<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST TWO WORLD TRADE CENTER, NEW
YORK, NEW YORK 10048
LETTER TO SHAREHOLDERS
DEAR SHAREHOLDER:
The six-month period ended March 31, 1995 provided mixed results for the
financial markets. As the period began, the financial markets were still feeling
the effects of an overheating economy, the prospect of renewed inflation and
possible further monetary tightening by the Federal Reserve Board. Increased
volatility in the stock market resulted in a flight to larger, more established
companies. It wasn't until near the end of 1994 that investors sat up and took
notice of small growth companies, which offered compelling values after a major
sell-off for most of 1994. During the final quarter of 1994, technology and
other growth areas were acting better, although still eclipsed by their larger
brethren. As we entered 1995, the equity markets rallied, producing strong
investment returns for the first quarter. Small cap stocks, however, remained
out of favor in January, but made a strong showing in February and March.
Against this backdrop, Dean Witter Developing Growth Securities provided a total
return of 8.05 percent for the six-month period ended March 31, 1995. As of
March 31, 1995, the Fund's net assets totaled $357 million.
In the first quarter of 1995, the Fund's exposure to broad-category of health
care was steadily increased and by the end of March accounted for 26 percent of
net assets. Within this broad category, the Fund's holdings were spread among
such sectors as Hospitals/HMOs (9 percent of assets), medical devices and
services (12 percent), biotechnology and drugs (1.5 percent) and miscellaneous
health care (3 percent). The Fund remained heavily invested in technology
stocks, with semi-conductors and equipment stocks representing 18 percent,
software representing 11 percent and telecommunications equipment companies at
15 percent. The reason for this heavy exposure to technology is the mass
proliferation of electronics world wide. Many companies today are turning to
technology, be it hardware, software or communications solutions, to lower
personnel costs, raise revenues or
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
LETTER TO SHAREHOLDERS, CONTINUED
both. Although this sector can be volatile, we believe that this trend toward
the greater use of technology will make this an attractive sector through the
end of the decade.
Among the Fund's key holdings on March 31, 1995 were 3Com Corporation
(networking equipment), Boston Scientific Corp. (medical devices), Tellabs
(telecommunication equipment), Stratacom (telecommunication equipment) and
Peoplesoft (software).
LOOKING AHEAD
Looking ahead, there are still factors that could negatively impact small stocks
over the short term. Technically, the advance-decline line continues to
deteriorate and breath of the market is poor. In addition, fears of a further
Federal Reserve Board tightening and a falling dollar could throw the overall
stock market into a correction. However, despite these short-term influences, we
believe that small cap stocks remain an attractive opportunity for investors
over the long term.
We appreciate your support of Dean Witter Developing Growth Securities and look
forward to serving your investment needs.
Very truly yours,
[SIG]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (91.9%)
AUTO PARTS (0.7%)
50,000 Allen Group, Inc.................... $ 1,237,500
30,000 Exide Corp.......................... 1,102,500
---------------
2,340,000
---------------
BANKING (0.9%)
80,000 First Bank System, Inc.............. 3,230,000
---------------
BANKS - REGIONAL (0.9%)
25,000 Charter One Financial, Inc.......... 503,125
50,000 Provident Bankshares Corp........... 1,175,000
20,000 Regions Financial Corp.............. 727,500
15,000 U.S. Bancorp........................ 390,000
15,000 Victoria Bankshares, Inc............ 378,750
---------------
3,174,375
---------------
BANKS - THRIFT INSTITUTIONS (0.2%)
15,000 Columbia First Bank, A Federal
Savings Bank*....................... 622,500
---------------
BIOTECHNOLOGY (0.5%)
30,000 Centocor, Inc.*..................... 468,750
60,000 Protein Design Labs, Inc.*.......... 1,200,000
---------------
1,668,750
---------------
BROADCAST MEDIA (0.5%)
25,000 Heftel Broadcasting Corp.*.......... 309,375
55,000 United Video Satellite Group, Inc.
