<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS JANUARY 31, 1996
DEAR SHAREHOLDER:
Health care stocks came back in favor in 1995 as investor concerns about major
health care reform subsided. The fear that Congress would significantly reduce
the amount of Medicare spending has abated and there is generally a more
positive feeling in the health care industry. Cost containment is now the
driving force in this arena, bringing with it numerous mergers and
consolidations. These factors have created an exciting environment that provides
an abundance of investment opportunities.
The health care industry has also been fueled by the Federal Drug Administration
(FDA) becoming more expedient with new product applications and more responsive
to industry needs. This proves to be especially beneficial for the
pharmaceutical, medical device and biotechnology companies. These areas are
especially well situated to experience solid growth and earnings from an
increased number of new product launches.
PERFORMANCE AND PORTFOLIO STRATEGY
Against this favorable backdrop, Dean Witter Health Sciences Trust produced a
total return of 38.84 percent for the six-month period ended January 31, 1996,
compared to a return of 14.53 percent for the broad-based Standard & Poor's 500
Composite Stock Price Index. For the same six-month period, the Fund was ranked
#1 of 19 health/ biotechnology funds, according to Lipper Analytical Services,
Inc. The Fund was also ranked #1 of 18 funds for the twelve-month period ended
January 31, 1996.
On January 31, 1996, the Fund's net assets exceeded $391 million. The Fund's
portfolio was well diversified among different sectors within the health care
industry. Throughout the reporting period, the Fund had a relatively large
exposure to the medical products and supplies sector. On January 31, 1996, this
sector accounted for 28.4 percent of Fund's assets. Several of the Fund's
medical device holdings benefited from the heightened merger activity during the
period.
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
LETTER TO THE SHAREHOLDERS JANUARY 31, 1996, CONTINUED
Throughout the six-month period, the Fund had a relatively small exposure to the
pharmaceutical industry, which accounted for 11.2 percent of net assets on
January 31, 1996. Among the Fund's key holdings in this area were Biovail
Corporation International, Watson Pharmaceuticals, Inc., Guilford
Pharmaceuticals, Inc. and Alpharma Inc.
As the period came to a close, investor confidence appears to be building in the
biotech industry with the announcement of positive results in a number of
clinical trials as well as from their alliances with major pharmaceuticals both
domestically and abroad. On January 31, 1996, this sector accounted for 16.6
percent of the portfolio. Among the Fund's key biotech holdings were Agouron
Pharmaceutical, Inc., Biochem Pharma, Inc., Genzyme Corp. General Division and
Gilead Sciences, Inc.
LOOKING AHEAD
Going forward, we believe the health care industry will continue to provide
attractive investment opportunities in the 1990s. Driven by an aging population
and the potential of new products and services, the outlook for the health care
industry is as bright as ever.
We appreciate your support of Dean Witter Health Sciences Trust and look forward
to continuing to serve your investment needs.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS JANUARY 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (98.7%)
BIOTECHNOLOGY (16.6%)
40,000 Advanced Magnetics, Inc.*........... $ 1,090,000
150,000 Agouron Pharmaceutical, Inc.*....... 6,300,000
120,000 Alkermes, Inc.*..................... 1,185,000
15,000 Athena Neurosciences, Inc.*......... 200,625
72,500 Autoimmune, Inc.*................... 978,750
140,000 Biochem Pharma, Inc.*............... 6,125,000
120,000 Cell Genesys, Inc.*................. 1,185,000
30,000 Centocor, Inc.*..................... 1,023,750
45,000 Cephalon Inc.*...................... 1,108,125
25,000 Chiron Corp.*....................... 2,862,500
