<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST TWO WORLD TRADE CENTER, NEW
YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS MARCH 31, 1996
DEAR SHAREHOLDER:
When the fiscal year began on October 1, 1995, robust corporate earnings, benign
inflation and a steadily advancing bond market combined to propel stocks higher
into the new year. After a harsh winter and the resumption of government
operations, however, the economy began to hint of a possible upturn, creating
uncertainty in the financial markets. Further compounding this belief was
better-than-expected employment data for February which showed a sharp decline
in the unemployment level. On the political front, the Republican primaries
temporarily deflected the focus from a balanced budget deal to a shorter-term
emphasis on jobs and flat taxes. But probably the most damaging event to impact
the stock market was the sharp increase in long-term interest rates. The yield
on the 30-year Treasury bond jumped from 5.95% at the start of the year to 6.67%
on March 31, 1996.
Throughout most of the six-month period ended March 31, 1996,
larger-capitalization stocks continued to perform better versus
small-capitalization companies, marking a continuation of a trend that began in
early 1994. In February, however, small company stocks began to show signs of
new life, outperforming their larger-cap counterparts. This was quite unusual
given that the Utility Average was breaking down, typically a harbinger of
rising interest rates and a death knell to small caps.
PERFORMANCE AND PORTFOLIO STRATEGY
Against this backdrop, Dean Witter Developing Growth Securities provided a total
return of 5.02 percent for the six months ended March 31, 1996. During the same
period, the Russell 2000 Index and the NASDAQ Composite Index posted returns of
7.41 percent and 5.50 percent, respectively.
When the current fiscal year began on October 1, 1995, the Fund held
approximately 50 percent of its assets in technology and technology-related
industries. Over the six-month period under review, this weighting was slowly
scaled down to just under 35 percent by March 31, 1996. The Fund held many
high-quality semi-conductor issues which saw their market caps fall
significantly during the period, as evidenced by the semi-conductor index (SOX)
which fell nearly
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
LETTER TO THE SHAREHOLDERS MARCH 31, 1996, CONTINUED
36 percent during the six-month period. Although the Fund did selectively sell
some of its semi-conductor holdings, the Fund chose to ride out the storm with
those companies which it believes will rebound after the panic selling of the
past few months is over. Among the Fund's key technology holdings on March 31,
1996 were LSI Logic Corp., Atmel Corp. and Analog Devices, Inc.
The Fund's weighting in healthcare stocks, which was increased from 19 percent
to 22 percent during the period, continues to remain a large part of the Fund's
portfolio strategy. The Fund is heavily involved in software and service
companies for hospitals and doctors' offices as productivity remains a huge
concern as businesses try to contain what they spend for medical services. Among
the Fund's key healthcare holdings on March 31, 1996 were Medaphis Corp. and
Medic Computer Systems, Inc.
As consumer confidence began to rise during the first quarter of 1996, the Fund
selectively added to its holdings in the consumer growth sector, which increased
from 7.15 percent of assets on September 30, 1995 to 8.40 percent on March 31,
1996. Among the Fund's holdings in this and the consumer products sector are
Williams-Sonoma Inc. and Cannondale Corp.
LOOKING AHEAD
Looking ahead, the Fund's portfolio manager is optimistic about the remainder of
1996, and will continue to focus on small- and medium-sized companies exhibiting
exceptional growth potential as a result of strong product and market trends.
On the economic front, we expect the U.S. economy to maintain a slow-to-moderate
pace during the remainder of 1996, and we believe that the Federal Reserve Board
will continue to make modest adjustments to monetary policy if evidence of a
weak economy re-emerges. Inflation should continue to remain subdued albeit at a
slightly higher level in the year ahead. Should interest rates remain relatively
stable in the months ahead, we believe small-cap stocks should outperform their
larger brethren.
