<PAGE>
DEAN WITTER HIGH INCOME SECURITIES TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS
DEAR SHAREHOLDER:
The fiscal year ended March 31, 1995 has produced somewhat mixed performance
results for Dean Witter High Income Securities. The first six months following
the Fund's inception on June 2, 1994, proved to be disappointing for most
fixed-income markets, including the high-yield sector. Questions concerning the
strength of the economy, inflation prospects, interest rate levels and possible
Federal Reserve Board moves created a great deal of uncertainty for the
financial markets. High-yield investors, concerned about rising interest rates
and possible further tightening actions by the Federal Reserve Board, remained
nervous throughout 1994, leading to a significant correction in bond prices. In
addition, a rather large amount of new-issue supply, coming in a period of weak
demand, helped contribute to 1994's market weakness.
As we entered 1995, however, the high-yield bond market began to bounce back,
along with most other fixed-income markets. Interest rates have declined sharply
during the first quarter of 1995, increasing the yield advantage provided by
high-yield issues. This has attracted more investors to the high-yield market
and has created more value for shareholders. Also providing fundamental support
to the market is the fact that credit quality remains solid, reflecting the
strong economy, improved corporate earnings picture and the spruced up balance
sheets of many high-yield issuers.
Since its inception through March 31, 1995, Dean Witter High Income Securities
has provided a total return of 5.19 percent. As of March 31, 1995, the Fund's
net assets exceeded $168 million. During the reporting period, the Fund
distributed income dividends totaling $.722 per share, including an extra income
dividend of $.022 per share paid on December 30, 1994. The accompanying chart
illustrates the growth of a $10,000 investment in the Fund since inception on
June 2, 1994, compared to a similar investment in the Lehman Brothers Corporate/
High Yield Index.
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
LETTER TO THE SHAREHOLDERS, CONTINUED
INVESTMENT STRATEGY
Given the weakness in the high-yield market, the Fund remained defensively
positioned during the second half of 1994, maintaining more than 50 percent of
its assets in high-coupon, short-duration U.S. Treasury securities. This
defensive positioning helped to stabilize the Fund and protect shareholder value
during a period of extreme market volatility and weakness. More recently, the
Fund has moved to take advantage of the correction in high-yield bond prices by
increasing its weighting in discount B-rated issues and reducing its defensive
holdings to approximately 35 percent of assets. Despite the fact that corporate
credit quality in most cases remains strong, B-rated issues can now be purchased
at 13 percent yield levels versus the 10 percent levels that existed early in
1994 and at significant discounts to par (face) value.
[GRAPHIC]
As part of its current investment
strategy, the Fund has increased its
emphasis on discounted issues, which
possess more upside opportunity for the
Fund when the high-yield bond market
rebounds. While the Fund overall is
positioned for a recovery in the
market, it still retains a sizeable
holding in various defensive
securities. These securities should
provide the portfolio flexibility
needed to take advantage of any
opportunities that may arise in the
high-yield marketplace.
MARKET OUTLOOK
Given our outlook for slower, but
continued growth in the economy, we
find today's B-rated issues (currently
yielding more than six percentage
points or 600 basis points over U.S.
Treasury securities and trading at
steep discounts) offer excellent long-
term return potential. Over the near
term, we expect continued volatility in
the financial markets as investors
attempt to assess the economy's
strength, the level of interest rates
and possible Federal Reserve Board
actions. However, despite any possible
short-term weakness, we consider
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
LETTER TO THE SHAREHOLDERS, CONTINUED
today's high-yield market to be an attractive long-term opportunity for
investors. Currently high-yield issues provide an exceptionally large yield
advantage over U.S. Treasury securities with the opportunity for substantial
capital appreciation if the high-yield market continues to rebound.
We thank you for your continued support of Dean Witter High Income Securities
and look forward to continuing to serve your investment needs.
