<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC. TWO WORLD TRADE
CENTER, NEW YORK, NEW
YORK 10048
LETTER TO THE SHAREHOLDERS
DEAR SHAREHOLDER:
The six-month period ended August 31, 1995 was challenging for Dean Witter
Natural Resource Development Securities Inc. Recent economic statistics have
painted a mixed scenario of little or no inflationary pressure and soft global
demand for natural resources. In this environment, the best performing sectors
included aluminum, building supply, natural gas, offshore drilling and oil
equipment and services. Industries lagging the market included gold, copper,
coal, miscellaneous metals, oils and pollution control. Against this backdrop,
the Fund produced a total return of 12.16 percent for the six-month period ended
August 31, 1995, compared to a return of 16.79 percent for the broad-based
Standard & Poor's 500 Composite Stock Price Index.
THE PORTFOLIO
At the end of the period under review, energy stocks represented 56 percent of
the Fund's total net assets. Oil and natural gas-related holdings took different
paths during the period with natural gas and energy equipment and service stocks
being the strong performers. Lackluster oil prices and declining chemical
revenues should impact future downstream operations for the major oil companies.
On the other hand, the growing use of technology oil exploration positively
impacted oil equipment and service stocks such as Schlumberger, Weatherford
International, Camco and BJ Services. Since technology has reduced the
exploration costs to major oil companies, we are concentrating on companies that
are able to generate strong cash flow and are restructuring their operations:
Mobil, Exxon, Amoco and Unocal. Natural gas prices have rebounded and we expect
prices to remain firm going into the winter heating season. The strong demand
for natural gas has kept storage levels below historical comparable periods
providing further support to prices.
The remainder of the Fund's assets (approximately 40 percent) was invested in
industries that should benefit from growing economies around the world. Global
economic growth slowed somewhat during the
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
LETTER TO THE SHAREHOLDERS, CONTINUED
reporting period although there was evidence of a pickup toward the end of the
period. Commodity chemical prices collapsed as demand was soft and new capacity
was announced. The best opportunities in the chemical industry remain with
companies that are restructuring and cutting costs, such as Du Pont (E.I.),
Grace (W.R.) and Morton International. In the base metal area, there seems to be
a mixed picture with aluminum inventories shrinking and copper inventories
rising, with more copper supply coming in 1996. The Fund has also placed an
emphasis on industries that are expected to benefit from a low inflation/low
interest rate environment, such as housing, building materials, lumber and steel
related industries. Added to the portfolio were Armstrong World, Nucor,
Weyerhaeuser and International Paper.
LOOKING AHEAD
The Fund's investment strategy is designed to provide shareholders with the
opportunity to participate in the earnings of companies that will benefit from
the long-term growing demand of resources. Our balanced approach using a
combination of energy and cyclical stocks should temper the risk of owning a
single commodity, such as oil or copper, yet offer the potential for
above-average returns at any point in the market cycle. The Fund's holdings in
integrated oils (approximately 29 percent of the portfolio) should continue to
provide a degree of stability and dividend growth to the Fund in the months to
come.
We appreciate your support of Dean Witter Natural Resource Development
Securities Inc. and look forward to continuing to serve your investment needs.