We appreciate your support of Dean Witter Developing Growth Securities and look
forward to continuing to serve your financial needs and objectives.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (91.8%)
AGRICULTURE (0.6%)
75,000 Case Corp........................... $ 3,815,625
---------------
BANKS & THRIFTS (0.6%)
25,000 Anchor Bancorp Wisconsin, Inc....... 843,750
51,500 Downey Financial Corp............... 1,210,250
20,000 Firstar Corp........................ 895,000
25,000 TR Financial Corp................... 643,750
---------------
3,592,750
---------------
BEVERAGES (0.2%)
20,000 Canandaigua Wine Company, Inc.*..... 765,000
15,000 Odwalla, Inc.*...................... 258,750
---------------
1,023,750
---------------
BIOTECHNOLOGY (4.0%)
40,000 Agouron Pharmaceutical, Inc.*....... 1,540,000
80,000 Alteon, Inc.*....................... 810,000
80,000 Biochem Pharma, Inc.*............... 3,260,000
120,000 COR Therapeutics, Inc.*............. 1,365,000
35,000 Creative Biomolecules, Inc.*........ 323,750
145,000 Cytel Corp.*........................ 1,087,500
40,000 Genetics Institute, Inc.*........... 2,610,000
70,000 Genzyme Corp. General Division*..... 3,850,000
60,000 Gilead Sciences, Inc.*.............. 1,695,000
16,000 Incyte Pharmaceuticals, Inc.*....... 448,000
120,000 La Jolla Pharmaceutical Co.*........ 960,000
100,000 NABI, Inc.*......................... 1,312,500
70,000 OEC Medical Systems, Inc.*.......... 822,500
50,000 Pathogenesis Corp.*................. 812,500
80,000 Protein Design Labs, Inc.*.......... 1,960,000
57,500 Sangstat Medical Corp.*............. 927,187
55,500 Vertex Pharmaceuticals, Inc.*....... 1,470,750
---------------
25,254,687
---------------
BROADCAST MEDIA (2.1%)
40,000 American Radio Systems Corp.*....... 1,330,000
80,000 Cinar Films Inc. (Class B)*
(Canada)............................ 1,160,000
60,000 Heftel Broadcasting Corp.*.......... 1,200,000
110,000 Infinity Broadcasting Corp. (Class
A)*................................. 4,771,250
23,000 Lin Television Corp.*............... 810,750
60,000 SFX Broadcasting, Inc. (Class A)*... 2,025,000
100,000 Tele-Communications, Inc.*.......... 1,850,000
---------------
13,147,000
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
BUILDING MATERIALS (0.3%)
48,000 NCI Building Systems, Inc.*......... $ 1,596,000
---------------
BUSINESS EQUIPMENT (0.6%)
60,000 Micros Systems, Inc.*............... 1,470,000
100,000 Zebra Technologies Corp. (Class
A)*................................. 2,600,000
---------------
4,070,000
---------------
BUSINESS SERVICES (1.4%)
112,800 Dendrite International, Inc.*....... 2,453,400
18,000 Gartner Group, Inc. (Class A)*...... 1,098,000
110,000 Information Resources, Inc.*........ 1,567,500
4,400 IntelliQuest Information Group,
Inc.*............................... 121,000
22,000 Netscape Communications Corp.*...... 913,000
25,000 Sitel Corp.*........................ 1,125,000
73,400 UUNET Technologies, Inc.*........... 1,871,700
---------------
9,149,600
---------------
CHEMICALS (0.4%)
40,000 Hanna (M.A.) Co..................... 1,390,000
30,000 Petrolite Corp...................... 862,500
---------------
2,252,500
---------------
COMMERCIAL EQUIPMENT (0.8%)
180,000 Checkpoint Systems, Inc.*........... 4,477,500
25,000 Watsco, Inc......................... 650,000
---------------
5,127,500
---------------
COMMERCIAL SERVICES (2.8%)
26,000 APAC Teleservices, Inc.*............ 1,865,500
24,100 Barnett, Inc.*...................... 542,250
200,000 Career Horizons, Inc.*.............. 5,950,000
