<PAGE> 1
DEAN WITTER HEALTH SCIENCES TRUST Two World Trade Center,
New York, New York 10048
LETTER TO THE SHAREHOLDERS January 31, 1997
DEAR SHAREHOLDER:
The six-month period ended January 31, 1997, was volatile for small-cap
healthcare stocks. Beginning in the summer months, these issues began losing
ground, in line with the pullback experienced by the entire over-the-counter
market. Since then, we have seen little expansion in price-to-earnings multiples
for small-cap names throughout the healthcare industry. The only strong
performers were large-cap pharmaceuticals, of which Dean Witter Health Sciences
Trust has little exposure. We remain focused on small- to mid-cap NASDAQ names
because we believe that in an economic environment characterized by benign
interest rates and moderate growth, the small-cap group is positioned to
outperform larger-cap stocks. During the period under review, biotechnology,
medical suppliers, devices manufacturers and home care providers performed
moderately, while generic drugs, nursing homes and HMOs delivered poor returns.
Although these past six months have been disappointing, the fundamentals of the
healthcare industry remain sound. The FDA has adopted an accelerated approval
process that should continue to benefit the biotech companies. The introduction
of promising drugs such as protease inhibitors and anti-obesity remedies have
revived positive investor sentiment. The aging population has increased the
demand for companies that offer a more complete range of value-added products
and technology services that allow clinicians to improve the cost and quality of
healthcare.
PERFORMANCE AND PORTFOLIO STRATEGY
In this environment, Dean Witter Health Sciences Trust produced a total return
of 11.90 percent for the six-month period ended January 31, 1997, compared to
24.16 for the broad-based Standard & Poor's 500 Composite Stock Index (S&P 500).
During the period under review, the Fund remained well diversified among
different sectors within the healthcare industry. On January 31, 1997,
pharmaceuticals made up 23.3 percent of the Fund's portfolio, biotechnology made
up 20.9 percent, and medical products and supplies made up 19.2 percent. The
Fund's five largest
<PAGE> 2
DEAN WITTER HEALTH SCIENCES TRUST
LETTER TO THE SHAREHOLDERS January 31, 1997, continued
holdings on January 31, 1997, were Agouron Pharmaceutical, Inc.,
Dura-Pharmaceuticals, Inc., Medicis Pharmaceutical Corp., Guilford
Pharmaceuticals, Inc. and Quintiles Transnational Corp. At the end of the period
under review, the Fund's net assets totaled $492 million.
LOOKING AHEAD
Going forward, we believe that the small- and mid-cap names in healthcare that
the Fund focuses on are positioned to outperform their large-cap counterparts
and that the fundamentals of the healthcare industry overall bode well for the
future performance of the Fund.
We appreciate your support of Dean Witter Health Sciences Trust and look forward
to continuing to serve your financial needs and objectives.
Very truly yours,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE> 3
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS January 31, 1997 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (99.4%)
Agriculture Related (0.3%)
40,000 Delta & Pine Land Co. ....... $ 1,495,000
------------
Biotechnology (20.9%)
100,000 Affymetrix, Inc.*............ 2,900,000
170,000 Agouron Pharmaceutical,
Inc.*....................... 14,577,500
30,000 Aksys Ltd.*.................. 375,000
150,000 Alexion Pharmaceuticals,
Inc.*....................... 1,818,750
250,000 Alkermes, Inc.*.............. 5,718,750
30,000 Allelix Biopharmaceuticals,
Inc.* (Canada).............. 342,832
140,000 Biochem Pharma, Inc.*........ 7,857,500
60,000 Biofield Corp.*.............. 682,500
220,000 Biomira, Inc.* (Canada)...... 1,141,596
70,000 Cambridge Heart, Inc. ....... 866,250
100,000 Cardiothoracic Systems,
Inc. ....................... 2,500,000
80,000 Cardiovascular Dynamics,
Inc.*....................... 790,000
170,000 Cell Genesys, Inc.*.......... 1,253,750
140,000 Centocor, Inc.*.............. 5,337,500
150,000 Cephalon Inc.*............... 3,881,250
100,000 Cytotherapeutics, Inc.*...... 987,500
50,100 Cytyc Corp. ................. 1,239,975
50,000 ESC Medical Systems Ltd.*
(Israel).................... 1,625,000
170,000 Genzyme Corp. General
Division*................... 4,738,750
185,000 Gilead Sciences, Inc.*....... 6,035,625
120,000 Gliatech, Inc.*.............. 1,275,000
232,000 IDEC Pharmaceuticals
Corp.*...................... 5,365,000
75,000 Immune Response Corp. ....... 609,375
130,000 Lifecore Biomedical, Inc.*... 2,340,000
130,000 Ligand Pharmaceuticals, Inc.