100,000 Cytotherapeutics, Inc.*............. 1,675,000
20,000 ESC Medical Systems Ltd.*
(Israel)............................ 505,000
80,000 Genzyme Corp. General Division*..... 6,060,000
109,450 Genzyme Corp. Tissue Repair
Division*........................... 2,955,150
185,000 Gilead Sciences, Inc.*.............. 6,567,500
50,000 Gliatech, Inc.*..................... 581,250
75,000 ID Biomedical Corp.*................ 534,375
200,000 IDEC Pharmaceuticals Corp.*......... 4,250,000
40,000 Integra Lifesciences Corp.*......... 430,000
200,000 La Jolla Pharmaceutical Co.*........ 1,475,000
100,000 Lifecore Biomedical, Inc.*.......... 1,762,500
30,000 Ligand Pharmaceuticals, Inc.*....... 393,750
30,000 Liposome Co., Inc.*................. 720,000
60,000 Magainin Pharmaceuticals, Inc.*..... 870,000
80,000 Medarex, Inc.*...................... 520,000
30,000 Medimmune, Inc.*.................... 547,500
20,000 Metra Biosystems, Inc.*............. 295,000
40,000 Myriad Genetics, Inc.*.............. 1,330,000
78,000 Neurogen Corp.*..................... 2,340,000
100,000 Nexstar Pharmaceuticals, Inc.*...... 2,075,000
80,000 Norland Medical Systems, Inc.*...... 2,280,000
50,000 Oncormed, Inc.*..................... 406,250
60,000 Pharmacopeia, Inc.*................. 1,762,500
90,000 Vertex Pharmaceuticals, Inc.*....... 2,430,000
---------------
64,824,525
---------------
CHEMICALS (0.9%)
140,000 Ivax Corp........................... 3,675,000
---------------
COMMERCIAL SERVICES (3.6%)
105,000 ABR Information Services, Inc.*..... 4,961,250
30,000 Equity Corporation International*... 705,000
30,000 Mecon, Inc.*........................ 525,000
80,000 MedPartners/Mullikin, Inc.*......... 2,820,000
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
5,000 Medquist, Inc.*..................... $ 61,250
5,400 Pharmaceutical Product Development,
Inc.*............................... 140,400
70,000 RTW, Inc.*.......................... 2,030,000
77,500 Stewart Enterprises, Inc............ 2,906,250
---------------
14,149,150
---------------
COMPUTER SOFTWARE (3.7%)
170,000 Base Ten Systems Inc. (Class A)*.... 1,806,250
55,000 HCIA, Inc.*......................... 3,066,250
90,000 MDL Information Systems, Inc.*...... 1,710,000
90,000 Medic Computer Systems, Inc.*....... 5,107,500
100,000 Phamis, Inc.*....................... 2,600,000
---------------
14,290,000
---------------
COMPUTER SOFTWARE & SERVICES (0.2%)
7,500 Imnet Systems, Inc.*................ 161,250
40,000 Summit Medical Systems, Inc.*....... 680,000
---------------
841,250
---------------
COMPUTERS - SYSTEMS (0.5%)
95,000 Quality Systems, Inc.*.............. 1,852,500
---------------
CONSUMER PRODUCTS (0.4%)
70,000 General Nutrition Companies,
Inc.*............................... 1,522,500
---------------
DRUGS (3.1%)
50,000 Alza Corp.*......................... 1,412,500
30,000 Astra AB (ADR) (Sweden)............. 1,226,250
120,000 Dura-Pharmaceuticals, Inc.*......... 4,560,000
110,000 Teva Pharmaceutical Industries Ltd.
(ADR) (Israel)...................... 4,922,500
---------------
12,121,250
---------------
ELECTRONICS (0.1%)
30,000 Thermospectra Corp.*................ 558,750
---------------
HEALTH EQUIPMENT & SERVICES (6.2%)
30,000 Bard (C.R.), Inc.................... 1,050,000
70,000 Compdent Corp.*..................... 2,432,500
100,000 Renal Treatment Centers, Inc.*...... 4,575,000
105,000 Rotech Medical Corp.*............... 3,123,750
120,000 Safetytek Corp.*.................... 1,470,000
70,000 Shared Medical Systems Corp......... 3,955,000
60,000 Sybron Corp.*....................... 1,455,000
60,000 United Healthcare Corp.............. 3,772,500
96,000 Vivra, Inc.*........................ 2,424,000
---------------
24,257,750
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS JANUARY 31, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
HEALTHCARE - DIVERSIFIED (4.7%)
107,000 Access Health Marketing, Inc.*...... $ 5,323,250
30,000 Envoy Corp.*........................ 600,000
