<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST TWO WORLD TRADE CENTER, NEW YORK, NEW
YORK 10048
LETTER TO THE SHAREHOLDERS
DEAR SHAREHOLDER:
The fiscal year ended September 30, 1995 began on a rocky note with
uncertainties about the strength of the economy, the direction of interest rates
and the threat of inflation. However, by the mid-point of the fiscal year, the
U.S. stock market, led by the technology sector, was beginning one of the
strongest bull markets in recent years.
PERFORMANCE
For the twelve-month period ended September 30, 1995, Dean Witter Convertible
Securities Trust provided a return of 13.68 percent, compared to a return of
18.83 percent for the Goldman Sachs Convertible 100 Index and a return of 14.24
percent for the average fund in the Lipper convertible securities funds
category. During the fiscal year, the Fund's quarterly income dividend was
increased from $0.085 per share to $0.12 per share. The Fund declared dividends
totaling $0.496 per share during the fiscal year, including a special income
dividend of $0.086 per share paid on December 30, 1994.
The Fund underperformed the broad stock market during the fiscal year due
primarily to its heavy exposure to small-capitalization companies, which lagged
larger-capitalization companies, and to the limited number of convertible issues
available in the technology universe, which performed extraordinarily well
during the period under review. The accompanying chart illustrates the
performance of a $10,000 investment in the Fund since inception (October 31,
1985) through the fiscal year ended September 30, 1995, 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
Fund 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. In contrast, the Fund 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
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
LETTER TO THE SHAREHOLDERS, CONTINUED
and the correction following the Persian Gulf crisis in 1990. However, since a
restructuring of the portfolio that took place at the end of 1992, the Fund has
more closely tracked the convertible market and performed admirably against its
peer group.
INVESTMENT STRATEGY
[GRAPHIC]
During the past year, the Fund focused
on reducing volatility by diversifying
its portfolio over a wide range of
industries and by emphasizing
convertible issues with short
maturities and long call protection and
attractive risk/reward characteristics.
These characteristics include a
relatively high current yield to
support the price of the convertible
issue in the event of a decline in the
underlying stock and a reasonable
conversion premium to ensure price
participation in any appreciation of
the underlying stock. While this
strategy should prove to be beneficial
in a declining market, it can result in
the Fund's underperforming in very
strong markets.
Currently, the Fund's portfolio is
diversified among a broad range of
industries including home building (4
percent of assets), energy (5 percent),
real estate (9 percent), restaurants (6
percent) and retailers (7 percent).
Among the Fund's stronger performing
holdings during the fiscal year were
U.S. Home Corp. and Toll Corp.
(homebuilding), Valero Energy Corp
(energy), Capstone Capital Corp. (real
estate), Careline, Inc. (health care)
and United States Filter Corp.
(environmental). More recently, the
Fund finds the broadcasting sector
attractive and has added Rogers
Communications and Scandinavian Broadcasting to the portfolio.
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
LETTER TO THE SHAREHOLDERS, CONTINUED
LOOKING AHEAD
Going forward, the Fund will continue to utilize 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, the Fund focuses on
under-followed, small and medium-capitalization companies that issue convertible
securities. We believe these issues offer excellent participation in a rising
equity market and solid downside protection in a declining market.
As the convertible securities market continues to grow, we believe this
under-utilized asset class will offer a wide variety of investment opportunities
which will provide investors with current income and capital appreciation
potential.
