<PAGE> 1
DEAN WITTER CONVERTIBLE SECURITIES TRUST Two World Trade Center, New York, New
LETTER TO THE SHAREHOLDERS March 31, 1997 York 10048
DEAR SHAREHOLDER:
The six-month period ended March 31, 1997, saw solid gains in the stock market
with the major indices breaking record high after record high. However, at the
end of the period, concerns over rising interest rates and dollar-related
earnings shortfalls caused equities to retreat. The convertible market was also
generally robust, although not to the same extent, because the convertible
universe consists of many small-cap companies that, as a group, advanced less
rapidly than large caps for most of the period.
PERFORMANCE AND PORTFOLIO
Dean Witter Convertible Securities Trust posted a total return of 4.17 percent
for the six-month period ended March 31, 1997, compared to 3.40 percent for the
Goldman Sachs Convertible 100 Index and 4.46 percent for the Lipper Convertible
Securities Fund Index. The Fund's quarterly income dividend was $0.13 per share.
For the period, the Fund paid total dividends of $0.29 per share, which includes
an additional income dividend of $0.03 per share paid on December 31, 1996.
The Fund's relatively heavy exposure to small-cap companies that in general
lagged large caps for much of the period under review caused it to underperform
slightly against its peer group. While the Fund's relatively heavy weighting in
bonds also contributed to this underperformance, their yields provided
significant downside support during the equity sell-off that occurred the latter
half of the first quarter of 1997. The Fund's holdings in Integrated Health
Services, Inc., Ann Taylor and Royal Caribbean Cruises Inc. contributed
positively toward performance.
INVESTMENT STRATEGY
The Fund's value-oriented, bottom-up approach leads us to seek out companies and
industries with strong fundamentals and solid long-term growth potential. We
emphasize underfollowed small- and medium-capitalization companies that issue
convertible securities that we
<PAGE> 2
DEAN WITTER CONVERTIBLE SECURITIES TRUST
LETTER TO THE SHAREHOLDERS March 31, 1997, continued
believe offer opportunities for price participation in a rising equity market
and downside protection in a declining market. The Fund also searches for
convertible securities with good risk/reward characteristics. These
characteristics include a relatively high yield, to provide support if the
underlying stock declines, and a reasonable conversion premium, to ensure
participation in any appreciation of the underlying stock.
We attempt to limit the Fund's volatility by generally concentrating on issues
with short maturities while diversifying its assets across a wide range of
industries. As of March 31, 1997, the Fund was invested in health care (13.5%),
real estate investment trusts (7.3%), cable/cellular providers (4.8%) and
telecommunications (4.5%). Approximately 5 percent of the Fund's net assets were
invested in common stocks in order to provide diversification into industries
and companies not represented in the convertible universe.
LOOKING AHEAD
We expect that convertibles will perform well over the long run, offering
superior returns in modestly increasing, stable or declining equity markets, but
lagging equities during periods of very strong markets.
We appreciate your continued support of Dean Witter Convertible Securities Trust
and look forward to continuing to serve your investment needs.
Very truly yours,
/S/ CHARLES A. FIUMEFREDDO
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE> 3
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (57.7%)
CONVERTIBLE BONDS (57.7%)
Aerospace & Defense (0.8%)
$ 2,000 Titan Corp........................... 8.25% 11/01/03 $ 2,057,500
------------
Auto Parts (1.4%)
4,000 MascoTech, Inc. ..................... 4.50 12/15/03 3,610,000
------------
Banks - International (0.0%)
130 Bangkok Bank Public Co.
(Hong Kong)......................... 3.25 03/03/04 124,150
------------
Biotechnology (0.3%)
1,050 Nabi, Inc. - 144A**.................. 6.50 02/01/03 871,185
------------
Broadcast Media (1.5%)
4,000 Jacor Communications, Inc. .......... 0.00 06/12/11 1,855,120
2,065 Scandinavian Broadcasting System SA
(Luxembourg)........................ 7.25 08/01/05 1,868,825
------------
3,723,945
------------
Cable/Cellular (3.4%)
210 Comcast Corp. ....................... 3.375 09/09/05 198,076
4,130 Comcast Corp. ....................... 1.125 04/15/07 2,108,984
4,000 Tele-Communications International,
Inc. ............................... 4.50 02/15/06 2,970,000
10,270 U.S. Cellular Corp. ................. 0.00 06/15/15 3,361,371
------------
8,638,431
------------
Chemicals (2.2%)
12,500 RPM Inc. ............................ 0.00 09/30/12 5,703,125
------------
Drugs (1.3%)
3,075 Bindley Western Industries, Inc. .... 6.50 10/01/02 3,228,750
------------
Electronics & Electrical (1.2%)
3,000 Richey Electronics Inc. ............. 7.00 03/01/06 3,191,250
------------
Electronics - Semiconductors (0.3%)
1,000 Cirrus Logic, Inc. .................. 6.00 12/15/03 768,130
90 Integrated Device Technology......... 5.50 06/01/02 74,123
------------
842,253
------------
Engineering & Construction (0.0%)
