<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
Although the fourth quarter of 1993 ended on a relatively strong note, the
first quarter of 1994 was quite volatile for both the stock and bond markets. As
expected, some of this weakness carried over to the convertible market. Given
the environment, we are pleased with Dean Witter Convertible Securities Trust's
performance. For the first quarter, the Fund registered a total return -0.07
percent, versus -3.13 percent for the Lehman Brothers Government/Corporate Bond
Index. For the six-month period ended March 31, 1994, the Fund was ranked #3 out
of 24 funds in Lipper Analytical Services, Inc.'s convertible fund universe,
with a total return of 3.45 percent (the average convertible fund returned -0.17
percent, according to Lipper). The Fund's total return for the trailing 12
months ended March 31 was 10.37 percent, good for a Lipper ranking of #5 out of
23 funds.
During the period under review, the convertible market experienced an
interval of overvaluation, followed by a correction in the first quarter of
1994. The Fund's concentration in short-term, defensive convertible securities
helped it weather the volatility. In addition, the portfolio's diversification
across a wide variety of industries and its focus on value-oriented issues
helped the Fund avoid heavy exposure to industries that were especially weak.
Over the last six months, the Fund increased exposure to retailers,
health-care related companies and some cyclical areas. The Fund has been a
seller of banks and more recently, real estate investment trusts (REITs). Strong
performers in the health-care sector during the period included Integrated
Health Services, Beverly Enterprises, and Mediplex Group. Carter Hawley Hale,
which operates department stores, Southdown, Inc., which is involved in cement,
concrete and environmental services, and Tanger Factory Outlet Centers, a REIT,
also performed well for the Fund.
The Fund's emphasis is on companies and industries with strong underlying
fundamentals. The particular focus is on small-capitalization companies that
issue convertible securities. We feel this strategy will offer excellent
participation in a rising equity market and solid downside protection in a
declining market. The Fund also maintains a portion of its assets in high-coupon
convertibles to maintain a minimum income level. A small portion of the Fund's
assets are invested in common stocks to help it diversify into industries and
companies not represented in the convertible universe. The Fund continues to
work to provide the long-term growth available from small-capitalization stocks,
with the dual benefit of some income and significantly lower volatility than a
small-capitalization stock fund.
On March 31, 1994, the Fund paid a quarterly income dividend of $0.075 per
share -- an increase over the previous dividend level of $0.070 per share -- to
shareholders of record on March 24, 1994. For the six-month period under review,
the Fund distributed income dividends totaling approximately $0.24 per share,
including an extra income dividend of approximately $0.092 per share paid on
December 31, 1993.
The convertible market has been weak over the last month because of both
declining bond values, which generally adds support to convertibles, and
declining stock prices. We have seen substantial compression of conversion
premiums, the result of hedge funds liquidating convertible
<PAGE>
positions. Although this pressure can be painful near term, we believe the Fund
was positioned properly going into this correction. While we hesitate to make
specific projections regarding the convertible market's direction, we do believe
the combination of declining stock and bond prices and premium contraction will
provide some excellent buying opportunities in the future. We recently began
purchasing convertible bonds with attractive risk/reward profiles at
substantially lower prices compared to several months ago. As always, we
encourage you to focus on long-term growth opportunities in equity-linked
securities and view pullbacks as buying opportunities.
We appreciate your support of Dean Witter Convertible Securities Trust and
look forward to continuing to serve your investment objectives in the future.