(Class B)................... 1,803,750
60,000 Liposome Co., Inc.*.......... 1,372,500
150,000 Matritech, Inc.*............. 1,181,250
90,000 Maxim Pharmaceuticals,
Inc. ....................... 686,250
60,000 Medimmune, Inc.*............. 952,500
100,000 Neurogen Corp.*.............. 1,950,000
90,000 Norland Medical Systems,
Inc. ....................... 607,500
60,000 OEC Medical Systems, Inc.*... 1,035,000
80,000 Pharmacopeia, Inc. .......... 1,560,000
120,000 Protein Design Labs, Inc.*... 4,110,000
200,000 Scios, Inc.*................. 1,187,500
140,000 Sepracor Inc. ............... 3,692,500
150,000 Vertex Pharmaceuticals,
Inc.*....................... 7,350,000
110,000 Virus Research Institute,
Inc. ....................... 742,500
60,000 Visible Genetics Inc.
(Canada).................... 465,000
------------
102,955,653
------------
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
Business Services (0.3%)
50,000 Cognizant Corp.*............. $ 1,606,250
------------
Chemicals (0.2%)
40,000 Fresenius Medical Care AG
(ADR) (Germany)............. 1,190,000
------------
Commercial Services (4.9%)
127,500 ABR Information Services,
Inc.*....................... 5,578,125
33,000 Advanced Health Corp. ....... 379,500
20,000 American Medical Response,
Inc. ....................... 795,000
40,000 Complete Management, Inc. ... 515,000
150,000 Equity Corporation
International*.............. 2,943,750
60,000 Interim Services, Inc.*...... 2,175,000
100,000 Medquist, Inc.*.............. 2,475,000
30,000 Pharmaceutical Product
Development, Inc. .......... 855,000
70,000 Physician Support Systems,
Inc. ....................... 1,225,000
97,000 RTW, Inc.*................... 1,200,375
156,250 Stewart Enterprises, Inc.
(Class A)................... 5,507,812
40,000 Urocor, Inc.*................ 410,000
20,000 Walsh International Inc.*.... 157,500
------------
24,217,062
------------
Computer Software (2.7%)
80,000 Apache Medical Systems,
Inc......................... 450,000
20,000 HCIA, Inc.*.................. 765,000
130,000 Healthdyne Information
Enterprises, Inc. .......... 771,875
120,000 MDL Information Systems,
Inc.*....................... 2,640,000
180,000 Medic Computer Systems,
Inc.*....................... 6,975,000
60,000 QuadraMed Corp. ............. 697,500
60,000 Tripos, Inc. ................ 1,140,000
------------
13,439,375
------------
Computer Software &
Services (0.5%)
30,000 Health Systems Design
Corp. ...................... 255,000
50,000 ImageMatrix Corp.
