<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
The fiscal year ended September 30, 1994 was quite difficult for equity
markets in general, and for stocks of small-to mid-size growth companies in
particular, as investors shifted assets toward larger, more established
companies. During the 12-month period, Dean Witter Developing Growth Securities
declined 8.88 percent (not reflecting any deduction for the applicable
contingent deferred sales charge), compared to an increase of 3.69 percent for
the Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index), which
favors large-cap stocks. The small-and mid-size capitalization market is better
reflected in the performance of the Hambrecht & Quist Index of Small Stocks (H&Q
Index), which rose 0.07 percent during the same 12-month period. Taking a
closer look, the H&Q Index declined 15.18 percent during the second quarter of
1994 and was up 21.60 percent during the third quarter of 1994, as small
and medium-capitalization stocks led the quarter's stock market rally. This
market rally is also reflected in the Fund's third quarter total return of
12.28 percent. Although the fiscal year concluded on a positive note, we believe
the market is likely to remain volatile over the near term until market
leadership can once again be established. The accompanying chart illustrates
the performance of a $10,000 investment in the Fund on September 30, 1984
through the fiscal year ended September 30, 1994, versus the performance of a
$10,000 investment in the issues that comprise the S&P 500 Index. (The Fund
commenced operations on April 29, 1983.)
A PERIOD OF MARKET VOLATILITY
The Fund's underperformance to the general market can be attributed to two
things, investment strategy and sector allocation. Dean Witter Developing Growth
Securities seeks long-term capital growth primarily through investments in the
common stocks of small, developing growth companies. Generally, while these
companies have the potential to provide greater returns over the long term, they
tend to be more sensitive to stock market declines than larger, more established
companies. However, since the equity markets have historically prevailed over
short-term volatility, we believe there is no need to change our investment
strategy for near-term market conditions and instead remain focused on the long
term. History has shown us that investors who stay for the long term have, in
the past, been rewarded.
[GRAPH]
<PAGE>
The second reason for the Fund's underperformance is sector weightings. The
market, while not exhibiting any real leadership during the reporting period,
did show a shift toward cyclical and low P/E issues, in which the Fund does not
normally invest. Rather, the Fund, by objective, concentrates in high growth
sectors such as technology and health care, which normally exhibit greater
volatility.
LOOKING AHEAD
Although the Fund may experience continued pressure in the near term, the
longer-term benefit of investing in small and medium sized companies looks
favorable given the moderate level of inflation and the forecast of moderate,
but sustained, growth for the nineties. In addition, we believe smaller, more
nimble companies should perform well in the years to come as increased global
competition will require companies to be more flexible and responsive to
changing market conditions.
Looking to 1995, we believe the Fund is poised to take advantage of these
aforementioned trends with such quality holdings as Oracle Systems, Tellabs and
3Com Corp. Consolidating trends in healthcare are expected to continue to
benefit our holdings, which include Healthsouth Rehabilitation, SciMed Life
Systems and Quantum Health. The Fund also has a position in the leisure
time/hotel sector, which is expected to continue to do well as the economy
improves. Large holdings within this sector include Hospitality Franchise
Systems and La Quinta Inns.
We appreciate your support of Dean Witter Developing Growth Securities Trust
and look forward to continuing to serve your investment needs and objectives.
