<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- - -----------------------------------------------------------------------------
Investor sentiment regarding the health-care sector has been swinging back
and forth like a pendulum. This uncertainty is reflected in the Fund's
performance during the fiscal year. For the six-month period ended January
31, 1994, the Fund's total return, not reflecting the contingent deferred
sales charge was 27.66 percent compared to 8.97 percent for the broad-based
Standard & Poor's 500 Index (S&P 500). During that period, the fear among
investors of a draconian health-care reform plan coming out of Washington
dissipated. However, as Congress actively pursued a proposal during the
second half of the Fund's fiscal year, concern over health-care reform
resurfaced. This factor weighed heavily on investor psychology, as well as
the multiples accorded to health-care stocks. As a result, the Fund ended its
fiscal year with a modest total return of 1.08 percent (see note 1 below),
compared to 5.15 percent for the S&P 500.
UNCERTAINTY IN THE HEALTH CARE SECTOR
The Fund's performance for the fiscal year reflects an oversold market
rather than anything specific within the health-care industry. The Fund is
heavily weighted in small-to mid-cap companies, sectors which are weathering
major corrections dating back to October, 1993. As far as the overall
health-care industry is concerned, whether or not a reform package will come
out of Washington this year is still very much up in the air. If a plan does
emerge, we do not anticipate that it will be particularly onerous.
The health-care industry has been adjusting to an increasingly
cost-conscious environment, as evidenced by the numerous layoff
announcements, restructurings and mergers. With the exception of certain
large drug and medical supply manufacturers, earnings trends in the
health-care industry remain pretty much on track. The earnings momentum in
the HMO industry, which represents a large weighting in the Fund, is
exceptionally strong. The accompanying chart illustrates the performance of a
$10,000 investment in the Fund from inception through the fiscal year ended
July 31, 1994, versus the performance of a similar hypothetical investment in
the issues that comprise the S&P 500.
<TABLE>
<CAPTION>
DEAN WITTER HEALTH SCIENCES TRUST
GROWTH OF $10,000
($ IN THOUSANDS)
DATE TOTAL S&P 500
- - -------------------------------------------------------------------------------
<S> <C>
October 30, 1992 $10,000 $10,000
- - -------------------------------------------------------------------------------
July 31, 1993 $9,220 $10,932
- - -------------------------------------------------------------------------------
July 31, 1994 $8,947(3) $11,496
- - -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR LIFE OF FUND
- - -------------------------------------------------------------------------------
NON-STANDARD 1.08 (1) -3.95(1)
- - -------------------------------------------------------------------------------
STANDARD (-CDSC) -3.92(2) -6.16(2)
- - -------------------------------------------------------------------------------
____Fund ____S&P 500(4)
Past performance is not predictive of future returns.
<FN> ________________________________________
(1) Figure shown assumes reinvestment of all distributions and does not reflect any
sales charges.
(2) Figure shown assumes the deduction of the maximum applicable contingent
deferred sales charges (the CDSC is scaled down from 5% to 1%; see the
prospectus for complete details on fees and sales charges.)
(3) Closing value after a deduction of 4% CDSC assuming a complete redemption
on July 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>
<PAGE>
<PAGE>
MERGERS AND ACQUISITIONS
The one area that is causing excitement among investors is the heightened
merger and acquisition activity taking place in the health-care industry.
During the past several months, we've seen Merck & Co. acquire Medco, the
pharmaceutical mail order and benefits manager. Lilly acquired a similar
operation from McKesson, at a huge premium. Consolidation is taking place in
the HMO and hospital management industries. And, it is also occurring in the
pharmaceutical industry. Hoffmann LaRoche has acquired Syntex and, more
recently, American Home Products made an extraordinarily high bid for
American Cyanamid. Going forward, merger activity is likely to continue;
there seems to be a perception among health-care industry executives that
"bigger is better." The Fund was fortunate to own several companies that were
acquired recently at large premiums, including American Cyanamid and Zenith
Labs.
