<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC. TWO WORLD TRADE
CENTER, NEW YORK, NEW
YORK 10048
LETTER TO THE SHAREHOLDERS
DEAR SHAREHOLDER:
The twelve-month period ended February 28, 1995 was challenging for the
financial markets. Concerned about an overheating economy and the threat of
higher inflation, the U.S. Federal Reserve Board continued their restrictive
monetary policy of increasing short-term interest rates which began in early
February 1994. Both the equity and fixed-income markets were negatively impacted
by rising interest rates for much of 1994, before rebounding in early 1995.
Commodity prices (e.g. aluminum, copper) were strong throughout 1994 and
continuing into the new year, however; gold prices remained weak primarily due
to low inflation.
PERFORMANCE AND PORTFOLIO COMPOSITION
For the fiscal year ended February 28, 1995, Dean Witter Natural Resource
Development Securities Inc. produced a total return of -1.26 percent. During the
reporting period, the Fund distributed income dividends totaling $0.115356 per
share, and capital gain distributions totaling $0.783358 per share. On February
28, 1995, the Fund's net assets totaled $133 million. The chart on the following
page illustrates the growth of a $10,000 investment in the Fund for the last ten
years through the end of the fiscal year on February 28, 1995, versus the
performance of a similar hypothetical investment in the issues that comprise the
broad-based Standard & Poor's 500 Composite Stock Price Index. Unlike the Fund
which invests primarily in natural resource-related industries, the S&P 500 is a
broad-based index, of which natural resource-related stocks account for only
21.7 percent of its total market capitalization.
ENERGY MARKETS LACKLUSTER
The energy-related segment of the Fund, representing 56 percent of assets at
fiscal year-end, provided a stable base for performance for the year. The Fund's
investments in the major integrated oil companies such as Chevron, Exxon, and
Mobil provided a positive total return. These companies generally post
relatively strong earnings results when oil and natural gas prices are
lackluster. In addition, these companies derive a large portion of their
earnings from refining and marketing chemicals that generally do well during
periods of worldwide economic growth.
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
LETTER TO THE SHAREHOLDERS, CONTINUED
In contrast to the stable integrated oils, the Fund's exposure to natural gas
producers, representing 8.4 percent of assets on February 28, 1995, experienced
a downturn for the year. This past winter, natural gas product prices hit lows
similar to those typically experienced during the summer months. These companies
experienced lower earnings and cash flows due to the lower prices, while volume
growth was not sufficient to offset the effects of lower prices. Drilling
activity also slowed down as a result of lower prices. The decline in
exploration and production creates a healthy supply situation for the coming
year. If demand should pick up, natural gas prices should rise through 1995
giving us confidence to add to current holdings during periods of weakness.
ECONOMIC SLOWDOWN ANTICIPATED
The basic industrial investments in the Fund were shifted during the
recently-completed fiscal year toward a more defensive posture. The chemicals,
machinery, and metals holdings are concentrated in companies that have broad
exposure to global economic growth such as DuPont, Caterpillar, and
Alcoa. As the Federal Reserve Board
increased interest rates throughout
the past twelve months, market
sentiment turned against the cyclical
stocks. High real interest rates also
precipitated a negative move in gold
stocks, the worst performing industry
for the year. However, since the close
of the Fund's fiscal year, gold prices
have rebounded primarily as a result
of weak currency and the lowering of
German interest rates.
Dean Witter Natural Resource
Development Securities remains
committed to its investment strategy
to participate in companies
benefitting from rising commodity
prices and worldwide economic growth.
[GRAPHIC]
We appreciate your support of Dean
Witter Resource Development Securities
and look forward to continuing to serve
your financial needs and objectives.
