<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- - --------------------------------------------------------------------------------
"If you can keep your head when all about you are losing theirs..."
In the current small-and mid-capitalization sectors, Kipling's words are
those by which to live. Following a fiscal year in which the Fund registered a
total return of nearly 68 percent, the first six months of the current fiscal
year were difficult to say the least. For the six months ended March 31, 1994,
the Fund's total return was -8.83 percent, based on change in net asset value
from $20.50 per share on September 30, 1993, to $17.56 per share on March 31,
1994, and including reinvestment of $1.13 per share in long-term capital gains.
For the same period, the Standard & Poor's 500 Index (S & P 500) and the NASDAQ
registered a total returns of -1.57 percent and -2.53 percent, respectively.
Despite the volatility of the last six months, for the trailing year ended March
31, 1994, the Fund produced a total return of 20.13 percent, placing it in the
top 10 percent of all small company growth funds, according to Lipper Analytical
Services, Inc.
THE MARKET
The overall economic recovery picked up steam during the fourth quarter of
1993, driven in part by accelerating industrial production, stronger consumer
confidence and lower unemployment. However, during the first quarter of this
year, anxiety over potential inflationary pressure induced the Federal Reserve
Board to raise the federal-funds rate--the interest rate banks charge each other
for overnight loans--from 3.00 percent to 3.50 percent, in two separate moves.
These actions represented the first time in several years the central bank had
acted on short-term interest rates. The markets reacted immediately, with both
stock and bond prices tumbling. Despite higher interest rates, the economy
appears to be even stronger than expected: fourth quarter gross domestic product
was seven percent and evidence of continued strength is emerging.
We have said it before, but it is worth repeating: Since the Fund commenced
operations on April 29, 1983, the small-capitalization sector of the market has
experienced very heavy selling pressure from time to time. This occurs during
periods of uncertainty as investors tend to buy stocks of well-known companies
as a "flight to safety." These intervals of volatility have resulted in the
disparity between the Fund's performance and that of the S & P 500. It should be
stressed, however, that over time the small-capitalization sector of the market
has outperformed larger-capitalized companies.
TECHNOLOGY SECTOR HIT HARD
The cycle certainly turned against technology stocks in this period,
accounting for much of the Fund's decline. After performing particularly well
during the corresponding period a year earlier--prompting the Fund to initiate a
large exposure to this sector--technology-related companies experienced a major
sell-off that continued throughout the six-month period. However, the March
correction brought many of these issues down by more than 30 percent from their
highs, suggesting the bottom may be near.
As for the rest of the portfolio, exposure was reduced in the broadcast
media area because of regulatory uncertainty. Specifically, the Fund sold
Broadcasting Partners, Inc., Cablemax and Pittencrieff Communications. Also, the
potential for further interest rate increases has prompted a reduction in the
home building sector, including the elimination of Hovnanian Enterprises and
Shaw Industries from the portfolio. On the buy side, the strengthening economy
has led to an increase in the Fund's exposure to the industrial
<PAGE>
manufacturing and basic materials sectors. New positions in those sectors
include Donaldson Co. and Kennametal, Inc. (industrial manufacturing), and A.
Schulman and Seitel Inc. (basic materials).
LOOKING AHEAD
It is hard to say with any certainty where the market will go from here,
especially with the prospects of a continuing trend toward higher interest
rates. Historically, however, the small-and mid-capitalization sectors have
outperformed the broader stock market. Thus, we believe opportunities abound for
long-term investors. We feel that the technology-related sector, in particular,
represents a compelling value. As always, we will continue to closely monitor
the dynamic small-and mid-capitalization sectors for attractive growth
opportunities.
We appreciate your support of Dean Witter Developing Growth Securities Trust
and look forward to continuing to serve your investment needs.