Very truly yours,
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------
COMMON STOCKS (96.8%)
<C> <S> <C>
ADVERTISING (0.4%)
30,000 CMG Information Services, Inc.*......................................................... $ 307,500
70,000 Dimark, Inc.*........................................................................... 1,163,750
---------------
1,471,250
---------------
AEROSPACE & DEFENSE (0.7%)
70,000 Watkins-Johnson Company................................................................. 2,397,500
---------------
AUTO PARTS (1.0%)
80,000 Allen Group, Inc........................................................................ 1,650,000
20,000 Exide Corp.............................................................................. 947,500
17,000 Hi Shear Technology Corp.*.............................................................. 62,688
50,000 Safety Components International, Inc.*.................................................. 850,000
---------------
3,510,188
---------------
AUTO RELATED (0.8%)
100,000 Harley Davidson, Inc.................................................................... 2,762,500
---------------
BANKING (1.1%)
30,000 Commercial Federal Corp.*............................................................... 742,500
80,000 First Bank System, Inc.................................................................. 2,920,000
---------------
3,662,500
---------------
BANKS - REGIONAL (3.9%)
80,000 Bank South Corp......................................................................... 1,480,000
35,000 Charter One Financial, Inc.............................................................. 708,750
60,000 Coral Gables Fedcorp., Inc.*............................................................ 1,132,500
20,000 Cullen/Frost Bankers, Inc............................................................... 750,000
60,000 First Security Corp./Delaware........................................................... 1,710,000
20,000 Leader Financial Corp.*................................................................. 520,000
20,000 Liberty Bankcorp, Inc./Oklahoma......................................................... 660,000
30,000 Provident Bancorp, Inc.................................................................. 1,035,000
50,000 Provident Bankshares Corporation........................................................ 1,200,000
50,000 Regions Financial Corp.................................................................. 1,743,750
20,000 US Bancorp Oregon....................................................................... 510,000
20,000 Victoria Bankshares, Inc................................................................ 530,000
50,000 West One Bancorp........................................................................ 1,393,750
---------------
13,373,750
---------------
BANKS - THRIFT INSTITUTIONS (0.2%)
15,000 Columbia First Bank*.................................................................... 592,500
---------------
BIOTECHNOLOGY (2.2%)
80,000 Cellpro, Inc.*.......................................................................... 1,600,000
120,000 Centocor, Inc.*......................................................................... 2,205,000
80,000 Procyte Corp.*.......................................................................... 710,000
110,000 Protein Design Labs, Inc.*.............................................................. 2,117,500
120,000 U.S. Bioscience, Inc.*.................................................................. 930,000
---------------
7,562,500
---------------
BROADCAST MEDIA (0.3%)
45,000 United Video Satellite Group (Class A)*................................................. 877,500
---------------
</TABLE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- BUILDING MATERIALS (0.1%) ---------------
<C> <S> <C>
20,000 NCI Building System*.................................................................... $ 380,000
---------------
BUSINESS EQUIPMENT (1.6%)
20,000 Corporate Express*...................................................................... 415,000
50,000 Investment Technology Group*............................................................ 662,500
40,000 IPC Information*........................................................................ 600,000
30,000 Metrologic Instrument*.................................................................. 330,000
30,000 Scitex, Ltd............................................................................. 671,250
90,000 Symbol Technologies, Inc.*.............................................................. 2,745,000
---------------
5,423,750
---------------
BUSINESS SYSTEMS (0.3%)
45,000 American Management Systems, Inc.*...................................................... 1,057,500
---------------
CHEMICALS (0.8%)
60,000 Borden Chemicals and Plastics, L.P...................................................... 1,485,000
70,000 Methanex Corp.*......................................................................... 1,242,500
---------------
2,727,500
---------------
COMMERCIAL SERVICES (1.8%)
25,000 Affiliated Computer*.................................................................... 487,500
50,000 Career Horizons, Inc.*.................................................................. 812,500
20,000 Danka Business Systems (ADR)............................................................ 367,500
25,800 Insurance Auto Auctions, Inc.*.......................................................... 864,300
100,000 Manpower, Inc........................................................................... 2,737,500