Very truly yours,
[SIG]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (66.2%)
AIRLINES (3.1%)
$ 6,602 GPA Delaware, Inc.............................. 8.75 % 12/15/98 $ 5,199,075
---------------
AUTOMOTIVE (2.2%)
5,500 Envirotest Systems, Inc........................ 9.625 04/01/03 3,795,000
---------------
CABLE/CELLULAR (1.0%)
3,000 Marcus Cable Co................................ 13.50++ 08/01/04 1,710,000
---------------
COMPUTER EQUIPMENT (3.9%)
6,000 Unisys Corp.................................... 13.50 07/01/97 6,540,000
---------------
CONSUMER PRODUCTS (2.9%)
2,150 J.B. Williams Holdings, Inc.................... 12.00* 03/01/04 2,074,750
2,000 Playtex Family Products Corp................... 9.00 12/15/03 1,860,000
1,000 Thermoscan, Inc. (Units)+++ - 144A**........... 13.438* 08/15/01 1,015,000
---------------
4,949,750
---------------
CONTAINERS (2.0%)
7,000 Ivex Holdings Corp. (Series B)................. 13.25++ 03/15/05 3,430,000
---------------
ELECTRICAL & ALARM SYSTEMS (1.4%)
3,000 Mosler, Inc.................................... 11.00 04/15/03 2,310,000
---------------
ENTERTAINMENT/GAMING & LODGING (5.4%)
3,000 Motels of America, Inc. (Series B)............. 12.00 04/15/04 3,067,500
11,559 Spectravision, Inc............................. 11.65+ 12/01/02 1,791,645
4,556 Trump Plaza Holding Assoc...................... 12.50+ 06/15/03 4,328,428
---------------
9,187,573
---------------
FOODS & BEVERAGES (6.5%)
6,941 Envirodyne Industries, Inc..................... 10.25 12/01/01 5,761,030
10,250 Specialty Foods Acquisition Corp. (Series B)... 13.00++ 08/15/05 5,227,500
---------------
10,988,530
---------------
MANUFACTURING (6.2%)
4,000 Berry Plastics Corp............................ 12.25 04/15/04 3,920,000
3,000 MS Essex Holdings Inc.......................... 16.00++ 05/15/04 2,985,000
2,000 Talley Manufacturing & Technology Inc.......... 10.75 10/15/03 1,875,000
2,000 Uniroyal Technology Corp....................... 11.75 06/01/03 1,660,000
---------------
10,440,000
---------------
MANUFACTURING - DIVERSIFIED (4.4%)
3,000 Interlake Corp................................. 12.125 03/01/02 2,932,500
2,000 J.B. Poindexter & Co., Inc..................... 12.50 05/15/04 1,920,000
1,000 Jordan Industries, Inc......................... 10.375 08/01/03 950,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1995, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
3,000 Jordan Industries, Inc......................... 11.75++ 08/01/05 1,650,000
---------------
7,452,500
---------------
OIL & GAS (5.1%)
$ 3,000 Deeptech International, Inc.................... 12.00 % 12/15/00 $ 2,610,000
4,000 Empire Gas Corp................................ 7.00 07/15/04 2,800,000
5,250 Presidio Oil Co. (Series B).................... 13.30*** 07/15/02 3,189,113
---------------
8,599,113
---------------
PUBLISHING (3.1%)
7,000 Affiliated Newspapers Investments, Inc......... 13.25++ 07/01/06 3,745,000
2,000 United States Banknote Corp.................... 10.375 06/01/02 1,520,000
---------------
5,265,000
---------------
RESTAURANTS (5.2%)
2,000 American Restaurant Group Holdings, Inc........ 14.00++ 12/15/05 960,000
3,000 Carrols Corp................................... 11.50 08/15/03 2,797,500
6,000 Flagstar Corp.................................. 11.25 11/01/04 4,980,000
---------------
8,737,500
---------------
RETAIL (4.9%)
4,420 Cort Furniture Rental Corp..................... 12.00 09/01/00 4,243,200
1,000 County Seat Stores Co.......................... 12.00 10/01/01 980,000
3,000 Thrifty Payless, Inc........................... 12.25 04/15/04 3,015,000
---------------
8,238,200
---------------
RETAIL - FOOD CHAINS (5.1%)
3,000 Food 4 Less Holdings, Inc. (Series B).......... 15.25++ 12/15/04 2,370,000
6,000 Grand Union Capital Corp.
(Series A) (b)................................. 15.00++ 07/15/04 75,000
2,000 Grand Union Capital Corp.