We appreciate your continued support of Dean Witter Convertible Securities Trust
and look forward to serving your investment needs.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (60.6%)
CONVERTIBLE BONDS (59.6%)
AIRLINES (2.1%)
$ 2,999 Continental Airlines - 144A**............... 6.00+ % 02/01/02 $ 2,849,036
1,000 Reno Air Inc. - 144A**...................... 9.00 09/30/02 1,000,000
---------------
3,849,036
---------------
AUTO PARTS (1.6%)
2,900 Arvin Industries, Inc....................... 7.50 09/30/14 2,907,250
---------------
BANKS - INTERNATIONAL (1.7%)
3,000 MBL International Finance (Bermuda) (WI).... 3.00 11/30/02 3,135,000
---------------
BROADCASTING (3.1%)
7,000 Rogers Communications, Inc.................. 2.00 11/26/05 3,517,500
2,000 Scandinavian Broadcasting (Luxembourg)...... 7.25 08/01/05 2,245,000
---------------
5,762,500
---------------
CHEMICALS (1.7%)
7,500 RPM, Inc.................................... 0.00 09/30/12 3,131,250
---------------
CONGLOMERATES (0.8%)
1,500 Alfa S.A. de C.V. (Mexico) - 144A**......... 8.00 09/15/00 1,500,000
---------------
DRUGS (0.5%)
1,000 McKesson Corp............................... 4.50 03/01/04 904,000
---------------
ELECTRICAL & ELECTRONICS (0.4%)
850 Recognition Equipment Inc................... 7.25 04/15/11 765,000
---------------
ELECTRICAL EQUIPMENT (1.1%)
2,000 Magnetek, Inc............................... 8.00 09/15/01 1,975,000
---------------
ENTERTAINMENT (0.9%)
2,050 Savoy Pictures Entertainment, Inc........... 7.00 07/01/03 1,588,750
---------------
ENTERTAINMENT/GAMING (3.7%)
2,500 Argosy Gaming Co............................ 12.00 06/01/01 2,531,250
1,900 United Gaming, Inc.......................... 7.50 09/15/03 1,179,254
5,200 United Gaming, Inc. - 144A**................ 7.50 09/15/03 3,227,432
---------------
6,937,936
---------------
ENVIRONMENTAL CONTROL (1.5%)
2,000 Air & Water Technologies Corp............... 8.00 05/15/15 1,675,000
1,000 United States Filter Corp. - 144A**......... 6.00 09/15/05 1,065,000
---------------
2,740,000
---------------
FINANCIAL (1.2%)
2,100 American Travellers Corp.................... 6.50 10/01/05 2,193,219
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FINANCIAL SERVICES (3.8%)
$ 2,000 AT&T Latin American Equity - 144A**......... 0.00 % 03/30/99 $ 1,690,000
12,500 Fidelity National Financial, Inc............ 0.00 02/15/09 5,281,250
---------------
6,971,250
---------------
HEALTHCARE (4.6%)
4,335 Careline, Inc. - 144A**..................... 8.00 05/01/01 4,519,237
2,900 Grancare, Inc............................... 6.50 01/15/03 2,675,250
850 Pharmaceutical Marketing Services, Inc...... 6.25 02/01/03 671,500
850 Pharmaceutical Marketing Services, Inc. -
144A**...................................... 6.25 02/01/03 689,596
---------------
8,555,583
---------------
HOME BUILDING (2.1%)
1,300 Toll Corp................................... 4.75 01/15/04 1,315,015
3,015 U.S. Home Corp.............................. 4.875 11/01/05 2,612,498
---------------
3,927,513
---------------
INDUSTRIALS (0.6%)
900 Raymond Corp................................ 6.50 12/15/03 1,116,000
---------------
INSURANCE (0.8%)
1,500 Horace Mann Educators Corp.................. 6.50 12/01/99 1,541,250
---------------
METALS (0.5%)
1,250 Crown Resources Corp........................ 5.75 08/27/01 925,000
---------------
OIL & GAS (2.7%)
1,000 Cross Timbers Oil Co........................ 5.25 11/01/03 850,000
11,000 Valhi Inc................................... 0.00 10/20/07 4,070,000
---------------
4,920,000
---------------
PHARMACEUTICALS (0.7%)
1,500 Sandoz Capital BVI, Ltd. (Switzerland) -
144A** (WI)................................. 2.00 10/06/02 1,264,687
---------------
PUBLISHING (4.2%)
10,000 Hollinger, Inc.............................. 0.00 10/05/13 3,062,500
4,500 Time Warner, Inc............................ 0.00 12/17/12 1,528,560
3,092 Time Warner, Inc............................ 8.75 01/10/15 3,246,128
---------------
7,837,188
---------------
REAL ESTATE INVESTMENT TRUST (4.2%)
2,850 Alexander Haagen Properties, Inc. (Series
A).......................................... 7.50 01/15/01 2,372,625
3,750 Camden Property Trust....................... 7.33 04/01/01 3,675,000
1,500 Capstone Capital Corp....................... 10.50 04/01/02 1,725,825
---------------
7,773,450
