Registration No. 2-81151
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST Two World Trade Center, New
York, New York 10048
LETTER TO THE SHAREHOLDERS
- ------------------------------------------------------------------------------
DEAR SHAREHOLDER:
The fiscal year ended September 30, 1995, was an outstanding period for the
equity markets in general, and for small- to mid-sized growth companies in
particular.
When the fiscal year began on September 30, 1994, the Federal Reserve Board
was in the midst of aggressively tightening monetary policy with the hopes of
orchestrating a "soft landing" for the economy and restraining inflation. By
the first quarter of 1995, it appeared that the central bank's strategy was
on the mark, as both the stock and bond markets advanced. The U.S. equity
market, led by technology and financial stocks, scaled new heights during the
second quarter. Clearly, the bulls had a lot to celebrate: the expectation of
slower U.S. growth (with no recession), containment of inflation, continued
profit increases, a balanced budget bill, slower growth overseas and an
improvement in the dollar.
As the fiscal year came to a close on September 30, 1995, stock prices
sprinted higher, with the intrepid technology sector propelling several major
averages to record levels. An improving, but somewhat lackluster, economy
with relatively moderate inflation should curb Federal Reserve Board
intervention for a while, keeping interest rates trading at their current
levels.
PERFORMANCE AND PORTFOLIO
Against this backdrop, Dean Witter Developing Growth Securities posted a
total return of 46.87 percent during the fiscal year ended September 30,
1995. During the same period, the broad-based, capitalization-weighted
Standard & Poor's 500 Composite Stock Price Index returned 29.76 percent,
while the NASDAQ Composite Index returned 36.54 percent. The accompanying
chart illustrates the growth of a $10,000 investment in the Fund on September
30, 1985 through the end of the fiscal year, compared to a similar investment
in the issues that comprise the Standard & Poor's 500 Composite Stock Price
Index. (The Fund commenced operations on April 29, 1983.)
The Fund's performance was driven by its large weighting in technology stocks
which led the overall market during the second and third quarters.
<PAGE>
Dean Witter Developing Growth Securities Trust
LETTER TO THE SHAREHOLDERS, continued
- ------------------------------------------------------------------------------
The Fund's technology holdings are diversified among several sectors
including semiconductors (9.8 percent of Fund assets), computer software (5.3
percent) and telecommunications equipment companies (.4 percent). These
companies have posted above average earnings through increased market
penetration and new product introductions. Among the Fund's technology holdings
are LSI Logic Corp., Micron Technology, Inc., Glenayre Technologies, Inc. and
U.S. Robotics Corp.
The Fund also has a significant position in the health care sector (12.2
percent of Fund assets), which has been fueled by changes in government
regulations that make new product applications more expedient. Recently, the
Fund added biotechnology and generic drug companies which the portfolio
manager believes are well situated to benefit from the current environment.
DEAN WITTER DEVELOPING GROWTH
GROWTH OF $10,000
DATE TOTAL S&P 500
- ---------------------------------------------------------
September 30, 1985 $10,000 $10,000
September 30, 1986 $11,222 $13,174
September 30, 1987 $14,371 $18,894
September 30, 1988 $12,680 $16,555
September 30, 1989 $14,856 $22,006
September 30, 1990 $11,756 $19,974
September 30, 1991 $18,517 $26,190
September 30, 1992 $16,079 $29,079
September 30, 1993 $27,004 $32,854
September 30, 1994 $24,606 $34,064
September 30, 1995 $36,138(3) $44,201
- ---------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
- ---------------------------------------------------------
46.87(1) 25.18(1) 13.71(1)
41.87(2) 25.02(2) 13.71(2)
- ---------------------------------------------------------
_______Fund _______S&P 500 (4)
- ---------------------------------------------------------
Past performance is not predictive of future returns.
________________________________________
(1) Figure shown assumes reinvestment of all distributions and does not
reflect the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the
deduction of the maximum applicable contingent deferred sales charge (CDSC)
(1 year-5%, 5 years-2%, 10 years-0%). See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value assuming a complete redemption on September 30, 1995.
(4) The Standard and Poor's 500 Composite Stock Price Index (S&P 500) is a
broad-based index, the performance of which is based on the average performance
of 500 widely held common stocks. The index does not include any expenses, fees
or charges.
