<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
LETTER TO THE SHAREHOLDERS August 31, 1997
Two World Trade Center, New York, New York 10048
DEAR SHAREHOLDER:
The last six months proved to be another strong period for equities, with
several favorable economic factors in place that lured investors into the
market. Interest rates declined, inflation remained in check and the dollar
strengthened, all of which pushed the market to record levels.
PERFORMANCE AND PORTFOLIO
The strength exhibited in the market over the six months ended August 31,
1997, was evident in the performance of Dean Witter Dividend Growth
Securities' performance. The Fund's Class B shares posted a total return of
12.14 percent for the period versus 13.51 percent for the Lipper Growth and
Income Funds Index and 14.78 percent for the Standard & Poor's 500 Composite
Stock Index (S&P 500).
In our opinion, the Fund's slight underperformance of the S&P 500 index over
this period was largely due to the fact that the index includes many
high-technology stocks and selected smaller and mid-cap stocks, both of which
were strong performers during the period. These stocks generally pay little,
if any, dividends and therefore are not included in the Fund. One of the
Fund's primary investment objectives is to provide reasonable current yield,
an objective of which we remain mindful.
Several portfolio shifts occurred during the period that helped the Fund
perform well. Such changes included selling holdings in NorAm Energy Corp.
and PanEnergy Corp., and purchasing positions in AMP, Inc., Providian Corp.,
Jefferson-Pilot Corp., Consolidated Natural Gas Co., Sonat, Inc. and Crown
Cork & Seal Co., Inc. As a result of a spin-off involving Providian Corp.,
shares of Providian Financial Co. and Aegon N.V.-American Registered Shares
were received into the portfolio.
In August, Forbes Magazine named Dean Witter Dividend Growth Securities to
its Honor Roll for the third consecutive year. The Fund was one of only 16
funds to be recognized by the publication. In order to be included in the
Forbes Honor Roll, funds have to be open ended and meet certain stringent
criteria, which include superior performance during bull
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
LETTER TO THE SHAREHOLDERS August 31, 1997, continued
markets after deducting taxes and sales commissions, preserving capital in
bear markets by performing in the top 45 percent of their peer group and
maintaining the same portfolio manager for over five years.
On July 28, 1997, the Fund began offering four classes of shares: A, B, C and
D, each with its own sales charge and distribution fee structure. A revised
prospectus, which includes complete details regarding the Fund's conversion
to multiple classes of shares, was mailed to shareholders in mid-summer.
LOOKING AHEAD
We are convinced that the continued use of our stringent screening process
that seeks out high-quality, overlooked stocks as well as monitoring the
progress of current investments will be key to the Fund's strong long-term
performance. Also, we believe that the outlook for the economy continues to
be favorable.
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,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
RESULTS OF SPECIAL MEETING (unaudited)
On May 21, 1997, a special meeting of the Fund's shareholders was held for
the purpose of voting on five separate matters, the results of which were as
follows:
(1) APPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE CORPORATION
AND DEAN WITTER INTERCAPITAL INC, IN CONNECTION WITH THE MERGER OF MORGAN
STANLEY GROUP INC. WITH DEAN WITTER, DISCOVER & CO.:
VOTE NO. OF SHARES
---- -------------
For................................................... 148,509,712
Against .............................................. 4,254,993
Abstain .............................................. 14,713,811
(2) ELECTION OF DIRECTORS:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Michael Bozic John R. Haire Michael E. Nugent
For............... 157,254,323 For............... 156,504,203 For............... 157,195,537
Withheld.......... 10,224,193 Withheld.......... 10,974,313 Withheld.......... 10,282,979
Charles A. Fiumefreddo Wayne E. Hedien Philip J. Purcell
For............... 156,752,000 For............... 156,903,181 For............... 157,787,190
Withheld.......... 10,726,516 Withheld.......... 10,575,335 Withheld.......... 9,691,326
Edwin J. Garn Dr. Manuel H. Johnson John L. Schroeder
For............... 156,653,598 For............... 156,602,897 For............... 157,054,151