Very truly yours,
[SIG]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1995
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (99.1%)
BASIC ENERGY (44.9%)
NATURAL GAS - DIVERSIFIED (4.0%)
45,000 Enron Corp.......................... $ 1,485,000
52,000 Questar Corp........................ 1,501,500
40,000 Sonat, Inc.......................... 1,160,000
26,000 Tenneco, Inc........................ 1,183,000
---------------
5,329,500
---------------
NATURAL GAS - EXPLORATION & PRODUCTION (4.4%)
40,000 Anardarko Petroleum Corp............ 1,755,000
50,000 Apache Corp......................... 1,250,000
68,000 Canadian Natural Resources Ltd*..... 690,659
50,000 Enron Oil & Gas Co.................. 1,043,750
100,000 Maxus Energy Corp.*................. 387,500
40,000 Seagull Energy Corp.*............... 675,000
---------------
5,801,909
---------------
OIL INTEGRATED - DOMESTIC (7.7%)
33,800 Amerada Hess Corp................... 1,656,200
35,000 Amoco Corp.......................... 2,073,750
31,000 Kerr-McGee Corp..................... 1,561,625
56,000 Phillips Petroleum Co............... 1,869,000
55,000 Unocal Corp......................... 1,560,625
90,000 USX-Marathon Group.................. 1,462,500
---------------
10,183,700
---------------
OIL INTEGRATED - INTERNATIONAL (19.6%)
117,000 Chevron Corp........................ 5,557,500
44,481 Elf Aquitane (ADR).................. 1,595,756
94,000 Exxon Corp.......................... 6,016,000
50,000 Imperial Oil Ltd.................... 1,700,000
34,000 Mobil Corp.......................... 2,958,000
23,000 Royal Dutch Petroleum Co............ 2,578,875
64,000 Texaco, Inc......................... 4,080,000
80,000 YPF S.A. (ADR)...................... 1,520,000
---------------
26,006,131
---------------
OIL INTERNATIONAL - EXPLORATION & PRODUCTION (3.7%)
138,000 Occidental Petroleum Corp........... 2,742,750
80,000 Oryx Energy Co*..................... 880,000
65,000 Union Texas Petroleum Holdings,
Inc................................. 1,251,250
---------------
4,874,000
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
OIL PRODUCTION - DOMESTIC (2.9%)
36,000 Louisiana Land & Exploration Co..... $ 1,246,500
42,000 Murphy Oil Corp..................... 1,837,500
44,700 Parker & Parsley Petroleum Co....... 815,775
---------------
3,899,775
---------------
OIL REFINERIES (2.6%)
65,000 Sun Co., Inc........................ 1,893,125
55,000 Tosco Corp.......................... 1,588,125
---------------
3,481,250
---------------
TOTAL BASIC ENERGY.................. 59,576,265
---------------
ENERGY DEVELOPMENT & TECHNOLOGY (11.6%)
OIL DRILLING (2.4%)
60,000 Energy Service Co., Inc............. 705,000
30,000 Helmerich & Payne, Inc.............. 780,000
130,000 Rowan Companies, Inc.*.............. 812,500
40,000 Sonat Offshore Drilling, Inc........ 835,000
---------------
3,132,500
---------------
OIL EQUIPMENT & SERVICES (9.2%)
63,000 Baker Hughes Inc.................... 1,212,750
30,000 Camco International, Inc............ 555,000
55,000 Dresser Industries, Inc............. 1,134,375
20,000 Halliburton Co...................... 745,000
55,000 J. Ray McDermott S.A................ 1,223,750
50,000 Offshore Logistics, Inc.*........... 631,250
40,000 Schlumberger, Ltd................... 2,275,000
29,000 SEACOR Holdings, Inc.*.............. 529,250
70,000 Smith International, Inc.*.......... 936,250
45,000 Tidewater, Inc...................... 883,125
96,500 Weatherford International, Inc.*.... 832,313
30,000 Western Atlas, Inc.*................ 1,237,500
---------------
12,195,563
---------------
TOTAL ENERGY DEVELOPMENT &
TECHNOLOGY.......................... 15,328,063
---------------
METALS & BASIC MATERIALS (42.6%)
ALUMINUM (2.0%)
45,000 Alumax Inc.*........................ 1,288,125
36,000 Aluminum Co. of America............. 1,404,000
---------------
2,692,125
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
BUILDING MATERIALS (1.3%)
70,000 Masco Corp.......................... $ 1,758,750
---------------
CHEMICALS (9.7%)
56,400 DuPont (E.I.) de Nemours & Co....... 3,165,450
55,000 Ferro Corp.......................... 1,409,375
40,000 Georgia Gulf Corp.*................. 1,200,000
29,000 Monsanto Co......................... 2,298,250
170,000 Nova Corp........................... 1,381,250
30,000 OM Group, Inc....................... 716,250
40,000 PPG Industries, Inc................. 1,470,000
55,000 Praxair, Inc........................ 1,244,375
---------------
12,884,950
---------------
CHEMICALS - SPECIALTY (3.6%)
100,000 Calgon Carbon Corp.................. 1,050,000