LOOKING AHEAD
Looking ahead to 1996, the benefits of investing in small- and medium-sized
companies looks favorable given the forecasts of moderate, but sustained,
economic growth and low inflation. In addition, we continue to believe that
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. Further driving the equity markets,
through inflows into mutual funds, are investor needs to invest for such
long-term goals as retirement and college education. These factors, combined,
lead us to believe that multiples will continue to expand.
We appreciate your support of Dean Witter Developing Growth Securities and look
forward to serving your investment objectives.
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS September 30, 1995
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------------------------------- --------------
<S> <C> <C>
COMMON STOCKS (87.9%)
Aerospace & Defense (0.1%)
45,000 Base Ten Systems Inc. (Class A)* $ 500,625
--------------
Auto Parts (0.1%)
40,000 Safety Components International,
Inc.* 735,000
--------------
Banking (0.7%)
80,000 First Bank System, Inc. 3,850,000
--------------
Banks - Commercial (0.1%)
20,000 Firstar Corp. 740,000
--------------
Banks - Regional (0.3%)
52,500 Provident Bankshares Corp. 1,575,000
--------------
Beverages - Alcoholic (0.2%)
35,000 Mondavi (Robert) Corp. (The) (Class A)* 892,500
--------------
Biotechnology (0.7%)
30,000 Alteon, Inc.* 363,750
30,000 Cephalon Inc.* 817,500
35,000 Creative Biomolecules, Inc.* 194,688
20,000 Genetics Institute, Inc.* 750,000
60,000 Protein Design Labs, Inc.* 1,170,000
25,000 Sepracor, Inc.* 540,625
--------------
3,836,563
--------------
Broadcast Media (0.8%)
60,000 Heftel Broadcasting Corp.* 1,155,000
30,000 SFX Broadcasting, Inc. (Class A) 840,000
50,000 United Video Satellite Group, Inc.
(Class A)* 1,475,000
45,000 Westwood One, Inc.* 798,750
--------------
4,268,750
--------------
Business Systems (0.1%)
20,000 American Management Systems, Inc.* 530,000
--------------
Chemicals (0.3%)
40,000 Adco Technologies, Inc.* 340,000
25,000 Sigma-Aldrich Corp. 1,212,500
--------------
1,552,500
--------------
Commercial Services (1.5%)
45,000 Alternative Resources Corp.* 1,440,000
50,000 Career Horizons, Inc.* 1,350,000
70,000 Danka Business Systems PLC (ADR)
(United Kingdom)* $ 2,520,000
40,000 Norrell Corp. 1,270,000
45,000 On Assignment, Inc.* 1,136,250
--------------
7,716,250
--------------
Communications - Equipment &
Software (4.7%)
180,000 3Com Corp.* 8,190,000
115,000 Bay Networks, Inc.* 6,138,125
85,000 Cisco Systems, Inc.* 5,865,000
50,000 Colonial Data Technologies Corp.* 925,000
40,000 Global Village Communications, Inc.* 555,000
70,000 Madge Networks NV (Netherlands)* 2,248,750
60,000 Performance Systems International,
Inc.* 1,275,000
--------------
25,196,875
--------------
Communications -
Equipment/Manufacturers (8.7%)
75,000 ADC Telecommunications, Inc.* 3,412,500
130,000 Andrew Corp.* 7,930,000
50,000 Comverse Technology, Inc.* 1,087,500
100,000 DSC Communications Corp.* 5,925,000
120,000 Glenayre Technologies, Inc.* 8,640,000
50,000 Stratacom, Inc.* 2,743,750
190,000 Tellabs, Inc.* 7,980,000
100,000 U.S. Robotics Corp.* 8,525,000
--------------
46,243,750
--------------
Computer - Aided Design (1.5%)
9,000 ArcSys, Inc.* 367,875
50,000 Cadence Design Systems, Inc.* 1,962,500
70,000 Integrated Silicon Systems, Inc. 2,030,000
120,000 Synopsys, Inc.* 3,690,000
--------------
8,050,375
--------------
Computer Equipment (0.1%)
30,000 Storage Technology Corp.* 735,000
--------------
Computer Software (5.3%)
45,000 Cheyenne Software, Inc.* 900,000
25,000 Computron Software, Inc.* 431,250