Very truly yours,
[SIG]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (96.5%)
BASIC ENERGY (43.5%)
NATURAL GAS - DIVERSIFIED (3.9%)
50,000 Enron Corp.......................... $ 1,681,250
50,000 Questar Corp........................ 1,525,000
40,000 Sonat, Inc.......................... 1,270,000
20,000 Tenneco Inc......................... 970,000
---------------
5,446,250
---------------
NATURAL GAS - EXPLORATION & PRODUCTION (5.1%)
45,000 Anardarko Petroleum Corporation..... 2,148,750
50,000 Apache Corp......................... 1,456,250
55,000 Enron Oil & Gas Co.................. 1,278,750
35,000 Noble Affiliates, Inc............... 966,875
60,000 Seagull Energy Corp.*............... 1,207,500
---------------
7,058,125
---------------
OIL INTEGRATED - DOMESTIC (8.8%)
40,000 Amerada Hess Corp................... 1,895,000
50,000 Amoco Corp.......................... 3,187,500
27,000 Kerr-McGee Corp..................... 1,485,000
46,000 Phillips Petroleum Co............... 1,512,250
60,000 Unocal Corp......................... 1,747,500
80,000 USX-Marathon Group.................. 1,650,000
40,000 Vintage Petroleum, Inc.............. 800,000
---------------
12,277,250
---------------
OIL INTEGRATED - INTERNATIONAL (19.8%)
117,000 Chevron Corp........................ 5,659,875
88,000 Exxon Corp.......................... 6,050,000
50,000 Imperial Oil Ltd. (F shares)
(Canada)............................ 1,793,750
47,000 Mobil Corp.......................... 4,476,750
25,000 Royal Dutch Petroleum Co. (ADR)
(Netherlands)....................... 2,981,250
59,000 Texaco, Inc......................... 3,820,250
40,000 Total S.A. (ADR) (France)........... 1,190,000
95,000 YPF S.A. (ADR) (Argentina).......... 1,674,375
---------------
27,646,250
---------------
OIL INTERNATIONAL - EXPLORATION & PRODUCTION (2.2%)
75,000 Occidental Petroleum Corp........... 1,631,250
70,000 Union Texas Petroleum Holdings,
Inc................................. 1,365,000
---------------
2,996,250
---------------
OIL PRODUCTION - DOMESTIC (3.1%)
40,000 Louisiana Land & Exploration Co..... 1,530,000
32,000 Murphy Oil Corp..................... 1,296,000
69,700 Parker & Parsley Petroleum Co....... 1,489,838
---------------
4,315,838
---------------
OIL REFINERIES (0.6%)
30,917 Sun Co., Inc........................ 823,165
---------------
TOTAL BASIC ENERGY.................. 60,563,128
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
ENERGY DEVELOPMENT & TECHNOLOGY (12.9%)
OIL DRILLING (2.7%)
50,000 Ensco International Inc............. $ 900,000
25,000 Helmerich & Payne, Inc.............. 715,625
90,000 Rowan Companies, Inc.*.............. 731,250
40,000 Sonat Offshore Drilling, Inc........ 1,370,000
---------------
3,716,875
---------------
OIL EQUIPMENT & SERVICES (10.2%)
35,000 BJ Services Co.*.................... 875,000
50,000 Baker Hughes Inc.................... 1,125,000
25,000 Camco International, Inc............ 568,750
35,000 Coflexip S.A. (ADR) (France)........ 612,500
35,000 Dresser Industries, Inc............. 840,000
50,000 Falcon Drilling Company, Inc........ 562,500
30,000 J. Ray McDermott S.A................ 705,000
50,000 Offshore Logistics, Inc.*........... 675,000
41,000 Schlumberger Ltd. (Netherlands
Antilles)........................... 2,644,500
29,000 SEACOR Holdings, Inc.*.............. 659,750
75,000 Smith International, Inc.*.......... 1,312,500
45,000 Tidewater, Inc...................... 1,113,750
80,000 Weatherford International, Inc.*.... 1,050,000
32,000 Western Atlas Inc.*................. 1,452,000
---------------
14,196,250
---------------
TOTAL ENERGY DEVELOPMENT &
TECHNOLOGY.......................... 17,913,125
---------------
METALS & BASIC MATERIALS (40.1%)
ALUMINUM (2.1%)
35,000 Alumax Inc.*........................ 1,194,375
30,000 Aluminum Co. of America............. 1,713,750
---------------
2,908,125
---------------
BUILDING MATERIALS (1.7%)
10,000 Armstrong World Industries Inc...... 573,750
65,000 Masco Corp.......................... 1,820,000
---------------
2,393,750
---------------
CHEMICALS (8.9%)
20,000 Agrium Inc. (Canada)................ 685,033
70,000 Du Pont (E.I.) de Nemours & Co...... 4,576,250
40,000 Georgia Gulf Corp................... 1,325,000
15,000 Grace (W.R.) & Co................... 999,375
22,000 Monsanto Co......................... 2,087,250
15,000 OM Group, Inc....................... 448,125
25,000 PPG Industries, Inc................. 1,068,750
45,000 Praxair, Inc........................ 1,170,000