Withheld.......... 10,824,918 Withheld.......... 10,875,619 Withheld.......... 10,424,365
</TABLE>
(3) APPROVAL OF AN AMENDMENT TO THE CORPORATION'S ARTICLES OF INCORPORATION
TO PERMIT MULTIPLE CLASSES OR SERIES OF SHARES:
For .................................................. 141,638,492
Against ............................................. 8,377,846
Abstain ............................................. 17,462,178
(4) APPROVAL OF A NEW INVESTMENT POLICY WITH RESPECT TO INVESTMENTS IN
CERTAIN OTHER INVESTMENT COMPANIES:
For .................................................. 136,510,349
Against ............................................. 13,244,642
Abstain............................................... 17,723,525
(5) RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP AS THE
CORPORATION'S INDEPENDENT ACCOUNTANTS:
For .................................................. 152,632,645
Against ............................................. 2,404,811
Abstain ............................................. 12,441,060
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS August 31, 1997 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (88.2%)
Aerospace (4.0%)
1,800,000 Lockheed Martin Corp. .......................................... $ 186,637,500
3,050,000 Raytheon Co. .................................................... 167,750,000
3,100,000 United Technologies Corp. ....................................... 241,993,750
--------------
596,381,250
--------------
Aluminum (2.0%)
2,250,000 Alcan Aluminium Ltd. (Canada) ................................... 78,609,375
2,670,000 Aluminum Co. of America ......................................... 219,607,500
--------------
298,216,875
--------------
Apparel (0.7%)
1,100,000 VF Corp. ....................................................... 97,212,500
--------------
Auto Parts (1.4%)
2,000,000 Dana Corp. ...................................................... 92,125,000
2,300,000 TRW, Inc. ....................................................... 119,887,500
--------------
212,012,500
--------------
Automotive (3.0%)
3,600,000 Chrysler Corp. .................................................. 126,450,000
3,850,000 Ford Motor Co. ................................................. 165,550,000
2,400,000 General Motors Corp. ........................................... 150,600,000
--------------
442,600,000
--------------
Banks (5.5%)
4,000,000 BankAmerica Corp. .............................................. 263,250,000
2,600,000 KeyCorp ......................................................... 157,625,000
1,500,000 Morgan (J.P.) & Co., Inc. ....................................... 160,875,000
3,850,000 NationsBank Corp. ............................................... 228,593,750
--------------
810,343,750
--------------
Beverages-Soft Drinks (2.7%)
3,900,000 Coca Cola Co. .................................................. 223,518,750
5,000,000 PepsiCo Inc. ................................................... 180,000,000
--------------
403,518,750
--------------
Chemicals (5.0%)
1,575,000 Dow Chemical Co. ............................................... 139,387,500
Du Pont (E.I.) de Nemours &
3,900,000 Co., Inc. ...................................................... 243,018,750
5,300,000 Monsanto Co. ................................................... 232,868,750
2,100,000 PPG Industries, Inc. ........................................... 132,300,000
--------------
747,575,000
--------------
Coal (0.2%)
1,000,000 MAPCO Inc. ...................................................... $ 30,000,000
--------------
Computers (1.9%)
2,800,000 International Business Machines Corp. .......................... 282,450,000
--------------
Conglomerates (2.1%)
1,950,000 Minnesota Mining & Manufacturing Co. .......................... 175,256,250
365,000 Newport News Shipbuilding Inc. ................................. 7,071,875
2,650,000 Tenneco, Inc. ................................................... 128,690,625
--------------
311,018,750
--------------
Containers-Metal & Glass (0.7%)
2,025,000 Crown Cork & Seal Co., Inc. ..................................... 103,021,875
--------------
Cosmetics (3.5%)
3,000,000 Avon Products, Inc. ............................................ 192,187,500
2,900,000 Gillette Co. ................................................... 240,156,250
1,700,000 International Flavors & Fragrances Inc. ....................... 86,912,500
--------------
519,256,250
--------------
Drugs (8.0%)
3,300,000 Abbott Laboratories ............................................. 197,793,750