LOOKING AHEAD
We are confident that our approach to investing in the health-care
industry will prove rewarding. We plan to remain heavily invested in the
fastest-growing companies --primarily small-to mid-cap stocks. Our working
assumption is that the Federal Reserve Board's attempts to slow the economy
will prove successful. Already, we are seeing positive signs, based on recent
trends in the automobile and housing sectors. As evidence mounts that the
economy is slowing, we expect to see investors shift from cyclical stocks
toward growth companies, especially those that can produce good bottom-line
results regardless of trends in the overall economy. We expect to see this
shift begin to occur as we approach year-end. By then, we should also have a
better handle on Washington's plans for a health-care reform program.
Longer term, we remain optimistic regarding the health-care industry. The
advent of new services and products, especially in the biotechnology sector,
combined with an aging population, are expected to fuel the industry's
growth. Currently, the biotech industry is represented by only a 9.8 percent
weighting in the Fund. We expect that weighting to increase to 15 percent as
we approach 1995/1996. Right now, only a handful of biotech companies are in
the black, but as we approach the middle of the decade, we expect to see many
of those companies turn profitable as they bring to market products currently
under development. We also expect this sector to be a source of "blockbuster"
products and spectacular investment returns. For example, Biogen's stock
recently rose 30 percent in one day when the company announced that clinical
trials to develop a drug treatment for multiple sclerosis were successful.
We thank you for your continued support of Dean Witter Health Sciences
Trust and look forward to continuing to serve your investment needs.
Very truly yours,
Charles A. Fiumefreddo
Chairman of the Board
<PAGE>
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS July 31, 1994
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- - ------------ ------------
<C> <S> <C>
COMMON STOCKS (98.9%)
BIOTECHNOLOGY (9.8%)
60,000 Agouron Pharmaceutical, Inc.* ..................... $ 585,000
50,000 Amgen, Inc.* ...................................... 2,475,000
50,000 Cell Genesys, Inc.* ............................... 425,000
235,000 CellPro, Inc.* .................................... 5,052,500
200,000 Centocor, Inc.* ................................... 2,350,000
142,000 Cephalon, Inc.* ................................... 1,349,000
60,000 Chiron Corp.* ..................................... 3,210,000
50,000 Genzyme Corp.* .................................... 1,425,000
70,000 Procyte Corp.* .................................... 656,250
170,000 Protein Design Laboratories, Inc.* ................ 3,208,750
250,000 US Bioscience, Inc.* .............................. 1,468,750
75,000 Viagene, Inc.* .................................... 290,625
-----------
22,495,875
-----------
CHEMICALS (3.3%)
60,000 American Cyanamid Co. ............................. 3,637,500
140,000 Ivax Corp. ........................................ 2,345,000
50,000 Mallinckrodt Group, Inc. .......................... 1,525,000
-----------
7,507,500
-----------
COMMERCIAL SERVICES (0.3%)
25,000 ABR Information Services, Inc.* ................... 275,000
30,000 Careerstaff Unlimited, Inc.* ...................... 412,500
-----------
687,500
-----------
COMPUTER SOFTWARE (8.7%)
150,000 Cerner Corp.* ..................................... 5,362,500
225,000 Clinicom, Inc.* ................................... 3,825,000
280,000 HBO & Co. ......................................... 7,980,000
130,000 Medic Computer Systems, Inc.* ..................... 2,210,000
65,000 Serving Software, Inc.* ........................... 544,375
-----------
19,921,875
-----------
DRUGS (18.9%)
120,000 Allergan, Inc. .................................... 2,895,000
17,050 Arjo AB (ADR)* 144A** ............................. 549,863
340,000 Astra AB, Series "A" Free (Sweden) ................ 7,366,520
60,000 Chronimed, Inc.* .................................. 540,000
140,000 Cygnus Therapeutic Systems* ....................... 1,067,500
120,000 Diagnostek, Inc.* ................................. 2,715,000
145,000 Dura Pharmaceuticals, Inc.* ....................... 1,522,500
60,000 Elan Corp.* (ADR) ................................. 2,047,500
40,000 Forest Laboratories, Inc.* ........................ 1,710,000
120,000 Grupo Casa Autrey S.A. de CV (ADR) ................ 3,735,000
<PAGE>
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS July 31, 1994 (continued)