125 Kumagai Gumi Finance Inc.
(Hong Kong)......................... 4.875 12/08/98 118,125
------------
Entertainment/Gaming (0.6%)
2,050 Savoy Pictures Entertainment,
Inc. ............................... 7.00 07/01/03 1,660,500
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 4
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Environmental (1.3%)
$ 3,825 Thermo Terratech, Inc. .............. 4.625% 05/01/03 $ 3,423,375
------------
Equipment (0.9%)
2,225 Varlen Corp. ........................ 6.50 06/01/03 2,247,250
------------
Finance - Leasing (1.1%)
3,000 Leasing Solutions, Inc. ............. 6.875 10/01/03 2,685,000
------------
Financial Services (3.4%)
2,000 AT&T Latin American
Equity - 144A**..................... 0.00 03/30/99 1,857,500
5,000 Deutsche Bank Finance BV - 144A**
(Netherlands)....................... 0.00 02/12/17 2,160,000
5,000 UBS Finance Delaware................. 2.00 12/15/00 4,631,250
------------
8,648,750
------------
Foreign Government (0.8%)
2,000 Republic of Italy (Italy)............ 5.00 06/28/01 1,961,260
------------
Healthcare (11.7%)
2,500 ARV Assisted Living, Inc. - 144A**... 6.75 04/01/06 2,090,625
950 Beverly Enterprises, Inc. ........... 5.50 08/01/18 1,062,860
3,000 Emeritus Corp. - 144A**.............. 6.25 01/01/06 2,443,140
2,000 FPA Medical Management, Inc. ........ 6.50 12/15/01 1,988,750
2,200 Integrated Health Services, Inc. .... 5.75 01/01/01 2,297,438
2,600 Integrated Health Services, Inc. .... 6.00 01/01/03 2,741,154
500 Phoenix Shannon - 144A** (Ireland)
(a)................................. 9.50 11/01/00 --
5,960 Phymatrix Corp. ..................... 6.75 06/15/03 5,035,366
105 Quantum Health Resources Inc. ....... 4.75 10/01/00 96,361
2,000 Rotech Medical Corp. ................ 5.25 06/01/03 1,867,000
2,500 Sterling House Corp. ................ 6.75 06/30/06 1,765,625
3,000 Tenet Healthcare, Inc. .............. 6.00 12/01/05 3,447,960
5,000 Theratx Inc. ........................ 8.00 02/01/02 5,000,000
------------
29,836,279
------------
Healthcare - Miscellaneous (1.2%)
3,800 Pharmaceutical Marketing
Services, Inc. ..................... 6.25 02/01/03 2,978,250
------------
Heating & Air Conditioning (0.8%)
2,000 American Residential Holdings
Corp. - 144A**...................... 7.25 04/15/04 1,975,000
------------
Home Building (1.1%)
3,015 U.S. Home Corp. ..................... 4.875 11/01/05 2,749,921
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Hospital Management & Health
Maintenance Organizations (1.1%)
$ 3,000 CII Financial Inc. .................. 7.50% 09/15/01 $ 2,729,190
------------
Hotels/Motels (2.1%)
225 Shangri-La Asia Capital (Hong
Kong)............................... 2.875 12/16/00 191,531
4,400 Sholodge Inc. ....................... 7.50 05/01/04 3,960,000
1,310 Signature Resorts, Inc. ............. 5.75 01/15/07 1,088,938
------------
5,240,469
------------
Insurance (0.1%)
200 USF&G Corp. ......................... 0.00 03/03/09 132,346
------------
Leisure (0.0%)
325 Coleman Worldwide Corp. ............. 0.00 05/27/13 92,853
------------
Machinery (0.4%)
1,094 Cooper Industries, Inc. ............. 7.05 01/01/15 1,149,772
------------
Media Group (0.1%)
395 News America Holdings, Inc. ......... 0.00 03/11/13 168,175
------------
Medical Products & Supplies (0.9%)
2,750 Uromed Corp. - 144A**................ 6.00 10/15/03 2,345,530
------------
Metals & Mining (0.5%)