3,200,000 American Home Products Corp. .................................... 230,400,000
3,350,000 Bristol-Myers Squibb Co. ........................................ 254,600,000
5,550,000 Schering-Plough Corp. ........................................... 266,400,000
5,600,000 Smithkline Beecham PLC (ADR) (United Kingdom) .................. 242,550,000
--------------
1,191,743,750
--------------
Electric-Major (2.5%)
3,800,000 General Electric Co. ........................................... 237,500,000
5,400,000 Westinghouse Electric Corp. ..................................... 139,050,000
--------------
376,550,000
--------------
Electrical Equipment (0.9%)
2,800,000 AMP, Inc. ....................................................... 140,000,000
--------------
Energy (0.5%)
1,300,000 Kerr-McGee Corp. ................................................ 80,762,500
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS August 31, 1997 (unaudited) continued
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------
Finance (1.9%)
1,000,000 Beneficial Corp. ................................................ $ 71,562,500
1,360,000 Household International, Inc. .................................. 150,875,000
1,825,000 Providian Financial Corp. ....................................... 67,981,250
-------------
290,418,750
-------------
Financial-Miscellaneous (1.1%)
3,800,400 Fannie Mae ...................................................... 167,217,600
-------------
Foods (0.9%)
3,000,000 Quaker Oats Company (The) ....................................... 141,000,000
-------------
Household Appliances (0.6%)
1,600,000 Whirlpool Corp. ................................................. 91,600,000
-------------
Insurance (3.0%)
1,725,000 Aetna Inc. ...................................................... 164,629,687
1,659,600 Jefferson-Pilot Corp. .......................................... 115,445,925
2,350,000 Lincoln National Corp. ......................................... 157,303,125
-------------
437,378,737
-------------
Life Insurance (0.4%)
781,950 Aegon N.V. (ADR)(Netherlands) ................................... 58,059,787
-------------
Machinery-Agricultural (1.6%)
4,150,000 Deere & Co. .................................................... 232,400,000
-------------
Machinery-Diversified (0.6%)
1,800,000 Johnson Controls, Inc. .......................................... 85,837,500
-------------
Manufacturing-Diversified (1.0%)
2,250,000 Honeywell, Inc. ................................................ 155,531,250
-------------
Metals & Mining (0.9%)
1,700,000 Phelps Dodge Corp. ............................................. 136,743,750
-------------
Natural Gas (2.0%)
2,400,000 Burlington Resources, Inc. ..................................... 121,500,000
1,000,000 El Paso Natural Gas Co. ........................................ 56,250,000
3,100,000 Enron Corp. .................................................... 119,543,750
-------------
297,293,750
-------------
Office Equipment (2.8%)
2,400,000 Pitney Bowes, Inc. ............................................. 183,300,000
3,100,000 Xerox Corp. .................................................... 234,050,000
-------------
417,350,000
-------------
Oil-Domestic (3.2%)
1,750,000 Amoco Corp. ..................................................... $ 165,484,375
2,000,000 Atlantic Richfield Co. ......................................... 150,000,000
5,100,000 USX-Marathon Group .............................................. 166,068,750
-------------
481,553,125
-------------
Oil Integrated-International (4.0%)
3,350,000 Exxon Corp. .................................................... 204,978,125
2,600,000 Mobil Corp. ..................................................... 189,150,000
3,900,000 Royal Dutch Petroleum Co. (ADR)(Netherlands) .................. 197,925,000
-------------
592,053,125
-------------
Paper & Forest Products (2.0%)
2,750,000 International Paper Co. ........................................ 145,062,500
2,500,000 Weyerhaeuser Co. ................................................ 144,375,000
-------------
289,437,500
-------------
Photography (1.0%)
2,225,000 Eastman Kodak Co. .............................................. 145,459,375
-------------
Railroads (2.0%)
1,600,000 Burlington Northern Santa Fe Corp. ............................. 146,700,000
2,500,000 CSX Corp. ....................................................... 142,968,750
-------------
289,668,750
-------------
Retail (1.7%)
4,350,000 Dayton-Hudson Corp. ............................................ 247,950,000
-------------
Retail-Department Stores (0.9%)