170,000 Iron Mountain, Inc.*................ 2,465,000
45,000 On Assignment, Inc.*................ 1,659,375
100,000 Reynolds & Reynolds Co.............. 4,100,000
31,000 Sunguard Data Systems, Inc.*........ 1,038,500
---------------
17,620,625
---------------
COMPUTER - AIDED DESIGN (2.3%)
60,000 3D Systems Corp.*................... 1,252,500
60,000 Cadence Design Systems, Inc.*....... 2,647,500
100,000 Macromedia, Inc.*................... 4,275,000
100,000 MetaTools, Inc.*.................... 1,850,000
13,500 Segue Software, Inc.*............... 280,125
282,000 Silicon Valley Research Inc.*....... 1,233,750
101,000 Synopsys, Inc.*..................... 3,206,750
---------------
14,745,625
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMPUTER SERVICES (2.2%)
200,000 Amdahl Corp.*....................... $ 1,700,000
135,000 American Management Systems,
Inc.*............................... 3,442,500
61,100 Anicom, Inc.*....................... 824,850
100,000 Computer Horizons Corp.*............ 3,775,000
91,000 Computer Task Group, Inc............ 1,854,125
70,000 DST Systems, Inc.*.................. 2,143,750
---------------
13,740,225
---------------
COMPUTER SOFTWARE (5.8%)
65,000 Borland International, Inc.*........ 1,161,875
70,000 Business Objects S.A. (ADR)*
(France)............................ 5,950,000
50,000 Ciber, Inc.*........................ 1,637,500
25,000 Clarify, Inc.*...................... 962,500
6,100 Elcom International, Inc.*.......... 42,700
70,000 Fulcrum Technologies, Inc.*......... 2,607,500
69,000 Geoworks*........................... 2,052,750
37,000 Hummingbird Communications Ltd.*
(Canada)............................ 1,378,250
22,000 Integrated Systems, Inc.*........... 1,061,500
30,000 JDA Software Group, Inc.*........... 356,250
65,000 Kronos, Inc.*....................... 1,657,500
40,000 McAfee Associates, Inc.*............ 2,190,000
75,000 Micrografx, Inc.*................... 965,625
35,000 Novadigm, Inc.*..................... 525,000
90,000 Peoplesoft, Inc.*................... 5,175,000
4,500 Raptor Systems, Inc.*............... 133,875
65,000 Rational Software Corp.*............ 2,567,500
60,000 Renaissance Solutions Inc.*......... 1,740,000
75,000 Saville Systems Ireland PLC (ADR)*
(Ireland)........................... 1,396,875
20,000 Security Dynamics Technologies,
Inc.*............................... 1,050,000
36,000 TCSI Corp.*......................... 1,044,000
20,000 Visio Corp.*........................ 560,000
42,000 Wonderware Corp.*................... 987,000
19,800 Workgroup Technology Corp.*......... 425,700
---------------
37,628,900
---------------
COMPUTER SOFTWARE & SERVICES (0.6%)
60,000 Analysts International Corp......... 2,010,000
42,000 Inso Corp.*......................... 1,921,500
---------------
3,931,500
---------------
COMPUTERS (0.2%)
50,000 Storage Technology Corp.*........... 1,306,250
---------------
COMPUTERS - PERIPHERAL EQUIPMENT (0.7%)
95,000 Nimbus CD International, Inc.*...... 748,125
65,000 Seagate Technology, Inc.*........... 3,558,750
---------------
4,306,875
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
CONSUMER PRODUCTS (1.4%)
95,000 Blyth Industries, Inc.*............. $ 3,158,750
45,000 Cannondale Corp.*................... 787,500
52,000 Galoob (Lewis) Toys, Inc.*.......... 1,053,000
50,000 Oakley, Inc.*....................... 1,887,500
60,000 Rexall Sundown, Inc.*............... 1,807,500
---------------
8,694,250
---------------
CONSUMER SERVICES (2.5%)
70,000 America Online, Inc.*............... 3,928,750
100,000 Apollo Group, Inc. (Class A)*....... 3,875,000
