------------ -----------------
END OF PERIOD
(Including undistributed net investment income
of $100,880,808 and $61,941,516, respectively) . $10,574,995,672 $9,782,105,977
================== =================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS August 31, 1996 (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'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 August 31, 1996 (unaudited) 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 the 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; 0.35% to the portion of daily net assets
exceeding $6 billion but not exceeding $8 billion; 0.325% to the portion of
daily net assets exceeding $8 billion but not exceeding $10 billion.
Effective May 31, 1996, the Agreement was amended to reduce the annual fee to
0.30% to the portion of daily net assets exceeding $10 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
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS August 31, 1996 (unaudited) continued
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. ("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.
Although there is no legal obligation for the Fund to pay expenses incurred
in excess of payments made to the Distributor under the Plan and the proceeds
of contingent deferred sales charges paid by investors upon redemption of
shares, if for any reason the Plan is terminated, the Trustees will consider
at that time the manner in which to treat such expenses. The Distributor has
advised the Fund that such excess amounts, included carrying charges, totaled
$202,263,300 at August 31, 1996.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS August 31, 1996 (unaudited) continued
The Distributor has informed the Fund that for the six months ended August
31, 1996, it received approximately $4,600,000 in contingent deferred sales
charges from certain redemptions of the Fund's shares.
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, 1996
aggregated $409,094,479 and $96,259,018, respectively.
For the six months ended August 31, 1996, the Fund incurred brokerage
commissions of $283,070 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 August 31, 1996, the Fund had
transfer agent fees and expenses payable of approximately $674,000.
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 six months ended August 31, 1996, included in Directors' fees and
expenses in the Statement of Operations amounted to $651. At August 31, 1996,
the Fund had an accrued pension liability of $52,930 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 FOR THE YEAR
ENDED ENDED
AUGUST 31, 1996 FEBRUARY 29, 1996
------------------------------ -------------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sold ........................................ 27,914,911 $1,136,440,941 50,150,972 $ 1,797,441,027
Reinvestment of dividends and distributions 1,138,068 46,717,704 4,681,316 166,381,580
-------------- -------------- -------------- ---------------
29,052,979 1,183,158,645 54,832,288 1,963,822,607
Repurchased ................................. (16,596,356) (674,696,448) (35,988,870) (1,277,011,394)
-------------- -------------- -------------- ---------------
Net increase ................................ 12,456,623 $ 508,462,197 18,843,418 $ 686,811,213
============== ============== ============== ===============
</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 SIX MONTHS FOR THE YEAR ENDED FEBRUARY 28
ENDED ----------------------------------------------------
AUGUST 31, 1996 1996* 1995 1994 1993 1992*
- -----------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .. $ 39.65 $31.16 $30.86 $28.70 $27.01 $23.50
------------------ -------- -------- -------- -------- --------
Net investment income .................. 0.40 0.75 0.72 0.68 0.70 0.71
Net realized and unrealized gain ...... 1.08 8.50 0.24 2.16 1.72 3.63
------------------ -------- -------- -------- -------- --------
Total from investment operations ...... 1.48 9.25 0.96 2.84 2.42 4.34
------------------ -------- -------- -------- -------- --------
Less dividends and distributions from:
Net investment income ................. (0.26) (0.67) (0.66) (0.68) (0.69) (0.76)
Net realized gain ..................... (0.07) (0.09) -- -- (0.04) (0.07)
------------------ -------- -------- -------- -------- --------
Total dividends and distributions ..... (0.33) (0.76) (0.66) (0.68) (0.73) (0.83)
------------------ -------- -------- -------- -------- --------
Net asset value, end of period ......... $ 40.80 $39.65 $31.16 $30.86 $28.70 $27.01
================== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN+ ............... 3.73%(1) 30.01% 3.25% 9.98% 9.13% 18.82%
Ratios to Average Net Assets:
Expenses ............................... 1.24%(2) 1.31% 1.42% 1.37% 1.40% 1.42%
Net investment income .................. 2.01%(2) 2.14% 2.42% 2.31% 2.67% 2.91%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions $ 10,575 $9,782 $7,101 $6,712 $5,386 $4,071
Portfolio turnover rate ................ 1%(1) 10% 6% 13% 8% 5%
Average commission rate paid ........... $ 0.0544 -- -- -- -- --
<FN>
- ------------
* Year ended February 29.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
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<PAGE>
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<PAGE>
BOARD OF DIRECTORS
- ----------------------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
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
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.
DEAN WITTER
DIVIDEND GROWTH
SECURITIES
[GRAPHIC OMITTED]
Semiannual Report
August 31, 1996
