<PAGE>
DEAN WITTER HIGH INCOME SECURITIES TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS
DEAR SHAREHOLDER:
During the six months ended September 30, 1995, the fixed-income markets have
rebounded as economic growth continued to slow and inflation fears subsided. The
high-yield market has had a strong 1995 thus far, benefiting from the rally in
the U.S. Treasury market, which has driven long-term interest rates
significantly lower and from the continued strength in corporate earnings. As is
typical in a decelerating economic environment, however, high-yield bonds have
lagged the 1995 rally in U.S. Treasuries, as concerns over the severity of the
economic slowdown have offset some of the benefit of lower interest rates.
Reflecting the high-yield market's rebound, Dean Witter High Income Securities
produced a total return of 6.55 percent for the six-month period ended September
30, 1995. The Fund continued to distribute regular income dividends at a rate of
$0.08 per share per month, with income dividends totaling $0.48 per share for
the trailing six months. As of September 30, 1995, the Fund had net assets in
excess of $332 million.
INVESTMENT STRATEGY
The Fund's overall investment strategy entering calendar year 1995 was to
capitalize on the opportunity created by the 1994 market correction by
positioning the Fund for an eventual rebound in the market. Despite the fact
that corporate credit quality remained strong, the 1994 market correction pushed
yields on many B rated issues 300-400 basis points higher (to the 13-14 percent
range) and caused bond prices to decline by as much as 15-20 percent in some
cases.
In light of these opportunities, the Fund significantly increased its emphasis
on discounted issues (primarily B-rated) during the latter part of 1994 and
early part of 1995. This renewed focus on discounted issues has helped to boost
the Fund's return in 1995 and should provide more long-term capital appreciation
potential in the future. While the Fund's portfolio is still positioned for
further upside in the high-yield market, it
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
LETTER TO THE SHAREHOLDERS, CONTINUED
does maintain a sizable position in various defensive securities. These
securities should provide the Fund with the flexibility needed to take advantage
of any interim trading opportunities that may arise.
LOOKING AHEAD
Given our outlook for continued, albeit modest economic growth, we find that
many of today's B-rated issues -- still yielding more than 600 basis points (6
percentage points) above U.S. Treasury securities and trading at significant
discounts -- offer excellent long-term return potential. Over the near term, we
expect continued volatility in the financial markets as investors assess the
economy's strength, the level of interest rates and possible Federal Reserve
Board actions. However, despite any potential short-term weakness, we consider
today's high-yield market to be an attractive long-term opportunity for
investors, as many current high-yield issues provide an attractive yield
advantage over U.S. Treasuries and the opportunity for substantial capital
appreciation if the high-yield market continues its recovery.
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,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (81.7%)
AEROSPACE (1.3%)
$ 4,400 Sabreliner Corp. (Series B)................. 12.50 % 04/15/03 $ 4,136,000
---------------
AIRLINES (3.9%)
14,352 GPA Delaware, Inc........................... 8.75 12/15/98 12,916,800
---------------
AUTOMOTIVE (2.2%)
12,500 Envirotest Systems, Inc..................... 9.625 04/01/03 7,375,000
---------------
CABLE & TELECOMMUNICATIONS (3.9%)
7,956 Adelphia Communications Corp. (Series B).... 9.50+ 02/15/04 6,662,952
15,200 In-Flight Phone Corp. (Units)+++ - 144A**... 14.00++ 05/15/02 6,232,000
---------------
12,894,952
---------------
COMPUTER EQUIPMENT (6.5%)
8,000 IBM Credit Corp............................. 15.00 06/13/96 8,473,600
11,900 Unisys Corp................................. 13.50 07/01/97 13,283,375
---------------
21,756,975
---------------
CONSUMER PRODUCTS (1.7%)
4,650 J.B. Williams Holdings, Inc................. 12.00 03/01/04 4,696,500
1,000 Thermoscan, Inc. (Series B)................. 13.5625 * 08/15/01 1,030,000
---------------
5,726,500
---------------
CONTAINERS (2.6%)
14,900 Ivex Holdings Corp. (Series B).............. 13.25++ 03/15/05 8,642,000
---------------
ELECTRICAL & ALARM SYSTEMS (2.2%)
9,000 Mosler, Inc................................. 11.00 04/15/03 7,290,000
---------------
ENTERTAINMENT/GAMING & LODGING (6.3%)
3,500 Fitzgeralds Gaming Corp. - 144A**........... 14.25* 03/15/96 2,765,000
7,000 Motels of America, Inc. (Series B).......... 12.00 04/15/04 7,035,000
4,000 Six Flags Theme Parks Corp. - 144A**........ 12.25++ 06/15/05 2,990,000
21,178 Spectravision, Inc. (c)..................... 11.65 12/01/02 2,026,366
4,328 Trump Castle Funding, Inc................... 11.75 11/15/03 3,375,840
3,000 Trump Taj Mahal (Series A).................. 11.35+ 11/15/99 2,670,000