39,000 Devry, Inc.*........................ 1,326,000
150,000 Protection One, Inc.*............... 2,193,750
97,600 Spyglass, Inc.*..................... 2,110,600
75,000 Sylvan Learning Systems, Inc.*...... 2,681,250
---------------
16,115,350
---------------
ENTERTAINMENT & LEISURE TIME (0.4%)
40,000 Grand Casinos, Inc.*................ 1,200,000
70,000 Softkey International, Inc.*........ 1,400,000
---------------
2,600,000
---------------
ENVIRONMENTAL (2.1%)
145,000 Memtec Ltd. (ADR)* (Australia)...... 3,860,625
35,000 Molten Metal Technology, Inc.*...... 1,163,750
110,000 Philip Environmental, Inc.*
(Canada)............................ 701,250
26,000 Sanifill, Inc.*..................... 997,750
55,000 U.S. Filter Corp.*.................. 1,540,000
100,000 United Waste Systems, Inc.*......... 4,900,000
---------------
13,163,375
---------------
FINANCIAL SERVICES (1.8%)
64,000 Finova Group Inc.................... 3,496,000
3,800 First USA Paymentech, Inc.*......... 133,950
30,000 First USA, Inc...................... 1,698,750
48,000 Intuit, Inc.*....................... 2,148,000
22,400 Sterling Commerce, Inc.*............ 688,800
100,000 Transaction Network Services,
Inc.*............................... 3,450,000
---------------
11,615,500
---------------
HEALTHCARE - DISTRIBUTION (1.5%)
150,000 Omnicare, Inc....................... 8,081,250
42,000 Schein (Henry), Inc.*............... 1,218,000
---------------
9,299,250
---------------
HEALTHCARE PRODUCTS (0.5%)
60,000 De Rigo SpA (ADR)* (Italy).......... 1,687,500
48,000 Sola International, Inc.*........... 1,494,000
---------------
3,181,500
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
HEALTHCARE SERVICES (3.4%)
25,000 Access Health Marketing, Inc.*...... $ 968,750
85,000 Genesis Health Ventures, Inc.*...... 3,431,875
92,400 Mariner Health Group, Inc.*......... 1,501,500
45,000 Medpartners/Mullikin, Inc.*......... 1,282,500
15,000 National Surgery Centers, Inc.*..... 472,500
15,000 NCS Healthcare, Inc.*............... 367,500
65,000 Nellcor Puritan Bennett, Inc.*...... 4,176,250
48,200 Orthodontic Centers of America,
Inc.*............................... 1,446,000
130,000 PhyCor, Inc.*....................... 5,687,500
45,000 Total Renal Care Holdings, Inc.*.... 1,400,625
30,000 Veterinary Centers of America,
Inc.*............................... 806,250
---------------
21,541,250
---------------
HOME BUILDING (0.3%)
80,000 Clayton Homes, Inc.................. 1,670,000
---------------
HOSPITAL MANAGEMENT & HEALTH MAINTENANCE
ORGANIZATIONS (1.1%)
200,000 Healthsouth Corp.*.................. 6,800,000
---------------
HOTELS/MOTELS (2.5%)
190,000 HFS, Inc.*.......................... 9,238,750
114,600 La Quinta Inns, Inc................. 3,366,375
70,000 Red Roof Inns Inc.*................. 1,041,250
110,000 Renaissance Hotel Group NV* (Hong
Kong)............................... 2,365,000
---------------
16,011,375
---------------
HOUSEHOLD FURNISHINGS & APPLIANCES (0.2%)
38,600 Miller (Herman), Inc................ 1,196,600
---------------
INSURANCE (2.7%)
35,000 Ace, Ltd. (Bermuda)................. 1,561,875
75,000 American Travellers Corp.*.......... 2,221,875
96,000 Delphi Financial Group, Inc.*....... 2,304,000
40,000 Exel, Ltd. (Bermuda)................ 2,760,000
70,000 Lawyers Title Corp.................. 1,312,500
60,000 Mid Ocean Ltd. (Bermuda)............ 2,317,500
55,000 PartnerRe Ltd. (Bermuda)............ 1,629,375
30,000 Stewart Information Services
Corp................................ 592,500
50,000 U.S. Facilities Corp................ 918,750