Very truly yours,
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1994 (UNAUDITED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- - ----------- ---------------
<C> <S> <C>
COMMON STOCKS (98.7%)
ADVERTISING (0.4%)
70,000 Dimark International, Inc............ $ 1,198,750
---------------
AUTO PARTS (3.0%)
20,000 *Bailey Corp......................... 202,500
60,000 Federal-Mogul Corp................... 1,770,000
80,000 Magna International, Inc............. 3,760,000
50,000 Mascotech, Inc....................... 1,025,000
100,000 Titan Wheel International, Inc....... 2,700,000
---------------
9,457,500
---------------
BEVERAGES - SOFT DRINKS (0.9%)
80,000 +Buenos Aires Embotelladora
SA - ADR........................... 2,720,000
---------------
BIOTECHNOLOGY (3.2%)
100,000 *Cellpro, Inc........................ 2,350,000
80,000 *Centocor, Inc....................... 890,000
50,000 Elan Corp PLC........................ 1,662,500
100,000 *Procyte Corp........................ 1,100,000
110,000 *Protein Design Labs, Inc............ 2,406,250
100,000 *Synergen, Inc....................... 1,025,000
80,000 *U.S. Bioscience, Inc................ 550,000
---------------
9,983,750
---------------
BROADCAST MEDIA (0.8%)
20,000 *Future Communications, Inc.......... 20,000
22,500 Infinity Broadcating, Class A........ 568,125
14,500 *Peoples Choice TV Corp.............. 438,625
40,000 *United International Holdings, Inc.,
Class A............................ 1,310,000
25,000 *United Video Satellite Group, Class
A.................................. 293,750
---------------
2,630,500
---------------
BUILDING & CONSTRUCTION (4.1%)
75,000 BMC West Corp........................ 1,856,250
60,000 CBI Industries....................... 1,792,500
80,000 Lafarge Corp......................... 1,720,000
40,000 *Martin Marietta Materials........... 880,000
80,000 *National Gypsum Co.................. 3,660,000
90,000 *Redman Industries, Inc.............. 1,597,500
45,000 Shelter Components Corp.............. 618,750
100,000 *Wilcox & Gibbs, Inc................. 675,000
---------------
12,800,000
---------------
BUSINESS SERVICES (1.7%)
140,000 +Danka Business Systems - ADR........ 5,442,500
---------------
CHEMICALS - SPECIALTY (0.4%)
40,000 Schulman (A.), Inc................... 1,260,000
---------------
COMMERCIAL SERVICES (0.7%)
20,000 *Career Horizons, Inc................ 345,000
82,500 Stewart Enterprises, Inc., Class A... 1,938,750
---------------
2,283,750
---------------
COMMUNICATIONS - EQUIPMENT & SOFTWARE (3.8%)
20,000 *Cidco, Inc.......................... 350,000
80,000 *Cisco Systems, Inc.................. 2,720,000
40,000 *Digital Link Corp................... 600,000
40,000 *FTP Software, Inc................... 1,070,000
80,000 *Network General Corp................ 1,400,000
50,000 *Plantronics, Inc.................... 762,500
29,000 *Summa Four, Inc..................... 971,500
50,000 *Wellfleet Communications............ 3,512,500
<CAPTION>
NUMBER OF
SHARES VALUE
- - ----------- ---------------
<C> <S> <C>
30,000 Xircom, Inc.......................... $ 607,500
---------------
11,994,000
---------------
COMPUTER SERVICES (0.0%)
25,000 CMC Industries, Inc.................. 131,250
---------------
COMPUTER SOFTWARE (6.3%)
80,000 *Aldus Corp.......................... 2,120,000
140,000 Corel Corp........................... 2,642,500
110,000 *Fulcrum Technologies Corp........... 1,430,000
20,000 *Global Village Communication........ 190,000
25,000 Infomix Corp......................... 518,750
35,700 *Infosoft International, Inc......... 740,775
31,000 Integrated Silicon Systems........... 720,750
30,000 *Macromedia, Inc..................... 435,000
145,000 Oracle Systems Corp.................. 4,640,000
70,000 *Powersoft Corp...................... 3,797,500
46,000 *Quickturn Design Systems, Inc....... 609,500
70,000 Systems & Computer Technology
Corp............................... 1,347,500