120 Banpu Public Company Ltd.
(Thailand).......................... 3.50 08/25/04 118,200
1,250 Crown Resources Corp. ............... 5.75 08/27/01 1,112,500
------------
1,230,700
------------
Office Equipment & Supplies (2.3%)
7,175 U.S. Office Products Co. ............ 5.50 05/15/03 6,000,094
------------
Pollution Control (0.1%)
213 WMX Technologies, Inc. .............. 2.00 01/24/05 190,132
------------
Publishing (2.6%)
13,000 Hollinger, Inc. (Canada)............. 0.00 10/05/13 4,647,500
45 Nelson (Thomas), Inc. - 144A**....... 5.75 11/30/99 41,644
5,000 Time Warner, Inc. ................... 0.00 12/17/12 1,897,900
------------
6,587,044
------------
Real Estate Investment Trust (2.3%)
2,850 Alexander Haagen Properties, Inc.
(Series A).......................... 7.50 01/15/01 2,657,625
3,140 Mid Atlantic Realty Trust............ 7.625 09/15/03 3,289,527
------------
5,947,152
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Restaurants (1.3%)
$ 3,600 Hometown Buffet, Inc. ............... 7.00% 12/01/02 $ 3,321,000
------------
Retail (2.6%)
1,750 Home Depot, Inc. .................... 3.25 10/01/01 1,737,645
2,000 Jumbosports, Inc. ................... 4.25 11/01/00 1,372,500
2,000 Men's Wearhouse, Inc. (The).......... 5.25 03/01/03 2,071,820
145 Office Depot, Inc. .................. 0.00 11/01/08 87,787
75 Pep Boys - Manny, Moe & Jack,
Inc. ............................... 4.00 09/01/99 75,407
1,500 The Sports Authority, Inc. .......... 5.25 09/15/01 1,358,805
------------
6,703,964
------------
Steel (1.6%)
3,900 Quanex Corp. ........................ 6.88 06/30/07 3,900,000
450 Sahaviriya Steel Industries - 144A**
(Thailand).......................... 3.50 07/26/05 283,500
------------
4,183,500
------------
Technology (3.7%)
2,420 Eidos PLC - 144A** (United
Kingdom)............................ 6.25 07/31/02 2,350,425
1,000 HMT Technology Corp. - 144A**........ 5.75 01/15/04 841,520
2,000 Intevac Corp - 144A**................ 6.50 03/01/04 1,841,240
1,500 Lernout & Hauspie Speech Products
NV - 144A** (Belgium)............... 8.00 11/15/01 1,525,800
800 Safeguard Scientifics, Inc. ......... 6.00 02/01/06 686,000
200 Safeguard Scientifics,
Inc. - 144A**....................... 6.00 02/01/06 174,624
2,135 Unisys Corp. ........................ 8.25 08/01/00 2,054,938
------------
9,474,547
------------
Telecommunications (0.7%)
137 General Instrument Corp. ............ 5.00 06/15/00 142,443
1,750 SA Telecommunications
Inc. - 144A**....................... 10.00 08/15/06 1,540,000
------------
1,682,443
------------
TOTAL CONVERTIBLE BONDS
(Identified Cost $147,671,122)................................ 147,453,210
------------
NON-CONVERTIBLE BOND (0.0%)
Oil & Gas
70 SFP Pipeline Holdings
(Identified Cost $91,700)............ 11.16 08/15/10 85,050
------------
TOTAL CORPORATE BONDS
(Identified Cost $147,762,822)................................ 147,538,260
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS (32.5%)
Apparel (1.3%)
102,000 Designer Finance Trust $3.00.............................. $ 3,327,750
------------
Auto Parts (1.5%)
66,600 Mascotech, Inc. $1.20..................................... 1,232,100
100,000 Walbro Capital Trust $2.00................................ 2,600,000
------------
3,832,100
------------
Banks - International (1.9%)
40,000 Banco Comercial Portuguese (Series A) (Portugal) $4.00.... 2,230,000
110,000 National Australia Bank, Ltd. (Australia) $1.969
(Units)++................................................. 2,750,000
------------
4,980,000
------------
Biotechnology (0.5%)
63,500 Gensia Inc. $3.75 - 144A**................................ 1,162,875
------------
Broadcast Media (2.5%)
101,570 SFX Broadcasting, Inc. (Series D) $3.25................... 4,354,814
242,000 Triathlon Broadcasting Co. $0.945......................... 1,996,500
------------
6,351,314
------------
Cable/Cellular (1.2%)
215,000 Nextel Trust (STRYPES) $1.015............................. 3,063,750
------------
Chemicals (0.1%)
1,700 Occidental Petroleum Corp. $3.875 - 144A**................ 98,495
3,300 Occidental Petroleum Corp. (Series A) $3.00............... 219,450
------------
317,945
------------
Computer Software (1.6%)
51,000 Microsoft Corp. (Series A) $2.196......................... 4,131,000
------------
Financial Services (4.1%)
100,000 Insignia Financing, Inc. $3.25 - 144A**................... 4,506,300
100,000 Merrill Lynch & Co., Inc. (STRYPES) $4.087 (1)............ 5,900,000
------------
10,406,300
------------
Foods (0.6%)
30,000 Chiquita Brands International, Inc. (Series A) $2.875..... 1,477,500
------------
Industrials (1.1%)
75,000 Elsag Bailey Process Automation (Netherlands) $2.75....... 2,760,975
------------
Leisure (0.4%)
