<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS
DEAR SHAREHOLDER:
Dean Witter Health Sciences Trust completed a productive fiscal year on July 31,
1995 with a total return of 38.20 percent. Over the same 12-month period, the
Standard & Poor's 500 Composite Stock Price Index (S&P 500) registered a total
return of 26.07 percent. The Fund's impressive performance during the fiscal
year resulted in a #5 ranking (out of 16 health care/biotechnology funds)
according to Lipper Analytical Services, Inc.
The accompanying chart illustrates the growth of a $10,000 investment in the
Fund from its inception on October 30, 1992 through June 30, 1995, versus the
performance of similar hypothetical investments in the issues that comprise the
S&P 500 (unlike the Fund, indexes are unmanaged and not subject to fees and
expenses).
THE PORTFOLIO: AS REFORM GOES DOWN, HEALTH CARE RETURNS GO UP
The November 1994 mid-term elections marked a turning point in investor
psychology toward the health-care industry, with the mindset of the new Congress
suggesting that the Clinton administration's attempts at major reform are
finished. Since that time, investor focus has been on the solid earnings
momentum underway in many health-care sectors. Recent high levels of merger and
acquisition activity has also fueled investor interest in health-care stocks.
The announced merger between Upjohn and Pharmacia is an example.
Another outgrowth of the elections is that the Food and Drug Administration
(FDA) has become more accommodating to the health-care industry. Sectors that
are especially well situated to benefit from a decreased time-to-market for new
products are the medical device and generic drug companies. The Fund's exposure
in the pharmaceutical sector is centered on the generic companies (Watson
Pharmaceuticals, Inc. and Biovail Corporation International, for example)
because of improving fundamentals, faster earnings and the portfolio's small- to
mid-sized company orientation. Medical device companies (represented
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
LETTER TO THE SHAREHOLDERS, CONTINUED
in the portfolio by Cordis Corp. and Boston Scientific Corp., among others) have
benefited from an increase in hospital procedures which has in turn fueled
demand and expanded the price/earnings multiples of these stocks.
On the other hand, profit margins for health maintenance organizations (HMOs)
have been hurt by increased medical-loss ratios. These conditions, along with
disappointing performance in the first half of 1995, led the portfolio manager
to lighten the Fund's weighting in the HMO group, from 23 percent of net assets
on July 31, 1994 to 1 percent as of July 31, 1995. The Fund's HMO holdings at
the end of the fiscal year included Humana, Inc and Oxford Health Plans, Inc.
[GRAPHIC]
Another sector in which the Fund has
reduced exposure is in nursing homes.
Demand utilization in this area looked
strong, but with a large percentage of
revenue coming from Medicare, these
stocks suffered from attempts to reduce
the spending on this program and the
resulting decrease in investor
enthusiasm. The Fund still has a
considerable exposure in this area (4
percent of net assets as of July 31,
1995, versus 8 percent 12 months ago),
and we expect these stocks to recover
as investor concerns subside.
[GRAPHIC]
Over the fiscal year, we have increased
the Fund's biotechnology holdings to
approximately 12 percent of net assets,
which has helped performance in recent
months. This sector has lagged since
1991, but bigger companies -- including
portfolio holdings such as Amgen, Inc.,
Biogen, Inc. and Genzyme Corp. --
performed better during the second half
of 1994 and thus far in 1995. Investor
enthusiasm has recently reached the
smaller companies as well, and this
sector is expected to continue its
upward trend. Helping spur investor
interest in these stocks is the fact
that many of these companies have made
progress in clinical trials of new
technologies.
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
LETTER TO THE SHAREHOLDERS, CONTINUED
Mergers and joint venture arrangements with major pharmaceutical companies have
also helped this group's outlook.
LOOKING AHEAD
We continue to feel that the health-care industry is a source of attractive
investment opportunities. We expect it to again be the dynamic and interesting
sector it was between 1980 and 1991, when health-care-related stocks
outperformed the broader market.
We appreciate your support of Dean Witter Health Sciences Trust and look forward
to continuing to serve your investment needs.
