<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC. TWO WORLD TRADE CENTER, NEW YORK,
NEW YORK 10048
LETTER TO THE SHAREHOLDERS FEBRUARY 28, 1998
DEAR SHAREHOLDER:
During the twelve-month period ended February 28, 1998, the U.S. economy
exhibited healthy growth with declining inflation. Periodically during the
second half of the year, the Federal Reserve Board expressed concern over the
possible rise of inflationary pressures, due to the combined strength of the
economy and strong employment growth. However, the anticipated rise in inflation
did not materialize and the Federal Reserve Board left interest rates unchanged.
A STRONG YEAR FOR THE EQUITY MARKETS
Overall, the stock market was very generous to investors over the past twelve
months. However, in August the Dow Jones Industrial Average appeared to have
peaked, at 8340. Bellwether multinational corporations such as Coca-Cola began
to lead earnings estimates downward for the first time in many years, on the
basis of slower growth and the impact of currency turmoil in Asia. The Nasdaq
Composite and Mid-Cap indexes peaked in early October, while the Standard &
Poor's 500 Composite Stock Price Index (S&P 500) topped out in early December as
uncertainty grew regarding earnings outlooks. Despite a flat to down fourth
quarter for the various indexes, the stock market increased by more than 20
percent for three years in a row, for the first time ever. As year-end
approached, historically defensive sectors such as consumer goods and utilities
outperformed the overall market while cyclical stocks lagged.
As the summer came to a close the situation in Asia induced an investor "flight
to quality". As a result, demand for U.S. Treasury securities and the U.S.
dollar increased. With many Southeast Asian economies in turmoil, 1998 may see
the United States inherit the deflationary (declining price) aspect of those
markets. This would be likely to benefit the disinflationary (slowing in the
rate of price increases) trend here.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
LETTER TO THE SHAREHOLDERS FEBRUARY 28, 1998, CONTINUED
PERFORMANCE AND PORTFOLIO
The strength exhibited in the stock market during the twelve-month period ended
February 28, 1998 was evident in the performance of Dean Witter Dividend Growth
Securities. For the fiscal year, the Fund's Class B shares posted a total return
of 29.10 percent, compared to a return of 34.98 percent for the S&P 500 and a
return of 28.31 percent for the Lipper Growth and Income Funds Index. For the
period since their inception on July 28, 1997, through February 28, 1998, the
Fund's Class A, C and D shares returned 11.15 percent, 10.68 percent and 11.31
percent, respectively. The performance of the Fund's four share classes varies
because of differing charges and expenses. The accompanying chart illustrates
the performance of a $10,000 investment in the Fund's Class B shares for the
ten-year period ended February 28, 1998, versus the performance of similar
hypothetical investments in the securities that comprise the S&P 500 and the
Lipper Index.
We believe the Fund's underperformance of the S&P 500 Index over the fiscal year
was largely due to the Fund's low exposure to high-technology stocks and its
underweighted position in the financial sector. High-technology stocks generally
pay little, if any, dividends and therefore are not included in the Fund. Also,
while the Fund does have reasonable exposure to financial stocks, the weighting
is less than that in the S&P 500 Index. On February 28, 1998, the Fund's net
assets exceeded $17 billion.
Several portfolio changes occurred during the fiscal year that contributed to
the Fund's performance. These changes included selling the Fund's holdings in
NorAm Energy Corp., PanEnergy Corp., Solutia Inc., (a spinoff from Monsanto),
Newport News Shipbuilding Inc. (a spinoff from Tenneco, Inc.), MAPCO Inc. and
CBS Corporation. Additionally, two bond positions were sold, at significant
profits: $50 million par value U.S. Treasury bonds 8 1/8% due in 2019 and $50
million par value U.S. Treasury bonds 7 1/8% due in 2023. New additions to the
portfolio included AMP, Inc., Providian Financial Corp., Aegon N.V. -- American
Registered Shares, Jefferson-Pilot Corp., Consolidated Natural Gas Co., Sonat,
Inc., Crown Cork & Seal Co., Inc., Albertson's, Inc., Sears, Roebuck & Co. and
Supervalu Inc.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
LETTER TO THE SHAREHOLDERS FEBRUARY 28, 1998, CONTINUED
LOOKING AHEAD
We believe that moderate economic activity and low inflation, coupled with the
Fund's stringent screening process, should enable the Fund to provide investors
with competitive returns in the months ahead.