Sincerely,
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1994 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- --------- -------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (58.3%)
CONVERTIBLES (55.9%)
AUTO PARTS (2.7%)
$ 2,750 Arvin Industries, Inc. .......................................... 7.50 % 9/30/14 $ 2,983,750
2,850 MascoTech, Inc. ................................................. 4.50 12/15/03 2,554,313
-------------
5,538,063
-------------
BUILDING MATERIALS (1.0%)
2,000 Masco Corp. ..................................................... 5.25 2/15/12 1,935,000
-------------
CHEMICALS (1.5%)
7,500 RPM Inc. Ohio ................................................... 0.00 9/30/12 3,056,250
-------------
COMPUTERS (0.9%)
1,500 EMC Corp. ....................................................... 4.25 1/01/01 1,732,500
-------------
ELECTRICAL EQUIPMENT (0.4%)
750 Magnetek, Inc. .................................................. 8.00 9/15/01 817,500
-------------
ENTERTAINMENT/GAMING (1.0%)
2,000 United Gaming, Inc. -- 144A* .................................... 7.50 9/15/03 1,920,000
-------------
FINANCIAL SERVICES (3.9%)
3,000 American Tel. & Tel. Latin American Equity -- 144A* ............. 0.00 3/30/99 2,977,500
4,000 Fidelity National Financial Inc. ................................ 0.00 2/15/09 1,725,000
3,500 Waterhouse Investment ........................................... 6.00 12/15/03 3,080,000
-------------
7,782,500
-------------
GAS TRANSMISSION (1.0%)
2,000 Consolidated Natural Gas Co. .................................... 7.25 12/15/15 2,090,000
-------------
HEALTH CARE (5.2%)
1,050 Greenery Rehabilitation Group, Inc. ............................. 8.75 4/01/15 1,026,375
1,750 Integrated Health Services, Inc. -- 144A* ....................... 5.75 1/01/01 2,086,875
725 Integrated Health Services, Inc. ................................ 6.00 1/01/03 830,125
3,700 Mediplex Group Inc. ............................................. 6.50 8/01/03 4,329,000
1,250 Novacare Inc. ................................................... 5.50 1/15/00 1,143,750
1,000 Sun Healthcare Group. -- 144A* .................................. 6.00 3/01/04 1,005,000
-------------
10,421,125
-------------
INDUSTRIALS (11.8%)
2,000 Air & Water Technologies Corp. .................................. 8.00 5/15/15 1,830,000
1,500 Audiovox Corp. -- 144A* ......................................... 6.25 3/15/01 1,395,000
3,000 Bell Sports Corp. ............................................... 4.25 11/15/00 2,602,500
3,200 Empresas ICA Sociedad Controlador ............................... 5.00 3/15/04 3,040,000
2,000 Hawley Group, Ltd. .............................................. 6.00 10/03/02 2,740,000
3,000 Laidlaw Inc. -- 144A* ........................................... 6.00 1/15/99 3,255,000
2,000 Raymond Corp. ................................................... 6.50 12/15/03 2,220,000
3,000 Titan Wheel Intl. Inc. .......................................... 4.75 12/01/00 3,525,000
3,500 U.S. Filter Corp. -- 144A* ...................................... 5.00 10/15/00 3,220,000
-------------
23,827,500
-------------
INSURANCE (1.4%)
1,300 Alexander & Alexander Services, Inc. ............................ 11.00 4/15/07 1,358,500
1,500 Horace Mann Educators Corp. ..................................... 4.00 12/01/99 1,500,000
-------------
2,858,500
-------------
MEDIA GROUP (0.8%)
3,500 Comcast Corp. ................................................... 1.125 4/15/07 1,627,500
-------------
</TABLE>
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1994 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- --------- -------------
<C> <S> <C> <C> <C>
METALS (1.9%)
$ 3,000 Freeport-McMoran, Inc. .......................................... 6.55 % 1/15/01 $ 2,741,250
1,250 Crown Resource Corp. ............................................ 5.75 8/27/01 993,750
-------------
3,735,000
-------------
OIL & GAS (2.5%)
750 Noble Affiliates, Inc. .......................................... 4.25 11/01/03 682,500