40,000 Norrell Corp............................................................................ 690,000
---------------
5,959,300
---------------
COMMUNICATIONS - SOFTWARE (1.6%)
70,000 FTP Software, Inc.*..................................................................... 1,662,500
20,000 Fulcrum Technologies, Inc.*............................................................. 235,000
60,000 Glenayre Technologies, Inc.*............................................................ 3,435,000
---------------
5,332,500
---------------
COMMUNICATIONS - EQUIPMENT/MANUFACTURERS (10.0%)
170,000 3COM Corp.*............................................................................. 6,353,750
100,000 Andrew Corp.*........................................................................... 4,975,000
70,000 Antec Corp.*............................................................................ 1,785,000
60,000 Boston Technology*...................................................................... 780,000
20,000 C Cor Electronics*...................................................................... 785,000
37,500 Cabletron System, Inc.*................................................................. 1,785,937
80,000 Cisco Systems, Inc.*.................................................................... 2,190,000
130,000 DSC Communications Corp.*............................................................... 3,705,000
100,000 General Datacomm Industries, Inc.*...................................................... 2,825,000
70,000 General Instrument Corp.*............................................................... 1,995,000
40,000 Telco Systems, Inc.*.................................................................... 520,000
150,000 Tellabs, Inc.*.......................................................................... 6,375,000
---------------
34,074,687
---------------
COMPUTER SOFTWARE (6.5%)
40,000 Adobe Systems........................................................................... 1,300,000
80,000 Alias Research, Inc.*................................................................... 1,560,000
54,000 Compuware*.............................................................................. 2,538,000
</TABLE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------
<C> <S> <C>
140,000 Corel Corp.*............................................................................ $ 2,905,000
40,000 Informix Software, Inc.*................................................................ 1,105,000
50,000 Intuit, Inc.*........................................................................... 2,187,500
135,000 Oracle Systems Corp.*................................................................... 5,805,000
60,000 Peoplesoft, Inc.*....................................................................... 2,895,000
80,000 Vmark Software, Inc.*................................................................... 1,680,000
---------------
21,975,500
---------------
COMPUTER-AIDED DESIGN (1.3%)
40,000 Integrated Silicon Systems*............................................................. 1,150,000
20,000 Parametric Technology*.................................................................. 655,000
60,000 Synopsys, Inc.*......................................................................... 2,715,000
---------------
4,520,000
---------------
COMPUTERS - DISTRIBUTION (1.3%)
15,000 Intelligent Electronics, Inc............................................................ 253,125
20,000 Merisel, Inc.*.......................................................................... 197,500
110,000 Micro Warehouse, Inc.*.................................................................. 3,410,000
15,000 Tech Data Corp.*........................................................................ 281,250
40,000 Ultimate Electronics, Inc.*............................................................. 400,000
---------------
4,541,875
---------------
COMPUTERS - PERIPHERAL EQUIPMENT (2.3%)
110,000 EMC Corporation*........................................................................ 2,213,750
40,000 Exabyte Corp.*.......................................................................... 815,000
30,000 Mylex Corp.*............................................................................ 285,000
45,000 Network General Corp.*.................................................................. 871,875
100,000 Read-Rite Corp.*........................................................................ 1,875,000
80,000 Seagate Technology Corp.*............................................................... 1,920,000
---------------
7,980,625
---------------
CRUDE PRODUCTS (0.9%)
140,000 Pogo Producing Co....................................................................... 2,940,000
---------------
ELECTRICAL HOUSEHOLD APPLIANCES (1.9%)
30,000 Duracraft Corp.*........................................................................ 1,012,500
60,000 First Alert, Inc.*...................................................................... 2,280,000
50,000 Harman International Industries, Inc.................................................... 1,743,750
95,000 Recoton Corp.*.......................................................................... 1,520,000
---------------
6,556,250
---------------
ELECTRONICS (0.9%)
45,000 Hutchinson Technology, Inc.*............................................................ 1,215,000
30,000 Molex, Inc.............................................................................. 1,275,000