(Class A)*.......................... 1,443,750
35,000 Westwood One, Inc.*................. 415,625
---------------
2,168,750
---------------
BUSINESS SYSTEMS (0.2%)
40,000 American Management Systems,
Inc.*............................... 775,000
---------------
CHEMICALS (0.3%)
40,000 Adco Technologies, Inc.*............ 275,000
25,000 Sigma-Aldrich Corp.................. 962,500
---------------
1,237,500
---------------
COMMERCIAL SERVICES (1.5%)
50,000 Career Horizons, Inc.*.............. 975,000
80,000 Danka Business Systems PLC (ADR).... 2,090,000
40,000 Manpower Inc........................ 1,285,000
40,000 Norrell Corp........................ 850,000
---------------
5,200,000
---------------
COMMUNICATIONS - EQUIPMENT & SOFTWARE (5.1%)
120,000 3Com Corp.*......................... 6,765,000
125,000 Bay Networks, Inc.*................. 4,609,375
85,000 Cisco Systems, Inc.*................ 3,230,000
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
85,000 FTP Software, Inc.*................. $ 2,677,500
80,000 Global Village Communications,
Inc.*............................... 940,000
---------------
18,221,875
---------------
COMMUNICATIONS - EQUIPMENT/MANUFACTURERS (9.4%)
30,000 ADC Telecommunications, Inc.*....... 885,000
150,000 Andrew Corp.*....................... 6,075,000
30,000 Aspect Telecommunications Corp.*.... 1,087,500
40,000 Boston Technology, Inc.*............ 620,000
40,000 C-COR Electronics, Inc.*............ 790,000
50,000 California Microwave, Inc.*......... 1,250,000
100,000 DSC Communications Corp.*........... 3,250,000
90,000 Glenayre Technologies, Inc.*........ 4,095,000
40,000 Network Equipment Technologies,
Inc.*............................... 1,010,000
80,000 Stratacom, Inc.*.................... 3,440,000
40,000 Telco Systems, Inc.*................ 440,000
130,000 Tellabs, Inc.*...................... 7,540,000
50,000 U.S. Robotics Corp.*................ 3,125,000
---------------
33,607,500
---------------
COMPUTER - AIDED DESIGN (1.9%)
60,000 Aspen Technology, Inc.*............. 1,185,000
60,000 Cadence Design Systems, Inc.*....... 1,590,000
35,000 Integrated Silicon Systems, Inc..... 997,500
14,000 National Instruments Corp.*......... 245,000
60,000 Synopsys, Inc.*..................... 2,850,000
---------------
6,867,500
---------------
COMPUTER SOFTWARE (6.0%)
8,600 C*ATS Software, Inc.*............... 124,700
30,000 Corel Corp.......................... 390,000
2,000 Datastream Systems, Inc.*........... 40,500
90,000 Informix Corp.*..................... 3,071,250
35,000 Kronos, Inc.*....................... 1,006,250
90,000 Macromedia, Inc.*................... 2,992,500
150,000 Oracle Systems Corp.*............... 4,668,750
100,000 Peoplesoft, Inc.*................... 4,350,000
50,000 Progress Software Corp.*............ 2,562,500
50,000 Project Software & Development,
Inc.*............................... 1,225,000
17,000 Security Dynamics Technologies,
Inc.*............................... 561,000
15,000 Transaction Systems Architects,
Inc.*............................... 313,125
---------------
21,305,575
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
CONSUMER SERVICES (0.7%)
125,000 Safecard Services, Inc.............. $ 2,390,625
---------------
DISTRIBUTORS - CONSUMER PRODUCTS (0.5%)
90,000 CompUSA, Inc.*...................... 1,631,250
---------------
ELECTRICAL HOUSEHOLD APPLIANCES (0.4%)
40,000 Harman International Industries,
Inc................................. 1,485,000
---------------
ELECTRONIC COMPONENTS (2.2%)
25,000 Adaptec Inc.*....................... 818,750
30,000 Adtran, Inc.*....................... 1,657,500
70,000 Dialogic Corp.*..................... 1,960,000
60,000 Electro Scientific Industries,
Inc.*............................... 1,425,000
86,000 Pairgain Technologies, Inc.*........ 2,021,000
---------------
7,882,250
---------------
ELECTRONICS (0.5%)
100,000 Trimble Navigation Ltd.*............ 1,862,500
---------------
ENTERTAINMENT & LEISURE TIME (2.5%)
60,000 Broderbund Software, Inc.*.......... 3,105,000
40,000 Electronic Arts, Inc.*.............. 900,000
120,000 Sierra On-Line, Inc.*............... 2,580,000
80,000 Softkey International, Inc.*........ 2,160,000
---------------
8,745,000
---------------
ENVIRONMENTAL CONTROL (0.8%)
100,000 United Waste Systems, Inc.*......... 2,800,000
---------------
FINANCIAL SERVICES (1.4%)
100,000 Green Tree Financial Corp........... 4,100,000
60,000 Mercury Finance Co.................. 967,500
---------------
5,067,500
---------------
HEALTHCARE PRODUCTS & SERVICES (5.0%)