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
RESTAURANTS (4.4%)
$ 14,000 Boston Chicken Inc.......................... 0.00 % 06/01/15 $ 3,395,000
4,000 Shoney's Inc................................ 0.00 04/11/04 1,710,000
3,375 TPI Enterprises, Inc........................ 8.25 07/15/02 3,105,000
---------------
8,210,000
---------------
RETAIL (5.9%)
1,500 Baby Superstore............................. 4.875 10/01/00 1,530,937
1,500 Eagle Hardware & Garden Inc................. 6.25 03/15/01 1,166,250
1,250 Federated Department Stores, Inc............ 9.72 02/15/04 1,259,375
7,000 Rite Aid Corp............................... 0.00 07/24/06 3,498,880
2,000 Sports & Recreation Inc..................... 4.25 11/01/00 1,505,000
2,000 Tops Appliance City Inc..................... 6.50 11/30/03 900,000
1,150 Waban, Inc.................................. 6.50 07/01/02 1,138,500
---------------
10,998,942
---------------
STEEL (0.7%)
1,275 Nippon Denro Ltd. (India) - 144A**.......... 3.00 04/01/01 809,625
500 Sahaviriya Steel (Thailand) - 144A**........ 3.50 07/26/05 458,750
---------------
1,268,375
---------------
TELECOMMUNICATIONS (1.8%)
2,500 Audiovox Corp............................... 6.25 03/15/01 1,587,500
5,000 U.S. Cellular Corp.......................... 0.00 06/15/15 1,793,750
---------------
3,381,250
---------------
TEXTILES (1.9%)
3,250 Interface, Inc.............................. 8.00 09/15/13 3,539,089
---------------
TRANSPORTATION - INTERNATIONAL (0.4%)
1,651 Consorcio G Grupo S.A. de C.V. (Mexico)..... 8.00 08/08/04 718,185
---------------
TOTAL CONVERTIBLE BONDS
(IDENTIFIED COST $112,562,947)....................................... 110,336,703
---------------
NON-CONVERTIBLE BOND (1.0%)
RESTAURANTS
2,500 Flagstar Corp. (Identified Cost
$2,450,000)................................. 11.375 09/15/03 1,925,000
---------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $115,012,947)....................................... 112,261,703
---------------
</TABLE>
<TABLE>
<S> <S> <C>
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<S> <S> <C>
CONVERTIBLE PREFERRED STOCKS (16.8%)
AUTO PARTS (0.9%)
111,100 MascoTech, Inc. $1.20................................................... $ 1,472,075
---------------
BIOTECHNOLOGY (0.5%)
63,500 Gensia, Inc. $3.75 - 144A**............................................. 920,750
---------------
CHEMICALS (0.8%)
10,000 Atlantic Richfield Co. $2.228........................................... 255,000
20,000 Occidental Petroleum Corp. $3.875 - 144A**.............................. 1,132,500
---------------
1,387,500
---------------
CONGLOMERATES (0.8%)
100,000 Westinghouse Electric Corp. (Series C) $1.30 - 144A**................... 1,512,500
---------------
ENTERTAINMENT (1.1%)
62,600 AMC Entertainment, Inc. $1.75........................................... 2,065,800
---------------
ENTERTAINMENT/GAMING (1.1%)
175,000 Bally Entertainment Corp. $0.89......................................... 1,968,750
---------------
FINANCIAL (2.3%)
45,000 Penncorp Financial Group $3.375......................................... 2,722,500
50,000 Time Warner Financing $1.24............................................. 1,625,000
---------------
4,347,500
---------------
FOODS (0.8%)
30,000 Chiquita Brands International, Inc. (Series A) $2.875................... 1,545,000
---------------
HOME BUILDING (1.7%)
120,000 Beazer Homes (Series A) $2.00........................................... 3,210,000
---------------
METALS (0.2%)
16,600 Freeport-McMoran Copper & Gold, Inc. $1.25.............................. 427,450
---------------
OIL & GAS (2.5%)
75,000 Kelley Oil & Gas Corp. $2.625........................................... 1,331,250
65,000 Valero Energy Corp. $3.125.............................................. 3,339,375
---------------
4,670,625
---------------
PAPER PRODUCTS (0.6%)
25,000 International Paper Capital Trust $2.625 - 144A**....................... 1,185,950
---------------
REAL ESTATE (1.1%)
50,000 Catellus Development Corp (Series B) $3.625 - 144A**.................... 2,028,150
---------------
STEEL (1.2%)
25,000 WHX Corp. (Series A) $3.25.............................................. 1,146,875
25,000 WHX Corp. (Series B) $3.75.............................................. 1,087,500
---------------
2,234,375
---------------
TELECOMMUNICATIONS (0.7%)