2,550,000 May Department Stores Co. ...................................... 137,221,875
-------------
Soap & Household Products (1.7%)
1,850,000 Procter & Gamble Co. ............................................ 246,165,625
-------------
Telecommunications (0.9%)
3,550,000 U.S. West, Inc. ................................................. 127,134,375
-------------
Telephones (3.0%)
1,800,000 Bell Atlantic Corp. ............................................ 130,275,000
3,100,000 GTE Corp. ...................................................... 138,143,750
3,700,000 Sprint Corp. ................................................... 173,900,000
-------------
442,318,750
-------------
Tire & Rubber Goods (1.0%)
2,300,000 Goodyear Tire & Rubber Co. ..................................... 141,737,500
-------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS August 31, 1997 (unaudited) continued
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------------------------------------
Tobacco (0.8%)
3,950,000 UST, Inc. ...................................................... $ 114,056,250
---------------
Utilities-Electric (3.4%)
2,425,000 FPL Group, Inc. ................................................. 112,762,500
3,200,000 GPU, Inc. ...................................................... 107,600,000
4,700,000 Houston Industries, Inc. ....................................... 95,175,000
3,600,000 PG & E Corp. .................................................... 83,475,000
4,450,000 Unicom Corp. ................................................... 105,131,250
---------------
504,143,750
---------------
Utilities-Natural Gas (1.2%)
1,255,000 Consolidated Natural Gas Co. .................................... 74,123,438
2,125,000 Sonat, Inc. .................................................... 105,851,563
---------------
179,975,001
---------------
TOTAL COMMON STOCKS
(Identified Cost $6,213,514,287) ................................ 13,092,369,875
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- -----------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (9.0%)
$ 50,000 U.S. Treasury Bond
8.125% due 08/15/19 ............................................ 58,110,000
90,000 U.S. Treasury Bond
8.00% due 11/15/21 ............................................. 103,796,100
50,000 U.S. Treasury Bond
7.125% due 02/15/23 ............................................ 52,542,500
725,000 U.S. Treasury Bond
6.25% due 08/15/23 ............................................. 685,676,000
450,000 U.S. Treasury Bond
6.00% due 02/15/26 ............................................. 411,615,000
25,000 U.S. Treasury Note
8.00% due 05/15/01 ............................................. 26,485,250
-------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Identified Cost $1,356,560,375) ................................ 1,338,224,850
-------------
SHORT-TERM INVESTMENTS (2.5%)
COMMERCIAL PAPER (a) (1.0%)
Banks-Commercial (0.3%)
40,000 Societe Generale N.A. Inc.
5.50% due 09/08/97 ............................................. 39,957,222
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Finance-Diversified (0.7%)
$100,000 Associates Corp. of North America 5.49% due 09/18/97 ............ $ 99,740,750
-------------
TOTAL COMMERCIAL PAPER
(Amortized Cost $139,697,972) ................................... 139,697,972
-------------
U.S. GOVERNMENT AGENCIES (a) (1.6%)
100,000 Federal Home Loan Banks
5.37% due 09/04/97 ............................................. 99,955,250
135,000 Federal Home Loan Mortgage Corp. 5.50% due 09/02/97 ............ 134,979,375
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(Amortized Cost $234,934,625) ................................... 234,934,625
-------------
REPURCHASE AGREEMENT (0.0%)
625 The Bank of New York
5.25% due 09/02/97 (dated
08/29/97; proceeds
$625,059)(b)
(Identified Cost $624,695) .................................... 624,695
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $375,257,292) .................................. 375,257,292
-------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost
$7,945,331,954)(C) ............................................... 99.7% 14,805,852,017
OTHER ASSETS IN EXCESS OF
LIABILITIES....................................................... 0.3 38,330,657
----- ---------------
NET ASSETS ....................................................... 100.0% $14,844,182,674
===== ===============
</TABLE>
- --------------
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) Collateralized by $657,657 Federal Home Loan Mortgage Corp. 6.03% due
02/01/37 valued at $637,188.