16,800 Royal Caribbean Cruises Inc. (Series A) $3.625............ 940,800
------------
Machine Tools (1.6%)
100,000 Greenfield Capital Trust, Inc. $3.00...................... 4,162,500
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------
<C> <S> <C>
Metals & Mining (0.8%)
117,900 Coeur D'Alene Mines Corp. $1.488.......................... $ 2,092,725
------------
Oil & Gas (2.8%)
55,000 Callon Petroleum Co. (Series A) $2.125.................... 2,048,750
155,000 ENRON Corp. $1.36......................................... 3,332,500
30,000 NorAm Financing I $3.125.................................. 1,867,500
------------
7,248,750
------------
Paper Products (1.6%)
81,800 James River Corp. of Virginia (Series K) $3.375........... 3,987,750
------------
Publishing (0.6%)
165,000 Hollinger International, Inc. $0.951...................... 1,650,000
------------
Real Estate (0.7%)
36,600 Rouse Co. (Series B) $3.00................................ 1,793,400
------------
Real Estate Investment Trust (3.2%)
151,100 FelCor Suite Hotels, Inc. (Series A) $1.95................ 4,306,350
163,100 Wellsford Residential Property Trust (Series A) $1.75..... 3,873,625
------------
8,179,975
------------
Steel (0.6%)
45,000 WHX Corp. (Series A) $3.25................................ 1,620,000
------------
Telecommunications (3.8%)
70,000 General Datacomm Industries, Inc. $2.25 - 144A**.......... 1,378,160
50,000 Globalstar Telecommunications, Ltd. $3.25................. 2,587,500
25,000 IXC Communication, Inc. $7.25 - 144A**+................... 2,487,500
40,000 Loral Space & Communications Ltd. $3.00 - 144A**.......... 1,950,000
35,000 Sprint Corp. $2.63........................................ 1,203,125
------------
9,606,285
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified Cost $83,505,591)............................. 83,093,694
------------
COMMON STOCKS (5.0%)
Cable/Cellular (0.2%)
40,000 Centennial Cellular Corp. (Class A)*...................... 410,000
------------
Drugs (0.1%)
20,000 Bindley Western Industries, Inc. ......................... 375,000
------------
Entertainment/Gaming (1.2%)
861,328 Alliance Gaming Corp.*.................................... 3,068,481
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------
<C> <S> <C>
Healthcare (0.6%)
50,000 Integrated Health Services, Inc. ......................... $ 1,462,500
------------
Medical Products & Supplies (0.2%)
60,000 Neuromedical Systems, Inc.*............................... 585,000
------------
Pollution Control (0.4%)
122,000 OHM Corp.*................................................ 960,750
------------
Real Estate Investment Trust (1.8%)
90,100 American General Hospitality Corp. ....................... 2,455,225
77,083 Camden Property Trust..................................... 2,100,512
------------
4,555,737
------------
Restaurants (0.5%)
100,000 Brinker International, Inc.*.............................. 1,262,500
------------
TOTAL COMMON STOCKS
(Identified Cost $12,665,720)............................. 12,679,968
------------
PREFERRED STOCKS (0.8%)
Broadcast Media
5,000 Chancellor Radio Broadcast, Inc. $12.00 - 144A**.......... 488,125
15,000 SFX Broadcasting, Inc. (Series E) $12.625+................ 1,449,375
------------
TOTAL PREFERRED STOCKS
(Identified Cost $2,000,000).............................. 1,937,500
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE
- --------- ---------
<C> <S> <C> <C>
WARRANTS (0.0%)
Telecommunications
45,000 Audiovox Corp.* - 144A**
(Identified Cost $0).......................... 03/15/01 106,875
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 10
DEAN WITTER CONVERTIBLE SECURITIES TRUST
PORTFOLIO OF INVESTMENTS March 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENT (4.6%)
REPURCHASE AGREEMENT
$11,785 The Bank of New York (dated 03/31/97;
proceeds $11,786,638; collateralized
by $12,258,828 U.S. Treasury Note
6.25% due 02/15/03 valued at
$12,020,576) (Identified Cost
$11,784,878)........................ 5.375% 04/01/97 $ 11,784,878
------------
TOTAL INVESTMENTS
(Identified Cost $257,719,011) (b).................... 100.6% 257,141,175
LIABILITIES IN EXCESS OF OTHER ASSETS................ (0.6) (1,509,817)
------ ------------
NET ASSETS............................................ 100.0% $255,631,358
====== ============
</TABLE>
- ---------------------
<TABLE>
<C> <S>
STRYPES Structured yield product exchangeable for stock.
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
++ Consists of one or more class of securities traded together as a unit;
stocks with attached warrants.
+ Payment-in-kind security.
(1) Exchangeable for SunAmerica, Inc. common stock.
(a) Non-income producing security; bond in default.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $9,406,393 and the