90,000 Ethyl Corp.......................... 922,500
40,000 Morton International, Inc........... 1,170,000
47,000 Nalco Chemical Co................... 1,615,625
---------------
4,758,125
---------------
COAL (1.4%)
100,000 Hanson PLC (ADR).................... 1,875,000
---------------
CONSTRUCTION & MATERIALS HANDLING (4.9%)
25,000 Caterpillar, Inc.................... 1,290,625
22,000 Deere & Co.......................... 1,685,750
33,000 Fluor Corp.......................... 1,608,750
65,400 Indresco, Inc.*..................... 809,325
34,000 Ingersoll-Rand Co................... 1,083,750
---------------
6,478,200
---------------
COPPER (2.5%)
45,000 Cyprus Amax Minerals Co............. 1,215,000
75,687 Freeport-McMoran Copper & Gold, Inc.
(Series A).......................... 1,589,427
10,000 Phelps Dodge Corp................... 545,000
---------------
3,349,427
---------------
GOLD MINING (5.3%)
70,000 Barrick Gold Corp................... 1,522,500
70,000 Hecla Mining Co*.................... 656,250
80,000 Homestake Mining Co................. 1,240,000
34,954 Newmont Mining Corp................. 1,262,713
80,000 Placer Dome Inc..................... 1,630,000
120,000 TVX Gold, Inc.*..................... 780,000
---------------
7,091,463
---------------
METALS & MINING (2.0%)
55,000 Inco Ltd............................ 1,478,125
75,000 Stillwater Mining Co*............... 1,162,500
---------------
2,640,625
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
PAPER & FOREST PRODUCTS (2.9%)
60,000 Longview Fibre Co................... $ 1,065,000
54,000 Louisiana-Pacific Corp.............. 1,525,500
25,000 Temple-Inland Inc................... 1,221,875
---------------
3,812,375
---------------
RAILROADS (4.7%)
20,000 Burlington Northern, Inc............ 1,120,000
100,000 Canadian Pacific Ltd................ 1,400,000
25,000 CSX Corp............................ 1,943,750
76,000 Santa Fe Pacific Gold Corp.*........ 826,500
50,000 Southern Pacific Rail Corp.*........ 893,750
---------------
6,184,000
---------------
STEEL (0.7%)
55,000 Oregon Steel Mills, Inc............. 914,375
---------------
WASTE DISPOSAL (1.6%)
110,000 Allwaste, Inc.*..................... 591,250
60,000 WMX Technologies, Inc............... 1,582,500
---------------
2,173,750
---------------
TOTAL METALS & BASIC MATERIALS...... 56,613,165
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $125,788,276)...... 131,517,493
---------------
CONVERTIBLE PREFERRED STOCK (0.7%)
STEEL
22,000 USX Corp. 6.50% (Identified Cost
$1,106,050)......................... 995,500
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$126,894,326) (A)........... 99.8% 132,512,993
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES....... 0.2 298,621
----- ------------
NET ASSETS.................. 100.0% $132,811,614
----- ------------
----- ------------
<FN>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $126,978,727; the
aggregate gross unrealized appreciation is $12,071,736 and the aggregate
gross unrealized depreciation is $6,537,470, resulting in net unrealized
appreciation of $5,534,266.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $126,894,326)............................ $132,512,993
Cash........................................................ 73,025
Receivable for:
Dividends............................................... 572,905
Capital stock sold...................................... 75,439
Foreign withholding taxes reclaimed..................... 13,555
Prepaid expenses............................................ 27,128
------------
TOTAL ASSETS........................................... 133,275,045
------------
LIABILITIES:
Payable for:
Capital stock repurchased............................... 184,336
Plan of distribution fee................................ 98,964
Investment management fee............................... 63,981
Accrued expenses............................................ 116,150
------------
TOTAL LIABILITIES...................................... 463,431
------------
NET ASSETS:
Paid-in-capital............................................. 126,742,669
Net unrealized appreciation................................. 5,618,667
Distributions in excess of net investment income............ (32,132)
Accumulated undistributed net realized gain................. 482,410
------------
NET ASSETS............................................. $132,811,614
------------
------------
NET ASSET VALUE PER SHARE,
12,326,890 SHARES OUTSTANDING (500,000,000 SHARES
AUTHORIZED OF $.01 PAR VALUE).............................
