<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
The fiscal year ended September 30, 1994, began on a positive note with both
the equity and fixed-income markets benefiting from low interest rates, slow
economic growth and low inflation. However, by the mid-point of the fiscal year,
a strong economy, inflationary fears and rising interest rates resulted in
increased volatility and negative performance in both markets.
UNCERTAINTY IN THE FINANCIAL MARKETS
Although the financial markets were volatile and difficult to operate in
during the fiscal year, Dean Witter Convertible Securities Trust clearly
benefited from its portfolio of convertible securities. Since convertibles
generally offer a higher level of income than the underlying common stock, they
may provide better resistance to market declines than a strictly common stock
portfolio. At the same time, a convertible's link to its underlying common stock
allows for capital appreciation potential should the value of the stock rise.
For the 12-month period ended September 30, 1994, the Trust provided a total
return of 5.02%, outperforming both the equity and fixed-income markets. During
the period, the Standard & Poor's 500
Composite Stock Price Index and the Lehman
Brothers Government/Corporate Bond Index
returned 3.69 percent and -4.14 percent,
respectively. During the fiscal year, the
Trust distributed income dividends of
approximately $0.40 per share, including
an extra income dividend of approximately
$0.09 per share, paid to shareholders of
record on December 23, 1993. The
combination of strong performance and
rising income levels resulted in the
Trust's quarterly dividend being increased
to $0.085 per share. The accompanying
chart illustrates the performance of a
$10,000 investment in the Trust since
inception (October 31, 1985) through the
fiscal year ended September 30, 1994,
versus the performance of a similar
investment in the issues represented in
the Goldman Sachs Convertible 100 Index
(the Index). The divergence between the
performance of the Trust and the Index is
attributable to the fact that the 100
issues in the Index are equally weighted
(each one represents one percent), so that
no bond or stock would significantly
impact performance. By contrast, the Trust
is not equally weighted and thus was
affected more acutely than the Index by
the extreme volatility experienced by the
convertible securities market following
the October 19, 1987 stock market crash
and the correction following the Persian
Gulf crisis in 1990. However, since a
restructuring of the portfolio that took
place at the end of June, 1992, the Trust
has more closely tracked the convertible
market and performed admirably against its
peer group. For the 12-month period ended
September 30,
<PAGE>
1994, the Trust ranked #3 out of 24 convertible securities funds, according to
Lipper Analytical Services, Inc., an independent research organization generally
considered to be the leading monitor of the mutual fund industry.
PORTFOLIO ACTIVITY
The convertible market experienced some volatility over the past year along
with the stock and bond markets. The Trust focused on reducing volatility by
diversifying the portfolio across a wide range of industries and by emphasizing
convertible issues with short maturities and good risk/reward characteristics.
These characteristics include a relatively high current yield to support the
convertible in the event of a decline in the underlying stock and a reasonable
conversion premium to ensure participation in any appreciation of the underlying
stock.
The Trust utilizes a value-oriented, bottom-up approach to evaluate
companies and their investment merits, emphasizing companies and industries with
strong underlying fundamentals and solid long-term growth prospects. In
selecting securities for the portfolio, we focus on under-followed, small-and
medium-capitalization companies that issue convertible securities. These issues
offer excellent participation in a rising equity market and solid downside
protection in a declining market. In addition, the Trust may also invest a
portion of its assets in high-coupon, lower-rated debt securities in order to
maintain a minimum income level and in common stocks to help the Trust diversify
into industries and companies not represented in the convertible universe.
Currently, the Trust's portfolio is diversified among a broad range of
industries, including health care, manufacturing, real estate, restaurants, and
retail. Among the Trust's stronger performing holdings during the fiscal year
were Sun Healthcare Group (health care), Raymond Corp. (manufacturing), Western
Company of North America (energy), First Data Corp. (financial services), U.S.
Surgical Corp. (health care), and Peoples Bank Bridgeport Conn. (banking).
LOOKING AHEAD
Over the near term, we expect continued volatility in the financial markets
as investors attempt to assess the economy's strength, the direction of interest
rates and the likelihood of Federal Reserve Board actions. With this scenario in
mind, we will continue to look for investments that will provide investors with
long-term growth potential and income while minimizing share price volatility.