30,000 *Wonderware Corp..................... 517,500
---------------
19,709,775
---------------
COMPUTERS (0.5%)
100,000 *Unisys Corp......................... 1,487,500
---------------
COMPUTERS - EQUIPMENT (1.5%)
50,000 *Computer Network Technology Corp.... 456,250
70,000 EMC Corp............................. 1,391,250
65,000 *Golden Systems, Inc................. 333,125
60,000 *Lasermaster Technologies, Inc....... 825,000
50,000 Norand Corp.......................... 1,562,500
7,500 Sigma Designs, Inc................... 63,750
---------------
4,631,875
---------------
COMPUTERS - PERIPHERAL EQUIPMENT (1.0%)
45,000 *Hutchinson Technology, Inc.......... 1,395,000
70,000 *Seagate Technology Corp............. 1,610,000
---------------
3,005,000
---------------
ELECTRONIC COMPONENTS (9.2%)
40,000 *Altera Corp......................... 1,275,000
90,000 *Analog Devices...................... 2,340,000
100,000 *Cypress Semiconductor Corp.......... 1,600,000
45,000 *DSP Group, Inc...................... 720,000
60,000 *Electro Scientific Industries,
Inc................................ 705,000
40,000 Harris Corp.......................... 1,885,000
50,000 *Illinois Superconductor Corp........ 725,000
70,000 *Integrated Device Technology, Inc... 1,767,500
50,000 Intel Corp........................... 3,362,500
80,000 *Microchip Technology, Inc........... 3,040,000
90,000 Micron Technology, Inc............... 7,515,000
20,000 *Satcon Technology Corp.............. 235,000
70,000 *Xilinx, Inc......................... 3,482,500
---------------
28,652,500
---------------
ELECTRONICS (0.5%)
60,000 *Harman International Industries,
Inc................................ 1,665,000
---------------
ELECTRONICS - SEMICONDUCTORS/
COMPONENTS (6.3%)
105,000 *Applied Materials, Inc.............. 4,672,500
60,000 *Credence Systems Corp............... 1,230,000
60,000 *Electroglass, Inc................... 1,650,000
70,500 *Gasonics International Corp......... 916,500
100,000 *KLA Instruments Corp................ 3,575,000
150,000 Lam Research Corp.................... 4,650,000
</TABLE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1994 (UNAUDITED) (CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- - ----------- ---------------
<C> <S> <C>
70,000 *Medar, Inc.......................... $ 857,500
35,000 *Micro Component Corp................ 481,250
60,000 *Ultratech Stepper, Inc.............. 1,470,000
---------------
19,502,750
---------------
ENTERTAINMENT (0.9%)
100,000 *Grand Casinos, Inc.................. 2,700,000
---------------
ENTERTAINMENT, GAMING & LODGING (1.4%)
120,000 Autotote Corp., Class A.............. 2,280,000
100,000 *Players International, Inc.......... 2,037,500
---------------
4,317,500
---------------
ENVIRONMENTAL CONTROL (0.3%)
15,000 *Electric Fuel Corp.................. 120,000
40,000 *Molten Metal Technology, Inc........ 810,000
---------------
930,000
---------------
FINANCIAL SERVICES (1.5%)
60,000 *Casino & Credit Services, Inc....... 450,000
20,000 *Concord Holding Corp................ 255,000
90,000 First USA, Inc....................... 3,172,500
40,000 Mercury Finance Co................... 675,000
---------------
4,552,500
---------------
GOLD (0.3%)
130,000 *Mk Gold Company..................... 812,500
---------------
HEALTH CARE DIVERSIFIED (5.8%)
60,000 *Coventry Corp....................... 2,625,000
130,000 HBO & Co............................. 3,250,000
50,000 Healthsouth Rehabilitation........... 1,450,000
70,000 *Oxford Health Plans, Inc............ 3,832,500
40,000 *Ramsay-HMO, Inc..................... 2,210,000
60,000 *Sun Healthcare Group, Inc........... 1,267,500
70,000 United American Healthcare, Inc...... 1,312,500
70,000 *Wellpoint Health Network............ 2,196,250
---------------
18,143,750
---------------
HOSPITAL MANAGEMENT (3.3%)
50,000 Columbia Healthcare Corp............. 2,012,500
250,000 Humana, Inc.......................... 4,656,250