40,000 Trimble Navigation Ltd.*................................................................ 570,000
---------------
3,060,000
---------------
ENTERTAINMENT (0.7%)
40,000 Acclaim Entertainment, Inc.*............................................................ 680,000
100,000 Casino America, Inc.*................................................................... 1,125,000
40,000 Electronic Arts, Inc.*.................................................................. 730,000
---------------
2,535,000
---------------
</TABLE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ENVIRONMENTAL (2.1%) ---------------
<C> <S> <C>
20,000 Donaldson Co., Inc...................................................................... $ 445,000
40,000 Newpark Resources, Inc.*................................................................ 760,000
60,000 United Waste Systems, Inc.*............................................................. 1,455,000
90,000 Wellman, Inc............................................................................ 3,071,250
70,000 Western Waste Industries*............................................................... 1,242,500
---------------
6,973,750
---------------
FOOD PROCESSING (0.3%)
40,000 Hudson Foods, Inc. (Class A)............................................................ 910,000
---------------
HEALTH CARE DIVERSIFIED (0.8%)
100,000 United American Healthcare Corp.*....................................................... 2,850,000
---------------
HEALTHCARE PRODUCTS & SERVICES (2.6%)
31,000 Cardinal Health, Inc.................................................................... 1,298,125
60,000 Cerner Corp.*........................................................................... 2,430,000
100,000 Diagnostek, Inc.*....................................................................... 1,850,000
100,000 HBO & Co................................................................................ 3,400,000
---------------
8,978,125
---------------
HOSPITAL MANAGEMENT & HEALTH MAINTENANCE ORGANIZATIONS (7.8%)
100,000 Beverly Enterprises*.................................................................... 1,537,500
50,000 Columbia HCA Healthcare Corp............................................................ 2,175,000
35,000 Coventry Corp.*......................................................................... 805,000
120,000 Healthsouth Rehabilitation*............................................................. 4,710,000
100,000 Humana, Inc.*........................................................................... 2,362,500
25,000 Ornda Healthcorp*....................................................................... 396,875
40,000 Oxford Health Plans, Inc.*.............................................................. 3,040,000
100,000 Quantum Health Resources, Inc.*......................................................... 4,200,000
100,000 Regency Health Services, Inc.*.......................................................... 1,112,500
115,000 Sun Healthcare Group, Inc.*............................................................. 2,515,625
35,000 United Healthcare Corp.*................................................................ 1,855,000
40,000 Vencor, Inc.*........................................................................... 1,820,000
---------------
26,530,000
---------------
HOTELS / MOTELS (3.5%)
35,000 Doubletree, Corp.*...................................................................... 638,750
130,000 Hospitality Franchise Systems, Inc.*.................................................... 4,078,750
100,000 La Quinta Inns, Inc..................................................................... 3,587,500
110,000 Promus Cos., Inc.*...................................................................... 3,698,750
---------------
12,003,750
---------------
INSURANCE (2.6%)
100,000 AFLAC, Inc.............................................................................. 3,412,500
50,000 Frontier Insurance Group, Inc........................................................... 1,531,250
50,000 John Alden Financial Corp............................................................... 1,831,250
50,000 Partnerre Holdings, Ltd................................................................. 1,075,000
30,000 Pxre Corp............................................................................... 847,500
---------------
8,697,500
---------------
LEISURE TIME / EQUIPMENT (2.7%)
90,000 Arctco, Inc............................................................................. 1,665,000
30,000 Callaway Golf Co........................................................................ 1,031,250
</TABLE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------
<C> <S> <C>
50,000 Cobra Golf, Inc.*....................................................................... $ 2,762,500
80,000 Hollywood Entertainment Corp.*.......................................................... 2,200,000
80,000 International Game Technology........................................................... 1,650,000
---------------
9,308,750
---------------
MACHINERY - CONSTRUCTION & MATERIALS (0.5%)
70,000 Kennametal, Inc......................................................................... 1,828,750
---------------
MEDICAL EQUIPMENT (2.9%)
120,000 Pyxis Corporation*...................................................................... 2,940,000
80,000 SciMed Life Systems, Inc.*.............................................................. 3,460,000