51,000 Inference Corp. (Class A)* 726,750
90,000 Informix Corp.* 2,925,000
60,000 Kronos, Inc.* 2,775,000
80,000 Macromedia, Inc.* 4,560,000
50,000 Oracle Systems Corp.* 1,912,500
</TABLE>
See Notes to Financial Statements
<PAGE>
Dean Witter Developing Growth Securities Trust
PORTFOLIO OF INVESTMENTS September 30, 1995, continued
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------------------------------- --------------
<S> <C> <C>
90,000 Peoplesoft, Inc.* $ 8,145,000
40,500 Progress Software Corp.* 2,693,250
78,000 Project Software & Development, Inc.* 1,998,750
40,000 Symantec Corp.* 1,195,000
--------------
28,262,500
--------------
Computer Software & Services (0.7%)
45,000 C.I.S. Technologies, Inc.* 171,563
38,000 Checkfree Corp.* 760,000
2,500 Computer Management Sciences, Inc. 41,875
30,000 Cycare Systems, Inc.* 997,500
23,000 New Paradigm Software Corp.* 132,250
17,200 Novadigm, Inc.* 288,100
40,000 Premenos Technology Corp.* 1,270,000
--------------
3,661,288
--------------
Computers - Peripheral Equipment (0.3%)
35,000 Exabyte Corp.* 463,750
25,000 Seagate Technology, Inc.* 1,053,125
--------------
1,516,875
--------------
Computers - Systems (0.3%)
25,000 Sequent Computer Systems, Inc.* 496,875
36,000 VideoServer, Inc.* 1,269,000
--------------
1,765,875
--------------
Consumer Services (0.3%)
45,000 3D Systems Corp. 753,750
20,000 ITI Technologies, Inc.* 540,000
50,000 Protection One, Inc.* 450,000
--------------
1,743,750
--------------
Cosmetics (0.1%)
25,000 Thermolase Corp.* 509,375
--------------
Distributors - Consumer Products (0.5%)
60,000 CompUSA, Inc.* 2,580,000
--------------
Drugs (0.0%)
20,000 IDEC Pharmaceuticals Corp. 157,500
--------------
Electrical Equipment (0.7%)
50,000 Fore Systems, Inc.* 1,837,500
50,000 Methode Electronics, Inc. (Class A) 1,112,500
41,000 Zycon Corp.* 502,250
--------------
3,452,250
--------------
Electronic Components (2.6%)
60,000 Adaptec, Inc.* $ 2,475,000
70,000 Adtran, Inc.* 2,432,500
60,000 Electro Scientific Industries, Inc.* 2,085,000
50,000 Komag Inc.* 3,250,000
60,000 Pairgain Technologies, Inc. * 2,070,000
49,000 Teltrend, Inc.* 1,580,250
--------------
13,892,750
--------------
Electronics (0.3%)
50,000 Accom Inc 425,000
Franklin Electronics Publishers,
20,000 Inc.* 787,500
37,000 Mackie Designs, Inc.* 527,250
--------------
1,739,750
--------------
Electronics - Instrumentation (0.5%)
110,000 Trimble Navigation Ltd.* 2,750,000
--------------
Electronics - Semiconductors (0.6%)
97,500 MEMC Electronic Materials, Inc.* 2,620,312
50,000 Semiconductor Packaging Materials
Co., Inc. 587,500
--------------
3,207,812
--------------
Energy (0.1%)
35,000 Nuevo Energy Co.* 787,500
--------------
Entertainment & Leisure Time (2.3%)
25,000 Acclaim Entertainment, Inc.* 640,625
70,000 Cinar Films Inc. (Class B) (Canada)* 848,750
80,000 Electronic Arts, Inc.* 2,930,000
55,000 Gaylord Entertainment Co. (Class A) 1,491,875
80,000 Sierra On-Line, Inc.* 3,120,000
80,000 Softkey International, Inc.* 3,540,000
--------------
12,571,250
--------------
Entertainment/Gaming (0.4%)
30,000 Scientific Games Holding Corp.* 1,110,000
35,000 Showboat, Inc. 756,875
30,000 Station Casinos, Inc.* 457,500
--------------
2,324,375
--------------
Environmental Control (0.9%)
35,000 U.S.A. Waste Services, Inc.* 682,500
100,000 United Waste Systems, Inc.* 4,175,000
--------------
4,857,500
--------------
</TABLE>
See Notes to Financial Statements
<PAGE>
Dean Witter Developing Growth Securities Trust
PORTFOLIO OF INVESTMENTS September 30, 1995, continued
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------------------------------- --------------
