<PAGE>
DEAN WITTER CAPITAL GROWTH SECURITIES
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
Since Dean Witter Capital Growth Securities' last report to shareholders six
months ago, consumer spending has continued to increase significantly as 1993's
mortgage refinancings generated increased disposable income. What's more,
retail, home and automobile sales have risen rapidly in conjunction with higher
levels of employment.
This has brought about a steady diet of higher interest rates. Since our
last report, the federal funds rate -- the interest rate banks charge each other
for overnight loans -- has risen 100 basis points to 4.75 percent. The Federal
Reserve Board's tighter policy has also affected the discount rate -- the rate
the Federal Reserve charges member banks for loans -- which stood at 4.00
percent on October 31, 1994. Both stock and bond prices have been hard hit by
this environment.
PERFORMANCE
For the fiscal year ended October 31,
1994, the broad market as measured by the
Standard & Poor's Index of 500 stocks
(S&P 500) recorded a total return of 3.85
percent. Over the same period, the Fund
registered a total return of -0.79
percent. Since inception (April 2, 1990),
through October 31, 1994, the Fund's
total return was 34.50 percent, versus
60.60 percent for the S&P 500. (Total
returns do not reflect the effect of
sales charges.)
The reason for the Fund's
underperformance versus the S&P 500 since
inception is its rigorous stock screening
process. As outlined in previous letters
to shareholders, early in the Fund's life
companies had to have exhibited at least
10 consecutive years of earnings and
revenue growth before being considered
for inclusion in the portfolio. However,
the effect of 1991's recession on
corporate revenues and earnings severely
constricted the number of qualifying
issues. The inherent decrease in
diversification seriously hurt the Fund's
performance. In addition, many of the
stocks in the portfolio represented
consumer brand-name companies, primarily
companies in the food and health care
industries. Historically, these issues
had been the most consistent growth
companies in the most stable industries,
but in recent years have dramatically
underperformed the market. The Fund's
underperformance of the broad market over
the most recent fiscal year is also
attributable to higher interest rates and
a focus by investors on cyclical stocks
rather than growth stocks. To qualify a
broader list of appropriate securities,
the Fund's stock-
<PAGE>
screening process has been slightly modified. As such, companies are now
eligible for inclusion in the portfolio if they show positive earnings and
revenue growth for the last five consecutive years AND nine of the last ten
years. As of October 31, 1994, the portfolio consisted of 42 equity issues
spread among 33 industry groups. We believe that the actions taken in modifying
the screening process will improve the Fund's performance in the months to come.
The accompanying chart illustrates the performance of a $10,000 investment
in the Fund from inception (April 2, 1990) through the fiscal year ended October
31, 1994, versus the performance of a similar hypothetical investment in the
issues that comprise the S&P 500.
THE PORTFOLIO
During the past 12 months, the Fund initiated purchases of Coca-Cola Co.,
Schering-Plough, Federal National Mortgage Association, Sherwin-Williams and
American Barrick Resources, as these issues qualified for the portfolio for the
first time under the Fund's screening process. Sold were the Fund's positions in
Philip Morris Cos., EG&G, Inc., Tyson Foods, Inc. (Class A), Dillard Department
Stores Inc. (Class A), Block Drug, Inc. (Class A), and J.M. Smucker (Class A&B).
These issues no longer qualified for the portfolio.
GOING FORWARD
Given the Federal Reserve Board's commitment to controlling inflation
through higher interest rates, periods of share price volatility like those seen
over the Fund's recently concluded fiscal year may recur. However, we continue
to believe that the long-term outlook for the economy and the securities markets
in general is favorable. We also remain strongly convinced that the common
stocks of well-established growth companies will perform relatively well longer
term. Consequently, we are confident, patient and relatively fully invested.
We look forward to continuing to serve you and your investment needs. If you
have any questions concerning your investments, please feel free to contact us.