(Units)+*................... 153,125
40,000 Lanvision Systems, Inc.*..... 285,000
100,000 Sunquest Information Systems,
Inc.*....................... 1,575,000
------------
2,268,125
------------
Drugs (4.9%)
30,000 Atrix Laboratories, Inc. .... 375,000
100,000 Columbia Laboratories,
Inc. ....................... 1,487,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 4
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS January 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
280,000 Dura-Pharmaceuticals,
Inc.*....................... $ 11,760,000
110,000 Elan Corp. PLC (ADR)*
(Ireland)................... 4,235,000
100,000 Labopharm Inc.* (Canada)..... 489,760
160,000 Nexstar Pharmaceuticals,
Inc.*....................... 2,400,000
20,000 Scherer (R.P.) Corp.*........ 1,132,500
40,000 Teva Pharmaceutical
Industries Ltd. (ADR)
(Israel).................... 2,180,000
------------
24,059,760
------------
Electronics (0.2%)
42,436 Del Global Technologies
Corp.*...................... 381,924
40,000 Galileo Corp. ............... 740,000
------------
1,121,924
------------
Finance (0.1%)
45,000 HealthCare Financial
Partners, Inc. ............. 697,500
------------
Health Equipment &
Services (3.5%)
70,000 ADAC Laboratories............ 1,732,500
30,000 Matria Healthcare, Inc.*..... 150,000
197,400 Renal Treatment Centers,
Inc. ....................... 5,551,875
270,000 RoTech Medical Corp.*........ 4,657,500
60,000 Sybron International
Corp.*...................... 1,852,500
100,000 Vivra, Inc.*................. 3,050,000
------------
16,994,375
------------
Healthcare (0.5%)
100,000 Allegiance Corp. ............ 2,562,500
------------
Healthcare - Diversified (2.3%)
30,000 Foundation Health Corp. ..... 997,500
110,000 Healthsouth Corp.*........... 4,798,750
100,000 Mentor Corp. ................ 2,812,500
100,000 Universal Health Services,
Inc. (Class B)*............. 2,900,000
------------
11,508,750
------------
Healthcare - Miscellaneous
(0.4%)
15,000 Cornell Corrections, Inc. ... 161,250
70,000 MedPartners, Inc. ........... 1,303,750
20,500 Trigon Healthcare, Inc. ..... 363,875
------------
1,828,875
------------
Hospital Management (4.7%)
180,750 American HomePatient,
Inc.*....................... 4,247,625
100,000 Enterprise Systems, Inc.*.... 2,075,000
150,000 FPA Medical Management,
Inc. ....................... 3,693,750
50,000 Harborside Healthcare
Corp. ...................... 612,500
50,000 Impath, Inc.*................ 875,000
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
195,000 PhyCor, Inc.*................ $ 6,825,000
35,000 Pro-Dex, Inc.*............... 72,187
75,000 Renal Care Group, Inc.*...... 2,700,000
50,000 Sterling House Corp. ........ 475,000
48,600 Total Renal Care Holdings,
Inc.*....................... 1,779,975
------------
23,356,037
------------
Hospital Management & Health
Maintenance
Organizations (1.0%)
120,000 Collaborative Clinical
Research, Inc.*............. 1,200,000
74,400 NCS Healthcare, Inc. (Class
A).......................... 2,511,000
120,000 Raytel Medical Corp. ........ 1,200,000
------------
4,911,000
------------
Hospital Supply (0.2%)
120,000 Boston Biomedica, Inc. ...... 960,000
------------
Life Insurance (0.7%)
50,000 CRA Managed Care, Inc. ...... 2,425,000
70,000 Provident American Corp. .... 910,000
------------
3,335,000
------------
Manufacturing (0.9%)
35,000 Axogen Ltd. (Units)+......... 962,500
67,500 Memtec Ltd. (ADR)
(Australia)................. 1,957,500
45,000 Waters Corp.*................ 1,333,125
------------
4,253,125
------------
Medical Equipment (1.7%)
50,000 AccuMed International,
Inc. ....................... 165,625
50,000 Applied Imaging Corp. ....... 362,500
10,000 Biopsys Medical, Inc. ....... 267,500