aggregate gross unrealized depreciation is $9,984,229, resulting in net
unrealized depreciation of $577,836.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 11
DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1997 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $257,719,011)....................................... $257,141,175
Receivable for:
Investments sold.................................................. 7,179,444
Interest.......................................................... 2,124,424
Shares of beneficial interest sold................................ 496,047
Dividends......................................................... 150,146
Prepaid expenses and other assets..................................... 65,821
------------
TOTAL ASSETS...................................................... 267,157,057
------------
LIABILITIES:
Payable for:
Investments purchased............................................. 10,687,115
Shares of beneficial interest repurchased......................... 222,337
Plan of distribution fee.......................................... 218,526
Investment management fee......................................... 131,116
Dividends to shareholders......................................... 109,111
Accrued expenses and other payables................................... 157,494
------------
TOTAL LIABILITIES................................................. 11,525,699
------------
NET ASSETS:
Paid-in-capital....................................................... 599,139,750
Net unrealized depreciation........................................... (577,836)
Accumulated undistributed net investment income....................... 4,628,090
Accumulated net realized loss......................................... (347,558,646)
------------
NET ASSETS........................................................ $255,631,358
============
NET ASSET VALUE PER SHARE,
19,719,736 shares outstanding
(unlimited shares authorized of $.01 par value)...................... $12.96
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 12
DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended March 31, 1997 (unaudited)
NET INVESTMENT INCOME:
INCOME
Interest............................................................... $ 5,681,253
Dividends.............................................................. 1,800,030
-----------
TOTAL INCOME....................................................... 7,481,283
-----------
EXPENSES
Plan of distribution fee............................................... 1,224,399
Investment management fee.............................................. 734,639
Transfer agent fees and expenses....................................... 180,706
Shareholder reports and notices........................................ 38,153
Professional fees...................................................... 29,769
Registration fees...................................................... 21,964
Custodian fees......................................................... 12,886
Trustees' fees and expenses............................................ 6,561
Other.................................................................. 6,687
-----------
TOTAL EXPENSES..................................................... 2,255,764
-----------
NET INVESTMENT INCOME.............................................. 5,225,519
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain...................................................... 8,482,125
Net change in unrealized appreciation.................................. (3,886,439)
-----------
NET GAIN........................................................... 4,595,686
-----------
NET INCREASE........................................................... $ 9,821,205
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 13
DEAN WITTER CONVERTIBLE SECURITIES TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE YEAR
MARCH 31, ENDED
1997 SEPTEMBER 30, 1996
- ------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income.............................. $ 5,225,519 $ 9,834,008
Net realized gain.................................. 8,482,125 13,199,408
Net change in unrealized
appreciation/depreciation......................... (3,886,439) 5,765,842
----------- -----------
NET INCREASE................................... 9,821,205 28,799,258
Dividends from net investment income............... (5,512,213) (10,327,902)
Net increase from transactions in shares of
beneficial interest............................... 16,988,160 30,464,485
----------- -----------
NET INCREASE................................... 21,297,152 48,935,841
NET ASSETS:
Beginning of period................................ 234,334,206 185,398,365
----------- -----------
END OF PERIOD