170,000 Healthsouth Rehabilitation Corp.*... 5,482,500
160,000 Mentor Corp......................... 4,460,000
50,000 Universal Health Services, Inc.*.... 2,493,750
---------------
18,359,500
---------------
HEALTHCARE PRODUCTS & SERVICES (0.1%)
15,000 Living Centers of America, Inc.*.... 532,500
---------------
HOSPITAL MANAGEMENT & HEALTH MAINTENANCE
ORGANIZATIONS (0.4%)
60,000 Owen Healthcare, Inc.*.............. 1,245,000
40,000 Raytel Medical Corp.*............... 430,000
---------------
1,675,000
---------------
HOSPITAL MANAGEMENT (6.1%)
70,000 American Healthcorp, Inc.*.......... 621,250
85,000 American Home Patient Centers,
Inc.*............................... 2,252,500
30,000 Caremark International, Inc......... 708,750
100,000 Emeritus Corp.*..................... 1,800,000
30,500 Enterprise Systems, Inc.*........... 869,250
45,000 Medcath, Inc.*...................... 1,113,750
50,000 Occusystems, Inc.*.................. 1,162,500
50,000 OrNda Healthcorp*................... 1,262,500
100,000 Orthodontic Centers of America,
Inc.*............................... 2,275,000
100,000 Pediatric Services of America,
Inc.*............................... 1,950,000
130,000 PhyCor, Inc.*....................... 6,207,500
50,000 Physician Reliance Network, Inc.*... 2,250,000
60,000 Sterling House Corp.*............... 885,000
15,000 Total Renal Care Holdings, Inc.*.... 416,250
---------------
23,774,250
---------------
HOSPITAL SUPPLY (1.3%)
100,000 Boston Scientific Corp.*............ 5,125,000
---------------
INSURANCE (0.7%)
80,000 Inphynet Medical Management,
Inc.*............................... 1,980,000
40,000 John Alden Financial Corp........... 830,000
---------------
2,810,000
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
MANUFACTURING (0.5%)
67,500 Memtec Ltd. (ADR) (Australia)....... $ 1,383,750
25,000 Waters Corp.*....................... 496,875
---------------
1,880,625
---------------
MEDICAL EQUIPMENT (1.5%)
60,000 Sofamor/Danek Group, Inc.*.......... 1,635,000
60,000 Thermo Cardiosystems, Inc.*......... 4,440,000
---------------
6,075,000
---------------
MEDICAL PRODUCTS & SUPPLIES (28.4%)
250,000 Angeion Corp.*...................... 2,281,250
120,000 ATS Medical, Inc.*.................. 1,320,000
7,500 Avecor Cardiovascular, Inc.*........ 78,750
100,000 Bio-Vascular, Inc.*................. 812,500
100,000 Capstone Pharmacy Services, Inc.*... 825,000
40,000 Cardiometrics, Inc.*................ 280,000
20,000 Cellpro, Inc.*...................... 347,500
100,000 Clintrials, Inc.*................... 2,700,000
50,000 Coherent, Inc.*..................... 2,262,500
165,000 Conmed Corp.*....................... 3,671,250
90,000 Corvita Corp.*...................... 821,250
70,000 Cryolife, Inc.*..................... 1,058,750
7,500 De Rigo SpA* (ADR) (Italy).......... 187,500
60,000 Enzo Biochem, Inc.*................. 1,147,500
60,000 Fischer Imaging Corp.*.............. 817,500
120,000 Guidant Corp........................ 5,505,000
50,000 Gynecare, Inc.*..................... 487,500
20,000 Heartstream, Inc.*.................. 260,000
25,000 Hologic, Inc.*...................... 1,200,000
120,000 I-STAT Corp.*....................... 3,870,000
30,000 ICU Medical, Inc.*.................. 483,750
150,000 IDEXX Laboratories, Inc.*........... 7,537,500
50,000 InStent, Inc.*...................... 962,500
120,000 Invacare Corp....................... 3,330,000
110,000 Kensey Nash Corp.*.................. 1,457,500
110,000 Kinetics Concepts, Inc.............. 1,333,750
60,000 Life Medical Sciences, Inc.*........ 622,500
215,000 Lunar Corp.*........................ 8,223,750
30,000 Med-Design Corp. (The)*............. 592,500
10,000 Medisense, Inc.*.................... 262,500
120,000 Millipore Corp...................... 5,130,000
30,000 Minimed Inc.*....................... 472,500
80,000 Minntech Corp....................... 1,540,000
25,000 Molecular Devices Corp.*............ 281,250
17,500 Neuromedical Systems, Inc.*......... 417,813
40,000 NewVision Technology, Inc.