We appreciate your support of Dean Witter Dividend Growth Securities and look
forward to continuing to serve your investments need in the future.
Very truly yours,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FUND PERFORMANCE FEBRUARY 28, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000 -- Class B
Shares
($ in Thousands)
Fund S&P 500(4) Lipper(5)
<S> <C> <C> <C>
February 1988 $10,000 $10,000 $10,000
February 1989 $ 11,326 $ 11,183 $ 11,297
February 1990 $13,347 $13,291 $12,774
February 1991 $14,483 $15,239 $14,062
February 1992 $17,209 $17,681 $16,312
February 1993 $18,781 $19,564 $18,113
February 1994 $20,656 $21,189 $20,307
February 1995 $21,327 $22,748 $21,137
February 1996 $27,728 $30,632 $27,468
February 1997 $33,652 $38,650 $33,450
February 1998 $43,443(3) $52,170 $42,921
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. PERFORMANCE FOR CLASS
A, CLASS C, AND CLASS D SHARES WILL VARY FROM THE PERFORMANCE OF CLASS B
SHARES SHOWN ABOVE DUE TO DIFFERENCES IN CHARGES AND EXPENSES.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
- ----------------------------------------------------------------------------------------------------
CLASS B SHARES** CLASS A SHARES+
- ----------------------------------------------- -----------------------------------------------
PERIOD ENDED 2/28/98 PERIOD ENDED 2/28/98
- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
1 Year 29.10%(1) 24.10%(2) From Inception (7/28/97) 11.15%(1) 5.31%(2)
5 Years 18.26(1) 18.06(2)
10 Years 15.82(1) 15.82(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES++ CLASS D SHARES(++)
- ----------------------------------------------- -----------------------------------------------
PERIOD ENDED 2/28/98 PERIOD ENDED 2/28/98
- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
From Inception (7/28/97) 10.68%(1) 9.68%(2) From Inception (7/28/97) 11.31%(1)
</TABLE>
- ------------------------
(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 sales charge. See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value assuming a complete redemption on February 28, 1998.
(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.
(5) The Lipper Growth and Income Funds Index is an equally-weighted performance
index of the largest-qualifying funds (based on net assets) in the Lipper
Growth and Income Funds objective. The Index, which is adjusted for capital
gains distributions and income dividends, is unmanaged and should not be
considered an investment. There are currently 30 funds represented in this
Index.
* For periods of less than one year, the Fund quotes its total return on a
non-annualized basis.
** The maximum contingent deferred sales charge (CDSC) for Class B is 5.00%.
The CDSC declines to 0% after six years.
+ The maximum front-end sales charge for Class A is 5.25%.
++ The maximum contingent deferred sales charge for Class C shares is 1% for
shares redeemed within one year of purchase.