- - -----------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- - ------------ ------------
40,000 Guilford Pharmaceuticals, Inc.* ................... $ 330,000
60,000 Johnson & Johnson ................................. 2,820,000
100,000 Mylan Laboratories ................................ 2,212,500
160,000 Noven Pharmaceuticals, Inc.* ...................... 1,800,000
30,000 Roche Holdings Ltd. (ADR) ......................... 1,185,000
100,000 Scherer (R.P.)* ................................... 3,775,000
130,000 Teva Pharmaceutical Industries Ltd. (ADR) ........ 3,640,000
200,000 Zenith Laboratories, Inc.* ........................ 3,150,000
-----------
43,061,383
-----------
HEALTH CARE DIVERSIFIED (1.9%)
50,000 Healthsouth Rehabilitation Corp.* ................. 1,518,750
120,000 Horizon Healthcare Corp.* ......................... 2,805,000
-----------
4,323,750
-----------
HEALTH CARE EQUIPMENT & SERVICES (9.9%)
100,000 Coastal Healthcare Group, Inc.* ................... 3,450,000
135,000 Columbia Healthcare Corp. ......................... 5,467,500
140,000 Healthcare Compare Corp.* ......................... 2,870,000
170,000 Novacare Corp.* ................................... 2,337,500
65,000 Quantum Health Resources, Inc.* ................... 2,128,750
82,500 Renal Treatment Centers, Inc.* .................... 1,299,375
80,000 Rotech Medical Corp.* ............................. 1,500,000
60,000 St. Jude Medical, Inc. ............................ 1,890,000
80,000 Ventritex, Inc.* .................................. 1,560,000
-----------
22,503,125
-----------
HOSPITAL MANAGEMENT (13.8%)
35,000 Advocat, Inc.* .................................... 319,375
95,000 Arbor Health Care Co.* ............................ 1,995,000
100,000 Charter Medical Corp.* ............................ 2,287,500
30,000 Community Health Systems, Inc.* ................... 622,500
200,000 Community Psychiatric Centers ..................... 2,575,000
85,050 Coram Healthcare Corp.* ........................... 978,075
160,000 Genesis Health Ventures, Inc.* .................... 3,920,000
160,000 Health Systems International, Inc. (Class A) ..... 4,140,000
160,000 Healthtrust, Inc.* ................................ 4,460,000
50,000 Homedco Group, Inc.* .............................. 1,462,500
130,000 Mariner Health Group, Inc.* ....................... 2,258,750
140,000 Ornda Healthcorp* ................................. 2,082,500
80,000 Pediatric Services of America, Inc.* .............. 750,000
90,000 PhyCor, Inc.* ..................................... 2,745,000
30,000 Theratx, Inc.* .................................... 348,750
100,000 Unilab Corp.* ..................................... 575,000
-----------
31,519,950
-----------
<PAGE>
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS July 31, 1994 (continued)
- - -----------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
------------ -----------
HOSPITAL SUPPLY (1.1%)
30,000 Mitek Surgical Products, Inc.* .................... $ 532,500
80,000 National Medical Enterprises ...................... 1,360,000
110,000 Trimedyne, Inc.* .................................. 660,000
-----------
2,552,500
-----------
MEDICAL EQUIPMENT (1.6%)
30,000 Heart Technology, Inc.* ........................... 592,500
80,000 Sofamor Danek Group, Inc.* ........................ 1,300,000
60,000 Summit Technology, Inc.* .......................... 1,710,000
-----------
3,602,500
-----------
MEDICAL PRODUCTS & SUPPLIES (6.7%)
130,000 I-Stat Corp.* ..................................... 1,852,500
240,000 IDEXX Laboratories, Inc.* ......................... 7,080,000
30,000 Minntech Corp.* ................................... 382,500
165,000 Perspective Biosystems, Inc.* ..................... 2,021,250
15,000 PerSeptive Technology II Corp.* ................... 206,250
130,000 Target Therapeutics, Inc.* ........................ 2,665,000
70,000 Visx, Inc.* ....................................... 1,102,500
-----------
15,310,000
-----------
MEDICAL SERVICES (21.6%)
60,000 Apogee, Inc.* ..................................... 1,155,000
100,000 Caremark International, Inc. ...................... 2,312,500
50,000 Coventry Corp.* ................................... 1,675,000
20,000 Gulf South Medical Supply, Inc.* .................. 530,000
230,000 Health Care & Retirement Corp.* ................... 5,721,250
100,000 Health Management System, Inc.* ................... 2,325,000
100,000 Healthsource, Inc.* ............................... 2,825,000
200,000 Humana, Inc.* ..................................... 3,750,000
55,000 Integrated Health Services, Inc.* ................. 1,718,750