---------------
20,862,206
---------------
FOODS & BEVERAGES (11.4%)
16,923 Envirodyne Industries, Inc.................. 10.25 12/01/01 13,538,400
8,000 PepsiCo Inc................................. 15.00 06/14/96 8,480,160
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 8,340 Seven Up/RC Bottling Co. Southern
California, Inc. (d)........................ 11.50 % 08/01/99 $ 3,684,625
24,315 Specialty Foods Acquisition Corp. (Series
B).......................................... 13.00++ 08/15/05 12,157,500
---------------
37,860,685
---------------
INDUSTRIALS (0.9%)
3,000 SC International Services, Inc.............. 13.00 10/01/05 3,030,000
---------------
MANUFACTURING (5.2%)
5,250 Alpine Group, Inc. - 144A**................. 12.25 07/15/03 4,830,000
4,000 Berry Plastics Corp......................... 12.25 04/15/04 4,210,000
2,500 Cabot Safety Corp. - 144A**................. 12.50 07/15/05 2,612,500
6,000 Uniroyal Technology Corp.................... 11.75 06/01/03 5,640,000
---------------
17,292,500
---------------
MANUFACTURING - DIVERSIFIED (8.2%)
6,000 Foamex L.P.................................. 11.875 10/01/04 5,940,000
7,000 Interlake Corp.............................. 12.125 03/01/02 6,790,000
6,000 J.B. Poindexter & Co., Inc.................. 12.50 05/15/04 5,640,000
15,000 Jordan Industries, Inc...................... 11.75++ 08/01/05 9,000,000
---------------
27,370,000
---------------
OIL & GAS (3.2%)
5,500 Deeptech International, Inc................. 12.00 12/15/00 4,675,000
7,000 Empire Gas Corp............................. 7.00 07/15/04 5,915,000
---------------
10,590,000
---------------
PUBLISHING (5.9%)
12,500 Affiliated Newspapers Investments, Inc...... 13.25++ 07/01/06 7,000,000
7,284 BFP Holdings, Inc. (Series B)
(Restricted)................................ 13.50++ 04/15/04 5,426,580
8,500 United States Banknote Corp................. 10.375 06/01/02 7,012,500
---------------
19,439,080
---------------
RESTAURANTS (7.0%)
12,000 American Restaurant Group Holdings, Inc..... 14.00++ 12/15/05 5,640,000
4,937 Carrols Corp................................ 11.50 08/15/03 4,912,315
16,500 Flagstar Corp............................... 11.25 11/01/04 12,746,250
---------------
23,298,565
---------------
RETAIL (3.6%)
5,520 Cort Furniture Rental Corp.................. 12.00 09/01/00 5,740,800
1,000 County Seat Stores Co....................... 12.00 10/01/02 950,000
5,000 Thrifty Payless, Inc........................ 12.25 04/15/04 5,225,000
---------------
11,915,800
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
RETAIL - FOOD CHAINS (0.9%)
$ 3,000 Bruno's Inc................................. 10.50 % 08/01/05 $ 2,913,750
---------------
TEXTILES - APPAREL MANUFACTURERS (3.8%)
10,334 JPS Textile Group, Inc...................... 10.85 06/01/99 9,817,300
3,500 U.S. Leather, Inc........................... 10.25 07/31/03 2,922,500
---------------
12,739,800
---------------
TRANSPORTATION (1.0%)
5,000 Transtar Holdings L.P. (Series B)........... 13.375++ 12/15/03 3,250,000
---------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $274,428,855)....................................... 271,300,613
---------------
U.S. GOVERNMENT OBLIGATION (10.7%)
35,250 U.S. Treasury Note (Identified Cost
$36,338,242)................................ 11.50 11/15/95 35,503,359
---------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (a) (3.6%)
BUILDING & CONSTRUCTION (2.2%)
274,900 USG Corp. (b)........................................................... 7,697,200
---------------
CONSUMER PRODUCTS (0.1%)
13,000 Thermoscan, Inc. (Class B) - 144A**..................................... 208,000
---------------
FOODS & BEVERAGES (0.3%)
300,975 Specialty Foods Acquisition Corp. - 144A**.............................. 902,925
---------------
MANUFACTURING - DIVERSIFIED (0.7%)
385,800 Interlake Corp.......................................................... 916,275
84,100 Thermadyne Holdings Corp. (b)........................................... 1,513,800
---------------
2,430,075
---------------
PUBLISHING (0.1%)
12,500 Affiliated Newspapers Investments, Inc. (Class B)....................... 375,000
---------------
RESTAURANTS (0.1%)
12,000 American Restaurant Group Holdings, Inc. - 144A**....................... 180,000
---------------
RETAIL (0.1%)
64,421 Thrifty Payless Holdings, Inc. (Class C)................................ 273,789
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $10,383,393)........................................... 12,066,989
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS (a) (0.2%)
ENTERTAINMENT/GAMING & LODGING (0.0%)
9,250 Fitzgeralds Gaming Corp. - 144A**........................ 03/15/99 $ 92,500
---------------
MANUFACTURING (0.1%)
4,000 BPC Holdings Corp........................................ 04/15/04 50,000
20,000 Uniroyal Technology Corp................................. 06/01/03 50,000
---------------
100,000
---------------
OIL & GAS (0.0%)
5,520 Empire Gas Corp.......................................... 07/15/04 55,200