(++) Class D shares have no sales charge.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1998
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (87.7%)
AEROSPACE (3.8%)
1,800,000 Lockheed Martin Corp............................................................... $ 210,037,500
3,050,000 Raytheon Co. (Class B)............................................................. 179,378,125
3,100,000 United Technologies Corp........................................................... 276,868,750
---------------
666,284,375
---------------
ALUMINUM (1.6%)
2,500,000 Alcan Aluminium Ltd. (Canada)...................................................... 77,656,250
2,670,000 Aluminum Co. of America............................................................ 195,911,250
---------------
273,567,500
---------------
APPAREL (0.6%)
2,200,000 VF Corp............................................................................ 104,912,500
---------------
AUTO PARTS (1.4%)
2,000,000 Dana Corp.......................................................................... 109,125,000
2,300,000 TRW, Inc........................................................................... 126,068,750
---------------
235,193,750
---------------
AUTOMOTIVE (3.0%)
3,600,000 Chrysler Corp...................................................................... 140,175,000
3,850,000 Ford Motor Co...................................................................... 217,765,625
2,400,000 General Motors Corp................................................................ 165,450,000
---------------
523,390,625
---------------
BANKS (5.4%)
4,000,000 BankAmerica Corp................................................................... 310,000,000
2,600,000 KeyCorp............................................................................ 182,162,500
1,500,000 Morgan (J.P.) & Co., Inc........................................................... 179,250,000
3,850,000 NationsBank Corp................................................................... 263,725,000
---------------
935,137,500
---------------
BEVERAGES - SOFT DRINKS (2.6%)
3,900,000 Coca Cola Co....................................................................... 267,881,250
5,000,000 PepsiCo Inc........................................................................ 182,812,500
---------------
450,693,750
---------------
CHEMICALS (4.5%)
1,575,000 Dow Chemical Co.................................................................... 144,112,500
3,900,000 Du Pont (E.I.) de Nemours & Co., Inc............................................... 239,118,750
5,300,000 Monsanto Co........................................................................ 269,637,500
2,125,000 PPG Industries, Inc................................................................ 137,726,562
---------------
790,595,312
---------------
COMPUTERS - SYSTEMS (1.7%)
2,800,000 International Business Machines Corp............................................... 292,425,000
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CONGLOMERATES (1.6%)
1,950,000 Minnesota Mining & Manufacturing Co................................................ $ 166,359,375
2,800,000 Tenneco, Inc....................................................................... 115,150,000
---------------
281,509,375
---------------
CONTAINERS - METAL & GLASS (0.7%)
2,250,000 Crown Cork & Seal Co., Inc......................................................... 121,500,000
---------------
COSMETICS (3.5%)
3,000,000 Avon Products, Inc................................................................. 211,312,500
2,900,000 Gillette Co........................................................................ 312,837,500
1,700,000 International Flavors & Fragrances, Inc............................................ 78,200,000
---------------
602,350,000
---------------
DISTRIBUTORS - FOOD & HEALTH (0.4%)
1,550,000 Supervalu, Inc..................................................................... 73,818,750
---------------
DRUGS (8.0%)
3,225,000 American Home Products Corp........................................................ 302,343,750
3,350,000 Bristol-Myers Squibb Co............................................................ 335,628,125
5,450,000 Schering-Plough Corp............................................................... 414,540,625
5,600,000 Smithkline Beecham PLC (ADR) (United Kingdom)...................................... 346,500,000
---------------
1,399,012,500
---------------
DRUGS & HEALTHCARE (1.4%)
3,300,000 Abbott Laboratories................................................................ 246,881,250
---------------
ELECTRIC - MAJOR (1.7%)
3,800,000 General Electric Co................................................................ 295,450,000
---------------
ELECTRICAL EQUIPMENT (0.7%)
2,800,000 AMP, Inc........................................................................... 123,725,000
---------------
FINANCE (2.1%)
700,000 Beneficial Corp.................................................................... 82,600,000
1,360,000 Household International, Inc....................................................... 176,630,000
1,825,000 Providian Financial Corp........................................................... 103,568,750
---------------
362,798,750
---------------
FINANCIAL - MISCELLANEOUS (1.4%)
3,800,400 Fannie Mae......................................................................... 242,513,025
---------------
FOODS (0.9%)
3,000,000 Quaker Oats Company (The).......................................................... 161,625,000
---------------
HOUSEHOLD APPLIANCES (0.6%)
1,675,000 Whirlpool Corp..................................................................... 111,910,938
---------------
INSURANCE (2.9%)
1,850,000 Aetna Inc.......................................................................... 161,643,750
1,700,000 Jefferson-Pilot Corp............................................................... 142,587,500
2,350,000 Lincoln National Corp.............................................................. 196,812,500
---------------
501,043,750
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1998, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
LIFE INSURANCE (0.5%)
781,950 Aegon N.V. (ARS) (Netherlands)..................................................... $ 87,969,375
---------------
MACHINERY - AGRICULTURAL (1.3%)