2,250 Pennzoil Co. .................................................... 4.75 10/01/03 2,070,000
2,500 Western Company of North America ................................ 7.25 1/15/15 2,312,500
-------------
5,065,000
-------------
OIL SERVICES (1.9%)
11,000 Valhi Inc. ...................................................... 0.00 10/20/07 3,905,000
-------------
PUBLISHING (4.4%)
10,000 Hollinger, Inc. ................................................. 0.00 10/05/13 3,550,000
4,500 Time Warner, Inc. ............................................... 0.00 6/22/13 1,721,250
3,522 Time Warner, Inc. ............................................... 8.75 1/10/15 3,702,503
-------------
8,973,753
-------------
REAL ESTATE INVESTMENT TRUST (2.7%)
5,000 Alexander Haggen Properties ..................................... 7.50 1/15/01 4,850,000
505 Meditrust Corp. ................................................. 9.00 1/01/02 600,950
-------------
5,450,950
-------------
RESTAURANTS (1.1%)
1,750 TPI Enterprises, Inc. ........................................... 8.25 7/15/02 2,135,000
-------------
RETAIL (4.9%)
1,500 Carter Hawley Hale Stores, Inc. -- 144A* ........................ 6.25 12/31/00 1,830,000
2,000 Costco Wholesale Corp. .......................................... 5.75 5/15/02 1,820,000
1,500 Eagle Hardware & Garden, Inc. ................................... 6.25 3/15/01 1,436,250
3,500 Federated Department Stores, Inc. ............................... 0.00 2/15/04 3,307,500
2,000 Topps Appliance City -- 144A* ................................... 6.50 11/30/03 1,400,000
-------------
9,793,750
-------------
STEEL (0.6%)
1,500 Nippon Denro Ltd. -- 144A* ...................................... 3.00 4/01/01 1,297,500
-------------
TELECOMMUNICATIONS (3.1%)
1,500 Arch Communications Group, Inc. --144A* ......................... 6.75 12/01/03 1,567,500
1,250 California Microwave Inc. ....................................... 5.25 12/15/03 1,221,875
1,000 General Instruments Corp. ....................................... 5.00 6/15/00 1,130,000
3,450 Motorola, Inc. .................................................. 0.00 9/27/13 2,337,375
-------------
6,256,750
-------------
TEXTILES (1.2%)
2,500 Interface, Inc. ................................................. 8.00 9/15/13 2,481,250
-------------
TOTAL CONVERTIBLE BONDS (IDENTIFIED COST $114,561,420) ................................. 112,700,391
-------------
NON-CONVERTIBLES (2.4%)
HEALTHCARE (1.4%)
3,000 Healthsouth Rehabilitation Corp. ................................ 9.50 4/01/01 2,940,000
-------------
RESTAURANTS (1.0%)
2,000 Flagstar Corp. .................................................. 11.375 9/15/03 1,960,000
-------------
TOTAL NON-CONVERTIBLE BONDS (IDENTIFIED COST $4,971,250) ............................... 4,900,000
-------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $119,577,424) ................................... 117,600,391
-------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
- -----------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS (23.4%)
AIRLINES (0.4%)
20,000 American Airlines Corp. $3.00 -- 144A* ............................................. 870,000
-------------
</TABLE>
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1994 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -------------
<C> <S> <C>
CHEMICALS (0.3%)
50,000 Occidental Petroleum $3.00 ......................................................... $ 697,500
-------------
COMPUTER SERVICES (1.4%)
50,000 General Motors Corp. $3.25 ......................................................... 2,800,000
-------------
ENTERTAINMENT (1.6%)
146,500 AMC Entertainment Inc. $1.75 ....................................................... 3,241,313
-------------
FINANCIAL SERVICES (1.4%)
50,000 American Express Co. $2.297 ........................................................ 1,993,750
35,000 Salomon, Inc $2.12.................................................................. 875,000
-------------
2,868,750
-------------
HEALTHCARE (1.8%)