(Units)++*.......................... 555,000
110,000 Omnicare, Inc....................... 5,115,000
10,000 Perclose, Inc.*..................... 227,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS JANUARY 31, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
250,000 Physician Sales and Service,
Inc.*............................... $ 7,000,000
200,000 PLC Systems, Inc.* (Canada)......... 4,750,000
80,000 Quest Medical, Inc.*................ 980,000
130,000 Quidel Corp.*....................... 788,125
50,000 ResMed, Inc.*....................... 662,500
150,000 Respironics, Inc.*.................. 2,812,500
30,000 Rochester Medical Corp.*............ 438,750
67,500 Sano Corp.*......................... 860,625
50,000 Serologicals Corp.*................. 825,000
80,400 Spine-Tech Inc.*.................... 2,110,500
100,000 Staar Surgical Co.*................. 1,187,500
90,000 Target Therapeutics, Inc.*.......... 4,882,500
185,000 Thermolase Corp.*................... 5,526,875
30,000 Universal Hospital Services,
Inc.*............................... 285,000
100,000 Uromed Corp.*....................... 1,300,000
100,000 Utah Medical Products, Inc.*........ 2,050,000
80,000 VISX, Inc.*......................... 2,860,000
40,000 Vital Signs, Inc.................... 1,260,000
70,000 Vivus, Inc.*........................ 1,933,750
---------------
110,992,688
---------------
MEDICAL SERVICES (7.1%)
60,000 American Oncology Resources,
Inc.*............................... 2,835,000
150,000 Health Management Systems, Inc.*.... 3,675,000
100,000 Healthsource, Inc.*................. 3,350,000
160,000 Medaphis Corp.*..................... 6,360,000
120,000 NABI, Inc.*......................... 1,425,000
47,000 Neopath, Inc.*...................... 1,210,250
20,000 Phoenix International Life Sciences,
Inc.* (Canada)...................... 167,454
70,000 Physicians Health Services, Inc.
(Class A)*.......................... 2,485,000
100,000 Quintiles Transnational Corp.*...... 5,375,000
35,000 Research Industries Corp.*.......... 713,125
50,000 Sterling Vision, Inc.*.............. 306,250
---------------
27,902,079
---------------
MULTI-LINE INSURANCE (0.1%)
5,000 United Dental Care, Inc.*........... 201,250
---------------
PERSONAL PRODUCTS (0.5%)
50,000 National Dentex Corp.*.............. 975,000
30,000 Nature's Sunshine Products, Inc..... 937,500
---------------
1,912,500
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
PHARMACEUTICALS (11.2%)
100,000 Alliance Pharmaceutical Corp.*...... $ 1,662,500
60,000 Alpharma Inc. (Class A)............. 1,620,000
50,000 Amrion, Inc.*....................... 631,250
238,968 Biovail Corporation
International*...................... 6,183,297
150,000 Curative Technologies, Inc.*........ 2,887,500
80,000 Cygnus, Inc.*....................... 1,670,000
120,000 Cypros Pharmaceutical Corp.*........ 600,000
100,000 Cytel Corp.*........................ 737,500
28,000 Depotech Corp.*..................... 539,000
100,000 Ergo Science Corp.*................. 1,900,000
50,000 Fuisz Technologies Ltd.*............ 1,000,000
25,000 Geltex Pharmaceuticals, Inc.*....... 468,750
215,000 Guilford Pharmaceuticals, Inc.*..... 5,079,375
100,000 Interneuron Pharmaceuticals,
Inc.*............................... 2,950,000
30,000 Jones Medical Industries, Inc....... 1,147,500
170,000 North American Vaccine, Inc.*....... 2,380,000
100,000 Orthologic Corp.*................... 2,050,000
20,000 Parexel International Corp.*........ 690,000
100,000 Pathogenesis Corp.*................. 1,612,500
25,000 Pharmacyclics, Inc.*................ 331,250
160,000 Royce Laboratories, Inc.*........... 1,740,000
50,000 Sangstat Medical Corp.*............. 812,500
30,000 Sequus Pharmaceuticals, Inc.*....... 558,750
100,000 Watson Pharmaceuticals, Inc.*....... 4,575,000
---------------
43,826,672
---------------
RETAIL - SPECIALTY (0.8%)
110,000 Cole National Corp.*................ 1,182,500
90,000 Rexall Sundown, Inc.*............... 1,946,250
---------------
3,128,750
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $228,590,339)...... 386,288,489
---------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- ----------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS (0.1%)
MEDICAL PRODUCTS & SUPPLIES
50,000 Angeion Corp.*....... 03/12/96 106,250
70,000 ATS Medical, Inc.*... 03/02/97 83,125
---------------
TOTAL WARRANTS
(IDENTIFIED COST $0).............. 189,375
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS JANUARY 31, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (2.4%)
U.S. GOVERNMENT AGENCY (a) (1.8%)
$ 7,000 Federal Home Loan Mortgage Corp.