<S> <C> <C>
--------------
Financial - Miscellaneous (0.1%)
25,000 First Colony Corp. $ 675,000
--------------
Financial Services (1.7%)
60,000 Envoy Corp.* 690,000
90,000 Green Tree Financial Corp. 5,490,000
70,000 Mercury Finance Co. 1,706,250
50,000 Olympic Financial Ltd.* 1,362,500
--------------
9,248,750
--------------
Food Services (0.2%)
30,000 Daka International, Inc.* 978,750
--------------
Healthcare Products & Services (2.9%)
40,000 Cerner Corp.* 1,350,000
20,000 HBO & Co. 1,250,000
190,000 Medaphis Corp.* 5,225,000
70,000 Medic Computer Systems, Inc.* 3,587,500
100,000 Shared Medical Systems Corp. 4,150,000
--------------
15,562,500
--------------
Hospital Management & Health
Maintenance Organizations (4.6%)
60,000 Apogee, Inc.* 1,065,000
175,000 Apria Healthcare Group, Inc.* 4,243,750
35,000 Genesis Health Ventures, Inc.* 1,251,250
200,000 Healthsouth Rehabilitation Corp.* 5,100,000
30,000 Horizon/CMS Healthcare Corp.* 682,500
60,000 Oxford Health Plans, Inc.* 4,350,000
132,500 PhyCor, Inc.* 4,538,125
55,000 Theratx, Inc.* 708,125
80,000 Vencor, Inc.* 2,560,000
--------------
24,498,750
--------------
Hospital Supply (0.2%)
30,000 Clintrials, Inc. 596,250
40,000 North American Biologicals, Inc. 330,000
--------------
926,250
--------------
Hotels/Motels (1.9%)
80,000 Hospitality Franchise Systems, Inc.* 4,190,000
150,000 La Quinta Inns, Inc. 4,200,000
50,000 Prime Hospitality Corp.* 512,500
60,000 Renaissance Hotel Group NV (Hong
Kong)* 1,065,000
--------------
9,967,500
--------------
Household Furnishings &
Appliances (0.1%)
35,000 Ethan Allen Interiors, Inc.* $ 752,500
--------------
Insurance (0.2%)
50,000 U.S. Facilities Corp. 1,000,000
--------------
Life Insurance (0.1%)
20,000 Reinsurance Group of America, Inc. 705,000
--------------
Machinery - Diversified (0.0%)
16,000 Computational Systems, Inc. 256,000
--------------
Manufacturing (0.5%)
50,000 Crane Co. 1,725,000
60,000 Memtec Ltd. (ADR) (Australia) 1,050,000
--------------
2,775,000
--------------
Manufacturing - Diversified (0.1%)
55,000 Figgie International, Inc. (Class A) 721,875
--------------
Medical Equipment (2.8%)
210,000 Boston Scientific Corp.* 8,951,250
100,000 Respironics, Inc.* 1,900,000
170,000 Staar Surgical Co.* 2,040,000
50,000 Summit Technology, Inc.* 2,287,500
--------------
15,178,750
--------------
<PAGE>
Medical Products & Supplies (1.5%)
150,000 Omnicare, Inc. 5,850,000
15,000 Penederm, Inc. 125,625
60,000 Research Industries Corp.* 1,740,000
--------------
7,715,625
--------------
Medical Services (0.2%)
40,000 Compdent Corp. 1,170,000
--------------
Metals & Mining (0.4%)
60,000 Case Corp. 2,205,000
--------------
Multi-Line Insurance (0.2%)
25,000 American Financial Group Inc. 750,000
5,000 United Dental Care, Inc. 150,000
--------------
900,000
--------------
Office Equipment (0.2%)
50,000 Nu-Kote Holdings, Inc. (Class A)* 1,087,500
--------------
</TABLE>
See Notes to Financial Statements
<PAGE>
Dean Witter Developing Growth Securities Trust
PORTFOLIO OF INVESTMENTS September 30, 1995, continued
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------------------------------- --------------
<S> <C> <C>
Office Equipment & Supplies (1.0%)
70,000 Corporate Express, Inc.* $ 1,688,750
30,000 Staples, Inc.* 847,500
60,000 Viking Office Products, Inc.* 2,505,000
--------------
5,041,250
--------------
Oil & Gas Products (0.8%)
60,000 Barrett Resources Corp.* 1,350,000
70,000 Chesapeake Energy Corp.* 2,213,750
57,500 Core Laboratories, Inc. NV* 690,000
--------------
4,253,750
--------------
Oil Drilling & Services (0.1%)
40,000 Global Marine, Inc.* 285,000
--------------