4,150,000 Deere & Co......................................................................... 232,918,750
---------------
MACHINERY - CONSTRUCTION & MATERIALS (0.7%)
2,200,000 Caterpillar Inc.................................................................... 120,175,000
---------------
MACHINERY - DIVERSIFIED (0.6%)
2,000,000 Johnson Controls, Inc.............................................................. 111,125,000
---------------
MANUFACTURING - DIVERSIFIED (1.0%)
2,250,000 Honeywell, Inc..................................................................... 178,312,500
---------------
METALS & MINING (0.6%)
1,700,000 Phelps Dodge Corp.................................................................. 107,950,000
---------------
NATURAL GAS (1.9%)
2,550,000 Burlington Resources, Inc.......................................................... 114,112,500
1,100,000 El Paso Natural Gas Co............................................................. 73,012,500
3,200,000 Enron Corp......................................................................... 150,400,000
---------------
337,525,000
---------------
OFFICE EQUIPMENT (2.9%)
4,800,000 Pitney Bowes, Inc.................................................................. 225,000,000
3,100,000 Xerox Corp......................................................................... 274,931,250
---------------
499,931,250
---------------
OIL & GAS - EXPLORATION & PRODUCTION (1.5%)
1,600,000 Burlington Northern Santa Fe Corp.................................................. 159,400,000
1,450,000 Kerr-McGee Corp.................................................................... 98,056,250
---------------
257,456,250
---------------
OIL - DOMESTIC (2.7%)
1,750,000 Amoco Corp......................................................................... 148,750,000
2,000,000 Atlantic Richfield Co.............................................................. 155,500,000
5,100,000 USX-Marathon Group................................................................. 176,268,750
---------------
480,518,750
---------------
OIL INTEGRATED - INTERNATIONAL (3.5%)
3,350,000 Exxon Corp......................................................................... 213,981,250
2,600,000 Mobil Corp......................................................................... 188,337,500
3,900,000 Royal Dutch Petroleum Co. (ADR) (Netherlands)...................................... 211,818,750
---------------
614,137,500
---------------
PAPER & FOREST PRODUCTS (1.4%)
2,750,000 International Paper Co............................................................. 128,218,750
2,500,000 Weyerhaeuser Co.................................................................... 124,843,750
---------------
253,062,500
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PHOTOGRAPHY (0.8%)
2,250,000 Eastman Kodak Co................................................................... $ 147,656,250
---------------
RAILROADS (0.8%)
2,500,000 CSX Corp........................................................................... 139,843,750
---------------
RETAIL (1.9%)
4,350,000 Dayton-Hudson Corp................................................................. 336,309,375
---------------
RETAIL - DEPARTMENT STORES (0.9%)
2,550,000 May Department Stores Co........................................................... 154,912,500
---------------
RETAIL - MAIL ORDER/GENERAL MERCHANDISING (0.7%)
2,400,000 Sears, Roebuck & Co................................................................ 127,350,000
---------------
SOAP & HOUSEHOLD PRODUCTS (1.8%)
3,650,000 Procter & Gamble Co................................................................ 310,021,875
---------------
SUPERMARKETS (0.7%)
2,700,000 Albertson's, Inc................................................................... 126,393,750
---------------
TELECOMMUNICATIONS (1.1%)
3,550,000 U.S. West Communications Group..................................................... 184,821,875
---------------
TELEPHONES (3.3%)
1,800,000 Bell Atlantic Corp................................................................. 161,550,000
3,100,000 GTE Corp........................................................................... 167,787,500
3,700,000 Sprint Corp........................................................................ 244,200,000
---------------
573,537,500
---------------
TIRE & RUBBER GOODS (0.9%)
2,300,000 Goodyear Tire & Rubber Co.......................................................... 158,987,500
---------------
TOBACCO (0.8%)
3,950,000 UST, Inc........................................................................... 139,978,125
---------------
UTILITIES - ELECTRIC (3.7%)
2,425,000 FPL Group, Inc..................................................................... 140,801,562
3,200,000 GPU, Inc........................................................................... 128,600,000
4,700,000 Houston Industries, Inc............................................................ 121,612,500
3,600,000 PG & E Corp........................................................................ 108,675,000
4,450,000 Unicom Corp........................................................................ 142,678,125
---------------
642,367,187
---------------
UTILITIES - NATURAL GAS (1.2%)
1,950,000 Consolidated Natural Gas Co........................................................ 112,125,000
2,400,000 Sonat, Inc......................................................................... 103,500,000
---------------
215,625,000
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $6,612,697,192)................................................... 15,335,225,212
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1998, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS (7.5%)
$ 90,000 U.S. Treasury Bond
8.00% due 11/15/21............................................................... $ 112,514,400
725,000 U.S. Treasury Bond
6.25% due 08/15/23............................................................... 749,418,000
450,000 U.S. Treasury Bond
6.00% due 02/15/26............................................................... 450,832,500
---------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $1,233,585,375)................................................... 1,312,764,900
---------------
</TABLE>
<TABLE>
<C> <S> <C>
SHORT-TERM INVESTMENTS (4.5%)
COMMERCIAL PAPER (a) (3.7%)
AUTOMOTIVE - FINANCE (1.6%)
140,000 Ford Motor Credit Co.