$10.77
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED FEBRUARY 28, 1995
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $80,570 foreign withholding tax).......... $ 3,693,741
Interest.................................................... 89,819
-----------
TOTAL INCOME........................................... 3,783,560
-----------
EXPENSES
Plan of distribution fee.................................... 1,368,666
Investment management fee................................... 886,340
Transfer agent fees and expenses............................ 239,964
Shareholder reports and notices............................. 63,526
Professional fees........................................... 52,912
Registration fees........................................... 29,742
Directors' fees and expenses................................ 28,576
Custodian fees.............................................. 18,451
Other....................................................... 4,201
-----------
TOTAL EXPENSES......................................... 2,692,378
-----------
NET INVESTMENT INCOME.................................. 1,091,182
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain........................................... 4,977,602
Net change in unrealized appreciation....................... (7,920,860)
-----------
NET LOSS............................................... (2,943,258)
-----------
NET DECREASE................................................ $(1,852,076)
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
FEBRUARY 28, 1995 FEBRUARY 28, 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 1,091,182 $ 958,628
Net realized gain........................................... 4,977,602 11,362,433
Net change in unrealized appreciation....................... (7,920,860) 2,278,548
----------------- -----------------
NET INCREASE (DECREASE)................................ (1,852,076) 14,599,609
----------------- -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income....................................... (1,433,023) (923,181)
Net realized gain........................................... (9,652,919) (8,542,530)
----------------- -----------------
TOTAL.................................................. (11,085,942) (9,465,711)
----------------- -----------------
Net increase from capital stock transactions................ 6,290,710 15,828,824
----------------- -----------------
TOTAL INCREASE (DECREASE).............................. (6,647,308) 20,962,722
NET ASSETS:
Beginning of period......................................... 139,458,922 118,496,200
----------------- -----------------
END OF PERIOD
(INCLUDING DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME OF $32,132 AND UNDISTRIBUTED NET INVESTMENT
INCOME OF $309,709, RESPECTIVELY)....................... $132,811,614 $139,458,922
----------------- -----------------
----------------- -----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1995
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter Natural Resource Development Securities Inc. (the "Fund") is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
a diversified, open-end management investment company. The Fund was incorporated
in Maryland on December 22, 1980.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York or American Stock Exchange is valued at its latest sale price on that
exchange prior to the time when assets are valued; if there were no sales that
day, the security is valued at the latest bid price; (2) all other portfolio
securities for which over-the-counter market quotations are readily available
are valued at the latest available bid price prior to the time of valuation; (3)
when market quotations are not readily available, including circumstances under
which it is determined by the Investment Manager that sale or bid prices are not
reflective of a security's market value, portfolio securities are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision of the Directors (valuation of debt securities for
which market quotations are not readily available may be based upon current
market prices of securities which are comparable in coupon, rating and maturity
or an appropriate matrix utilizing similar factors); and (4) short-term debt
securities having a maturity date of more than sixty days at time of purchase
are valued on a mark-to-market basis until sixty days prior to maturity and
thereafter at amortized cost based on their value on the 61st day. Short-term
debt securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily and includes amortization of discounts on certain short-term securities.