(Including undistributed net investment income
of $4,628,090 and $4,914,784, respectively)... $255,631,358 $234,334,206
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 14
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 1997 (unaudited)
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's investment objective is to
seek a high level of total return on its assets through a combination of current
income and capital appreciation. The Fund was organized as a Massachusetts
business trust on May 21, 1985 and commenced operations on October 31, 1985.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign 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 pursuant to procedures
adopted 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 Dean Witter InterCapital Inc. (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 portfolio securities may be valued by an outside pricing service
approved by the Trustees. The pricing service may utilize 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 are accreted over the life of the respective securities. Dividend
<PAGE> 15
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 1997 (unaudited) continued
income is recorded on the ex-dividend date. Interest income is accrued daily
except where collection is not expected.
C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the record date. The amounts 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, the Fund pays the 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 daily net assets not exceeding $750
million; 0.55% to the portion of daily net assets exceeding $750 million but not
exceeding $1 billion; 0.50% to the portion of daily net assets exceeding $1
billion but not exceeding $1.5 billion; 0.475% to the portion of daily net
assets exceeding $1.5 billion but not exceeding $2 billion; 0.45% to the portion
of daily net assets exceeding $2 billion but not exceeding $3 billion; and
0.425% to 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.
<PAGE> 16
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 1997 (unaudited) continued
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act pursuant
to which the Fund pays the Distributor compensation, accrued daily and payable
monthly, at an annual rate of 1.0% of the lesser of: (a) the average daily
aggregate gross sales of the Fund's shares since the Fund's inception (not
including reinvestment of dividend or capital gain distributions) less the
average daily aggregate net asset value of the Fund's shares redeemed since the
Fund's inception upon which a contingent deferred sales charge has been imposed
or upon which such charge has been waived; or (b) the Fund's average daily net
assets. Amounts paid under the Plan are paid to the Distributor to compensate it
for the services provided and the expenses borne by it and others in the
distribution of the Fund's shares, including the payment of commissions for
sales of the Fund's shares and incentive compensation to, and expenses of, the
account executives of Dean Witter Reynolds Inc. ("DWR"), an affiliate of the
Investment Manager and Distributor, and other employees or selected
broker-dealers who engage in or support distribution of the Fund's shares or who
service shareholder accounts, including overhead and telephone expenses,
printing and distribution of prospectuses and reports used in connection with
the offering of the Fund's shares to other than current shareholders and
preparation, printing and distribution of sales literature and advertising
materials. In addition, the Distributor may be compensated under the Plan for
its opportunity costs in advancing such amounts, which compensation would be in
the form of a carrying charge on any unreimbursed expenses incurred by the
Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred but
not yet recovered may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
Although there is no legal obligation for the Fund to pay expenses incurred in
excess of payments made to the Distributor under the Plan and the proceeds of
contingent deferred sales charges paid by the investors upon redemption of
shares, if for any reason the Plan is terminated, the Trustees will consider at
that time the manner in which to treat such expenses. The Distributor has
advised the Fund that such excess amounts, including carrying charges, totaled
$74,316,532 at March 31, 1997.
The Distributor has informed the Fund that for the six months ended March 31,
1997, it received approximately $83,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares.
<PAGE> 17
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 1997 (unaudited) continued
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended March 31, 1997 aggregated
$219,355,749 and $179,336,258, respectively.