5.48% due 03/19/98............................................................... 139,616,400
135,000 General Motors Acceptance Corp. 5.48% due 03/09/98................................. 134,835,600
---------------
274,452,000
---------------
BANK HOLDING COMPANIES (0.8%)
140,000 Morgan (J.P.) & Co., Inc. 5.48% due 03/13/98....................................... 139,744,268
---------------
BANKS - COMMERCIAL (0.6%)
110,000 Societe General N.A. Inc. 5.506% due 03/23/98...................................... 109,631,622
---------------
FINANCE - DIVERSIFIED (0.7%)
125,000 General Electric Capital Corp.
5.46% due 03/02/98............................................................... 124,981,042
---------------
TOTAL COMMERCIAL PAPER
(AMORTIZED COST $648,808,932)...................................................... 648,808,932
---------------
U.S. GOVERNMENT AGENCY (a) (0.8%)
145,000 Federal National Mortgage Association 5.613% due 03/02/98 (AMORTIZED COST
$144,977,404).................................................................... 144,977,404
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (0.0%)
$ 4,031 The Bank of New York 5.438% due 03/02/98 (dated 02/27/98; proceeds $4,032,852) (b)
(IDENTIFIED COST $4,031,025)..................................................... $ 4,031,025
---------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $797,817,361)..................................................... 797,817,361
---------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $8,644,099,928) (C)................................................... 99.7 % 17,445,807,473
OTHER ASSETS IN EXCESS OF LIABILITIES.................................................. 0.3 44,472,488
------ ----------------
NET ASSETS............................................................................. 100.0 % $ 17,490,279,961
------ ----------------
------ ----------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
ARS American Registered Share.
(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 $1,000,000 Federal National Mortgage Assoc. 7.19% due
11/06/06 valued at $1,059,589, $1,066,362 Federal National Mortgage Assoc.
6.01% due 01/18/05 valued at $1,058,896, $785,000 U.S. Treasury Bond 9.25%
due 02/15/16 valued at $1,064,610 and $882,377 U.S. Treasury Note 7.125%
due 09/30/99 valued at $928,551.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $8,831,022,110 and the
aggregate gross unrealized depreciation is $29,314,565, resulting in net
unrealized appreciation of $8,801,707,545.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $8,644,099,928)......................................................... $17,445,807,473
Receivable for:
Dividends.............................................................................. 40,184,620
Capital stock sold..................................................................... 27,881,135
Interest............................................................................... 4,906,730
Investments sold....................................................................... 881,783
Prepaid expenses and other assets.......................................................... 207,161
---------------
TOTAL ASSETS.......................................................................... 17,519,868,902
---------------
LIABILITIES:
Payable for:
Capital stock repurchased.............................................................. 11,666,654
Plan of distribution fee............................................................... 9,188,336
Investment management fee.............................................................. 4,814,669
Investments purchased.................................................................. 1,528,055
Payable to bank............................................................................ 1,676,890
Accrued expenses and other payables........................................................ 714,337
---------------
TOTAL LIABILITIES..................................................................... 29,588,941
---------------
NET ASSETS............................................................................ $17,490,279,961
---------------
---------------
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................ $8,449,406,947
Net unrealized appreciation................................................................ 8,801,707,545
Accumulated undistributed net investment income............................................ 50,860,781
Accumulated undistributed net realized gain................................................ 188,304,688
---------------
NET ASSETS............................................................................ $17,490,279,961
---------------
---------------
CLASS A SHARES:
Net Assets................................................................................. $84,986,633
Shares Outstanding (500,000,000 SHARES AUTHORIZED, $.01 PAR VALUE)......................... 1,455,487
NET ASSET VALUE PER SHARE............................................................. $58.39
---------------
---------------
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE)..................................... $61.62
---------------
---------------
CLASS B SHARES:
Net Assets................................................................................. $16,989,452,766
Shares Outstanding (500,000,000 SHARES AUTHORIZED, $.01 PAR VALUE)......................... 291,093,157
NET ASSET VALUE PER SHARE............................................................. $58.36
---------------
---------------
CLASS C SHARES:
Net Assets................................................................................. $50,773,011
Shares Outstanding (500,000,000 SHARES AUTHORIZED, $.01 PAR VALUE)......................... 871,251