40,000 Vesta Insurance Group, Inc.......... 1,305,000
---------------
16,923,375
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
LOCAL AREA NETWORKING (3.2%)
160,000 Bay Networks, Inc.*................. $ 4,920,000
70,000 Cisco Systems, Inc.*................ 3,246,250
75,000 FORE Systems, Inc.*................. 5,353,125
110,000 Madge Networks NV* (Netherlands).... 4,386,250
60,000 NetStar, Inc.*...................... 945,000
40,000 Network General Corp.*.............. 1,580,000
---------------
20,430,625
---------------
MANUFACTURING (0.1%)
40,000 NN Ball & Roller, Inc............... 880,000
---------------
MEDICAL PRODUCTS & SUPPLIES (1.2%)
40,000 Capstone Pharmacy Services*......... 360,000
40,000 Clintrials, Inc.*................... 1,385,000
60,000 Guidant Corp........................ 3,247,500
70,000 Physician Sales & Service, Inc.*.... 1,732,500
40,000 Spine-Tech, Inc.*................... 910,000
---------------
7,635,000
---------------
MEDICAL SERVICES (2.3%)
150,000 Boston Scientific Corp.*............ 6,900,000
35,000 InStent, Inc.*...................... 778,750
17,500 Neuromedical Systems, Inc.*......... 378,437
43,000 Protocol Systems, Inc.*............. 714,875
100,000 Staar Surgical Co.*................. 1,400,000
35,000 Thermolase Corp.*................... 848,750
100,000 VISX, Inc.*......................... 3,600,000
---------------
14,620,812
---------------
MEDICAL SOFTWARE (3.7%)
90,000 Envoy Corp.*........................ 2,092,500
40,000 Imnet Systems, Inc.*................ 1,190,000
170,000 Medaphis Corp.*..................... 8,266,250
70,000 Medic Computer Systems, Inc.*....... 5,302,500
22,000 Quality Systems, Inc.*.............. 473,000
100,000 Shared Medical Systems Corp......... 6,000,000
---------------
23,324,250
---------------
OFFICE EQUIPMENT & SUPPLIES (2.6%)
80,000 Corporate Express, Inc.*............ 2,630,000
82,500 Daisytek International Corp.*....... 2,640,000
110,000 Danka Business Systems PLC (ADR)*
(United Kingdom).................... 4,647,500
76,500 Staples, Inc.*...................... 1,558,688
85,000 Viking Office Products, Inc.*....... 4,717,500
---------------
16,193,688
---------------
OIL & GAS PRODUCTS (1.6%)
105,000 Chesapeake Energy Corp.*............ 4,856,250
20,000 Stone Energy Corp.*................. 335,000
90,000 Triton Energy Corp.................. 5,017,500
---------------
10,208,750
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
OIL DRILLING & SERVICES (3.2%)
140,000 Ensco International Inc.*........... $ 3,902,500
50,000 Global Industries Ltd.*............. 1,050,000
100,000 Global Marine, Inc.*................ 1,000,000
180,000 Input/Output, Inc.*................. 5,580,000
323,000 Marine Drilling Co., Inc.*.......... 2,543,625
75,000 Noble Drilling Corp.*............... 946,875
150,000 Smith International, Inc.*.......... 3,787,500
30,000 Western Atlas Inc.*................. 1,800,000
---------------
20,610,500
---------------
PHARMACEUTICALS (3.4%)
85,000 Alliance Pharmaceutical Corp.*...... 1,466,250
63,000 Alza Corp.*......................... 1,937,250
100,000 Dura-Pharmaceuticals, Inc.*......... 4,950,000
60,000 Guilford Pharmaceuticals, Inc.*..... 1,305,000
20,000 IDEC Pharmaceuticals Corp.*......... 442,500
25,000 Interneuron Pharmaceuticals,
Inc.*............................... 925,000
70,000 Ivax Corp........................... 1,811,250
60,000 Jones Medical Industries, Inc....... 2,295,000
159,000 Royce Laboratories, Inc.*........... 1,421,063
70,000 Sequus Pharmaceuticals, Inc.*....... 962,500
110,000 Teva Pharmaceutical Industries Ltd.