(c) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$6,958,914,385 and the aggregate gross unrealized depreciation is
$98,394,322, resulting in net unrealized appreciation of $6,860,520,063.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1997 (unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value (identified cost $7,945,331,954). $14,805,852,017
Receivable for:
Dividends.......................................................... 40,776,262
Capital stock sold ................................................ 38,792,899
Interest........................................................... 6,418,038
Prepaid expenses and other assets ................................... 307,917
---------------
TOTAL ASSETS ...................................................... 14,892,147,133
---------------
LIABILITIES:
Payable for:
Capital stock repurchased.......................................... 29,548,397
Plan of distribution fee........................................... 8,650,726
Investments purchased.............................................. 4,684,800
Investment management fee.......................................... 4,723,673
Accrued expenses and other payables ................................. 356,863
---------------
TOTAL LIABILITIES ................................................. 47,964,459
---------------
NET ASSETS ........................................................ $14,844,182,674
===============
COMPOSITION OF NET ASSETS:
Paid-in-capital ..................................................... $ 7,840,341,089
Net unrealized appreciation ......................................... 6,860,520,063
Accumulated undistributed net investment income ..................... 92,902,847
Accumulated undistributed net realized gain ......................... 50,418,675
---------------
NET ASSETS ........................................................ $14,844,182,674
===============
CLASS A SHARES:
Net Assets .......................................................... $28,194,245
Shares Outstanding (500,000,000 shares authorized of $.01 par value) 547,677
NET ASSET VALUE PER SHARE ......................................... $51.48
======
MAXIMUM OFFERING PRICE PER SHARE
(net asset value plus 5.54% of net asset value)................... $54.33
======
CLASS B SHARES:
Net Assets........................................................... $14,508,804,316
Shares Outstanding (500,000,000 shares authorized of $.01 par value) 281,938,221
NET ASSET VALUE PER SHARE ......................................... $51.46
======
CLASS C SHARES:
Net Assets .......................................................... $9,912,427
Shares Outstanding (500,000,000 shares authorized of $.01 par value) 192,662
NET ASSET VALUE PER SHARE ......................................... $51.45
======
CLASS D SHARES:
Net Assets .......................................................... $297,271,686
Shares Outstanding (500,000,000 shares authorized of $.01 par value) 5,773,157
NET ASSET VALUE PER SHARE ......................................... $51.49
======
</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, 1997* (unaudited)
NET INVESTMENT INCOME:
INCOME
Dividends (net of $882,604 foreign withholding
tax)............................................... $ 146,766,573
Interest ........................................... 56,923,652
--------------
TOTAL INCOME ..................................... 203,690,225
--------------
EXPENSES
Plan of distribution fee (Class B shares) ......... 49,087,830
Investment management fee........................... 26,289,645
Transfer agent fees and expenses.................... 4,849,610
Registration fees .................................. 366,970
Custodian fees ..................................... 245,689
Shareholder reports and notices .................... 239,731
Professional fees .................................. 39,474
Directors' fees and expenses ....................... 8,148
Other............................................... 55,287
--------------
TOTAL EXPENSES ................................... 81,182,384
--------------
NET INVESTMENT INCOME............................. 122,507,841
--------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain................................... 50,418,416
Net change in unrealized appreciation .............. 1,417,504,832
--------------
NET GAIN.......................................... 1,467,923,248
--------------
NET INCREASE........................................ $1,590,431,089
==============
- --------------
* Class A, Class C and Class D shares were issued July 28, 1997.