220,000 National Medical Enterprises, Inc.... 3,547,500
---------------
10,216,250
---------------
HOTELS/MOTELS (4.0%)
60,000 *Hospitality Franchise System........ 3,300,000
90,000 La Quinta Inns, Inc.................. 2,553,750
100,000 *Mirage Resorts, Inc................. 2,100,000
115,000 *Promus Cos., Inc.................... 4,528,125
---------------
12,481,875
---------------
HOUSEHOLD FURNISHINGS & APPLIANCES (1.2%)
50,000 *Bush Industries, Inc., Class A...... 1,206,250
60,000 *Ethan Allen Interiors, Inc.......... 1,560,000
53,500 *O'Sullivan Industries Holdings,
Inc................................ 1,043,250
---------------
3,809,500
---------------
INSURANCE (0.9%)
50,000 John Alden Financial Corp............ 1,775,000
50,000 Partnerre Holdings Ltd............... 962,500
---------------
2,737,500
---------------
LEISURE TIME/EQUIPMENT (0.4%)
41,600 Callaway Golf Company................ 1,346,800
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- - ----------- ---------------
<C> <S> <C>
MACHINERY - CONSTRUCTION & MATERIALS (0.3%)
20,000 Kennametal, Inc...................... $ 1,072,500
---------------
MACHINERY - DIVERSIFIED (0.8%)
70,000 Agco Corp............................ 2,485,000
---------------
MANUFACTURING (1.8%)
40,000 Donaldson Co., Inc................... 1,815,000
25,000 *Duracraft Corp...................... 737,500
30,000 *First Alert, Inc.................... 540,000
20,000 Flair Corp........................... 420,000
10,000 *NN Ball & Roller, Inc............... 150,000
50,000 Trimas Corp.......................... 1,250,000
50,000 *Welbitt Corp........................ 850,000
---------------
5,762,500
---------------
MEDICAL EQUIPMENT (0.7%)
50,000 *Summit Technology, Inc.............. 1,350,000
40,000 *VISX, Inc........................... 750,000
---------------
2,100,000
---------------
MEDICAL SERVICES (2.9%)
100,000 *Cerner Corp......................... 4,125,000
90,000 *Diagnostek, Inc..................... 1,575,000
100,000 *Medaphis Corp....................... 3,300,000
---------------
9,000,000
---------------
NATURAL RESOURCES (1.2%)
150,000 Freeport-McMoran Copper & Gold,
Inc................................ 3,843,750
---------------
OIL & GAS PRODUCTS (1.7%)
80,000 *Input/Output, Inc................... 3,080,000
50,000 Pogo Producing Corp.................. 825,000
60,000 *Seitel, Inc......................... 1,260,000
---------------
5,165,000
---------------
PHARMACEUTICAL (0.9%)
70,000 *Scherer (R.P.) Corp................. 2,563,750
20,000 *Scicione Pharmaceuticals, Inc....... 302,500
---------------
2,866,250
---------------
PROPERTY - CASUALTY INSURANCE (0.0%)
5,000 *Transnational RE Corp., Class A..... 87,500
---------------
RESTAURANTS (0.7%)
75,000 Applebees International, Inc......... 1,631,250
40,000 *Taco Cabana, Inc., Class A.......... 690,000
---------------
2,321,250
---------------
RETAIL (1.2%)
90,000 *Michaels Stores, Inc................ 3,690,000
---------------
RETAIL - SPECIALTY (5.1%)
60,000 *Bed Bath & Beyond, Inc.............. 1,725,000
105,000 *Bombay Co., Inc. (The).............. 2,611,875
70,000 *Burlington Coat Factory............. 1,767,500
70,000 Claires Stores, Inc.................. 1,321,250
35,000 *Damark International, Inc., Class
A.................................. 770,000
62,000 *DM Management Company............... 666,500
45,000 *General Nutrition Companies......... 1,113,750
40,000 Lands End, Inc....................... 2,015,000
35,000 *Micro Warehouse, Inc................ 1,575,000
50,000 *Rexall Sundown, Inc................. 837,500
35,000 *Ultimate Electronics, Inc........... 367,500
40,000 *Williams-Sonoma, Inc................ 1,260,000
---------------
16,030,875
---------------
</TABLE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1994 (UNAUDITED) (CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- - ----------- ---------------
<C> <S> <C>
STEEL (1.4%)