35,000 Sprint Corporation $2.63................................................ 1,246,875
---------------
WASTE MANAGEMENT (0.5%)
45,000 International Technology Corp. $1.75.................................... 922,500
---------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(IDENTIFIED COST $29,240,124)........................................... 31,145,800
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<S> <S> <C>
COMMON STOCKS (9.9%)
AUTO PARTS (0.3%)
49,900 MascoTech, Inc.......................................................... $ 561,375
---------------
ENTERTAINMENT/GAMING (0.4%)
57,938 International Game Technology........................................... 774,921
---------------
ENVIRONMENTAL CONTROL (0.6%)
122,000 OHM Corp.*.............................................................. 1,098,000
---------------
HEALTHCARE (0.3%)
50,000 Regency Health Services, Inc.*.......................................... 518,750
---------------
HOTELS/MOTELS (0.5%)
85,000 Equity Inns, Inc........................................................ 977,500
---------------
MANUFACTURING (1.1%)
201,000 Foamex International Inc.*.............................................. 2,085,375
---------------
REAL ESTATE INVESTMENT TRUST (3.9%)
95,155 Alexander Haagen Properties, Inc........................................ 1,106,177
58,100 Avalon Properties, Inc.................................................. 1,183,787
12,000 Camden Property Trust................................................... 265,500
105,000 Irvine Apartment Communities, Inc....................................... 1,850,625
50,000 Patriot American Hospitality............................................ 1,281,250
35,000 Reckson Associates Realty Corp.......................................... 927,500
25,000 Urban Shopping Centers, Inc............................................. 550,000
---------------
7,164,839
---------------
RESTAURANTS (1.1%)
105,000 Brinker International, Inc.*............................................ 1,561,875
75,000 Flagstar Companies, Inc.*............................................... 393,750
---------------
1,955,625
---------------
RETAIL (1.5%)
35,000 Michaels Stores, Inc.*.................................................. 568,750
58,700 TJX Companies, Inc...................................................... 697,062
20,000 Toys 'R' Us, Inc.*...................................................... 540,000
54,500 Waban, Inc.*............................................................ 1,028,688
---------------
2,834,500
---------------
TRANSPORTATION (0.2%)
40,000 Team Rental Group, Inc.*................................................ 390,000
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $21,087,206)........................................... 18,360,885
---------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS (0.0%)
TELECOMMUNICATIONS
45,000 Audiovox Corp. - 144A** (Identified Cost $0)*............ 03/15/01 67,500
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (16.9%)
U.S. GOVERNMENT AGENCIES (a) (16.8%)
$ 4,000 Federal Home Loan Banks
5.57% due 10/18/95...................................................... $ 3,989,479
19,100 Federal Home Loan Mortgage Corp.
5.65 to 6.30% due 10/02/95 to 10/06/95***............................... 19,090,770
8,000 Federal National Mortgage Association
5.60 to 5.63% due 10/10/95 to 10/12/95.................................. 7,987,525
---------------
TOTAL U.S. GOVERNMENT AGENCIES
(AMORTIZED COST $31,067,774)............................................ 31,067,774
---------------
REPURCHASE AGREEMENT (0.1%)
217 The Bank of New York
5.375% due 10/02/95 (dated 09/29/95; proceeds $217,096; collateralized
by $228,527 U.S. Treasury Note 7.25% due 05/15/04 valued at $249,505)
(Identified Cost $216,999).............................................. 216,999
---------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $31,284,773)........................................... 31,284,773
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST $196,625,050) (B)........... 104.2% 193,120,661
LIABILITIES IN EXCESS OF OTHER ASSETS........ (4.2) (7,722,296)
----- ------------
NET ASSETS................................... 100.0% $185,398,365
----- ------------
----- ------------
<FN>
- ---------------------
WI Securities purchased on a when issued basis.