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 FOR THE YEAR
MONTHS ENDED ENDED
AUGUST 31, 1997* FEBRUARY 28, 1997
- ---------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ............................. $ 122,507,841 $ 216,913,534
Net realized gain.................................. 50,418,416 263,776,646
Net change in unrealized appreciation ............. 1,417,504,832 1,713,084,128
--------------- ---------------
NET INCREASE .................................... 1,590,431,089 2,193,774,308
--------------- ---------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class B shares ................................... (78,586,783) (229,873,261)
Net realized gain
Class B shares ................................... (140,295,517) (140,667,573)
--------------- ---------------
TOTAL DIVIDENDS AND DISTRIBUTIONS ............... (218,882,300) (370,540,834)
--------------- ---------------
Net increase from capital stock transactions ..... 565,855,150 1,301,439,284
--------------- ---------------
NET INCREASE .................................... 1,937,403,939 3,124,672,758
NET ASSETS:
Beginning of period ............................... 12,906,778,735 9,782,105,977
--------------- ---------------
END OF PERIOD
(Including undistributed net investment income of
$92,902,847 and $48,981,789, respectively) ..... $14,844,182,674 $12,906,778,735
=============== ===============
</TABLE>
- --------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS August 31, 1997 (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. On July 28, 1997, the Fund
commenced offering three additional classes of shares, with the then current
shares, other than shares which were purchased prior to July 2, 1984 (and
with respect to such shares, certain shares acquired through reinvestment of
dividends and capital gains distributions (collectively the "Old Shares"))
and shares held by certain employee benefit plans established by Dean Witter
Reynolds Inc. and its affiliate, SPS Transaction Services, Inc., designated
as Class B shares. The Old Shares and shares held by those employee benefit
plans prior to July 28, 1997 have been designated Class D shares.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase, some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year,
six years and one year, respectively. Class D shares are not subject to a
sales charge. Additionally, Class A shares, Class B shares and Class C shares
incur distribution expenses.
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 or other domestic or foreign 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
Dean Witter InterCapital Inc. (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
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS August 31, 1997 (unaudited) continued
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.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are
allocated to each class of shares based upon the relative net asset value on
the date such items are recognized. Distribution fees are charged directly to
the respective class.
D. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends
and distributions to its shareholders on the 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 the Investment Manager,
the Fund pays a management fee, accrued daily and payable monthly, by
applying the following annual rates to the net
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS August 31, 1997 (unaudited) continued
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; and 0.30% to the portion of daily net assets exceeding
$10 billion. Effective May 1, 1997, the Agreement was amended to reduce the
annual fee to 0.275% of the portion of daily net assets in excess of $15
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.
The Plan provides that the Fund will pay the Distributor a fee which is
accrued daily and paid monthly at the following annual rates: (i) Class A
- -0.25% of the average daily net assets of Class A; (ii) Class B -1.0% of the
lesser of: (a) the average daily aggregate gross sales of the Class B shares
since the inception 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 Class B shares redeemed since the Plan's inception
upon which a contingent deferred sales charge has been imposed or waived; or
(b) the average daily net assets of Class B attributable to shares issued,
net of related shares redeemed, since the Plan's inception; and (iii) Class C
- -1.0% of the average daily net assets of Class C. In the case of Class A
shares, amounts paid under the Plan are paid to the Distributor for services
provided. In the case of Class B and Class C shares, amounts paid under the
Plan are paid to the Distributor for services provided and the expenses borne
by it and others in the distribution of the shares of these Classes,
including the payment of commissions for sales of these Classes and incentive
compensation to, and expenses of, the account executives of Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS August 31, 1997 (unaudited) continued
Distributor, and others who engage in or support distribution of the 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 these shares to other than current
shareholders; and preparation, printing and distribution of sales literature
and advertising materials. In addition, the Distributor may utilize fees paid
pursuant to the Plan, in the case of Class B shares, to compensate DWR and
other selected broker-dealers for their opportunity costs in advancing such
amounts, which compensation would be in the form of a carrying charge on any
unreimbursed expenses.
In the case of Class B shares, provided that the Plan continues in effect,
any cumulative expenses incurred by the Distributor but not yet recovered may
be recovered through the payment of future distribution fees from the Fund
pursuant to the Plan and contingent deferred sales charges paid by investors
upon redemption of Class B shares. 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, including carrying charges, totaled $240,432,577 at August
31, 1997.