80,000 Cerner Corp.*....................... 3,820,000
50,000 GMIS, Inc.*......................... 1,262,500
70,000 HBO & Co............................ 3,027,500
50,000 Medaphis Corp.*..................... 3,125,000
70,000 Medic Computer Systems, Inc.*....... 3,010,000
110,000 Shared Medical Systems Corp......... 4,015,000
---------------
18,260,000
---------------
HOSPITAL MANAGEMENT & HEALTH MAINTENANCE
ORGANIZATIONS (10.4%)
60,000 Apogee, Inc.*....................... 1,110,000
140,000 Coram Healthcare Corp.*............. 3,552,500
60,000 Coventry Corp.*..................... 1,732,500
62,500 Health Management, Inc.*............ 1,164,063
100,000 Healthsouth Rehabilitation Corp.*... 4,062,500
80,000 Homedco Group, Inc.*................ 4,340,000
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
100,000 Humana, Inc.*....................... $ 2,562,500
60,000 Lincare Holdings, Inc.*............. 1,755,000
120,000 Oxford Health Plans, Inc.*.......... 6,690,000
60,000 PhyCor, Inc.*....................... 2,040,000
100,000 Regency Health Services, Inc.*...... 1,325,000
115,000 Sun Healthcare Group, Inc.*......... 2,932,500
75,000 Theratx, Inc.*...................... 1,228,125
73,000 Vencor, Inc.*....................... 2,600,625
---------------
37,095,313
---------------
HOTELS/MOTELS (2.2%)
80,000 Hospitality Franchise Systems,
Inc.*............................... 2,560,000
150,000 La Quinta Inns, Inc................. 4,068,750
102,400 Prime Hospitality Corp.*............ 1,075,200
---------------
7,703,950
---------------
INSURANCE (0.2%)
30,000 American Travellers Corp.*.......... 585,000
---------------
MANUFACTURING - CONSUMER & INDUSTRIAL PRODUCTS (0.5%)
45,000 Metrologic Instruments, Inc.*....... 731,250
22,000 Simula, Inc.*....................... 451,000
30,000 Ultralife Batteries, Inc.*.......... 517,500
---------------
1,699,750
---------------
MEDICAL EQUIPMENT (4.0%)
300,000 Boston Scientific Corp.*............ 7,387,500
100,000 Puritan-Bennett Corp................ 2,325,000
100,000 Respironics, Inc.*.................. 1,400,000
170,000 Staar Surgical Co.*................. 1,593,750
50,000 Summit Technology, Inc.*............ 1,600,000
---------------
14,306,250
---------------
MEDICAL PRODUCTS & SUPPLIES (2.4%)
80,000 Cardinal Health, Inc................ 3,810,000
80,000 Omnicare, Inc....................... 4,200,000
30,000 Research Industries Corp.*.......... 525,000
---------------
8,535,000
---------------
NATURAL GAS (0.3%)
35,000 Noble Affiliates, Inc............... 958,125
---------------
OFFICE EQUIPMENT & SUPPLIES (1.0%)
60,000 Corporate Express, Inc.*............ 1,575,000
70,000 Viking Office Products, Inc.*....... 2,135,000
---------------
3,710,000
---------------
OIL & GAS PRODUCTS (0.7%)
60,000 Barrett Resources Corp.*............ 1,297,500
60,000 Chesapeake Energy Corp.*............ 1,275,000
---------------
2,572,500
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
OIL WELL EQUIPMENT & SERVICE (2.3%)
100,000 Input/Output, Inc.*................. $ 2,637,500
40,000 Petroleum Geo Services A/S (ADR)*... 885,000
100,000 Seitel Inc.*........................ 3,250,000
90,000 Smith International, Inc.*.......... 1,282,500
---------------
8,055,000
---------------
PAPER PRODUCTS (1.2%)
60,000 Alco Standard Corp.................. 4,350,000
---------------
PHARMACEUTICALS (1.2%)
100,000 Dura-Pharmaceuticals, Inc.*......... 1,450,000
50,000 Ivax Corp........................... 1,250,000
50,000 Roberts Pharmaceutical Corp.*....... 1,362,500
30,000 Royce Laboratories, Inc.*........... 251,250
---------------
4,313,750
---------------
RETAIL - DRUG STORES (0.2%)
30,000 Rite Aid Corp....................... 735,000
---------------
RETAIL - SPECIALTY (2.1%)
18,750 Baby Superstore, Inc.*.............. 726,563
30,000 Consolidated Stores Corp.*.......... 596,250
125,000 Dollar General Corp................. 3,281,250
80,000 Hollywood Entertainment Corp.*...... 2,780,000
---------------
7,384,063
---------------
SEMICONDUCTOR EQUIPMENT (7.5%)
55,000 Applied Materials, Inc.*............ 3,025,000
50,000 Electroglas, Inc.*.................. 2,162,500
95,000 FSI International, Inc.*............ 3,823,750
45,000 Fusion Systems Corp.*............... 1,316,250
100,000 KLA Instruments Corp.*.............. 6,275,000
110,000 Kulicke & Soffa Industries, Inc.*... 3,011,250
35,000 Mylex Corp.*........................ 358,750
30,000 Semitool, Inc.*..................... 630,000
20,000 Tencor Instruments*................. 1,180,000
100,000 Ultratech Stepper, Inc.*............ 4,850,000