80,000 Endovascular Technologies,
Inc. ....................... 930,000
110,000 Steris Corp.*................ 3,245,000
30,000 Stryker Corp. ............... 870,000
90,000 Thermo Cardiosystems,
Inc.*....................... 2,306,250
------------
8,146,875
------------
Medical Products &
Supplies (19.2%)
165,000 Angeion Corp.*............... 804,375
80,000 Aradigm Corp.*............... 700,000
70,000 ArQule, Inc. ................ 1,487,500
60,000 Avecor Cardiovascular,
Inc. ....................... 705,000
75,000 Biosource International,
Inc.*....................... 553,125
70,000 Calypte Biomedical Corp.*.... 472,500
192,600 Capstone Pharmacy Services,
Inc.*....................... 2,214,900
145,500 ClinTrials Research Inc.*.... 4,292,250
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS January 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
82,500 Conmed Corp.*................ $ 1,598,437
200,000 Cryolife, Inc.*.............. 2,075,000
30,000 Dentsply International,
Inc. ....................... 1,492,500
100,000 EP MedSystems, Inc. ......... 350,000
110,000 Hanger Orthopedic Group,
Inc.*....................... 673,750
50,000 Heartport, Inc.*............. 1,575,000
100,000 I-STAT Corp.*................ 2,725,000
130,000 IDEXX Laboratories, Inc.*.... 4,225,000
75,000 Imagyn Medical, Inc.*........ 684,375
120,000 Immunomedics, Inc.*.......... 712,500
150,000 Innerdyne, Inc.*............. 562,500
110,000 Invacare Corp. .............. 2,915,000
110,000 IRIDEX Corp.*................ 770,000
75,000 Kensey Nash Corp. ........... 900,000
120,000 Kinetic Concepts, Inc. ...... 1,470,000
80,000 Laser Industries, Ltd.*
(Israel).................... 850,000
81,000 Life Medical Sciences,
Inc.*....................... 425,250
100,000 Lincare Holdings, Inc.*...... 3,762,500
170,000 Med-Design Corp. ............ 1,147,500
120,000 Minimed Inc. ................ 3,990,000
20,000 Minntech Corp. .............. 210,000
40,000 NewVision Technology, Inc.
(Units)+*................... 235,000
100,000 Novoste Corp. ............... 1,675,000
220,000 Omnicare, Inc. .............. 6,077,500
100,000 Oncogene Science, Inc. ...... 750,000
150,000 PLC Systems, Inc.*
(Canada).................... 3,712,500
120,000 Possis Medical, Inc.*........ 2,235,000
100,000 ResMed, Inc. ................ 2,175,000
170,000 Sano Corp.*.................. 2,210,000
110,000 Serologicals Corp.*.......... 3,245,000
160,000 Staar Surgical Co.*.......... 2,140,000
30,000 Sterile Recoveries, Inc. .... 502,500
90,000 Target Therapeutics, Inc.*... 6,266,250
40,000 Thoratec Laboratories
Corp.*...................... 400,000
110,000 United States Surgical
Corp. ...................... 4,413,750
100,000 Urologix, Inc. .............. 1,725,000
90,000 Ventana Medical Systems,
Inc.*....................... 1,215,000
70,000 VISX, Inc.*.................. 1,505,000
160,000 Vivus, Inc.*................. 9,700,000
------------
94,526,462
------------
Medical Services (4.3%)
40,000 Alternative Living Services,
Inc. ....................... 525,000
40,000 Atria Communities, Inc. ..... 480,000
15,000 Kapson Senior Quarters
Corp. ...................... 144,375
65,200 Medical Alliance, Inc. ...... 912,800
110,000 Medical Resources, Inc.*..... 1,182,500
230,000 NABI, Inc.*.................. 2,501,250
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
30,000 Oxford Health Plans, Inc.*... $ 1,631,250
40,000 Patient Infosystems, Inc. ... 325,000
20,000 Phoenix International Life
Sciences, Inc.* (Canada).... 153,606
115,000 Prime Medical Services,
Inc.*....................... 1,322,500
120,000 Quintiles Transnational
Corp.*...................... 8,940,000
103,000 Transkaryotic Therapies,
Inc. ....................... 2,034,250
80,000 Zoll Medical Corp.*.......... 790,000