35,000 Cleveland-Cliffs..................... $ 1,509,375
70,000 Huntco, Inc. Class A................. 1,732,500
35,000 Timken Co............................ 1,150,625
---------------
4,392,500
---------------
TECHNOLOGY RELATED (0.5%)
30,000 Intelligent Electronics, Inc......... 742,500
20,000 Tech Data Corp....................... 725,000
---------------
1,467,500
---------------
TELECOMMUNICATION EQUIPMENT (4.5%)
8,000 *Applied Digital Access, Inc......... 126,000
95,000 *DSC Communications Corp............. 4,773,750
50,000 General Instrument Corp.............. 2,375,000
60,000 *Glenayre Technologies, Inc.......... 2,145,000
80,000 Newbridge Networks Corp.............. 4,370,000
10,500 *Telular Corp........................ 168,000
---------------
13,957,750
---------------
TELECOMMUNICATIONS (7.4%)
45,000 *American Mobile Systems, Inc........ 573,750
15,000 Broadband Technologies, Inc.......... 300,000
60,000 *Cencall Communications Corp......... 1,380,000
80,000 *Centigram Communications Corp....... 2,700,000
30,000 *CMG Information Services, Inc....... 217,500
204,000 *IDB Communications Group, Inc....... 3,264,000
75,000 *Inter-Tel, Inc...................... 684,375
180,000 *LDDS Communications................. 4,275,000
52,000 *Metrocall, Inc...................... 936,000
70,000 *MFS Communications Co., Inc......... 2,012,500
123,284 *Millicom International Cellular
S.A................................ 2,866,353
70,000 *Nextel Communications, Inc., Class
A.................................. 2,695,000
40,000 *Pittencrieff Communications, Inc.... 710,000
50,000 *Telco Systems, Inc.................. 600,000
---------------
23,214,478
---------------
TEXTILES (1.1%)
25,000 Farah Manufacturing Co............... 462,500
35,000 *Jones Apparel Group, Inc............ 1,106,875
30,000 *Nautica Enterprises, Inc............ 720,000
50,000 *Norton McNaughton, Inc.............. 975,000
---------------
3,264,375
---------------
TOYS (0.1%)
30,000 *Equity Marketing, Inc............... 172,500
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- - ----------- ---------------
<C> <S> <C>
TRANSPORTATION (1.9%)
25,000 *Celadon Group, Inc.................. $ 350,000
35,000 *Landair Services, Inc............... 752,500
30,000 *Landstar System, Inc................ 660,000
30,000 Pittston Services Group.............. 667,500
35,000 *Railtex, Inc........................ 971,250
40,000 Skywest, Inc......................... 1,390,000
40,000 Werner Enterprises, Inc.............. 1,120,000
---------------
5,911,250
---------------
WHOLESALE DISTRIBUTOR (0.2%)
50,000 *Finishmaster, Inc................... 456,250
---------------
TOTAL COMMON STOCKS (IDENTIFIED COST
$272,307,514)...................... 307,865,803
---------------
CONVERTIBLE PREFERRED STOCK (0.0%)
OIL & GAS PRODUCTS (0.0%)
4,000 Snyder Oil Corp. (Indentified cost
$100,000).......................... 104,000
---------------
WARRANTS (0.0%)
ELECTRONIC COMPONENTS (0.0%)
20,000 Applied Science & Technology, Inc.... 17,500
---------------
FINANCIAL SERVICES (0.0%)
25,000 Casino & Credit Services, Inc........ 46,875
---------------
TOTAL WARRANTS
(IDENTIFIED COST $7,000)........... 64,375
---------------
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS)
- - -----------
<C> <S> <C>
SHORT-TERM INVESTMENT (1.2%)
REPURCHASE AGREEMENT (1.2%)
$3,747 The Bank of New York 3.50% due 4/1/94
(dated 3/31/94; proceeds
$3,747,692; collateralized by
$3,936,975 U.S. Treasury Note 6.25%
due 2/15/03 valued at $3,892,875)
(Identified Cost $3,747,328)... 3,747,328
-------------
<C>
TOTAL INVESTMENTS (IDENTIFIED
COST $276,161,842)(A).......... 99.9 % 311,781,506
OTHER ASSETS IN EXCESS OF
LIABILITIES.................... 0.1 362,684
---------- -------------
NET ASSETS....................... 100.0 % $ 312,144,190
---------- -------------
---------- -------------
<FN>
- - ------------------
+ AMERICAN DEPOSITORY RECEIPT.
* NON-INCOME PRODUCING SECURITY.