In the case of Class A shares and Class C shares, expenses incurred pursuant
to the Plan in any calendar year in excess of 0.25% or 1.0% of the average
daily net assets of Class A or Class C, respectively, will not be reimbursed
by the Fund through payments in any subsequent year, except that the expenses
representing a gross sales credit to account executives may be reimbursed in
the subsequent calendar year. For the period ended August 31, 1997, the
distribution fee was accrued for Class A shares and Class C shares at the
annual rate of 0.25% and 1.0%, respectively.
The Distributor has informed the Fund that for the six months ended August
31, 1997, it received contingent deferred sales charges from certain
redemptions of the Fund's Class B shares and Class C shares of $6,442,873 and
$815, respectively and received $115,716 in front-end sales charges from
sales of the Fund's Class A shares. The respective shareholders pay such
charges which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the six months ended August 31, 1997
aggregated $669,132,489 and $113,132,367, respectively.
For the six months ended August 31, 1997, the Fund incurred $24,340 in
brokerage commissions with DWR for portfolio transactions executed on behalf
of the Fund.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS August 31, 1997 (unaudited) continued
For the period May 31, 1997 through August 31, 1997, the Fund incurred
brokerage commissions of $25,000 with Morgan Stanley & Co., Inc., an
affiliate of the Investment Manager since May 31, 1997, for portfolio
transactions executed on behalf of the Fund.
The Fund has an unfunded noncontributory defined benefit pension plan
covering all independent Directors of the Fund who will have served as
independent Directors 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, 1997 included in Directors' fees and expenses in the
Statement of Operations amounted to $1,796. At August 31, 1997, the Fund had
an accrued pension liability of $55,151 which is included in accrued expenses
in the Statement of Assets and Liabilities.
Dean Witter Trust FSB, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent.
5. CAPITAL STOCK+
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
AUGUST 31, 1997 FEBRUARY 28, 1997
----------------------------- ----------------------------
(UNAUDITED)
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
CLASS A SHARES*
Sold ........................................ 549,424 $ 28,627,547 -- --
Redeemed .................................... (1,747) (93,159) -- --
----------- -------------- ----------- --------------
Net increase - Class A ...................... 547,677 28,534,388 -- --
----------- -------------- ----------- --------------
CLASS B SHARES
Sold ........................................ 28,886,877 1,425,312,937 57,912,895 $2,481,578,268
Reinvestment of dividends and distributions 4,082,737 204,476,070 7,903,656 344,605,406
Redeemed .................................... (22,243,973) (1,102,331,943) (35,552,864) (1,524,744,390)
----------- -------------- ----------- --------------
Net increase - Class B ...................... 10,725,641 527,457,064 30,263,687 $1,301,439,284
----------- -------------- ----------- --------------
CLASS C SHARES*
Sold ........................................ 194,615 10,324,018 -- --
Redeemed .................................... (1,953) (101,222) -- --
----------- -------------- ----------- --------------
Net increase - Class C ...................... 192,662 10,222,796 -- --
----------- -------------- ----------- --------------
CLASS D SHARES*
Sold ........................................ 95,536 5,044,508 -- --
Redeemed .................................... (101,625) (5,403,606) -- --
----------- -------------- ----------- --------------
Net decrease - Class D ...................... (6,089) (359,098) -- --
----------- -------------- ----------- --------------
Net increase in Fund ........................ 11,459,891 $ 565,855,150 30,263,687 $1,301,439,284
=========== ============== =========== ==============
</TABLE>
- --------------
+ On July 28, 1997, 5,779,246 shares representing $308,785,103 were
transferred to Class D.
* For the period July 28, 1997 (issue date) through August 31, 1997.