(ADR) (Israel)...................... 4,207,500
---------------
21,723,313
---------------
PRECISION INSTRUMENTS (0.6%)
70,000 Millipore Corp...................... 2,677,500
25,000 Perkin-Elmer Corp................... 1,353,125
---------------
4,030,625
---------------
RESTAURANTS (0.5%)
40,000 BAB Holdings, Inc.*................. 310,000
31,000 Boston Chicken, Inc.*............... 1,054,000
76,100 Daka International, Inc.*........... 1,902,500
---------------
3,266,500
---------------
RETAIL (1.7%)
60,000 AnnTaylor Stores Corp.*............. 1,080,000
50,000 Gucci Group NV (ADR)* (Italy)....... 2,400,000
78,800 Gymboree Corp. (The)*............... 2,048,800
100,000 Men's Wearhouse, Inc. (The)*........ 3,100,000
73,000 Stein Mart, Inc.*................... 1,095,000
30,200 Talbot's, Inc. (The)................ 1,147,600
---------------
10,871,400
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
RETAIL - SPECIALTY (1.7%)
80,000 Bed, Bath & Beyond, Inc.*........... $ 4,220,000
60,000 Kohl's Corp.*....................... 3,802,500
53,000 PetSmart, Inc.*..................... 1,921,250
30,000 Williams-Sonoma Inc.*............... 671,250
---------------
10,615,000
---------------
SEMICONDUCTOR EQUIPMENT (1.2%)
100,000 KLA Instruments Corp.*.............. 2,250,000
110,000 MEMC Electronic Materials, Inc.*.... 4,001,250
90,000 Ultratech Stepper, Inc.*............ 1,563,750
---------------
7,815,000
---------------
SEMICONDUCTORS (2.4%)
145,000 Analog Devices, Inc.*............... 4,060,000
60,000 Atmel Corp.*........................ 1,522,500
145,000 International Rectifier Corp.*...... 2,610,000
100,000 LSI Logic Corp.*.................... 2,675,000
75,000 Microchip Technology, Inc.*......... 2,025,000
90,000 Unitrode Corp.*..................... 2,182,500
---------------
15,075,000
---------------
TELECOMMUNICATION EQUIPMENT (5.5%)
97,500 Andrew Corp.*....................... 3,729,375
35,000 Aspect Telecommunications Corp.*.... 1,601,250
10,000 Boston Technology, Inc.*............ 132,500
110,000 Comverse Technology, Inc.*.......... 2,653,750
80,000 Dialogic Corp.*..................... 3,380,000
85,000 General Instrument Corp.*........... 2,326,875
100,000 Glenayre Technologies, Inc.*........ 3,825,000
60,000 Global Village Communications,
Inc.*............................... 892,500
16,000 Microcom, Inc.*..................... 478,000
60,000 Picturetel Corp.*................... 1,845,000
60,000 Qualcomm Inc.*...................... 2,482,500
87,000 Scientific-Atlanta, Inc............. 1,544,250
70,000 U.S. Robotics Corp.*................ 9,065,000
47,000 Voice Control Systems, Inc.*........ 646,250
---------------
34,602,250
---------------
TELECOMMUNICATIONS (2.4%)
80,000 Frontier Corp....................... 2,520,000
100,000 IntelCom Group, Inc.*............... 1,775,000
62,000 Intercel, Inc.*..................... 1,395,000
107,000 Intermedia Communications of
Florida, Inc.*...................... 1,926,000
110,000 LCI International, Inc.*............ 2,695,000
50,000 MFS Communication Co., Inc.*........ 3,112,500
85,000 U.S. Long Distance Corp.*........... 1,700,000
---------------
15,123,500
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS - WIRELESS (2.4%)
110,000 Arch Communications Group, Inc.*.... $ 2,543,750
95,000 CommNet Cellular, Inc.*............. 2,624,375
100,000 Globalstar Telecommunications Ltd.*
(Bermuda)........................... 5,075,000
100,000 MobileMedia Corp.*.................. 2,037,500
120,000 Paging Network, Inc.*............... 3,000,000
---------------
15,280,625
---------------
TEXTILES - APPAREL (1.1%)
19,000 Jones Apparel Group, Inc.*.......... 921,500
25,000 Kenneth Cole Productions, Inc.*..... 446,875
60,000 Marisa Christina, Inc.*............. 1,177,500
40,000 Nautica Enterprises, Inc.*.......... 1,900,000
95,000 Wolverine World Wide, Inc........... 2,660,000
---------------
7,105,875
---------------
TRANSPORTATION (1.6%)
17,000 Atlas Air, Inc.*.................... 631,125
60,000 Comair Holdings, Inc................ 2,062,500
90,000 Fritz Companies, Inc.*.............. 3,442,500
86,000 Hub Group, Inc.*.................... 1,515,750
49,800 Midwest Express Holdings, Inc.*..... 1,867,500
55,000 Offshore Logistics, Inc.*........... 721,875
---------------
10,241,250
---------------
WIDE AREA NETWORKING (3.4%)
24,000 ACT Networks, Inc.*................. 531,000
75,000 ADC Telecommunications, Inc.*....... 2,568,750
30,000 Adtran, Inc.*....................... 1,372,500
80,000 Ascend Communications, Inc.*........ 4,310,000
45,000 Cascade Communications Corp.*....... 4,038,750
120,000 Tellabs, Inc.*...................... 5,790,000
69,000 Teltrend, Inc.*..................... 3,070,500
---------------
21,681,500
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $440,271,593)...... 582,456,700
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (8.9%)
COMMERCIAL PAPER (a) (1.6%)
AUTOMOTIVE - FINANCE
$ 10,000 Ford Motor Credit Co.