------------
20,942,531
------------
Personal Products (0.2%)
50,000 National Dentex Corp.*....... 862,500
------------
Pharmaceuticals (23.3%)
100,000 Algos Pharmaceutical
Corp. ...................... 1,350,000
160,000 Alliance Pharmaceutical
Corp.*...................... 2,000,000
100,000 Amrion, Inc.*................ 1,812,500
80,000 Andrx Corp. ................. 1,500,000
100,000 Aronex Pharmaceuticals,
Inc.*....................... 787,500
50,000 Autoimmune, Inc.*............ 831,250
60,000 Biotransplant, Inc.*......... 435,000
228,968 Biovail Corporation
International*.............. 6,611,451
167,500 Bone Care International,
Inc.*....................... 1,298,125
50,000 Cadus Pharmaceutical
Corp. ...................... 693,750
100,000 Cambridge Neuroscience,
Inc. ....................... 1,187,500
100,000 Collagenex Pharmaceuticals,
Inc. ....................... 925,000
50,000 Coulter Pharmaceutical,
Inc. ....................... 600,000
180,000 Curative Health Services,
Inc.*....................... 5,827,500
100,000 Cygnus, Inc.*................ 1,450,000
200,000 Cypros Pharmaceutical
Corp.*...................... 1,075,000
150,000 DUSA Pharmaceuticals,
Inc. ....................... 1,143,750
150,000 Emisphere Technologies,
Inc. ....................... 3,487,500
130,000 Ergo Science Corp.*.......... 1,820,000
30,000 Flamel Technologies (ADR)*
(France).................... 225,000
70,000 Geltex Pharmaceuticals,
Inc. ....................... 1,697,500
80,000 Genset (ADR)* (France)....... 1,130,000
397,500 Guilford Pharmaceuticals,
Inc.*....................... 9,738,750
50,000 Hyal Pharmaceutical Corp.
(Canada).................... 194,791
120,000 ICOS Corp.*.................. 960,000
200,000 Imclone Systems, Inc.*....... 1,575,000
120,000 Incyte Pharmaceuticals,
Inc.*....................... 7,920,000
80,000 Intercardia, Inc.*........... 1,240,000
200,000 Interferon Sciences, Inc.*... 518,750
185,100 Interneuron Pharmaceuticals,
Inc.*....................... 5,460,450
97,500 Jones Medical Industries,
Inc. ....................... 3,692,813
200,000 Medarex, Inc.*............... 1,775,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
DEAN WITTER HEALTH SCIENCES TRUST
PORTFOLIO OF INVESTMENTS January 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
160,000 Medicis Pharmaceutical Corp.
(Class A)*.................. $ 10,040,000
50,000 Microcide Pharmaceuticals,
Inc.*....................... 593,750
20,000 Millennium Pharmaceuticals,
Inc.*....................... 387,500
50,000 Neose Technologies, Inc. .... 900,000
110,000 Neurocrine Bioscience,
Inc. ....................... 1,003,750
220,000 North American Vaccine,
Inc.*....................... 5,390,000
85,000 NPS Pharmaceuticals, Inc.*... 956,250
100,000 Onyx Pharmaceuticals,
Inc. ....................... 1,000,000
130,000 Orphan Medical, Inc.*........ 991,250
100,000 Parexel International
Corp. ...................... 5,825,000
150,000 Pathogenesis Corp. .......... 4,537,500
45,000 Pharmacyclics, Inc.*......... 860,625
75,000 Ribozyme Pharmaceuticals,
Inc.*....................... 890,625
180,000 Sangstat Medical Corp.*...... 5,512,500
100,000 Sequus Pharmaceuticals,
Inc. ....................... 1,337,500
100,000 Sonus Pharmaceuticals,
Inc. ....................... 2,725,000
12,500 SuperGen, Inc.*.............. 156,250
100,000 Zila, Inc.*.................. 806,250
------------
114,877,630
------------
Retail - Specialty (1.5%)
110,000 Cole National Corp.*......... 3,135,000
125,000 Rexall Sundown, Inc.*........ 3,968,750
------------
7,103,750
------------
TOTAL COMMON STOCKS
(Identified Cost
$346,332,483)................ 489,220,059
------------
WARRANTS (0.0%)
Medical Products & Supplies (0.0%)
70,000 ATS Medical, Inc.