---------------
26,632,500
---------------
SEMICONDUCTORS (10.0%)
75,000 Altera Corp.*....................... 4,171,875
150,000 Analog Devices, Inc.*............... 3,825,000
90,000 Atmel Corp*......................... 3,476,250
100,000 Cypress Semiconductor Corp.*........ 2,787,500
21,000 Information Storage Devices,
Inc.*............................... 435,750
60,000 Integrated Device Technology,
Inc................................. 2,220,000
100,000 LSI Logic Corp.*.................... 5,250,000
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
45,000 Maxim Integrated Products Inc.*..... $ 1,631,250
70,000 Microchip Technology, Inc.*......... 1,960,000
90,000 Micron Technology, Inc.............. 6,840,000
31,500 Vishay Intertechnology, Inc......... 1,767,938
85,000 VLSI Technology, Inc.*.............. 1,519,375
---------------
35,884,938
---------------
TELECOMMUNICATIONS (0.8%)
60,000 Paging Network, Inc.*............... 1,980,000
55,000 U.S. Long Distance Corp.*........... 776,875
---------------
2,756,875
---------------
TEXTILES (0.8%)
40,000 Nautica Enterprises, Inc.*.......... 1,250,000
50,000 Wolverine World Wide, Inc........... 1,531,250
---------------
2,781,250
---------------
TRANSPORTATION (2.0%)
55,000 Fritz Companies, Inc.*.............. 3,506,250
50,000 Landstar Systems, Inc.*............. 1,550,000
60,000 Swift Transportation Co., Inc.*..... 930,000
130,000 Worldcorp, Inc.*.................... 1,251,250
---------------
7,237,500
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $256,544,900)...... 327,840,214
---------------
CONVERTIBLE PREFERRED STOCK (0.0%)
OIL & GAS PRODUCTS (0.0%)
4,000 Snyder Oil Corp. (Identified Cost
$100,000)........................... 86,000
---------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
WARRANTS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
WARRANTS (0.0%)
ELECTRONIC COMPONENTS (0.0%)
20,000 Applied Science & Technology, Inc.*
(Expiration Date 11/09/98).......... 10,000
---------------
FINANCIAL SERVICES (0.0%)
25,000 Casino & Credit Services, Inc.*
(Expiration Date 08/10/98).......... 35,936
---------------
TOTAL WARRANTS
(IDENTIFIED COST $7,000)............ 45,936
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (7.5%)
COMMERCIAL PAPER (a) (7.0%)
AUTOMOTIVE FINANCE (2.8%)
$ 10,000 Ford Motor Credit Co. 5.95% due
04/05/95 (Amortized Cost
$9,993,412)......................... $ 9,993,412
---------------
FINANCE - DIVERSIFIED (4.2%)
15,000 General Electric Capital Corp. 5.94%
due 04/11/95 (Amortized Cost
$14,975,291)........................ 14,975,291
---------------
REPURCHASE AGREEMENT (0.5%)
1,692 The Bank of New York 5.875% due
04/03/95 (dated 03/31/95; proceeds
$1,692,875, collateralized by
$1,749,037 U.S. Treasury Bill 5.88%
due 09/07/95 valued at $1,704,737)
(Identified Cost $1,692,047)........ 1,692,047
---------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $26,660,750)....... 26,660,750
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$283,312,650) (b)........... 99.4% 354,632,900
OTHER ASSETS IN EXCESS OF
LIABILITIES................. 0.6 2,028,455
----- ------------
NET ASSETS.................. 100.0% $356,661,355
----- ------------
----- ------------
<FN>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Securities were purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $283,680,588; the
aggregate gross unrealized appreciation is $74,705,962 and the aggregate
gross unrealized depreciation is $3,753,650, resulting in net unrealized
appreciation of $70,952,312.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $283,312,650)............................ $354,632,900
Receivable for:
Shares of beneficial interest sold...................... 5,489,248
Investments sold........................................ 4,860,127
Dividends............................................... 43,400
Interest................................................ 276
Prepaid expenses............................................ 80,818
------------
TOTAL ASSETS........................................... 365,106,769
------------
LIABILITIES:
Payable for:
Investments purchased................................... 7,338,617
Shares of beneficial interest repurchased............... 551,957
Plan of distribution fee................................ 299,518
Investment management fee............................... 149,759
Accrued expenses............................................ 105,563
------------
TOTAL LIABILITIES...................................... 8,445,414
------------
NET ASSETS:
Paid-in-capital............................................. 287,468,807
Net unrealized appreciation................................. 71,320,250
Accumulated net investment loss............................. (1,835,207)
Accumulated net realized loss............................... (292,495)
------------
NET ASSETS............................................. $356,661,355
------------
------------
NET ASSET VALUE PER SHARE,
18,979,445 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$18.79
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $978 foreign withholding tax)............. $ 669,101
Interest.................................................... 439,193
-----------
TOTAL INCOME........................................... 1,108,294
-----------
EXPENSES
Plan of distribution fee.................................... 1,669,631
Investment management fee................................... 834,816
Transfer agent fees and expenses............................ 304,028
Shareholder reports and notices............................. 45,865
Registration fees........................................... 37,165
Professional fees........................................... 34,008
Custodian fees.............................................. 29,332
Trustees' fees and expenses................................. 16,056
Other....................................................... 2,800
-----------
TOTAL EXPENSES......................................... 2,973,701
-----------
NET INVESTMENT LOSS.................................... (1,865,407)
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 114,441
Net change in unrealized appreciation....................... 28,538,766
-----------
NET GAIN............................................... 28,653,207
-----------
NET INCREASE................................................ $26,787,800
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED
MARCH 31, 1995 FOR THE YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss......................................... $ (1,865,407) $ (3,993,533)
Net realized gain........................................... 114,441 3,682,165
Net change in unrealized appreciation....................... 28,538,766 (27,082,586)
------------------ ------------------
NET INCREASE (DECREASE)................................ 26,787,800 (27,393,954)
------------------ ------------------
Distributions to shareholders from net realized gain........ (2,979,381) (16,359,904)
Net increase (decrease) from transactions in shares of
beneficial interest....................................... (7,316,048) 143,534,029
------------------ ------------------
TOTAL INCREASE......................................... 16,492,371 99,780,171
NET ASSETS:
Beginning of period......................................... 340,168,984 240,388,813
------------------ ------------------
END OF PERIOD
(INCLUDING NET INVESTMENT LOSS OF $1,835,207 AND
UNDISTRIBUTED NET INVESTMENT INCOME OF $30,200,
RESPECTIVELY)........................................... $356,661,355 $340,168,984
------------------ ------------------
------------------ ------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995 (UNAUDITED)
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, including circumstances under
which it is determined by the Investment Manager that sale or bid prices are not
reflective of a security's market value, portfolio securities are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision of the 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); and (4) short-term debt
securities having a maturity date of more than sixty days at time of purchase
are valued on a mark-to-market basis until sixty days prior to maturity and
thereafter at amortized cost based on their value on the 61st day. Short-term
debt securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily and includes the amortization of certain short-term securities.
C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the record date. The amount of dividends
and distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995 (UNAUDITED) CONTINUED
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
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% to the portion of the daily net assets not exceeding $500
million and 0.475% to 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
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995 (UNAUDITED) CONTINUED
payment of commissions for sales of the Fund's shares and incentive compensation
to, and expenses of, the account executives of Dean Witter Reynolds Inc.