30,300 Beverly Enterprises, Inc. $2.75 .................................................... 1,780,125
88,000 U.S. Surgical Corp. $2.198 --144A* ................................................. 1,870,000
-------------
3,650,125
-------------
INDUSTRIALS (1.4%)
30,000 Chiquita Brands Intl., Inc. Series A $2.875 ........................................ 1,612,500
25,000 Southdown, Inc. Series D $2.875 .................................................... 1,281,250
-------------
2,893,750
-------------
INSURANCE (1.3%)
65,000 Alexander & Alexander $3.625 -- 144A* .............................................. 2,665,000
-------------
MACHINERY (1.0%)
80,000 Cooper Industries, Inc. $5.60 ...................................................... 1,910,000
-------------
METALS (1.8%)
100,000 Freeport McMoran Copper & Gold, Inc. $1.25 ......................................... 2,450,000
100,000 Kaiser Aluminum Corp. $.65 ......................................................... 775,000
45,500 Kaiser Aluminum Corp. Series D $.97 ................................................ 455,000
-------------
3,680,000
-------------
OIL & GAS (0.7%)
30,000 Valero Energy Corp. $3.125 ......................................................... 1,455,000
-------------
PAPER (1.1%)
52,000 Boise Cascade Corp. Series G $1.58 ................................................. 1,183,000
44,500 Bowater, Inc. Series B $1.645 ...................................................... 1,051,313
-------------
2,234,313
-------------
REAL ESTATE (0.8%)
40,000 Catellas Development Corp. $3.625 -- 144A* ......................................... 1,660,000
-------------
REAL ESTATE INVESTMENT TRUSTS (2.1%)
40,000 Merry Land & Investment Co. $1.75 .................................................. 1,130,000
36,900 Tanger Factory Outlet, Inc. Series A $1.575 ........................................ 1,033,200
90,000 Wellsford Residential Properties Series A $1.75 .................................... 2,002,500
-------------
4,165,700
-------------
REGIONAL BANKS (3.3%)
25,000 Norwest Corp. $3.50 ................................................................ 1,787,500
42,000 Peoples Bank Bridgeport Conn. $4.25 ................................................ 2,604,000
35,000 Roosevelt Financial Group $3.25 .................................................... 2,170,000
-------------
6,561,500
-------------
RESTAURANT (0.6%)
50,000 Flagstar Cos., Inc. Series A $2.875 ................................................ 1,137,500
-------------
SAVINGS & LOAN ASSOCIATIONS (0.6%)
20,000 Great Western Financial Corp. $4.375 ............................................... 1,115,000
-------------
TELECOMMUNICATIONS (0.4%)
30,000 Mobile Telecommunications Corp. $2.25 -- 144A* ..................................... 858,750
-------------
GAS TRANSMISSION (1.0%)
40,000 Transco Energy Co. Series E $3.50 -- 144A* ......................................... 1,920,000
-------------
WASTE MANAGEMENT (0.4%)
40,000 International Technology Corp. $1.75 ............................................... 845,000
-------------
TOTAL CONVERTIBLE PREFERRED STOCKS (IDENTIFIED COST $48,035,130) 47,229,201
-------------
</TABLE>
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1994 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -------------
<C> <S> <C>
COMMON STOCKS (10.7%)
BEVERAGE (0.5%)
40,000 Cott Corp. ......................................................................... $ 990,000
-------------
BROADCAST MEDIA (0.4%)
88,571 Westwood One, Inc. ................................................................. 808,210
-------------
CHEMICALS (0.7%)
85,000 Occidental Petroleum ............................................................... 1,370,625
-------------
ENTERTAINMENT (0.0%)
6,000 AMC Entertainment, Inc. ............................................................ 63,750
-------------
HOME BUILDING (0.3%)
40,000 Toll Brothers, Inc. ................................................................ 555,000
-------------
HEALTHCARE (0.8%)