(Series A) (b)................................. 0.00 01/15/07 12,500
2,000 Pathmark Stores, Inc........................... 9.625 05/01/03 1,870,000
5,100 Purity Supreme, Inc. (Series B)................ 11.75 08/01/99 4,335,000
---------------
8,662,500
---------------
TEXTILES (3.1%)
6,195 JPS Textile Group, Inc......................... 10.85 06/01/99 5,141,850
---------------
TRANSPORTATION (0.7%)
2,000 Transtar Holdings L.P. (Series B).............. 13.375++ 12/15/03 1,120,000
---------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $111,339,002).......................................... 111,766,591
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1995, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (28.9%)
$ 37,750 U.S. Treasury Note............................. 12.625 % 05/15/95 $ 38,027,226
10,500 U.S. Treasury Note............................. 11.50 11/15/95 10,829,766
---------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $50,045,468)........................................... 48,856,992
---------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (a)(2.9%)
BUILDING & CONSTRUCTION (1.9%)
140,500 USG Corp................................................................ 3,231,500
---------------
FOODS & BEVERAGES (0.3%)
153,750 Specialty Foods Acquisition Corp. - 144A**.............................. 422,813
---------------
MANUFACTURING - DIVERSIFIED (0.5%)
380,500 Interlake Corp.......................................................... 856,125
---------------
PUBLISHING (0.1%)
7,000 Affiliated Newspapers Investments, Inc. (Class B)....................... 210,000
---------------
RESTAURANTS (0.0%)
2,000 American Restaurant Group Holdings, Inc. - 144A**....................... 36,000
---------------
RETAIL (0.1%)
38,000 Thrifty Payless Holdings, Inc. (Class C)................................ 171,000
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $4,525,202)............................................ 4,927,438
---------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS (a)(0.2%)
MANUFACTURING (0.1%)
4,000 BPC Holdings Corp........................................ 04/15/04 50,000
20,000 Uniroyal Technology Corp................................. 06/01/03 30,000
---------------
80,000
---------------
OIL & GAS (0.0%)
5,520 Empire Gas Corp.......................................... 07/15/04 55,200
---------------
RETAIL (0.1%)
99,000 New Cort Holdings Corp................................... 09/01/98 210,378
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1995, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
RETAIL - FOOD CHAINS (0.0%)
3,465 Purity Supreme, Inc.**................................... 08/06/97 $ --
---------------
TOTAL WARRANTS
(IDENTIFIED COST $210,298)............................................ 345,578
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST $166,119,970) (C)................................... 98.2% 165,896,599
OTHER ASSETS IN EXCESS OF LIABILITIES................................ 1.8 2,984,577
----- ---------------
NET ASSETS........................................................... 100.0% $ 168,881,176
----- ---------------
----- ---------------
<FN>
- ---------------------
* Adjustable rate. Rate shown is the rate in effect at March 31, 1995.
** Resale is restricted to qualified institutional investors.
*** Base interest is 13.25%, additional interest, if any, is linked to
the Gas Index. Rate shown is the rate in effect at March 31, 1995.
+++ Consists of more than one class of securities traded together as a
unit; generally bonds with attached stocks/warrants.
+ Payment-in-kind securities.
++ Currently a zero coupon bond and will pay interest at the rate shown
at a future specified date.
(a) Non-income producing.
(b) Non-income producing, issuer in bankruptcy.
(c) The aggregate cost for federal income tax purposes is $166,121,845;
the aggregate gross unrealized appreciation is $3,681,431 and the
gross unrealized depreciation is $3,906,677, resulting in net
unrealized depreciation of $225,246.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $166,119,970)............................ $165,896,599
Receivable for:
Interest................................................ 5,319,604
Shares of beneficial interest sold...................... 3,234,014
Deferred organizational expenses............................ 132,570
Prepaid expenses and other assets........................... 9,459
------------
TOTAL ASSETS........................................... 174,592,246
------------
LIABILITIES:
Payable for:
Investments purchased................................... 3,263,068
Shares of beneficial interest repurchased............... 591,661
Dividends to shareholders............................... 274,441
Plan of distribution fee................................ 106,709
Investment management fee............................... 66,737
Payable to bank............................................. 1,295,531
Accrued expenses and other payables......................... 112,923
------------
TOTAL LIABILITIES...................................... 5,711,070
------------
NET ASSETS:
Paid-in-capital............................................. 169,840,479
Net unrealized depreciation................................. (223,371)
Undistributed net investment income......................... 605,072
Net realized loss........................................... (1,341,004)
------------
NET ASSETS............................................. $168,881,176
------------
------------
NET ASSET VALUE PER SHARE,
17,289,007 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$9.77
------------
------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE PERIOD JUNE 2, 1994* THROUGH MARCH 31, 1995
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $ 9,285,143
-----------
EXPENSES
Plan of distribution fee.................................... 598,938
Investment management fee................................... 374,452
Professional fees........................................... 64,257
Registration fees........................................... 60,843
Transfer agent fees and expenses............................ 59,907
Organizational expenses..................................... 26,270
Custodian fees.............................................. 21,035
Trustees' fees and expenses................................. 15,031
Shareholder reports and notices............................. 9,427
Other....................................................... 4,641
-----------