50,000 Lincare Holdings, Inc.* ........................... 1,062,500
60,000 Manor Care, Inc. .................................. 1,507,500
50,000 Medaphis Corp.* ................................... 1,450,000
80,000 Mid Atlantic Medical Services, Inc.* .............. 3,310,000
60,000 Oxford Health Plans, Inc.* ........................ 3,465,000
140,000 Physicians Health Services, Inc. (Class A)* ...... 3,185,000
10,000 Quintiles Transnational Corp.* .................... 182,500
50,000 Safeguard Health Enterprise, Inc.* ................ 650,000
40,000 Sierra Health Services, Inc.* ..................... 1,050,000
210,000 Summit Care Corp.* ................................ 3,885,000
75,000 United Healthcare Corp. ........................... 3,412,500
110,000 Vencor, Inc.* ..................................... 4,262,500
-----------
49,435,000
-----------
<PAGE>
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS July 31, 1994 (continued)
- - ------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
------------ ------------
MULTI-INSURANCE (1.3%)
100,000 Emphesys Financial Group, Inc. .................... $ 3,050,000
------------
TOTAL COMMON STOCKS (IDENTIFIED COST $211,862,651) 225,970,958
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS)
- - -----------
<C> <S> <C>
SHORT-TERM INVESTMENT (6.5%)
U.S. GOVERNMENT AGENCY (a) (6.5%)
$ 14,920 Federal Home Loan Mortgage Corp. 4.001% due 8/1/94
(Amortized Cost $14,920,000)........................ 14,920,000
------------
TOTAL INVESTMENTS
(IDENTIFIED COST $226,782,651)(B)........ 105.4% 240,890,958
LIABILITIES IN EXCESS OF OTHER ASSETS ..... (5.4) (12,317,604)
----- ------------
NET ASSETS ................................ 100.0% $228,573,354
===== ============
</TABLE>
ADR-- American Depository Receipt.
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
(a) US Government Agency 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 $227,234,293;
the aggregate gross unrealized appreciation is $27,588,117 and the
aggregate gross unrealized depreciation is $13,931,452, resulting in
net unrealized appreciation of $13,656,665.
See Notes to Financial Statements
<PAGE>
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
FINANCIAL STATEMENTS
- - -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1994
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(Identified cost $226,782,651)(Note 1) ... $240,890,958
Receivable for:
Investments sold .......................... 6,640,660
Shares of beneficial interest sold ....... 224,372
Dividends ................................. 4,050
Deferred organizational expenses (Note 1) . 104,789
Prepaid expenses ........................... 28,964
------------
TOTAL ASSETS ............................ 247,893,793
------------
LIABILITIES:
Payable for:
Investments purchased (Note 4) ............ 16,492,684
Shares of beneficial interest repurchased 148,194
Investment management fee (Note 2) ....... 194,305
Plan of distribution fee (Note 3) ........ 194,943
Payable to bank ............................ 2,147,433
Accrued expenses (Note 4) .................. 142,880
------------
TOTAL LIABILITIES ....................... 19,320,439
------------
NET ASSETS:
Paid-in-capital ............................ 233,155,146
Accumulated net realized loss .............. (18,683,099)
Net unrealized appreciation ................ 14,108,307
Accumulated net investment loss ............ (7,000)
------------
NET ASSETS .............................. $228,573,354
============
NET ASSET VALUE PER SHARE, 24,537,465
shares outstanding (unlimited shares
authorized of $.01 par value) ............. $9.32
=====
<CAPTION>
STATEMENT OF OPERATIONS
July 31, 1994
- - -----------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
INCOME
Dividends (net of $48,192 foreign
withholding tax) ...................... $ 540,715
Interest ................................ 95,745
----------
TOTAL INCOME ........................... 636,460
----------
EXPENSES
Investment management fee (Note 2) ...... 2,603,442
Plan of distribution fee (Note 3) ....... 2,603,442
Transfer agent fees and expenses (Note 4) 495,239
Professional fees ....................... 76,374
Shareholder reports and notices ......... 55,644
Custodian fees .......................... 46,803
Registration fees ....................... 43,382
Organizational expenses (Note 1) ........ 32,222
Trustees' fees and expenses (Note 4) .... 25,188
Other ................................... 7,332
----------
TOTAL EXPENSES ......................... 5,989,068
----------
NET INVESTMENT LOSS ................... (5,352,608)
----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (Note 1):
Net realized gain ........................ 1,562,522