Oil Equipment & Services (0.2%)
40,000 Arethusa (Off-Shore) Ltd. 825,000
--------------
Oil Well Equipment & Service (1.6%)
90,000 Input/Output, Inc.* 3,453,750
40,000 Petroleum Geo-Services AS (ADR)
(Norway)* 980,000
80,000 Seitel Inc.* 2,270,000
90,000 Smith International, Inc.* 1,563,750
--------------
8,267,500
--------------
Paper Products (0.8%)
50,000 Alco Standard Corp. 4,237,500
--------------
Pharmaceuticals (3.3%)
25,000 Alliance Pharmaceutical Corp.* 300,000
40,000 Autoimmune, Inc. 615,000
42,000 Depotech Corp.* 567,000
100,000 Dura-Pharmaceuticals, Inc.* 2,950,000
60,000 Genzyme Corp. General Division* 3,450,000
30,000 Gilead Sciences, Inc.* 652,500
25,000 Interneuron Pharmaceuticals, Inc.* 284,375
100,000 Ivax Corp. 3,012,500
110,000 Royce Laboratories, Inc.* 969,375
15,000 Sequus Pharmaceuticals, Inc.* 172,500
100,000 Teva Pharmaceutical Industries Ltd.
(ADR) (Israel) 3,600,000
25,000 Watson Pharmaceuticals, Inc.* 1,025,000
--------------
17,598,250
--------------
Precision Instruments (0.6%)
80,000 Millipore Corp. 3,000,000
--------------
Property - Casualty Insurance (0.4%)
35,000 Exel Ltd. (Bermuda) $ 2,034,375
--------------
Restaurants (0.4%)
55,000 Cheesecake Factory, Inc.* 1,457,500
27,500 Sonic Corp.* 605,000
--------------
2,062,500
--------------
Retail (0.6%)
10,000 Marisa Christina, Inc. 155,000
30,000 Oakley, Inc.* 888,750
85,000 Wolverine World Wide, Inc. 2,326,875
--------------
3,370,625
--------------
Retail - General Merchandise (0.2%)
50,000 Duty Free International, Inc. 637,500
15,000 Eastbay, Inc. 296,250
--------------
933,750
--------------
Retail - Specialty (1.9%)
30,000 Barnes & Noble, Inc.* 1,147,500
50,000 Bed, Bath & Beyond, Inc.* 1,512,500
40,000 Claire's Stores Inc. 820,000
30,000 CML Group, Inc. 210,000
20,000 Cole National Corp. (Class A) 242,500
65,000 Dollar General Corp. 1,909,375
154,000 Hollywood Entertainment Corp.* 3,291,750
34,000 Moovies, Inc.* 663,000
20,000 West Marine, Inc.* 620,000
--------------
10,416,625
--------------
Retail - Specialty Apparel (0.4%)
40,000 Just for Feet, Inc. 1,230,000
20,000 Mens Wearhouse, Inc. (The) 720,000
--------------
1,950,000
--------------
Semiconductor Equipment (7.7%)
50,000 Applied Materials, Inc.* 5,112,500
30,000 BMC Industries, Inc. 1,158,750
50,000 Electroglas, Inc.* 3,375,000
180,000 FSI International, Inc.* 5,895,000
62,500 Fusion Systems Corp.* 1,796,875
90,000 KLA Instruments Corp.* 7,222,500
150,000 Kulicke & Soffa Industries, Inc.* 5,475,000
35,000 Mylex Corp.* 595,000
100,000 Tencor Instruments* 4,400,000
150,000 Ultratech Stepper, Inc.* 6,300,000
--------------
41,330,625
--------------
</TABLE>
See Notes to Financial Statements
<PAGE>
Dean Witter Developing Growth Securities Trust
PORTFOLIO OF INVESTMENTS September 30, 1995, continued
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------------------------------- --------------
<S> <C> <C>
Semiconductors (9.8%)
110,000 Altera Corp.* $ 6,861,250
120,000 Analog Devices, Inc.* 4,155,000
155,000 Atmel Corp* 5,231,250
140,000 Integrated Device Technology, Inc.* 3,482,500
175,000 LSI Logic Corp.* 10,106,250
45,000 Maxim Integrated Products Inc.* 3,330,000
65,000 Microchip Technology, Inc.* 2,461,875
115,000 Micron Technology, Inc. 9,142,500
60,000 S3, Inc. 2,100,000
63,000 Vishay Intertechnology, Inc. 2,646,000
85,000 VLSI Technology, Inc.* 2,900,625
--------------
52,417,250
--------------
Telecommunication Equipment (0.4%)
35,000 Ortel Corp.* 463,750
40,000 Picturetel Corp.* 1,795,000
--------------
2,258,750
--------------
Telecommunications (2.5%)
40,000 Arch Communications Group, Inc.* 1,045,000
70,000 Globalstar Telecommunications Ltd.