(due 03/02/97)*............. 21,875
------------
Pharmaceuticals (0.0%)
30,000 SuperGen, Inc.
(due 03/12/01)*............. 163,125
------------
TOTAL WARRANTS
(Identified Cost $43,448).... 185,000
------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------
<S> <C>
SHORT-TERM INVESTMENT (1.0%)
REPURCHASE AGREEMENT
$ 4,875 The Bank of New York 5.25%
due 02/03/97 (dated
01/31/97; proceeds
$4,876,953; collateralized
by $4,611,138 FNMA 6.25% due
11/10/99 valued at
$4,664,958 and $440,265 U.S.
Treasury Strip 0.00% due
11/15/02 valued at $307,358)
(Identified Cost
$4,874,820)................. $ 4,874,820
------------
TOTAL INVESTMENTS
(Identified Cost $351,250,751)
(a)................................ 100.4% 494,279,879
LIABILITIES)IN EXCESS OF
OTHER ASSETS....................... (0.4) (1,909,875)
---- ----------
NET ASSETS......................... 100.0% $492,370,004
==== ==========
</TABLE>
- ---------------------
<TABLE>
<C> <S>
ADR American Depository Receipt.
* Non-income producing security.
+ Consists of more than one class of securities
traded together as a unit; stocks with attached
warrants.
(a) The aggregate cost for federal income tax
purposes approximates identified cost. The
aggregate gross unrealized appreciation is
$164,106,142 and the aggregate gross unrealized
depreciation is $21,077,014, resulting in net
unrealized appreciation of $143,029,128.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
DEAN WITTER HEALTH SCIENCES TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
January 31, 1997 (unaudited)
ASSETS:
Investments in securities, at value (identified cost $351,250,751).... $494,279,879
Receivable for:
Investments sold.................................................. 5,273,061
Shares of beneficial interest sold................................ 1,008,320
Deferred organizational expenses...................................... 24,012
Prepaid expenses...................................................... 129,996
----------
TOTAL ASSETS...................................................... 500,715,268
------------
LIABILITIES:
Payable for:
Investments purchased............................................. 6,634,899
Shares of beneficial interest repurchased......................... 767,562
Plan of distribution fee.......................................... 408,198
Investment advisory fee........................................... 408,198
Accrued expenses...................................................... 126,407
------------
TOTAL LIABILITIES................................................. 8,345,264
------------
NET ASSETS:
Paid-in-capital....................................................... 363,100,261
Net unrealized appreciation........................................... 143,029,128
Accumulated net investment loss....................................... (5,058,494)
Accumulated net realized loss......................................... (8,700,891)
------------
NET ASSETS........................................................ $492,370,004
============
NET ASSET VALUE PER SHARE,
31,334,590 shares outstanding (unlimited shares authorized of $.01
par value)........................................................... $15.71
=====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
DEAN WITTER HEALTH SCIENCES TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended January 31, 1997 (unaudited)
NET INVESTMENT INCOME:
INCOME
Interest............................................................... $ 206,421
Dividends (net of $2,467 foreign withholding tax)...................... 104,859
---------
TOTAL INCOME....................................................... 311,280
---------
EXPENSES
Plan of distribution fee............................................... 2,406,821
Investment advisory fee................................................ 2,406,219
Transfer agent fees and expenses....................................... 347,086
Registration fees...................................................... 57,367
Shareholder reports and notices........................................ 33,577
Custodian fees......................................................... 29,406
Professional fees...................................................... 27,968
Organizational expenses................................................ 16,244
Trustees' fees and expenses............................................ 11,972
Other.................................................................. 4,766
---------
TOTAL EXPENSES..................................................... 5,341,426
---------
NET INVESTMENT LOSS................................................ (5,030,146)
---------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain...................................................... 2,570,344
Net change in unrealized appreciation.................................. 54,559,089
---------
NET GAIN........................................................... 57,129,433
---------
NET INCREASE........................................................... $52,099,287
=========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
DEAN WITTER HEALTH SCIENCES TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR
FOR THE SIX ENDED
MONTHS ENDED JULY 31,
JANUARY 31, 1997 1996
------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss................................... $ (5,030,146) $ (7,836,792)
Net realized gain..................................... 2,570,344 38,104,756
Net change in unrealized appreciation................. 54,559,089 16,813,336
----------- -----------
NET INCREASE...................................... 52,099,287 47,081,300
Distributions from net realized gain.................. (28,286,327) (22,643,391)
Net increase from transactions in shares of beneficial
interest............................................. 25,681,466 144,702,568
----------- -----------
NET INCREASE...................................... 49,494,426 169,140,477
NET ASSETS:
Beginning of period................................... 442,875,578 273,735,101
----------- -----------
END OF PERIOD
(Including accumulated net investment losses of
$5,058,494 and $28,348, respectively)............. $492,370,004 $442,875,578
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 10
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1997 (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's investment objective is
capital appreciation. The Fund seeks to achieve its objective by investing in
securities of companies in the health sciences industry throughout the world.
The Fund was organized as a Massachusetts business trust on May 26, 1992 and
commenced operations on October 30, 1992.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York or American or other domestic or foreign stock exchange is valued at
its latest sale price on that exchange prior to the time when assets are valued;
if there were no sales that day, the security is valued at the latest bid price
(in cases where a security is traded on more than one exchange, the security is
valued on the exchange designated as the primary market pursuant to procedures
adopted by the Trustees); (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it is
determined by Dean Witter InterCapital Inc. (the "Investment Manager") that sale
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 portfolio 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
<PAGE> 11
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1997 (unaudited) continued
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.
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 -- 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 the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined at the close of
each business day: 1.0% to the portion of daily net assets not exceeding $500
million and 0.95% to the portion of daily net assets exceeding $500 million.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
<PAGE> 12
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1997 (unaudited) continued
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act pursuant
to which the Fund pays the Distributor compensation, accrued daily and payable
monthly, at an annual rate of 1.0% of the lesser of: (a) the average daily
aggregate gross sales of the Fund's shares since the Fund's inception (not
including reinvestment of dividend or capital gain distributions) less the
average daily aggregate net asset value of the Fund's shares redeemed since the
Fund's inception upon which a contingent deferred sales charge has been imposed
or upon which such charge has been waived; or (b) the Fund's average daily net
assets. Amounts paid under the Plan are paid to the Distributor to compensate it
for the services provided and the expenses borne by it and others in the
distribution of the Fund's shares, including the payment of commissions for
sales of the Fund's shares and incentive compensation to, and expenses of, the
account executives of Dean Witter Reynolds Inc. ("DWR"), an affiliate of the
Investment Manager and Distributor, and other employees or selected
broker-dealers who engage in or support distribution of the Fund's shares or who
service shareholder accounts, including overhead and telephone expenses,
printing and distribution of prospectuses and reports used in connection with
the offering of the Fund's shares to other than current shareholders and
preparation, printing and distribution of sales literature and advertising
materials. In addition, the Distributor may be compensated under the Plan for
its opportunity costs in advancing such amounts, which compensation would be in
the form of a carrying charge on any unreimbursed expenses incurred by the
Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred but
not yet recovered, may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
Although there is no legal obligation for the Fund to pay expenses incurred in
excess of payments made to the Distributor under the Plan and the proceeds of
contingent deferred sales charges paid by investors upon redemption of shares,
if for any reason the Plan is terminated, the Trustees will consider at that
time the manner in which to treat such expenses. The Distributor has advised the
Fund that such excess amounts, including carrying charges, total $17,093,930 at
January 31, 1997.