Net change in unrealized appreciation .... 6,227,017
----------
NET GAIN ON INVESTMENTS ................ 7,789,539
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ....................... $2,436,931
==========
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR OCTOBER 30, 1992
ENDED THROUGH
JULY 31, 1994 JULY 31, 1993 (NOTE 1)
-------------- ----------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss............................ $ (5,352,608) $ (2,098,326)
Net realized gain (loss)....................... 1,562,522 (20,245,621)
Net change in unrealized appreciation.......... 6,227,017 7,881,290
------------ ------------
Net increase (decrease) in net assets
resulting from operations................... 2,436,931 (14,462,657)
Net increase (decrease) from transactions in
shares of beneficial interest (Note 5).......... (5,509,664) 246,008,744
------------ ------------
Total increase (decrease).................... (3,072,733) 231,546,087
NET ASSETS:
Beginning of period.............................. 231,646,087 100,000
------------ ------------
END OF PERIOD (including accumulated net investment
loss of $7,000 and $0, respectively)............ $228,573,354 $231,646,087
============ ============
</TABLE>
See Notes to Financial Statements
<PAGE>
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS
- - -----------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES --Dean Witter Health Sciences Trust
(the "Fund") is registered under the Investment Company Act of 1940, as
amended (the "Act"), as a non-diversified, open-end management investment
company. The Fund was organized as a Massachusetts business trust on May 26,
1992 and on August 13, 1992 issued 10,000 shares of beneficial interest for
$100,000 to Dean Witter Reynolds, an affiliate of the Investment Manager, to
effect the Fund's initial capitalization. The Fund commenced operations on
October 30, 1992.
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 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); (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 (valuation of debt
securities for which market quotations are not readily available may be based
upon current market prices of securities which are comparable in coupon,
rating and maturity or an appropriate matrix utilizing similar factors); (4)
short-term debt securities having a maturity date of sixty days or less at
the time of purchase are valued at amortized cost; and (5) the foreign
currency market value of investment securities are translated at the exchange
rates prevailing at the end of the period.
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. In computing net investment income, the Fund amortizes discounts on
certain short-term securities. Dividend income is recorded on the ex-dividend
date.
C. Repurchase Agreements --The Fund's custodian takes possession on
behalf of the Fund of the collateral pledged for investments in repurchase
agreements. It is the policy of the Fund to value the underlying collateral
daily on a mark-to-market basis to determine that the value, including
accrued interest, is at least equal to the repurchase price plus accrued
interest. In the event of default of the obligation to repurchase, the Fund
has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation.
D. Federal Income Tax Status --It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
E. Dividends and Distributions to Shareholders --The Fund records
dividends and distributions to its shareholders on the ex-dividend 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
<PAGE>
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
-----------------------------------------------------------------------------
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.
F. Organizational Expenses --The Fund's Investment Manager paid the
organizational expenses of the Fund in the amount of approximately $162,000.
The Fund has reimbursed the Investment Manager for these expenses which 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.
2. INVESTMENT MANAGEMENT AGREEMENT --Pursuant to an Investment Management
Agreement with Dean Witter InterCapital Inc. (the "Investment Manager"), the
Fund pays its Investment Manager a management fee, calculated and accrued
daily and payable monthly, by applying the annual rate of 1.0% to the net
assets of the Fund determined as of the close of each business day.
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 inception of the Fund (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 Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Investment Manager, 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.