5.45% due 04/04/96
(Amortized Cost $9,995,458)......... 9,995,458
---------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (a) (7.3%)
$ 40,000 Federal Home Loan Banks 5.35% due
04/02/96............................ $ 39,994,056
6,500 Federal Home Loan Mortgage Corp.
5.30% due 04/01/96.................. 6,500,000
---------------
TOTAL U.S. GOVERNMENT AGENCIES
(AMORTIZED COST $46,494,056)........ 46,494,056
---------------
REPURCHASE AGREEMENT (0.0%)
218 The Bank of New York 4.50% due
04/01/96 (dated 03/29/96; proceeds
$218,794; collateralized by $208,697
U.S. Treasury Bond 7. 25% due
05/15/16 valued at $223,086)
(Identified Cost $218,712).......... 218,712
---------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $56,708,226)....... 56,708,226
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST $496,979,819)
(B)........................... 100.7% 639,164,926
LIABILITIES IN EXCESS OF OTHER
ASSETS........................ (0.7) (4,458,898)
----- ------------
NET ASSETS.................... 100.0% $634,706,028
----- ------------
----- ------------
<FN>
- ---------------------
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 approximates identified
cost. The aggregate gross unrealized appreciation was $154,403,513 and the
aggregate gross unrealized depreciation was $12,585,130, resulting in net
unrealized appreciation of $141,818,383.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $496,979,819)............................ $639,164,926
Receivable for:
Shares of beneficial interest sold...................... 3,239,968
Investments sold........................................ 2,746,414
Dividends............................................... 93,242
Prepaid expenses and other assets........................... 79,617
------------
TOTAL ASSETS........................................... 645,324,167
------------
LIABILITIES:
Payable for:
Investments purchased................................... 9,152,119
Plan of distribution fee................................ 522,071
Shares of beneficial interest repurchased............... 496,661
Investment management fee............................... 258,571
Accrued expenses............................................ 188,717
------------
TOTAL LIABILITIES...................................... 10,618,139
------------
NET ASSETS:
Paid-in-capital............................................. 445,851,894
Net unrealized appreciation................................. 142,185,107
Accumulated net investment loss............................. (2,508,958)
Accumulated undistributed net realized gain................. 49,177,985
------------
NET ASSETS............................................. $634,706,028
------------
------------
NET ASSET VALUE PER SHARE,
25,635,258 SHARES OUTSTANDING (UNLIMITED
SHARES AUTHORIZED OF $.01 PAR VALUE)......................
$24.76
------------
------------
</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, 1996 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Interest.................................................... $ 1,935,594
Dividends (net of $4,890 foreign withholding tax)........... 389,695
------------
TOTAL INCOME........................................... 2,325,289
------------
EXPENSES
Plan of distribution fee.................................... 2,820,165
Investment management fee................................... 1,402,021
Transfer agent fees and expenses............................ 364,032
Registration fees........................................... 68,607
Custodian fees.............................................. 46,176
Shareholder reports and notices............................. 34,483
Trustees' fees and expenses................................. 28,993
Professional fees........................................... 27,835
Other....................................................... 8,161
------------
TOTAL EXPENSES......................................... 4,800,473
------------
NET INVESTMENT LOSS.................................... (2,475,184)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain........................................... 63,664,289
Net change in unrealized appreciation....................... (29,936,247)
------------
NET GAIN............................................... 33,728,042
------------
NET INCREASE................................................ $ 31,252,858
------------
------------
</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, 1996 FOR THE YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss......................................... $ (2,475,184) $ (3,969,410)
Net realized gain........................................... 63,664,289 32,573,927
Net change in unrealized appreciation....................... (29,936,247) 129,339,870
------------------ ------------------
NET INCREASE........................................... 31,252,858 157,944,387
Distributions from net realized gain........................ (42,760,548) (2,979,381)
Net increase from transactions in shares of beneficial
interest.................................................. 111,345,214 39,734,514
------------------ ------------------
TOTAL INCREASE......................................... 99,837,524 194,699,520
NET ASSETS:
Beginning of period......................................... 534,868,504 340,168,984
------------------ ------------------
END OF PERIOD
(INCLUDING ACCUMULATED NET INVESTMENT LOSS OF $2,508,958
AND $33,774, RESPECTIVELY).............................. $634,706,028 $534,868,504
------------------ ------------------
------------------ ------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (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 and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily.