(Bermuda)* 1,470,000
75,000 Metrocall Inc.* 2,043,750
70,000 Mobilemedia Corp.* 1,890,000
60,000 Paging Network, Inc.* 2,880,000
59,500 Qualcomm Inc.* 2,729,562
20,000 Transaction Network Services, Inc.* 522,500
45,000 U.S. Long Distance Corp.* 675,000
--------------
13,255,812
--------------
Transportation (1.2%)
50,000 Fritz Companies, Inc.* 3,675,000
30,000 Midwest Express Holdings, Inc.* 675,000
150,000 Worldcorp, Inc.* 1,818,750
--------------
6,168,750
--------------
Utilities - Telephone (0.2%)
40,000 Frontier Corp. 1,065,000
--------------
Wholesale & International Trade (0.1%)
18,000 Daisytek International Corp.* 585,000
--------------
TOTAL COMMON STOCKS
(Identified Cost $297,743,746) 469,885,600
--------------
CONVERTIBLE PREFERRED STOCK (0.0%)
Oil & Gas Products
4,000 Snyder Oil Corp. $1.50 (Identified
Cost $100,000) 79,500
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------- --------------------------------- --------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (15.2%)
COMMERCIAL PAPER (a) (6.5%)
Automotive Finance (2.8%)
$15,000 Ford Motor Credit Co.
5.73% due 10/06/95 $14,988,063
--------------
Industrials (3.7%)
20,000 General Electric Co.
5.75% due 10/02/95 19,996,805
--------------
TOTAL COMMERCIAL PAPER (Amortized
Cost $34,984,868) 34,984,868
--------------
U.S. GOVERNMENT AGENCY (a) (8.4%)
44,910 Federal Home Loan Mortgage Corp.
6.30% due 10/02/95 (Amortized
Cost $44,902,141) 44,902,141
--------------
REPURCHASE AGREEMENT (0.3%)
1,464 The Bank of New York 5.375% due
10/02/95 (dated 09/29/95;
proceeds $1,464,705;
collateralized by $1,619,459 U.S.
Treasury Note 6.875% due 07/31/99
valued at $1,683,364) (Identified
Cost $1,464,049) 1,464,049
--------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $81,351,058) 81,351,058
--------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $379,194,804) (b) 103.1% 551,316,158
LIABILITIES IN EXCESS OF
OTHER ASSETS ....................... (3.1) (16,447,654)
-------- --------------
NET ASSETS ......................... 100.0% $534,868,504
======== ==============
</TABLE>
- ------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Securities were purchased on a discount basis. The interest rates
shown have been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $379,561,528;
the aggregate gross unrealized appreciation is $175,242,918 and the
aggregate gross unrealized depreciation is $3,488,288, resulting in
net unrealized appreciation of $171,754,630.