35,000 Mediplex Group, Inc. (a) ........................................................... 1,128,750
21,400 Grancare, Inc. (a) ................................................................. 430,675
-------------
1,559,425
-------------
LIFE INSURANCE (0.4%)
60,000 Western National Corp. ............................................................. 765,000
-------------
MANUFACTURING (0.6%)
90,000 Foamex International, Inc. (a) ..................................................... 1,237,500
-------------
REAL ESTATE INVESTMENT TRUST (4.4%)
65,000 Avalon Properties, Inc. ............................................................ 1,430,000
15,000 Chelsea GCA Realty, Inc. ........................................................... 414,375
54,600 Colonial Properties Trust (a)....................................................... 1,235,325
50,000 Irvine Apartment Comunities, Inc. .................................................. 993,750
26,600 McArthur/Glen Realty Corp. ......................................................... 651,700
30,000 Oasis Residential, Inc. ............................................................ 795,000
60,000 Summit Properties, Inc. ............................................................ 1,200,000
100,000 Urban Shopping Centers, Inc. ....................................................... 2,150,000
-------------
8,870,150
-------------
RESTAURANTS (0.2%)
50,000 Flagstar Cos., Inc. ................................................................ 475,000
-------------
RETAIL (0.4%)
45,000 Woolworth Corp. .................................................................... 680,625
-------------
SAVINGS & LOAN ASSOCIATIONS (0.9%)
30,000 Ahmanson H F & Co. ................................................................. 506,250
75,000 Commercial Federal Corp. (a)........................................................ 1,350,000
-------------
1,856,250
-------------
TELECOMMUNICATION (0.9%)
30,000 Telefonos de Mexico S.A. Series L ADR + ............................................ 1,807,500
-------------
WASTE DISPOSAL (0.2%)
148,200 International Technology Corp. ..................................................... 426,075
-------------
TOTAL COMMON STOCKS (IDENTIFIED COST $22,105,333) .................................. 21,465,110
-------------
</TABLE>
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1994 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS) VALUE
- ------------- -------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS (10.3%)
U.S. GOVERNMENT AGENCIES (B) (9.4%)
$ 5,600 Federal Farm Credit Bank 3.49% due 4/04/94 ............................................ $ 5,598,372
6,000 Federal Home Loan Banks 3.45% due 4/04/94 ............................................. 5,998,275
7,300 Federal National Mortgage Association 3.47% due 4/04/94 ............................... 7,297,185
-------------
TOTAL U.S. GOVERNMENT AGENCIES (AMORTIZED COST $18,893,832) ........................... 18,893,832
-------------
REPURCHASE AGREEMENT (0.9%)
The Bank of New York 3.50% due 4/4/94 (dated 3/31/94; proceeds $1,880,505;
1,880 collateralized by $1,975,481 U.S. Treasury Note 3.50% due 2/15/03 valued at $1,917,928)
(Identified Cost $1,880,320) .......................................................... $ 1,880,320
-------------
TOTAL SHORT-TERM INVESTMENTS (IDENTIFIED COST $20,774,152) ............................ 20,774,152
-------------
TOTAL INVESTMENTS (IDENTIFIED COST $210,492,039)(C) ........................ 102.7% 207,068,854
LIABILITIES IN EXCESS OF OTHER ASSETS ...................................... (2.7) (5,374,932)
--------- -------------
NET ASSETS ................................................................. 100.0% $ 201,693,922
--------- -------------
--------- -------------
<FN>
- ------------------------------
* RESALE IS RESTRICTED TO QUALIFIED INSTITUTIONAL INVESTORS.
+ AMERICAN DEPOSITORY RECEIPT
(A) NON-INCOME PRODUCING SECURITY.
(B) U.S. GOVERNMENT AGENCIES WERE PURCHASED ON A DISCOUNT BASIS. THE RATES
SHOWN HAVE BEEN ADJUSTED TO REFLECT A BOND EQUIVALENT YIELD.