C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the record date. The amount of dividends
and distributions from net investment
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (UNAUDITED) CONTINUED
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 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 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
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (UNAUDITED) CONTINUED
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 broker-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,
1996, it received approximately $362,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares.
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, 1996 aggregated
$441,310,998 and $362,537,739, respectively.
For the six months ended March 31, 1996, the Fund incurred $88,566 in brokerage
commissions with DWR for portfolio transactions executed on behalf of the Fund.
At March 31, 1996, the Fund's receivable for investments sold included unsettled
trades with DWR of $417,251.
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 six months ended March 31, 1996
included in Trustees' fees and expenses in the Statement of Operations amounted
to $23,629. At March 31, 1996, the Fund had an accrued pension liability of
$41,632 which is included in accrued expenses in the Statement of Assets and
Liabilities.
<PAGE>
DEAN WITTER DEVELOPING GROWTH SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (UNAUDITED) CONTINUED
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At March 31, 1996, the Fund had
transfer agent fees and expenses payable of approximately $31,000.
5. SHARES OF BENEFICAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
MARCH 31, 1996
---------------------------- FOR THE YEAR ENDED
SEPTEMBER 30, 1995
(UNAUDITED) --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 10,163,643 $ 245,611,305 20,063,775 $404,852,064
Reinvestment of distributions.................................... 1,750,437 40,382,573 166,910 2,830,799
----------- -------------- ----------- ------------
11,914,080 285,993,878 20,230,685 407,682,863
Repurchased...................................................... (7,218,489) (174,648,664) (18,669,019) (367,948,349)
----------- -------------- ----------- ------------
Net increase..................................................... 4,695,591 $ 111,345,214 1,561,666 $ 39,734,514
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</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 a permanent book/tax
difference primarily attributable to a net operating loss.
<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
1996 -----------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period............... $ 25.54 $ 17.55 $ 20.50 $ 12.20 $ 14.05 $ 8.92
---------- --------- --------- --------- --------- ---------
Net investment loss................ (0.10) (0.19) -- (0.12) (0.12) (0.07)
Net realized and unrealized gain
(loss)............................ 1.24 8.34 (1.82) 8.42 (1.73) 5.20
---------- --------- --------- --------- --------- ---------
Total from investment operations... 1.14 8.15 (1.82) 8.30 (1.85) 5.13
Less distributions from net
realized gain..................... (1.92) (0.16) (1.13) -- -- --
---------- --------- --------- --------- --------- ---------
Net asset value, end of period..... $ 24.76 $ 25.54 $ 17.55 $ 20.50 $ 12.20 $ 14.05
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN+........... 5.02 %(1 46.87% (8.88)% 67.95% (13.17)% 57.51%
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 1.70 %(2 1.77% 1.78% 1.84% 1.86% 1.92%
Net investment loss................ (0.88)%(2) (1.04)% (1.32)% (1.52)% (1.14)% (0.73)%
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $634,706 $534,869 $340,169 $240,389 $112,982 $115,337
Portfolio turnover rate............ 72 %(1 114% 160% 203% 153% 88%
Average commission rate paid....... $0.0566 -- -- -- -- --
<FN>
- ---------------------
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TRUSTEES
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
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
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.
DEAN WITTER
DEVELOPING
GROWTH
SECURITIES
SEMIANNUAL REPORT
MARCH 31, 1996