TOTAL EXPENSES BEFORE FEES WAIVED/ ASSUMED............. 1,234,801
Less: Expenses Waived/Assumed........................... (72,272)
-----------
TOTAL EXPENSES AFTER FEES WAIVED/ ASSUMED.............. 1,162,529
-----------
NET INVESTMENT INCOME.................................. 8,122,614
-----------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss........................................... (1,341,004)
Net unrealized depreciation................................. (223,371)
-----------
NET LOSS............................................... (1,564,375)
-----------
NET INCREASE................................................ $ 6,558,239
-----------
-----------
<FN>
- ---------------------
* Commencement of operations.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
JUNE 2, 1994*
THROUGH
MARCH 31, 1995
- ----------------------------------------------------------------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 8,122,614
Net realized loss........................................... (1,341,004)
Net unrealized depreciation................................. (223,371)
--------------
NET INCREASE........................................... 6,558,239
--------------
Dividends to shareholders from net investment income........ (7,517,542)
Net increase from transactions in shares of beneficial
interest.................................................. 169,740,479
--------------
TOTAL INCREASE......................................... 168,781,176
--------------
NET ASSETS:
Beginning of period......................................... 100,000
--------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$605,072)............................................... $ 168,881,176
--------------
--------------
<FN>
- ---------------------
* Commencement of operations.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter High Income Securities (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund was organized as a
Massachusetts business trust on March 23, 1994 and had no operations other than
those relating to organizational matters and the issuance of 10,000 shares of
beneficial interest for $100,000 to Dean Witter InterCapital Inc. (the
"Investment Manager"). The Fund commenced operations on June 2, 1994.
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 (in cases where a security
is traded on more than one exchange, the security is valued on the exchange
designated as the primary market 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 the Investment Manager that sale and 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; (4) certain of the Fund's
portfolio securities may be valued by an outside pricing service approved by the
Trustees. The pricing service utilizes a matrix system incorporating security
quality, maturity and coupon as the evaluation model parameters, and/or research
and evaluations by its staff, including review of broker-dealer market price
quotations, if available, in determining what it believes is the fair valuation
of the portfolio securities valued by such pricing service; and (5) 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.
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.
Discounts on securities purchased are amortized over the life of the respective
securities. The Fund does not amortize premiums on securities. Interest income
is accrued daily except where collection is not expected.
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995, CONTINUED
C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the record date. The amount of dividends
and distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Dividends and distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as dividends in excess
of net investment income or distributions in excess of net realized capital
gains. To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of paid-in-capital.
E. ORGANIZATIONAL EXPENSES -- The Investment Manager paid the organizational
expenses of the Fund in the amount of approximately $159,000 exclusive of
approximately $5,600 assumed by the Investment Manager. The Fund will reimburse
the Investment Manager for such expenses which have been deferred and are being
amortized by the Fund 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, calculated daily and payable monthly, by applying the
annual rate of 0.50% to the net assets of the Fund determined as of the close of
each business day.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995, CONTINUED
The Investment Manager had undertaken to assume all expenses (except for the
Plan of Distribution fee and brokerage fees) and waive the compensation provided
for in the Agreement until such time as the Fund reached $50 million of net
assets which occurred on August 3, 1994.
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 0.80% of the lesser of: (a) the average daily
aggregate gross sales of the Fund's shares since the Fund's inception (not
including reinvestment of dividend or capital gain distributions) less the
average daily aggregate net asset value of the Fund's shares redeemed since the
Fund's inception upon which a contingent deferred sales charge has been imposed
or upon which such charge has been waived; or (b) the Fund's average daily net
assets. Amounts paid under the Plan are paid to the Distributor to compensate it
for the services provided and the expenses borne by it and others in the
distribution of the Fund's shares, including the payment of commissions for
sales of the Fund's shares and incentive compensation to, and expenses of, the
account executives of Dean Witter Reynolds Inc., an affiliate of the Investment
Manager and Distributor, and other employees or selected dealers who engage in
or support distribution of the Fund's shares or who service shareholder
accounts, including overhead and telephone expenses, printing and distribution
of prospectuses and reports used in connection with the offering of the Fund's
shares to other than current shareholders and preparation, printing and
distribution of sales literature and advertising materials. In addition, the
Distributor may be compensated under the Plan for its opportunity costs in
advancing such amounts, which compensation would be in the form of a carrying
charge on any unreimbursed expenses incurred by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred but
not yet recovered may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the period ended March 31, 1995,
it received approximately $160,000 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.