---------------
RETAIL (0.1%)
135,300 New Cort Holdings Corp................................... 09/01/98 253,688
---------------
RETAIL - FOOD CHAINS (0.0%)
4,359 Grand Union Co. (Series 1) (b)........................... 06/16/00 4,359
8,718 Grand Union Co. (Series 2) (b)........................... 06/16/00 4,359
---------------
8,718
---------------
TOTAL WARRANTS
(IDENTIFIED COST $354,494)............................................ 510,106
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS (1.9%)
U.S. GOVERNMENT AGENCY (e) (1.4%)
$ 4,600 Federal Home Loan Mortgage Corp. (Amortized
Cost $4,598,390)............................ 6.30 % 10/02/95 4,598,390
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENT (0.5%)
$ 1,873 The Bank of New York (dated 09/29/95;
proceeds $1,873,389; collateralized by
$2,071,324 U.S. Treasury Note 6.875% due
07/31/99 valued at $2,153,058) (Identified
Cost $1,872,550)............................ 5.375 % 10/02/95 $ 1,872,550
---------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $6,470,940)......................................... 6,470,940
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST $327,975,924) (F)........... 98.1% 325,852,007
OTHER ASSETS IN EXCESS OF LIABILITIES........ 1.9 6,404,415
----- ------------
NET ASSETS................................... 100.0% $332,256,422
----- ------------
----- ------------
<FN>
- ---------------------
* Adjustable rate. Rate shown is the rate in effect at September 30, 1995.
** Resale is restricted to qualified institutional investors.
+++ Consists of one or more class of securities traded together as a unit;
generally bonds with attached stocks/warrants.
+ Payment-in-kind security.
++ Currently a zero coupon bond and will pay interest at the rate shown at a
future specified date.
(a) Non-income producing security.
(b) Acquired through exchange offer.
(c) Non-income producing security, issuer in bankruptcy.
(d) Non-income producing security, bond in default.
(e) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(f) The aggregate cost for federal income tax purposes is $327,977,799; the
aggregate gross unrealized appreciation is $10,725,603 and the aggregate
gross unrealized depreciation is $12,851,395, resulting in net unrealized
depreciation of $2,125,792.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $327,975,924)............................ $325,852,007
Receivable for:
Interest................................................ 9,254,411
Investments sold........................................ 8,032,635
Shares of beneficial interest sold...................... 2,278,068
Prepaid expenses and other assets........................... 117,759
Deferred organizational expenses............................ 116,361
------------
TOTAL ASSETS........................................... 345,651,241
------------
LIABILITIES:
Payable for:
Investments purchased................................... 12,251,423
Dividends to shareholders............................... 554,663
Plan of distribution fee................................ 208,038
Shares of beneficial interest repurchased............... 170,171
Investment management fee............................... 130,024
Accrued expenses and other payables......................... 80,500
------------
TOTAL LIABILITIES...................................... 13,394,819
------------
NET ASSETS:
Paid-in-capital............................................. 331,469,775
Net unrealized depreciation................................. (2,123,917)
Accumulated undistributed net investment income............. 1,999,919
Accumulated undistributed net realized gain................. 910,645
------------
NET ASSETS............................................. $332,256,422
------------
------------
NET ASSET VALUE PER SHARE,
33,473,539 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$9.93
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $15,675,174
-----------
EXPENSES
Plan of distribution fee.................................... 1,005,920
Investment management fee................................... 628,700
Registration fees........................................... 71,574
Transfer agent fees and expenses............................ 64,015
Custodian fees.............................................. 36,612
Professional fees........................................... 34,370
Organizational expenses..................................... 16,209
Shareholder reports and notices............................. 9,578
Trustees' fees and expenses................................. 5,744
Other....................................................... 2,671
-----------
TOTAL EXPENSES......................................... 1,875,393
-----------
NET INVESTMENT INCOME.................................. 13,799,781
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain........................................... 2,251,649
Net change in unrealized depreciation....................... (1,900,546)
-----------
NET GAIN............................................... 351,103
-----------