NET ASSET VALUE PER SHARE............................................................. $58.28
---------------
---------------
CLASS D SHARES:
Net Assets................................................................................. $365,067,551
Shares Outstanding (500,000,000 SHARES AUTHORIZED, $.01 PAR VALUE)......................... 6,247,921
NET ASSET VALUE PER SHARE............................................................. $58.43
---------------
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 28, 1998*
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $1,521,586 foreign withholding tax)....................................... $ 299,699,971
Interest.................................................................................... 112,873,482
--------------
TOTAL INCOME........................................................................... 412,573,453
--------------
EXPENSES
Plan of distribution fee (Class A shares)................................................... 61,937
Plan of distribution fee (Class B shares)................................................... 102,153,119
Plan of distribution fee (Class C shares)................................................... 146,126
Investment management fee................................................................... 54,825,425
Transfer agent fees and expenses............................................................ 10,647,110
Registration fees........................................................................... 716,964
Custodian fees.............................................................................. 588,989
Shareholder reports and notices............................................................. 534,844
Professional fees........................................................................... 71,379
Directors' fees and expenses................................................................ 12,741
Other....................................................................................... 93,331
--------------
TOTAL EXPENSES......................................................................... 169,851,965
--------------
NET INVESTMENT INCOME.................................................................. 242,721,488
--------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................................................... 262,042,293
Net change in unrealized appreciation....................................................... 3,358,692,314
--------------
NET GAIN............................................................................... 3,620,734,607
--------------
NET INCREASE................................................................................ $3,863,456,095
--------------
--------------
</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.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
FEBRUARY 28, 1998* FEBRUARY 28, 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................................ $ 242,721,488 $ 216,913,534
Net realized gain.................................................... 262,042,293 263,776,646
Net change in unrealized appreciation................................ 3,358,692,314 1,713,084,128
------------------ -----------------
NET INCREASE.................................................... 3,863,456,095 2,193,774,308
------------------ -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares................................................... (589,361) --
Class B shares................................................... (235,858,916) (229,873,261)
Class C shares................................................... (262,929) --
Class D shares................................................... (4,131,290) --
Net realized gain
Class A shares................................................... (252,349) --
Class B shares................................................... (212,169,081) (140,667,573)
Class C shares................................................... (142,422) --
Class D shares................................................... (1,469,529) --
------------------ -----------------
TOTAL DIVIDENDS AND DISTRIBUTIONS............................... (454,875,877) (370,540,834)
------------------ -----------------
Net increase from capital stock transactions......................... 1,174,921,008 1,301,439,284
------------------ -----------------
NET INCREASE.................................................... 4,583,501,226 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 $50,860,781 AND
$48,981,789, RESPECTIVELY)....................................... $ 17,490,279,961 $ 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 FEBRUARY 28, 1998
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
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1998, CONTINUED
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.
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.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1998, CONTINUED
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 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 -- up to 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 dividends
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 -- up to 1.0% of the
average daily net assets of Class C. In the case of Class A shares,
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1998, CONTINUED
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 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 $250,796,590 at February 28, 1998.
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 calendar year, except that the expenses
representing a gross sales credit to account executives may be reimbursed in the
subsequent year. For the period ended February 28, 1998, the distribution fee
was accrued for Class A shares and Class C shares at the annual rate of 0.24%
and 1.0%, respectively.