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 SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ---------- ---------- --------- ---------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (64.7%)
CONVERTIBLE BONDS (60.6%)
AUTO PARTS (3.0%)
$ 3,800 Arvin Industries, Inc......... 7.50% 9/30/14 $ 3,819,000
2,850 MascoTech, Inc................ 4.50 12/15/03 1,959,375
---------------
5,778,375
---------------
BUILDING MATERIALS (0.8%)
1,500 Cemex S.A. - 144A*............ 4.25 11/ 1/97 1,515,000
---------------
CHEMICALS (1.6%)
7,500 RPM Inc. Ohio................. 0.00 9/30/12 3,000,000
---------------
ELECTRICAL EQUIPMENT (1.8%)
2,000 Magnetek, Inc................. 8.00 9/15/01 2,020,000
1,550 Willcox & Gibbs, Inc.......... 7.00 8/ 1/14 1,404,688
---------------
3,424,688
---------------
ENTERTAINMENT/GAMING (2.2%)
1,000 Argosy Gaming Co.............. 12.00 6/ 1/01 1,090,000
1,800 United Gaming, Inc............ 7.50 9/15/03 1,458,000
2,000 United Gaming, Inc. - 144A*... 7.50 9/15/03 1,620,000
---------------
4,168,000
---------------
ENVIRONMENTAL CONTROL (2.4%)
2,000 Air & Water Technologies
Corp........................ 8.00 5/15/15 1,400,000
3,500 United States Filter Corp..... 5.00 10/15/00 3,255,000
---------------
4,655,000
---------------
FINANCIAL SERVICES (3.2%)
2,000 AT&T Latin American Equity -
144A*....................... 0.00 3/30/99 1,980,000
4,000 Fidelity National Financial,
Inc......................... 0.00 2/15/09 1,440,000
3,500 Waterhouse Investment
Services, Inc............... 6.00 12/15/03 2,642,500
---------------
6,062,500
---------------
FOOD & BEVERAGES (0.5%)
1,000 Giant Group, Ltd.............. 7.00 4/15/06 953,750
---------------
HEALTHCARE (3.7%)
2,500 Careline, Inc. - 144A*........ 8.00 5/ 1/01 2,118,750
4,300 Sun Healthcare Group.......... 6.00 3/ 1/04 4,853,625
---------------
6,972,375
---------------
HOME BUILDING (3.1%)
3,100 Toll Corp..................... 4.75 1/15/04 2,433,500
4,925 US Home Corp.................. 4.875 11/ 1/05 3,385,938
---------------
5,819,438
---------------
HOTELS (0.3%)
600 Hospitality Franchise System,
Inc......................... 4.50 10/ 1/99 621,000
---------------
INDUSTRIALS (7.1%)
7,250 Bell Sports Corp.............. 4.25 11/15/00 5,292,500
2,000 Hawley Group, Ltd............. 6.00 10/ 3/02 2,765,000
1,400 Raymond Corp.................. 6.50 12/15/03 1,732,500
3,500 Titan Wheel International,
Inc......................... 4.75 12/ 1/00 3,710,000
---------------
13,500,000
---------------
</TABLE>
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ---------- ---------- --------- -------------
<C> <S> <C> <C> <C>
INSURANCE (1.5%)
$ 1,300 Alexander & Alexander
Services, Inc............... 11.00% 4/15/07 $ 1,326,000
1,500 Horace Mann Educators Corp.... 4.00 12/ 1/99 1,455,000
-------------
2,781,000
-------------
METALS (2.9%)
1,250 Crown Resource Corp........... 5.75 8/27/01 962,500
5,000 Freeport-McMoran, Inc......... 6.55 1/15/01 4,562,500
-------------
5,525,000
-------------
OIL & GAS (1.4%)
2,500 Western Company of North
America..................... 7.25 1/15/15 2,675,000
-------------
OIL SERVICES (1.8%)
11,000 Valhi, Inc.................... 0.00 10/20/07 3,520,000
-------------
PUBLISHING (4.9%)
10,000 Hollinger, Inc................ 0.00 10/ 5/13 3,075,000
4,500 Time Warner, Inc.............. 0.00 6/22/13 1,597,500
4,622 Time Warner, Inc.............. 8.75 1/10/15 4,616,223
-------------
9,288,723
-------------
REAL ESTATE INVESTMENT TRUST (2.2%)
3,000 Alexander Haagen Properties,
Inc......................... 7.50 1/15/01 2,790,000
1,500 Liberty Property Trust........ 8.00 7/ 1/01 1,500,000