5.80% due 02/01/96.................. $ 7,000,000
---------------
REPURCHASE AGREEMENT (0.6%)
2,428 The Bank of New York 5.75% due
02/01/96 (dated 01/31/96; proceeds
$2,428,192; collateralized by
$3,272,491 U.S. Treasury Principal
Strip due 05/15/01 valued at
$2,476,360) (Identified Cost
$2,427,804)......................... 2,427,804
---------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $9,427,804)........ 9,427,804
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$238,018,143) (B)........... 101.2% 395,905,668
LIABILITIES IN EXCESS OF
OTHER ASSETS................ (1.2) (4,639,299)
----- ------------
NET ASSETS.................. 100.0% $391,266,369
----- ------------
----- ------------
<FN>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
++ Consists of more than one class of securities traded together as a unit;
generally stocks with attached warrants.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $238,442,445; the
aggregate gross unrealized appreciation is $159,053,417 and the aggregate
gross unrealized depreciation is $1,590,194, resulting in net unrealized
appreciation of $157,463,223.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $238,018,143)............................ $395,905,668
Receivable for:
Shares of beneficial interest sold...................... 3,366,212
Investments sold........................................ 3,285,137
Dividends............................................... 10,800
Deferred organizational expenses............................ 56,323
Prepaid expenses and other assets........................... 98,546
------------
TOTAL ASSETS........................................... 402,722,686
------------
LIABILITIES:
Payable for:
Investments purchased................................... 7,842,954
Shares of beneficial interest repurchased............... 2,847,053
Investment management fee............................... 322,520
Plan of distribution fee................................ 322,520
Accrued expenses............................................ 121,270
------------
TOTAL LIABILITIES...................................... 11,456,317
------------
NET ASSETS:
Paid-in-capital............................................. 227,365,962
Net unrealized appreciation................................. 157,887,525
Accumulated net investment loss............................. (3,192,529)
Accumulated undistributed net realized gain................. 9,205,411
------------
NET ASSETS............................................. $391,266,369
------------
------------
NET ASSET VALUE PER SHARE,
23,507,063 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$16.64
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 1996 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $3,898 foreign withholding tax)........... $ 143,863
Interest.................................................... 74,677
------------
TOTAL INCOME........................................... 218,540
------------
EXPENSES
Investment management fee................................... 1,537,631
Plan of distribution fee.................................... 1,537,631
Transfer agent fees and expenses............................ 200,945
Custodian fees.............................................. 26,207
Registration fees........................................... 22,344
Shareholder reports and notices............................. 20,928
Trustees' fees and expenses................................. 18,672
Organizational expenses..................................... 16,244
Professional fees........................................... 8,988
Other....................................................... 2,815
------------
TOTAL EXPENSES......................................... 3,392,405
------------
NET INVESTMENT LOSS.................................... (3,173,865)
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 22,467,967
Net change in unrealized appreciation....................... 86,230,822
------------
NET GAIN............................................... 108,698,789
------------
NET INCREASE................................................ $105,524,924
------------
------------
</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 SIX MONTHS FOR THE YEAR
ENDED ENDED
JANUARY 31, 1996 JULY 31,
(UNAUDITED) 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss......................................... $ (3,173,865) $ (5,067,553)
Net realized gain........................................... 22,467,967 28,063,934
Net change in unrealized appreciation....................... 86,230,822 57,548,396
------------------ ------------
NET INCREASE........................................... 105,524,924 80,544,777
Distributions from net realized gain........................ (22,643,391) --
Net increase (decrease) from transactions in shares of
beneficial interest....................................... 34,649,735 (35,383,030)
------------------ ------------
TOTAL INCREASE......................................... 117,531,268 45,161,747
NET ASSETS:
Beginning of period......................................... 273,735,101 228,573,354
------------------ ------------
END OF PERIOD
(INCLUDING ACCUMULATED NET INVESTMENT LOSS OF $3,192,529
AND $18,664, RESPECTIVELY).............................. $391,266,369 $273,735,101
------------------ ------------
------------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1996 (UNAUDITED)
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 market value of foreign
denominated securities is translated at the exchange rate 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 and other distributions are recorded on the ex-dividend date.