40,000 Sofamor Danek Group, Inc.*.............................................................. 775,000
50,000 Summit Technology, Inc.*................................................................ 1,687,500
50,000 Ventritex, Inc.*........................................................................ 975,000
---------------
9,837,500
---------------
MEDICAL SERVICES (0.3%)
50,000 Apogee, Inc.*........................................................................... 862,500
---------------
METALS & MINING (0.4%)
50,000 Freeport-McMoran Copper & Gold, Inc..................................................... 1,250,000
---------------
NATURAL GAS (1.0%)
60,000 Noble Affiliates, Inc................................................................... 1,605,000
70,000 Parker & Parsley Petroleum Co........................................................... 1,741,250
---------------
3,346,250
---------------
OIL & GAS PRODUCTS (1.0%)
50,000 Barrett Resources Corp.*................................................................ 931,250
50,000 Chesapeake Energy Corp.*................................................................ 1,037,500
90,000 Energy Service Company, Inc.*........................................................... 1,338,750
---------------
3,307,500
---------------
OIL WELL EQUIPMENT & SERVICE (3.1%)
100,000 Baker Hughes, Inc....................................................................... 1,862,500
140,000 Input/Output, Inc.*..................................................................... 3,290,000
70,000 Petroleum Geo - Services (ADR)*......................................................... 1,365,000
100,000 Seitel, Inc.*........................................................................... 2,712,500
90,000 Smith International, Inc.*.............................................................. 1,395,000
---------------
10,625,000
---------------
PAPER & FOREST PRODUCTS (0.7%)
20,000 Consolidated Paper...................................................................... 1,030,000
50,000 Shorewood Packaging Corp.*.............................................................. 1,075,000
20,000 Stone Container Corp.*.................................................................. 390,000
---------------
2,495,000
---------------
PHARMACEUTICALS (0.8%)
70,000 Dura Pharmaceuticals, Inc.*............................................................. 770,000
100,000 Ivax Corp............................................................................... 1,962,500
---------------
2,732,500
---------------
RETAIL - GENERAL MERCHANDISE (0.2%)
20,000 Dollar General.......................................................................... 515,000
---------------
</TABLE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- RETAIL - SPECIALTY (3.4%) ---------------
<C> <S> <C>
12,500 Baby Superstore*........................................................................ $ 403,125
30,000 Bed Bath & Beyond, Inc.*................................................................ 765,000
31,300 Claires Stores, Inc..................................................................... 344,300
40,000 Ernst Home Center*...................................................................... 660,000
70,000 Fossil, Inc.*........................................................................... 1,697,500
60,000 Hechinger Co. (Class A)................................................................. 862,500
40,000 Lowe's Co., Inc......................................................................... 1,545,000
50,000 Welcome Home, Inc.*..................................................................... 587,500
135,000 Williams-Sonoma, Inc.*.................................................................. 4,590,000
---------------
11,454,925
---------------
SEMICONDUCTOR EQUIPMENT (7.8%)
75,000 Applied Materials, Inc.*................................................................ 3,468,750
40,000 Asyst Technologies, Inc.*............................................................... 620,000
70,000 Credence Systems Corp.*................................................................. 1,767,500
80,000 Electroglas, Inc.*...................................................................... 3,940,000
80,000 F S I International, Inc.*.............................................................. 1,840,000
100,000 KLA Instruments Corp.*.................................................................. 4,950,000
110,000 Kulicke & Soffa Industries*............................................................. 1,787,500
120,000 LSI Logic Corp.*........................................................................ 4,485,000
100,000 Ultratech Stepper, Inc.*................................................................ 3,600,000
---------------
26,458,750
---------------
SEMICONDUCTORS (4.3%)
40,000 Altera Corp.*........................................................................... 1,175,000
100,000 Analog Devices*......................................................................... 3,300,000
60,000 Atmel Corp*............................................................................. 1,882,500
80,000 DSP Group, Inc.*........................................................................ 1,720,000
55,000 Integrated Device Technology, Inc.*..................................................... 1,148,125
50,000 Microchip Technology, Inc.*............................................................. 1,950,000
100,000 Micron Technology, Inc.................................................................. 3,450,000