-------------
4,290,000
-------------
RESTAURANTS (3.0%)
2,000 Boston Chicken, Inc........... 4.50 2/ 1/04 1,710,000
2,075 TPI Enterprises, Inc.......... 8.25 7/15/02 2,272,125
4,000 Shoney's, Inc................. 0.00 4/11/04 1,750,000
-------------
5,732,125
-------------
RETAIL (5.1%)
1,500 Carter Hawley Hale Stores,
Inc......................... 6.25 12/31/00 1,687,500
1,500 Eagle Hardware & Garden,
Inc......................... 6.25 3/15/01 1,181,250
4,500 Federated Department Stores,
Inc.+....................... 0.00 2/15/04 4,320,000
1,750 Proffitts, Inc................ 4.75 11/ 1/03 1,312,500
2,000 Tops Appliance City, Inc. -
144A*....................... 6.50 11/30/03 1,275,000
-------------
9,776,250
-------------
STEEL (0.5%)
1,275 Nippon Denro, Ltd. - 144A*.... 3.00 4/ 1/01 1,045,500
-------------
TELECOMMUNICATIONS (2.8%)
2,000 Arch Communications Group,
Inc. - 144A*................ 6.75 12/ 1/03 2,360,000
1,500 Motorola, Inc................. 0.00 9/27/13 1,012,500
2,500 Audiovox Corp. - 144A*........ 6.25 3/15/01 1,900,000
-------------
5,272,500
-------------
TEXTILES (1.3%)
2,500 Interface, Inc................ 8.00 9/15/13 2,475,000
-------------
TRANSPORTATION (1.5%)
2,200 Air Express International
Corp........................ 6.00 1/15/03 2,145,000
750 Airborne Freight Corp......... 6.75 8/15/01 729,375
-------------
2,874,375
-------------
</TABLE>
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ---------- ---------- --------- -------------
<C> <S> <C> <C> <C>
TRANSPORTATION - INTERNATIONAL (0.3%)
$ 651 Consorcio G. Grupo Dina S.A.
de C.V...................... 8.00% 8/ 8/04 $ 546,840
-------------
WASTE MANAGEMENT (1.7%)
3,000 Laidlaw, Inc. - 144A*......... 6.00 1/15/99 3,165,000
-------------
TOTAL CONVERTIBLE BONDS (IDENTIFIED COST
$121,410,016)...................................... 115,437,439
-------------
</TABLE>
<TABLE>
<C> <S> <C> <C> <C>
NON-CONVERTIBLE BONDS (4.1%)
CHEMICALS (1.4%)
2,500 General Chemical Corp......... 14.00 11/ 1/98 2,650,000
---------------
HEALTHCARE (1.6%)
3,000 Healthsouth Rehabilitation
Corp........................ 9.50 4/ 1/01 2,940,000
---------------
RESTAURANTS (1.1%)
2,500 Flagstar Corp................. 11.375 9/15/03 2,181,250
---------------
TOTAL NON-CONVERTIBLE BONDS (IDENTIFIED COST
$8,078,575)........................................ 7,771,250
---------------
TOTAL CORPORATE BONDS (IDENTIFIED COST
$129,488,591)...................................... 123,208,689
---------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
- ----------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS (18.4%)
AUTO PARTS (0.3%)
36,100 MascoTech, Inc. $1.20................................ 482,838
---------------
BIOTECHNOLOGY (0.4%)
39,600 Liposome, Inc. Series A $1.93........................ 757,350
---------------
BUILDING MATERIALS (0.6%)
25,000 Southdown, Inc. Series D $2.875...................... 1,056,250
---------------
CHEMICALS (1.1%)
40,000 Occidental Petroleum Corp. $3.875 - 144A*............ 2,097,500
---------------
ENTERTAINMENT (1.9%)
147,600 AMC Entertainment, Inc. $1.75........................ 3,579,300
---------------
FINANCIAL SERVICES (0.9%)
40,000 American Express Co. $2.297.......................... 1,780,000
---------------
HEALTHCARE (1.1%)
70,000 U.S. Surgical Corp. $2.198........................... 2,047,500
---------------
INDUSTRIALS (1.8%)
30,000 Chiquita Brands, Inc. Series A $2.875................ 1,477,500
40,000 Corning, Inc. $3.00.................................. 1,990,000
---------------
3,467,500
---------------
INSURANCE (1.4%)