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1995, 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 period ended March 31, 1995 aggregated
$141,718,353 and $27,079,035, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and the
Distributor, is the Fund's transfer agent. At March 31, 1995, the Fund had
transfer agent fees and expenses payable of approximately $9,000.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD JUNE 2, 1994*
THROUGH MARCH 31, 1995
----------------------------
SHARES AMOUNT
----------- --------------
<S> <C> <C>
Sold............................................................. 19,293,553 $ 189,368,053
Reinvestment of dividends........................................ 297,694 2,889,883
----------- --------------
19,591,247 192,257,936
Repurchased...................................................... (2,312,240) (22,517,457)
----------- --------------
Net increase..................................................... 17,279,007 $ 169,740,479
----------- --------------
----------- --------------
<FN>
- ---------------------
* Commencement of operations.
</TABLE>
6. FEDERAL INCOME TAX STATUS
At March 31, 1995, the Fund had net capital loss carryovers of approximately
$736,000 which may be used to offset future capital gains to the extent provided
by regulations through March 31, 2003.
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
approximately $603,000 during fiscal 1995.
At March 31, 1995, the Fund had temporary book/tax differences primarily
attributable to post-October losses.
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout the period:
<TABLE>
<CAPTION>
FOR THE PERIOD
JUNE 2, 1994*
THROUGH
MARCH 31, 1995
- ----------------------------------------------------------------------------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 10.00
------
Net investment income................................................. 0.75
Net realized and unrealized loss...................................... (0.26)
------
Total from investment operations...................................... 0.49
Less dividends from net investment income............................. (0.72)
------
Net asset value, end of period........................................ $ 9.77
------
------
TOTAL INVESTMENT RETURN+.............................................. 5.19%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.55%(2)(3)
Net investment income................................................. 10.85%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $168,881
Portfolio turnover rate............................................... 53%(1)
<FN>
- ---------------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all the expenses that were assumed or waived by the
Investment Manager, the above annualized expense and net investment ratios
would have been 1.65% and 10.75%, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER HIGH INCOME SECURITIES
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Dean Witter High Income Securities
("the Fund") at March 31, 1995, and the results of its operations, the changes
in its net assets and the financial highlights for the period June 2, 1994
(commencement of operations) through March 31, 1995, 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 audit. We conducted our audit
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
audit, which included confirmation of securities at March 31, 1995 by
correspondence with the custodian and brokers, provides a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
MAY 10, 1995
<PAGE>
TRUSTEES DEAN WITTER
HIGH INCOME
Jack F. Bennett SECURITIES
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
Peter M. Avelar
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT [PHOTO]
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 ANNUAL REPORT
MARCH 31, 1995
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.
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
GROWTH OF $10,000
<TABLE>
<CAPTION>
DATE TOTAL LEHMAN
<S> <C> <C>
- --------------------------------------------------------------
June 2, 1994 $10000 $10000
- --------------------------------------------------------------
June 30, 1994 $10010 $ 9985
- --------------------------------------------------------------
September 30, 1994 $10036 $10073
- --------------------------------------------------------------
December 31, 1994 $10126 $10102
- --------------------------------------------------------------
March 31, 1995 $10129 (3) $10702
- --------------------------------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
LIFE OF FUND
<S> <C>
--------------
6.32 (1)
--------------
2.41 (2)
--------------
<CAPTION>
<S> <C>
-----------------------------
____Fund ____Lehman (4)
-----------------------------
Past performance is not predictive of future returns.
<FN>
- --------------
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable contingent deferred sales charge (CDSC) (since
inception 4%). See the Fund's current prospectus for complete details on
fees and sales charges.
(3) Closing value after the deduction of a 4% CDSC, assuming a complete
redemption on March 31, 1995.
(4) The Lehman Brothers Mutual Fund Corporate/ High Yield Index is an index
measuring all investment and noninvestment grade corporate debt securities.
</TABLE>