---------------
14,625,625
---------------
TELECOMMUNICATIONS (1.1%)
70,000 Airtouch Communications, Inc.*.......................................................... 2,003,750
30,000 Mobile Telecommunication Tech Corp.*.................................................... 607,500
40,000 Paging Network*......................................................................... 1,150,000
---------------
3,761,250
---------------
TEXTILES (1.4%)
40,000 Donnkenny, Inc.*........................................................................ 835,000
30,000 Farah, Inc.*............................................................................ 341,250
40,000 Nautica Enterprise, Inc.*............................................................... 1,220,000
50,000 Norton McNaughton, Inc.*................................................................ 1,000,000
60,000 Wolverine World Wide.................................................................... 1,530,000
---------------
4,926,250
---------------
TRANSPORTATION (2.9%)
25,000 Dorsey Trailers, Inc.*.................................................................. 403,125
20,000 Greenbrier Cos., Inc.*.................................................................. 367,500
70,000 Landstar System, Inc.*.................................................................. 2,362,500
60,000 Pittston Services Group................................................................. 1,710,000
</TABLE>
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------
<C> <S> <C>
35,000 Railtex, Inc.*.......................................................................... $ 735,000
25,000 Swift Transportation Co., Inc.*......................................................... 1,068,750
75,000 Wabash National Corp.................................................................... 2,756,250
50,000 WorldCorp, Inc.*........................................................................ 337,500
---------------
9,740,625
---------------
TOTAL COMMON STOCKS (IDENTIFIED COST $286,546,866)...................................... 329,293,975
---------------
CONVERTIBLE PREFERRED STOCK (0.0%)
OIL & GAS PRODUCTS (0.0%)
4,000 Snyder Oil Corp. (Identified Cost $100,000)............................................. 97,000
---------------
WARRANTS* (0.0%)
ELECTRONIC COMPONENTS (0.0%)
20,000 Applied Science & Technology (expiration date 11/9/98).................................. 10,000
---------------
FINANCIAL SERVICES (0.0%)
25,000 Casino & Credit Services, Inc. (expiration date 8/10/98)................................ 34,375
---------------
TOTAL WARRANTS (IDENTIFIED COST $7,000)................................................. 44,375
---------------
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS)
- -----------
<C> <S> <C>
SHORT-TERM INVESTMENTS (3.5%)
U.S. GOVERNMENT AGENCY (A)(2.5%)
$ 8,590 Student Loan Market Association 4.9% due 10/3/94 (Amortized Cost $8,587,662)............ 8,587,662
-------------
REPURCHASE AGREEMENT (1.0%)
3,218 The Bank of New York 5.0% due 10/3/94 (dated 9/30/94; proceeds $3,219,973;
collateralized by $3,366,805 U.S. Treasury Bond 7.50% due 11/15/16 valued at
$3,283,005) (Identified Cost $3,218,632).............................................. 3,218,632
-------------
TOTAL SHORT-TERM INVESTMENTS (IDENTIFIED COST $11,806,294).............................. 11,806,294
-------------
TOTAL INVESTMENTS (IDENTIFIED COST $298,460,160)(B)................... 100.3% 341,241,644
LIABILITIES IN EXCESS OF OTHER ASSETS................................. (0.3) (1,072,660)
---------- -------------
NET ASSETS............................................................ 100.0% $ 340,168,984
---------- -------------
---------- -------------
<FN>
- ----------------
ADR AMERICAN DEPOSITORY RECEIPT.
* NON-INCOME PRODUCING SECURITY.
(A) U.S. GOVERNMENT AGENCY WAS PURCHASED ON A DISCOUNT BASIS. THE INTEREST
RATE SHOWN HAS BEEN ADJUSTED TO REFLECT A BOND EQUIVALENT YIELD.
(B) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $298,828,098; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $52,953,832 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $10,540,286, RESULTING IN NET UNREALIZED
APPRECIATION OF $42,413,546.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $298,460,160) (Note
1)...................................... $ 341,241,644
Receivable for:
Investments sold........................ 7,982,800
Shares of beneficial interest sold...... 1,311,969
Dividends............................... 94,530
Interest................................ 447
Prepaid expenses.......................... 47,401
-------------
TOTAL ASSETS...................... 350,678,791
-------------
LIABILITIES:
Payable for:
Investments purchased................... 9,700,764
Plan of distribution fee (Note 3)....... 272,828
Shares of beneficial interest
repurchased............................. 233,129
Investment management fee (Note 2)...... 136,414
Accrued expenses (Note 4)................. 166,672
-------------
TOTAL LIABILITIES................. 10,509,807
-------------
NET ASSETS:
Paid-in-capital........................... 294,784,855
Net unrealized appreciation on
investments............................. 42,781,484
Accumulated undistributed net investment
income.................................. 30,200
Accumulated undistributed net realized
gain on investments..................... 2,572,445
-------------
NET ASSETS........................ $ 340,168,984
-------------
-------------
NET ASSET VALUE PER SHARE, 19,378,001
shares outstanding (unlimited shares
authorized of $.01 par value)...........