Discounts are accreted over the life of the respective securities. Interest
income is accrued daily.
C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1996 (UNAUDITED) CONTINUED
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 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 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
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1996 (UNAUDITED) CONTINUED
daily and payable monthly, at an annual rate of 1.0% of the lesser of: (a) the
average daily aggregate gross sales of the Fund's shares since the Fund's
inception (not including reinvestment of dividend or capital gain distributions)
less the average daily aggregate net asset value of the Fund's shares redeemed
since the Fund's inception upon which a contingent deferred sales charge has
been imposed or upon which such charge has been waived; or (b) the Fund's
average daily net assets. Amounts paid under the Plan are paid to the
Distributor to compensate it for the services provided and the expenses borne by
it and others in the distribution of the Fund's shares, including the payment of
commissions for sales of the Fund's shares and incentive compensation to, and
expenses of, the account executives of Dean Witter Reynolds Inc. ("DWR"), an
affiliate of the Investment Manager and Distributor, and other employees or
selected broker-dealers who engage in or support distribution of the Fund's
shares or who service shareholder accounts, including overhead and telephone
expenses, printing and distribution of prospectuses and reports used in
connection with the offering of the Fund's shares to other than current
shareholders and preparation, printing and distribution of sales literature and
advertising materials. In addition, the Distributor may be compensated under the
Plan for its opportunity costs in advancing such amounts, which compensation
would be in the form of a carrying charge on any unreimbursed expenses incurred
by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred but
not yet recovered, may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the six months ended January 31,
1996, it received approximately $298,000 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 six months ended January 31, 1996 aggregated
$123,172,342 and $114,064,475, respectively.
For the six months ended January 31, 1996, the Fund incurred brokerage
commissions of $6,000 with DWR for portfolio transactions executed on behalf of
the Fund.
<PAGE>
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1996 (UNAUDITED) CONTINUED
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At January 31, 1996, the Fund had
transfer agent fees and expenses payable of approximately $37,500.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the six months ended January 31, 1996
included in Trustees' fees and expenses in the Statement of Operations amounted
to $8,929. At January 31, 1996, the Fund had an accrued pension liability of
$27,348 which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JANUARY 31, 1996 JULY 31, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 10,677,105 $ 158,091,492 12,330,853 $136,338,116
Reinvestment of distributions.................................... 1,434,910 21,121,878 -- --
----------- -------------- ----------- ------------
12,112,015 179,213,370 12,330,853 136,338,116
Repurchased...................................................... (9,860,010) (144,563,635) (15,613,260) (171,721,146)
----------- -------------- ----------- ------------
Net increase (decrease).......................................... 2,252,005 $ 34,649,735 (3,282,407) $(35,383,030)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
6. FEDERAL INCOME TAX STATUS
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.
<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 SIX FOR THE PERIOD
MONTHS OCTOBER 30,
ENDED FOR THE YEAR FOR THE YEAR 1992*
JANUARY 31, 1996 ENDED ENDED THROUGH
(UNAUDITED) JULY 31, 1995 JULY 31, 1994 JULY 31, 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................ $ 12.88 $ 9.32 $ 9.22 $ 10.00
------ ------ ------ ------
Net investment loss................ (0.13) (0.24) (0.22) (0.08)
Net realized and unrealized gain
(loss)............................ 4.98 3.80 0.32 (0.70)
------ ------ ------ ------
Total from investment operations... 4.85 3.56 0.10 (0.78)
Less distributions from net
realized gain..................... (1.09) -- -- --
------ ------ ------ ------
Net asset value, end of period..... $ 16.64 $ 12.88 $ 9.32 $ 9.22
------ ------ ------ ------
------ ------ ------ ------
TOTAL INVESTMENT RETURN+........... 38.84%(1) 38.20% 1.08% (7.80)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 2.20%(2) 2.30% 2.30% 2.38%(2)
Net investment loss................ (2.06)%(2) (2.05)% (2.06)% (1.38)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $391,266 $273,735 $228,573 $231,646
Portfolio turnover rate............ 37%(1) 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>
(This page has been left blank intentionally.)
<PAGE>
TRUSTEES
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
The financial statements included herein have been taken from the records of the
Fund without examination by the independent accountants and accordingly they do
not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of the
Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER HEALTH SCIENCES TRUST
[Graphic]
SEMIANNUAL REPORT
JANUARY 31, 1996