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
*** Some or all of these securities are segregated in connection with
when-issue securities.
+ Payment-in-kind security.
(a) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $197,493,421; the
aggregate gross unrealized appreciation is $7,999,341 and the aggregate
gross unrealized depreciation is $12,372,101, resulting in net unrealized
depreciation of $4,372,760.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $196,625,050)............................ $ 193,120,661
Receivable for:
Investments sold........................................ 2,065,625
Interest................................................ 1,313,598
Dividends............................................... 209,320
Shares of beneficial interest sold...................... 121,345
Prepaid expenses and other assets........................... 16,089
-------------
TOTAL ASSETS........................................... 196,846,638
-------------
LIABILITIES:
Payable for:
Investments purchased................................... 10,876,125
Plan of distribution fee................................ 151,433
Dividends to shareholders............................... 98,221
Investment management fee............................... 90,860
Shares of beneficial interest repurchased............... 88,279
Accrued expenses and other payables......................... 143,355
-------------
TOTAL LIABILITIES...................................... 11,448,273
-------------
NET ASSETS:
Paid-in-capital............................................. 552,749,655
Net unrealized depreciation................................. (3,504,389)
Accumulated undistributed net investment income............. 5,408,228
Accumulated net realized loss............................... (369,255,129)
-------------
NET ASSETS............................................. $ 185,398,365
-------------
-------------
NET ASSET VALUE PER SHARE,
15,885,991 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF
$.01 PAR VALUE)...........................................
$11.67
-------------
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Interest.................................................... $10,345,101
Dividends (net of $2,372 foreign withholding tax)........... 2,538,044
-----------
TOTAL INCOME........................................... 12,883,145
-----------
EXPENSES
Plan of distribution fee.................................... 1,790,824
Investment management fee................................... 1,074,494
Transfer agent fees and expenses............................ 368,931
Registration fees........................................... 73,370
Shareholder reports and notices............................. 62,399
Professional fees........................................... 59,863
Custodian fees.............................................. 34,737
Trustees' fees and expenses................................. 25,679
Other....................................................... 12,513
-----------
TOTAL EXPENSES......................................... 3,502,810
-----------
NET INVESTMENT INCOME.................................. 9,380,335
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 10,976,243
Net change in unrealized depreciation....................... 2,262,729
-----------
NET GAIN............................................... 13,238,972
-----------
NET INCREASE................................................ $22,619,307
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 9,380,335 $ 7,373,073
Net realized gain........................................... 10,976,243 24,216,296
Net change in unrealized appreciation/depreciation.......... 2,262,729 (21,824,460)
------------------ ------------------
NET INCREASE........................................... 22,619,307 9,764,909
------------------ ------------------
Dividends to shareholders from net investment income........ (8,166,179) (7,325,103)
Net decrease from transactions in shares of beneficial
interest.................................................. (19,449,807) (19,938,327)
------------------ ------------------
TOTAL DECREASE.......................................... (4,996,679) (17,498,521)
NET ASSETS:
Beginning of period......................................... 190,395,044 207,893,565
------------------ ------------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$5,408,228 AND $3,360,672, RESPECTIVELY)................ $185,398,365 $190,395,044
------------------ ------------------
------------------ ------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995
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 (in cases where a security
is traded on more than one exchange, the security is valued on the exchange
designated as the primary market by the Trustees); (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 and 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; (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, if available, in determining what it believes is the fair valuation
of the portfolio securities valued by such pricing service; and (5) 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.
Discounts on securities purchased are accreted over the life of the respective
securities. Dividend income is recorded on the ex-dividend date. 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.