For the same period, the Fund incurred brokerage commissions of $1,218 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 March 31, 1997, the Fund had
transfer agent fees and expenses payable of approximately $63,500.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the six months ended March 31, 1997
included in Trustees' fees and expenses in the Statement of Operations amounted
to $639. At March 31, 1997, the Fund had an accrued pension liability of $48,209
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 SIX FOR THE YEAR
MONTHS ENDED ENDED
MARCH 31, 1997 SEPTEMBER 30, 1996
--------------------------- ---------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold.......................................................... 4,474,343 $ 58,240,915 6,348,274 $ 78,466,531
Reinvestment of dividends..................................... 345,885 4,492,066 715,417 8,632,934
Shares issued in connection with the acquisition of TCW/DW
Global Convertible Trust (Note 6)............................ -- -- 1,665,682 19,179,898
---------- ------------ ---------- ------------
4,820,228 62,732,981 8,729,373 106,279,363
Repurchased................................................... (3,522,838) (45,744,821) (6,193,018) (75,814,878)
---------- ------------ ---------- ------------
Net increase.................................................. 1,297,390 $ 16,988,160 2,536,355 $ 30,464,485
========== ============ ========== ============
</TABLE>
<PAGE> 18
DEAN WITTER CONVERTIBLE SECURITIES TRUST
NOTES TO FINANCIAL STATEMENTS March 31, 1997 (unaudited) continued
6. ACQUISITION OF TCW/DW GLOBAL CONVERTIBLE TRUST
As of the close of business on December 22, 1995, the Fund acquired all the net
assets of TCW/DW Global Convertible Trust ("Global Convertible") pursuant to a
plan of reorganization approved by the shareholders of Global Convertible on
December 19, 1995. The acquisition was accomplished by a tax-free exchange of
1,665,682 shares of the Fund at a net asset value of $11.52 for 1,811,960 shares
of Global Convertible.
7. FEDERAL INCOME TAX STATUS
At September 30, 1996, the Fund had an approximate net capital loss carryover to
offset future capital gains to the extent provided by regulations, which is
available through September 30 of the following years:
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
---------------------------------------------------------
1997 1998 1999 2000 TOTAL
-------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
$207,480 $36,349 $46,135 $62,731 $352,695
======== ======= ======= ======= ========
</TABLE>
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
approximately $2,373,000 during fiscal 1996.
As of September 30, 1996, the Fund had temporary book/tax differences primarily
attributable to post-October losses and capital loss deferrals on wash sales.
<PAGE> 19
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 SIX
MONTHS ENDED FOR THE YEAR ENDED SEPTEMBER 30
MARCH 31, ----------------------------------------------
1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................ $12.72 $11.67 $10.75 $10.62
------ ------ ------ ------
Net investment income....................................... 0.26 0.55 0.60 0.42
Net realized and unrealized gain............................ 0.27 1.12 0.82 0.11
------ ------ ------ ------
Total from investment operations............................ 0.53 1.67 1.42 0.53
------ ------ ------ ------
Less dividends from net investment income................... (0.29) (0.62) (0.50) (0.40)
------ ------ ------ ------
Net asset value, end of period.............................. $12.96 $12.72 $11.67 $10.75
====== ====== ====== ======
TOTAL INVESTMENT RETURN+.................................... 4.17%(1) 14.70% 13.68% 5.02%
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.84%(2) 1.89% 1.96% 1.93%
Net investment income....................................... 4.27%(2) 4.78% 5.24% 3.68%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions...................... $256 $234 $185 $190
Portfolio turnover rate..................................... 82%(1) 171% 138% 184%
Average commission rate paid................................ $0.0566 $0.0581 -- --
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30
-------------------------------
1993 1992
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................ $ 8.92 $ 8.67
------ ------
Net investment income....................................... 0.37 0.34
Net realized and unrealized gain............................ 1.67 0.15
------ ------
Total from investment operations............................ 2.04 0.49
------ ------
Less dividends from net investment income................... (0.34) (0.24)
------ ------
Net asset value, end of period.............................. $10.62 $ 8.92
====== ======
TOTAL INVESTMENT RETURN+.................................... 23.22% 5.69%
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.93% 1.92%
Net investment income....................................... 3.44% 3.43%
SUPPLEMENTAL DATA:
Net assets, end of period, in millions...................... $208 $218
Portfolio turnover rate..................................... 221% 145%
Average commission rate paid................................ -- --
</TABLE>
- ---------------------
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 20
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
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
The financial statements included herein have been taken from the records of
the Fund without examination by the independent accountants and accordingly
they do not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and
trustees, fees, expenses and other pertinent information, please see the
prospectus of the Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
CONVERTIBLE
SECURITIES
TRUST
[PHOTO]
Semiannual Report
March 31, 1997