65,000 Alexander & Alexander Series A $3.625 - 144A*........ 2,746,250
---------------
MACHINERY (1.6%)
135,000 Cooper Industries, Inc. $1.60........................ 3,206,250
---------------
METALS (1.7%)
100,000 Freeport-McMoran Copper & Gold, Inc. $1.25........... 2,450,000
100,000 Kaiser Aluminum Corp. $.65........................... 825,000
---------------
3,275,000
---------------
OIL & GAS (1.0%)
75,000 Kelley Oil Corp. $2.625.............................. 1,912,500
---------------
</TABLE>
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- -------------
<C> <S> <C>
OIL & GAS DRILLING (0.4%)
20,000 McDermott International, Inc. $2.875................. $ 833,750
-------------
PAPER (0.7%)
52,000 Boise Cascade Corp. $1.58............................ 1,371,500
-------------
REAL ESTATE (1.2%)
50,000 Catellus Development Corp. Series B $3.625 - 144A*... 2,275,000
-------------
REGIONAL BANKS (1.3%)
27,000 Peoples Bank Bridgeport Conn. Series A $4.25......... 2,409,750
-------------
TELECOMMUNICATIONS (0.5%)
30,000 Mobile Telecommunications Corp. $2.25 - 144A*........ 892,500
-------------
WASTE MANAGEMENT (0.5%)
45,000 International Technology Corp. $1.75................. 894,375
-------------
TOTAL CONVERTIBLE PREFERRED STOCKS (IDENTIFIED COST
$33,589,360)....................................... 35,085,113
-------------
</TABLE>
<TABLE>
<C> <S> <C>
COMMON STOCKS (9.7%)
ADVERTISING (0.7%)
110,000 DIMAC Corp. (a)...................................... 1,347,500
---------------
AUTO PARTS (0.5%)
74,900 MascoTech, Inc....................................... 889,437
---------------
BUILDING MATERIALS (0.2%)
20,000 Masco Corporation.................................... 482,500
---------------
ENTERTAINMENT/GAMING (0.8%)
57,938 International Game Technology........................ 1,194,971
42,500 United Gaming, Inc. (a).............................. 302,812
---------------
1,497,783
---------------
ENVIRONMENTAL CONTROL (0.3%)
47,700 OHM Corp. (a)........................................ 548,550
---------------
FINANCIAL SERVICES (0.1%)
25,000 Lomas Financial Corp. (a)............................ 121,875
---------------
HEALTHCARE (0.5%)
120,000 Careline, Inc. (a)................................... 660,000
13,300 Grancare, Inc. (a)................................... 242,725
---------------
902,725
---------------
HOME BUILDING (0.2%)
40,000 Toll Brothers, Inc. (a).............................. 455,000
---------------
INDUSTRIALS (0.5%)
50,000 Hanson PLC (ADR)..................................... 906,250
---------------
MACHINERY (0.0%)
2,500 Albany International Corp. (Class A)................. 44,062
---------------
MANUFACTURING (1.1%)
201,000 Foamex International, Inc. (a)....................... 2,135,625
---------------
REAL ESTATE INVESTMENT TRUST (2.9%)
105,555 Alexander Haagen Properties, Inc..................... 1,794,435
58,100 Avalon Properties, Inc............................... 1,227,362
50,000 Irvine Apartment Communities, Inc.................... 893,750
53,600 Merry Land & Investment, Inc......................... 1,051,900
25,000 Urban Shopping Centers, Inc.......................... 553,125
---------------
5,520,572
---------------
</TABLE>
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ---------------
<C> <S> <C>
RESTAURANTS (0.4%)
65,000 Flagstar Cos., Inc. (a).............................. $ 552,500
40,000 TPI Enterprises, Inc. (a)............................ 255,000
---------------
807,500
---------------
RETAIL (0.7%)
15,000 Dillard Department Stores, Inc. (Class A) (a)........ 401,250
50,000 Woolworth Corp....................................... 868,750
---------------