<PAGE>
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
- - -----------------------------------------------------------------------------
The Distributor has informed the Fund that for the year ended July 31,
1994, it received approximately $877,000 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 July 31, 1994 aggregated
$271,097,122 and $282,309,506, respectively. For the same period, the Fund
paid brokerage commissions of approximately $75,000 to DWR for portfolio
transactions executed on behalf of the Fund. At July 31, 1994, the Fund's
payable for investments purchased included unsettled trades with DWR of
approximately $839,000.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At July 31, 1994, the Fund had
transfer agent fees and expenses payable of approximately $57,000.
Effective January 1, 1994, the Fund adopted 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 July 31, 1994, included in Trustees' fees and
expenses in the Statement of Operations, amounted to $7,000. At July 31,
1994, the Fund had an accrued pension liability of $7,000 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 PERIOD OCTOBER 30, 1992
JULY 31, 1994 THROUGH JULY 31, 1993 (NOTE 1)
-------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ -------- ------
<S> <C> <C> <C> <C>
Sold ............... 8,331,492 $ 86,324,143 28,901,791 $280,298,687
Repurchased ........ (8,906,748) (91,833,807) (3,799,070) (34,289,943)
---------- ------------ ---------- ------------
Net increase
(decrease)......... (575,256) $ (5,509,664) 25,102,721 $246,008,744
========== ============ ========== ============
</TABLE>
6. FEDERAL INCOME TAXES --At July 31, 1994, the Fund had a net capital loss
carryover of approximately $18,231,000 which will be available through July
31, 2002 to offset future capital gains to the extent provided by
regulations. To the extent that this carryover loss is used to offset future
capital gains, it is probable that the gains so offset will not be
distributed to shareholders. The Fund had permanent book/tax differences
attributable to net operating loss. To reflect cumulative reclassifications
arising from permanent book/tax differences as of July 31, 1993, accumulated
net investment loss was credited and paid-in-capital was charged $2,098,326.
To reflect reclassifications arising from permanent book/tax differences for
the year ended July 31, 1994 accumulated net investment loss was credited and
paid-in-capital was charged $5,345,608.
<PAGE>
<PAGE>
DEAN WITTER HEALTH SCIENCES 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 OCTOBER 30, 1992*
ENDED JULY 31, 1994 THROUGH JULY 31, 1993
------------------- ---------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning
of period ..................... $ 9.22 $ 10.00
-------- --------
Net investment loss ............ (0.22) (0.08)
Net realized and unrealized gain
(loss) on investments.......... 0.32 (0.70)
-------- --------
Total from investment
operations ................... 0.10 (0.78)
-------- --------
Net asset value, end of period.. $ 9.32 $ 9.22
======== ========
TOTAL INVESTMENT RETURN+ ....... 1.08% (7.80)%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)................. $228,573 $231,646
Ratio of expenses to average
net assets .................... 2.30% 2.38%(2)
Ratio of net investment loss
to average net assets.......... (2.06)% (1.38)%(2)
Portfolio turnover rate......... 106 % 55 %
<FN>
* Commencement of operations.
+ Does not reflect the deduction of sales load.
(1) Not annualized.
(2) Annualized.
</TABLE>
See Notes to Financial Statements
REPORT OF INDEPENDENT ACCOUNTANTS
- - -----------------------------------------------------------------------------
To the Shareholders and Trustees of Dean Witter Health Sciences 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
Health Sciences Trust (the "Fund") at July 31, 1994, the results of its
operations for the year then ended and the changes in its net assets and its
financial highlights for the year then ended and for the period October 30,
1992 (commencement of operations) through July 31, 1993, 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
July 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
September 16, 1994
<PAGE>
<PAGE>
T R U S T E E S
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling
O F F I C E R S
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Ronald J. Worobel
Vice President
Thomas F. Caloia
Treasurer
T R A N S F E R A G E N T
Dean Witter Trust Company
Harborside Financial Center -Plaza Two
Jersey City, New Jersey 07311
L E G A L C O U N S E L
Sheldon Curtis
Two World Trade Center
New York, New York 10048
I N D E P E N D E N T A C C O U N T A N T S
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
I N V E S T M E N T M A N A G E R
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and
trustees, fees, expenses and other pertinent information, please see the
prospectus of the Fund.
This report is not authorized for distribution to prospective investors in
the Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
HEALTH SCIENCES
TRUST
ANNUAL REPORT
JULY 31, 1994