Very truly yours,
[LOGO]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS JULY 31, 1995
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (98.1%)
BIOTECHNOLOGY (12.3%)
40,000 Advanced Magnetics, Inc.*........... $ 875,000
120,000 Agouron Pharmaceutical, Inc.*....... 3,480,000
30,000 Alkermes, Inc.*..................... 255,000
70,000 Amgen Inc.*......................... 5,941,250
60,000 Autoimmune, Inc.*................... 697,500
140,000 Biochem Pharma, Inc.*............... 3,430,000
100,000 Biogen Inc.*........................ 4,550,000
45,000 Cell Genesys, Inc.*................. 258,750
50,000 Cephalon Inc.*...................... 1,156,250
109,450 Genzyme Corp. Tissue Repair
Division*........................... 1,231,312
90,000 Genzyme Corp. General Division*..... 4,387,500
170,000 Gilead Sciences, Inc.*.............. 3,187,500
150,000 IDEC Pharmaceuticals Corp.*......... 993,750
10,000 Metra Biosystems, Inc.*............. 182,500
30,000 Molecular Dynamics, Inc.*........... 228,750
35,000 Neurogen Corp.*..................... 503,125
60,000 Nexstar Pharmaceuticals, Inc.*...... 720,000
70,000 Perseptive Biosystems, Inc.*........ 796,250
40,000 Vertex Pharmaceuticals, Inc.*....... 650,000
---------------
33,524,437
---------------
CHEMICALS (1.0%)
110,000 Ivax Corp........................... 2,653,750
---------------
COMMERCIAL SERVICES (3.7%)
105,000 ABR Information Services, Inc.*..... 2,152,500
30,000 Equity Corporation International*... 622,500
55,000 Loewen Group, Inc................... 1,945,625
80,000 MedPartners, Inc.*.................. 1,620,000
70,000 RTW, Inc.*.......................... 1,277,500
77,500 Stewart Enterprises, Inc............ 2,518,750
---------------
10,136,875
---------------
COMPUTER SOFTWARE (7.0%)
120,000 Base Ten Systems Inc. (Class A)*.... 1,095,000
40,000 Cerner Corp.*....................... 2,460,000
65,000 GMIS, Inc..*........................ 958,750
70,000 HBO & Co............................ 3,850,000
30,000 HCIA, Inc.*......................... 870,000
90,000 MDL Information Systems, Inc.*...... 1,327,500
130,000 Medic Computer Systems, Inc.*....... 5,752,500
100,000 Phamis, Inc.*....................... 2,875,000
---------------
19,188,750
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------
<C> <S> <C>
COMPUTER SOFTWARE & SERVICES (0.1%)
7,500 Imnet Systems, Inc.*................ $ 135,000
---------------
DRUGS (4.1%)
90,000 Alza Corp.*......................... 2,317,500
100,000 Dura-Pharmaceuticals, Inc.*......... 2,575,000
50,000 Elan Corp. PLC (ADR)*............... 2,100,000
110,000 Teva Pharmaceutical Industries Ltd.
(ADR)............................... 4,358,750
---------------
11,351,250
---------------
FINANCIAL SERVICES (0.1%)
40,000 Rockford Industries, Inc.*.......... 340,000
---------------
HEALTH CARE - MISCELLANEOUS (0.5%)
50,000 Envoy Corp.*........................ 475,000
30,000 Integrated Health Services, Inc..... 967,500
---------------
1,442,500
---------------
HEALTH CARE DIVERSIFIED (3.6%)
90,000 Access Health Marketing, Inc.*...... 1,788,750
150,000 Healthsouth Rehabilitation Corp.*... 2,887,500
25,000 Humana, Inc.*....................... 484,375
110,000 Mentor Corp......................... 3,781,250
30,000 Universal Health Services, Inc.*.... 952,500