<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* FOR THE YEAR ENDED FEBRUARY 28
MONTHS ENDED ---------------------------------------------------------
AUGUST 31, 1997 1997 1996** 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .. $46.60 $39.65 $31.16 $30.86 $28.70 $27.01
------ ------ ------ ------ ------ ------
Net investment income.................. 0.43 0.81 0.75 0.72 0.68 0.70
Net realized and unrealized gain ...... 5.21 7.55 8.50 0.24 2.16 1.72
------ ------ ------ ------ ------ ------
Total from investment operations ...... 5.64 8.36 9.25 0.96 2.84 2.42
------ ------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income................. (0.28) (0.88) (0.67) (0.66) (0.68) (0.69)
Net realized gain..................... (0.50) (0.53) (0.09) -- -- (0.04)
------ ------ ------ ------ ------ ------
Total dividends and distributions ..... (0.78) (1.41) (0.76) (0.66) (0.68) (0.73)
------ ------ ------ ------ ------ ------
Net asset value, end of period......... $51.46 $46.60 $39.65 $31.16 $30.86 $28.70
====== ====== ====== ====== ====== ======
TOTAL INVESTMENT RETURN+ .............. 12.14%(1) 21.37% 30.01% 3.25% 9.98% 9.13%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................... 1.16%(2) 1.22% 1.31% 1.42% 1.37% 1.40%
Net investment income.................. 1.72%(2) 1.95% 2.14% 2.42% 2.31% 2.67%
SUPPLEMENTAL DATA:
Net assets, end of period, in
millions.............................. $14,509 $12,907 $9,782 $7,101 $6,712 $5,386
Portfolio turnover rate................ 1%(1) 4% 10% 6% 13% 8%
Average commission rate paid........... $0.0548 $0.0541 -- -- -- --
</TABLE>
- --------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares
of the Fund held prior to that date, other than shares which were
purchased prior to July 2, 1984 (and with respect to such shares, certain
shares acquired through reinvestment of dividends and capital gains
distributions (collectively the "Old Shares")) and shares held by certain
employee benefit plans established by Dean Witter Reynolds Inc. and its
affiliate, SPS Transaction Services, Inc., have been designated Class B
shares. The Old Shares and shares held by those employee benefit plans
prior to July 28, 1997 have been designated Class D shares.
** 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.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL HIGHLIGHTS, continued
FOR THE PERIOD
JULY 28, 1997*
THROUGH
AUGUST 31, 1997
- -----------------------------------------------------------------------------
(UNAUDITED)
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ........................ $53.79
------
Net investment income ........................................ 0.13
Net realized and unrealized loss ............................ (2.44)
------
Total from investment operations ............................ (2.31)
------
Net asset value, end of period ............................... $51.48
======
TOTAL INVESTMENT RETURN+ ..................................... (3.65)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ..................................................... 0.72%(2)
Net investment income ........................................ 3.16%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions ....................... $28
Portfolio turnover rate ...................................... 1%(1)
Average commission rate paid ................................. $0.0548
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ........................ $53.79
------
Net investment income ........................................ 0.12
Net realized and unrealized loss ............................ (2.46)
------
Total from investment operations ............................ (2.34)
------
Net asset value, end of period ............................... $51.45
------
TOTAL INVESTMENT RETURN+ ..................................... (3.71)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ..................................................... 1.47%(2)
Net investment income ........................................ 2.38%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions ....................... $10
Portfolio turnover rate ...................................... 1%(1)
Average commission rate paid ................................. $0.0548
- --------------
* The date shares were first issued.
+ 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.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL HIGHLIGHTS, continued
FOR THE PERIOD
JULY 28, 1997*
THROUGH
AUGUST 31, 1997
- -----------------------------------------------------------------------------
(UNAUDITED)
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ......................... $53.79
------
Net investment income......................................... 0.17
Net realized and unrealized loss ............................. (2.47)
------
Total from investment operations ............................. (2.30)
------
Net asset value, end of period................................ $51.49
======
TOTAL INVESTMENT RETURN+...................................... (3.63)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses...................................................... 0.46%(2)
Net investment income......................................... 3.36%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions ....................... $297
Portfolio turnover rate....................................... 1%(1)
Average commission rate paid.................................. $0.0548
- --------------
* The date shares were first issued. Shareholders who held shares of the Fund
prior to July 28, 1997 (the date the Fund converted to a multiple class
share structure) should refer to the Financial Highlights of Class B to
obtain the historical per share data and ratio information of their shares.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
BOARD OF DIRECTORS
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Paul D. Vance
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust FSB
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
SEMIANNUAL REPORT
AUGUST 31, 1997