C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends
and distributions to its shareholders on the record date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1995, CONTINUED
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with Dean Witter InterCapital
Inc. (the "Investment Manager"), the Fund pays its Investment Manager a
management fee, accrued daily and payable monthly, by applying the following
annual rates to the net assets of the Fund determined at the close of each
business day: 0.625% to the portion of daily net assets not exceeding $250
million and 0.50% to the portion of daily net assets exceeding $250 million.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act, pursuant
to which the Fund pays the Distributor compensation, accrued daily and payable
monthly, at an annual rate of 1.0% of the lesser of: (a) the average daily
aggregate gross sales of the Fund's shares since the implementation of the Plan
on July 2, 1984 (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net asset value of the Fund's
shares redeemed since the Fund's implementation of the Plan upon which a
contingent deferred sales charge has been imposed or upon which such charge has
been waived; or (b) the Fund's average daily net assets attributable to shares
issued, net of related shares redeemed, since implementation of the Plan.
Amounts paid under the Plan are paid to the Distributor to compensate it for the
services provided and the expenses borne by it and others in the distribution
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1995, CONTINUED
of the Fund's shares, including the payment of commissions for sales of the
Fund's shares and incentive compensation to, and expenses of the account
executives of Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Investment
Manager and Distributor, and other employees or selected dealers who engage in
or support distribution of the Fund's shares or who service shareholder
accounts, including overhead and telephone expenses, printing and distribution
of prospectuses and reports used in connection with the offering of the Fund's
shares to other than current shareholders and preparation, printing and
distribution of sales literature and advertising materials. In addition, the
Distributor may be compensated under the Plan for its opportunity costs in
advancing such amounts, which compensation would be in the form of a carrying
charge on any unreimbursed expenses incurred by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred but
not yet recovered may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the year ended February 28, 1995,
it received approximately $177,000 in contingent deferred sales charges from
certain redemptions of the Fund's shares. The Fund's shareholders pay such
charges which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended February 28, 1995 aggregated
$81,719,964 and $85,325,023, respectively.
For the year ended February 28, 1995, the Fund incurred brokerage commissions of
$84,230 with DWR for portfolio transactions executed on behalf of the Fund.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At February 28, 1995, the Fund had
transfer agent fees and expenses payable of approximately $20,300.
The Fund established an unfunded noncontributory defined benefit pension plan
covering all independent Directors of the Fund who will have served as
independent Directors/Trustees for at least five years at the time of
retirement. Benefits under this plan are based on years of service and
compensation during the last five years of service. Aggregate pension costs for
the year ended
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1995, CONTINUED
February 28, 1995, included in Directors' fees and expenses in the Statement of
Operations, amounted to $8,288. At February 28, 1995, the Fund had an accrued
pension liability of $48,113 which is included in accrued expenses in the
Statement of Assets and Liabilities.
5. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
FEBRUARY 28, 1995 FEBRUARY 28, 1994
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 8,003,288 $ 91,308,700 6,076,972 $ 72,864,840
Reinvestment of dividends and distributions...................... 943,312 10,339,857 774,911 8,863,719
----------- -------------- ----------- ------------
8,946,600 101,648,557 6,851,883 81,728,559
Repurchased...................................................... (8,419,961) (95,357,847) (5,482,912) (65,899,735)
----------- -------------- ----------- ------------
Net increase..................................................... 526,639 $ 6,290,710 1,368,971 $ 15,828,824
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of capital stock outstanding
throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FEBRUARY 28
----------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992* 1991 1990 1989 1988* 1987 1986
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE
OPERATING PERFORMANCE:
Net asset value,
beginning of
period.......... $ 11.82 $ 11.36 $ 10.20 $ 11.03 $ 11.33 $ 9.93 $ 9.46 $ 9.10 $ 7.43 $ 7.41
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Net investment
income.......... 0.09 0.09 0.16 0.20 0.25 0.30 0.23 0.20 0.14 0.22
Net realized and
unrealized gain
(loss).......... (0.24) 1.25 1.18 (0.44) 0.02 1.80 0.72 0.44 1.75 0.03
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Total from
investment
operations...... (0.15) 1.34 1.34 (0.24) 0.27 2.10 0.95 0.64 1.89 0.25
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Less dividends
and
distributions
from:
Net investment
income........ (0.12) (0.09) (0.18) (0.20) (0.28) (0.32) (0.21) (0.28) (0.22) (0.23)
Net realized
gain.......... (0.78) (0.79) -- (0.39) (0.29) (0.38) (0.27) -- -- --
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Total dividends
and
distributions... (0.90) (0.88) (0.18) (0.59) (0.57) (0.70) (0.48) (0.28) (0.22) (0.23)
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
Net asset value,
end of period... $ 10.77 $ 11.82 $ 11.36 $ 10.20 $ 11.03 $ 11.33 $ 9.93 $ 9.46 $ 9.10 $ 7.43
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
---------- --------- --------- ---------- --------- --------- ---------- --------- --------- ----------
TOTAL INVESTMENT
RETURN+.......... (1.26)% 12.16% 13.31% (1.91)% 2.87% 21.11% 10.29% 7.32% 26.21% 3.50%
RATIOS TO AVERAGE
NET ASSETS:
Expenses......... 1.90% 1.91% 1.96% 1.93% 1.80% 1.81% 1.92% 1.81% 1.74% 1.39%
Net investment
income.......... 0.77% 0.73% 1.46% 1.67% 2.28% 2.57% 2.09% 2.14% 2.61% 3.07%
SUPPLEMENTAL DATA:
Net assets, end
of period, in
thousands....... $132,812 $139,459 $118,496 $113,145 $150,636 $154,741 $136,911 $171,725 $82,985 $23,664
Portfolio
turnover rate... 59% 69% 52% 31% 29% 22% 7% 26% 14% 78%
<FN>
- ---------------------
* Year ended February 29.
+ Does not reflect the deduction of sales charge.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF DEAN WITTER NATURAL RESOURCE DEVELOPMENT 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 Natural Resource
Development Securities Inc. (the "Fund") at February 28, 1995, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended and the financial highlights for each
of the ten years in the period then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities owned at February 28, 1995 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
APRIL 12, 1995
- --------------------------------------------------------------------------------
1995 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended February 28, 1995, the Fund paid to its
shareholders $0.581522 per share from long-term capital gains. For
such period, 75.12% of the income paid qualified for the dividends
received deduction available to corporations.
<PAGE>
BOARD OF DIRECTORS
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo DEAN WITTER
Edwin J. Garn NATURAL RESOURCE
John R. Haire DEVELOPMENT
Dr. Manuel H. Johnson SECURITIES
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Diane Lisa Sobin
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
This report is submitted for the general
information of shareholders of the Fund.
For more detailed information about the
Fund, its officers and trustees, 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. ANNUAL REPORT
FEBRUARY 28, 1995
<PAGE>
DEAN WITTER NATURAL RESOURCES FUND
GROWTH OF $10,000
DATE TOTAL S&P 500
February 28, 1985 $10,000 $10,000
February 28, 1986 $10,350 $13,047
February 28, 1987 $13,062 $16,897
February 29, 1988 $14,018 $16,437
February 28, 1989 $15,461 $18,382
February 28, 1990 $18,724 $21,846
February 28, 1991 $19,262 $25,049
February 29, 1992 $18,894 $29,063
February 28, 1993 $21,409 $32,157
February 28, 1994 $24,012 $34,828
February 28, 1995 $23,708(3) $37,401
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
-1.26(1) 4.83(1) 9.02(1)
-5.82(2) 4.52(2) 9.02(2)
Fund S&P 500 (4)
------ ------
Past performance is not predictive of future returns.
- ----------------------------------------
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable contingent deferred sales charge (CDSC) (1 year-5%,
5 years-2%, 10 years-0%). See the Fund's current prospectus for complete
details on fees and sales charges.
(3) Closing value assuming a complete redemption on February 28, 1995.
(4) The Standard and Poor's 500 Composite Stock Price Index (S&P 500) is a
broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The index does not include
any expenses, fees or charges.