The Distributor has informed the Fund that for the period ended February 28,
1998, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $12,358,935 and $16,047,
respectively and received $805,310 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.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1998, 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 28, 1998 aggregated
$1,186,678,145 and $566,094,202, respectively. Included in the aforementioned
are sales of U.S. Government securities in the amount of $149,190,430.
For the year ended February 28, 1998, the Fund incurred $401,017 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.
At February 28, 1998, the Fund's receivable for investments sold included
unsettled trades with DWR of $881,783.
For the period May 31, 1997 through February 28, 1998, the Fund incurred
brokerage commissions of $155,990 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 year ended February 28, 1998
included in Directors' fees and expenses in the Statement of Operations amounted
to $3,604. At February 28, 1998, the Fund had an accrued pension liability of
$51,621 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. At February 28, 1998, the Fund had transfer agent
fees and expenses payable of approximately $15,000.
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1998, CONTINUED
5. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
FEBRUARY 28, 1998+ FEBRUARY 28, 1997
----------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
CLASS A SHARES*
Sold......................................... 1,531,951 $ 82,190,159 -- --
Reinvestment of dividends and
distributions............................... 10,089 547,397 -- --
Redeemed..................................... (86,553) (4,728,188) -- --
---------------- ---------------- ---------------- ----------------
Net increase - Class A....................... 1,455,487 78,009,368 -- --
---------------- ---------------- ---------------- ----------------
CLASS B SHARES
Sold......................................... 51,834,503 2,670,318,255 57,912,895 $ 2,481,578,268
Reinvestment of dividends and
distributions............................... 7,994,489 416,521,197 7,903,656 344,605,406
Redeemed..................................... (39,948,415) (2,062,805,412) (35,552,864) (1,524,744,390)
---------------- ---------------- ---------------- ----------------
Net increase - Class B....................... 19,880,577 1,024,034,040 30,263,687 1,301,439,284
---------------- ---------------- ---------------- ----------------
CLASS C SHARES*
Sold......................................... 930,792 50,207,370 -- --
Reinvestment of dividends and
distributions............................... 6,914 374,891 -- --
Redeemed..................................... (66,455) (3,610,402) -- --
---------------- ---------------- ---------------- ----------------
Net increase - Class C....................... 871,251 46,971,859 -- --
---------------- ---------------- ---------------- ----------------
CLASS D SHARES*
Sold......................................... 841,753 45,989,589 -- --
Reinvestment of dividends and
distributions............................... 101,638 5,504,556 -- --
Redeemed..................................... (474,716) (25,588,404) -- --
---------------- ---------------- ---------------- ----------------
Net increase - Class D....................... 468,675 25,905,741 -- --
---------------- ---------------- ---------------- ----------------
Net increase in Fund......................... 22,675,990 $ 1,174,921,008 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 February 28, 1998.
<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,
--------------------------------------------------------------------------------
1998*++ 1997 1996** 1995 1994 1993 1992** 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <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 $23.50 $22.47 $20.32 $19.28
------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Net investment income................... 0.84 0.81 0.75 0.72 0.68 0.70 0.71 0.79 0.72 0.68
Net realized and unrealized gain........ 12.50 7.55 8.50 0.24 2.16 1.72 3.63 1.04 2.83 1.78
------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations........ 13.34 8.36 9.25 0.96 2.84 2.42 4.34 1.83 3.55 2.46
------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income................ (0.83) (0.88) (0.67) (0.66) (0.68) (0.69) (0.76) (0.80) (0.76) (0.62)
Net realized gain.................... (0.75) (0.53) (0.09) -- -- (0.04) (0.07) -- (0.64) (0.80)
------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Total dividends and distributions....... (1.58) (1.41) (0.76) (0.66) (0.68) (0.73) (0.83) (0.80) (1.40) (1.42)
------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period.......... $ 58.36 $ 46.60 $39.65 $31.16 $30.86 $28.70 $27.01 $23.50 $22.47 $20.32
------- ------- ------ ------ ------ ------ ------ ------ ------ ------
------- ------- ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN+................ 29.10% 21.37% 30.01% 3.25% 9.98% 9.13% 18.82% 8.51% 17.85% 13.26%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 1.14% 1.22% 1.31% 1.42% 1.37% 1.40% 1.42% 1.51% 1.41% 1.55%
Net investment income................... 1.61% 1.95% 2.14% 2.42% 2.31% 2.67% 2.91% 3.62% 3.46% 3.44%
SUPPLEMENTAL DATA:
Net assets, end of period, in
millions............................... $16,989 $12,907 $9,782 $7,101 $6,712 $5,386 $4,071 $3,015 $2,760 $1,860
Portfolio turnover rate................. 4% 4% 10% 6% 13% 8% 5% 5% 3% 8%
Average commission rate paid............ $0.0539 $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.