---------------
12,359,783
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
PORTFOLIO OF INVESTMENTS AUGUST 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
CHEMICALS - SPECIALTY (2.9%)
100,000 Calgon Carbon Corp.................. $ 1,137,500
70,000 Ethyl Corp.......................... 761,250
35,000 Morton International, Inc........... 1,137,500
30,000 Nalco Chemical Co................... 1,050,000
---------------
4,086,250
---------------
COAL (0.9%)
75,000 Hanson PLC (ADR) (United Kingdom)... 1,284,375
---------------
CONSTRUCTION & MATERIALS HANDLING (3.5%)
20,000 Caterpillar, Inc.................... 1,342,500
13,000 Deere & Co.......................... 1,111,500
30,000 Fluor Corp.......................... 1,755,000
40,000 Indresco, Inc.*..................... 670,000
---------------
4,879,000
---------------
COPPER (2.3%)
35,000 Cyprus Amax Minerals Co............. 980,000
70,687 Freeport-McMoran Copper & Gold, Inc.
(Series A).......................... 1,652,309
10,000 Phelps Dodge Corp................... 633,750
---------------
3,266,059
---------------
GOLD MINING (5.5%)
65,000 Barrick Gold Corp. (Canada)......... 1,649,375
45,000 Hecla Mining Co.*................... 517,500
32,954 Newmont Mining Corp................. 1,433,499
65,000 Placer Dome Inc. (Canada)........... 1,698,125
125,000 Santa Fe Pacific Gold Corp.......... 1,515,625
120,000 TVX Gold, Inc. (Canada)*............ 870,000
---------------
7,684,124
---------------
METALS & MINING (1.7%)
30,000 Inco Ltd. (Canada).................. 1,050,000
60,000 Stillwater Mining Company*.......... 1,290,000
---------------
2,340,000
---------------
PAPER & FOREST PRODUCTS (3.9%)
15,000 International Paper Co.............. 1,228,125
25,000 Jefferson Smurfit Corp.*............ 375,000
50,000 Longview Fibre Co................... 806,250
70,000 Louisiana-Pacific Corp.............. 1,662,500
15,000 Temple-Inland Inc................... 776,250
12,500 Weyerhaeuser Co..................... 575,000
---------------
5,423,125
---------------
RAILROADS (3.3%)
13,000 Burlington Northern, Inc............ 900,250
45,000 Canadian Pacific Ltd. (Canada)...... 759,375
20,000 CSX Corp............................ 1,650,000
50,000 Southern Pacific Rail Corp.*........ 1,225,000
---------------
4,534,625
---------------
STEEL (0.9%)
10,000 Nucor Corp.......................... 490,000
50,000 Oregon Steel Mills, Inc............. 837,500
---------------
1,327,500
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
WASTE DISPOSAL (2.5%)
90,000 Allwaste, Inc.*..................... $ 483,750
35,000 Browning-Ferris Industries, Inc..... 1,176,875
60,000 WMX Technologies, Inc............... 1,762,500
---------------
3,423,125
---------------
TOTAL METALS & BASIC MATERIALS...... 55,909,841
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $115,656,614)...... 134,386,094
---------------
CONVERTIBLE PREFERRED STOCK (0.7%)
STEEL
20,000 USX Corp. 6.50% (Identified Cost
$1,004,910)......................... 967,500
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (2.4%)
REPURCHASE AGREEMENT
$ 3,281 The Bank of New York 5.8125% due
09/01/95 (dated 08/31/95; proceeds
$3,280,793; collateralized by
$3,655,792 Federal National Mortgage
Association 5.764% due 04/25/19
valued at $3,445,817) (Identified
Cost $3,280,793).................... 3,280,793
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$119,942,317) (A)........... 99.6% 138,634,387
OTHER ASSETS IN EXCESS OF
LIABILITIES................. 0.4 586,254
----- ------------
NET ASSETS.................. 100.0% $139,220,641
----- ------------
----- ------------
<FN>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $120,026,718; the
aggregate gross unrealized appreciation is $20,745,470 and the aggregate
gross unrealized depreciation is $2,137,801, resulting in net unrealized
appreciation of $18,607,669.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $119,942,317)............................ $138,634,387
Receivable for:
Investments sold........................................ 1,664,201
Dividends............................................... 520,083
Capital stock sold...................................... 79,251
Foreign withholding taxes reclaimed..................... 13,555
Prepaid expenses............................................ 60,705
------------
TOTAL ASSETS........................................... 140,972,182
------------
LIABILITIES:
Payable for:
Investments purchased................................... 1,367,075