---------------
9,894,375
---------------
HEALTH EQUIPMENT & SERVICES (7.3%)
70,000 ADAC Laboratories................... 918,750
40,000 APPS Dental, Inc.*.................. 830,000
30,000 Medtronic Inc....................... 2,460,000
100,000 Renal Treatment Centers, Inc.*...... 2,500,000
135,000 Rotech Medical Corp.*............... 3,881,250
20,000 Safetytek Corp.*.................... 260,000
100,000 Shared Medical Systems Corp......... 4,137,500
50,000 Surgical Care Affiliates, Inc....... 950,000
50,000 Sybron Corp.*....................... 2,068,750
64,000 Vivra, Inc. .*...................... 1,904,000
---------------
19,910,250
---------------
HEALTHCARE PRODUCTS & SERVICES (0.4%)
30,000 Living Centers of America, Inc.*.... 967,500
---------------
HOSPITAL MANAGEMENT (7.7%)
105,000 American Home Patient Centers,
Inc.*............................... 3,045,000
180,000 Apria Healthcare Group, Inc.*....... 5,760,000
45,000 Medcath, Inc.*...................... 596,250
100,000 Ornda Healthcorp*................... 1,962,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS JULY 31, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------
<C> <S> <C>
70,000 Orthodontic Centers of America,
Inc.*............................... $ 2,047,500
146,000 Pediatric Services of America,
Inc.*............................... 2,701,000
100,000 PhyCor, Inc.*....................... 4,050,000
60,000 Theratx, Inc.*...................... 907,500
---------------
21,069,750
---------------
HOSPITAL SUPPLY (3.7%)
113,000 Arrow International, Inc............ 4,548,250
100,000 Boston Scientific Corp.*............ 3,650,000
100,000 Circon Corp.*....................... 2,037,500
---------------
10,235,750
---------------
INSURANCE (1.1%)
50,000 American Travellers Corp.*.......... 825,000
110,000 Inphynet Medical Management,
Inc.*............................... 2,310,000
---------------
3,135,000
---------------
MEDICAL EQUIPMENT (2.3%)
70,000 Summit Technology, Inc.*............ 3,535,000
70,000 Thermo Cardiosystems, Inc.*......... 2,695,000
---------------
6,230,000
---------------
MEDICAL PRODUCTS & SUPPLIES (25.2%)
250,000 Angeion Corp.*...................... 1,687,500
120,000 ATS Medical, Inc.*.................. 1,065,000
50,000 Avecor Cardiovascular, Inc.*........ 675,000
60,000 Benson Eyecare Corp.*............... 510,000
100,000 Coherent, Inc.*..................... 3,750,000
110,000 Conmed Corp.*....................... 3,300,000
25,000 Cordis Corp.*....................... 1,793,750
50,000 Corvita Corp.*...................... 293,750
70,000 Cryolife, Inc.*..................... 1,032,500
42,000 Exogen, Inc.*....................... 462,000
100,000 Guidant Corp.*...................... 2,587,500
10,000 Hologic, Inc.*...................... 171,250
130,000 I-STAT Corp.*....................... 4,777,500
40,000 ICU Medical, Inc.*.................. 645,000
200,000 IDEXX Laboratories, Inc.*........... 6,150,000
50,000 InStent, Inc.*...................... 662,500
80,000 Invacare Corp....................... 3,480,000
1,000 KeraVision, Inc.*................... 12,500
150,000 Lunar Corp.*........................ 4,162,500
120,000 Millipore Corp...................... 4,140,000
40,000 NewVision Technology, Inc.