(C) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $212,829,180; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $3,142,470 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $8,902,796, RESULTING IN NET UNREALIZED
DEPRECIATION OF $5,760,326.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1994 (UNAUDITED)
- --------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $210,492,039) (Note
1)...................................... $ 207,068,854
Receivable for:
Investments sold (Note 4).............. 3,441,481
Interest............................... 1,358,595
Dividends.............................. 252,166
Shares of beneficial interest sold..... 217,244
Prepaid expenses and other assets........ 27,726
-------------
TOTAL ASSETS..................... 212,366,066
-------------
LIABILITIES:
Payable for:
Investments purchased.................. 9,912,017
Shares of beneficial interest
repurchased........................... 225,955
Plan of distribution fee (Note 3)...... 178,438
Investment management fee (Note 2)..... 107,063
Dividends to shareholders................ 83,503
Accrued expenses and other payables (Note
4)...................................... 165,168
-------------
TOTAL LIABILITIES................ 10,672,144
-------------
NET ASSETS:
Paid-in-capital.......................... 583,157,722
Accumulated net realized loss on
investments............................. (380,027,080)
Net unrealized depreciation on
investments............................. (3,423,185)
Accumulated undistributed net investment
income.................................. 1,986,465
-------------
NET ASSETS....................... $ 201,693,922
-------------
-------------
NET ASSET VALUE PER SHARE, 18,753,745
shares outstanding (unlimited authorized
shares of $.01 par value)............... $10.75
-------------
-------------
</TABLE>
STATEMENT OF OPERATIONS FOR THE SIX
MONTHS ENDED MARCH 31, 1994 (UNAUDITED)
- --------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME
Interest.............................. $ 3,526,962
Dividends (net of $302 of foreign
withholding tax)..................... 1,639,527
-----------
TOTAL INCOME...................... 5,166,489
-----------
EXPENSES
Plan of distribution fee (Note 3)..... 1,036,497
Investment management fee (Note 2).... 621,898
Transfer agent fees and expenses
(Note 4)............................. 254,800
Professional fees..................... 37,502
Custodian fees........................ 30,030
Shareholder reports and notices....... 25,976
Registration fees..................... 15,944
Trustees' fees and expenses (Note
4)................................... 5,913
Other................................. 5,879
-----------
TOTAL EXPENSES.................... 2,034,439
-----------
NET INVESTMENT INCOME........... 3,132,050
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 1):
Net realized gain on investments........ 23,587,188
Net change in unrealized appreciation on
investments............................ (19,480,527)
-----------
NET GAIN ON INVESTMENTS........... 4,106,661
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...... $ 7,238,711
-----------
-----------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
MARCH 31, 1994 SEPTEMBER 30,
(UNAUDITED) 1993
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................................ $ 3,132,050 $ 7,329,034
Net realized gain on investments..................................... 23,587,188 25,935,964
Net change in unrealized appreciation on investments................. (19,480,527) 11,444,791
--------------- ---------------
Net increase in net assets resulting from operations............. 7,238,711 44,709,789
Dividends to shareholders from net investment income................... (4,458,287) (7,306,204)
Net decrease from shares of beneficial interest transactions........... (8,980,067) (47,158,302)
--------------- ---------------
Total decrease................................................... (6,199,643) (9,754,717)
NET ASSETS:
Beginning of period.................................................... 207,893,565 217,648,282
--------------- ---------------
END OF PERIOD (including undistributed net investment income of
$1,986,465 and $ 3,312,702, respectively)............................ $ 201,693,922 $ 207,893,565
--------------- ---------------
--------------- ---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- Dean Witter Convertible Securities
Trust (the "Fund") was organized on May 21, 1985 as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
(the "Act"), as a diversified, open-end management investment company. The Fund
commenced operations on October 31, 1985.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity portfolio security listed or
traded on the New York or American Stock Exchange is valued at its latest
sale price on that exchange (if there were no sales that day, the security
is valued at the closing bid price); (2) all other portfolio securities for
which over-the-counter market quotations are readily available are valued at
the latest bid price; (3) when market quotations are not readily available,
including circumstances under which it is determined by the Adviser 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); (4) certain of the Fund's portfolio securities
may be valued by an outside pricing service approved by the Fund's Trustees.
The pricing service utilizes a matrix system incorporating security quality,
maturity and coupon as the evaluation model parameters, and/or research and
evaluations by its staff, including review of broker-dealer market price
quotations, in determining what it believes is the fair valuation of the
portfolio securities valued by such pricing service; (5) the fair value of
short-term debt securities which mature at a date less than sixty days
subsequent to the valuation date will be determined on an amortized cost or
amortized value basis; other short-term debt securities will be valued on a
mark-to-market basis until such time as they reach a maturity of 60 days,
whereupon they will be valued at amortized value unless the Trustees
determine such does not reflect the securities' fair value, in which case
these securities will be valued at their fair value as determined by the
Trustees; and (6) the value of other assets will be determined in good faith
at fair value under procedures established by and under the general
supervision of the Fund's Trustees.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). In computing net
investment income, the Fund does not amortize premiums or accrue discounts
on fixed income securities in the portfolio, except those original issue
discounts for which amortization is required for federal income tax
purposes. Additionally, with respect to market discount, a portion of any
gain realized upon disposition may be recharacterized as investment income.