Very truly yours,
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER CAPITAL GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- --------------
<C> <S> <C>
COMMON STOCKS (97.4%)
ADVERTISING (2.6%)
362,200 Interpublic Group Cos., Inc............................ $ 11,952,600
--------------
APPAREL (1.5%)
191,000 Cintas Corp............................................ 6,780,500
--------------
AUTOMOTIVE - REPLACEMENT PARTS (2.6%)
327,200 Genuine Parts Co....................................... 11,820,100
--------------
BANKING (7.2%)
349,300 Banc One Corp.......................................... 10,086,038
370,700 Central Fidelity Banks, Inc............................ 10,657,625
228,600 Fifth Third Bancorp.................................... 11,887,200
--------------
32,630,863
--------------
BEVERAGES - ALCOHOLIC (2.5%)
227,800 Anheuser-Busch Cos., Inc............................... 11,560,850
--------------
BEVERAGES - SOFT DRINKS (1.3%)
119,000 Coca Cola Co. (The).................................... 5,979,750
--------------
BUILDING MATERIALS (1.6%)
223,000 Sherwin-Williams Co.................................... 7,275,375
--------------
BUSINESS SYSTEMS (2.6%)
324,600 General Motors Corp. (Class E)......................... 11,888,475
--------------
CHEMICALS - SPECIALTY (4.8%)
358,600 Nalco Chemical Co...................................... 11,564,850
293,200 Sigma-Aldrich, Inc..................................... 10,188,700
--------------
21,753,550
--------------
COMPUTER SERVICES (2.7%)
207,800 Automatic Data Processing, Inc......................... 12,130,325
--------------
CONSUMER SERVICES (2.5%)
254,800 Block (H&R), Inc....................................... 11,306,750
--------------
COSMETICS (2.6%)
273,200 International Flavors & Fragrances, Inc................ 11,986,650
--------------
DRUGS (4.0%)
250,000 Forest Laboratories, Inc. (Class A)*................... 11,500,000
95,000 Schering-Plough Corp................................... 6,768,750
--------------
18,268,750
--------------
DRUGS & HEALTHCARE (2.6%)
378,500 Abbott Laboratories.................................... 11,733,500
--------------
ELECTRIC EQUIPMENT (2.2%)
182,900 Grainger (W.W.), Inc................................... 10,059,500
--------------
ELECTRONICS (2.4%)
294,600 Dionex Corp.*.......................................... 10,900,200
--------------
ENTERTAINMENT (2.2%)
457,500 Circus Circus Enterprises, Inc.*....................... 10,179,375
--------------
</TABLE>
<PAGE>
DEAN WITTER CAPITAL GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- --------------
<C> <S> <C>
FINANCIAL - MISCELLANEOUS (1.7%)
101,000 Federal National Mortgage Association.................. $ 7,676,000
--------------
FOOD WHOLESALERS (2.6%)
479,200 Sysco Corp............................................. 11,920,100
--------------
FOODS (8.2%)
375,700 ConAgra, Inc........................................... 11,693,662
235,073 Tootsie Roll Industries, Inc........................... 14,603,910
247,800 Wrigley, (Wm.) Jr., Co., (Class A)..................... 11,181,975
--------------
37,479,547
--------------
GOLD MINING (1.7%)
322,000 American Barrick Resource Corp......................... 7,687,750
--------------
HOUSEWARES (2.6%)
433,400 Rubbermaid, Inc........................................ 11,918,500
--------------
INSURANCE (2.3%)
683,200 Crawford & Co., (Class B).............................. 10,675,000
--------------
MACHINERY - DIVERSIFIED (2.6%)
265,000 Thermo Electron Corp.*................................. 12,090,625
--------------
MANUFACTURED HOUSING (2.2%)
565,000 Clayton Homes, Inc.*................................... 10,240,625
--------------
MANUFACTURING (2.6%)
619,700 Federal Signal Corp.................................... 11,929,225
--------------
MEDICAL EQUIPMENT (5.1%)
1,003,100 Biomet, Inc.*.......................................... 11,535,650
335,000 Stryker Corp........................................... 11,473,750
--------------
23,009,400
--------------
RESTAURANTS (5.7%)
135,000 Brinker International*................................. 3,121,875
691,100 International Dairy Queen, Inc. (Class A)*............. 11,230,375
411,000 McDonald's Corp........................................ 11,816,250
--------------
26,168,500
--------------
RETAIL - DEPARTMENT STORES (2.4%)
474,300 Wal-Mart Stores, Inc................................... 11,146,050
--------------
RETAIL - DRUG STORES (2.6%)
289,900 Walgreen Co............................................ 12,030,850
--------------
RETAIL - FOOD CHAINS (2.6%)
400,300 Albertson's, Inc....................................... 12,009,000
--------------
TOBACCO (2.3%)
400,100 UST, Inc............................................... 10,602,650
--------------
UTILITIES (2.3%)
529,043 Citizens Utilities Co. of Delaware (Series A)*......... 7,009,820
279,610 Citizens Utilities Co. of Delaware (Series B)*......... 3,704,832
--------------
10,714,652
--------------
TOTAL COMMON STOCKS (IDENTIFIED COST $435,998,987)..... 445,505,587
--------------
</TABLE>
<PAGE>
DEAN WITTER CAPITAL GROWTH SECURITIES
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS) VALUE
- ------------ --------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (2.7%)
COMMERCIAL PAPER (A)(1.8%)
AUTOMOTIVE FINANCE (1.8%)
$ 8,000 Ford Motor Credit Corp. 4.724% due 11/02/94 (Amortized
Cost $7,998,951)..................................... $ 7,998,951
--------------
REPURCHASE AGREEMENT (0.9%)
4,118 The Bank of New York 4.8125% due 11/1/94 (dated
10/31/94; proceeds $4,118,734; collaterized by
$2,203,143 U.S. Treasury Note 5.125% due 12/31/98
valued at $2,063,634 and $2,052,935 U.S. Treasury