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995, CONTINUED
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the record date. The amount of dividends
and distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Dividends and distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as dividends in excess
of net investment income or distributions in excess of net realized capital
gains. To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with Dean Witter InterCapital
Inc. (the "Investment Manager"), the Fund pays its Investment Manager a
management fee, accrued daily and payable monthly, by applying the following
annual rates to the Fund's net assets determined as of the close of each
business day: 0.60% to the portion of average daily net assets not exceeding
$750 million; 0.55% to the portion of average daily net assets exceeding $750
million but not exceeding $1 billion; 0.50% to the portion of average daily net
assets exceeding $1 billion but not exceeding $1.5 billion; 0.475% to the
portion of average daily net assets exceeding $1.5 billion but not exceeding $2
billion; 0.45% to the portion of average daily net assets exceeding $2 billion
but not exceeding $3 billion; and 0.425% to the portion of average 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
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995, CONTINUED
gross sales of the Fund's shares since the Fund's inception (not including
reinvestment of dividend or capital gain distributions) less the average daily
aggregate net asset value of the Fund's shares redeemed since the Fund's
inception upon which a contingent deferred sales charge has been imposed or upon
which such charge has been waived; or (b) the Fund's average daily net assets.
Amounts paid under the Plan are paid to the Distributor to compensate it for the
services provided and the expenses borne by it and others in the distribution of
the Fund's shares, including the payment of commissions for sales of the Fund's
shares and incentive compensation to, and expenses of, the account executives of
Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and
Distributor, and other employees or selected dealers 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 but
not yet recovered, may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the year ended September 30,
1995, it received approximately $76,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares. The Fund's shareholders pay such
charges which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended September 30, 1995 aggregated
$217,276,501 and $245,971,391, respectively. For the same period, the Fund
incurred brokerage commissions of $27,100 with DWR for portfolio 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, 1995, the Fund had
transfer agent fees and expenses payable of approximately $36,000.
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
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995, CONTINUED
the last five years of service. Aggregate pension costs for the year ended
September 30, 1995 included in Trustees' fees and expenses in the Statement of
Operations amounted to $7,987. At September 30, 1995, the Fund had an accrued
pension liability of $52,482 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, 1995 SEPTEMBER 30, 1994
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 2,692,941 $ 29,337,865 2,423,832 $ 26,535,360
Reinvestment of dividends........................................ 648,602 6,920,932 578,431 6,216,691
----------- -------------- ----------- ------------
3,341,543 36,258,797 3,002,263 32,752,051
Repurchased...................................................... (5,171,631) (55,708,604) (4,869,009) (52,690,378)
----------- -------------- ----------- ------------
Net decrease..................................................... (1,830,088) $ (19,449,807) (1,866,746) $(19,938,327)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
6. FEDERAL INCOME TAX STATUS
During the year ended September 30, 1995, the Fund utilized approximately
$10,073,000 of its net capital loss carryover. At September 30, 1995, the Fund
had a net capital loss carryover of approximately $368,387,000 to offset future
capital gains to the extent provided by regulations available through September
30 of the following years:
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
- ------------------------------------------------------------------------------
1996 1997 1998 1999 2000 Total
- --------- ------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
$ 5,107 $ 218,065 $ 36,349 $ 46,135 $ 62,731 $ 368,387
</TABLE>
As of September 30, 1995, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales and permanent book/tax
differences primarily attributable to corporate reorganizations. To reflect
reclassifications arising from permanent book/tax differences for the year ended
September 30, 1995, accumulated net realized loss was charged and accumulated
undistributed net investment income was credited $833,400.
7. AGREEMENT AND PLAN OF REORGANIZATION
On August 24, 1995, the Board of Trustees of TCW/DW Global Convertible Trust
("Global Convertible"), an open-end, non-diversified management investment
company, unanimously adopted an Agreement and Plan of Reorganization, whereby
shareholders of Global Convertible would become shareholders of the Fund
receiving shares of the Fund equal to the value of their holdings in Global
Convertible (the "Reorganization"). The Fund's investment objective and policies
will not be changed as a result of the Reorganization. The Reorganization is
contingent upon the approval of Global Convertible Shareholders as of record
date October 20, 1995.