1,270,000
---------------
TEXTILES (0.1%)
20,000 Interface, Inc. (Class A)............................ 260,000
---------------
TRANSPORTATION (0.7%)
87,555 Consorcio G. Grupo Dina S.A. de C.V. (ADR) (a)....... 908,383
40,000 Team Rental Group, Inc. (a).......................... 450,000
---------------
1,358,383
---------------
TOTAL COMMON STOCKS (IDENTIFIED COST $19,530,731).... 18,547,762
---------------
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ---------- ------------- ---------- ---------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS (7.6%)
COMMERCIAL PAPER (B) (6.3%)
FINANCE - DIVERSIFIED (6.3%)
$ 7,000 Ford Motor Credit Co.......... 4.75% 10/ 5/94 6,996,306
5,000 General Electric Capital
Corp........................ 4.82 10/ 7/94 4,995,983
---------------
TOTAL COMMERCIAL PAPER (AMORTIZED COST
$11,992,289)....................................... 11,992,289
---------------
REPURCHASE AGREEMENT (1.3%)
2,365 The Bank of New York (dated
9/30/94; proceeds
$2,365,681; collateralized
by $2,473,560 U.S. Treasury
Bond 7.50% due 11/15/16
valued at $2,411,990)
(Identified Cost
$2,364,696)................. 5.00 10/ 3/94 2,364,696
---------------
TOTAL SHORT-TERM INVESTMENTS (IDENTIFIED COST
$14,356,985)....................................... 14,356,985
---------------
TOTAL INVESTMENTS (IDENTIFIED COST $196,965,667) (C).................. 100.4% 191,198,549
LIABILITIES IN EXCESS OF OTHER ASSETS................................. (0.4) (803,505)
---------- -------------
NET ASSETS............................................................ 100.0% $ 190,395,044
---------- -------------
---------- -------------
<FN>
- ----------------
* RESALE IS RESTRICTED TO QUALIFIED INSTITUTIONAL INVESTORS.
+ PAYMENT IN KIND.
(A) NON-INCOME PRODUCING SECURITY.
(B) COMMERCIAL PAPER WAS PURCHASED ON A DISCOUNT BASIS. THE INTEREST RATE
SHOWN HAS BEEN ADJUSTED TO REFLECT A BOND EQUIVALENT YIELD.
(C) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $198,708,168; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $5,545,604 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $13,055,223, RESULTING IN NET UNREALIZED
DEPRECIATION OF $7,509,619.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $196,965,667) (Note
1)..................................... $ 191,198,549
Receivable for:
Investments sold....................... 2,522,531
Interest............................... 1,812,765
Dividends.............................. 262,640
Shares of beneficial interest sold..... 160,987
Prepaid expenses and other assets........ 48,574
--------------
TOTAL ASSETS..................... 196,006,046
--------------
LIABILITIES:
Payable for:
Investments purchased.................. 4,988,734
Plan of distribution fee (Note 3)...... 157,817
Shares of beneficial interest
repurchased.......................... 143,316
Investment management fee (Note 2)..... 94,690
Dividends to shareholders.............. 86,846
Accrued expenses and other payables (Note
4)..................................... 139,599
--------------
TOTAL LIABILITIES................ 5,611,002
--------------
NET ASSETS:
Paid-in-capital.......................... 572,199,462
Net unrealized depreciation on
investments............................ (5,767,118)
Accumulated undistributed net investment
income................................. 3,360,672
Accumulated net realized loss on
investments............................ (379,397,972)
--------------
NET ASSETS....................... $ 190,395,044
--------------
--------------
NET ASSET VALUE PER SHARE, 17,716,079
shares outstanding (unlimited
authorized shares of $.01 par value)...