See Notes to Financial Statements
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $379,194,804) ........ $551,316,158
Receivable for:
Shares of beneficial interest sold ... 2,016,497
Investments sold ...................... 381,954
Dividends ............................. 53,638
Prepaid expenses and other assets ...... 38,267
--------------
TOTAL ASSETS .......................... 553,806,514
--------------
LIABILITIES:
Payable for:
Investments purchased ................. 16,219,820
Shares of beneficial interest
repurchased ........................... 1,902,520
Plan of distribution fee .............. 431,986
Investment management fee ............. 215,312
Accrued expenses and other payables .... 168,372
--------------
TOTAL LIABILITIES ..................... 18,938,010
--------------
NET ASSETS:
Paid-in-capital ......................... 334,506,680
Net unrealized appreciation ............. 172,121,354
Accumulated net investment loss ........ (33,774)
Accumulated undistributed net realized
gain ................................... 28,274,244
--------------
NET ASSETS ............................ $534,868,504
==============
NET ASSET VALUE PER SHARE,
20,939,667 shares outstanding
(unlimited shares authorized of $.01
par value) .............................. $ 25.54
==============
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Interest .............................. $ 1,824,842
Dividends (net of $4,452 foreign
withholding tax) ..................... 990,645
-------------
TOTAL INCOME ........................ 2,815,487
-------------
EXPENSES
Plan of distribution fee .............. 3,834,696
Investment management fee ............. 1,916,827
Transfer agent fees and expenses ..... 626,725
Custodian fees ........................ 98,442
Shareholder reports and notices ...... 96,753
Registration fees ..................... 88,658
Professional fees ..................... 69,881
Trustees' fees and expenses ........... 48,181
Other ................................. 4,734
-------------
TOTAL EXPENSES ...................... 6,784,897
-------------
NET INVESTMENT LOSS ................. (3,969,410)
-------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain ..................... 32,573,927
Net change in unrealized appreciation 129,339,870
-------------
NET GAIN ............................ 161,913,797
-------------
NET INCREASE .......................... $157,944,387
=============
</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 YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss ................................... $ (3,969,410) $ (3,993,533)
Net realized gain ..................................... 32,573,927 3,682,165
Net change in unrealized appreciation ................. 129,339,870 (27,082,586)
------------------ ------------------
NET INCREASE (DECREASE) ............................. 157,944,387 (27,393,954)
Distributions to shareholders from net realized gain . (2,979,381) (16,359,904)
Net increase from transactions in shares of beneficial
interest ............................................. 39,734,514 143,534,029
------------------ ------------------
TOTAL INCREASE ...................................... 194,699,520 99,780,171
NET ASSETS:
Beginning of period ................................... 340,168,984 240,388,813
------------------ ------------------
END OF PERIOD
(Including accumulated net investment loss of $33,774
and undistributed net investment income of $30,200,
respectively) ........................................ $534,868,504 $340,168,984
================== ==================
</TABLE>
See Notes to Financial Statements
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 1995
- ------------------------------------------------------------------------------
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 accretion of discounts on certain
short-term securities.
C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends
and distributions to its shareholders on the record date. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered
<PAGE>
Dean Witter Developing Growth Securities Trust
NOTES TO FINANCIAL STATEMENTS September 30, 1995, continued
- ------------------------------------------------------------------------------
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 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
<PAGE>
Dean Witter Developing Growth Securities Trust
NOTES TO FINANCIAL STATEMENTS September 30, 1995, continued
- ------------------------------------------------------------------------------
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,
1995, it received approximately $991,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares. The Fund's shareholders pay
such charges which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the year ended September 30, 1995
aggregated $406,228,484 and $427,323,003, respectively.
For the year ended September 30, 1995, the Fund incurred $91,840 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the
Fund. At September 30, 1995, the Fund's payable for investments purchased
included unsettled trades with DWR of $797,880.
The Fund has 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 year
ended September 30, 1995 included in Trustees' fees and expenses in the
Statement of Operations amounted to $27,260. At September 30, 1995, the Fund
had an accrued pension liability of $33,778 which is included in accrued
expenses in the Statement of Assets and Liabilities.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Fund's transfer agent. At September 30, 1995, the Fund had transfer agent
fees and expenses payable of approximately $55,000.
<PAGE>
Dean Witter Developing Growth Securities Trust
NOTES TO FINANCIAL STATEMENTS September 30, 1995, continued
- ------------------------------------------------------------------------------
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, 1995 SEPTEMBER 30, 1994
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sold ....................................... 20,063,775 $ 404,852,064 18,140,578 $ 331,909,789
Reinvestment of dividends and distributions 166,910 2,830,799 876,511 15,566,841
-------------- --------------- -------------- ---------------
20,230,685 407,682,863 19,017,089 347,476,630
Repurchased ................................ (18,669,019) (367,948,349) (11,367,004) (203,942,601)
-------------- --------------- -------------- ---------------
Net increase ............................... 1,561,666 $ 39,734,514 7,650,085 $ 143,534,029
============== =============== ============== ===============
</TABLE>
6. FEDERAL INCOME TAX STATUS
As of September 30, 1995, the Fund had temporary book/tax differences
primarily attributable to capital loss deferrals on wash sales and permanent
book/tax differences primarily attributable to a net operating loss. To
reflect reclassifications arising from permanent book/tax differences for the
year ended September 30, 1995, accumulated undistributed net realized gain
was charged $3,892,747, paid-in-capital was charged $12,689 and accumulated
net investment loss was credited $3,905,436.