(A) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $276,227,806; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $50,874,078 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $15,320,378, RESULTING IN NET UNREALIZED
APPRECIATION OF $35,553,700.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES
FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1994 (UNAUDITED)
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $276,161,842) (Note
1)...................................... $ 311,781,506
Receivable for:
Investments sold (Note 1)............... 4,796,247
Shares of beneficial interest sold...... 2,788,651
Dividends............................... 19,741
Prepaid expenses and other assets......... 96,356
-------------
TOTAL ASSETS...................... 319,482,501
-------------
LIABILITIES:
Payable for:
Investments purchased................... 4,309,125
Shares of beneficial interest
repurchased........................... 2,461,943
Plan of distribution fee (Note 3)....... 286,739
Investment management fee............... 143,369
Accrued expenses and other payables (Note
4)...................................... 137,135
-------------
TOTAL LIABILITIES................. 7,338,311
-------------
NET ASSETS:
Paid-in-capital........................... 272,078,192
Accumulated net investment loss........... (2,401,499)
Accumulated undistributed net realized
gains................................... 6,847,833
Net unrealized appreciation............... 35,619,664
-------------
NET ASSETS........................ $ 312,144,190
-------------
-------------
NET ASSET VALUE PER SHARE, 17,780,228
shares outstanding (unlimited shares
authorized of $.01 par value)...........
$17.56
-------------
-------------
</TABLE>
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1994 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME
Dividends (net of $5,741 foreign
withholding tax).................... $ 231,085
Interest.............................. 79,832
-------------
TOTAL INCOME...................... 310,917
-------------
EXPENSES
Plan of distribution fee (Note 3)..... 1,446,853
Investment management fee (Note 2).... 723,426
Transfer agent fees and expenses (Note
4).................................. 268,326
Registration fees..................... 51,210
Professional fees..................... 19,708
Custodian fees........................ 18,200
Trustees' fees and expenses........... 11,975
Shareholder reports and notices....... 10,330
Other................................. 3,414
-------------
TOTAL EXPENSES.................... 2,553,442
-------------
NET INVESTMENT LOSS............. (2,242,525)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 1):
Net realized gain on investments...... 7,957,553
Net change in unrealized appreciation
on investments...................... (34,244,406)
-------------
NET LOSS ON INVESTMENTS........... (26,286,853)
-------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS..... $ (28,529,378)
-------------
-------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED
MARCH 31, 1994 FOR THE YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1993
----------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss............................................ $ (2,242,525) $ (2,434,277)
Net realized gain.............................................. 7,957,553 28,771,728
Net change in unrealized appreciation.......................... (34,244,406) 58,521,596
----------------------- -------------------
Net (decrease) increase in net assets resulting from
operations................................................... (28,529,378) 84,859,047
Distributions to shareholders from net realized gains on
investments..................................................... (16,359,904) -0-
Net increase from transactions in shares of beneficial interest
(Note 6)........................................................ 116,644,659 42,548,116
----------------------- -------------------
Total increase............................................. 71,755,377 127,407,163
NET ASSETS:
Beginning of period.............................................. 240,388,813 112,981,650
----------------------- -------------------
END OF PERIOD (including accumulated net investment loss of
$2,401,499 and $6,180,542, respectively)........................ $ 312,144,190 $ 240,388,813
----------------------- -------------------
----------------------- -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- - --------------------------------------------------------------------------------
1. Organization and Accounting Policies--Dean Witter Developing Growth
Securities Trust (the "Fund") was organized on December 28, 1982 as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended (the "Act"), as a diversified, open-end management
investment company. The Fund commenced operations on April 29, 1983.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS--(1) an equity portfolio 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 bid price; (3)
when market quotations are not readily available, portfolio securities are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Trustees (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); (4) the value of short-term debt securities which mature at a date
less than sixty days subsequent to the valuation date is determined on an
amortized cost basis; and (5) the value of other assets will be determined
in good faith at fair value under procedures established by and under the
general supervision of the Fund's Trustees.
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 on the identified cost
method. Dividend income is recorded on the ex-dividend date. Interest income
is accrued daily.
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" differences are either considered temporary or permanent in
nature. To the extent that 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.
E. REPURCHASE AGREEMENTS--The Fund's custodian takes possession on behalf of
the Fund of the collateral pledged for investments in repurchase agreements.
It is the policy of the Fund to value the underlying collateral daily on a
mark-to-market basis to determine that the value, including accrued interest,
is at least equal to the repurchase price plus accrued interest. In the event
of default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation.
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- - --------------------------------------------------------------------------------
2. Investment Management Agreement--Pursuant to an Investment Management
Agreement (the "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 annual rate of 1/2 of 1% to the net assets
of the Fund determined as of the close of each business day.