Realized gains and losses on security transactions are determined on the
identified cost method. Dividend income is recorded on the ex-dividend date.
Interest income is accrued daily except where collection is not expected.
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
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
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
reclassifications. Dividends and distributions which exceed net investment
income and net realized capital gains for financial reporting purposes but
not for tax purposes are reported as dividends in excess of net investment
income or distributions in excess of net realized capital gains. To the
extent they exceed net investment income and net realized capital gains for
tax purposes, they are reported as distributions of paid-in-capital.
E. REPURCHASE AGREEMENTS -- The Fund's custodian takes possession on behalf
of the Fund of the collateral pledged for investments in repurchase
agreements. It is the policy of the Fund to value the underlying collateral
daily on a mark-to-market basis to determine that the value, including
accrued interest, is at least equal to the repurchase price plus accrued
interest. In the event of default of the obligation to repurchase, the Fund
has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation.
2. INVESTMENT MANAGEMENT AGREEMENT -- Pursuant to an Investment Management
Agreement (the "Agreement") with Dean Witter InterCapital Inc. (the "Investment
Manager"), the Fund pays its Investment Manager a management fee, accrued daily
and payable monthly, by applying the following annual rates to the net assets of
the Fund determined as of the close of each business day: 0.60% of the portion
of the daily net assets not exceeding $750 million; 0.55% of the portion of the
daily net assets exceeding $750 million but not exceeding $1 billion; 0.50% of
the portion of the daily net assets exceeding $1 billion but not exceeding $1.5
billion; 0.475% of the portion of the daily net assets exceeding $1.5 billion
but not exceeding $2 billion; 0.45% of the portion of the daily net assets
exceeding $2 billion but not exceeding $3 billion; and 0.425% of the portion of
the daily net assets exceeding $3 billion.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes office space and facilities, equipment, clerical,
bookkeeping and certain legal services, and pays the salaries of all personnel,
including officers of the Fund, who are employees of the Investment Manager. The
Investment Manager also bears the cost of telephone services, heat, light, power
and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION -- Shares of the Fund are distributed by Dean Witter
Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager.
The Fund has adopted a Plan of Distribution (the "Plan"), pursuant to Rule 12b-1
under the Act pursuant to which the Fund pays the Distributor compensation,
accrued daily and payable monthly, at the annual rate of 1.0% of the lesser of:
(a) the average daily aggregate gross sales of the Fund's shares since the
inception of the Fund (not including reinvestments of dividends or capital gains
distributions), less the average daily aggregate net asset value of the Fund's
shares redeemed since the 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 Dean Witter Reynold's Inc.'s account executives and others,
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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; 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 or 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, 1994, it received approximately $15,000 in contingent deferred sales charges
from redemptions of the Fund's shares. The Fund's shareholders pay such charges
which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and the proceeds from sales of portfolio securities for the six months
ended March 31, 1994, excluding short-term investments, aggregated $241,217,995
and $257,794,964, respectively. For the same period, the Fund incurred brokerage
commissions of $20,610 with Dean Witter Reynolds Inc. for transactions executed
on behalf of the Fund. Included in the Fund's receivable for investments sold is
$266,991 for unsettled trades with Dean Witter Reynolds Inc.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At March 31, 1994, the Fund had
transfer agent fees and expenses payable of $58,040.
On April 1, 1991, the Fund established an unfunded noncontributory defined
benefit pension plan covering all independent Trustees of the Fund who will have
served as Independent Trustee for at least five years at the time of retirement.
Benefits under this plan are based on years of service and compensation during
the last five years of service. Aggregate pension cost for the six months ended
March 31, 1994, included in Trustees' fees and expenses in the Statement of
Operations, amounted to $4,577. At March 31, 1994, the Fund had an accrued
pension liability of $40,827 which is included in accrued expenses in the
Statement of Assets and Liabilities.