$17.55
-------------
-------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME
Dividends (net of $9,412 foreign
withholding tax).................... $ 905,624
Interest.............................. 486,977
-------------
TOTAL INCOME...................... 1,392,601
-------------
EXPENSES
Plan of distribution fee (Note 3)..... 3,031,093
Investment management fee (Note 2).... 1,515,547
Transfer agent fees and expenses (Note
4).................................. 555,179
Registration fees..................... 112,520
Custodian fees........................ 46,290
Shareholder reports and notices....... 44,732
Professional fees..................... 42,989
Trustees' fees and expenses (Note
4).................................. 31,479
Other................................. 6,305
-------------
TOTAL EXPENSES.................... 5,386,134
-------------
NET INVESTMENT LOSS............. (3,993,533)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 1):
Net realized gain on investments...... 3,682,165
Net change in unrealized appreciation
on investments...................... (27,082,586)
-------------
NET LOSS ON INVESTMENTS........... (23,400,421)
-------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS..... $ (27,393,954)
-------------
-------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1994 SEPTEMBER 30, 1993
------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss................................................. $ (3,993,533) $ (2,434,277)
Net realized gain on investments.................................... 3,682,165 28,771,728
Net change in unrealized appreciation on investments................ (27,082,586) 58,521,596
------------------- -------------------
Net increase (decrease) in net assets resulting from
operations..................................................... (27,393,954) 84,859,047
------------------- -------------------
Distributions to shareholders from net realized gain.................. (16,359,904) -0-
------------------- -------------------
Net increase from transactions in shares of beneficial interest (Note
5)................................................................... 143,534,029 42,548,116
------------------- -------------------
Total increase.................................................. 99,780,171 127,407,163
NET ASSETS:
Beginning of period................................................... 240,388,813 112,981,650
------------------- -------------------
END OF PERIOD (including accumulated undistributed net investment
income
of $30,200 and -0-, respectively)................................... $ 340,168,984 $ 240,388,813
------------------- -------------------
------------------- -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- Dean Witter Developing Growth
Securities Trust (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 organized as a Massachusetts business trust on December
28, 1982 and commenced operations on April 29, 1983.
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,
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) short-term debt securities having a maturity
date of more than sixty days are valued on a mark-to-market basis, that is,
at prices based on market quotations for securities of a similar type,
yield, quality and maturity, 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; and (5) all other
securities and other assets are valued at their fair value as determined in
good faith under procedures established by and under the supervision of the
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. 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.
D. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends
and distributions to its shareholders on the 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
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 as of the close of each business day: 0.50% of the portion of the
daily net assets not exceeding $500 million and 0.475% of the portion of the
daily net assets exceeding $500 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
Fund's inception (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 inception 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. 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 the account executives of Dean Witter Reynolds Inc., 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
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 that for the year ended September 30,
1994, it received approximately $450,000 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 the proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended September 30, 1994 aggregated
$582,402,460 and $467,215,835, respectively. For the year ended September 30,
1994, the
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Fund incurred brokerage commissions of $118,670 with Dean Witter Reynolds Inc.
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 September 30, 1994, the Fund had
transfer agent fees and expenses payable of approximately $54,000.
Effective January 1, 1994, the Fund adopted an unfunded noncontributory
defined benefit pension plan covering all independent Trustees of the Fund who
will have served as an independent Trustee 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 September 30, 1994, included in Trustees' fees and expenses in
the Statement of Operations, amounted to $8,804. At September 30, 1994, the Fund
had an accrued pension liability of $8,124 which is included in accrued expenses
in the Statement of Assets and Liabilities.
5. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1994 SEPTEMBER 30, 1993
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- --------------
<S> <C> <C> <C> <C>
Sold....................................... 18,140,578 $ 331,909,789 10,539,927 $ 172,956,853
Reinvestment of distributions.............. 876,511 15,566,841 -0- -0-
------------ -------------- ----------- --------------
19,017,089 347,476,630 10,539,927 172,956,853
Repurchased................................ (11,367,004) (203,942,601) (8,070,367) (130,408,737)
------------ -------------- ----------- --------------
Net increase............................... 7,650,085 $ 143,534,029 2,469,560 $ 42,548,116
------------ -------------- ----------- --------------
------------ -------------- ----------- --------------
</TABLE>
6. FEDERAL INCOME TAX STATUS -- At September 30, 1994, the Fund had temporary
book/tax differences which were primarily attributable to capital loss deferrals
on wash sales and permanent book/tax differences primarily attributable to net
operating losses and dividend redesignations. To reflect cumulative
reclassifications arising from permanent book/tax differences as of September
30, 1993, accumulated undistributed net realized gain on investments was charged
$37,339, paid-in-capital was charged $6,143,207 and accumulated undistributed
net investment income was credited $6,180,546. To reflect reclassifications
arising from permanent book/tax differences for the year ended September 30,
1994, paid-in-capital was charged and accumulated undistributed net investment
income was credited $4,023,729.
1994 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended September 30, 1994, the Fund paid to shareholders
$1.133603 per share from long-term capital gains.