<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
----------------------------------------------------------
1995 1994 1993 1992 1991
- ----------------------------- ---------- ---------- ---------- ---------- ----------
<S> <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
---------- ---------- ---------- ---------- ----------
Net investment income (loss) (0.19) -- (0.12) (0.12) (0.07)
Net realized and
unrealized gain (loss) 8.34 (1.82) 8.42 (1.73) 5.20
---------- ---------- ---------- ---------- ----------
Total from investment
operations 8.15 (1.82) 8.30 (1.85) 5.13
---------- ---------- ---------- ---------- ----------
Less dividends and
distributions from:
Net investment income -- -- -- -- --
Net realized gain (0.16) (1.13) -- -- --
---------- ---------- ---------- ---------- ----------
Total dividends and
distributions (0.16) (1.13) -- -- --
---------- ---------- ---------- ---------- ----------
Net asset value,
end of period $25.54 $17.55 $20.50 $ 12.20 $14.05
========== ========== ========== ========== ==========
Total Investment Return+ 46.87 % (8.88)% 67.95 % (13.17)% 57.51 %
Ratios To
Average Net Assets:
Expenses 1.77 % 1.78 % 1.84 % 1.86 % 1.92 %
Net investment income (loss) (1.04)% (1.32)% (1.52)% (1.14)% (0.73)%
Supplemental Data:
Net assets, end of period,
in thousands $534,869 $340,169 $240,389 $112,982 $115,337
Portfolio turnover rate 114 % 160 % 203 % 153 % 88 %
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986
- ----------------------------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE
OPERATING PERFORMANCE:
Net asset value,
beginning of period $ 11.33 $ 9.67 $ 10.96 $ 8.57 $ 7.68
---------- --------- ---------- ---------- ----------
Net investment income (loss) (0.15) 0.04 (0.03) (0.02) 0.01
Net realized and
unrealized gain (loss) (2.21) 1.62 (1.26) 2.42 0.92
---------- --------- ---------- ---------- ----------
Total from investment
operations (2.36) 1.66 (1.29) 2.40 0.93
---------- --------- ---------- ---------- ----------
Less dividends and
distributions from:
Net investment income (0.05) -- -- (0.01) (0.04)
Net realized gain -- -- -- -- --
---------- --------- ---------- ---------- ----------
Total dividends and
distributions (0.05) -- -- (0.01) (0.04)
---------- --------- ---------- ---------- ----------
Net asset value,
end of period $ 8.92 $ 11.33 $ 9.67 $ 10.96 $ 8.57
========== ========= ========== ========== ==========
Total Investment Return+ (20.87)% 17.17% (11.77)% 28.07 % 12.22%
Ratios To
Average Net Assets:
Expenses 2.02 % 1.89% 1.90 % 1.83 % 1.80%
Net investment income (loss) (1.32)% 0.59% (0.28)% (0.20)% 0.08%
Supplemental Data:
Net assets, end of period,
in thousands $67,604 $89,236 $108,411 $179,276 $139,662
Portfolio turnover rate 53 % 84% 70 % 68 % 90%
<FN>
- ------------
Does not reflect the deduction of sales charge.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<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, 1995, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for each of the ten years in the period then ended, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at
September 30, 1995 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from
brokers were not received, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
November 10, 1995
1995 FEDERAL TAX NOTICE (unaudited)
During the year ended September 30, 1995, the Fund paid to the
shareholders $0.16 per share from long-term capital gains.
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
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
Ronald J. Worobel
Vice President
Jayne Stevlingson
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center--Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and
trustees, fees, expenses and other pertinent information, please see the
prospectus of the Fund.
This report is not authorized for distribution to prospective investors in
the Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
DEVELOPING
GROWTH
SECURITIES
TRUST
ANNUAL REPORT
SEPTEMBER 30, 1995