(Units)++*.......................... 540,000
140,000 Omnicare, Inc....................... 4,340,000
105,000 Physician Sales and Service,
Inc.*............................... 4,541,250
170,000 PLC Systems, Inc.*.................. 2,337,500
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------
<C> <S> <C>
20,000 Protocol Systems, Inc.*............. $ 215,000
30,000 Quest Medical, Inc.*................ 390,000
95,000 Quidel Corp.*....................... 486,875
50,000 ResMed, Inc.*....................... 687,500
140,000 Respironics, Inc.*.................. 2,450,000
50,000 Serologicals Corp.*................. 637,500
60,000 Spectral Diagnostic, Inc.*.......... 1,170,000
140,000 Staar Surgical Co.*................. 1,382,500
90,000 Target Therapeutics, Inc.*.......... 4,455,000
160,000 Uromed Corp.*....................... 1,340,000
120,000 Utah Medical Products, Inc.*........ 1,830,000
50,000 Vivus, Inc.*........................ 737,500
---------------
68,898,875
---------------
MEDICAL SERVICES (10.6%)
30,000 American Oncology Resources,
Inc.*............................... 993,750
50,000 Beverly Enterprises, Inc.*.......... 706,250
40,000 Gulf South Medical Supply Inc.*..... 1,250,000
50,000 Health Care & Retirement Corp.*..... 1,600,000
125,000 Health Management Systems, Inc.*.... 3,843,750
20,000 Health Systems International,
Inc.*............................... 575,000
80,000 Lincare Holdings, Inc.*............. 2,760,000
160,000 Medaphis Corp.*..................... 4,040,000
40,000 Neopath, Inc.*...................... 730,000
200,000 North American Biologicals, Inc.*... 2,250,000
40,000 Oxford Health Plans, Inc.*.......... 2,050,000
20,000 Phoenix International Life Sciences,
Inc.*............................... 146,520
50,000 Quintiles Transnational Corp.*...... 2,775,000
90,000 Research Industries Corp.*.......... 2,137,500
60,000 Sterling Healthcare Group, Inc.*.... 900,000
50,000 Sun Healthcare Group, Inc.*......... 737,500
50,000 Vencor, Inc.*....................... 1,618,750
---------------
29,114,020
---------------
MISCELLANEOUS (2.3%)
80,000 Clintrials, Inc.*................... 1,170,000
50,000 Occusystems, Inc.*.................. 950,000
45,000 Penn Treaty American Corp.*......... 551,250
170,000 Thermolase Corp.*................... 3,591,250
---------------
6,262,500
---------------
PERSONAL PRODUCTS (0.2%)
40,000 National Dentex Corp.*.............. 580,000
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS JULY 31, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------------------------------------------------------------------
<C> <S> <C>
PHARMACEUTICALS (4.4%)
50,000 Amrion, Inc.*....................... $ 487,500
115,000 Biovail Corporation
International*...................... 2,745,625
130,000 Curative Technologies, Inc.*........ 1,381,250
10,000 Duramed Pharmaceuticals, Inc.*...... 167,500
60,000 Medarex, Inc.*...................... 322,500
140,000 North American Vaccine, Inc.*....... 1,435,000
19,000 Pharmaceutical Resources, Inc.*..... 190,000
110,000 Royce Laboratories, Inc.*........... 763,125
40,000 Taro Pharmaceuticals Industries
Ltd.*............................... 315,000
120,000 Watson Pharmaceuticals, Inc.*....... 4,320,000
---------------
12,127,500
---------------
RETAIL - SPECIALTY (0.5%)
50,000 Cole National Corp.*................ 600,000
60,000 Rexall Sundown, Inc.*............... 825,000
---------------
1,425,000
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $197,014,504)...... 268,623,082
---------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
SHARES DATE VALUE
-----------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS (0.0%)
MEDICAL PRODUCTS & SUPPLIES
70,000 ATS Medical, Inc.*
(IDENTIFIED COST $-0-).. 03/02/97 48,125
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (2.2%)
REPURCHASE AGREEMENT
$ 5,934 The Bank of New York 5.8125% due
08/01/95 (dated 07/31/95; proceeds
$5,934,568, collateralized by
$6,259,690 Federal National Mortgage
Association zero coupon due 11/03/95
valued at $6,167,988) (Identified
Cost $5,933,610).................... $ 5,933,610
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$202,948,114) (A)............ 100.3% 274,604,817
OTHER ASSETS IN EXCESS OF
LIABILITIES.................. (0.3) (869,716)
----- ------------
NET ASSETS................... 100.0% $273,735,101
----- ------------
----- ------------
<FN>
---------------------
ADR American Depository Receipt.
* Non-income producing security.
++ Consist of more than one class of securities traded together as a unit;
generally stocks with attached warrants.