The Distributor has informed the Fund that for the six months ended January 31,
1997, it received approximately $509,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares.
<PAGE> 13
DEAN WITTER HEALTH SCIENCES TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1997 (unaudited) continued
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended January 31, 1997 aggregated
$159,976,549 and $155,061,958, respectively.
For the six months ended January 31, 1997, the Fund incurred brokerage
commissions of $6,330 with DWR for portfolio transactions executed on behalf of
the Fund.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At January 31, 1997, the Fund had
transfer agent fees and expenses payable of approximately $40,000.
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, 1997
included in Trustees' fees and expenses in the Statement of Operations amounted
to $2,497. At January 31, 1997, the Fund had an accrued pension liability of
$30,096 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
JANUARY 31, 1997
---------------------------- FOR THE YEAR ENDED
JULY 31, 1996
(unaudited) -----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold....................................................... 8,052,051 $ 126,429,499 26,005,478 $ 429,545,190
Reinvestment of distributions.............................. 1,860,102 26,655,267 1,434,910 21,121,878
-------- ----------- --------- -----------
9,912,153 153,084,766 27,440,388 450,667,068
Repurchased................................................ (8,170,765) (127,403,300) (19,102,244) (305,964,500)
-------- ----------- --------- -----------
Net increase............................................... 1,741,388 $ 25,681,466 8,338,144 $ 144,702,568
======== =========== ========= ===========
</TABLE>
6. FEDERAL INCOME TAX STATUS
As of July 31, 1996, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales.
<PAGE> 14
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 YEAR ENDED JULY 31
MONTHS ENDED ------------------------------
JANUARY 31, 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................... $14.97 $12.88 $ 9.32
--------- ----- -----
Net investment loss..................................... (0.16) (0.26) (0.24)
Net realized and unrealized gain (loss)................. 1.85 3.44 3.80
--------- ----- -----
Total from investment operations........................ 1.69 3.18 3.56
--------- ----- -----
Less distributions from net realized gain............... (0.95) (1.09) --
--------- ----- -----
Net asset value, end of period.......................... $15.71 $14.97 $12.88
========= ===== =====
TOTAL INVESTMENT RETURN+................................ 11.90%(1) 24.84% 38.20%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................................ 2.22%(2) 2.20% 2.30%
Net investment loss..................................... (2.09)%(2) (2.03)% (2.05)%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands................. $492,370 $442,876 $273,735
Portfolio turnover rate................................. 33%(1) % 63 %145
Average commission rate paid............................ $0.0547 $0.0562 --
<CAPTION>
FOR THE PERIOD
FOR THE YEAR OCTOBER 30, 1992*
ENDED THROUGH
JULY 31, 1994 JULY 31, 1993
- -------------------------------------------------------------------------------------------------------------------------
(unaudited)
<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)................. 0.32 (0.70)
----- ---------
Total from investment operations........................ 0.10 (0.78)
----- ---------
Less distributions from net realized gain............... -- --
----- ---------
Net asset value, end of period.......................... $ 9.32 $ 9.22
===== =========
TOTAL INVESTMENT RETURN+................................ 1.08% (7.80)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................................ 2.30% 2.38%(2)
Net investment loss..................................... (2.06)% (1.38)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands................. $228,573 $231,646
Portfolio turnover rate................................. 106% 55%(1)
Average commission rate paid............................ -- --
</TABLE>
- ---------------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 15
(This Page Intentionally Left Blank)
<PAGE> 16
TRUSTEES
Michael Bozic
Charles Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
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
[PHOTO]
Semiannual Report
January 31, 1997