$10.75
--------------
--------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME
Interest.............................. $ 7,932,911
Dividends (net of $207 foreign
withholding tax).................... 3,313,565
-------------
TOTAL INCOME...................... 11,246,476
-------------
EXPENSES
Plan of distribution fee (Note 3)..... 2,002,443
Investment management fee (Note 2).... 1,201,442
Transfer agent fees and expenses (Note
4).................................. 439,000
Shareholder reports and notices....... 77,656
Professional fees..................... 55,225
Custodian fees........................ 41,225
Trustees' fees and expenses (Note
4).................................. 32,552
Registration fees..................... 11,786
Other................................. 12,074
-------------
TOTAL EXPENSES.................... 3,873,403
-------------
NET INVESTMENT INCOME........... 7,373,073
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 1):
Net realized gain on investments...... 24,216,296
Net change in unrealized depreciation
on investments...................... (21,824,460)
-------------
NET GAIN ON INVESTMENTS........... 2,391,836
-------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS..... $ 9,764,909
-------------
-------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30,1994 SEPTEMBER 30, 1993
------------------ -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................................ $ 7,373,073 $ 7,329,034
Net realized gain on investments..................................... 24,216,296 25,935,964
Net change in unrealized appreciation (depreciation) on
investments........................................................ (21,824,460) 11,444,791
------------------ -------------------
Net increase in net assets resulting from operations............. 9,764,909 44,709,789
Dividends to shareholders from net investment income................... (7,325,103) (7,306,204)
Net decrease from transactions in shares of beneficial interest (Note
5).................................................................... (19,938,327) (47,158,302)
------------------ -------------------
Total decrease................................................... (17,498,521) (9,754,717)
NET ASSETS:
Beginning of period.................................................... 207,893,565 217,648,282
------------------ -------------------
END OF PERIOD (including undistributed net investment income of
$3,360,672
and $3,312,702, respectively)........................................ $ 190,395,044 $ 207,893,565
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- Dean Witter Convertible 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 May 21, 1985 and
commenced operations on October 31, 1985.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on
the New York or American Stock Exchange is valued at its latest sale price
on that exchange prior to the time when assets are valued (if there were no
sales that day, the security is valued at the latest bid price); (2) all
other portfolio securities for which over-the-counter market quotations are
readily available are valued at the latest available bid price prior to the
time of valuation; (3) when market quotations are not readily available,
portfolio securities are valued at their fair value as determined in good
faith under procedures established by and under the general supervision of
the Trustees; (4) certain of the Fund's portfolio securities may be valued
by an outside pricing service approved by the 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) short-term debt securities
having a maturity date of more than sixty days are valued on a
mark-to-market basis, that is, at prices based on market quotations for
securities of a similar type, yield, quality and maturity, until sixty days
prior to maturity and thereafter at amortized cost based on their value on
the 61st day. Short-term debt securities having a maturity date of sixty
days or less at the time of purchase are valued at amortized cost and (6)
the value of other assets will be determined in good faith at fair value
procedures established by and under the general supervision of the Trustees.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). Realized gains
and losses on security transactions are determined on the identified cost
method. Discounts on securities purchased are amortized over the life of the
respective securities. The Fund does not amortize premiums on securities
purchased. Dividend income is recorded on the ex-dividend date. Interest
income is accrued daily except where collection is not expected.
C. REPURCHASE AGREEMENTS -- The Fund's custodian takes possession on behalf
of the Fund of the collateral pledged for investments in repurchase
agreements. It is the policy of the Fund to value the underlying collateral
daily on a mark-to-market basis to determine that the value, including
accrued interest, is at least equal to the repurchase price plus accrued
interest. In the event of default of the obligation to repurchase, the Fund
has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation.
D. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records
dividends and distributions to its shareholders on the record date. The
amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions which exceed net investment income and net
realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they
exceed net investment income and net realized capital gains for tax
purposes, they are reported as distributions of paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT -- Pursuant to an Investment Management
Agreement with Dean Witter InterCapital Inc. (the "Investment Manager"), the
Fund pays its Investment Manager a management fee, calculated 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 daily
net assets not exceeding $750 million; 0.55% of the portion of daily net assets
exceeding $750 million but not exceeding $1 billion; 0.50% of the portion of
daily net assets exceeding $1 billion but not exceeding $1.5 billion; 0.475% of
the portion of daily net assets exceeding $1.5 billion but not exceeding $2
billion; 0.45% of the portion of daily net assets exceeding $2 billion but not
exceeding $3 billion; and 0.425% of the portion of 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, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
3. PLAN OF DISTRIBUTION -- Shares of the Fund are distributed by Dean Witter
Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager.