<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
FOR THE YEAR ENDED SEPTEMBER 30 OCTOBER 31, 1985*
---------------------------------------------------------------------- THROUGH
1995 1994 1993 1992 1991 1990 1989 1988 1987 SEPTEMBER 30, 1986
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of
period.......... $10.75 $10.62 $ 8.92 $ 8.67 $ 7.65 $ 9.68 $ 8.63 $12.42 $11.22 $ 10.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment
income.......... 0.60 0.42 0.37 0.34 0.37 0.46 0.48 0.38 0.48 0.76
Net realized and
unrealized gain
(loss).......... 0.82 0.11 1.67 0.15 1.05 (2.06) 1.20 (2.87) 1.59 1.22 **
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
investment
operations...... 1.42 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........ (0.50) (0.40) (0.34) (0.24) (0.40) (0.43) (0.63) (0.23) (0.46) (0.76)
Net realized
gain.......... -- -- -- -- -- -- -- (1.07) (0.41) --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total dividends
and
distributions... (0.50) (0.40) (0.34) (0.24) (0.40) (0.43) (0.63) (1.30) (0.87) (0.76)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period... $11.67 $10.75 $10.62 $ 8.92 $ 8.67 $ 7.65 $ 9.68 $ 8.63 $12.42 $ 11.22
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT
RETURN+.......... 13.68% 5.02% 23.22% 5.69% 18.93% (16.93)% 20.20% (19.79)% 19.21% 19.91 %(1)
RATIOS TO AVERAGE
NET ASSETS:
Expenses......... 1.96% 1.93% 1.93% 1.92% 1.92% 1.88% 1.76% 1.79% 1.62% 1.72 %(2)
Net investment
income.......... 5.24% 3.68% 3.44% 3.43% 4.34% 4.96% 4.93% 3.87% 3.85% 7.11 %(2)
SUPPLEMENTAL DATA:
Net assets, end
of period, in
millions........ $185 $190 $208 $218 $297 $413 $822 $1,073 $2,029 $1,488
Portfolio
turnover rate... 138% 184% 221% 145% 133% 92% 167% 472% 572% 272 %(1)
<FN>
- ---------------------
* Commencement of operations.
** Includes the effect of capital share transactions.
+ Does not reflect the deduction of sales charge.
(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, 1995, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the nine 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, 1995, by correspondence with
the custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
OCTOBER 18, 1995
- --------------------------------------------------------------------------------
1995 FEDERAL TAX NOTICE (UNAUDITED)
During the fiscal year ended September 30, 1995, 15.39% of the
income dividends qualified for dividends received deduction
available to corporations.
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo DEAN WITTER
Edwin J. Garn CONVERTIBLE
John R. Hiare SECURITIES
Dr. Manuel H. Johnson TRUST
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Ronald J. Worobel
Vice President
Michael G. Knox
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 turstees,
fees, expenses and other pertinent information, please see the prospectus of
the Fund
This report is not authorized for distribution to prospective infestors in
the Fund unless prreceded or accompanied by an effective prospectus.
ANNUAL REPORT
SEPTEMBER 30, 1995
<PAGE>
DEAN WITTER CONVERTIBLE SECURITIES TRUST
GROWTH OF $10,000
DATE TOTAL GOLDMAN SACHS
|------------------------|-------------------|-------------------------|
| 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 | $24,006 |
|------------------------|-------------------|-------------------------|
| September 30, 1995 | $21,168(3) | $28,536 |
|------------------------|-------------------|-------------------------|
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS LIFE OF FUND
|------------|----------------|-------------------|
| 13.68(1) | 13.08(1) | 7.86(1) |
|------------|----------------|-------------------|
| 8.68(2) | 12.83(2) | 7.86(2) |
|------------|----------------|-------------------|
|------------------------------------------------|
| __ Fund __ Goldman Sachs (4) |
|------------------------------------------------|
Past performance is not predictive of future returns.
- ---------------------------------------
(1) Figure shown assumes reinvestment of all distributions and does not
reflect the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction
of the maximum applicable contingent deferred sales charge (CDSC)
(1 year-5%, 5 years-2%, 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, 1995.
(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.