5. FEDERAL INCOME TAX STATUS -- During the year ended September 30, 1993, the
Fund utilized approximately $25,488,000 of its net capital loss carryovers. At
September 30, 1993, the Fund had net capital loss carryovers of approximately
$403,381,000 of which $40,101,000 will be available through September 30, 1996,
$218,065,000 will be availble through September 30, 1997, $36,349,000 will be
available through September 30, 1998, $46,135,000 will be available through
September 30, 1999 and $62,731,000 will be available through September 30, 2000
to offset future capital gains to the extent provided by regulations.
As of September 30, 1993, the Fund had temporary book/tax differences
primarily attributable to capital loss deferrals on wash sales and corporate
reorganizations and permanent book/tax differences primarily attributable to
corporate reorganizations. To reflect reclassifications arising from permanent
book/tax differences for the year ended September 30, 1993, accumulated
undistributed net investment income was credited and accumulated net realized
loss on investments was charged for $431,384.
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
6. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
MARCH 31, 1994 SEPTEMBER 30, 1993
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold.............................. 1,763,607 $ 19,532,181 1,190,150 $ 11,477,771
Reinvestment of dividends......... 348,911 3,786,014 617,822 6,123,361
----------- ------------ ----------- ------------
2,112,518 23,318,195 1,807,972 17,601,132
Repurchased....................... (2,941,597) (32,298,262) (6,630,391) (64,759,434)
----------- ------------ ----------- ------------
Net decrease...................... (829,079) $ (8,980,067) (4,822,419) $(47,158,302)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)
- --------------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding thoughout each period:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS
ENDED FOR THE YEAR ENDED SEPTEMBER 30,
MARCH 31, ------------------------------------------------
1994 1993 1992 1991 1990 1989
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................... $ 10.62 $ 8.92 $ 8.67 $ 7.65 $ 9.68 $ 8.63
----------- -------- -------- -------- -------- --------
Net investment income............... 0.18 0.37 0.34 0.37 0.46 0.48
Net realized and unrealized gain
(loss) on investments.............. 0.19 1.67 0.15 1.05 (2.06) 1.20
----------- -------- -------- -------- -------- --------
Total from investment operations...... 0.37 2.04 0.49 1.42 (1.60) 1.68
Dividends from net investment
income............................... (0.24) (0.34) (0.24) (0.40) (0.43) (0.63)
----------- -------- -------- -------- -------- --------
Net asset value, end of period........ $ 10.75 $ 10.62 $ 8.92 $ 8.67 $ 7.65 $ 9.68
----------- -------- -------- -------- -------- --------
----------- -------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN+................ 3.45%(1) 23.22% 5.69% 18.93% (16.93)% 20.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................... $201,694 $207,894 $217,648 $296,844 $413,297 $821,750
Ratio of expenses to average net
assets............................... 1.96%(2) 1.93% 1.92% 1.92% 1.88% 1.76%
Ratio of net investment income to
average net assets................... 3.02%(2) 3.44% 3.43% 4.34% 4.96% 4.93%
Portfolio turnover rate............... 125% 221% 145% 133% 92% 167%
<FN>
- ------------------------------
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TRUSTEES
- ---------------------------------------------------
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Dean Witter
Edwin J. Garn Convertible Securities
John R. Haire Trust
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling
OFFICERS
- -------------------------------------------------
Charles A. Fiumefreddo
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Sheldon Curtis
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
Ronald J. Worobel
VICE PRESIDENT
Thomas F. Caloia
TREASURER
TRANSFER AGENT
- -------------------------------------------------
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
LEGAL COUNSEL
- -------------------------------------------------
Sheldon Curtis
Two World Trade Center
New York, New York 10048
INDEPENDENT ACCOUNTANTS
- -------------------------------------------------
Price Waterhouse
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
- -------------------------------------------------
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
<TABLE>
<S> <C>
The financial statements included herein have been
taken from the records of the Fund without
examination by the independent accountants and
accordingly they do not express an opinion
thereon.
This report is submitted for the general
information of shareholders of the Fund. For more
detailed information about the Fund, its officers
and trustees, fees, expenses and other pertinent
information, please see the prospectus of the
Fund.
This report is not authorized for distribution to
prospective investors in the Fund unless preceded
or accompanied by an effective prospectus.
SEMIANNUAL REPORT
MARCH 31, 1994
</TABLE>