The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1
under the Act pursuant to which the Fund pays the Distributor compensation
accrued daily and payable monthly at an annual rate of 1.0% of the lesser of:
(a) the average daily aggregate gross sales of the Fund's shares since the
Fund's inception (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net asset value of the Fund's
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or upon which such charge has been waived; or (b)
the Fund's average daily net assets. Amounts paid under the Plan are paid to the
Distributor to compensate it for the services provided and the expenses borne by
it and others in the distribution of the Fund's shares, including the payment of
commissions for sales of the Fund's shares and incentive compensation to and
expenses of the account executives of Dean Witter Reynolds Inc., an affiliate of
the Investment Manager and Distributor, and other employees or selected dealers
who engage in or support distribution of the Fund's shares or who service
shareholder accounts, including overhead and telephone expenses, printing and
distribution of prospectuses and reports used in connection with the offering of
the Fund's shares to other than current shareholders and preparation, printing
and distribution of sales literature and advertising materials. In addition, the
Distributor may be compensated under the Plan for its opportunity costs in
advancing such amounts, which compensation would be in the form of a carrying
charge on any unreimbursed expenses incurred by the Distributor.
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Provided that the Plan continues in effect, any cumulative expenses incurred
by the Distributor but not yet recovered, may be recovered through future
distribution fees from the Fund and contingent deferred sales charges from the
Fund's shareholders.
The Distributor has informed the Fund that for the year ended September 30,
1994, it received approximately $38,000 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, 1994 aggregated $342,378,922 and
$367,332,144, respectively.
For the same period, the Fund incurred brokerage commissions of $31,360 with
Dean Witter Reynolds Inc. for transactions executed on behalf of the Fund.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At September 30, 1994, the Fund had
transfer agent fees and expenses payable of approximately $38,000.
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 an independent Trustee for at least five years at the time of
retirement. Benefits under this plan are based on years of service and
compensation during the last five years of service. Aggregate pension costs for
the year ended September 30, 1994, included in Trustees' fees and expenses in
the Statement of Operations, amounted to $9,479. At September 30, 1994, the Fund
had an accrued pension liability of $45,142 which is included in accrued
expenses in the Statement of Assets and Liabilities.
5. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1994 SEPTEMBER 30, 1993
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold.................................... 2,423,832 $ 26,535,360 1,190,150 $ 11,477,771
Reinvestment of dividends............... 578,431 6,216,691 617,822 6,123,361
---------- ------------ ---------- ------------
3,002,263 32,752,051 1,807,972 17,601,132
Repurchased............................. (4,869,009) (52,690,378) (6,630,391) (64,759,434)
---------- ------------ ---------- ------------
Net decrease............................ (1,866,746) $(19,938,327) (4,822,419) $(47,158,302)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
6. FEDERAL INCOME TAX STATUS -- During the year ended September 30, 1994, the
Fund utilized approximately $24,921,000 of its net capital loss carryovers. At
September 30, 1994, the Fund had net capital loss carryovers to offset future
capital gains to the extent provided by regulations available through September
30 of the following years:
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 TOTAL
- ----------- ------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
$15,180,000 $218,065,000 $36,349,000 $46,135,000 $62,731,000 $378,460,000
</TABLE>
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
As of September 30, 1994, the Fund had temporary book/tax differences
primarily attributable to capital loss deferral 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 as of September 30, 1993, accumulated undistributed net
investment income was credited and accumulated net realized loss on investments
was charged $431,384.
1994 FEDERAL TAX NOTICE (UNAUDITED)
During the fiscal year ended September 30, 1994, 48.18% of the income
dividends qualified for dividends received deduction available to
corporations.