Plan of distribution fee................................ 114,766
Capital stock repurchased............................... 102,041
Investment management fee............................... 74,160
Accrued expenses............................................ 93,499
------------
TOTAL LIABILITIES...................................... 1,751,541
------------
NET ASSETS:
Paid-in-capital............................................. 117,490,261
Net unrealized appreciation................................. 18,692,070
Accumulated undistributed net investment income............. 417,389
Accumulated undistributed net realized gain................. 2,620,921
------------
NET ASSETS............................................. $139,220,641
------------
------------
NET ASSET VALUE PER SHARE,
11,574,061 SHARES OUTSTANDING (500,000,000 SHARES
AUTHORIZED OF $.01 PAR VALUE).............................
$12.03
------------
------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED AUGUST 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $42,422 foreign withholding tax).......... $ 1,687,992
Interest.................................................... 99,026
-----------
TOTAL INCOME........................................... 1,787,018
-----------
EXPENSES
Plan of distribution fee.................................... 684,705
Investment management fee................................... 442,412
Transfer agent fees and expenses............................ 112,793
Professional fees........................................... 24,936
Shareholder reports and notices............................. 23,189
Custodian fees.............................................. 16,255
Registration fees........................................... 15,935
Directors' fees and expenses................................ 12,494
Other....................................................... 4,778
-----------
TOTAL EXPENSES......................................... 1,337,497
-----------
NET INVESTMENT INCOME.................................. 449,521
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 2,721,299
Net change in unrealized appreciation....................... 13,073,403
-----------
NET GAIN............................................... 15,794,702
-----------
NET INCREASE................................................ $16,244,223
-----------
-----------
</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 SIX MONTHS
ENDED FOR THE YEAR
AUGUST 31, 1995 ENDED
(UNAUDITED) FEBRUARY 28, 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 449,521 $ 1,091,182
Net realized gain........................................... 2,721,299 4,977,602
Net change in unrealized appreciation....................... 13,073,403 (7,920,860)
------------------ -----------------
NET INCREASE (DECREASE)................................ 16,244,223 (1,852,076)
------------------ -----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income....................................... -- (1,433,023)
Net realized gain........................................... (582,788) (9,652,919)
------------------ -----------------
TOTAL.................................................. (582,788) (11,085,942)
------------------ -----------------
Net increase (decrease) from capital stock transactions..... (9,252,408) 6,290,710
------------------ -----------------
TOTAL INCREASE (DECREASE).............................. 6,409,027 (6,647,308)
NET ASSETS:
Beginning of period......................................... 132,811,614 139,458,922
------------------ -----------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$417,389 AND DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME OF $32,132, RESPECTIVELY)........................ $139,220,641 $132,811,614
------------------ -----------------
------------------ -----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1995 (UNAUDITED)
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 accretion 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 AUGUST 31, 1995 (UNAUDITED) 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 AUGUST 31, 1995 (UNAUDITED) 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 six months ended August 31,
1995, it received approximately $97,000 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 six months ended August 31, 1995 aggregated
$21,738,283 and $34,676,400, respectively. At August 31, 1995, the Fund's
payable for investments purchased included unsettled trades with Dean Witter
Reynolds Inc. of $415,075.