++ The per share amounts were computed using an average number of shares
outstanding.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
FEBRUARY 28,
1998++
- ----------------------------------------------------------------------------------------
<S> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 53.43
------
Net investment income................................................. 0.66
Net realized and unrealized gain...................................... 5.22
------
Total from investment operations...................................... 5.88
------
Less dividends and distributions from:
Net investment income.............................................. (0.67)
Net realized gain.................................................. (0.25)
------
Total dividends and distributions..................................... (0.92)
------
Net asset value, end of period........................................ $ 58.39
------
------
TOTAL INVESTMENT RETURN+.............................................. 11.15%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.70%(2)
Net investment income................................................. 2.09%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions................................ $85
Portfolio turnover rate............................................... 4%(1)
Average commission rate paid.......................................... $0.0539
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 53.43
------
Net investment income................................................. 0.43
Net realized and unrealized gain...................................... 5.21
------
Total from investment operations...................................... 5.64
------
Less dividends and distributions from:
Net investment income.............................................. (0.54)
Net realized gain.................................................. (0.25)
------
Total dividends and distributions..................................... (0.79)
------
Net asset value, end of period........................................ $ 58.28
------
------
TOTAL INVESTMENT RETURN+.............................................. 10.68%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.45%(2)
Net investment income................................................. 1.37%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions................................ $51
Portfolio turnover rate............................................... 4%(1)
Average commission rate paid.......................................... $0.0539
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding.
+ 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
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
FEBRUARY 28,
1998++
- ----------------------------------------------------------------------------------------
<S> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 53.43
------
Net investment income................................................. 0.76
Net realized and unrealized gain...................................... 5.20
------
Total from investment operations...................................... 5.96
------
Less dividends and distributions from:
Net investment income.............................................. (0.71)
Net realized gain.................................................. (0.25)
------
Total dividends and distributions..................................... (0.96)
------
Net asset value, end of period........................................ $ 58.43
------
------
TOTAL INVESTMENT RETURN+.............................................. 11.31%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 0.45%(2)
Net investment income................................................. 2.39%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in millions................................ $365
Portfolio turnover rate............................................... 4%(1)
Average commission rate paid.......................................... $0.0539
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding.
+ 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.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Dean Witter Dividend Growth
Securities Inc. (the "Fund") at February 28, 1998, 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 periods
presented, 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 at
February 28, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
APRIL 13, 1998
<PAGE>
DEAN WITTER DIVIDEND GROWTH SECURITIES INC.
FEDERAL TAX NOTICE (UNAUDITED)
1998 FEDERAL TAX NOTICE
For the year ended February 28, 1998, the Fund paid to shareholders the
following per share amounts from long-term capital gains. These distributions
are taxable as 28% rate gains or 20% rate gains, as indicated below:
<TABLE>
<CAPTION>
PER SHARE
-------------------------------------
CLASS A CLASS B CLASS C CLASS D
------- ------- ------- -------
<S> <C> <C> <C> <C>
Portion of long-term capital gains taxable as:
28% rate gain........................................ -- $0.50 -- --
20% rate gain........................................ 0.25 0.25 0.25 0.25
------- ------- ------- -------
Total.................................................. $0.25 $0.75 $0.25 $0.25
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
For the year ended February 28, 1998, 100% of the income dividends qualified for
the dividends received deduction available to corporations.
<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
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
[PHOTO]
ANNUAL REPORT
FEBRUARY 28, 1998