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of Dean Witter Developing Growth Securities
Trust
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 Developing Growth
Securities Trust (the "Fund") at September 30, 1994, 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 September 30, 1994 by correspondence with
the custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
New York, New York
November 10, 1994
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <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 $ 10.96 $ 8.57
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net investment income
(loss).................. 0.00 (0.12) (0.12) (0.07) (0.15) 0.04 (0.03) (0.02)
Net realized and
unrealized gain (loss)
on investments.......... (1.82) 8.42 (1.73) 5.20 (2.21) 1.62 (1.26) 2.42
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations.............. (1.82) 8.30 (1.85) 5.13 (2.36) 1.66 (1.29) 2.40
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Less dividends and
distributions from:
Net investment income.. 0.00 0.00 0.00 0.00 (0.05) 0.00 0.00 (0.01)
Net realized gains on
investments........... (1.13) 0.00 0.00 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 0.00 (0.01)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of
period.................. $ 17.55 $ 20.50 $ 12.20 $ 14.05 $ 8.92 $ 11.33 $ 9.67 $ 10.96
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
TOTAL INVESTMENT RETURN
+....................... (8.88)% 67.95% (13.17)% 57.51% (20.87)% 17.17% (11.77)% 28.07%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands).......... $ 340,169 $ 240,389 $ 112,982 $ 115,337 $ 67,604 $ 89,236 $ 108,411 $ 179,276
Ratios to average net
assets:
Expenses............... 1.78% 1.84% 1.86% 1.92% 2.02% 1.89% 1.90% 1.83%
Net investment income
(loss)................ (1.32)% (1.52)% (1.14)% (0.73)% (1.32)% 0.59% (0.28)% (0.20)%
Portfolio turnover
rate.................... 160% 203% 153% 88% 53% 84% 70% 68%
- --------------------
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
<CAPTION>
1986 1985
----------- -----------
<S> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period..... $ 7.68 $ 7.95
----------- -----------
Net investment income
(loss).................. 0.01 0.05
Net realized and
unrealized gain (loss)
on investments.......... 0.92 (0.13)
----------- -----------
Total from investment
operations.............. 0.93 (0.08)
----------- -----------
Less dividends and
distributions from:
Net investment income.. (0.04) (0.19)
Net realized gains on
investments........... 0.00 0.00
----------- -----------
Total dividends and
distributions........... (0.04) (0.19)
----------- -----------
Net asset value, end of
period.................. $ 8.57 $ 7.68
----------- -----------
----------- -----------
TOTAL INVESTMENT RETURN
+....................... 12.22% (1.05)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands).......... $ 139,662 $ 153,524
Ratios to average net
assets:
Expenses............... 1.80% 1.82%
Net investment income
(loss)................ 0.08% 0.52%
Portfolio turnover
rate.................... 90% 51%
- --------------------
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic Dean Witter
Charles A. Fiumefreddo Developing
Edwin J. Garn Growth
John R. Haire Securities
Dr. John E. Jeuck
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
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 Annual Report
by an effective prospectus. September 30, 1994
<PAGE>
DEAN WITTER DEVELOPING GROWTH
<TABLE>
<CAPTION>
GROWTH OF $10,000
($ IN THOUSANDS)
DATE TOTAL S&P 500
- ----------------------------------------------------------------------
<S> <C> <C>
September 30, 1984 $10,000 $10,000
- ----------------------------------------------------------------------
September 30, 1985 $ 9,895 $11,450
- ----------------------------------------------------------------------
September 30, 1986 $11,104 $15,084
- ----------------------------------------------------------------------
September 30, 1987 $14,221 $21,634
- ----------------------------------------------------------------------
September 30, 1988 $12,547 $18,956
- ----------------------------------------------------------------------
September 30, 1989 $14,701 $25,197
- ----------------------------------------------------------------------
September 30, 1990 $11,633 $22,870
- ----------------------------------------------------------------------
September 30, 1991 $18,323 $29,988
- ----------------------------------------------------------------------
September 30, 1992 $15,910 $33,296
- ----------------------------------------------------------------------
September 30, 1993 $26,721 $37,618
- ----------------------------------------------------------------------
September 30, 1994 $24,348(3) $39,006
- ----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
-----------------------------------
<S> <C> <C>
-8.88(1) 10.62(1) 9.31(1)
-13.88(2) 10.35(2) 9.31(2)
------------------------------------
Fund S&P 500 (4)
-------- --------
Past performance is not predictive of future returns.
- ---------------------------------------
<FN>
(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 September 30, 1994.
(4) The 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.
</TABLE>