For the six months ended August 31, 1995, the Fund incurred brokerage
commissions of $32,220 with DWR for portfolio transactions executed on behalf of
the Fund.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At August 31, 1995, the Fund had
transfer agent fees and expenses payable of approximately $15,000.
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 six months ended
<PAGE>
DEAN WITTER NATURAL RESOURCE DEVELOPMENT SECURITIES INC.
NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1995 (UNAUDITED) CONTINUED
August 31, 1995 included in Directors' fees and expenses in the Statement of
Operations amounted to $2,461. At August 31, 1995, the Fund had an accrued
pension liability of $49,703 which is included in accrued expenses in the
Statement of Assets and Liabilities.
5. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
AUGUST 31, 1995 FEBRUARY 28, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 6,997,196 $ 80,215,522 8,003,288 $ 91,308,700
Reinvestment of dividends and distributions...................... 46,234 543,259 943,312 10,339,857
----------- -------------- ----------- ------------
7,043,430 80,758,781 8,946,600 101,648,557
Repurchased...................................................... (7,796,259) (90,011,189) (8,419,961) (95,357,847)
----------- -------------- ----------- ------------
Net increase (decrease).......................................... (752,829) $ (9,252,408) 526,639 $ 6,290,710
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</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 SIX
MONTHS ENDED
AUGUST 31, FOR THE YEAR ENDED FEBRUARY 28
1995 --------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992* 1991
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period.......... $ 10.77 $ 11.82 $ 11.36 $ 10.20 $ 11.03 $ 11.33
------ ---------- --------- ---------- ---------- ---------
Net investment income......... 0.04 0.09 0.09 0.16 0.20 0.25
Net realized and unrealized
gain (loss).................. 1.27 (0.24) 1.25 1.18 (0.44) 0.02
------ ---------- --------- ---------- ---------- ---------
Total from investment
operations................... 1.31 (0.15) 1.34 1.34 (0.24) 0.27
------ ---------- --------- ---------- ---------- ---------
Less dividends and
distributions from:
Net investment income...... -- (0.12) (0.09) (0.18) (0.20) (0.28)
Net realized gain.......... (0.05) (0.78) (0.79) -- (0.39) (0.29)
------ ---------- --------- ---------- ---------- ---------
Total dividends and
distributions................ (0.05) (0.90) (0.88) (0.18) (0.59) (0.57)
------ ---------- --------- ---------- ---------- ---------
Net asset value,
end of period................ $ 12.03 $ 10.77 $ 11.82 $ 11.36 $ 10.20 $ 11.03
------ ---------- --------- ---------- ---------- ---------
------ ---------- --------- ---------- ---------- ---------
TOTAL INVESTMENT RETURN+...... 12.16%(1) (1.26)% 12.16% 13.31% (1.91)% 2.87%
RATIOS TO AVERAGE NET ASSETS:
Expenses...................... 1.89%(2) 1.90% 1.91% 1.96% 1.93% 1.80%
Net investment income......... 0.64%(2) 0.77% 0.73% 1.46% 1.67% 2.28%
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.................... $139,221 $132,812 $139,459 $118,496 $113,145 $150,636
Portfolio turnover rate....... 16%(1) 59% 69% 52% 31% 29%
<FN>
- ---------------------
* Year ended February 29.
+ Does not reflect the deduction of sales charge.
(1) Not annualized.
(2) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<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
Konrad Krill
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein
have been taken from the records of the
Fund without examination by the independent
accountants and accordingly they do not
express an opinion thereon.
This report is submitted for the general
information of shareholders of the Fund.
For more detailed information about the
Fund, its officers and directors, fees,
expenses and other pertinent information,
please see the prospectus of the Fund.
This report is not authorized for
distribution to prospective investors in
the Fund unless preceded or accompanied
by an effective prospectus. SEMIANNUAL REPORT
AUGUST 31, 1995