(a) The aggregate cost for federal income tax purposes is $203,372,416; the
aggregate gross unrealized appreciation is $73,604,901 and the aggregate
gross unrealized depreciation is $2,372,500, resulting in net unrealized
appreciation of $71,232,401.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $202,948,114)............................ $274,604,817
Receivable for:
Investments sold........................................ 4,835,528
Shares of beneficial interest sold...................... 1,432,608
Dividends............................................... 5,250
Deferred organizational expenses............................ 72,566
Prepaid expenses and other assets........................... 70,808
------------
TOTAL ASSETS........................................... 281,021,577
------------
LIABILITIES:
Payable for:
Investments purchased................................... 6,409,832
Shares of beneficial interest repurchased............... 270,949
Plan of distribution fee................................ 220,149
Investment management fee............................... 220,149
Accrued expenses............................................ 165,397
------------
TOTAL LIABILITIES...................................... 7,286,476
------------
NET ASSETS:
Paid-in-capital............................................. 192,716,227
Net unrealized appreciation................................. 71,656,703
Accumulated net investment loss............................. (18,664)
Accumulated undistributed net realized gain................. 9,380,835
------------
NET ASSETS............................................. $273,735,101
------------
------------
NET ASSET VALUE PER SHARE,
21,255,058 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$12.88
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1995
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $4,839 foreign withholding tax)........... $ 539,406
Interest.................................................... 92,204
-----------
TOTAL INCOME........................................... 631,610
-----------
EXPENSES
Investment management fee................................... 2,477,072
Plan of distribution fee.................................... 2,477,072
Transfer agent fees and expenses............................ 442,372
Custodian fees.............................................. 88,292
Shareholder reports and notices............................. 78,465
Professional fees........................................... 41,665
Organizational expenses..................................... 32,222
Trustees' fees and expenses................................. 31,677
Registration fees........................................... 21,719
Other....................................................... 8,607
-----------
TOTAL EXPENSES......................................... 5,699,163
-----------
NET INVESTMENT LOSS.................................... (5,067,553)
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 28,063,934
Net change in unrealized appreciation....................... 57,548,396
-----------
NET GAIN............................................... 85,612,330
-----------
NET INCREASE................................................ $80,544,777
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
JULY 31, JULY 31,
1995 1994
-----------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss......................................... $ (5,067,553) $ (5,352,608)
Net realized gain........................................... 28,063,934 1,562,522
Net change in unrealized appreciation....................... 57,548,396 6,227,017
------------ ------------
NET INCREASE........................................... 80,544,777 2,436,931
------------ ------------
Net decrease from transactions in shares of beneficial
interest.................................................. (35,383,030) (5,509,664)
------------ ------------
TOTAL INCREASE (DECREASE).............................. 45,161,747 (3,072,733)
NET ASSETS:
Beginning of period......................................... 228,573,354 231,646,087
------------ ------------
END OF PERIOD
(INCLUDING ACCUMULATED NET INVESTMENT LOSS OF $18,664
AND $7,000, RESPECTIVELY)............................... $273,735,101 $228,573,354
------------ ------------
------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS JULY 31, 1995
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 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 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, including circumstances under
which it is determined by the Investment Manager that sale or 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 (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 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; 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 by the identified cost method.
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily and includes accretion of 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 ex-dividend date. The amount of
dividends and distributions from net investment
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS JULY 31, 1995, CONTINUED
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 $162,000 which have been reimbursed 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.
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
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 book 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
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS JULY 31, 1995, CONTINUED
capital gain distributions) less the average daily aggregate net asset value of
the Fund's shares redeemed since the Fund's inception upon which a contingent
deferred sales charge has been imposed or upon which such charge has been
waived; or (b) the Fund's average daily net assets. Amounts paid under the Plan
are paid to the Distributor to compensate it for the services provided and the
expenses borne by it and others in the distribution of the Fund's shares,
including the payment of commissions for sales of the Fund's shares and
incentive compensation to, and expenses of, the account executives of Dean
Witter Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and
Distributor, and other employees or selected dealers who engage in or support
distribution of the Fund's shares or who service shareholder accounts, including
overhead and telephone expenses, printing and distribution of prospectuses and
reports used in connection with the offering of the Fund's shares to other than
current shareholders and preparation, printing and distribution of sales
literature and advertising materials. In addition, the Distributor may be
compensated under the Plan for its opportunity costs in advancing such amounts,
which compensation would be in the form of a carrying charge on any unreimbursed
expenses incurred by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred but
not yet recovered, may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the year ended July 31, 1995, it
received approximately $953,000 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, 1995 aggregated $360,273,041
and $403,185,122, respectively.