Note 7.25% due 11/15/96 valued at $2,136,921)
(Identified Cost $4,118,191)......................... 4,118,191
--------------
TOTAL SHORT-TERM INVESTMENTS (IDENTIFIED COST
$12,117,142)......................................... 12,117,142
--------------
TOTAL INVESTMENTS (IDENTIFIED COST $448,116,129) (B)... 100.1% 457,622,729
LIABILITIES IN EXCESS OF OTHER ASSETS.................. (0.1) (645,940)
------ --------------
NET ASSETS............................................. 100.0% $456,976,789
------ --------------
------ --------------
<FN>
- ----------------
* NON-INCOME PRODUCING SECURITY.
(A) COMMERCIAL PAPER WAS PURCHASED ON A DISCOUNT BASIS. THE INTEREST RATE
SHOWN HAS BEEN ADJUSTED TO REFLECT A BOND EQUIVALENT YIELD.
(B) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $448,395,011; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $39,897,616 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $30,669,898, RESULTING IN NET UNREALIZED
APPRECIATION OF $9,227,718.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CAPITAL GROWTH SECURITIES
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (identified cost
$448,116,129) (Note 1).................................... $457,622,729
Receivable for:
Investments sold (Note 4)................................. 1,325,131
Dividends................................................. 383,020
Shares of beneficial interest sold........................ 367,710
Deferred organizational expenses (Note 1)................... 10,460
Prepaid expenses and other assets........................... 30,710
-------------
TOTAL ASSETS........................................ 459,739,760
-------------
LIABILITIES:
Payable for:
Investments purchased (Note 4)............................ 1,349,123
Shares of beneficial interest repurchased................. 525,049
Plan of distribution fee (Note 3)......................... 391,178
Investment management fee (Note 2)........................ 254,266
Payable to bank............................................. 4,835
Accrued expenses (Note 4)................................... 238,520
-------------
TOTAL LIABILITIES................................... 2,762,971
-------------
NET ASSETS:
Paid-in-capital............................................. 470,166,328
Net unrealized appreciation on investments.................. 9,506,600
Accumulated net investment loss............................. (46,185)
Accumulated net realized loss on investments................ (22,649,954)
-------------
NET ASSETS.......................................... $456,976,789
-------------
-------------
NET ASSET VALUE PER SHARE, 38,525,537 shares outstanding
(unlimited shares authorized of $.01 par value)...........
$11.86
-------------
-------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME
Dividends............................................... $ 9,034,949
Interest................................................ 436,110
-------------
TOTAL INCOME........................................ 9,471,059
-------------
EXPENSES
Plan of distribution fee (Note 3)....................... 5,495,508
Investment management fee (Note 2)...................... 3,515,322
Transfer agent fees and expenses........................ 1,003,556
Shareholder reports and notices......................... 91,586
Professional fees....................................... 52,114
Custodian fees.......................................... 43,874
Registration fees....................................... 33,879
Trustees' fees and expenses (Note 4).................... 27,896
Organizational expenses (Note 1)........................ 25,440
Other................................................... 13,238
-------------
TOTAL EXPENSES...................................... 10,302,413
-------------
NET INVESTMENT LOSS............................... (831,354)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note
1):
Net realized loss on investments........................ (22,635,036)
Net change in unrealized depreciation on investments.... 21,479,587
-------------
NET LOSS ON INVESTMENTS............................. (1,155,449)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... $ (1,986,803)
-------------
-------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, 1994 OCTOBER 31, 1993
--------------------- ---------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
Operations:
Net investment loss....... $ (831,354) $(3,384,674)
Net realized gain (loss)
on investments.......... (22,635,036) 68,600,006
Net change in unrealized
depreciation on
investments............. 21,479,587 (115,365,070)
--------------------- ---------------------
Net decrease in net assets
resulting from
operations................. (1,986,803) (50,149,738)
Distributions to
shareholders from net
realized gain.............. (68,486,686) (11,268,234)
Net decrease from
transactions in shares of
beneficial interest (Note
5)......................... (155,714,841) (228,526,648)
--------------------- ---------------------
Total decrease........ (226,188,330) (289,944,620)
NET ASSETS:
Beginning of period......... 683,165,119 973,109,739
--------------------- ---------------------
END OF PERIOD (including
accumulated net investment
loss of $46,185 and
$37,261, respectively)..... $456,976,789 $683,165,119
--------------------- ---------------------
--------------------- ---------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- Dean Witter Capital Growth
Securities (the "Fund") is registered under the Investment Company Act of 1940,
as amended (the "Act"), as a diversified, open-end management investment
company. The Fund was organized as a Massachusetts business trust on December 8,
1989 and commenced operations on April 2, 1990.