("DWR"), an affiliate of the Investment Manager and Distributor, and other
employees or selected dealers who engage in or support distribution of the
Fund's shares or who service shareholder accounts, including overhead and
telephone expenses, printing and distribution of prospectuses and reports used
in connection with the offering of the Fund's shares to other than current
shareholders and preparation, printing and distribution of sales literature and
advertising materials. In addition, the Distributor may be compensated under the
Plan for its opportunity costs in advancing such amounts, which compensation
would be in the form of a carrying charge on any unreimbursed expenses incurred
by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred 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 six months ended March 31,
1995, it received approximately $599,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares. The Fund's shareholders pay such
charges which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended March 31, 1995 aggregated
$224,113,500 and $254,151,228, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the Fund's
transfer agent. At March 31, 1995, the Fund had transfer agent fees and expenses
payable of approximately $52,000.
The Fund adopted an unfunded noncontributory defined benefit pension plan
covering all independent Trustees of the Fund who will have served as
independent Trustees for at least five years at the time of retirement. Benefits
under this plan are based on years of service and compensation during the last
five years of service. Aggregate pension costs for the six months ended March
31, 1995 included in Trustees' fees and expenses in the Statement of Operations
amounted to $6,127. At March 31, 1995, the Fund had an accrued pension liability
of $13,448 which is included in accrued expenses in the Statement of Assets and
Liabilities.
For the six months ended March 31, 1995, the Fund incurred $717,793 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995 (UNAUDITED) CONTINUED
5. 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, 1995 SEPTEMBER 30, 1994
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 8,979,612 $ 158,527,582 18,140,578 $331,909,789
Reinvestment of distributions.................................... 175,671 2,979,381 876,511 15,566,841
----------- -------------- ----------- ------------
9,155,283 161,506,963 19,017,089 347,476,630
Repurchased...................................................... (9,553,839) (168,823,011) (11,367,004) (203,942,601)
----------- -------------- ----------- ------------
Net increase (decrease).......................................... (398,556) $ (7,316,048) 7,650,085 $143,534,029
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
6. FEDERAL INCOME TAX STATUS
At September 30, 1994, 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 to net operating losses
and dividend redesignations.
<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
SIX MONTHS
ENDED
MARCH 31, FOR THE YEAR ENDED SEPTEMBER 30
1995 -----------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period............... $ 17.55 $ 20.50 $ 12.20 $ 14.05 $ 8.92 $ 11.33
---------- --------- --------- --------- --------- ---------
Net investment loss................ (0.10) -- (0.12) (0.12) (0.07) (0.15)
Net realized and unrealized gain
(loss)............................ 1.50 (1.82) 8.42 (1.73) 5.20 (2.21)
---------- --------- --------- --------- --------- ---------
Total from investment operations... 1.40 (1.82) 8.30 (1.85) 5.13 (2.36)
---------- --------- --------- --------- --------- ---------
Less dividends and distributions
from:
Net investment income........... -- -- -- -- -- (0.05)
Net realized gain............... (0.16) (1.13) -- -- -- --
---------- --------- --------- --------- --------- ---------
Total dividends and
distributions..................... (0.16) (1.13) 0.00 0.00 0.00 (0.05)
---------- --------- --------- --------- --------- ---------
Net asset value, end of period..... $ 18.79 $ 17.55 $ 20.50 $ 12.20 $ 14.05 $ 8.92
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN+........... 8.05%(1) (8.88)% 67.95% (13.17)% 57.51% (20.87)%
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... (1.78)%(2) 1.78% 1.84% 1.86% 1.92% 2.02%
Net investment loss................ (1.12)%(2) (1.32)% (1.52)% (1.14)% (0.73)% (1.32)%
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $356,661 $340,169 $240,389 $112,982 $115,337 $67,604
Portfolio turnover rate............ 70%(1) 160% 203% 153% 88% 53%
<FN>
- ---------------------
+ Does not reflect the deduction of sales charge.
(1) Not annualized.
(2) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TRUSTEES
Jack F. Bennett DEAN WITTER
Michael Bozic DEVELOPING
Charles A. Fiumefreddo GROWTH
Edwin J. Garn SECURITIES
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and
General Counsel
Jayne Stevlingson
Vice President
Ronald J. Worobel
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT [GRAPHIC]
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have
been taken from the records of the Fund without
examination by the independent accountants and
accordingly they do not express an opinion
thereon.
This report is submitted for the general
information of shareholders of the Fund. For
more detailed information about the Fund, its
officers and 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, 1995