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE
PERIOD
OCTOBER 31,
FOR THE YEAR ENDED SEPTEMBER 30, 1985*
--------------------------------------------------------------------------------- THROUGH
1994 1993 1992 1991 1990 1989 1988 1987 1986
-------- --------- -------- -------- -------- -------- --------- --------- ------------
<S> <C> <C> <C> <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 $ 12.42 $ 11.22 $ 10.00
-------- --------- -------- -------- -------- -------- --------- --------- ------------
Net investment income............. 0.42 0.37 0.34 0.37 0.46 0.48 0.38 0.48 0.76
Net realized and unrealized gain
(loss) on investments............ 0.11 1.67 0.15 1.05 (2.06) 1.20 (2.87) 1.59 1.22**
-------- --------- -------- -------- -------- -------- --------- --------- ------------
Total from investment
operations....................... 0.53 2.04 0.49 1.42 (1.60) 1.68 (2.49) 2.07 1.98
-------- --------- -------- -------- -------- -------- --------- --------- ------------
Less dividends and distributions
from:
Net investment income........... (0.40) (0.34) (0.24) (0.40) (0.43) (0.63) (0.23) (0.46) (0.76)
Net realized gains on
investments.................... -0 - -0 - -0 - -0 - -0 - -0 - (1.07) (0.41) -0 -
-------- --------- -------- -------- -------- -------- --------- --------- ------------
Total dividends and
distributions.................... (0.40) (0.34) (0.24) (0.40) (0.43) (0.63) (1.30) (0.87) (0.76)
-------- --------- -------- -------- -------- -------- --------- --------- ------------
Net asset value, end of period.... $ 10.75 $ 10.62 $ 8.92 $ 8.67 $ 7.65 $ 9.68 $ 8.63 $ 12.42 $ 11.22
-------- --------- -------- -------- -------- -------- --------- --------- ------------
-------- --------- -------- -------- -------- -------- --------- --------- ------------
TOTAL INVESTMENT RETURN+.......... 5.02% 23.22% 5.69% 18.93% (16.93)% 20.20% (19.79)% 19.21% 19.91%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)....................... $190,395 $207,894 $217,648 $296,844 $413,297 $821,750 $1,073,374 $2,029,462 $1,488,418
Ratios to average net assets:
Expenses........................ 1.93% 1.93% 1.92% 1.92% 1.88% 1.76% 1.79% 1.62% 1.72%(2)
Net investment income........... 3.68% 3.44% 3.43% 4.34% 4.96% 4.93% 3.87% 3.85% 7.11%(2)
Portfolio turnover rate........... 184% 221% 145% 133% 92% 167% 472% 572% 272%
<FN>
- ------------------------
* COMMENCEMENT OF OPERATIONS.
** INCLUDES THE EFFECT OF CAPITAL SHARE TRANSACTIONS.
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of Dean Witter Convertible 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 Convertible Securities
Trust, (the "Fund") at September 30, 1994, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the eight years in
the period then ended and for the period October 31, 1985 (commencement of
operations) through September 30, 1986, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities owned at September 30, 1994, by correspondence with
the custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
New York, New York
November 10, 1994
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic Dean Witter
Charles A. Fiumefreddo Convertible
Edwin J. Garn 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
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
This report is submitted for the general
information of shareholders of the Fund.
For more detailed information about the
Fund, its officers and trustees, fees,
expenses and other pertinent information,
please see the prospectus of the Fund.
This report is not authorized for
distribution to prospective investors
in the Fund unless preceded or accompanied Annual Report
by an effective prospectus. September 30, 1994
<PAGE>
<TABLE>
<CAPTION>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
GROWTH OF $10,000
($ IN THOUSANDS)
DATE TOTAL GOLDMAN SACHS
- ----------------------------------------------------------
- ----------------------------------------------------------
<S> <C> <C>
October 31, 1985 $10,000 $10,000
- ----------------------------------------------------------
- ----------------------------------------------------------
September 30, 1986 $11,991 $12,282
- ----------------------------------------------------------
- ----------------------------------------------------------
September 30, 1987 $14,295 $15,023
- ----------------------------------------------------------
- ----------------------------------------------------------
September 30, 1988 $11,465 $13,998
- ----------------------------------------------------------
- ----------------------------------------------------------
September 30, 1989 $13,781 $15,696
- ----------------------------------------------------------
- ----------------------------------------------------------
September 30, 1990 $11,449 $13,322
- ----------------------------------------------------------
September 30, 1991 $13,615 $16,742
- ----------------------------------------------------------
September 30, 1992 $14,390 $19,756
- ----------------------------------------------------------
September 30, 1993 $17,731 $23,402
- ----------------------------------------------------------
September 30, 1994 $18,621(3) $23,980
- ----------------------------------------------------------
- ----------------------------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS LIFE OF FUND
--------------------------------------
--------------------------------------
<S> <C> <C>
5.02(1) 6.20(1) 7.22(1)
--------------------------------------
0.02(2) 5.89(2) 7.22(2)
--------------------------------------
--------------------------------------
______ Fund ______ Goldman Sachs (4)
--------------------------------------
--------------------------------------
<FN>
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%, since inception-0%).
See the Fund's current prospectus for complete details on fees
and sales charges.
(3) Closing value assuming a complete redemption on September
30, 1994.
(4) The Goldman Sachs Convertible 100 Index tracks the
performance of 100 equally weighted convertible issues with
market capitalizations of at least $100 million. The index
does not include any expenses, fees or charges.
</TABLE>