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; and (4) short-term debt securities having a maturity date of
more than sixty days at the 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 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 on the identified cost
method. Dividend income is recorded on the ex-dividend date. Interest income
is accrued daily and includes discounts on certain short-term securities.
C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records
dividends and distributions to its shareholders on the record date. The
amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal 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.
E. ORGANIZATIONAL EXPENSES -- Dean Witter InterCapital Inc. (the
"Investment Manager") paid the organizational expenses of the Fund in the
amount of approximately $127,100 which have been reimbursed by the Fund for
the full amount thereof. Such expenses have been deferred and are being
amortized on the straight-line method over a period not to exceed five years
from the commencement of operations.
<PAGE>
DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
2. INVESTMENT MANAGEMENT AGREEMENT -- Pursuant to an Investment Management
Agreement, the Fund pays its Investment Manager a management fee, accrued daily
and payable monthly, by applying the following annual rates to the net assets of
the Fund determined at the close of each business day: 0.65% to the portion of
daily net assets not exceeding $500 million; 0.55% to the portion of daily net
assets exceeding $500 million but not exceeding $1 billion; 0.50% to the portion
of daily net assets exceeding $1 billion but not exceeding $1.5 billion; and
0.475% to the portion of daily net assets exceeding $1.5 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.
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 October 31,
1994, it received approximately $1,599,000 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 the proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended October 31, 1994 aggregated
$68,085,380 and $286,909,998, respectively.
<PAGE>
DEAN WITTER CAPITAL GROWTH SECURITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
For the year ended October 31, 1994, the Fund incurred brokerage commissions
of $242,720 with Dean Witter Reynolds Inc. for portfolio transactions executed
on behalf of the Fund. At October 31, 1994, the Fund's receivable for
investments sold and payables for investments purchased included unsettled
trades with Dean Witter Reynolds Inc. of $1,325,131 and $231,750, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At October 31, 1994, the Fund had
transfer agent fees and expenses payable of approximately $101,000.
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 October 31, 1994, included in Trustees' fees and expenses in the
Statement of Operations amounted to $8,924. At October 31, 1994, the Fund had an
accrued pension liability of $46,771 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
OCTOBER 31, 1994 OCTOBER 31, 1993
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Sold........................................ 4,146,525 $ 51,264,523 12,557,157 $ 177,024,756
Reinvestment of distributions............... 5,417,749 65,717,298 719,602 10,786,826
-------------- ---------------- -------------- ----------------
9,564,274 116,981,821 13,276,759 187,811,582
Repurchased................................. (22,223,330) (272,696,662) (31,140,889) (416,338,230)
-------------- ---------------- -------------- ----------------
Net decrease................................ (12,659,056) $ (155,714,841) (17,864,130) $ (228,526,648)
-------------- ---------------- -------------- ----------------
-------------- ---------------- -------------- ----------------
</TABLE>
6. FEDERAL INCOME TAX STATUS -- At October 31, 1994, the Fund had net capital
loss carryovers of approximately $22,371,000 which will be available through
October 31, 2002 to offset future capital gains to the extent provided by
regulations. To the extent that these carryover losses are used to offset future
capital gains, it is probable that the gains so offset will not be distributed
to shareholders.