NET INCREASE................................................ $14,150,884
-----------
-----------
</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 SIX MONTHS
ENDED FOR THE PERIOD
SEPTEMBER 30, 1995 JUNE 2, 1994* THROUGH
(UNAUDITED) MARCH 31, 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 13,799,781 $ 8,122,614
Net realized gain (loss).................................... 2,251,649 (1,341,004)
Net change in unrealized depreciation....................... (1,900,546) (223,371)
------------------ ---------------------
NET INCREASE........................................... 14,150,884 6,558,239
Dividends from net investment income........................ (12,404,934) (7,517,542)
Net increase from transactions in shares of beneficial
interest.................................................. 161,629,296 169,740,479
------------------ ---------------------
TOTAL INCREASE......................................... 163,375,246 168,781,176
NET ASSETS:
Beginning of period......................................... 168,881,176 100,000
------------------ ---------------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$1,999,919 AND $605,072, RESPECTIVELY).................. $332,256,422 $168,881,176
------------------ ---------------------
------------------ ---------------------
</TABLE>
- ---------------------
* Commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (UNAUDITED)
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 are accreted over the life of the respective securities. Interest
income is accrued daily except where collection is not expected.
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (UNAUDITED) 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 ex-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 $153,534. The Fund has reimbursed the
Investment Manager for such expenses, exclusive of the amount assumed. Such
expenses 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 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 SEPTEMBER 30, 1995 (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 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 six months ended September
30, 1995, it received approximately $214,000 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 September 30, 1995 aggregated
$239,771,654 and $78,233,435, respectively.
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (UNAUDITED) CONTINUED
Dean Witter Trust Company, an affiliate of the Investment Manager and the
Distributor, is the Fund's transfer agent. At September 30, 1995, the Fund had
transfer agent fees and expenses payable of approximately $16,000.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE PERIOD
SEPTEMBER 30, 1995 JUNE 2, 1994*
(UNAUDITED) THROUGH MARCH 31, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 18,715,895 $ 186,985,538 19,293,553 $189,368,053
Reinvestment of dividends........................................ 494,406 4,910,226 297,694 2,889,883
----------- -------------- ----------- ------------
19,210,301 191,895,764 19,591,247 192,257,936
Repurchased...................................................... (3,025,769) (30,266,468) (2,312,240) (22,517,457)
----------- -------------- ----------- ------------
Net increase..................................................... 16,184,532 $ 161,629,296 17,279,007 $169,740,479
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
- ---------------------
* Commencement of operations.
6. FEDERAL INCOME TAX STATUS
At March 31, 1995, the Fund had an approximate net capital loss carryover of
approximately $736,000 which is available through March 31, 2003 which may be
used to offset future capital gains to the extent provided by regulations.
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 each period:
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX PERIOD
MONTHS JUNE 2,
ENDED 1994*
SEPTEMBER THROUGH
30, 1995 MARCH 31,
(UNAUDITED) 1995
- ---------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................ $ 9.77 $ 10.00
---------- ---------
Net investment income.............. 0.50 0.75
Net realized and unrealized gain
(loss)............................ 0.14 (0.26)
---------- ---------
Total from investment operations... 0.64 0.49
Less dividends from net investment
income............................ (0.48) (0.72)
---------- ---------
Net asset value, end of period..... $ 9.93 $ 9.77
---------- ---------
---------- ---------
TOTAL INVESTMENT RETURN+........... 6.55%(1) 5.19%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 1.49%(2) 1.55%(2)(3)
Net investment income.............. 10.94%(2) 10.85%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $332,256 $168,881
Portfolio turnover rate............ 38%(1) 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 expense and net investment ratios would have
been 1.65% and 10.75%, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Sheldon Curtis
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
Peter M. Avelar
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 HIGH INCOME SECURITIES
[Graphic]
SEMIANNUAL REPORT
SEPTEMBER 30, 1995