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 office space and 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 beneficial interest 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 the annual
rate of 1.0% of the lesser of: (a) the average daily aggregate gross sales of
the Fund's shares since the inception of the Fund (not including reinvestments
of dividends or capital gains distributions), less the average daily aggregate
net asset value of the Fund's shares redeemed since the Plan implementation upon
which a contingent deferred sales charge has been imposed or waived; or (b) the
Fund's average daily net assets. Amounts paid under the Plan are paid to the
Distributor to compensate it for the services provided and the expenses borne by
it and others in the distribution of the Fund's shares, including the payment of
commissions for sales of the Fund's shares and incentive compensation to and
expenses of Dean Witter Reynolds Inc.'s, an affiliate of the Investment Manager,
and other account executives 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
by the Distributor, 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 for the six months ended March 31,
1994, it received approximately $169,000 in deferred sales charges from certain
redemptions of the Fund's shares of beneficial interest. 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 the proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended March 31, 1994, aggregated
$292,570,816 and $195,945,295, respectively. For the same period, the Fund
incurred brokerage commissions of approximately $81,000 with Dean Witter
Reynolds Inc. for 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 March 31, 1994, the Fund had
transfer agent fees and expenses payable of approximately $60,000.
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- - --------------------------------------------------------------------------------
5. Federal Income Tax Status--As of September 30, 1993, the Fund had temporary
book/tax differences which were primarily attributable to realized capital loss
deferrals on wash sales and permanent book/tax differences primarily
attributable net operating losses and dividend redesignations. To reflect
cumulative reclassifications arising from permanent book/tax differences as of
September 30, 1993, accumulated investment loss was credited $6,021,568,
accumulated undistributed net realized gain on investments was charged $37,339
and paid-in-capital was charged $5,984,229.
6. Shares of Beneficial Interest--Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
MARCH 31, 1994 SEPTEMBER 30, 1993
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Sold........................................ 10,403,355 $ 201,756,998 10,539,927 $ 172,956,853
Reinvestment of distributions............... 876,511 15,566,841 -0- -0-
----------- -------------- ----------- --------------
11,279,866 217,323,839 10,539,927 172,956,853
Repurchased................................. (5,227,554) (100,679,180) (8,070,367) (130,408,737)
----------- -------------- ----------- --------------
Net increase................................ 6,052,312 $ 116,644,659 2,469,560 $ 42,548,116
----------- -------------- ----------- --------------
----------- -------------- ----------- --------------
</TABLE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
- - --------------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
MARCH 31, FOR THE YEAR ENDED SEPTEMBER 30,
---------------- ------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989
---------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period........................... $20.50 $12.20 $14.05 $8.92 $11.33 $9.67
------------ ------------ ------------ ------------ ------------ ------------
Net investment income............ 0.05 (0.12) (0.12) (0.07) (0.15) 0.04
Net realized and unrealized gain
(loss) on investments........... (1.86) 8.42 (1.73) 5.20 (2.21) 1.62
------------ ------------ ------------ ------------ ------------ ------------
Total from investment operations... (1.81) 8.30 (1.85) 5.13 (2.36) 1.66
------------ ------------ ------------ ------------ ------------ ------------
Less dividends and distributions:
Dividends from net investment
income.......................... 0.00 0.00 0.00 0.00 (0.05) 0.00
Distributions from net realized
gains on investments............ (1.13) 0.00 0.00 0.00 0.00 0.00
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions.................... (1.13) 0.00 0.00 0.00 (0.05) 0.00
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, end of period..... $17.56 $20.50 $12.20 $14.05 $8.92 $11.33
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INVESTMENT RETURN+........... (4.72)%(1) 67.95% (13.17)% 57.51% (20.87)% 17.17%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)....................... $312,144 $240,389 $112,982 $115,337 $67,604 $89,236
Ratio of expenses to average net
assets........................... 1.77%(2) 1.84% 1.86% 1.92% 2.02% 1.89%
Ratio of net investment income
(loss) to average net assets..... (1.55)%(2) (1.52)% (1.14)% (0.73)% (1.32)% 0.59%
Portfolio turnover rate............ 69% 203% 153% 88% 53% 84%
</TABLE>
- - -------------
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo DEAN WITTER
Edwin J. Garn DEVELOPING
John R. Haire GROWTH
Dr. John E. Jeuck SECURITIES
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Ronald J. Worobel
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311
LEGAL COUNSEL
Sheldon Curtis
Two World Trade Center
New York, New York 10048
INDEPENDENT ACCOUNTANTS
Price Waterhouse
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 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.
SEMIANNUAL REPORT
MARCH 31, 1994