As of October 31, 1994, the Fund had permanent book/tax differences
primarily attributable to net operating losses and dividend redesignations. To
reflect cumulative reclassifications arising from permanent book/tax differences
as of October 31, 1993, accumulated net realized loss on investments was charged
$167,340, paid-in-capital was charged $6,747,367 and accumulated net investment
loss was credited $6,914,707. To reflect reclassifications arising from
permanent book/tax differences for the year ended October 31, 1994,
paid-in-capital was charged $823,423, accumulated net investment loss was
credited $822,430 and accumulated net realized loss on investments was credited
$993.
<PAGE>
DEAN WITTER CAPITAL GROWTH SECURITIES
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 OCTOBER 31, APRIL 2, 1990*
--------------------------------------------- THROUGH
1994 1993 1992 1991 OCTOBER 31, 1990
--------- --------- --------- --------- ---------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................ $ 13.35 $ 14.09 $ 13.58 $ 9.19 $ 10.00
--------- --------- --------- --------- ----------
Net investment income (loss)....... (0.07) (0.08) (0.03) (0.01) 0.01
Net realized and unrealized gain
(loss) on investments............. 0.00 (0.50) 0.58 4.42 (0.82)
--------- --------- --------- --------- ----------
Total from investment operations... (0.07) (0.58) 0.55 4.41 (0.81)
--------- --------- --------- --------- ----------
Less dividends and distributions
from:
Net investment income............ 0.00 0.00 0.00 (0.02) 0.00
Net realized gains on
investments..................... (1.42) (0.16) (0.04) 0.00 0.00
--------- --------- --------- --------- ----------
Total dividends and
distributions..................... (1.42) (0.16) (0.04) (0.02) 0.00
--------- --------- --------- --------- ----------
Net asset value, end of period..... $ 11.86 $ 13.35 $ 14.09 $ 13.58 $ 9.19
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
TOTAL INVESTMENT RETURN +.......... (0.79)% (4.25)% 4.06% 48.07% (8.10)%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $456,977 $683,165 $973,110 $600,027 $206,588
Ratios to average net assets:
Expenses......................... 1.87% 1.81% 1.74% 1.83% 1.97%(2)
Net investment income (loss)..... (0.15)% (0.38)% (0.32)% (0.17)% 0.25%(2)
Portfolio turnover rate............ 13% 25% 29% 40% 10%
<FN>
- --------------
* COMMENCEMENT OF OPERATIONS.
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER CAPITAL GROWTH SECURITIES
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of Dean Witter Capital Growth Securities
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 Capital Growth
Securities (the "Fund") at October 31, 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 four years in
the period then ended and for the period April 2, 1990 (commencement of
operations) through October 31, 1990, 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 October 31, 1994 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
New York, New York
December 12, 1994
1994 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended October 31, 1994, the Fund paid to shareholders
$1.416445 per share from long-term capital gains.
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire DEAN WITTER
Dr. Manuel H. Johnson CAPITAL GROWTH
Paul Kolton SECURITIES
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
Paul D. Vance
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS [PHOTO]
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 directors, 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.
ANNUAL REPORT
OCTOBER 31, 1994
<PAGE>
DEAN WITTER CAPITAL GROWTH
GROWTH OF $10,000
($ IN THOUSANDS)
<TABLE>
<CAPTION>
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DATE TOTAL S&P
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<S> <C> <C>
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April 2, 1990 $10,000 $10,000
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October 31, 1990 $ 9,190 $ 9,173
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October 31, 1991 $13,605 $12,242
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October 31, 1992 $14,158 $13,459
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October 31, 1993 $13,556 $15,465
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October 31, 1994 $13,250 (3) $16,060
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<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR LIFE OF FUND
----------------------------
----------------------------
<S> <C>
-0.79 (1) 6.68 (1)
----------------------------
-5.23 (2) 6.34 (2)
----------------------------
----------------------------
----------------------------
----------------------------
____ Fund ____ S&P 500 (4)
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Past performance is not predictive of future returns.
<FN>
_______________________________________
(1) Figure shown assumes reinvestment of all distributions and does not
reflect the deduction of any sales charges.
(2) Figure shown assumes the deduction of the maximum applicable contingent
deferred sales charge (CDSC) (1 year-5%, since inception - 2%). See the
Fund's current prospectus for complete details on fees and sales charges.
(3) Closing value after the deduction of a 2% CDSC, assuming a complete
redemption on October 31, 1994.
(4) The S&P 500 is a broad-based index, the performance of which is based on
the average performance of 500 widely held common stocks. The index does
not include any expenses, fees or charges.
</TABLE>