For the year ended July 31, 1995, the Fund incurred brokerage commissions of
$95,560 with DWR for portfolio transactions executed on behalf of the Fund. At
July 31, 1995, the Fund's receivable for investments sold included unsettled
trades with DWR of $503,857.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At July 31, 1995, the Fund had
transfer agent fees and expenses payable of approximately $46,000.
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS JULY 31, 1995, CONTINUED
The Fund adopted 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 year ended July 31, 1995
included in Trustees' fees and expenses in the Statement of Operations amounted
to $12,142. At July 31, 1995, the Fund had an accrued pension liability of
$18,664 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
JULY 31, 1995 JULY 31, 1994
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 12,330,853 $ 136,338,116 8,331,492 $ 86,324,143
Repurchased...................................................... (15,613,260) (171,721,146) (8,906,748) (91,833,807)
----------- -------------- ----------- ------------
Net decrease..................................................... (3,282,407) $ (35,383,030) (575,256) $ (5,509,664)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
6. FEDERAL INCOME TAX STATUS
During the year ended July 31, 1995, the Fund utilized its net capital loss
carryover of approximately $18,353,000. As of July 31, 1995, the Fund had
temporary book/tax differences primarily attributable to capital loss deferrals
on wash sales and permanent book/tax differences attributable to a net operating
loss. To reflect reclassifications arising from permanent book/tax differences
for the year ended July 31, 1995, paid-in-capital was charged and accumulated
net investment loss was credited $5,055,889.
<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
OCTOBER 30,
FOR THE YEAR FOR THE YEAR 1992*
ENDED ENDED THROUGH
JULY 31, 1995 JULY 31, 1994 JULY 31, 1993
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................ $ 9.32 $ 9.22 $ 10.00
------ ------ ------
Net investment loss................ (0.24) (0.22) (0.08)
Net realized and unrealized gain
(loss)............................ 3.80 0.32 (0.70)
------ ------ ------
Total from investment operations... 3.56 0.10 (0.78)
------ ------ ------
Net asset value, end of period..... $ 12.88 $ 9.32 $ 9.22
------ ------ ------
------ ------ ------
TOTAL INVESTMENT RETURN+........... 38.20% 1.08% (7.80)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 2.30% 2.30% 2.38%(2)
Net investment loss................ (2.05)% (2.06)% (1.38)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $273,735 $228,573 $231,646
Portfolio turnover rate............ 145% 106% 55%(1)
<FN>
---------------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge.
(1) Not annualized.
(2) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
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, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the two years in the period
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, 1995 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
SEPTEMBER 11, 1995
<PAGE>
DEAN WITTER
HEALTH SCIENCES
TRUST
[Photograph]
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Ronald J. Worobel
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
This report is submitted for the general
information of shareholders of the Fund.
For more detailed information about the Fund,
its officers and trustees, fees, expenses and
other pertinent information, please see the
prospectus of the Fund.
This report is not authorized for distribution
to prospective investors in the Fund unless
preceded or accompanied by an effective
prospectus.
ANNUAL REPORT
JULY 31, 1995
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
GROWTH OF $10,000
DATE TOTAL S&P 500
-------------------------------------------------
October 30, 1992 $10,000 $10,000
-------------------------------------------------
July 31, 1993 $9,220 $10,932
-------------------------------------------------
July 31, 1994 $9,320 $11,496
-------------------------------------------------
July 31, 1995 $12,580(3) $14,491
-------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR LIFE OF FUND
-------------------------------
38.20 (1) 9.64 (1)
-------------------------------
33.20 (2) 8.71 (2)
-------------------------------
------------------------------------------
Fund S&P 500(4)
----- -----
------------------------------------------
Past performance is not predictive of future returns.
-------------------------------------
(1) Figure shown does not reflect any sales charges.
(2) Figure shown assumes the deduction of the maximum applicable contingent
deferred sales charge (CDSC) (1 year-5%, since inception-3%). See the
Fund's current prospectus for complete details on fees and sales charges.
(3) Closing value after the deduction of a 3% CDSC assuming a complete
redemption on July 31, 1995.
(4) The Standard and Poors 500 Composite Stock Price Index (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.
